<PAGE> 1
As filed with the Securities and Exchange Commission on November 27, 1996
Registration No.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
----------------------
<TABLE>
<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------
Copies to:
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CHARLES C. PINCKNEY FRANK M. CONNER III MR. H. HALL WARE, III
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD GILBERT, HARRELL, GILBERT,
SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W. SUMERFORD & MARTIN
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 777 GLOUCESTER STREET, SUITE 200
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 BRUNSWICK, GEORGIA 31520
(205) 250-5000 (202) 508-3303 (912) 265-6700
</TABLE>
--------------------
Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
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CALCULATION OF REGISTRATION FEE
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Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit* offering price* registration fee
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<S> <C> <C> <C> <C>
Common Stock 2,854,286 $ 50.3539701 $ 143,724,632 $ 43,552.92
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</TABLE>
*Calculated in accordance with Rule 457(f), based on the maximum number of
shares of Allied Bankshares, Inc. to be outstanding of 12,629,581 and the
average of the high and low sales prices of Allied Bankshares, Inc. common stock
on November 20, 1996 of $11.38.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
shall determine.
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<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
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CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
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1. Forepart of registration statement and outside front
cover page of prospectus.............................. Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of
Registration Statement; Cross-Reference Sheet.
2. Inside front and outside back cover of prospectus..... Available Information; Documents
Incorporated by Reference; Table of
Contents.
3. Risk factors, ratio of earnings to fixed charges and
other information..................................... Summary; Comparative Market Prices and Dividends.
4. Terms of the transaction.............................. Summary; Description of the Transaction;
Effect of the Merger on Rights of
Stockholders; Description of Regions
Common Stock.
5. Pro forma financial information....................... Summary; Pro Forma Financial Information.
6. Material contacts with the company being acquired..... Summary; Description of the Transaction.
7. Additional information required for re-offering by
persons and parties deemed to be underwriters......... Not applicable.
8. Interest of named experts and counsel................. Opinions.
9. Disclosure of Commission position on indemnification
for Securities Act liabilities........................ Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants........... Documents Incorporated by Reference;
Summary; Business of Regions.
11. Incorporation of certain information by reference..... Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3 registrants.... Not Applicable.
13. Incorporation of certain information by reference..... Not Applicable.
14. Information with respect to registrants other than S-2
or S-3 registrants.................................... Not Applicable.
15. Information with respect to S-3 companies............. Business of Allied; Voting Securities and
Principal Stockholders of Allied
16. Information with respect to S-2 or S-3 companies...... Not Applicable.
17. Information with respect to companies other than S-2
or S-3 companies...................................... Not Applicable.
18. Information if proxies, consents, or authorizations
are to be solicited................................... Documents Incorporated by Reference; Summary;
The Special Meeting; Description of the Transaction;
Description of Regions Common Stock.
19. Information if proxies, consents, or authorizations
are not to be solicited or in an exchange offer....... Not Applicable.
</TABLE>
<PAGE> 3
Dear Allied Bankshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Allied Bankshares, Inc. ("Allied") to be held at the Thomson-McDuffie County
Library, 338 Main Street, Thomson, Georgia on January ______, 1997, at ______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 Allied
will merge (the "Merger") with and into Regions, and the subsidiaries of Allied
will become subsidiaries of Regions. Upon consummation of the Merger, each
share of Allied common stock issued and outstanding (except for certain shares
held by Allied or Regions) will be converted into .226 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. Consummation of the Merger is
subject to certain conditions, including approval of the Agreement by Allied
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 shares of common stock of Allied
outstanding and 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 Allied, 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,
Boone A. Knox
Chairman and Chief Executive
Officer
<PAGE> 4
ALLIED BANKSHARES, INC.
149 MAIN STREET, THOMSON, GEORGIA, 30824
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY ______, 1997
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Allied Bankshares, Inc. ("Allied"), a bank holding company, will
be held at the Thomson-McDuffie County Library, 338 Main Street, Thomson,
Georgia on January ______, 1997, at ______:00 .m., local time, for the
following purposes:
1. Merger. To consider and vote on the Agreement and Plan of Merger, dated
as of June 13, 1996 (the "Agreement"), by and between Allied and Regions
Financial Corporation ("Regions") pursuant to which (i) Regions will acquire
all of the issued and outstanding common stock of Allied through the merger of
Allied with and into Regions (the "Merger"), (ii) each share of Allied common
stock (except for certain shares held by Allied or Regions) will be converted
into .226 of a share of Regions common stock, and (iii) each Allied 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 ______,
1996, are entitled to receive notice of and to vote at the Special Meeting or
any adjournment or postponement thereof.
Stockholders of Allied do not have the right to dissent from the Merger and
obtain payment of the fair value of their shares in cash.
The Board of Directors of Allied unanimously recommends that holders of
Allied 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
Allied 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
Ben O. Howell, Jr.
Corporate Secretary
December ______, 1996
<PAGE> 5
ALLIED BANKSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD JANUARY ______, 1997 (PAR VALUE $.625)
2,854,286 SHARES
______________________________________
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
Allied Bankshares, Inc., a bank holding company organized and existing under the
laws of the state of Georgia ("Allied") upon consummation of the proposed merger
(the "Merger") described herein, by which Allied will merge with and into
Regions pursuant to the terms of an Agreement and Plan of Merger, dated as of
June 13, 1996, by and between Regions and Allied (the "Agreement").
On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) Allied will merge with and into Regions, (ii)
each outstanding share of the $1.00 par value common stock of Allied ("Allied
Common Stock") will be converted into .226 of a share of Regions Common Stock,
and (iii) each Allied 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 Allied will cease, and
the subsidiaries of Allied will become wholly owned subsidiaries of Regions.
For a further description of the terms of the Merger, see "Description of the
Transaction."
This Prospectus also constitutes a Proxy Statement of Allied and is being
furnished to the stockholders of Allied in connection with the solicitation of
proxies by the Board of Directors of Allied for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on January ______, 1997, 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 Allied on or
about December ______, 1996.
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 ______, 1996.
<PAGE> 6
AVAILABLE INFORMATION
Regions and Allied 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. The SEC also maintains a
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the SEC.
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 ALLIED. 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
ALLIED 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 Allied
was supplied by Allied.
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, 1995 (which includes supplemental consolidated financial
statements of Regions, giving effect to the March 1, 1996 combination of
First National Bancorp with Regions, accounted for as a pooling of
interests);
2. Regions' Quarterly Reports on Form 10-Q for the three months ended
March 31, June 30, and September 30, 1996;
2
<PAGE> 7
3. Regions' Current Report on Form 8-K dated as of March 1, 1996, and
amendment no. 1 thereto filed March 28, 1996;
4. Regions' Current Report on Form 8-K filed June 4, 1996 (which
includes management's discussion and analysis of financial condition and
results of operations of Regions, giving effect to the combination of First
National Bancorp with Regions, accounted for as a pooling of interests);
5. Regions' Current Report on Form 8-K filed June 26, 1996;
6. Regions' Current Report on Form 8-K filed November 20, 1996;
7. Regions' report on Form 10-C filed March 11, 1996; and
8. 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.
Regions' Annual Report on Form 10-K for the year ended December 31, 1995,
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 1995," "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 Allied pursuant to
the Exchange Act are hereby incorporated by reference herein:
1. Allied's Annual Report on Form 10-K for the fiscal year ended December
31, 1995;
2. Allied's Quarterly Reports on Form 10-Q for the three months ended
March 31, June 30, and September 30, 1996; and
3. Allied's Current Report on Form 8-K filed with the SEC and dated
June 21, 1996.
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. In
particular, reference is made to the Regions' Annual Report on Form 10-K for
the year ended December 31, 1995, and Regions' Current Report on Form 8-K dated
June 4, 1996, which include supplemental consolidated financial statements and
the related management's discussion and analysis of financial condition and
results of operations of Regions, giving effect to the combination of First
National Bancorp with Regions, effected March 1, 1996, and accounted for as a
pooling of interests. See "Summary" and "Business of Regions--Recent
Developments."
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 ALLIED, FROM BEN O. HOWELL, JR., CORPORATE
SECRETARY, 149 MAIN STREET, THOMSON, GEORGIA,
3
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30824 (TELEPHONE (706) 595-9500). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY JANUARY ___, 1997.
4
<PAGE> 9
TABLE OF CONTENTS
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Meeting of Allied Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Absence of Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reasons for the Merger; Recommendation of Allied's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opinion of Allied's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Differences in Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparative Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Opinion of Allied's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Absence of Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Resales of Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
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Amendment of Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Classified Board of Directors and Absence of Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . .
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Limitations on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholder Nominations and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Combinations with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OF ALLIED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF ALLIED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Pro Forma Combined Data for Regions and Allied . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Pro Forma Combined Data for Regions, Allied, and
Other Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A--Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Opinion of Financial Consulting Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
</TABLE>
6
<PAGE> 11
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 "Allied" refer to those entities,
respectively, and, where the context requires, to those entities and their
respective subsidiaries.
THE PARTIES
Allied. Allied is a bank holding company organized and existing under the
laws of the state of Georgia, with its principal executive office located in
Thomson, Georgia. Allied operates principally through its three banking
subsidiaries, which provide a range of retail banking services through 26
offices in east central Georgia. At September 30, 1996, Allied had total
consolidated assets of approximately $557 million, total consolidated deposits
of approximately $442 million, and total consolidated stockholders' equity of
approximately $68 million. Allied's principal executive office is located at
149 Main Street, Thomson, Georgia, 30824 and its telephone number at such
address is (706) 595-9500.
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 373 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of September 30, 1996. At that date,
Regions had total consolidated assets of approximately $18.7 billion, total
consolidated deposits of approximately $15.2 billion, and total consolidated
stockholders' equity of approximately $1.6 billion. Regions is the second
largest bank holding company headquartered in Alabama in terms of assets, based
on September 30, 1996 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.
Since December 31, 1995, Regions has completed the acquisitions of eight
financial institutions, six of which are located in Georgia and two of which
are located in Louisiana (referred to as the "Recently Completed
Acquisitions"). Regions also has entered into definitive agreements to
acquire, in addition to Allied, three additional financial institutions, one of
which is located in Florida and two of which are located in Louisiana (the
"Other Pending Acquisitions"). For information with respect to the Recently
Completed Acquisitions and the Other Pending Acquisitions, see "Documents
Incorporated by Reference" and "Business of Regions--Recent Developments."
Regions commenced operations in 1971, under its former name First Alabama
Bancshares, Inc., 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."
7
<PAGE> 12
SPECIAL MEETING OF ALLIED STOCKHOLDERS
The Special Meeting will be held at :00 p.m., local time, on January
______, 1997, at the Thomson-McDuffie County Library, 338 Main Street, Thomson,
Georgia 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 Allied Common Stock at the close of business on
December ______, 1996 (the "Record Date"), will be entitled to vote at the
Special Meeting. The affirmative vote of a majority of the shares of Allied
Common Stock outstanding and entitled to vote at the Special Meeting will be
required to approve the Agreement. As of the Record Date, there were 12,629,581
shares of Allied Common Stock outstanding and entitled to be voted.
The directors and executive officers of Allied and their affiliates
beneficially owned, as of the Record Date, ______ shares (or approximately
______% of the outstanding shares) of Allied Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of
the Record Date, no shares of Allied Common Stock. As of that date, neither
Allied nor Regions held any shares of Allied 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 Allied by Regions pursuant to
the Merger of Allied with and into Regions. On the Effective Date, each share
of Allied Common Stock then issued and outstanding (excluding any shares held
by Allied, Regions, or their respective subsidiaries, other than shares held in
a fiduciary capacity or as a result of debts previously contracted) will be
converted into .226 of a share of Regions Common Stock (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 Allied
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 Allied 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 ALLIED'S BOARD OF DIRECTORS
Allied'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, Allied and its stockholders. Accordingly, Allied's Board
unanimously recommends that Allied's stockholders vote FOR approval of the
Agreement. In approving the Agreement, Allied's directors considered Allied'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, and legal advice concerning the proposed
Merger, and the opinion of Financial Consulting Associates, Inc. ("FCA") that,
as of the date of its opinion, the consideration to be received in the
8
<PAGE> 13
Merger was fair, from a financial point of view, to the stockholders of Allied.
See "Description of the Transaction--Background of and Reasons for the Merger."
OPINION OF ALLIED'S FINANCIAL ADVISOR
FCA has rendered an opinion to Allied 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 Allied. The opinion of FCA is attached as Appendix
B to this Proxy Statement/Prospectus. Allied 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 Allied'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
Allied, 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 before the tenth business day following the last to
occur of: (i) the effective date (including the expiration of any applicable
waiting period) of the last required consent of any federal or state
regulatory authority having authority over approving or exempting the Merger
and (ii) the date on which the Agreement is approved by the requisite vote of
Allied 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 1997, 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 an exchange agent
selected by Regions (the "Exchange Agent"), to mail to the former stockholders
of Allied a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of Allied
Common Stock for certificates representing shares of Regions Common Stock.
ALLIED 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, each of which has
yet to issue its approval of the Merger. There can be no assurance that the
approvals of the Georgia Department and the Federal Reserve will be given or as
to the timing or conditions of such approvals.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of Allied stockholders, receipt of
an opinion of counsel or a ruling from the Internal Revenue Service
9
<PAGE> 14
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."
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 consent of the Boards of Directors of
both Allied and Regions, or by action of the Board of Directors of either
company under certain circumstances, including if the Merger is not consummated
by March 31, 1997, 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, Allied 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 Allied's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of
Allied generally. Those interests relate to, among other things, provisions in
the Agreement regarding indemnification and eligibility for certain Regions
employee benefits. See "Description of the Transaction--Interests of Certain
Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned 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 Allied
Common Stock for Regions Common Stock will not give rise to gain or loss to
Allied 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, ALLIED
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, Allied stockholders, whose rights are governed by
the Georgia Act and by Allied'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 Allied
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."
10
<PAGE> 15
OPTION AGREEMENT
Allied, as issuer, and Regions, as grantee, entered into a stock option
agreement (the "Option Agreement") pursuant to which Allied granted Regions an
option to purchase, under certain circumstances and subject to certain
adjustments and limitations, up to 2,513,286 shares of Allied Common Stock at a
price of $12.00 per share. The Option Agreement is exercisable upon the
occurrence of certain events that create the potential for another party to
acquire control of Allied. To the best knowledge of Allied, no such event which
would permit exercise of the Option Agreement has occurred as of the date of
this Proxy Statement/Prospectus. The Option Agreement was granted by Allied as
a condition of and in consideration for Regions' entering into the Agreement
and is intended to increase the likelihood that the Merger will be effected by
making it more difficult and more expensive for a third party to acquire
control of Allied. See "Description of the Transaction--Option Agreement."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock and Allied Common Stock are traded in the
over-the-counter market and are quoted in the Nasdaq National Market. The
following table sets forth the most recent closing sale price of Regions Common
Stock, the most recent closing sale price of Allied Common Stock, and the
equivalent per share price (as explained below) of Allied Common Stock as of
the close of the market on June 13, 1996, the last trading day
immediately preceding public announcement of the Merger, and December ______,
1996, the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus:
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS ALLIED OF ALLIED
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
June 13, 1996 $ 47.75 $ 12.00 $ 10.79
December, 1996
</TABLE>
The equivalent per share price of Allied 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 .226. Stockholders are advised to
obtain current market quotations for Regions Common Stock and Allied 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 Allied, (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 Allied Common Stock, giving effect to the Merger, (iv) a pro forma
combined basis per share of Regions Common Stock, giving effect to the Merger
and the Other Pending Acquisitions (as defined under "Business of
Regions--Recent Developments"), and (v) an equivalent pro forma basis per share
of Allied Common Stock, giving effect to the Merger and the Other Pending
Acquisitions. The Regions and Allied pro forma combined information and the
Allied pro forma Merger equivalent information give effect to the Merger on a
pooling-of-interests accounting basis and assume an Exchange Ratio of .226.
The Regions, Allied, and Other Pending Acquisitions pro forma combined
information and the Allied pro forma Merger and Other Pending
11
<PAGE> 16
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, Allied, and Other 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 Allied, including the respective notes thereto. Regions' historical
information has been restated to give effect to the combination of First
National Bancorp with Regions, effected March 1, 1996, and accounted for as a
pooling of interests. See "Documents Incorporated by Reference," and
"--Selected Financial Data."
12
<PAGE> 17
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ ---------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions
and Allied historical)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . . . $ 2.66 $ 2.49 $ 3.21 $ 3.10 $ 2.81
Allied historical . . . . . . . . . . . . . . . . . .43 .53 .73 .63 .68
Regions and Allied pro forma combined(1) . . . . . . 2.63 3.21 3.09 2.82
Allied pro forma Merger equivalent(2) . . . . . . . . .59 .73 .70 .64
Regions, Allied, and Other Pending Acquisitions
pro forma combined(3) . . . . . . . . . . . . . 2.63 3.23 3.10 2.83
Allied pro forma Merger and Other Pending
Acquisitions equivalent(2) . . . . . . . . . . . .59 .73 .70 .64
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . . . $ 1.05 $ .99 $ 1.32 $ 1.20 $ 1.04
Allied historical . . . . . . . . . . . . . . . . . . .27 .24 .32 .29 .24
Allied pro forma Merger equivalent(4) . . . . . . . . .24 .22 .30 .27 .24
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical . . . . . . . . . . . . . . . . . $24.86 $23.00 $23.38 $21.26 $19.85
Allied historical. . . . . . . . . . . . . . . . . . 5.39 5.17 5.36 4.47 4.47
Regions and Allied pro forma combined(1) . . . . . . 24.91
Allied pro forma Merger equivalent(2) . . . . . . . . 5.63
Regions, Allied, and Other Pending Acquisitions
pro forma combined(3) . . . . . . . . . . . . . 24.89
Allied pro forma Merger and Other Pending
Acquisitions equivalent(2) . . . . . . . . . . . 5.63
</TABLE>
_____________________
(1) Represents the combined results of Regions and Allied as if the Merger were
consummated on January 1, 1993 (or September 30, 1996, in the case of Book
Value Per Share Data), and were accounted for as a pooling of interests.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of .226 of a share of Regions Common Stock for each share of Allied Common
Stock.
(3) Represents the pro forma combined information of Regions, Allied, and 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, Allied, and Other
Pending Acquisitions."
(4) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of .226 of a share of Regions Common Stock for each
share of Allied Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and Allied. The data for Regions have been restated to
give effect to the combination with First National Bancorp consummated on March
1, 1996, which was accounted for as a pooling of interests. The data should be
read in conjunction with the historical financial statements, related notes,
and other financial information concerning Regions and Allied incorporated by
reference or included herein. Interim unaudited data for the nine months ended
September 30, 1996 and 1995 of Regions and Allied reflect, in the opinion of
the respective managements of Regions and Allied, all adjustments (consisting
only of normal recurring adjustments) necessary for a fair presentation of such
data. Results for the nine months ended September 30, 1996, 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."
13
<PAGE> 18
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . $1,029,151 $ 937,180 $ 1,259,600 $ 991,693 $ 746,544 $ 737,094 $ 778,848
Total interest expense . . . 508,573 472,106 635,336 436,157 296,195 324,420 428,083
Net interest income . . . . . 520,578 465,074 624,264 555,536 450,349 412,674 350,765
Provision for loan losses . . 21,734 17,275 30,271 20,580 24,695 39,367 34,879
Net interest income after
loan loss provision . . 498,844 447,799 593,993 534,956 425,654 373,307 315,886
Total noninterest income excluding
security gains (losses) 162,759 138,919 187,830 171,705 169,318 148,007 129,232
Security gains (losses) . . . 259 307 (424) 344 831 2,353 (89)
Total noninterest expense . . 415,955 355,734 487,461 442,376 383,130 343,279 302,795
Income tax expense . . . . . 81,022 77,339 96,109 84,109 66,169 56,405 41,502
Net income . . . . . . . . . 164,885 153,952 197,829 180,520 146,504 123,983 100,732
PER SHARE DATA:
Net income . . . . . . . . . $ 2.66 $ 2.49 $ 3.21 $ 3.10 $ 2.81 $ 2.42 $ 2.01
Cash dividends . . . . . . . 1.05 .99 1.32 1.20 1.04 .91 .87
Book value . . . . . . . . . 24.86 23.00 23.38 21.26 19.85 17.13 15.47
OTHER INFORMATION:
Average number of shares
outstanding 61,980 61,765 61,670 58,206 52,153 51,192 50,192
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . $18,731,424 $16,959,785 $16,851,774 $15,810,076 $13,163,161 $10,457,676 $9,188,048
Securities . . . . . . . . . 4,005,675 3,848,618 3,863,781 3,346,291 2,993,417 2,255,732 2,076,199
Loans, net of unearned income 13,032,238 11,567,327 11,542,311 10,855,195 8,430,931 6,657,557 5,726,818
Total deposits . . . . . . . 15,186,950 13,329,310 13,497,612 12,575,593 11,025,376 8,923,801 8,047,731
Long-term debt . . . . . . . 447,959 653,431 632,019 599,476 525,820 151,460 24,461
Stockholders' equity . . . . 1,554,740 1,418,056 1,429,253 1,286,322 1,106,361 886,116 779,002
PERFORMANCE RATIOS:
Return on average assets (1) 1.25% 1.26% 1.21% 1.27% 1.38% 1.29% 1.15%
Return on average stockholders'
equity (1) . . . . . . . 14.83 15.06 14.29 15.26 15.76 15.04 13.58
Net interest margin (1) . . . 4.29 4.22 4.21 4.37 4.77 4.85 4.58
Efficiency (2) . . . . . . . 59.97 57.70 58.79 59.44 60.23 59.62 60.92
Dividend payout . . . . . . . 39.47 39.76 41.12 38.71 37.01 37.60 43.28
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1) .10% .10% .17%. .19% .23% .36% .45%
Problem assets to net loans and
other real estate (3) . .54 .65 .59 .75 1.12 1.29 1.62
Nonperforming assets to net loans
and other real estate (4) .73 .71 .68 .80 1.28 1.39 1.74
Allowance for loan losses to loans,
net of unearned income . 1.37 1.36 1.38 1.32 1.48 1.51 1.34
Allowance for loan losses to
nonperforming assets (4) 186.89 191.54 202.55 164.48 115.88 107.97 76.76
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 8.41% 8.39% 8.44% 8.35% 8.76% 8.60% 8.49%
Average loans to average deposits 85.01 86.91 86.12 79.90 76.41 71.59 72.34
Tier 1 risk-based capital (5) 10.71 10.82 11.14 10.69 11.13 11.68 11.85
Total risk-based capital (5) 13.53 14.28 14.61 14.29 13.48 14.44 13.19
Tier 1 leverage (5) . . . . . 7.57 7.25 7.49 8.21 10.11 8.44 8.40
</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.
14
<PAGE> 19
Selected Historical Financial Data of Allied
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . $ 33,017 $ 32,547 $ 43,637 $ 35,724 $ 33,363 $ 34,782 $ 34,056
Total interest expense . . . 15,005 14,427 19,455 13,846 13,134 16,046 19,325
Net interest income . . . . . 18,012 18,120 24,182 21,878 20,229 18,736 14,731
Provision for loan losses . . 800 389 700 489 520 1,465 3,104
Net interest income after
loan loss provision . . 17,212 17,731 23,482 21,389 19,709 17,271 11,627
Total noninterest income
excluding security gains
(losses) 4,028 3,947 5,063 4,618 4,693 4,807 4,457
Security gains (losses) . . . 153 41 531 432 378 531 847
Total noninterest expense . . 13,386 11,917 15,724 15,879 13,689 13,541 11,287
Income tax expense . . . . . 2,564 3,068 4,190 3,020 3,222 2,465 1,307
Net income . . . . . . . . . 5,443 6,734 9,162 7,540 7,869 6,603 4,337
PER SHARE DATA:
Net income . . . . . . . . . $ .43 $ .53 $ .73 $ .63 $ .68 $ .57 $ .37
Cash dividends . . . . . . . .27 .24 .32 .29 .24 .19 .14
Book value . . . . . . . . . 5.39 5.17 5.36 4.47 4.47 3.63 2.82
OTHER INFORMATION:
Average number of shares
outstanding 12,623 12,616 12,614 11,901 11,611 11,579 11,613
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . $557,394 $538,892 $538,399 $ 535,840 $ 448,946 $ 410,196 $397,977
Securities. . . . . . . . . . 175,869 157,475 173,099 162,168 153,675 145,266 135,998
Loans, net of unearned income 305,773 318,105 307,968 312,202 234,910 227,103 211,772
Total deposits . . . . . . . 442,474 416,061 421,585 414,813 363,091 342,376 332,559
Long-term debt . . . . . . . 26,087 1,213 1,050 1,164 6,226 1,289 3,202
Stockholders' equity . . . . 68,084 65,340 67,635 56,452 52,056 42,035 37,506
PERFORMANCE RATIOS:
Return on average assets (1) 1.31% 1.70% 1.73% 1.64% 1.84% 1.64% 1.31%
Return on average stockholders'
equity (1) . . . . . . . 10.93 14.59 14.68 14.55 17.30 16.37 14.13
Net interest margin (1) . . . 5.05 5.33 5.34 5.48 5.46 5.39 5.56
Efficiency (2) . . . . . . . 58.08 51.71 51.13 56.98 52.33 55.19 51.95
Dividend payout . . . . . . . 62.59 44.33 43.80 44.02 33.66 31.32 35.00
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1) .40% .25% .33% .21% .27% .18% 1.43%
Nonperforming assets to net loans
and other real estate (3) 1.82 1.59 2.00 1.97 .76 .88 2.03
Allowance for loan losses to loans,
net of unearned income . 1.27 1.33 1.40 1.48 1.64 1.73 1.35
Allowance for loan losses to
nonperforming assets (3) 68.85 83.17 69.59 74.78 215.94 196.59 66.23
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 11.98% 11.69% 11.76% 11.26% 10.63% 10.05% 9.25%
Average loans to average deposits 70.81 77.57 76.64 71.68 67.87 66.32 94.81
Tier 1 risk-based capital (4) 17.10 15.15 16.72 16.06 17.86 15.79 15.63
Total risk-based capital (4) 18.32 16.10 18.13 17.65 19.11 17.04 17.19
Tier 1 leverage (4) . . . . . 10.05 9.59 9.68 9.00 10.15 10.58 10.33
</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.
15
<PAGE> 20
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of Allied
Common Stock in connection with the solicitation by the Allied Board of
Directors of proxies for use at the Special Meeting, at which Allied
stockholders will be asked to vote upon a proposal to approve the Agreement.
The Special Meeting will be held at :00 .m., local time, on January ______,
1997, at the Thomson-McDuffie County Library, 338 Main Street, Thomson,
Georgia.
Allied stockholders are requested promptly to sign, date, and return the
accompanying proxy card to Allied 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 Allied 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
Allied a signed proxy card bearing a later date, provided that such notice or
proxy card is actually received by Allied 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 Allied Bankshares, Inc.,
149 Main Street, Thomson, Georgia, 30824, Attention: Ben O. Howell, Jr.,
Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Secretary. The shares of
Allied 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, Allied 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
Allied, 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.
Allied stockholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
Allied's Board of Directors has established the close of business on
December ______, 1996, as the Record Date for determining the Allied
stockholders entitled to notice of and to vote at the Special Meeting. Only
Allied 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
shares of Allied Common Stock outstanding and 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 ______ holders of
the 12,629,581 shares of Allied 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 Allied to beneficially own more than 5.0% of the
outstanding shares of Allied Common Stock as of the Record Date, see "Voting
Securities and Principal Stockholders of Allied."
16
<PAGE> 21
The presence, in person or by proxy, of a majority of the outstanding
shares of Allied 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 Allied 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 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 Allied Common Stock outstanding and entitled to
vote at the Special Meeting.
The directors and executive officers of Allied and their affiliates
beneficially owned, as of the Record Date, ______ shares (or approximately
______ % of the outstanding shares) of Allied Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of
the Record Date, no shares of Allied Common Stock. As of that date, no
subsidiary of either Allied or Regions held any shares of Allied 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
Each share of Allied Common Stock (excluding any shares held by Allied,
Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or as a result of debts previously contracted) issued and
outstanding at the Effective Date will be converted into .226 of a share of
Regions Common Stock. Each share of Regions Common Stock outstanding
immediately prior to the Effective Date will remain outstanding and unchanged
as a result of the Merger.
No fractional shares of Regions Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, Regions will make a cash
payment equal to the fractional part of a share which an Allied 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.
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 the increased emphasis and dependence on automation,
specialization of products and services, increased competition from other
financial institutions, and a trend toward consolidation and geographic
expansion, coupled with a relaxation of regulatory restrictions on interstate
conduct of business of financial institutions.
In March of 1996, Allied requested that FCA discuss with its Board of
Directors its view of the implications for Allied of these and other industry
developments and trends. On April 9, FCA met with Allied's Board of Directors
to discuss, in light of these industry developments and trends, strategies which
could enhance stockholder value with Allied remaining independent, transactions
designed to more effectively utilize Allied's excess capital and the
effectiveness of efforts to improve the liquidity characteristics of Allied
Common Stock. FCA also discussed the likely affiliation candidates who could
be expected to have an acquisition interest in Allied and the valuation and
quality of currency implications of selling control of the institution to one
of these affiliation candidates.
In its presentation FCA noted, among other things, that the continued
consolidation among depository financial institutions has resulted in
historically high acquisition premiums being realized in the sale of community
based banking institutions. These high acquisition premiums have made it
increasingly difficult for institutions like Allied to create stockholder value
through their own acquisition programs. FCA also noted that the consolidation
among larger financial institutions and changes in the larger institution's
market strategies have reduced the number of affiliation candidates who could
be expected to have an acquisition interest in Allied. FCA finally noted that
recent banking legislation in Georgia permitting limited statewide branching
could be expected to increase competition in certain of Allied's markets,
adversely affecting Allied's profitability and franchise value.
Allied and its Board of Directors concluded that it could best serve its
stockholders, employees, customers and community by combining with a regional
banking organization, provided that Allied could obtain a fair price for its
stockholders. Accordingly, Allied engaged FCA as its financial advisor, to
assist it in identifying its most attractive affiliation candidate. This led
to discussions between Allied and Regions which culminated in the Agreement.
17
<PAGE> 22
ALLIED'S REASONS FOR THE MERGER. In approving the Merger, the directors of
Allied considered a number of factors. Without assigning any relative or
specific weights to the factors, the Allied Board of Directors considered the
following material factors:
(a) the information presented to the directors by the management of Allied
concerning the business, operations, earnings, asset quality, and financial
condition of Allied, 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 Allied Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of Allied Common Stock for Regions Common Stock
for federal and state income tax purposes;
(d) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay;
(e) the opinion rendered by Allied's financial advisor to the effect that,
from a financial point of view, the conversion of each share of Allied Common
Stock into the number of shares of Regions Common Stock equal to the Exchange
Ratio on the terms and conditions set forth in the Agreement is fair to the
holders of Allied Common Stock.
The terms of the Merger were the result of arms-length negotiations between
representatives of Allied and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of Allied
unanimously approved the Merger as being in the best interests of Allied and
its stockholders.
Allied's Board of Directors unanimously recommends that Allied 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 Allied on an historical, prospective, and
pro forma basis and in comparison to other financial institutions in the area,
(ii) the demographic, economic, and financial characteristics of the markets in
which Allied 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 Allied; 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 ALLIED'S FINANCIAL ADVISOR
Allied has retained FCA to act as its financial advisor in connection with
the Merger. Representatives of FCA participated in numerous meetings of the
Allied Board where a possible combination with Regions or other regional bank
holding companies was discussed including a meeting held on June 12, 1996. At
that meeting the Allied Board approved the final Agreement with Regions and FCA
rendered its oral opinion to the effect that, as of such date, conversion of
each share of Allied Common Stock into the right to receive a number of shares
of Regions Common Stock equal to the Exchange Ratio and the additional terms
provided
18
<PAGE> 23
by the Agreement (the "Per Share Purchase Price and Terms") were fair to the
stockholders of Allied from a financial point of view. FCA has also rendered
its written opinion to the Allied Board that on the date of this
Prospectus/Proxy Statement, based on the information set forth therein, the Per
Share Purchase Price and Terms were fair, from a financial point of view, to
the Allied stockholders.
THE FULL TEXT OF FCA'S WRITTEN OPINION IS ATTACHED AS APPENDIX B TO THIS
PROXY STATEMENT/PROSPECTUS AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF THE OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX B. ALLIED STOCKHOLDERS ARE URGED TO READ THE OPINION IN
ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE,
MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE REVIEW UNDERTAKEN
BY FCA IN CONNECTION THEREWITH.
FCA's opinion is directed to the Allied Board only and is directed only to
the Per Share Purchase Price and Terms and does not constitute a recommendation
to any Allied stockholder regarding how such stockholder should vote at the
Special Meeting.
In arriving at its written opinion, FCA, among other things: (i) analyzed
certain audited and unaudited financial statements and other information of
Allied and Regions; (ii) reviewed and discussed with appropriate management
personnel of Allied and Regions the past and current business activities and
financial results and the business and financial outlook of Allied and Regions;
(iii) reviewed the historical price and trading activity of the common stock of
Allied and Regions; (iv) compared certain financial and stock market data
relating to Regions with similar data of other publicly held banking
institutions considered to be potential alternative affiliation candidates to
Regions for Allied; (v) performed an analysis comparing the pro forma
consequences of the Merger to Allied stockholders with respect to earnings per
share, tangible book value per share and dividends per share represented by the
Regions Common Stock they will receive in the Merger to those same measures
represented by the Allied Common Stock they currently hold; (vi) reviewed the
prices paid in certain comparable acquisition transactions of community banking
institutions and the multiples of earnings and book value and the level of
deposit base premium received by the selling institutions; (vii) reviewed the
Agreement and certain related documents; (viii) considered the financial
implications of certain other strategic alternatives available to Allied; and
(ix) performed such other analyses as FCA deemed appropriate.
In conducting its analysis and arriving at its opinion, FCA assumed and
relied upon, without independent verification, the accuracy and completeness of
the information it reviewed for the purposes of the opinion. FCA also relied
upon the management of Allied with respect to the reasonableness and
achievability of the financial forecast (and the assumptions and bases
underlying such forecast) provided to it. Allied instructed FCA that, for the
purposes of its opinion, FCA should assume that such forecast will be realized
in the amounts and in the time periods currently estimated by the management of
Allied. FCA also assumed, with Allied's consent, that the aggregate allowances
for loan losses for each of Allied and Regions are adequate to cover such
losses. FCA is not an expert in the evaluation of allowances for loan losses
and has not reviewed any individual credit files. FCA did not make, nor was it
furnished with, independent valuations or appraisals of the assets or
liabilities of either Allied or Regions or any of their subsidiaries. FCA did
not, and was not asked to, express any opinion about what the value of Regions
Common Stock actually will be when issued to the holders of Allied Common Stock
pursuant to the Merger or the price at which Regions Common Stock will trade
subsequent to the Merger. Moreover, Allied has informed FCA, and FCA has
assumed, that the Merger will be recorded utilizing pooling-of-interests
accounting under generally accepted accounting principles ("GAAP").
No limitations were imposed by Allied or the Allied Board on the scope of
FCA's investigation or the procedures to be followed by FCA in rendering its
opinion. As part of its procedures, FCA solicited major regional bank holding
companies for their indications of acquisition interest in Allied. The opinion
is necessarily based on economic, market and other conditions as in effect on,
and the information made available to FCA as of, the date of its analysis.
19
<PAGE> 24
In arriving at the fairness, from a financial point of view, of the
consideration to be received by the stockholders of Allied, FCA developed an
opinion of the value of Allied Common Stock should the institution remain
independent and analyzed such value in light of the premium represented by the
Per Share Purchase Price and Terms. In connection with rendering its opinion to
the Allied Board, FCA also reviewed a variety of generally recognized valuation
methodologies and merger analyses and performed those which it believed were
most appropriate for developing its opinion of fairness, from a financial point
of view.
The preparation of a fairness opinion involves various determinations of
the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances, and, therefore,
such an opinion is not readily susceptible to summary description. In arriving
at its fairness opinion, FCA did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments
about the significance and relevancy of each analysis and factor. None of the
analyses performed by FCA was assigned a greater significance by FCA than any
other. Accordingly, FCA believes that its analyses must be considered as a
whole and that a review of selected portions of such analyses and the factors
considered therein, without considering all analyses and factors, could create
a misleading or incomplete view of the processes underlying its opinion and any
conclusions reached therein. In its analyses, FCA made numerous assumptions
with respect to industry performance, general business and economic conditions,
and other matters, many of which are beyond Allied's and Regions' control. Any
estimates contained in FCA's analyses are not necessarily indicative of actual
values or predictive of future results or values that may be significantly more
or less favorable than such estimates. Estimates of values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies
or their securities actually may be sold. In addition, as described above,
FCA's opinion and presentation to the Allied Board was one of many factors
taken into consideration by the Allied Board in making its determination to
approve the Agreement.
The following is a brief summary of analyses performed by FCA in connection
with its oral opinion delivered to the Allied Board on June 12, 1996:
Summary of Proposal. FCA reviewed the terms of the proposed transaction as
reflected in the Agreement, including the calculation of the Exchange Ratio.
FCA stated that based on the recent price of Regions Common Stock of $47.875,
an Exchange Ratio of .2260 shares of Regions Common Stock per share of Allied
Common Stock would provide Allied stockholders a per share value of $10.82 (the
"Per Share Purchase Price").
Indicated Value of Allied as an Independent Bank. FCA undertook an analysis
addressing the range of potential values which would be implied if Allied were
to remain an independent bank. FCA computed this range of values based on a
discounted cash flow analysis, relying on projections extrapolated from
Allied's 1996 budget and its historical performance. In this analysis
methodology, FCA assumed stockholders received, in addition to the projected
dividend stream, a terminal valuation at December 31, 2000 based upon a 1.7
times multiple of December 31, 2000 stated book value and a 12.0 times multiple
of earnings for such year. These amounts were discounted at rates ranging from
10% to 12% and indicated net present values to Allied stockholders on a per
share basis ranging from $7.83 to $9.24.
Per Share Merger Consequences Analysis. Based upon an Exchange Ratio of
.2260 shares of Regions Common Stock for each share of Allied Common Stock and
using the earnings estimates for Allied prepared by Allied management and
earnings estimates for Regions prepared by independent securities analysts, FCA
compared the estimated 1996 and 1997 earnings per share of Allied Common Stock
on a stand-alone basis to the equivalent pro forma earnings per share of
Regions Common Stock which would be received in the Merger. FCA concluded that
the Merger would result in an earnings increase of 21% in 1996 and 23% in 1997
for Allied stockholders in the combined company.
FCA also analyzed the impact of the Merger on the amount of fully diluted
tangible book value represented by a share of Allied Common Stock. FCA assumed
consummation of the Merger as of
20
<PAGE> 25
December 31, 1996 and utilized the above described earnings estimates for
Allied and Regions. FCA concluded that the Merger would result in an increase
of 11% and 15% in fully diluted tangible book value on an equivalent per share
basis, respectively, for Allied stockholders projected as of December 31, 1996
and December 31, 1997.
Finally, FCA compared the amount of dividends expected to be paid on a
share of Allied Common Stock before the Merger to the level expected to be paid
on a pro forma basis reflecting the Merger. FCA concluded that the Merger would
result in a decrease of 12% in dividends per share for Allied stockholders.
Analysis of Selected Other Bank Mergers Involving Southeastern Community
Banks. FCA reviewed forty mergers involving southeastern community banks and
bank holding companies announced between January, 1995, and April, 1996. FCA
noted in particular the prices paid in these mergers as a multiple of earnings
and book values and the transaction premiums paid in excess of tangible book
value as a percentage of core deposits. FCA also reviewed other data in
connection with each of these mergers, including the amount of total assets and
the capital level of the acquired institutions and the return on equity and the
return on assets of the acquired institutions. FCA then compared this data to
that of Allied and to the value to be received by Allied stockholders in the
Merger.
This comparison yielded a range of transaction values as multiples of
latest twelve-months earnings per share of a low of 11.0 times and a high of
57.8 times and a median value of 18.8 times. The Allied multiple of trailing
earnings was 15.0 times. The calculations yielded a range of transaction values
as multiples of book value per share of a low of 1.24 times to a high of 3.49
times and a median value of 2.21 times. The Allied multiple of book value was
2.01 times. Finally, the calculations yielded a range of deposit base premiums
paid from a low of 3.7% to a high of 28.9%, with a median value of 12.0%. The
equivalent premium on Allied deposits represented by the Per Share Purchase
Price and Terms was 19.3%.
No company or transaction used in the above analyses as a comparison is
identical to Allied, Regions, or the Merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies and other factors that could affect the public trading value of
the companies to which they are being compared. Mathematical analysis (such as
determining the average or median) is not, in itself, a meaningful method of
using comparable company data.
In connection with its opinion dated the date of this Prospectus/Proxy
Statement, FCA confirmed the appropriateness of its reliance on the analyses
used to render its June 14, 1996 oral opinion by performing procedures to
update certain of such analyses and by reviewing the assumptions on which such
analyses were based and the factors considered in connection therewith.
FCA is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements, and
valuations for estate, tax, corporate and other purposes. Allied has agreed to
pay FCA a fee of 0.8% of the aggregate market value of the consideration
received by Allied stockholders in connection with the Merger. Based upon an
assumed market price and value of a share of Regions common stock at the
Effective Date of the Merger of $49.00 (the closing price of Regions common
stock on October 7, 1996) this fee would be approximately $1,118,085. No
compensation payable to FCA is contingent on the conclusions reached in the
opinion of FCA. Allied has also agreed to reimburse FCA for reasonable
out-of-pocket expenses and to indemnify FCA and certain related persons against
certain liabilities relating to or arising out of its engagement.
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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 Allied, 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 or before the tenth business day
following the last to occur of: (i) the effective date (including the
expiration of any applicable waiting period) of the last required consent of
any federal or state regulatory authority having authority over approving or
exempting the Merger and (ii) the date on which the Agreement is approved by
the requisite vote of Allied stockholders; or such later date within 30 days
thereof as specified by Regions. Allied and Regions have agreed to cooperate
in setting the Effective Date to ensure that holders of Allied Common Stock,
with respect to the quarterly period in which the Effective Date occurs, will
not receive dividends on both Allied and Regions common stock, and will not
fail to receive any dividend.
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 Allied anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the first quarter of 1997. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or Allied generally may terminate
the Agreement if the Merger is not consummated by March 31, 1997, 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 an exchange agent
selected by Regions to mail to the former stockholders of Allied a form letter
of transmittal, together with instructions for the exchange of such
stockholders' certificates representing shares of Allied Common Stock for
certificates representing shares of Regions Common Stock.
ALLIED 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 Allied Common Stock, together with a
properly completed letter of transmittal, there will be issued and mailed to
each holder of Allied 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, Allied 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 Allied Common Stock has been converted, regardless of whether such
stockholders have surrendered their Allied 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
Allied 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.
The stock transfer books of Allied will be closed at the effective time of
the Merger and after the Effective Date, there will be no transfers of shares
of Allied Common Stock on Allied's stock transfer books. If certificates
representing shares of Allied Common Stock are presented for transfer after the
Effective Date, they will be canceled and exchanged for the shares of Regions
Common Stock and a check for the amount due in lieu of fractional shares, if
any, deliverable in respect thereof.
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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, and the
expiration of all applicable waiting periods associated with these approvals,
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;
(b) the approval by the holders of a majority of the Allied Common Stock
outstanding and entitled to vote at the Special Meeting;
(c) the absence of any action by any court or governmental authority
restricting 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 Allied Common Stock for Regions
Common Stock will not give rise to recognition of gain or loss to Allied
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 Allied of opinions of their respective counsel
and certificates executed by their respective duly authorized officers as to
the satisfaction of certain conditions and obligations set forth in 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 both
parties of a letter from Regions' independent auditors to the effect that the
Merger will qualify for pooling-of-interests accounting treatment.
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 Allied 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 the 30th day following the date of Federal Reserve
approval, which
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may be shortened by the Federal Reserve to the 15th day, during which time the
United States Department of Justice may challenge the transaction on antitrust
grounds. The commencement of any antitrust action would stay the effectiveness
of the Federal Reserve's approval, unless a court specifically orders
otherwise.
The Merger also is subject to the approval of the Georgia Department. In
its evaluation, the Georgia Department will take into account considerations
similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and
Allied approved by their respective Boards of Directors; provided, however,
that after approval by the Allied stockholders, no amendment relating to the
manner or basis in which shares of Allied Common Stock shall be exchanged for
Regions Common Stock 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 Allied
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required regulatory approval, or by the Board of Directors of Regions if any
required regulatory approval is conditioned or restricted in the manner
described under "--Conditions to Consummation of the Merger" above;
(b) by the Board of Directors of either party, if the holders of the
requisite number of shares of Allied Common Stock shall not have approved the
Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and Allied;
(d) by the Board of Directors of either party, in the event of a breach of
any provision of the Agreement which meets certain standards specified in the
Agreement; or
(e) by the Board of Directors of either party if the Merger shall not have
been consummated by March 31, 1997, 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 generally 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 Allied 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
Allied or Regions prior to consummation of the Merger, as described below.
ALLIED. Allied 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
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limitation: (i) amending the Articles of Incorporation or Bylaws or other
governing instrument of Allied and its subsidiaries; (ii) becoming responsible
for any obligation for borrowed money (other than indebtedness among Allied and
its subsidiaries) in excess of an aggregate amount outstanding at any time of
$150,000 (for Allied and its subsidiaries on a consolidated basis) except in
the ordinary course of business consistent with past practices; (iii) acquiring
or exchanging any shares, or any securities convertible into shares, of its
capital stock or paying any dividend or other distribution in respect of its
capital stock, except that Allied may, but shall not be legally obligated to,
declare and pay regular quarterly cash dividends at a rate not in excess of
$.09 per share, in accordance with past practice; (iv) issuing, encumbering, or
selling any additional shares of any Allied capital stock, any rights to
acquire any such stock, or any security convertible into such stock (except as
set forth in the Agreement or the Option Agreement); (v) adjusting, splitting,
combining, or reclassifying any of its capital stock; (vi) making any material
investment in or otherwise acquiring control over any other entity; (vii)
granting any increase in compensation or benefits to employees, officers, or
directors (except in accordance with past practice as previously disclosed to
Regions or as required by law), paying any severance pay or bonus (except
pursuant to any existing written policies or contracts), entering into or
amending any severance agreements with officers, or voluntarily accelerating
the vesting of any employee benefits; (viii) entering into or amending any
employment contract that it does not have the unconditional right to terminate
(unless such amendment is required by law); (ix) adopting any new employee
benefit plan or program, or materially changing any existing plan or program
(except for any change required by law or a change which, in the opinion of
counsel, is necessary 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
GAAP); (xi) commencing any litigation (except in accordance with past
practices), or settling any litigation for material money damages or
restrictions upon the operations of Allied or any of its subsidiaries; or (xii)
modifying, amending or terminating any material contract or waiving, releasing,
compromising or assigning any material rights or claims.
In addition, Allied has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. Allied 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, Allied 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 Allied to,
maintain all rights of indemnification existing in favor of each person
entitled to indemnification from Allied or any of its subsidiaries to the full
extent permitted by Georgia Law and by Allied's Articles of Incorporation or
Bylaws 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 Allied and its subsidiaries who,
at or after the Effective Date, become officers or employees of Regions or its
subsidiaries, employee benefits under employee benefit plans (other than stock
option or other
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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 Allied 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 Allied to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between Allied 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 Allied's benefit plans.
As of the Record Date, directors and executive officers of Allied owned no
shares of Regions Common Stock.
ABSENCE OF DISSENTERS' RIGHTS
In accordance with the applicable provisions of the Georgia Act, the
holders of shares of Allied 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, AND CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and Allied 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 applicable
law, the Merger will be a reorganization within the meaning of Section 368(a).
Allied and Regions will each be "a party to a reorganization" within the
meaning of Section 368(b).
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(b) The stockholders of Allied will recognize no gain or loss upon the
exchange of their Allied Common Stock solely for shares of Regions Common
Stock.
(c) The basis of the Regions Common Stock received by the Allied
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the Allied Common Stock surrendered in exchange therefor.
(d) The holding period of the Regions Common Stock received by the Allied
stockholders will, in each instance, include the period during which the Allied
Common Stock surrendered in exchange therefor was held, provided that the
Allied Common Stock was held as a capital asset on the date of the exchange.
(e) The payment of cash to Allied 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. ALLIED STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests as that term is used pursuant to GAAP, for accounting and financial
reporting purposes. Under the pooling-of-interests method of accounting,
assets, liabilities, and equity of the acquired company are carried forward to
the combined entity at their stated amounts. See "Summary--Comparative Per
Share Data."
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including filing, registration, and application fees, printing fees
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that each of the parties will bear
and pay one-half of the printing costs in connection with this Proxy
Statement/Prospectus.
RESALES OF THE REGIONS COMMON STOCK
The Regions Common Stock to be issued to Allied 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, Allied (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 and in
compliance with SEC Rule 145 or in accordance with a legal opinion satisfactory
to Regions that such sale or transfer is otherwise exempt from the Securities
Act registration requirements.
Each person who Allied reasonably believes will be an affiliate of Allied
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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OPTION AGREEMENT
As an inducement and a condition to Regions entering into the Agreement,
Allied and Regions entered into the Option Agreement, pursuant to which Allied
granted Regions an option (the "Option") entitling it to purchase up to
2,513,286 shares (representing 19.9% of the shares issued and outstanding
before giving effect to the exercise of such Option) of Allied Common Stock
under the circumstances described below, at a cash price per share equal to
$12.00. THIS DESCRIPTION OF THE OPTION AGREEMENT AND THE OPTION DOES NOT
PURPORT TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
OPTION AGREEMENT, WHICH IS FILED AS AN EXHIBIT TO THIS REGISTRATION STATEMENT
AND INCORPORATED HEREIN BY REFERENCE.
Subject to applicable law and regulatory restrictions, Regions may exercise
the Option, in whole or in part, if, but only if, a Purchase Event (as defined
below) occurs prior to the Option's termination; provided that Regions, at the
time, is not in material breach of the Option Agreement or the Agreement. As
defined in the Option Agreement, "Purchase Event" means either of the following
events:
(a) without Regions' written consent, Allied authorizing, recommending,
publicly proposing, or publicly announcing an intention to authorize,
recommend, or propose or entering into an agreement with any third party to
effect (i) a merger, consolidation, or similar transaction involving Allied or
any of its subsidiaries (other than transactions solely between Allied's
subsidiaries), (ii) except as permitted by the Agreement, the disposition, by
sale, lease, exchange, or otherwise, of 20% or more of the consolidated assets
of Allied and its subsidiaries, or (iii) the issuance, sale, or other
disposition of (including by way of merger, consolidation, share exchange, or
any similar transaction) securities representing 20% or more of the voting
power of Allied or any of its subsidiaries (any of the foregoing, an
"Acquisition Transaction"); or
(b) any third party acquiring beneficial ownership (as such term is defined
in Rule 13d-3 promulgated under the Exchange Act), or the right to acquire
beneficial ownership, of 20% or more of the outstanding shares of Allied Common
Stock.
The Option will terminate upon the earliest of the following:
(a) the Effective Date;
(b) termination of the Agreement in accordance with the terms thereof prior
to the occurrence of a Purchase Event or a Preliminary Purchase Event (other
than a termination of the Agreement under certain circumstances involving a
willful breach by Allied)(a "Default Termination");
(c) 15 months after a Default Termination and;
(d) 15 months after termination of the Agreement (other than pursuant to a
Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event.
As defined in the Option Agreement, "Preliminary Purchase Event" includes
either of the following events:
(a) commencement (as such term is defined in Rule 14d-2 under the Exchange
Act) or filing of a registration statement under the Securities Act by any
third party of a tender offer or exchange offer to purchase any shares of
Allied Common Stock such that, upon consummation of such offer, such person
would own or control 15% or more of the then outstanding shares of Allied
Common Stock (a "Tender Offer" or an "Exchange Offer," respectively); or
(b) failure of the stockholders of Allied to approve the Agreement at the
meeting of such stockholders held for the purpose of voting on the Agreement,
the failure to have such meeting prior to termination of the Agreement, or the
withdrawal or modification by Allied's Board of Directors in a manner adverse
to Regions
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of the recommendation of the Board of Directors with respect to the Agreement
after public announcement that a third party (i) made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction, (ii)
commenced a Tender Offer or filed a registration statement under the Securities
Act with respect to an Exchange Offer, or (iii) filed an application under
certain federal statutes for approval to engage in an Acquisition Transaction.
In the event of any change in Allied Common Stock by reason of a stock
dividend, split-up, recapitalization, exchange of shares, or similar
transaction, the type and number of securities subject to the Option, and the
purchase price therefore, will be adjusted appropriately. In the event that any
additional shares of Allied Common Stock are issued after June 13, 1996 (other
than pursuant to an event described in the preceding sentence), the number of
shares of Allied Common Stock subject to the Option will be adjusted so that,
after such issuance, it, together with any shares of Allied Common Stock
previously issued pursuant to the Option Agreement, equals 19.9% of the number
of shares then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
Upon the occurrence of a Repurchase Event (as defined below) that occurs
prior to the exercise or termination of the Option, at the request of Regions,
delivered within 12 months of the Repurchase Event, Allied will, subject to
regulatory restrictions, be obligated to repurchase the Option and any shares
of Allied Common Stock therefor purchased pursuant to the Option Agreement at a
specified Price.
As defined in the Option Agreement, "Repurchase Event" shall occur if (i)
any person (other than Regions or any Regions subsidiary) shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial ownership, or any "group"
(as such term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 50% or
more of the then-outstanding shares of Allied Common Stock, or (ii) any of the
following transactions is consummated: (A) Allied consolidates with or merges
into any person, other than Regions or one of Regions' subsidiaries, and is not
the continuing or surviving corporation of such consolidation or merger; (B)
Allied permits any person, other than Regions or one of Regions' subsidiaries,
to merge into Allied and Allied shall be the continuing or surviving
corporation, but, in connection with such merger, the then outstanding shares
of Allied Common Stock shall be changed into or exchanged for stock or other
securities of Allied or any other person or cash or any other property or the
outstanding shares of Allied Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (C) Allied sells or otherwise
transfers all or substantially all of its assets to any person, other than
Regions or one of Regions' subsidiaries.
In the event that prior to the exercise or termination of the Option,
Allied enters into an agreement to engage in any of the transactions described
in clause (ii) of the definition of Repurchase Event above, the agreement
governing such transaction must make proper provision so that the Option will,
upon consummation of such transaction, be converted into, or exchanged for, an
option with terms similar to the Option, at the election of Regions, of either
the acquiring person or any person that controls the acquiring person.
After the occurrence of a Purchase Event, Regions may assign the Option
Agreement and its rights thereunder in whole or in part.
Upon the occurrence of certain events, Allied has agreed to file with the
SEC and to cause to become effective certain registration statements under the
Securities Act with respect to dispositions by Regions and its assigns of all
or part of the Option and/or any shares of Allied Common Stock into which the
Option is exercisable.
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EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of Allied Common Stock will be
exchanging their shares of a Georgia corporation governed by the Georgia Act
and Allied'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 Allied stockholders
and those of Regions stockholders. The differences deemed material by Allied
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 Allied'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.
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<PAGE> 35
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 62,810,998 shares were issued,
including 260,000 treasury shares as of September 30, 1996. 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.
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.
Allied. Allied's authorized capital stock consists of 50,000,000 shares of
Allied Common Stock, of which 12,659,581 shares were issued and outstanding as
of the Record Date, and 25,000,000 shares of preferred stock, of which no
shares are issued and outstanding.
Pursuant to the Georgia Act, Allied's Board of Directors may authorize the
issuance of additional shares of Allied Common Stock without further action by
Allied's stockholders. Allied's Articles, as amended, do not provide the
stockholders of Allied with preemptive rights to purchase or subscribe to any
unissued authorized shares of Allied 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 Regions Bylaws may be taken
only upon the affirmative vote of the holders of at least 75% of the
outstanding shares of Regions Common Stock.
Allied. 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. Allied's Articles do not
include any provision altering the requirement set forth in the Georgia Act.
The Board of Directors of Allied has the power to adopt, amend, or repeal
the Bylaws by a vote of a majority of the directors then in office, subject to
the right of the stockholders to adopt, amend, or repeal the
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<PAGE> 36
Bylaws and to prescribe that Bylaws adopted by the stockholders may not be
amended or repealed by the Board of Directors.
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.
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.
Allied. Allied's Articles provide for a single class of directors elected
annually. Allied's 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.
Allied. Pursuant to Allied's Bylaws, a director or the entire Board of
Directors may be removed by the stockholders with or without cause, by the
affirmative vote of the holders of at least two-thirds of the shares entitled
to vote in an election of directors. A director may be removed by the Board of
Directors for cause, defined by the Bylaws to include the adjudication by a
court of incompetency, conviction of a felony, unexcused failure to attend
three consecutive regular board of director meetings, or failure to fulfill any
other requirement of holding the office of director.
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
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<PAGE> 37
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.
Allied. While the Georgia Act generally permits a corporation's articles of
incorporation to relieve directors of liability for monetary damages for good
faith conduct, the Articles do not include such a provision.
INDEMNIFICATION
Regions. The Certificate provides that Regions will indemnify its officers,
directors, employees, and agents to the full extent permitted by the Delaware
GCL. Under Section 145 of the Delaware GCL as currently in effect, other than
in actions brought by or in the right of Regions, such indemnification would
apply if it were determined in the specific case that the proposed indemnitee
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of Regions and, with respect to any criminal
proceeding, if such person had no reasonable cause to believe that the conduct
was unlawful. In actions brought by or in the right of Regions, such
indemnification probably would be limited to reasonable expenses (including
attorneys' fees) and would apply if it were determined in the specific case
that the proposed indemnitee acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of Regions,
except that no indemnification may be made with respect to any matter as to
which such person is adjudged liable to Regions, unless, and only to the extent
that, the court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent that any director, officer, employee, or agent of Regions has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
Allied. Allied'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.
Allied. Under the Bylaws, a special meeting of Allied stockholders may be
called by the Chairman of the Board of Directors, the President, a majority of
the directors, or upon the written request of the holders of 25% or more of all
the shares of capital stock entitled to vote in an election of directors.
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<PAGE> 38
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.
Allied. The Georgia Act permits actions of the stockholders to be taken
upon written consent of the holders of the requisite number of shares, the
approval of which is required for the action taken. The Articles and Bylaws do
not include any provisions altering the basic requirements of the Georgia Act.
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 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.
Allied. Allied's Articles and Bylaws do not include provisions pertaining
to stockholder nominations and proposals.
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.
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<PAGE> 39
Allied. Under the Georgia Act, the approval of the holders of a majority of
the shares of Allied Common Stock outstanding and entitled to vote at a meeting
of stockholders is required to effect any merger, consolidation, or similar
transaction, or to effect a disposition of substantially all the assets of
Allied.
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.
Allied. The Georgia Act permits a Georgia corporation such as Allied, by
adoption of a Bylaw provision, to become subject to provisions of the Georgia
Act restricting certain business combinations with an interested stockholder
(Section 14-2-1111 of the Georgia Act) and imposing fair pricing requirements
on certain business combination transactions (Section 14-2-1112 of the Georgia
Act). Allied has not "opted in" to either of these provisions, so they do not
apply to the Merger.
DISSENTERS' RIGHTS OF APPRAISAL
Regions. The rights of appraisal of dissenting stockholders of Regions are
governed by the Delaware GCL. Pursuant thereto, except as described below, any
stockholder has the right to dissent from any merger of which Regions could be
a constituent corporation. No appraisal rights are available, however, for (i)
the shares of any class or series of stock that is either listed on a national
securities exchange, quoted on the Nasdaq National Market, 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.
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Allied. The rights of appraisal of dissenting stockholders under Georgia
law are generally similar to those afforded under the Delaware GCL. Because
Allied Common Stock is quoted on the Nasdaq National Market, unless the
exception described in the preceding paragraph applies, holders of Allied
Common Stock do not have dissenters' rights of appraisal.
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.
Allied. 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 lists, 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 additional specified categories of
other corporate records, relating principally to financial information.
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."
Allied. 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.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock and Allied Common Stock are listed for quotation on
the Nasdaq National Market under the symbols "RGBK" and "ABGA," respectively.
The following table sets forth, for the indicated periods, the high and low
closing sale prices for Regions Common Stock and Allied Common Stock as
reported by Nasdaq, and the cash dividends declared per share of Regions Common
Stock and Allied Common Stock for the indicated periods. Amounts indicated for
Allied have been adjusted to reflect all stock dividends issued by Allied since
January 1, 1994. Quarterly amounts may not add to annual amounts because of
rounding.
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<TABLE>
<CAPTION>
REGIONS ALLIED
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>
1994
First Quarter . . . . . . $ 33.50 $ 30.13 $ .30 $11.82 $10.55 $ .07
Second Quarter . . . . . . 36.13 30.50 .30 11.45 10.00 .07
Third Quarter . . . . . . 36.75 34.63 .30 11.27 10.00 .07
Fourth Quarter . . . . . . 35.00 29.75 .30 10.91 8.64 .07
1995
First Quarter . . . . . . . 36.50 31.63 .33 10.45 8.64 .07
Second Quarter . . . . . . 37.44 34.50 .33 10.45 9.09 .08
Third Quarter . . . . . . . 41.25 37.00 .33 11.36 9.55 .08
Fourth Quarter . . . . . . 44.88 39.63 .33 11.59 9.32 .08
1996
First Quarter . . . . . . 48.00 40.75 .35 11.13 10.68 .09
Second Quarter . . . . . . 48.38 42.25 .35 11.50 10.25 .09
Third Quarter . . . . . . . 48.63 43.63 .35 10.25 9.50 .09
Fourth Quarter (through
, 1996) . . . .
</TABLE>
On ______, 1996, the last reported sale prices of Regions Common Stock and
Allied Common Stock, as reported on the Nasdaq National Market, were $______
and $______, respectively. At the close on June 13, 1996, the last trading day
prior to public announcement of the proposed Merger, the last reported sale
prices of Regions Common Stock and Allied Common Stock, as reported on the
Nasdaq National Market, were $47.75 and $12.00, 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 Regions Bank in Alabama.
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."
Allied has paid dividends to its stockholders since 1987. In 1996, Allied
has paid quarterly dividends at the rate of $.09 per share, and intends to pay
a quarterly dividend at such rate until the consummation of the Merger. If
for any reason the Merger is not consummated, Allied anticipates continuing
its historical practice of paying regular quarterly cash dividends. However,
Allied's future dividend policy would depend on its results of operations,
capital needs, and other factors, and there can be no assurance that Allied
would pay cash dividends indefinitely into the future or as to the amount of
cash dividends to be paid. Allied and Regions have agreed to cooperate in
setting the Effective Date to ensure that holders of Allied Common Stock, with
respect to the quarterly period in which the Effective Date occurs, will not
receive dividends on both Allied and Regions common stock, and will not fail
to receive any dividend.
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BUSINESS OF ALLIED
Allied is a bank holding company organized under the laws of the state of
Georgia with its principal executive office located in Thomson, Georgia. Allied
operates principally through its three banking subsidiaries, which provide a
range of retail banking services through 26 offices in east central Georgia. At
September 30, 1996, Allied had total consolidated assets of approximately $557
million, total consolidated deposits of approximately $442 million, and total
consolidated stockholders' equity of approximately $68 million. Allied's
principal executive office is located at 149 Main Street, Thomson, Georgia,
30824 and its telephone number at such address is (706) 595-9500.
Allied has pending the acquisition of the Bank of Stapleton, with
approximately $15 million in assets and one office located in Stapleton,
Georgia. The pro forma effects of this transaction, which will be accounted for
as a purchase are not material to Allied's consolidated financial statements.
Additional information with respect to Allied and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, including Allied's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, and Allied's
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and
September 30, 1996, accompany this Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF ALLIED
The following table sets forth certain information concerning the only
person known by Allied to own beneficially more than 5.0% of Allied Common
Stock, as of the Record Date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- ------------------- -------------------- -------
<S> <C> <C> <C>
Common Stock Boone A. Knox xxx,xxx(1) xx.x %
149 Main Street
Thomson, Georgia, 30824
</TABLE>
_________
(1) Includes ______ shares held by the Allied Bankshares, Inc. Profit Sharing
Plan and Trust of which Mr. Knox is a co- trustee and shares voting and
investment power, ______ shares held by the Knox Family Trust, of which Mr.
Knox is the sole trustee, ______ shares held by the Knox Foundation, of which
Mr. Knox is co-trustee, and ______ shares held by BT Investments, an investment
partnership in which Mr. Knox is co-general partner and shares voting and
investment power.
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BUSINESS OF REGIONS
GENERAL
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 373 banking offices located in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of September 30, 1996. At that date, Regions had
total consolidated assets of approximately $18.7 billion, total consolidated
deposits of approximately $15.2 billion and total consolidated stockholders'
equity of approximately $1.6 billion. Regions operates banking subsidiaries in
Alabama, Florida, Georgia, Louisiana, and Tennessee and banking-related
subsidiaries engaged in mortgage banking, credit life insurance, and investment
brokerage activities with offices in various Southeastern states. Through its
subsidiaries, Regions offers a broad range of banking and banking-related
services.
The following table presents information about Regions' banking operations
in the states in which its subsidiary depository institutions are located,
based on September 30, 1996 information:
<TABLE>
<CAPTION>
NUMBER OF TOTAL TOTAL
BANKING OFFICES ASSETS DEPOSITS
--------------- ------ --------
(In thousands)
<S> <C> <C> <C>
Alabama . . . . . . 181 $11,557,055 $ 8,467,873
Florida . . . . . . 36 1,194,596 1,083,748
Georgia . . . . . . 75 3,529,206 3,039,924
Louisiana . . . . . 57 2,209,689 1,819,863
Tennessee . . . . . 24 482,520 431,734
</TABLE>
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."
RECENT DEVELOPMENTS
Recent Acquisitions. Since December 31, 1995, Regions has completed the
acquisitions of eight financial institutions (the "Recently Completed
Acquisitions"), certain aspects of which transactions are set forth in the
following table:
39
<PAGE> 44
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
----------------------- ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
The Enterprise National Bank of Atlanta, $ 54 $ 9 Cash Purchase
located in Atlanta, Georgia
Metro Financial Corporation, located in Atlanta, 210 31 Regions Purchase
Georgia Common
Stock
First National Bancorp, located in Gainesville, 3,199 728 Regions Pooling
Georgia Common of
Stock Interests
First Federal Bank of Northwest Georgia, Federal 94 17 Regions Pooling
Savings Bank, located in Cedartown, Georgia Common of
Stock Interests
First Gwinnett Bancshares, Inc., located in 68 15 Regions Purchase
Norcross, Georgia Common
Stock
Delta Bank & Trust Company, located in Belle 191 38 Regions Purchase
Chasse, Louisiana Common
Stock
American Bancshares of Houma, Inc., located in 89 18 Regions Purchase
Houma, Louisiana Common
Stock
Rockdale Community Bank, located in Conyers, 47 12 Regions Purchase
Georgia ------ --- Common
Totals $3,952 $868 Stock
====== ===
</TABLE>
_______________
(1) Calculated as of the date of consummation.
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending three acquisitions in addition to
Allied, certain aspects of which transactions are set forth below:
40
<PAGE> 45
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
----------------------- ACCOUNTING
INSTITUTION ASSET SIZE VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
Florida First Bancorp, Inc., located in Panama $ 297 $ 40 Cash Purchase
City, Florida (the "Florida First Acquisition")
West Carroll Bancshares, Inc., located in 125 32 Regions Pooling
Oak Grove, Louisiana (the "West Carroll Acquisition") Common of
Stock Interests
Gulf South Bancshares, Inc., located in Gretna, 55 9 Regions Purchase
Louisiana (the "Gulf South Acquisition") Common
Stock
-------- --------
Totals $ 477 $ 81
======= ========
- ---------------
</TABLE>
(1) Calculated as of the date of announcement of the transaction.
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. 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.
If the Other Pending Acquisitions and the Merger had been consummated on
September 30, 1996, based on September 30, 1996 pro forma financial
information, Regions' total consolidated assets would have increased by
approximately $1.0 billion to approximately $19.7 billion; its total
consolidated deposits would have increased by approximately $845 million to
approximately $16.0 billion; and its total consolidated stockholders' equity
would have increased by approximately $82 million to approximately $1.6
billion. See "Documents Incorporated by Reference" and Summary Pro Forma
Financial Data" and the related pro forma financial information in Regions'
Current Report on Form 8-K dated November 20, 1996.
Regions has purchased in the open market approximately 260,000 shares of
Regions Common Stock to be issued in connection with the Merger.
41
<PAGE> 46
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the Merger and the Other Pending Acquisitions as of the dates
and for the periods indicated and pursuant to the accounting bases described
below. The unaudited pro forma financial data are presented for informational
purposes only and are not necessarily indicative of the combined financial
position or results of 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 20, 1996. 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 ALLIED
The following unaudited pro forma combined data give effect to the
acquisition of Allied as of the date or at the beginning of the periods
indicated, assuming such acquisition is treated as a pooling of interests.
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1996
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . $19,288,818
Securities . . . . . . . . . . . . . . . . . . . . . . 4,181,544
Loans, net of unearned income . . . . . . . . . . . . 13,338,011
Total deposits . . . . . . . . . . . . . . . . . . . . 15,629,424
Other borrowed money . . . . . . . . . . . . . . . . . 508,752
Stockholders' equity . . . . . . . . . . . . . . . . . 1,622,824
Book value per common share . . . . . . . . . . . . . 24.91
</TABLE>
42
<PAGE> 47
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -------------------------------------------
1996 1995 1994 1993
---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . . . . $1,061,357 $ 1,302,441 $1,026,634 $ 779,047
Total interest expense . . . . . . . . . . . . . 523,578 654,791 450,003 309,329
--------- --------- --------- -------
Net interest income . . . . . . . . . . . . . . 537,779 647,650 576,631 469,718
Provision for loan losses . . . . . . . . . . . . 22,534 30,971 21,069 25,215
--------- --------- --------- -------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . 515,245 616,679 555,562 444,503
Total noninterest income . . . . . . . . . . . . 167,199 193,000 177,099 175,220
Total noninterest expense . . . . . . . . . . . . 429,341 503,185 458,255 396,819
Income tax expense . . . . . . . . . . . . . . . 83,302 100,020 86,855 69,090
--------- --------- --------- -------
Net income . . . . . . . . . . . . . . . . . . . $ 169,801 $ 206,474 $ 187,551 $ 153,814
======= ======= ======= =======
Net income per share . . . . . . . . . . . . . . $ 2.63 $ 3.21 $ 3.09 $ 2.82
==== ==== ==== ====
Average common shares outstanding . . . . . . . 64,573 64,261 60,636 54,517
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, ALLIED, AND OTHER PENDING
ACQUISITIONS
The following unaudited pro forma combined data as of September 30, 1996,
and for the nine months ended September 30, 1996, and for each of the three
years in the period ended December 31, 1995, give effect to (i) the
acquisitions of Florida First and Gulf South by Regions, assuming such
acquisitions are accounted for as purchases, and (ii) the Merger and the
acquisition of West Carroll by Regions, assuming such transactions are treated
as poolings of interests for accounting purposes, as if all such transactions
had been consummated on September 30, 1996, in the case of the data included
under "Balance Sheet Data," and at the beginning of the indicated periods in
the case of the data included under "Income Statement Data," except that the
income statement data for the transactions accounted for as purchases are
reflected as if such transactions had been consummated on January 1, 1995, and
are not included for the years ended December 31, 1994 and 1993.
43
<PAGE> 48
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1996
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . $19,739,998
Securities . . . . . . . . . . . . . . . . . . . . . . . 4,265,955
Loans, net of unearned income . . . . . . . . . . . . . . 13,619,290
Total deposits . . . . . . . . . . . . . . . . . . . . . 16,032,050
Other borrowed money . . . . . . . . . . . . . . . . . . 536,273
Stockholders' equity . . . . . . . . . . . . . . . . . . 1,636,724
Book value per common share . . . . . . . . . . . . . . . 24.89
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, -----------------------------------
1996 1995 1994 1993
---- ---- ---- ----
(In thousands except per share data)
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . . . . $1,087,556 $ 1,335,811 $1,034,842 $ 785,994
Total interest expense . . . . . . . . . . . . . 537,200 672,520 452,555 311,486
--------- --------- --------- -------
Net interest income . . . . . . . . . . . . . . 550,356 663,291 582,287 474,508
Provision for loan losses . . . . . . . . . . . . 22,981 31,090 21,039 25,064
------- ------- ------- -------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . 527,375 632,201 561,248 449,444
Total noninterest income . . . . . . . . . . . . 170,468 197,335 177,904 176,077
Total noninterest expense . . . . . . . . . . . . 442,212 518,164 461,704 399,543
Income tax expense . . . . . . . . . . . . . . . 84,483 102,047 87,608 69,993
------- ------- ------- -------
Net income . . . . . . . . . . . . . . . . . . . $ 171,148 $ 209,325 $ 189,840 $ 155,985
======= ======= ======= =======
Net income per share . . . . . . . . . . . . . . $ 2.63 $ 3.23 $ 3.10 $ 2.83
==== ==== ==== ====
Average common shares outstanding . . . . . . . 65,181 64,869 61,244 55,125
</TABLE>
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 Allied. Additional
information is available in Regions' Annual Report on Form 10-K for the fiscal
year ended December 31, 1995. See "Documents Incorporated by Reference."
GENERAL
Regions and Allied are both bank holding companies registered with the
Federal Reserve under the BHC Act. As such, Regions and Allied 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
44
<PAGE> 49
savings and loan holding company, Regions is also registered with the OTS and
is subject to the 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, and consideration of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977.
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 in September 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, none
of the states in which the banking subsidiaries of Regions or Allied are
located has either moved up the date after which interstate branching will be
permissible 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 Allied from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices. For example,
factoring accounts receivable, acquiring or servicing loans, leasing personal
property, conducting discount securities brokerage activities, performing
certain data processing services, acting as agent or broker in selling credit
life insurance and certain other types of insurance in connection with credit
transactions, and performing certain insurance underwriting activities all have
been determined by the Federal Reserve to be permissible activities of bank
holding companies. The BHC Act does not place territorial limitations on
permissible nonbanking activities of bank holding companies. Despite prior
approval, the Federal Reserve has the power to order a bank holding company or
its subsidiaries to terminate any activity
45
<PAGE> 50
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 Allied is a
member of the Federal Deposit Insurance Corporation (the "FDIC"), and as such,
its deposits are insured by the FDIC to the 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 Allied (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. The federal and state banking regulators also have the power
to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.
PAYMENT OF DIVIDENDS
Regions and Allied are legal entities separate and distinct from their
banking, thrift, and other subsidiaries. The principal sources of cash flow of
both Regions and Allied, 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 Allied, as
well as by Regions and Allied to their stockholders.
As to the payment of dividends, the Bank and all of Regions'
state-chartered banking subsidiaries are subject to the respective laws and
regulations of the state in which the bank is located, and to the regulations
of the bank's primary federal regulator. Regions' subsidiaries that are thrift
institutions are subject to the OTS' capital distributions regulation.
If, in the opinion of the federal banking regulatory agency, 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 agency
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"), an insured
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 which
provide that bank holding companies and insured banks should generally pay
dividends only out of current operating earnings.
At September 30, 1996, under dividend restrictions imposed under federal
and state laws, the subsidiary depository institutions of Regions and Allied,
without obtaining governmental approvals, could declare aggregate dividends to
Regions and Allied of approximately $219 million and $2.8 million respectively.
The payment of dividends by Regions and Allied 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.
CAPITAL ADEQUACY
Regions, Allied, 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 Allied and the
46
<PAGE> 51
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 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 be composed of common equity, undivided profits,
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, 1996, Regions' consolidated Total Capital Ratio and its Tier 1
Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were
13.53% and 10.71%, respectively, and Allied's consolidated Total Capital and
Tier 1 Capital Ratios were 18.32% and 17.10%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and certain other
intangible assets (the "Leverage Ratio"), of 3.0% for bank holding companies
that meet certain specified criteria, including having the highest regulatory
rating. All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points. Regions' and Allied's respective Leverage Ratios at September 30, 1996,
were 7.57% and 10.05%. 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 indicators of capital
strength in evaluating proposals for expansion or new activities.
Each of Regions' and Allied'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. Each of the subsidiary depository institutions was in compliance with
applicable minimum capital requirements as of September 30, 1996. Neither
Regions, Allied, 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
institution 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 to 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, recently adopted fiscal regulations requiring regulators to
consider interest rate risk (when the interest rate sensitivity of an
institution's assets does not match the sensitivity of its liabilities or its
off-balance-sheet position) in the evaluation of a bank's capital adequacy.
The bank regulatory agencies have concurrently proposed a methodology for
evaluating interest rate risk which would require banks with excessive interest
rate risk exposure to hold additional amounts of capital against such
exposures. The OTS has already included an interest-rate risk component in its
risk-based capital guidelines for savings associations that it regulates.
47
<PAGE> 52
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions and Allied 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 Allied 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 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' 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 Capital Ratio of 10% or
greater, a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of
5.0% or greater and (ii) is not subject to any written agreement, order,
capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency is deemed to be "well capitalized." An
institution with a Total Capital Ratio of 8.0% or greater, a Tier 1 Capital
Ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or greater is considered
to be "adequately capitalized." A depository institution that has a Total
Capital Ratio of less than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a
Leverage Ratio of less than 4.0% is considered to be "undercapitalized." A
depository institution that has a Total Capital Ratio of less than 6.0%, a Tier
1 Capital Ratio of less than 3.0%, or a Leverage Ratio of less than 3.0% is
considered to be "significantly undercapitalized," and an institution that has
a tangible equity capital to assets ratio equal to or less than 2.0% is deemed
to be "critically undercapitalized." For purposes of the regulation, the term
"tangible equity" includes core capital elements counted as Tier 1 Capital for
purposes of the risk-based capital standards plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets with certain exceptions. A depository institution may be
deemed to be in
48
<PAGE> 53
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.
At September 30, 1996, all of the subsidiary depository institutions of
Regions and Allied had the requisite capital levels to qualify as well
capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a 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
risk-based assessment system, which went into effect on January 1, 1994,
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, 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 Savings Association Insurance Fund ("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 in May 1995, the FDIC
reduced the assessment rate applicable to BIF deposits in two stages, so that,
beginning in 1996, the deposit insurance premiums for 92% of all BIF members in
the highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size. The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.
Recognizing that the disparity between the SAIF and BIF premium rates have
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, in July 1995, the FDIC, the
Treasury Department, and the OTS released statements outlining a proposed plan
to recapitalize the SAIF, the principal
49
<PAGE> 54
feature of which was a special one-time assessment on depository institutions
holding SAIF-insured deposits, which was intended to recapitalize the SAIF at a
reserve ratio of 1.25%. This proposal contemplated elimination of the disparity
between the assessment rates on BIF and SAIF deposits following
recapitalization of the SAIF.
A variation of this proposal designated the Deposit Insurance Funds Act of
1996 (the "Funds Act") was enacted by Congress as part of the omnibus budget
legislation and signed into law on September 30, 1996. As directed by the Funds
Act, the FDIC has implemented a special one-time assessment of approximately
65.7 basis points (0.657%) on a depository institution's SAIF-insured deposits
held as of March 31, 1995 (or approximately 52.6 basis points on SAIF deposits
acquired by banks in certain qualifying transactions). Regions and Allied
recorded a charge against earnings for the special assessment in the quarter
ended September 30, 1996 in the pre-tax amounts of approximately $21.0 million
and $692,000, respectively.
In addition, the FDIC has proposed a revision in the SAIF assessment rate
schedule which would effect, as of October 1, 1996 (i) a widening in the
assessment rate spread among institutions in the different capital and risk
assessment categories, (ii) an overall reduction of the assessment rate range
assessable on SAIF deposits of from 0 to 27 basis points, and (iii) a special
interim assessment rate range for the last quarter of 1996 of from 18 to 27
basis points on institutions subject to FICO assessments. Effective January 1,
1997, FICO assessments will be imposed on both BIF- and SAIF- insured
deposits in annual amounts presently estimated at 1.29 basis points and 6.44
basis points, respectively. Beginning in January, 2000, BIF- and SAIF-insured
institutions will share the FICO interest costs at equal rates currently
estimated 2.43 basis points. Regions anticipates that the net effect of the
decrease in the premium assessment rate on SAIF deposits will result in a
reduction in its total deposit insurance premium assessments for the years 1997
through 1999, assuming no further changes in announced premium assessment
rates.
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.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common Stock,
of which 62,810,998 shares were issued, including 260,000 treasury shares, at
September 30, 1996. 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, 1996, under
such requirements and guidelines, Regions' subsidiary institutions had $219
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 May 1997. 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 December 2, 1996, for
consideration by Regions for possible inclusion in such proxy materials.
Proposals with respect to Regions' 1998 annual meeting of stockholders may be
submitted until the date specified in Regions' 1997 annual meeting proxy
statement.
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<PAGE> 55
EXPERTS
The consolidated financial statements and the supplemental consolidated
financial statements of Regions incorporated by reference in or appearing as an
exhibit to Regions' Annual Report (Form 10-K) for the year ended December 31,
1995, have been audited by Ernst & Young LLP, independent auditors, for the
periods indicated in their reports thereon incorporated by reference or
included therein and incorporated herein by reference. Such consolidated
financial statements and supplemental consolidated financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The consolidated financial statements of Allied Bankshares, Inc.
incorporated by reference in this Registration Statement, to the extent and for
the periods indicated, have been audited by Arthur Andersen LLP, independent
public accountants as indicated in their report with respect thereto, and are
incorporated herein by reference in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
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 ______, 1996, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of ______ shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
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<PAGE> 56
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
ALLIED BANKSHARES, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF JUNE 13, 1996
<PAGE> 57
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C> <C>
Parties..................................................................................
Preamble.................................................................................
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER............................................
1.1 Merger.......................................................................
1.2 Time and Place of Closing....................................................
1.3 Effective Time...............................................................
1.4 Execution of Stock Option Agreement..........................................
ARTICLE 2 -- TERMS OF MERGER.............................................................
2.1 Charter......................................................................
2.2 Bylaws.......................................................................
2.3 Directors and Officers.......................................................
ARTICLE 3 -- MANNER OF CONVERTING SHARES.................................................
3.1 Conversion of Shares.........................................................
3.2 Anti-Dilution Provisions.....................................................
3.3 Shares Held by Allied or Regions.............................................
3.4 Fractional Shares............................................................
3.5 Dissenting Stockholders......................................................
ARTICLE 4 -- EXCHANGE OF SHARES..........................................................
4.1 Exchange Procedures..........................................................
4.2 Rights of Former Allied Stockholders.........................................
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF ALLIED....................................
5.1 Organization, Standing, and Power............................................
5.2 Authority; No Breach By Agreement............................................
5.3 Capital Stock................................................................
5.4 Allied Subsidiaries..........................................................
5.5 SEC Filings; Financial Statements............................................
5.6 Absence of Undisclosed Liabilities...........................................
5.7 Absence of Certain Changes or Events.........................................
5.8 Tax Matters..................................................................
5.9 Assets.......................................................................
5.10 Environmental Matters........................................................
5.11 Compliance with Laws.........................................................
5.12 Labor Relations..............................................................
5.13 Employee Benefit Plans.......................................................
5.14 Material Contracts...........................................................
5.15 Legal Proceedings............................................................
5.16 Reports......................................................................
5.17 Statements True and Correct..................................................
5.18 Accounting, Tax, and Regulatory Matters......................................
5.19 State Takeover Laws..........................................................
5.20 Charter Provisions...........................................................
5.21 Derivatives Contracts........................................................
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS...................................
6.1 Organization, Standing, and Power............................................
6.2 Authority; No Breach By Agreement............................................
6.3 Capital Stock................................................................
6.4 Regions Subsidiaries.........................................................
6.5 SEC Filings; Financial Statements............................................
</TABLE>
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<TABLE>
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<S> <C> <C> <C>
6.6 Absence of Undisclosed Liabilities...........................................
6.7 Absence of Certain Changes or Events.........................................
6.8 Tax Matters..................................................................
6.9 Environmental Matters........................................................
6.10 Compliance with Laws.........................................................
6.11 Legal Proceedings............................................................
6.12 Reports......................................................................
6.13 Statements True and Correct..................................................
6.14 Accounting, Tax, and Regulatory Matters......................................
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION....................................
7.1 Affirmative Covenants of Allied..............................................
7.2 Negative Covenants of Allied.................................................
7.3 Covenants of Regions.........................................................
7.4 Adverse Changes in Condition.................................................
7.5 Reports......................................................................
ARTICLE 8 -- ADDITIONAL AGREEMENTS.......................................................
8.1 Registration Statement; Statement; Stockholder Approval......................
8.2 Exchange Listing.............................................................
8.3 Applications.................................................................
8.4 Filings with State Offices...................................................
8.5 Agreement as to Efforts to Consummate........................................
8.6 Investigation and Confidentiality............................................
8.7 Press Releases...............................................................
8.8 Certain Actions..............................................................
8.9 Accounting and Tax Treatment.................................................
8.10 State Takeover Laws..........................................................
8.11 Charter Provisions...........................................................
8.12 Agreement of Affiliates......................................................
8.13 Employee Benefits and Contracts..............................................
8.14 Indemnification..............................................................
8.15 Certain Modifications........................................................
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE...........................
9.1 Conditions to Obligations of Each Party......................................
9.2 Conditions to Obligations of Regions.........................................
9.3 Conditions to Obligations of Allied..........................................
ARTICLE 10 -- TERMINATION................................................................
10.1 Termination..................................................................
10.2 Effect of Termination........................................................
10.3 Non-Survival of Representations and Covenants................................
ARTICLE 11 -- MISCELLANEOUS..............................................................
11.1 Definitions..................................................................
11.2 Expenses.....................................................................
11.3 Brokers and Finders..........................................................
11.4 Entire Agreement.............................................................
11.5 Amendments...................................................................
11.6 Waivers......................................................................
11.7 Assignment...................................................................
11.8 Notices......................................................................
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C> <C>
11.9 Governing Law................................................................
11.10 Counterparts.................................................................
11.11 Captions.....................................................................
11.12 Interpretations..............................................................
11.13 Enforcement of Agreement.....................................................
11.14 Severability.................................................................
Signatures...............................................................................
</TABLE>
(iii)
<PAGE> 60
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<S> <C>
1. Form of Stock Option Agreement. (sec. 1.4).
2. Form of Affiliate Agreement. (sec.sec. 8.13, 9.2(e)).
</TABLE>
(iv)
<PAGE> 61
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of June 13, 1996, by and between ALLIED BANKSHARES, INC. ("Allied"), a
corporation organized and existing under the laws of the State of Georgia, with
its principal office located in Thomson, 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 Allied and Regions are of the opinion that the
transactions described herein are in the best interests of the parties to this
Agreement and their respective stockholders. This Agreement provides for the
acquisition of Allied by Regions pursuant to the merger of Allied with and into
Regions. At the effective time of such merger, the outstanding shares of the
capital stock of Allied shall be converted into shares of the common stock of
Regions (except as provided herein). As a result, stockholders of Allied shall
become stockholders of Regions and each of the subsidiaries of Allied 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 stockholders of Allied, the Board of Governors of the Federal
Reserve System and the Georgia Department of Banking and Finance, and the
satisfaction of certain other conditions described in this Agreement. It is the
intention of the parties to this Agreement that the Merger for federal income
tax purposes shall qualify as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code, and for accounting purposes shall qualify
for treatment as a pooling of interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to Regions' willingness to enter into this Agreement,
Allied and Regions are entering into a stock option agreement (the "Stock Option
Agreement"), in substantially the form of Exhibit 1, pursuant to which Allied is
granting to Regions an option to purchase shares of Allied common stock.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the Parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, Allied shall be merged with and into Regions in accordance with
the provisions of Section 14-2-1107 of the GBCC and of Section 258 of the DGCL
and with the effect provided in Section 14-2-1106 of the GBCC and Section 259 of
the DGCL (the "Merger"). Regions shall be the Surviving Corporation resulting
from 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 respective Boards of
Directors of Allied 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 duly authorized officers, may mutually agree. The place of
Closing shall be at such location 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 duly
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on or before the tenth business day
(as designated by Regions) following the last to occur of (i) the
<PAGE> 62
effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the stockholders
of Allied approve the matters relating to this Agreement required to be approved
by such stockholders by applicable Law or such later date within 30 days thereof
as may be specified by Regions.
1.4 Execution of Stock Option Agreement. Immediately after the execution
of this Agreement and as a condition thereto, Allied is executing and delivering
to Regions the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Certificate of Incorporation of Regions in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation 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 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 Regions or Allied, or the stockholders of either of the foregoing, the shares
of the constituent corporations shall be converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Allied Common Stock (excluding shares held by any
Allied Company or any Regions Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted or shares
held by stockholders who perfect their dissenters' rights of appraisal)
issued and outstanding at the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for .226 of a share of Regions
Common Stock (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event Regions changes the number of
shares of Regions Common Stock issued and outstanding prior to the Effective
Time as a result of a stock split, stock dividend, or similar recapitalization
with respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by Allied or Regions. Each of the shares of Allied Common
Stock held by any Allied 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 Allied Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Regions Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a
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share of Regions Common Stock multiplied by the market value of one share of
Regions Common Stock at the Effective Time. The market value of one share of
Regions Common Stock at the Effective Time shall be the closing price of such
common stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if
not reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a stockholder in respect of
any fractional shares.
3.5 Dissenting Stockholders. Any holder of shares of Allied Common Stock
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 14-2-1302 of the GBCC shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, that no such payment shall be made to any dissenting
stockholder unless and until such dissenting stockholder has complied with the
applicable provisions of the GBCC and surrendered to Allied the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting stockholder of Allied fails to
perfect, or effectively withdraws or loses, such holder's right to appraisal and
of payment for such holder's shares, Regions shall issue and deliver the
consideration to which such holder of shares of Allied Common Stock is entitled
under this Article 3 (without interest) upon surrender by such holder of the
certificate or certificates representing shares of Allied Common Stock held by
such holder.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, Regions and
Allied shall cause the exchange agent selected by Regions (the "Exchange Agent")
to mail to the former stockholders of Allied appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of Allied Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of Allied Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement or as to
which dissenters' rights have been perfected as provided in Section 3.5 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 Allied
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 Allied Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
certificate or certificates representing the shares of Allied Common Stock for
exchange as provided in this Section 4.1, or otherwise complies with the
procedures of the Exchange Agent with respect to lost, stolen, or destroyed
certificates. The certificate or certificates of Allied Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither Regions, Allied, nor the
Exchange Agent shall be liable to a holder of Allied 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 Allied Stockholders. At the Effective Time, the stock
transfer books of Allied shall be closed as to holders of Allied Common Stock
immediately prior to the Effective Time and no transfer of Allied Common Stock
by any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of Allied Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement or as to
which dissenters' rights have been perfected as provided in Section 3.5 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.4 of
this Agreement in exchange therefor, subject, however, to the Surviving
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Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Allied in respect of such shares of Allied Common Stock in accordance with
the terms of this Agreement and which remain unpaid at the Effective Time. To
the extent permitted by Law, former stockholders of record of Allied shall be
entitled to vote after the Effective Time at any meeting of Regions stockholders
the number of whole shares of Regions Common Stock into which their respective
shares of Allied Common Stock are converted, regardless of whether such holders
have exchanged their certificates representing Allied 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 Allied 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 Allied Common Stock certificate, both the Regions Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered dividends and cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ALLIED
Allied hereby represents and warrants to Regions:
5.1 Organization, Standing, and Power. Allied is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its material Assets. Allied 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 Allied.
5.2 Authority; No Breach By Agreement.
(a) Allied 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 Allied, subject to the
approval of this Agreement by the required vote of the holders of outstanding
shares of Allied Common Stock, which is the only stockholder vote required for
approval of this Agreement and consummation of the Merger by Allied. Subject to
such requisite stockholder approval, this Agreement represents a legal, valid,
and binding obligation of Allied, enforceable against Allied 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 Allied, nor the
consummation by Allied of the transactions contemplated hereby, nor compliance
by Allied with any of the provisions hereof, will (i) conflict with or result in
a breach of any provision of Allied'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 Allied Company
under, any Contract or Permit of any Allied 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 Allied, or, (iii)
subject to receipt of the requisite Consents referred to
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in Section 9.1(b) of this Agreement, violate any Law or Order applicable to any
Allied Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Allied, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation by
Allied of the Merger and the other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Allied consists of (i) 50,000,000
shares of Allied Common Stock, of which 12,629,581 shares are issued and
outstanding as of the date of this Agreement and not more than 12,629,581 shares
will be issued and outstanding at the Effective Time and (ii) 25,000,000 shares
of preferred stock, $1.00 par value, of which no shares are, or will be, issued
and outstanding as of the date of this Agreement or at the Effective Time,
respectively. All of the issued and outstanding shares of capital stock of
Allied 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
Allied has been issued in violation of any preemptive rights of the current or
past stockholders of Allied.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as provided
pursuant to the Stock Option Agreement, there are no shares of capital stock or
other equity securities of Allied outstanding and no outstanding Rights relating
to the capital stock of Allied.
5.4 Allied Subsidiaries. Allied has disclosed in Section 5.4 of the Allied
Disclosure Memorandum all of the Allied Subsidiaries as of the date of this
Agreement. Allied or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each Allied Subsidiary. No equity
securities of any Allied Subsidiary are or may become required to be issued
(other than to another Allied Company) by reason of any Rights, and there are no
Contracts by which any Allied Subsidiary is bound to issue (other than to
another Allied Company) additional shares of its capital stock or Rights or by
which any Allied Company is or may be bound to transfer any shares of the
capital stock of any Allied Subsidiary (other than to another Allied Company).
There are no Contracts relating to the rights of any Allied Company to vote or
to dispose of any shares of the capital stock of any Allied Subsidiary. All of
the shares of capital stock of each Allied Subsidiary held by an Allied Company
are fully paid and nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the Allied Company free and clear of any Lien. Each Allied Subsidiary is
either a bank or a corporation, and is duly organized, validly existing, and (as
to corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each Allied 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 Allied. Each Allied Subsidiary that is a depository
institution is an "insured institution" as defined in the Federal Deposit
Insurance Act and applicable regulations thereunder, and the deposits in which
are insured by the Bank Insurance Fund or Savings Association Insurance Fund.
5.5 SEC Filings; Financial Statements.
(a) Allied has filed and made available to Regions all forms, reports, and
documents required to be filed by Allied with the SEC since December 31, 1991
(collectively, the "Allied SEC Reports"). The Allied SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
1933 Act and the 1934 Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or
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superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Allied SEC Reports or necessary in
order to make the statements in such Allied SEC Reports, in light of the
circumstances under which they were made, not misleading. Except for Allied
Subsidiaries that are registered as a broker, dealer, or investment advisor,
none of Allied's Subsidiaries is required to file any forms, reports, or other
documents with the SEC.
(b) Each of the Allied Financial Statements (including, in each case, any
related notes) contained in the Allied SEC Reports, including any Allied SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements, or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
presented the consolidated financial position of Allied and its Subsidiaries as
at the respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
5.6 Absence of Undisclosed Liabilities. No Allied Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Allied, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Allied as of
March 31, 1996 included in the Allied Financial Statements or reflected in the
notes thereto. No Allied Company has incurred or paid any Liability since March
31, 1996, 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
Allied.
5.7 Absence of Certain Changes or Events. Since March 31, 1996, except as
disclosed in Section 5.7 of the Allied 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 Allied,
and (ii) the Allied 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 Allied 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
Allied Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before March
31, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Allied, and all Tax Returns filed are complete and accurate in
all material respects. All Taxes shown on filed Tax Returns have been paid.
There is no audit examination, deficiency, or refund Litigation with respect to
any Taxes that is reasonably likely to result in a determination that would
have, individually or in the aggregate, a Material Adverse Effect on Allied,
except as reserved against in the Allied Financial Statements delivered prior to
the date of this Agreement. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) None of the Allied Companies has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of the
Allied Companies for the period or periods through and including the date of the
respective Allied Financial Statements has been made and is reflected on such
Allied Financial Statements.
(d) Deferred Taxes of the Allied Companies have been adequately provided
for in the Allied Financial Statements.
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(e) Each of the Allied 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, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Allied.
(f) None of the Allied Companies has made any payments, is obligated to
make any payments, or is a party to any contract, agreement, or other
arrangement that could obligate it to make any payments that would be disallowed
as a deduction under Section 280G or 162(m) of the Internal Revenue Code.
(g) There are no Liens with respect to Taxes upon any of the assets of the
Allied Companies.
(h) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the Allied Companies that occurred during or after any
Taxable Period in which the Allied Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1994.
(i) No Allied Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(j) All material elections with respect to Taxes affecting the Allied
Companies as of the date of this Agreement have been or will be timely made as
set forth in Section 5.8 of the Allied Disclosure Memorandum. After the date
hereof, no election with respect to Taxes will be made without the prior written
consent of Regions, which consent will not be unreasonably withheld.
(k) No Allied Company has or has had a permanent establishment in any
foreign country, as defined in any applicable tax treaty or convention between
the United States and such foreign country.
5.9 Assets. The Allied Companies have good and marketable title, free and
clear of all Liens, to all of their respective Assets. All tangible properties
used in the businesses of the Allied Companies are in good condition, reasonable
wear and tear excepted, and are usable in the ordinary course of business
consistent with Allied's past practices. All Assets which are material to
Allied's business on a consolidated basis, held under leases or subleases by any
of the Allied Companies, are held under valid Contracts enforceable in
accordance with their respective terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The Allied
Companies currently maintain insurance similar in amounts, scope, and coverage
to that maintained by other peer banking organizations. None of the Allied
Companies has received notice from any insurance carrier that (i) such insurance
will be canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance will be
substantially increased. There are presently no claims pending under such
policies of insurance and no notices have been given by any Allied Company under
such policies. The Assets of the Allied Companies include all Assets required to
operate the business of the Allied Companies as presently conducted.
5.10 Environmental Matters.
(a) To the Knowledge of Allied, each Allied Company, its Participation
Facilities, and its Loan Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Allied.
(b) There is no Litigation pending, or, to the Knowledge of Allied,
threatened before any court, governmental agency, or authority or other forum in
which any Allied Company or any of its Loan Properties or Participation
Facilities (or any Allied Company in respect of any such Loan Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, or involving a site owned, leased, or operated
by any Allied Company or any of its Loan Properties or
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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 Allied.
(c) To the Knowledge of Allied, there have been no releases of Hazardous
Material in, on, under, or affecting any Participation Facility or Loan Property
of an Allied Company, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Allied.
5.11 Compliance with Laws. Allied is duly registered as a bank holding
company under the BHC Act. Each Allied Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Allied, 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 Allied. None of
the Allied 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 Allied; 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 Allied 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 Allied, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Allied, or (iii) requiring any
Allied Company to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
5.12 Labor Relations. No Allied Company is the subject of any Litigation
asserting that it or any other Allied Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state law) or seeking to compel it or any other Allied Company to bargain with
any labor organization as to wages or conditions of employment, nor is there any
strike or other labor dispute involving any Allied Company, pending or
threatened, or to the Knowledge of Allied, is there any activity involving any
Allied Company's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.13 Employee Benefit Plans.
(a) Allied has disclosed in Section 5.13 of the Allied 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 Allied Company or ERISA
Affiliate (as defined below) thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Allied Benefit Plans"). Any of the Allied 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 an "Allied ERISA Plan." Each Allied 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 an "Allied Pension Plan." No
Allied Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
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(b) All Allied 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 Allied, and each Allied ERISA Plan which
is intended to be qualified under Section 401(a) of the Internal Revenue Code
has received a favorable determination letter from the Internal Revenue Service,
and Allied is not aware of any circumstances likely to result in revocation of
any such favorable determination letter. To the Knowledge of Allied, no Allied
Company has engaged in a transaction with respect to any Allied Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any Allied Company to a Tax imposed by either Section 4975
of the Internal Revenue Code or Section 502(i) of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Allied.
(c) No Allied Pension Plan has any "unfunded current liability," as that
term is defined in Section 302(d)(8)(A) of ERISA, and the fair market value of
the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any Allied Pension Plan, (ii) no change in the actuarial assumptions with
respect to any Allied Pension Plan, and (iii) no increase in benefits under any
Allied 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 Allied or materially adversely affect the funding status of
any such plan. Neither any Allied Pension Plan nor any "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any Allied Company, or the single-employer plan of any entity
which is considered one employer with Allied under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of ERISA (whether or not
waived) (an "ERISA Affiliate") has an "accumulated funding deficiency" within
the meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
which is reasonably likely to have a Material Adverse Effect on Allied. No
Allied Company has provided, or is required to provide, security to an Allied
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no Liability
under Subtitle C or D of Title IV of ERISA has been or is expected to be
incurred by any Allied Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate, which Liability is reasonably likely to have a Material Adverse
Effect on Allied. No Allied Company has incurred any withdrawal Liability with
respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate), which
Liability is reasonably likely to have a Material Adverse Effect on Allied. 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 Allied Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(e) No Allied Company has any Liability for retiree health and life
benefits under any of the Allied Benefit Plans and there are no restrictions on
the rights of such Allied Company to amend or terminate any such Plan without
incurring any Liability thereunder, which Liability is reasonably likely to have
a Material Adverse Effect on Allied.
(f) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Allied Company
from any Allied Company under any Allied Benefit Plan or otherwise, (ii)
increase any benefits otherwise payable under any Allied Benefit Plan, or (iii)
result in any acceleration of the time of payment or vesting of any such
benefit, where such payment, increase, or acceleration is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Allied.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees
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and former employees of any Allied 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 Allied Financial Statements to the
extent required by and in accordance with GAAP.
5.14 Material Contracts. Except as otherwise reflected in the Allied
Financial Statements, none of the Allied Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $100,000, (ii) any Contract relating to the borrowing
of money by any Allied Company or the guarantee by any Allied Company of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully-secured repurchase agreements, and Federal Home Loan
Bank advances of depository institution Subsidiaries, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business), and (iii) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by Allied with the SEC
as of the date of this Agreement that has not been filed as an exhibit to
Allied's Form 10-K filed for the fiscal year ended December 31, 1995, or in
another SEC Document and identified to Regions (together with all Contracts
referred to in Sections 5.8 and 5.13(a) of this Agreement, the "Allied
Contracts"). With respect to each Allied Contract: (i) the Contract is in full
force and effect; (ii) no Allied Company is in Default thereunder, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Allied; (iii) no Allied Company has
repudiated or waived any material provision of any such Contract; and (iv) no
other party to any such Contract is, to the Knowledge of Allied, in Default in
any respect, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Allied, or has
repudiated or waived any material provision thereunder. Except for Federal Home
Loan Bank advances, all of the indebtedness of any Allied Company for money
borrowed is prepayable at any time by such Allied Company without penalty or
premium.
5.15 Legal Proceedings.
(a) There is no Litigation instituted or pending, or, to the Knowledge of
Allied, 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 Allied Company, or against any Asset, employee benefit
plan, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Allied, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any Allied Company, that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Allied.
(b) Section 5.15(b) of the Allied Disclosure Memorandum includes a summary
report of all Litigation as of the date of this Agreement to which any Allied
Company is a party and which names an Allied Company as a defendant or
cross-defendant and where the maximum exposure is estimated to be $100,000 or
more.
5.16 Reports. Since January 1, 1992, or the date of organization if later,
each Allied Company has timely filed all reports and statements, together with
any amendments required to be made with respect thereto, that it was required to
file with any Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Allied). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.17 Statements True and Correct. None of the information supplied or to
be supplied by any Allied Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Regions with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Allied Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Allied's stockholders in connection with the
Stockholders' Meeting, and
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any other documents to be filed by an Allied Company or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
stockholders of Allied, be false or misleading with respect to any material
fact, or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
any Allied Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.18 Accounting, Tax, and Regulatory Matters. Except as specifically
contemplated by this Agreement, no Allied Company or any Affiliate thereof has
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
5.19 State Takeover Laws. Each Allied Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "moratorium," "control share," "fair price," "business combination,"
or other anti-takeover laws and regulations of the State of Georgia
(collectively, "Takeover Laws"), including Sections 14-2-1111 and 14-2-1132 of
the GBCC.
5.20 Charter Provisions. Each Allied Company has taken all action so that
the entering into of this Agreement and the consummation of the Merger and the
other transactions contemplated by this Agreement do not and will not result in
the grant of any rights to any Person under the Articles of Incorporation,
Bylaws, or other governing instruments of any Allied Company or restrict or
impair the ability of Regions or any of its Subsidiaries to vote, or otherwise
to exercise the rights of a stockholder with respect to, shares of any Allied
Company that may be directly or indirectly acquired or controlled by it.
5.21 Derivatives Contracts. Neither Allied nor any of its Subsidiaries is
a party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor, or collar financial contract, or any
other interest rate or foreign currency protection contract not included on its
balance sheet which is a financial derivative contract (including various
combinations thereof).
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to Allied 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 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
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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 Consents referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any Regions
Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Regions, no notice to, filing with,
or Consent of, any public body or authority is necessary for the consummation by
Regions of the Merger and the other transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of Regions consists of
120,000,000 shares of Regions Common Stock, of which 62,182,540 shares were
issued and outstanding as of March 18, 1996. 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 Allied 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 Allied Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
stockholders of Regions.
6.4 Regions Subsidiaries. Regions or one of its Subsidiaries owns all of
the issued and outstanding shares of capital stock of each Regions Subsidiary.
No equity securities of any Regions Subsidiary are or may become required to be
issued (other than to another Regions Company) by reason of any Rights, and
there are no Contracts by which any Regions Subsidiary is bound to issue (other
than to another Regions Company) additional shares of its capital stock or
Rights or by which any Regions Company is or may be bound to transfer any shares
of the capital stock of any Regions Subsidiary (other than to another Regions
Company). There are no Contracts relating to the rights of any Regions Company
to vote or to dispose of any shares of the capital stock of any Regions
Subsidiary. All of the shares of capital stock of each Regions Subsidiary held
by a Regions Company are fully paid and nonassessable (except pursuant to 12 USC
Section 55 in the case of national banks and comparable, applicable state Law,
if any, in the case of state depository institutions) under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the Regions Company free and clear of any Lien. Each
Regions Subsidiary is either a bank or a corporation, and is duly organized,
validly existing, and (as to corporations) in good standing under the Laws of
the jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each Regions Subsidiary is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in
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the aggregate, a Material Adverse Effect on Regions. Each Regions Subsidiary
that is a depository institution is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Bank Insurance Fund or Savings Association
Insurance Fund.
6.5 SEC Filings; Financial Statements.
(a) Regions has filed and made available to Allied all forms, reports, and
documents required to be filed by Regions with the SEC since December 31, 1991,
other than registration statements on Forms S-4 and S-8 (collectively, the
"Regions SEC Reports"). The Regions SEC Reports (i) at the time filed, complied
in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be stated in such
Regions SEC Reports or necessary in order to make the statements in such Regions
SEC Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the Regions Financial Statements (including, in each case, any
related notes) contained in the Regions SEC Reports, including any Regions SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly
presented the consolidated financial position of Regions and its Subsidiaries as
at the respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount.
6.6 Absence of Undisclosed Liabilities. To the Knowledge of Regions, no
Regions Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Regions as of March 31, 1996 included in the Regions Financial
Statements or reflected in the notes thereto. Except as disclosed in Section 6.6
of the Regions Disclosure Memorandum, no Regions Company has incurred or paid
any Liability since March 31, 1996, except for such Liabilities incurred or paid
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions.
6.7 Absence of Certain Changes or Events. Since March 31, 1996, except as
disclosed in the Regions Financial Statements delivered prior to the date of
this Agreement or in Section 6.7 of the Regions Disclosure Memorandum, (i) there
have been no events, changes or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions, and (ii) the Regions Companies have not taken any action, or failed to
take any action, prior to the date of this Agreement, which action or failure,
if taken after the date of this Agreement, would represent or result in a
material breach or violation of any of the covenants and agreements of Regions
provided in Article 7 of this Agreement.
6.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
Regions Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1995, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on Regions, and all Tax Returns filed are complete and accurate
in all material respects. All Taxes shown on filed Tax Returns have been paid.
There is no audit examination, deficiency, or refund Litigation with respect to
any Taxes that is reasonably likely to result in a determination that would
have, individually or in the aggregate, a Material Adverse Effect on Regions,
except as reserved against in the Regions Financial Statements delivered prior
to the date of this Agreement. All
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Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid.
(b) Adequate provision for any Taxes due or to become due for any of the
Regions Companies for the period or periods through and including the date of
the respective Regions Financial Statements has been made and is reflected on
such Regions Financial Statements.
(c) Deferred Taxes of the Regions Companies have been adequately provided
for in the Regions Financial Statements.
6.9 Environmental Matters.
(a) To the Knowledge of Regions, each Regions Company, its Participation
Facilities, and its Loan Properties are, and have been, in compliance with all
Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Regions.
(b) There is no Litigation pending, or, to the Knowledge of Regions,
threatened before any court, governmental agency, or authority or other forum in
which any Regions Company or any of its Loan Properties or Participation
Facilities (or any Regions Company in respect of any such Loan Property or
Participation Facility) has been or, with respect to threatened Litigation, may
be named as a defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any Environmental Law or (ii)
relating to the release into the environment of any Hazardous Material, whether
or not occurring at, on, under, or involving any of its Loan Properties or
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions.
(c) To the Knowledge of Regions, there have been no releases of Hazardous
Material in, on, under, or affecting any Participation Facility or Loan Property
of a Regions Company, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions.
6.10 Compliance with Laws. Regions is duly registered as a bank holding
company under the BHC Act and as a savings and loan holding company under the
HOLA. Each Regions Company has in effect all Permits necessary for it to own,
lease, or operate its material Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions. No Regions Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any Regions Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions, (ii) threatening to revoke any Permits, the
revocation of which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, or (iii) requiring any
Regions Company to enter into or consent to the issuance of a cease and
desist order, formal agreement, directive, commitment, or memorandum of
understanding, or to adopt any Board resolution or similar undertaking,
which restricts materially the conduct of its business, or in any manner
relates to its capital adequacy, its credit or reserve policies, its
management, or the payment of dividends.
6.11 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of Regions, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Regions Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material
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Adverse Effect on Regions, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Regions Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions.
6.12 Reports. Since January 1, 1992, or the date of organization if later,
each Regions Company has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with Regulatory Authorities (except, in the case of state securities
authorities, failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
6.13 Statements True and Correct. None of the information supplied or to
be supplied by any Regions Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by Regions with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Regions Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Allied's stockholders in connection with the
Stockholders' Meeting, and any other documents to be filed by any Regions
Company or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the stockholders of Allied, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
any Regions Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
6.14 Accounting, Tax, and Regulatory Matters. Except as specifically
contemplated by this Agreement, no Regions Company or any Affiliate thereof has
taken or agreed to take any action or has any Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Allied. Unless the prior written consent of
Regions shall have been obtained, and except as otherwise expressly contemplated
herein, Allied shall and shall cause each of its Subsidiaries to (i) operate its
business only in the usual, regular, and ordinary course, (ii) preserve intact
its business organization and Assets and maintain its rights and franchises,
(iii) use its reasonable efforts to maintain its current employee relationships,
and (iv) take no action which would (a) adversely affect the ability of any
Party to obtain any Consents required for the transactions contemplated hereby
without imposition of a condition or restriction of the type referred to in the
last sentence of Section 9.1(b) of this Agreement, or (b) adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement.
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7.2 Negative Covenants of Allied. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Allied
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 an authorized officer of Regions:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any Allied Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of an Allied Company to another
Allied Company) in excess of an aggregate of $150,000 (for the Allied
Companies on a consolidated basis) except in the ordinary course of the
business of Allied Subsidiaries consistent with past practices (which shall
include, for Allied 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 Allied 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 Allied
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 Allied Company, or declare or pay any dividend or
make any other distribution in respect of Allied's capital stock, provided
that Allied 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 Allied Common Stock at a rate of $.09 per share
with usual and regular record and payment dates in accordance with past
practice disclosed in Section 7.2(c) of the Allied Disclosure Memorandum
and such dates may not be changed without the prior written consent of
Regions; provided, that, notwithstanding the provisions of Section 1.3 of
this Agreement, the Parties shall cooperate in selecting the Effective Time
to ensure that, with respect to the quarterly period in which the Effective
Time occurs, the holders of Allied Common Stock do not receive both a
dividend in respect of their Allied Common Stock and a dividend in respect
of Regions Common Stock or fail to receive any dividend; or
(d) except for this Agreement or pursuant to the Stock Option
Agreement, 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 Allied Common Stock or any other capital stock of any Allied
Company, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
Allied Company or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of Allied Common Stock, or
sell, lease, mortgage, or otherwise dispose of or otherwise encumber (x)
any shares of capital stock of any Allied Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Allied
Company) or (y) any Asset other than in the ordinary course of business for
reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, purchase any securities or make any material investment,
either by purchase of stock or securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned Allied Subsidiary, or otherwise acquire direct or indirect control
over any Person, other than in connection with (i) foreclosures in the
ordinary course of business, (ii) acquisitions of control by a depository
institution Subsidiary in its fiduciary capacity, or (iii) the creation of
new wholly owned Subsidiaries organized to conduct or continue activities
otherwise permitted by this Agreement; or
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(g) grant any increase in compensation or benefits to the employees or
officers of any Allied Company, except in accordance with past practice
disclosed in Section 7.2(g) of the Allied Disclosure Memorandum or as
required by Law; pay any severance or termination pay or any bonus other
than pursuant to written policies or written Contracts in effect on the
date of this Agreement; enter into or amend any severance agreements with
officers of any Allied Company; grant any material increase in fees or
other increases in compensation or other benefits to directors of any
Allied Company except in accordance with past practice disclosed in Section
7.2(g) of the Allied Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits; or
(h) enter into or amend any employment Contract between any Allied
Company and any Person (unless such amendment is required by Law) that the
Allied 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 Allied Company or make
any material change in or to any existing employee benefit plans of any
Allied Company other than any such change that is required by Law or that,
in the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan; or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice or settle any Litigation involving any Liability of any Allied
Company for material money damages or restrictions upon the operations of
any Allied Company; or
(l) except in the ordinary course of business, modify, amend, or
terminate any material Contract or waive, release, compromise, or assign
any material rights or claims.
7.3 Covenants of Regions. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Regions
covenants and agrees that it shall (i) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the Regions Common Stock and the business
prospects of the Regions Companies, and (ii) take no action which would (a)
materially adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of Section
9.1(b) of this Agreement, or (b) materially adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement; provided,
that the foregoing shall not prevent any Regions Company from discontinuing or
disposing of any of its Assets or business if such action is, in the judgment of
Regions, desirable in the conduct of the business of Regions and its
Subsidiaries.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As
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of their respective dates, such reports filed with the SEC will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Stockholder Approval. As soon
as reasonably practicable after execution of this Agreement, Regions shall file
the Registration Statement with the SEC, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act 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. Allied shall furnish all information
concerning it and the holders of its capital stock as Regions may reasonably
request in connection with such action. Allied shall call a Stockholders'
Meeting, to be held as soon as reasonably practicable after the Registration
Statement is declared effective by the SEC, for the purpose of voting upon
approval of this Agreement and such other related matters as it deems
appropriate. In connection with the Stockholders' Meeting, (i) Allied shall mail
the Proxy Statement to its stockholders, (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 Allied
shall recommend (subject to compliance with their fiduciary duties as advised by
counsel) to its stockholders the approval of the matters submitted for approval,
and (iv) the Board of Directors and officers of Allied shall (subject to
compliance with their fiduciary duties as advised by counsel) use their
reasonable efforts to obtain such stockholders' approval.
8.2 Exchange Listing. Regions shall use its reasonable efforts to list,
prior to the Effective Time, on the Nasdaq NMS, subject to official notice of
issuance, the shares of Regions Common Stock to be issued to the holders of
Allied Common Stock pursuant to the Merger.
8.3 Applications. Regions shall promptly prepare and file, and Allied
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 Georgia and
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 best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including using its reasonable best 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
best 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
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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. 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 ("Confidential Information") and shall not use such information for
any purpose except in furtherance of the transactions contemplated by this
Agreement. Each Party shall maintain the confidentiality of all Confidential
Information obtained in connection with this Agreement or the transactions
contemplated hereby unless (i) such information becomes publicly available
through no fault of such Party, or was, is, or becomes available to that Party
from a source other than the other Party or its Representatives, which source
was itself not bound by a confidentiality agreement with, or other contractual,
legal, or fiduciary obligation of confidentiality with respect to that
information, or (ii) the furnishing or use of such information is required by
proper judicial, administrative, or other legal proceeding, provided that the
other Party is promptly notified in writing of such request, unless such
notification is not, in the opinion of counsel, permitted by Law. Each Party and
its Representatives will hold and maintain all Confidential Information in
confidence and will not disclose to any third party or permit any third party
access to any Confidential Information or the substance thereof provided that a
Party may disclose Confidential Information to such of its Representatives who
need to know such information in connection with the transactions contemplated
hereby. If this Agreement is terminated prior to the Effective Time, each Party
shall promptly return or certify the destruction of all documents and copies
thereof, and all work papers containing confidential information received from
the other Party.
(c) Each Party agrees to give the other Party notice as soon as practicable
after any determination by it of any fact or occurrence relating to the other
Party which it has discovered through the course of its investigation and which
represents, or is reasonably likely to represent, either a material breach of
any representation, warranty, covenant, or agreement of the other Party or which
has had or is reasonably likely to have a Material Adverse Effect on the other
Party.
8.7 Press Releases. Prior to the Effective Time, Regions and Allied 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 Allied Company nor any Affiliate thereof
nor any Representatives thereof retained by any Allied Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of Allied's Board of Directors as
advised by counsel, no Allied 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 Allied may communicate information about such an
Acquisition Proposal to its stockholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Allied shall promptly notify Regions orally and in writing in the event
that it receives any inquiry or proposal relating to any such transaction.
Allied shall (i) immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause of all its Representatives not to engage in any of the
foregoing.
8.9 Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for treatment as a pooling of
interests for accounting purposes or as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
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8.10 State Takeover Laws. Each Allied Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Laws, including Sections 14-2-1111 and 14-2-1132 of the GBCC.
8.11 Charter Provisions. Each Allied Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws, or other governing instruments of any Allied Company or
restrict or impair the ability of Regions or any of its Subsidiaries to vote, or
otherwise to exercise the rights of a stockholder with respect to, shares of any
Allied Company that may be directly or indirectly acquired or controlled by it.
8.12 Agreement of Affiliates. Allied has disclosed in Section 8.12 of the
Allied Disclosure Memorandum each Person whom it reasonably believes is an
"affiliate" of Allied for purposes of Rule 145 under the 1933 Act. Allied shall
use its reasonable efforts to cause each such Person to deliver to Regions not
later than 30 days prior to the Effective Time, a written agreement, in
substantially the form of Exhibit 2, providing that such Person will not sell,
pledge, transfer, or otherwise dispose of the shares of Allied Common Stock held
by such Person except as contemplated by such agreement or by this Agreement and
will not sell, pledge, transfer, or otherwise dispose of the shares of Regions
Common Stock to be received by such Person upon consummation of the Merger
except in compliance with applicable provisions of the 1933 Act and the rules
and regulations thereunder and until such time as financial results covering at
least 30 days of combined operations of Regions and Allied have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies. Shares of Regions Common Stock issued to such affiliates of
Allied in exchange for shares of Allied Common Stock shall not be transferable
until such time as financial results covering at least 30 days of combined
operations of Regions and Allied have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies,
regardless of whether each such affiliate has provided the written agreement
referred to in this Section 8.12 (and Regions shall be entitled to place
restrictive legends upon certificates for shares of Regions Common Stock issued
to affiliates of Allied pursuant to this Agreement to enforce the provisions of
this Section 8.12). Regions shall not be required to maintain the effectiveness
of the Registration Statement under the 1933 Act for the purposes of resale of
Regions Common Stock by such affiliates.
8.13 Employee Benefits and Contracts. Following the Effective Time,
Regions shall provide generally to officers and employees of the Allied
Companies, who at or after the Effective Time become employees of a Regions
Company, employee benefits under employee benefit plans (other than stock option
or other plans involving the potential issuance of Regions Common Stock except
as set forth in this Section 8.13), on terms and conditions which when taken as
a whole are substantially similar to those currently provided by the Regions
Companies to their similarly situated officers and employees. For purposes of
participation and vesting (but not accrual of benefits) under such employee
benefit plans, (i) service under any qualified defined benefit plans of Allied
should be treated as service under Regions' qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of Allied shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of Allied shall be treated
as service under any similar employee benefit plans maintained by Regions.
Regions also shall cause Allied and its Subsidiaries to honor on terms
reasonably agreed upon by the Parties all employment, severance, consulting, and
other compensation Contracts disclosed in Section 8.13 of the Allied Disclosure
Memorandum to Regions between any Allied 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
Allied Benefit Plans.
8.14 Indemnification.
(a) Regions shall indemnify, defend, and hold harmless the present and
former directors, officers, employees, and agents of the Allied 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 Allied's Articles of Incorporation and Bylaws as in effect on
the date hereof, including provisions relating to advances of expenses
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incurred in the defense of any Litigation. Without limiting the foregoing, in
any case in which approval by Regions is required to effectuate any
indemnification, Regions shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between Regions and the Indemnified Party.
(b) If Regions or any of its successors or assigns shall consolidate with
or merge into any other Person and shall not be the continuing or surviving
Person of such consolidation or merger or shall transfer all or substantially
all of its assets to any Person, then and in each case, proper provision shall
be made so that the successors and assigns of Regions shall assume the
obligations set forth in this Section 8.14.
(c) The provisions of this Section 8.14 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives.
8.15 Certain Modifications. Regions and Allied shall consult with respect
to their loan, litigation, and real estate valuation policies and practices
(including loan classifications and levels of reserves) and Allied shall make
such modifications or changes to its policies and practices, if any, prior to
the Effective Time, as may be mutually agreed upon. Regions and Allied also
shall consult with respect to the character, amount, and timing of restructuring
and Merger-related expense charges to be taken by each of the Parties in
connection with the transactions contemplated by this Agreement and shall take
such charges in accordance with GAAP, prior to the Effective Time, as may be
mutually agreed upon by the Parties. Neither Parties' representations,
warranties, and covenants contained in this Agreement shall be deemed to be
inaccurate or breached in any respect as a consequence of any modifications or
charges undertaken solely on account of this Section 8.15.
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 to 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) Stockholder Approval. The stockholders of Allied shall have approved
this Agreement, and the consummation of the transactions contemplated hereby,
including the Merger, as and to the extent required by Law, by the provisions of
any governing instruments, or by the rules of the NASD.
(b) Regulatory Approvals. All Consents of, filings and registrations with,
and notifications to, all Regulatory Authorities required for consummation of
the Merger shall have been obtained or made and shall be in full force and
effect and all waiting periods required by Law shall have expired. No Consent
obtained from any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a manner
(including requirements relating to the raising of additional capital or the
disposition of Assets) which in the reasonable judgment of the Board of
Directors of Regions would so materially adversely impact the economic or
business benefits of the transactions contemplated by this Agreement that, had
such condition or requirement been known, Regions would not, in its reasonable
judgment, have entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and all
Consents required for consummation of the Merger (other than those referred to
in Section 9.1(b) of this Agreement) or for the preventing of any Default under
any Contract or Permit of such Party which, if not obtained or made, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on such Party. 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,
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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, subject to
official notice of issuance.
(g) Tax Matters. Each Party shall have received a written opinion or
opinions from Alston & Bird in a form reasonably satisfactory to such Parties
(the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
and (ii) the exchange in the Merger of Allied Common Stock for Regions Common
Stock will not give rise to gain or loss to the stockholders of Allied with
respect to such exchange (except to the extent of any cash received). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Allied and Regions reasonably satisfactory in
form and substance to such counsel.
(h) Pooling Letter. Each of the Parties shall have received a letter,
dated as of the Effective Time, in form and substance reasonably acceptable to
such Party, from Ernst & Young LLP to the effect that the Merger will qualify
for pooling-of-interests accounting treatment.
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 Allied 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 Allied 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 Allied set forth in Sections 5.18,
5.19, and 5.20 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Allied set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.18, 5.19, and
5.20) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Allied; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" or to the "Knowledge" of Allied or to a matter being
"known" by Allied shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Allied 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. Allied shall have delivered to Regions (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, 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
Allied's Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Regions and its
counsel shall request.
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(d) Affiliate Agreements. Regions shall have received from each
affiliate of Allied the affiliates agreement referred to in Section 8.12 of
this Agreement, to the extent necessary to assure in the reasonable
judgment of Regions that the transactions contemplated hereby will qualify
for pooling-of-interests accounting treatment.
9.3 Conditions to Obligations of Allied. The obligations of Allied 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 Allied pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Regions set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Regions set forth in Section 6.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Regions set forth in Section 6.14 of
this Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
Regions set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.14) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Regions; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or to the "Knowledge"
of Regions or to a matter being "known" by Regions shall be deemed not to
include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Regions to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. Regions shall have delivered to Allied (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, 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 Allied and its counsel shall request.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of
Allied, 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 Allied; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Allied and Section 9.3(a)
of this Agreement in the case of Regions or in material breach of any
covenant or other agreement contained in this Agreement) in the event of an
inaccuracy of any representation or warranty of the other Party contained
in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of Allied and
Section 9.3(a) of this Agreement in the case of Regions; 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
stockholders of Allied fail to vote their approval of the matters submitted
for the approval by such stockholders at the Stockholders' Meeting where
the transactions were presented to such stockholders for approval and voted
upon; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by March 31, 1997, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Allied and Section 9.3(a)
of this Agreement in the case of Regions or in material breach of any
covenant or other agreement contained in this Agreement) in the event that
any of the conditions precedent to the obligations of such Party to
consummate the Merger cannot be satisfied or fulfilled by the date
specified in Section 10.1(e) of this Agreement.
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article 11 and Section 8.6(b) of this Agreement shall
survive any such termination and abandonment, and (ii) a termination pursuant to
Sections 10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. The Stock Option Agreement shall be governed by its own terms as to
its termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.12 and 8.14 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any
of its Subsidiaries.
"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including
the Exhibits (other than the Stock Option Agreement) delivered pursuant
hereto and incorporated herein by reference.
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"Allied Common Stock" shall mean the $1.00 par value common stock of
Allied.
"Allied Companies" shall mean, collectively, Allied and all Allied
Subsidiaries.
"Allied Disclosure Memorandum" shall mean the written information
entitled "Allied Bancorp Disclosure Memorandum" delivered prior to 5:00
p.m., Eastern time, on the seventh day 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 or subsection of this Agreement under which such disclosure is
being made. Information disclosed with respect to one Section or subsection
shall not be deemed to be disclosed for purposes of any other Section or
subsection not specifically referenced with respect thereto.
"Allied Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Allied as of
March 31, 1996, and as of December 31, 1995, and 1994, and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for three months ended
March 31, 1996 and for each of the three fiscal years ended December 31,
1995, 1994, and 1993, as filed by Allied in SEC Documents, and (ii) the
consolidated balance sheets of Allied (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to March 31, 1996.
"Allied Subsidiaries" shall mean the Subsidiaries of Allied, which
shall include the Allied Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Allied in the future and owned by
Allied at the Effective Time.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"Closing Date" shall mean the date on which the Closing occurs.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of
any kind or character, or other document to which any Person is a party or
that is binding on any Person or its capital stock, Assets, or business.
"Default" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order, or Permit, or
(iii) any occurrence of any event that with or without the passage of time
or the giving of notice would give rise to a right to terminate or revoke,
change the current terms of, or renegotiate, or to accelerate, increase, or
impose any Liability under, any Contract, Order, or Permit, where, in any
such event, such Default is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on a Party.
"Delaware Certificate of Merger" shall mean the 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.
"DGCL" shall mean the Delaware General Corporation Law.
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"Environmental Laws" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and which
are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et seq.
("CERCLA"), the Resource Conservation and Recovery Act, as amended, 42
U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exhibits" 1 and 2, 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 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 (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"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 (including references to
such Person being aware of a particular matter) shall mean the personal
knowledge of the chairman, president, chief financial officer, chief
accounting officer, chief credit officer, general counsel, any assistant or
deputy general counsel, or any senior or executive vice president of such
Person and the knowledge of any such persons obtained or which would have
been obtained from a reasonable investigation.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
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"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits, and other Liens
incurred in the ordinary course of the banking business.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"Loan Property" shall mean any property owned, leased, or operated by
the Party in question or by any of its Subsidiaries or in which such Party
or Subsidiary holds a security or other interest (including an interest in
a fiduciary capacity), and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.
"material" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries,
taken as a whole, or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "Material
Adverse Effect" shall not be deemed to include the impact of (a) changes in
banking and similar Laws of general applicability or interpretations
thereof by courts or governmental authorities, (b) changes in GAAP or
regulatory accounting principles generally applicable to banks and their
holding companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, and (d) the Merger
and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Nasdaq NMS" shall mean the National Market Service of Nasdaq.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, 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 Allied or Regions, and "Parties" shall mean
both Allied 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
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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 Allied to
solicit the approval of its stockholders of the transactions contemplated
by this Agreement, which shall include the prospectus of Regions relating
to the issuance of the Regions Common Stock to holders of Allied 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 Allied describing in reasonable
detail the matters contained therein and, with respect to each disclosure
made therein, specifically referencing each Section or subsection of this
Agreement under which such disclosure is being made. Information disclosed
with respect to one Section or subsection shall not be deemed to be
disclosed for purposes of any other Section or subsection not specifically
referenced with respect thereto.
"Regions Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of March 31, 1996, and the restated consolidated statements of
condition (including related notes and schedules, if any) of Regions as of
December 31, 1995 and 1994, the related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) for the three months ended March 31, 1996 and the
related restated statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for each of the
three years ended December 31, 1995, 1994, and 1993, as filed by Regions in
SEC Documents and reflecting the acquisition of First National Bancorp
accounted for as a pooling of interests and (ii) the consolidated
statements of condition of Regions (including related notes and schedules,
if any) and related statements of income, changes in stockholders' equity,
and cash flows (including related notes and schedules, if any) included in
SEC Documents filed with respect to periods ended subsequent to March 31,
1996.
"Regions Subsidiaries" shall mean the Subsidiaries of Regions and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of Regions in the future and owned by Regions at the Effective
Time.
"Registration Statement" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Regions under the 1933 Act with respect to the shares of Regions Common
Stock to be issued to the stockholders of Allied in connection with the
transactions contemplated by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, the Office of
Thrift Supervision, all state regulatory agencies having jurisdiction over
the Parties and their respective Subsidiaries, the NASD, and the SEC.
"Representative" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"Rights" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC" 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.
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"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"Stock Option Agreement" shall mean the stock option agreement by and
between Allied and Regions, in substantially the form of Exhibit 1.
"Stockholders' Meeting" shall mean the meeting of the stockholders of
Allied 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 all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall
profits, environmental, federal highway use, commercial rent, customs
duties, capital stock, paid-up capital, profits, withholding, Social
Security, single business and unemployment, disability, real property,
personal property, registration, ad valorem, value added, alternative or
add-on minimum, estimated, or other tax or governmental fee of any kind
whatsoever, imposed or required to be withheld by the United States or any
state, local, foreign government or subdivision or agency thereof,
including any interest, penalties or additions thereto.
"Taxable Period" shall mean any period prescribed by any governmental
authority, including the United States or any state, local, foreign
government or subdivision or agency thereof for which a Tax Return is
required to be filed or Tax is required to be paid.
"Tax Return" shall mean any report, return, information return, or
other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
<TABLE>
<S> <C>
Closing Section 1.2
Effective Time Section 1.3
ERISA Affiliate Section 5.13(c)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
Allied Benefit Plans Section 5.13(a)
Allied Contracts Section 5.14
Allied ERISA Plan Section 5.13(a)
Allied Pension Plan Section 5.13(a)
Allied SEC Reports Section 5.5(a)
Indemnified Party Section 8.14
Merger Section 1.1
Regions SEC Reports Section 6.5(a)
Takeover Laws Section 5.19
Tax Opinion Section 9.1(g)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
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11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration, and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel, except that each of the Parties shall bear and pay one-half of the
printing costs incurred in connection with the printing of the Registration
Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 Brokers and Finders. Except for Financial Consulting Associates, Inc.
as to Allied, 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, her, or its representing or being
retained by or allegedly representing or being retained by Allied or Regions,
each of Allied and Regions, as the case may be, agrees to indemnify and hold the
other Party harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (except for the
Confidentiality Agreements). Nothing in this Agreement expressed or implied, is
intended to confer upon any Person, other than the Parties or their respective
successors, any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, other than as provided in Sections 8.12 and 8.14 of this
Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
stockholder approval of this Agreement has been obtained; provided, that the
provisions of this Agreement relating to the manner or basis in which shares of
Allied Common Stock will be exchanged for Regions Common Stock shall not be
amended after the Stockholders' Meeting without the requisite approval of the
holders of the issued and outstanding shares of Allied Common Stock entitled to
vote thereon.
11.6 Waivers.
(a) Prior to or at the Effective Time, Regions, acting through its Board of
Directors, chief executive officer, chief financial officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Allied, to waive or extend the time for the compliance
or fulfillment by Allied 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, Allied, acting through its Board of
Directors, chief executive officer, chief financial officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Regions, to waive or extend the time for the
compliance or fulfillment by Regions of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of Allied 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 Allied.
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<PAGE> 91
(c) The failure of any Party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such Party at a
later time to enforce the same or any other provision of this Agreement. No
waiver of any condition or of the breach of any term contained in this Agreement
in one or more instances shall be deemed to be or construed as a further or
continuing waiver of such condition or breach or a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage prepaid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
<TABLE>
<S> <C>
Allied: Allied Bankshares, Inc.
149 Main Street
Thomson, Georgia 30824
Telecopy Number: (706) 595-1149
Attention: Boone A. Knox
Chairman and Chief Executive Officer
Copy to Counsel: Gilbert, Harrell, Gilbert, Sumerford & Martin
777 Gloucester Street, Suite 200
Brunswick, Georgia 31520
Telecopy Number: (912) 264-3917
Attention: H. Hall Ware III
Regions: Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive
Financial Officer
Copy to Counsel: Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Samuel E. Upchurch, Jr.
General Counsel
</TABLE>
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws, except to the extent that the Laws of the State of
Georgia relate to the consummation of the Merger.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
A-31
<PAGE> 92
11.12 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of the
Parties.
11.13 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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<PAGE> 93
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: ALLIED BANKSHARES, INC.
By: /s/ Ben O. Howell, Jr. By: /s/ Boone A. Knox
-------------------------------------- ------------------------------------------
Ben O. Howell, Jr. Boone A. Knox
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ Samuel E. Upchurch, Jr. By: /s/ J. Stanley Mackin
-------------------------------------- ------------------------------------------
Samuel E. Upchurch, Jr. J. Stanley Mackin
Corporate Secretary Chairman of the Board and Chief
Executive Officer
[CORPORATE SEAL]
</TABLE>
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<PAGE> 94
APPENDIX B
November , 1996
Board of Directors
Allied Bankshares, Inc.
149 Main Street
Thomson, GA
Dear Members of the Board:
You have asked us to advise you with respect to the fairness to the
shareholders of Allied Bankshares, Inc. (the "Company"), from a financial point
of view, of the per share purchase price and terms (the "Per Share Purchase
Price and Terms") provided for in the Agreement and Plan of Merger dated as of
June 13, 1996 (the "Merger Agreement") between the Company and Regions Financial
Corporation ("Regions"). The Merger Agreement provides for a merger (the
"Merger") of the Company and Regions pursuant to which the common shareholders
of the Company will receive .2260 common shares of Regions for every common
share of the Company.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to Regions and the Company. We have
also reviewed certain other information, including financial forecasts and
budgets, provided to us by Regions and the Company, and have discussed with the
Company's management the business and prospects of the Company.
We have also considered certain financial and stock market data of Regions
and the Company and we have compared that data with similar data for other
publicly held bank holding companies and we have considered the financial terms
of certain other comparable transactions which have recently been effected. We
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant. In connection with our review, we have not independently verified any
of the foregoing information and have relied on its being complete and accurate
in all material respects. With respect to the financial forecasts and budgets,
we have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments of Regions' and the Company's
managements as to the future financial performance of Regions and the Company.
In addition, we have not made an independent evaluation or appraisal of the
assets of Regions or the Company and we have assumed that the aggregate
allowances for loan losses for Regions and the Company are adequate to cover
such losses. We have solicited third party indications of interest in acquiring
the Company and have considered the results of that solicitation in arriving at
our opinion.
It should be noted that this opinion is based on market conditions and
other circumstances existing on the date hereof and this opinion does not
represent our view as to what the value of the Regions common stock necessarily
will be when the Regions common stock is issued to the stockholders of the
Company upon consummation of the Merger.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.
It is understood that this opinion may be included in its entirety in any
communication by the Company or the Board of Directors to the shareholders of
the Company. The opinion may not, however, be summarized, excerpted from or
otherwise publicly referred to without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that as of the
date hereof, the Per Share Purchase Price and Terms of the Merger are fair to
the common shareholders of the Company from a financial point of view.
Very truly yours,
FINANCIAL CONSULTING ASSOCIATES, INC.
B-1
<PAGE> 95
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Company
to indemnify its officers and directors under certain circumstances. The
pertinent provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
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<PAGE> 96
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such action,
suit or proceeding, even though less than a quorum, or (2) if there are no
such directors, or if such directors so direct, by independent legal
counsel in a written opinion, or (3) by the stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking indemnification
or advancement of expenses may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the
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<PAGE> 97
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
"(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court
of Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
The Company has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on inside
information, illegal payments, dishonesty, accounting of securities profits in
violation of Section 16(b) of the Securities Exchange Act of 1934 and acts
within the scope of the Pension Reform Act of 1974.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of June 13, 1996 by and between Allied Bankshares, Inc. and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 33-54231.
5. -- Form of Opinion re: legality.
8. -- Form of Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- to be included in Exhibit 8.
23.5 -- Consent of Financial Consulting Associates, Inc. -- to be filed by amendment.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
registration statement.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
II-3
<PAGE> 98
thereof.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
C.(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
D. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 99
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on this the 26th day of November, 1996.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
/s/ Richard D. Horsley
BY: --------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ------------------------------ ------------------
<S> <C> <C> <C>
/s/ J. Stanley Mackin
- -------------------------- Chairman of the Board and November 26, 1996
J. Stanley Mackin Chief Executive Officer and
Director
/s/ Richard D. Horsley
- -------------------------- Vice Chairman of the Board and November 26, 1996
Richard D. Horsley Executive Financial Officer
and Director
/s/ Robert P. Houston
- -------------------------- Executive Vice President and November 26, 1996
Robert P. Houston Comptroller
- -------------------------- Director November , 1996
Sheila S. Blair
/s/ William B. Boles, Sr.
- -------------------------- Director November 26, 1996
William B. Boles, Sr.
/s/ James B. Boone, Jr.
- -------------------------- Director November 26, 1996
James B. Boone, Jr.
/s/ Albert P. Brewer
- -------------------------- Director November 26, 1996
Albert P. Brewer
</TABLE>
II-5
<PAGE> 100
<TABLE>
<S> <C> <C> <C>
/s/ James S.M. French
- -------------------------- Director November 26, 1996
James S.M. French
/s/ Catesby ap C. Jones
- -------------------------- Director November 26, 1996
Catesby ap C. Jones
/s/ Olin B. King
- -------------------------- Director November 26, 1996
Olin B. King
/s/ Henry E. Simpson
- -------------------------- Director November 26, 1996
Henry E. Simpson
/s/ Lee J. Styslinger, Jr.
- -------------------------- Director November 26, 1996
Lee J. Styslinger, Jr.
/s/ Robert J. Williams
- -------------------------- Director November 26, 1996
Robert J. Williams
</TABLE>
II-6
<PAGE> 101
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------- ------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of June 13, 1996 by and between Allied Bankshares, Inc. and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 33-54231.
5. -- Form of Opinion re: legality.
8. -- Form of Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Arthur Andersen LLP.
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- to be included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- to be included in Exhibit 8.
23.5 -- Consent of Financial Consulting Associates, Inc. -- to be filed by amendment.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
registration statement.
</TABLE>
<PAGE> 1
Exhibit 5
[Letterhead of Lange, Simpson, Robinsion & Somerville]
December , 1996
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation
S4 Registration Statement
Combination with Allied Bankshares, Inc.
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the acquisition of Allied
Bankshares, Inc. ("Allied") and Regions (the "Merger") and in connection with
the registration of shares of common stock of Regions, par value $.625 per
share ("Regions Common Stock"), on Form S-4 under the Securities Act of 1933.
The Merger provides for issuance of shares of common stock of Regions, par
value $.625 per share, to the stockholders of Allied upon consummation of the
Merger. The maximum number of shares of Regions to be issued in the Merger is
2,854,286.
We have examined and are familiar with the registration statement on Form
S-4 filed with the Securities and Exchange Commission, as such registration
statement has been amended to date. We have examined and are familiar with the
records relating to the organization of Regions and the documents and records
as we have deemed relevant for purposes of rendering this opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of Regions Common Stock issued pursuant to the Merger will be duly
authorized, validly issued and outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
<PAGE> 1
Alston&Bird
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777 Telex: 54-2996
Philip C. Cook Direct Dial (404) 881-7491
[FORM OF TAX OPINION]
November __, 1996
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Allied Bankshares, Inc.
P.O. Box 1020
Thompson, Georgia 30824
Re: Proposed Merger of Allied Bankshares, Inc. with and into
Regions Financial Corporation
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State
of Delaware, in connection with the proposed merger of Allied Bankshares, Inc.
("Allied"), a corporation organized and existing under the laws of the State of
Georgia, with and into Regions. The Merger will be effected pursuant to the
Agreement and Plan of Merger, dated as of June 13, 1996, by and between Allied
and Regions (the "Agreement"). In our capacity as counsel to Regions, our
opinion has been requested with respect to certain of the federal income tax
consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury Regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all
section references herein are to the Code.
<PAGE> 2
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:
(1) the Agreement;
(2) the Registration Statement on Form S-4 filed by Regions with
the Securities and Exchange Commission under the Securities
Act of 1933, on November __, 1996, including the Proxy
Statement/Prospectus for the Special Meeting of the
Stockholders of Allied.
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate. We have also obtained
such additional information and representations as we have deemed relevant and
necessary through consultation with various officers and representatives of
Regions and Allied and through certificates provided by the management of
Regions and the management of Allied.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale, yield a wider
array of banking and banking related services to consumers and businesses, and
provide for a stronger market position and for greater financial resources to
meet competitive challenges within the Thomson, Georgia market area. To
achieve these goals, the following will occur pursuant to the Agreement:
(1) Subject to the terms and conditions of the Agreement,
at the Effective Time, Allied shall be merged with and into Regions in
accordance with the provisions of Section 14-2-1107 of the GBCC and Section 258
of the DGCL and with the effect provided in Section 14-2-1106 of the GBCC and
Section 259 of the DGCL (the "Merger"). Regions shall be the Surviving
Corporation resulting from 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 the Agreement, which has been approved and adopted by the respective
Boards of Directors of Allied and Regions.
(2) Subject to the provisions of Article 3 of the
Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Regions or Allied, or the stockholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Regions Common Stock issued and
outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
<PAGE> 3
(b) Each share of Allied Common Stock (excluding
shares held by any Allied Company or any Regions Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted or shares held by stockholders who perfect their
dissenters' rights of appraisal) issued and outstanding at the
Effective Time shall cease to be outstanding and shall be converted
into and exchanged for .226 of a share of Regions Common Stock (the
"Exchange Ratio").
(3) In the event Regions changes the number of shares of
Regions Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
(4) Each of the shares of Allied Common Stock held by any
Allied 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.
(5) Notwithstanding any other provision of this
Agreement, each holder of shares of Allied Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Regions Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Regions
Common Stock multiplied by the market value of one share of Regions Common
Stock at the Effective Time. The market value of one share of Regions Common
Stock at the Effective Time shall be the closing price of such common stock on
the Nasdaq NMS (as reported by The Wall Street Journal or, if not reported
thereby, any other authoritative source selected by Regions) on the last
trading day preceding the Effective Time. No such holder will be entitled to
dividends, voting rights, or any other rights as a stockholder in respect of
any fractional shares.
(6) Any holder of shares of Allied Common Stock who
perfects their dissenters' rights of appraisal in accordance with and as
contemplated by Section 14-2-1302 of the GBCC shall be entitled to receive the
value of such shares in cash as determined pursuant to such provision of Law;
provided, that no such payment shall be made to any dissenting stockholder
unless and until such dissenting stockholder has complied with the applicable
provisions of the GBCC and surrendered to Allied the certificate or
certificates representing the shares for which payment is being made. In the
event that after the Effective Time a dissenting stockholder of Allied fails to
perfect, or effectively withdraws or loses, such holder's right to appraisal
and of payment for such holder's shares, Regions shall issue and deliver the
consideration to which such holder of shares of Allied Common Stock is entitled
under Article 3 of the Agreement (without interest) upon surrender by such
holder of the certificate or certificates representing shares of Allied Common
Stock held by such holder.
<PAGE> 4
With your consent, we have also assumed that the following statements
are true on the date hereof and will be true on the date the proposed
transaction is consummated:
(1) The fair market value of the Regions Common Stock and other
consideration received in the aggregate by the stockholders of Allied will be
approximately equal to the fair market value of the Allied Common Stock
surrendered in exchange therefor.
(2) There is no plan or intention on the part of the stockholders
of Allied who own five percent (5%) or more of Allied Common Stock, and to the
best of the knowledge of the management of Allied, there is no plan or
intention on the part of the remaining stockholders of Allied to sell,
exchange, or otherwise dispose of a number of shares of Regions Common Stock to
be received in the proposed transaction that would reduce their holdings in
Regions Common Stock received to a number of shares having, in the aggregate, a
value as of the Effective Time of less than fifty percent (50%) of the total
value of all of the Allied Common Stock outstanding immediately prior to the
Effective Time. For purposes of this assumption, shares of Allied Common Stock
exchanged for cash or other property, surrendered by dissenters or exchanged
for cash in lieu of fractional shares of Regions Common Stock will be treated
as outstanding Allied Common Stock as of the Effective Time. Moreover, shares
of Allied Common Stock and shares of Regions Common Stock held by Allied
stockholders and otherwise sold, redeemed, or disposed of prior or subsequent
to the transaction will be considered in making this assumption.
(3) Regions has no plan or intention to redeem or otherwise
reacquire any shares of Regions Common Stock issued in the Merger, except for
purchases of stock in the open market in the normal course of business executed
through an independent broker in which Regions is not aware of the identity of
any seller or in private placement transactions in which the sellers are not
former Allied stockholders.
(4) Regions will not dispose of any of the assets of Allied
acquired in the transaction, except for dispositions made in the ordinary
course of business or transfers to a corporation controlled by Allied. For
purposes of this paragraph, a corporation is considered to control another
corporation in which it owns stock possessing at least eighty percent (80%) of
the total combined voting power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of shares of all other classes
of stock of the corporation.
(5) The liabilities of Allied assumed by Regions and the
liabilities to which the transferred assets of Allied are subject were incurred
by Allied in the ordinary course of its business.
(6) Following the transaction, Regions will continue the historic
business of Allied or use a significant portion of Allied's historic business
assets in a business.
(7) Regions and Allied will pay only their respective expenses, if
any, incurred in connection with the transaction, except that each of Regions
and Allied shall bear and pay one-half of the printing costs incurred in
connection with the printing of the Registration Statement and the Proxy
Statement.
<PAGE> 5
(8) There is no intercorporate indebtedness existing between
Allied and Regions that was issued, acquired, or will be settled at a discount.
(9) Allied is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership, foreclosure, or
similar proceeding in a federal or state court.
(10) Both the fair market value and the total adjusted basis of the
assets of Allied transferred to Regions will equal or exceed the sum of the
liabilities assumed by Regions plus the amount of the liabilities, if any, to
which the transferred assets are subject.
(11) The payment of cash in lieu of fractional shares of Regions
Common Stock is solely for the purpose of avoiding the expense and
inconvenience to Regions of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that will
be paid in the transaction to the Allied stockholders instead of issuing
fractional shares of Regions Common Stock will not exceed one percent (1%) of
the total consideration that will be issued in the transaction to the Allied
stockholders in exchange for their shares of Allied Common Stock. The
fractional share interests of each Allied stockholder will be aggregated, and
no Allied stockholder will receive cash in an amount equal to or greater than
the value of one full share of Regions Common Stock.
(12) None of the compensation received by any stockholder-employees
of Allied will be separate consideration for, or allocable to, any of their
shares of Allied Common Stock; none of the shares of Regions Common Stock
received by any stockholder-employees will be separate consideration for, or
allocable to, any employment agreement; and the compensation paid to any
stockholder-employees will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(13) At all times during the five-year period ending on the
Effective Date of the Merger, the fair market value of all of Allied's United
States real property interests was and will have been less than fifty percent
(50%) of the fair market value of the total of (a) its United States real
property interests, (b) its interests in real property located outside the
United States, and (c) its other assets used or held for use in a trade or
business. For purposes of the preceding sentence, (i) United States real
property interests include all interests (other than an interest solely as a
creditor) in real property and associated personal property (such as movable
walls and furnishings) located in the United States or the Virgin Islands and
interests in any corporation (other than a controlled corporation) owning any
United States real property interest, (ii) Allied is treated as owning its
proportionate share (based on the relative fair market value of its ownership
interest to all ownership interests) of the assets owned by any controlled
corporation or any partnership, trust, or estate in which Allied is a partner
or beneficiary, and (iii) any such entity in turn is treated as owning its
proportionate share of the assets owned by any controlled corporation or any
partnership, trust, or estate in which the entity is a partner or beneficiary.
As used in this paragraph, "controlled corporation" means any corporation at
<PAGE> 6
least fifty percent (50%) of the fair market value of the stock of which is
owned by Allied, in the case of a first-tier subsidiary of Allied or by a
controlled corporation, in the case of a lower-tier subsidiary.
(14) Neither Regions nor Allied are investment companies as defined
in Code section 368(a)(2)(F).
(15) The Agreement represents the entire understanding of Allied
and Regions with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Agreement and that the representations made by Regions and Allied (including
the representation that Allied stockholders will maintain sufficient equity
ownership interests in Regions after the Merger) are true and correct at the
time of the consummation of the Merger, we are of the opinion that:
(1) Provided the Merger qualifies as a statutory merger under
applicable state law, the Merger will be a reorganization within the meaning of
section 368(a). Allied and Regions will each be "a party to a reorganization"
within the meaning of section 368(b).
(2) The stockholders of Allied will recognize no gain or loss upon
the exchange of their Allied Common Stock solely for shares of Regions Common
Stock.
(3) The basis of the Regions Common Stock received by the Allied
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the Allied Common Stock surrendered in exchange therefor.
(4) The holding period of the Regions Common Stock received by the
Allied stockholders will, in each instance, include the period during which the
Allied Common Stock surrendered in exchange therefor was held, provided that
the Allied Common Stock was held as a capital asset on the date of the
exchange.
(5) The payment of cash to Allied 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.
(6) Where solely cash is received by an Allied stockholder in
exchange for his Allied Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of his
Allied Common Stock, subject to the provisions and limitations of Section 302.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time
with retroactive effect. In addition, our opinions are based solely on the
documents that we have examined, the
<PAGE> 7
additional information that we have obtained, and the statements set out
herein, which we have assumed and you have confirmed to be true on the date
hereof and will be true on the date on which the proposed transaction is
consummated. Our opinions cannot be relied upon if any of the facts contained
in such documents or if such additional information is, or later becomes,
inaccurate, or if any of the statements set out herein is, or later becomes,
inaccurate. Finally, our opinions are limited to the tax matters specifically
covered thereby, and we have not been asked to address, nor have we addressed,
any other tax consequences of the proposed transaction, including for example
any issues related to intercompany transactions, accounting methods, or changes
in accounting methods resulting from the Merger.
This opinion is being provided solely for the benefit of Regions, Allied, and
their stockholders. No other person or party shall be entitled to rely on this
opinion.
We consent to the use of this opinion and to the references made to
the firm under the captions "Summary -- Certain Federal Income Tax Consequences
of the Merger" and "Description of the Transaction -- Certain Federal Income
Tax Consequences of the Merger" in the Proxy Statement/Prospectus constituting
part of the Registration Statement on Form S-4 of Regions.
Very truly yours,
ALSTON & BIRD
By:
------------------------------------
Philip C. Cook
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 2,854,286 shares of its common stock
and to the incorporation by reference therein of our reports dated February 2,
1996 (except for the last two paragraphs of Note Q as to which the date is March
1, 1996) and March 25, 1996, with respect to the consolidated financial
statements and supplemental consolidated financial statements, respectively, of
Regions Financial Corporation included or incorporated by reference in its
Annual Report (Form 10-K) for the year ended December 31, 1995, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Birmingham, Alabama
November 25, 1996
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 31, 1996
incorporated by reference in Allied Bankshares, Inc. Form 10-K for the year
ended December 31, 1995 and to all references to our firm included in this
registration statement.
Atlanta, Georgia /s/ Arthur Andersen LLP
November 26, 1996
