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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-06237
Dear Rockdale Community Bank Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Rockdale Community Bank ("Rockdale") to be held at Rockdale's main office, 1172
Old Salem Road, Conyers, Georgia, 30207 on August 8, 1996, at 4:00 p.m., local
time, notice of which is enclosed.
At the Annual Meeting, you will be asked to consider and vote on a proposal
to approve an Amended and Restated Agreement and Plan of Reorganization (the
"Agreement"), entered into with Regions Financial Corporation ("Regions") and
the related Plan of Merger, pursuant to which Rockdale will merge with and into
Regions Bank, a wholly owned Georgia banking subsidiary of Regions (the
"Merger"). Upon consummation of the Merger, each share of Rockdale common stock
issued and outstanding (except for certain shares held by Rockdale or Regions
and shares held by stockholders who perfect their dissenters' rights of
appraisal) will be converted into .515116 of a share of Regions common stock,
subject to possible adjustment.
The accompanying Proxy Statement/Prospectus includes a description of the
proposed Merger and provides other specific information concerning the Annual
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.
The Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of Rockdale has agreed to vote those Rockdale shares over which such
member has voting authority (other than in a fiduciary capacity) in favor of
the Merger. Consummation of the Merger is subject to certain conditions,
including approval of the Agreement and the Plan by Rockdale stockholders and
approval of the Merger by various regulatory agencies.
Stockholders of Rockdale who perfect their dissenters' rights of appraisal
prior to the proposed Merger and comply with applicable law will be entitled to
receive the fair value of their Rockdale shares in cash, as provided by
applicable law.
It is important to understand that approval of the Agreement requires the
affirmative vote of at least two-thirds of the common stock of Rockdale
entitled to vote at the Annual Meeting, not just two-thirds 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 Annual Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Annual Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for Rockdale, 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,
Charles D. East
President and Chief Executive Officer
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ROCKDALE COMMUNITY BANK
1172 OLD SALEM ROAD, CONYERS, GEORGIA, 30207
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 8, 1996
Notice is hereby given that the Annual Meeting of Stockholders (the "Annual
Meeting") of Rockdale Community Bank ("Rockdale"), a Georgia state commercial
bank, will be held at Rockdale's main office, 1172 Old Salem Road, Conyers,
Georgia, 30207 on August 8, 1996, at 4:00 p.m., local time, for the following
purposes:
1. Merger. To consider and vote on the Amended and Restated Agreement and
Plan of Reorganization, dated as of March 12, 1996 and amended and restated as
of May 20, 1996, by and between Rockdale and Regions Financial Corporation
("Regions") and the related Plan of Merger by and between Rockdale and Regions
Bank, a wholly owned subsidiary of Regions, pursuant to which (i) Regions will
acquire all of the issued and outstanding common stock of Rockdale through the
merger of Rockdale with and into Regions Bank (the "Merger"), (ii) each share
of Rockdale common stock (except for certain shares held by Rockdale or Regions
or any Regions subsidiary and shares held by stockholders who perfect their
dissenters' rights of appraisal) will be converted into .515116 of a share of
Regions common stock, subject to possible adjustment, and (iii) each Rockdale
stockholder will receive cash in lieu of any remaining fractional share
interest, all as described more fully in the accompanying Proxy
Statement/Prospectus;
2. Election of Directors. To elect nine directors of Rockdale to serve a
term of one year or until their successors are elected and qualified; and
3. Other Business. To transact such other business as may properly come
before the Annual Meeting, including adjourning the Annual Meeting to permit,
if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on June 26, 1996, are
entitled to receive notice of and to vote at the Annual Meeting or any
adjournment or postponement thereof.
Stockholders of Rockdale have a right to dissent from the Merger and obtain
payment of the fair value of their shares in cash by complying with the
applicable provisions of applicable law, which are attached to the accompanying
Proxy Statement/Prospectus as Appendix C.
The Board of Directors of Rockdale unanimously recommends that holders of
Rockdale 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 Annual Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Corporate
Secretary of Rockdale an instrument of revocation or a duly executed proxy
bearing a later date or by electing to vote in person at the Annual Meeting.
By Order of the Board of Directors
James R. Simpson
Corporate Secretary
July 9, 1996
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ROCKDALE COMMUNITY BANK REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR ANNUAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD AUGUST 8, 1996 (PAR VALUE $.625)
UP TO 284,867 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 up to 284,867 shares of its common stock, par value
$.625 per share ("Regions Common Stock"), which are issuable to the
stockholders of Rockdale Community Bank ("Rockdale") upon consummation of the
proposed merger (the "Merger") described herein, by which Rockdale will merge
with and into Regions Bank, a wholly owned Georgia banking subsidiary of
Regions, pursuant to the terms of an Amended and Restated Agreement and Plan of
Reorganization, dated as of March 12, 1996, and amended and restated as of May
20, 1996, by and between Regions and Rockdale (the "Agreement") and the related
Plan of Merger, dated as of May 20, 1996, by and between Regions Bank and
Rockdale (the "Plan").
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.
On the effective date of the Merger (the "Effective Date"), except as
described herein, (i) Rockdale will merge with and into Regions Bank pursuant
to the terms of the Plan, (ii) each outstanding share of the $5.00 par value
common stock of Rockdale ("Rockdale Common Stock") (except for shares held by
stockholders who perfect their dissenters' rights of appraisal and shares held
by Rockdale or Regions, other than in a fiduciary capacity or in satisfaction
of debts previously contracted) will be converted into .515116 of a share of
Regions Common Stock, subject to possible adjustment (the "Exchange Ratio"),
and (iii) each holder of Rockdale Common Stock will receive cash in lieu of any
remaining fractional interest. Copies of the Agreement and the Plan are
attached to this Proxy Statement/Prospectus as Appendices A and B,
respectively.
The Exchange Ratio is adjustable upward only if certain conditions are met
concerning the quoted price of Regions Common Stock, and then only with the
concurrence of both Rockdale and Regions. The Board of Directors of Rockdale
would likely invoke the adjustment mechanism in the Agreement if the conditions
permit, in which case Regions must determine whether to proceed with the Merger
at a higher Exchange Ratio. In making this determination, the principal factors
Regions will consider include the projected effect of the Merger on Regions'
pro forma earnings per share and whether Regions' assessment of Rockdale's
earning potential as part of Regions justifies the issuance of a higher number
of Regions' shares. If Regions declines to adjust the Exchange Ratio, Rockdale
may elect to proceed without the adjustment. In making such
(cover page continued)
<PAGE> 4
determination, the Board of Directors of Rockdale will consider whether the
Merger remains in the best interest of Rockdale and its stockholders, despite a
decline in Regions' stock price, and whether the consideration to be received
by the holders of Rockdale Common Stock remains fair from a financial point of
view. Rockdale intends to resolicit approval of the Merger from holders of
Rockdale Common Stock if the value of the consideration to be received by such
holders in the Merger is below $15.45 as of the Determination Date (as defined
in the Agreement.) See "Description of the Transaction--Possible Adjustment of
Exchange Ratio."
This Prospectus also constitutes a Proxy Statement of Rockdale and is being
furnished to the stockholders of Rockdale in connection with the solicitation
of proxies by the Board of Directors of Rockdale for use at its annual meeting
of stockholders, including any adjournment or postponement thereof (the "Annual
Meeting"), to be held on August 8, 1996, to consider and vote on the proposed
Merger and related matters. This Proxy Statement/Prospectus and the
accompanying proxy card are first being mailed to stockholders of Rockdale on
or about July 9, 1996.
The date of this Proxy Statement/Prospectus is July 9, 1996.
<PAGE> 5
AVAILABLE INFORMATION
Regions is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and, in accordance therewith,
files reports, proxy statements, and other information with the Securities and
Exchange Commission (the "SEC"). Copies of such reports, proxy statements, and
other information can be obtained, at prescribed rates, from the SEC by
addressing written requests for such copies to the Public Reference Section at
the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In
addition, such reports, proxy statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. In addition, the SEC maintains a World Wide Web site
on the Internet through which electronic access is available to reports, proxy
statements, information statements, and other information which have been filed
with the SEC electronically. The Internet address of this site is
"http://www.sec.gov."
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 Rockdale. 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
Rockdale 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
Rockdale was supplied by Rockdale.
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 Report on Form 10-Q for the three months ended
March 31, 1996;
3. Regions' Current Report on Form 8-K dated as of March 1, 1996, and
amendment no. 1 thereto filed March 28, 1996;
3
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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 March 1, 1996
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' report on Form 10-C filed March 11, 1996; and
7. 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.
All documents filed by Regions pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the date of the Annual Meeting shall be deemed to be incorporated by
reference in this Proxy Statement/Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed to constitute a part hereof, except as so modified or superseded. 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 by
Regions 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), FROM RONALD C.
JACKSON, STOCKHOLDER ASSISTANCE, REGIONS FINANCIAL CORPORATION, P.O. BOX 1448,
MONTGOMERY, ALABAMA 36102 (TELEPHONE (334) 832-8401). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY AUGUST 1, 1996.
4
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TABLE OF CONTENTS
<TABLE>
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AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Annual Meeting of Rockdale Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reasons for the Merger; Recommendation of Rockdale's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Certain Differences in Stockholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Comparative Market Prices of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Adjustment of Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Treatment of Rockdale Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Resales of the Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Amendment of Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Classified Board of Directors and Absence of Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
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<TABLE>
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Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Limitations on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Stockholder Nominations and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Business Combinations with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SUMMARY PRO FORMA FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Selected Pro Forma Combined Data for Regions and Rockdale . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Selected Pro Forma Combined Data for Regions, Rockdale and Other Acquisitions . . . . . . . . . . . . . . . . . 40
ROCKDALE MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
BUSINESS OF ROCKDALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ELECTION OF DIRECTORS OF ROCKDALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
INDEX TO ROCKDALE FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
APPENDIX A--Amended and Restated Agreement and Plan of Reorganization . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C--Copy of Title 14, Chapter 2, Article 13, of the Georgia Code
Relating to Rights of Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
</TABLE>
6
<PAGE> 9
SUMMARY
The following is a summary of certain information relating to the Annual
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 "Rockdale" refer to those
entities, respectively, and, where the context requires, to those entities and
their respective subsidiaries.
THE PARTIES
Rockdale. Rockdale is a commercial bank organized and existing under the
laws of the state of Georgia, located in Conyers, Georgia. Rockdale provides a
range of retail banking services through its one office in Rockdale County,
Georgia. At March 31, 1996, Rockdale had total consolidated assets of
approximately $47.9 million, total consolidated deposits of approximately $40.7
million, and total consolidated stockholders' equity of approximately $7.0
million. Rockdale's office is located at 1172 Old Salem Road, Conyers,
Georgia, 30207 and its telephone number at such address is (770) 922-6510.
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 353 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of March 31, 1996. At that date, Regions
had total consolidated assets of approximately $17.5 billion, total
consolidated deposits of approximately $14.2 billion, and total consolidated
stockholders' equity of approximately $1.5 billion. Regions is the third
largest bank holding company headquartered in Alabama in terms of assets, based
on March 31, 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 March 31, 1996, Regions has completed the acquisition of one
financial institution in Georgia. Regions also has entered into definitive
agreements to acquire, in addition to Rockdale, six financial institutions, two
of which are located in Georgia and three of which are located in Louisiana,
and one of which is located in Florida (the "Other Pending Acquisitions"). For
information with respect to the Other Pending Acquisitions see "Business of
Regions--Recent Developments," and "Summary Pro Forma Financial Data."
Regions commenced operations in 1971 as a registered bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHC Act").
Regions' principal executive offices are located at 417 North 20th Street,
Birmingham, Alabama 35203, and its telephone number at such address is (205)
326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
ANNUAL MEETING OF ROCKDALE STOCKHOLDERS
The Annual Meeting will be held at 4:00 p.m., local time, on August 8,
1996, at Rockdale's main office, 1172 Old Salem Road, Conyers, Georgia, 30207,
for the purpose of considering and voting on approval of the Agreement and the
election of nine directors. See "The Annual Meeting."
7
<PAGE> 10
RECORD DATE; VOTE REQUIRED
Only holders of record of Rockdale Common Stock at the close of business on
June 26, 1996 (the "Record Date"), will be entitled to vote at the Annual
Meeting. The affirmative vote of at least two-thirds of the Rockdale Common
Stock entitled to vote at the Annual Meeting will be required to approve the
Agreement, not just two-thirds of the votes cast. As of the Record Date, there
were 523,614 shares of Rockdale Common Stock outstanding and entitled to be
voted.
The directors and executive officers of Rockdale and their affiliates
beneficially owned, as of the Record Date, 158,554 shares (or approximately
30.3% of the outstanding shares) of Rockdale Common Stock. Each member of the
Board of Directors of Rockdale has agreed to vote those Rockdale shares over
which such member holds voting authority (other than in a fiduciary capacity)
in favor of the Merger. The directors and executive officers of Regions and
their affiliates beneficially owned, as of the Record Date, no shares of
Rockdale Common Stock. As of that date, neither Rockdale nor Regions held any
shares of Rockdale Common Stock in a fiduciary capacity for others, or as a
result of debts previously contracted. See "The Annual Meeting--Record Date;
Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of Rockdale by Regions pursuant
to the Merger of Rockdale with and into Regions Bank. On the Effective Date,
each share of Rockdale Common Stock then issued and outstanding (excluding any
shares held by stockholders who perfect their dissenters' rights of appraisal
and shares held by Rockdale, Regions, or any Regions subsidiary, in each case,
other than shares held in a fiduciary capacity or in satisfaction of debts
previously contracted) will be converted into .515116 of a share of Regions
Common Stock, subject to possible adjustment. Under no circumstances would the
Exchange Ratio be less than .515116 of a share of Regions Common Stock for each
share of Rockdale Common Stock. The possible upward adjustment of the Exchange
Ratio depends on the average closing price of Regions Common Stock for a
specified period and other factors, and is not subject to a contractual limit.
See "Description of the Transaction--Possible Adjustment of 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 Rockdale 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."
DISSENTING STOCKHOLDERS
Holders of Rockdale Common Stock entitled to vote on approval of the
Agreement and the Plan have the right to dissent from the Merger and, upon
consummation of the Merger and the satisfaction of certain specified procedures
and conditions, to receive fair value of such holders' shares of Rockdale
Common Stock in cash in accordance with the applicable provisions of the
Financial Institutions Code of Georgia and the Georgia Business Corporation
Code (the "Georgia Act"). The procedures to be followed by dissenting
stockholders are summarized under "Description of the Transaction--Dissenting
Stockholders," and the applicable provisions of the Georgia Act are reproduced
as Appendix C.
REASONS FOR THE MERGER; RECOMMENDATION OF ROCKDALE'S BOARD OF DIRECTORS
Rockdale's Board of Directors has unanimously approved the Merger, the
Agreement and the Plan and has determined that the Merger is fair to, and in
the best interests of, Rockdale and its stockholders. Accordingly, Rockdale's
Board unanimously recommends that Rockdale's stockholders vote FOR approval of
the Agreement and the Plan. EACH MEMBER OF THE BOARD OF DIRECTORS OF ROCKDALE
HAS AGREED TO VOTE THOSE SHARES OF ROCKDALE COMMON STOCK OVER WHICH SUCH MEMBER
HAS VOTING AUTHORITY (OTHER THAN IN A FIDUCIARY CAPACITY) IN FAVOR OF THE
AGREEMENT AND THE PLAN. In approving the Merger, Rockdale's
8
<PAGE> 11
directors considered Rockdale'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. See "Description of the
Transaction--Background of and Reasons for the Merger."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Certificate of Merger is issued by with the Georgia Secretary of State and
becomes effective. Unless otherwise agreed upon by Regions and Rockdale, and
subject to the conditions to the obligations of the parties to effect the
Merger, the parties will use their reasonable efforts to cause the Effective
Date to occur on the first business day following the last to occur of: (i) the
effective date (including the expiration of any applicable waiting period) of
the last federal or state regulatory approval required for the Merger and (ii)
the date on which the Agreement is approved by the requisite vote of Rockdale
stockholders; or such later date within 30 days thereof as specified by
Regions. The parties expect that all conditions to consummation of the Merger
will be satisfied so that the Merger can be consummated during the third
quarter of 1996, although there can be no assurance as to whether or when the
Merger will occur. See "Description of the Transaction-- Effective Date of the
Merger," "--Conditions to Consummation of the Merger," and "--Waiver,
Amendment, and Termination of the Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions (the "Exchange Agent"), to mail to the former stockholders
of Rockdale a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of Rockdale
Common Stock for certificates representing shares of Regions Common Stock.
ROCKDALE 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 Federal Deposit Insurance
Corporation (the "FDIC") 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 FDIC 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 Rockdale stockholders, receipt of
an opinion of counsel 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 action of the Boards of Directors of both
Rockdale and Regions, or by action of the Board of Directors of either company
under certain circumstances, including if the Merger is not consummated by
December 31, 1996, unless the failure to consummate by such time is due to a
breach of the Agreement by the party seeking to terminate. If for any reason
the Merger is not consummated, Rockdale will continue to operate as a
commercial bank under its present management. See "Description of the
Transaction--Waiver, Amendment, and Termination of the Agreement."
9
<PAGE> 12
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of Rockdale's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of
Rockdale generally. Those interests relate to, among other things, provisions
in the Agreement regarding indemnification and eligibility for certain Regions
employee benefits, and treatment of outstanding options to acquire Rockdale
Common Stock. See "Description of the Transaction--Interests of Certain Persons
in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned on the receipt of an opinion of
counsel to the effect that, among other things: (i) the Merger will constitute
a reorganization within of Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code"); the exchange in the Merger of Rockdale Common Stock
for Regions Common Stock will not give rise to gain or loss to the stockholders
of Rockdale with respect to such exchange, except to the extent of any cash
received; (iii) the exchange or conversion by the stockholders of Rockdale of
their Rockdale Options for options with respect to Regions Common Stock, as
contemplated by Section 3.6 of the Agreement, will not give rise to any gain or
loss to such stockholders with respect to such exchange; (iv) each of Rockdale,
Regions, and Regions Bank will be a party to the reorganization within the
meaning of Section 368(b) of the Code; and (v) 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,
ROCKDALE 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, Rockdale stockholders, whose rights are governed by
the Financial Institutions Code of Georgia (or Georgia banking laws), the
Georgia Act, and by Rockdale'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 Rockdale
stockholders in certain important respects, some of which constitute additional
antitakeover provisions provided for in Regions' governing documents. See
"Effect of the Merger on Rights of Stockholders."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock is traded in the over-the-counter market and quoted on
the Nasdaq National Market. Rockdale Common Stock is not traded in any
established market. The following table sets forth, as of the indicated dates,
(i) the last sale price of Regions Common Stock, (ii) the sale price in the
last known transaction of purchase and sale of Rockdale Common Stock, which
occurred on March 1, 1996, and (iii) the equivalent per share price (as
explained below) of Rockdale Common Stock. The indicated dates of March 12,
1996, and July 5, 1996 represent, respectively, the last trading day
immediately preceding public announcement of the proposed acquisition of
Rockdale by Regions and the latest practicable date prior to the mailing of
this Proxy Statement/Prospectus.
10
<PAGE> 13
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS ROCKDALE OF ROCKDALE
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
March 12, 1996 $ 45.50 $ 18.00 $ 23.44
July 5, 1996 46.75 18.00 24.08
</TABLE>
The equivalent per share price of Rockdale 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 .515116. Stockholders are advised to
obtain current market quotations for Regions Common Stock and Rockdale 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 Rockdale, (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 Rockdale Common Stock, giving effect to the Merger, (iv) a pro
forma combined basis per share of Regions Common Stock, giving effect to the
Merger and the Other Acquisitions (as defined under "Business of
Regions--Recent Developments"), and (v) as appropriate, an equivalent pro forma
basis per share of Rockdale Common Stock, giving effect to the Merger and the
Other Acquisitions. The Regions and Rockdale pro forma combined information
and the Rockdale pro forma Merger equivalent information give effect to the
Merger on a purchase accounting basis and assume an Exchange Ratio of .515116.
The Regions, Rockdale, and Other Acquisitions pro forma combined information
and the Rockdale pro forma Merger and Other Acquisitions equivalent information
give effect to (i) the Merger as described in the preceding sentence and (ii)
the Other Acquisitions as described under "Summary Pro Forma Financial
Data--Selected Pro Forma Combined Data for Regions, Rockdale, 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 and the Other Acquisitions
been consummated at the dates or during the periods indicated, nor are they
necessarily indicative of future results of operations or combined financial
position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements and other
financial information of Regions and Rockdale, 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," "--Selected Financial Data," "Summary Pro Forma Financial Data,"
and "Index to Rockdale Financial Statements."
11
<PAGE> 14
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
---------------------- ----------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions and
Rockdale historical)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . $.85 $ .81 $ 3.21 $ 3.10 $ 2.81
Rockdale historical . . . . . . . . . . . . . .39 .38 1.65 1.19 .77
Regions and Rockdale pro forma combined(1) . . .85 3.21
Rockdale pro forma Merger equivalent(2) . . . . .44 1.65
Regions, Rockdale, and Other Acquisitions
pro forma combined(3) . . . . . . . . . . . . .85 3.18
Rockdale pro forma Merger and Other
Acquisitions equivalent(2) . . . . . . . . . .44 1.64
DIVIDENDS DECLARED PER COMMON
SHARE
Regions historical . . . . . . . . . . . . . . $.35 $ .33 $ 1.32 $ 1.20 $ 1.04
Rockdale historical . . . . . . . . . . . . . . .30 .25 .60 .38 .15
Rockdale pro forma Merger equivalent(4) . . . . .18 .17 .68 .62 .54
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions historical . . . . . . . . . . . . . . $23.84 $ 21.92 $ 23.38 $ 21.26 $ 19.85
Rockdale historical. . . . . . . . . . . . . . 13.36 11.93 13.22 11.34 11.56
Regions and Rockdale pro forma combined(1) . . 23.85
Rockdale pro forma Merger equivalent(2) . . . . 12.29
Regions, Rockdale, and Other Acquisitions
pro forma combined(3) . . . . . . . . . . . . 23.90
Rockdale pro forma Merger and Other
Acquisitions equivalent(2) . . . . . . . . . 12.31
</TABLE>
_____________________
(1) Represents the combined results of Regions and Rockdale as if the Merger
were consummated on January 1, 1995 (or March 31, 1996 in the case of Book
Value Per Common Share data), and were accounted for as a purchase.
(2) Represents pro forma combined information multiplied by the Exchange
Ratio of .515116 of a share of Regions Common Stock for each share of
Rockdale Common Stock.
(3) Represents the pro forma combined information of Regions, Rockdale, and the
Other Acquisitions as if the Merger were consummated at the time and
pursuant to the accounting basis described in note (1) and the Other
Acquisitions were consummated at the time and pursuant to the accounting
bases described under "Summary Pro Forma Financial Data-- Selected Pro
Forma Combined Data for Regions, Rockdale, and Other Acquisitions."
(4) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of .515116 of a share of Regions Common Stock for each
share of Rockdale Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and Rockdale. 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 Rockdale
incorporated by reference or included herein. Interim unaudited data for the
three months ended March 31, 1996 and 1995 of Regions and Rockdale reflect, in
the opinion of the respective managements of Regions and Rockdale, all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such data. Results for the three months ended March 31,
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."
12
<PAGE> 15
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, 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 . . . . $ 329,005 $ 299,945 $ 1,259,600 $ 991,693 $ 746,544 $ 737,094 $ 778,848
Total interest expense . . . 165,119 147,415 635,336 436,157 296,195 324,420 428,083
Net interest income . . . . . 163,886 152,530 624,264 555,536 450,349 412,674 350,765
Provision for loan losses . . 6,874 5,050 30,271 20,580 24,695 39,367 34,879
Net interest income after
loan loss provision . . 157,012 147,480 593,993 534,956 425,654 373,307 315,886
Total noninterest income excluding
security gains (losses) 55,551 43,912 187,830 171,705 169,318 148,007 129,232
Security gains (losses) . . . 131 7 (424) 344 831 2,353 (89)
Total noninterest expense . . 135,008 116,229 487,461 442,376 383,130 343,279 302,795
Income tax expense . . . . . 24,892 24,920 96,109 84,109 66,169 56,405 41,502
Net income . . . . . . . . . 52,794 50,250 197,829 180,520 146,504 123,983 100,732
PER SHARE DATA:
Net income . . . . . . . . . $ .85 $ .81 $ 3.21 $ 3.10 $ 2.81 $ 2.42 $ 2.01
Cash dividends . . . . . . . .35 .33 1.32 1.20 1.04 . 91 .87
Book value . . . . . . . . . 23.84 21.92 23.38 21.26 19.85 17.13 15.47
OTHER INFORMATION:
Average number of shares
outstanding . . . . . . . . 61,985 61,907 61,670 58,206 52,153 51,192 50,192
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . $17,531,422 $16,200,279 $16,851,774 $15,810,076 $13,163,161 $10,457,676 $9,188,048
Securities . . . . . . . . . 4,120,997 3,296,536 3,863,781 3,346,291 2,993,417 2,255,732 2,076,199
Loans, net of unearned income 11,864,356 11,412,740 11,542,311 10,855,195 8,430,931 6,657,557 5,726,818
Total deposits . . . . . . . 14,182,607 13,121,692 13,497,612 12,575,593 11,025,376 8,923,801 8,047,731
Long-term debt . . . . . . . 501,520 606,662 632,019 599,476 525,820 151,460 24,461
Stockholders' equity . . . . 1,482,790 1,358,964 1,429,253 1,286,322 1,106,361 886,116 779,002
PERFORMANCE RATIOS:
Return on average assets (1) 1.24% 1.28% 1.21% 1.27% 1.38% 1.29% 1.15%
Return on average stockholders'
equity (1) . . . . . . . 14.51 15.38 14.29 15.26 15.76 15.04 13.58
Net interest margin (1) . . . 4.22 4.31 4.21 4.37 4.77 4.85 4.58
Efficiency (2) . . . . . . . 60.49 57.94 58.79 59.44 60.23 59.62 60.92
Dividend payout . . . . . . . 41.18 40.74 41.12 38.71 37.01 37.60 43.28
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1) .06% .03% .17% .19% .23% .36% .45%
Problem assets to net loans and
other real estate (3) . .61 .71 .59 .75 1.12 1.29 1.62
Nonperforming assets to net loans
and other real estate (4) .70 .76 .68 .80 1.28 1.39 1.74
Allowance for loan losses to loans,
net of unearned income . 1.41 1.34 1.38 1.32 1.48 1.51 1.34
Allowance for loan losses to
nonperforming assets (4) 200.73 175.18 202.55 164.48 115.88 107.97 76.76
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 8.56% 8.31% 8.44% 8.35% 8.76% 8.60% 8.49%
Average loans to average deposits 84.75 86.68 86.12 79.90 76.41 71.59 72.34
Tier 1 risk-based capital (5) 11.34 10.66 11.14 10.69 11.13 11.68 11.85
Total risk-based capital (5) 14.30 14.23 14.61 14.29 13.48 14.44 13.19
Tier 1 leverage (5) . . . . . 7.81 7.43 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.
13
<PAGE> 16
Selected Historical Financial Data of Rockdale
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, 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 . . . . $ 923 $ 850 $ 3,604 $ 2,870 $ 2,424 $ 2,281 $ 2,445
Total interest expense . . . 362 284 1,306 986 864 957 1,309
Net interest income . . . . . 561 566 2,298 1,884 1,560 1,324 1,136
Provision for loan losses . . -- 10 20 50 110 126 166
Net interest income after
loan loss provision . . 561 556 2,278 1,834 1,450 1,198 970
Total noninterest income
excluding security gains (losses) 58 59 197 232 238 201 175
Security gains (losses) . . . -- -- -- 38 -- 1 --
Total noninterest expense . . 297 300 1,100 1,123 1,069 1,071 923
Income tax expense . . . . . 116 117 511 364 223 105 69
Net income . . . . . . . . . $ 206 198 864 617 396 224 153
PER SHARE DATA:
Net income . . . . . . . . . $ .39 $ .38 $ 1.65 $ 1.19 $ .77 $ .43 $ .30
Cash dividends . . . . . . . .30 .25 .60 .38 .15 -- --
Book value . . . . . . . . . 13.36 11.93 13.22 11.34 11.56 10.95 10.51
OTHER INFORMATION:
Average number of shares
outstanding . . . . . . . 524 519 520 517 517 517 517
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . $ 47,894 $ 40,857 $ 46,221 $ 38,776 $ 36,838 $ 31,947 $ 30,853
Securities held to maturity (1) 5,718 2,416 5,914 2,421 10,548 8,771 10,028
Securities available for sale 7,647 9,927 8,778 9,255 -- -- --
Loans, net of unearned income 25,786 24,164 23,912 22,936 21,244 17,350 13,183
Total deposits . . . . . . . 40,657 34,432 38,957 32,707 30,639 26,125 25,207
Stockholders' equity . . . . 6,993 6,204 6,921 5,865 5,980 5,661 5,437
PERFORMANCE RATIOS:
Return on average assets (2) 1.72% 1.94% 2.03% 1.59% 1.16% .71% .54%
Return on average stockholders'
equity (2) . . . . . . . 11.78 12.77 12.48 10.52 6.62 3.96 2.81
Net interest margin (2) . . . 5.21 6.05 5.55 5.28 4.61 4.63 4.15
Efficiency (3) . . . . . . . 48 48 44 53 59 70 71
Dividend payout . . . . . . . 76.92 65.79 36.36 31.93 19.48 -- --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (2) --% --% --% .09% --% .40% 1.06%
Nonperforming assets to net loans
and other real estate (4) 1.31 .54 1.14 1.09 1.04 4.37 5.64
Allowance for loan losses to loans,
net of unearned income . 1.66 1.73 1.79 1.77 1.77 1.53 1.55
Allowance for loan losses to
nonperforming assets (4) 128.83 325.78 159.33 164.37 173.27 .36 .28
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . 14.60% 15.18% 14.97% 15.12% 16.23% 17.72% 17.61%
Average loans to average
deposits . . . . . . . . . 63.40 70.20 61.40 70.10 69.30 66.40 52.40
Tier 1 risk-based capital (5) 20.34 22.83 24.04 24.98 23.87 29.75 27.82
Total risk-based capital (5) 21.17 23.84 25.29 26.23 25.12 31.00 30.95
Tier 1 leverage (5) . . . . . 14.75 15.91 15.75 15.99 16.23 17.72 17.77
</TABLE>
__________________________
(1) Prior to adoption of SFAS 115, "Accounting for Certain Investments in
Debt and Equity Securities" in 1994, all investment securities were
accounted for on a held to maturity basis.
(2) Interim period ratios are annualized.
(3) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains
(losses) from security transactions.
(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> 17
THE ANNUAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of
Rockdale Common Stock in connection with the solicitation by the Rockdale Board
of Directors of proxies for use at the Annual Meeting, at which Rockdale
stockholders will be asked to vote upon a proposal to approve the Agreement and
the Plan. The Annual Meeting will be held at 4:00 p.m., local time, on August
8, 1996, at the main office of Rockdale, located at 1172 Old Salem Road,
Conyers, Georgia, 30207.
Rockdale stockholders are requested promptly to sign, date, and return the
accompanying proxy card to Rockdale in the enclosed postage-paid, addressed
envelope. A stockholder's failure to return a properly executed proxy card or
to vote at the Annual Meeting will have the same effect as a vote against the
Agreement and the Plan.
Any Rockdale 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 Rockdale a signed proxy card bearing a later date, provided that such notice
or proxy card is actually received by Rockdale before the vote of stockholders
or in open meeting prior to the taking of the stockholder vote at the Annual
Meeting. Any notice of revocation should be sent to Rockdale Community Bank,
1172 Old Salem Road, Conyers, Georgia, 30207, Attention: James R. Simpson,
Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Corporate Secretary of
Rockdale. The shares of Rockdale Common Stock represented by properly executed
proxies received at or prior to the Annual Meeting and not subsequently revoked
will be voted as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN,
SHARES REPRESENTED BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE
AGREEMENT AND THE PLAN AND FOR APPROVAL OF EACH OF THE NOMINEES FOR DIRECTORS
AND IN THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY
MAY COME BEFORE THE ANNUAL MEETING. IF NECESSARY, AND UNLESS CONTRARY
INSTRUCTIONS ARE GIVEN, THE PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL
TO ADJOURN THE ANNUAL MEETING TO PERMIT FURTHER SOLICITATION OF PROXIES IN
ORDER TO OBTAIN SUFFICIENT VOTES TO APPROVE THE AGREEMENT. As of the date of
this Proxy Statement/Prospectus, Rockdale is unaware of any other matter to be
presented at the Annual Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
Rockdale, 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.
Rockdale stockholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
Rockdale's Board of Directors has established the close of business on
June 26, 1996, as the Record Date for determining the Rockdale stockholders
entitled to notice of and to vote at the Annual Meeting. Only Rockdale
stockholders of record as of the Record Date will be entitled to vote at the
Annual Meeting. Approval of the Agreement and the Plan will require the
affirmative vote of the holders of at least two-thirds of the Rockdale Common
Stock entitled to vote at the Annual Meeting, and not just two-thirds of the
votes cast. Therefore, an abstention or failure to return a properly executed
proxy card will have the same effect as a vote against the Merger, as will a
broker's submitting a proxy card without exercising discretionary voting
authority with respect to the Merger. As of the Record Date, there were
approximately 420 holders of 523,614 shares of Rockdale Common Stock
outstanding and entitled to vote at the Annual Meeting, with each share
entitled to one vote. For information as to persons known by Rockdale to
beneficially own more
15
<PAGE> 18
than 5.0% of the outstanding shares of Rockdale Common Stock as of the Record
Date, see "Election of Directors of Rockdale--Information as to Nominees."
The presence, in person or by proxy, of a majority of the outstanding
shares of Rockdale Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Annual Meeting. For these purposes,
shares of Rockdale Common Stock that are present, or represented by proxy, at
the Annual Meeting will be counted for quorum purposes regardless of whether
the holder of the shares or proxy fails to vote on the Merger or whether a
broker with discretionary authority fails to exercise its discretionary voting
authority with respect to the Merger. Once a quorum is established, approval of
the Agreement and the Plan requires the affirmative vote of the holders of at
least two-thirds of the Rockdale Common Stock entitled to vote at the Annual
Meeting. In the election of directors, the nine nominees receiving the largest
number of votes are elected.
The directors and executive officers of Rockdale and their affiliates
beneficially owned, as of the Record Date, 158,554 shares (or approximately
30.3% of the outstanding shares) of Rockdale Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of
the Record Date, no shares of Rockdale Common Stock. As of that date, no
subsidiary of either Rockdale or Regions held any shares of Rockdale Common
Stock in a fiduciary capacity for others, or as the result of debts previously
contracted.
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 and the Plan, which
are attached as Appendices A and B, respectively, to this Proxy
Statement/Prospectus and are incorporated herein by reference. All stockholders
are urged to read the Appendices in their entirety.
GENERAL
Each share of Rockdale Common Stock (excluding any shares held by Rockdale,
Regions, or any Regions subsidiary, other than shares held in a fiduciary
capacity or in satisfaction of debts previously contracted, and shares held by
stockholders who perfect their dissenters' rights of appraisal) issued and
outstanding at the Effective Date will be converted into .515116 of a share of
Regions Common Stock, subject to possible adjustment as described below under
the caption "-- Possible Adjustment of Exchange Ratio." 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 a Rockdale 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.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
Under certain circumstances, the Exchange Ratio could be adjusted pursuant
to certain provisions in the Agreement; under no circumstances would the
Exchange Ratio be less than .515116 of a share of Regions Common Stock for each
share of Rockdale Common Stock. An adjustment to the Exchange Ratio could occur
only if Rockdale's Board of Directors elects by majority vote to terminate the
Agreement pursuant to the provisions of the Agreement described below, and if
Regions then elects to avoid termination by adjusting the
16
<PAGE> 19
Exchange Ratio. For purposes of the description of these provisions and their
operation, the following definitions apply.
"Determination Date" means the date of the Annual Meeting. "Average Closing
Price" means the average closing sales price of Regions Common Stock as
reported on the Nasdaq National Market (as reported by The Wall Street Journal,
or, if not reported thereby, by another authoritative source selected by
Regions) for the ten consecutive full trading days in which such shares are
traded on the Nasdaq National Market, ending on the Determination Date. "Index
Ratio" means the quotient obtained by dividing the weighted average of the
closing prices (the "Index Price") of 20 designated bank holding companies (the
"Index Group") on the Determination Date by the Index Price on March 12, 1996,
less .20. "Regions Ratio" means the quotient obtained by dividing the Average
Closing Price by $42.125.
If both (i) the Average Closing Price is less than $33.70, and (ii) the
Regions Ratio is less than the Index Ratio, then Rockdale may elect not to
effect the Merger at the original Exchange Ratio of .515116.
In such case, Rockdale has the right to terminate the Agreement during the
ten-day period commencing two days after the Determination Date by giving
Regions prompt notice of that decision. Rockdale may withdraw its termination
notice at any time during that ten-day period. During the five-day period after
receipt of such notice, Regions has the option to increase the consideration
payable to Rockdale stockholders by increasing the Exchange Ratio to equal the
lesser of (i) the quotient obtained by dividing (1) the product of $33.70 and
the Exchange Ratio (as then in effect) by (2) the Average Closing Price, and
(ii) the quotient obtained by dividing (1) the product of the Index Ratio and
the Exchange Ratio (as then in effect) by (2) the Regions Ratio. REGIONS IS
UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO. If Regions elects to adjust
the Exchange Ratio, it must give Rockdale prompt notice of that election and of
the adjusted Exchange Ratio, whereupon no termination shall have occurred
pursuant to the Agreement and the Agreement shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have been so
modified).
These conditions reflect the parties' agreement that Rockdale's
stockholders will assume the risk of declines in the value of Regions Common
Stock to $33.70 per share. If the value of Regions Common Stock were to decline
to an amount below $33.70 per share but the price of Regions Common Stock did
not decline more than 20% in comparison to the stock prices of the group of
comparable bank holding company stocks (the Index Group referenced above), then
Rockdale's stockholders would continue to assume the risk of decline in the
value of Regions Common Stock. Rockdale has the right to terminate the
Agreement only when the price of Regions Common Stock declines to an amount
below $33.70 per share and such decline exceeds by more than 20% the decline in
value for the group of comparable bank holding companies over the same period.
If the Average Closing Price is less than $33.70 per share and the Regions
Ratio is less than the Index Ratio, the Board of Directors of Rockdale would
likely elect to terminate the Agreement so as to require Regions to consider
increasing the Exchange Ratio. Regions would then determine whether to proceed
with the Merger at the higher Exchange Ratio. In making this determination, the
principal factors Regions will consider include the projected effect of the
Merger on Regions' pro forma earnings per share and whether Regions' assessment
of Rockdale's earning potential as part of Regions justifies the issuance of a
higher number of Regions' shares. If Regions declines to adjust the Exchange
Ratio, Rockdale may elect to proceed without the adjustment, provided it does
so within 12 days of the Determination Date. In making such determination, the
Board of Directors of Rockdale will consider whether the Merger remains in the
best interest of Rockdale and its stockholders, despite a decline in Regions'
stock price, and whether the consideration to be received by the holders of
Rockdale Common Stock remains fair from a financial point of view.
Rockdale and Regions concur that Rockdale will resolicit approval of the
Merger from holders of Rockdale Common Stock if (i) Rockdale is entitled to and
gives Regions notice of termination and Regions
17
<PAGE> 20
declines to adjust the Exchange Ratio, (ii) the Board of Directors of Rockdale
elects to proceed with the Merger without an adjustment to the Exchange Ratio,
and (iii) the value of .515116 of a share of Regions Common Stock on the
Determination Date is less that $15.45 (corresponding to an Average Closing
Price of $30.00.
The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the numerical examples, the Exchange Ratio is
.515116 and the Index Price is, as of March 12, 1996, $100.)
(a) The first scenario occurs if the Average Closing Price is not less than
$33.70. Under this scenario, regardless of any comparison between the Regions
Ratio and the Index Ratio, there would be no right on the part of Rockdale to
terminate the Agreement and therefore no potential adjustment to the Exchange
Ratio, even though the consideration to be received by Rockdale stockholders
would have fallen from a pro forma $22.02 per share to as little as pro forma
$17.36 per share.
(b) The second scenario occurs if the Average Closing Price is less than
$33.70, but does not decline by more than 20% than the decline in the Index
Group. Under this scenario, there again would be no right on the part of
Rockdale to terminate the Agreement and therefore no potential adjustment to
the Exchange Ratio, even though the consideration received by Rockdale
stockholders would have fallen from a pro forma $22.02 per share to something
less than pro forma $17.36 per share.
(c) The third scenario arises where the Average Closing Price is below
$33.70 and the Regions Ratio is below the Index Ratio (i.e., Regions' stock
price has declined by more than 20% relative to the price of shares of the
Index Group). Under this scenario, Rockdale would have the right to terminate
the Agreement and Regions would have the right, but not the obligation, to
remove such termination right by adjusting the Exchange Ratio. In this case,
the potential adjustment in the Exchange Ratio is designed to ensure that the
Rockdale stockholders receive shares of Regions Common Stock having a value
(based upon the Average Closing Price) that corresponds to not more than either
a decline in the Regions Common Stock price to $33.70 per share or a 20%
decline from the stock performance reflected by the Index Group.
For example, if the Average Closing Price were $30.00, and the Index Price
on the Determination Date were $93, the Regions Ratio would be .712 and would
be below the Index Ratio (.73, or .93 - .20). In such a case, Rockdale could
terminate the Agreement unless Regions elected within five days to increase the
Exchange Ratio to equal .5281, which represents the lesser of (a) .578647 [the
result of dividing $17.359409 (the product of $33.70 and the .515116 Exchange
Ratio) by the Average Closing Price ($30.00)] and (b) .5281 [the result of
dividing the Index Ratio (.73) times .515116 by the Regions Ratio (.712)].
Based upon the assumed $30.00 Average Closing Price, the new Exchange Ratio
would represent a value to the Rockdale stockholders of pro forma $15.84 per
share.
If the Average Closing Price were $30.00, and the ending Index Price were
$110, the Regions Ratio would be .712 and would be below the Index Ratio (.90,
or 1.10 - .20). In such a case, Rockdale could terminate the Agreement unless
Regions elected within five days to increase the Exchange Ratio to equal
.578647, which represents the lesser of (a) .578647 [the result of dividing
$17.359409 (the product of $33.70 and the .515116 Exchange Ratio) by the
Average Closing Price ($30.00)] and (b).651130 [the result of dividing the
Index Ratio (.9) times .515116 by the Regions Ratio (.712)]. Based upon the
assumed $30.00 Average Closing Price, the new Exchange Ratio would represent a
value to the Rockdale stockholders of pro forma $17.36 per share.
Rockdale stockholders should be aware that the actual market value of a
share of Regions Common Stock at the Effective Date and at the time
certificates for those shares are delivered following surrender and exchange of
certificates for shares of Rockdale Common Stock may be more or less than the
Average Closing Price. Rockdale stockholders are urged to obtain information on
the trading value of Regions Common Stock that is more recent than that
provided in this Proxy Statement/Prospectus. See "Comparative Market Prices and
Dividends."
18
<PAGE> 21
TREATMENT OF ROCKDALE OPTIONS
The Agreement provides that all rights with respect to Rockdale Common
Stock pursuant to stock options or stock appreciation rights granted by
Rockdale under its stock option plans which are outstanding at the Effective
Date, whether or not then exercisable, will be converted into and will become
rights with respect to Regions Common Stock, and Regions will assume each of
such options in accordance with the terms of the plan under which it was issued
and the agreement by which it is evidenced. After the Effective Date, those
options will become options to purchase Regions Common Stock, with the exercise
price and number of shares of Regions Common Stock purchasable thereunder
adjusted to reflect the Exchange Ratio. The executive officers or directors of
Rockdale that as of the date of this Proxy Statement/Prospectus hold
outstanding options are Charles East, James Bradley Henry, Jr., and Mollye D.
Parish, who hold exercisable options to purchase 5,400, 3,600, and 3,000 shares
of Rockdale Common Stock, respectively.
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.
Rockdale 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 Rockdale could obtain a fair price for its
stockholders. Accordingly, Rockdale and Regions entered into negotiations which
culminated in the Agreement.
For several years, management and the Board of Directors of Rockdale had
been considering possible future courses of action in light of Rockdale's
strong capital position. Among the general possibilities under consideration
were increasing the distributions to Rockdale's stockholders, by dividends or
special distributions, and merging Rockdale with a larger financial
institution.
In 1995 management representatives of Rockdale held preliminary discussions
with representatives of several financial institutions to explore the
possibilities that might be available in terms of a merger with another
institution. These discussions did not reach the level of active negotiations.
One of the institutions with which Rockdale had contact of this nature was
First National Bancorp of Gainesville, Georgia, whose President, Pete Miller,
had several exploratory discussions with Rockdale President Charles East in
mid-1995. Neither Rockdale nor First National Bancorp pursued further a
possible merger transaction at that time.
In October 1995, First National Bancorp entered into a definitive agreement
with Regions under which First National Bancorp was merged with Regions on
March 1, 1996. Early in 1996, Mr. Miller arranged for communications between
Regions and Rockdale concerning a possible acquisition of Rockdale by Regions.
Following meetings between Regions representatives and Rockdale representatives
in Rockdale's office and in Regions' office in Birmingham, Alabama, and the
exchange of certain financial and other information, Regions made a concrete
proposal for Regions' acquisition of Rockdale. In its deliberations the Board
of Directors of Rockdale found the proposal satisfactory. The definitive terms
of the Agreement were negotiated and the Agreement was approved by the Boards
of Directors of both Rockdale and Regions, and executed as of March 12, 1996.
ROCKDALE'S REASONS FOR THE MERGER. In approving the Merger, the directors
of Rockdale considered a number of factors. Without assigning any relative or
specific weights to the factors, the Rockdale Board of Directors considered the
following material factors:
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<PAGE> 22
(a) the information presented to the directors by the management of
Rockdale concerning the business, operations, earnings, asset quality, and
financial condition of Rockdale, 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 Rockdale Common Stock, the partial protection against a decline in the
market value of Regions Common Stock, and the participation in any appreciation
in value of Regions Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of Rockdale Common Stock for Regions Common Stock
for federal and state income tax purposes; and
(d) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay.
The terms of the Merger were the result of arms-length negotiations between
representatives of Rockdale and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of Rockdale
unanimously approved the Merger as being in the best interests of Rockdale and
its stockholders. Each member of the Board of Directors of Rockdale has agreed
to vote those shares of Rockdale Common Stock over which such member has voting
authority, other than in a fiduciary capacity, in favor of the Merger.
Rockdale's Board of Directors unanimously recommends that Rockdale
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 Rockdale 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 Rockdale 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 Rockdale; and
(b) a variety of factors affecting and relating to the overall strategic
focus of Regions, including Regions' desire to expand into markets in the
general vicinity of its core markets.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Certificate of Merger relating to the Merger is issued by the Georgia Secretary
of State and becomes effective. Unless otherwise agreed upon by Regions and
Rockdale, and subject to the conditions to the obligations of the parties to
effect the Merger, the parties will use their reasonable efforts to cause the
Effective Date to occur on the first business day following the last to occur
of: (i) the effective date (including the expiration of any applicable waiting
period) of the last federal or state regulatory approval required for the
Merger and (ii) the date on which the Agreement and the Plan are approved by
the requisite vote of Rockdale stockholders; or such later date within 30 days
thereof as specified by Regions.
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. Regions and Rockdale anticipate that
20
<PAGE> 23
all conditions to consummation of the Merger will be satisfied so that the
Merger can be consummated during the third quarter of 1996. However, delays in
the consummation of the Merger could occur.
The Board of Directors of either Regions or Rockdale generally may
terminate the Agreement if the Merger is not consummated by December 31, 1996,
unless the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See "--Conditions to Consummation
of the Merger" and "--Waiver, Amendment, and Termination of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions to mail to the former stockholders of Rockdale a form
letter of transmittal, together with instructions for the exchange of such
stockholders' certificates representing shares of Rockdale Common Stock for
certificates representing shares of Regions Common Stock.
ROCKDALE 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 Rockdale Common Stock, together with a
properly completed letter of transmittal, there will be issued and mailed to
each holder of Rockdale 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, Rockdale 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 Rockdale Common Stock has been converted, regardless of whether such
stockholders have surrendered their Rockdale 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
Rockdale certificate until the holder duly surrenders such certificate. Upon
such surrender, all undelivered dividends and other distributions and, if
applicable, a check for the amount to be paid in lieu of any fractional share
interest will be delivered to such stockholder, in each case without interest.
After the Effective Date, there will be no transfers of shares of Rockdale
Common Stock on Rockdale's stock transfer books. If certificates representing
shares of Rockdale Common Stock are presented for transfer after the Effective
Date, they will be canceled and exchanged for the shares of Regions Common
Stock and a check for the amount due in lieu of fractional shares, if any,
deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) approval of the Merger from the FDIC and the Georgia Department without
any conditions or restrictions that would, in the reasonable good faith
judgment of Regions' Board of Directors, so materially adversely impact the
economic benefits of the transactions contemplated by the Agreement as to
render inadvisable the consummation of the Merger, and the expiration of all
applicable waiting periods;
(b) the approval of the Agreement and the Plan by the holders of at least
two-thirds of the Rockdale Common Stock issued and outstanding;
(c) the absence of any action by any court or governmental authority
restraining or prohibiting the Merger;
(d) the receipt of a satisfactory opinion of counsel that the Merger
qualifies for federal income tax treatment as a reorganization under Section
368(a) of the Code and that the exchange of Rockdale Common Stock for Regions
Common Stock will not give rise to recognition of gain or loss to Rockdale
stockholders, except to the extent of any cash received; and
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(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 Rockdale of opinions of their respective
counsel and certificates executed by their duly authorized officers as to
compliance with the Agreement and (ii) as of the Effective Date, the accuracy
of certain representations and warranties and the compliance in all material
respects with the agreements and covenants of each party.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. 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 Rockdale 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 FDIC. In granting its
approval, the FDIC 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 FDIC 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 FDIC 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 Bank Merger Act, the Merger may not be
consummated until the 30th day, which may be shortened to the 15th day,
following the date of FDIC approval, during which time the United States
Department of Justice may challenge the transaction on antitrust grounds. The
commencement of any antitrust action would stay the effectiveness of the FDIC'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 FDIC.
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
Rockdale approved by their respective Boards of Directors; provided, however,
that after approval by the Rockdale stockholders, no amendment decreasing the
consideration to be received by Rockdale stockholders may be made without the
further approval of such stockholders.
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date, either before or after approval by Rockdale
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required regulatory approval, provided that the terminating party is not then
in material breach of any provision of the Agreement, or by the Board of
Directors of Regions if any required regulatory approval is conditioned or
restricted in the manner described under " -- Conditions to Consummation of the
Merger" above;
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(b) by the Board of Directors of either party, if the holders of at least
two-thirds of the shares of Rockdale Common Stock entitled to vote shall not
have approved the Agreement and the Plan, provided that the terminating party
is not then in material breach of any provision of the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and Rockdale;
(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 December 31, 1996, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's breach
of the Agreement.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination will not relieve the parties from the
consequences of any uncured willful breach of the Agreement giving rise to such
termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Rockdale 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 and to
consummate the Merger, 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 Rockdale or Regions prior to consummation of the Merger,
as described below.
ROCKDALE. Rockdale has agreed not to take certain action relating to the
operation of its business pending consummation of the Merger without the prior
approval of Regions. Those actions generally include, without limitation: (i)
amending its Articles of Incorporation or Bylaws; (ii) becoming responsible for
any obligation for borrowed money in excess of an aggregate of $100,000 (except
in the ordinary course of business consistent with past practices) or, except
as previously disclosed, forgiving any such indebtedness in excess of $25,000;
(iii) acquiring or exchanging any shares of its capital stock or paying any
dividend or other distribution in respect of its capital stock except that
Rockdale may, but shall not be legally obligated to, declare and pay semiannual
cash dividends at a rate not in excess of $.30 per share or, under certain
circumstances, a quarterly dividend at a rate not in excess of $.15 per share;
(iv) issuing or selling any additional shares of any Rockdale capital stock,
any rights to acquire any such stock, or any security convertible into such
stock (except as set forth in the Agreement or pursuant to the exercise of
outstanding stock options); (v) adjusting, splitting, combining, or
reclassifying any of its capital stock; (vi) making any material investment in
any other entity; (vii) granting any increase in compensation or benefits to
employees or officers (except as previously disclosed to Regions or as required
by law), paying any bonus (except as previously disclosed to Regions or in
accordance with any existing program or plan), entering into or amending any
severance agreements with officers (except as previously disclosed to Regions),
or granting any increase in compensation or other benefits to directors; (viii)
entering into or amending any employment contract that it does not have the
unconditional right to terminate (except as previously disclosed to Regions and
except for any amendment required by law); (ix) adopting any new employee
benefit plan or program, or materially changing any existing plan or program
(except as previously disclosed to Regions and except for any change required
by law or advisable to maintain the tax qualified status of any such plan); (x)
making any significant change in any accounting methods, principles, or systems
of internal accounting controls (except in conformity to changes in generally
accepted accounting principles ("GAAP")); (xi) commencing
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any litigation (except in accordance with past practices) or settling any
litigation for money damages in excess of $25,000 or which imposes material
restrictions upon the operations of Rockdale; or (xii) entering into,
modifying, or terminating any material contract.
In addition, Rockdale has agreed not to solicit, directly or indirectly,
any acquisition proposal from any other person or entity. Rockdale 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, Rockdale 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, without the prior
written consent of a duly authorized officer of Rockdale, amending the
Certificate of Incorporation of Bylaws of Regions, in each case, in any manner
which is adverse to, and discriminates against, the holders of Rockdale Common
Stock.
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 Rockdale to,
maintain all rights of indemnification existing in favor of each person
entitled to indemnification from Rockdale or any of its subsidiaries on terms
no less favorable than the rights provided in the Certificate of Incorporation
or Bylaws of Rockdale, as the case may be, or the rights otherwise in effect on
the date of the Agreement, and that such rights will continue in full force and
effect for six years from the Effective Date with respect to matters occurring
at or prior to the Effective Date.
The Agreement also provides that, after the Effective Date, Regions will
provide generally to officers and employees of Rockdale who become officers or
employees of Regions, employee benefits under employee benefit plans (other
than stock option or other plans involving the potential issuance of Regions
Common Stock) on terms and conditions that, taken as a whole, are substantially
similar to those currently provided by Regions and its subsidiaries to their
similarly situated officers and employees. For purposes of participation and
vesting (but not benefit accrual) under such employee benefit plans, service
with Rockdale prior to the Effective Date will be treated as service with
Regions or its subsidiaries. The Agreement further provides that Regions will
cause Rockdale to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between Rockdale and any
current or former director, officer, or employee, and all provisions for vested
amounts earned or accrued through the Effective Date under Rockdale's benefit
plans.
As described above under "--Treatment of Rockdale Options," the Agreement
also provides that all rights with respect to Rockdale Common Stock pursuant to
stock options or stock appreciation rights granted by Rockdale under its stock
option and other stock-based compensation plans which are outstanding at the
Effective Date, whether or not then exercisable, will be converted into and
will become rights with respect to Regions Common Stock, and Regions will
assume each of such options in accordance with its terms.
As of the Record Date, directors and executive officers of Rockdale owned
no shares of Regions Common Stock.
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DISSENTING STOCKHOLDERS
By virtue of the provisions of the Financial Institutions Code of Georgia
applicable to Georgia state banks and trust companies, the rights of
stockholders who desire to dissent from the Merger are governed by the
provisions of Chapter 2, Article 13 of the Georgia Act. Pursuant to such
provisions, if the Merger is consummated, any holder of record of Rockdale
Common Stock who (i) gives to Rockdale, prior to the vote at the Annual Meeting
with respect to the approval of the Agreement, written notice of such holder's
intent to demand payment for such holder's shares, and (ii) does not vote in
favor thereof, shall be entitled to receive, upon compliance with the statutory
requirements summarized below, the fair value of such holder's shares as of the
Effective Date. The term "fair value" means the value of shares of Rockdale
Common Stock immediately prior to the effectuation of the Merger, exclusive of
any appreciation or depreciation in anticipation of the Merger, as defined in
Article 13 of the Georgia Act. The Fair Value of Rockdale Common Stock may be
more or less than the consideration that a holder of such stock would be
entitled to receive in the Merger. The following is a summary of the procedures
to be followed by record holders of Rockdale Common Stock who wish to dissent
from the Merger. A copy of the pertinent provisions of Chapter 2, Article 13 of
the Georgia Act is reproduced as Appendix C to this Proxy Statement/Prospectus.
A stockholder of record may assert dissenters' rights as to fewer than all
the shares registered in such holder's name only if such holder dissents with
respect to all shares beneficially owned by any one beneficial stockholder and
such holder notifies Rockdale in writing of the name and address of each person
on whose behalf such holder asserts dissenters' rights. The rights of such a
partial dissenter are determined as if the shares as to which such holder
dissents and such holder's other shares were registered in the names of
different stockholders. Stockholders who hold their shares of Rockdale Common
Stock in brokerage acocunts or other nominee forms and who wish to exercise
dissenters' rights should consult with their brokers to determine the
appropriate procedures for the making of demand for appraisal by such nominee.
The written objection requirement referred to above will not be satisfied
under the Georgia statutory provisions by merely voting against approval of the
Agreement by proxy or in person at the Annual Meeting. Any holder of Rockdale
Common Stock who returns a signed proxy but fails to provide instructions as to
the manner in which such shares are to be voted will be deemed to have voted in
favor of the transaction and will not be entitled to assert dissenters' rights
of appraisal. In addition to not voting in favor of the Agreement, a
stockholder wishing to preserve the right to dissent and seek appraisal must
give a separate written notice of such holder's intent to demand payment for
such holder's shares if the Merger is effected, as hereinabove provided.
Any written objection to the Agreement satisfying the requirements
discussed above should be addressed as follows: Rockdale Community Bank, 1172
Old Salem Road, Conyers, Georgia, 30207, Attention: James R. Simpson, Corporate
Secretary.
If the Merger is authorized at the Annual Meeting, Rockdale or the
surviving corporation must deliver a written dissenters' notice (the
"Dissenters' Notice") to all holders of Rockdale Common Stock who have
satisfied the foregoing requirements. The Dissenters' Notice must be sent
within ten days after the Effective Date and must (i) state where the demand
for payment must be sent and where and when certificates for shares of Rockdale
Common Stock must be deposited, (ii) inform holders of uncertificated shares to
what extent transfer of these shares will be restricted after the demand for
payment is received, (iii) set a date by which Rockdale or the surviving
corporation must receive the demand for payment (which date may not be fewer
than 30 nor more than 60 days after the Dissenters' Notice is delivered), and
(iv) be accompanied by a copy of Article 13 of the Georgia Act.
A stockholder of record who receives the Dissenters' Notice must demand
payment and deposit such holder's certificates in accordance with the
Dissenters' Notice. Such stockholder will retain all other rights of a
stockholder until those rights are canceled or modified by the consummation of
the Merger. A record
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stockholder who does not demand payment or deposit such holder's shares
certificates where required, each by the date set in the Dissenters' Notice, is
not entitled to payment for such holder's shares under Article 13.
Except as described below, Regions Bank, the surviving corporation
resulting from the Merger, must, within ten days of the later of the Effective
Date or receipt of a payment demand, offer to pay to each dissenting
stockholder who complied with the payment demand and deposit requirements
described above the amount the surviving corporation estimates to be the fair
value of such holder's shares, plus accrued interest from the Effective Date.
Such offer of payment must be accompanied by (i) certain recent Rockdale
financial statements, (ii) the surviving corporation's estimate of the fair
value of the shares, (iii) an explanation of how the interest was calculated,
(iv) a statement of the dissenter's right to demand payment under Section
14-2-1327 of the Georgia Act, and (v) a copy of the Article 13 of the Georgia
Act. If the stockholder accepts the surviving corporation's offer by written
notice to the surviving corporation within 30 days after the surviving
corporation's offer, payment must be made within 60 days after the later of the
making of the offer or the Effective Date.
If the Merger is not effected within 60 days after the date set for
demanding payment and depositing share certificates, Rockdale must return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares. If, after such return and release, the Merger is
effected, the surviving corporation must send a new Dissenter's Notice and
repeat the payment demand procedure described above.
Section 14-2-1327 of the Georgia Act provides that a dissenting stockholder
may notify the surviving corporation in writing of such holder's own estimate
of the fair value or such holder's shares and the interest due, and may demand
payment of such holder's estimate, if (i) such holder believes that the amount
offered by the surviving corporation is less than the fair value of such
holder's shares or that the interest due has been calculated incorrectly, or
(ii) Rockdale, having failed to effect the Merger, does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within 60 days after the date set for demanding payment.
A dissenting stockholder waives such holder's right to demand payment under
Section 14-2-1327 unless such holder notifies the surviving corporation of such
holder's demand in writing within 30 days after the surviving corporation makes
or offers payment for such holder's shares. If the surviving corporation does
not offer payment within ten days of the later of the Effective Date or receipt
of a payment demand, then (i) the stockholder may demand the financial
statements and other information required to accompany the surviving
corporation's payment offer, and the surviving corporation must provide such
information within ten days after receipt of the written demand, and (ii) the
stockholder may notify the surviving corporation of such holder's own estimate
of the fair value of such holder's shares and the amount of interest due, and
may demand payment of that estimate.
If a demand for payment under Section 14-2-1327 remains unsettled, the
surviving corporation must commence a nonjury equity valuation proceeding in
the Superior Court of Rockdale County, Georgia, within 60 days after receiving
the payment demand and must petition the court to determine the fair value of
the shares and accrued interest. If the surviving corporation does not commence
the proceeding within those 60 days, it is required to pay each dissenting
stockholder whose demand remains unsettled, the amount demanded. The surviving
corporation is required to make all dissenting stockholders whose demands
remain unsettled parties to the proceeding and to serve a copy of the petition
upon each dissenting stockholder. The court may appoint appraisers to receive
evidence and to recommend a decision on fair value. Each dissenting stockholder
made a party to the proceeding is entitled to judgment for the fair value of
such holder's shares plus interest to the date of judgment.
The court in an appraisal proceeding commenced under the foregoing
provision must determine the costs of the proceeding, excluding fees and
expenses of attorneys and experts for the respective parties, and must assess
those costs against the surviving corporation, except that the court may assess
the costs against all or some of the dissenting stockholders to the extent the
court finds they acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 14-2-1327. The court also may assess the fees
and expenses
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of attorneys and experts for the respective parties against the surviving
corporation if the court finds the surviving corporation did not substantially
comply with the requirements of specified provisions of Article 13 of the
Georgia Act, or against either the surviving corporation or a dissenting
stockholder if the court finds that such party acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by Article 13 of the
Georgia Act.
If the court finds that the services of attorneys for any dissenting
stockholder were of substantial benefit to other dissenting stockholders
similarly situated, and that the fees for those services should not be assessed
against the surviving corporation, the court may award those attorneys
reasonable fees out of the amounts awarded the dissenting stockholders who were
benefitted. No action by any dissenting stockholder to enforce dissenters'
rights may be brought more than three years after the Effective Date,
regardless of whether notice of the Merger and of the right to dissent was
given by Rockdale or the surviving corporation in compliance with the
Dissenters' Notice and payment offer requirements.
The foregoing is a summary of the material rights of a dissenting
stockholder of Rockdale, but is qualified in its entirety by reference to
Article 13 of the Georgia Act, included in Appendix C to this Prospectus/Proxy
Statement. Any Rockdale stockholder who intends to dissent from approval of the
Agreement should carefully review the text of such provisions and should also
consult with such holder's attorney. No further notice of the events giving
rise to dissenters' rights or any steps associated therewith will be furnished
to Rockdale stockholders, except as indicated above or otherwise required by
law.
Any dissenting Rockdale stockholder who perfects such holder's right to be
paid the value of such holder's shares will recognize taxable gain or loss upon
receipt of cash for such shares for federal income tax purposes. See "--Certain
Federal Income Tax Consequences of the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A SUMMARY OF CERTAIN ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER. THIS SUMMARY IS BASED ON THE FEDERAL INCOME TAX
LAWS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT DOES NOT TAKE INTO ACCOUNT
POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS, INCLUDING AMENDMENTS TO
APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN JUDICIAL OR ADMINISTRATIVE
RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT. THIS SUMMARY DOES NOT
PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL INCOME TAX CONSEQUENCES
OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY PERSON. IN PARTICULAR,
AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT ADDRESS THE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER TO STOCKHOLDERS IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN PERSONS, TAX-EXEMPT
ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND CORPORATIONS, AMONG
OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF THE MERGER UNDER ANY
STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. STOCKHOLDERS, THEREFORE, ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM
OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND
EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service. Instead, Alston & Bird, special
counsel to Regions, has rendered an opinion to Regions and Rockdale 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)of
the Code. Each of Rockdale, Regions, and Regions Bank will be a party to a
reorganization within the meaning of Section 368(b) of the Code.
(b) No gain or loss will be recognized by a Rockdale stockholder upon the
receipt of Regions Common Stock solely in exchange for their shares of Rockdale
Common Stock.
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(c) The basis of the Regions Common Stock received by a Rockdale
stockholder in the transaction will, in each instance, be the same as the basis
of the Rockdale Common Stock surrendered in exchange therefor.
(d) The holding period of the Regions Common Stock received by a Rockdale
stockholder (including the holding period of any fractional share interest)
will include the holding period of the Rockdale Common Stock surrendered in
exchange therefor, provided the Rockdale Common Stock was held as a capital
asset on the date of the exchange.
(e) The payment of cash in lieu of fractional shares of Regions Common
Stock will be treated as if the fractional shares were issued as part of the
exchange and then redeemed by Regions. These cash payments will be treated as
having been received as distributions in full payment in exchange for the
fractional shares of Regions Common Stock redeemed as provided in Section
302(a). 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.
(f) No gain or loss will be recognized by the stockholders of Rockdale upon
the exchange or conversion of their Rockdale Options for options with respect
to Regions Common Stock, as contemplated by Section 3.6 of the Agreement.
(g) Where solely cash is received by a Rockdale stockholder in exchange for
his shares of Rockdale Comon Stock pursuant to the exercise of dissenters'
rights of appraisal, such cash will be treated as having been received in
redemption of his shares of Rockdale Common Stock, subject to the provisions
and limitations of Section 302 of the Code.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, OR OTHER TAX
CONSEQUENCES OF THE MERGER. ROCKDALE STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE OR LOCAL LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a "purchase," as
that term is used pursuant to GAAP, for accounting and financial reporting
purposes. Under the purchase method of accounting, the assets and liabilities
of Rockdale as of the Effective Date will be recorded at their estimated
respective fair values and added to those of Regions. Financial statements of
Regions issued after the Effective Date will reflect such values and will not
be restated retroactively to reflect the historical financial position or
results of operations of Rockdale.
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.
RESALES OF THE REGIONS COMMON STOCK
The Regions Common Stock to be issued to Rockdale 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, Rockdale (such persons are referred to
hereinafter as "affiliates" and generally include executive officers,
directors, and 10% stockholders) at the time of the Annual Meeting. Affiliates
may not sell shares of Regions Common Stock acquired in connection with the
Merger, except pursuant to an effective registration statement under the
Securities Act or in compliance with SEC Rule 145 or another applicable
exemption from the Securities Act registration requirements.
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Each person who Rockdale reasonably believes will be an affiliate of
Rockdale has delivered to Regions a written agreement providing that such
person generally will not sell, pledge, transfer, or otherwise dispose of any
Regions Common Stock to be received by such person upon consummation of the
Merger, except in compliance with the Securities Act and the rules and
regulations of the SEC promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of Rockdale Common Stock will be
exchanging their shares of a Georgia banking corporation governed by the
Georgia Banking Code and Rockdale'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 Rockdale stockholders and those of Regions stockholders. The
differences deemed material by Rockdale 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 Financial Institutions
Code of Georgia and the Delaware GCL as well as to Regions' Certificate and
Bylaws and Rockdale'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
29
<PAGE> 32
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 62,185,402 shares were issued as of
March 31, 1996, none of which were held as treasury shares. 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.
Rockdale. Rockdale's authorized capital stock consists of 10,000,000 shares
of Rockdale Common Stock, which is the only class of capital stock authorized
and of which 523,614 shares were issued and outstanding as of the Record Date.
Pursuant to the Rockdale Articles, Rockdale's Board of Directors may
authorize the issuance of additional shares of Rockdale Common Stock without
further action by Rockdale's stockholders. Rockdale's Articles, as amended, do
not provide the stockholders of Rockdale with preemptive rights to purchase or
subscribe to any unissued authorized shares of Rockdale Common Stock or any
option or warrant for the purchase thereof.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware GCL generally provides that the approval of a
corporation's board of directors and the affirmative vote of a majority of (i)
all shares entitled to vote thereon and (ii) the shares of each class of stock
entitled to vote thereon as a class is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. The Certificate states that its provisions regarding authorized
capital stock, election, classification, and removal of directors, the approval
required for certain business combinations, meetings of stockholders, and
amendment of the Certificate and Bylaws may be amended or repealed only by the
affirmative vote of the holders of at least 75% of the outstanding shares of
Regions Common Stock.
The Certificate also provides that the Board of Directors has the power to
adopt, amend, or repeal the Bylaws. Any action taken by the stockholders with
respect to adopting, amending, or repealing any Bylaws may be taken only upon
the affirmative vote of the holders of at least 75% of the outstanding shares
of Regions Common Stock.
Rockdale. The Georgia Banking Code generally provides that a Georgia bank'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. Rockdale's Articles do not
provide for a higher or lower voting requirement except in two specific
instances. First, a vote of 80% of the outstanding shares and two-thirds of the
shares not owned by a related person is required to amend Article IX of the
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<PAGE> 33
Articles, which relates to certain business combinations with related persons,
unless certain conditions are met. See "-- Business Combinations with Certain
Persons." Second, the same voting requirement is necessary to amend Article X
of the Articles, which relates to the number of directors, removal of
directors, and filling vacancies in the office of director.
Under the Georgia Banking Code and Rockdale's Bylaws, the Bylaws may be
amended by a majority vote of the board of directors or by the holders of a
majority of the shares of Rockdale Common Stock entitled to vote in a election
of directors. Moreover, in adopting or amending any Bylaw provision the
stockholders may specify that such provision may be amended or repealed only by
vote of the stockholders.
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.
Rockdale. Rockdale's Articles do not provide for a classified board of
directors and do not confer upon holders of Rockdale Common Stock 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.
Rockdale. Pursuant to Rockdale's Articles, the entire board of directors or
any individual director may be removed without cause by the affirmative vote of
the holders of at least 80% of the outstanding shares of Rockdale Common Stock,
or by the affirmative vote of the holders of at least two-thirds of Rockdale
Common Stock not owned by a related person if the removal is sought by such
related person.
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.
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<PAGE> 34
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefitted Regions and its stockholders. The SEC has taken the
position that similar provisions added to other corporations' certificates of
incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
Rockdale. The Articles do not include a provision to relieve directors of
liability for money damages for good faith conduct.
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.
Rockdale. Rockdale'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.
Rockdale. Under the Bylaws of Rockdale, a special meeting of Rockdale
stockholders may be called by the Board of Directors or upon written request of
the holders of 50% of the shares of Rockdale Common Stock entitled to vote at a
meeting of stockholders.
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<PAGE> 35
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.
Rockdale. Under the Bylaws of Rockdale, action requiring or permitting
stockholder approval may be approved by unanimous written consent of all
stockholders entitled to vote at a meeting of stockholders.
STOCKHOLDER NOMINATIONS
Regions. Regions' Certificate and Bylaws provide that any nomination by
stockholders of individuals for election to the Board of Directors must be made
by delivering written notice of such nomination (the "Nomination Notice") to
the Corporate 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 Corporate
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.
Rockdale. Rockdale's Articles and Bylaws do not include provisions
pertaining to stockholder nominations and proposals.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware GCL ("Section 203") places certain
restrictions on "business combinations" (as defined in Section 203 to include,
generally, mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203 to include, generally, the beneficial owner of 15%
or more of the corporation's outstanding voting stock). Section 203 generally
applies to Delaware corporations, such as Regions, that have a class of voting
stock listed on a national securities exchange, authorized for quotation on an
interdealer quotation system of a registered national securities association,
or held of record by more than 2,000 stockholders, unless the corporation
expressly elects in its certificate of incorporation or bylaws not to be
governed by Section 203.
Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination
by Regions or a subsidiary with an interested stockholder within three years
after the person or entity becomes an interested stockholder, unless (i) prior
to the time when the person or entity becomes an interested stockholder,
Regions' Board of Directors approved either the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder, (ii) upon consummation of the transaction in which the person or
entity became an interested stockholder, the interested stockholder held at
least 85% of the outstanding Regions voting stock (excluding shares held by
persons who are both officers and directors and shares held by certain employee
benefit plans), or (iii) once the person or entity becomes an interested
stockholder, the business combination is approved by
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<PAGE> 36
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.
Rockdale. The Articles provide that certain business combination
transactions with any interested person may not be consummated unless approved
by the affirmative vote of 80% of the outstanding shares of Rockdale Common
Stock or of two-thirds of the outstanding Rockdale Common Stock not owned by
the interested person. If certain conditions are met relating either to the
nature and amount of the consideration to be received by Rockdale stockholders
in a proposed transaction or to approval of a proposed transaction by
Rockdale's board of directors, then the higher voting requirements do not apply
and the transaction would require the approval of the holders of two-thirds of
the outstanding voting stock under the Georgia bank merger statute.
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.
Rockdale. Under the Georgia Banking Code, the approval of the holders of at
least two-thirds of the shares of Rockdale Common Stock 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 Rockdale.
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
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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.
Rockdale. The rights of appraisal of dissenting stockholders under Georgia
law are generally similar to those afforded under the Delaware GCL. For a
detailed description of the dissenters' rights of holders of Rockdale Common
Stock, see "Description of the Transaction--Dissenting Stockholders."
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware GCL provides that a stockholder may inspect books and
records upon written demand under oath stating the purpose of the inspection,
if such purpose is reasonably related to such person's interest as a
stockholder.
Rockdale. Pursuant to the Georgia Banking Code, upon written request to
inspect corporate records, a stockholder is entitled to inspect specified
corporate records, including certain financial reports and other financial
information, stockholder lists, and information concerning director and officer
compensation.
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."
Rockdale. As a Georgia state bank, Rockdale is subject to various
statutory and regulatory restrictions on the payment of dividends to its
stockholders. In general, Rockdale may pay dividends only out of retained
earnings, and only if the payment would not cause Rockdale to have less than
adequate capital under state and federal bank regulatory capital requirements.
See "Certain Regulatory Considerations--Payment of Dividends."
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock is quoted on the Nasdaq National Market under the
symbol "RGBK." Rockdale Common Stock is not traded in any established market.
The following table sets forth, for the indicated periods, the high and low
closing sale prices for Regions Common Stock as reported on the Nasdaq National
Market and the cash dividends declared per share of Regions Common Stock and
Rockdale Common Stock for the indicated periods. Based on actual transactions
of which Rockdale management is aware, since January 1, 1994, purchases and
sales of Rockdale Common Stock have occurred in a price range of $13.50 to
$18.00 per share. Over such period, however, there have only been a limited
number of such transactions, and no assurance can be given that the stated
price range represents the actual market value of the Rockdale Common Stock.
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<TABLE>
<CAPTION>
REGIONS
PRICE RANGE ROCKDALE
----------- CASH DIVIDENDS CASH DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE PER SHARE
---- --- --------- ---------
<S> <C> <C> <C> <C>
1994
First Quarter . . . . . . $ 33.50 $ 30.13 $ .30 $ --
Second Quarter . . . . . . 36.13 30.50 .30 .20
Third Quarter . . . . . . 36.75 34.63 .30 __
Fourth Quarter . . . . . . 35.00 29.75 .30 .18
1995
First Quarter . . . . . . 36.50 31.63 .33 .25
Second Quarter . . . . . . 37.44 34.50 .33 --
Third Quarter . . . . . . . 41.25 37.00 .33 --
Fourth Quarter . . . . . . 44.88 39.63 .33 .35
1996
First Quarter . . . . . . 48.00 40.75 .35 .30
Second Quarter . . . . . . 48.38 42.25 .35 --
Third Quarter (through
July 5) . . . . . . . . 47.13 46.75 -- --
</TABLE>
On July 5, 1996, the last reported sale price of Regions Common Stock as
reported on the Nasdaq National Market, and the price of Rockdale Common Stock
in the last known transaction, which occurred on March 1, 1996, were $46.75 and
$18.00, respectively. On March 12, 1996, the last business day prior to public
announcement of the proposed Merger, the last reported sale price of Regions
Common Stock as reported on the Nasdaq National Market, and the last known
price of Rockdale Common Stock, were $45.50 and $18.00, respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971.
Although Regions currently intends to continue to pay quarterly cash dividends
on the Regions Common Stock, there can be no assurance that Regions' dividend
policy will remain unchanged after completion of the Merger. The declaration
and payment of dividends thereafter will depend upon business conditions,
operating results, capital and reserve requirements, and the Board of
Directors' consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions, particularly First Alabama Bank. Regions'
subsidiary depository institutions are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. See "Certain Regulatory
Considerations--Payment of Dividends."
It has been Rockdale's recent policy to pay semiannual cash dividends of
between 30% to 40% of the previous fiscal years net earnings. Rockdale is not
aware of any circumstance that would cause an immediate change in its current
dividend policy if the Merger is not consummated, however, Rockdale's future
dividend policy will depend on its results of operations, capital needs and
other factors. There can be no assurance that Rockdale will pay cash dividends
indefinitely into the future or as to the amount of cash dividends to be paid.
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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 353 banking offices located in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of March 31, 1996. At that date, Regions had total
consolidated assets of approximately $17.5 billion, total consolidated deposits
of approximately $14.2 billion and total consolidated stockholders' equity of
approximately $1.5 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 March 31, 1996 information:
<TABLE>
<CAPTION>
NUMBER OF TOTAL TOTAL
BANKING OFFICES ASSETS DEPOSITS
--------------- ------ --------
(In thousands)
<S> <C> <C> <C>
Alabama . . . . . 181 $10,717,943 $8,330,187
Florida . . . . . 36 1,225,590 1,102,605
Georgia . . . . . 71 3,569,536 2,995,178
Louisiana . . . . 41 2,049,759 1,626,968
Tennessee . . . . 24 485,584 433,493
</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
Recently Completed Acquisitions. During the first three months of 1996,
Regions has consummated, in addition to the combination with First National
Bancorp, the acquisitions of (i) Metro Financial Corporation, located in
Atlanta, Georgia and (ii) Enterprise National Bank of Atlanta, located in
Atlanta, Georgia.
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Since March 31, 1996, Regions has completed the acquisition of First
Federal Bank of Northwest Georgia, Federal Savings Bank, located in Cedartown,
Georgia (the "First Federal Acquisition"), with total assets of approximately
$94 million. The consideration for this acquisition, which was accounted for as
a pooling of interests, consisted of Regions Common Stock having an approximate
value on the date of acquisition of $17.1 million.
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending six acquisitions in addition to
Rockdale (the "Other Pending Acquisitions," and, together with the First
Federal Acquisition, the "Other Acquisitions"), certain aspects of which
transactions are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
-----------------------
ACCOUNTING
INSTITUTION ASSET SIZE VALUE TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
First Gwinnett Bancshares, Inc., located in $ 68 $ 13 Regions Purchase
Norcross, Georgia (the "First Gwinnett Acquisition") Common
Stock
Delta Bank & Trust Company, located in Belle 197 34 Regions Purchase
Chasse, Louisiana (the "Delta Acquisition") Common
Stock
American Bancshares of Houma, Inc., located in 89 17 Regions Purchase
Houma, Louisiana (the "ABH Acquisition") Common
Stock
Florida First Bancorp, Inc., located in Panama 304 40 Cash Purchase
City, Florida (the "Florida First Acquisition")
Allied Bankshares, Inc., located in Thomson, 562 136 Regions Pooling
Georgia (the "Allied Acquisition") Common of
Stock Interests
West Carroll Bancshares, Inc., located in Oak Grove, 121 29 Regions Pooling
Louisiana (the "West Carroll Acquisition") Common of
Stock Interests
-------- --------
Totals $ 1,341 $ 269
======= =======
</TABLE>
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 Acquisitions and the Merger had been consummated on March 31,
1996, based on March 31, 1996 pro forma financial information, Regions' total
consolidated assets would have increased by approximately $1.5 billion to
approximately $19.0 billion; its total consolidated deposits would have
increased by approximately $1.2 billion to approximately $15.4 billion; and its
total consolidated stockholders' equity would have increased by approximately
$96 million to approximately $1.6 billion. See "Documents
38
<PAGE> 41
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 June 26, 1996.
Regions has purchased, in the open market, approximately 1.8 million shares
of Regions Common Stock to be issued in the Merger, the First Gwinnett
Acquisition, the Delta Acquisition, and the ABH Acquisition.
SUMMARY PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data give effect, as
appropriate, to the Merger and the Other Acquisitions as of the dates and for
the periods indicated and pursuant to the accounting bases described below. The
unaudited pro forma financial data are presented for informational purposes
only and are not necessarily indicative of the combined financial position or
results of operations which actually would have occurred if the transactions
had been consummated at the date and for the periods indicated or which may be
obtained in the future. The information should be read in conjunction with the
unaudited pro forma financial information included in Regions' Current Report
on Form 8-K dated June 26, 1996. For additional information relating to
specific transactions within the scope of the Other Acquisitions, see "Business
of Regions--Recent Developments."
SELECTED PRO FORMA COMBINED DATA FOR REGIONS AND ROCKDALE
The following unaudited pro forma combined data give effect to the
acquisition of Rockdale as of the date or at the beginning of the periods
indicated, assuming such acquisition is treated as a purchase.
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1996
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,572,553
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,121,815
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,890,142
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,223,264
Other borrowed funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 545,302
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,483,021
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.85
</TABLE>
39
<PAGE> 42
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1996 1995
---- ----
(In thousands except per share data)
<S> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . . . . . . . . $ 329,723 $ 1,262,398
Total interest expense . . . . . . . . . . . . . . . . . 165,481 636,642
------- ---------
Net interest income . . . . . . . . . . . . . . . . . . 164,242 625,756
Provision for loan losses . . . . . . . . . . . . . . . 6,874 30,291
------- -------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . . . . . 157,368 595,465
Total noninterest income . . . . . . . . . . . . . . 55,740 187,601
Total noninterest expense . . . . . . . . . . . . . . . 135,383 488,882
Income tax expense . . . . . . . . . . . . . . . . . . . 24,937 96,337
------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 52,758 $ 197,847
======= =========
Net income per share . . . . . . . . . . . . . . . . . . $ .85 $ 3.21
Average common shares outstanding . . . . . . . . . . 61,985 61,670
</TABLE>
SELECTED PRO FORMA COMBINED DATA FOR REGIONS, ROCKDALE, AND OTHER ACQUISITIONS
The following unaudited pro forma combined data as of March 31, 1996, and
for the three months ended March 31, 1996, and the year ended December 31,
1995, give effect to (i) the acquisitions of First Gwinnett, Delta, ABH,
Rockdale, and Florida First by Regions, assuming such acquisitions are
accounted for as purchases, and (ii) the acquisitions of First Federal, Allied,
and West Carroll by Regions, assuming such acquisitions are treated as poolings
of interests for accounting purposes, as if all such transactions had been
consummated on March 31, 1996, in the case of the data included under "Balance
Sheet Data," and on January 1, 1995, in the case of the data included under
"Income Statement Data."
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1996
----
(In thousands
except per
share data)
<S> <C>
Balance Sheet Data:
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,957,394
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,483,191
Loans, net of unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,696,376
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,402,570
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 636,969
Stockholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,578,966
Book value per common share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.90
</TABLE>
40
<PAGE> 43
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1996 1995
---- ----
(In thousands except per share data)
<S> <C> <C>
Income Statement Data:
Total interest income . . . . . . . . . . . . . . . . . $ 355,580 $ 1,363,095
Total interest expense . . . . . . . . . . . . . . . . . 178,503 685,884
------- -------
Net interest income . . . . . . . . . . . . . . . . . . 177,077 677,211
Provision for loan losses . . . . . . . . . . . . . . . . 7,325 31,371
------- ------
Net interest income after loan loss
provision . . . . . . . . . . . . . . . . . . . . . . 169,752 645,840
Total noninterest income . . . . . . . . . . . . . . . . 59,050 200,433
Total noninterest expense . . . . . . . . . . . . . . . . 146,451 535,109
Income tax expense . . . . . . . . . . . . . . . . . . . 26,689 102,917
------- -------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 55,662 $ 208,247
======= ========
Net income per common share . . . . . . . . . . . . . $ .85 $ 3.18
Average common shares outstanding . . . . . . . . . . . 65,868 65,550
</TABLE>
41
<PAGE> 44
ROCKDALE MANAGEMENTS' DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Rockdale's results of operation are primarily affected by its net interest
income. Net interest income is defined as interest and fees on loans and
investments, less interest expense on deposits. Interest from loans and
investments is a function of the average balance outstanding during the period
and the average rates earned. Rockdale's cost of funds is a function of the
average rates paid on such deposits. Non-interest income, such as service
charges and other fees, also affect income. Rockdale's net income is further
affected by the level of other expenses such as employee compensation and
benefits, occupancy and equipment cost, insurance, supplies and other operating
expenses.
INTEREST RATE SENSITIVITY
The relationship between earning assets and interest-bearing liabilities
considered to be interest rate sensitive within given maturity ranges is called
the asset or liability funding gap, depending on whether such earning assets
exceed or are exceeded by interest-sensitive liabilities.
Rate sensitive earning assets and interest-bearing liabilities are those
that can be repriced to current market rates within a relatively short time
period. At December 31, 1995, approximately 74% of earning assets and 94% of
the funding for these earning assets were scheduled to be repriced to current
market rates at least once during 1996.
The accompanying table shows Rockdale's rate sensitive position at December
31, 1995, as measured by gap analysis (the difference between the earning asset
and interest-bearing liability amounts scheduled to be repriced to current
market rate in subsequent periods). Over the next 12 months approximately $1.5
million more earning assets than interest-bearing liabilities can be repriced
to current market rates at least once. As a result, the one-year cumulative gap
(the ratio of rate sensitive assets to rate sensitive liabilities) at December
31, 1995 was 1.05, indicating a "asset sensitive" position.
INTEREST RATE SENSITIVITY ANALYSIS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
0-90 91-365 Over
Days Days 1 Year Total
---- ------ ------ -----
<S> <C> <C> <C> <C>
Earning Assets:
Loans . . . . . . . . . . . . . . . . . . . . $ 17,892 $ 1,386 $ 4,634 $ 23,912
Securities . . . . . . . . . . . . . . . . . 8,083 641 5,968 14,692
Funds Sold . . . . . . . . . . . . . . . . . 2,870 -- -- 2,870
Total Earning Assets . . . . . . . . . . . . . 28,845 2,027 10,602 41,474
Interest-Bearing Liabilities
Interest Bearing Deposits . . . . . . . . . . 22,021 7,253 1,718 30,992
Interest Sensitivity Gap . . . . . . . . . . . $ 6,824 $ (5,226) $ 8,884 $ 10,482
Cumulative Gap at
December 31, 1995 . . . . . . . . . . . . . . $ 6,824 $ 1,598 $ 10,482
Cumulative Gap at
December 31, 1994 . . . . . . . . . . . . . . $ 4,995 $ 793 $ 8,829
</TABLE>
42
<PAGE> 45
EFFECTS OF INFLATION
Rockdale's financial statements and related data have been prepared in
accordance with generally accepted accounting principles that require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in the relative purchasing power of money
over time due to inflation. Unlike industrial companies, virtually all of the
assets and liabilities of a financial institution are monetary in nature. As a
result, interest rates have a more significant impact on a financial
institution's performance than the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the same
magnitude as the prices of goods and services. However, non-interest expenses
do reflect general levels of inflation.
CAPITAL RESOURCES AND LIQUIDITY
Rockdale is categorized as a "well-capitalized" bank under FDIC guidelines
for purposes of assessing deposit insurance premiums. At March 31, 1996
Rockdale's Tier 1 capital ratio and leverage capital ratio were 20.34% and
14.75%, respectively. See "Certain Regulatory Considerations--Capital
Adequacy." From December 31, 1994 to December 31, 1995, stockholders' equity
increased by $1,056,000 or 18% to $6,921,000.
Rockdale's principal sources of funds are deposits, loan repayments,
proceeds from sales of mortgage-backed securities and investment securities,
investment security maturities, other borrowings, and retained earnings.
Rockdale's average liquidity level as of December 31, 1995 was 45.2% compared
to 35.9% as of December 31, 1994. Rockdale's liquidity has been considered
adequate and satisfactory at all times.
PROBLEM ASSETS AND ASSET CLASSIFICATION
Loans are reviewed on a regular basis and are placed on nonaccrual status
when, in the opinion of management, the collection of additional interest is
doubtful. Generally, this occurs when either principal or interest is 90 days
or more past due. Interest accrued and unpaid at the time a loan is placed on
nonaccrual status is charged against interest income. Subsequent payments are
either applied to the outstanding principal balance or recorded as interest
income, depending on the assessment of the ultimate collectibility of the loan.
Real estate acquired by Rockdale as a result of foreclosure or by deed in
lieu of foreclosure is classified as real estate owned until such time as it is
sold. When such property is acquired, it is recorded at the lower of the unpaid
principal balance of the related loan or its fair value less estimated cost to
sell. Any writedown of the property subsequent to acquisition is charged to
operations.
The following table presents information concerning loans with risk
elements. Risk elements include (i) loans accounted for on a nonaccrual basis,
(ii) accruing loans which are contractually past due 90 days or more as to
principal or interest payments, and (iii) real estate acquired through
foreclosures or repossessions.
43
<PAGE> 46
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Nonperforming assets:
Loans accounted for on a nonaccrual basis . . . $191 $ 13 $ 16 $610 $523
Accruing loans which are contractually
past due 90 days or more as to
principal or interest payments . . . . . . . 77 27 21 52 --
Real estate acquired through foreclosure
or repossession (other real estate) . . . . . -- 207 180 85 210
---- ---- ---- ---- ----
Total . . . . . . . . . . . . . . . . . . . $268 $247 $217 $747 $733
==== ==== ==== ==== ====
</TABLE>
ALLOWANCE FOR POSSIBLE LOSSES ON LOANS AND REAL ESTATE
In making loans, Rockdale recognizes that credit losses will be experienced
and that the risk of loss will vary with, among other things, the type of loan
being made, the credit worthiness of the borrower over the term of the loan,
and, in the case of a secured loan, the quality of the security for the loan.
It is management's policy to maintain adequate allowances for estimated
losses on loans and real estate acquired. Such allowances are based on, among
other things, estimates of the historical loan loss experience, evaluation of
economic conditions in general and in various sectors of Rockdale's customer
base, and periodic reviews of loan portfolio quality by Rockdale's personnel.
Specific allowances are provided for individual loans where the ultimate
collection is considered questionable by management after reviewing the current
status of loans which are contractually past due and considering the net
realizable value of the loan or guarantees, if applicable.
The following analysis sets forth information with respect to Rockdale's
loan loss experience and allowance for loan losses for the periods indicated.
44
<PAGE> 47
ALLOWANCE FOR LOAN LOSSES AND OTHER SELECTED STATISTICS
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Allowance for Possible Loan Losses:
Balance at beginning of year . . . . . . . $ 406 $ 376 $ 266 $ 205 $ 171
Charge-Offs . . . . . . . . . . . . . . . . 5 24 2 72 143
Recoveries . . . . . . . . . . . . . . . . 6 4 2 7 11
---- ---- ---- ---- ----
Net Charge-Offs . . . . . . . . . . . . . (1) 20 -- 65 132
Provision Charged to Expense . . . . . . . . 20 50 110 126 166
---- ---- ---- ---- ----
Balance at End of Year . . . . . . . . . . $ 427 $ 406 $ 376 $ 266 $ 205
==== ==== ==== ==== ====
Average Loans . . . . . . . . . . . . . . . . $22,240 $22,504 $20,777 $16,221 $12,501
Total Loans . . . . . . . . . . . . . . . . . 23,912 22,939 21,244 17,350 13,183
Net Charge-Offs to
Average Loans . . . . . . . . . . . . . . . . --% .09% --% .40% 1.06%
Allowance for Loan Losses
to Total Loans . . . . . . . . . . . . . . . 1.79 1.77 1.77 1.53 1.55
Allowance for Loan Losses
to Non-Accruing Loans . . . . . . . . . . . . 223.56 3,123.08 2350.00 43.61 39.20
Net Charge-Offs (Recoveries) to
Allowance for Loan Losses . . . . . . . . . . (.23) 4.93 -- 24.44 64.39
Recoveries to
Charge-Offs . . . . . . . . . . . . . . . . . 120.00 16.67 100.00 9.72 7.69
</TABLE>
RESULTS OF OPERATIONS
Comparison of the Fiscal Years Ended December 31, 1995 and December 31, 1994
Net Income
Rockdale's net income was $864,000 for the year ended December 31, 1995, an
increase of $247,000 or 40% from $617,000 for the prior year. This increase was
due principally to increased interest income on commercial loans.
Interest Income
Interest income increased by $734,000 from $2,870,000 for the year ended
December 31, 1994 to $3,604,000 for the year ended December 31, 1995. The
increase was due primarily to higher rates on commercial loans and U.S.
Government securities.
Interest Expense
Interest expense increased by $320,000 from $986,000 at December 31, 1994
to $1,306,000 at December 31, 1995. This increase is principally due to
increased deposits, and an increase in interest rates paid on deposits.
45
<PAGE> 48
Provision for Loan Losses
In establishing its provision for loan losses, management reviews loans for
which full repayment may not be reasonably assured and considers, among other
matters, the estimated net realizable value of the underlying collateral. In
accordance with Rockdale's Classification of Assets Policy, management performs
a detailed monthly review and critical analysis which determines the percentage
of risk and the amount needed in the loan loss provision. The loan loss reserve
at December 31, 1995 was $427,000 which was 1.79% of outstanding loans.
Other Income
Noninterest income decreased by $35,000 to $197,000 for the year ended
December 31, 1995, compared to $232,000 for the previous year. The decrease was
principally due to reduced service charges collected on deposit accounts,
principally insufficient fund charges.
Other Expenses
Noninterest expenses decreased by $23,000 to $1,100,000 for the year ended
December 30, 1995, compared to $1,123,000 for the previous year.
Comparison of the Three Months Ended March 31, 1996 to the Three Months Ended
March 31, 1995
Rockdale enjoyed an increased level of net income in the first quarter of
1996 compared to the first quarter of 1995. Through the first three months of
1996, Rockdale earned $206,000 compared to $198,000 for the prior year first
quarter, an increase of 4.0%. This was a return on assets of 1.72% annualized
compared to 1.94% in 1995. Interest income increased from $850,000 to $923,000
or 8.6%, while interest expense increased from $284,000 to $362,000, or 27.5%.
The increased expense was partially offset by no loan loss provision in the
1996 first quarter compared to a $10,000 loan loss provision in the 1995 first
quarter. Non-interest income declined slightly from $59,000 to $58,000 or
$1,000 and non-interest expense also declined $3,000 from $300,000 to $297,000.
The bank enjoyed healthy growth on the balance sheet in first quarter 1996
compared to the same quarter in 1995. Total deposits grew from $34,432,000 to
$40,657,000, or 18.1%. Loan growth was much more moderate with gross loans
growing from $24,164,000 to $25,786,000, or 6.7%. The rest of this deposit
growth was absorbed by Federal Funds Sold ($3 million) and the investment
portfolio ($1 million).
The bank's capital accounts also enjoyed healthy growth due, in part, to
the recapture of market depreciation in the available-for-sale investment
portfolio ($233,000). Stockholder's equity increased from $6,204,000 to
$6,993,000, or 12.7%. This growth in capital was net of payment of over
$340,000 in dividends.
46
<PAGE> 49
BUSINESS OF ROCKDALE
GENERAL
Rockdale is a state-chartered commercial bank organized under the laws of
the state of Georgia with its one office located in Conyers, Georgia, through
which it provides a range of retail banking services. At March 31, 1996,
Rockdale had total consolidated assets of approximately $47.9 million, total
consolidated deposits of approximately $40.7 million, and total consolidated
stockholders' equity of approximately $7.0 million. Rockdale's principal
executive office is located at 1172 Old Salem Road, Conyers, Georgia, 30207 and
its telephone number at such address is (770) 922-6510.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation of the Chief Executive Officer during 1995 and previous
years. No other executive officer of Rockdale earned annual compensation
exceeding $100,000 or otherwise requiring disclosure.
Summary Compensation Table
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------- ---------------------------------
AWARDS PAYOUTS
OTHER ------------------ ------- ALL
ANNUAL RESTRICTED OTHER
COMPENSATION STOCK OPTIONS/ LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY(1)BONUS (2) AWARDS SAR (NO.) PAYOUTS (3)
- --------------------------- ---- -------------------------- ------ -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Charles D. East 1995 $94,500 0 $ 3,750 n/a 0 n/a $9,450
President and Chief 1994 90,000 7,500 3,665 n/a 0 n/a 0
Executive Officer 1993 84,000 5,000 3,465 n/a 0 n/a 0
</TABLE>
(1) Amounts shown do not include amounts for employee benefits (including group
life and health insurance) that are generally available to all salaried
employees.
(2) Directors fees and club dues.
(3) Contributions by the Bank to the profit sharing retirement plan and 401(k)
plan.
ELECTION OF DIRECTORS OF ROCKDALE
(PROPOSAL 2)
GENERAL
Directors of Rockdale are elected for a term of one year. The number of
Directors is currently set at nine. Each stockholder of Rockdale is entitled
to one vote for each share of Rockdale's Common Stock held. There is no
cumulative voting rights in the election of Directors.
It is intended that each Proxy solicited on behalf of the Board of
Directors will be voted only for the election of the designated nominees. At
this time, the Board of Directors knows of no reason why any nominee might be
unable to serve, but, if that should occur before the Annual Meeting, it is
intended that the Proxies will be voted for the election of such other person
or persons as the Board of Directors may recommend.
The directors of Rockdale will not serve as directors of Regions Bank after
the Merger, and their service as directors of Rockdale will cease on the
Effective Date. If for any reason the Merger is not consummated,
47
<PAGE> 50
the directors of Rockdale will continue in office for the completion of their
terms and until their successors are elected and qualified.
INFORMATION AS TO NOMINEES
The following table sets forth the names and certain information with
respect to each of the nominees for Director.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
POSITIONS WITH OF BENEFICIAL PERCENT OF
NAME OF NOMINEE ROCKDALE OWNERSHIP (1) CLASS (2)
- --------------- ---------------------- ------------- ---------
<S> <C> <C> <C>
Troy A. Athon Chairman of the Board 36,375 (3) 6.9
Charles D. East President and Director 35,575 (4) 6.8
Harrill L. Dawkins Director 2,200 *
James E. Florence Director 5,000 *
William W. Lavigno, III Director 21,000 4.0
William C. Mangum, Jr. Director 16,604 (5) 3.1
Ronald A. Mercer Director 14,400 2.7
Herbert A. Peavy, Jr. Director 21,650 (6) 4.1
James R. Simpson Director and Secretary 5,250 1.0
James Bradley Hendry, Jr. Vice President and 500 *
Senior Loan Officer
Mollye D. Parish Vice President and Cashier -- *
All executive officers and
directors as a group (11 persons)
158,554 30.3
</TABLE>
- ---------------------------
(1) Except as noted, includes shares held by spouses and minor children. Does
not include the following shares that may be acquired upon the exercise of
options that are currently exercisable: Mr. East, 5,400 shares; Mr. Hendry,
3,600 shares; and Ms. Parish, 3,000 shares.
(2) Asterisk (*) indicates percentage ownership of less than 1.0% of the
outstanding Rockdale Common Stock.
(3) Includes 2,000 shares owned by Mr. Athon's spouse, for which Mr. Athon
disclaims beneficial ownership.
(4) Includes 2,400 shares owned by Mr. East's spouse, for which Mr. East
disclaims beneficial ownership.
(5) Includes 250 shares held jointly with Mr. Mangum's brother.
(6) Include 300 shares held by Mr. Peavy's spouse, for which Mr. Peavy
disclaims beneficial ownership, but excludes shares held jointly by Mr.
Peavy's spouse and mother-in-law.
48
<PAGE> 51
The only persons known by Rockdale to be beneficial owners, as defined by
Rule 13d-3 promulgated by the SEC under the Exchange Act, of more than 5.0% of
the outstanding shares of Rockdale Common Stock, are Mr. Athon and Mr. East,
whose beneficial ownership of Rockdale Common Stock is indicated in the table
above.
Troy A. Athon is the Chief Executive Officer and owner of Geriatric Health
Services, a chain of nursing homes. He also currently serves as Vice Chairman
of the Georgia Nursing Home Association and previously served as a state
representative in the Georgia General Assembly.
Harrill L. Dawkins has been Chairman of the State Board of Workers
Compensation and Chief Appellate Judge and Administrator of the Georgia Workers
Compensation System since 1992. Previously, Mr. Dawkins was in the private
practice of law and served as a state senator in the Georgia General Assembly.
Charles D. East has been the Chief Executive Officer of Rockdale since the
Bank's organization in 1988. Prior to becoming an organizer and the President
of Rockdale, he was Senior Vice President and Comptroller of the Federal
Reserve Bank of Atlanta.
James E. Florence is a real estate broker and founder of Jim Florence &
Company, a company engaged in the real estate construction, brokerage and
appraisals business since 1981.
William W. Lavigno, III is a lawyer in private practice in Conyers, Georgia
for more than 20 years. In addition to his private law practice, Mr. Lavigno
has served as a Rockdale County Juvenile Court Judge.
William C. Mangum, Jr. was Executive Director of the Nonpublic
Postsecondary Education Commission from 1993 until his retirement at the end of
1995. Prior to 1993, he was employed by the Atlanta Public Schools. From 1982
to 1992, Mr. Mangum also was a state representative in the Georgia General
Assembly.
Ronald A. Mercer has been Vice President and Sales Manager of the National
Graphics Printing Company in Decatur, Georgia since 1970.
Herbert A. Peavy, Jr. has been President of J.O. King, Inc., a manufacturer
of fasteners, for the past five years. He was also owner of Medical Arts
Health, Inc., a distributor of prepackaged prescriptions to nursing homes,
until January 1996.
James R. Simpson is an insurance consultant with the State Board of Workers
Compensation. From 1975 to 1993, he owned and operated an insurance agency in
Conyers.
VOTE REQUIRED
Election of directors will require the presence of a quorum at the Annual
Meeting, and the nine nominees with the highest number of votes will be elected
as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE NINE PERSONS NAMED ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors conducts business through meetings of the Board and
through its committees. During the fiscal year ended December 31, 1995, the
Board of Directors held 11 meetings. No Director attended less than 75 percent
of the aggregate of the meetings of the Board of Directors and meetings of the
committees on which the Director served.
The Board of Directors has 5 active standing committees consisting of the
Executive, Audit, Investment, Loan and Compensation Committees.
49
<PAGE> 52
DIRECTOR COMPENSATION
Directors of Rockdale receive a fee of $275 per meeting, and members of the
Loan Committee receive $50 for each Loan Committee meeting attended.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors and officers of Rockdale and their associates were customers of,
and had transactions with, Rockdale in the ordinary course of business during
1995; additional transactions may be expected to take place in the ordinary
course of business. Included in such transactions are outstanding loans and
commitments from Rockdale, all of which were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
for comparable transactions with other persons, and did not involve more than
the normal risk of collectibility or present other unfavorable features.
While Rockdale is not aware of any other matters to be brought before the
stockholders at the Annual Meeting, other items of business could be raised
properly at the Annual Meeting. Any matter properly raised at the Annual
Meeting would be addressed and could be acted upon.
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 Rockdale.
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 is a bank holding company registered with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") under the BHC Act. As such,
Regions and its non-bank subsidiaries are subject to the supervision,
examination, and reporting requirements of the BHC Act and the regulations of
the Federal Reserve. In addition, as a savings and loan holding company,
Regions is also registered with the OTS under the Home Owners Loan Act, as
amended, 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
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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 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 from engaging in activities other
than banking or managing or controlling banks or other permissible subsidiaries
and from acquiring or retaining direct or indirect control of any company
engaged in any activities other than those activities determined by the Federal
Reserve to be so closely related to banking or managing or controlling banks as
to be a proper incident thereto. In determining whether a particular activity
is permissible, the Federal Reserve must consider whether the performance of
such an activity reasonably can be expected to produce benefits to the public,
such as greater convenience, increased competition, or gains in efficiency,
that outweigh possible adverse effects, such as undue concentration of
resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act
does not place territorial limitations on permissible non-banking activities of
bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a bank holding company or its subsidiaries to terminate any
activity or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that continuation of such activity or such
ownership or control constitutes a serious risk to the financial safety,
soundness, or stability of any bank subsidiary of that bank holding company.
Each of the subsidiary depository institutions of Regions is a member of
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 Rockdale and
the subsidiary institutions of Regions (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.
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PAYMENT OF DIVIDENDS
Regions is a legal entity separate and distinct from its banking, thrift,
and other subsidiaries. The principal sources of cash flow of both Regions,
including cash flow to pay dividends to its stockholders, are dividends from
its subsidiary depository institutions. There are statutory and regulatory
limitations on the payment of dividends by these subsidiary depository
institutions to Regions, as well as by Regions to its stockholders.
As to the payment of dividends, Rockdale 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 March 31, 1996, under dividend restrictions imposed under federal and
state laws, the subsidiary depository institutions of Regions, without
obtaining governmental approvals, could declare aggregate dividends to Regions
of approximately $205 million, and Rockdale, without obtaining governmental
approvals, could declare dividends to its stockholders of approximately
$432,000.
The payment of dividends by Rockdale, Regions and Regions' Subsidiary
Institutions may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Rockdale, Regions, and Regions' subsidiary depository institutions are
required to comply with the capital adequacy standards established by the
Federal Reserve in the case of Regions and the appropriate federal banking
regulator in the case of Rockdale and each of Regions' 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 March 31, 1996, Regions' consolidated Total Capital Ratio and its Tier 1
Capital Ratio
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(i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 14.30% and
11.34%, respectively, and Rockdale's Total Capital and Tier 1 Capital Ratios
were 21.17% and 20.34%, 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 Rockdale's respective Leverage Ratios at March 31, 1996,
were 7.81% and 14.75%. 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.
Rockdale and each of Regions' subsidiary depository institutions is subject
to risk-based and leverage capital requirements adopted by its federal banking
regulator, which are substantially similar to those adopted by the Federal
Reserve for bank holding companies. Each of the subsidiary depository
institutions was in compliance with applicable minimum capital requirements as
of March 31, 1996. Neither Rockdale, Regions, nor any of Regions' 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, proposed an amendment to the risk-based capital standards
that would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures. The OTS has already included an
interest-rate risk component in its risk-based capital guidelines for savings
associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions is expected to act as a source of
financial strength for, and to commit resources to support, each of its banking
subsidiaries. This support may be required at times when, absent such Federal
Reserve policy, Regions may not be inclined to provide it. In addition, any
capital loans by a bank holding company to any of 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
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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' 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 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.
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At March 31, 1996, Rockdale and all of the subsidiary depository
institutions of Regions had the requisite capital levels to qualify as well
capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994, and replaced a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, as well as the
prior transitional system, there are nine assessment risk classifications
(i.e., combinations of capital groups and supervisory subgroups) to which
different assessment rates are applied. Assessment rates for members of both
the Bank Insurance Fund ("BIF") and the 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 was
authorized to reduce the minimum assessment rate below the 23 basis points and
to set future assessment rates at such levels that would maintain the fund's
reserve ratio at the designated level. In August 1995, the FDIC adopted final
regulations reducing the assessment rates for BIF-member banks. Under the
revised schedule, BIF-member banks, starting with the second half of 1995, will
pay assessments ranging from 4.0 basis points to 31 basis points, with an
average assessment rate of 4.5 basis points. Refunds with interest were paid
for assessments for the month(s) after the month in which the designated
reserve ratio for the BIF was reached. Subsequently, on November 14, 1995, the
FDIC announced that, beginning in 1996, it would further reduce the deposit
insurance premiums for 92% of all BIF members that are in the highest capital
and supervisory categories to $2,000 per year, regardless of deposit size. At
the same time, 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.
By virtue of the BIF assessments being reduced, Regions' subsidiary banks
realized savings of approximately $7.9 million pre-tax, during the second half
of 1995, and anticipate annual savings of approximately $16.3 million pre-tax,
with respect to their deposits that are assessed at BIF rates. However, given
that approximately 28% of the total deposits of the Regions subsidiary banks as
of December 31, 1995 were (and are now being) assessed at the much higher SAIF
premium rates, Regions' subsidiary banks are now paying substantially more in
insurance premium costs than they would be if they did not hold any SAIF-
assessed deposits.
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
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impaired ability to raise funds in capital markets and to attract deposits, on
July 28, 1995, the FDIC, the Treasury Department, and the OTS released
statements outlining a proposed plan (the "Proposed Plan") to recapitalize the
SAIF, certain features of which were subsequently approved by the Banking
Committees of the House of Representatives and the Senate of the United States
in bills that provided for different resolutions of the BIF-SAIF disparity.
Under the Proposed Plan, as approved by the members of the Banking Committees
of the House and Senate, all SAIF-member institutions were to pay a special
assessment to recapitalize the SAIF, and the assessment base for the payments
on the FICO bonds would have been expanded to include the deposits of both BIF-
and SAIF-insured institutions. As a result of the SAIF becoming fully
capitalized, it was anticipated that insurance premium rates for SAIF members
shortly thereafter would have been reduced to the same levels as those
currently paid by BIF members.
The amount of the special assessment required to recapitalize the SAIF was
estimated to be approximately 78 to 85 basis points. Under the latest version
of the Proposed Plan, banks that had acquired SAIF-insured deposits would have
paid a special assessment of approximately 64 basis points - 20% less than
SAIF-member institutions. The special assessment would have been payable some
time in 1996 based on deposits held on March 31, 1995. If the applicable 85 and
64 point assessments had been assessed against the Subsidiary Banks' deposits
as of March 31, 1995, the Subsidiary Banks would have been required to pay an
aggregate special assessment of $26.0 million pre-tax. However, the special
assessments paid by the Subsidiary Banks would have been at least partially
offset by a reduction in insurance premiums paid if, as expected, the FDIC were
to have reduced SAIF premiums to BIF levels following payment of the special
assessment and recapitalization of the SAIF.
Congress adopted the Proposed Plan as part of a budget bill. However, in
December 1995, the President vetoed the balanced budget legislation passed by
Congress which included the proposed provisions of the Proposed Plan. With no
prospect of a budget agreement between the Administration and Congress, as well
as significant opposition to the Proposed Plan now coming from many BIF-insured
banks, the fate of the SAIF special assessment provisions of the legislation is
uncertain, and it now appears possible that a significant disparity between
SAIF and BIF insurance premium rates could continue to exist for some time.
In view of the legislative uncertainty that currently exist, it cannot be
predicted whether the Proposed Plan or any other legislative proposal will be
enacted as described above or, if enacted, the amount of any special SAIF
assessment, whether ongoing SAIF premiums will be reduced to a level equal to
that of BIF premiums, or whether such legislation, if enacted, may contain
other provisions, for example, requiring all federally-chartered thrifts to
convert to bank charters. A significant increase in SAIF insurance premiums,
either absolutely relative to BIF premiums, a significant one-time fee to
recapitalize the SAIF, or a significant tax liability associated with the
recapture of the bad debt reserve could have a potentially adverse effect on
the operating expenses and results of operations of the Registrant.
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 62,185,402 shares were issued at March 31, 1996, none of which were
held as treasury shares. 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
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ability of its Subsidiary Institutions to pay dividends, which is limited by
applicable regulatory requirements and capital guidelines. At March 31, 1996,
under such requirements and guidelines, Regions' subsidiary institutions had
$205 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 be 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.
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 Rockdale, included in this
Registration Statement, have been audited by Mauldin & Jenkins, independent
auditors, for the periods indicated in their report thereon which is included
herein. The financial statements audited by Mauldin & Jenkins have been
included herein in reliance on their report given on their authority as experts
in accounting and auditing.
OPINIONS
The legality of the shares of Regions Common Stock to be issued in the
Merger will be passed upon by Lange, Simpson, Robinson & Somerville,
Birmingham, Alabama. Henry E. Simpson, partner in the law firm of Lange,
Simpson, Robinson & Somerville, is a member of the Board of Directors of
Regions. As of July 5, 1996, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of 118,745 shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
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INDEX TO ROCKDALE FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INDEPENDENT AUDITOR'S REPORT.......................................................... F-2
FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
Balance sheets...................................................................... F-3
Statements of income................................................................ F-4
Statements of stockholders' equity.................................................. F-5
Statements of cash flows............................................................ F-6
Notes to financial statements....................................................... F-7
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Condensed Balance Sheet as of March 31, 1996 (Unaudited)............................ F-17
Condensed Statements of Income (Unaudited).......................................... F-18
Condensed Statements of Cash Flows (Unaudited)...................................... F-19
Notes to Unaudited Condensed Interim Financial Statements........................... F-20
</TABLE>
F-1
<PAGE> 61
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Rockdale Community Bank
Conyers, Georgia
We have audited the accompanying balance sheets of Rockdale Community Bank
as of December 31, 1995 and 1994, and the related statements of income,
stockholders' equity and cash flows for the three years in the period ended
December 31, 1995. These financial statements are the responsibility of the
Bank's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rockdale Community Bank as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles.
MAULDIN & JENKINS
Atlanta, Georgia
April 5, 1996
F-2
<PAGE> 62
ROCKDALE COMMUNITY BANK
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks........................................... $ 3,316,057 $ 1,164,401
Securities available for sale, at fair value...................... 8,777,996 9,254,896
Securities held to maturity, at cost (fair value of $5,858,553 and
$2,358,805)..................................................... 5,914,469 2,420,633
Federal funds sold................................................ 2,870,000 1,105,000
Loans............................................................. 23,912,095 22,938,718
Less allowance for loan losses.................................... 427,558 405,849
----------- -----------
Loans, net...................................................... 23,484,537 22,532,869
----------- -----------
Premises and equipment, net....................................... 1,512,128 1,573,041
Other assets...................................................... 345,920 725,184
----------- -----------
$46,221,107 $38,776,024
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing demand...................................... $ 7,964,366 $ 5,750,555
Interest-bearing demand......................................... 8,887,851 7,325,103
Savings......................................................... 3,172,990 4,174,278
Time, $100,000 and over......................................... 3,575,530 2,549,832
Other time...................................................... 15,355,705 12,906,934
----------- -----------
Total deposits.......................................... 38,956,442 32,706,702
Other liabilities................................................. 343,067 204,943
----------- -----------
Total liabilities....................................... 39,299,509 32,911,645
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
Stockholders' equity
Common stock, par value $5; 10,000,000 shares authorized;
523,614 and 517,114 issued and outstanding................... 2,618,070 2,585,570
Capital surplus................................................. 2,618,070 2,585,570
Retained earnings............................................... 1,780,286 1,229,468
Unrealized losses on securities available for sale, net of
deferred taxes............................................... (94,828) (536,229)
----------- -----------
Total stockholders' equity.............................. 6,921,598 5,864,379
----------- -----------
$46,221,107 $38,776,024
=========== ===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 63
ROCKDALE COMMUNITY BANK
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Interest income
Interest and fees on loans............................... $2,677,748 $2,109,771 $1,717,250
Interest on taxable securities........................... 800,767 658,184 575,456
Interest on nontaxable securities........................ 23,046 18,874 25,395
Interest on deposits in banks............................ -- 8,781 52,131
Interest on Federal funds sold........................... 102,252 74,644 54,168
---------- ---------- ----------
3,603,813 2,870,254 2,424,400
---------- ---------- ----------
Interest expense on deposits............................... 1,305,777 986,429 863,734
---------- ---------- ----------
Net interest income.............................. 2,298,036 1,883,825 1,560,666
Provision for loan losses.................................. 20,000 50,000 110,000
---------- ---------- ----------
Net interest income after provision for loan
losses......................................... 2,278,036 1,833,825 1,450,666
---------- ---------- ----------
Other income
Service charges on deposit accounts...................... 168,069 198,895 203,270
Other service charges, commissions and fees.............. 11,335 13,284 13,947
Gain on sale of securities............................... -- 38,807 --
Other.................................................... 17,892 20,069 20,862
---------- ---------- ----------
197,296 271,055 238,079
---------- ---------- ----------
Other expense
Salaries and employee benefits........................... 609,607 585,025 560,981
Equipment expense........................................ 60,825 57,175 49,194
Occupancy expense........................................ 80,376 79,320 79,295
Other operating expenses................................. 349,602 401,684 380,167
---------- ---------- ----------
1,100,410 1,123,204 1,069,637
---------- ---------- ----------
Net income before income taxes................... 1,374,922 981,676 619,108
Applicable income taxes.................................... 510,811 364,273 222,815
---------- ---------- ----------
Net income....................................... $ 864,111 $ 617,403 $ 396,293
========= ========= =========
Per common and common equivalent share
Net income....................................... $ 1.65 $ 1.19 $ 0.77
========= ========= =========
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 64
ROCKDALE COMMUNITY BANK
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
UNREALIZED
LOSSES
ON
SECURITIES
AVAILABLE
COMMON STOCK FOR TOTAL
-------------------- CAPITAL RETAINED SALE, NET OF STOCKHOLDERS'
SHARES PAR VALUE SURPLUS EARNINGS DEFERRED TAX EQUITY
------- ---------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1992...................... 517,114 $2,585,570 $2,585,570 $ 489,842 $ -- $ 5,660,982
Net income................ -- -- -- 396,293 -- 396,293
Dividends on common stock,
$.15 per share......... -- -- -- (77,567) -- (77,567)
------- ---------- ---------- ---------- ------------ -------------
Balance, December 31,
1993...................... 517,114 2,585,570 2,585,570 808,568 -- 5,979,708
Net income................ -- -- -- 617,403 -- 617,403
Dividends on common stock,
$.38 per share......... -- -- -- (196,503) -- (196,503)
Net change in unrealized
losses on securities
available for sale, net
of deferred taxes...... -- -- -- -- (536,229) (536,229)
------- ---------- ---------- ---------- ------------ -------------
Balance, December 31,
1994...................... 517,114 2,585,570 2,585,570 1,229,468 (536,229) 5,864,379
Net income................ -- -- -- 864,111 -- 864,111
Dividends on common stock,
$.60 per share......... -- -- -- (313,293) -- (313,293)
Net change in unrealized
losses on securities
available for sale, net
of deferred taxes...... -- -- -- -- 441,401 441,401
Issuance of common
stock.................. 6,500 32,500 32,500 -- -- 65,000
------- ---------- ---------- ---------- ------------ -------------
Balance, December 31,
1995...................... 523,614 $2,618,070 $2,618,070 $1,780,286 $ (94,828) $ 6,921,598
======= ========= ========= ========= ========= ==========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 65
ROCKDALE COMMUNITY BANK
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income............................................ $ 864,111 $ 617,403 $ 396,293
----------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 64,111 63,111 69,646
Provision for loan losses.......................... 20,000 50,000 110,000
Provision for deferred income taxes (benefits)..... (13,602) 7,563 (17,090)
Net realized gains on securities available for
sale............................................. -- (38,807) --
Increase in interest receivable.................... (38,747) (32,552) (8,394)
Increase (decrease) in interest payable............ 85,861 12,059 (4,112)
Increase (decrease) in taxes payable............... 54,991 (18,448) 79,744
Other prepaids, deferrals and accruals, net........ 201,497 220,579 (104,305)
----------- ----------- -----------
Total adjustments............................. 374,111 263,505 125,489
----------- ----------- -----------
Net cash provided by operating activities..... 1,238,222 880,908 521,782
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale............ -- (4,967,343) --
Proceeds from sales of securities available for
sale............................................... -- 938,422 --
Proceeds from maturities of securities available for
sale............................................... 1,145,689 2,022,053 --
Purchases of securities held to maturity.............. (5,691,707) (1,750,000) (6,493,312)
Proceeds from maturities of securities held to
maturity........................................... 2,197,871 1,855,449 4,716,880
(Increase) decrease in Federal funds sold............. (1,765,000) 85,000 (140,000)
Decrease in interest-bearing deposits in banks........ -- 699,000 580,068
Increase in loans, net................................ (971,668) (1,952,847) (3,893,621)
Purchase of premises and equipment.................... (3,198) (18,174) (54,969)
----------- ----------- -----------
Net cash used in investing activities......... (5,088,013) (3,088,440) (5,284,954)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits.................................. 6,249,740 2,067,393 4,514,223
Dividends paid........................................ (313,293) (196,503) (77,567)
Proceeds from issuance of common stock................ 65,000 -- --
----------- ----------- -----------
Net cash provided by financing activities..... 6,001,447 1,870,890 4,436,656
----------- ----------- -----------
Net increase (decrease) in cash and due from banks...... 2,151,656 (336,642) (326,516)
Cash and due from banks at beginning of year............ 1,164,401 1,501,043 1,827,559
----------- ----------- -----------
Cash and due from banks at end of year.................. $ 3,316,057 $ 1,164,401 $ 1,501,043
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest........................................... $ 1,219,916 $ 974,370 $ 867,846
Income taxes....................................... $ 469,422 $ 375,158 $ 160,161
NONCASH TRANSACTIONS
Unrealized gains (losses) on securities available for
sale............................................... $ 668,789 $ (812,468) $ --
Principal balances on loans transferred to other real
estate............................................. $ -- $ 237,322 $ 180,000
</TABLE>
See Notes to Financial Statements.
F-6
<PAGE> 66
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation
Rockdale Community Bank is a commercial bank with operations in Conyers,
Georgia. The Bank provides a full range of banking services to individual and
corporate customers in its primary market area of Rockdale County, Georgia and
surrounding counties. The Bank is subject to the regulations of certain Federal
and state agencies. The Bank is periodically examined by certain regulatory
authorities.
The accounting and reporting policies of the Bank conform to generally
accepted accounting principles and general practices within the financial
services industry. In preparing the financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ from those estimates.
The principles which significantly affect the determination of financial
position, results of operations and cash flows are summarized below.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and due from banks includes cash
on hand and amounts due from banks (including cash items in process of
clearing). Cash flows from loans originated by the Bank, deposits,
interest-bearing deposits and Federal funds purchased and sold are reported net.
The Bank maintains amounts due from banks which, at times, may exceed
Federally insured limits. The Bank has not experienced any losses in such
accounts.
Investment Securities
The Bank's investment securities are accounted for as follows:
Securities Available for Sale. Securities classified as available for
sale are those debt securities that the Bank intends to hold for an
indefinite period of time, but not necessarily to maturity. Any decision to
sell a security classified as available for sale would be based on various
factors, including significant movements in interest rates, changes in the
maturity mix of the Bank's assets and liabilities, liquidity needs,
regulatory capital considerations and other similar factors. Securities
available for sale are carried at fair value. Unrealized gains or losses
are reported as increases or decreases in stockholders' equity, net of the
related deferred tax effect. Realized gains or losses, determined on the
basis of the cost of specific securities sold, are included in earnings.
Securities Held to Maturity. Securities classified as held to
maturity are those debt securities the Bank has both the intent and ability
to hold to maturity regardless of changes in market conditions, liquidity
needs or changes in general economic conditions. These securities are
carried at cost adjusted for amortization of premium and accretion of
discount, computed by the straight-line method over their contractual lives
which is not materially different from generally accepted accounting
principles. The sale of a security within three months of its maturity date
or after collection of at least 85 percent of the principal outstanding at
the time the security was acquired is considered a maturity for purposes of
classification and disclosure.
A decline in the fair value below cost of any available for sale or held to
maturity security that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the security.
F-7
<PAGE> 67
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Loans and Interest Income
Loans are stated at principal amounts outstanding less unearned fees and
the allowance for loan losses. Interest income on loans is credited to income
based on the principal amount outstanding at the respective rate of interest.
Accrual of interest income is discontinued on loans when, in the opinion of
management, collection of such interest becomes doubtful. When a loan is placed
on nonaccrual status, all interest previously accrued but not collected is
reversed against current interest income. Accrual of interest on such loans is
resumed when, in management's judgement, the collection of interest and
principal becomes probable.
Fees on loans and costs incurred in origination of loans are recognized
into income over the life of the loans.
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes that collectibility of the principal is
unlikely. The allowance is an amount that management believes will be adequate
to absorb estimated losses on existing loans that may become uncollectible,
based on evaluation of the collectibility of loans and prior loss experience.
This evaluation also takes into consideration such factors as changes in the
nature and volume of the loan portfolio, overall portfolio quality, review of
specific problem loans and current economic conditions that may affect the
borrower's ability to pay. Certain estimates are susceptible to change in the
near term. Such estimates include the creditworthiness of significant borrowers
and the collateral value of delinquent loans. While management uses the best
information available to make its evaluation, future adjustments to the
allowance may be necessary if there are significant changes in economic
conditions. In addition, regulatory agencies, as an integral part of their
examination process, periodically review the Bank's allowance for loan losses,
and may require the Bank to record additions to the allowance based on their
judgment about information available to them at the time of their examinations.
Impaired loans are measured based on the present value of expected future
cash flows discounted at the loan's effective interest rate or, as a practical
expedient, at the loan's observable market price or the fair value of the
collateral if the loan is collateral dependent. A loan is impaired when it is
probable the creditor will be unable to collect all contractual principal and
interest payments due in accordance with the terms of the loan agreement.
Accrual of interest on an impaired loan is discontinued when management
believes, after considering collection efforts and other factors, that the
borrower's financial condition is such that collection of interest is doubtful.
No interest income is recognized on impaired loans until the principal balance
has been collected.
Premises and Equipment
Premises and equipment are stated at cost less accumulated depreciation,
computed principally by the straight-line method over the following estimated
useful lives:
<TABLE>
<CAPTION>
YEARS
----
<S> <C>
Buildings and improvements................................................... 40
Furniture and equipment...................................................... 3-7
</TABLE>
Other Real Estate Owned
Other real estate owned (OREO) represents properties acquired through
foreclosure or other proceedings. OREO is held for sale and is recorded at the
lower of the recorded amount of the loan or fair value of the properties less
estimated costs of disposal. Any write-down to fair value at the time of
transfer to OREO is charged to the allowance for loan losses. Property is
evaluated regularly to ensure the recorded amount is supported by its current
fair value and valuation allowances to reduce the carrying amount to fair value
less
F-8
<PAGE> 68
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
estimated costs to dispose are recorded as necessary. Subsequent decreases and
increases in fair value, up to the value established at foreclosure, are
recognized as charges or credits to noninterest expense.
Employee Benefit Plan
Profit-sharing plan costs are funded as accrued and are based on a
percentage of individual employee's salary, not to exceed the amount that can be
deducted for Federal income tax purposes.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effect of changes in tax laws on
the date of enactment.
Earnings Per Share
Earnings per share is calculated on the weighted average number of shares
of common stock and common stock equivalents outstanding during the period.
Stock options granted, as described in Note 10, are considered to be common
stock equivalents for purposes of calculated net income per share. Common stock
equivalents that are anti-dilutive are excluded from weighted average
outstanding shares.
2. INVESTMENT SECURITIES
The amortized cost and approximate fair value of investment securities at
December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Securities Available for Sale
December 31, 1995:
U. S. Government and agency securities...... $ 1,025,000 $ 6,752 $ -- $1,031,752
Mortgage-backed securities.................. 7,896,675 60,544 (210,975) 7,746,244
----------- ---------- ---------- ----------
$ 8,921,675 $ 67,296 $ (210,975) $8,777,996
========== ======== ========= =========
December 31, 1994:
U. S. Government and agency securities...... $ 1,525,000 $ -- $ (76,289) $1,448,711
Mortgage-backed securities.................. 8,542,364 20,120 (756,299) 7,806,185
----------- ---------- ---------- ----------
$10,067,364 $ 20,120 $ (832,588) $9,254,896
========== ======== ========= =========
Securities Held to Maturity
December 31, 1995:
U. S. Government and agency securities...... $ 2,600,081 $ 938 $ (28,160) $2,572,859
State and municipal securities.............. 315,301 4,297 -- 319,598
Mortgage-backed securities.................. 2,999,087 7,654 (40,645) 2,966,096
----------- ---------- ---------- ----------
$ 5,914,469 $ 12,889 $ (68,805) $5,858,553
========== ======== ========= =========
</TABLE>
F-9
<PAGE> 69
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1994:
U. S. Government and agency securities...... $ 2,100,000 $ -- $ (59,375) $2,040,625
State and municipal securities.............. 320,633 -- (2,453) 318,180
----------- ---------- ---------- ----------
$ 2,420,633 $ -- $ (61,828) $2,358,805
========== ======== ========= =========
</TABLE>
Gross realized gains on sales of securities in 1994 amounted to $38,807.
There were no sales of securities for the years ended December 31, 1995 and
1993.
The amortized cost and fair value of investment securities as of December
31, 1995 by contractual maturity are shown below. Maturities may differ from
contractual maturities in mortgage-backed securities because the mortgages
underlying the securities may be called or prepaid without penalty. Therefore,
these securities are not included in the maturity categories in the following
maturity summary.
<TABLE>
<CAPTION>
SECURITIES AVAILABLE SECURITIES HELD TO
FOR SALE MATURITY
----------------------- -----------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Due in one year or less....................... $ -- $ -- $ 800,000 $ 798,284
Due from one year to five years............... 1,025,000 1,031,752 1,360,928 1,335,357
Due from five to ten years.................... -- -- 599,454 603,816
Due after ten years........................... -- -- 155,000 155,000
Mortgage-backed securities.................... 7,896,675 7,746,244 2,999,087 2,966,096
---------- ---------- ---------- ----------
$8,921,675 $8,777,996 $5,914,469 $5,858,553
========= ========= ========= =========
</TABLE>
Securities with a carrying value of $1,141,000 and $1,260,000 at December
31, 1995 and 1994, respectively, were pledged to secure public deposits and for
other purposes.
Effective January 1, 1994, the Bank adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities". Upon adoption, the Bank
transferred $8,021,689 from securities held to maturity to securities available
for sale. The securities available for sale were marked to fair value resulting
in a net unrealized gain of $137,101 which was included in stockholders' equity
at $90,487 net of related deferred taxes of $46,614.
3. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Commercial and financial.................................... $ 4,556,000 $ 4,368,000
Real estate -- construction................................. 5,592,000 4,567,000
Real estate -- mortgage..................................... 12,040,000 12,117,000
Consumer instalment loans................................... 1,148,000 1,015,000
Other....................................................... 659,313 949,252
----------- -----------
23,995,313 23,016,252
Unearned fees............................................... (83,218) (77,534)
Allowance for loan losses................................... (427,558) (405,849)
----------- -----------
Loans, net.................................................. $23,484,537 $22,532,869
========== ==========
</TABLE>
F-10
<PAGE> 70
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
At December 31, 1995, executive officers and directors, and companies in
which they have a 10 percent or more beneficial ownership, were indebted to the
Bank in the aggregate amount of $1,489,370. The interest rates on these loans
were substantially the same as rates prevailing at the time of the transaction
and repayment terms are customary for the type of loan involved. Following is a
summary of transactions:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Balance, beginning of year.................................. $ 1,594,699 $ 2,006,873
Advances.................................................. 1,127,501 1,446,614
Repayments................................................ (1,232,830) (1,847,288)
Transactions due to change in directors................... -- (11,500)
----------- -----------
Balance, end of year........................................ $ 1,489,370 $ 1,594,699
========== ==========
</TABLE>
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of year......................... $405,849 $376,588 $266,434
Provision charged to operations.................. 20,000 50,000 110,000
Loans charged off................................ (4,747) (24,896) (1,670)
Recoveries....................................... 6,456 4,157 1,824
-------- -------- --------
Balance, end of year............................... $427,558 $405,849 $376,588
======== ======== ========
</TABLE>
Information with respect to impaired loans as of and for the year ended
December 31, 1995 is as follows:
<TABLE>
<S> <C>
Loans receivable for which there is a related allowance for credit
losses.................................................................. $ --
Loans receivable for which there is no related allowance for credit
losses.................................................................. 191,133
--------
Total impaired loans............................................ $191,133
========
Allowance for loan losses related to impaired loans....................... $ --
========
Average balance (based on month-end balances)............................. $144,960
========
Interest income recognized................................................ $ 15,455
========
</TABLE>
Loans on which the accrual of interest had been discontinued or reduced
amounted to $191,133 and $12,500 at December 31, 1995 and 1994, respectively.
There was no significant reduction in interest income associated with nonaccrual
and renegotiated loans.
F-11
<PAGE> 71
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. PREMISES AND EQUIPMENT, NET
Major classifications of these assets are summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Land.......................................................... $ 534,160 $ 534,160
Buildings..................................................... 1,075,810 1,075,810
Equipment..................................................... 253,150 249,952
Auto.......................................................... 25,703 25,703
---------- ----------
1,888,823 1,885,625
Accumulated depreciation...................................... (376,695) (312,584)
---------- ----------
$1,512,128 $1,573,041
========= =========
</TABLE>
Depreciation expense for the years ended December 31, 1995, 1994 and 1993
was $64,111, $63,111 and $60,006, respectively.
5. INCOME TAXES
The total income taxes in the statements of income are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Current................................................ $524,413 $356,710 $239,905
Deferred............................................... (13,602) 7,563 (17,090)
-------- -------- --------
$510,811 $364,273 $222,815
======== ======== ========
</TABLE>
The Bank's provision for income taxes differs from the amounts computed by
applying the Federal income tax statutory rates to income before income taxes. A
reconciliation of the differences is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1995 1994 1993
------------------ ------------------ ------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Tax provision at statutory
rate...................... $467,473 34% $333,770 34% $210,496 34%
Increase (decrease)
resulting from:
Tax-exempt interest....... (7,804) (1) (6,374) (1) (8,602) (1)
Disallowed interest
expense................ 603 -- 589 -- 862 --
State income taxes........ 41,542 3 29,335 3 17,270 3
Other items, net.......... 8,997 1 6,953 1 2,789 --
-- -- --
-------- -------- --------
Provision for income
taxes..................... $510,811 37% $364,273 37% $222,815 36%
======== ===== ======== ===== ======== =====
</TABLE>
F-12
<PAGE> 72
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Net deferred income tax assets of $46,321 and $260,107 are included in
other assets at December 31, 1995 and 1994, respectively. The components of
deferred income taxes at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
-------- --------
<S> <C> <C>
Deferred tax assets:
Loan loss reserves........................................... $127,893 $120,345
Securities available for sale................................ 48,851 276,239
-------- --------
176,744 396,584
-------- --------
Deferred tax liabilities:
Depreciation and amortization................................ 45,275 46,852
Accrual to cash basis adjustment............................. 41,158 54,668
Other........................................................ 43,990 34,957
-------- --------
130,423 136,477
-------- --------
Net deferred tax assets........................................ $ 46,321 $260,107
======== ========
</TABLE>
6. EMPLOYEE BENEFIT PLAN
Profit Sharing Plan
The Bank has a contributory 401(K) Employee Savings plan available to all
eligible employees, subject to certain minimum age and service requirements. The
Bank's contribution to the plan was $66,636 for the year ended December 31,
1995. There were no contributions to the plan during the years ended December
31, 1994 and 1993.
7. COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Bank has entered into
off-balance-sheet financial instruments which are not reflected in the financial
statements. These financial instruments include commitments to extend credit and
standby letters of credit. Such financial instruments are included in the
financial statements when funds are disbursed or the instruments become payable.
These instruments involve, to varying degrees, elements of credit risk in excess
of the amount recognized in the balance sheet.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
standby letters of credit is represented by the contractual amount of those
instruments. The Bank uses the same credit and collateral policies for these
off-balance-sheet financial instruments as it does for on-balance-sheet
financial instruments. A summary of the Bank's commitments is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
---------- ----------
<S> <C> <C>
Commitments to extend credit.................................. $6,938,000 $4,752,000
Standby letters of credit..................................... 95,000 58,000
---------- ----------
$7,033,000 $4,810,000
========= =========
</TABLE>
Commitments to extend credit generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. The
credit risk involved in issuing these financial instruments is essentially the
same as that involved in extending loans to customers.
F-13
<PAGE> 73
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Bank evaluates each customer's creditworthiness on a case-by-case basis. The
amount of collateral obtained, if deemed necessary by the Bank upon extension of
credit, is based on management's credit evaluation of the customer. Collateral
held varies but may include real estate and improvements, marketable securities,
accounts receivable, inventory, equipment and personal property.
Standby letters of credit are conditional commitments issued by the Bank to
guarantee the performance of a customer to a third party. Those guarantees are
primarily issued to support public and private borrowing arrangements. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. Collateral held varies
as specified above and is required in instances which the Bank deems necessary.
The Bank does not anticipate any material losses as a result of the
commitments and contingent liabilities.
The nature of the business of the Bank is such that it ordinarily results
in a certain amount of litigation. In the opinion of management, there is no
litigation in which the outcome will have a material effect on the financial
statements.
8. CONCENTRATIONS OF CREDIT
The Bank makes commercial, residential and consumer loans to customers
primarily in Rockdale County.
A substantial portion of the Bank's customers' abilities to honor their
contracts is dependent on the business economy in Rockdale County and
surrounding areas.
The Bank, as a matter of policy, does not generally extend credit to any
single borrower or group of related borrowers in excess of 25% of the Bank's
combined common stock and capital surplus accounts which amounted to
approximately $1,309,000 at December 31, 1995.
A substantial portion of the Bank's loans are secured by real estate in the
Bank's primary market area. Accordingly, the ultimate collectibility of a
substantial portion of the Bank's loan portfolio is susceptible to changes in
market conditions in the Bank's primary market area.
The concentrations of credit by type of loan are set forth in Note 3.
The Bank has a concentration of funds on deposit at its principal
correspondent bank at December 31, 1995, as follows:
<TABLE>
<S> <C>
Noninterest-bearing accounts............................................. $2,571,000
Federal funds sold....................................................... 1,400,000
----------
$3,971,000
=========
</TABLE>
9. STOCKHOLDERS' EQUITY
At December 31, 1995, the Bank's capital ratios were considered adequate
based on regulatory minimum capital requirements. The minimum capital
requirements and the actual capital ratios for the Bank at December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
REGULATORY
ACTUAL REQUIREMENT
------ -----------
<S> <C> <C>
Leverage capital ratio............................................. 15.75% 4.00%
Risk based capital ratios:
Core capital..................................................... 24.04 4.00
Total capital.................................................... 25.29 8.00
</TABLE>
F-14
<PAGE> 74
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Retained Earnings
Banking regulations limit the amount of dividends that may be paid without
prior approval of the Bank's regulatory agency. Approximately $432,000 are
available to be paid as dividends by the Bank at December 31, 1995.
10. STOCK OPTION PLAN
The Bank has adopted a Key Employee Incentive Stock Option Plan with 80,000
shares of common stock reserved for options to key employees. During 1990,
39,500 stock options were granted at $10 per share and any options still
outstanding will expire on December 31, 2000. During 1995, stock options to
purchase 6,500 shares of common stock were exercised. During 1995 and previous
years, options to purchase 2,600 shares were terminated from the plan.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards Board Statement No. 107, "Disclosures About
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available, fair values are based on estimates
using present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, in many cases,
could not be realized in immediate settlement of the instrument. Statement No.
107 excludes certain financial instruments from its disclosure requirements.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Bank.
The following methods and assumptions were used by the Bank in estimating
the fair value of its financial instruments:
Carrying amounts approximate fair values for the following
instruments:
Cash and due from banks
Federal funds sold
Securities available for sale
Variable rate loans that reprice frequently
Equity line loans
Accrued interest receivable
Accrued interest payable
Quoted market prices, where available, or if not available, based on quoted
market prices of comparable instruments for securities held to maturity.
Discounted cash flows using interest rates currently being offered on
instruments with similar terms and with similar credit quality:
All loans except variable rate loans described above
Fixed rate certificates of deposit
Commitments to extend credit and standby letters of credit are not recorded
until such commitments are funded. The value of these commitments are the fees
charged to enter into such agreements. These commitments do not represent a
significant value to the Bank until such commitments are funded. The Bank has
determined that such instruments do not have a distinguishable fair value and no
fair value has been assigned to these instruments.
F-15
<PAGE> 75
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The carrying value and estimated fair values of the Bank's financial
instruments at December 31, 1995 are as follows:
<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
----------- -----------
<S> <C> <C>
Financial assets:
Cash and short-term investments........................... $ 3,316,057 $ 3,316,057
========== ==========
Investment securities..................................... $14,692,465 $14,636,549
========== ==========
Loans..................................................... $23,912,095 $23,910,000
Less allowance for loan losses............................ 427,558 --
----------- -----------
Loans, net........................................ $23,484,537 $23,910,000
========== ==========
Accrued interest receivable............................... $ 283,227 $ 283,227
========== ==========
Financial liabilities:
Noninterest-bearing demand................................ $ 7,964,366 $ 7,964,366
Interest-bearing demand................................... 8,887,851 8,887,851
Savings................................................... 3,172,990 3,172,990
Time deposits............................................. 18,931,235 18,990,000
----------- -----------
$38,956,442 $39,015,207
========== ==========
Accrued interest payable.................................. $ 167,623 $ 167,623
========== ==========
</TABLE>
12. MERGER
On March 11, 1996, the Board of Directors entered into an Agreement and
Plan of Reorganization with Regions Financial Corporation to convert all of the
outstanding shares of Rockdale Community Bank into shares of common stock of
Regions Financial Corporation. This agreement is subject to the approval of the
stockholders and appropriate regulatory authorities.
F-16
<PAGE> 76
ROCKDALE COMMUNITY BANK
BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Cash and due from banks......................................................... $ 3,552,803
Federal funds sold.............................................................. 3,730,000
Securities available for sale, at fair value.................................... 7,647,320
Securities held to maturity, at cost (fair value $5,589,268).................... 5,718,153
Loans........................................................................... 25,786,571
Less allowance for loan losses.................................................. 429,589
-----------
Loans, net.................................................................... 25,356,982
-----------
Premises and equipment, net..................................................... 1,495,824
Other assets.................................................................... 393,313
-----------
$47,894,395
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non interest-bearing demand................................................... $ 8,550,875
Interest-bearing demand....................................................... 9,221,146
Savings....................................................................... 2,793,598
Time, $100,000 and over....................................................... 4,163,973
Other time.................................................................... 15,927,894
-----------
Total deposits........................................................ 40,657,486
Other liabilities............................................................... 243,320
-----------
Total liabilities..................................................... 40,900,806
-----------
COMMITMENTS AND CONTINGENCIES
Stockholders' equity
Common stock, par value $5; 10,000,000 shares authorized; 523,614 shares
issued..................................................................... 2,618,070
Capital surplus............................................................... 2,618,070
Retained earnings............................................................. 1,829,330
Unrealized loss on securities available for sale, net of tax.................. (71,881)
-----------
6,993,589
-----------
Total stockholders' equity............................................ $47,894,395
==========
</TABLE>
The Accompanying Note is an Integral Part of these Financial Statements.
F-17
<PAGE> 77
ROCKDALE COMMUNITY BANK
STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Interest Income
Interest and fees on loans............................................. $652,827 $643,944
Interest on taxable securities......................................... 226,762 185,104
Interest on nontaxable securities...................................... 4,423 4,497
Interest on Federal funds sold......................................... 38,576 15,978
-------- --------
922,588 849,523
Interest Expense on Deposits............................................. 361,945 283,985
-------- --------
Net interest income............................................ 560,643 565,538
Provision for Loan Losses................................................ -- 10,000
-------- --------
Net interest income after provision for loan losses............ 560,643 555,538
-------- --------
Other Operating Income
Service charges on deposit accounts.................................... 46,130 42,606
Other.................................................................. 11,959 16,533
-------- --------
58,089 59,139
-------- --------
Other Operating Expenses
Salaries and other employee benefits................................... 161,201 148,306
Equipment expense...................................................... 21,077 15,542
Occupancy expense...................................................... 21,092 20,807
Other operating expense................................................ 92,835 115,312
-------- --------
296,205 299,967
-------- --------
Income before income taxes..................................... 322,527 314,710
Applicable Income Taxes.................................................. 116,399 116,632
-------- --------
Net income..................................................... $206,128 $198,078
======== ========
Per Share of Common Stock Based on Average Number of Shares Outstanding
During Period
Net income..................................................... $ 0.39 $ 0.38
======== ========
Average Shares Outstanding............................................... 523,614 518,614
======== ========
Cash Dividends Per Share of Common Stock................................. $ 0.30 $ 0.25
======== ========
</TABLE>
The Accompanying Note is an Integral Part of these Financial Statements.
F-18
<PAGE> 78
ROCKDALE COMMUNITY BANK
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows From Operating Activities
Net income...................................................... $ 206,128 $ 198,078
----------- -----------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation................................................. 16,304 16,069
Provision for loan losses.................................... -- 10,000
Decrease (increase) in interest receivable................... 60,238 (14,686)
(Decrease) increase in interest payable...................... (59,805) 5,345
Increase (decrease) in taxes payable......................... (53,114) 16,004
Other prepaids, deferrals and accruals, net.................. (106,273) 69,024
----------- -----------
Total adjustments....................................... (142,650) 101,756
----------- -----------
Net cash provided by operating activities............... 63,478 299,834
----------- -----------
Cash Flows From Investing Activities
Purchases of investment securities.............................. (501,482) (914,056)
Proceeds from maturities of investment securities............... 1,863,235 612,643
Net decrease (increase) in Federal funds sold................... (860,000) 335,000
Net increase in loans........................................... (1,872,445) (1,223,919)
Purchase of premises and equipment.............................. -- (2,348)
----------- -----------
Net cash used in investing activities................... (1,370,692) (1,192,680)
----------- -----------
Cash Flows From Financing Activities
Net increase in deposits........................................ 1,701,044 1,725,350
Dividends paid.................................................. (157,084) (130,029)
Proceeds from issuance of common stock.......................... -- 30,000
----------- -----------
Net cash provided by financing activities............... 1,543,960 1,625,321
----------- -----------
Net increase in cash and due from banks........................... 236,746 732,475
Cash and due from banks, beginning of period...................... 3,316,057 1,164,401
----------- -----------
Cash and due from banks, end of period............................ $ 3,552,803 $ 1,896,876
========== ==========
Supplemental Disclosures of Cash Flow Information
Cash paid during period for:
Interest..................................................... $ 421,750 $ 278,640
Income taxes................................................. 169,513 116,760
Noncash Transaction
Unrealized gains on securities available for sale............... 34,761 366,115
</TABLE>
The Accompanying Note is an Integral Part of these Financial Statements.
F-19
<PAGE> 79
ROCKDALE COMMUNITY BANK
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
The results of operations for the three month period ended March 31, 1996
are not necessarily indicative of the results to be expected for the full year.
F-20
<PAGE> 80
APPENDIX A
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
ROCKDALE COMMUNITY BANK
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF MARCH 12, 1996
AND
AMENDED AND RESTATED
AS OF MAY 20, 1996
A-1
<PAGE> 81
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties................................................................................ A-6
Preamble............................................................................... A-6
ARTICLE ONE -- TRANSACTIONS AND TERMS OF MERGER........................................ A-6
1.1 Merger....................................................................... A-6
1.2 Time and Place of Closing.................................................... A-6
1.3 Effective Time............................................................... A-7
ARTICLE TWO -- TERMS OF MERGER......................................................... A-7
2.1 Business of Surviving Bank................................................... A-7
2.2 Assumption of Rights......................................................... A-7
2.3 Assumption of Liabilities.................................................... A-7
2.4 Articles of Incorporation.................................................... A-7
2.5 Bylaws....................................................................... A-7
2.6 Directors and Officers....................................................... A-7
ARTICLE THREE -- MANNER OF CONVERTING SHARES........................................... A-8
3.1 Conversion of Shares......................................................... A-8
3.2 Anti-Dilution Provisions..................................................... A-8
3.3 Shares Held by Rockdale or Regions........................................... A-8
3.4 Dissenting Stockholders...................................................... A-8
3.5 Fractional Shares............................................................ A-8
3.6 Conversion of Stock Options; Restricted Stock................................ A-9
ARTICLE FOUR -- EXCHANGE OF SHARES..................................................... A-9
4.1 Exchange Procedures.......................................................... A-9
4.2 Rights of Former Rockdale Stockholders....................................... A-10
ARTICLE FIVE -- REPRESENTATIONS AND WARRANTIES OF ROCKDALE............................. A-10
5.1 Organization, Standing, and Power............................................ A-10
5.2 Authority; No Breach By Agreement............................................ A-10
5.3 Capital Stock................................................................ A-11
5.4 Rockdale Subsidiaries........................................................ A-11
5.5 Financial Statements......................................................... A-12
5.6 Absence of Undisclosed Liabilities........................................... A-12
5.7 Absence of Certain Changes or Events......................................... A-12
5.8 Tax Matters.................................................................. A-12
5.9 Assets....................................................................... A-13
5.10 Environmental Matters........................................................ A-13
5.11 Compliance With Laws......................................................... A-14
5.12 Labor Relations.............................................................. A-14
5.13 Employee Benefit Plans....................................................... A-14
5.14 Material Contracts........................................................... A-16
5.15 Legal Proceedings............................................................ A-16
5.16 Statements True and Correct.................................................. A-16
5.17 Tax and Regulatory Matters................................................... A-17
5.18 State Takeover Laws.......................................................... A-17
5.19 Articles of Incorporation Provisions......................................... A-17
5.20 Support Agreements........................................................... A-17
5.21 Derivatives Contracts........................................................ A-17
</TABLE>
A-2
<PAGE> 82
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE SIX -- REPRESENTATIONS AND WARRANTIES OF REGIONS............................... A-17
6.1 Organization, Standing, and Power............................................ A-17
6.2 Authority; No Breach By Agreement............................................ A-18
6.3 Capital Stock................................................................ A-18
6.4 Financial Statements......................................................... A-18
6.5 Absence of Undisclosed Liabilities........................................... A-19
6.6 Absence of Certain Changes or Events......................................... A-19
6.7 Compliance With Laws......................................................... A-19
6.8 Legal Proceedings............................................................ A-19
6.9 Reports...................................................................... A-19
6.10 Statements True and Correct.................................................. A-20
6.11 Authority of Regions Bank.................................................... A-20
6.12 Tax and Regulatory Matters................................................... A-20
ARTICLE SEVEN -- CONDUCT OF BUSINESS PENDING CONSUMMATION.............................. A-21
7.1 Covenants of Both Parties.................................................... A-21
7.2 Covenants of Rockdale........................................................ A-21
7.3 Covenants of Regions......................................................... A-22
7.4 Adverse Changes in Condition................................................. A-22
7.5 Reports...................................................................... A-23
ARTICLE EIGHT -- ADDITIONAL AGREEMENTS................................................. A-23
8.1 Registration Statement; Proxy Statement; Stockholder Approval................ A-23
8.2 Nasdaq/NMS Listing........................................................... A-23
8.3 Applications................................................................. A-23
8.4 Agreement as to Efforts to Consummate........................................ A-23
8.5 Investigation and Confidentiality............................................ A-24
8.6 Press Releases............................................................... A-24
8.7 Certain Actions.............................................................. A-24
8.8 Tax Matters.................................................................. A-24
8.9 Agreements of Affiliates..................................................... A-25
8.10 Employee Benefits and Contracts.............................................. A-25
8.11 Indemnification.............................................................. A-25
8.12 State Takeover Laws.......................................................... A-26
8.13 Articles of Incorporation Provisions......................................... A-26
ARTICLE NINE -- CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE........................................................................... A-26
9.1 Conditions to Obligations of Each Party...................................... A-26
9.2 Conditions to Obligations of Regions......................................... A-27
9.3 Conditions to Obligations of Rockdale........................................ A-28
ARTICLE TEN -- TERMINATION............................................................. A-28
10.1 Termination.................................................................. A-28
10.2 Effect of Termination........................................................ A-31
10.3 Non-Survival of Representations and Covenants................................ A-31
ARTICLE ELEVEN -- MISCELLANEOUS........................................................ A-31
11.1 Definitions.................................................................. A-31
11.2 Expenses..................................................................... A-35
11.3 Brokers and Finders.......................................................... A-36
11.4 Entire Agreement............................................................. A-36
11.5 Amendments................................................................... A-36
11.6 Waivers...................................................................... A-36
11.7 Assignment................................................................... A-36
</TABLE>
A-3
<PAGE> 83
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
11.8 Notices...................................................................... A-36
11.9 Governing Law................................................................ A-37
11.10 Counterparts................................................................. A-37
11.11 Captions..................................................................... A-37
11.12 Severability................................................................. A-37
Signatures........................................................................... A-38
</TABLE>
A-4
<PAGE> 84
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------
<C> <C> <S>
1. -- Form of Support Agreement. (sec. 11.1).
2. -- Form of Plan of Merger between Rockdale and Regions Bank. (sec.sec. 1.1, 11.1).
3. -- Form of agreement of affiliates of Rockdale. (sec. 8.9).
4. -- Form of Claims Letter. (sec. 9.2).
5. -- Form of Opinion Letter of Rockdale's Counsel. (sec. 9.2).
6. -- Form of Opinion Letter of Regions' Counsel. (sec. 9.3).
</TABLE>
A-5
<PAGE> 85
AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into as of March 12, 1996, and amended and
restated as of May 20, 1996, by and between ROCKDALE COMMUNITY BANK
("Rockdale"), a state bank organized and existing under the laws of the State of
Georgia, with its principal office located in Conyers, 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 Rockdale and Regions are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective stockholders. This Agreement provides for the acquisition of Rockdale
by Regions pursuant to the merger of Rockdale with and into Regions Bank, a
state bank organized and existing under the Laws of the State of Georgia and a
wholly owned subsidiary of Regions, with its principal office located in
Gainesville, Georgia. At the effective time of such merger, the outstanding
shares of the common stock of Rockdale shall be converted into the right to
receive shares of the common stock of Regions (except as provided herein). As a
result, stockholders of Rockdale shall become stockholders of Regions. The
transactions described in this Agreement are subject to the approvals of the
stockholders of Rockdale, the Federal Deposit Insurance Corporation, appropriate
state regulatory authorities, and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the Merger for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and that the exchange of Rockdale common stock, to the extent exchanged
for Regions common stock, will not give rise to gain or loss to the holders of
Rockdale common stock with respect to such exchange.
Within seven (7) days of the execution and delivery of this Agreement, as a
condition and inducement to "Regions" willingness to consummate the transactions
contemplated by this Agreement, each of Rockdale's directors and executive
officers will execute and deliver to Regions an agreement (a "Support
Agreement"), in substantially the form of Exhibit 1 to this Agreement.
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, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE ONE
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement and the
Plan of Merger, at the Effective Time, Rockdale shall be merged with and into
Regions Bank as authorized by Section 7-1-530 of the Financial Institutions Code
of Georgia and in accordance with the provisions of Sections 7-1-531, 7-1-532,
and 7-1-533 of the Financial Institutions Code of Georgia. Regions Bank shall be
the Surviving Bank resulting from the Merger and shall continue to operated as
an wholly-owned, first tier Subsidiary of Regions and shall continue to be
governed by the Laws of the State of Georgia. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the respective Boards of Directors of Rockdale and Regions, and the terms of a
Plan of Merger to be entered into by Regions Bank and Rockdale.
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 the offices of Regions, or such other place as may be
mutually agreed upon by the Parties.
A-6
<PAGE> 86
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time that the Georgia
Certificate of Merger reflecting the Merger is issued by the Secretary of State
of the State of Georgia (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the duly
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time to occur on the first business day following
the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the stockholders of Rockdale approve this Agreement to the
extent such approval is required by applicable Law; or such later date within
thirty (30) days of such date as may be specified by Regions.
ARTICLE TWO
TERMS OF MERGER
2.1 BUSINESS OF SURVIVING BANK. The business of the Surviving Bank from
and after the Effective Time shall continue to be that of a state bank organized
under the laws of the State of Georgia. The business shall be conducted from its
main office located in such place as Regions may determine and at its legally
established branches, which shall also include the main office and all branches,
whether in operation or approved but unopened, at the Effective Time.
2.2 ASSUMPTION OF RIGHTS. At the Effective Time, the separate existence
and corporate organization of Rockdale shall be merged into and continued in the
Surviving Bank. All rights, franchises, and interests of both Regions Bank and
Rockdale in and to every type of property (real, personal, and mixed), and all
choses in action of both Regions Bank and Rockdale shall be transferred to and
vested in the Surviving Bank without any deed or other transfer. The Surviving
Bank, upon consummation of the Merger and without any order or other action on
the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations, and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, and committee of estates of incompetent persons, and in every other
fiduciary capacity, in the same manner and to the same extent as such rights,
franchises, and interests were held or enjoyed by either Regions Bank or
Rockdale at the Effective Time.
2.3 ASSUMPTION OF LIABILITIES. All liabilities and obligations of both
Regions Bank and Rockdale of every kind and description shall be assumed by the
Surviving Bank, and the Surviving Bank shall be bound thereby in the same manner
and to the same extent that Regions Bank and Rockdale were so bound at the
Effective Time.
2.4 ARTICLES OF INCORPORATION. The Articles of Incorporation of Regions
Bank in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Bank until otherwise amended or repealed.
2.5 BYLAWS. The Bylaws of Regions Bank in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Bank until otherwise amended
or repealed.
2.6 DIRECTORS AND OFFICERS. The directors of Regions Bank 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 Bank
from and after the Effective Time in accordance with the Bylaws of the Surviving
Bank. The officers of Regions Bank 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 Bank from and after the Effective Time in
accordance with the Bylaws of the Surviving Bank.
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ARTICLE THREE
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article Three,
at the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of the constituent corporations or
associations shall be converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Regions Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(c) Each share of Rockdale Common Stock (excluding shares held by any
Rockdale Company or by any Regions Company, which shares shall be canceled
as provided in Section 3.3 of this Agreement, in each case other than in a
fiduciary capacity or in satisfaction of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for .515116 of a share of Regions
Common Stock, subject to adjustment as provided in Section 10.1(h) of this
Agreement (the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Rockdale or Regions changes the
number of shares of Rockdale Common Stock or Regions Common Stock, respectively,
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 shall be prior to the Effective Time, the Exchange Ratio
shall be proportionately adjusted.
3.3 SHARES HELD BY ROCKDALE OR REGIONS. Each of the shares of Rockdale
Common Stock held by any Rockdale Company or by any Regions Company, in each
case other than in a fiduciary capacity or in satisfaction of debts previously
contracted, shall be canceled and retired at the Effective Time, and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING STOCKHOLDERS. Any holder of shares of Rockdale Common Stock
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 7-1-537 of the Financial Institutions Code of
Georgia and Section 14-2-1106 of the GBCC shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of Law;
provided, however, 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 the Surviving Bank 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
Rockdale 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 Rockdale Common
Stock is entitled under this Article Three (without interest) upon surrender by
such holder of the certificate or certificates representing shares of Rockdale
Common Stock held by such holder. Rockdale will establish an escrow account with
an amount sufficient to satisfy the maximum aggregate payment that may be
required to be paid to dissenting stockholders. Upon satisfaction of all claims
of dissenting stockholders, the remaining escrowed amount, reduced by payment of
the fees and expenses of the escrow agent, will be returned to Rockdale.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Rockdale Common Stock exchanged pursuant to
the Merger, or of options to purchase shares of Rockdale Common Stock, who would
otherwise have been entitled to receive a fraction of a share of Regions Common
Stock (after taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Regions Common Stock multiplied by the market
value of one share of Regions Common Stock at the Effective Time, in the case of
shares exchanged pursuant to the Merger, or the date of exercise, in the case of
options. The market value of one share of Regions Common Stock at the Effective
Time or the date of exercise, as the case may be, shall be the last sale price
of such common stock on the Nasdaq/NMS (as reported by The Wall Street Journal
or, if not
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reported thereby, any other authoritative source) on the last trading day
preceding the Effective Time, in the case of shares exchanged pursuant to the
Merger, and the date of exercise, in the case of options. No such holder will be
entitled to dividends, voting rights, or any other rights as a stockholder in
respect of any fractional shares.
3.6 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK. (a) At the Effective
Time, all rights with respect to Rockdale Common Stock pursuant to stock options
or stock appreciation rights ("Rockdale Options") granted by Rockdale under the
Rockdale Stock Plans, which are outstanding at the Effective Time, whether or
not exercisable, shall be converted into and become rights with respect to
Regions Common Stock, and Regions shall assume each Rockdale Option, in
accordance with the terms of the Rockdale Stock Plan and stock option agreement
by which it is evidenced. From and after the Effective Time, (i) each Rockdale
Option assumed by Regions may be exercised solely for shares of Regions Common
Stock (or cash in the case of stock appreciation rights), (ii) the number of
shares of Regions Common Stock subject to such Rockdale Option shall be equal to
the number of shares of Rockdale Common Stock subject to such Rockdale Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(iii) the per share exercise price under each such Rockdale Option shall be
adjusted by dividing the per share exercise price under each such Rockdale
Option by the Exchange Ratio and rounding down to the nearest cent. It is
intended that the foregoing assumption shall be undertaken in a manner that will
not constitute a "modification" as defined in Section 424 of the Internal
Revenue Code, as to any stock option which is an "incentive stock option."
Rockdale agrees to take all necessary steps to effectuate the foregoing
provisions of this Section 3.6.
(b) All restrictions or limitations on transfer with respect to Rockdale
Common Stock awarded under the Rockdale Stock Plans or any other plan, program,
or arrangement of any Rockdale Company, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with respect to shares of Regions Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this Agreement.
ARTICLE FOUR
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions shall
cause the exchange agent selected by Regions (the "Exchange Agent") to mail to
the former stockholders of Rockdale appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Rockdale Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of Rockdale Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.5 of this
Agreement, each holder of shares of Rockdale 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 Rockdale Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's certificate or certificates
representing the shares of Rockdale Common Stock for exchange as provided in
this Section 4.1. The certificate or certificates of Rockdale Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither Regions, the Surviving
Bank, nor the Exchange Agent shall be liable to a holder of Rockdale Common
Stock for any amounts paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property Law.
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4.2 RIGHTS OF FORMER ROCKDALE STOCKHOLDERS. At the Effective Time, the
stock transfer books of Rockdale shall be closed as to holders of Rockdale
Common Stock immediately prior to the Effective Time, and no transfer of
Rockdale 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 Rockdale
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which the holder thereof has perfected dissenters' rights of
appraisal as contemplated by Section 3.4 of this Agreement) shall from and after
the Effective Time represent for all purposes only the right to receive the
consideration provided in Sections 3.1 and 3.5 of this Agreement in exchange
therefor. To the extent permitted by Law, former stockholders of record of
Rockdale 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 Rockdale Common Stock are converted, regardless
of whether such holders have exchanged their certificates representing Rockdale
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 of Regions Common Stock 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
Rockdale 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 Rockdale Common Stock
certificate, both the Regions Common Stock certificate (together with all such
undelivered dividends or other distributions without interest) and any
undelivered cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF ROCKDALE
Except as disclosed in the referenced section of the Rockdale Disclosure
Memorandum, Rockdale hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Rockdale is a state bank 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 Assets.
Rockdale 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 Rockdale.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Rockdale has the corporate
power and authority necessary to execute, deliver, and perform its
obligations under this Agreement and the Plan of Merger and to consummate
the transactions contemplated hereby and thereby, subject to the approval
of this Agreement by the holders of two-thirds of the outstanding shares of
Rockdale Common Stock. The execution, delivery, and performance of this
Agreement and the Plan of Merger and the consummation of the transactions
contemplated herein and therein, including the Merger, have been or will be
duly and validly authorized by all necessary corporate action in respect
thereof on the part of Rockdale, subject to the approval of this Agreement
and the Plan of Merger by the holders of two-thirds of the outstanding
shares of Rockdale Common Stock. Subject to such requisite approval, this
Agreement represents, and, when executed and delivered, the Plan of Merger
will represent, legal, valid, and binding obligations of Rockdale,
enforceable against Rockdale in accordance with their respective terms
(except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that
the availability of the
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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 and the Plan
of Merger by Rockdale, nor the consummation by Rockdale of the transactions
contemplated hereby or thereby, nor compliance by Rockdale with any of the
provisions hereof or thereof, will (i) conflict with or result in a breach
of any provision of Rockdale's Articles of Incorporation or Bylaws, or (ii)
except as disclosed in Section 5.2(b) of the Rockdale Disclosure
Memorandum, 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
Rockdale Company under, any Contract or Permit of any Rockdale Company, or
(iii) subject to receipt of the requisite approvals referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any
Rockdale Company or any of their respective 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, 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 Rockdale, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Rockdale of the Merger and the other transactions
contemplated in this Agreement or the Plan of Merger.
5.3 CAPITAL STOCK. (a) The authorized capital stock of Rockdale
consists of (i) 10,000,000 shares of Rockdale Common Stock, of which
523,614 shares are issued and outstanding as of the date of this Agreement
and not more than 553,014 shares will be issued and outstanding at the
Effective Time. All of the issued and outstanding shares of Rockdale Common
Stock are duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of Rockdale Common Stock has
been issued in violation of any preemptive rights of the current or past
stockholders of Rockdale.
(b) Except as set forth in Section 5.3(a) of this Agreement, there are
no shares of capital stock or other equity securities of Rockdale
outstanding and no outstanding options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares of
the capital stock of Rockdale or contracts, commitments, understandings, or
arrangements by which Rockdale is or may be bound to issue additional
shares of Rockdale capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.
5.4 ROCKDALE SUBSIDIARIES. Rockdale has disclosed in Section 5.4 of
the Rockdale Disclosure Memorandum all of the Rockdale Subsidiaries as of
the date of this Agreement. Except as disclosed, Rockdale or one of its
Subsidiaries owns all of the issued and outstanding shares of capital stock
of each Rockdale Subsidiary. No equity securities of any Rockdale
Subsidiary are or may become required to be issued (other than to a
Rockdale Company) by reason of any options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating
to, or securities or rights convertible into or exchangeable for, shares of
the capital stock of any such Subsidiary, and there are no Contracts by
which any Rockdale Subsidiary is bound to issue (other than to a Rockdale
Company) additional shares of its capital stock or options, warrants, or
rights to purchase or acquire any additional shares of its capital stock or
by which any Rockdale Company is or may be bound to transfer any shares of
the capital stock of any Rockdale Subsidiary (other than to a Rockdale
Company). There are no Contracts relating to the rights of any Rockdale
Company to vote or to dispose of any shares of the capital stock of any
Rockdale Subsidiary. All of the shares of capital stock of each Rockdale
Subsidiary held by a Rockdale Company are duly authorized, validly issued,
and 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 Rockdale Company free and clear of any Lien. Each Rockdale
Subsidiary is a corporation, and is duly organized, validly existing, and
in good standing under the Laws of the jurisdiction in which it is
incorporated or
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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 Rockdale 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 Rockdale.
5.5 FINANCIAL STATEMENTS. Rockdale has disclosed in Section 5.5 of
the Rockdale Disclosure Memorandum, and has delivered to Regions copies of,
all Rockdale Financial Statements prepared for periods ended prior to the
date hereof and will deliver to Regions copies of all Rockdale Financial
Statements prepared subsequent to the date hereof. The Rockdale Financial
Statements (as of the dates thereof and for the periods covered thereby)
(i) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of the Rockdale Companies, which are
or will be, as the case may be, complete and correct and which have been or
will have been, as the case may be, maintained in accordance with good
business practices, and (ii) present or will present, as the case may be,
fairly the consolidated financial position of the Rockdale Companies as of
the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows of the Rockdale Companies for the
periods indicated, in accordance with GAAP (subject to any exceptions as to
consistency specified therein or as may be indicated in the notes thereto
or, in the case of interim financial statements, to normal recurring
year-end adjustments that are not material).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of Rockdale,
no Rockdale Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Rockdale,
except Liabilities which are accrued or reserved against in the
consolidated balance sheets of Rockdale as of September 30, 1995 included
in the Rockdale Financial Statements or reflected in the notes thereto.
Except as disclosed in Section 5.6 of the Rockdale Disclosure Memorandum,
no Rockdale Company has incurred or paid any Liability since September 30,
1995, except for such Liabilities incurred or paid in the ordinary course
of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Rockdale.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995,
except as disclosed in the Rockdale Financial Statements filed with the
FDIC after such date and prior to the date of this Agreement, (i) there
have been no events, changes, or occurrences which have had, or are
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Rockdale, and (ii) the Rockdale 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 Rockdale provided in Article Seven
of this Agreement.
5.8 TAX MATTERS. (a) All Tax returns required to be filed by or on
behalf of any of the Rockdale Companies have been timely filed, or requests
for extensions have been timely filed, granted, and have not expired for
periods ended on or before December 31, 1994 and on or before the date of
the most recent fiscal year end immediately preceding the Effective Time,
except to the extent that all such failures to file, taken together, are
not reasonably likely to have a Material Adverse Effect on Rockdale, and
all such returns filed are complete and accurate in all material respects.
All Taxes shown on filed 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 Rockdale,
except to the extent reserved against in the Rockdale Financial Statements
dated 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 Rockdale Companies has executed an extension or waiver
of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years
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currently under examination by the Internal Revenue Service or other
applicable Taxing authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due for any of
the Rockdale Companies for the period or periods through and including the
date of the respective Rockdale Financial Statements has been made and is
reflected on such Rockdale Financial Statements.
5.9 ASSETS. Except as disclosed or reserved against in the Rockdale
Financial Statements, the Rockdale Companies have good and marketable
title, free and clear of all Liens, to all of their respective Assets that
are material to the business of the Rockdale Companies. All material
tangible properties used in the businesses of the Rockdale Companies are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Rockdale's past practices. All
Assets which are material to the business of the Rockdale Companies, held
under leases or subleases by any of the Rockdale 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.
5.10 ENVIRONMENTAL MATTERS. (a) To the Knowledge of Rockdale, each
Rockdale 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 Rockdale.
(b) To the Knowledge of Rockdale, there is no Litigation pending or
threatened before any court, governmental agency, or authority, or other
forum in which any Rockdale Company or any of its Participation Facilities
has been or, with respect to threatened Litigation, may be named as a
defendant (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 (as defined below) or oil, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by
any Rockdale Company or any of its 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
Rockdale.
(c) To the Knowledge of Rockdale, there is no Litigation pending or
threatened before any court, governmental agency, or board, or other forum
in which any of its Loan Properties (or Rockdale in respect of such Loan
Property) 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
or oil, whether or not occurring at, on, under, or involving a Loan
Property, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Rockdale.
(d) To the Knowledge of Rockdale, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Rockdale.
(e) To the Knowledge of Rockdale, during the period of (i) any
Rockdale Company's ownership or operation of any of their respective
current properties, (ii) any Rockdale Company's participation in the
management of any Participation Facility, or, (iii) any Rockdale Company's
holding of a security interest in a Loan Property, there have been no
releases of Hazardous Material or oil in, on, under, or affecting such
properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Rockdale. Prior to the
period of (i) any Rockdale Company's ownership or operation of any of their
respective current properties, (ii) any Rockdale Company's participation in
the management of any Participation Facility, or (iii) any Rockdale
Company's holding of a security interest in a Loan Property, to the
Knowledge of Rockdale, there were no releases of Hazardous Material or oil
in,
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on, under, or affecting any such property, Participation Facility, or Loan
Property, except such as are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Rockdale.
5.11 COMPLIANCE WITH LAWS. Rockdale is an "insured depository
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder. Each Rockdale Company has in effect all Permits
necessary for it to own, lease, or operate its 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 Rockdale, 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
Rockdale. None of the Rockdale 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 Rockdale; 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 Rockdale Company
is not in compliance with any of the material Laws or material 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 Rockdale, (ii)
threatening to revoke any material Permits the revocation of which is
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Rockdale, or (iii) requiring any Rockdale Company (x)
to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, commitment, or memorandum of understanding,
or (y) 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 management, or the payment of
dividends.
5.12 LABOR RELATIONS. No Rockdale Company is the subject of any
Litigation asserting that it or any other Rockdale 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 Rockdale
Company to bargain with any labor organization as to wages or conditions of
employment, nor is any Rockdale Company a party to or bound by any
collective bargaining agreement, contract, or other agreement or
understanding with a labor union or labor organization, nor is there any
strike or other labor dispute involving any Rockdale Company, pending or
threatened, or to its Knowledge, is there any activity involving any
Rockdale Company's employees seeking to certify a collective bargaining
unit or engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS. (a) Rockdale has disclosed in Section
5.13 of the Rockdale Disclosure Memorandum, and has delivered or made
available to Regions prior to the execution of this Agreement correct and
complete 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 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, without limitation, "employee benefit plans" as
that term is defined in Section 3(3) of ERISA, currently or previously
adopted, maintained by, sponsored in whole or in part by, or contributed to
by any Rockdale Company 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 "Rockdale Benefit Plans"). Any of the Rockdale Benefit
Plans which is an "employee welfare benefit plan," as that term is defined
in Section 3(l) of ERISA, or an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a
"Rockdale ERISA Plan." Any Rockdale ERISA Plan which is also a "defined
benefit plan" (as defined in Section 414(j) of the Internal Revenue Code or
Section 3(35) of ERISA) is referred to herein as a "Rockdale Pension Plan."
On or after September 26, 1980, neither Rockdale nor any Rockdale Company
has had an "obligation to contribute" (as defined in ERISA Section 4212) to
a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)).
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(b) Rockdale has delivered or made available to Regions prior to the
execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Rockdale Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Rockdale Benefit Plans or
amendments, all determination letters, rulings, opinion letters,
information letters, or advisory opinions issued by the Internal Revenue
Service, the United States Department of Labor, or the Pension Benefit
Guaranty Corporation after December 31, 1974, (iii) annual reports or
returns, audited or unaudited financial statements, actuarial valuations
and reports, and summary annual reports prepared for any Rockdale Benefit
Plan with respect to the most recent three plan years, and (iv) the most
recent summary plan descriptions and any material modifications thereto.
(c) All Rockdale 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 Rockdale.
Each Rockdale 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 Rockdale is not aware of any
circumstances which will or could result in revocation of any such
favorable determination letter. Each trust created under any Rockdale ERISA
Plan has been determined to be exempt from Tax under Section 501(a) of the
Internal Revenue Code and Rockdale is not aware of any circumstance which
will or could result in revocation of such exemption. With respect to each
Rockdale Benefit Plan, except as disclosed in Section 5.13(c) of the
Rockdale Disclosure Memorandum, no event has occurred which will or could
give rise to a loss of any intended Tax consequences under the Internal
Revenue Code or to any Tax under Section 511 of the Internal Revenue Code.
There is no material pending or threatened Litigation relating to any
Rockdale ERISA Plan. No Rockdale Company has engaged in a transaction with
respect to any Rockdale Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject any Rockdale
Company to a tax or penalty 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 Rockdale.
(d) No Rockdale 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 Rockdale Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Rockdale Pension Plan, and (iii)
no increase in benefits under any Rockdale 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 Rockdale or
materially adversely affect the funding status of any such plan. Neither
any Rockdale Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained
by any Rockdale Company, or the single-employer plan of any entity which is
considered one employer with Rockdale under Section 4001 of ERISA or
Section 414 of the Internal Revenue Code or Section 302 of ERISA (whether
or not waived) (an "ERISA Affiliate") has an "accumulated funding
deficiency" within the meaning of Section 412 of the Internal Revenue Code
or Section 302 of ERISA. No Rockdale Company has provided, or is required
to provide, security to a Rockdale Pension Plan or to any single-employer
plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(e) No liability under Title IV of ERISA has been or is expected to be
incurred by any Rockdale Company with respect to any defined benefit plan
currently or formerly maintained by any of them or by any ERISA Affiliate).
(f) No Rockdale Company has any obligations for retiree health and
life benefits under any of the Rockdale Benefit Plans.
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(g) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any director
or any employee of any Rockdale Company from any Rockdale Company under any
Rockdale Benefit Plan or otherwise, (ii) increase any benefits otherwise
payable under any Rockdale Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(h) No oral or written representation or communication with respect to
any aspect of the Rockdale Benefit Plans has been made to employees of any
of the Rockdale Companies prior to the date hereof which is not in
accordance with the written or otherwise preexisting terms and provisions
of such plans. All Rockdale Benefit Plan documents and annual reports or
returns, audited or unaudited financial statements, actuarial valuations,
summary annual reports, and summary plan descriptions issued with respect
to the Rockdale Benefit Plans are correct and complete and there have been
no changes in the information set forth therein.
5.14 MATERIAL CONTRACTS. None of the Rockdale Companies, nor any of
their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under (i) any employment,
severance, termination, consulting, or retirement Contract providing for
aggregate payments to any Person in any calendar year in excess of $50,000,
(ii) any Contract relating to the borrowing of money by any Rockdale
Company or the guarantee by any Rockdale 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, trade payables, and Contracts relating to borrowings or
guarantees made in the ordinary course of business), (iii) any Contracts
between or among Rockdale Companies; and (iv) any other Contract or
amendment thereto that would be required to be filed as an exhibit to a
Form 10-K filed by Rockdale with the SEC as of the date of this Agreement
if Rockdale were required to file a Form 10-K with the SEC (together with
all Contracts referred to in Sections 5.9 and 5.13(a) of this Agreement,
the "Rockdale Contracts"). None of the Rockdale Companies is in Default
under any Rockdale Contract which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on Rockdale.
5.15 LEGAL PROCEEDINGS. Except to the extent specifically reserved
against in the Rockdale Financial Statements dated prior to the date of
this Agreement, there is no Litigation instituted or pending, or, to the
Knowledge of Rockdale, 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 Rockdale Company, or
against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on Rockdale, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Rockdale
Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Rockdale. Rockdale has disclosed in
Section 5.15 of the Rockdale Disclosure Memorandum all Litigation pending
or, to the Knowledge of Rockdale, threatened as of the date of this
Agreement where there are claims against Rockdale.
5.16 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Rockdale
Company or any Affiliate thereof to Regions pursuant to this Agreement or
any other document, agreement, or instrument referred to herein contains or
will contain any untrue statement of material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any Rockdale 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
contain any untrue statement of a material fact, or omit to state any
material fact required to be stated thereunder or necessary to make the
statements therein not misleading. None of the information supplied or to
be supplied by any Rockdale Company or any Affiliate thereof for inclusion
in the Proxy Statement to be mailed to Rockdale's stockholders in
connection with the Stockholders' Meeting, and any other documents to be
filed by a Rockdale Company or any Affiliate thereof with the SEC or any
other
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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
Rockdale, be false or misleading with respect to any material fact, or
contain any misstatement of material fact, or omit to state any material
fact required to be stated thereunder or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false
or misleading with respect to any material fact, or omit to state any
material fact required to be stated thereunder or necessary to correct any
material statement in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
any Rockdale 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.
5.17 TAX AND REGULATORY MATTERS. No Rockdale Company or any Affiliate
thereof has taken any action, 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 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. To the Knowledge of Rockdale, there exists no
fact, circumstance, or reason why the requisite Consents referred to in
Section 9.1(b) of this Agreement cannot be received in a timely manner
without imposition of any condition of the type described in the second
sentence of such Section 9.1(b).
5.18 STATE TAKEOVER LAWS. Each Rockdale 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.
5.19 ARTICLES OF INCORPORATION PROVISIONS. Each Rockdale 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 (other than a Regions Company) under the Articles of Incorporation,
Bylaws, or other governing instruments of any Rockdale Company or restrict
or impair the ability of Regions to vote, or otherwise to exercise the
rights of a stockholder with respect to, shares of any Rockdale Company
that may be acquired or controlled by it.
5.20 SUPPORT AGREEMENTS. Each of the directors and executive officers
of Rockdale has executed and delivered to Regions an agreement in
substantially the form of Exhibit 1 to this Agreement.
5.21 DERIVATIVES CONTRACTS. Neither Rockdale 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 SIX
REPRESENTATIONS AND WARRANTIES OF REGIONS
Except as disclosed in the referenced section of the Regions Disclosure
Memorandum, Regions hereby represents and warrants to Rockdale 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 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
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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 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, or (iii) subject to receipt of
the requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any Regions Company or any of their
respective 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 and other than Consents, filings, or notifications which, if
not obtained or made, is 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 or Regions Bank of the Merger and the other
transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Regions consists
of 120,000,000 shares of Regions Common Stock, of which 45,460,362 shares
were issued and outstanding and 614,000 shares were held as treasury shares
as of December 31, 1995. All of the issued and outstanding shares of
Regions Common Stock are, and all of the shares of Regions Common Stock to
be issued in exchange for shares of Rockdale 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 Delaware GCL. 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 Rockdale 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 FINANCIAL STATEMENTS. Regions has disclosed in Section 6.4 of the
Regions Disclosure Memorandum and has delivered to Rockdale copies of all
Regions Financial Statements prepared for periods ended prior to the date
hereof and will deliver to Rockdale copies of all Regions Financial
Statements prepared subsequent to the date hereof. The Regions Financial
Statements (as of the dates thereof and for the periods covered thereby)
(i) are or, if dated after the date of this Agreement, will be in
accordance with the books and records of the Regions Companies, which are
or will be, as the case may be, complete and correct and which have been or
will have been, as the case may be, maintained in accordance with good
business practices, and (ii) present or will present, as the case may be,
fairly the consolidated financial position of the Regions Companies as of
the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows of the Regions Companies for the
periods indicated, in accordance with GAAP (subject to exceptions as to
consistency specified therein or
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as may be indicated in the notes thereto or, in the case of interim
financial statements, to normal recurring year-end adjustments that are not
material).
6.5 ABSENCE OF UNDISCLOSED LIABILITIES. No Regions Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, except Liabilities which
are accrued or reserved against in the consolidated balance sheets of
Regions as of September 30, 1995 included in the Regions Financial
Statements or reflected in the notes thereto. No Regions Company has
incurred or paid any Liability since September 30, 1995, except for such
Liabilities incurred or paid in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1995,
except as disclosed in the Regions Financial Statements filed with the SEC
after such date and prior to the date of this Agreement, 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.
6.7 COMPLIANCE WITH LAWS. Regions is duly registered as a bank
holding company under the BHC Act. Each Regions Company has in effect all
Permits necessary for it to own, lease, or operate its 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. None of the Regions 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 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 material Laws or material 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 are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
Regions, or (iii) requiring any Regions Company (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) 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 management, or the payment of dividends.
6.8 LEGAL PROCEEDINGS. Except to the extent specifically reserved
against in the Regions Financial Statements dated prior to the date of this
Agreement, there is no Litigation instituted or pending, or, to the
Knowledge of Regions, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any Regions Company, or
against any Asset, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on Regions, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Regions
Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions.
6.9 REPORTS. Since January 1, 1990, or the date of organization if
later, Regions has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required
to file with (i) the SEC, including, but not limited to, Forms 10-K, Forms
10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities,
and (iii) any applicable state securities or banking 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
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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 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.
6.10 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Regions
Company or any Affiliate thereof to Rockdale pursuant to this Agreement or
any other document, agreement, or instrument referred to herein contains or
will contain any untrue statement of material fact or will omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any 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
contain any untrue statement of a material fact, or omit to state any
material fact required to be stated thereunder or necessary to make the
statements therein not misleading. None of the information supplied or to
be supplied by any Regions Company or any Affiliate thereof for inclusion
in the Proxy Statement to be mailed to Rockdale'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
Rockdale, be false or misleading with respect to any material fact, or
contain any misstatement of material fact, or omit to state any material
fact required to be stated thereunder or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false
or misleading with respect to any material fact, or omit to state any
material fact required to be stated thereunder or necessary to correct any
statement in any earlier communication with respect to the solicitation of
any proxy for the 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.
6.11 AUTHORITY OF REGIONS BANK. Regions Bank is a state bank duly
organized, validly existing, and in good standing under the Laws of the
State of Georgia as a wholly owned, first tier Subsidiary of Regions.
Regions Bank has the corporate power and authority necessary to execute,
deliver, and perform its obligations under the Plan of Merger and to
consummate the transactions contemplated thereby. The execution, delivery,
and performance of the Plan of Merger and the consummation of the
transactions contemplated therein, including the Merger, will be duly and
validly authorized by all necessary corporate action in respect thereof on
the part of Regions Bank. When executed and delivered, the Plan of Merger
will represent a legal, valid, and binding obligation of Regions Bank,
enforceable against Regions Bank 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).
6.12 TAX AND REGULATORY MATTERS. No Regions Company or any Affiliate
thereof has taken any action, 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 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. To the Knowledge of Regions, there exists no
fact, circumstance, or reason why the requisite Consents referred to in
Section 9.1(b) of this Agreement cannot be received in a timely manner
without imposition of any condition of the type described in the second
sentence of such Section 9.1(b).
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ARTICLE SEVEN
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 COVENANTS OF BOTH PARTIES. Unless the prior written consent of the
other Party shall have been obtained, and except as otherwise expressly
contemplated herein, each Party 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 organizations and Assets and maintain its
rights and franchises, and (iii) take no action which would materially adversely
affect the ability of any Party to (a) obtain any Consents required for the
transactions contemplated hereby, or (b) perform its covenants and agreements
under this Agreement in all material respects and to consummate the Merger;
provided, that the foregoing shall not prevent any Regions Company from
discontinuing or disposing of any of its Assets or business, or from acquiring
or agreeing to acquire any other Person or any Assets thereof, if such action
is, in the judgment of Regions, desirable in the conduct of the business of
Regions and its Subsidiaries.
7.2 COVENANTS OF ROCKDALE. Except as specifically contemplated or
permitted by this Agreement, from the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement, Rockdale 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 a duly authorized officer of Regions:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any Rockdale Company; or
(b) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money (other
than indebtedness of a Rockdale Company to another Rockdale Company) in
excess of an aggregate of $100,000 (for the Rockdale Companies on a
consolidated basis) except in the ordinary course of the business of
Rockdale Companies consistent with past practices (which shall include, for
Rockdale, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Home Loan Bank or the Federal Reserve Bank, and
entry into repurchase agreements fully secured by U.S. government or agency
securities), or, except as disclosed in Section 7.2(b) of the Rockdale
Disclosure Memorandum, forgive any such indebtedness of any Person to any
Rockdale Company (in excess of an aggregate of $25,000), or impose, or
suffer the imposition, on any share of stock held by any Rockdale Company
of any Lien or permit any such Lien to exist; 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 Rockdale Company, or declare or pay any dividend
or make any other distribution in respect of any Rockdale Common Stock;
provided that Rockdale may (to the extent legally able to do so), but shall
not be obligated to, declare and pay regular semiannual cash dividends on
the Rockdale Common Stock at a rate not in excess of $0.30 per share with
record and payment dates in accordance with Rockdale's past record dates
for cash dividends as disclosed in Section 7.2(c) of the Rockdale
Disclosure Memorandum, and further provided that, in the event the
Effective Time occurs at a date that would not permit the payment of such
semiannual dividend in accordance with Rockdale's past record dates for
cash dividends as disclosed in Section 7.2(c) of the Rockdale Disclosure
Memorandum and would be subsequent to the record date for the quarterly
dividend payable by Regions on Regions Common Stock for the quarter in
which the Effective Time occurs, Rockdale may pay a quarterly cash dividend
on the Rockdale Common Stock not to exceed $.15 per share; or
(d) except pursuant to the exercise of stock options outstanding as of
the date hereof and pursuant to the terms thereof in existence on the date
hereof, issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional
shares of Rockdale Common Stock or any other capital stock of any Rockdale
Company, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
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(e) adjust, split, combine, or reclassify any capital stock of any
Rockdale Company or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of Rockdale Common Stock or
sell, lease, mortgage, or otherwise dispose of or otherwise encumber any
shares of capital stock of any Rockdale Subsidiary (unless any such shares
of stock are sold or otherwise transferred to another Rockdale Company) or
any Assets having in the aggregate a book value in excess of $100,000 other
than in the ordinary course of business for reasonable and adequate
consideration; or
(f) acquire direct or indirect control over, or invest in equity
securities of, any Person, other than in connection with (i) foreclosures
in the ordinary course of business, or (ii) acquisitions of control by
Rockdale in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any Rockdale Company except as disclosed in Section 7.2(g) of
the Rockdale Disclosure Memorandum or as required by Law; pay any bonus
except pursuant to the provisions of any applicable program or plan adopted
by its Board of Directors prior to the date of this Agreement and disclosed
in Section 7.2(g) of the Rockdale Disclosure Memorandum; enter into or
amend any severance agreements with officers of any Rockdale Company except
as disclosed in Section 7.2(g) of the Rockdale Disclosure Memorandum; grant
any increase in fees or other increases in compensation or other benefits
to directors of any Rockdale Company; or
(h) except as disclosed in Section 7.2(h) of the Rockdale Disclosure
Memorandum, enter into or amend any employment Contract between any
Rockdale Company and any Person (unless such amendment is required by Law)
that the Rockdale 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) except as disclosed in Section 7.2(i) of the Rockdale Disclosure
Memorandum, adopt any new employee benefit plan or program of any Rockdale
Company or make any material change in or to any existing employee benefit
plans or programs of any Rockdale 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 accounting methods, principles,
or practices or systems of internal accounting controls, except as may be
necessary to conform to changes in regulatory accounting requirements or
GAAP; or
(k) commence or settle any Litigation other than in accordance with
past practice; provided that, except to the extent specifically reserved
against in the Rockdale Financial Statements dated prior to the date of
this Agreement, no Rockdale Company shall settle any Litigation involving
any Liability of any Rockdale Company for money damages in excess of
$25,000 or restrictions upon the operations of any Rockdale Company; or
(l) except in the ordinary course of business, enter into or terminate
any material Contract or make any change in any material lease or Contract,
other than renewals of leases and Contracts without material adverse
changes of terms or as disclosed pursuant to Sections 7.2(g), (h), or (i)
of the Rockdale Disclosure Memorandum.
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 will not, without the prior written consent of a
duly authorized officer of Rockdale amend the Certificate of Incorporation or
Bylaws of Regions, in each case, in any manner which is adverse to, and
discriminates against, the holders of Rockdale Common Stock.
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) is reasonably likely to cause
or constitute a material breach of any of its
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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 Rockdale shall deliver to Regions copies of
all such reports filed by Rockdale promptly after the same are filed. If
financial statements are contained in any such reports filed with the SEC, in
the case of Regions, or the FDIC, in the case of Rockdale, such financial
statements will fairly present the consolidated financial position of the entity
filing such statements as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC or the FDIC, as the
case may be, 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 EIGHT
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL. As soon
as reasonably practicable after the execution of this Agreement, Regions shall
file the Registration Statement with the SEC, provided Rockdale has provided, on
a reasonably timely basis, all information concerning Rockdale necessary for
inclusion in the Registration Statement, and shall use its reasonable efforts to
cause the Registration Statement to become effective under the 1933 Act as soon
as reasonably practicable after the filing thereof 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. Rockdale shall promptly furnish all information concerning it and the
holders of its capital stock as Regions may reasonably request in connection
with such action. Rockdale shall call a Stockholders' Meeting, to be held within
forty-five (45) days after the Registration Statement is declared effective by
the SEC, for the purpose of voting upon approval of (i) this Agreement and the
Plan of Merger, (ii) such other related matters as it deems appropriate. In
connection with the Stockholders' Meeting, (i) Rockdale shall, if required, file
the Proxy Statement (which shall be included in the Registration Statement) with
the FDIC and mail it 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 Rockdale
shall recommend (subject to compliance with their fiduciary duties as advised in
writing by counsel to such Board) to its stockholders the approval of this
Agreement and the Plan of Merger, and (iv) the Board of Directors and officers
of Rockdale shall use their reasonable efforts to obtain such stockholders'
approval (subject to compliance with their fiduciary duties as advised in
writing by counsel to such Board).
8.2 NASDAQ/NMS LISTING. Regions shall file with the NASD a notification
for the listing on the Nasdaq/NMS relating to the proposed issuance of the
shares of Regions Common Stock to be issued to the holders of Rockdale Common
Stock pursuant to the Merger.
8.3 APPLICATIONS. As soon as reasonably practicable after execution of
this Agreement, Regions shall prepare and file, and Rockdale 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. Regions shall use all reasonable
efforts to obtain the requisite Consents of all Regulatory Authorities as soon
as reasonably practicable after the filing of the appropriate applications.
8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be
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taken, all actions, and to do, or cause to be done, all things necessary,
proper, or advisable under applicable Laws to consummate and make effective, as
soon as practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including, without limitation, using its
reasonable efforts to lift or rescind any Order adversely affecting its ability
to consummate the transactions contemplated herein and to cause to be satisfied
the conditions applicable to such Party referred to in Article Nine of this
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.5 INVESTIGATION AND CONFIDENTIALITY. (a) Prior to the Effective Time,
each Party will keep the other Party advised of all material developments
relevant to its business and to consummation of the Merger and shall permit the
other Party to make or cause to be made such investigation of the business and
properties of it and its Subsidiaries and of their respective financial and
legal conditions as the other Party reasonably requests, provided that such
investigation shall be reasonably related to the transactions contemplated
hereby and, after the 45th day after execution of this Agreement, shall not
interfere unreasonably 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 and shall not use such information for any purpose except in
furtherance of the transactions contemplated by this Agreement. If this
Agreement is terminated prior to the Effective Time, each Party shall promptly
return all documents and copies thereof, and all work papers containing
confidential information received from the other Party.
(c) Rockdale shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering an
acquisition transaction with Rockdale to preserve the confidentiality of the
information relating to Rockdale provided to such parties.
8.6 PRESS RELEASES. Prior to the Effective Time, Rockdale and Regions
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
8.6 shall be deemed to prohibit any Party from making any disclosure which its
counsel advises as necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.7 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no Rockdale Company nor any Affiliate thereof
nor any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any Rockdale Company shall
directly or indirectly solicit any Acquisition Proposal by any Person. Except to
the extent necessary to comply with the fiduciary duties of Rockdale's Board of
Directors as advised in writing by counsel to such Board of Directors, no
Rockdale 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, and shall direct and use its reasonable efforts to cause all of its
Representatives not to engage in any of the foregoing, but Rockdale 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. Rockdale shall promptly notify Regions orally and in writing
in the event that it receives any inquiry or proposal relating to any such
transaction. Rockdale shall immediately cease and cause to be terminated as of
the date of this Agreement any existing activities, discussions, or negotiations
with any Persons conducted heretofore with respect to any of the foregoing.
8.8 TAX MATTERS. The Parties agree to use their reasonable efforts to
obtain written opinions of Alston & Bird to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, (ii) the exchange in the Merger of Rockdale Common Stock for
Regions Common Stock will not give rise to gain or loss to the stockholders of
Rockdale with respect to such exchange (except to the extent of any cash
received), (iii) the exchange or conversion by the stockholders of Rockdale of
their Rockdale Options for options with respect to Regions Common Stock, as
contemplated by Section 3.6 of this Agreement, will not give rise to any gain or
loss to such stockholders with respect to such exchange, and (iv) each of
Rockdale, Regions, and Regions Bank will be a party to that reorganization
within
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the meaning of Section 368(b) of the Internal Revenue Code ("Tax Opinions"). In
rendering such Tax Opinions, counsel shall be entitled to rely upon
representations of officers of Rockdale and Regions reasonably satisfactory in
form and substance to such counsel. 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 "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for Federal
income tax purposes.
8.9 AGREEMENTS OF AFFILIATES. Rockdale has disclosed in Section 8.9 of the
Rockdale Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of Rockdale for purposes of Rule 145 under the 1933 Act. Rockdale
shall use its reasonable efforts to cause each such Person to deliver to Regions
not later than thirty (30) days prior to the Effective Time, a written
agreement, substantially in the form of Exhibit 3 to this Agreement, providing
that such Person will not sell, pledge, transfer, or otherwise dispose of the
shares of Rockdale 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 Regions
shall be entitled to place restrictive legends upon certificates for shares of
Regions Common Stock issued to affiliates of Rockdale pursuant to this Agreement
to enforce the provisions of this Section 8.9). 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.
8.10 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
Regions shall provide generally to officers and employees of the Rockdale
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 8.10), 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 Rockdale
should be treated as service under Regions' qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of Rockdale shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of Rockdale shall be
treated as service under any similar employee benefit plans maintained by
Regions. Regions also shall cause Rockdale and its Subsidiaries to honor on
terms reasonably agreed upon by the Parties all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.10 of the
Rockdale Disclosure Memorandum to Regions between any Rockdale 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 Rockdale Benefit Plans.
8.11 INDEMNIFICATION. (a) Subject to the conditions set forth in paragraph
(b) below, for a period of six (6) years after the Effective Time, Regions
shall, and shall cause the Surviving Bank to, indemnify, defend, and hold
harmless each person entitled to indemnification from a Rockdale Company (each,
an "Indemnified Party") against all Liabilities arising out of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement) to the full extent
permitted by Georgia Law and Rockdale's Articles of Incorporation and Bylaws, in
each case as in effect on the date hereof, including provisions relating to
advances of expenses incurred in the defense of any Litigation. Without limiting
the foregoing, in any case in which approval by the Surviving Bank is required
to effectuate any indemnification, Regions shall cause the Surviving Bank to
direct, at the election of the Indemnified Party, that the determination of any
such approval shall be made by independent counsel mutually agreed upon between
Regions and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a), upon learning of any such Liability or Litigation, shall promptly notify
Regions thereof. In the event of any such Litigation (whether arising before or
after the Effective Time), (i) Regions or the Surviving Bank shall have the
right to assume the defense thereof and Regions shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
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the defense thereof, except that if Regions or the Surviving Bank elects not to
assume such defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between Regions or the
Surviving Bank and the Indemnified Parties, the Indemnified Parties may retain
counsel satisfactory to them, and Regions or the Surviving Bank shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that Regions
shall be obligated pursuant to this paragraph (b) to pay for only one firm of
counsel for all Indemnified Parties in any jurisdiction, (ii) the Indemnified
Parties will cooperate in the defense of any such Litigation, and (iii) Regions
shall not be liable for any settlement effected without its prior written
consent; and provided further that the Surviving Bank shall not have any
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall determine, and such determination shall have become final,
that the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable Law.
8.12 STATE TAKEOVER LAWS. Each Rockdale 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.
8.13 ARTICLES OF INCORPORATION PROVISIONS. Each Rockdale Company shall
take all necessary action to ensure that the entering into of this Agreement and
the Plan of Merger and the consummation of the Merger and the other transactions
contemplated hereby or thereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws, or other
governing instruments of any Rockdale 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 Rockdale Company that may
be directly or indirectly acquired or controlled by it.
ARTICLE NINE
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(A) STOCKHOLDER APPROVAL. The stockholders of Rockdale shall have
approved this Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and
to the extent required by Law or by the provisions of any governing
instruments.
(B) REGULATORY APPROVALS. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent so obtained which is necessary to consummate the
transactions as contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable good faith judgment of the Board of
Directors of Regions would so materially adversely impact the economic
benefits of the transaction as contemplated by this Agreement so as to
render inadvisable the consummation of the Merger.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any and
all other Consents required for consummation of the Merger (other than
those referred to in Section 9.1(b) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party which,
if not obtained or made, is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on such Party.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
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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) NASDAQ/NMS LISTING. The shares of Regions Common Stock issuable
pursuant to the Merger shall have been approved for listing on the
Nasdaq/NMS.
(G) TAX MATTERS. Each Party shall have received a copy of the Tax
Opinions referred to in Section 8.8 of this Agreement. Each Party shall
have delivered to the other a Certificate, dated as of the date of the Tax
Opinion, signed by its duly authorized officers, to the effect that, to the
best knowledge and belief of such officers, the statement of facts and
representations made on behalf of the management of such Party, presented
to the legal counsel delivering the Tax Opinions were at the date of such
presentation, true, correct, and complete, and are on the date of such
Certificate, to the extent contemplated by the presentation, true, correct,
and complete, as though such presentation had been made on the date of such
Certificate.
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 Rockdale 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 Rockdale 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 Rockdale set forth in Sections 5.17,
5.18, and 5.19 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Rockdale set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.17, 5.18, and
5.19) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Rockdale; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" shall be deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Rockdale 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. Rockdale 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
Rockdale'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.
(D) CLAIMS LETTERS. Each of the directors and officers of Rockdale
shall have executed and delivered to Regions letters in substantially the
form of Exhibit 4 to this Agreement.
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(E) LEGAL OPINION. Regions shall have received a written opinion,
dated as of the Effective Time, of counsel to Rockdale, in substantially
the form of Exhibit 5 to this Agreement.
(F) AFFILIATE AGREEMENTS. Regions shall have received from each
affiliate of Rockdale the affiliates agreement referred to in Section 8.9
of this Agreement.
9.3 CONDITIONS TO OBLIGATIONS OF ROCKDALE. The obligations of Rockdale 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 Rockdale 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 6.12 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 6.12) 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" 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 Rockdale (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, to the effect that, to the best knowledge of such
officers, after due inquiry, 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
and Regions Bank's Board of Directors and stockholders evidencing the
taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement and the Plan of Merger, as
appropriate, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as Rockdale and its counsel shall request.
(D) LEGAL OPINION. Rockdale shall have received a written opinion,
dated as of the Effective Time, of counsel to Regions, in substantially the
form of Exhibit 6 to this Agreement.
ARTICLE TEN
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement
and the Plan of Merger, and notwithstanding the approval of this Agreement by
the stockholders of Rockdale, 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 Rockdale; 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 Rockdale and Section 9.3(a)
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
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which cannot be or has not been cured within thirty (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 Rockdale and Section 9.3(a) of this
Agreement in the case of Regions; or
(c) 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 Rockdale and Section 9.3(a)
in the case of Regions or in material breach of any covenant or other
agreement contained in this Agreement) 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 thirty (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 Rockdale fail to vote their approval of this Agreement and
the Plan of Merger and the transactions contemplated hereby and thereby as
required by the Laws of the State of Georgia at the Rockdale Stockholders'
Meeting where the transactions were presented to such stockholders for
approval and voted upon; or
(e) By the Board of Directors of Rockdale or by the Board of Directors
of Regions in the event that the Merger shall not have been consummated by
December 31, 1996, in each case only 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 Rockdale and Section 9.3(a)
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 (other than as contemplated by Section 10.1(d) of this Agreement)
cannot be satisfied or fulfilled by the date specified in Section 10.1(e)
of this Agreement as the date after which such Party may terminate this
Agreement; or
(g) By the Board of Directors of Regions, at any time prior to the
45th day after execution of this Agreement, without any Liability if it
determines in its reasonable good faith judgment that the Asset quality of
Rockdale, the status of litigation involving Rockdale (or any other
liability or undisclosed contingency of Rockdale), any information in the
Rockdale Disclosure Memorandum, or the projected ability of Rockdale to
reduce its non-interest expenses are materially less favorable to Regions
than as set forth in materials previously disclosed or provided to Regions
by Rockdale and its financial advisor; or
(h) By the Board of Directors of Rockdale, if it determines by a vote
of a majority of the members of its entire Board, at any time during the
ten-day period commencing two days after the Determination Date, if both of
the following conditions are satisfied:
(1) the Average Closing Price of shares of Regions Common Stock
shall be less than $33.70; and
(2) (i) the quotient obtained by dividing the Average Closing Price
by $42.125 (such number being referred to herein as the "Regions Ratio")
shall be less than (ii) the quotient obtained by dividing the Index
Price on the Determination Date by the Index Price on the Starting Date
and subtracting 0.20 from the quotient in this clause (2)(ii) (such
number being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If Rockdale refuses to
consummate the Merger pursuant to this Section 10.1(h), it shall give prompt
written notice thereof to Regions; provided, that such notice of election to
terminate may be withdrawn at any time within the aforementioned ten-day period.
During the
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<PAGE> 109
five-day period commencing with its receipt of such notice, Regions shall have
the option to elect to increase the Exchange Ratio to equal the lesser of (i)
the quotient obtained by dividing (1) the product of $33.70 and the Exchange
Ratio (as then in effect) by (2) the Average Closing Price, and (ii) the
quotient obtained by dividing (1) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (2) the Regions Ratio. If Regions makes an
election contemplated by the preceding sentence, within such five-day period, it
shall give prompt written notice to First National of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred pursuant to
this Section 10.1(h) and this Agreement shall remain in effect in accordance
with its terms (except as the Exchange Ratio shall have been so modified), and
any references in this Agreement to "Exchange Ratio" shall thereafter be deemed
to refer to the Exchange Ratio as adjusted pursuant to this Section 10.1(h).
For purposes of this Section 10.1(h), the following terms shall have the
meanings indicated:
"AVERAGE CLOSING PRICE" shall mean the average of the daily last sales
prices of Regions Common Stock as reported on the Nasdaq NMS (as reported
by The Wall Street Journal or, if not reported thereby, another
authoritative source as chosen by Regions) for the ten consecutive full
trading days in which such shares are traded on the Nasdaq NMS ending at
the close of trading on the Determination Date.
"DETERMINATION DATE" shall mean the date of the Rockdale Stockholders'
Meeting.
"INDEX GROUP" shall mean the 20 bank holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company
to be acquired or for such company to acquire another company or companies
in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index Group, the weights (which shall be determined based upon the
number of outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The 20 bank
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
----------------------------------------------------------- ---------
<S> <C>
AmSouth Bancorporation..................................... 4.73%
Barnett Banks, Inc......................................... 7.80
Central Fidelity Banks, Inc................................ 3.23
Compass Bancshares, Inc.................................... 3.09
Crestar Financial Corporation.............................. 3.05
Deposit Guaranty Corporation............................... 1.52
First American Corporation................................. 2.06
First Commerce Corporation................................. 2.35
First Maryland Bancorp..................................... 1.37
First Tennessee National Corporation....................... 2.72
First Union Corporation.................................... 13.91
First Virginia Banks, Inc.................................. 2.75
Hibernia Corporation....................................... 9.65
Mercantile Bankshares Corporation.......................... 3.84
National Commerce Bancorporation........................... 2.00
SouthTrust Corporation..................................... 6.75
SunTrust Banks, Inc........................................ 9.24
Trustmark Corporation...................................... 2.83
Union Planters Corporation................................. 3.31
Wachovia Corporation....................................... 13.80
---------
TOTAL............................................ 100.00%
</TABLE>
"INDEX PRICE" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
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<PAGE> 110
"STARTING DATE" shall mean March 12, 1996.
If any company belonging to the Index Group or Regions declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the
Starting Date and the Determination Date, the prices for the common stock
of such company or Regions shall be appropriately adjusted for the purposes
of applying this Section 10.1(h).
10.2 EFFECT OF TERMINATION. In the event of the termination 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 Eleven and Section 8.5(b) of this Agreement shall survive any
such termination, 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. Each of the Support Agreements
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 Two, Three, Four, and Eleven and Sections 8.9, and 8.11 of this
Agreement.
ARTICLE ELEVEN
MISCELLANEOUS
11.1 DEFINITIONS. Except as otherwise provided herein, the capitalized
terms set forth below (in their singular and plural forms as applicable) 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 ten
percent (10%) or greater equity or voting interest of such Person, or (iii)
any other Person for which a Person described in clause (ii) acts in any
such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Reorganization,
including the Plan of Merger and each of the Support Agreements and the
other Exhibits delivered pursuant hereto and incorporated herein by
reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"BUSINESS COMBINATION" shall mean an acquisition of, merger or
combination with, share exchange involving any class of voting stock of,
sale of more than fifty percent (50%) of the consolidated assets by, or
other business combination involving, or tender offer for or sale or
issuance of any equity securities involving an acquisition by a third-party
of more than fifty percent (50%) of the voting stock of, Rockdale, other
than the formation of a newly organized holding company for Rockdale in
which the shares of Rockdale Common Stock are exchanged for shares of the
holding company on a basis that does not cause the respective beneficial
interests of each stockholder to change or transactions with a Regions
Company.
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<PAGE> 111
"CLOSING" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"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.
"DELAWARE GCL" shall mean the Delaware General Corporation Law.
"EFFECTIVE TIME" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
"ENVIRONMENTAL LAWS" shall mean all Laws which are administered,
interpreted, or enforced by the United States Environmental Protection
Agency and state and local agencies with jurisdiction over pollution or
protection of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA PLAN" shall have the meaning provided in Section 5.12 of this
Agreement.
"EXCHANGE AGENT" shall have the meaning provided in Section 4.1 of
this Agreement.
"EXCHANGE RATIO" shall have the meaning provided in Section 3.1(c) of
this Agreement.
"EXHIBITS" 1 through 6, 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.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et seq., or
any similar federal, state, or local Law.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person shall mean the knowledge
after due inquiry of the chairman, president, chief financial officer,
chief accounting officer, chief credit officer, general counsel, any
assistant or deputy general counsel, or any senior or executive vice
president of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting, or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities, or business, including, without limitation, those
promulgated, interpreted, or enforced by any of the Regulatory Authorities.
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<PAGE> 112
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including,
without limitation, costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute, or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository institutions, pledges to
secure deposits and other Liens incurred in the ordinary course of the
banking business, and (iii) Liens which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on a Party.
"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, but shall not include regular, periodic examinations
of depository institutions and their Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned by the Party in question
or by any of its Subsidiaries or in which such Party or Subsidiary holds a
security interest, and, where required by the context, includes the owner
or operator of such property, but only with respect to such property.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, 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, or (d) the Merger
and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"MERGER" shall mean the merger of Rockdale with and into Regions Bank
referred to in Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"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.
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<PAGE> 113
"PARTICIPATION FACILITY" shall mean any facility in which the Party in
question or any of its Subsidiaries participates in the management and,
where required by the context, includes the owner or operator or such
property, but only with respect to such property.
"PARTY" shall mean either Rockdale or Regions and "Parties" shall mean
both Rockdale and Regions.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"PLAN OF MERGER" shall mean the Plan of Merger, in substantially the
form of Exhibit 2 to this Agreement, to be entered into by Rockdale and
Regions Bank setting forth the terms of the Merger.
"PROXY STATEMENT" shall mean the proxy statement used by Rockdale to
solicit the approval of its stockholders of the transactions contemplated
by this Agreement and the Plan of Merger and shall include the prospectus
of Regions relating to the shares of Regions Common Stock to be issued to
the stockholders of Rockdale.
"REGIONS BANK COMMON STOCK" shall mean the $3.00 par value common
stock of Regions Bank.
"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
within seven days after the date of this Agreement to Rockdale describing
in reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information disclosed
with respect to one Section shall not be deemed to be disclosed for
purposes of any other Section not specifically referenced with respect
thereto.
"REGIONS FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of September 30, 1995, and as of December 31, 1994 and 1993, and
the related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the nine months
ended September 30, 1995, and each of the three years ended December 31,
1994, 1993, and 1992, as filed by Regions in SEC Documents and (ii) the
consolidated statements of condition of Regions (including related notes
and schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to periods
ended subsequent to September 30, 1995.
"REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, filed with the SEC by Regions under the
1933 Act 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 OTS, the Office of the
Comptroller of the Currency, the FDIC, all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries, the NASD,
and the SEC.
"ROCKDALE BENEFIT PLANS" shall have the meaning set forth in Section
5.12 of this Agreement.
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<PAGE> 114
"ROCKDALE COMMON STOCK" shall mean the $5.00 par value common stock of
Rockdale.
"ROCKDALE COMPANIES" shall mean, collectively, Rockdale and all
Rockdale Subsidiaries.
"ROCKDALE DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Rockdale Disclosure Memorandum" delivered within seven days after
the date of this Agreement to Regions describing in reasonable detail the
matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any other
Section not specifically referenced with respect thereto.
"ROCKDALE FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Rockdale
as of September 30, 1995, and as of December 31, 1994 and 1993, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the nine months
ended September 30, 1995, and for each of the three fiscal years ended
December 30, 1994, 1993, and 1992, as filed by Rockdale in FDIC Documents,
and (ii) the consolidated balance sheets of Rockdale (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 FDIC Documents filed with respect to periods
ended subsequent to September 30, 1995.
"ROCKDALE SUBSIDIARIES" shall mean the Subsidiaries of Rockdale, which
shall include the Rockdale Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Rockdale in the future and owned
by Rockdale at the Effective Time.
"SEC DOCUMENTS" shall mean all reports and registration statements
filed, or required to be filed, by a Party or any of its Subsidiaries with
any Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"STOCKHOLDERS' MEETING" shall mean the meeting of the stockholders of
Rockdale to be held pursuant to Section 8.1 of this Agreement, including
any adjournment or adjournments thereof.
"SUBSIDIARY" OR COLLECTIVELY "SUBSIDIARIES" shall mean all those
corporations, banks, associations, or other entities of which the entity in
question owns or controls fifty percent (50%) or more of the outstanding
equity securities either directly or through an unbroken chain of entities
as to each of which fifty percent (50%) or more of the outstanding equity
securities is owned directly or indirectly by its Regions; provided,
however, 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.
"SUPPORT AGREEMENTS" shall mean the various Support Agreements, each
in substantially the form of Exhibit 1 to this Agreement.
"SURVIVING BANK" shall mean Rockdale, as the surviving bank resulting
from the Merger.
"TAX" OR "TAXES" shall mean any federal, state, county, local or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, of any nature whatsoever,
including interest, penalties, and additions imposed thereon or with
respect thereto.
11.2 EXPENSES. (a) Except as otherwise provided in this Section 11.2, each
of the Parties shall bear and pay all direct costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that Regions shall bear and pay the filing fees
payable in connection with the Registration Statement and the Proxy
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<PAGE> 115
Statement and printing costs incurred in connection with the printing of the
Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained by
Rockdale or Regions, each of Rockdale and Regions, as the case may be, agrees to
indemnify and hold the other Party harmless of and from any Liability in respect
of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement,
expressed or implied, is intended to, or shall, 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 8.9 and 8.11 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties; provided, however, that after
any such approval by the holders of Rockdale Common Stock, there shall be made
no amendment decreasing the consideration to be received by Rockdale
stockholders without the further approval of such stockholders.
11.6 WAIVERS. (a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, vice chairman, or other
authorized officer, shall have the right to waive on behalf of it and Regions
Bank any Default in the performance of any term of this Agreement by Rockdale,
to waive or extend the time for the compliance or fulfillment by Rockdale 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, Rockdale, acting through its Board
of Directors, chief executive officer, or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Agreement
by Regions, to waive or extend the time for the compliance or fulfillment by
Regions or Regions Bank of any and all of their obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of Rockdale 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 Rockdale.
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
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<PAGE> 116
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 received:
Rockdale: Rockdale Community Bank
1172 Old Salem Road
Conyers, Georgia 30207-5994
Telecopy Number: (770) 760-1013
Attention: Charles D. East
President
Copy to Counsel: Sutherland, Asbill and Brennan
999 Peachtree Street, N.E.
Atlanta, Georgia 30309-3996
Telecopy Number: (404) 853-8806
Attention: B. Knox Dobbins
Regions: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial Officer
Copy to Counsel: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7099
Attention: Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
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 federal laws of the
United States may apply to the Merger.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 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> 117
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: ROCKDALE COMMUNITY BANK
By: /s/ HARRILL L. DAWKINS By: /s/ CHARLES D. EAST
----------------------------------------- -----------------------------------
Harrill L. Dawkins Charles D. East
Secretary President
[BANK SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ SAMUEL E. UPCHURCH, JR. By: /s/ WILLIAM E. JORDAN
----------------------------------------- ----------------------------------
Samuel E. Upchurch, Jr. William E. Jordan
Corporate Secretary Regional President
[CORPORATE SEAL]
</TABLE>
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<PAGE> 118
APPENDIX B
PLAN OF MERGER
THIS PLAN OF MERGER (this "Plan of Merger") is made and entered into as of
the 20th day of May, 1996, by and between ROCKDALE COMMUNITY BANK ("Rockdale"),
a state bank organized and existing under the laws of the State of Georgia, with
its principal office located in Conyers, Georgia, and REGIONS BANK ("Regions
Bank), a state bank organized and existing under the laws of the State of
Georgia, with its principal office located in Gainesville, Georgia.
PREAMBLE
Each of the Boards of Directors of Regions Bank and Rockdale deems it
advisable and in the best interests of their respective institutions and the
stockholders thereof for Rockdale to be merged into Regions Bank (the "Merger")
on the terms and conditions provided in this Plan of Merger. This Plan of Merger
is made and entered into pursuant to an Amended and Restated Agreement and Plan
of Reorganization, dated as of March 12, 1996, and amended and restated as of
May 20, 1996, by and between Rockdale and Regions Financial Corporation
("Regions"). At the Effective Time of the Merger, the outstanding shares of the
common stock of Rockdale shall be converted into the right to receive shares of
the common stock of Regions (subject to certain exceptions as set forth in the
Agreement). As a result, stockholders of Rockdale shall become stockholders of
Regions. It is intended 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 that the exchange of Rockdale common stock, to the
extent exchanged for Regions common stock, will not give rise to gain or loss to
the holders of Rockdale common stock with respect to such exchange.
NOW, THEREFORE, in consideration of the covenants and agreements contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Regions Bank and Rockdale hereby
make, adopt, and approve this Plan of Merger in order to set forth the terms and
conditions of the merger of Rockdale into Regions Bank.
ARTICLE ONE
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth below
(in their singular and plural forms, as applicable) shall have the following
meanings:
"AGREEMENT" shall mean the Amended and Restated Agreement and Plan of
Reorganization, dated as of March 12, 1996, and amended and restated as of
May 20, 1996, by and between Rockdale and Regions, including each of the
supporting agreements and the other exhibits delivered pursuant thereto and
incorporated therein by reference.
"CERTIFICATE OF MERGER" shall mean the certificate of merger issued by
the Secretary of State of the State of Georgia under Section 7-1-535 of the
Financial Institutions Code of Georgia.
"CLOSING" shall mean the closing of the transactions contemplated
hereunder, as described in Section 5.1 of this Plan of Merger.
"EFFECTIVE TIME" shall mean the date and time on which the Merger
contemplated by this Plan of Merger becomes effective pursuant to the laws
of the State of Georgia, as defined in Section 5.2 of this Plan of Merger.
"EXCHANGE AGENT" shall have the meaning specified in Section 4.1 of
this Plan of Merger.
"EXCHANGE RATIO" shall have the meaning specified in Section 3.1(c) of
this Plan of Merger.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended.
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"MERGER" shall mean the merger of Rockdale with and into Regions Bank,
as provided in Article Two of this Plan of Merger.
"NASDAQ/NMS" shall mean the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System.
"OTS" shall mean the Office of Thrift Supervision (including its
predecessor, the Federal Home Loan Bank Board).
"PARTY" shall mean either Regions Bank or Rockdale and "Parties" shall
mean both Regions Bank and Rockdale.
"REGIONS BANK COMMON STOCK" shall mean the $3.00 par value common
stock of Regions Bank.
"REGIONS COMMON STOCK" shall mean the $.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
subsidiaries.
"ROCKDALE COMMON STOCK" shall mean the $5.00 par value common stock of
Rockdale.
"ROCKDALE COMPANIES" shall mean, collectively, Rockdale and all
Rockdale subsidiaries.
"SURVIVING BANK" shall mean Regions Bank as the surviving bank
resulting from the Merger.
ARTICLE TWO
TERMS OF MERGER
2.1 MERGER. Subject to the terms of this Plan of Merger and the Agreement,
at the Effective Time, Rockdale shall be merged with and into Regions Bank as
authorized by Section 7-1-530 of the Financial Institutions Code of Georgia and
in accordance with the provisions of Sections 7-1-531, 7-1-532, and 7-1-533 of
the Financial Institutions Code of Georgia. Regions Bank shall be the Surviving
Bank resulting from the Merger and shall be a wholly-owned, first-tier
subsidiary of Regions and shall continue to be governed by the laws of the State
of Georgia as a state bank operating under the name of "Regions Bank." The
Merger shall be consummated pursuant to the terms of this Plan.
2.2 SURVIVING BANK. The business of the Surviving Bank from and after the
Effective Time shall continue to be that of a sate bank organized under the laws
of the State of Georgia. The business shall be conducted from its main office
located in Gainesville, Georgia and its legally established branches, which
shall also include the main office and all branches, whether in operation or
approved but unopened, at the Effective Time, of Rockdale.
2.3 ASSUMPTION OF RIGHTS. At the Effective Time, the separate existence
and corporate organization of Rockdale shall be merged into and continued in the
Surviving Bank. All rights, franchises, and interests of both Regions Bank and
Rockdale in and to every type of property (real, personal, and mixed), and all
choses in action of both Regions Bank and Rockdale shall be transferred to and
vested in the Surviving Bank without any deed or other transfer. The Surviving
Bank, upon consummation of the Merger and without any order or other action on
the part of any court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations, and
nominations, and all other rights and interests as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee,
receiver, and committee of estates of incompetent persons, and in every other
fiduciary capacity, in the same manner and to the same extent as such rights,
franchises, and interests were held or enjoyed by either Regions Bank or
Rockdale at the Effective Time.
2.4 ASSUMPTION OF LIABILITIES. All liabilities and obligations of both
Regions Bank and Rockdale of every kind and description shall be assumed by the
Surviving Bank, and the Surviving Bank shall be bound thereby in the same manner
and to the same extent that Regions Bank and Rockdale were so bound at the
Effective Time.
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2.5 ACCOUNTS AND DEPOSITS. All accounts and deposits of Regions Bank and
Rockdale shall be and continue to be accounts and deposits of the Surviving
Bank, without change in their respective terms, maturity, minimum required
balances or withdrawal value. As of the Effective Time, each account or deposit
of Regions Bank or Rockdale shall be considered for dividend or interest
purposes as an account or deposit of the Surviving Bank from the time said
account or deposit was opened in Regions Bank and Rockdale and at all times
thereafter until such account or deposit ceases to be an account or deposit of
the Surviving Bank.
2.6 ARTICLES OF INCORPORATION. As authorized by Section 7-1-536(d) of the
Financial Institutions Code of Georgia, the Articles of Incorporation of Regions
Bank in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Bank until otherwise amended or repealed.
2.7 BYLAWS. The Bylaws of Regions Bank in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Bank until otherwise amended
or repealed.
2.8 BOARD OF DIRECTORS. Upon the Effective Time, the Board of Directors of
the Surviving Bank shall consist initially of the following eight (8)
individuals, who shall include the directors of Regions Bank in office
immediately prior to the Effective Time and shall continue to serve for the
terms to which such directors are elected prior to the Effective Time:
<TABLE>
<CAPTION>
NAME ADDRESS
----------------------------------------------------- ------------------------------
<S> <C>
William E. Jordan.................................... 4440 Frederickburg Drive
Birmingham, Alabama 35214
Richard D. Horsley................................... 545 Palomino Trail
Birmingham, Alabama 35242
Samuel E. Upchurch, Jr............................... 3828 Forest Glen Drive
Birmingham, Alabama 35213
Peter D. Miller...................................... 3748 Corinth Drive
Gainesville, Georgia 30506
Richard G. Rhodes, Sr................................ 111 Broadview Terrace
Dalton, Georgia 30720
Rayburn J. Fisher, Jr................................ 109 17th Street, N.E.
Atlanta, Georgia 30309
Richard D. White..................................... 2491 Club Drive
Gainesville, Georgia 30506
Stephen E. Kemp...................................... 486 New Rosedale Road
Armuchee, Georgia 30105
</TABLE>
2.9 OFFICES. The main office of the Surviving Bank after the Effective
Time will be located at the main office of the Surviving Bank in Georgia. The
Surviving Bank's offices will after the Effective Time be located at the
locations set forth in Exhibit A to this Plan of Merger.
ARTICLE THREE
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article Three,
at the Effective Time, by virtue of the Merger and without any action on the
part of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of Regions Bank Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective time.
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(c) Each share of Rockdale Common Stock (excluding shares held by any
Rockdale Company or by any Regions Company, which shares shall be canceled
pursuant to Section 3.3 of this Plan of Merger, in each case other than in
a fiduciary capacity or in satisfaction of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be outstanding
and shall be converted into and exchanged for .515116 of a share of Regions
Common Stock, subject to adjustment as provided in Section 10.1(h) of the
Agreement (the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event Rockdale or Regions changes the
number of shares of Rockdale Common Stock or Regions Common Stock, respectively,
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 shall be prior to the Effective Time, the Exchange Ratio
shall be proportionately adjusted.
3.3 SHARES HELD BY ROCKDALE OR REGIONS. Each of the shares of Rockdale
Common Stock held by any Rockdale Company or by any Regions Company, in each
case other than in a fiduciary capacity or in satisfaction of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING STOCKHOLDERS. Any holder of shares of Rockdale Common Stock
who perfects such holder's dissenters' rights of appraisal in accordance with
and as contemplated by Section 7-1-537 of the Financial Institutions Code of
Georgia and Section 14-2-1106 of the GBCC shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of law;
provided, however, that no such payment shall be made to any dissenting
stockholder unless and until such dissenting stockholder has complied with the
applicable provisions of Section 7-1-537 of the Financial Institutions Code of
Georgia and Section 14-2-1106 of the GBCC and surrendered to the Surviving Bank
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 Rockdale 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 Rockdale Common
Stock is entitled under this Article Three (without interest) upon surrender by
such holder of the certificate or certificates representing shares of Rockdale
Common Stock held by such holder. Rockdale will establish an escrow account with
an amount sufficient to satisfy the maximum aggregate payment that may be
required to be paid to dissenting stockholders. Upon satisfaction of all claims
of dissenting stockholders, the remaining escrowed amount, reduced by payment of
the fees and expenses of the escrow agent, will be returned to Rockdale.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan of
Merger, each holder of shares of Rockdale Common Stock exchanged pursuant to the
Merger, or of options to purchase shares of Rockdale Common Stock, who would
otherwise have been entitled to receive a fraction of a share of Regions Common
Stock (after taking into account all certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Regions Common Stock multiplied by the market
value of one share of Regions Common Stock at the Effective Time, in the case of
shares exchanged pursuant to the Merger, or the date of exercise, in the case of
options. The market value of one share of Regions Common Stock at the Effective
Time or the date of exercise, as the case may be, shall be the last sale price
of such common stock on the Nasdaq/NMS (as reported by The Wall Street Journal
or, if not reported thereby, any other authoritative source) on the last trading
day preceding the Effective Time, in the case of shares exchanged pursuant to
the Merger, and the date of exercise, in the case of options. No such holder
will be entitled to dividends, voting rights, or any other rights as a
shareholder in respect of any fractional shares.
3.6 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK. (a) At the Effective
Time, all rights with respect to Rockdale Common Stock pursuant to stock options
or stock appreciation rights ("Rockdale Options") granted by Rockdale under the
Rockdale Stock Plans (as defined in the Agreement), which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into and become
rights with respect to Regions Common Stock, and Regions shall assume each
Rockdale Option, in accordance with the terms of the Rockdale Stock Plan and
stock option agreement by which it is evidenced. From and after the Effective
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Time, (i) each Rockdale Option assumed by Regions may be exercised solely for
shares of Regions Common Stock (or cash in the case of stock appreciation
rights), (ii) the number of shares of Regions Common Stock subject to such
Rockdale Option shall be equal to the number of shares of Rockdale Common Stock
subject to such Rockdale Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iii) the per share exercise price under
each such Rockdale Option shall be adjusted by dividing the per share exercise
price under each such Rockdale Option by the Exchange Ratio and rounding down to
the nearest cent. It is intended that the foregoing assumption shall be
undertaken in a manner that will not constitute a "modification" as defined in
Section 424 of the Internal Revenue Code, as to any stock option which is an
"incentive stock option." Rockdale agrees to take all necessary steps to
effectuate the foregoing provisions of this Section 3.6.
(b) All restrictions or limitations on transfer with respect to Rockdale
Common Stock awarded under the Rockdale Stock Plans or any other plan, program,
or arrangement of any Rockdale Company, to the extent that such restrictions or
limitations shall not have already lapsed, and except as otherwise expressly
provided in such plan, program, or arrangement, shall remain in full force and
effect with respect to shares of Regions Common Stock into which such restricted
stock is converted pursuant to Section 3.1 of this Plan of Merger.
ARTICLE FOUR
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, Regions shall
cause the exchange agent selected by Regions (the "Exchange Agent") to mail to
the former stockholders of Rockdale appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Rockdale Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of Rockdale Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Plan of Merger)
issued and outstanding at the Effective Time shall surrender the certificate or
certificates or warrant representing such shares, to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Plan of Merger, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Plan of Merger. To the extent
required by Section 3.5 of this Plan of Merger, each holder of shares of
Rockdale 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 Rockdale
Common Stock is entitled as a result of the Merger until such holder surrenders
his certificates of Rockdale Common Stock for exchange as provided in this
Section 4.1. The certificate of Rockdale Common Stock so surrendered shall be
duly endorsed as the Exchange Agent may require. Any other provision of this
Plan of Merger notwithstanding, neither Regions, the Surviving Bank, nor the
Exchange Agent shall be liable to a holder of Rockdale 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 ROCKDALE STOCKHOLDERS. At the Effective Time, the
stock transfer books of Rockdale shall be closed as to holders of Rockdale
Common Stock immediately prior to the Effective Time, and no transfer of
Rockdale Common Stock by any such holder shall thereafter be made or recognized.
Until surrendered for exchange in accordance with the provisions of Section 4.1
of this Plan of Merger, each certificate theretofore representing shares of
Rockdale Common Stock (other than shares to be canceled pursuant to Section 3.3
of this Plan of Merger or as to which the holder thereof has perfected
dissenters' rights of appraisal as contemplated by Section 3.4 of this Plan of
Merger) shall from and after the Effective Time represent for all purposes only
the right to receive the consideration provided in Sections 3.1 and 3.5 of this
Plan of Merger in exchange therefor. To the extent permitted by law, former
stockholders of record of Rockdale 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 Rockdale Common Stock
are
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converted, regardless of whether such holders have exchanged their certificates
representing Rockdale Common Stock for certificates representing Regions Common
Stock in accordance with the provisions of this Plan of Merger. Whenever a
dividend or other distribution is declared by Regions on the Regions Common
Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares of
Regions Common Stock issuable pursuant to this Plan of Merger, 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 Rockdale Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 4.1 of this Plan of Merger. However, upon
surrender of such Rockdale Common Stock certificate, both the Regions Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
ARTICLE FIVE
CLOSING AND EFFECTIVE DATE
5.1 TIME AND PLACE OF CLOSING. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The place of Closing shall be at the offices of Regions, or such
other place as may be mutually agreed upon by the Parties.
5.2 EFFECTIVE TIME. The Merger and other transactions contemplated by the
Agreement shall become effective on the date and at the time that the Georgia
Certificate of Merger reflecting the Merger is issued by the Secretary of State
of the State of Georgia (the "Effective Time"). Subject to the terms and
conditions thereof, unless otherwise mutually agreed upon in writing by the
chief executive officers or chief financial officers of each party to the
Agreement, the parties to the Agreement shall use their reasonable efforts to
cause the Effective Time to occur on the first business day following the last
to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on which
the stockholders of Rockdale approve the Agreement to the extent such approval
is required by applicable Law; or such later date within thirty (30) days of
such date as may be specified by Regions; provided that Regions may not delay
the Effective Time pursuant to the immediately preceding clause if such delay
would cause the record date for payment of the quarterly dividend to holders of
Regions Common Stock for the quarter in which the Effective Time occurs to occur
prior to the Effective Time that, absent such delay, would have occurred
subsequent to the Effective Time.
ARTICLE SIX
EFFECTIVENESS
6.1 CONDITIONS PRECEDENT. Consummation of the Merger is conditioned upon
the approval of the Merger by the stockholders of Rockdale and the sole
stockholder of Regions Bank, as and to the extent required by law, and the
receipt of the requisite regulatory approvals as set forth in the Agreement.
Additionally, consummation of the Merger is conditioned upon the fulfillment of
the conditions precedent set forth in Article Nine of the Agreement or the
waiver of such conditions as provided in Section 11.6 of the Agreement.
6.2 TERMINATION. This Plan of Merger may be terminated at any time prior
to the Effective Time by the Parties hereto at any time after termination of the
Agreement as provided in Article Ten of the Agreement.
6.3 AMENDMENTS. To the extent permitted by law, this Plan of Merger 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
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Parties; provided, however, that after any such approval by the holders of
Rockdale Common Stock, there shall be made no amendment decreasing the
consideration to be received by Rockdale stockholders without the further
approval of such stockholders.
6.4 WAIVERS. (a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, vice chairman, or other
authorized officer, shall have the right to waive on behalf of it and Regions
Bank any Default in the performance of any term of this Plan of Merger by
Rockdale, to waive or extend the time for the compliance or fulfillment by
Rockdale of any and all of its obligations under this Plan of Merger, and to
waive any or all of the conditions precedent to the obligations of Regions under
this Plan of Merger, 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, Rockdale, acting through its Board
of Directors, chief executive officer, or other authorized officer, shall have
the right to waive any Default in the performance of any term of this Plan of
Merger by Regions, to waive or extend the time for the compliance or fulfillment
by Regions or Regions Bank of any and all of their obligations under this Plan
of Merger, and to waive any or all of the conditions precedent to the
obligations of Rockdale under this Plan of Merger, 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 Rockdale.
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ARTICLE SEVEN
MISCELLANEOUS
7.1 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth in
Section 11.8 of the Agreement (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
personally delivered or mailed; provided, however, that notice of termination of
this Plan of Merger shall be effective only upon actual delivery of such notice
to the Party entitled to the same.
7.2 GOVERNING LAW. This Plan of Merger shall be governed by and construed
in accordance with the laws of the State of Georgia.
7.3 COUNTERPARTS. This Plan of Merger may be executed in one 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.
7.4 INCONSISTENT PROVISIONS. The Parties agree that, to the extent any of
the provisions of this Plan of Merger shall conflict or be inconsistent with any
provision of the Agreement, the provisions of the Agreement shall control and
prevail and the Parties hereto agree to execute such amendments to this Plan of
Merger to conform the provisions hereof to the provisions of the Agreement.
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger to
be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto duly authorized all as of the day and year first
above written.
ROCKDALE COMMUNITY BANK
[BANK SEAL]
By: /s/ Charles D. East
------------------------------------
Charles D. East
President
ATTEST: /s/ James R. Simpson
------------------------------
James R. Simpson
Secretary
REGIONS BANK
[BANK SEAL]
By: /s/ Peter D. Miller
------------------------------------
Peter D. Miller
President
ATTEST: /s/ Samuel E. Upchurch, Jr.
------------------------------
Samuel E. Upchurch, Jr.
General Counsel and
Corporate Secretary
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EXHIBIT A
MAIN OFFICE:
111 Green Street, S.E.
Gainesville, Georgia
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APPENDIX C
CODE OF GEORGIA
TITLE 14. CORPORATIONS, PARTNERSHIPS, AND ASSOCIATIONS
CHAPTER 2. BUSINESS CORPORATIONS
ARTICLE 13. DISSENTERS' RIGHTS
PART 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
14-2-1301 Definitions.
As used in this article, the term:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporate action" means the transaction or other action by the
corporation that creates dissenters' rights under Code Section 14-2-1302.
(3) "Corporation" means the issuer of shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(4) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Code Section 14-2-1302 and who exercises that right
when and in the manner required by Code Sections 14-2-1320 through
14-2-1327.
(5) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action.
(6) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances.
(7) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(8) "Shareholder" means the record shareholder or the beneficial
shareholder.
14-2-1302 Right to dissent.
(a) A record shareholder of the corporation is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If approval of the shareholders of the corporation is required
for the merger by Code Section 14-2-1103 or the articles of
incorporation and the shareholder is entitled to vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under Code Section 14-2-1104;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all or substantially all of
the property of the corporation if a shareholder vote is required on the
sale or exchange pursuant to Code Section 14-2-1202, but not including a
sale pursuant to court order or a sale for cash pursuant to a plan by which
all or substantially all of the net proceeds of the sale will be
distributed to the shareholders within one year after the date of sale;
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(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption
or repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights;
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share so created is to be acquired
for cash under Code Section 14-2-604; or
(F) Cancels, redeems, or repurchases all or part of the shares of
the class; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent that Article 9 of this chapter, the articles of incorporation,
bylaws, or a resolution of the board of directors provides that voting or
nonvoting shareholders are entitled to dissent and obtain payment for their
shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this article may not challenge the corporate action creating his
entitlement unless the corporate action fails to comply with procedural
requirements of this chapter or the articles of incorporation or bylaws of the
corporation or the vote required to obtain approval of the corporate action was
obtained by fraudulent and deceptive means, regardless of whether the
shareholder has exercised dissenter's rights.
(c) Notwithstanding any other provision of this article, there shall be no
right of dissent in favor of the holder of shares of any class or series which,
at the record date fixed to determine the shareholders entitled to receive
notice of and to vote at a meeting at which a plan of merger or share exchange
or a sale or exchange of property or an amendment of the articles of
incorporation is to be acted on, were either listed on a national securities
exchange or held of record by more than 2,000 shareholders, unless:
(1) In the case of a plan of merger or share exchange, the holders of
shares of the class or series are required under the plan of merger or
share exchange to accept for their shares anything except shares of the
surviving corporation or another publicly held corporation which at the
effective date of the merger or share exchange are either listed on a
national securities exchange or held of record by more than 2,000
shareholders, except for scrip or cash payments in lieu of fractional
shares; or
(2) The articles of incorporation or a resolution of the board of
directors approving the transaction provides otherwise.
14-2-1303 Dissent by nominees and beneficial owners.
A record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one beneficial shareholder and notifies the
corporation in writing of the name and address of each person on whose behalf he
asserts dissenters' rights. The rights of a partial dissenter under this Code
section are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
14-2-1320 Notice of dissenters' rights.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this article and be accompanied by a copy of this article.
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(b) If corporate action creating dissenters' rights under Code Section
14-2-1302 is taken without a vote of shareholders, the corporation shall notify
in writing all shareholders entitled to assert dissenters' rights that the
action was taken and send them the dissenters' notice described in Code Section
14-2-1322 no later than ten days after the corporate action was taken.
14-2-1321 Notice of intent to demand payment.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is submitted to a vote at a shareholders' meeting, a record
shareholder who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A record shareholder who does not satisfy the requirements of
subsection (a) of this Code section is not entitled to payment for his shares
under this article.
14-2-1322 Dissenters' notice.
(a) If proposed corporate action creating dissenters' rights under Code
Section 14-2-1302 is authorized at a shareholders' meeting, the corporation
shall deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Code Section 14-2-1321.
(b) The dissenters' notice must be sent no later than ten days after the
corporate action was taken and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the notice required in subsection (a) of this Code section is
delivered; and
(4) Be accompanied by a copy of this article.
14-2-1323 Duty to demand payment.
(a) A record shareholder sent a dissenters' notice described in Code
Section 14-2-1322 must demand payment and deposit his certificates in accordance
with the terms of the notice.
(b) A record shareholder who demands payment and deposits his shares under
subsection (a) of this Code section retains all other rights of a shareholder
until these rights are canceled or modified by the taking of the proposed
corporate action.
(c) A record shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this article.
14-2-1324 Share restrictions.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under Code Section 14-2-1326.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
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14-2-1325 Offer of payment.
(a) Except as provided in Code Section 14-2-1327, within ten days of the
later of the date the proposed corporate action is taken or receipt of a payment
demand, the corporation shall by notice to each dissenter who complied with Code
Section 14-2-1323 offer to pay to such dissenter the amount the corporation
estimates to be the fair value of his or her shares, plus accrued interest.
(b) The offer of payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than 16 months before the date of payment, an income
statement for that year, a statement of changes in shareholders' equity for
that year, and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated; (4) A statement
of the dissenter's right to demand payment under Code Section 14-2-1327;
and
(5) A copy of this article.
(c) If the shareholder accepts the corporation's offer by written notice to
the corporation within 30 days after the corporation's offer or is deemed to
have accepted such offer by failure to respond within said 30 days, payment for
his or her shares shall be made within 60 days after the making of the offer or
the taking of the proposed corporate action, whichever is later.
14-2-1326 Failure to take action.
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under Code Section 14-2-1322 and repeat the payment demand
procedure.
14-2-1327 Procedure if shareholder dissatisfied with payment or offer.
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of his estimate of the fair value of his shares and interest due, if:
(1) The dissenter believes that the amount offered under Code Section
14-2-1325 is less than the fair value of his shares or that the interest
due is incorrectly calculated; or
(2) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his or her right to demand payment under this Code
section and is deemed to have accepted the corporation's offer unless he or she
notifies the corporation of his or her demand in writing under subsection (a) of
this Code section within 30 days after the corporation offered payment for his
or her shares, as provided in Code Section 14-2-1325.
(c) If the corporation does not offer payment within the time set forth in
subsection (a) of Code Section 14-2-1325:
(1) The shareholder may demand the information required under
subsection (b) of Code Section 14-2-1325, and the corporation shall provide
the information to the shareholder within ten days after receipt of a
written demand for the information; and
(2) The shareholder may at any time, subject to the limitations period
of Code Section 14-2-1332, notify the corporation of his own estimate of
the fair value of his shares and the amount of interest due and demand
payment of his estimate of the fair value of his shares and interest due.
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14-2-1330 Court action.
(a) If a demand for payment under Code Section 14-2-1327 remains unsettled,
the corporation shall commence a proceeding within 60 days after receiving the
payment demand and petition the court to determine the fair value of the shares
and accrued interest. If the corporation does not commence the proceeding within
the 60 day period, it shall pay each dissenter whose demand remains unsettled
the amount demanded.
(b) The corporation shall commence the proceeding, which shall be a nonjury
equitable valuation proceeding, in the superior court of the county where a
corporation's registered office is located. If the surviving corporation is a
foreign corporation without a registered office in this state, it shall commence
the proceeding in the county in this state where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the proceeding, which
shall have the effect of an action quasi in rem against their shares. The
corporation shall serve a copy of the petition in the proceeding upon each
dissenting shareholder who is a resident of this state in the manner provided by
law for the service of a summons and complaint, and upon each nonresident
dissenting shareholder either by registered or certified mail or by publication,
or in any other manner permitted by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) of this Code section is plenary and exclusive. The court
may appoint one or more persons as appraisers to receive evidence and recommend
decision on the question of fair value. The appraisers have the powers described
in the order appointing them or in any amendment to it. Except as otherwise
provided in this chapter, Chapter 11 of Title 9, known as the "Georgia Civil
Practice Act," applies to any proceeding with respect to dissenters' rights
under this chapter.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount which the court finds to be the fair value of his shares, plus
interest to the date of judgment.
14-2-1331 Court costs and counsel fees.
(a) The court in an appraisal proceeding commenced under Code Section
14-2-1330 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, but not
including fees and expenses of attorneys and experts for the respective parties.
The court shall assess the costs against the corporation, except that the court
may assess the costs against all or some of the dissenters, in amounts the court
finds equitable, to the extent the court finds the dissenters acted arbitrarily,
vexatiously, or not in good faith in demanding payment under Code Section
14-2-1327.
(b) The court may also assess the fees and expenses of attorneys and
experts for the respective parties, in amounts the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of Code Sections 14-2-1320 through 14-2-1327; or
(2) Against either the corporation or a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith
with respect to the rights provided by this article.
(c) If the court finds that the services of attorneys for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the corporation, the
court may award to these attorneys reasonable fees to be paid out of the amounts
awarded the dissenters who were benefited.
14-2-1332 Limitation of actions.
No action by any dissenter to enforce dissenters' rights shall be brought
more than three years after the corporate action was taken, regardless of
whether notice of the corporate action and of the right to dissent was given by
the corporation in compliance with the provisions of Code Section 14-2-1320 and
Code Section 14-2-1322.
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