<PAGE> 1
As filed with the Securities and Exchange Commission on April 11, 1997
Registration No.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
----------------------
<TABLE>
<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------
Copies to:
<TABLE>
<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III KATHRYN L. KNUDSON
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD POWELL, GOLDSTEIN, FRAZER & MURPHY
SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W. SIXTEENTH FLOOR
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 191 PEACHTREE STREET, N.E.
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 ATLANTA, GEORGIA 30303
(205) 250-5000 (202) 508-3303 (404) 572-6600
</TABLE>
----------------------
Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
registered registered per unit* offering price* registration fee
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 366,125 $54.68747 $20,022,450 $6,067.41
==========================================================================================================================
</TABLE>
*Calculated in accordance with Rule 457(f).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
shall determine.
- --------------------------------------------------------------------------------
<PAGE> 2
REGIONS FINANCIAL CORPORATION
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
- ---------------------------------------------------------- ------------------------------------------
<S> <C>
1. Forepart of registration statement and outside front
cover page of prospectus.............................. Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of
Registration Statement; Cross-Reference Sheet.
2. Inside front and outside back cover of prospectus..... Available Information; Documents
Incorporated by Reference; Table of
Contents.
3. Risk factors, ratio of earnings to fixed charges and
other information..................................... Summary; Comparative Market Prices and Dividends.
4. Terms of the transaction.............................. Summary; Description of the Transaction;
Effect of the Merger on Rights of
Stockholders; Description of Regions
Common Stock.
5. Pro forma financial information....................... Summary.
6. Material contacts with the company being acquired..... Summary; Description of the Transaction.
7. Additional information required for re-offering by
persons and parties deemed to be underwriters......... Not applicable.
8. Interest of named experts and counsel................. Opinions.
9. Disclosure of Commission position on indemnification
for Securities Act liabilities........................ Not Applicable (See Part II, Item 20).
10. Information with respect to S-3 registrants........... Documents Incorporated by Reference;
Summary; Business of Regions.
11. Incorporation of certain information by reference..... Documents Incorporated by Reference.
12. Information with respect to S-2 or S-3 registrants.... Not Applicable.
13. Incorporation of certain information by reference..... Not Applicable.
14. Information with respect to registrants other than S-2
or S-3 registrants.................................... Not Applicable.
15. Information with respect to S-3 companies............. Business of FBGA; Voting Securities and
Principal Stockholders of FBGA; Documents
Incorporated by Reference.
16. Information with respect to S-2 or S-3 companies...... Not Applicable.
17. Information with respect to companies other than S-2
or S-3 companies...................................... Not Applicable.
18. Information if proxies, consents, or authorizations
are to be solicited................................... Documents Incorporated by Reference; Summary;
The Special Meeting; Description of the Transaction;
Description of Regions Common Stock.
19. Information if proxies, consents, or authorizations
are not to be solicited or in an exchange offer....... Not Applicable.
</TABLE>
<PAGE> 3
Dear First Bankshares, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
First Bankshares, Inc. ("FBGA") to be held at FBGA's main office, 600 South
Central Avenue, Hapeville, Georgia, 30354 on _______, 1997, at 4:00 p.m., local
time, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Agreement"), entered
into with Regions Financial Corporation ("Regions") pursuant to which FBGA will
merge (the "Merger") with and into Regions, and First Bank of Georgia, a wholly
owned subsidiary of FBGA (the "Bank"), will become a wholly owned subsidiary of
Regions and will continue in operation serving its current markets as a
state-chartered commercial bank until combined with Regions Bank, Regions'
principal banking subsidiary operating in Georgia. The other subsidiaries of
FBGA will become subsidiaries of Regions. Upon consummation of the Merger, each
share of FBGA common stock issued and outstanding (except for certain shares
held by FBGA or Regions and shares held by stockholders who perfect their
dissenters' rights of appraisal) will be converted into .32 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 Special
Meeting. Please read these materials carefully and consider thoughtfully the
information set forth in them.
The Agreement and the Merger have been approved unanimously by your Board
of Directors and are recommended by the Board to you for approval. Each member
of the Board of Directors of FBGA has agreed to vote those FBGA shares over
which such member has voting authority (other than in a fiduciary capacity) in
favor of the Agreement and the Merger. Consummation of the Merger is subject to
certain conditions, including approval of the Agreement by FBGA stockholders and
approval of the Merger by various regulatory agencies.
Stockholders of FBGA 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 FBGA shares in cash, as provided by applicable
law.
It is important to understand that approval of the Agreement requires the
affirmative vote of a majority of the common stock of FBGA entitled to vote at
the Special Meeting, not just a majority of the votes cast. Consequently, a
failure to vote will have the same effect as a vote against the Agreement.
ACCORDINGLY, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, YOU ARE
URGED TO COMPLETE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY CARD. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for FBGA, 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,
R. Elliott Miller
President and Chief Executive Officer
Ray E. Hannah
Chairman of the Board
<PAGE> 4
FIRST BANKSHARES, INC.
600 SOUTH CENTRAL AVENUE, HAPEVILLE, GEORGIA, 30354
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD _______, 1997
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of First Bankshares, Inc. ("FBGA"), a bank holding company, will be
held at FBGA's office, 600 South Central Avenue, Hapeville, Georgia, 30354 on
_______, 1997, at 4:00 .m., local time, for the following purposes:
1. Merger. To consider and vote on the Agreement and Plan of Merger, dated
as of December 13, 1996 (the "Agreement"), by and between FBGA and Regions
Financial Corporation ("Regions") pursuant to which (i) Regions will acquire
all of the issued and outstanding common stock of FBGA through the merger of
FBGA with and into Regions (the "Merger"), (ii) each share of FBGA common stock
(except for certain shares held by FBGA or Regions and shares held by
stockholders who perfect their dissenters' rights of appraisal) will be
converted into .32 of a share of Regions common stock, subject to possible
adjustment, and (iii) each FBGA stockholder will receive cash in lieu of any
remaining fractional share interest, all as described more fully in the
accompanying Proxy Statement/Prospectus; and
2. Other Business. To transact such other business as may properly come
before the Special Meeting, including adjourning the Special Meeting to permit,
if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on _______, 1997, are
entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of FBGA 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 FBGA unanimously recommends that holders of FBGA
common stock vote to approve the proposals listed above.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the Special Meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
FBGA an instrument of revocation or a duly executed proxy bearing a later date
or by electing to vote in person at the Special Meeting.
By Order of the Board of Directors
Karla Benner
Corporate Secretary
_______, 1997
<PAGE> 5
FIRST BANKSHARES, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD _______, 1997 (PAR VALUE $.625)
366,125 SHARES
This Prospectus of Regions Financial Corporation, a regional bank holding
company organized and existing under the laws of the state of Delaware
("Regions"), relates to the shares of its common stock, par value $.625 per
share ("Regions Common Stock"), which are issuable to the stockholders of First
Bankshares, Inc., a bank holding company organized and existing under the laws
of the state of Georgia ("FBGA") upon consummation of the proposed merger (the
"Merger") described herein, by which FBGA will merge with and into Regions
pursuant to the terms of an Agreement and Plan of Merger, dated as of December
13, 1996 (the "Agreement"), by and between Regions and FBGA.
On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) FBGA will merge with and into Regions, (ii)
each outstanding share of the $1.00 par value common stock of FBGA ("FBGA
Common Stock") will be converted into .32 of a share of Regions Common Stock,
subject to possible adjustment (the "Exchange Ratio"), and (iii) each holder of
FBGA Common Stock will receive cash in lieu of any remaining fractional share
interest. A copy of the Agreement is attached to this Proxy
Statement/Prospectus as Appendix A.
The Exchange Ratio is subject to an upward adjustment under certain
circumstances relating to the price of Regions Common Stock over a specified
period, in relation to a floor of $45.685 per share of Regions Common Stock and
to a weighted average price of 20 specified bank holding companies over the
same period. Under such circumstances, described fully under the caption
"Description of the Transaction--Possible Adjustment of Exchange Ratio," the
Board of Directors of FBGA is permitted to, and likely would, invoke the
adjustment mechanism in the Agreement, 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 FBGA'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, FBGA may elect to proceed without the
adjustment. In making such determination, the Board of Directors of FBGA will
consider whether the Merger remains in the best interest of FBGA and its
stockholders, despite a decline in Regions' stock price, and whether the
consideration to be received by the holders of FBGA Common Stock remains fair
from a financial point of view. FBGA and Regions concur that FBGA will
resolicit approval of the Merger from holders of FBGA Common Stock if the value
of the consideration to be received by such holders in the Merger is below
$13.00 per share of FBGA Common Stock as of the date of the Special Meeting.
See "Description of the Transaction--Possible Adjustment of Exchange Ratio."
As a result of the Merger, the separate existence of FBGA will cease, and
First Bank of Georgia, a wholly owned subsidiary of FBGA (the "Bank"), will
become a wholly owned subsidiary of Regions and will continue in operation
serving its current markets as a state-chartered commercial bank until combined
with Regions Bank in Georgia, Regions' principal banking subsidiary operating
in Georgia, and the other subsidiaries of FBGA will become subsidiaries of
Regions. For a further description of the terms of the Merger, see "Description
of the Transaction."
This Prospectus also constitutes a Proxy Statement of FBGA and is being
furnished to the stockholders of FBGA in connection with the solicitation of
proxies by the Board of Directors of FBGA for use at its special meeting of
stockholders, including any adjournment or postponement thereof (the "Special
Meeting"), to be held on _______, 1997, to consider and vote on the Agreement
and the proposed Merger and related matters. This Proxy Statement/Prospectus
and the accompanying proxy card are first being mailed to stockholders of FBGA
on
<PAGE> 6
or about _______, 1997.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is April X, 1997.
2
<PAGE> 7
AVAILABLE INFORMATION
Regions and FBGA are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, file reports, proxy statements, and other information
with the Securities and Exchange Commission (the "SEC"). Copies of such
reports, proxy statements, and other information can be obtained, at prescribed
rates, from the SEC by addressing written requests for such copies to the
Public Reference Section at the SEC at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. In addition, such reports, proxy statements, and other
information can be inspected at the public reference facilities referred to
above and at the regional offices of the SEC at 7 World Trade Center, 13th
Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. The SEC also maintains a
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding registrants that
file electronically with the SEC.
This Proxy Statement/Prospectus constitutes part of the Registration
Statement on Form S-4 of Regions (including any exhibits and amendments
thereto, the "Registration Statement") filed with the SEC under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the securities
offered hereby. This Proxy Statement/Prospectus does not include all of the
information in the Registration Statement, certain portions of which have been
omitted pursuant to the rules and regulations of the SEC. For further
information about Regions and the securities offered hereby, reference is made
to the Registration Statement. The Registration Statement may be inspected and
copied, at prescribed rates, at the SEC's public reference facilities at the
addresses set forth above. Regions Common Stock is traded in the Nasdaq
National Market. Reports, proxy statements, and other information concerning
Regions may be inspected at the offices of the National Association of
Securities Dealers, Inc. (the "NASD"), 1735 K Street, N.W., Washington, D.C.
20006.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE INCLUDED IN THIS PROXY STATEMENT/PROSPECTUS,
AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY REGIONS OR FBGA. 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 FBGA
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 FBGA
was supplied by FBGA.
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, 1996;
2. 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, 1996,
incorporates by reference specific portions of Regions' Annual Report to
Stockholders for that year (the "Regions Annual Report to
3
<PAGE> 8
Stockholders"), but does not incorporate other portions of the Regions Annual
Report to Stockholders. Only those portions of the Regions Annual Report to
Stockholders captioned "Financial Summary & Review 1995," "Financial Statements
and Notes," and "Historical Financial Summary" are incorporated herein. Other
portions of the Annual Report to Stockholders are NOT incorporated herein and
are not a part of the Registration Statement.
The following documents previously filed with the SEC by FBGA pursuant to
the Exchange Act are hereby incorporated by reference herein:
1. FBGA's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996.
All documents filed by Regions pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference in this Proxy Statement/Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed to constitute a part hereof, except as so modified or superseded.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THOSE DOCUMENTS ARE AVAILABLE
UPON REQUEST, WITHOUT CHARGE (EXCEPT FOR THE EXHIBITS THERETO), IF FILED BY
REGIONS, FROM RONALD C. JACKSON, STOCKHOLDER ASSISTANCE, REGIONS FINANCIAL
CORPORATION, P.O. BOX 1448, MONTGOMERY, ALABAMA 36102 (TELEPHONE (334)
832-8493), AND IF FILED BY FBGA, FROM KARLA BENNER, CORPORATE SECRETARY, 600
SOUTH CENTRAL AVENUE, HAPEVILLE, GEORGIA, 30354 (TELEPHONE (404) 763-6720). IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
_______, 1997.
4
<PAGE> 9
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Special Meeting of FBGA Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
The Merger; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Reasons for the Merger; Recommendation of FBGA's Board
of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Opinion of FBGA's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Exchange of Stock Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Regulatory Approvals and Other Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Comparative Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Record Date; Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DESCRIPTION OF THE TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Adjustment of Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Treatment of FBGA Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Background of and Reasons for the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Opinion of FBGA's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Effective Date of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Distribution of Regions Stock Certificates and
Payment for Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Waiver, Amendment, and Termination of the Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Management Following the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Certain Federal Income Tax Consequences of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Expenses and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Resales of Regions Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Antitakeover Provisions Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Authorized Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Amendment of Certificate of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
</TABLE>
5
<PAGE> 10
<TABLE>
<S> <C>
Classified Board of Directors and Absence of Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . 36
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Limitations on Director Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Special Meetings of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Actions by Stockholders Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Stockholder Nominations and Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Mergers, Consolidations, and Sales of Assets Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Business Combinations with Certain Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Dissenters' Rights of Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Stockholders' Rights to Examine Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
COMPARATIVE MARKET PRICES AND DIVIDENDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
BUSINESS OF FBGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FBGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
BUSINESS OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Support of Subsidiary Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
DESCRIPTION OF REGIONS COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
OPINIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
APPENDIX A--Agreement and Plan of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B--Opinion of Brown, Burke Capital Partners, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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> 11
SUMMARY
The following is a summary of certain information relating to the Special
Meeting, the proposed Merger, and the offering of shares of Regions Common
Stock to be issued upon consummation thereof. This summary does not purport to
be complete and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Proxy
Statement/Prospectus. Stockholders are urged to read carefully the entire Proxy
Statement/Prospectus, including the Appendices. As used in this Proxy
Statement/Prospectus, the terms "Regions" and "FBGA" refer to those entities,
respectively, and, where the context requires, to those entities and their
respective subsidiaries.
THE PARTIES
FBGA. FBGA is a bank holding company organized and existing under the laws
of the state of Georgia, with its principal executive office located in
Hapeville, Georgia. FBGA operates principally through the Bank, which is a
wholly owned subsidiary of FBGA and a state-chartered commercial bank and which
provides a range of retail banking services through three offices in East
Point, Hapeville and Fairburn, Georgia and a construction lending office in
Stockbridge, Georgia. First Bankshares Mortgage and Investment, a subsidiary of
the Bank, serves the metropolitan Atlanta market. At December 31, 1996, FBGA
had total consolidated assets of approximately $121.4 million, total
consolidated deposits of approximately $91.6 million, and total consolidated
stockholders' equity of approximately $9.3 million. FBGA's principal executive
office is located at 600 South Central Avenue, Hapeville, Georgia, 30354 and
its telephone number at such address is (404)763-6720.
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 377 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of December 31, 1996. At that date,
Regions had total consolidated assets of approximately $18.9 billion, total
consolidated deposits of approximately $15.0 billion, and total consolidated
stockholders' equity of approximately $1.6 billion. Regions is the second
largest bank holding company headquartered in Alabama in terms of assets, based
on December 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 December 31, 1996, Regions has completed the acquisitions of three
financial institutions, one of which is located in each of the states of
Florida, Georgia, and Louisiana (referred to as the "Recently Completed
Acquisitions"). Regions also has entered into definitive agreements to
acquire, in addition to FBGA, four additional financial institutions (the
"Other Pending Acquisitions"), one of which is located in Florida, one in
Georgia, and two in Louisiana. For information with respect to the Recently
Completed Acquisitions and the Other Pending Acquisitions, (referred to
collectively as the "Other Acquisitions") see "Business of Regions--Recent
Developments."
Regions commenced operations in 1971, under its former name First Alabama
Bankshares, Inc., as a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Regions' principal executive
offices are located at 417 North 20th Street, Birmingham, Alabama 35203, and
its telephone number at such address is (205) 326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
7
<PAGE> 12
Reference," and "Business of Regions."
SPECIAL MEETING OF FBGA STOCKHOLDERS
The Special Meeting will be held at 4:00 p.m., local time, on _______,
1997, at FBGA's office located at 600 South Central Avenue, Hapeville,
Georgia, 30354, for the purpose of considering and voting on approval of the
Agreement and to transact such other business as may properly come before the
meeting. See "The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of FBGA Common Stock at the close of business on
_______, 1997 (the "Record Date"), will be entitled to vote at the Special
Meeting. The affirmative vote of a majority of the FBGA Common Stock
outstanding and entitled to vote at the Special Meeting, not just a majority of
the votes cast, will be required to approve the Agreement. As of the Record
Date, there were 1,052,462 shares of FBGA Common Stock outstanding and entitled
to be voted.
The directors and executive officers of FBGA and their affiliates
beneficially owned, as of the Record Date, 331,342 shares (or approximately
31.48% of the outstanding shares) of FBGA Common Stock. Each member of the
Board of Directors of FBGA has agreed to vote those FBGA shares beneficially
owned by such member in favor of the Agreement and the Merger. The directors
and executive officers of Regions and their affiliates beneficially owned, as
of the Record Date, no shares of FBGA Common Stock. As of that date, neither
FBGA nor Regions held any shares of FBGA Common Stock in a fiduciary capacity
for others. See "The Special Meeting--Record Date; Vote Required."
THE MERGER; EXCHANGE RATIO
The Agreement provides for the acquisition of FBGA by Regions pursuant to
the Merger of FBGA with and into Regions. On the Effective Date, each share of
FBGA Common Stock then issued and outstanding (except for shares held by FBGA,
Regions, or their respective subsidiaries, in each case other than shares held
in a fiduciary capacity or as a result of debts previously contracted, and
shares held by stockholders who perfect their dissenters' rights of appraisal)
will be converted into .32 of a share of Regions Common Stock, subject to
possible adjustment. 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 FBGA stockholder would be entitled upon consummation of the Merger,
based on the last sale 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 FBGA Common Stock entitled to vote on approval of the Agreement
have the right to dissent from the Merger and, upon consummation of the Merger
and the satisfaction of certain specified procedures and conditions, to receive
fair value of such holders' shares of FBGA Common Stock in cash in accordance
with the applicable provisions of the Georgia Business Corporation Law (the
"Georgia Act"). The procedures to be followed by dissenting stockholders are
summarized under "Description of the Transaction--Dissenters' Rights," and the
applicable provisions of the Georgia Act are reproduced as Appendix C.
8
<PAGE> 13
REASONS FOR THE MERGER; RECOMMENDATION OF FBGA'S BOARD OF DIRECTORS
FBGA's Board of Directors has unanimously approved the Agreement and the
Merger and has determined that the Merger is fair to, and in the best
interests of, FBGA and its stockholders. Accordingly, FBGA's Board unanimously
recommends that FBGA's stockholders vote FOR approval of the Agreement. EACH
MEMBER OF THE BOARD OF DIRECTORS OF FBGA HAS AGREED TO VOTE SUCH MEMBER'S
SHARES OF FBGA COMMON STOCK IN FAVOR OF THE AGREEMENT. In approving the
Agreement, FBGA's directors considered FBGA's financial condition, the
financial terms and the income tax consequences of the Merger, the likelihood
of the Merger being approved by regulatory authorities without undue conditions
or delay, and legal advice concerning the proposed Merger, and the opinion of
Brown, Burke Capital Partners, Inc. ("BBCP") that, as of the date of its
opinion, the consideration to be received in the Merger was fair, from a
financial point of view, to the stockholders of FBGA. See "Description of the
Transaction--Background of and Reasons for the Merger."
OPINION OF FBGA'S FINANCIAL ADVISOR
BBCP has rendered an opinion to FBGA that, based on and subject to the
procedures, matters, and limitations described in its opinion and such other
matters as it considered relevant, as of the date of its opinion, the
consideration to be received in the Merger was fair, from a financial point of
view, to the stockholders of FBGA. The opinion of BBCP is attached as Appendix
B to this Proxy Statement/Prospectus. FBGA stockholders are urged to read the
opinion in its entirety for a description of the procedures followed, matters
considered, and limitations on the reviews undertaken in connection therewith.
See "Description of the Transaction--Opinion of FBGA's Financial Advisor."
EFFECTIVE DATE
Subject to the conditions described in the Agreement relating to the
obligations of the parties to effect the Merger, the Effective Date will occur
on the date and at the time that the Delaware Certificate of Merger and the
Georgia Certificate of Merger are filed and become effective with, respectively,
the Delaware Secretary of State and the Georgia Secretary of State. Unless
otherwise agreed upon by Regions and FBGA, and subject to the conditions to the
obligations of the parties to effect the Merger, the parties will use their
reasonable efforts to cause the Effective Date to occur by the last day of the
month in which the last of the following events occurs: (i) the effective date
(including the expiration of any applicable waiting period) of the last required
consent of any regulatory authority having authority over approving or exempting
the Merger and (ii) the date on which the Agreement is approved by the requisite
vote of FBGA stockholders. The parties expect that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the second quarter of 1997, although there can be no
assurance as to whether or when the Merger will occur. See "Description of the
Transaction-- Effective Date of the Merger," "--Conditions to Consummation of
the Merger," and "--Waiver, Amendment, and Termination of the Agreement."
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions (the "Exchange Agent"), to mail to the former stockholders
of FBGA a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of FBGA Common
Stock for certificates representing shares of Regions Common Stock. FBGA
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."
9
<PAGE> 14
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the Department of Banking and
Finance of the state of Georgia (the "Georgia Department"). Applications for
the requisite approvals have been filed with these agencies, each of which has
yet to issue its approval of the Merger. There can be no assurance that the
approvals of the Georgia Department and the Federal Reserve will be given or as
to the timing or conditions of such approvals.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of FBGA stockholders, receipt of an
opinion of counsel or a ruling from the Internal Revenue Service as to the
tax-free nature of certain aspects of the Merger, and certain other customary
conditions. See "Description of the Transaction--Conditions to Consummation of
the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual consent of the Boards of Directors of
both FBGA and Regions, or by action of the Board of Directors of either company
under certain circumstances, including if the Merger is not consummated by
September 30, 1997, unless the failure to consummate by such time is due to a
breach of the Agreement by the party seeking to terminate. If for any reason
the Merger is not consummated, FBGA will continue to operate as a bank holding
company under its present management. See "Description of the
Transaction--Waiver, Amendment, and Termination of the Agreement."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of FBGA's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of FBGA 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 FBGA Common Stock.
See "Description of the Transaction--Interests of Certain Persons in the
Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Consummation of the Merger is conditioned on the receipt of an opinion of
counsel to the effect that, among other things, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the exchange in the Merger of FBGA
Common Stock for Regions Common Stock will not give rise to gain or loss to
FBGA stockholders, except to the extent of any cash received in lieu of
fractional share interests or as a result of the exercise of dissenters'
rights. 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 and cash received by dissenters. See "Description of
the Transaction--Certain Federal Income Tax Consequences of the Merger."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER AND OTHER CIRCUMSTANCES, EACH FBGA
STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER (INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS).
10
<PAGE> 15
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, FBGA stockholders, whose rights are governed by the
Georgia Act and by FBGA'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 FBGA
stockholders in certain important respects, some of which constitute additional
antitakeover provisions provided for in Regions' governing documents. See
"Effect of the Merger on Rights of Stockholders."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Regions Common Stock and FBGA Common Stock are traded in the
over-the-counter market and are quoted by the automated quotation system of the
National Association of Securities Dealers, Inc. (the "Nasdaq system"), in the
Nasdaq National Market and Nasdaq Small Cap Market, respectively. The following
table sets forth, as of the indicated dates, (i) the last sale price of Regions
Common Stock and the average of the last reported bid and asked prices of FBGA
Common Stock and (ii) the equivalent per share price (as explained below) of
FBGA Common Stock. The indicated dates of December 13, 1996, and _______, 1997
represent, respectively, the last trading day immediately preceding public
announcement of the proposed acquisition of FBGA by Regions and the latest
practicable date prior to the mailing of this Proxy Statement/Prospectus.
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS FBGA OF FBGA
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
December 13, 1996 $ 51.63 $ 17.00 $ 16.52
_______, 1997
</TABLE>
The equivalent per share price of FBGA 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 .32. Stockholders are advised to obtain
current market quotations for Regions Common Stock and FBGA 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 FBGA, (ii) a pro forma combined basis per share of Regions Common
Stock, giving effect to the Merger, and (iii) an equivalent pro forma basis per
share of FBGA Common Stock, giving effect to the Merger. The Regions and FBGA
pro forma combined information and the FBGA pro forma Merger equivalent
information give effect to the Merger on a pooling of interests accounting
basis and assume an Exchange Ratio of .32. See "Description of the
Transaction--Accounting Treatment." The pro forma data are presented for
information purposes only and are not necessarily indicative of the results of
operations or combined financial position that would have resulted had the
Merger been consummated at the dates or during the periods indicated, nor are
they necessarily indicative of future results of operations or combined
financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the
11
<PAGE> 16
historical financial statements of Regions and FBGA, including the respective
notes thereto. See "Documents Incorporated by Reference," and "--Selected
Financial Data."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
---- ---- ----
(Unaudited except Regions and
FBGA historical)
<S> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical . . . . . . . . . . . . . . . . . $ 3.70 $ 3.21 $ 3.10
FBGA historical . . . . . . . . . . . . . . . . . . 1.71 1.06 .78
Regions and FBGA pro forma combined(1) . . . . . . . 3.71 3.21 3.10
FBGA pro forma Merger equivalent(2) . . . . . . . . . 1.19 1.03 .99
DIVIDENDS DECLARED PER COMMON
SHARE
Regions historical . . . . . . . . . . . . . . . . . $ 1.40 $ 1.32 $ 1.20
FBGA historical . . . . . . . . . . . . . . . . . . . .29 .24 .25
FBGA pro forma Merger equivalent(3) . . . . . . . . . .45 .42 .38
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions historical . . . . . . . . . . . . . . . . . $ 25.52 $ 23.38 $ 21.26
FBGA historical. . . . . . . . . . . . . . . . . . . 8.91 7.54 6.41
Regions and FBGA pro forma combined(1) . . . . . . . 25.53
FBGA pro forma Merger equivalent(2) . . . . . . . . . 8.17
</TABLE>
- -------------------
(1) Represents the combined results of Regions and FBGA as if the Merger was
consummated on January 1, 1994 and was accounted for as a pooling of
interests.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of .32 of a share of Regions Common Stock for each share of FBGA Common
Stock.
(3) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of .32 of a share of Regions Common Stock for each share
of FBGA Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and FBGA. Only three years selected financial
information for FBGA is presented as FBGA commenced operations in 1994, as a
registered bank holding company under the federal Bank Holding Company Act of
1956 and the Georgia Bank Holding Company Law. The data should be read in
conjunction with the historical financial statements, related notes, and other
financial information concerning Regions and FBGA incorporated by reference or
included herein. See "Documents Incorporated by Reference."
12
<PAGE> 17
<TABLE>
<CAPTION>
Selected Historical Financial Data of Regions
YEAR ENDED DECEMBER 31,
----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income.............. $1,386,122 $ 1,259,600 $ 991,693 $ 746,544 $ 737,094
Total interest expense ............ 685,656 635,336 436,157 296,195 324,420
Net interest income................ 700,466 624,264 555,536 450,349 412,674
Provision for loan losses.......... 29,041 30,271 20,580 24,695 39,367
Net interest income after
loan loss provision........... 671,425 593,993 534,956 425,654 373,307
Total noninterest income excluding
security gains (losses)....... 217,624 187,830 171,705 169,318 147,943
Security gains (losses)............ 3,115 (424) 344 831 2,417
Total noninterest expense.......... 553,801 487,461 442,376 383,130 343,279
Income tax expense................. 108,677 96,109 84,109 66,169 56,405
Net income......................... 229,686 197,829 180,520 146,504 123,983
PER SHARE DATA:
Net income......................... $ 3.70 $ 3.21 $ 3.10 $ 2.81 $ 2.42
Cash dividends..................... 1.40 1.32 1.20 1.04 .91
Book value......................... 25.52 23.38 21.26 19.85 17.13
OTHER INFORMATION:
Average number of shares outstanding 62,136 61,670 58,206 52,153 51,192
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets....................... $18,930,175 $16,851,774 $15,810,076 $13,163,161 $10,457,676
Securities......................... 3,870,595 3,863,781 3,346,291 2,993,417 2,255,732
Loans, net of unearned income...... 13,311,172 11,542,311 10,855,195 8,430,931 6,657,557
Total deposits..................... 15,048,336 13,497,612 12,575,593 11,025,376 8,923,801
Long-term debt..................... 447,269 632,019 599,476 525,820 151,460
Stockholders' equity............... 1,598,726 1,429,253 1,286,322 1,106,361 886,116
PERFORMANCE RATIOS:
Return on average assets(5)........ 1.29% 1.21% 1.27% 1.38% 1.29%
Return on average stockholders'
equity(5)..................... 15.19 14.29 15.26 15.76 15.04
Net interest margin................ 4.27 4.21 4.37 4.77 4.85
Efficiency (1)(5).................. 59.44 58.79 59.44 60.23 59.62
Dividend payout.................... 37.84 41.12 38.71 37.01 37.60
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income........ .15% .17% .19% .23% .36%
Problem assets to net loans and
other real estate (2)......... .56 .59 .75 1.12 1.29
Nonperforming assets to net loans
and other real estate (3)..... .76 .68 .80 1.28 1.39
Allowance for loan losses to loans,
net of unearned income........ 1.32 1.38 1.32 1.48 1.51
Allowance for loan losses to
nonperforming assets (3)...... 173.65 202.55 164.48 115.88 107.97
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets................ 8.49% 8.44% 8.35% 8.76% 8.60%
Average loans to average deposits.. 85.90 86.12 79.90 76.41 71.59
Tier 1 risk-based capital (4)...... 10.81 11.14 10.69 11.13 11.68
Total risk-based capital (4)....... 13.59 14.61 14.29 13.48 14.44
Tier 1 leverage (4)................ 7.44 7.49 8.21 10.11 8.44
</TABLE>
- -------------------------------------
(1) Noninterest expense divided by the sum of net interest income (taxable-
equivalent basis) and noninterest income net of gains (losses) from
security transactions.
(2) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(3) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(4) The required minimum Tier 1 and total risk-based capital ratios are 4.0%
and 8.0%, respectively. The minimum leverage ratio of Tier 1 capital to
total adjusted assets is 3.0% to 5.0%, depending on the risk profile of
the institution and other factors.
(5) Ratios for 1996 excluding $19.0 million in after-tax charges for SAIF
assessment and merger expenses are as follows: Return on average
stockholders' equity 16.45%, Return on average total assets 1.40%, and
Efficiency 56.16%.
13
<PAGE> 18
Selected Historical Financial Data of FBGA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1996 1995 1994
---- ---- ----
(In thousands except per share data and ratios)
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income . . . . . . . . . $ 8,947 $ 6,211 $ 4,713
Total interest expense . . . . . . . . 3,251 2,469 1,590
Net interest income . . . . . . . . . . 5,696 3,742 3,123
Provision for loan losses . . . . . . . 84 41 172
Net interest income after
loan loss provision . . . . . . . 5,612 3,701 2,951
Total noninterest income . . . . . . . 2,119 989 549
Total noninterest expense . . . . . . . 4,800 3,036 2,317
Income tax expense . . . . . . . . . . 1,084 520 365
Net income . . . . . . . . . . . . . . 1,847 1,134 818
PER SHARE DATA:
Net income . . . . . . . . . . . . . . $ 1.71 $ 1.06 $ .78
Cash dividends . . . . . . . . . . . . .29 .24 .25
Book value . . . . . . . . . . . . . . 8.91 7.54 6.41
OTHER INFORMATION:
Average number of shares outstanding . 1,085 1,071 1,044
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets . . . . . . . . . . . . . $ 121,379 $ 92,251 $ 65,896
Securities . . . . . . . . . . . . . . 20,792 23,967 14,618
Loans, net of unearned income . . . . . 81,983 59,118 43,339
Total deposits . . . . . . . . . . . . 91,565 78,734 58,219
Stockholders' equity . . . . . . . . . 9,349 7,908 6,720
PERFORMANCE RATIOS:
Return on average assets . . . . . . . 1.86% 1.49% 1.25%
Return on average stockholders'
equity . . . . . . . . . . . . . . 21.78 15.85 12.59
Net interest margin . . . . . . . . . . 5.73 5.60 5.42
Efficiency (1) . . . . . . . . . . . . 61.43 64.17 63.11
Dividend payout . . . . . . . . . . . . 16.49 22.21 32.05
ASSET QUALITY RATIOS:
Net charge-offs (recoveries) to average
loans, net of unearned income . . (.03)% (.01)% .02%
Problem assets to net loans and
other real estate (2) .65 1.35 1.91
Nonperforming assets to net loans
and other real estate (3) . . . . 1.82 3.15 1.91
Allowance for loan losses to loans,
net of unearned income . . . . . . 1.38 1.74 2.26
Allowance for loan losses to
nonperforming assets (3) . . . . . 74.97 54.45 115.96
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets . . . . . . . . . . 8.54% 9.40% 9.89%
Average loans to average deposits . . . 80.30 65.06 66.91
Tier 1 risk-based capital (3) . . . . . 12.97 13.62 13.22
Total risk-based capital (3) . . . . . 14.22 14.87 14.52
Tier 1 leverage (3) . . . . . . . . . . 9.19 10.28 9.06
</TABLE>
- --------------------------
(1) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(2) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(3) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(4) The required minimum Tier 1 and total risk-based capital ratios are
4.0% and 8.0%, respectively. The minimum leverage ratio of Tier 1
capital to total adjusted assets is 3.0% to 5.0%, depending on the risk
profile of the institution and other factors.
14
<PAGE> 19
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of FBGA
Common Stock in connection with the solicitation by the FBGA Board of Directors
of proxies for use at the Special Meeting, at which FBGA stockholders will be
asked to vote upon a proposal to approve the Agreement. The Special Meeting
will be held at 4:00 p.m., local time, on _______, 1997, at the office of FBGA,
located at 600 South Central Avenue, Hapeville, Georgia, 30354.
FBGA stockholders are requested promptly to sign, date, and return the
accompanying proxy card to FBGA in the enclosed postage-paid, addressed
envelope. A stockholder's failure to return a properly executed proxy card or
to vote at the Special Meeting will have the same effect as a vote against the
Agreement.
Any FBGA 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
FBGA a signed proxy card bearing a later date, provided that such notice or
proxy card is actually received by FBGA before the vote of stockholders or in
open meeting prior to the taking of the stockholder vote at the Special
Meeting. Any notice of revocation should be sent to First Bankshares, Inc., 600
South Central Avenue, Hapeville, Georgia, 30354, Attention: Karla Benner,
Corporate Secretary. A proxy will not be revoked by death or supervening
incapacity of the stockholder executing the proxy unless, before the vote,
notice of such death or incapacity is filed with the Secretary. The shares of
FBGA Common Stock represented by properly executed proxies received at or prior
to the Special Meeting and not subsequently revoked will be voted as directed
in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED BY PROXIES
RECEIVED WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND IN THE DISCRETION OF
THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY COME BEFORE THE
SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS ARE GIVEN, THE
PROXY HOLDER ALSO MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL
MEETING TO PERMIT FURTHER SOLICITATION OF PROXIES IN ORDER TO OBTAIN SUFFICIENT
VOTES TO APPROVE THE AGREEMENT. As of the date of this Proxy
Statement/Prospectus, FBGA is unaware of any other matter to be presented at
the Special Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
FBGA, 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.
FBGA stockholders should not forward any stock certificates with their
proxy cards.
RECORD DATE; VOTE REQUIRED
FBGA's Board of Directors has established the close of business on
_______, 1997, as the Record Date for determining the FBGA stockholders
entitled to notice of and to vote at the Special Meeting. Only FBGA
stockholders of record as of the Record Date will be entitled to vote at the
Special Meeting. The affirmative vote of the holders of a majority of the FBGA
Common Stock outstanding and entitled to vote at the Special Meeting, and not
just a majority of the votes cast, is required in order to approve the
Agreement. Therefore, an abstention or failure to return a properly executed
proxy card will have the same effect as a vote against the Agreement, as will a
broker's submitting a proxy card without exercising discretionary voting
authority with respect to the Agreement. As of the Record Date, there were
approximately _______ holders of 1,052,462 shares of FBGA Common Stock
outstanding and entitled to vote at the Special Meeting, with each share
entitled to one vote. For information as to persons known by FBGA to
beneficially own more than 5.0% of the outstanding shares of FBGA Common Stock
as of the Record Date, see "Voting Securities and Principal Stockholders of
FBGA."
15
<PAGE> 20
The presence, in person or by proxy, of a majority of the outstanding
shares of FBGA Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these
purposes, shares of FBGA Common Stock that are present, or represented by
proxy, at the Special Meeting will be counted for quorum purposes regardless of
whether the holder of the shares or proxy fails to vote on the Agreement or
whether a broker with discretionary authority fails to exercise its
discretionary voting authority with respect to the Agreement. Once a quorum is
established, approval of the Agreement requires the affirmative vote of the
holders of a majority of the FBGA Common Stock outstanding and entitled to vote
at the Special Meeting.
The directors and executive officers of FBGA and their affiliates
beneficially owned, as of the Record Date, 331,342 shares (or approximately
31.48% of the outstanding shares) of FBGA Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of
the Record Date, no shares of FBGA Common Stock. As of that date, no subsidiary
of either FBGA or Regions held any shares of FBGA Common Stock in a fiduciary
capacity for others.
DESCRIPTION OF THE TRANSACTION
The following material describes certain aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement, which is attached
as Appendix A to this Proxy Statement/Prospectus and incorporated herein by
reference. All stockholders are urged to read the Appendices in their entirety.
GENERAL
Each share of FBGA Common Stock (excluding any shares held by FBGA,
Regions, or their respective subsidiaries, other than shares held in a
fiduciary capacity or as a result of debts previously contracted, and shares
held by stockholders who perfect their dissenters' rights of appraisal) issued
and outstanding at the Effective Date will be converted into .32 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 FBGA 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. Such an adjustment would occur
only if FBGA'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 Exchange Ratio. For
purposes of the description of these provisions and their operation, the
following definitions apply.
"Average Closing Price" means the average of the daily last sales prices 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) during the ten consecutive full trading days in
which such shares are traded on the Nasdaq National Market, ending on the date
of the Special Meeting. "Determination Date" means the date of the Special
Meeting. "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
December 13, 1996, less 20%. "Regions Ratio" means the
16
<PAGE> 21
quotient obtained by dividing the Average Closing Price by $53.747.
No Adjustment. There will be no adjustment to the Exchange Ratio if any or
more of three sets of circumstances occur: (i) the Average Closing Price is
equal to or greater than $45.685, (ii) the Regions Ratio is equal to or greater
than the Index Ratio, or (iii) Regions declines to adjust the Exchange Ratio
pursuant to the adjustment mechanism and the board of directors of FBGA elects
to proceed with the Merger with the original Exchange Ratio.
Upward Adjustment of Exchange Ratio. If during the ten day period
commencing two days after the Determination Date both (i) the Average Closing
Price is less than $45.685, and (ii) the Regions Ratio is less than the Index
Ratio, then FBGA may elect by a vote of a majority of the FBGA directors, not
to effect the Merger at the original Exchange Ratio of .32.
In such case, FBGA 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. FBGA 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 FBGA stockholders by increasing the Exchange Ratio to equal the
lesser of (i) the quotient obtained by dividing (1) the product of $45.685 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 FBGA 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 FBGA's stockholders
will assume the risk of declines in the value of Regions Common Stock to
$45.685 per share. If the value of Regions Common Stock were to decline to an
amount below $45.685 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
FBGA's stockholders would continue to assume the risk of decline in the value
of Regions Common Stock. FBGA has the right to terminate the Agreement only
when the price of Regions Common Stock declines to an amount below $45.685 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.
The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the numerical examples, the Exchange Ratio is .32
and the Index Price is, as of December 13, 1996, $100.)
(a) The first scenario occurs if the Average Closing Price is not less than
$45.685. Under this scenario, regardless of any comparison between the Regions
Ratio and the Index Ratio, there would be no right on the part of FBGA to
terminate the Agreement and therefore no potential adjustment to the Exchange
Ratio, even though the consideration to be received by FBGA stockholders would
have fallen from a pro forma $17.20 per share as of December 13, 1996, to as
little as pro forma $14.62 per share as of the Determination Date.
(b) The second scenario occurs if the Average Closing Price is less than
$45.685, but does not decline by significantly more (by more than 20%) than the
decline in the Index Group. Under this scenario, there again would be no right
on the part of FBGA to terminate the Agreement and therefore no potential
adjustment to the Exchange Ratio, even though the consideration received by
FBGA stockholders would have fallen from a pro forma $17.20 per share to
something less than pro forma $14.62 per share.
(c) The third scenario arises where the Average Closing Price is below
$45.685 and the Regions Ratio is below the Index Ratio (Regions' stock
price has declined by more than 20% relative to the price of shares of the
Index Group). Under this scenario, FBGA 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 FBGA
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 $45.685 per share or a 20% decline from
the stock performance reflected by the Index Group.
17
<PAGE> 22
For example, if the Average Closing Price were $38.00, and the Index Price
on the Determination Date were $95, the Regions Ratio would be .707 and would
be below the Index Ratio of .75 (.95 - .20). In such a case, FBGA could
terminate the Agreement unless Regions elected within five days to increase the
Exchange Ratio to equal .339, which represents the lesser of (a) .385 [the
result of dividing $14.619 (the product of $45.685 and the .32 Exchange Ratio)
by the Average Closing Price ($38.00)] and (b).339 [the result of dividing the
Index Ratio (.75) times .32 by the Regions Ratio (.707)]. Based upon the
assumed $38.00 Average Closing Price, the new Exchange Ratio would represent a
value to the FBGA stockholders as of the Determination Date of pro forma $12.88
per share.
If the Average Closing Price were $38.00, and the ending Index Price were
$110, the Regions Ratio would be .707 and would be below the Index Ratio of .9
(1.1 - .2). In such a case, FBGA could terminate the Agreement unless Regions
elected within five days to increase the Exchange Ratio to equal .385, which
represents the lesser of (a) .385 [the result of dividing $14.619 (the product
of $45.685 and the .32 Exchange Ratio) by the Average Closing Price ($38.00)]
and (b) .407 [the result of dividing the Index Ratio (.9) times .32 by the
Regions Ratio (.707)]. Based upon the assumed $38.00 Average Closing Price, the
new Exchange Ratio would represent a value to the FBGA stockholders of pro
forma $14.63 per share.
The foregoing examples are presented for illustration purposes only.
Moreover, FBGA 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 FBGA Common Stock may be more or less than the
Average Closing Price. FBGA 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."
If the Average Closing Price and the Index Price are such that FBGA would
be entitled to terminate the Agreement under the provisions just described, the
Board of Directors of FBGA 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 FBGA'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, FBGA 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 FBGA will
consider whether the Merger remains in the best interest of FBGA and its
stockholders, despite a decline in Regions' stock price, and whether the
consideration to be received by the holders of FBGA Common Stock remains fair
from a financial point of view.
FBGA and Regions concur that FBGA will resolicit approval of the Merger
from holders of FBGA Common Stock if (i) FBGA is entitled to and gives Regions
notice of termination and Regions declines to adjust the Exchange Ratio, (ii)
the Board of Directors of FBGA elects to proceed with the Merger without an
adjustment to the Exchange Ratio, and (iii) the equivalent per share value of
FBGA Common Stock on the Determination Date is less than $13.00.
Proportional Adjustment to Reflect Regions' Proposed Stock Split. Subject
to stockholder approval of a proposed amendment to the Certificate of
Incorporation increasing the number of authorized shares from 120,000,000 to
240,000,000, Regions intends to effect a 2 for 1 stock split on June 1, 1997.
In that event, the Exchange Ratio will be proportionately adjusted to reflect
such stock split.
TREATMENT OF FBGA OPTIONS
The Agreement provides that all rights with respect to FBGA Common Stock
pursuant to stock options or stock appreciation rights granted by FBGA 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 the terms of the plan under
which it was issued and the agreement by which it is evidenced.
18
<PAGE> 23
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 FBGA that as of the date of this Proxy
Statement/Prospectus hold outstanding options are R. Elliott Miller who holds
options to purchase 47,678 shares of FBGA Common Stock.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. During the last several years, there have been
significant developments in the banking and financial services industry. These
developments have included 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.
With this as a background, in the fall of 1994, FBGA's Board of Directors
began to have general discussions at the regular monthly board meetings about
the strategic options available to FBGA with respect to its growth. These
options included equity issues, mergers, acquisitions and other possible
transactions. The Board authorized its Executive Committee, consisting of
Chairman of the Committee James L. Lynn, Chairman of the Board Ray E. Hannah,
Vice-Chairman of the Board Conrad Waller, its CEO R. Elliott Miller, and its
General Counsel James A. Eidson, to begin exploring the various options.
In early 1995, the Executive Committee had discussions with a metropolitan
Atlanta financial institution concerning a possible combination with FBGA.
These discussions ended in early 1995 because the parties could not come to
agreeable terms regarding the price and post-combination status of the parties.
Also in 1995, the Executive Committee had discussions with another
metropolitan Atlanta financial institution regarding its possible acquisition
by FBGA. These discussions ended in 1995 because the potential acquisition
target was acquired by an out-of-state regional bank holding company before an
agreement could be reached.
In November of 1995, the Board of Directors of FBGA retained Stevens &
Company, a LaGrange based company, to provide consulting services and other
assistance regarding potential mergers and acquisitions. Stevens & Company
suggested the possibility of identifying a few financial institutions that
might be potential acquirers of FBGA. The Board of Directors decided that FBGA
was not interested in placing itself on the market, but did agree that it would
consider exploring opportunities with a few select financial institutions who
might have an interest in coming into or expanding their presence in the
Atlanta area. Over the course of 1996, FBGA's consultant and the Executive
Committee had discussions with several different institutions regarding
possible business combinations, and these discussions included the possibility
of selling FBGA to a larger bank holding company.
On January 19, 1996, the Executive Committee met with representatives of a
metropolitan Atlanta financial institution. Although the Executive Committee
entertained discussions regarding a possible business combination, it was
determined that the culture of the other institution would not provide a
relationship which would be beneficial to FBGA and its stockholders.
On July 3, 1996, the Executive Committee met with representatives of an
out-of-state regional bank holding company regarding a possible combination of
the two institutions. Following various discussions concerning a possible
business combination, it was determined that the price offered was not adequate
and that the culture of the other institution would not provide a relationship
which would be beneficial to FBGA and its stockholders.
19
<PAGE> 24
In the course of each of the discussions described above, the Executive
Committee and the Board of Directors of FBGA determined that the proposed
business combinations were not in the best interest of FBGA or its
stockholders.
Throughout the first half of 1996, FBGA continued to meet with and discuss
various business combinations with financial institutions in the metropolitan
Atlanta area, as well as both state and out-of-state regional bank holding
companies. In each instance, the Executive Committee and the Board of Directors
determined that the possible business combinations under consideration were not
in the best interests of FBGA or its stockholders.
By the summer of 1996, FBGA 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 FBGA could obtain
a fair price for its stockholders. Accordingly, FBGA and Regions entered into
negotiations. On September 4, 1996, Mr. Miller and Mr. Lynn met in Atlanta with
William Jordan, an executive officer of Regions, and discussed a possible
combination in which FBGA would merge with Regions. No price was discussed, but
it was agreed that both parties were interested and would continue further
discussions. On October 17, 1996, Mr. Miller, Mr. Waller and Mr. Lynn were
invited to visit Birmingham where they met with Regions' Vice Chairman Richard
Horsley and Mr. Jordan. At that time, a price was discussed with no agreement
being reached, and it was decided that the parties would exchange additional
information.
During the period from September 4, 1996, through December 6, 1996, FBGA's
Executive Committee and directors were kept informed by Mr. Miller of the
progress of the negotiations with Regions at each monthly board meeting. The
directors at each meeting authorized Mr. Miller and the Executive Committee to
continue to pursue the negotiations with the objective of obtaining an
agreeable price for the sale of FBGA.
At a special called meeting of the Board of Directors held on December 6,
1996, all of the terms of the proposal, as well as the definitive agreement,
were reviewed in detail with the directors by special counsel for FBGA. Special
counsel for FBGA also discussed with the directors their fiduciary duties with
regard to the sale of FBGA. Following these presentations, the directors
approved the proposed Merger. Thereafter, on December 13, 1996, a definitive
agreement was signed by FBGA and Regions, and a press release was issued on
December 16, 1996.
FBGA'S REASONS FOR THE MERGER. In approving the Merger, the directors of
FBGA considered a number of factors. Without assigning any relative or
specific weights to the factors, the FBGA Board of Directors considered the
following material factors:
(a) the information presented to the directors by the management of FBGA
concerning the business, operations, earnings, asset quality, and financial
condition of FBGA, 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 FBGA Common Stock; the partial protection against a decline in the market
value of Regions Common Stock;
(c) The financial terms of recent business combinations in the financial
services industry and a comparison of the multiples of selected combinations
with the terms of the proposed transaction with Regions;
(d) the nonfinancial terms of the Merger, including the greater liquidity
of Regions Common Stock compared to FBGA Common Stock and the treatment of the
Merger as a tax-free exchange of FBGA Common Stock for Regions Common Stock for
federal and state income tax purposes;
20
<PAGE> 25
(e) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay;
(f) The alternatives to the Merger, including remaining an independent
institution in light of the current economic condition of FBGA's market and
its competitive disadvantage compared to the larger financial institutions
operating in the market;
(g) The competitive and regulatory environment for financial institutions
generally;
(h) Regions' ability to provide comprehensive financial services through
the Bank to its market.
(i) the opinion rendered by FBGA's financial advisor to the effect that,
from a financial point of view, the Exchange Ratio is fair to the holders of
FBGA Common Stock.
The terms of the Merger were the result of arms-length negotiations between
representatives of FBGA and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of FBGA
unanimously approved the Merger as being in the best interests of FBGA and its
stockholders. Each member of the Board of Directors of FBGA has agreed to vote
such member's shares in favor of the Merger.
FBGA's Board of Directors unanimously recommends that FBGA 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 FBGA 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 FBGA 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 FBGA; and
(b) a variety of factors affecting and relating to the overall strategic
focus of Regions, including Regions' desire to expand into markets in the
general vicinity of its core markets.
OPINION OF FBGA'S FINANCIAL ADVISOR
FBGA has retained Brown, Burke Capital Partners, Inc. to act as its
financial advisor in connection with the Merger. From time to time beginning
in 1995, representatives of BBCP participated in informal discussions with the
senior management and certain board members of FBGA concerning strategies to
enhance the franchise value of the Company, the market for the sale of FBGA
should the Board of FBGA determine to explore the Company's affiliation
options and the likely values shareholders of FBGA could be expected to realize
upon the sale of FBGA. In early December 1996, these discussions with senior
management of FBGA became more specific and focused on the acquisition proposal
FBGA had received from Regions. In those discussions representatives of BBCP
indicated that, in their opinion, it was highly unlikely that a superior offer
to Regions' proposal would be received and that the implied valuation of the
Regions' proposal appeared very attractive. BBCP has undertaken its formal
review of the terms of the Merger as described below and has rendered its
written opinion to the FBGA Board that, on the date of this Prospectus/Proxy
Statement, based on the information set forth therein, the Exchange Ratio is
fair, from a financial point of
21
<PAGE> 26
view, to the FBGA stockholders.
The full text of BBCP's written opinion is attached as Appendix B to this
Prospectus/Proxy Statement and is incorporated herein by reference. The
description of the opinion set forth herein is qualified in its entirety by
reference to Appendix B. FBGA stockholders are urged to read the opinion in its
entirety for a description of the procedures followed, assumptions made,
matters considered, and qualifications and limitations on the review undertaken
by BBCP in connection therewith.
BBCP's opinion is directed to the FBGA Board only and is directed only to
the Exchange Ratio and does not constitute a recommendation to any FBGA
stockholder regarding how such stockholder should vote at the Special Meeting.
In arriving at its written opinion, BBCP, among other things: (i) analyzed
certain audited and unaudited financial statements and other information of
FBGA and Regions; (ii) reviewed and discussed with appropriate management
personnel of FBGA the past and current business activities and financial
results and the business and financial outlook of FBGA, (iii) reviewed the
historical price and trading activity of the Common Stock of FBGA and Regions;
(iv) compared certain financial and stock market data relating to FBGA and
Regions with similar data of other publicly held banking institutions
considered to be potential alternative affiliation candidates to Regions for
FBGA; (v) performed an analysis comparing the pro forma consequences of the
Merger to FBGA stockholders with respect to earnings per share, tangible book
value per share and dividends per share represented by the Regions Common Stock
they will receive in the Merger to those same measures represented by the FBGA
Common Stock they currently hold; (vi) reviewed the prices paid in certain
comparable acquisition transactions of community banking institutions and the
multiples of earnings and book value and the level of deposit base premium
received by the selling institutions; (vii) reviewed the Merger Agreement and
certain related documents; (viii) considered the financial implications of
certain other strategic alternatives available to FBGA; and (ix) performed such
other analyses as BBCP deemed appropriate.
In conducting its analysis and arriving at its opinion, BBCP assumed and
relied upon, without independent verification, the accuracy and completeness of
the information it reviewed for the purposes of the opinion. BBCP also relied
upon the management of FBGA with respect to the reasonableness and
achievability of the financial forecast (and the assumptions and bases
underlying such forecast) provided to it. FBGA instructed BBCP that, for the
purposes of its opinion, BBCP should assume that such forecast will be realized
in the amounts and in the time periods currently estimated by the management of
FBGA. BBCP also assumed, with FBGA consent, that the aggregate allowances for
loan losses for each of FBGA and Regions are adequate to cover such losses.
BBCP is not an expert in the evaluation of allowances for loan losses and has
not reviewed any individual credit files. BBCP did not make, nor was it
furnished with, independent valuations or appraisals of the assets or
liabilities of either FBGA or Regions or any of their subsidiaries. BBCP did
not, and was not asked to, express any opinion about what the value of Regions
Common Stock actually will be when issued to the holders of FBGA Common Stock
pursuant to the Merger or the price at which Regions Common Stock will trade
subsequent to the Merger. Moreover, FBGA has informed BBCP, and BBCP has
assumed that the Merger will be recorded utilizing pooling of interests
accounting under generally accepted accounting principles.
No limitations were imposed by FBGA or the FBGA Board on the scope of
BBCP's investigation or the procedures to be followed by BBCP in rendering its
opinion. BBCP did not solicit regional bank holding companies for their
indications of acquisition interest in FBGA. The opinion is necessarily based
on economic, market and other conditions as in effect on, and the information
made available to BBCP as of, the date of its analysis.
In arriving at the fairness, from a financial point of view, of the
consideration to be received by the stockholders of FBGA, BBCP developed an
opinion of the value of FBGA Common Stock should the institution remain
independent and analyzed such value in light of the premium represented by the
Exchange
22
<PAGE> 27
Ratio. In connection with rendering its opinion to the FBGA Board, BBCP also
reviewed a variety of generally recognized valuation methodologies and merger
analyses and performed those which it believed were most appropriate for
developing its opinion of fairness, from a financial point of view.
The preparation of a fairness opinion involves various determinations of
the most appropriate and relevant methods of financial analysis and the
application of those methods to the particular circumstances, and, therefore,
such an opinion is not readily susceptible to summary description. In arriving
at its fairness opinion, BBCP did not attribute any particular weight to any
analysis or factor considered by it, but rather made qualitative judgments
about the significance and relevancy of each analysis and factor. None of the
analyses performed by BBCP was assigned a greater significance by BBCP than any
other. Accordingly, BBCP believes that its analyses must be considered as a
whole and that a review of selected portions of such analyses and the factors
considered therein, without considering all analyses and factors, could create
a misleading or incomplete view of the processes underlying its opinion and any
conclusions reached therein. In its analyses, BBCP made numerous assumptions
with respect to industry performance, general business and economic conditions,
and other matters, many of which are beyond FBGA's and Regions' control. Any
estimates contained in BBCP's analyses are not necessarily indicative of actual
values or predictive of future results or values that may be significantly more
or less favorable than such estimates. Estimates of values of companies do not
purport to be appraisals or necessarily reflect the prices at which companies
or their securities actually may be sold. In addition, as described above,
BBCP's opinion was one of many factors taken into consideration by the FBGA
Board in making its determination to approve the Merger Agreement.
The following is a brief summary of analyses performed by BBCP in
connection with its written opinion delivered to the FBGA Board and dated the
date hereof:
Summary of Proposal. BBCP reviewed the terms of the proposed transaction as
reflected in the Merger Agreement, including the calculation of the market
value of the consideration represented by the Exchange Ratio. BBCP calculated
that based on the price of Regions Common Stock on December 13, 1996 and on
March 4, 1997 of $51.625 and $58.25, respectively, an Exchange Ratio of .32
shares of Regions Common Stock for each share of FBGA Common Stock would
provide FBGA stockholders a total valuation of $18.2 and $20.6 million and a
per share value of $16.52 and $18.64, respectively.
Market Value Premium Represented by the Exchange Ratio. BBCP calculated and
compared the market value of the consideration to be received by FBGA
shareholders in the Merger on a per share basis to the trading price of FBGA
Common Stock during certain historical periods prior to the public announcement
of the Merger. BBCP noted that the market value of the consideration to be
received by FBGA shareholders in the Merger represented a discount of 2.0% and
premiums of 11.5% and 22.5% over the closing trading price and average closing
prices of FBGA common shares on December 13, 1996 and for the 180 and 360 day
periods preceding such date. BBCP also noted that the average trading volume in
Regions Common Stock was significantly greater than the trading volume in FBGA.
BBCP also calculated the market price performance of Regions Common Stock
from December 13, 1996 to March 4, 1997 in comparison to the market price
performance for an index of regional bank holding companies similar to Regions
(the "Index Group"). BBCP noted that since December 13, 1996, Regions Common
Stock has appreciated in value 12.6% while the Index Group has appreciated
15.9% over the same period.
Indicated Value of FBGA as an Independent Company. BBCP undertook an
analysis addressing the range of potential values which would be implied if
FBGA were to remain independent. BBCP computed this range of values based
primarily on a discounted cash flow analysis of the core community banking
activities, relying on projections extrapolated from FBGA's 1997 budget and its
historical performance. BBCP separately modeled and evaluated FBGA's mortgage
banking activity. In this analytical methodology, BBCP assumed, for the
traditional banking activities of FBGA, stockholders received, in addition to
the projected dividend stream, a terminal valuation at December
23
<PAGE> 28
31, 2000 based upon a 1.80 times multiple of December 31, 2000 stated book
value and a 14.0 times multiple of earnings for such year. These amounts were
discounted at rates ranging from 12.0% to 16.0% and indicated net present
values to FBGA stockholders on a per share basis ranging from $10.21 to $11.71.
Similarly for the mortgage banking activity, BBCP assumed stockholders
received, in addition to a projected dividend stream, a terminal valuation at
December 31, 2000 based upon a 1.0 times multiple of book value and a 3.0 times
multiple of earnings for such year. These amounts were discounted at rates
ranging between 12.0% to 16.0% and indicated net present values to FBGA
stockholders on a per share basis ranging from $2.46 to $2.80. As a result of
this analysis, BBCP then estimated the total value of FBGA to be between $12.67
and $14.51 per share, if the Company were to remain independent through the
year 2000.
Per Share Merger Consequences Analysis. Based upon an Exchange Ratio of
.32 shares of Regions Common Stock for each share of FBGA Common Stock and
using the earnings estimates for FBGA prepared by FBGA management and earnings
estimates for Regions prepared by independent securities analysts, BBCP
compared the estimated 1996 and 1997 earnings per share of FBGA Common Stock on
a stand-alone basis to the equivalent pro forma earnings per share of Regions
Common Stock which would be received in the Merger. BBCP concluded that the
Merger would result in an equivalent earnings per share decrease of 33% in 1996
and 31% in 1997 for FBGA stockholders in the combined company.
BBCP also analyzed the impact of the Merger on the amount of fully diluted
tangible book value represented by a share of FBGA Common Stock. BBCP assumed
consummation of the Merger as of December 31, 1996. BBCP concluded that the
Merger would result in a decrease of 19% in fully diluted tangible book value
on an equivalent per share basis, respectively, for FBGA stockholders projected
as of 12/31/96.
Finally, BBCP compared the amount of dividends expected to be paid on a
share of FBGA Common Stock before the Merger to the level expected to be paid
on a pro forma basis reflecting the Merger. BBCP concluded that the Merger
would result in an increase of 60% in dividends per share for FBGA
stockholders.
Analysis of Selected Other Bank Mergers Involving Southeastern Community
Banks. BBCP reviewed thirty-one mergers involving Georgia community banks and
bank holding companies announced between September, 1993, and January, 1997.
BBCP noted in particular the prices paid in these mergers as a multiple of
earnings and book values and the transaction premiums paid in excess of
tangible book value as a percentage of core deposits. BBCP also reviewed other
data in connection with each of these mergers, including the amount of total
assets and the capital level of the acquired institutions and the return on
equity and the return on assets of the acquired institutions. BBCP then
compared this data to that of FBGA and to the value to be received by FBGA
stockholders in the Merger as of December 13, 1996.
This comparison yielded a range of transaction values as multiples of
latest twelve-months earnings per share of a low of 11.1 times and a high of
29.7 times and a median value of 16.4 times. The FBGA multiple of trailing
earnings was 10.7 times. In addressing this divergence in the earnings
multiple, BBCP noted that a significant proportion of FBGA earnings are
generated through its mortgage banking operations. In 1996, 47% of FBGA income
was generated by these mortgage banking operations. This amount is budgeted to
be 56% in 1997. Earnings generated by mortgage banking operations are typically
deemed to be more volatile than traditional bank earnings. As a result, it is
BBCP's experience that bank holding company acquirors place significantly lower
valuation multiples on mortgage banking earnings streams than they apply to
traditional core bank earnings. With regard to book value multiples, the
calculations yielded a range of transaction values as multiples of book value
per share of a low of 1.15 times to a high of 2.53 times and a median value of
1.98 times. The FBGA multiple of book value was 2.08 times. Finally, the
calculations yielded a range of deposit base premiums paid from a low of 2.6%
to a high of 22.4%, with a median value of 10.9%. The equivalent premium on
FBGA deposits represented by the Exchange Ratio was 14.2%.
BBCP also undertook an analysis where it valued the traditional banking
operations of FBGA based on the median values of the transaction multiples of
earnings, book value and deposit base premium and the
24
<PAGE> 29
mortgage banking operations based on representative multiples of origination
volume and earnings. This analysis indicated an aggregate value for the Company
of $17.6 million and a per share value of $16.09.
No company or transaction used in the above analyses as a comparison is
identical to FBGA, Regions, or the Merger. Accordingly, an analysis of the
results of the foregoing necessarily involves complex considerations and
judgments concerning differences in BBCP and operating characteristics of the
companies and other factors that could affect the public trading value of the
companies to which they are being compared. Mathematical analysis (such as
determining the average or median) is not, in itself, a meaningful method of
using comparable company data.
BBCP is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, private placements, and
valuations for estate, tax, corporate and other purposes. FBGA has agreed to
pay BBCP a fee of $10,000 for delivery of its written opinion and an additional
fee of $15,000 upon consummation of the Merger. No compensation payable to BBCP
is contingent on the conclusions reached in the opinion of BBCP. FBGA has also
agreed to reimburse BBCP for reasonable out-of-pocket expenses and to indemnify
BBCP and certain related persons against certain liabilities relating to or
arising out of its engagement.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Georgia Certificate of Merger relating
to the Merger are filed and declared effective with, respectively, the Delaware
Secretary of State and the Georgia Secretary of State. Unless otherwise agreed
upon by Regions and FBGA, and subject to the conditions to the obligations of
the parties to effect the Merger, the parties will use their reasonable efforts
to cause the Effective Date to occur on the last day of the month in which the
last of the following events occur: (i) the effective date (including the
expiration of any applicable waiting period) of the last required consent of any
regulatory authority having authority over approving or exempting the Merger
and (ii) the date on which the Agreement is approved by the requisite vote of
FBGA stockholders.
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 FBGA anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the second quarter of 1997. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or FBGA generally may terminate
the Agreement if the Merger is not consummated by September 30, 1997, unless
the failure to consummate by that date is the result of a breach of the
Agreement by the party seeking termination. See "--Conditions to Consummation
of the Merger" and "--Waiver, Amendment, and Termination of the Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the Effective Date, Regions will cause an exchange agent
selected by Regions to mail to the former stockholders of FBGA a form letter of
transmittal, together with instructions for the exchange of such stockholders'
certificates representing shares of FBGA Common Stock for certificates
representing shares of Regions Common Stock.
FBGA 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 FBGA Common Stock, together with a properly completed
letter of transmittal, there will be issued and mailed to each holder of FBGA
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
25
<PAGE> 30
lieu of any fractional share interest, without interest. After the Effective
Date, to the extent permitted by law, FBGA 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 FBGA Common Stock has been converted, regardless of whether such
stockholders have surrendered their FBGA 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 FBGA
certificate until the holder duly surrenders such certificate. Upon such
surrender, all undelivered dividends and other distributions and, if
applicable, a check for the amount to be paid in lieu of any fractional share
interest will be delivered to such stockholder, in each case without interest.
The stock transfer books of FBGA will be closed at the effective time of
the Merger and after the Effective Date, there will be no transfers of shares
of FBGA Common Stock on FBGA's stock transfer books. If certificates
representing shares of FBGA Common Stock are presented for transfer after the
Effective Date, they will be canceled and exchanged for the shares of Regions
Common Stock and a check for the amount due in lieu of fractional shares, if
any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) approval from the Federal Reserve and the Georgia Department, and the
expiration of all applicable waiting periods associated with these approvals,
without any conditions or restrictions that would, in the reasonable judgment
of Regions' Board of Directors, so materially adversely impact the economic
benefits of the transactions contemplated by the Agreement that, had such
condition or requirement been known, Regions would not, in its reasonable
judgment have entered into the Agreement;
(b) the approval by the holders of requisite number of shares of FBGA
Common Stock;
(c) the absence of any action by any court or governmental or regulatory
authority of competent jurisdiction restricting, prohibiting, or making illegal
the consummation of the Merger and the other transactions contemplated by the
Agreement;
(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 FBGA Common Stock for Regions
Common Stock will not give rise to recognition of gain or loss to FBGA
stockholders, except to the extent of any cash received; and
(e) notification for listing on the Nasdaq National Market of the shares of
Regions Common Stock to be issued in the Merger.
Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Agreement, including generally, among
others: (i) the delivery by Regions and FBGA of opinions of their respective
counsel opining generally as to the corporate authority, existence, and
ownership of the repsective party; (ii) certificates executed by their
respective duly authorized officers as to the satisfaction of certain
conditions and obligations set forth in the Agreement; (iii) as of the
Effective Date, the accuracy of certain representations and warranties and the
compliance in all material respects with the agreements and covenants of each
party; and (iv) the receipt of a letter from Regions' independent auditors to
the effect that the Merger will qualify for pooling-of-interests accounting
treatment.
26
<PAGE> 31
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 FBGA are not aware of any material governmental approvals or
actions that are required for consummation of the Merger, except as described
below. Should any other approval or action be required, it presently is
contemplated that such approval or action would be sought.
The Merger requires the prior approval of the Federal Reserve, pursuant to
Section 3 of the BHC Act. In granting its approval under Section 3 of the BHC
Act, the Federal Reserve must take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs of the communities to be served. The relevant
statutes prohibit the Federal Reserve from approving the Merger (i) if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States or (ii) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it
would be a restraint of trade in any other manner, unless the Federal Reserve
finds that any anticompetitive effects are outweighed clearly by the public
interest and the probable effect of the transaction in meeting the convenience
and needs of the communities to be served. Under the BHC Act, the Merger may
not be consummated until the 30th day following the date of Federal Reserve
approval, which may be shortened by the Federal Reserve to the 15th day, during
which time the United States Department of Justice may challenge the
transaction on antitrust grounds. The commencement of any antitrust action
would stay the effectiveness of the Federal Reserve's approval, unless a court
specifically orders otherwise.
The Merger also is subject to the approval of the Georgia Department. In
its evaluation, the Georgia Department will take into account considerations
similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and
FBGA approved by their respective Boards of Directors; provided, however, that
after approval by the FBGA stockholders, no amendment that pursuant to the
Georgia Act requires further approval of the FBGA stockholders, including
decreasing the consideration to be received by FBGA 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 FBGA
stockholders, under certain circumstances, including:
(a) by the Board of Directors of either party upon final denial of any
required consent of any regulatory authority, 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;
(b) by the Board of Directors of either party, if the holders of the
requisite number of shares of FBGA Common Stock shall not have approved the
Agreement;
(c) by mutual consent of the Boards of Directors of Regions and FBGA;
27
<PAGE> 32
(d) by the Board of Directors of either party, in the event of a breach by
the other party of any provision of the Agreement which meets certain standards
specified in the Agreement and cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party; or
(e) by the Board of Directors of either party if the Merger shall not have
been consummated by September 30, 1997, but only if the failure to consummate
the Merger by such date has not been caused by the terminating party's breach
of the Agreement.
If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination generally 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 FBGA 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
to take no action that would affect, adversely and materially, the ability of
either party to perform its covenants and agreements under the Agreement in all
material respects and to consummate the Merger or to obtain any consent or
approval required for the transactions contemplated by the Agreement. Provided
generally that Regions and its subsidiaries shall not be prevented 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. In addition, the Agreement contains certain other
restrictions applicable to the conduct of the business of either FBGA or
Regions prior to consummation of the Merger, as described below.
FBGA. FBGA has generally agreed not to take certain actions relating to the
operation of its business pending consummation of the Merger without the prior
written consent of Regions. Those actions generally include, without
limitation: (i) amending the Articles of Incorporation or Bylaws or other
governing instrument of FBGA and its subsidiaries; (ii) incurring,
guaranteeing, or otherwise becoming responsible for any additional debt or
other obligation for borrowed money (other than indebtedness among FBGA and its
subsidiaries) in excess of an aggregate amount outstanding at any time of
$100,000 (for FBGA and its subsidiaries on a consolidated basis) except in the
ordinary course of business consistent with past practices (as described in the
Agreement or forgiving any such indebtedness in excess of $25,000 except as
previously disclosed to Regions); (iii) acquiring or exchanging (other than
exchanges in the ordinary course under employee benefit plans) any shares, or
any securities convertible into shares, of its capital stock or paying any
dividend or other distribution in respect of its capital stock, except that
FBGA may, but shall not be legally obligated to, declare and pay regular annual
cash dividends in accordance with past practice as previously disclosed to
Regions; (iv) issuing, encumbering, or selling any additional shares of any
FBGA capital stock, any rights to acquire any such stock, or any security
convertible into such stock except pursuant to the exercise of stock options
outstanding as of the date of the Agreement; (v) adjusting, splitting,
combining, or reclassifying any of its capital stock or the capital stock of
any subsidiary; (vi) disposing of or encumbering any shares of capital stock of
any FBGA subsidiary or any assets having an aggregate book value in excess of
$100,000, other than in the ordinary course of business for reasonable and
adequate consideration; (vii) acquiring direct or indirect control over or
investing in the equity securities of any other person, other than under
circumstances set forth in the Agreement; (viii) granting any increase in
compensation or benefits to employees, officers, or directors (except in
accordance with past practice or previously approved by the FBGA Board of
Directors, in each case as previously disclosed to Regions or as required by
law), paying any severance pay or bonus (except pursuant to the provisions of
any applicable program or plan adopted by the FBGA Board of Directors prior to
the date of the Agreement previously disclosed to Regions), entering into or
amending any severance agreements with officers of FBGA or any of its
subsidiaries or except as previously disclosed to Regions, or granting any
increase in fees or other increases in compensation or other benefits to
directors of FBGA or any of its subsidiaries; (ix) except as previously
disclosed to Regions, entering into or amending any employment contract that it
does not have the unconditional right to terminate (unless such amendment is
required by law); (x) except as previously disclosed to Regions, adopting any
new employee benefit plan or program, or materially changing any existing plan
or program (except for any change required by law or a change which, in the
opinion of counsel, is necessary to maintain the tax qualified status of any
such plan); (xi) making any significant change in any accounting methods or
systems of internal accounting controls (except in conformity to changes in
generally accepted accounting principles ("GAAP")); (xii) commencing or
settling any litigation (except in accordance with past practices), provided
that, except to the extent specifically reserved against in FBGA's financial
statements dated prior to the date of the Agreement, neither FBGA or any of its
subsidiaries shall settle any litigation involving any liability for money
damages in excess of $25,000 or restrictions upon the operations of FBGA or
any of its subsidiaries; or (xiii) except in the ordinary course of business,
entering into or terminating any material contract or making any change in any
material lease or contract, other than renewals of leases and contracts without
material adverse changes of terms, or as previously disclosed to Regions.
28
<PAGE> 33
or terminating any material contract or waiving, releasing, compromising or
assigning any material rights or claims.
In addition, FBGA has agreed not to solicit, directly or indirectly, any
acquisition proposal from any other person or entity. FBGA 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, FBGA 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 from amending its certificate of
incorporation or bylaws in any manner which is adverse to, and discriminates
against, the holders of FBGA 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 FBGA to, indemnify
each person entitled to indemnification from FBGA or any of its subsidiaries to
the full extent permitted by the Georgia Act and the Articles of Incorporation
or Bylaws of FBGA or its subsidiaries as of the date of the Agreement, as the
case may be, 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 FBGA and its subsidiaries who,
at or after the Effective Date, become officers or employees of Regions or its
subsidiaries, employee benefits under employee benefit plans (other than stock
option or other 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 FBGA or
its subsidiaries prior to the Effective Date will be treated as service with
Regions or its subsidiaries. The Agreement further provides that Regions will
cause FBGA to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between FBGA or its
subsidiaries and any current or former director, officer, or employee, and all
provisions for vested amounts earned or accrued through the Effective Date
under FBGA's benefit plans.
As described above under " --Treatment of FBGA Options," the Agreement also
provides that all rights with respect to FBGA Common Stock pursuant to stock
options or stock appreciation rights granted by FBGA 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 FBGA owned no
shares of Regions Common Stock.
29
<PAGE> 34
DISSENTING STOCKHOLDERS
By virtue of provisions of the 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 FBGA Common Stock who (i) gives to FBGA, 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, excluding any appreciation or
depreciation in anticipation of 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 FBGA 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.
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 Special Meeting. Any holder of FBGA
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: First Bankshares, Inc., 600
South Central Avenue, Hapeville, Georgia, 30354, Attention: Karla Benner,
Corporate Secretary.
If the Merger is authorized at the Special Meeting, FBGA must deliver a
written dissenters' notice (the "Dissenters' Notice") to all holders of FBGA
Common Stock who 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 FBGA 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 FBGA 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 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, 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 FBGA financial statements, (ii) the
30
<PAGE> 35
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 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 forth
demanding payment and depositing share certificates, FBGA 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 of 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) FBGA, 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 Fulton 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 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
31
<PAGE> 36
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 FBGA 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 FBGA, 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 FBGA 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 FBGA stockholders, except as indicated above or otherwise required by law.
Any dissenting FBGA 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 FBGA concerning
certain federal income tax consequences of the proposed Merger under federal
income tax law. It is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the Delaware
GCL and the Georgia Act, the Merger will be a reorganization within the meaning
of Section 368(a) of the Code. FBGA and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
(b) The stockholders of FBGA will recognize no gain or loss upon the
exchange of their FBGA Common Stock solely for shares of Regions Common Stock.
(c) The basis of the Regions Common Stock received by the FBGA
stockholders in the Merger will, in each instance, be the same as the basis of
the FBGA Common Stock surrendered in exchange therefor, less the basis of any
fractional share of Regions Common Stock settled by cash payment.
(d) The holding period of the Regions Common Stock received by the FBGA
stockholders will, in each instance, include the period during which the FBGA
Common Stock surrendered in exchange therefor was held, provided that the FBGA
Common Stock was held as a capital asset on the date of the exchange.
(e) The payment of cash to FBGA stockholders in lieu of fractional share
interests of Regions Common
32
<PAGE> 37
Stock will be treated for federal income tax purposes as if the fractional
shares were distributed as part of the exchange and then were redeemed by
Regions. These cash payments will be treated as having been received as
distributions in full payment in exchange for the stock redeemed as provided in
Section 302(a) of the Code. 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) Where solely cash is received by a FBGA stockholder in exchange for
FBGA Common Stock pursuant to the exercise of dissenters' rights, such cash
will be treated as having been received in redemption of such holder's FBGA
Common Stock, subject to the provisions and limitations of Section 302 of the
Code.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN OR OTHER TAX
CONSEQUENCES OF THE MERGER. FBGA STOCKHOLDERS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER FOREIGN, STATE OR LOCAL
LAW.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests as that term is used pursuant to GAAP, for accounting and financial
reporting purposes. Under the pooling-of-interests method of accounting,
assets, liabilities, and equity of the acquired company are carried forward to
the combined entity at their stated amounts. See "Summary--Comparative Per
Share Data."
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that Regions
will bear and pay the filing fees and printing costs in connection with this
Proxy Statement/Prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions Common Stock to be issued to FBGA 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, FBGA (such persons are referred to hereinafter as
"affiliates" and generally include executive officers, directors, and 10%
stockholders) at the time of the Special Meeting. Affiliates may not sell
shares of Regions Common Stock acquired in connection with the Merger, except
pursuant to an effective registration statement under the Securities Act or in
compliance with SEC Rule 145 or in accordance with a legal opinion satisfactory
to Regions that such sale or transfer is otherwise exempt from the Securities
Act registration requirements.
Each person who FBGA reasonably believes will be an affiliate of FBGA 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.
33
<PAGE> 38
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of FBGA Common Stock will be exchanging
their shares of a Georgia corporation governed by the Georgia Act and FBGA'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 FBGA stockholders and those
of Regions stockholders. The differences deemed material by FBGA and Regions
are summarized below. In particular, Regions' Certificate and Bylaws contain
several provisions that may be deemed to have an antitakeover effect in that
they could impede or prevent an acquisition of Regions unless the potential
acquirer has obtained the approval of Regions' Board of Directors. The
following discussion is necessarily general; it is not intended to be a
complete statement of all differences affecting the rights of stockholders and
their respective entities, and it is qualified in its entirety by reference to
the Georgia Act and the Delaware GCL as well as to Regions' Certificate and
Bylaws and FBGA's Articles and Bylaws.
ANTITAKEOVER PROVISIONS GENERALLY
The provisions of Regions' Certificate and Bylaws described below under the
headings, "--Authorized Capital Stock," "--Amendment of Certificate of
Incorporation and Bylaws," "--Classified Board of Directors and Absence of
Cumulative Voting," "--Removal of Directors," "--Limitations on Director
Liability," "--Special Meetings of Stockholders," "--Actions by Stockholders
Without a Meeting," "--Stockholder Nominations and Proposals," and "--Mergers,
Consolidations, and Sales of Assets Generally," and the provisions of the
Delaware GCL described under the heading "--Business Combinations With Certain
Persons," are referred to herein as the "Protective Provisions." In general,
one purpose of the Protective Provisions is to assist Regions' Board of
Directors in playing a role in connection with attempts to acquire control of
Regions, so that the Board can further and protect the interests of Regions and
its stockholders as appropriate under the circumstances, including, if the
Board determines that a sale of control is in their best interests, by
enhancing the Board's ability to maximize the value to be received by the
stockholders upon such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions' stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions
discourage undesirable proposals, Regions may be able to avoid those
expenditures of time and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
34
<PAGE> 39
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 120,000,000
shares of Regions Common Stock, of which 66,435,634 shares were issued as of
March 17, 1997, 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. Subject to stockholder
approval, Regions intends to effect a 2 for 1 stock split on June 1, 1997.
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.
FBGA. FBGA's authorized capital stock consists of 10,000,000 shares of FBGA
Common Stock, which is the only class of capital stock authorized and of which
1,052,462 shares were issued and outstanding as of the Record Date.
Pursuant to the Georgia Act, FBGA's Board of Directors may authorize the
issuance of additional shares of FBGA Common Stock without further action by
FBGA's stockholders. FBGA's Articles, as amended, do not provide the
stockholders of FBGA with preemptive rights to purchase or subscribe to any
unissued authorized shares of FBGA 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.
FBGA. The Georgia Act generally provides that a Georgia corporation's
articles of incorporation may be amended by the affirmative vote of a majority
of the shares entitled to vote thereon, unless the articles of incorporation
provide for a higher or lower voting requirement. FBGA's Articles do not
provide for a higher or lower voting requirement.
35
<PAGE> 40
FBGA's Bylaws provide that the Board of Directors has the power to alter,
amend or repeal the Bylaws or adopt new Bylaws. Notice of any change made in
the Bylaws by the Board during the year is to be given to the stockholders at
the annual meeting, and the change is to be proposed for ratification by the
stockholders. If the stockholders fail to ratify the change in the Bylaws, the
change will not be effective after the stockholders' meeting at which it is
proposed for ratification.
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.
FBGA. FBGA's Articles do not provide for a classified Board of Directors
which means that all directors are elected annually by the stockholders to
serve for one-year terms. In addition, FBGA's Articles do not provide for
cumulative voting rights in the election of directors.
REMOVAL OF DIRECTORS
Regions. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of at least 75% of Regions' voting stock.
FBGA. Pursuant to FBGA's Bylaws, the entire Board of Directors or any
individual director may be removed from office with or without cause by the
affirmative vote of the holders of a majority of the shares entitled to vote in
an election of directors. In addition, the Board of Directors may remove a
director from office if such director is adjudicated an incompetent by a court,
if the director is convicted of a felony, or if the director fails to attend
regular meetings of the Board of Directors for three consecutive meetings
without having been excused by the Board of Directors.
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.
36
<PAGE> 41
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.
FBGA. The Georgia Act permits a corporation's articles of incorporation
to relieve directors from liability for money damages for good faith conduct.
The Articles provide that FBGA directors shall not be liable for money damages
for breach of duty as a director except for actions not taken in good faith or
that involve intentional misconduct or certain unlawful transactions. Such
limitations on director liability are substantially similar to those applicable
to Regions.
INDEMNIFICATION
Regions. The Certificate provides that Regions will indemnify its officers,
directors, employees, and agents to the full extent permitted by the Delaware
GCL. Under Section 145 of the Delaware GCL as currently in effect, other than
in actions brought by or in the right of Regions, such indemnification would
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.
FBGA. FBGA's Bylaws provide that any person, the person's heirs, executors
or administrators, may be indemnified or reimbursed by FBGA for reasonable
expenses actually incurred in connection with any action, suit or proceeding,
civil or criminal, to which the person shall be made a party by reason of the
fact that the person is or was a director, trustee, officer, employee or agent
of FBGA, or that the person is or was serving at the request of FBGA in such
position with a trust or other organization or enterprise, in substantially the
same manner and with substantially the same effect as provided by Regions'
Certificate.
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.
37
<PAGE> 42
FBGA. FBGA's Bylaws provide that special meetings of stockholders shall be
called by FBGA upon written request by the holders of 25% or more of all the
shares of FBGA which are entitled to vote in an election of directors. The
Bylaws also provide that special meetings of the stockholders may be called at
any time by the President, Chairman of the Board, or by the Board of Directors
of FBGA.
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.
FBGA. Under the Georgia Act, any action requiring or permitting shareholder
approval may be approved by the unanimous written consent of stockholders.
STOCKHOLDER NOMINATIONS
Regions. Regions' Certificate and Bylaws provide that any nomination by
stockholders of individuals for election to the Board of Directors must be made
by delivering written notice of such nomination (the "Nomination Notice") to
the Secretary of Regions not less than 14 days nor more than 50 days before any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days notice of the meeting is given to
stockholders, the Nomination Notice must be delivered to the Secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The Nomination Notice must set forth
certain background information about the persons to be nominated, including
information concerning (i) the name, age, business, and, if known, residential
address of each nominee, (ii) the principal occupation or employment of each
such nominee, and (iii) the number of shares of Regions capital stock
beneficially owned by each such nominee. The Board of Directors is not required
to nominate in the annual proxy statement any person so proposed; however,
compliance with this 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.
FBGA. Neither FBGA's Articles nor Bylaws provide procedures for the
nomination by stockholders of individuals for election to the Board of
Directors. Accordingly, a stockholder could nominate an individual to serve as
a director at a meeting at which directors are to be elected, although no such
nominations have been made in the past.
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
38
<PAGE> 43
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.
FBGA. Neither FBGA's Articles nor Bylaws contain provisions regarding
business combination transactions. Accordingly, the Georgia Act generally
provides that such transactions require the approval by the corporation's board
of directors and by a majority of the corporation's outstanding shares.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware GCL ("Section 203") places certain
restrictions on "business combinations" (as defined in Section 203 to include,
generally, mergers, sales and leases of assets, issuances of securities, and
similar transactions) by Delaware corporations with an "interested stockholder"
(as defined in Section 203 to include, generally, the beneficial owner of 15%
or more of the corporation's outstanding voting stock). Section 203 generally
applies to Delaware corporations, such as Regions, that have a class of voting
stock listed on a national securities exchange, authorized for quotation on an
interdealer quotation system of a registered national securities association,
or held of record by more than 2,000 stockholders, unless the corporation
expressly elects in its certificate of incorporation or bylaws not to be
governed by Section 203.
Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination
by Regions or a subsidiary with an interested stockholder within three years
after the person or entity becomes an interested stockholder, unless (i) prior
to the time when the person or entity becomes an interested stockholder,
Regions' Board of Directors approved either the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder, (ii) upon consummation of the transaction in which the person or
entity became an interested stockholder, the interested stockholder held at
least 85% of the outstanding Regions voting stock (excluding shares held by
persons who are both officers and directors and shares held by certain employee
benefit plans), or (iii) once the person or entity becomes an interested
stockholder, the business combination is approved by Regions' Board of
Directors and by the holders of at least two-thirds of the outstanding Regions
voting stock, excluding shares owned by the interested stockholder.
FBGA. Neither FBGA's Articles nor Bylaws provide that FBGA will be subject
to the sections of the Georgia Act that place restrictions on certain business
combinations.
DISSENTERS' RIGHTS OF APPRAISAL
Regions. The rights of appraisal of dissenting stockholders of Regions are
governed by the Delaware GCL. Pursuant thereto, except as described below, any
stockholder has the right to dissent from any merger of which Regions could be
a constituent corporation. No appraisal rights are available, however, for (i)
the shares of any class or series of stock that is either listed on a national
securities exchange, quoted on the Nasdaq National Market, or held of record by
more than 2,000 stockholders or (ii) any shares of stock of the constituent
corporation surviving a merger if the merger did not require the approval of
the surviving corporation's stockholders, unless, in either case, the holders
of such stock are required by an agreement of merger or consolidation to accept
for that stock something other than: (a) shares of stock of the corporation
surviving or resulting from the merger or consolidation; (b) shares of stock of
any other corporation that will be listed at the effective date of the merger
on a national securities exchange, quoted on the Nasdaq National Market, or
held of record by more than 2,000 stockholders; (c) cash in lieu of fractional
shares of stock described in clause (a) or (b) immediately above; or (d) any
combination of the shares of stock and cash in
39
<PAGE> 44
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.
FBGA. The rights of appraisal of dissenting stockholders under Georgia law
are generally similar to those afforded under the Delaware GCL. For a
description of the provisions of the Georgia Act governing dissenters' rights,
see "Description of the Transaction--Dissenting Stockholders." Such provisions
are set forth in full in Appendix C.
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.
FBGA. Pursuant to the Georgia Act, upon written notice of a demand to
inspect corporate records, a stockholder is entitled to inspect specified
corporate records, including articles of incorporation and bylaws, minutes of
stockholder meetings and certain resolutions adopted at director meetings, list
of directors and officers, and all stockholder communications for the preceding
three years, including financial statements. Upon demonstration of a proper
purpose, a stockholder may be entitled to inspect other corporate records.
DIVIDENDS
Regions. The Delaware GCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus, or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by Regions are derived from its
subsidiary depository institutions. There are various statutory limitations on
the ability of Regions' subsidiary depository institutions to pay dividends to
Regions. See "Certain Regulatory Considerations--Payment of Dividends."
FBGA. Pursuant to the Georgia Act, a board of directors may from time to
time make distributions to its stockholders, subject to restrictions in its
articles of incorporation, provided that no distribution may be made if, after
giving it effect, (i) the corporation would not be able to pay its debts as
they become due in the usual course of business, or (ii) the corporation's
total assets would be less than the sum of its total liabilities plus (unless
the articles of incorporation permit otherwise) the amount that would be
needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution. FBGA's Articles do not contain provisions concerning
distributions to stockholders.
40
<PAGE> 45
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock and FBGA Common Stock are listed for quotation on the
Nasdaq system. Regions Common Stock is quoted on the Nasdaq National Market
under the symbol "RGBK" and FBGA Common Stock is quoted on the Nasdaq Small Cap
Market under the symbol "FBGA." The following table sets forth, for the
indicated periods, the high and low closing sale prices for Regions Common
Stock and the high and low closing bid and asked prices for FBGA Common Stock
as reported by Nasdaq, and the cash dividends declared per share of Regions
Common Stock and FBGA Common Stock for the indicated periods.
<TABLE>
<CAPTION>
REGIONS FBGA
PRICE RANGE PRICE RANGE
----------- -----------
CASH DIVIDENDS BID ASKED CASH DVIDENDS
DECLARED --- ----- DECLARED
HIGH LOW PER SHARE HIGH LOW HIGH LOW PER SHARE
---- --- --------- ---- --- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995
First Quarter . . . . . . . $36.50 $31.63 $.33 $ -- $ -- $ -- $ -- $ .06
Second Quarter . . . . . . . 37.44 34.50 .33 -- -- -- -- .06
Third Quarter . . . . . . . . 41.25 37.00 .33 8.25 6.00 10.50 9.00 .06
Fourth Quarter . . . . . . . 44.88 39.63 .33 9.00 8.00 12.00 10.25 .06
1996
First Quarter . . . . . . . 48.00 40.75 .35 9.00 8.50 11.00 9.50 .07
Second Quarter . . . . . . . 48.38 42.25 .35 13.00 8.50 15.50 10.25 .07
Third Quarter . . . . . . . . 48.63 43.63 .35 13.00 9.75 15.50 12.50 .08
Fourth Quarter . . . . . . . 53.75 48.77 .35 15.75 10.50 18.50 13.50 .08
1997
First Quarter . . . . . . . . 61.88 51.38 .40 .09
Second Quarter (through
, 1997) . . . . . . . .
</TABLE>
On _______, 1997, the last reported sale price of Regions Common Stock and
the average of the last reported bid and asked prices of FBGA Common Stock, as
reported on NASDAQ, were $_______ and $_______, respectively. On December 13,
1996, the last business day prior to public announcement of the proposed
Merger, the last reported sale price of Regions Common Stock and the average of
the last reported bid and asked prices of FBGA Common Stock, as reported on
NASDAQ, were $51.63 and $17.00, respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971.
Although Regions currently intends to continue to pay quarterly cash dividends
on the Regions Common Stock, there can be no assurance that Regions' dividend
policy will remain unchanged after completion of the Merger. The declaration
and payment of dividends thereafter will depend upon business conditions,
operating results, capital and reserve requirements, and the Board of
Directors' consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions, particularly Regions Bank in Alabama.
Regions' subsidiary depository institutions are subject to certain legal
restrictions on the amount of dividends they are permitted to pay. See "Certain
Regulatory Considerations--Payment of Dividends."
In March 1997, FBGA declared a quarerly dividend of $.09 per share. In
1996, FBGA declared a quarterly dividend of $.07 per share for March and June
and one of $.08 per share for September and December, for an aggregate annual
dividend declared in 1996 of $.30 per share. In 1995, FBGA declared a quarterly
dividend of $.06 per share, for an aggregate annual dividend declared in
41
<PAGE> 46
1995 of $.24 per share. FBGA anticipates continuing to declare and pay
quarterly dividends prior to consummation of the Merger consistent with its
past practice. Whether dividends will actually be paid and the amount of such
dividends, however, will depend on FBGA's capital position, its ability to meet
its financial obligations as they become due, and its capacity to act as a
source of financial strength to the Bank.
42
<PAGE> 47
BUSINESS OF FBGA
FBGA is a bank holding company organized under the laws of the state of
Georgia with its principal executive office located in East Point, Georgia.
FBGA operates principally through the Bank, which is a state-chartered
commercial bank and which provides a range of retail banking services through
three offices in Fulton County, Georgia and a construction lending office in
Stockbridge, Georgia. First Bankshares Mortgage and Investment, a subsidiary of
the Bank, serves the metropolitan Atlanta market. At December 31, 1996, FBGA
had total consolidated assets of approximately $121.4 million, total
consolidated deposits of approximately $91.6 million, and total consolidated
stockholders' equity of approximately $9.3 million. FBGA's principal executive
office is located at 600 South Central Avenue, Hapeville, Georgia, 30354 and
its telephone number at such address is (404) 763-6720.
Additional information with respect to FBGA and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, including FBGA's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1996, accompany this
Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FBGA
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of FBGA Common Stock, as of the Record
Date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock James L. Lynn 75,000(2) 7.13 %
600 South Central Avenue
Hapeville, Georgia 30354
Common Stock Ray E. Hannah 53,100(3) 5.04
600 South Central Avenue
Hapeville, Georgia 30354
</TABLE>
(1) Information relating to beneficial ownership of common stock is based upon
"beneficial ownership" concepts set forth in rules of the SEC under Section
13(d) of the Securities Exchange Act of 1934. Under these rules, a person is
deemed to be a "beneficial owner" of a security if that person has or shares
"voting power," which includes the power to dispose or to direct the voting of
such security, or "investment power," which includes the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right to acquire
beneficial ownership within 60 days. Under the rules, more than one person may
be deemed to be a beneficial owner of the same securities, and a person may be
deemed to be a beneficial owner of securities as to which he has no beneficial
interest. For instance, beneficial ownership includes spouse, minor children
and other relatives residing in the same household, and trusts, partnerships,
and corporations or deferred compensation plans which are affiliated with the
principal. Percent is calculated by treating shares subject to options held by
the named individual for whom the percentage is calculated which are
exercisable within the next 60 days as if outstanding, but treating shares
subject to options held by others as not outstanding.
(2) Includes 25,000 shares of FBGA Common Stock held by Reliance Trust
Company as custodian for James L. Lynn IRA.
(3) Includes 11,100 shares of FBGA Common Stock held by Mr. Hannah's spouse.
43
<PAGE> 48
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 377 banking offices located in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of December 31, 1996. At that date, Regions had
total consolidated assets of approximately $18.9 billion, total consolidated
deposits of approximately $15.0 billion and total consolidated stockholders'
equity of approximately $1.6 billion. Regions operates banking subsidiaries in
Alabama, Florida, Georgia, Louisiana, and Tennessee and banking-related
subsidiaries engaged in mortgage banking, credit life insurance, and investment
brokerage activities with offices in various Southeastern states. Through its
subsidiaries, Regions offers a broad range of banking and banking-related
services.
The following table presents information about Regions' banking operations
in the states in which its subsidiary depository institutions are located,
based on December 31, 1996 information:
<TABLE>
<CAPTION>
NUMBER OF TOTAL TOTAL
BANKING OFFICES ASSETS DEPOSITS
--------------- ------ --------
(In thousands)
<S> <C> <C> <C>
Alabama . . . . 183 $11,923 $9,044
Florida . . . . 36 1,194 1,081
Georgia . . . . 74 3,473 2,998
Louisiana . . . 59 2,155 1,820
Tennessee . . . 25 507 458
</TABLE>
Regions was organized under the laws of the state of Delaware and commenced
operations in 1971 under the name First Alabama Bancshares, Inc. In 1994, the
name of First Alabama Bancshares, Inc. was changed to Regions Financial
Corporation. Regions' principal executive offices are located at 417 North 20th
Street, Birmingham, Alabama 35203, and its telephone number at such address is
(205) 326-7100.
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business
combinations involving cash, debt, or equity securities can be expected. Any
future business combination or series of business combinations that Regions
might undertake may be material, in terms of assets acquired or liabilities
assumed, to Regions' financial condition. Recent business combinations in the
banking industry have typically involved the payment of a premium over book and
market values. This practice could result in dilution of book value and net
income per share for the acquirer.
Additional information about Regions and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement/Prospectus. See
"Available Information" and "Documents Incorporated by Reference."
RECENT DEVELOPMENTS
Recent Acquisitions. Since December 31, 1996, Regions has completed the
acquisitions of three financial institutions (the "Recently Completed
Acquisitions"), certain aspects of which transactions are set forth in the
following table:
44
<PAGE> 49
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
-----------------------
ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
Florida First Bancorp, Inc., located in Panama $ 297 $ 40 Cash Purchase
City, Florida (the "Florida First Acquisition")
Allied Bankshares, Inc., located in Thomson, 569 158 Regions Pooling
Georgia (the "Allied Acquisition") Common of
Stock Interests
West Carroll Bancshares, Inc., located in Regions Pooling
Oak Grove, Louisiana (the "West Carroll Acquisition") 127 37 Common of
------ ------
Stock Interests
Totals $ 993 $ 235
======== ======
</TABLE>
- ---------------
(1) Calculated as of the date of consummation.
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending four acquisitions in addition to
FBGA, certain aspects of which transactions are set forth below:
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
-----------------------
ACCOUNTING
INSTITUTION ASSET SIZE VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
Gulf South Bancshares, Inc., located in Gretna, $ 55 $ 9 Regions Pooling
Louisiana Common of
Stock Interests
First Mercantile National Bank, located in Longwood, 145 21 Regions Purchase
Florida Common
Stock
SB&T Corporation, located in Smyrna, 152 26 Regions Pooling
Georgia Common of
Stock Interests
The New Iberia Bancorp, Inc., located in New 299 65 Regions Pooling
Iberia, Louisiana Common of
Stock Interests
-------- ------
Totals $ 651 $ 121
======== ======
</TABLE>
- ---------------
(1) Calculated as of the date of announcement of the transaction.
Consummation of the Other Pending Acquisitions is subject to the approval
of certain regulatory agencies, and of the stockholders of the institutions to
be acquired. Moreover, the closing of each transaction is subject to various
contractual conditions precedent. No assurance can be given that the conditions
precedent to
45
<PAGE> 50
consummating the transactions will be satisfied in a manner that will result in
their consummation.
If the Other Acquisitions and Merger had been consummated on December 31,
1996, Regions' total consolidated assets would have increased by approximately
$1.7 billion to approximately $20.6 billion; its total consolidated deposits
would have increased by approximately $1.5 billion to approximately $16.5
billion; and its total consolidated stockholders' equity would have increased
by approximately $120 million to approximately $1.7 billion.
Proposed Stock Split. Subject to stockholder approval of a proposed
amendment to the Certificate of Incorporation increasing the number of
authorized shares from 120,000,000 to 240,000,000, Regions intends to effect a
2 for 1 stock split on June 1, 1997.
46
<PAGE> 51
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 FBGA. Additional
information is available in Regions' Annual Report on Form 10-K for the fiscal
year ended December 31, 1996. See "Documents Incorporated by Reference."
GENERAL
Regions and FBGA are both bank holding companies registered with the
Federal Reserve under the BHC Act. As such, Regions and FBGA and their non-bank
subsidiaries are subject to the supervision, examination, and reporting
requirements of the BHC Act and the regulations of the Federal Reserve. In
addition, as a savings and loan holding company, Regions is also registered
with the OTS and is subject to the regulation, supervision, examination, and
reporting requirements of the OTS.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or
control more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require savings and loan holding
companies and other companies to obtain the prior approval of the OTS before
acquiring direct or indirect ownership or control of a savings association.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business
of banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy, and consideration of convenience and needs issues includes the
parties' performance under the Community Reinvestment Act of 1977.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Interstate Banking Act"), which became effective in September 1995, repealed
the prior statutory restrictions on interstate acquisitions of banks by bank
holding companies, such that Regions, and any other bank holding company
located in Alabama may now acquire a bank located in any other state, and any
bank holding company located outside Alabama may lawfully acquire any
Alabama-based bank, regardless of state law to the contrary, in either case
subject to certain deposit-percentage, aging requirements, and other
restrictions. The Interstate Banking Act also generally provides that, after
June 1, 1997, national and state-chartered banks may branch interstate through
acquisitions of banks in other states. By adopting legislation prior to that
date, a state has the ability either to "opt in" and accelerate the date after
which interstate branching is permissible or "opt out" and prohibit interstate
branching altogether. As of the date of this Proxy Statement/Prospectus, none
of the states in which the banking subsidiaries of Regions or FBGA are located
has either moved up the date after which interstate branching will be
permissible or "opted out." Assuming no state action prior to June 1, 1997,
Regions would be able to consolidate all of its bank subsidiaries into a single
bank with interstate branches following that date.
The BHC Act generally prohibits Regions and FBGA from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or
47
<PAGE> 52
indirect control of any company engaged in any activities other than those
activities determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices. For example,
factoring accounts receivable, acquiring or servicing loans, leasing personal
property, conducting discount securities brokerage activities, performing
certain data processing services, acting as agent or broker in selling credit
life insurance and certain other types of insurance in connection with credit
transactions, and performing certain insurance underwriting activities all have
been determined by the Federal Reserve to be permissible activities of bank
holding companies. The BHC Act does not place territorial limitations on
permissible nonbanking activities of bank holding companies. Despite prior
approval, the Federal Reserve has the power to order a bank holding company or
its subsidiaries to terminate any activity or to terminate its ownership or
control of any subsidiary when it has reasonable cause to believe that
continuation of such activity or such ownership or control constitutes a
serious risk to the financial safety, soundness, or stability of any bank
subsidiary of that bank holding company.
Each of the subsidiary depository institutions of Regions and FBGA is a
member of the Federal Deposit Insurance Corporation (the "FDIC"), and as such,
its deposits are insured by the FDIC to the extent provided by law. Each such
subsidiary is also subject to numerous state and federal statutes and
regulations that affect its business, activities, and operations, and each is
supervised and examined by one or more state or federal bank regulatory
agencies.
The regulatory agencies having supervisory jurisdiction over the
respective subsidiary institutions of Regions and FBGA (the FDIC and the
applicable state authority in the case of state-chartered nonmember banks and
the OTS in the case of federally chartered thrift institutions) regularly
examine the operations of such institutions and have authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The federal and state banking regulators also have the power
to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.
PAYMENT OF DIVIDENDS
Regions and FBGA are legal entities separate and distinct from their
banking, thrift, and other subsidiaries. The principal sources of cash flow of
both Regions and FBGA, including cash flow to pay dividends to their respective
stockholders, are dividends from their subsidiary depository institutions.
There are statutory and regulatory limitations on the payment of dividends by
these subsidiary depository institutions to Regions and FBGA, as well as by
Regions and FBGA to their stockholders.
As to the payment of dividends, the Bank and all of Regions'
state-chartered banking subsidiaries are subject to the respective laws and
regulations of the state in which the bank is located, and to the regulations
of the bank's primary federal regulator. Regions' subsidiaries that are thrift
institutions are subject to the OTS' capital distributions regulation.
If, in the opinion of the federal banking regulatory agency, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency
may require, after notice and hearing, that such institution cease and desist
from such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), an insured
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "--Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements which
provide that bank holding companies and
48
<PAGE> 53
insured banks should generally pay dividends only out of current operating
earnings.
At December 31, 1996, under dividend restrictions imposed under federal and
state laws, the subsidiary depository institutions of Regions and FBGA, without
obtaining governmental approvals, could declare aggregate dividends to Regions
and FBGA of approximately $169 million and $.93 million respectively.
The payment of dividends by Regions and FBGA and their subsidiary
depository institutions may also be affected or limited by other factors, such
as the requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Regions, FBGA, and their respective subsidiary depository institutions are
required to comply with the capital adequacy standards established by the
Federal Reserve in the case of Regions and FBGA and the appropriate federal
banking regulator in the case of each of their subsidiary depository
institutions. There are two basic measures of capital adequacy for bank holding
companies that have been promulgated by the Federal Reserve: a risk-based
measure and a leverage measure. All applicable capital standards must be
satisfied for a bank holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.
The minimum guideline for the ratio (the "Total 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 December 31, 1996, Regions' consolidated Total Capital Ratio and its Tier 1
Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were
13.59% and 10.81%, respectively, and FBGA's consolidated Total Capital and Tier
1 Capital Ratios were 14.22% and 12.97%, 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 FBGA's respective Leverage Ratios at December 31, 1996
were 7.44% and 9.19%. The guidelines also provide that bank holding companies
experiencing internal growth or making acquisitions will be expected to
maintain strong capital positions substantially above the minimum supervisory
levels without significant reliance on intangible assets. Furthermore, the
Federal Reserve has indicated that it will consider a "tangible Tier 1 Capital
leverage ratio" (deducting all intangibles) and other indicators of capital
strength in evaluating proposals for expansion or new activities.
Each of Regions' and FBGA's subsidiary depository institutions is subject
to risk-based and leverage capital requirements adopted by its federal banking
regulator, which are substantially similar to those adopted by the Federal
Reserve. Each of the subsidiary depository institutions was in compliance with
applicable minimum capital requirements as of December 31, 1996. Neither
Regions, FBGA, nor any of their subsidiary depository institutions has been
advised by any federal banking agency of any specific minimum capital ratio
49
<PAGE> 54
requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift
institution to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, a
prohibition on the taking of brokered deposits, and to certain other
restrictions on its business. As described below, substantial additional
restrictions can be imposed upon FDIC-insured depository institutions that fail
to meet applicable capital requirements. See "--Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the OCC, and the FDIC have,
pursuant to FDICIA, recently adopted final regulations requiring regulators to
consider interest rate risk (when the interest rate sensitivity of an
institution's assets does not match the sensitivity of its liabilities or its
off-balance-sheet position) in the evaluation of a bank's capital adequacy. The
bank regulatory agencies have concurrently proposed a methodology for
evaluating interest rate risk which would require banks with excessive interest
rate risk exposure to hold additional amounts of capital against such
exposures. The OTS has already included an interest-rate risk component in its
risk-based capital guidelines for savings associations that it regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, Regions and FBGA are expected to act as
sources of financial strength for, and to commit resources to support, each of
their respective banking subsidiaries. This support may be required at times
when, absent such Federal Reserve policy, Regions or FBGA may not be inclined
to provide it. In addition, any capital loans by a bank holding company to any
of its banking subsidiaries are subordinate in right of payment to deposits and
to certain other indebtedness of such banks. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(i) the default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to any commonly controlled
FDIC-insured depository institution "in danger of default." "Default" is
defined generally as the appointment of a conservator or receiver, and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of stockholders
of the insured depository institution or its holding company, but is
subordinate to claims of depositors, secured creditors, and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. The subsidiary depository institutions of Regions are
subject to these cross-guarantee provisions. As a result, any loss suffered by
the FDIC in respect of any of these subsidiaries would likely result in
assertion of the cross-guarantee provisions, the assessment of such estimated
losses against the depository institution's banking or thrift affiliates, and a
potential loss of Regions' respective investments in such other subsidiary
depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized") and to take certain mandatory supervisory
actions, and are authorized to take other discretionary actions, with respect
to institutions in the three undercapitalized categories, the severity of which
will depend upon the capital category in which the institution
50
<PAGE> 55
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.
At December 31, 1996, all of the subsidiary depository institutions of
Regions and FBGA had the requisite capital levels to qualify as well
capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The
risk-based assessment system, which went into effect on January 1, 1994,
assigns an institution to one of three capital categories: (i) well
capitalized; (ii) adequately capitalized; and (iii) undercapitalized. These
three categories are substantially similar to the prompt corrective action
categories described above, with the "undercapitalized" category including
institutions that are undercapitalized, significantly undercapitalized, and
critically undercapitalized for prompt corrective action purposes. An
institution is also assigned by the FDIC to one of three supervisory subgroups
within each capital group. The supervisory subgroup to which an institution is
assigned is based on a supervisory evaluation provided to the FDIC by the
institution's primary federal regulator and information which the FDIC
determines to be relevant to the institution's financial condition and the risk
posed to the deposit insurance funds (which may include, if applicable,
information provided by the institution's state supervisor). An institution's
insurance assessment rate is then determined based on the capital category and
supervisory category to which it is assigned. Under the final risk-based
51
<PAGE> 56
assessment system, there are nine assessment risk classifications (i.e.,
combinations of capital groups and supervisory subgroups) to which different
assessment rates are applied. Assessment rates for members of both the Bank
Insurance Fund ("BIF") and the Savings Association Insurance Fund ("SAIF") for
the first half of 1995, as they had been during 1994, ranged from 23 basis
points (0.23% of deposits) for an institution in the highest category (i.e.,
"well capitalized" and "healthy") to 31 basis points (0.31% of deposits) for an
institution in the lowest category (i.e., "undercapitalized" and "substantial
supervisory concern"). These rates were established for both funds to achieve a
designated ratio of reserves to insured deposits (i.e., 1.25%) within a
specified period of time.
Once the designated ratio for the BIF was reached in May 1995, the FDIC
reduced the assessment rate applicable to BIF deposits in two stages, so that,
beginning in 1996, the deposit insurance premiums for 92% of all BIF members in
the highest capital and supervisory categories were set at $2,000 per year,
regardless of deposit size. The FDIC elected to retain the existing assessment
rate range of 23 to 31 basis points for SAIF members for the foreseeable future
given the undercapitalized nature of that insurance fund.
Recognizing that the disparity between the SAIF and BIF premium rates have
adverse consequences for SAIF-insured institutions and other banks with SAIF
assessed deposits, including reduced earnings and an impaired ability to raise
funds in capital markets and to attract deposits, in July 1995, the FDIC, the
Treasury Department, and the OTS released statements outlining a proposed plan
to recapitalize the SAIF, the principal feature of which was a special one-time
assessment on depository institutions holding SAIF-insured deposits, which was
intended to recapitalize the SAIF at a reserve ratio of 1.25%. This proposal
contemplated elimination of the disparity between the assessment rates on BIF
and SAIF deposits following recapitalization of the SAIF.
A variation of this proposal designated the Deposit Insurance Funds Act of
1996 (the "Funds Act") was enacted by Congress as part of the omnibus budget
legislation and signed into law on September 30, 1996. As directed by the Funds
Act, the FDIC has implemented a special one-time assessment of approximately
65.7 basis points (0.657%) on a depository institution's SAIF-insured deposits
held as of March 31, 1995 (or approximately 52.6 basis points on SAIF deposits
acquired by banks in certain qualifying transactions). Regions recorded a
charge against earnings for the special assessment in the quarter ended
September 30, 1996 in the pre-tax amounts of approximately $21.0 million. FBGA
was not affected by the special assessment.
In addition, the FDIC revised the SAIF assessment rate schedule to
effect, (i) a widening in the assessment rate spread among institutions in the
different capital and risk assessment categories and (ii) an overall reduction
of the assessment rate range assessable on SAIF deposits of from 0 to 27 basis
points. Effective January 1, 1997, FICO assessments will be imposed on both
BIF- and SAIF-insured deposits in annual amounts presently estimated at 1.29
basis points and 6.44 basis points, respectively. Beginning in January, 2000,
BIF- and SAIF-insured institutions will share the FICO interest costs at equal
rates currently estimated at 2.43 basis points. Regions anticipates that the net
effect of the decrease in the premium assessment rate on SAIF deposits will
result in a reduction in its total deposit insurance premium assessments for
the years 1997 through 1999, assuming no further changes in announced premium
assessment rates.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 120,000,000 shares of Regions Common Stock,
of which 66,435,634 shares
52
<PAGE> 57
were issued as of March 17, 1997, none of which were held as treasury shares.
No other class of stock is authorized. Subject to stockholder approval,
Regions intends to effect a 2 for 1 stock split on June 1, 1997.
Holders of Regions Common Stock are entitled to receive such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. The ability of Regions to pay dividends is affected by the ability of
its subsidiary institutions to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At December 31, 1996, under
such requirements and guidelines, Regions' subsidiary institutions had $169
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 1998. 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, 1997, for consideration
by Regions for possible inclusion in such proxy materials.
EXPERTS
The consolidated financial statements of Regions, incorporated by reference
in this Registration Statement, have been audited by Ernst & Young LLP,
independent auditors, for the periods indicated in their report thereon which
is included in the Annual Report to Stockholders which is incorporated by
reference in the Annual Report of Regions on Form 10-K for the year ended
December 31, 1996. The financial statements audited by Ernst & Young LLP have
been incorporated herein by reference in reliance on their report given on their
authority as experts in accounting and auditing.
The consolidated financial statements of FBGA, incorporated by reference in
this Registration Statement, have been audited by Porter Keadle Moore, LLP,
independent auditors, for the periods indicated in their report thereon which
is included in the Annual Report of FBGA on Form 10-KSB for the year ended
December 31, 1996. The financial statements audited by Porter Keadle Moore, LLP
have been incorporated herein by reference 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 _______, 1997, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville owned an aggregate of _______ shares of Regions Common
Stock.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
53
<PAGE> 58
APPENDIX A
FINAL AGREEMENT
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST BANKSHARES, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF DECEMBER 13, 1996
A-1
<PAGE> 59
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties..............................................................
Preamble.............................................................
ARTICLE ONE -- TRANSACTIONS AND TERMS OF MERGER......................
1.1 Merger......................................................
1.2 Time and Place of Closing...................................
1.3 Effective Time..............................................
ARTICLE TWO -- TERMS OF MERGER.......................................
2.1 Certificate of Incorporation................................
2.2 Bylaws......................................................
2.3 Directors and Officers......................................
ARTICLE THREE -- MANNER OF CONVERTING SHARES.........................
3.1 Conversion of Shares........................................
3.2 Anti-Dilution Provisions....................................
3.3 Shares Held by FBI or Regions...............................
3.4 Dissenting Stockholders.....................................
3.5 Fractional Shares...........................................
3.6 Conversion of Stock Options; Restricted Stock...............
ARTICLE FOUR -- EXCHANGE OF SHARES...................................
4.1 Exchange Procedures.........................................
4.2 Rights of Former FBI Stockholders...........................
ARTICLE FIVE -- REPRESENTATIONS AND WARRANTIES OF FBI................
5.1 Organization, Standing, and Power...........................
5.2 Authority; No Breach By Agreement...........................
5.3 Capital Stock...............................................
5.4 FBI Subsidiaries............................................
5.5 Financial Statements........................................
5.6 Absence of Undisclosed Liabilities..........................
5.7 Absence of Certain Changes or Events........................
5.8 Tax Matters.................................................
5.9 Assets......................................................
5.10 Environmental Matters.......................................
5.11 Compliance With Laws........................................
5.12 Labor Relations.............................................
5.13 Employee Benefit Plans......................................
5.14 Material Contracts..........................................
5.15 Legal Proceedings...........................................
5.16 Statements True and Correct.................................
5.17 Accounting, Tax, and Regulatory Matters.....................
5.18 State Takeover Laws.........................................
5.19 Articles of Incorporation Provisions........................
5.20 Support Agreements..........................................
5.21 Derivatives Contracts.......................................
</TABLE>
A-2
<PAGE> 60
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE SIX -- REPRESENTATIONS AND WARRANTIES OF REGIONS.............
6.1 Organization, Standing, and Power...........................
6.2 Authority; No Breach By Agreement...........................
6.3 Capital Stock...............................................
6.4 SEC Filings; Financial Statements...........................
6.5 Absence of Undisclosed Liabilities..........................
6.6 Absence of Certain Changes or Events........................
6.7 Compliance With Laws........................................
6.8 Legal Proceedings...........................................
6.9 Statements True and Correct.................................
6.10 Accounting, Tax, and Regulatory Matters.....................
ARTICLE SEVEN -- CONDUCT OF BUSINESS PENDING CONSUMMATION............
7.1 Covenants of Both Parties...................................
7.2 Covenants of FBI............................................
7.3 Covenants of Regions........................................
7.4 Adverse Changes in Condition................................
7.5 Reports.....................................................
ARTICLE EIGHT -- ADDITIONAL AGREEMENTS...............................
8.1 Registration Statement; Proxy Statement; Stockholder
Approval..................................................
8.2 Nasdaq/NMS Listing..........................................
8.3 Applications................................................
8.4 Agreement as to Efforts to Consummate.......................
8.5 Investigation and Confidentiality...........................
8.6 Press Releases..............................................
8.7 Certain Actions.............................................
8.8 Tax Matters.................................................
8.9 Agreement of Affiliates.....................................
8.10 Employee Benefits and Contracts.............................
8.11 Indemnification.............................................
8.12 State Takeover Laws.........................................
8.13 Articles of Incorporation Provisions........................
ARTICLE NINE -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE....
9.1 Conditions to Obligations of Each Party.....................
9.2 Conditions to Obligations of Regions........................
9.3 Conditions to Obligations of FBI............................
ARTICLE TEN -- TERMINATION...........................................
10.1 Termination.................................................
10.2 Effect of Termination.......................................
10.3 Non-Survival of Representations and Covenants...............
</TABLE>
A-3
<PAGE> 61
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE ELEVEN -- MISCELLANEOUS......................................
11.1 Definitions.................................................
11.2 Expenses....................................................
11.3 Brokers and Finders.........................................
11.4 Entire Agreement............................................
11.5 Amendments..................................................
11.6 Waivers.....................................................
11.7 Assignment..................................................
11.8 Notices.....................................................
11.9 Governing Law...............................................
11.10 Counterparts................................................
11.11 Captions....................................................
11.12 Severability................................................
Signatures...........................................................
</TABLE>
A-4
<PAGE> 62
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of December 13, 1996, by and between FIRST BANKSHARES, INC. ("FBI"), a
corporation organized and existing under the laws of the State of Georgia, with
its principal office located in East Point, 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 FBI 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 FBI by
Regions pursuant to the merger of FBI into and with Regions. At the effective
time of such merger, the outstanding shares of the capital stock of FBI shall be
converted into shares of the common stock of Regions (except as provided
herein). As a result, stockholders of FBI shall become stockholders of Regions
and each of the subsidiaries of FBI shall continue to conduct its business and
operations as a wholly owned subsidiary of Regions. The transactions described
in this Agreement are subject to the approvals of the stockholders of FBI, the
Board of Governors of the Federal Reserve System, and the appropriate state
regulatory authorities and the satisfaction of certain other conditions
described in this Agreement. It is the intention of the parties to this
Agreement that the merger (i) for federal income tax purposes shall qualify as a
"reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code and (ii) for accounting purposes shall be accounted for as a "pooling of
interests."
As a condition and inducement to Regions' willingness to consummate the
transactions contemplated by this Agreement, prior to the execution of this
Agreement, each of FBI's directors 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
0.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, FBI shall be merged into and with Regions in accordance with the
provisions of Sections 14-2-1103 and 14-2-1107 of the GBCC and with the effect
provided in Section 14-2-1106 of the GBCC and of Section 258 of the DGCL and
with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the Boards of Directors of FBI and Regions.
1.2 Time and Place of Closing. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their duly authorized officers, may mutually agree. The place of
Closing shall be at the offices of Regions, or such other place as may be
mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Georgia
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Georgia and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the duly
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time
A-5
<PAGE> 63
to occur on the last day of the month in which occurs the last to occur of (i)
the effective date (including expiration of any applicable waiting period) of
the last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger, and (ii) the date on which the stockholders
of FBI approve this Agreement to the extent such approval is required by
applicable Law.
ARTICLE TWO
TERMS OF MERGER
0.2 Certificate of Incorporation. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
0.3 Bylaws. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
0.4 Directors and Officers. The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE THREE
MANNER OF CONVERTING SHARES
0.5 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of FBI Common Stock (excluding shares held by FBI or
any of its Subsidiaries or by Regions or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the Effective Time shall be converted
into .32 of a share of Regions Common Stock, subject to adjustment as
provided in Section 10.1(h) of this Agreement (the "Exchange Ratio").
0.6 Anti-Dilution Provisions. In the event FBI changes the number of
shares of FBI Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock, the Exchange Ratio shall be proportionately adjusted. In
the event Regions changes the number of shares of Regions Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
0.7 Shares Held by FBI or Regions. Each of the shares of FBI Common Stock
held by any FBI Company or by any Regions Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.4 Dissenting Stockholders. Any holder of shares of FBI Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Sections 14-2-1301 et seq. of the GBCC shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of
A-6
<PAGE> 64
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 FBI 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 FBI 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 FBI Common Stock is entitled
under this Article Three (without interest) upon surrender by such holder of the
certificate or certificates representing shares of FBI Common Stock held by such
holder. FBI 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 FBI.
0.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of FBI Common Stock exchanged pursuant to the
Merger, or of options to purchase shares of FBI 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
stockholder in respect of any fractional shares.
0.6 Conversion of Stock Options; Restricted Stock.
(a) At the Effective Time, all rights with respect to FBI Common Stock
pursuant to stock options or stock appreciation rights ("FBI Options") granted
by FBI under the FBI 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 FBI Option, in
accordance with the terms of the FBI Stock Plan and stock option agreement by
which it is evidenced. From and after the Effective Time, (i) each FBI 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 FBI Option shall be equal to the number of
shares of FBI Common Stock subject to such FBI Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such FBI Option shall be adjusted by dividing the per
share exercise price under each such FBI 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." FBI 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 FBI Common
Stock awarded under the FBI Stock Plans or any other plan, program, or
arrangement of any FBI 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 FBI appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
A-7
<PAGE> 65
certificates theretofore representing shares of FBI Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of FBI 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 FBI 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 FBI
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's certificate or certificates representing the shares of FBI Common
Stock for exchange as provided in this Section 4.1. The certificate or
certificates of FBI Common Stock so surrendered shall be duly endorsed as the
Exchange Agent may require. Any other provision of this Agreement
notwithstanding, neither Regions, FBI, nor the Exchange Agent shall be liable to
a holder of FBI 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 FBI Stockholders. At the Effective Time, the stock
transfer books of FBI shall be closed as to holders of FBI Common Stock
immediately prior to the Effective Time, and no transfer of FBI 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 FBI 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 FBI 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 FBI
Common Stock are converted, regardless of whether such holders have exchanged
their certificates representing FBI 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 FBI 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
FBI 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 FBI
FBI hereby represents and warrants to Regions as follows:
5.1 Organization, Standing, and Power. FBI is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Georgia, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Assets. FBI 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
A-8
<PAGE> 66
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 FBI.
5.2 Authority; No Breach by Agreement.
(a) FBI has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby, subject to the approval of this Agreement by
the holders of a majority of the outstanding shares of FBI Common Stock. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been or will be
duly and validly authorized by all necessary corporate action in respect thereof
on the part of FBI, subject to the approval of this Agreement by the holders of
a majority of the outstanding shares of FBI Common Stock. Subject to such
requisite approval, this Agreement represents a legal, valid, and binding
obligation of FBI, enforceable against FBI 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 FBI, nor the
consummation by FBI of the transactions contemplated hereby, nor compliance by
FBI with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of FBI's Articles of Incorporation or Bylaws, or (ii)
except as disclosed in Section 5.2(b) of the FBI 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 FBI Company under, any
Contract or Permit of any FBI 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 FBI 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 FBI, no notice to, filing with, or Consent of, any
public body or authority is necessary for the consummation by FBI of the Merger
and the other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of FBI consists of 10,000,000 shares of
FBI Common Stock, of which 1,052,462 shares are issued and outstanding as of the
date of this Agreement and not more than 1,144,140 shares will be issued and
outstanding at the Effective Time. All of the issued and outstanding shares of
FBI Common Stock are duly and validly issued and outstanding and are fully paid
and nonassessable. None of the outstanding shares of FBI Common Stock has been
issued in violation of any preemptive rights of the current or past stockholders
of FBI. FBI has reserved 160,000 shares of FBI Common Stock for issuance under
the FBI Stock Plans, pursuant to which options to purchase not more than 91,678
shares of FBI Common Stock are outstanding.
(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 FBI 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 FBI or
contracts, commitments, understandings, or arrangements by which FBI is or may
be bound to issue additional shares of FBI capital stock or options, warrants,
or rights to purchase or acquire any additional shares of its capital stock.
5.4 FBI Subsidiaries. FBI has disclosed in Section 5.4 of the FBI
Disclosure Memorandum all of the FBI Subsidiaries as of the date of this
Agreement. Except as disclosed, FBI or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each FBI Subsidiary. No equity
securities of any FBI
A-9
<PAGE> 67
Subsidiary are or may become required to be issued (other than to a FBI 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 FBI Subsidiary is bound to
issue (other than to a FBI 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 FBI Company is or may be bound to transfer any
shares of the capital stock of any FBI Subsidiary (other than to a FBI Company).
There are no Contracts relating to the rights of any FBI Company to vote or to
dispose of any shares of the capital stock of any FBI Subsidiary. All of the
shares of capital stock of each FBI Subsidiary held by a FBI Company are duly
authorized, validly issued, and fully paid and nonassessable (except pursuant to
12 U.S.C. Section 55 in the case of national banks and comparable, applicable
state Law, if any, in the case of state depository institutions) under the
applicable corporation Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the FBI Company free and clear of any
Lien. Each FBI 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 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 FBI 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 FBI. Each FBI Subsidiary that is a depository institution is
an "insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or the Savings Association Insurance Fund, as appropriate.
5.5 Financial Statements. FBI has disclosed in Section 5.5 of the FBI
Disclosure Memorandum, and has delivered to Regions copies of, all FBI Financial
Statements prepared for periods ended prior to the date hereof and will deliver
to Regions copies of all FBI Financial Statements prepared subsequent to the
date hereof. The FBI 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 FBI 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 FBI Companies as of the dates indicated
and the consolidated results of operations, changes in stockholders' equity, and
cash flows of the FBI 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. No FBI Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FBI, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of FBI as of September 30, 1996 included in
the FBI Financial Statements or reflected in the notes thereto. No FBI Company
has incurred or paid any Liability since September 30, 1996, except for such
Liabilities incurred or paid in the ordinary course of business consistent with
past business practice and which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on FBI.
5.7 Absence of Certain Changes or Events. Since September 30, 1996, except
as disclosed in the FBI Financial Statements, (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 FBI, and (ii) the
FBI 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 FBI provided in Article Seven of this
Agreement.
A-10
<PAGE> 68
5.8 Tax Matters.
(a) All Tax returns required to be filed by or on behalf of any of the FBI
Companies have been timely filed, or requests for extensions have been timely
filed, granted, and have not expired for periods ended on or before December 31,
1995 and on or before the date of the most recent fiscal year end immediately
preceding the Effective Time to the Knowledge of FBI, and all returns filed are
complete and accurate to the Knowledge of FBI. 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
FBI, except to the extent reserved against in the FBI 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 FBI Companies has executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due (excluding
such statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable Taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to become due for any of the
FBI Companies for the period or periods through and including the date of the
respective FBI Financial Statements has been made and is reflected on such FBI
Financial Statements.
(d) Deferred Taxes of the FBI Companies have been adequately provided for
in the FBI Financial Statements.
(e) Each of the FBI Companies is in compliance with, and its records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local Tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the Internal Revenue Code, except for such instances of
noncompliance and such omissions as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FBI.
(f) None of the FBI Companies has made any payments, is obligated to make
any payments, or is a party to any contract, agreement, or other arrangement
that could obligate it to make any payments that would be disallowed as a
deduction under Section 280G or 162(m) of the Internal Revenue Code.
(g) There are no Liens with respect to Taxes upon any of the assets of the
FBI Companies.
(h) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the FBI Companies that occurred during or after any
Taxable Period in which the FBI Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1994.
(i) No FBI Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(j) All material elections with respect to Taxes affecting the FBI
Companies as of the date of this Agreement have been or will be timely made as
set forth in Section 5.8 of the FBI Disclosure Memorandum. After the date
hereof, no election with respect to Taxes will be made without the prior written
consent of Regions, which consent will not be unreasonably withheld.
(k) No FBI Company has or has had a permanent establishment in any foreign
country, as defined in any applicable tax treaty or convention between the
United States and such foreign country.
5.9 Assets. Except as disclosed or reserved against in the FBI Financial
Statements, the FBI 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 FBI Companies. All material tangible properties used in the businesses of
the FBI Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with FBI's past
practices. All Assets which are material to the business of the FBI Companies,
which are held under leases or subleases by any of the FBI 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
A-11
<PAGE> 69
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 FBI, each FBI 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 FBI.
(b) To the Knowledge of FBI, there is no Litigation pending or threatened
before any court, governmental agency, or authority, or other forum in which any
FBI 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 FBI 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 FBI.
(c) To the Knowledge of FBI, 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 FBI 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 FBI.
(d) To the Knowledge of FBI, 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 FBI.
(e) To the Knowledge of FBI, during the period of (i) any FBI Company's
ownership or operation of any of their respective current properties, (ii) any
FBI Company's participation in the management of any Participation Facility, or,
(iii) any FBI 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 FBI. Prior to the period of
(i) any FBI Company's ownership or operation of any of their respective current
properties, (ii) any FBI Company's participation in the management of any
Participation Facility, or (iii) any FBI Company's holding of a security
interest in a Loan Property, to the Knowledge of FBI, there were no releases of
Hazardous Material or oil in, 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
FBI.
5.11 Compliance With Laws. Each FBI 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 FBI, 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 FBI. Except as disclosed in Section 5.11
of the FBI Disclosure Memorandum, none of the FBI 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 FBI; 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 FBI Company is not in
compliance with any of the material Laws or material Orders which such
A-12
<PAGE> 70
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FBI, (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 FBI, or
(iii) requiring any FBI 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 FBI Company is the subject of any Litigation
asserting that it or any other FBI 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 FBI Company to bargain with any
labor organization as to wages or conditions of employment, nor is any FBI
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 FBI Company, pending or
threatened, or to its Knowledge, is there any activity involving any FBI
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.
5.13 Employee Benefit Plans.
(a) FBI has disclosed in Section 5.13 of the FBI 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 maintained by, sponsored in whole or in
part by, or contributed to by any FBI 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 "FBI Benefit Plans"). Any of the FBI 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 "FBI ERISA Plan."
Any FBI 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 "FBI Pension Plan." On or after September 26, 1980, neither FBI nor
any FBI 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)). The only "employee pension benefit plan," as defined in Section
3(2) of ERISA, ever maintained by any FBI Company that was intended to qualify
under Section 401(a) of the Internal Revenue Code, is the First Bank of Georgia
Section 401(k) Profit Sharing Plan.
(b) FBI 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 FBI Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such FBI 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 FBI 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) Except as set forth in Section 5.13(c) of the Disclosure Memorandum,
all FBI 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 FBI. Each FBI 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
A-13
<PAGE> 71
FBI is not aware of any circumstances which will or could result in revocation
of any such favorable determination letter. Each trust created under any FBI
ERISA Plan has been determined to be exempt from Tax under Section 501(a) of the
Internal Revenue Code and FBI is not aware of any circumstance which will or
could result in revocation of such exemption. With respect to each FBI Benefit
Plan, except as disclosed in Section 5.13(c) of the FBI Disclosure Memorandum,
to the Knowledge of FBI, 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 FBI ERISA Plan. No FBI Company
has engaged in a transaction with respect to any FBI Benefit Plan that, assuming
the taxable period of such transaction expired as of the date hereof, would
subject any FBI 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 FBI.
(d) No FBI 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 FBI Pension Plan, (ii) no change in the actuarial assumptions with respect
to any FBI Pension Plan, and (iii) no increase in benefits under any FBI 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 FBI or materially adversely affect the funding status of any such
plan. Neither any FBI Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
FBI Company, or the single-employer plan of any entity which is considered one
employer with FBI 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 FBI Company
has provided, or is required to provide, security to a FBI 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 FBI Company with respect to any defined benefit plan currently
or formerly maintained by any of them or by any ERISA Affiliate).
(f) Except as set forth in Section 5.13(f) of the Disclosure Memorandum, no
FBI Company has any obligations for retiree health and retiree life benefits
under any of the FBI Benefit Plans.
(g) Except as set forth in Section 5.13(g) of the FBI Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, or otherwise) becoming due to any director or any employee of
any FBI Company from any FBI Company under any FBI Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any FBI 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 FBI Benefit Plans has been made to employees of any of the FBI
Companies prior to the date hereof which is not in accordance with the written
or otherwise preexisting terms and provisions of such plans. All FBI 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 FBI Benefit Plans are correct and
complete and there have been no changes in the information set forth therein.
5.14 Material Contracts. Except as disclosed in the Section 5.14 of the
FBI Disclosure Memorandum, none of the FBI 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 FBI Company or the guarantee by any
FBI
A-14
<PAGE> 72
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 FBI 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 FBI with the Securities and Exchange Commission (the "SEC") as of
the date of this Agreement if FBI 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 "FBI Contracts"). None of the FBI Companies is in Default under
any FBI Contract which, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect on FBI.
5.15 Legal Proceedings. Except to the extent specifically reserved against
in the FBI Financial Statements dated prior to the date of this Agreement, there
is no Litigation instituted or pending, or, to the Knowledge of FBI, 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
FBI 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 FBI, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any FBI Company,
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FBI.
5.16 Statements True and Correct. No statement, certificate, instrument,
or other writing furnished or to be furnished by any FBI 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
FBI 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 FBI Company or any Affiliate thereof for inclusion in the Proxy Statement to
be mailed to FBI's stockholders in connection with the Stockholders' Meeting,
and any other documents to be filed by a FBI 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 FBI, 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 FBI 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 Accounting, Tax, and Regulatory Matters. No FBI 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
pooling-of-interests accounting treatment or treatment as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement. To the Knowledge of FBI, 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 FBI Company has taken all necessary action
to exempt the transactions contemplated by this Agreement from any applicable
"moratorium," "control share," "fair
A-15
<PAGE> 73
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 FBI 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 FBI 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 FBI Company that may be acquired or controlled by it.
5.20 Support Agreements. Each of the directors of FBI has executed and
delivered to Regions an agreement in substantially the form of Exhibit 1 to this
Agreement.
5.21 Derivatives Contracts. Neither FBI 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
Regions hereby represents and warrants to FBI 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 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
A-16
<PAGE> 74
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 of the Merger and the other transactions
contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of Regions consists of
120,000,000 shares of Regions Common Stock, of which 62,810,998 shares were
issued and outstanding and 260,000 shares were held as treasury shares as of
September 30, 1996. All of the issued and outstanding shares of Regions Common
Stock are, and all of the shares of Regions Common Stock to be issued in
exchange for shares of FBI Common Stock upon consummation of the Merger, when
issued in accordance with the terms of this Agreement, will be, duly and validly
issued and outstanding and fully paid and nonassessable under the DGCL. None of
the outstanding shares of Regions Common Stock has been, and none of the shares
of Regions Common Stock to be issued in exchange for shares of FBI 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 SEC Filings; Financial Statements.
(a) Regions has filed all forms, reports, and documents required to be
filed by Regions with the SEC since December 31, 1992, other than registration
statements on Forms S-4 and S-8 (collectively, the "Regions SEC Reports"). The
Regions SEC Reports (i) at the time filed, complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Regions SEC Reports or necessary in
order to make the statements in such Regions SEC Reports, in light of the
circumstances under which they were made, not misleading.
(b) Each of the Regions Financial Statements (including, in each case, any
related notes) contained in the Regions SEC Reports, including any Regions SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC), and fairly presented or will fairly present the consolidated financial
position of Regions and its Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount.
6.5 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, 1996 included in the Regions Financial Statements or reflected in
the notes thereto. No Regions Company has incurred or paid any Liability since
September 30, 1996, except for such Liabilities incurred or paid in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions.
6.6 Absence of Certain Changes or Events. Since September 30, 1996, 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.
A-17
<PAGE> 75
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 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 FBI 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 FBI'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 FBI, 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
A-18
<PAGE> 76
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
6.10 Accounting, 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
pooling-of-interests accounting or treatment as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement. 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).
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 FBI. 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, FBI 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 FBI 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 FBI Company to another FBI Company) in excess of an
aggregate of $100,000 (for the FBI Companies on a consolidated basis)
except in the ordinary course of the business of FBI Companies consistent
with past practices (which shall include, for FBI, 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 FBI Disclosure Memorandum, forgive any
such indebtedness of any Person to any FBI Company (in excess of an
aggregate of $25,000), or impose, or suffer the imposition, on any share of
stock held by any FBI 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 FBI Company, or declare or pay any dividend or
make any other distribution in respect of any FBI Common Stock; provided
that FBI may (to the extent legally able to do so), but shall not be
obligated to, declare and pay regular annual cash dividends on the FBI
Common Stock in the amounts and with the usual and regular record and
payment dates in accordance with past practice as disclosed in Section
7.2(c) of the FBI Disclosure Memorandum; or
A-19
<PAGE> 77
(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 FBI Common Stock or any other capital stock of any FBI Company,
or any stock appreciation rights, or any option, warrant, conversion, or
other right to acquire any such stock, or any security convertible into any
such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any FBI
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of FBI Common Stock or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any FBI Subsidiary (unless any such shares of stock are
sold or otherwise transferred to another FBI 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 FBI
in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any FBI Company except as disclosed in Section 7.2(g) of the
FBI 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 FBI Disclosure Memorandum; enter into or amend any
severance agreements with officers of any FBI Company except as disclosed
in Section 7.2(g) of the FBI Disclosure Memorandum; grant any increase in
fees or other increases in compensation or other benefits to directors of
any FBI Company; or
(h) except as disclosed in Section 7.2(h) of the FBI Disclosure
Memorandum, enter into or amend any employment Contract between any FBI
Company and any Person (unless such amendment is required by Law) that the
FBI 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 FBI Disclosure
Memorandum, adopt any new employee benefit plan or program of any FBI
Company or make any material change in or to any existing employee benefit
plans or programs of any FBI 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 FBI Financial Statements dated prior to the date of this
Agreement, no FBI Company shall settle any Litigation involving any
Liability of any FBI Company for money damages in excess of $25,000 or
restrictions upon the operations of any FBI 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 FBI 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 FBI 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 FBI Common Stock.
A-20
<PAGE> 78
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 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 FBI shall deliver to Regions copies of all
such reports filed by FBI promptly after the same are filed. If financial
statements are contained in any such reports filed with appropriate Regulatory
Authorities, such financial statements will fairly present the consolidated
financial position of the entity filing such statements as of the dates
indicated and the consolidated results of operations, changes in stockholders'
equity, and cash flows for the periods then ended in accordance with GAAP
(subject in the case of interim financial statements to normal recurring year-
end adjustments that are not material). As of their respective dates, such
reports filed with the SEC, will comply in all material respects with the
Securities Laws and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Any financial statements contained in any other
reports to a 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 FBI has provided, on a
reasonably timely basis, all information concerning FBI 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. FBI shall promptly furnish all information concerning it and the holders
of its capital stock as Regions may reasonably request in connection with such
action. FBI 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 (ii) such other
related matters as it deems appropriate. In connection with the Stockholders'
Meeting, (i) FBI shall mail the Proxy Statement to all of 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 FBI 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 (iv) the Board of Directors and
officers of FBI 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 FBI 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 FBI 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.
A-21
<PAGE> 79
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 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 30th 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) FBI shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering an
acquisition transaction with FBI to preserve the confidentiality of the
information relating to FBI provided to such parties.
8.6 Press Releases. Prior to the Effective Time, FBI 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 FBI Company nor any Affiliate thereof nor
any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any FBI Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of FBI's Board of Directors as
advised in writing by counsel to such Board of Directors, no FBI 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 FBI 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. FBI shall
promptly notify Regions orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. FBI 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 FBI Common Stock for Regions
Common Stock will not give rise to gain or loss to the stockholders of FBI with
respect to such exchange (except to the
A-22
<PAGE> 80
extent of any cash received), and (iii) each of FBI and Regions will be a party
to that reorganization within 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 FBI 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 Agreement of Affiliates. FBI has disclosed in Section 0.9 of the FBI
Disclosure Memorandum each Person whom it reasonably believes is an "affiliate"
of FBI for purposes of Rule 145 under the 1933 Act. FBI shall use its reasonable
efforts to cause each such Person to deliver to Regions not later than 30 days
prior to the Effective Time a written agreement, substantially in the form of
Exhibit 2 providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of FBI Common Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of Regions Common Stock to
be received by such Person upon consummation of the Merger except in compliance
with applicable provisions of the 1933 Act and the rules and regulations
thereunder and until such time as financial results covering at least 30 days of
combined operations of Regions and FBI have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies. Shares
of Regions Common Stock issued to such affiliates of FBI in exchange for shares
of FBI Common Stock shall not be transferable until such time as financial
results covering at least 30 days of combined operations of Regions and FBI have
been published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the written agreement referred to in this Section 8.9 (and Regions
shall be entitled to place restrictive legends upon certificates for shares of
Regions Common Stock issued to affiliates of FBI 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 FBI 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 FBI
should be treated as service under Regions' qualified defined benefit plans,
(ii) service under any qualified defined contribution plans of FBI shall be
treated as service under Regions' qualified defined contribution plans, and
(iii) service under any other employee benefit plans of FBI shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause FBI and its Subsidiaries to honor all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.10 of the
FBI Disclosure Memorandum to Regions between any FBI 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 FBI 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
FBI to, indemnify, defend, and hold harmless each person entitled to
indemnification from a FBI 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 FBI'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 FBI is required to effectuate any indemnification, Regions shall cause the
FBI to direct,
A-23
<PAGE> 81
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 FBI shall have the right to assume the
defense thereof and Regions shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except that
if Regions or FBI 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 FBI and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Regions or FBI
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 FBI 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 FBI 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 FBI Company shall take all
necessary action to ensure that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated hereby do not
and will not result in the grant of any rights to any Person under the Articles
of Incorporation, Bylaws, or other governing instruments of any FBI 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
FBI 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 FBI shall have approved
this Agreement and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law or by
the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent 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
A-24
<PAGE> 82
Party. No Consent obtained which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable judgment of the Board of Directors of
Regions would so materially adversely impact the economic or business
benefits of the transactions contemplated by this Agreement so as to render
inadvisable the consummation of the Merger.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of Regions Common Stock issuable
pursuant to the Merger shall have been received.
(f) 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 FBI 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 FBI 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 FBI 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
FBI 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 FBI; 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 FBI 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. FBI 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
FBI's Board of Directors and stockholders evidencing
A-25
<PAGE> 83
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 FBI shall
have executed and delivered to Regions letters in substantially the form of
Exhibit 3 to this Agreement.
(e) Legal Opinion. Regions shall have received a written opinion,
dated as of the Effective Time, of counsel to FBI, in substantially the
form of Exhibit 4 to this Agreement.
(f) Affiliate Agreements. Regions shall have received from each
affiliate of FBI the affiliates agreement referred to in Section 8.9 of
this Agreement.
(g) Pooling Letter. Regions shall have received a letter from Ernst &
Young, LLP, dated as of the Effective Time, to the effect that the Merger
will qualify for pooling-of-interests accounting treatment under Accounting
Principles Board Opinion No. 16 if closed and consummated in accordance
with this Agreement.
9.3 Conditions to Obligations of FBI. The obligations of FBI 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 FBI 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 6.10 of
this Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
Regions set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.10) 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 FBI (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 stockholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement, as
appropriate, and the consummation of the transactions contemplated hereby,
all in such reasonable detail as FBI and its counsel shall request.
(d) Legal Opinion. FBI shall have received a written opinion, dated
as of the Effective Time, of counsel to Regions, in substantially the form
of Exhibit 5 to this Agreement.
A-26
<PAGE> 84
ARTICLE TEN
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of FBI,
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 FBI; 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 FBI 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
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 FBI 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 FBI 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 FBI fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the Laws of the State of
Georgia at the FBI Stockholders' Meeting where the transactions were
presented to such stockholders for approval and voted upon; or
(e) By the Board of Directors of FBI or by the Board of Directors of
Regions in the event that the Merger shall not have been consummated by
September 30, 1997, 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 FBI 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
30th day after execution of this Agreement without any Liability in the
event that the review of the Assets, business, financial condition, results
of operations, and prospects of FBI undertaken by Regions during such time
period or any of the disclosures contained in the FBI Disclosure Memorandum
causes the Board of Directors of Regions to determine, in its reasonable
good faith judgment, that a fact or circumstance exists or is likely to
exist or result which materially and adversely impacts one or more of the
economic benefits to Regions of the
A-27
<PAGE> 85
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger; or
(h) By the Board of Directors of FBI, 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 $45.685; and
(2) (i) the quotient obtained by dividing the Average Closing Price
by $53.747 (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 FBI refuses to
consummate the Merger pursuant to this Section 10.1(h), it shall give
prompt written notice thereof to Regions; provided, that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, Regions shall have the option to elect
to increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of $45.685 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 FBI 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 FBI 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
A-28
<PAGE> 86
outstanding shares of common stock) shall be redistributed proportionately
for purposes of determining the Index Price. The 20 bank holding companies
and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
- ---------------------- ---------
<S> <C>
AmSouth Bancorporation...................................... 4.73%
Barnett Banks, Inc.......................................... 7.80
Central Fidelity Banks, Inc................................. 3.23
Compass Bancshares, Inc..................................... 3.09
Crestar Financial Corporation............................... 3.05
Deposit Guaranty Corporation................................ 1.52
First American Corporation.................................. 2.06
First Commerce Corporation.................................. 2.35
First Maryland Bancorp...................................... 1.37
First Tennessee National Corporation........................ 2.72
First Union Corporation..................................... 13.91
First Virginia Banks, Inc................................... 2.75
Hibernia Corporation........................................ 9.65
Mercantile Bankshares Corporation........................... 3.84
National Commerce Bancorporation............................ 2.00
SouthTrust Corporation...................................... 6.75
SunTrust Banks, Inc......................................... 9.24
Trustmark Corporation....................................... 2.83
Union Planters Corporation.................................. 3.31
Wachovia Corporation........................................ 13.80
------
Total............................................. 100.00%
</TABLE>
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Starting Date" shall mean December 13, 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.
A-29
<PAGE> 87
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 Merger, including
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, FBI, other than
the formation of a newly organized holding company for FBI in which the
shares of FBI 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.
"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.
"DGCL" 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.
A-30
<PAGE> 88
"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 5.13 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 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"FBI Benefit Plans" shall have the meaning set forth in Section 5.13
of this Agreement.
"FBI Common Stock" shall mean the $1.00 par value common stock of FBI.
"FBI Companies" shall mean, collectively, FBI and all FBI
Subsidiaries.
"FBI Disclosure Memorandum" shall mean the written information
entitled "FBI Disclosure Memorandum" delivered by the 14th day following
execution 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.
"FBI Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of FBI as of
September 30, 1996, and as of December 31, 1995 and 1994, and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for the nine months ended
September 30, 1996, and for each of the three fiscal years ended December
31, 1995, 1994, and 1993, included in the FBI Disclosure Memorandum, and
(ii) the consolidated balance sheets of FBI (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) with respect to periods ended subsequent to September
30, 1996.
"FBI Subsidiaries" shall mean the Subsidiaries of FBI, which shall
include the FBI Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of FBI in the future and owned by FBI at the Effective
Time.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"GBCC" shall mean the Georgia Business Corporation Code.
"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.
"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.
A-31
<PAGE> 89
"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 FBI with and into Regions 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.
A-32
<PAGE> 90
"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 FBI or Regions and "Parties" shall mean both
FBI and Regions.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by FBI to
solicit the approval of its stockholders of the transactions contemplated
by this Agreement and shall include the prospectus of Regions relating to
the shares of Regions Common Stock to be issued to the stockholders of FBI.
"Regions Common Stock" shall mean the $.625 par value common stock of
Regions.
"Regions Companies" shall mean, collectively, Regions and all Regions
Subsidiaries.
"Regions Disclosure Memorandum" shall mean the written information
entitled "Regions Financial Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to FBI 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, 1996, and the restated consolidated statements
of condition (including related notes and schedules, if any) of Regions as
of December 31, 1995 and 1994, the related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) for the nine months ended September 30, 1996 and the
related restated statements of income, changes in stockholders' equity, and
cash flows (including related notes and schedules, if any) for each of the
three years ended December 31, 1995, 1994, and 1993, as filed by Regions in
SEC Documents and reflecting the acquisition of First National Bancorp
accounted for as a pooling of interests and (ii) the consolidated
statements of condition of Regions (including related notes and schedules,
if any) and related statements of income, changes in stockholders' equity,
and cash flows (including related notes and schedules, if any) included in
SEC Documents filed with respect to periods ended subsequent to September
30, 1996.
"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 Office of Thrift Supervision,
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.
"SEC" shall mean the United States Securities and Exchange Commission.
"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.
A-33
<PAGE> 91
"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
FBI 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 parent; 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 Corporation" shall mean Regions as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, 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 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 except for the fees payable by FBI to Stevens & Co. and Brown, Burke
Capital Partners, Inc. In the event of a claim by any other broker or finder
based upon his or its representing or being retained by or allegedly
representing or being retained by FBI or Regions, each of FBI 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 FBI Common Stock, there shall be made no
A-34
<PAGE> 92
amendment decreasing the consideration to be received by FBI 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 any Default in the performance of any term of this
Agreement by FBI, to waive or extend the time for the compliance or fulfillment
by FBI 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, FBI, acting through its Board of
Directors, chief executive officer, or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Regions, to waive or extend the time for the compliance or fulfillment by
Regions of any and all of their obligations under this Agreement, and to waive
any or all of the conditions precedent to the obligations of FBI 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 FBI.
11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage prepaid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so received:
<TABLE>
<S> <C>
FBI: First Bankshares, Inc.
2833 Main Street
East Point, Georgia 30344
Telecopy Number: (404) 305-1284
Attention: R. Elliott Miller
President and Chief Executive Officer
Copy to Counsel: Powell, Goldstein, Frazer & Murphy
191 Peachtree Street, N.E., Sixteenth Floor
Atlanta, Georgia 30303
Telecopy Number: (404) 572-5958
Attention: Walter G. Moeling IV
Regions: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial
Officer
Copy to Counsel: Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7099
Attention: Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
</TABLE>
A-35
<PAGE> 93
11.9 Governing Law. Except to the extent the laws of the State of Georgia
apply to the Merger, this Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in 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.
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: FIRST BANKSHARES, INC.
By: /s/ KARLA BENNER By: /s/ R. ELLIOTT MILLER
----------------------------------------- -----------------------------------------
Karla Benner R. Elliott Miller
Corporate Secretary President and Chief Executive Officer
[CORPORATE 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>
A-36
<PAGE> 94
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1. Form of Support Agreement. (sec. 11.1).
2. Form of Agreement of Affiliates of FBI. (sec. 8.9).
3. Form of Claims Letter. (sec. 9.2).
4. Form of Opinion Letter of FBI's Counsel. (sec. 9.2).
5. Form of Opinion Letter of Regions' Counsel. (sec. 9.3).
</TABLE>
[Exhibits Omitted]
<PAGE> 95
APPENDIX B
April , 1997
Board of Directors
First Bankshares, Inc.
600 South Central Ave.
Hapeville, GA 30354
Dear Member of the Board:
You have asked us to advise you with respect to the fairness to the
shareholders of First Bankshares, Inc. (the "Company"), from a financial point
of view, of the exchange ratio (the "Exchange Ratio") provided for in the
Agreement and Plan of Merger dated as of December 13, 1996 (the "Merger
Agreement") between the Company and Regions Financial Corporation ("Regions").
The Merger Agreement provides for a merger (the "Merger") of the Company and
Regions pursuant to which the common shareholders of the Company will receive
.32 common shares of Regions for every common share of the Company. Termination
rights to the Merger are available to the Company as fully described in the
Merger Agreement, if the trading price of Regions common stock for a defined
period prior to the effective date of the Merger has declined below $45.685 per
share and the decline since December 13, 1996 exceeds by more than 20% the
decline in value for a group of comparable bank holding companies (the "Index
Group") over the same period. In the event this termination right is exercised
by the Company, Regions can require the Company to consummate the Merger by
increasing the Exchange Ratio to a level which provides a value to the Company
that corresponds to the value which would have been received if Regions stock
had declined to the lower of $45.685 or the level which reflects a 20% decline
from the stock performance reflected by the Index Group.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to Regions and the Company. We have
also reviewed certain other information, including financial forecasts and
budgets and have discussed with the Company's management the business and
prospects of the Company.
We have also considered certain financial and stock market data of Regions
and the Company and we have compared that data with similar data for other
publicly held bank holding companies and we have considered the financial terms
of certain other comparable transactions which have recently been effected. We
also considered such other information, financial studies, analyses and
investigations and financial, economic and market criteria which we deemed
relevant. In connection with our review, we have not independently verified any
of the foregoing information and have relied on its being complete and accurate
in all material respects. With respect to the financial forecasts and budgets,
we have assumed that they have been reasonably prepared on bases reflecting the
best currently available estimates and judgments the Company's management as to
the future financial performance of the Company. We have not made an independent
evaluation or appraisal of the assets of Regions or the Company and we have
assumed that the aggregate allowances for loan losses for Regions and the
Company are adequate to cover such losses. We have not solicited third party
indications of interest in acquiring the Company.
It should be noted that this opinion is based on market conditions and
other circumstances existing on the date hereof and this opinion does not
represent our view as to what the value of the Regions common stock necessarily
will be when the Regions common stock is issued to the stockholders of the
Company upon consummation of the Merger.
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.
It is understood that this opinion may be included in its entirety in any
communication by the Company or the Board of Directors to the shareholders of
the Company. The opinion may not, however, be summarized, excerpted from or
otherwise publicly referred to without our prior written consent.
<PAGE> 96
Board of Directors
First Bankshares, Inc.
April , 1997
Page Two
Based upon and subject to the foregoing, it is our opinion that as of the
date hereof, the Exchange Ratio of the Merger is fair to the common shareholders
of the Company from a financial point of view.
Very truly yours,
/s/ BROWN, BURKE CAPITAL PARTNERS, INC.
<PAGE> 97
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;
C-1
<PAGE> 98
(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.
C-2
<PAGE> 99
(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.
C-3
<PAGE> 100
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.
C-4
<PAGE> 101
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.
C-5
<PAGE> 102
<PAGE> 103
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Company
to indemnify its officers and directors under certain circumstances. The
pertinent provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
II-1
<PAGE> 104
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or (2) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the
stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the
II-2
<PAGE> 105
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
"(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court
of Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
The Company has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
director or officer whose actions in his capacity result in liability, or to
the Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on
inside information, illegal payments, dishonesty, accounting of securities
profits in violation of Section 16(b) of the Securities Exchange Act of 1934
and acts within the scope of the Pension Reform Act of 1974.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ --------------------------------------------------------------------------------------------------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of December 13, 1996 by and between First Bankshares, Inc.and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 33-54231.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Porter Keadle Moore, LLP.
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
23.5 -- Consent of Brown, Burke Capital Partners, Inc.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
registration statement.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 106
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
C.(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
D. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 107
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on this the 10th day of April, 1997.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
BY: /s/ Richard D. Horsley
--------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney- in-fact and agents, or their substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ------------------------------ ------------------
<S> <C> <C>
/s/ J. Stanley Mackin
- -------------------------- Chairman of the Board and April 10, 1997
J. Stanley Mackin Chief Executive Officer and
Director
/s/ Richard D. Horsley
- -------------------------- Vice Chairman of the Board and April 10, 1997
Richard D. Horsley Executive Financial Officer
and Director
/s/ Robert P. Houston
- -------------------------- Executive Vice President and April 10, 1997
Robert P. Houston Comptroller
- -------------------------- Director
Sheila S. Blair
/s/ William B. Boles, Sr.
- -------------------------- Director April 10, 1997
William B. Boles, Sr.
/s/ James B. Boone, Jr.
- -------------------------- Director April 10, 1997
James B. Boone, Jr.
/s/ Albert P. Brewer
- -------------------------- Director April 10, 1997
Albert P. Brewer
</TABLE>
II-5
<PAGE> 108
<TABLE>
<S> <C> <C>
/s/ James S.M. French
- -------------------------- Director April 10, 1997
James S.M. French
/s/ Catesby ap C. Jones
- -------------------------- Director April 10, 1997
Catesby ap C. Jones
/s/ Carl E. Jones, Jr.
- -------------------------- President and Chief Operating April 10, 1997
Carl E. Jones, Jr. Officer and Director
/s/ Olin B. King
- -------------------------- Director April 10, 1997
Olin B. King
/s/ Henry E. Simpson
- -------------------------- Director April 10, 1997
Henry E. Simpson
/s/ Lee J. Styslinger, Jr.
- -------------------------- Director April 10, 1997
Lee J. Styslinger, Jr.
/s/ Robert J. Williams
- -------------------------- Director April 10, 1997
Robert J. Williams
</TABLE>
II-6
<PAGE> 109
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------ ------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of December 13, 1996 by and between First Bankshares, Inc.and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 33-54231.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 33-54231.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Porter Keadle Moore, LLP.
23.3 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
23.5 -- Consent of Brown, Burke Capital Partners, Inc.
24. -- Power of Attorney -- the manually signed power of attorney is set forth in the signature page of the
registration statement.
</TABLE>
<PAGE> 1
EXHIBIT 5
[Letterhead of Lange, Simpson, Robinson & Somerville]
April 9, 1997
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation
S-4 Registration Statement
Combination with First Bankshares, Inc.
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger of First Bankshares, Inc.
("FBGA") with and into Regions (the "Merger") and in connection with the
registration of shares of common stock of Regions, par value $.625 per share
("Regions Common Stock"), on Form S-4 under the Securities Act of 1933. The
Merger provides for issuance of shares of common stock of Regions, par value
$.625 per share, to the stockholders of FBGA upon consummation of the Merger.
The maximum number of shares of Regions to be issued in the Merger is estimated
to be 366,125.
We have examined and are familiar with the registration statement on
Form S-4 filed with the Securities and Exchange Commission, as such
registration statement has been amended to date. We have examined and are
familiar with the records relating to the organization of Regions and the
documents and records as we have deemed relevant for purposes of rendering this
opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such
conditions capable of being waived, and upon consummation of the Merger, the
shares of Regions Common Stock issued pursuant to the Merger will be duly
authorized, validly issued and outstanding, fully paid and non-assessable, with
no personal liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
/s/ Lange, Simpson, Robinson & Somerville
<PAGE> 1
EXHIBIT 8
[LETTERHEAD] ALSTON & BIRD LLP
April 11, 1997
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
First Bankshares, Inc.
2833 Main Street
East Point, Georgia 30344
Re: Proposed Merger of First Bankshares, Inc. with and into
Regions Financial Corporation
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State of
Delaware, in connection with the proposed merger of First Bankshares, Inc.
("FBI"), a corporation organized and existing under the laws of the State of
Georgia, with and into Regions. The Merger will be effected pursuant to the
Agreement and Plan of Merger, dated as of December 13, 1996, by and between FBI
and Regions (the "Agreement"). In our capacity as counsel to Regions, our
opinion has been requested with respect to certain of the federal income tax
consequences of the proposed Merger.
In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury Regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all section
references herein are to the Code.
<PAGE> 2
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 2
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:
(1) the Agreement;
(2) the Registration Statement on Form S-4 filed by Regions with
the Securities and Exchange Commission under the Securities
Act of 1933, on April 11, 1997, including the Proxy
Statement/Prospectus for the Special Meeting of the
stockholders of First Bankshares, Inc.; and
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate.
We have also obtained such additional information and representations
as we have deemed relevant and necessary through consultation with various
officers and representatives of Regions and FBI and through certificates
provided by the management of Regions and the management of FBI.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale, yield a wider array
of banking and banking related services to consumers and businesses, and provide
for a stronger market position and for greater financial resources to meet
competitive challenges within the south metropolitan Atlanta, Georgia market
area. To achieve these goals, the following will occur pursuant to the
Agreement:
(1) Subject to the terms and conditions of the Agreement, at the
Effective Time, FBI shall be merged into and with Regions in accordance with the
provisions of Sections 14-2-1103 and 14-2-1107 of the GBCC and with the effect
provided in Section 14-2-1106 of the GBCC and of Section 258 of the DGCL and
with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the Boards of Directors of FBI and Regions.
(2) Subject to the provisions of Article 3 of the Agreement, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holders thereof, the shares of the constituent corporations shall be
converted as follows:
<PAGE> 3
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 3
(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 FBI Common Stock (excluding shares held by
FBI or any of its Subsidiaries or by Regions or any of its
Subsidiaries, in each case other than in a fiduciary capacity or as a
result of debts previously contracted) issued and outstanding at the
Effective Time shall be converted into .32 of a share of Regions Common
Stock, subject to adjustment as provided in Section 10.1(h) of the
Agreement (the "Exchange Ratio").
(3) In the event FBI changes the number of shares of FBI Common Stock
issued and outstanding prior to the Effective Time as a result of a stock split,
stock dividend, or similar recapitalization with respect to such stock, the
Exchange Ratio shall be proportionately adjusted. In the event Regions changes
the number of shares of Regions Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
(4) Each of the shares of FBI Common Stock held by any FBI Company or
by any Regions Company, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, shall be canceled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
(5) Any holder of shares of FBI Common Stock who perfects such holder's
dissenters' rights of appraisal in accordance with and as contemplated by
Sections 14-2-1301 et seq. 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 FBI 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 FBI 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 FBI Common Stock is entitled under this Article
Three (without interest) upon surrender by such holder of the certificate or
certificates representing shares of FBI Common Stock held by such holder. FBI
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 FBI.
<PAGE> 4
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 4
(6) Notwithstanding any other provision of this Agreement, each holder
of shares of FBI Common Stock exchanged pursuant to the Merger, or of options to
purchase shares of FBI 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 stockholder in respect of any fractional
shares.
(7) At the Effective Time, all rights with respect to FBI Common Stock
pursuant to stock options or stock appreciation rights ("FBI Options") granted
by FBI under the FBI 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 FBI Option, in
accordance with the terms of the FBI Stock Plan and stock option agreement by
which it is evidenced. All restrictions or limitations on transfer with respect
to FBI Common Stock awarded under the FBI Stock Plans or any other plan,
program, or arrangement of any FBI 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 the Agreement.
With your consent, we have also assumed that the following statements
are true on the date hereof and will be true on the date the proposed
transaction is consummated:
(1) The fair market value of the Regions Common Stock and other
consideration received in the aggregate by the stockholders of FBI will be
approximately equal to the fair market value of the FBI Common Stock surrendered
in exchange therefor.
(2) There is no plan or intention on the part of the stockholders of
FBI who own five percent (5%) or more of FBI Common Stock, and to the best of
the knowledge of the management of FBI, there is no plan or intention on the
part of the remaining stockholders of FBI to sell, exchange, or otherwise
dispose of a number of shares of Regions Common Stock to be received in the
proposed transaction that would reduce their holdings in Regions Common Stock
received to a number of shares having, in the aggregate, a value as of the
Effective Time of less than fifty percent (50%) of the total
<PAGE> 5
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 5
value of all shares of FBI Common Stock outstanding immediately prior to the
Effective Time. For purposes of this assumption, shares of FBI Common Stock
exchanged for cash or other property, surrendered by dissenters or exchanged for
cash in lieu of fractional shares of Regions Common Stock will be treated as
outstanding FBI Common Stock as of the Effective Time. Moreover, shares of FBI
Common Stock and shares of Regions Common Stock held by FBI stockholders and
otherwise sold, redeemed, or disposed of prior or subsequent to the transaction
will be considered in making this assumption.
(3) Regions has no plan or intention to redeem or otherwise reacquire
any shares of Regions Common Stock issued in the Merger, except for purchases of
stock in the open market in the normal course of business executed through an
independent broker in which Regions is not aware of the identity of any seller
or in private placement transactions in which the sellers are not former FBI
Stockholders.
(4) Regions has no plan or intention to dispose of any of the assets of
FBI acquired in the transaction, except for dispositions made in the ordinary
course of business or transfers described in Section 368(a)(2)(C).
(5) The liabilities of FBI assumed by Regions and the liabilities to
which the transferred assets of FBI are subject were incurred by FBI in the
ordinary course of its business.
(6) Following the transaction, Regions will continue the historic
business of FBI or use a significant portion of FBI's historic business assets
in a business.
(7) Regions, FBI, and the stockholders of FBI will pay their respective
expenses, if any, incurred in connection with the transaction, except that
Regions shall bear and pay the filing fees payable in connection with the
Registration Statement and the Proxy Statement and printing costs incurred in
connection with the printing of the Registration Statement and the Proxy
Statement.
(8) There is no intercorporate indebtedness existing between FBI and
Regions that was issued, acquired, or will be settled at a discount.
(9) FBI is not under the jurisdiction of a court in a case under Title
11 of the United States Code or a receivership, foreclosure, or similar
proceeding in a federal or state court.
(10) Both the fair market value and the total adjusted basis of the
assets of FBI transferred to Regions will equal or exceed the sum of the
liabilities assumed by Regions plus the amount of the liabilities, if any, to
which the transferred assets are subject.
(11) The payment of cash to FBI stockholders in lieu of fractional
shares of Regions Common Stock is solely for the purpose of avoiding the expense
and inconvenience to Regions of issuing fractional shares and does not represent
separately bargained for consideration. The total cash consideration that will
be paid in the transaction to the FBI stockholders instead of issuing fractional
shares of Regions
<PAGE> 6
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 6
Common Stock will not exceed one percent (1%) of the total consideration that
will be issued in the transaction to the FBI stockholders in exchange for their
shares of FBI Common Stock. The fractional share interests of each FBI
stockholder will be aggregated, and no FBI stockholder will receive cash in an
amount equal to or greater than the value of one full share of Regions Common
Stock.
(12) None of the compensation received by any stockholder-employees of
FBI will be separate consideration for, or allocable to, any of their shares of
FBI Common Stock; none of the shares of Regions Common Stock received by any
stockholder-employees will be separate consideration for, or allocable to, any
employment agreement; and the compensation paid to any stockholder-employees
will be for services actually rendered and will be commensurate with amounts
paid to third parties bargaining at arm's length for similar services.
(13) At all times during the five-year period ending on the Effective
Date of the Merger, the fair market value of all of FBI's United States real
property interests was and will have been less than fifty percent (50%) of the
fair market value of the total of (a) its United States real property interests,
(b) its interests in real property located outside the United States, and (c)
its other assets used or held for use in a trade or business. For purposes of
the preceding sentence, (i) United States real property interests include all
interests (other than an interest solely as a creditor) in real property and
associated personal property (such as movable walls and furnishings) located in
the United States or the Virgin Islands and interests in any corporation (other
than a controlled corporation) owning any United States real property interest,
(ii) FBI is treated as owning its proportionate share (based on the relative
fair market value of its ownership interest to all ownership interests) of the
assets owned by any controlled corporation or any partnership, trust, or estate
in which FBI is a partner or beneficiary, and (iii) any such entity in turn is
treated as owning its proportionate share of the assets owned by any controlled
corporation or any partnership, trust, or estate in which the entity is a
partner or beneficiary. As used in this paragraph, "controlled corporation"
means any corporation at least fifty percent (50%) of the fair market value of
the stock of which is owned by FBI, in the case of a first-tier subsidiary of
FBI or by a controlled corporation, in the case of a lower-tier subsidiary.
(14) Neither Regions nor FBI is an investment company as defined in
Code Section 368(a)(2)(F).
(15) The Agreement represents the entire understanding of FBI and
Regions with respect to the Merger.
<PAGE> 7
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 7
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Agreement and that the representations made by Regions and FBI (including the
representation that FBI stockholders will maintain sufficient equity ownership
interests in Regions after the Merger) are true and correct at the time of the
consummation of the Merger, we are of the opinion that:
(1) Provided the Merger qualifies as a statutory merger under
applicable law, the Merger will be a reorganization within the meaning of
Section 368(a) of the Code. FBI and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
(2) The stockholders of FBI will recognize no gain or loss upon the
exchange of their FBI Common Stock solely for shares of Regions Common Stock.
(3) The basis of the Regions Common Stock received by the FBI
stockholders in the proposed transaction will, in each instance, be the same as
the basis of the FBI Common Stock surrendered in exchange therefor, less the
basis of any fractional share of Regions Common Stock settled by cash payment.
(4) The holding period of the Regions Common Stock received by the FBI
stockholders will, in each instance, include the period during which the FBI
Common Stock surrendered in exchange therefor was held, provided that the FBI
Common Stock was held as a capital asset on the date of the exchange.
(5) The payment of cash to FBI stockholders in lieu of fractional share
interests of Regions Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Regions. These cash payments will be treated as having
been received as distributions in full payment in exchange for the shares
redeemed as provided in Section 302(a) of the Code. Generally any gain or loss
recognized upon such exchange will be capital gain or loss, provided the
fractional share would constitute a capital asset in the hands of the exchanging
stockholder.
(6) Where solely cash is received by an FBI stockholder in exchange for
FBI Common Stock pursuant to the exercise of dissenters' rights, such cash will
be treated as having been received in redemption of such holder's FBI Common
Stock, subject to the provisions and limitations of Section 302 of the Code.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements set out herein, which we have assumed and you have confirmed to be
true on the date hereof and will be true on
<PAGE> 8
Regions Financial Corporation
First Bankshares, Inc.
April 11, 1997
Page 8
the date on which the proposed transaction is consummated. Our opinions cannot
be relied upon if any of the facts contained in such documents or if such
additional information is, or later becomes, inaccurate, or if any of the
statements set out herein is, or later becomes, inaccurate. Finally, our
opinions are limited to the tax matters specifically covered thereby, and we
have not been asked to address, nor have we addressed, any other tax
consequences of the proposed transaction, including for example any issues
related to intercompany transactions, accounting methods, or changes in
accounting methods resulting from the Merger.
This opinion is being provided solely for the benefit of Regions, FBI
and its stockholders. No other person or party shall be entitled to rely on this
opinion.
We consent to the use of this opinion and to the references made to the
firm under the caption "Description of the Transaction--Certain Federal Income
Tax Consequences of the Merger" in the Proxy Statement/Prospectus constituting
part of the Registration Statement on Form S-4 of Regions.
Very truly yours,
ALSTON & BIRD LLP
By: /s/ Philip C. Cook
------------------------------------
Philip C. Cook
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 366,125 shares of its common stock
and to the incorporation by reference therein of our report dated February 4,
1997 (except for the last two paragraphs of Note Q as to which the date is
March 13, 1997), with respect to the consolidated financial statements of
Regions Financial Corporation incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Birmingham, Alabama
April 7, 1997
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITOR
We have issued our report dated February 7, 1997, accompanying the financial
statements of First Bancshares, Inc., included in the Annual Report on Form
10-KSB and incorporated by reference in the Form S-4 Registration Statement and
Prospectus. We consent to the incorporation by reference of the
aforementioned report in the Registration Statement and Prospectus, and to the
use of our name as it appears under the caption "Experts".
/s/ PORTER KEADLE MOORE, LLP
Successor to the practice of
Evans, Porter, Bryan & Co.
Atlanta, Georgia
April 7, 1997
<PAGE> 1
EXHIBIT 23.5
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the use in this Registration Statement on form S-4 of
Regions Financial Corporation of our letter to the Board of Directors of First
Bankshares, Inc. included as Appendix B to the Proxy Statement/Prospectus that
is part of the Registration Statement, and to the references to such letter and
to our firm in the Proxy Statement/Prospectus. In giving such consent we do
not thereby admit that we come within the category of persons whose consent is
required under section 7 of the Securities Act of 1933 or the rules and
regulations of the Securities and Exchange Commission thereunder.
/s/ BROWN, BURKE CAPITAL PARTNERS, INC.
- ----------------------------------------
Brown, Burke Capital Partners, Inc.
April 7, 1997
