<PAGE> 1
As filed with the Securities and Exchange Commission on January 23, 1998
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)
----------------------
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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 GEORGE S. KING, JR.
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD SINKLER & BOYD, P.A.
SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W. THE PALMETTO CENTER
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 1426 MAIN STREET, SUITE 1200
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 COLUMBIA, SC 29201-2834
(205) 250-5000 (202) 508-3303 (803) 779-3080
</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>
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 2,197,469 $39.87 $87,613,089 $25,845.86
=====================================================================================================================
</TABLE>
*Calculated in accordance with Rule 457(f), based on the average of the high and
low quoted sales prices of common stock of the Company being acquired on the
Nasdaq National Market on January 20, 1998.
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 First United; Voting Securities and
Principal Stockholders of First United
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 United Bancorporation Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
First United Bancorporation ("First United") to be held at First United's main
office, 304 North Main Street, Anderson, South Carolina, 29622, on ______, 1998,
at ______:00 p.m., local time, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Agreement"), entered
into with Regions Financial Corporation ("Regions") pursuant to which First
United will merge (the "Merger") with and into Regions. As successor to First
United, Regions will continue the banking operations of First United's banking
subsidiaries through Regions' subsidiaries. The other subsidiary of First
United, Quick Credit Corporation, will become a subsidiary of Regions. Upon
consummation of the Merger, each share of First United common stock issued and
outstanding (except for certain shares held by First United, Regions, or their
respective subsidiaries and shares held by stockholders who perfect their
dissenters' rights) will be converted into .5173 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 Merger has been approved unanimously by your Board of Directors and is
recommended by the Board to you for approval. Each member of the Board of
Directors of First United has agreed to vote those First United shares over
which such member has voting authority (other than in a fiduciary capacity) in
favor of the Merger. Consummation of the Merger is subject to certain
conditions, including approval of the Agreement by First United stockholders and
approval of the Merger by various regulatory agencies.
Stockholders of First United who perfect their dissenters' rights prior to
the proposed Merger and comply with applicable law will be entitled to receive
the fair value of their First United shares in cash, as provided by applicable
law.
It is important to understand that approval of the Agreement requires the
affirmative vote of at least two-thirds of the common stock of First United
entitled to vote at the Special Meeting, not just two-thirds of the votes cast.
Consequently, a failure to vote will have the same effect as a vote against the
Agreement.
Accordingly, whether or not you plan to attend the Special Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for First United, 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,
Mason Y. Garrett
President and Chief Executive Officer
<PAGE> 4
FIRST UNITED BANCORPORATION
304 NORTH MAIN STREET, ANDERSON, SOUTH CAROLINA, 29622
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ______, 1998
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of First United Bancorporation ("First United"), a bank holding
company, will be held at First United's main office, 304 North Main Street,
Anderson, South Carolina, 29622, on ______, 1998, at ______:00 p.m., local time,
for the following purposes:
1. Merger. To consider and vote on the approval of the Agreement and Plan
of Merger, dated as of October 28, 1997 (the "Agreement"), by and between First
United and Regions Financial Corporation ("Regions"), pursuant to which (i)
Regions will acquire all of the issued and outstanding common stock of First
United through the merger of First United with and into Regions (the "Merger"),
(ii) each share of First United common stock (except for certain shares held by
First United, Regions, or their respective subsidiaries and shares held by
stockholders who perfect their dissenters' rights) will be converted into .5173
of a share of Regions common stock, subject to possible adjustment, and (iii)
each First United 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 ______, 1998, are
entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
Stockholders of First United 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 Chapter 13 of the South Carolina Business Corporation
Act, which is attached to the accompanying Proxy Statement/Prospectus as
Appendix C.
The Board of Directors of First United unanimously recommends that holders
of First United 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
First United 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
William B. West
Corporate Secretary
______, 1998
<PAGE> 5
FIRST UNITED BANCORPORATION REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD ______, 1998 (PAR VALUE $.625)
UP TO 2,197,469 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
United Bancorporation, a bank holding company organized and existing under the
laws of the state of South Carolina ("First United") upon consummation of the
proposed merger (the "Merger") described herein, by which First United will
merge with and into Regions pursuant to the terms of an Agreement and Plan of
Merger, dated as of October 28, 1997, by and between Regions and First United
(the "Agreement").
On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) First United will merge with and into Regions,
(ii) each outstanding share of the $1 1/9 par value common stock of First United
("First United Common Stock") will be converted into .5173 of a share of Regions
Common Stock, subject to possible adjustment, and (iii) each holder of First
United 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 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 Exchange Ratio is adjustable upward only if certain conditions are met
concerning the quoted price of Regions Common Stock, and then only with the
concurrence of both First United and Regions. The Board of Directors of First
United would likely invoke the adjustment mechanism in the Agreement if the
conditions permit, in which case Regions must determine whether to proceed with
the Merger at a higher Exchange Ratio. In making this determination, the
principal factors Regions will consider include the projected effect of the
Merger on Regions' pro forma earnings per share and whether Regions' assessment
of First United'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, First United may elect to proceed without the adjustment. In making such
determination, the Board of Directors of First United will consider whether the
Merger remains in the best interest of First United and its stockholders,
despite a decline in Regions' stock price, and whether the consideration to be
received by the holders of First United Common Stock remains fair from a
financial point of view. First United intends to resolicit approval of the
Merger from holders of First United Common Stock if its Board of Directors
determines to proceed with the Merger under circumstances such that the value of
the consideration to be received by such holders in the Merger is below $15.52
per share as of the Determination Date (as defined in the Agreement.) See
"Description of the Transaction--Possible Adjustment of Exchange Ratio."
As a result of the Merger, the separate existence of First United will
cease, and Regions will continue the banking operations of First United's
banking subsidiaries through Regions' subsidiaries. The other subsidiary of
First United, Quick Credit Corporation, will become a subsidiary 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 First United and is
being furnished to the stockholders of First United in connection with the
solicitation of proxies by the Board of Directors of First United for use at its
special meeting of stockholders, including any adjournment or postponement
thereof (the "Special Meeting"), to be held on ______, 1998, to consider and
vote on the proposed Merger and related matters. This Proxy Statement/Prospectus
and the accompanying proxy card are first being mailed to stockholders of First
United on or about ______.
The date of this Proxy Statement/Prospectus is ______, 1998.
<PAGE> 6
AVAILABLE INFORMATION
Regions and First United 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 FIRST UNITED. 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 FIRST UNITED 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 First
United was supplied by First United.
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. Regions' Quarterly Reports on Form 10-Q for the three months ended
March 31, June 30, and September 30, 1997;
3. Regions' Report on Form 10-C filed June 20, 1997; and
4. The description of Regions Common Stock under the heading "Item 1.
Capital Stock to be Registered" in the registration statement on Form 8-A
of Regions relating to Regions Common Stock and in any amendment or report
filed for the purpose of updating such description.
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 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 1996," "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 First United
pursuant to the Exchange Act are hereby incorporated by reference herein:
<PAGE> 7
1. First United's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
2. First United's Quarterly Reports on Form 10-Q for the three months
ended March 31, June 30, and September 30, 1997;
3. First United's Current Report on Form 8-K filed with the SEC on
December 5, 1997.
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.
Copies of the audited consolidated financial statements of Regions included
in Regions' Annual Report on Form 10-K for the year ended December 31, 1996, and
the audited consolidated financial statements of First United included in First
United's annual report on Form 10-K for the year ended December 31, 1996
accompany this Proxy Statement/Prospectus.
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, 417 NORTH 20TH STREET, BIRMINGHAM, ALABAMA 35203 (TELEPHONE (205)
326-7090), AND IF FILED BY FIRST UNITED, FROM WILLIAM B. WEST, CORPORATE
SECRETARY, FIRST UNITED BANCORPORATION, 304 NORTH MAIN STREET, ANDERSON, SOUTH
CAROLINA, 29622 (TELEPHONE (864) 224-1112). IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY ______, 1998.
3
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION........................................................2
DOCUMENTS INCORPORATED BY REFERENCE..........................................2
SUMMARY......................................................................6
The Parties.............................................................6
Special Meeting of First United Stockholders............................6
Record Date; Vote Required..............................................7
The Merger; Exchange Ratio..............................................7
Dissenting Stockholders.................................................7
Reasons for the Merger; Recommendation of First United's Board
of Directors...........................................................7
Opinion of First United's Financial Advisor.............................8
Effective Date..........................................................8
Exchange of Stock Certificates..........................................8
Regulatory Approvals and Other Conditions...............................8
Waiver, Amendment, and Termination of the Agreement.....................8
Interests of Certain Persons in the Merger..............................9
Certain Federal Income Tax Consequences of the Merger...................9
Certain Differences in Stockholders' Rights.............................9
Comparative Market Prices of Common Stock...............................9
Comparative Per Share Data.............................................10
Selected Financial Data................................................10
THE SPECIAL MEETING.........................................................14
General................................................................14
Record Date; Vote Required.............................................14
DESCRIPTION OF THE TRANSACTION..............................................15
General................................................................15
Possible Adjustment of Exchange Ratio .................................15
Treatment of First United Options......................................17
Background of and Reasons for the Merger...............................17
Opinion of First United's Financial Advisor............................19
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...................................................26
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..................33
Accounting Treatment...................................................34
Expenses and Fees......................................................34
Resales of the Regions Common Stock....................................34
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS..............................35
Antitakeover Provisions Generally......................................35
Authorized Capital Stock...............................................36
Amendment of Certificate of Incorporation and Bylaws...................36
</TABLE>
4
<PAGE> 9
<TABLE>
<S> <C>
Classified Board of Directors and Absence of Cumulative Voting.........37
Removal of Directors...................................................37
Limitations on Director Liability......................................37
Indemnification........................................................38
Special Meetings of Stockholders.......................................38
Actions by Stockholders Without a Meeting..............................39
Stockholder Nominations and Proposals..................................39
Mergers, Consolidations, and Sales of Assets Generally.................39
Business Combinations with Certain Persons.............................40
Dissenters' Rights.....................................................41
Stockholders' Rights to Examine Books and Records......................41
Dividends..............................................................42
COMPARATIVE MARKET PRICES AND DIVIDENDS.....................................42
BUSINESS OF FIRST UNITED ...............................................44
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FIRST UNITED................44
BUSINESS OF REGIONS.........................................................45
General................................................................45
Recent Developments....................................................46
CERTAIN REGULATORY CONSIDERATIONS...........................................48
General................................................................48
Payment of Dividends...................................................49
Capital Adequacy.......................................................50
Support of Subsidiary Institutions.....................................51
Prompt Corrective Action...............................................51
FDIC Insurance Assessments.............................................52
DESCRIPTION OF REGIONS COMMON STOCK.........................................53
STOCKHOLDER PROPOSALS.......................................................53
EXPERTS.....................................................................53
OPINIONS....................................................................54
APPENDIX A--Agreement and Plan of Merger...................................A-1
APPENDIX B--Opinion of The Carson-Medlin Company ..........................B-1
APPENDIX C--Copy of Title 33, Chapter 13 of Code
of Laws of South Carolina, ,1976,
as amended relating to dissenters' rights.............................C-1
</TABLE>
5
<PAGE> 10
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 "First United" refer to those
entities, respectively, and, where the context requires, to those entities and
their respective subsidiaries.
THE PARTIES
First United. First United is a bank holding company organized and existing
under the laws of the state of South Carolina, headquartered in Anderson, South
Carolina. First United operates principally through its three subsidiary banks,
which provide a range of commercial and retail banking services through eight
banking offices in the Piedmont region of South Carolina. At September 30, 1997,
First United had total consolidated assets of approximately $297 million, total
consolidated deposits of approximately $256 million, and total consolidated
stockholders' equity of approximately $21 million. First United's principal
executive office is located at 304 North Main Street, Anderson, South Carolina,
29622, and its telephone number at such address is (864) 224-1112.
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 435 banking offices located in Alabama, Florida,
Georgia, Louisiana, and Tennessee as of September 30, 1997. At that date,
Regions had total consolidated assets of approximately $22.2 billion, total
consolidated deposits of approximately $17.6 billion, and total consolidated
stockholders' equity of approximately $1.9 billion. Regions is the second
largest bank holding company headquartered in Alabama in terms of assets, based
on September 30, 1997 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 nine
financial institutions, two of which are located in Florida, four in Georgia,
and three in Louisiana. In addition to the Merger, Regions has entered into
definitive agreements or letters of intent to acquire six financial
institutions, two of which are located in Georgia, one in Florida, one in
Louisiana, and two in South Carolina. For information with respect to the
completed and pending transactions, see "Documents Incorporated by Reference"
and "Business of Regions--Recent Developments."
Regions commenced operations in 1971, under its former name First Alabama
Bancshares, Inc., as a registered bank holding company under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). Regions' principal executive
offices are located at 417 North 20th Street, Birmingham, Alabama 35203, and its
telephone number at such address is (205) 326-7100.
Additional information with respect to Regions and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. See "Available Information," "Documents Incorporated by
Reference," and "Business of Regions."
SPECIAL MEETING OF FIRST UNITED STOCKHOLDERS
The Special Meeting will be held at ______:00 p.m., local time, on ______,
1998, at First United's main office, 304 North Main Street, Anderson, South
Carolina, 29622, 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."
6
<PAGE> 11
RECORD DATE; VOTE REQUIRED
Only holders of record of First United Common Stock at the close of
business on ______, 1998 (the "Record Date"), will be entitled to vote at the
Special Meeting. The affirmative vote of at least two-thirds of the First United
Common Stock outstanding and entitled to vote at the Special Meeting will be
required to approve the Agreement, not just two-thirds of the votes cast. As of
the Record Date, there were ______ shares of First United Common Stock
outstanding and entitled to be voted.
The directors and executive officers of First United and their affiliates
beneficially owned, as of the Record Date, 1,610,167 shares (or approximately
39.8% of the outstanding shares) of First United Common Stock. Each member of
the Board of Directors of First United has agreed to vote those First United
shares over which such member has voting authority (other than in a fiduciary
capacity) in favor of the Merger. The directors and executive officers of
Regions and their affiliates beneficially owned, as of the Record Date, no
shares of First United Common Stock. As of that date, neither First United nor
Regions held any shares of First United 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 First United by Regions
pursuant to the Merger of First United with and into Regions. On the Effective
Date, each share of First United Common Stock then issued and outstanding
(except for shares held by First United, 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) will be converted into .5173 of a share of
Regions Common Stock, subject to possible adjustment (the "Exchange Ratio"). No
fractional shares of Regions Common Stock will be issued. Rather, cash will be
paid in lieu of any fractional share interest to which any First United
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 trading day preceding the Effective
Date. See "Description of the Transaction--General."
DISSENTING STOCKHOLDERS
Holders of First United 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 the fair value of such holders' shares of First United Common Stock
in cash in accordance with the applicable provisions of the South Carolina
Business Corporation Act (the "South Carolina Act"). The procedures to be
followed by dissenting stockholders are summarized under "Description of the
Transaction--Dissenters' Rights," and the applicable provisions of the South
Carolina Act are included as Appendix C.
REASONS FOR THE MERGER; RECOMMENDATION OF FIRST UNITED'S BOARD OF DIRECTORS
First United's Board of Directors has unanimously approved the Merger and
the Agreement and has determined that the Merger is fair to, and in the best
interests of, First United and its stockholders. Accordingly, First United's
Board unanimously recommends that First United's stockholders vote FOR approval
of the Agreement. EACH MEMBER OF THE BOARD OF DIRECTORS OF FIRST UNITED HAS
AGREED TO VOTE SUCH MEMBER'S SHARES OF FIRST UNITED COMMON STOCK IN FAVOR OF THE
AGREEMENT. In approving the Agreement, First United's directors considered First
United'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 The Carson-Medlin Company
("Carson Medlin") 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 First United. See "Description of the Transaction--Background of
and Reasons for the Merger."
7
<PAGE> 12
OPINION OF FIRST UNITED'S FINANCIAL ADVISOR
Carson Medlin, First United's financial advisor, has rendered an opinion
to First United 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
First United. The opinion of Carson Medlin is attached as Appendix B to this
Proxy Statement/Prospectus. First United 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 First United's Financial
Advisor."
EFFECTIVE DATE
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the South Carolina Articles of Merger are
filed and become effective with, respectively, the Delaware Secretary of State
and the South Carolina Secretary of State. Unless otherwise agreed upon by
Regions and First United, 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 federal or state
regulatory approval required for the Merger or (ii) the date on which the
Agreement is approved by the requisite vote of First United stockholders. The
parties expect that all conditions to consummation of the Merger will be
satisfied so that the Merger can be consummated during the first quarter of
1998, 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 First United a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of First United
Common Stock for certificates representing shares of Regions Common Stock. FIRST
UNITED STOCKHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY
RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. See "Description of the
Transaction--Distribution of Regions Stock Certificates and Payment for
Fractional Shares."
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the Federal
Reserve System (the "Federal Reserve") and the South Carolina State Board of
Financial Institutions (the "South Carolina State Board"). Applications for the
requisite approvals have been filed with these agencies, of which the Federal
Reserve has issued its approval of the Merger, and the South Carolina State
Board has yet to issue its approval. There can be no assurance that the
approval of the South Carolina State Board will be given or as to the timing or
conditions of such approval.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of First United stockholders, receipt
of an opinion of counsel as to the tax-free nature of certain aspects of the
Merger, and certain other customary conditions. See "Description of the
Transaction-- Conditions to Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement may be terminated, and the Merger abandoned, at any time
prior to the Effective Date by mutual consent of the Boards of Directors of both
First United 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, 1998, unless the failure to consummate by such time is due to a
breach of the Agreement by the party seeking to terminate. If for any reason the
Merger is not consummated, First United 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."
8
<PAGE> 13
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of First United's management and Board of Directors have
interests in the Merger in addition to their interests as stockholders of First
United 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 First United
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 First United
Common Stock for Regions Common Stock will not give rise to gain or loss to
First United stockholders, except to the extent of any cash received in lieu of
fractional share interests or as a result of 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 CIRCUMSTANCE OF EACH STOCKHOLDER AND OTHER CIRCUMSTANCES, EACH FIRST
UNITED 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).
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS
On the Effective Date, First United stockholders, whose rights are governed
by the South Carolina Act and by First United'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 First United
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 First United Common Stock are traded in the
over-the-counter market and are quoted in the Nasdaq National Market. The
following table sets forth the last sale price of Regions Common Stock, the last
sale price of First United Common Stock, and the equivalent per share price (as
explained below) of First United Common Stock as of September 22, 1997, the last
trading day immediately preceding public announcement of the Merger, and ______,
1998, the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus:
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS FIRST UNITED OF FIRST UNITED
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
September 22, 1997 $ 39.13 $ 16.75 $ 20.24
______, 1998
</TABLE>
9
<PAGE> 14
The equivalent per share price of First United 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 .5173. Stockholders are advised
to obtain current market quotations for Regions Common Stock and First United
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 First United, (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 First United Common Stock, giving effect to the Merger. The
Regions and First United pro forma combined information and the First United pro
forma Merger equivalent information give effect to the Merger on a
pooling-of-interests accounting basis and assume an Exchange Ratio of .5173. See
"Description of the Transaction--Accounting Treatment." The pro forma data are
presented for information purposes only and are not necessarily indicative of
the results of operations or combined financial position that would have
resulted had the Merger been consummated at the dates or during the periods
indicated, nor are they necessarily indicative of future results of operations
or combined financial position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical financial statements of Regions and
First United, including the respective notes thereto. Regions' historical
information has been adjusted to reflect a 2-for-1 stock split effected by
Regions on June 13, 1997. First United's historical information has been
adjusted to reflect 3-for-2 stock splits effected by First United on November
22, 1994, and August 15, 1997, as well as a 10% stock dividend in 1994 and 5%
stock dividends in 1995 and 1996. See "Documents Incorporated by Reference," and
"--Selected Financial Data."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ --------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions
and First United historical)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical....................................... $ 1.62 $ 1.33 $ 1.85 $ 1.60 $ 1.55
First United historical (primary)........................ .64 .38 .48 .60 .54
Regions and First United pro forma combined(1)........... 1.61 1.84 1.61 1.55
First United pro forma Merger equivalent(2).............. .83 .95 .83 .80
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical....................................... .60 .525 .70 .66 .60
First United historical.................................. .06 .06 .08 .08 .02
First United pro forma Merger equivalent(3).............. .31 .27 .36 .34 .31
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical....................................... 13.58 12.43 12.76 11.69 10.63
First United historical.................................. 5.33 4.86 4.71 4.29 3.58
Regions and First United pro forma combined(1)........... 13.53
First United pro forma Merger equivalent(2).............. 7.00
</TABLE>
- -------------------
(1) Represents the combined results of Regions and First United as if the
Merger were consummated on January 1, 1994 (or September 30, 1997, in the
case of Book Value Per Common Share Data), and were accounted for as a
pooling of interests.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of .5173 of a share of Regions Common Stock for each share of First United
Common Stock.
(3) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of .5173 of a share of Regions Common Stock for each
share of First United Common Stock.
(4) The Exchange Ratio is subject to upward adjustment if the average of the
closing sales prices of Regions Common Stock over a specified period is
less than $30.00. See "Description of the Transaction--Possible
Adjustment of Exchange Ratio." The presentation of pro forma Merger
equivalent information would be affected by any increase in the Exchange
Ratio.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and First United. The per share data for Regions have
been adjusted to reflect a 2-for-1 stock split effected by Regions on June 13,
1997. The per share data for First United have been adjusted to reflect 3-for-2
stock splits effected by First United on November 22, 1994, and August 15, 1997,
as well as a
10
<PAGE> 15
10% stock dividend in 1994 and 5% stock dividends in 1992, 1993, 1995, and 1996.
The data should be read in conjunction with the historical financial statements,
related notes, and other financial information concerning Regions and First
United incorporated by reference or included herein. Interim unaudited data for
the nine months ended September 30, 1997 and 1996 of Regions and First United
reflect, in the opinion of the respective managements of Regions and First
United, all adjustments (consisting only of normal recurring adjustments)
necessary for a fair presentation of such data. Results for the nine months
ended September 30, 1997, are not necessarily indicative of results which may be
expected for any other interim period or for the year as a whole. See "Documents
Incorporated by Reference."
11
<PAGE> 16
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income .......... $ 1,217,085 $ 1,029,151 $ 1,386,122 $ 1,259,600 $ 991,693 $ 746,544 $ 737,094
Total interest expense ......... 603,046 508,573 685,656 635,336 436,157 296,195 324,420
Net interest income ............ 614,039 520,578 700,466 624,264 555,536 450,349 412,674
Provision for loan losses ...... 31,449 21,734 29,041 30,271 20,580 24,695 39,367
Net interest income after
loan loss provision ....... 582,590 498,844 671,425 593,993 534,956 425,654 373,307
Total noninterest income
excluding security
gains (losses) ............ 189,852 162,759 217,624 187,830 171,705 169,318 147,943
Security gains (losses) ........ 541 259 3,115 (424) 344 831 2,417
Total noninterest expense ...... 441,688 415,955 553,801 487,461 442,376 383,130 343,279
Income tax expense ............. 110,592 81,022 108,677 96,109 84,109 66,169 56,405
Net income ..................... 220,703 164,885 229,686 197,829 180,520 146,504 123,983
PER SHARE DATA:
Net income ..................... $ 1.62 $ 1.33 $ 1.85 $ 1.60 $ 1.55 $ 1.40 $ 1.21
Cash dividends ................. .60 .525 .70 .66 .60 .52 .46
Book value ..................... 13.58 12.43 12.76 11.69 10.63 9.93 8.57
OTHER INFORMATION:
Average number of
shares outstanding ............. 136,526 123,960 124,272 123,340 116,412 104,306 102,384
STATEMENT OF
CONDITION DATA
(PERIOD END):
Total assets ................... $22,241,897 $18,731,424 $18,930,175 $16,851,774 $15,810,076 $13,163,161 $10,457,676
Securities ..................... 4,386,163 4,005,675 3,870,595 3,863,781 3,346,291 2,993,417 2,255,732
Loans, net of
unearned income ........... 15,823,660 13,032,238 13,311,172 11,542,311 10,855,195 8,430,931 6,657,557
Total deposits ................. 17,623,742 15,186,950 15,048,336 13,497,612 12,575,593 11,025,376 8,923,801
Long-term debt ................. 402,627 447,959 447,269 632,019 599,476 525,820 151,460
Stockholders' equity ........... 1,851,493 1,554,740 1,598,726 1,429,253 1,286,322 1,106,361 886,116
PERFORMANCE RATIOS:
Return on average
assets(1)(6) .............. 1.41% 1.25% 1.29% 1.21% 1.27% 1.38% 1.29%
Return on average
stockholders'
equity(1)(6) .............. 16.26 14.83 15.19 14.29 15.26 15.76 15.04
Net interest margin ............ 4.30 4.29 4.27 4.21 4.37 4.77 4.85
Efficiency (2)(6) .............. 54.06 59.97 59.44 58.79 59.44 60.23 59.62
Dividend payout ................ 37.04 39.47 37.84 41.12 38.71 37.01 37.60
ASSET QUALITY RATIOS:
Net charge-offs to
average loans,net
of unearned income(1) ..... .22% .10% .15% .17% .19% .23% .36%
Problem assets to net
loans and other
real estate (3) ........... .69 .54 .56 .59 .75 1.12 1.29
Nonperforming assets
to net loans and
other real estate (4) ..... .81 .73 .76 .68 .80 1.28 1.39
Allowance for loan losses
to loans, net of
unearned income ........... 1.24 1.37 1.32 1.38 1.32 1.48 1.51
Allowance for loan
losses to
nonperforming
assets (4) ................ 153.38 186.89 173.65 202.55 164.48 115.88 107.97
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders'
equity to average
assets .................... 8.66% 8.41% 8.49% 8.44% 8.35% 8.76% 8.60%
Average loans to
average deposits .......... 88.43 85.01 85.90 86.12 79.90 76.41 71.59
Tier 1 risk-based capital (5) .. 9.85 10.71 10.81 11.14 10.69 11.13 11.68
Total risk-based capital (5) ... 12.24 13.53 13.59 14.61 14.29 13.48 14.44
Tier 1 leverage (5) ............ 7.35 7.65 7.44 7.49 8.21 10.11 8.44
</TABLE>
- -------------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans, and
foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
respectively. The minimum leverage ratio of Tier 1 capital to total assets
is 3% to 5%. The ratios for prior periods have not been restated to reflect
the combination with First National Bancorp effected March 1, 1996, and
accounted for as a pooling of interests, or any other pooling-of-interests
transactions.
(6) Ratios for 1996 excluding $19.0 million (after-tax) charged 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%.
12
<PAGE> 17
Selected Historical Financial Data of First United
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------------- --------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income............ $ 22,015 $ 17,560 $ 24,375 $ 19,666 $ 15,545 $ 13,280 $ 13,438
Total interest expense .......... 9,305 6,705 9,439 7,038 4,769 4,525 5,755
Net interest income.............. 12,710 10,855 14,936 12,628 10,776 8,755 7,683
Provision for loan losses........ 1,075 1,253 2,149 779 397 282 391
Net interest income after
loan loss provision......... 11,635 9,602 12,787 11,849 10,379 8,473 7,292
Total noninterest income
excluding security
gains (losses).............. 1,565 1,492 2,073 1,883 1,758 2,019 1,338
Security gains (losses).......... 38 -0- -0- -0- -0- -0- 24
Total noninterest expense........ 9,171 8,739 11,891 10,028 8,957 8,032 7,037
Income tax expense............... 1,425 824 1,023 1,291 1,082 850 579
Cumulative effect of change in
accounting method............. -- -- - - - (56) -
Net income....................... $ 2,642 $ 1,531 $ 1,946 $ 2,413 $ 2,078 $ 1,666 $ 1,038
PER SHARE DATA:
Net income (primary)............. $ .64 $ .38 $ .48 $ .60 $ .54 $ .44 $ .27
Net income (fully diluted)....... .63 .38 .48 .59 .54 .44 .27
Cash dividends................... .06 .06 .08 .08 .02 -- --
Book value....................... 5.33 4.86 4.71 4.29 3.58 3.26 2.77
OTHER INFORMATION:
Average number of shares
outstanding (fully diluted).... 4,168 4,067 4,068 3,675 3,489 3,417 3,417
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets..................... $ 297,153 $242,253 $ 270,195 $ 194,414 $ 165,203 $ 150,038 $143,449
Securities held to maturity...... 7,193 8,093 7,843 9,481 9,233 9,528 17,796
Securities available for sale.... 26,186 24,495 26,304 19,032 22,081 23,227 13,359
Loans, net of unearned income.... 237,620 186,120 202,391 145,674 117,896 100,488 90,007
Total deposits................... 256,224 194,557 218,219 160,381 137,666 127,424 123,752
Long-term debt................... -- -- -- -- -- -- --
Stockholders' equity............. 21,157 17,852 18,285 16,407 13,591 12,286 10,458
PERFORMANCE RATIOS:
Return on average assets (1)..... 1.24% .94% .86% 1.36% 1.32% 1.13% .71%
Return on average stockholders'
equity (1).................. 17.85 11.86 11.14 15.72 15.92 14.83 10.44
Net interest margin (1).......... 6.38 7.12 7.03 7.59 7.38 6.48 5.78
Efficiency (2)................... 64.25 70.78 69.36 68.45 70.83 73.74 77.38
Dividend payout.................. 9.28 13.98 16.67 12.12 3.03 -- --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1).. .33% .45% .76% .31% .15% (.01)% 1.23%
Problem assets to net loans and
other real estate (3)....... .94 .27 .26 .22 .31 1.22 3.36
Nonperforming assets to net loans
and other real estate (4)... 1.17 .62 .47 .41 .43 1.31 3.48
Allowance for loan losses to
loans, net of unearned
income...................... 1.48 1.52 1.54 1.57 1.62 1.65 1.49
Allowance for loan losses to
nonperforming assets (4).... 146.27 245.79 336.89 395.91 389.58 128.83 43.18
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets.............. 6.96% 7.92% 7.70% 8.62% 8.27% 7.63% 6.86%
Average loans to average
deposits.................... 94.12 91.52 92.83 90.95 82.64 75.04 75.78
Tier 1 risk-based capital (5).... 9.02 9.71 8.92 11.48 12.25 12.12 11.72
Total risk-based capital (5)..... 10.35 11.10 10.30 12.73 13.78 13.37 12.97
Tier 1 leverage (5).............. 7.09 7.35 6.72 8.23 8.35 8.09 7.28
</TABLE>
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured
loans, and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis,
restructured loans, loans 90 days or more past due, and foreclosed
properties.
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
respectively. The minimum leverage ratio of Tier 1 capital to total
assets is 3% to 5%.
13
<PAGE> 18
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of First
United Common Stock in connection with the solicitation by the First United
Board of Directors of proxies for use at the Special Meeting, at which First
United stockholders will be asked to vote upon a proposal to approve the
Agreement. The Special Meeting will be held at ______:00 p.m., local time, on
______, 1998, at the main offices of First United, located at 304 North Main
Street, Anderson, South Carolina, 29622.
First United stockholders are requested promptly to sign, date, and return
the accompanying proxy card to First United 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 First United 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 First United a signed proxy card bearing a later date, provided that such
notice or proxy card is actually received by First United 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 United
Bancorporation, 304 North Main Street, Anderson, South Carolina, 29622,
Attention: William B. West, 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 received by the
Secretary. The shares of First United 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, First United 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 other electronic means, other methods of delivery, or in person by
the directors, officers, and employees of First United, 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.
First United stockholders should not forward any stock certificates with
their proxy cards.
RECORD DATE; VOTE REQUIRED
First United's Board of Directors has established the close of business on
______, 1998, as the Record Date for determining the First United stockholders
entitled to notice of and to vote at the Special Meeting. Only First United
stockholders of record as of the Record Date will be entitled to vote at the
Special Meeting. As of the Record Date, there were approximately ______ holders
of ______ shares of First United 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 First United to beneficially own more than 5.0% of the
outstanding shares of First United Common Stock as of the Record Date, see
"Voting Securities and Principal Stockholders of First United."
The presence, in person or by proxy, of a majority of the outstanding
shares of First United Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting.
14
<PAGE> 19
For these purposes, shares of First United 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 for any reason, including broker nonvotes. Generally, a broker who
holds shares of First United Common Stock in "street" name on behalf of a
beneficial owner lacks authority to vote such shares in the absence of specific
voting instructions from the beneficial owner.
ONCE A QUORUM IS ESTABLISHED, APPROVAL OF THE AGREEMENT REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF THE FIRST UNITED
COMMON STOCK OUTSTANDING AND ENTITLED TO VOTE AT THE SPECIAL MEETING. A FAILURE
TO VOTE, IN PERSON OR BY PROXY, FOR ANY REASON HAS THE SAME EFFECT AS A VOTE
AGAINST THE AGREEMENT, INCLUDING FAILURE TO RETURN A PROPERLY EXECUTED PROXY,
AN ABSTENTION, OR A BROKER NONVOTE.
The directors and executive officers of First United and their affiliates
beneficially owned, as of the Record Date, 1,610,167 shares (or approximately
39.8% of the outstanding shares) of First United Common Stock. The directors
and executive officers of Regions and their affiliates beneficially owned, as
of the Record Date, no shares of First United Common Stock. As of that date, no
subsidiary of either First United or Regions held any shares of First United
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 First United Common Stock (excluding any shares held by First
United, 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) issued and
outstanding at the Effective Date will be converted into .5173 of a share of
Regions Common Stock, subject to possible adjustment as described below under
the caption "-- 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 First United stockholder
would otherwise receive multiplied by 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 preceding the Effective Date.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
Under certain circumstances, the Exchange Ratio could be adjusted upward
pursuant to certain provisions in the Agreement. Such an adjustment could occur
only if First United'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 as chosen by Regions) for the ten consecutive full trading days in which
such
15
<PAGE> 20
shares are traded on the Nasdaq National Market, ending at the close of trading
on the Determination Date. "Determination Date" means the seventh full trading
day immediately preceding the anticipated date of closing the Merger.
If the Average Closing Price is less than $30.00, then First United may
elect not to effect the Merger at the original Exchange Ratio of .5173. In such
case, First United has the right to terminate the Agreement during the
five-business-day period commencing on the day immediately following the
Determination Date by giving Regions written notice of that decision. First
United may withdraw its termination notice at any time during that
five-business-day period. During the three-business-day period commencing upon
the receipt of such notice, Regions has the option to increase the Exchange
Ratio to equal the quotient obtained by dividing (1) the product of $30.00 and
the Exchange Ratio (as then in effect) by (2) the Average Closing Price. Regions
is under no obligation to adjust the Exchange Ratio. If Regions elects to adjust
the Exchange Ratio, it must give First United 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 First United's
stockholders will assume the risk of declines in the value of Regions Common
Stock to $30.00 per share. However, First United has the right to terminate the
Agreement if the price of Regions Common Stock, as represented by the Average
Closing Price, declines to an amount below $30.00 per share as of the
Determination Date (the seventh full trading day preceding the anticipated date
of closing the Merger).
The operation of the adjustment mechanism can be illustrated by the
following two scenarios. (For purposes of the numerical examples, the Exchange
Ratio is .5173).
(a) The first scenario occurs if the Average Closing Price is $30.00 or
higher. Under this scenario, there would be no right on the part of First United
to terminate the Agreement and therefore no potential adjustment to the Exchange
Ratio, even though the consideration to be received by First United stockholders
would have fallen from a pro forma $20.24 per share (as of September 22, 1997,
the date immediately preceding public announcement of the proposed Merger) to as
little as pro forma $15.52 per share.
(b) The second scenario arises where the Average Closing Price is less than
$30.00. Under this scenario, First United would have the right to terminate the
Agreement and Regions would have the right, but not the obligation, to remove
such termination right by adjusting the Exchange Ratio. In this case, the
potential adjustment in the Exchange Ratio is designed to ensure that the First
United stockholders receive for each share of First United Common Stock that
fraction of a share of Regions Common Stock having a value (based upon the
Average Closing Price) of at least $15.52 per share, which corresponds to a
decline in the Regions Common Stock price to $30.00 per share.
For example, if the Average Closing Price were $26.00, First United could
terminate the Agreement unless Regions elected within three business days of
Regions' receipt of First United's termination notice to increase the Exchange
Ratio to equal .5969, which represents the quotient obtained by dividing (x) the
product of $30.00 and .5173 (the Exchange Ratio as then effect) by (y) $26.00
(the Average Closing Price). Based upon the assumed $26.00 Average Closing
Price, the new Exchange Ratio would represent a value to the First United
stockholders of pro forma $15.52 per share.
First United 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 First United Common Stock may be more or less than the Average
Closing Price. First United stockholders are urged to obtain information on the
market price of Regions Common Stock that is more recent than that provided in
this Proxy Statement/Prospectus. See "Comparative Market Prices and Dividends."
16
<PAGE> 21
TREATMENT OF FIRST UNITED OPTIONS
The Agreement provides that all rights with respect to First United Common
Stock pursuant to stock options or stock appreciation rights granted by First
United under its stock option plans which are outstanding at the Effective Date,
whether or not then exercisable, will be converted into and will become rights
with respect to Regions Common Stock, and Regions will assume each of such
options in accordance with the terms of the plan under which it was issued and
the agreement by which it is evidenced. After the Effective Date, those options
will become options to purchase Regions Common Stock, with the exercise price
and number of shares of Regions Common Stock purchasable thereunder adjusted to
reflect the Exchange Ratio. The executive officers or directors of First United
that as of the date of this Proxy Statement/Prospectus hold outstanding options
are Ronald K. Earnest, James G. Badnal, III, and Frank W. Wingate who hold
exercisable options to purchase 31,644, 31,605, and 9,572 shares of First United
Common Stock, respectively.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. During the last several years, there have been
significant developments in the banking and financial services industry. These
developments have included the increased emphasis and dependence on automation,
specialization of products and services, increased competition from other
financial institutions, and a trend toward consolidation and geographic
expansion, coupled with a relaxation of regulatory restrictions on interstate
conduct of business of financial institutions.
In March 1997, a representative of Carson Medlin, First United's financial
advisor, contacted the President of First United and indicated that, due to
rising bank stock prices, increasing bank merger prices, the cycle for bank
stocks, and structural changes in the banking industry, he believed the then
current conditions were right to achieve a merger of First United on favorable
terms. Over the next several weeks the President and Carson Medlin discussed the
potential terms of a possible merger. The President agreed that it would be
desirable to attempt to determine the terms that might be available from
potential acquirors in a merger with First United, if such determination could
be made confidentially.
In early May, Carson Medlin identified two potential acquirors, including
Regions, that Carson Medlin believed would have an interest in a merger with
First United, and would be capable of offering terms attractive to First United
stockholders. First United engaged Carson Medlin to contact those two potential
acquirors to determine their level of interest and to commence negotiations
leading to a potential merger with First United.
Carson Medlin assisted First United in preparing a confidential memorandum
regarding First United and contacted the two potential acquirors. Both potential
acquirors entered into confidentiality agreements and received the confidential
memorandum. Both potential acquirors indicated an interest in a merger with
First United but the level of consideration suggested by the potential acquiror
other than Regions was below the level the President believed would be necessary
for the Board of Directors and stockholders to support the transaction. On July
1, 1997, the President of First United met with senior executives of Regions and
discussed a possible merger transaction.
Subsequent discussions between Carson Medlin on behalf of First United and
Regions indicated that, while Regions had a strong interest in acquiring First
United and its subsidiary banks, it was not, at that time, prepared to acquire
First United's consumer finance subsidiary. Regions advised First United that it
had been studying for some time the desirability of engaging in the consumer
finance business but that it had not yet reached a decision to do so and that
until such a decision had been made Regions would not want to acquire First
United's consumer finance subsidiary. Further discussions between Carson Medlin
and Regions continued. In mid-September, 1997 Regions advised Carson Medlin that
it had determined that it could be advantageous for Regions to engage in the
consumer finance business through a subsidiary and that Regions would be willing
to acquire First United's consumer finance subsidiary as part of a merger with
First United.
17
<PAGE> 22
On September 19, 1997, Carson Medlin received a letter from Regions
expressing an indication of interest in engaging in a merger transaction with
First United, pursuant to which each share of the outstanding common stock of
First United would be exchanged for .5173 shares of the common stock of Regions.
The President of First United decided that a merger on such terms would be
sufficiently attractive to be brought before First United's Board of Directors
for consideration.
On September 22, 1997, a Special Meeting of the Executive Committee of the
First United Board of Directors was held to review the proposed merger of First
United and Regions. All of the other members of the Board of Directors were
invited to attend the meeting of the Executive Committee and all but one
director were present at that meeting. At that meeting, the President of First
United advised the outside directors for the first time that he had engaged
Carson Medlin and related their activities described above. Carson Medlin then
explained the key elements of the proposal and provided information regarding
Regions. Carson Medlin also advised the Committee that, on a preliminary basis,
in its opinion the terms of the Merger are fair to First United stockholders
from a financial point of view. First United's counsel reviewed with the members
of the Board present the procedures necessary for the Board to follow in
considering and entering into a merger transaction. After a lengthy discussion
of the desirability of the Regions proposal, all of the members of the Board of
Directors present voted to proceed with negotiations of a definitive merger
agreement with Regions. On September 23, 1997, Regions made a public
announcement that it had made a proposal to First United and that First United's
Executive Committee had agreed to negotiate a definitive agreement including the
terms stated in the announcement.
The officers of First United negotiated the terms of the Merger Agreement
with the assistance of counsel and Carson Medlin over the next few weeks. The
Board of Directors of First United met on October 28, 1997, with counsel and
Carson Medlin to review and consider the proposed Merger Agreement. The terms of
the Merger Agreement were reviewed with the Board of Directors by counsel.
Carson Medlin stated that, in its opinion, the terms of the Merger are fair to
First United stockholders from a financial point of view. After a lengthy
discussion, the Board of Directors unanimously agreed to approve the Merger
Agreement and to recommend approval of the transaction to the stockholders.
First United's Reasons for the Merger. In approving the Merger, the
directors of First United considered a number of factors. Without assigning any
relative or specific weights to the factors, the First United Board of Directors
considered the following material factors:
(a) the information presented to the directors by the management of First
United concerning the business, operations, earnings, asset quality, and
financial condition of First United, 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
First United Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of First United Common Stock for Regions Common
Stock for federal and state income tax purposes;
(d) the likelihood of the Merger's being approved by applicable regulatory
authorities without undue conditions or delay;
(e) the opinion rendered by Carson Medlin, First United's financial
advisor, to the effect that, from a financial point of view, the exchange of
First United Common Stock for Regions Common Stock on the terms and conditions
set forth in the Agreement is fair to the holders of First United Common Stock.
18
<PAGE> 23
The terms of the Merger were the result of arms-length negotiations between
representatives of First United and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of First United
unanimously approved the Merger as being in the best interests of First United
and its stockholders. Each member of the Board of Directors of First United has
agreed to vote such member's shares in favor of the Merger.
FIRST UNITED'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT FIRST UNITED
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 First United 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 First United 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 First United; 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 FIRST UNITED'S FINANCIAL ADVISOR
The Board of Directors of First United retained Carson Medlin to serve as
its financial advisor with respect to a proposed transaction which would lead to
the acquisition of First United. As part of its engagement, Carson Medlin agreed
to render its opinion as to the fairness, from a financial point of view, of the
consideration to be received by First United's stockholders. Carson Medlin is a
National Association of Securities Dealers, Inc. member investment banking firm
which specializes in the securities of southeastern United States financial
institutions. As part of its investment banking activities, Carson Medlin is
regularly engaged in the valuation of southeastern United States financial
institutions and transactions relating to their securities, including mergers
and acquisitions. Carson Medlin will be compensated for its services. No
limitations were imposed by First United on Carson Medlin with respect to the
investigations made or procedures followed by Carson Medlin in rendering its
opinion.
A representative of Carson Medlin attended the meeting of First United's
Board held on September 22, 1997, at which meeting the terms of the proposed
Merger were discussed and considered. At that meeting, Carson Medlin delivered a
preliminary verbal opinion to First United's Board that the consideration to be
received by the stockholders of First United as a result of the Merger is fair
from a financial point of view. A representative of Carson Medlin also attended
a meeting of the Board on October 22, 1997 at which time the Merger was
discussed and Carson Medlin reaffirmed its opinion that the consideration is
fair to First United's stockholders. Carson Medlin subsequently confirmed such
opinion in writing as of the date of this Proxy Statement/Prospectus. The full
text of Carson Medlin's written opinion dated the date of this Proxy
Statement/Prospectus is attached as Appendix B to this Proxy
Statement/Prospectus and should be read in its entirety with respect to the
procedures followed, assumptions made, matters considered and qualifications of
and limitations on the review undertaken by Carson Medlin in connection
therewith. Carson Medlin's opinion is addressed to First United's Board only,
and the opinion does not constitute a recommendation to any First United
stockholder as to how such stockholder should vote at the First United Special
Meeting to consider the Merger or as to any other matter. The summary of the
opinion of Carson Medlin set forth in this Proxy
19
<PAGE> 24
Statement/Prospectus is qualified in its entirety by reference to the full text
of such opinion attached as Appendix B.
Carson Medlin has relied upon, without independent verification, the
accuracy and completeness of the information reviewed by it for the purposes of
rendering its opinion. Carson Medlin did not undertake any independent
evaluation or appraisal of the assets and liabilities of First United or
Regions, nor was it furnished with any such appraisals. Carson Medlin assumed
that the financial forecasts reviewed by it have been reasonably prepared on a
basis reflecting the best currently available judgments and estimates of the
managements of First United and Regions, and that such projected financial
results will be realized in the amounts and at the times contemplated thereby.
Carson Medlin is not expert in the evaluation of loan portfolios,
underperforming or nonperforming assets, net charge-offs of such assets or the
adequacy of allowances for losses with respect thereto; has not reviewed any
individual credit files; and has assumed that the loan loss allowances for each
of First United and Regions are in the aggregate adequate to cover such losses.
Carson Medlin assumed that the Merger will be recorded as a pooling of interests
under generally accepted accounting principles. Carson Medlin's opinion is
necessarily based on economic, market and other conditions as in effect on the
date of its analysis, and on information made available to it dated as of
various earlier dates.
In connection with rendering its opinion, Carson Medlin performed a variety
of financial analyses. The preparation of a financial fairness opinion of this
nature involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to the
particular circumstances, and, therefore, is not readily susceptible to partial
analysis or summary description. Carson Medlin believes that its analyses must
be considered together as a whole and that selecting portions of such analyses
and the facts considered therein, without considering all other factors and
analyses, could create an incomplete view of the analyses and the process
underlying Carson Medlin's opinion. In its analyses, Carson Medlin made numerous
assumptions with respect to industry performance, business and economic
conditions, and other matters, many of which are beyond the control of First
United and Regions and which may not be realized in the amounts or at the times
anticipated. Any estimates contained in Carson Medlin's analyses are not
necessarily predictive of future results or values, which 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 such
companies or their securities may actually be sold. None of the analyses
performed by Carson Medlin was assigned a greater significance by Carson Medlin
than any other.
In connection with rendering its opinion dated the date hereof, Carson
Medlin reviewed (i) the Agreement; (ii) the annual reports to stockholders of
First United, including audited financial statements, for the five years ended
December 31, 1996; (iii) the Proxy Statement of First United, dated April 4,
1997, prepared for the annual meeting of the stockholders of First United held
on April 22, 1997; (iv) the Report of Form 10-Q of First United, dated September
30, 1997 (v) the Uniform Bank Performance Report for Anderson National Bank as
of June 30, 1997; (vi) the Uniform Bank Performance Report for Spartanburg
National Bank as of June 30, 1997; (vii) the Uniform Bank Performance Report for
The Community Bank of Greenville, N.A. as of June 30, 1997; (viii) the Call
Report for Anderson National Bank as of September 30, 1997; (ix) the Call Report
for Spartanburg National Bank as of September 30, 1997; (x) the Call Report for
The Community Bank of Greenville, N.A. as of September 30, 1997; (xi) the annual
reports to stockholders of Regions, including audited financial statements, for
the five years ended December 31, 1996; (xi) the Proxy Statement of Regions
dated April 1, 1997 for the annual meeting of the stockholders of Regions held
on May 14, 1997; (xii) the Report of Form 10-Q of Regions, dated September 30,
1997 (xiii) monthly unaudited interim financial statements of First United
through November 30, 1997; (xiv) a preliminary copy of the Proxy
Statement/Prospectus prepared in connection with a special meeting of the
stockholders of First United to consider the Merger; and (xv) certain other
financial and operating information with respect to the business, operations and
prospects of First United and Regions.
Carson Medlin also (i) held discussions with members of the senior
management of First United and Regions regarding their respective historical and
current business operations, financial conditions and future
20
<PAGE> 25
prospects; (ii) reviewed the historical market prices and trading activity for
the common stocks of First United and Regions and compared them with those of
certain publicly traded companies which it deemed to be relevant; (iii) compared
the results of operations of First United and Regions with those of certain
publicly traded companies which it deemed to be relevant; (iv) compared the
proposed financial terms of the Merger with the financial terms, to the extent
publicly available, of certain other recent business combinations of commercial
banking organizations; (v) analyzed the pro forma financial impact of the Merger
on Regions; and (vi) conducted such other studies, analyses, inquiries and
examinations as Carson Medlin deemed appropriate.
The following is a summary of the principal analyses performed by Carson
Medlin in connection with its opinion.
Summary of Transaction Consideration. Carson Medlin reviewed the terms of
the proposed transaction, including the Exchange Ratio and the aggregate
transaction value. Carson Medlin reviewed the implied value of the consideration
offered based upon the $41.75 per share closing price of Regions' Common Stock
on December 10, 1997 which showed that the implied value of the proposed
transaction was approximately $21.60 per share of First United Common Stock,
representing a 27% premium to a recent trading price for First United Common
Stock prior to the public announcement of the Merger (September 22, 1997), or a
total transaction value of approximately $91.7 million (including outstanding
options to acquire First United Common Stock). Carson Medlin calculated that as
of December 10, 1997 the aggregate transaction value represented 407% of First
United's stated book value at September 30, 1997, adjusted pro forma for the
conversion of stock options and 30.0 times First United's September 30, 1997
trailing twelve months earnings, a 34.8% premium on First United's September 30,
1997 core deposits (defined as the aggregate transaction value minus stated book
value, as a percentage of core deposits) and 30.9% of the total assets of First
United at September 30, 1997.
Comparable Transaction Analysis. Carson Medlin reviewed certain information
relating to 23 selected southeastern bank and thrift mergers announced between
March 1996 and September 1997 in which the acquired institutions had total
assets of from $38 million to $1.4 billion (the "Comparable Transactions"). The
Comparable Transactions are (acquiree/acquiror): Enterprise National
Bank/Compass Bancshares, Inc.; Fort Brooke Bancorporation/The Colonial
BancGroup, Inc.; Citi-Bancshares, Inc./Huntington Bancshares Incorporated; Bank
of Winter Park/Huntington Bancshares Incorporated; Dadeland Bancshares, Inc./The
Colonial BancGroup, Inc.; South Florida Banking Corporation/The Colonial
BancGroup, Inc.; Rockdale Community Bank/Regions Financial Corporation; First
Bankshares/Regions Financial Corporation; SB&T Corporation/Regions Financial
Corporation; Bank Corp. of Georgia/Century South Banks, Inc.; Citizens Gwinnett
Bankshares, Inc./Premier Bancshares, Inc.; First Community Bank/Centura Banks,
Inc.; FirstSouth Bank/Centura Banks, Inc.; Salem Trust Bank/CCB Financial
Corporation; Old North State Bank/LSB Bancshares, Inc.; Bank of
Mecklenburg/Triangle Bancorp, Inc.; Carolina State Bank/First Charter
Corporation; American Federal Bank, FSB/CCB Financial Corporation; Greenville
Financial Corporation/Regions Financial Corporation; W.B.T. Holding Co./First
Commercial Corporation; Hanover Bank/MainStreet BankGroup, Inc.; First Patriot
Bankshares/United Bankshares, Inc.; and George Mason Bankshares, Inc./United
Bankshares, Inc. Carson Medlin considered, among other factors, the earnings,
capital level, asset size and quality of assets of the acquired financial
institutions. Carson Medlin compared the transaction prices to the then recently
reported annual earnings, stated book values, total assets and core deposits.
On the basis of the Comparable Transactions, Carson Medlin calculated a
range of purchase prices as a percentage of stated book value for the Comparable
Transactions from a low of 195.1% to a high of 369.5%, with a mean of 263.3%.
These transactions indicated a range of values for First United from $41.2
million to $78.1 million, with a mean of $55.6 million. The aggregate
consideration implied by the terms of the Merger is approximately $91.7 million,
which is above the high end of the range for the Comparable Transactions.
21
<PAGE> 26
Carson Medlin calculated a range of purchase prices as a multiple of
earnings for the Comparable Transactions from a low of 10.6 times to a high of
29.8 times, with a mean of 20.1 times. These transactions indicated a range of
values for First United from $32.4 million to $91.1 million, with a mean of
$61.5 million (based on First United's trailing twelve months earnings of
$3,058,000). The aggregate consideration implied by the terms of the Merger is
approximately $91.7 million or 30.0 times trailing twelve months earnings, which
is above the high end of the range for the Comparable Transactions.
Carson Medlin calculated the core deposit premiums for the Comparable
Transactions and found a range of values from a low of 11.3% to a high of 31.8%,
with a mean of 19.7%. The premium on First United's core deposits implied by the
terms of the Agreement is 30.9%, which is at the high end of the range for the
Comparable Transactions.
Finally, Carson Medlin calculated a range of purchase prices as a
percentage of total assets for the Comparable Transactions from a low of 15.7%
to a high of 31.8%, with a mean of 22.7%. The aggregate consideration as a
percentage of total assets implied by the terms of the Agreement is
approximately 34.8%, which is above the high end of the range for the Comparable
Transactions.
Industry Comparative Analysis. In connection with rendering its opinion,
Carson Medlin compared selected operating results of First United to those of 49
publicly-traded community commercial banks in Alabama, Florida, Georgia, North
Carolina, South Carolina, Virginia and West Virginia (the "SIBR Banks") as
contained in the Southeastern Independent Bank Review(tm), a proprietary
research publication prepared by Carson Medlin quarterly since 1991. The SIBR
Banks range in asset size from approximately $103 million to $2.4 billion and in
stockholders' equity from approximately $10.9 million to $235 million. Carson
Medlin considers this group of financial institutions more comparable to First
United than larger, more widely traded regional financial institutions. Carson
Medlin compared, among other factors, the profitability, capitalization, and
asset quality of First United to those of the SIBR Banks. Carson Medlin noted
that for the six months ended June 30, 1997: (i) First United had a return on
average assets (ROA) of 1.28% compared to 1.24% on average for the SIBR Banks;
(ii) First United had a return on average equity (ROE) of 18.5% compared to
12.5% on average for the SIBR Banks; (iii) First United had common equity to
total assets of 6.93% compared to 9.69% on average for the SIBR Banks; and (iv)
First United's nonperforming assets ratio (defined as loans 90 days past due,
nonaccrual loans and other real estate to total loans net of unearned income and
other real estate) was 0.45% compared to 0.97% on average for the SIBR Banks.
Carson Medlin also noted that for the year ended December 31, 1996: (i) First
United's ROA was 0.86% compared to 1.23% on average for the SIBR Banks; (ii)
First United's ROE was 11.1% compared to 12.6% on average for the SIBR Banks;
(iii) First United had common equity to total assets of 6.77% compared to 9.62%
on average for the SIBR Banks; and (iv) First United's nonperforming assets
ratio was 0.46% compared to 1.02% on average for the SIBR Banks.
Carson Medlin also compared selected operating results of Regions to those
of 8 other publicly-traded southeastern United States mid-size regional bank
holding companies with assets between $4.6 and $29.8 billion (the "Peer Banks").
The Peer Banks include: AmSouth Bancorporation, The Colonial BancGroup, Inc.,
Compass Bancshares, Inc., First American Corporation, First Tennessee National
Corporation, National Commerce Bancorporation, SouthTrust Corporation, and Union
Planters Corporation. Carson Medlin considers this group of southeastern
financial institutions comparable to Regions as to financial characteristics,
stock price performance and stock trading volume. Carson Medlin compared
selected balance sheet data, asset quality, capitalization, and profitability
ratios at or for the nine months ended September 30, 1997 and stock market data
as of November 6, 1997. This comparison showed, among other things, that (i)
Regions' net interest margin was 4.30% compared to a mean of 4.17% and a median
of 4.10% for the Peer Banks; (ii) Regions' efficiency ratio (defined as
noninterest expense divided by the sum of noninterest income and taxable
equivalent net interest income before provision for loan losses) was 54.1%
compared to a mean of 56.8% and a median of 56.1% for the Peer Banks; (iii)
Regions' ROA was 1.41% compared to a mean of 1.34% and a median of 1.33% for the
Peer Banks; (iv) Regions' ROE was 16.3% compared to a mean of 17.5% and a median
of 17.0% for the Peer Banks; (v) Regions' stockholders' equity to total assets
was 8.32% compared
22
<PAGE> 27
to a mean of 7.65% and a median of 7.39% for the Peer Banks; (vi) Regions'
nonperforming assets to total assets were 0.49% compared to a mean of 0.39% and
a median of 0.35% for the Peer Banks; (vii) Regions' loan loss reserve to
nonperforming assets was 180% compared to a mean of 272% and a median of 233%
for the Peer Banks; and (viii) at November 6, 1997, Regions' market
capitalization was $5.2 billion compared to the Peer Banks which ranged from a
low of $1.3 billion to a high of $5.1 billion. This comparison indicated that
Regions' financial performance is higher than the Peer Banks by some measures
and lower than the Peer Banks by some measures.
No company or transaction used in the preceding Industry Comparative or
Comparable Transaction Analyses is identical to First United, Regions or the
contemplated Merger. Accordingly, evaluating the results of these analyses
necessarily involves complex considerations and judgments concerning differences
in financial and operating characteristics of First United and Regions and other
factors that could affect the 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 industry or transaction
data.
Contribution Analysis. Carson Medlin reviewed the relative contributions in
terms of various balance sheet items, net income and market capitalization to be
made by First United and Regions to the combined institution based on (i)
balance sheet data at September 30, 1997 and (ii) income statement data for the
nine months ended September 30, 1997. The income statement and balance sheet
components analyzed included total assets, total loans, total deposits,
stockholders' equity, and net income. This analysis showed that, while First
United stockholders and optionholders would own approximately 1.54% of the
aggregate outstanding shares and options of the combined institution based on
the Exchange Ratio, First United is contributing 1.32% of total assets, 1.48% of
total loans (net of unearned income), 1.43% of total deposits, 1.13% of
stockholders' equity, and 1.18% of annual net income. This analysis indicates
that First United's ownership (by stockholders and optionholders) of Regions,
after completion of the Merger, will be higher than First United's relative
contribution for various balance sheet and income statement items.
Present Value Analysis. Carson Medlin calculated the present value of First
United's Common Stock assuming that First United remains an independent bank.
For purposes of this analysis, Carson Medlin utilized certain projections of
First United's future earnings through the year 2002. The analysis assumes that
First United would pay a dividend in 1998 equal to 12% of projected net income,
increasing each year to 2002 when the dividend would be 20% of projected net
income. This analysis further assumes that First United would be acquired at the
end of 2002 at a purchase price of 275% of projected book value. The present
value of the annual dividends plus the merger consideration at the end of 2002
was then calculated using discount rates of 13% t0 15% per annum. These rates
were selected to reflect the rates that investors in securities such as the
Common Stock of First United would likely require in order to be competitive
with alternative investments with similar characteristics. On the basis of these
assumptions, Carson Medlin calculated that the present value of First United as
an independent bank ranged from $68.6 million to 74.9 million. The aggregate
consideration implied by the terms of the Agreement is approximately $91.7
million which is above the high end of the range of the calculated present value
were First United to remain independent through 2002. Carson Medlin considered
the present value analysis because it is a widely used valuation methodology,
but noted that the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings growth rates,
dividend payout rates, terminal values and discount rates.
Stock Trading History. Carson Medlin reviewed and analyzed the historical
trading prices and volumes for Regions' Common Stock from December 1992 to
November 1997. Carson Medlin also compared the price performance of Regions'
Common Stock during this period to the Dow Jones Southeastern U.S. Banks Index
and the Dow Jones Equity Market Index and evaluated recent trading patterns and
price performance of Regions Common Stock relative to the eight Peer Banks.
This analysis showed that for the five-year period ending December 11,
1997, the total return (annualized) for Regions' Common Stock (all cash
distributions and dividends reinvested on the ex-dividend date) was 24.16%
compared to 26.23% for the Dow Jones Southeastern U.S. Banks Index and 19.83%
for the Dow
23
<PAGE> 28
Jones Equity Market Index. For the twelve-month period ending November 7, 1997,
the total return for Regions' Common Stock was 63.04% compared to 48.02% for the
Dow Jones Southeastern U.S. Banks Index and 30.52% for the Dow Jones Equity
Market Index.
During the four quarters ending September 30, 1997, the ratio of stock
price to trailing 12 months earnings per share for the Peer Banks was: a low of
14.4 times, a high of 19.8 times, and a mean of 16.8 times. For the same
periods, Regions' price to earnings ratio ranged from a low of 14.2 times to a
high of 18.5 times with a mean of 16.0 times. Regions' Common Stock has traded
on average at a lower price to earnings ratio than the Peer Banks.
During the four quarters ending September 30, 1997, the stock price as a
percentage of book value for the Peer Banks was: a low of 223%, a high of 312%,
and a mean of 260%. For the same periods, Regions' price to book ratio ranged
from a low of 208% to a high of 277% with a mean of 237%. Regions' Common Stock
has traded on average at a lower price to book value basis compared to the Peer
Banks.
Carson Medlin also compared the recent trading volume in Regions' Common
Stock, which trades on the NASDAQ National Market, to that of the Peer Banks.
During the four quarters ending September 30, 1997, the quarter end monthly
trading volume as a percentage of outstanding shares of the Peer Banks ranged
from a low of 4.9% to a high of 7.3% with a mean of 5.6%. Regions' quarter end
monthly trading volume to outstanding shares ranged from a low of 2.5% to a high
of 6.6% with a mean of 3.9%. Carson Medlin considers Regions' Common Stock to be
liquid and marketable.
Carson Medlin also examined recent trading prices and volumes of First
United's Common Stock, which also trades on the NASDAQ National Market. Carson
Medlin placed little weight on the market price of First United's Common Stock
in its analysis.
Stockholder Claims Analysis. Carson Medlin compared the ownership of one
share of First United Common Stock to the ownership of .5173 shares of Regions'
Common Stock (as implied by the terms of the Merger Agreement) from the
perspective of claims on various balance sheet and income statement variables.
Carson Medlin found that First United stockholders would have had a claim to
$1.10 per First United fully-diluted share of projected pro forma 1997 earnings
after consummation of the Merger versus $0.84 without the Merger and $1.20 per
First United fully-diluted share of projected pro forma 1998 earnings versus
$1.05 without. First United stockholders would have had a claim to $81.87 per
First United fully-diluted share in September 30, 1997 total assets compared to
$69.95 without the Merger. First United stockholders would have had a claim to
$7.24 in September 30, 1997 pro forma book value per fully-diluted First United
share compared to $5.27 before the Merger. At a price of $41.75 per share for
Regions' Common Stock, the implied value of the proposed transaction is $21.60
per First United share compared to a reported $17.00 before the Merger.
Furthermore, First United's stockholders would be expected, assuming
continuation of Regions' recent dividend rate, to receive cash dividends at the
annual rate of $0.41 per First United share after the Merger versus $0.09 per
First United share prior to the Merger. In view of this generally favorable
stockholder claims comparison, Carson Medlin concluded that .5173 shares of
Regions' Common Stock is likely to be worth more than one share of First United
Common Stock at the date of consummation of the Merger.
Other Analyses. Carson Medlin also reviewed selected investment research
reports on and earnings estimates for Regions. In addition, Carson Medlin
performed a dilution analyses and such other analyses and comparisons that it
deemed appropriate.
The opinion expressed by Carson Medlin was based upon market, economic and
other relevant considerations as they existed and were evaluated as of the date
of the opinion. Events occurring after the date of issuance of the opinion,
including but not limited to, changes affecting the securities markets, the
results of operations or material changes in the assets or liabilities of First
United or Regions could materially affect the assumptions used in preparing the
opinion.
For its services as independent financial advisor to First United in
connection with the Merger, including the rendering of its opinion as to the
fairness, from a financial point of view, of the consideration to be received
by First United's stockholders, First United agreed to pay Carson Medlin a fee
based on the value of the transaction ultimately entered into by First United.
The fee to be paid to Carson Medlin will equal __________. The value of
Regions Common Stock for purposes of determining the fee to be paid to Carson
Medlin is based on the average closing price of Regions Common Stock _____
prior to the consummation of the Merger.
24
<PAGE> 29
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 South Carolina Articles of Merger
relating to the Merger are filed and declared effective with, respectively, the
Delaware Secretary of State and the South Carolina Secretary of State. Unless
otherwise agreed upon by Regions and First United, 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
federal or state regulatory approval required for the Merger or (ii) the date on
which the Agreement is approved by the requisite vote of First United
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 First United anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the first quarter of 1998. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Regions or First United generally may
terminate the Agreement if the Merger is not consummated by September 30, 1998,
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 First United a form
letter of transmittal, together with instructions for the exchange of such
stockholders' certificates representing shares of First United Common Stock for
certificates representing shares of Regions Common Stock.
FIRST UNITED 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 First United Common Stock, together with a
properly completed letter of transmittal, there will be issued and mailed to
each holder of First United Common Stock surrendering such items a certificate
or certificates representing the number of shares of Regions Common Stock to
which such holder is entitled, if any, and a check for the amount to be paid in
lieu of any fractional share interest, without interest. After the Effective
Date, to the extent permitted by law, First United 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
First United Common Stock has been converted, regardless of whether such
stockholders have surrendered their First United 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
First United 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 First United will be closed at the effective
time of the Merger and after the Effective Date, there will be no transfers of
shares of First United Common Stock on First United's stock transfer books. If
certificates representing shares of First United 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.
25
<PAGE> 30
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 (which has been given) and the South
Carolina State Board, and the expiration of all applicable waiting periods
associated with these approvals, without any conditions or restrictions that
would, in the reasonable good faith judgment of Regions' Board of Directors, so
materially adversely impact the economic benefits of the transactions
contemplated by the Agreement so as to render inadvisable the consummation of
the Merger;
(b) the approval of the Agreement by the holders of requisite number of
shares of First United Common Stock;
(c) the absence of any action by any court or governmental 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 First United Common Stock for
Regions Common Stock will not give rise to recognition of gain or loss to First
United stockholders, except to the extent of any cash received; and
(e) notification for listing on the Nasdaq National Market of the shares of
Regions Common Stock to be issued in the Merger.
Consummation of the Merger also is subject to the satisfaction or waiver of
various other conditions specified in the Agreement, including, among others:
(i) the delivery by Regions and First United of opinions of their respective
counsel and certificates executed by their respective duly authorized officers
as to the satisfaction of certain conditions and obligations set forth in the
Agreement; (ii) as of the Effective Date, the accuracy of certain
representations and warranties and the compliance in all material respects with
the agreements and covenants of each party; and (iii) the receipt by Regions of
a letter from Regions' independent auditors at the time of closing to the effect
that the Merger will qualify for pooling-of-interests accounting treatment.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. Applications for the approvals described below have been
submitted to the appropriate regulatory agencies. The Federal Reserve has issued
its approval of Merger, and the South Carolina State Board has yet to issue its
approval. There can be no assurance that such regulatory approval of the South
Carolina State Department will be obtained or as to the timing of such approval.
There also can be no assurance that such approval will not be accompanied by a
conditional requirement which causes such approval to fail to satisfy the
conditions set forth in the Agreement.
Regions and First United 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
26
<PAGE> 31
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 South Carolina State
Board. In the evaluation, the South Carolina State Board 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
First United approved by their respective Boards of Directors; provided,
however, that after approval by the First United stockholders, no amendment that
pursuant to the South Carolina Act requires further approval of the First United
stockholders, including decreasing the consideration to be received by First
United 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 First United
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, 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 First United Common Stock shall not have approved
the Agreement;
(c) by mutual agreement of the Boards of Directors of Regions and First
United;
(d) by the Board of Directors of either party, in the event of a breach by
the other party of certain provisions 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;
(e) under certain circumstances, by the Board of Directors of either party
in the event of an inaccuracy of any representation or warranty of the other
party in the Agreement that cannot be cured within 30 days after giving notice
to the breaching party, provided the terminating party is not in breach of
certain
(f) by the Board of Directors of either party if the Merger shall not have
been consummated by September 30, 1998, 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; or
(g) subject to certain conditions, by the Board of Directors of First
United if the Average Closing Price is less than $30.00 (See "--Possible
Adjustment of Exchange Ratio").
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.
27
<PAGE> 32
CONDUCT OF BUSINESS PENDING THE MERGER
Each of First United and Regions generally has agreed to operate its
business only in the usual, regular, and ordinary course, to preserve intact its
business organizations and assets and maintain its rights and franchises, and to
take no action which would materially adversely affect the ability of either
party to obtain any consents required for the Merger or to perform its covenants
and agreements under the Agreement in all material respects and to consummate
the Merger. The foregoing shall not prevent Regions or any subsidiary of Regions
from discontinuing or disposing of any of its assets or business, or from
acquiring or agreeing to acquire any other entity 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 includes certain
other restrictions applicable to the conduct of the business of either First
United or Regions prior to consummation of the Merger, as described below.
First United. First United has 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. Generally, First United has agreed
that it will not:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of First United or any subsidiary;
(b) incur, guarantee, or otherwise become responsible for, any additional
debt obligation or other obligation for borrowed money in excess of an aggregate
of $100,000 (for First United and its subsidiaries on a consolidated basis)
except in the ordinary course of the business of First United and its
subsidiaries consistent with past practices (which shall include 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 forgive any such
indebtedness of any person to First United or any of its subsidiaries in excess
of an aggregate of $25,000 or impose, or suffer the imposition, on any share of
stock held by First United or any subsidiary of any lien or permit any such lien
to exist;
(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 First United or any subsidiary, or declare or pay any dividend
or make any other distribution in respect of First United Common Stock; provided
that First United may (to the extent legally able to do so), but shall not be
obligated to, declare and pay regular annual cash dividends on the First United
Common Stock at an amount not to exceed 35% of First United's net income after
taxes, in no event to exceed $.98 per share;
(d) except pursuant to the exercise of stock options outstanding as of the
date of the Agreement and pursuant to the terms thereof in existence on the date
of the Agreement, issue, sell, pledge, encumber, authorize the issuance of,
enter into any contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional shares of
First United Common Stock or any other capital stock of First United or any
subsidiary, 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;
(e) adjust, split, combine, or reclassify any capital stock of First United
or any subsidiary or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of First United Common Stock or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares of
capital stock of any subsidiary 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;
28
<PAGE> 33
(f) acquire direct or indirect control over, or invest in equity securities
of, any entity, other than in connection with foreclosures in the ordinary
course of business, or acquisitions of control by First United in its fiduciary
capacity;
(g) grant any increase in compensation or benefits to the employees or
officers of First United or any subsidiary except as previously disclosed to
Regions 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 the Agreement and previously disclosed to Regions; enter into or amend
any severance agreements with officers of First United or any subsidiary except
as previously disclosed to Regions; grant any increase in fees or other
increases in compensation or other benefits to directors of First United or any
subsidiary;
(h) enter into or amend any employment contract between First United or any
subsidiary and any person (unless such amendment is required by law) that First
United or subsidiary 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 Date;
(i) except as previously disclosed to Regions, adopt any new employee
benefit plan or program of First United or any subsidiary or make any material
change in or to any existing employee benefit plans or programs of First United
or any subsidiary 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;
(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 generally
accepted accounting principles ("GAAP");
(k) with certain exceptions, commence or settle any litigation for money
damages in excess of $25,000; 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.
In addition, First United has agreed not to solicit, directly or
indirectly, any acquisition proposal from any other person or entity. First
United 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, First United has
agreed to use reasonable efforts to cause its advisors and other representatives
not to engage in any of the foregoing activities.
Regions. Regions has agreed, until the earlier of the Effective Date or
termination of the Agreement, not to amend its certificate of incorporation or
bylaws in any manner which is adverse to, and discriminates against, the holders
of First United Common Stock, without the prior written consent of First United.
MANAGEMENT FOLLOWING THE MERGER
Consummation of the Merger will not alter the present officers and
directors of Regions. Certain information pertaining to the directors and
executive officers of Regions, executive compensation, certain relationships and
related transactions, and other related matters, is incorporated by reference or
set forth in Regions' Annual Report on Form 10-K for the year ended December 31,
1996, incorporated herein by reference. See "Documents Incorporated by
Reference."
29
<PAGE> 34
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Agreement generally provides that Regions will, and will cause First
United to, indemnify each person entitled to indemnification from First United
or its subsidiaries, as the case may be, to the full extent permitted by South
Carolina law and by First United's Articles of Incorporation or Bylaws or the
rights otherwise in effect on the date of the Agreement, 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 First United 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 First
United 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 assume and honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between First United or
its subsidiaries and any current or former director, officer, or employee, and
all provisions for vested benefits or other vested amounts earned or accrued
through the Effective Date under First United's benefit plans.
As described above under "--Treatment of First United Options," the
Agreement also provides that all rights with respect to First United Common
Stock pursuant to stock options or stock appreciation rights granted by First
United 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 First United
owned no shares of Regions Common Stock.
DISSENTING STOCKHOLDERS
Pursuant to the provisions of Chapter 13 of the South Carolina Act, if the
Merger is consummated, any holder of First United Common Stock who (i) gives to
First United, prior to the vote at the Special 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 person 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 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 First United 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. A beneficial stockholder may assert dissenter's rights
as to shares held on his behalf only if he dissents with respect to all shares
of which he is the beneficial stockholder or over which he has power to direct
the vote. A beneficial stockholder asserting dissenters' rights to shares held
on such holder's behalf shall notify First United in writing of the name and
address of the record stockholder of the shares, if known.
The written notice requirement referred to above will not be satisfied
under the South Carolina statutory provisions by merely voting against approval
of the Agreement by proxy or in person at the Special Meeting. In addition to
not voting in favor of the Agreement, a stockholder wishing to preserve the
30
<PAGE> 35
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 notice of intent to demand payment pursuant to Chapter 13 of
the South Carolina Act should be addressed as follows: First United
Bancorporation, 304 North Main Street, Anderson, South Carolina, 29622,
Attention: Corporate Secretary.
If the Merger is authorized at the Special Meeting, First United must
deliver a written dissenters' notice (the "Dissenters' Notice") to all holders
of First United 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 certificates
for shares of First United 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) supply a form for
demanding payment that includes the date of the first announcement to news media
or to stockholders of the terms of the Merger and requires that the person
asserting dissenters' rights certify whether or not such person, or if a nominee
asserting dissenters' rights on behalf of a beneficial stockholder, the
beneficial stockholder acquired beneficial ownership of the shares before that
date, (iv) set a date by which First United 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), (v) set a date by which certificates for certificated
shares must be deposited, which may not be earlier than 20 days after the demand
date, and (vi) be accompanied by a copy of Chapter 13 of the South Carolina Act.
A stockholder of record who receives the Dissenters' Notice must demand
payment, certify whether such holder (or the beneficial stockholder on whose
behalf such holder is asserting dissenters' rights) acquired beneficial
ownership of the shares before the date set forth in the Dissenters' Notice, 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 stockholder
who does not comply substantially with the requirements that such holder demand
payment and deposit such holder's share certificates where required, each by the
date set in the Dissenters' Notice, is not entitled to payment for such holder's
shares under Chapter 13.
Except as described below, as soon as the Merger is consummated, or upon
receipt of a payment demand, the surviving corporation resulting from the Merger
must 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 payment must be accompanied by (i) certain recent
First United financial statements, (ii) the surviving corporation's estimate of
the fair value of the shares and an explanation how the fair value was
calculated, (iii) an explanation of how the interest was calculated, (iv) a
statement of the dissenter's right to demand additional payment under Section
33-13-280 of the South Carolina Act, and (v) a copy of Chapter 13 of the South
Carolina Act.
The surviving corporation may elect to withhold such payment from a
dissenter as to any shares of which such dissenter (or the beneficial owner on
whose behalf such dissenter is asserting dissenters' rights) was not the
beneficial owner on the date set forth in the Dissenters' Notice as the date of
the first announcement to news media or to stockholders of the terms of the
proposed Merger, unless the beneficial ownership of the shares devolved upon him
by operation of law from a person who was the beneficial owner on the date of
the first announcement. To the extent the surviving corporation elects so to
withhold payment, it shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to accept it in
full satisfaction of such dissenter's demand. The surviving corporation shall
send with its offer a statement of its estimate of the fair value of the shares,
an explanation of how the fair value and interest were calculated, and a
statement of the dissenter's right to demand additional payment under Section
33-13-280.
31
<PAGE> 36
Section 33-13-280 of the South Carolina 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 (less any payment already received), 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, (ii) the surviving corporation fails to make
payment under Section 33-13-250 or to offer payment under Section 33-13-270
within sixty days after the date set for demanding payment; or (iii) the
corporation has failed to effect the Merger and does not return the deposited
certificates or release the transfer restrictions imposed on uncertificated
shares within sixty days after the date set for demanding payment. A dissenting
stockholder waives such holder's right to demand payment under Section 33-13-280
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 a demand for payment under Section 33-13-280 remains unsettled, the
surviving corporation must commence a proceeding in the Circuit Court of
Anderson County, South Carolina, within 60 days after receiving the demand for
additional payment 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 all
such parties. The court may appoint appraisers to receive evidence and to
recommend a decision on fair value. Each dissenter made a party to the
proceeding is entitled to judgment for the amount, if any, by which the court
finds the fair value of such dissenter's shares, plus interest, exceeds the
amount paid by the surviving corporation.
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 33-13-280. 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 Chapter 13
of the South Carolina 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 Chapter
13 of the South Carolina Act.
If the court finds that the services of counsel 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 surviving corporation, the
court may award to these counsel reasonable fees to be paid out of the amounts
awarded the dissenters who were benefitted.
In a proceeding commenced by dissenters to enforce the liability under
Section 33-13-300(a) of a corporation that has failed to commence an appraisal
proceeding within the sixty-day period, the court shall assess the costs of the
proceeding and the fees and expenses of dissenters' counsel against the
surviving corporation and in favor of the dissenters.
The foregoing is a summary of the material rights of a dissenting
stockholder of First United, but is qualified in its entirety by reference to
Chapter 13 of the South Carolina Act, included in Appendix C to this Proxy
Statement/Prospectus. It is not intended to give any right of dissent or payment
to any stockholder and should not be so read. Stockholders' rights of dissent
and payment are limited to those provided by law. Any First United stockholder
who intends to exercise the right to dissent from consummation of the Merger
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 First
United stockholders, except as indicated above or otherwise required by law.
32
<PAGE> 37
Any dissenting First United 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, AND INSURANCE COMPANIES, 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, consummation of the Merger
is conditioned upon receipt by Regions and First United of an opinion from
Alston & Bird LLP, special counsel to Regions, concerning certain federal income
tax consequences of the proposed Merger under federal income tax law. Based upon
representations made by Regions and First United (including the representation
that First United stockholders will maintain sufficient equity interest in
Regions after the Merger), it is such firm's opinion that:
(a) Provided the Merger qualifies as a statutory merger under the Delaware
GCL and the South Carolina Act, the Merger will be a reorganization within the
meaning of Section 368(a) of the Code. First United and Regions will each be "a
party to a reorganization" within the meaning of Section 368(b) of the Code.
(b) The stockholders of First United will recognize no gain or loss upon
the exchange of their First United Common Stock solely for shares of Regions
Common Stock.
(c) The basis of the Regions Common Stock received by the First United
stockholders in the Merger will, in each instance, be the same as the basis of
the First United 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 First
United stockholders will, in each instance, include the period during which the
First United Common Stock surrendered in exchange therefor was held, provided
that the First United Common Stock was held as a capital asset on the date of
the exchange.
(e) The payment of cash to First United stockholders in lieu of fractional
share interests of Regions Common Stock will be treated for federal income tax
purposes as if the fractional shares were distributed as part of the exchange
and then were redeemed by Regions. These cash payments will be treated as having
been received as distributions in full payment in exchange for the stock
redeemed as provided in section 302(a) of the Code.
(f) Where solely cash is received by a First United stockholder in exchange
for First United Common Stock pursuant to the exercise of dissenters' rights,
such cash will be treated as having been received in
33
<PAGE> 38
redemption of such holder's First United 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. FIRST UNITED STOCKHOLDERS SHOULD CONSULT THEIR OWN
TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED TRANSACTION TO
THEM INDIVIDUALLY, INCLUDING TAX CONSEQUENCES UNDER STATE, LOCAL, OR FOREIGN
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 THE REGIONS COMMON STOCK
The shares of Regions Common Stock issuableto First United stockholders in
the Merger have 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, First United (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 First United reasonably believes will be an affiliate of
First United 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.
34
<PAGE> 39
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of First United Common Stock will be
exchanging their shares of a South Carolina corporation governed by the South
Carolina Act and First United'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 First United stockholders and those of Regions stockholders. The
differences deemed material by First United 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 South Carolina Act and the Delaware GCL as well as
to Regions' Certificate and Bylaws and First United'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.
35
<PAGE> 40
AUTHORIZED CAPITAL STOCK
Regions. The Certificate authorizes the issuance of up to 240,000,000
shares of Regions Common Stock, of which 136,820,461 shares were issued,
including 500,000 treasury shares as of September 30, 1997, and 5,000,000 shares
of preferred stock, none of which are outstanding. Regions' Board of Directors
may authorize the issuance of additional shares of Regions Common Stock or
preferred stock without further action by Regions' stockholders, unless such
action is required in a particular case by applicable laws or regulations or by
any stock exchange upon which Regions' capital stock may be listed. The
Certificate does not provide preemptive rights to Regions stockholders.
The authority to issue additional shares of Regions capital 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. Regions has committed not to
issue shares of preferred stock for any anti-takeover purpose, including any
purpose to make a change in control of Regions more costly or difficult.
First United. First United's authorized capital stock consists of
22,500,000 shares of First United Common Stock, of which ______ shares were
issued and outstanding as of the Record Date, and 10,000,000 shares of preferred
stock, none of which are outstanding.
Pursuant to the South Carolina Act, First United's Board of Directors may
authorize the issuance of additional shares of First United Common Stock without
further action by First United's stockholders. First United's Articles, as
amended, do not provide the stockholders of First United with preemptive rights
to purchase or subscribe to any unissued authorized shares of First United
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.
First United. The South Carolina Act generally provides that a South
Carolina corporation's articles of incorporation may be amended by the
affirmative vote of at least two-thirds of the shares entitled to vote thereon,
except that articles of incorporation may provide for a higher or lower voting
requirement, but not less than a majority of the shares outstanding and entitled
to vote. First United's Articles provide that those
36
<PAGE> 41
provisions in the Articles restricting certain business combinations with a
major stockholder may be amended only by the affirmative vote of at least 80%
of the outstanding voting shares and at least 80% of the voting shares held by
stockholders other than a major stockholder. Otherwise the Articles do not
specify a higher or lower voting requirement for amendment of the Articles than
provided by the South Carolina Act.
The Articles also provide that the Board of Directors has the power to
adopt, alter, amend, or repeal the Bylaws, subject to the power of the
stockholders to alter, amend, or repeal the Bylaws and to adopt new Bylaws.
Under the South Carolina Act the Bylaws may be adopted, altered, amended, or
repealed by a majority vote of the board of directors or the stockholders, as
the case may be.
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.
First United. First United's Articles generally provide for a classified
board of directors with three classes, and provide that voting stock does not
have cumulative voting rights.
REMOVAL OF DIRECTORS
Regions. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of at least 75% of Regions' voting stock.
First United. Pursuant to First United's Bylaws, a director may be removed
only for cause at a meeting of stockholders called expressly for that purpose,
by the affirmative vote of the holders of a majority of the shares of First
United stock entitled to vote in an election 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.
37
<PAGE> 42
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.
First United. The South Carolina Act provides that a director is not liable
for any action taken, or any failure to take any action, if such director
performed the duties of a director (i) in good faith; (ii) with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances; and (iii) in a manner he reasonably believes to be in the best
interests of the corporation and its stockholders.
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.
First United. First United's Articles in conjunction with the South
Carolina Act provide for indemnification of its directors, officers, employees,
and agents in substantially the same manner and with substantially the same
effect as in the case of Regions.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that special meetings of
stockholders may be called at any time, but only by the chief executive officer,
the secretary, or the Board of Directors of Regions. Regions stockholders do not
have the right to call a special meeting or to require that Regions' Board of
Directors call such a meeting. This provision, combined with other provisions of
the Certificate and the restriction on the removal of directors, would prevent a
substantial stockholder from compelling stockholder consideration of any
proposal (such as a proposal for a business combination) over the opposition of
Regions' Board of Directors by calling a special meeting of stockholders at
which such stockholder could replace the entire Board with nominees who were in
favor of such proposal.
First United. Under First United's Bylaws, a special meeting of First
United stockholders may be called at any time by the President, the Chairman of
the Board, a majority of the Board of Directors, or the holders of not less than
10% of the shares of First United Common Stock entitled to vote at such meeting.
38
<PAGE> 43
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.
First United. Under the South Carolina Act any action requiring or
permitting stockholder approval may be approved without a meeting by written
consent of all the stockholders entitled to vote on the matter.
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.
First United. First United's Articles and Bylaws do not include any
provisions governing stockholder nominations.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The Certificate generally requires the affirmative vote of the
holders of at least 75% of the outstanding voting stock of Regions to effect (i)
any merger or consolidation with or into any other corporation, or (ii) any sale
or lease of any substantial part of the assets of Regions to any party that
beneficially owns 5.0% or more of the outstanding shares of Regions voting
stock, unless the transaction was approved by Regions' Board of Directors before
the other party became a 5.0% beneficial owner or is approved by 75% or more of
the Board of Directors after the party becomes such a 5.0% beneficial owner. In
addition, the Delaware GCL generally requires the approval of a majority of the
outstanding voting stock of Regions to effect (i) any merger or consolidation
with or into any other corporation, (ii) any sale, lease, or exchange of all or
substantially all of Regions property and assets, or (iii) the dissolution of
Regions. However, pursuant to the Delaware GCL, Regions may enter into a merger
transaction without stockholder approval if (i) Regions is the surviving
corporation, (ii) the agreement of merger does not amend in any respect Regions'
Certificate, (iii) each share of Regions stock outstanding immediately prior to
the effective date of the merger is to be an identical outstanding or treasury
share of Regions after the effective date of the merger, and (iv) either no
shares of Regions Common Stock and no shares, securities, or obligations
convertible into such stock are to be issued or delivered under the plan of
merger, or the authorized unissued shares or the treasury shares of Regions
Common Stock to be issued or delivered under the plan of merger plus those
initially issuable upon conversion of any other shares, securities, or
obligations to be issued or delivered under such plan do not exceed 20% of the
shares of Regions Common Stock outstanding immediately prior to the effective
date of the merger.
39
<PAGE> 44
First United. The South Carolina Act provides that certain categories of
corporate transactions, including mergers, consolidations, share exchanges, and
sale of all or substantially all of a corporation's assets, must be approved by
the board of directors and recommended to the stockholders by the board of
directors, and approved by the holders of at least two-thirds of the
corporation's voting stock. A corporation's articles of incorporation may
provide for a higher or lower voting requirement, but not less than a majority
of the voting stock. The Articles do not provide for a higher or lower voting
requirement except with respect to certain business combinations with a major
stockholder. See "--Business Combinations with Certain Persons."
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.
First United. The Articles provide that certain business combination
transactions with a major stockholder may not be consummated unless (i) approved
by the Board of Directors of the Corporation prior to the major stockholder
involved in the transaction becoming such; (ii) the major stockholder involved
in the transaction sought and obtained unanimous prior approval of the Board of
Directors to become a major stockholder and the transaction was approved by a
majority of the directors who were directors immediately prior to the major
stockholder becoming such; (iii) the transaction was approved by at least 80% of
such directors; or (iv) the transaction was approved by the affirmative vote of
at least 80% of the outstanding voting shares and at least 80% of the voting
shares held by stockholders other than a major stockholder. Absent such
provision, the South Carolina Act would require approval of at least two-thirds
of a corporation's voting stock. The Merger is not subject to such provision in
the Articles because Regions is not a major stockholder of First United.
The South Carolina business combinations statute provides that a 10% or
greater stockholder of a resident domestic corporation cannot engage in a
"business combination" (as defined in the statute) with such corporation for a
period of two years following the date on which the 10% stockholder became such,
unless the business combination or the acquisition of shares is approved by a
majority of the disinterested members of such corporation's board of directors
before the 10% stockholder's share acquisition date. This statute further
provides that at no time (even after the two-year period subsequent to such
share acquisition date) may the 10% stockholder engage in a business combination
with the relevant corporation unless certain approvals of the board of
directors or disinterested stockholders are obtained or unless the consideration
given in the combination meets certain minimum standards set forth in the
statute. The law is very broad in its scope and is designed to inhibit
unfriendly acquisitions but it does not apply to corporations whose articles of
40
<PAGE> 45
incorporation contain a provision electing not to be covered by the law. First
United's articles of incorporation do not contain such a provision. An amendment
of the articles of incorporation to that effect would, however, permit a
business combination with an interested stockholder even though that status was
obtained prior to the amendment.
South Carolina law also includes provisions that, under certain
circumstances, would preclude an acquiror of the shares of a South Carolina
corporation who crosses one of three voting thresholds (20%, 33 1/3% or 50%)
from obtaining voting rights with respect to such shares unless a majority in
interest of the disinterested stockholders of the corporation votes to accord
voting power to such shares.
The legislation provides that, if authorized by the articles of
incorporation or bylaws prior to the occurrence of a control share acquisition,
the corporation may redeem the control shares for their fair value if the
acquiring person has not complied with certain procedural requirements
(including the filing of an "acquiring person statement" with the corporation
within 60 days after the control share acquisition) or if the control shares are
not accorded full voting rights by the stockholders. First United is not
authorized by its Articles or bylaws to redeem control shares pursuant to such
legislation.
DISSENTERS' RIGHTS
Regions. The rights 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 dissenters' rights are available, however, for (i) the shares of
any class or series of stock that is either listed on a national securities
exchange, quoted on the Nasdaq National Market, or held of record by more than
2,000 stockholders or (ii) any shares of stock of the constituent corporation
surviving a merger if the merger did not require the approval of the surviving
corporation's stockholders, unless, in either case, the holders of such stock
are required by an agreement of merger or consolidation to accept for that stock
something other than: (a) shares of stock of the corporation surviving or
resulting from the merger or consolidation; (b) shares of stock of any other
corporation that will be listed at the effective date of the merger on a
national securities exchange, quoted on the Nasdaq National Market, or held of
record by more than 2,000 stockholders; (c) cash in lieu of fractional shares of
stock described in clause (a) or (b) immediately above; or (d) any combination
of the shares of stock and cash in lieu of fractional shares described in
clauses (a) through (c) immediately above. Because Regions Common Stock is
quoted on the Nasdaq National Market and is held of record by more than 2,000
stockholders, unless the exception described immediately above applies, holders
of Regions Common Stock do not have dissenters' rights.
First United. The rights of dissenting stockholders of First United are
governed by South Carolina law. The applicable provisions of the South Carolina
Act are included in this Proxy Statement/Prospectus and Appendix C, and are
summarized under the caption "Description of the Transaction--Dissenting
Stockholders."
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware GCL provides that a stockholder may inspect books and
records upon written demand under oath stating the purpose of the inspection, if
such purpose is reasonably related to such person's interest as a stockholder.
First United. Pursuant to the South Carolina 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 for the preceding 10 years, the record of stockholders, stockholder
communications, a list of current directors and officers, and annual report to
the department of revenue and taxation. A holder of at least 1% of the
outstanding stock is entitled to examine federal and state income tax returns.
Upon written demonstration of a proper purpose, a stockholder may be entitled to
inspect other specified corporate records, including accounting and stockholder
records.
41
<PAGE> 46
DIVIDENDS
Regions. The Delaware GCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus, or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by Regions are derived from its
subsidiary depository institutions. There are various statutory limitations on
the ability of Regions' subsidiary depository institutions to pay dividends to
Regions. See "Certain Regulatory Considerations--Payment of Dividends."
First United. Pursuant to the South Carolina Act, a board of directors may
from time to time make distributions to its stockholders, subject to
restrictions in its articles of incorporation, provided that no distribution may
be made if, after giving it effect, (i) the corporation would not be able to pay
its debts as they become due in the usual course of business, or (ii) the
corporation's total assets would be less than the sum of its total liabilities
plus (unless the articles of incorporation permit otherwise) the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions Common Stock and First United Common Stock are listed for quotation
on the Nasdaq National Market under the symbols "RGBK" and "FUSC," respectively.
The following table sets forth, for the indicated periods, the high and low
closing sale prices for Regions Common Stock and First United Common Stock as
reported by Nasdaq, and the cash dividends declared per share of Regions Common
Stock and First United Common Stock for the indicated periods.
The amounts indicated for Regions have been adjusted to reflect a 2-for-1
stock split effected by Regions on June 13, 1997. The amounts indicated for
First United have been adjusted to reflect a 3-for-2 stock split effected by
First United on August 15, 1997 as well as a 5% stock dividend in 1996.
42
<PAGE> 47
<TABLE>
<CAPTION>
REGIONS FIRST UNITED
PRICE RANGE CASH DIVIDENDS PRICE RANGE CASH DIVIDENDS
----------- DECLARED ----------- DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter ................ 24.00 20.38 .175 10.44 8.94 .02
Second Quarter ............... 24.19 21.13 .175 9.56 7.75 .02
Third Quarter................. 24.32 21.82 .175 8.44 6.88 .02
Fourth Quarter................ 26.88 24.38 .175 8.13 6.88 .02
1997
First Quarter................. 30.94 25.69 .20 10.38 6.93 .02
Second Quarter................ 33.25 27.38 .20 12.21 10.23 .02
Third Quarter................. 39.13 32.06 .20 19.50 11.58 .0225
Fourth Quarter ............... 44.75 36.56 .20 22.50 17.38 --
1998
First Quarter (through
______, 1998) ............ .0225
</TABLE>
On ______, 1998, the last reported sale prices of Regions Common Stock and
First United Common Stock, as reported on the Nasdaq National Market, were
$_______ and $_______, respectively. At the close on September 22, 1997, the
last trading day prior to public announcement of the proposed Merger, the last
reported sale prices of Regions Common Stock and First United Common Stock, as
reported on the Nasdaq National Market, were $39.13 and $16.75, respectively.
The holders of Regions Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971. Although
Regions currently intends to continue to pay quarterly cash dividends on the
Regions Common Stock, there can be no assurance that Regions' dividend policy
will remain unchanged after completion of the Merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the Board of Directors'
consideration of other relevant factors.
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."
The holders of First United Common Stock are entitled to receive dividends
when and if declared by the Board of Directors out of funds legally available
therefor. First United has paid regular quarterly cash dividends since 1994.
Although First United currently intends to continue to pay quarterly cash
dividends on the First United Common Stock should the Merger not be consummated,
there can be no assurance that First United's dividend policy will remain
unchanged. 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.
First United 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 the three banks. First United's
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."
43
<PAGE> 48
BUSINESS OF FIRST UNITED
First United is a bank holding company organized under the laws of the
state of South Carolina with its principal executive office located in Anderson,
South Carolina. First United operates principally through its three subsidiary
banks, which are national banks providing a range of commercial and retail
banking services through eight offices in the piedmont region of South Carolina.
At September 30, 1997, First United had total consolidated assets of
approximately $297 million, total consolidated deposits of approximately $256
million, and total consolidated stockholders' equity of approximately $21
million. First United's principal executive office is located at 304 North Main
Street, Anderson, South Carolina, 29622, and its telephone number at such
address is (864) 224-1112.
Additional information with respect to First United and its subsidiaries is
included in documents incorporated by reference in this Proxy
Statement/Prospectus. Copies of such documents, including First United's Annual
Report on Form 10-K for the year ended December 31, 1996, First United's
Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30, and
September 30, 1997, and First United's Current Report on Form 8-K filed on
December 5, 1997, accompany this Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF FIRST UNITED
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of First United Common Stock, as of the
Record Date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock Mason Y. Garrett 681,390(1) 16.9%
1601 North Boulevard
Anderson, South Carolina 29621
</TABLE>
(1) Includes 15,078 shares held by Edgar Norris for Mr. Garrett's IRA, 236,113
shares held by Mr. Garrett as custodian for his children, 17,591 shares owned by
Mr. Garrett's wife, 12,528 shares owned by the Garrett Motel Trust, 16,648 held
by a trust for the benefit of an immediate family member sharing the same
household of which Mr. Garrett is the settlor, but is not a trustee, cannot
revoke the trust, and has no investment control over the trust, and 5,706 shares
held as custodian for Mr. Garrett's grandchildren.
44
<PAGE> 49
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 435 banking offices located in Alabama, Florida, Georgia,
Louisiana, and Tennessee as of September 30, 1997. At that date, Regions had
total consolidated assets of approximately $22.2 billion, total consolidated
deposits of approximately $17.6 billion and total consolidated stockholders'
equity of approximately $1.9 billion. Regions has banking operations 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.
The following table presents information about Regions' banking operations
in the states in which its subsidiary depository institutions are located, based
on September 30, 1997 information:
<TABLE>
<CAPTION>
NUMBER OF TOTAL TOTAL
BANKING OFFICES ASSETS DEPOSITS
--------------- ------ --------
(In millions)
<S> <C> <C> <C>
Alabama............ 183 $8,869 $7,990
Florida............ 45 1,593 1,498
Georgia............ 107 3,998 3,489
Louisiana.......... 75 2,295 2,167
Tennessee.......... 25 526 458
Unallocated(1)..... 4,171 2,000
</TABLE>
- ----------
(1) Represents indirect mortgage loans, indirect auto loans, and credit
card loans of $2.5 billion, $1.5 billion, and $171 million, respectively, and
negotiable certificates of deposit and certain trust and other deposits, which
in the aggregate approximate $2 billion.
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."
45
<PAGE> 50
RECENT DEVELOPMENTS
Recent Acquisitions. Since December 31, 1996, Regions has completed the
acquisitions of nine financial institutions (the "Recently Completed
Acquisitions"), certain aspects of which transactions are set forth in the
following table:
<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
Allied Bankshares, Inc., located in Thomson, 569 158 Regions Pooling
Georgia Common of
Stock Interests
West Carroll Bancshares, Inc., located in 127 37 Regions Pooling
Oak Grove, Louisiana Common of
Stock Interests
Gulf South Bancshares, Inc., located in Gretna, 55 10 Regions Pooling
Louisiana Common of
Stock Interests
First Mercantile National Bank, located in Longwood, 157 18 Cash Purchase
Florida
The New Iberia Bancorp, Inc., located in New Iberia, 313 65 Regions Pooling
Louisiana Common of
Stock Interests
First Bankshares, Inc., located in Hapeville, 127 20 Regions Pooling
Georgia Common of
Stock Interests
SB&T Corporation, located in Smyrna, 148 33 Regions Pooling
Georgia Common of
Stock Interests
GF Bancshares, Inc., located in Griffin, 97 19 Regions Purchase
Georgia Common
Stock
--------- --------
Totals $ 1,890 $ 400
========= ========
</TABLE>
- ---------------
(1) Calculated as of the date of consummation.
Other Pending Acquisitions. As of the date of this Proxy
Statement/Prospectus, Regions has pending six acquisitions in addition to First
United (the "Other Pending Acquisitions"), certain aspects of which transactions
are set forth below:
46
<PAGE> 51
<TABLE>
<CAPTION>
CONSIDERATION
-------------------
APPROXIMATE
---------------------
ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
----------- ---------- ----- ---- ---------
(In millions)
<S> <C> <C> <C> <C>
Greenville Financial Corporation, located in $ 134 $ 34 Regions Pooling
Greenville, South Carolina Common of
Stock Interests
PALFED, Inc., located in Aiken, 665 145 Regions Pooling
South Carolina Common of
Stock Interests
St. Mary Holding Corporation, located in Franklin, 113 31 Regions Pooling
Louisiana Common of
Stock Interests
Key Florida Bancorp, Inc. located in Bradenton, Florida 212 39 Regions Pooling
Common of
Stock Interests
First State Corporation, located in Albany, Georgia 540 161 Regions Pooling
Common of
Stock Interests
Etowah Bank, located in Canton, Georgia 432 117 Regions Pooling
Common of
Stock Interests
--------- -------
Totals $ 2,096 $ 527
========= =======
</TABLE>
- ---------------
(1) Calculated as of the date of announcement of the transaction.
Consummation of the Other Pending Acquisitions is subject to the approval
of certain regulatory agencies, and of the stockholders of the institutions to
be acquired. Moreover, the closing of each transaction is subject to various
contractual conditions precedent. No assurance can be given that the conditions
precedent to consummating the transactions will be satisfied in a manner that
will result in their consummation.
If the Other Pending Acquisitions and Merger had been consummated on
September 30, 1997, Regions' total consolidated assets would have increased by
approximately $2.5 billion to approximately $24.7 billion; its total
consolidated deposits would have increased by approximately $2.2 billion to
approximately $19.8 billion; and its total consolidated stockholders' equity
would have increased by approximately $200 million to approximately $2.1
billion.
1997 Operating Results. For the fourth quarter ended December 31, 1997,
Regions reported net income of $79.0 million (or $.58 per share), representing a
22% increase in net income (and a 12% increase on a per share basis) over the
same period of 1996. For the twelve months ended December 31, 1997, Regions
reported net income of $299.7 million or $2.20 per share, representing a 19%
increase on a per-share basis in net income over 1996. The return on average
total assets for 1997 was 1.4%, and the return on average stockholders' equity
was 16.3%. At December 31, 1997, the ratio of stockholders' equity to total
assets was 8.3%. As of December 31, 1997, Regions had total consolidated assets
of approximately $23.0 billion, total consolidated deposits of approximately
$17.8 billion, and total consolidated stockholders' equity of approximately $1.9
billion.
47
<PAGE> 52
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to Regions and First United. 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 First United are both bank holding companies registered with
the Federal Reserve under the BHC Act. As such, Regions and First United 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.
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.
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 had the
ability to "opt out" and prohibit interstate branching altogether. None of the
states in which the banking subsidiaries of Regions or First United are located
has "opted out." Accordingly, Regions has the ability to and intends to
consolidate all of its bank subsidiaries into a single bank with interstate
branches, and has commenced a program to that end.
The BHC Act generally prohibits Regions and First United from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In determining
whether a particular activity is permissible, the Federal Reserve must consider
whether the performance of such an activity reasonably can be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects,
such as undue concentration of resources, decreased or unfair competition,
conflicts of interest, or unsound banking practices. For example, factoring
accounts receivable, acquiring or servicing loans, leasing personal property,
48
<PAGE> 53
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 First United
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 First United (the FDIC and the applicable
state authority in the case of state-chartered nonmember banks, the Office of
the Comptroller of the Currency (the "OCC") in the case of national 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 First United are legal entities separate and distinct from
their banking, thrift, and other subsidiaries. The principal sources of cash
flow of both Regions and First United, 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 First
United, as well as by Regions and First United to their stockholders.
As to the payment of dividends, the Bank and all of Regions'
state-chartered banking subsidiaries are subject to the respective laws and
regulations of the state in which the bank is located, and to the regulations of
the bank's primary federal regulator. Regions' subsidiaries that are thrift
institutions are subject to the OTS' capital distributions regulation.
If, in the opinion of the federal banking regulatory agency, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), an insured institution
may not pay any dividend if payment would cause it to become undercapitalized or
if it already is undercapitalized. See "--Prompt Corrective Action." Moreover,
the federal agencies have issued policy statements which provide that bank
holding companies and insured banks should generally pay dividends only out of
current operating earnings.
At September 30, 1997, under dividend restrictions imposed under federal
and state laws, the subsidiary depository institutions of Regions and First
United, without obtaining governmental approvals, could declare aggregate
dividends to Regions and First United of approximately $138 million and $5
million, respectively.
49
<PAGE> 54
The payment of dividends by Regions and First United 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, First United, 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 First United 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 September 30, 1997, Regions' consolidated Total Capital Ratio and its Tier 1
Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were
12.24% and 9.85%, respectively, and First United's consolidated Total Capital
and Tier 1 Capital Ratios were 10.35% and 9.02%, 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 First United's respective Leverage Ratios at September 30,
1997 were 7.35% and 7.09%. 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 First United's subsidiary depository institutions is
subject to risk-based and leverage capital requirements adopted by its federal
banking regulator, which are substantially similar to those adopted by the
Federal Reserve. Each of the subsidiary depository institutions was in
compliance with applicable minimum capital requirements as of September 30,
1997. Neither Regions, First United, nor any of their subsidiary depository
institutions has been advised by any federal banking agency of any specific
minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift
institution to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, a
prohibition on the taking of brokered deposits, and to certain other
restrictions on its business. As described below, substantial additional
restrictions can be imposed upon FDIC-insured depository institutions that fail
to meet applicable capital requirements. See "--Prompt Corrective Action."
50
<PAGE> 55
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'
methodology for evaluating interest rate risk requires banks with excessive
interest rate risk exposure to hold additional amounts of capital against such
exposures. The OTS also includes 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 First United are expected to act
as sources of financial strength for, and to commit resources to support, each
of their respective banking subsidiaries. This support may be required at times
when, absent such Federal Reserve policy, Regions or First United may not be
inclined to provide it. In addition, any capital loans by a bank holding company
to any of its banking subsidiaries are subordinate in right of payment to
deposits and to certain other indebtedness of such banks. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository institution
insured by the FDIC can be held liable for any loss incurred by, or reasonably
expected to be incurred by, the FDIC after August 9, 1989, in connection with
(i) the default of a commonly controlled FDIC-insured depository institution or
(ii) any assistance provided by the FDIC to any commonly controlled FDIC-insured
depository institution "in danger of default." "Default" is defined generally as
the appointment of a conservator or receiver, and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance. The FDIC's
claim for damages is superior to claims of stockholders of the insured
depository institution or its holding company, but is subordinate to claims of
depositors, secured creditors, and holders of subordinated debt (other than
affiliates) of the commonly controlled insured depository institution. The
subsidiary depository institutions of Regions are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking or thrift affiliates, and a potential loss of
Regions' respective investments in such other subsidiary depository
institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized") and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or greater,
a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be "well capitalized." An institution with a
Total Capital Ratio of 8.0% or greater, a Tier 1 Capital Ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be "adequately
capitalized." A depository institution that has a Total Capital Ratio of less
than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage Ratio
51
<PAGE> 56
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 September 30, 1997, all of the subsidiary depository institutions of
Regions and First United had the requisite capital levels to qualify as well
capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The
risk-based assessment system, which went into effect on January 1, 1994, assigns
an institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, there are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
Pursuant to the Deposit Insurance Funds Act of 1996, the FDIC
implemented a special one-time assessment of approximately 65.7 basis points
(0.657%) on a depository institution's deposits insured by the Savings
Association Insurance Fund ("SAIF") held as of March 31, 1995 (or approximately
52.6 basis points on SAIF deposits acquired by banks in certain qualifying
transactions), and adopted revisions to the assessment rate schedules that would
generally eliminate the disparity between assessment rates applicable to the
deposits insured by the Bank Insurance Fund ("BIF") and the SAIF. The revisions
in the assessment rate schedules reduced assessment rates on SAIF-insured
deposits and would generally equalize BIF and SAIF assessment rates by January,
2000. 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
52
<PAGE> 57
1997 through 1999 as compared to prior years, assuming no further changes in
announced premium assessment rates. Regions recorded a charge against earnings
for the special assessment in the quarter ended September 30, 1996 in the
pre-tax amount of approximately $21.0 million.
Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 240,000,000 shares of Regions Common Stock,
of which 136,820,461 shares were issued, including 500,000 treasury shares, at
September 30, 1997, and 5,000,000 shares of preferred stock, none of which are
outstanding. No other class of stock is authorized.
Holders of Regions Common Stock are entitled to receive such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. The ability of Regions to pay dividends is affected by the ability of
its subsidiary institutions to pay dividends, which is limited by applicable
regulatory requirements and capital guidelines. At September 30, 1997, under
such requirements and guidelines, Regions' subsidiary institutions had $138
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 have been 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.
Proposals with respect to Regions' 1999 annual meeting of stockholders may be
submitted until the date specified in Regions' 1998 annual meeting proxy
statement. First United expects to hold its next annual meeting of stockholders
if the Merger has not been consummated before such time, in April 1998. Under
SEC rules, proposals of First United stockholders intended to be presented at
that meeting must have been received by First United at its principal executive
offices no later than December 15, 1997, for consideration by First United 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 Regions' Annual Report 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 First United, as of December 31,
1996 and 1995 and for each of the years in the three year period ended December
31, 1996, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
53
<PAGE> 58
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 ______,
1998, 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 LLP, Atlanta, Georgia.
54
<PAGE> 59
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST UNITED BANCORPORATION
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF OCTOBER 28, 1997
A-1
<PAGE> 60
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Parties................................................................ A-5
Preamble............................................................... A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER.......................... A-5
1.1 Merger...................................................... A-5
1.2 Time and Place of Closing................................... A-5
1.3 Effective Time.............................................. A-5
ARTICLE 2 -- TERMS OF MERGER........................................... A-6
2.1 Certificate of Incorporation................................ A-6
2.2 Bylaws...................................................... A-6
2.3 Directors and Officers...................................... A-6
ARTICLE 3 -- MANNER OF CONVERTING SHARES............................... A-6
3.1 Conversion of Shares........................................ A-6
3.2 Anti-Dilution Provisions.................................... A-6
3.3 Shares Held by First United or Regions...................... A-6
3.4 Dissenting Stockholders..................................... A-7
3.5 Fractional Shares...........................................
3.6 Conversion of Stock Options; Restricted Stock............... A-7
ARTICLE 4 -- EXCHANGE OF SHARES........................................ A-8
4.1 Exchange Procedures.........................................
4.2 Rights of Former First United Stockholders.................. A-8
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF FIRST UNITED............ A-9
5.1 Organization, Standing, and Power........................... A-9
5.2 Authority; No Breach By Agreement........................... A-9
5.3 Capital Stock............................................... A-9
5.4 First United Subsidiaries................................... A-10
5.5 Financial Statements........................................
5.6 Absence of Undisclosed Liabilities.......................... A-10
5.7 Absence of Certain Changes or Events........................ A-11
5.8 Tax Matters................................................. A-11
5.9 Assets...................................................... A-12
5.10 Environmental Matters....................................... A-12
5.11 Compliance With Laws........................................ A-13
5.12 Labor Relations.............................................
5.13 Employee Benefit Plans...................................... A-13
5.14 Material Contracts.......................................... A-15
5.15 Legal Proceedings...........................................
5.16 Statements True and Correct................................. A-15
5.17 Accounting, Tax, and Regulatory Matters..................... A-16
5.18 Articles of Incorporation Provisions........................ A-16
5.19 Support Agreements.......................................... A-16
5.20 Derivatives Contracts....................................... A-16
5.21 Year 2000................................................... A-16
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS................. A-16
6.1 Organization, Standing, and Power........................... A-16
6.2 Authority; No Breach By Agreement........................... A-17
6.3 Capital Stock...............................................
6.4 SEC Filings; Financial Statements........................... A-17
6.5 Absence of Undisclosed Liabilities.......................... A-18
</TABLE>
A-2
<PAGE> 61
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
6.6 Absence of Certain Changes or Events........................ A-18
6.7 Compliance With Laws........................................ A-18
6.8 Legal Proceedings........................................... A-18
6.9 Statements True and Correct................................. A-19
6.10 Accounting, Tax, and Regulatory Matters..................... A-19
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................. A-19
7.1 Covenants of Both Parties................................... A-19
7.2 Covenants of First United................................... A-19
7.3 Covenants of Regions........................................ A-21
7.4 Adverse Changes in Condition................................ A-21
7.5 Reports..................................................... A-21
ARTICLE 8 -- ADDITIONAL AGREEMENTS..................................... A-21
8.1 Registration Statement; Proxy Statement; Stockholder
Approval.................................................... A-21
8.2 Nasdaq/NMS Listing.......................................... A-22
8.3 Applications................................................ A-22
8.4 Agreement as to Efforts to Consummate....................... A-22
8.5 Investigation and Confidentiality........................... A-22
8.6 Press Releases.............................................. A-23
8.7 Certain Actions............................................. A-23
8.8 Tax Matters................................................. A-23
8.9 Agreement of Affiliates..................................... A-23
8.10 Employee Benefits and Contracts............................. A-23
8.11 Indemnification............................................. A-24
8.12 Articles of Incorporation Provisions........................ A-24
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......... A-25
9.1 Conditions to Obligations of Each Party..................... A-25
9.2 Conditions to Obligations of Regions........................ A-26
9.3 Conditions to Obligations of First United................... A-26
ARTICLE 10 -- TERMINATION.............................................. A-27
10.1 Termination................................................. A-27
10.2 Effect of Termination....................................... A-28
10.3 Non-Survival of Representations and Covenants............... A-28
ARTICLE 11 -- MISCELLANEOUS............................................ A-29
11.1 Definitions................................................. A-29
11.2 Expenses.................................................... A-33
11.3 Brokers and Finders......................................... A-33
11.4 Entire Agreement............................................ A-33
11.5 Amendments.................................................. A-33
11.6 Waivers..................................................... A-33
11.7 Assignment.................................................. A-34
11.8 Notices..................................................... A-34
11.9 Governing Law............................................... A-34
11.10 Counterparts................................................ A-34
11.11 Captions.................................................... A-35
11.12 Severability................................................ A-35
Signatures............................................................. A-35
</TABLE>
A-3
<PAGE> 62
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <C> <S>
-- Form of Support Agreement. (sec.sec. 5.19, 11.1).
-- Form of Affiliate Agreement. (sec. 8.9).
-- Form of Claims Letter. (sec. 9.2).
-- Form of Opinion Letter of First United's Counsel.
(sec. 9.2).
-- Form of Opinion Letter of Regions' Counsel. (sec. 9.3).
</TABLE>
A-4
<PAGE> 63
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of October 28, 1997, by and between FIRST UNITED BANCORPORATION ("First
United"), a corporation organized and existing under the laws of the State of
South Carolina, with its principal office located in Anderson, South Carolina,
and REGIONS FINANCIAL CORPORATION ("Regions"), a corporation organized and
existing under the laws of the State of Delaware, with its principal office
located in Birmingham, Alabama.
PREAMBLE
The Boards of Directors of First United 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
First United by Regions pursuant to the merger of First United into and with
Regions. At the effective time of such merger, the outstanding shares of the
capital stock of First United shall be converted into shares of the common stock
of Regions (except as provided herein). As a result, stockholders of First
United shall become stockholders of Regions and the subsidiaries of First United
shall continue to conduct their business and operations as wholly-owned
subsidiaries of Regions. The transactions described in this Agreement are
subject to the approvals of the stockholders of First United, the Board of
Governors of the Federal Reserve System and other regulatory agencies 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 First United'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 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at the
Effective Time, First United shall be merged into and with Regions in accordance
with the provisions of Section 252 of the DGCL and with the effect provided in
Section 259 of the DGCL and in accordance with Section 33-11-107 of the SCBCA
with the effect provided in Section 33-11-106 of the SCBCA (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 First United 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 South Carolina
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of South Carolina and the Delaware Certificate
of Merger reflecting the Merger shall become effective with the Secretary of
State of the State of Delaware (the
A-5
<PAGE> 64
"Effective Time"). Subject to the terms and conditions hereof, unless otherwise
mutually agreed upon in writing by the duly authorized officers of each Party,
the Parties shall use their reasonable efforts to cause the Effective Time to
occur on the 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, or (ii) the date on which the stockholders of
First United approve this Agreement to the extent such approval is required by
applicable Law.
ARTICLE 2
TERMS OF MERGER
2.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
2.2 BYLAWS. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of the holders thereof, the shares of the constituent corporations shall be
converted as follows:
(a) Each share of Regions Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding
from and after the Effective Time.
(b) Each share of First United Common Stock (excluding shares held by
First United 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 .5173 of a share of Regions Common
Stock, subject to adjustment as provided in Section 10.1(g) of this
Agreement (the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event First United changes the number
of shares of First United Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock, the Exchange Ratio shall be
proportionately adjusted. In the event Regions changes the number of shares of
Regions Common Stock issued and outstanding prior to the Effective Time as a
result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY FIRST UNITED OR REGIONS. Each of the shares of First
United Common Stock held by any First United 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.
A-6
<PAGE> 65
3.4 DISSENTING STOCKHOLDERS. Any holder of shares of First United Common
Stock who perfects such holder's dissenters' rights of appraisal in accordance
with and as contemplated by Sections 33-13-101, et seq. of the SCBCA 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 SCBCA and surrendered to First
United 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 First United 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 First United Common Stock is entitled under this Article 3 (without interest)
upon surrender by such holder of the certificate or certificates representing
shares of First United Common Stock held by such holder. First United 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 First United.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of First United Common Stock exchanged pursuant
to the Merger, or of options to purchase shares of First United 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.
3.6 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK. (a) At the Effective
Time, all rights, which are outstanding at the Effective Time, with respect to
First United Common Stock pursuant to stock options or stock appreciation rights
("First United Options") granted by First United under the First United Stock
Plans whether or not exercisable, shall be converted into and become rights with
respect to Regions Common Stock, and Regions shall assume each First United
Option, in accordance with the terms of the First United Stock Plan and stock
option agreement by which it is evidenced. From and after the Effective Time,
(i) each First United 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 First
United Option shall be equal to the number of shares of First United Common
Stock subject to such First United Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, and (iii) the per share exercise price
under each such First United Option shall be adjusted by dividing the per share
exercise price under each such First United 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." First United 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 First
United Common Stock awarded under the First United Stock Plans or any other
plan, program, or arrangement of any First United 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.
A-7
<PAGE> 66
ARTICLE 4
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 First United appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of First United Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of First United 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 First United Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of Regions Common Stock to which such holder may be otherwise
entitled (without interest). Regions shall not be obligated to deliver the
consideration to which any former holder of First United Common Stock is
entitled as a result of the Merger until such holder surrenders such holder's
certificate or certificates representing the shares of First United Common Stock
for exchange as provided in this Section 4.1. The certificate or certificates of
First United Common Stock so surrendered shall be duly endorsed as the Exchange
Agent may require. Any other provision of this Agreement notwithstanding,
neither Regions, First United, nor the Exchange Agent shall be liable to a
holder of First United Common Stock for any amounts paid or property delivered
in good faith to a public official pursuant to any applicable abandoned property
Law.
4.2 RIGHTS OF FORMER FIRST UNITED STOCKHOLDERS. At the Effective Time, the
stock transfer books of First United shall be closed as to holders of First
United Common Stock immediately prior to the Effective Time, and no transfer of
First United Common Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of First United 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 First United shall be entitled to vote after the
Effective Time at any meeting of Regions stockholders the number of whole shares
of Regions Common Stock into which their respective shares of First United
Common Stock are converted, regardless of whether such holders have exchanged
their certificates representing First United 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 First United Common
Stock issued and outstanding at the Effective Time until such holder surrenders
such certificate for exchange as provided in Section 4.1 of this Agreement.
However, upon surrender of such First United 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.
A-8
<PAGE> 67
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FIRST UNITED
First United hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. First United is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
South Carolina, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its Assets. First
United is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First United.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) First United 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 two-thirds of the
outstanding shares of First United 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
First United, subject to the approval of this Agreement by the holders of
two-thirds of the outstanding shares of First United Common Stock. Subject to
such requisite approval, this Agreement represents a legal, valid, and binding
obligation of First United, enforceable against First United 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 First United,
nor the consummation by First United of the transactions contemplated hereby,
nor compliance by First United with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of First United's Articles
of Incorporation or Bylaws, or (ii) except as disclosed in Section 5.2(b) of the
First United 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 First United Company under, any Contract or Permit of any First
United 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 First United 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 First United, no notice to, filing with, or Consent
of, any public body or authority is necessary for the consummation by First
United of the Merger and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK. (a) The authorized capital stock of First United
consists of 15,000,000 shares of First United Common Stock, of which 3,983,910
shares are issued and outstanding as of the date of this Agreement and not more
than 4,247,957 shares will be issued and outstanding at the Effective Time and
10,000,000 shares of preferred stock (no par value), of which none are issued
and outstanding. All of the issued and outstanding shares of First United Common
Stock are duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of First United Common Stock has
been issued in violation of any preemptive rights of the current or past
stockholders of First United. First United has reserved 430,091 shares of First
United Common Stock for issuance under the First United Stock Plans,
A-9
<PAGE> 68
pursuant to which options to purchase not more than 264,047 shares of First
United 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 First United 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 First
United or contracts, commitments, understandings, or arrangements by which First
United is or may be bound to issue additional shares of First United capital
stock or options, warrants, or rights to purchase or acquire any additional
shares of its capital stock.
5.4 FIRST UNITED SUBSIDIARIES. First United has disclosed in Section 5.4
of the First United Disclosure Memorandum all of the First United Subsidiaries
as of the date of this Agreement. Except as disclosed, First United or one of
its Subsidiaries owns all of the issued and outstanding shares of capital stock
of each First United Subsidiary. No equity securities of any First United
Subsidiary are or may become required to be issued (other than to a First United
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 First United Subsidiary
is bound to issue (other than to a First United 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 First United Company is
or may be bound to transfer any shares of the capital stock of any First United
Subsidiary (other than to a First United Company). There are no Contracts
relating to the rights of any First United Company to vote or to dispose of any
shares of the capital stock of any First United Subsidiary. All of the shares of
capital stock of each First United Subsidiary held by a First United 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 First United
Company free and clear of any Lien. Each First United 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 First United
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First United. Each First United 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. First United has disclosed in Section 5.5 of the
First United Disclosure Memorandum, and has delivered to Regions copies of, all
First United Financial Statements prepared for periods ended prior to the date
hereof and will deliver to Regions copies of all First United Financial
Statements prepared subsequent to the date hereof. The First United 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 First United Companies, which are or will be, as the
case may be, materially 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 First United Companies as of the dates indicated and
the consolidated results of operations, changes in stockholders' equity, and
cash flows of the First United 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 First United Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First United, except Liabilities which
are accrued or reserved against in the consolidated balance sheets of First
United as of
A-10
<PAGE> 69
June 30, 1997 included in the First United Financial Statements or reflected in
the notes thereto. No First United Company has incurred or paid any Liability
since June 30, 1997, except for such Liabilities incurred or paid (a) to
counsel, accountants and investment bankers in connection with the Merger or (b)
in the ordinary course of business consistent with past business practice and
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First United.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1997, except as
disclosed in the First United Financial Statements or in Section 5.7 of the
First United Disclosure Memorandum, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First United, and (ii) the First
United Companies have not taken any action, or failed to take any action, prior
to the date of this Agreement, which action or failure, if taken after the date
of this Agreement, would represent or result in a material breach or violation
of any of the covenants and agreements of First United provided in Article 7 of
this Agreement.
5.8 TAX MATTERS. (a) All Tax returns required to be filed by or on behalf
of any of the First United 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, 1996, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time to the Knowledge
of First United, and all returns filed are complete and accurate to the
Knowledge of First United. 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 First
United, except to the extent reserved against in the First United 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 First United 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
First United Companies for the period or periods through and including the date
of the respective First United Financial Statements has been made and is
reflected on such First United Financial Statements.
(d) Deferred Taxes of the First United Companies have been adequately
provided for in the First United Financial Statements.
(e) Each of the First United 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 First United.
(f) None of the First United Companies has made any payments, is obligated
to make any payments, or is a party to any contract, agreement, or other
arrangement that could obligate it to make any payments that would be disallowed
as a deduction under Section 280G or 162(m) of the Internal Revenue Code.
(g) There are no Liens with respect to Taxes upon any of the assets of the
First United Companies.
(h) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the First United Companies that occurred during or after
any Taxable Period in which the First United Companies incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1994.
(i) No First United Company has filed any consent under Section 341(f) of
the Internal Revenue Code concerning collapsible corporations.
A-11
<PAGE> 70
(j) All material elections with respect to Taxes affecting the First United
Companies as of the date of this Agreement have been or will be timely made as
set forth in Section 5.8 of the First United Disclosure Memorandum. After the
date hereof, no election with respect to Taxes will be made without the prior
written consent of Regions, which consent will not be unreasonably withheld.
(k) No First United 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 First United
Financial Statements, the First United 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 First United Companies. All material tangible properties
used in the businesses of the First United Companies are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with First United's past practices. All Assets which are
material to the business of the First United Companies, which are held under
leases or subleases by any of the First United Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect.
5.10 ENVIRONMENTAL MATTERS. (a) To the Knowledge of First United, each
First United Company, its Participation Facilities, and its Loan Properties are,
and have been, in compliance with all Environmental Laws, except for violations
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First United.
(b) To the Knowledge of First United, there is no Litigation pending or
threatened before any court, governmental agency, or authority, or other forum
in which any First United 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 First United 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 First United.
(c) To the Knowledge of First United, 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 First United 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 First United.
(d) To the Knowledge of First United, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c), except such as is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on First United.
(e) To the Knowledge of First United, during the period of (i) any First
United Company's ownership or operation of any of their respective current
properties, (ii) any First United Company's participation in the management of
any Participation Facility, or, (iii) any First United 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 First United. Prior to the period of (i) any First United
Company's ownership or operation of any of their respective current properties,
(ii) any First United Company's participation in the management of any
Participation Facility, or (iii) any First United Company's holding of a
security interest in a Loan Property, to the Knowledge of First United, there
were no releases of Hazardous Material or oil in, on, under,
A-12
<PAGE> 71
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 First United.
5.11 COMPLIANCE WITH LAWS. Each First United 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 First United, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on First United.
Except as disclosed in Section 5.11 of the First United Disclosure Memorandum,
none of the First United Companies:
(a) Is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business, except for violations which
are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on First United; and
(b) Has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any First United 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 First United, (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 First
United, or (iii) requiring any First United 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 First United Company is the subject of any
Litigation asserting that it or any other First United Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other First United Company
to bargain with any labor organization as to wages or conditions of employment,
nor is any First United 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
First United Company, pending or threatened, or to its Knowledge, is there any
activity involving any First United Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS. (a) First United has disclosed in Section
5.13 of the First United 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 First United 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 "First United Benefit Plans"). Any of the First
United 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 "First
United ERISA Plan." Any First United 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 "First United Pension Plan." On or
after September 26, 1980, neither First United nor any First United 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
A-13
<PAGE> 72
defined in Section 3(2) of ERISA, ever maintained by any First United Company
that was intended to qualify under Section 401(a) of the Internal Revenue Code,
is the First United Bancorporation Employee Savings Plan & Trust.
(b) First United 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 First
United Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such First United 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 First United Benefit Plan with respect to the most recent three
plan years, and (iv) the most recent summary plan descriptions and any material
modifications thereto.
(c) All First United Benefit Plans are in compliance with the applicable
terms of ERISA, the Internal Revenue Code, and any other applicable Laws the
breach or violation of which are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on First United. Each First United
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and First United is not aware of any circumstances
which will or could result in revocation of any such favorable determination
letter. Each trust created under any First United ERISA Plan has been determined
to be exempt from Tax under Section 501(a) of the Internal Revenue Code and
First United is not aware of any circumstance which will or could result in
revocation of such exemption. With respect to each First United Benefit Plan,
except as disclosed in Section 5.13(c) of the First United Disclosure
Memorandum, to the Knowledge of First United, 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 First United
ERISA Plan. No First United Company has engaged in a transaction with respect to
any First United Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject any First United
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 First
United.
(d) No First United Pension Plan has any "unfunded current liability," as
that term is defined in Section 302(d)(8)(A) of ERISA, and the fair market value
of the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any First United Pension Plan, (ii) no change in the actuarial assumptions with
respect to any First United Pension Plan, and (iii) no increase in benefits
under any First United Pension Plan as a result of plan amendments or changes in
applicable Law which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on First United or materially adversely
affect the funding status of any such plan. Neither any First United Pension
Plan nor any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any First United Company, or the
single-employer plan of any entity which is considered one employer with First
United 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 First United Company has
provided, or is required to provide, security to a First United 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 First United Company with respect to any defined benefit plan
currently or formerly maintained by any of them or by any ERISA Affiliate).
A-14
<PAGE> 73
(f) No First United Company has any obligations for retiree health and
retiree life benefits under any of the First United Benefit Plans.
(g) Except as set forth in Section 5.13(g) of the First United 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 First United Company from any First United Company under any First United
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any First United 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 First United Benefit Plans has been made to employees of any of
the First United Companies prior to the date hereof which is not in accordance
with the written or otherwise preexisting terms and provisions of such plans.
All First United 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 First United 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
First United Disclosure Memorandum, none of the First United 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 First United Company or the guarantee
by any First United 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 First United 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 First United with the Securities and Exchange
Commission (the "SEC") as of the date of this Agreement if First United 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 "First United Contracts").
None of the First United Companies is in Default under any First United Contract
which, individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on First United.
5.15 LEGAL PROCEEDINGS. Except to the extent specifically reserved against
in the First United Financial Statements dated prior to the date of this
Agreement, there is no Litigation instituted or pending, or, to the Knowledge of
First United, threatened (or unasserted but considered probable of assertion and
which if asserted would have at least a reasonable probability of an unfavorable
outcome) against any First United 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 First United, nor are there any Orders
of any Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any First United Company, that are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on First
United.
5.16 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
or other writing furnished or to be furnished by any First United 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
First United 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 First United Company or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to First United's stockholders in connection
A-15
<PAGE> 74
with the Stockholders' Meeting, and any other documents to be filed by a First
United 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 First United, 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 First United 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 First United 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
First United, 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 ARTICLES OF INCORPORATION PROVISIONS. Each First United 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 First United 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 First United Company that may be
acquired or controlled by it.
5.19 SUPPORT AGREEMENTS. Each of the directors of First United has
executed and delivered to Regions an agreement in substantially the form of
Exhibit 1 to this Agreement.
5.20 DERIVATIVES CONTRACTS. Neither First United 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).
5.21 YEAR 2000. Except as disclosed in Section 5.22 of the First United
Disclosure Memorandum, First United represents and warrants that all computer
software necessary for the conduct of its business (the "Software") is designed
to be used prior to, during, and after the calendar year 2000 A.D., and that the
Software will operate during each such time period without error relating to the
year 2000, specifically including any error relating to, or the product of, date
data which represents or references different centuries or more than one
century. First United further represents and warrants that the Software accepts,
calculates, sorts, extracts and otherwise processes date inputs and date values,
and returns and displays date values, in a consistent manner regardless of the
dates used, whether before, on, or after January 1, 2000.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to First United 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
A-16
<PAGE> 75
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 notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by Regions of the
Merger and the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Regions consists of
240,000,000 shares of Regions Common Stock, of which 136,722,928 shares were
issued and outstanding and no shares were held as treasury shares as of June 30,
1997. All of the issued and outstanding shares of Regions Common Stock are, and
all of the shares of Regions Common Stock to be issued in exchange for shares of
First United Common Stock upon consummation of the Merger, when issued in
accordance with the terms of this Agreement, will be, duly and validly issued
and outstanding and fully paid and nonassessable under the DGCL. None of the
outstanding shares of Regions Common Stock has been, and none of the shares of
Regions Common Stock to be issued in exchange for shares of First United 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, 1993, 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
A-17
<PAGE> 76
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
June 30, 1997 included in the Regions Financial Statements or reflected in the
notes thereto. No Regions Company has incurred or paid any Liability since June
30, 1997, except for such Liabilities incurred or paid in the ordinary course of
business consistent with past business practice and which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Regions.
6.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1997, except as
disclosed in the Regions 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 Regions, and (ii)
the Regions Companies have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken after the
date of this Agreement, would represent or result in a material breach or
violation of any of the covenants and agreements of Regions provided in Article
7 of this Agreement.
6.7 COMPLIANCE WITH LAWS. Regions is duly registered as a bank holding
company under the BHC Act. Each Regions Company has in effect all Permits
necessary for it to own, lease, or operate its 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.
A-18
<PAGE> 77
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 First United 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 First United'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 First United, be false or misleading with
respect to any material fact, or contain any misstatement of material fact, or
omit to state any material fact required to be stated thereunder or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated thereunder or necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that any Regions Company or
any Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
6.10 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 7
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 FIRST UNITED. 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, First United
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries
A-19
<PAGE> 78
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 First United 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 First United Company to another First United
Company) in excess of an aggregate of $100,000 (for the First United
Companies on a consolidated basis) except in the ordinary course of the
business of First United Companies consistent with past practices (which
shall include, for First United, 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 First United Disclosure Memorandum, forgive any such indebtedness of
any Person to any First United Company (in excess of an aggregate of
$25,000), or impose, or suffer the imposition, on any share of stock held
by any First United 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 First United Company, or declare or pay any
dividend or make any other distribution in respect of any First United
Common Stock; provided that First United may (to the extent legally able to
do so), but shall not be obligated to, declare and pay regular annual cash
dividends on the First United Common Stock at an amount not to exceed 35%
of First United's net income after taxes, and in no event may such an
amount per share of First United Common Stock exceed $.98 and with the
usual and regular record and payment dates as disclosed in Section 7.2(c)
of the First United Disclosure Memorandum; or
(d) Except pursuant to the exercise of stock options outstanding as of
the date hereof and pursuant to the terms thereof in existence on the date
hereof, issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional
shares of First United Common Stock or any other capital stock of any First
United 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
First United Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of First United
Common Stock or sell, lease, mortgage, or otherwise dispose of or otherwise
encumber any shares of capital stock of any First United Subsidiary (unless
any such shares of stock are sold or otherwise transferred to another First
United 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
First United in its fiduciary capacity; or
(g) Grant any increase in compensation or benefits to the employees or
officers of any First United Company except as disclosed in Section 7.2(g)
of the First United 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 First United Disclosure Memorandum;
enter into or amend any severance agreements with officers of any First
United Company except as disclosed in Section 7.2(g) of the First United
Disclosure Memorandum; grant any increase in fees or other increases in
compensation or other benefits to directors of any First United Company; or
(h) Enter into or amend any employment Contract between any First
United Company and any Person (unless such amendment is required by Law)
that the First United Company does not have the
A-20
<PAGE> 79
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 First United
Disclosure Memorandum, adopt any new employee benefit plan or program of
any First United Company or make any material change in or to any existing
employee benefit plans or programs of any First United 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 First United Financial Statements dated prior to the date of
this Agreement, no First United Company shall settle any Litigation
involving any Liability of any First United Company for money damages in
excess of $25,000 (exclusive of insurance proceeds) or restrictions upon
the operations of any First United 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 First United 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 First United 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 First United Common Stock.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) is reasonably likely to cause
or constitute a material breach of any of its 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 First United shall deliver to Regions
copies of all such reports filed by First United 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 8
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,
A-21
<PAGE> 80
provided First United has provided, on a reasonably timely basis, all
information concerning First United 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.
First United shall promptly furnish all information concerning it and the
holders of its capital stock as Regions may reasonably request in connection
with such action. First United 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) First United 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 First
United 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 First United
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 First United
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 First United shall cooperate
in the preparation and, where appropriate, filing of, applications with all
Regulatory Authorities having jurisdiction over the transactions contemplated by
this Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. Regions shall use all reasonable
efforts to obtain the requisite Consents of all Regulatory Authorities as soon
as reasonably practicable after the filing of the appropriate applications.
8.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be 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 9 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) First United shall use its reasonable efforts to exercise its rights
under confidentiality agreements entered into with Persons which were
considering an acquisition transaction with First United to preserve the
confidentiality of the information relating to First United provided to such
parties.
A-22
<PAGE> 81
8.6 PRESS RELEASES. Prior to the Effective Time, First United 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 is 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 First United Company nor any Affiliate
thereof nor any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any First United Company shall
directly or indirectly solicit any Acquisition Proposal by any Person. Except to
the extent necessary to comply with the fiduciary duties of First United's Board
of Directors as advised in writing by counsel to such Board of Directors, no
First United 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 First
United 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. First United shall promptly notify Regions
orally and in writing in the event that it receives any inquiry or proposal
relating to any such transaction. First United 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 First United Common Stock for
Regions Common Stock will not give rise to gain or loss to the stockholders of
First United with respect to such exchange (except to the extent of any cash
received), and (iii) each of First United 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 First United 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. First United has disclosed in Section 8.9 of
the First United Disclosure Memorandum each Person whom it reasonably believes
is an "affiliate" of First United for purposes of Rule 145 under the 1933 Act.
First United 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 First
United Common Stock held by such Person except as contemplated by such agreement
or by this Agreement and will not sell, pledge, transfer, or otherwise dispose
of the shares of Regions Common Stock to be received by such Person upon
consummation of the Merger except in compliance with applicable provisions of
the 1933 Act and the rules and regulations thereunder and until such time as
financial results covering at least 30 days of combined operations of Regions
and First United have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies. Shares of Regions Common
Stock issued to such affiliates of First United in exchange for shares of First
United Common Stock shall not be transferable until such time as financial
results covering at least 30 days of combined operations of Regions and First
United 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 First United 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 First United
Companies, who at or after the Effective Time become
A-23
<PAGE> 82
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 First United should be treated as service under
Regions' qualified defined benefit plans, (ii) service under any qualified
defined contribution plans of First United shall be treated as service under
Regions' qualified defined contribution plans, and (iii) service under any other
employee benefit plans of First United shall be treated as service under any
similar employee benefit plans maintained by Regions. Regions also shall assume
and honor all employment, severance, consulting, and other compensation
Contracts disclosed in Section 8.10 of the First United Disclosure Memorandum to
Regions between any First United Company and any current or former director,
officer, or employee thereof, and all provisions for vested benefits or other
vested amounts earned or accrued through the Effective Time under the First
United 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 First United to, indemnify, defend, and hold harmless
each person entitled to indemnification from a First United 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
South Carolina Law and First United'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 First United is required to
effectuate any indemnification, Regions shall cause the First United to direct,
at the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
Regions and the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a), upon learning of any such Liability or Litigation, shall promptly notify
Regions thereof. In the event of any such Litigation (whether arising before or
after the Effective Time), (i) Regions or First United 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 First United 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 First
United and the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Regions or First United 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 First United 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 ARTICLES OF INCORPORATION PROVISIONS. Each First United 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 First
United Company or restrict or impair the ability of Regions or any of its
Subsidiaries to vote, or otherwise to exercise the rights of a stockholder with
respect to, shares of any First United Company that may be directly or
indirectly acquired or controlled by it.
A-24
<PAGE> 83
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Stockholder Approval. The stockholders of First United 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 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.
A-25
<PAGE> 84
9.2 CONDITIONS TO OBLIGATIONS OF REGIONS. The obligations of Regions to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Regions pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of First United
set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of First United set forth in Section 5.3 of
this Agreement shall be true and correct (except for inaccuracies which are
de minimus in amount). The representations and warranties of First United
set forth in Sections 5.17 and 5.18 of this Agreement shall be true and
correct in all material respects. There shall not exist inaccuracies in the
representations and warranties of First United set forth in this Agreement
(including the representations and warranties set forth in Sections 5.3,
5.17 and 5.18) such that the aggregate effect of such inaccuracies has, or
is reasonably likely to have, a Material Adverse Effect on First United;
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 First United to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. First United 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
First United's Board of Directors and stockholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Regions and its
counsel shall request.
(d) Claims Letters. Each of the directors and officers of First
United 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 First United, in
substantially the form of Exhibit 4 to this Agreement.
(f) Affiliate Agreements. Regions shall have received from each
affiliate of First United 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 FIRST UNITED. The obligations of First
United 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 First United 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
A-26
<PAGE> 85
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 First United (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 First United and its counsel shall
request.
(d) Legal Opinion. First United 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.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of First
United, 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 First United; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of First United 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 First United
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 First United 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
A-27
<PAGE> 86
is not appealed within the time limit for appeal, or (ii) the stockholders
of First United fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the Laws of the State of
South Carolina at the First United Stockholders' Meeting where the
transactions were presented to such stockholders for approval and voted
upon; or
(e) By the Board of Directors of First United or by the Board of
Directors of Regions in the event that the Merger shall not have been
consummated by September 30, 1998, 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 First United 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.
(g) By the Board of Directors of First United, if it determines by a
vote of a majority of the members of its entire Board, at any time during
the five business-day period commencing on the day immediately following
the Determination Date, if the Average Closing Price shall be less than
$30.00; subject, however, to the following three sentences. If First United
refuses to consummate the Merger pursuant to this Section 10.1(g), 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 five business-day period. During the three business-day
period commencing with its receipt of such notice, Regions shall have the
option to elect to increase the Exchange Ratio to equal the quotient
obtained by dividing (1) the product of $30.00 and the Exchange Ratio (as
then in effect) by (2) the Average Closing Price. If Regions makes an
election contemplated by the preceding sentence, within such three
business-day period, it shall give prompt written notice to First United of
such election and the revised Exchange Ratio, whereupon no termination
shall have occurred pursuant to this Section 10.1(g) 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(g).
For purposes of this Section 10.1(g), 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 seventh full trading day
immediately preceding the date of the anticipated Closing.
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 11 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 2, 3, 4, and 11 and Sections 8.9, and 8.11 of this Agreement.
A-28
<PAGE> 87
ARTICLE 11
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, First United,
other than the formation of a newly organized holding company for First
United in which the shares of First United 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-29
<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.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FIRST UNITED BENEFIT PLANS" shall have the meaning set forth in
Section 5.13 of this Agreement.
"FIRST UNITED COMMON STOCK" shall mean the $1.66 2/3 par value common
stock of First United.
"FIRST UNITED COMPANIES" shall mean, collectively, First United and
all First United Subsidiaries.
"FIRST UNITED DISCLOSURE MEMORANDUM" shall mean the written
information entitled "First United Disclosure Memorandum" delivered prior
to the date of this Agreement to Regions describing in reasonable detail
the matters contained therein and, with respect to each disclosure made
therein, specifically referencing each Section of this Agreement under
which such disclosure is being made.
"FIRST UNITED FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of First
United as of June 30, 1997, and as of December 31, 1996 and 1995, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the six months
ended June 30, 1997, and for each of the three fiscal years ended December
31, 1996, 1995, and 1994, included in the First United Disclosure
Memorandum, and (ii) the consolidated balance sheets of First United
(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
June 30, 1997.
"FIRST UNITED SUBSIDIARIES" shall mean the Subsidiaries of First
United, which shall include the First United Subsidiaries described in
Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of First United
in the future and owned by First United at the Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601 et seq., or
any similar federal, state, or local Law.
"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-30
<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 First United 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-31
<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 First United or Regions and "Parties" shall
mean both First United 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 First United
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 First United.
"REGIONS COMMON STOCK" shall mean the $.625 par value common stock of
Regions.
"REGIONS COMPANIES" shall mean, collectively, Regions and all Regions
Subsidiaries.
"REGIONS FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of June 30, 1997, and the restated consolidated statements of
condition (including related notes and schedules, if any) of Regions as of
December 31, 1996 and 1995, the related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) for the nine months ended June 30, 1997, 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, 1996, 1995, and 1994, as filed by Regions in SEC
Documents, and (ii) the consolidated statements of condition of Regions
(including related notes and schedules, if any) and related statements of
income, changes in stockholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect
to periods ended subsequent to June 30, 1997.
"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.
"SCBCA" shall mean the South Carolina Business Corporation Act.
"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.
"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
First United to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.
A-32
<PAGE> 91
"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 First United to The Carson-Medlin Company.
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
First United or Regions, each of First United 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 First United Common Stock, there shall be
made no amendment decreasing the consideration to be received by First United
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 First United, to waive or extend the time for
the compliance or fulfillment by First United 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
A-33
<PAGE> 92
which, if not satisfied, would result in the violation of any Law. No such
waiver shall be effective unless in writing signed by a duly authorized officer
of Regions.
(b) Prior to or at the Effective Time, First United, 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 First
United under this Agreement, except any condition which, if not satisfied, would
result in the violation of any Law. No such waiver shall be effective unless in
writing signed by a duly authorized officer of First United.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by, the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so received:
<TABLE>
<S> <C>
First United: FIRST UNITED BANCORPORATION
304 North Main Street
Anderson, South Carolina 29622
Telecopy Number: (864) 231-2945
Attention: Mason Y. Garrett
Chairman of the Board, President and Chief
Executive Officer
Copy to Counsel: Sinkler & Boyd, P.A.
1426 Main Street, 12th Floor
Columbia, South Carolina 29201
Telecopy Number: (803) 765-1243
Attention: George S. King, Jr.
Regions: REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive Financial Officer
Copy to Counsel: REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7099
Attention: Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
</TABLE>
11.9 GOVERNING LAW. Except to the extent the laws of the State of South
Carolina 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.
A-34
<PAGE> 93
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 UNITED BANCORPORATION
By: /s/ WILLIAM B. WEST By: /s/ MASON Y. GARRETT
------------------------------------------------- -------------------------------------------------
William B. West Mason Y. Garrett
Secretary Chairman of the Board, 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-35
<PAGE> 94
APPENDIX B
Board of Directors January , 1998
First United Bancorporation
304 North Main Street
Anderson, SC 29622
Members of the Board:
You have requested our opinion as to the fairness, from a financial point
of view, of the consideration to be received by the shareholders of First United
Bancorporation ("First United") under the terms of a certain Agreement and Plan
of Merger dated as of October 28, 1997 (the "Agreement"), by and between First
United and Regions Financial Corporation ("Regions") pursuant to which First
United will merge with and into Regions (the "Merger"). Under the terms of the
Agreement, each of the outstanding shares of First United common stock shall be
converted into the right to receive .5173 shares of Regions common stock. The
foregoing summary of the Merger is qualified in its entirety by reference to the
Agreement.
The Carson Medlin Company is a National Association of Securities Dealers,
Inc. (NASD) member investment banking firm which specializes in the securities
of southeastern United States financial institutions. As part of our investment
banking activities, we are regularly engaged in the valuation of southeastern
United States financial institutions and transactions relating to their
securities. We regularly publish our research on independent community banks
regarding their financial and stock price performance. We are familiar with the
commercial banking industry in North Carolina and the Southeast and the major
commercial banks operating in that market. We have been retained by First United
in a financial advisory capacity to render our opinion hereunder, for which we
will receive compensation.
In reaching our opinion, we have analyzed the respective financial
positions, both current and historical, of First United and Regions. We have
reviewed: (i) the Agreement; (ii) the annual reports to stockholders of First
United, including audited financial statements, for the five years ended
December 31, 1996; (iii) the Proxy Statement of First United, dated April 4,
1997, prepared for the annual meeting of the stockholders of First United held
on April 22, 1997; (iv) the Report of Form 10-Q of First United, dated September
30, 1997 (v) the Uniform Bank Performance Report for Anderson National Bank as
of June 30, 1997; (vi) the Uniform Bank Performance Report for Spartanburg
National Bank as of June 30, 1997; (vii) the Uniform Bank Performance Report for
The Community Bank of Greenville, N.A. as of June 30, 1997; (viii) the Call
Report for Anderson National Bank as of September 30, 1997; (ix) the Call Report
for Spartanburg National Bank as of September 30, 1997; (x) the Call Report for
The Community Bank of Greenville, N.A. as of September 30, 1997; (xi) the annual
reports to stockholders of Regions, including audited financial statements, for
the five years ended December 31, 1996; (xii) the Proxy Statement of Regions
dated April 1, 1997 for the annual meeting of the stockholders of Regions held
on May 14, 1997; (xiii) the Report of Form 10-Q of Regions, dated September 30,
1997 (xiv) monthly unaudited interim financial statements of First United
through November 30, 1997; (xv) a preliminary copy of the Proxy
Statement/Prospectus prepared in connection with a special meeting of the
shareholders of First United to consider the Merger; and (xvi) certain other
financial and operating information with respect to the business, operations and
prospects of First United and Regions. We also: (i) held discussions with
members of the senior management of First United and Regions regarding their
respective historical and current business operations, financial conditions and
future prospects; (ii) reviewed the historical market prices and trading
activity for the common stocks of First United and Regions and compared them
with those of certain publicly traded companies which we deemed to be relevant;
(iii) compared the results of operations of First United and Regions with those
of certain banking companies which we deemed to be relevant; (iv) compared the
proposed financial terms of the Merger with the financial terms, to the extent
publicly available, of certain other recent business combinations
B-1
<PAGE> 95
of commercial banking organizations; (v) analyzed the pro forma financial impact
of the Merger on Regions; and (vi) conducted such other studies, analyses,
inquiries and examinations as we deemed appropriate.
We have relied upon and assumed, without independent verification, the
accuracy and completeness of all information provided to us. We have not
performed or considered any independent appraisal or evaluation of the assets of
First United or Regions. The opinion we express herein is necessarily based upon
market, economic and other relevant considerations as they exist and can be
evaluated as of the date of this letter.
Based upon the foregoing, it is our opinion that the consideration provided
for in the Agreement is fair, from a financial point of view, to the
stockholders of First United Bancorporation.
Very truly yours,
THE CARSON MEDLIN COMPANY
B-2
<PAGE> 96
APPENDIX C
CODE OF LAWS OF SOUTH CAROLINA 1976 ANNOTATED
TITLE 33. CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS
CHAPTER 13. DISSENTERS' RIGHTS
ARTICLE 1. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SEC. 33-13-101. DEFINITIONS.
In this chapter:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Section 33-13-102 and who exercises that right when
and in the manner required by Sections 33-13-200 through 33-13-280.
(3) "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 to which the dissenter
objects, excluding any appreciation or depreciation in anticipation of the
corporate action unless exclusion would be inequitable. The value of the
shares is to be determined by techniques that are accepted generally in the
financial community.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair
and equitable under all the circumstances.
(5) "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.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
SEC. 33-13-102. RIGHT TO DISSENT.
A shareholder 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 (i) if shareholder approval is required for the merger by Section
33-11-103 or the articles of incorporation and the shareholder is entitled
to vote on the merger or (ii) if the corporation is a subsidiary that is
merged with its parent under Section 33-11-104 or 33-11-108 or if the
corporation is a parent that is merged with its subsidiary under Section
33-11-108;
(2) consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares are to 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 other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, 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 must be distributed to
the shareholders within one year after the date of sale;
C-1
<PAGE> 97
(4) an amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it:
(i) alters or abolishes a preferential right of the shares;
(ii) 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;
(iii) alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(iv) 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; or
(v) 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 Section 33-6-104; or
(5) the approval of a control share acquisition under Article 1 of
Chapter 2 of Title 35;
(6) any corporate action to the extent 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.
SEC. 33-13-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) 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 person 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 subsection are determined
as if the shares to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if he dissents with respect to all shares of which he is
the beneficial shareholder or over which he has power to direct the vote. A
beneficial shareholder asserting dissenters' rights to shares held on his behalf
shall notify the corporation in writing of the name and address of the record
shareholder of the shares, if known to him.
SEC. 33-13-200. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under Section
33-13-102 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 chapter and be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under Section 33-13-102
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 Section 33-13-220.
SEC. 33-13-210. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under Section
33-13-102 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights (1) must give 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. A vote in favor of the proposed action cast by the holder
of a proxy solicited by the corporation shall not disqualify a shareholder from
demanding payment for his shares under this chapter.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for his shares under this chapter.
C-2
<PAGE> 98
SEC. 33-13-220. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under Section
33-13-102 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Section 33-13-210(a).
(b) The dissenters' notice must be delivered no later than ten days after
the corporate action was taken and must:
(1) state where the payment demand must be sent and where certificates
for certificated shares must be deposited;
(2) inform holders of uncertificated shares to what extent transfer of
the shares is to be restricted after the payment demand is received;
(3) supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the terms of the
proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he or, if he is a nominee
asserting dissenters' rights on behalf of a beneficial shareholder, the
beneficial shareholder acquired beneficial ownership of the shares before
that date;
(4) set a date by which the corporation must receive the payment
demand, which may not be fewer than thirty nor more than sixty days after
the date the subsection (a) notice is delivered and set a date by which
certificates for certificated shares must be deposited, which may not be
earlier than twenty days after the demand date; and
(5) be accompanied by a copy of this chapter.
SEC. 33-13-230. SHAREHOLDERS' PAYMENT DEMAND.
(a) A shareholder sent a dissenters' notice described in Section 33-13-220
must demand payment, certify whether he (or the beneficial shareholder on whose
behalf he is asserting dissenters' rights) acquired beneficial ownership of the
shares before the date set forth in the dissenters' notice pursuant to Section
33-13-220(b)(3), and deposit his certificates in accordance with the terms of
the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are canceled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not comply substantially with the requirements
that he demand payment and 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 chapter.
SEC. 33-13-240. SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for payment for them is received until the proposed
corporate action is taken or the restrictions are released under Section
33-13-260.
(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.
SEC. 33-13-250. PAYMENT.
(a) Except as provided in Section 33-13-270, as soon as the proposed
corporate action is taken, or upon receipt of a payment demand, the corporation
shall pay each dissenter who substantially complied with Section 33-13-230 the
amount the corporation estimates to be the fair value of his shares, plus
accrued interest.
C-3
<PAGE> 99
(b) The payment must be accompanied by:
(1) the corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen 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 and an explanation of how the fair value was calculated;
(3) an explanation of how the interest was calculated;
(4) a statement of the dissenter's right to demand additional payment
under Section 33-13-280; and
(5) a copy of this chapter.
SEC. 33-13-260. FAILURE TO TAKE ACTION.
(a) If the corporation does not take the proposed action within sixty days
after the date set for demanding payment and depositing share certificates, the
corporation, within the same sixty-day period, 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 Section 33-13-220 and repeat the payment demand
procedure.
SEC. 33-13-270. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by section 33-13-
250 from a dissenter as to any shares of which he (or the beneficial owner on
whose behalf he is asserting dissenters' rights) was not the beneficial owner on
the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action, unless the beneficial ownership of the shares devolved upon
him by operation of law from a person who was the beneficial owner on the date
of the first announcement.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after taking the proposed corporate action, it shall estimate
the fair value of the shares, plus accrued interest, and shall pay this amount
to each dissenter who agrees to accept it in full satisfaction of his demand.
The corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the fair value and interest were
calculated, and a statement of the dissenter's right to demand additional
payment under Section 33-13-280.
SEC. 33-13-280. 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 (less any payment under Section 33-13-250) or reject the
corporation's offer under Section 33-13-270 and demand payment of the fair value
of his shares and interest due, if the:
(1) dissenter believes that the amount paid under Section 33-13-250 or
offered under Section 33-13-270 is less than the fair value of his shares
or that the interest due is calculated incorrectly;
(2) corporation fails to make payment under Section 33-13-250 or to
offer payment under Section 33-13-270 within sixty days after the date set
for demanding payment; or
(3) corporation, having failed to take the proposed action, does not
return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within sixty days after the date set for
demanding payment.
C-4
<PAGE> 100
(b) A dissenter waives his right to demand additional payment under this
section unless he notifies the corporation of his demand in writing under
subsection (a) within thirty days after the corporation made or offered payment
for his shares.
SEC. 33-13-300. COURT ACTION.
(a) If a demand for additional payment under Section 33-13-280 remains
unsettled, the corporation shall commence a proceeding within sixty days after
receiving the demand for additional payment 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 sixty-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the circuit court of
the county where the corporation's principal office (or, if none in this State,
its registered office) is located. If the 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 principal office (or, if none in this State,
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 as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication, as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint persons as
appraisers to receive evidence and recommend decisions on the question of fair
value. The appraisers have the powers described in the order appointing them or
in any amendment to it. The dissenters are entitled to the same discovery rights
as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
SEC. 33-13-310. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Section 33-13-300
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess 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 Section 33-13-280.
(b) The court also may assess the fees and expenses of counsel 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 comply substantially with the
requirements of Sections 33-13-200 through 33-13-280; 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 chapter.
(c) If the court finds that the services of counsel 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 counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
(d) In a proceeding commenced by dissenters to enforce the liability under
Section 33-13-300(a) of a corporation that has failed to commence an appraisal
proceeding within the sixty-day period, the court shall assess the costs of the
proceeding and the fees and expenses of dissenters' counsel against the
corporation and in favor of the dissenters.
C-5
<PAGE> 101
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
II-1
<PAGE> 102
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such 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.
II-2
<PAGE> 103
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
"(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court of
Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
The Company has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
II-3
<PAGE> 104
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 October 28, 1997, by
and between First United Bancorporation 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. 333-37361.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-37361.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Lange, Simpson, Robinson & Somerville LLP -- included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
23.5 -- Consent of The Carson-Medlin Company
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.
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
II-4
<PAGE> 105
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-5
<PAGE> 106
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 23rd day of January, 1998.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
/s/ Richard D. Horsley
BY: --------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney- in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- --------------------------- ------------------
<S> <C> <C>
/s/ Carl E. Jones, Jr.
- -------------------------- President and Chief Executive January 23, 1998
Carl E. Jones, Jr. Officer and Director
/s/ Richard D. Horsley
- -------------------------- Vice Chairman of the Board and January 23, 1998
Richard D. Horsley Executive Financial Officer
and Director
/s/ Robert P. Houston
- -------------------------- Executive Vice President and January 23, 1998
Robert P. Houston Comptroller
</TABLE>
II-5
<PAGE> 107
<TABLE>
<S> <C> <C>
/s/ Sheila S. Blair
- -------------------------- Director January 23, 1998
Sheila S. Blair
/s/ William B. Boles, Sr.
- -------------------------- Director January 23, 1998
William B. Boles, Sr.
/s/ James B. Boone, Jr.
- -------------------------- Director January 23, 1998
James B. Boone, Jr.
/s/ Albert P. Brewer
- -------------------------- Director January 23, 1998
Albert P. Brewer
/s/ James S.M. French
- -------------------------- Director January 23, 1998
James S.M. French
/s/ Olin B. King
- -------------------------- Director January 23, 1998
Olin B. King
/s/ J. Stanley Mackin
- -------------------------- Chairman of the Board and January 23, 1998
J. Stanley Mackin Director
/s/ Henry E. Simpson
- -------------------------- Director January 23, 1998
Henry E. Simpson
/s/ Lee J. Styslinger, Jr.
- -------------------------- Director January 23, 1998
Lee J. Styslinger, Jr.
- -------------------------- Director
Robert J. Williams
</TABLE>
II-6
<PAGE> 108
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------ ------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of October 28, 1997, by
and between First United Bancorporation 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. 333-37361.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-37361.
5. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of KPMG Peat Marwick LLP
23.3 -- Consent of Lange, Simpson, Robinson & Somerville LLP -- included in Exhibit 5.
23.4 -- Consent of Alston & Bird -- included in Exhibit 8.
23.5 -- Consent of The Carson-Medlin Company
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 LLP]
January 23, 1998
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation
S-4 Registration Statement
Combination with First United Bancorporation
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger of First United
Bancorporation ("First United") 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 First
United upon consummation of the Merger. The maximum number of shares of
Regions to be issued in the Merger is estimated to be 2,197,469.
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 LLP
<PAGE> 1
EXHIBIT 8
ALSTON&BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-4777
www.alston.com
Philip C. Cook Direct Dial (404) 881-7000
January 23, 1998
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
First United Bancorporation
304 North Main Street
Anderson, South Carolina 29621
Re: Proposed Merger of First United Bancorporation 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 United Bancorporation
("First United"), a corporation organized and existing under the laws of the
South Carolina, with and into Regions. The Merger (as defined below) will be
effected pursuant to the Agreement and Plan of Merger by and between First
United and Regions, dated as of October 28, 1997 (the "Agreement"). Prior to and
in anticipation of the Merger, Community Bank of Greenville, National
Association, a wholly-owned subsidiary of First United, will be merged with and
into Anderson National Bank ("Anderson"), also a wholly-owned subsidiary of
First United (the "Community Merger"). Following the Merger, Anderson and
Spartanburg National Bank, also a wholly-owned subsidiary of First United, may
both be merged with and into a wholly-owned subsidiary of Regions (the "Bank
Mergers"). 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
<TABLE>
<S> <C> <C>
1211 East Morehead Street 3605 Glenwood Avenue 601 Pennsylvania Avenue, N.W.
P. O. Drawer 34009 P. O. Drawer 31107 North Building, Suite 250
Charlotte, NC 28234-4009 Raleigh, NC 27622-1107 Washington, DC 20004-2601
704-331-6000 919-420-2200 202-508-3300
Fax: 704-334-2014 Fax: 919-881-3175 Fax: 202-508-3333
</TABLE>
<PAGE> 2
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 2
have the respective meanings specified in the Agreement, and unless otherwise
specified, all section references herein are to the Code.
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 January 23, 1998, including the Proxy
Statement/Prospectus for the Special Meeting of the
stockholders of First United Bancorporation; 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 First United and through
certificates provided by the management of Regions and the management of First
United.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale, provide a wider
array of banking and banking related services to consumers and businesses, and
strengthen market position and increase financial resources to meet competitive
challenges within the Anderson, South Carolina 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, First United shall be merged into and with Regions in accordance
with the provisions of Section 252 of the DGCL and with the effect provided in
Section 259 of the DGCL and in accordance with Section 33-11-107 of the SCBCA
with the effect provided in Section 33-11-106 of the SCBCA (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 the Agreement, which has been approved and
adopted by the Boards of Directors of First United and Regions.
<PAGE> 3
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 3
(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:
(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 First United Common Stock (excluding shares held
by First United 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
.5173 of a share of Regions Common Stock, subject to adjustment
as provided in Section 10.1(g) of the Agreement (the "Exchange
Ratio").
(3) In the event First United changes the number of shares of First
United 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 First United Common Stock held by any
First United 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 First United Common Stock who perfects
such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Sections 33-13-101, et seq. of the SCBCA 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 SCBCA and surrendered to First United the
certificate or certificates representing the shares for which payment is being
made.
(6) Notwithstanding any other provision of the Agreement, each
holder of shares of First United Common Stock exchanged pursuant to the Merger,
or of options to purchase shares of First United Common Stock, who would
otherwise have been entitled
<PAGE> 4
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 4
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, which are outstanding at the
Effective Time, with respect to First United Common Stock pursuant to stock
options or stock appreciation rights ("First United Options") granted by First
United under the First United Stock Plans whether or not exercisable, shall be
converted into and become rights with respect to Regions Common Stock, and
Regions shall assume each First United Option, in accordance with the terms of
the First United Stock Plan and stock option agreement by which it is evidenced.
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, if any, received in the aggregate by the stockholders of First
United will be approximately equal to the fair market value of the First United
Common Stock surrendered in exchange therefor.
(2) There is no plan or intention on the part of the stockholders of
First United who own one percent (1%) or more of First United Common Stock, and
to the best of the knowledge of the management of First United, there is no plan
or intention on the part of the remaining stockholders of First United to sell,
exchange, or otherwise dispose of a number of shares of Regions Common Stock to
be received in the proposed transaction that would reduce their holdings in
Regions Common Stock received to a number of shares having, in the aggregate, a
value as of the Effective Time of less than fifty percent (50%) of the total
value of all shares of First United Common Stock outstanding immediately prior
to the Effective Time. For purposes of this assumption, shares of First United
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 First United Common Stock as of the Effective Time.
Moreover, shares of First United Common Stock and shares of Regions Common Stock
held by First United
<PAGE> 5
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 5
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 First
United stockholders.
(4) Regions has no plan or intention to dispose of any of the assets
of First United acquired in the transaction, except for the Bank Mergers,
dispositions made in the ordinary course of business or transfers described in
Section 368(a)(2)(C).
(5) The liabilities of First United assumed by Regions and the
liabilities to which the transferred assets of First United are subject were
incurred by First United in the ordinary course of its business.
(6) Following the transaction, Regions will continue the historic
business of First United or use a significant portion of First United's historic
business assets in a business.
(7) Regions, First United, and the stockholders of First United 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 First
United and Regions that was issued, acquired, or will be settled at a discount.
(9) First United 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 First United 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 First United 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 First United
stockholders instead of issuing fractional shares of Regions Common Stock will
not exceed one percent (1%) of the total consideration that will be
<PAGE> 6
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 6
issued in the transaction to the First United stockholders in exchange for their
shares of First United Common Stock. The fractional share interests of each
First United stockholder will be aggregated, and no First United 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
First United will be separate consideration for, or allocable to, any of their
shares of First United 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 First United'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 domestic corporation (other than a controlled corporation) owning any United
States real property interest, (ii) First United 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 First United 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 First United, in the case of a first-tier subsidiary of First United or
by a controlled corporation, in the case of a lower-tier subsidiary.
(14) Neither Regions nor First United is an investment company. For
purposes of the foregoing, an "investment company" is a corporation that is a
regulated investment company, a real estate investment trust, or a corporation
fifty percent (50%) or more of the value of whose total assets are stock and
securities and eighty percent (80%) or more of the value of whose total assets
are assets held for investment. In making the fifty percent (50%) and eighty
percent (80%) determinations under the preceding sentence, stock and securities
in any subsidiary corporation shall be disregarded and the parent corporation
shall be deemed to own its ratable share of the subsidiary's assets, and a
corporation shall be considered a subsidiary if the parent owns fifty percent
(50%) or more
<PAGE> 7
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 7
of the combined voting power of all classes of stock entitled to vote or fifty
percent (50%) or more of the total value of shares of all classes of stock
outstanding.
(15) The Agreement represents the entire understanding of First United
and Regions with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above and assuming that the Merger will take place as described in the
Agreement and that the representations made by Regions and First United
(including the representation that First United 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 the DGCL
and the SCBCA, the Merger will be a reorganization within the meaning of Section
368(a) of the Code. First United and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
(2) The stockholders of First United will recognize no gain or loss
upon the exchange of all of their First United Common Stock solely for shares of
Regions Common Stock.
(3) The basis of the Regions Common Stock received by the First United
stockholders in the Merger will, in each instance, be the same as the basis of
the First United 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
First United stockholders will, in each instance, include the period during
which the First United Common Stock surrendered in exchange therefor was held,
provided that the First United Common Stock was held as a capital asset on the
date of the exchange.
(5) The payment of cash to First United 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.
(6) Where solely cash is received by a First United stockholder in
exchange for First United Common Stock pursuant to the exercise of dissenters'
rights, such cash will be treated as having been received in redemption of such
holder's First United Common Stock, subject to the provisions and limitations of
Section 302 of the Code.
<PAGE> 8
Regions Financial Corporation
First United Bancorporation
January 23, 1998
Page 8
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 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 the Community Merger or Bank Mergers, intercompany
transactions, accounting methods, bad debt reserves, or changes in accounting
methods resulting from the Merger.
This opinion is being provided solely for the benefit of Regions, First
United and First United's 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 2,197,469 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
January 22, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
First United Bancorporation
We consent to the use of our report dated January 22, 1997, related to the audit
of First United Bancorporation as of December 31, 1996 and 1995 and for each of
the years in the three-year period ended December 31, 1996, incorporated herein
by reference and to the reference to our firm under the heading "Experts" in
the proxy statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Greenville, South Carolina
January 23, 1998
<PAGE> 1
EXHIBIT 23.5
CONSENT OF THE CARSON MEDLIN COMPANY
We hereby consent to the inclusion as Appendix B to the Proxy
Statement/Prospectus constituting part of the Registration Statement on Form
S-4 of Regions Financial Corporation of our letter to the Board of Directors of
First United Bancorporation and to the references made to such letter and to
the firm in such 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/ The Carson Medlin Company
THE CARSON MEDLIN COMPANY
Raleigh, North Carolina
January 23, 1998
