<PAGE> 1
As filed with the Securities and Exchange Commission on January 28, 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)
----------------------
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<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35203
(205) 326-7100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------
Copies to:
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<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III JOHN P. GREELEY
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD SMITH, MACKINNON, GREELEY, BOWDOIN & EDWARDS, P.A.
SOMERVILLE 601 PENNSYLVANIA AVENUE, N.W. CITRUS TOWER, SUITE 800
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 255 SOUTH ORANGE AVENUE
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 ORLANDO, FLORIDA 32801
(205) 250-5000 (202) 508-3303 (407) 843-7300
</TABLE>
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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
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<CAPTION>
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
registered registered per unit* offering price* registration fee
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<S> <C> <C> <C> <C>
Common Stock 1,038,196 $ 38.03 $39,482,594 $ 11,647.36
========================================================================================================================
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*Calculated in accordance with Rule 457(f) based on the average of the current
bid and asked prices of the common stock of the company being acquired on the
Nasdaq National Market on January 22, 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
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<CAPTION>
CAPTION OR LOCATION IN
FORM S-4 ITEM PROXY STATEMENT/PROSPECTUS
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1. Forepart of registration statement and outside front
cover page of prospectus.............................. Outside Front Cover of Proxy
Statement/Prospectus; Facing Page of
Registration Statement; Cross-Reference Sheet.
2. Inside front and outside back cover of prospectus..... Available Information; Documents
Incorporated by Reference; Table of
Contents.
3. Risk factors, ratio of earnings to fixed charges and
other information..................................... Summary; Comparative Market Prices and Dividends.
4. Terms of the transaction.............................. Summary; Description of the Transaction;
Effect of the Merger on Rights of
Stockholders; Description of Regions
Common Stock.
5. Pro forma financial information....................... Summary.
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............. Not Applicable.
16. Information with respect to S-2 or S-3 companies...... Business of KFB; Voting Securities and
Principal Stockholders of KFB
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 Key Florida Bancorp, Inc. Stockholder:
You are cordially invited to attend the Special Meeting of Stockholders of
Key Florida Bancorp, Inc. ("KFB") to be held at the El Conquistador Country
Club, 4350 El Conquistador Parkway, Bradenton, Florida, 34210 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, dated as of November 25,
1997 (the "Agreement"), entered into with Regions Financial Corporation
("Regions") pursuant to which KFB will merge (the "Merger") with and into
Regions, and Liberty National Bank (the "Bank"), a wholly owned subsidiary of
KFB, will become a wholly owned subsidiary of Regions. Upon consummation of the
Merger, each share of KFB common stock issued and outstanding (except for
certain shares held by KFB, Regions, or their respective subsidiaries) will be
converted into .3666 of a share of Regions common stock. The Carson Medlin
Company has advised the Board of Directors that in its opinion the aggregate
consideration provided for in the Agreement is fair, from a financial point of
view, to the stockholders of KFB.
The accompanying Proxy Statement/Prospectus includes a description of the
proposed Merger and provides other specific information concerning the Special
Meeting, KFB, the Bank, and Regions. 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 KFB has agreed to vote those KFB 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 KFB stockholders.
It is important to understand that approval of the Agreement requires the
affirmative vote of a majority of the common stock of KFB entitled to vote at
the Special Meeting, not just a majority of the votes cast. Consequently, a
failure to vote will have the same effect as a vote against the Agreement.
Accordingly, whether or not you plan to attend the Special Meeting, you are
urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Special Meeting, you may vote in person if you wish, even if you
previously have returned your proxy card. The proposed Merger with Regions is a
significant step for KFB, 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,
Harvey E. Anderson
Chairman of the Board
<PAGE> 4
KEY FLORIDA BANCORP, INC.
6001 26TH STREET, BRADENTON, FLORIDA, 34207
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD _______, 1998
Notice is hereby given that a Special Meeting of Stockholders (the "Special
Meeting") of Key Florida Bancorp, Inc. ("KFB"), a bank holding company, will be
held at the El Conquistador Country Club, 4350 El Conquistador Parkway,
Bradenton, Florida, 34210 on _______, 1998, at _______:00 p.m., local time, for
the following purposes:
1. Merger. To consider and vote on the Agreement and Plan of Merger, dated
as of November 25, 1997 (the "Agreement"), by and between KFB and Regions
Financial Corporation ("Regions") pursuant to which (i) Regions will acquire all
of the issued and outstanding common stock of KFB through the merger of KFB with
and into Regions (the "Merger"), (ii) each share of KFB common stock (except for
certain shares held by KFB, Regions, or their respective subsidiaries) will be
converted into .3666 of a share of Regions common stock, and (iii) each KFB
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 or postponing the Special
Meeting to permit, if necessary, further solicitation of proxies.
Only stockholders of record at the close of business on January 30, 1998,
are entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof.
The Board of Directors of KFB unanimously recommends that holders of KFB
common stock vote to approve the Agreement.
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 KFB
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
Harvey E. Anderson
Chairman of the Board
_______, 1998
<PAGE> 5
KEY FLORIDA BANCORP, INC. REGIONS FINANCIAL CORPORATION
PROXY STATEMENT PROSPECTUS
FOR SPECIAL MEETING OF STOCKHOLDERS COMMON STOCK
TO BE HELD _______, 1998 (PAR VALUE $.625)
_______ 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 Key
Florida Bancorp, Inc., a bank holding company organized and existing under the
laws of the state of Florida ("KFB") upon consummation of the proposed merger
(the "Merger") described herein, by which KFB will merge with and into Regions
pursuant to the terms of an Agreement and Plan of Merger, dated as of November
25, 1997, by and between Regions and KFB (the "Agreement").
On the effective date of the Merger (the "Effective Date"), except as
otherwise described herein, (i) KFB will merge with and into Regions, (ii) each
outstanding share of the $0.01 par value common stock of KFB ("KFB Common
Stock") (except for certain shares held by KFB, Regions, or their respective
subsidiaries) will be converted into .3666 of a share of Regions Common Stock,
and (iii) each holder of KFB 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.
As a result of the Merger, the separate existence of KFB will cease, and
Liberty National Bank, a wholly owned subsidiary of KFB (the "Bank"), will
become a wholly owned subsidiary of Regions. Regions anticipates combining the
Bank with its principal banking subsidiary as soon as reasonably practical. For
a further description of the terms of the Merger, see "Description of the
Transaction."
This Prospectus also constitutes a Proxy Statement of KFB and is being
furnished to the stockholders of KFB in connection with the solicitation of
proxies by the Board of Directors of KFB 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 KFB on or about _______,
1998.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Proxy Statement/Prospectus is_______, 1998.
<PAGE> 6
AVAILABLE INFORMATION
Regions and KFB 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 KFB. 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 KFB 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 KFB was
supplied by KFB.
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 of 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.
<PAGE> 7
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 KFB pursuant to
the Exchange Act are hereby incorporated by reference herein:
1. KFB's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996;
2. KFB's Quarterly Reports on Form 10-QSB for the three months ended
March 31, June 30, and September 30, 1997;
3. KFB's Current Report on Form 8-K filed with the SEC on November 12,
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.
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 KFB, FROM LYNNE M. SCHOOLEY, CORPORATE SECRETARY,
6001 26TH STREET, BRADENTON, FLORIDA, 34207 (TELEPHONE (941) 751-4460). IN ORDER
TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY
_______, 1998.
3
<PAGE> 8
TABLE OF CONTENTS
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AVAILABLE INFORMATION.............................................................................................2
DOCUMENTS INCORPORATED BY REFERENCE...............................................................................2
SUMMARY...........................................................................................................6
The Parties..................................................................................................6
Special Meeting of KFB Stockholders..........................................................................7
Record Date; Vote Required...................................................................................7
The Merger; Exchange Ratio...................................................................................7
Absence of Dissenters' Rights................................................................................7
Reasons for the Merger; Recommendation of KFB's Board
of Directors................................................................................................8
Opinion of KFB's Financial Advisor...........................................................................8
Effective Date...............................................................................................8
Exchange of Stock Certificates...............................................................................9
Regulatory Approvals and Other Conditions....................................................................9
Waiver, Amendment, and Termination of the Agreement..........................................................9
Interests of Certain Persons in the Merger...................................................................9
Certain Federal Income Tax Consequences of the Merger.......................................................10
Certain Differences in Stockholders' Rights.................................................................10
Comparative Market Prices of Common Stock...................................................................10
Comparative Per Share Data..................................................................................11
Selected Financial Data.....................................................................................12
THE SPECIAL MEETING..............................................................................................15
General.....................................................................................................15
Record Date; Vote Required..................................................................................15
DESCRIPTION OF THE TRANSACTION...................................................................................16
General.....................................................................................................16
Treatment of KFB Options....................................................................................16
Background of and Reasons for the Merger....................................................................17
Opinion of KFB's Financial Advisor..........................................................................18
Effective Date of the Merger................................................................................24
Distribution of Regions Stock Certificates and
Payment for Fractional Shares.............................................................................24
Conditions to Consummation of the Merger....................................................................25
Regulatory Approvals........................................................................................25
Waiver, Amendment, and Termination of the Agreement.........................................................26
Conduct of Business Pending the Merger......................................................................27
Management Following the Merger.............................................................................29
Interests of Certain Persons in the Merger..................................................................30
Absence of Dissenters' Rights...............................................................................31
Certain Federal Income Tax Consequences of the Merger.......................................................33
Accounting Treatment........................................................................................34
Expenses and Fees...........................................................................................34
Resales of Regions Common Stock.............................................................................35
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS...................................................................36
Antitakeover Provisions Generally...........................................................................36
Authorized Capital Stock....................................................................................37
Amendment of Certificate of Incorporation and Bylaws........................................................37
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4
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Classified Board of Directors and Absence of Cumulative Voting...............................................38
Removal of Directors.........................................................................................38
Limitations on Director Liability............................................................................39
Indemnification..............................................................................................39
Special Meetings of Stockholders.............................................................................40
Actions by Stockholders Without a Meeting....................................................................40
Stockholder Nominations and Proposals........................................................................40
Mergers, Consolidations, and Sales of Assets Generally.......................................................41
Business Combinations with Certain Persons...................................................................41
Dissenters' Rights...........................................................................................42
Stockholders' Rights to Examine Books and Records............................................................43
Dividends....................................................................................................43
COMPARATIVE MARKET PRICES AND DIVIDENDS...........................................................................43
BUSINESS OF KFB ..............................................................................................45
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF KFB...............................................................45
BUSINESS OF REGIONS...............................................................................................46
General......................................................................................................46
Recent Developments..........................................................................................47
CERTAIN REGULATORY CONSIDERATIONS.................................................................................49
General......................................................................................................49
Payment of Dividends.........................................................................................49
Capital Adequacy.............................................................................................51
Support of Subsidiary Institutions...........................................................................52
Prompt Corrective Action.....................................................................................53
FDIC Insurance Assessments...................................................................................54
DESCRIPTION OF REGIONS COMMON STOCK...............................................................................54
STOCKHOLDER PROPOSALS.............................................................................................55
EXPERTS...........................................................................................................55
OPINIONS..........................................................................................................55
APPENDIX A--Agreement and Plan of Merger.........................................................................A-1
APPENDIX B--Opinion of The Carson-Medlin Company ................................................................B-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 "KFB" refer to those entities,
respectively, and, where the context requires, to those entities and their
respective subsidiaries.
THE PARTIES
KFB. KFB is a bank holding company organized and existing under the laws of
the state of Florida, headquartered in Bradenton, Florida. KFB operates
principally through the Bank, which is a wholly owned subsidiary of KFB and a
national bank and which provides a range of consumer and commercial banking
services through a total of seven offices in Manatee and Sarasota counties,
Florida. At September 30, 1997, KFB had total consolidated assets of
approximately $212 million, total consolidated deposits of approximately $198
million, and total consolidated stockholders' equity of approximately $13.1
million. KFB's principal executive office is located at 6001 26th Street West,
Bradenton, Florida, 34207 and its telephone number at such address is (941)
751-4400. See "Business of KFB."
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 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.
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 to acquire six financial institutions, three of which are
located in South Carolina, two in Georgia, and one in Louisiana. 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."
6
<PAGE> 11
SPECIAL MEETING OF KFB STOCKHOLDERS
The Special Meeting will be held at _______:00 p.m., local time, on
_______, 1998, at the El Conquistador Country Club, 4350 El Conquistador
Parkway, Bradenton, Florida, 34207, for the purpose of considering and voting on
approval of the Agreement and to transact such other business as may properly
come before the meeting. See "The Special Meeting."
RECORD DATE; VOTE REQUIRED
Only holders of record of KFB Common Stock at the close of business on
January 30, 1998 (the "Record Date"), will be entitled to vote at the Special
Meeting. The affirmative vote of a majority of the KFB Common Stock outstanding
and entitled to vote at the Special Meeting will be required to approve the
Agreement. As of the Record Date, there were _______ shares of KFB Common Stock
outstanding and entitled to be voted.
The directors and executive officers of KFB and their affiliates
beneficially owned, as of the Record Date, _______ shares (or approximately
_______% of the outstanding shares) of KFB Common Stock. Each member of the
Board of Directors of KFB has agreed to vote those KFB 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 KFB Common Stock. As of
that date, neither KFB nor Regions held any shares of KFB 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 KFB by Regions pursuant to
the Merger of KFB with and into Regions. On the Effective Date, each share of
KFB Common Stock then issued and outstanding (except for shares held by KFB,
Regions, or their respective subsidiaries, in each case other than shares held
in a fiduciary capacity or as a result of debts previously contracted) will be
converted into .3666 of a share of Regions Common Stock (the "Exchange Ratio").
No fractional shares of Regions Common Stock will be issued. Rather, cash will
be paid in lieu of any fractional share interest to which any KFB 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 immediately preceding the Effective
Date. See "Description of the Transaction--General."
ABSENCE OF DISSENTERS' RIGHTS
In accordance with the applicable provisions of the Florida Act and
because KFB Common Stock is quoted on the Nasdaq National Market, the holders
of shares of KFB Common Stock are not afforded the right to dissent from the
Merger and to receive an appraised value of such shares in cash.
<PAGE> 12
REASONS FOR THE MERGER; RECOMMENDATION OF KFB'S BOARD OF DIRECTORS
KFB'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, KFB and its stockholders. Accordingly, KFB's Board unanimously
recommends that KFB's stockholders vote FOR approval of the Agreement. EACH
MEMBER OF THE BOARD OF DIRECTORS OF KFB HAS AGREED TO VOTE THOSE SHARES OF KFB
COMMON STOCK OVER WHICH SUCH MEMBER HAS VOTING AUTHORITY (OTHER THAN IN A
FIDUCIARY CAPACITY) IN FAVOR OF THE AGREEMENT. In approving the Agreement, KFB's
directors considered KFB's financial condition, the financial terms and the
income tax consequences of the Merger, the likelihood of the Merger being
approved by regulatory authorities without undue conditions or delay, legal
advice concerning the proposed Merger, and the opinion of The Carson Medlin
Company ("Carson Medlin") that, as of the date of its opinion, the aggregate
consideration provided for in the Agreement is fair, from a financial point of
view, to the stockholders of KFB. See "Description of the
Transaction--Background of and Reasons for the Merger."
OPINION OF KFB'S FINANCIAL ADVISOR
KFB retained Carson Medlin as financial advisor in connection with the
Merger. Carson Medlin has rendered an opinion to KFB 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
aggregate consideration provided for in the Agreement is fair, from a financial
point of view, to the stockholders of KFB. The opinion of Carson Medlin is
attached as Appendix B to this Proxy Statement/Prospectus. KFB 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. The opinion issued by Carson Medlin was addressed to the
Board of Directors of KFB for use by such Board in its consideration of the
financial terms of the Merger. Such opinion does not constitute a recommendation
to any KFB stockholder as to how the stockholder should vote at the Special
Meeting. See "Description of the Transaction--Opinion of KFB'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 Florida Certificate of Merger become
effective with, respectively, the Delaware Secretary of State and the Florida
Secretary of State. Unless otherwise agreed upon by Regions and KFB, and subject
to the conditions to the obligations of the parties to effect the Merger, the
parties will use their reasonable efforts to cause the Effective Date to occur
on the last business day of the month in which the last of the following events
occurs: (i) the effective date (including the expiration of any applicable
waiting period) of the last federal or state regulatory approval required for
the Merger and (ii) the date on which the Agreement is approved by the requisite
vote of KFB stockholders; or such later date within 30 days thereof as specified
by Regions. The parties expect that all conditions to consummation of the Merger
will be satisfied so that the Merger can be consummated during the first quarter
of 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."
8
<PAGE> 13
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 KFB a form letter of transmittal, together with instructions for the exchange
of such stockholders' certificates representing shares of KFB Common Stock for
certificates representing shares of Regions Common Stock. KFB 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"). Application for the requisite approval
was filed with the Federal Reserve, which has issued its approval of the Merger.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of KFB stockholders, receipt of an
opinion of counsel as to the tax-free nature of certain aspects of the Merger,
and certain other conditions. See "Description of the Transaction--Conditions to
Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
The Agreement generally may be terminated, and the Merger abandoned, by
mutual consent of the Boards of Directors of both KFB and Regions, or by action
of the Board of Directors of either company under certain circumstances,
including if the Merger is not consummated by August 31, 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, KFB
and the Bank will continue their respective operations as a bank holding company
and a national bank. See "Description of the Transaction--Waiver, Amendment, and
Termination of the Agreement." The Agreement may be amended at any time prior to
the Effective Date by written agreement of Regions and KFB upon the approval of
the Board of Directors of each party; provided, that after approval by KFB
stockholders of the Agreement, no amendment may be made that decreases the
consideration to be received by the KFB stockholders without the further
approval of such stockholders. In addition, substantially all of the conditions
to consummation of the Merger may be waived, in whole or in part, to the extent
permissible under applicable law, by the party for whose benefit the condition
has been imposed, without the approval of KFB stockholders.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of KFB's management and Board of Directors have interests
in the Merger in addition to their interests as stockholders of KFB 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 KFB Common Stock. KFB also has
entered into employment agreements with certain officers which provide for
severance pay and other benefits to be paid to such individuals upon the
occurrence of a change in control of KFB, including the Merger. See "Description
of the Transaction--Interests of Certain Persons in the Merger."
9
<PAGE> 14
DIRECTOR AGREEMENTS
In conjunction with the Agreement, each of the directors of KFB has entered
into an agreement with Regions which provides, among other things, that the
director will not sell, pledge, or otherwise dispose of the directors' shares of
KFB Common Stock and will vote such shares of KFB Common Stock in favor of the
Agreement. See "The Merger - Director Agreements."
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 KFB Common
Stock for Regions Common Stock will not give rise to gain or loss to KFB
stockholders, except to the extent of any cash received in lieu of fractional
share interests. Gain recognition, if any, will not be in excess of the amount
of cash received. Subject to the provisions and limitations of Section 302(a) of
the Code, gain or loss will be recognized upon the receipt of cash in lieu of
fractional share interests. See "Description of the Transaction--Certain Federal
Income Tax Consequences of the Merger."
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCE OF EACH STOCKHOLDER AND OTHER CIRCUMSTANCES, EACH KFB
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, KFB stockholders, whose rights are governed by the
Florida Act and by KFB'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 KFB
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 KFB Common Stock are traded in the
over-the-counter market and are quoted in the Nasdaq National Market. The
following table sets forth, as of the indicated dates, (i) the last sale price
of Regions Common Stock and KFB Common Stock and (ii) the equivalent per share
price (as explained below) of KFB Common Stock. The indicated dates of November
6, 1997, and _______, 1998 represent, respectively, the last trading day
immediately preceding public announcement of the proposed acquisition of KFB by
Regions and the latest practicable date prior to the mailing of this Proxy
Statement/Prospectus.
10
<PAGE> 15
<TABLE>
<CAPTION>
EQUIVALENT
PER
SHARE PRICE
REGIONS KFB OF KFB
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK COMMON STOCK
- -------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
November 6, 1997 $ 38.13 $ 12.50 $ 13.98
_______, 1998
</TABLE>
The equivalent per share price of KFB 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 .3666. Stockholders are advised to obtain
current market quotations for Regions Common Stock and KFB 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 KFB, (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 KFB Common Stock, giving effect to the Merger. The Regions and KFB pro
forma combined information and the KFB pro forma Merger equivalent information
give effect to the Merger on a pooling-of-interests accounting basis and assume
an Exchange Ratio of .3666. 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
KFB, 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. See "Documents Incorporated by Reference," and "--Selected Financial
Data."
11
<PAGE> 16
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ --------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited) (Unaudited except Regions
and KFB historical)
<S> <C> <C> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical....................................... $ 1.62 $ 1.33 $ 1.85 $ 1.60 $ 1.55
KFB historical .......................................... .15 .14 .25 .64 .12
Regions and KFB pro forma combined(1).................... 1.61 1.84 1.60 1.55
KFB pro forma Merger equivalent(2)....................... .59 .67 .59 .57
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical....................................... .60 .525 .70 .66 .60
KFB historical........................................... -- -- -- -- --
KFB pro forma Merger equivalent(3)....................... .22 .19 .26 .24 .22
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical....................................... 13.58 12.43 12.76 11.69 10.63
KFB historical........................................... 4.76 4.74 4.60 7.81 7.43
Regions and KFB pro forma combined(1).................... 13.58
KFB pro forma Merger equivalent(2)....................... 4.98
</TABLE>
(1) Represents the combined results of Regions and KFB as if the Merger were
consummated on January 1, 1994 (or September 30, 1997, in the case of Book
Value Per Share Data), and were accounted for as a pooling of interests.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of .3666 of a share of Regions Common Stock for each share of KFB Common
Stock.
(3) Represents historical dividends declared per share by Regions multiplied by
the Exchange Ratio of .3666 of a share of Regions Common Stock for each
share of KFB Common Stock.
SELECTED FINANCIAL DATA
The following tables present certain selected historical financial
information for Regions and KFB. The data should be read in conjunction with the
historical financial statements, related notes, and other financial information
concerning Regions and KFB incorporated by reference or included herein. Interim
unaudited data for the nine months ended September 30, 1997 and 1996 of Regions
and KFB reflect, in the opinion of the respective managements of Regions and
KFB, 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."
12
<PAGE> 17
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 periods prior to 1996 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%.
13
<PAGE> 18
Selected Historical Financial Data of KFB
The following sets forth certain selected historical financial data of KFB
for the periods indicated. On July 30, 1996, KFB and the Bank closed the merger
of Key Florida Bank, FSB (a former subsidiary of KFB) with and into the Bank.
Due to the change in majority ownership interest to that of the Bank
stockholders, the merger was considered to be an acquisition by the Bank of KFB
and its subsidiary. The transaction was accounted for under the purchase method
of accounting. Due to the recapitalization resulting from the merger
transaction and the resulting change in control to the Bank stockholders, the
operating results and the financial data below for the years ended December 31,
1995 and 1994 reflect those of the Bank.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- ---------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(Unaudited)
(In thousands except per share data and ratios)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income................ $ 12,283 $ 7,274 $ 11,078 $ 6,856 $ 4,754
Total interest expense .............. 6,456 3,678 5,798 3,682 2,212
Net interest income.................. 5,827 3,596 5,280 3,174 2,542
Provision for loan losses............ 361 257 257 362 276
Net interest income after
loan loss provision............. 5,466 3,339 5,023 2,812 2,266
Total noninterest income
excluding security gains (losses) 616 287 482 579 447
Security gains (losses).............. 88 1 (14) (6) 5
Total noninterest expense............ 5,538 3,140 4,771 2,472 2,664
Income tax expense................... 221 178 284 351 (51)
Net income........................... 411 309 436 562 105
PER SHARE DATA:
Net income........................... $ .15 $ .14 $ .25 $ .64 $ .12
Cash dividends....................... -- -- -- -- --
Book value........................... 4.76 4.74 4.60 7.81 7.43
OTHER INFORMATION:
Average number of shares outstanding 2,800 2,196 1,715 879 845
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets......................... $ 212,372 $ 198,603 $ 200,890 $ 96,069 $ 79,504
Securities held to maturity.......... -- -- -- -- --
Securities available for sale........ 26,601 29.524 27,414 21,294 21,471
Loans, net of unearned income........ 159,133 146,963 153,709 65,744 49,339
Total deposits....................... 197,913 183,972 187,347 87,955 72,717
Long-term debt....................... 125 149 143 0 0
Stockholders' equity................. 13,133 12,988 12,691 7,349 6,286
PERFORMANCE RATIOS:
Return on average assets (1)......... .27% .34% .31% .63% .15%
Return on average stockholders'
equity (1)...................... 4.21 4.70 4.43 8.02 1.63
Net interest margin (1).............. 4.09 4.30 4.03 3.78 3.93
Efficiency (2)....................... 85.96 80.87 82.79 66.16 89.06
Dividend payout...................... -- -- -- -- --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income (1)...... .19% .26% .16% .15% .50%
Problem assets to net loans and
other real estate (3)........... 1.51 1.30 1.36 1.26 .73
Nonperforming assets to net loans
and other real estate (4)....... 1.71 1.30 1.36 1.26 1.76
Allowance for loan losses to loans,
net of unearned income.......... .86 .89 .85 1.06 .86
Allowance for loan losses to
nonperforming assets (4)........ 70.91 93.70 62.73 83.71 49.03
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets.................. 6.36% 7.26% 7.05% 7.90% 9.23%
Average loans to average deposits 91.63 95.92 89.44 79.02 78.44
Tier 1 risk-based capital (5)........ 9.01 9.17 9.04 11.07 13.09
Total risk-based capital (5)......... 10.01 10.19 10.05 12.13 13.93
Tier 1 leverage (5).................. 5.96 6.69 5.91 7.98 8.84
</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%.
14
<PAGE> 19
THE SPECIAL MEETING
GENERAL
This Proxy Statement/Prospectus is being furnished to the holders of KFB
Common Stock in connection with the solicitation by the KFB Board of Directors
of proxies for use at the Special Meeting, at which KFB 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 El Conquistador
Country Club, 4350 El Conquistador Parkway, Bradenton, Florida, 34210.
Stockholders of Regions are not required to approve the Agreement and the
transactions contemplated thereby.
KFB stockholders are requested promptly to sign, date, and return the
accompanying proxy card to KFB in the enclosed postage-paid, addressed envelope.
Any KFB 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
KFB a signed proxy card bearing a later date, provided that such notice or proxy
card is actually received by KFB 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 Key Florida Bancorp, Inc., 6001 26th
Street, Bradenton, Florida, 34207, Attention: Lynne M. Schooley, Corporate
Secretary. A proxy will not be revoked by death or supervening incapacity of the
stockholder executing the proxy unless, before the vote, notice of such death or
incapacity is filed with the Secretary. The shares of KFB 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, KFB is unaware of
any other matter to be presented at the Special Meeting.
Solicitation of proxies will be made by mail but also may be made by
telephone or telegram or in person by the directors, officers, and employees of
KFB, 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.
KFB stockholders should not forward any stock certificates with their proxy
cards.
RECORD DATE; VOTE REQUIRED
KFB's Board of Directors has established the close of business on January
30, 1998, as the Record Date for determining the KFB stockholders entitled to
notice of and to vote at the Special Meeting. Only KFB 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 KFB
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 KFB to
beneficially own more than 5.0% of the outstanding shares of KFB Common Stock as
of the Record Date, see "Voting Securities and Principal Stockholders of KFB."
15
<PAGE> 20
The presence, in person or by proxy, of a majority of the outstanding
shares of KFB Common Stock is necessary to constitute a quorum of the
stockholders in order to take action at the Special Meeting. For these purposes,
shares of KFB 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 KFB 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 a majority of the KFB Common Stock
outstanding and entitled to vote at the Special Meeting, and not just a majority
of the votes cast. Therefore, 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 KFB and their affiliates
beneficially owned, as of the Record Date, _______ shares (or approximately
_______% of the outstanding shares) of KFB Common Stock. The directors and
executive officers of Regions and their affiliates beneficially owned, as of the
Record Date, no shares of KFB Common Stock. As of that date, no subsidiary of
either KFB or Regions held any shares of KFB 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 KFB Common Stock (excluding any shares held by KFB, Regions,
or their respective subsidiaries, other than shares held in a fiduciary capacity
or as a result of debts previously contracted) issued and outstanding at the
Effective Date will be converted into .3666 of a share of Regions Common Stock.
Each share of Regions Common Stock outstanding immediately prior to the
Effective Date will remain outstanding and unchanged as a result of the Merger.
No fractional shares of Regions Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, Regions will make a cash
payment equal to the fractional part of a share which a KFB 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 prior to the Effective Date.
TREATMENT OF KFB OPTIONS
The Agreement provides that all rights with respect to KFB Common Stock
pursuant to stock options granted by KFB under its stock option plans which are
outstanding at the Effective Date, whether or not then exercisable, will be
converted into and will become options 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
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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 KFB who as of the date of this
Proxy Statement/Prospectus hold outstanding options are _______ who hold
exercisable options to purchase _______ shares of KFB Common Stock,
respectively.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger.
From time to time during the first half of 1997, KFB had received periodic
inquiries from other financial institutions regarding a possible combination or
merger transaction with KFB. On July 17, 1997, the KFB Board discussed retaining
an investment banking firm which would assist KFB in the assessment of its
current strategic position and to advise KFB on potential alternatives to
enhance and/or realize stockholder value. On August 7, 1997, the KFB Board met
with representatives from three separate investment banking firms. The Board and
these representatives discussed an analysis of three strategic options for KFB,
including raising capital for KFB by the sale of additional KFB Common Stock,
proceeding with the internal growth of KFB in existing markets, or selling KFB.
With regard to selling additional capital, the Board considered that this option
may result in KFB stockholders receiving less value for their shares than if
there was a sale of KFB. With regard to the alternative for continued growth in
earnings by KFB on an independent basis, the Board considered that this option
may not allow KFB to accelerate growth to a greater asset size and more
competitive position with other financial institutions. The Board also
considered that the alternatives of raising additional capital or having KFB
continue on an independent basis also had the risk that the prices being
received for the sales of financial institutions in the prevailing market could
decline over the ensuing years. The Board also considered the costs and
operational risks associated with further investment in the Bank's operational
systems and acquiring and instituting new technology in order to enhance its
ability to compete in the rapidly changing financial institutions industry. With
respect to the alternative for a sale of KFB, the Board considered factors
including the trend in the financial institutions industry for consolidation and
the multiples being paid for independent community banks, and that a sale would
afford liquidity for KFB stockholders with less risk than reliance on future KFB
growth and market penetration.
While not making any final decision whether any transaction involving a
sale of KFB should be entered into, the Board authorized KFB to retain Carson
Medlin, an investment banking firm which specializes in the securities of
southeastern United States financial institutions, to solicit indications of
interest that might warrant serious consideration and potentially result in an
agreement to merge or otherwise be acquired. On August 13, 1997, KFB retained
Carson Medlin as investment bankers to serve as the exclusive financial advisor
to KFB.
Through the remainder of August, 1997 representatives of KFB and Carson
Medlin identified and evaluated potential acquirers. During the first week of
September, 1997, Carson Medlin contacted 12 companies (including Regions) to
explore, more formally, their interest in acquiring KFB. As to the 12 companies
contacted, nine (including Regions) elected to sign a confidentiality agreement
to review confidential information with respect to KFB. On September 29, 1997,
Carson Medlin received preliminary indications of interest from five companies
(not including Regions). Regions indicated on September 23, 1997 that, while
Regions was interested in pursuing a transaction with KFB, it also was pursuing
other strategic alternatives, and was not in a position to meet KFB's schedule
for a preliminary proposal.
On October 3, 1997, Carson Medlin met with KFB's executive committee to
review the preliminary proposals. The committee authorized Carson Medlin to
continue its discussions with the interested parties. On October 13, 1997,
Carson Medlin and the committee further discussed the proposals by telephone
conference and, based upon the proposals received, the committee authorized four
of the companies to conduct their respective due diligence reviews of KFB.
On October 16, 1997, one of the five companies that originally had
expressed an interest in KFB advised Carson Medlin that it was no longer
interested in pursuing a transaction with KFB, primarily due to that party's
successful bid in another transaction. From October 20 to October 28, 1997 three
financial institutions conducted a due diligence review of KFB. On October 31,
1997, Regions called Carson Medlin to advise of Regions' renewed interest in
KFB. Regions was advised that final proposals for a transaction with KFB were
due on November 5, 1997. On November 5, 1997, Carson Medlin received three
proposals from parties that had already performed their due diligence reviews of
KFB, plus Regions. On November 7, 1997, the KFB Board met with Carson Medlin
representatives and legal counsel and reviewed the proposals received. At that
meeting, the Board of Directors reviewed the proposals received, including that
from Regions (which had a value per share of KFB Common Stock in excess of the
proposals received from the other parties). The Board unanimously agreed to
accept the proposal from Regions and authorized KFB to enter into a letter of
intent with Regions regarding an acquisition by Regions of KFB at a price of
.3666 of a share of Regions Common Stock for each outstanding share of KFB
Common Stock. Among other things, the letter of intent was subject to a due
diligence review by Regions of KFB. At that meeting, the Board of Directors also
directed KFB's officers, with the assistance of KFB's financial and legal
advisors, to commence negotiations of a definitive agreement that would be
brought back to the KFB Board of Directors for review and consideration.
Following the meeting, KFB announced that it had entered into a letter of intent
with Regions.
From November 10, 1997 through November 12, 1997, Regions performed a due
diligence of KFB. From November 10 through November 24, 1997, Regions and KFB
reviewed drafts, and negotiated the terms, of a definitive agreement. As part of
the negotiations, KFB representatives had requested that the definitive
agreement include pricing collars which would provide some adjustment in the
Exchange Ratio in the event of certain decreases in the trading value of Regions
Common Stock during the pendency of the transaction. Regions indicated it was
not interested in pursuing a transaction structured on that basis. The agreement
was reviewed and approved by the Board of Directors of KFB at a meeting held on
November 25, 1997. At this meeting, legal counsel reviewed generally for KFB's
directors the fiduciary obligations of directors in sales of financial
institutions and commented on the form of definitive agreement, the agreement to
be entered into between KFB's directors and Regions, and the change of control
provisions of the employment agreements previously entered into with several KFB
officers (see "--Interests of Certain Persons in the Merger") that would arise
as a result of the Merger. At the meeting, representatives of Carson Medlin
rendered an opinion that the aggregate consideration provided for in the
Agreement is fair, from a financial point of view, to the stockholders of KFB.
KFB's Board then unanimously approved the Agreement and the transactions
contemplated thereby. KFB's management also was authorized to execute the
Agreement, which was signed by Regions and KFB effective November 25, 1997.
KFB's Reasons for the Merger. In approving the Merger, the directors of KFB
considered a number of factors. Without assigning any relative or specific
weights to the factors, the KFB Board of Directors considered the following
material factors:
(a) the information presented to the directors by the management of KFB
concerning the business, operations, earnings, asset quality, and financial
condition of KFB, including the competitive and regulatory environment for
financial institutions generally;
(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
KFB Common Stock;
(c) the nonfinancial terms of the Merger, including the treatment of the
Merger as a tax-free exchange of KFB Common Stock for Regions Common Stock for
federal and state income tax purposes (except in respect of cash received for
KFB Common Stock);
(d) that the Merger will enable KFB stockholders to exchange their shares
of KFB Common Stock for shares of common stock of a larger and more diversified
entity, the stock of which is more widely held and more actively traded;
(e) that the Merger will enable KFB stockholders to own stock in a
financial institution that has historically paid cash dividends to its
stockholders as compared to KFB which has not paid cash dividends to its
stockholders since February 1991.
(f) the likelihood of the Merger being approved by applicable regulatory
authorities without undue conditions or delay; and
(g) the opinion rendered by KFB's financial advisor to the effect that the
aggregate consideration provided for in the Agreement is fair, from a financial
point of view, to the holders of KFB Common Stock.
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The terms of the Merger were the result of arms-length negotiations between
representatives of KFB and representatives of Regions. Based upon the
consideration of the foregoing factors, the Board of Directors of KFB
unanimously approved the Merger as being in the best interests of KFB and its
stockholders. Each member of the Board of Directors of KFB has agreed to vote
those shares of KFB Common Stock over which such member has voting authority
(other than in a fiduciary capacity) in favor of the Merger.
KFB's Board of Directors unanimously recommends that KFB 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 KFB 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
KFB 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 KFB; 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 KFB'S FINANCIAL ADVISOR
Pursuant to an engagement letter dated August 13, 1997, the Board of
Directors of KFB engaged Carson Medlin to provide the Board of Directors of KFB
with a written opinion regarding the fairness of the Merger from a financial
point of view. KFB selected Carson Medlin as its financial advisor on the basis
of Carson Medlin's experience and expertise in representing community banks in
acquisition transactions. Carson Medlin is an investment banking firm which
specializes in the securities of financial institutions located in the
southeastern United States. As part of its investment banking activities, Carson
Medlin is regularly engaged in the valuation of financial institutions and
transactions relating to their securities.
As part of its engagement, representatives of Carson Medlin attended the
meeting of KFB's Board held on November 25, 1997, at which meeting the terms of
the proposed Merger were discussed and considered. Carson Medlin delivered its
written opinion (dated as of that date) to the Board of Directors of KFB stating
that the aggregate consideration to be provided for in the Agreement is fair,
from a financial point of view, to the stockholders of KFB. 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 qualification and
limitation on the review undertaken by Carson Medlin in connection with its
opinion. Carson Medlin's opinion is addressed to KFB's Board of Directors and is
substantially identical to the written opinion delivered to KFB's Board dated
November 25, 1997. The summary of the opinion of Carson Medlin set forth in this
Proxy Statement/Prospectus is qualified in its entirety by reference to the full
text of such opinion. Carson Medlin's
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opinions to KFB's Board of Directors on the merger do not constitute a
recommendation to any KFB stockholder regarding how such stockholder should vote
at the Special Meeting.
No limitations were imposed by the Board of Directors or management of KFB
upon Carson Medlin with respect to the investigations made or the procedures
followed by Carson Medlin in rendering its opinions.
The preparation of a fairness opinion involves various determinations as to
the most appropriate 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. In connection with
rendering its opinions, Carson Medlin performed a variety of financial analyses.
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
or inaccurate 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 Regions and KFB and which may not be
realized. 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. Except as described below,
none of the analyses performed by Carson Medlin were assigned a greater
significance by Carson Medlin than any other.
Carson Medlin has relied upon, without independent verification, the
accuracy and completeness of the information reviewed by it for purpose of its
opinion. Carson Medlin did not undertake any independent evaluation or appraisal
of the assets and liabilities of Regions or KFB, nor was it furnished with any
such appraisals. Carson Medlin is not expert in the evaluation of loan
portfolios, including under-performing or non-performing assets, charge-offs or
the allowance for loan losses. It has not reviewed any individual credit files
of Regions or KFB. Instead, it has assumed that the allowances for each of
Regions and KFB are in the aggregate adequate to cover such losses. Carson
Medlin's opinion is necessarily based on economic, market and other conditions
existing on the date of its opinion, and on information as of various earlier
dates made available to it. Carson Medlin reviewed certain financial projections
prepared by Regions and KFB. Carson Medlin assumed that these projections were
prepared on a reasonable basis using the best and most current information
available to the managements of Regions and KFB, and that such projections will
be realized in the amounts and at the times contemplated thereby. Neither
Regions nor KFB publicly discloses internal management projections of the type
provided to Carson Medlin. Such projections were not prepared for, or with a
view toward, public disclosure. Carson Medlin assumed that the Merger will be
recorded as a pooling-of-interests under generally accepted accounting
principles.
In connection with its opinion, dated as of the date hereof, Carson Medlin
reviewed: (i) the Agreement; (ii) the annual reports to stockholders of Regions,
including the audited financial statements for the five years ended December 31,
1996; (iii) audited financial statements of KFB for the three years ended
December 31, 1996; (iv) the unaudited interim financial statements of Regions
for the nine months ended September 30, 1997; (v) the unaudited interim
financial statements for KFB for the nine months ended September 30, 1997; (vi)
certain financial and operating information with respect to the business,
operations and prospects of Regions and KFB; and (vii) this Proxy
Statement/Prospectus. In addition, Carson Medlin: (a) held discussions with
members of the senior management of Regions and KFB regarding the historical and
current business operations, financial condition and future prospects of their
respective companies; (b) reviewed the historical market prices and trading
activity for the common stock of Regions and KFB and compared them with those of
certain publicly traded companies which it deemed to be relevant; (c) compared
the results of operations of Regions and KFB with those of certain financial
institutions which it deemed to be relevant; (d) compared
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the financial terms of the Merger with the financial terms, to the extent
publicly available, of certain other recent business combinations of financial
institutions; (e) analyzed the pro form financial impact of the Merger on
Regions; and (f) conducted such other studies, analyses, inquiries and
examinations as Carson Medlin deemed appropriate.
Valuation Methodologies. The following is a summary of the principal
analyses performed by Carson Medlin and presented to the KFB Board of Directors
on November 25, 1997, in connection with Carson Medlin's opinion of that date.
Summary of the Proposal. Carson Medlin reviewed the terms of the proposed
Merger, including the form of consideration, the Exchange Ratio, the closing
price of Regions' Common Stock as of November 24, 1997, and the resulting price
per share of KFB Common Stock pursuant to the proposed Merger. Under the terms
of the Agreement, each outstanding share of KFB Common Stock will be converted
into .3666 of a share of Regions Common Stock resulting in an indicated
value of $13.95 per share based on the closing price of Regions' Common Stock on
November 24, 1997 of $38 1/16 per share. Carson Medlin calculated that the
indicated value represented a 43.1% premium over the closing price of KFB Common
Stock five days prior to the announcement of the letter of intent. The indicated
value also represented 293% of stated book value at September 30, 1997, 22.6
times estimated 1998 earnings, a 14.8% core deposit premium (defined as the
aggregate transaction value minus stated book value divided by core deposits)
and 18.6% of total assets of KFB at September 30, 1997.
Industry Comparative Analysis. In connection with rendering its opinion,
Carson Medlin compared selected operating results of KFB 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 KFB
than larger, more widely traded regional financial institutions. Carson Medlin
compared, among other factors, profitability, capitalization, and asset quality
of KFB to these financial institutions. Carson Medlin noted that based on
results through six months ended June 30, 1997:
- - KFB had a return on average assets (ROA) of 0.41%, compared to mean ROA of
1.24% for the SIBR Banks;
- - KFB had a return on average equity (ROE) of 6.4%, compared to mean ROE of
12.5% for the SIBR Banks;
- - KFB had common equity to total assets at June 30, 1997 of 6.33%, compared
to mean common equity to total assets of 9.69% for the SIBR Banks; and
- - KFB had non-performing assets (defined as loans 90 days past due,
nonaccrual loans and other real estate) to total loans net of unearned
income and other real estate at June 30, 1997 of 2.27%, compared to mean
nonperforming assets to total loans net of unearned income and other real
estate of 0.97% for the SIBR Banks.
This comparison indicated that KFB's financial performance was below the
average SIBR Bank for most of the factors considered.
Carson Medlin also compared selected operating results of Regions to those
of 8 other publicly-traded mid-size regional bank holding companies defined as
those with assets between $5 and $30 billion (the "Peer Banks") located in the
Southeast. The Peer Banks include: AmSouth Bancorporation, The Colonial
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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 trading volume. Carson Medlin
compared selected balance sheet data, asset quality, capitalization,
profitability ratios and market statistics using financial data at or for the
nine months ended September 30, 1997 and market data as of November 24, 1997.
This comparison showed, among other things, that:
- - for the nine months ended September 30, 1997, Regions' ROA was 1.41%
compared to a mean of 1.34% and a median of 1.33% for the Peer Banks;
- - for the nine months ended September 30, 1997, Regions' ROE was 16.26%
compared to a mean of 17.47% and a median of 16.98% for the Peer Banks;
- - for the nine months ended September 30, 1997, Regions' net interest margin
was 4.30% compared to a mean of 4.19% and a median of 4.13% for the Peer
Banks;
- - for the nine months ended September 30, 1997, Regions' efficiency ratio
(defined as non interest expense divided by the sum of non interest 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;
- - at September 30, 1997, Regions' stockholders' equity to total assets was
8.32% compare to a mean of 7.65% and a median of 7.39% for the Peer Banks;
- - at September 30,, 1997, Regions' non-performing assets to total assets were
0.49% compare to a mean of 0.39% and a median of 0.40% for the Peer Banks;
- - at September 30, 1997, the ratio of Regions' loan loss reserves to
non-performing assets was 180% compared to a mean of 272% and a median of
233% for the Peer Banks; and
- - at November 24, 1997, Regions' market capitalization was $5.2 billion
compared to the Peer Banks which ranged from a low of $1.4 billion to a
high of $4.2 billion.
This comparison indicated that Regions' financial performance is at or
above average in comparison to the Peer Banks for most of the factors
considered.
Comparable Transaction Analysis. Carson Medlin reviewed certain information
relating to 15 selected Central and Southwest Florida bank mergers with total
assets exceeding $100 million announced since January 1994, (the "Comparable
Transactions"). The Comparable Transactions were (acquiree/acquiror): First
Commerce Banks of Florida/The Colonial BancGroup, Inc.; Founders Financial
Corp./TAC Bancshares, Inc.; Mercantile Bank of Southwest Florida/FNB Corp.;
First Mercantile National Bank/Regions Financial Corp.; West Coast Bancorp/FNB
Corp.; Florida Gulfcoast Bancorp/Provident Bancorp; Fort Brooke
Bancorporation/The Colonial BancGroup, Inc.; Security National Corp./Huntington
Bancshares Incorporated; Tampa Banking Company/AmSouth Bancorporation; Southern
Banking Corp./The Colonial BancGroup, Inc.; United American Bank/The Colonial
BancGroup, Inc.; South Florida Banking Corp./The Colonial BancGroup, Inc.;
Southwest Banks, Inc./FNB Corp.; Citi-Bancshares, Inc./Huntington Bancshares
Incorporated; and Peoples Bank of Lakeland/Huntington Bancshares Incorporated.
Carson Medlin considered, among other factors, the earnings, capital level,
asset size and quality of assets of the acquired financial institutions. Carson
Medlin
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compared the transaction prices to trailing four quarter earnings, stated book
values, total assets and core deposit premiums.
On the basis of the Comparable Transactions, Carson Medlin calculated a
range of purchase prices as a percentage of book value for the Comparable
Transactions from a low of 151% to a high of 362%, with a mean of 238%. These
transactions indicated a range of values for KFB from $7.17 per share to $17.23
per share, with a mean of $11.35 per share (based on KFB's stated book value of
$4.76 per share at September 30, 1997). The consideration implied by multiplying
the Exchange Ratio and Regions' Common Stock price as of November 24, 1997 was
$13.95 per share and implies a price to book value multiple of 293% which is
above the average of the range for the Comparable Transactions.
Carson Medlin calculated a range of purchase prices as a multiple of
earnings for the Comparable Transactions, from a low of 17.0 times to a high of
24.3 times, with a mean of 21.0 times. These transactions indicated a range of
values for KFB from $10.54 to $15.07 per share, with a mean of $13.02 per share
(based on KFB's 1998 estimated earnings per share of $0.62 per share). The
consideration implied by the terms of the Agreement is $13.95 per share and
implies a price to earnings multiple of 22.5 times which is above the average 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 4.2% to a high of 25.4%,
with a mean of 14.7%. The premium on KFB's core deposits implied by the terms of
the Agreement is 14.8%, near the average 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 7.0% to
a high of 29.1%, with a mean of 20.0%. The percentage of total assets implied by
the terms of the Agreement is approximately 18.6%, slightly below the average of
the range for the Comparable Transactions.
No company or transaction used in Carson Medlin's analyses is identical to
Regions, KFB or the contemplated transaction. Accordingly, the results of these
analyses necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of Regions and KFB and
other factors that could affect the value of the companies to which they have
been compared.
Present Value Analysis. Carson Medlin calculated the present value of KFB
assuming that KFB remained an independent bank. For purposes of this analysis,
Carson Medlin utilized certain projections of KFB's future earnings. It assumed
that all of these earnings would be retained and that the KFB Common Stock would
be sold at the end of 5 years at 250% of projected book value. This value was
then discounted to present value utilizing discount rates of 14% through 16%.
These rates were selected because, in Carson Medlin's experience, they represent
the rates that investors in securities such as the KFB Common Stock would demand
in light of the potential appreciation and risks. On the basis of these
assumptions, Carson Medlin calculated that the present value of KFB as an
independent bank ranged from $11.89 per share to $12.97 per share. The
consideration implied by the terms of the Agreement was $13.95 per share which
falls above the high end of the range under present value analysis. Carson
Medlin noted that the present value analysis was included 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 the Regions Common Stock on a monthly basis from
December 1992 to October 1997. Carson Medlin also
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compared price performance of the Regions Common Stock during this period to the
eight Peer Banks. Carson Medlin considers Regions Common Stock to be liquid and
marketable in comparison with these Peer Banks and other bank holding companies.
Over the past four quarters ending September 30, 1997, the ratio of quarter
end stock price to trailing 12 months earnings per share for the Peer Banks
ranged from 14.3 times to 19.8 times. Regions' stock price to earnings ratio
ranged from 14.2 times to 18.5 times trailing 12 months earnings over the same
period. Regions Common Stock has traded on average at a slightly lower price to
earnings ratio than the Peer Banks.
The quarter end stock price as a percentage of book value for Peer Banks
over the four quarters ending September 30, 1997 ranged from 223% to 312%.
Regions' quarter end stock price to book ratio ranged from 208% to 277% over the
same four quarters. Regions Common Stock has traded slightly below average on a
price to book value basis compared to the Peer Banks.
Carson Medlin also examined the trading prices and volumes of KFB Common
Stock since it began trading on NASDAQ National Market System in May 1997,
although Carson Medlin did not place any weight on the market price of the KFB
Common Stock in preparing its fairness opinions.
Contribution Analysis. Carson Medlin reviewed the relative contributions in
terms of various balance sheet and income statement components to be made by KFB
and Regions to the combined institution based on (i) balance sheet data at
September 30, 1997, and (ii) nine month earnings as of September 30, 1997. The
income statement and balance sheet components analyzed included total assets,
net loans, total deposits, stockholders' equity, and net income. This analysis
showed that, while KFB stockholders would own approximately 0.8% of the
aggregate outstanding shares of the combined institution based on the Exchange
Ratio, KFB was contributing 0.9% of total assets, 1.0% of net loans, 1.1% of
total deposits, 0.7% of stockholders' equity, and 0.2% of nine months 1997 net
income.
Other Analysis. Carson Medlin also reviewed selected investment research
reports on and earnings estimates for Regions and prepared a stockholder claims
analysis.
The opinion expressed by Carson Medlin was based upon market, economic and
other relevant considerations as they existed and have been 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 KFB
could materially affect the assumptions used in preparing the opinion.
In connection with its opinion dated as of the date of this Proxy
Statement/Prospectus, Carson Medlin confirmed the appropriateness of its
reliance on the analyses used to render its November 25, 1997 opinion by
performing procedures to update certain of such analyses and reviewing the
assumptions on which its analyses were based and the factors considered in
connection therewith.
Compensation of Carson Medlin. Pursuant to an engagement letter dated
August 13, 1997, KFB engaged Carson Medlin to assist in effecting a transaction
similar to the Merger and to act as its financial advisor in connection with
such proposed transaction. KFB has paid Carson Medlin $25,000 to date for its
services pursuant to the terms of the engagement letter. In addition, KFB agreed
to pay Carson Medlin an Investment Banking Fee equal to 1.50% of the
consideration at the current price per share. The Investment Banking Fee is
payable in cash upon the consummation of the merger and will be reduced by the
$25,000 previously paid to Carson Medlin. KFB has also agreed to reimburse
Carson Medlin for its reasonable out-of-pocket expenses
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and to indemnify Carson Medlin against certain liabilities, including certain
liabilities under the federal securities laws.
EFFECTIVE DATE OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Date will occur on the date and at the time that the
Delaware Certificate of Merger and the Florida Certificate of Merger relating to
the Merger become effective with, respectively, the Delaware Secretary of State
and the Florida Secretary of State. Unless otherwise agreed upon by Regions and
KFB, and subject to the conditions to the obligations of the parties to effect
the Merger, the parties will use their reasonable efforts to cause the Effective
Date to occur on the last business day of the month in which the last of the
following events occur: (i) the effective date (including the expiration of any
applicable waiting period) of the last federal or state regulatory approval
required for the Merger and (ii) the date on which the Agreement is approved by
the requisite vote of KFB stockholders; or such later date within 30 days
thereof as may be specified by Regions.
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. Regions and KFB 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 KFB generally may terminate the
Agreement if the Merger is not consummated by August 31, 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 KFB a form letter of
transmittal, together with instructions for the exchange of such stockholders'
certificates representing shares of KFB Common Stock for certificates
representing shares of Regions Common Stock.
KFB 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 KFB Common Stock, together with a properly completed
letter of transmittal, there will be issued and mailed to each holder of KFB
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, KFB 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 KFB Common Stock has been
converted, regardless of whether such stockholders have surrendered their KFB
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 KFB 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.
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The stock transfer books of KFB will be closed at the effective time of the
Merger and thereafter there will be no transfers of shares of KFB Common Stock
on KFB's stock transfer books. If certificates representing shares of KFB Common
Stock are presented for transfer after the Effective Date, they will be canceled
and exchanged for the shares of Regions Common Stock and a check for the amount
due in lieu of fractional shares, if any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to a number of conditions, including,
but not limited to:
(a) approval from the Federal Reserve (which has been granted), and the
expiration of all applicable waiting periods associated with such approval,
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 transaction contemplated by the Agreement so as to
render inadvisable the consummation of the Merger;
(b) the approval by the holders of requisite number of shares of KFB 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 KFB Common Stock for Regions Common
Stock will not give rise to recognition of gain or loss to KFB 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 KFB 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 certain
undertakings from holders of KFB Common Stock who may be deemed to be
"affiliates" of KFB pursuant to the rules of the SEC.
REGULATORY APPROVALS
The Merger may not proceed in the absence of receipt of the requisite
regulatory approvals. Application for the approval of the Federal Reserve as
described below has been submitted, and the Federal Reserve has issued its
approval of the Merger.
Regions and KFB 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.
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The Merger requires the prior approval of the Federal Reserve, pursuant to
Section 3 of the BHC Act. In granting its approval under Section 3 of the BHC
Act, the Federal Reserve must take into consideration, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs of the communities to be served. The relevant statutes
prohibit the Federal Reserve from approving the Merger (i) if it would result in
a monopoly or be in furtherance of any combination or conspiracy to monopolize
or attempt to monopolize the business of banking in any part of the United
States or (ii) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it would
be a restraint of trade in any other manner, unless the Federal Reserve finds
that any anticompetitive effects are outweighed clearly by the public interest
and the probable effect of the transaction in meeting the convenience and needs
of the communities to be served. Under the BHC Act, the Merger may not be
consummated until the 30th day following the date of Federal Reserve approval,
which may be shortened by the Federal Reserve to the 15th day, during which time
the United States Department of Justice may challenge the transaction on
antitrust grounds. The commencement of any antitrust action would stay the
effectiveness of the Federal Reserve's approval, unless a court specifically
orders otherwise.
The approval received from the Federal Reserve reflects only its view that
the Merger does not contravene applicable competitive standards imposed by law,
and that the Merger is consistent with regulatory policies relating to safety
and soundness. THE APPROVAL OF THE FEDERAL RESERVE IS NOT AN ENDORSEMENT OR
RECOMMENDATION OF THE MERGER.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT
Prior to the Effective Date, and to the extent permitted by law, any
provision of the Agreement generally may be (i) waived by the party benefitted
by the provision or (ii) amended by a written agreement between Regions and KFB
approved by their respective Boards of Directors; provided, however, that after
approval by the KFB stockholders, no amendment that pursuant to the Florida Act
requires further approval of the KFB stockholders, including decreasing the
consideration to be received by KFB 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 KFB
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 KFB Common Stock shall not have approved the
Agreement;
(c) by mutual consent of the Boards of Directors of Regions and KFB;
(d) by the Board of Directors of either party, in the event of a breach by
the other party of any provision of the Agreement which meets certain standards
specified in the Agreement and cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party; or
(e) by the Board of Directors of either party if the Merger shall not have
been consummated by August 31, 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.
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If the Agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination generally will not relieve the parties from
the consequences of any uncured willful breach of the Agreement giving rise to
such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of KFB 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 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 KFB or Regions prior to
consummation of the Merger, as described below.
KFB. KFB 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, which Regions has agreed shall not be unreasonably withheld.
Generally, KFB has agreed that, except as specifically contemplated by the
Agreement or previously disclosed to Regions, it will not:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of KFB or its subsidiaries;
(b) incur, guarantee, or otherwise become responsible for, any additional
debt obligation or other obligation for borrowed money in excess of an aggregate
of $50,000 (for KFB and its subsidiaries on a consolidated basis) except in the
ordinary course of the business of KFB 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 impose, or suffer the imposition, on any share of stock
held by KFB or its subsidiaries 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 KFB or its subsidiaries, or declare or pay any dividend or make
any other distribution in respect of KFB Common Stock.
(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
KFB Common Stock or any other
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capital stock of KFB or its subsidiaries, 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 KFB or its
subsidiaries or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of KFB Common Stock or sell, lease,
mortgage, or otherwise dispose of or otherwise encumber any shares of capital
stock of KFB's subsidiaries or any assets having in the aggregate a book value
in excess of $25,000, other than in the ordinary course of business for
reasonable and adequate consideration;
(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 KFB in its fiduciary capacity;
(g) grant any increase in compensation or benefits to the employees or
officers of KFB or its subsidiaries 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 this Agreement and previously disclosed to Regions; enter into or amend any
severance agreements with officers of KFB or its subsidiaries except as
previously disclosed to Regions; grant any increase in fees or other increases
in compensation or other benefits to directors of KFB or its subsidiaries;
(h) voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits;
(i) enter into or amend any employment contract between KFB or its
subsidiaries and any person (unless such amendment is required by law) that KFB
or its subsidiaries 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;
(j) except as previously disclosed to Regions, adopt any new employee
benefit plan or program of KFB or its subsidiaries or make any material change
in or to any existing employee benefit plans or programs of KFB or its
subsidiaries 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;
(k) 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");
(l) with certain exceptions, commence or settle any litigation for money
damages; or
(m) except in the ordinary course of business, enter into or terminate any
material contract or make any change in any material lease or contract.
Regions and KFB have agreed to give written notice promptly to the other
upon becoming aware of the occurrence or impending occurrence of any event or
circumstance relating to it or any of its
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subsidiaries which is reasonably likely to cause or constitute a material breach
of any of its representations, warranties, or covenants contained in the
Agreement, and to use its reasonable efforts to prevent or promptly remedy the
same. Regions and KFB also have agreed to file all reports required to be filed
by it with regulatory authorities prior to the Effective Date and to deliver to
the other party copies of all such reports promptly after the same are filed.
The Agreement requires Regions to prepare and file, and for KFB to
cooperate in the preparation and, where appropriate, the filing of, applications
with all regulatory authorities having jurisdiction over the transactions
contemplated by the Agreement seeking the requisite consents necessary to
consummate the transactions contemplated by the Agreement. Regions and KFB have
each agreed 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 the
transactions contemplated by the Agreement, including using its reasonable
efforts to lift or rescind any order adversely affecting its ability to
consummate the transactions contemplated by the Agreement and to cause to be
satisfied the conditions to consummation of the Agreement; provided, that
nothing shall preclude either party from exercising its rights under the
Agreement. Each party also has agreed to use its reasonable efforts to obtain
all consents necessary or desirable for the consummation of the transactions
contemplated by the Agreement. Regions and KFB also have agreed to keep each
other advised of all material developments relevant to its business and to
consummation of the Acquisition and to permit the other party to make or cause
to be made such investigation of the business and properties of it and of its
financial and legal conditions as the other party reasonably requests. Further,
the parties have agreed to maintain the confidentiality of information furnished
to it by the other.
The Agreement provides that the Board of Directors of KFB will recommend
(subject to compliance with their fiduciary duties as advised by counsel) to KFB
stockholders the approval of the Agreement and the Merger, and (subject to
compliance with their fiduciary duties as advised by counsel) to use their
reasonable efforts to obtain such stockholder approval. Neither KFB nor any of
its directors, officers, employees, agents, advisors, attorneys, accountants, or
other representatives may (i) directly or indirectly solicit any tender offer or
exchange offer or any proposal for a consolidation, acquisition of all of the
stock or assets of, or other business combination involving KFB or the
acquisition of a substantial equity interest in, or a substantial portion of the
assets of, KFB (an "Acquisition Proposal"); or (ii) except to the extent
necessary to comply with their fiduciary duties as advised by counsel, furnish
any non-public information that it is not legally obligated to furnish with
respect to, negotiate with respect to, or enter into any contract with respect
to, any Acquisition Proposal. KFB may communicate information about an
Acquisition Proposal to its stockholders if and to the extent that it or its
directors are required to do so in order to comply with their legal obligations.
The Agreement requires KFB to promptly notify Regions orally and in writing in
the event that KFB receives any inquiry or proposal relating to any such
transaction. KFB also is required to immediately cease and cause to be
terminated any existing activities, discussions, or negotiations with any person
with respect to any of the foregoing.
Regions. The Agreement prohibits Regions, without the prior written consent
of a duly authorized officer of KFB, from amending its certificate of
incorporation or bylaws in any manner which is adverse to, and discriminates
against, the holders of KFB Common Stock.
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
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Regions' Annual Report on Form 10-K for the year ended December 31, 1996,
incorporated herein by reference. See "Documents Incorporated by Reference."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. The Agreement provides that Regions will indemnify each person
entitled to indemnification from KFB or any of its subsidiaries, to the full
extent permitted by Florida Law and by KFB's Articles of Incorporation or
Bylaws, in each case as in effect on the date of the Agreement, for a period of
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 KFB 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 KFB or its
subsidiaries prior to the Effective Date will be treated as service with Regions
or its subsidiaries. The Agreement further provides that Regions will cause KFB
to honor all employment, severance, consulting, and other compensation contracts
previously disclosed to Regions between KFB or its subsidiaries and any current
or former director, officer, or employee, and all provisions for vested amounts
earned or accrued through the Effective Date under KFB's benefit plans.
As described above under " --Treatment of KFB Options," the Agreement also
provides that all rights with respect to KFB Common Stock pursuant to stock
options granted by KFB 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 options 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 KFB owned no
shares of Regions Common Stock.
Employment Agreements. KFB and the Bank have entered into an employment
agreement with Daniel S. Hager (President and Chief Executive Officer of the
Bank) which can be terminated by him upon thirty days' prior notice, or by KFB
or the Bank for "cause" as defined in the agreement. The agreement continues for
three years following a change in control, including the Merger. Pursuant to the
agreement, Mr. Hager receives a base salary and is entitled to receive annual
bonuses as determined by the Board of Directors. The agreement provides for him
to receive an automobile or an allowance in lieu thereof, insurance and other
benefits. Mr. Hager has agreed for a period of twelve months following the date
of termination of employment, that he will not, directly or indirectly, enter
into, engage in, be employed by, or consult with any individual or entity in the
banking business or any related field in Sarasota and Manatee counties. Also
during such period, he has agreed that he will not, directly or indirectly,
solicit any employees of KFB or the Bank to terminate their employment and/or
accept employment with or seek remuneration by any of the clients or customers
of KFB or the Bank with whom KFB or the Bank did business during the term of the
employment agreement.
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On ___________, 1998, KFB and the Bank entered into an agreement with
Stephen R. Jonsson (the former President and Chief Executive Officer of KFB)
which provides for Mr. Jonsson to receive on the Effective Date a sum
approximately equal to two times the amount payable to Mr. Jonsson under his
prior employment agreement with KFB. KFB and Mr. Jonsson had previously
entered into an employment agreement which provided for Mr. Jonsson to serve as
President and Chief Executive Officer of KFB (an office that would be
eliminated as a duplicative position in the Merger). The agreement entered
into with Mr. Jonsson on ___________, 1998 terminated the prior employment
agreement and, in addition to the payments to be made to him on the Effective
Date, provides that he will serve as a consultant to KFB and the Bank until the
Effective Date and also will not, at any time prior to September 30, 1999,
enter into, engage in, be employed by, serve as a consultant to, serve as a
management official of, or be or become a major shareholder of any financial
institution or company involved in the banking business or any related field
having an office in Sarasota or Manatee counties.
Director Agreements. Each director of KFB has entered into an agreement
with Regions which provides that the director will not sell, assign, convey or
encumber any shares of KFB Common Stock owned by him during the term of the
Agreement except (i) transfers by operation of law, by will or pursuant to the
laws of descent and distribution, (ii) transfers in which the transferee agrees
in writing to be bound by the provisions of the agreement between Regions and
the director, or (iii) to Regions pursuant to the terms of the Agreement. The
director also has agreed not to grant any option or right to purchase the shares
or any interest therein to any party. The director agreements also require each
director to vote all shares of KFB Common Stock over which he has voting
authority (other than in a fiduciary capacity) in favor of the Agreement and (i)
against any merger agreement, share exchange, or merger (other than the
Agreement and the Merger), consolidation, combination, sale of substantial
assets, merger, recapitalization, dissolution, liquidation, or winding-up of or
by KFB or (ii) any amendment of KFB's Articles of Incorporation or Bylaws or
other proposal or transaction involving KFB, which amendment or other proposal
or transaction would in any manner impede, frustrate, prevent, or nullify the
Merger, the Agreement, or any of the other transactions contemplated thereby.
The director also has agreed to surrender the certificates representing the
shares of KFB Common Stock over which the director has dispositive authority to
Regions upon consummation of the Merger and waives any rights of appraisal or
rights to dissent from the Merger that the director may have.
The Director agreements also preclude each director for a period of two
years after the Effective Date from directly or indirectly serving as a
consultant to, a management official (as defined in the Agreement) of, or a
major shareholder (i.e., the beneficial owner of 5% or more of any class of
voting securities of such company) of, any financial institution having an
office in Sarasota or Manatee County (the counties in which KFB maintained an
office as of November 25, 1997). The foregoing restriction does not apply to (i)
management official positions which the director held with financial
institutions other than KFB as of November 25, 1997, (ii) securities holdings
which cause the director to be deemed a major stockholder of a financial
institution other than KFB as of November 25, 1997, or (iii) advisory
relationships with a financial institution which the director had as of November
25, 1997 or may have thereafter solely in the capacity as legal counsel,
accountant, or investment advisor. The restrictions are not applicable if the
director is not offered employment as a director of Regions or any of its
subsidiaries or divisions at the Effective Date or, if the director is so
employed, the director's employment is terminated by Regions after the Effective
Date.
ABSENCE OF DISSENTERS' RIGHTS
In accordance with the applicable provisions of the Florida Act and
because KFB Common Stock is quoted on the Nasdaq National Market, holders of
shares of KFB Common Stock are not afforded the right to dissent from the Merger
and to receive an appraised value of such shares in cash.
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Any written objection to the Agreement satisfying the requirements
discussed above should be addressed as follows: Key Florida Bancorp, Inc., 6001
26th Street, Bradenton, Florida, 34207, Attention: Corporate Secretary.
If the Merger is approved at the Special Meeting, the "Corporation"
(referring to KFB prior to the Effective Date or Regions as the surviving
corporation after the Effective Date, as the case may be) must deliver a written
notice of such approval to all holders of KFB Common Stock who satisfied the
foregoing requirements within 10 days of such approval.
Any stockholder who receives such notice and elects to dissent must within
20 days after the giving of such notice by KFB file with the Corporation a
notice of such election, stating the stockholder's name and address, the number,
classes, and series of shares as to which such holder dissents, and a demand for
payment of the fair value of such holder's shares. Any stockholder failing to
file such election to dissent within the period set forth shall be bound by the
terms of the proposed corporate action. Any stockholder filing an election to
dissent shall deposit such holder's certificates for certificated shares with
the Corporation simultaneously with the filing of the election to dissent.
Within 10 days after the expiration of the period in which stockholders may
file their notices of election to dissent, or within 10 days after the Merger is
effected, whichever is later (but in no case later than 90 days from the date of
the stockholders' approval), the Corporation shall make a written offer to each
dissenting stockholder who has made demand as provided in this section to pay an
amount the Corporation estimates to be the fair value for such shares. If the
Merger has not been consummated before the expiration of the 90-day period after
the date of stockholders' approval, the offer may be made conditional upon the
consummation of the Merger. Such notice and offer must be accompanied by
specified financial information.
If within 30 days after the making of such offer any stockholder accepts
the same, payment for such holder's shares shall be made within 90 days after
the making of such offer or the consummation of the Merger, whichever is later.
Upon payment of the agreed value, the dissenting stockholder shall cease to have
any interest in such shares.
If the Corporation fails to make such offer within the period specified
therefor or if it makes the offer and any dissenting stockholder or stockholders
fail to accept the same within the period of 30 days thereafter, then the
Corporation, within 30 days after receipt of written demand from any dissenting
stockholder given within 60 days after the date on which the Merger was
effected, shall, or at its election at any time within such period of 60 days
may, file an action in any court of competent jurisdiction in Manatee County
requesting that the fair value of such shares be determined. The court shall
also determine whether each dissenting stockholder, as to whom the Corporation
requests the court to make such determination, is entitled to receive payment
for such holder's shares.
If the Corporation fails to institute the proceeding as herein provided,
any dissenting stockholder may do so in the name of the Corporation. All
dissenting stockholders (whether or not residents of this state), other than
stockholders who have agreed with the Corporation as to the value of their
shares, shall be made parties to the proceeding as an action against their
shares. The Corporation shall serve a copy of the initial pleading in such
proceeding upon each dissenting stockholder in a specified manner.
The jurisdiction of the court is plenary and exclusive. All stockholders
who are proper parties to the proceeding are entitled to judgment against the
Corporation for the amount of the fair value of their shares. The court may, if
it so elects, appoint one or more persons as appraisers to receive evidence and
recommend
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a decision on the question of fair value. The appraisers shall have such power
and authority as is specified in the order of their appointment or an amendment
thereof.
The Corporation shall pay each dissenting stockholder the amount found to
be due such holder within 10 days after final determination of the proceedings.
Upon payment of the judgment, the dissenting stockholder shall cease to have any
interest in such shares.
The costs and expenses of any such proceeding shall be determined by the
court and shall be assessed against the Corporation, but all or any part of such
costs and expenses may be apportioned and assessed as the court deems equitable
against any or all of the dissenting stockholders who are parties to the
proceeding, to whom the Corporation has made an offer to pay for the shares, if
the court finds that the action of such stockholders in failing to accept such
offer was arbitrary, vexatious, or not in good faith. Such expenses shall
include reasonable compensation for, and reasonable expenses of, the appraisers,
but shall exclude the fees and expenses of counsel for, and experts employed by,
any party. If the fair value of the shares, as determined, materially exceeds
the amount which the Corporation offered to pay therefor or if no offer was
made, the court in its discretion may award to any stockholder who is a party to
the proceeding such sum as the court determines to be reasonable compensation to
any attorney or expert employed by the stockholder in the proceeding.
The foregoing is a summary of the material rights of a dissenting
stockholder of KFB, but is qualified in its entirety by reference to the
pertinent provisions of the Florida Act, included in Appendix C to this Proxy
Statement/Prospectus. Any KFB stockholder who intends to dissent from approval
of the Agreement should carefully review the text of such provisions and should
also consult with such holder's attorney. No further notice of the events giving
rise to dissenters' rights or any steps associated therewith will be furnished
to KFB stockholders, except as indicated above or otherwise required by law.
Any dissenting KFB 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 KFB of an opinion from Alston & Bird
LLP, special counsel to Regions, concerning certain federal income tax
consequences of
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the proposed Merger under federal income tax law. Based upon representations
made by Regions and KFB (including the representation that KFB stockholders will
maintain sufficient equity ownership 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 Florida Act, the Merger will be a reorganization within the meaning
of Section 368(a) of the Code. KFB and Regions will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
(b) The stockholders of KFB will recognize no gain or loss upon the
exchange of their KFB Common Stock solely for shares of Regions Common Stock.
(c) The basis of the Regions Common Stock received by the KFB stockholders
in the Merger will, in each instance, be the same as the basis of the KFB 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 KFB
stockholders will, in each instance, include the period during which the KFB
Common Stock surrendered in exchange therefor was held, provided that the KFB
Common Stock was held as a capital asset on the date of the exchange.
(e) The payment of cash to KFB 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.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN, OR OTHER TAX
CONSEQUENCES OF THE MERGER. KFB 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.
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RESALES OF REGIONS COMMON STOCK
The Regions Common Stock to be issued to KFB stockholders in the Merger has
been registered under the Securities Act, but that registration does not cover
resales of those shares by persons who control, are controlled by, or are under
common control with, KFB (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 KFB reasonably believes will be an affiliate of KFB 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 until
Regions' has publicly announced results of operations covering a period of
combined operations of Regions and KFB following the Merger for a period of at
least 30 days (as required by guidelines applicable to pooling-of-interests
accounting treatment), or thereafter except in compliance with the Securities
Act and the rules and regulations of the SEC promulgated thereunder.
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EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of KFB Common Stock will be exchanging
their shares of a Florida corporation governed by the Florida Act and KFB'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 KFB stockholders and those of Regions
stockholders. The differences deemed material by KFB 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 Florida Act and the Delaware GCL
as well as to Regions' Certificate and Bylaws and KFB'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 or Articles
of Incorporation and Bylaws," "--Classified Board of Directors and Absence of
Cumulative Voting," "--Removal of Directors," "--Limitations on Director
Liability," "--Special Meetings of Stockholders," "--Actions by Stockholders
Without a Meeting," "--Stockholder Nominations and Proposals," and "--Mergers,
Consolidations, and Sales of Assets Generally," and the provisions of the
Delaware GCL described under the heading "--Business Combinations With Certain
Persons," are referred to herein as the "Protective Provisions." In general, one
purpose of the Protective Provisions is to assist Regions' Board of Directors in
playing a role in connection with attempts to acquire control of Regions, so
that the Board can further and protect the interests of Regions and its
stockholders as appropriate under the circumstances, including, if the Board
determines that a sale of control is in their best interests, by enhancing the
Board's ability to maximize the value to be received by the stockholders upon
such a sale.
Although Regions' management believes the Protective Provisions are,
therefore, beneficial to Regions' stockholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of Regions Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the Protective Provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
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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.
KFB. KFB's authorized capital stock consists of 4,000,000 shares of KFB
Common Stock, of which _______ shares were issued and outstanding as of the
Record Date. KFB's Articles also authorize it to issue up to one million shares
of Preferred Stock, none of which were issued and outstanding as of the date of
this Proxy Statement.
Pursuant to the Florida Act, KFB's Board of Directors may authorize the
issuance of additional shares of KFB Common Stock without further action by
KFB's stockholders. KFB's Articles, as amended, do not provide the stockholders
of KFB with preemptive rights to purchase or subscribe to any unissued
authorized shares of KFB 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.
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KFB. The Florida Act generally provides that a Florida corporation's
articles of incorporation may be amended in certain minor respects without
stockholder action, but the Florida Act requires most amendments to be adopted
by the affirmative vote of a majority of the shares entitled to vote thereon
upon recommendation of the Board of Directors. Unless the Florida Act requires a
greater vote, amendments may be adopted by a majority of the votes cast, a
quorum being present. The Florida Act also permits the Board of Directors to
amend or repeal the bylaws unless the Florida Act or the stockholders provide
otherwise. The stockholders entitled to vote have concurrent power to amend or
repeal the bylaws.
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.
KFB. KFB's directors are elected to terms of three years with
approximately one-third of the Board to be elected annually. There is no
cumulate voting in the election of directors.
REMOVAL OF DIRECTORS
Regions. Under the Certificate, any director or the entire Board of
Directors may be removed only for cause and only by the affirmative vote of the
holders of at least 75% of Regions' voting stock.
KFB. The Florida Act provides that stockholders may remove a director with
or without cause unless the articles of incorporation provide that any director
or the entire Board of Directors may be removed only for cause. The KFB Articles
provide that KFB directors may be removed only for cause and only by the
affirmative vote of the holders of in excess of 60% of the outstanding shares of
KFB Common Stock.
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LIMITATIONS ON DIRECTOR LIABILITY
Regions. The Certificate provides that a director of Regions will have no
personal liability to Regions or its stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability for (i) any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) the payment of certain unlawful dividends and
the making of certain unlawful stock purchases or redemptions, or (iv) any
transaction from which the director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the likelihood
of stockholder derivative litigation against directors and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duties, even though such action, if successful, might have
benefitted Regions and its stockholders. The SEC has taken the position that
similar provisions added to other corporations' certificates of incorporation
would not protect those corporations' directors from liability for violations of
the federal securities laws.
KFB. The Florida Act generally provides that a director is not personally
liable for monetary damages to the corporation or any other person for any
statement, vote, decision or failure to act regarding corporate management or
policy, unless: (i) the director breached or failed to perform his duties as a
director and (ii) the director's breach of or failure to perform those duties
constitutes: (1) a violation of the criminal law, unless the director had
reasonable cause to believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful; (2) a transaction from which the director
derived an improper personal benefit, either directly or indirectly; (3) an
unlawful distribution; (4) conscious disregard for the best interest of the
corporation, or willful misconduct; or (5) recklessness or an act or omission
which was committed in bad faith or with malicious purpose or in a manner
exhibiting wanton and willful disregard of human rights, safety or property.
This provision would absolve directors of KFB of personal liability for
negligence in the performance of their duties, including gross negligence. It
would not permit a director to be exculpated, however, from liability for
actions involving conflicts of interest or breaches of the traditional "duty of
loyalty" to KFB and its stockholders, and it would not affect the availability
of injunctive or other equitable relief as a remedy.
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
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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.
KFB. KFB's Bylaws provide for indemnification of its directors, officers,
employees, and agents in substantially the same manner and with substantially
the same effect as in the case of Regions.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' Certificate and Bylaws provide that special meetings of
stockholders may be called at any time, but only by the chief executive officer,
the secretary, or the Board of Directors of Regions. Regions stockholders do not
have the right to call a special meeting or to require that Regions' Board of
Directors call such a meeting. This provision, combined with other provisions of
the Certificate and the restriction on the removal of directors, would prevent a
substantial stockholder from compelling stockholder consideration of any
proposal (such as a proposal for a business combination) over the opposition of
Regions' Board of Directors by calling a special meeting of stockholders at
which such stockholder could replace the entire Board with nominees who were in
favor of such proposal.
KFB. KFB's bylaws provide that special meetings of KFB stockholders may be
called only by KFB's Board of Directors. Accordingly, stockholders cannot force
stockholder consideration of a proposal over the opposition of the KFB Board of
Directors by calling a special meeting of stockholders prior to such time that
the Board believed such consideration to be appropriate.
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.
KFB. Under the Articles no action requiring or permitting stockholder
approval may be approved by written consent of stockholders.
STOCKHOLDER NOMINATIONS
Regions. Regions' Certificate and Bylaws provide that any nomination by
stockholders of individuals for election to the Board of Directors must be made
by delivering written notice of such nomination (the "Nomination Notice") to the
Secretary of Regions not less than 14 days nor more than 50 days before any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days notice of the meeting is given to
stockholders, the Nomination Notice must be delivered to the Secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The Nomination Notice must set forth certain
background information about the persons to be nominated, including information
concerning (i) the name, age, business, and, if known, residential address of
each nominee, (ii) the principal occupation or employment of each such nominee,
and (iii) the number of shares of Regions capital stock beneficially owned by
each such nominee. The Board of Directors is not required to nominate in the
annual proxy statement any person so proposed; however, compliance with this
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.
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KFB. KFB's Bylaws provide for thirty days' advance notice to KFB's
secretary if a stockholder desires to nominate a candidate for director or place
any other business before a meeting of the stockholders.
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.
KFB. The Florida Act generally requires that any merger, consolidation or
sale of substantially all the assets of a corporation be approved by a vote of
the holders of a majority of all outstanding shares entitled to vote thereon.
The articles of incorporation of a Florida corporation may provide for a greater
vote. KFB may effect a merger, consolidation, or sale of substantially all of
its assets if the holders of a majority of the outstanding shares of KFB Common
Stock cast their votes in favor of such a proposal.
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
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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.
KFB. Section 607.0901 of the Florida Act provides that the approval of the
holders of two-thirds of the voting shares of a corporation, other than the
shares owned by an interested stockholder (generally, any person who is the
beneficial owner of 10% or more of the outstanding voting stock of the
corporation), would be required in order to effectuate certain transactions,
including, among others, a merger, sale of assets, sale of shares and
reclassification of securities involving the corporation and an interested
stockholder. Such special voting requirements do not apply under certain
circumstances specified in the statute.
A corporation may "opt-out" of the provisions of Section 607.0901 by
electing to do so in its articles of incorporation. KFB has not elected to
"opt-out" of Section 607.0901 of the Florida Act. In any event the special
voting requirements do not apply to the Merger because Regions is not an
interested stockholder.
Section 607.0902 of the Florida Act restricts voting rights of shares
acquired in certain control share acquisitions. Generally, "control shares" (as
defined in the statute) are shares acquired by a person who acquires in one or a
series of related transactions an amount of stock equal to one-fifth or more of
all of the voting stock of a Florida corporation meeting certain criteria.
Control shares have voting rights only upon approval by a majority of
stockholders of each class of voting stock of the corporation, excluding those
shares held by interested persons. The control share voting restrictions do not
apply to shares acquired pursuant to, among other things, an agreement or plan
of merger or share exchange effected in compliance with the relevant provisions
of the Florida Act and to which the corporation is a party, or an acquisition of
shares previously approved by the board of directors of the corporation. In
addition, unless otherwise provided in a corporation's articles of incorporation
or bylaws, in the event control shares acquired in a control-share acquisition
are accorded full voting rights and the acquiring person has acquired control
shares with a majority or more of all voting power, all stockholders of the
issuing public corporation shall have dissenters' rights. The control share
restrictions do not apply to the Merger.
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 appraisal rights are available, however, for (i) the shares of
any class or series of stock that is either listed on a national securities
exchange, quoted on the Nasdaq National Market, or held of record by more than
2,000 stockholders or (ii) any shares of stock of the constituent corporation
surviving a merger if the merger did not require the approval of the surviving
corporation's stockholders, unless, in either case, the holders of such stock
are required by an agreement of merger or consolidation to accept for that stock
something other than: (a) shares of stock of the corporation surviving or
resulting from the merger or consolidation; (b) shares of stock of any other
corporation that will be listed at the effective date of the merger on a
national securities exchange, quoted on the Nasdaq National Market, or held of
record by more than 2,000 stockholders; (c) cash in lieu of fractional shares of
stock described in clause (a) or (b) immediately above; or (d) any combination
of the shares of stock and cash in lieu of fractional shares described in
clauses (a) through (c) immediately above. Because Regions Common Stock is
quoted on the Nasdaq National Market and is held of record by more than 2,000
stockholders, unless the exception described immediately above applies, holders
of Regions Common Stock do not have dissenters' rights.
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<PAGE> 47
KFB. The rights of dissenting stockholders under Florida law are generally
similar to those afforded under the Delaware GCL. Because KFB Common Stock is
quoted on the Nasdaq National Market, holders of KFB Common Stock do not have
dissenters' rights of appraisal in connection with the Merger.
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.
KFB. Pursuant to the Florida Act, upon written notice of a demand to
inspect corporate records, a stockholder is entitled to inspect corporate books
and records. Except for certain categories of records, including the current
articles of incorporation and bylaws, list of names and business addresses of
current officers and directors, and minutes of stockholder meetings and
communications directed to stockholders generally, the demand must be made in
good faith with a proper purpose, the demand must state with reasonable
particularity the purpose and the records desired to be inspected, and the
records must relate directly to the purpose.
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."
KFB. Pursuant to the Florida 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 KFB Common Stock are quoted on the Nasdaq National
Market under the symbol "RGBK" and "KEYB", respectively. The following table
sets forth, for the indicated periods, the high and low closing sale prices for
Regions Common Stock and KFB Common Stock as quoted on the Nasdaq National
Market, and the cash dividends declared per share of Regions Common Stock for
the indicated periods. KFB has not paid any cash dividends since February 1991.
The amounts indicated for Regions have been adjusted to reflect a 2-for-1
stock split effected by Regions on June 13, 1997.
43
<PAGE> 48
<TABLE>
<CAPTION>
REGIONS KFB
PRICE RANGE CASH DIVIDENDS PRICE RANGE
----------- DECLARED ------------
HIGH LOW PER SHARE HIGH LOW
---- --- --------- ---- ---
<S> <C> <C> <C> <C> <C>
1996
First Quarter ................ $24.00 $20.38 $.175 $ 4.50 $ 4.50
Second Quarter ............... 24.19 21.13 .175 4.50 4.50
Third Quarter................. 24.32 21.82 .175 8.00 7.50
Fourth Quarter................ 26.88 24.38 .175 8.00 8.00
1997
First Quarter................. 30.94 25.69 .20 8.50 7.00
Second Quarter................ 33.25 27.38 .20 8.75 7.00
Third Quarter................. 39.13 32.06 .20 10.38 7.50
Fourth Quarter................ 44.75 36.56 .20 16.50 8.38
1998
First Quarter (through
_______, 1998) ........... .23
</TABLE>
On _______, 1998, the last reported sale prices of Regions Common Stock and
KFB Common Stock on the Nasdaq National Market were $ _______ and $ _______,
respectively. On November 6, 1997, the last business day prior to public
announcement of the proposed Merger, the last reported sale price of Regions
Common Stock and KFB Common Stock on the Nasdaq National Market were $38.13 and
$12.50, 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."
KFB's dividend policy has been to retain its earnings to provide for
additional capital for KFB and the Bank to support operations and possible
expansion.
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<PAGE> 49
BUSINESS OF KFB
KFB is a bank holding company organized and existing under the laws of the
state of Florida, headquartered in Bradenton, Florida. KFB operates principally
through the Bank, which is a wholly owned subsidiary of KFB and a national bank
and which provides a range of consumer and commercial banking services through a
total of seven offices in Manatee and Sarasota counties, Florida. At September
30, 1997, KFB had total consolidated assets of approximately $212 million, total
consolidated deposits of approximately $198 million, and total consolidated
stockholders' equity of approximately $13.1 million. KFB's principal executive
office is located at 6001 26th Street West, Bradenton, Florida, 34207 and its
telephone number at such address is (941) 751-4400.
Additional information with respect to KFB and its subsidiaries is included
in documents incorporated by reference in this Proxy Statement/Prospectus.
Copies of such documents, including KFB's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1996, and KFB's Quarterly Reports on Form 10-QSB
for the quarters ended March 31, June 30, and September 30, 1997, accompany this
Proxy Statement/Prospectus.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS OF KFB
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of KFB Common Stock, as of the Record Date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
- -------------- ------------------- -------------------- ----------
<S> <C> <C> <C>
Common Stock Marilynne V. Anderson, Trustee 147,577 5.35%
3807 Bayside Drive
Bradenton, Florida 34210
Common Stock Harvey E. Anderson, Trustee 147,578 5.35
3807 Bayside Drive
Bradenton, Florida 34210
</TABLE>
45
<PAGE> 50
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."
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<PAGE> 51
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 (the "GF Acquisition") 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 KFB
(the "Other Pending Acquisitions"), certain aspects of which transactions are
set forth below:
47
<PAGE> 52
<TABLE>
<CAPTION>
CONSIDERATION
-------------
APPROXIMATE
-----------
ACCOUNTING
INSTITUTION ASSET SIZE 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
First United Bancorporation, located in Anderson, South 292 80 Regions Pooling
Carolina Common of
Stock Interests
St. Mary Holding Corporation, located in Franklin, 113 31 Regions Pooling
Louisiana 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 $ 2,176 $ 568
========= ======
</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 GF Acquisition, the Other Pending Acquisitions, and the 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.
48
<PAGE> 53
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 KFB. 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 KFB are both bank holding companies registered with the Federal
Reserve under the BHC Act. As such, Regions and KFB 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 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 KFB 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
consolidation program to this end.
49
<PAGE> 54
The BHC Act generally prohibits Regions and KFB from engaging in activities
other than banking or managing or controlling banks or other permissible
subsidiaries and from acquiring or retaining direct or indirect control of any
company engaged in any activities other than those activities determined by the
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act does
not place territorial limitations on permissible nonbanking activities of bank
holding companies. Despite prior approval, the Federal Reserve has the power to
order a bank holding company or its subsidiaries to terminate any activity 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 KFB 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 KFB (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 KFB are legal entities separate and distinct from their
banking, thrift, and other subsidiaries. The principal sources of cash flow of
both Regions and KFB, 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 KFB, as well as by Regions and
KFB 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.
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,
50
<PAGE> 55
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 KFB,
without obtaining governmental approvals, could declare aggregate dividends to
Regions and KFB of approximately $138 million and $1 million respectively.
The payment of dividends by Regions and KFB 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, KFB, 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 KFB 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 KFB's consolidated Total Capital and Tier 1
Capital Ratios were 10.01% and 9.01%, 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 KFB's respective Leverage Ratios at September 30, 1997 were
7.35% and 5.96%. 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
51
<PAGE> 56
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 KFB'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, KFB, nor any of their subsidiary depository institutions has been
advised by any federal banking agency of any specific minimum capital ratio
requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift
institution to a variety of enforcement remedies, including issuance of a
capital directive, the termination of deposit insurance by the FDIC, a
prohibition on the taking of brokered deposits, and to certain other
restrictions on its business. As described below, substantial additional
restrictions can be imposed upon FDIC-insured depository institutions that fail
to meet applicable capital requirements. See "--Prompt Corrective Action."
The Federal 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 KFB 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 KFB 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
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depository institution's banking or thrift affiliates, and a potential loss of
Regions' respective investments in such other subsidiary depository
institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized," and "critically
undercapitalized") and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or greater,
a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be "well capitalized." An institution with a
Total Capital Ratio of 8.0% or greater, a Tier 1 Capital Ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be "adequately
capitalized." A depository institution that has a Total Capital Ratio of less
than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be "undercapitalized." A depository institution that
has a Total Capital Ratio of less than 6.0%, a Tier 1 Capital Ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be "significantly
undercapitalized," and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk- based capital standards plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A depository institution may be deemed to be in
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 KFB had the requisite capital levels to qualify as well capitalized.
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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 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."
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<PAGE> 59
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 1999. 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.
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 its 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 KFB, incorporated by reference in
this Registration Statement, have been audited by Purvis, Gray and Company,
independent auditors, for the periods indicated in their report thereon which is
included in the Annual Report of KFB on Form 10-KSB for the year ended December
31, 1996. The financial statements audited by Purvis, Gray and Company have been
incorporated by reference in reliance on their report given on their authority
as experts in accounting and auditing. The financial statements of the Bank at
December 31, 1995 and for the year then ended, incorporated by reference in this
Registration Statement, was audited by Varnadore Tyler & Hawthorne, P.A.,
independent auditors, as stated in their report thereon. The financial
statements audited by Varnadore Tyler & Hawthorne, P.A. have been incorporated
by referenced in reliance to their report given on their authority as experts in
accounting and auditing.
OPINIONS
The legality of the shares of Regions Common Stock to be issued in the
Merger will be passed upon by Lange, Simpson, Robinson & Somerville LLP,
Birmingham, Alabama. Henry E. Simpson, partner in the law firm of Lange,
Simpson, Robinson & Somerville LLP, is a member of the Board of Directors of
Regions. As of _______, 1998, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville LLP owned an aggregate of _______ shares of Regions Common
Stock. Certain legal matters relating to the Merger are being passed upon for
KFB by the law firm of Smith, Mackinnon, Greeley, Bowdoin & Edwards, P.A.,
Orlando, Florida.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird LLP, Atlanta, Georgia.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
KEY FLORIDA BANCORP, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF NOVEMBER 25, 1997
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PARTIES............................................................. A-5
PREAMBLE............................................................ A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER....................... A-5
1.1 Merger...................................................... A-5
1.2 Time and Place of Closing................................... A-5
1.3 Effective Time.............................................. A-5
1.4 Execution of Support Agreements............................. A-6
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 KFB or Regions............................... A-6
3.4 Fractional Shares........................................... A-7
3.5 Conversion of Stock Options; Restricted Stock............... A-7
ARTICLE 4 -- EXCHANGE OF SHARES..................................... A-7
4.1 Exchange Procedures......................................... A-7
4.2 Rights of Former KFB Stockholders........................... A-8
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF KFB.................. A-8
5.1 Organization, Standing, and Power........................... A-8
5.2 Authority; No Breach by Agreement........................... A-8
5.3 Capital Stock............................................... A-9
5.4 KFB Subsidiaries............................................ A-9
5.5 Financial Statements........................................ A-10
5.6 Absence of Undisclosed Liabilities.......................... A-10
5.7 Absence of Certain Changes or Events........................ A-10
5.8 Tax Matters................................................. A-10
5.9 Assets...................................................... A-11
5.10 Environmental............................................... A-11
5.11 Compliance with Laws........................................ A-12
5.12 Labor Relations............................................. A-13
5.13 Employee Benefit Plans...................................... A-13
5.14 Material Contracts.......................................... A-14
5.15 Legal Proceedings........................................... A-15
5.16 Statements True and Correct................................. A-15
5.17 Tax, Accounting, and Regulatory Matters..................... A-15
5.18 State Takeover Laws......................................... A-15
5.19 Articles of Incorporation Provisions........................ A-15
5.20 Support Agreements.......................................... A-16
5.21 Derivatives Contracts....................................... A-16
5.22 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-16
6.3 Capital Stock............................................... A-17
</TABLE>
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<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
6.4 SEC Filings; Financial Statements........................... A-17
6.5 Absence of Undisclosed Liabilities.......................... A-17
6.6 Absence of Certain Changes or Events........................ A-17
6.7 Compliance with Laws........................................ A-17
6.8 Legal Proceedings........................................... A-18
6.9 Statements True and Correct................................. A-18
6.10 Tax, Accounting, and Regulatory Matters..................... A-18
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION............... A-19
7.1 Covenants of Both Parties................................... A-19
7.2 Covenants of KFB............................................ A-19
7.3 Covenants of Regions........................................ A-20
7.4 Adverse Changes in Condition................................ A-20
7.5 Reports..................................................... A-21
ARTICLE 8 -- ADDITIONAL AGREEMENTS.................................. A-21
8.1 Registration Statement; Proxy Statement; Stockholder A-21
Approval....................................................
8.2 Nasdaq/NMS Listing.......................................... A-21
8.3 Applications................................................ A-21
8.4 Agreement as to Efforts to Consummate....................... A-21
8.5 Investigation and Confidentiality........................... A-22
8.6 Press Releases.............................................. A-22
8.7 Certain Actions............................................. A-22
8.8 Tax Matters................................................. A-22
8.9 Agreements of Affiliates.................................... A-23
8.10 Employee Benefits and Contracts............................. A-23
8.11 Indemnification............................................. A-23
8.12 State Takeover Laws......................................... A-24
8.13 Articles of Incorporation Provisions........................ A-24
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE...... A-24
9.1 Conditions to Obligations of Each Party..................... A-24
9.2 Conditions to Obligations of Regions........................ A-25
9.3 Conditions to Obligations of KFB............................ A-26
ARTICLE 10 -- TERMINATION........................................... A-27
10.1 Termination................................................. A-27
10.2 Effect of Termination....................................... A-27
10.3 Non-Survival of Representations and Covenants............... A-28
ARTICLE 11 -- MISCELLANEOUS......................................... A-28
11.1 Definitions................................................. A-28
11.2 Expenses.................................................... A-32
11.3 Brokers and Finders......................................... A-32
11.4 Entire Agreement............................................ A-32
11.5 Amendments.................................................. A-33
11.6 Waivers..................................................... A-33
11.7 Assignment.................................................. A-33
11.8 Notices..................................................... A-33
11.9 Governing Law............................................... A-34
Counterparts................................................
11.10 A-34
Captions....................................................
11.11 A-34
Severability................................................
11.12 A-34
SIGNATURES.......................................................... A-34
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <C> <S>
1 -- Form of Support Agreement. (sec. 1.4).
2 -- Form of agreement of affiliates of KFB. (sec. 8.9).
3 -- Form of Claims Letter. (sec. 9.2).
4 -- Form of Opinion Letter of KFB's Counsel. (sec. 9.2).
5 -- Form of Opinion Letter of Regions' Counsel. (sec. 9.3).
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of November 25, 1997, by and between KEY FLORIDA BANCORP, INC. ("KFB"),
a corporation organized and existing under the laws of the State of Florida,
with its principal office located in Bradenton, Florida, 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 KFB 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 KFB by
Regions pursuant to the merger of KFB into and with Regions. At the effective
time of such merger, the outstanding shares of the capital stock of KFB shall be
converted into shares of the common stock of Regions (except as provided
herein). As a result, stockholders of KFB shall become stockholders of Regions
and the sole subsidiary of KFB shall continue to conduct its business and
operations as a wholly-owned subsidiary of Regions. The transactions described
in this Agreement are subject to the approvals of the stockholders of KFB, the
Board of Governors of the Federal Reserve System, and other applicable federal
and state regulatory authorities and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the merger (i) for federal income tax purposes shall qualify
as a "reorganization" within the meaning of Section 368(a) of the Internal
Revenue Code and (ii) for accounting purposes shall be accounted for as a
"pooling of interests."
As a condition and inducement to Regions' willingness to consummate the
transactions contemplated by this Agreement, prior to the execution of this
Agreement, each of KFB's directors will execute and deliver to Regions an
agreement (a "Support Agreement"), in substantially the form of Exhibit 1.
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, KFB shall be merged into and with Regions in accordance with the
provisions of Sections 607.1101, 607.1103 and 607.1105 of the FBCA and with the
effect provided in Section 607.1106 of the FBCA and of Section 252 of the DGCL
and with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of this Agreement, which has been approved and adopted by
the Boards of Directors of KFB 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 Florida
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Florida and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon in writing by the duly
authorized officers of each Party, the Parties shall use their reasonable
efforts to cause the Effective Time
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to occur on the last business day of the month in which occurs the last to occur
of (i) the effective date (including expiration of any applicable waiting
period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on which
the stockholders of KFB approve this Agreement to the extent such approval is
required by applicable Law; or such later date within 30 days thereof as may be
specified by Regions.
1.4 EXECUTION OF SUPPORT AGREEMENTS. Immediately prior to the execution of
this Agreement by the Parties and as a condition hereto, each of the directors
of KFB is executing and delivering to Regions a support agreement (the "Support
Agreement") in substantially the form of Exhibit 1 to this Agreement.
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 KFB Common Stock (excluding shares held by KFB 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 .3666 of a share of Regions Common Stock (the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event KFB changes the number of
shares of KFB 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 KFB OR REGIONS. Each of the shares of KFB Common Stock
held by any KFB 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.
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3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of KFB Common Stock exchanged pursuant to the
Merger, or of options to purchase shares of KFB 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.
3.5 CONVERSION OF STOCK OPTIONS; RESTRICTED STOCK. (a) At the Effective
Time, all rights with respect to KFB Common Stock pursuant to stock options or
stock appreciation rights ("KFB Options") granted by KFB under the KFB Stock
Plans, which are outstanding at the Effective Time, whether or not exercisable,
shall be converted into and become rights with respect to Regions Common Stock,
and Regions shall assume each KFB Option, in accordance with the terms of the
KFB Stock Plan and stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each KFB 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 KFB Option shall be equal to the number of shares of KFB Common
Stock subject to such KFB Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iii) the per share exercise price under
each such KFB Option shall be adjusted by dividing the per share exercise price
under each such KFB 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." KFB agrees to take all necessary steps to effectuate the
foregoing provisions of this Section 3.5
(b) All restrictions or limitations on transfer with respect to KFB Common
Stock awarded under the KFB Stock Plans or any other plan, program, or
arrangement of any KFB 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. As soon as
reasonably practicable after the Effective Time, Regions shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), with respect to the shares of Regions
Common stock subject to such options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding.
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 KFB appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of KFB Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of KFB Common Stock (other than shares to
be canceled pursuant to Section 3.3 of this Agreement) issued and outstanding at
the Effective Time shall surrender the certificate or certificates representing
such shares to the Exchange Agent and shall promptly upon surrender thereof
receive in exchange therefor the consideration provided in Section 3.1 of this
Agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest thereon) pursuant to Section 4.2 of this
Agreement. To the extent required by Section 3.4 of
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this Agreement, each holder of shares of KFB 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 KFB Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's certificate or certificates
representing the shares of KFB Common Stock for exchange as provided in this
Section 4.1. The certificate or certificates of KFB Common Stock so surrendered
shall be duly endorsed as the Exchange Agent may require. Any other provision of
this Agreement notwithstanding, neither Regions, KFB, nor the Exchange Agent
shall be liable to a holder of KFB 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 KFB STOCKHOLDERS. At the Effective Time, the stock
transfer books of KFB shall be closed as to holders of KFB Common Stock
immediately prior to the Effective Time, and no transfer of KFB 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 KFB Common Stock (other than
shares to be canceled pursuant to Section 3.3 of this Agreement shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.4 of this Agreement in exchange
therefor. To the extent permitted by Law, former stockholders of record of KFB
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 KFB Common Stock are converted, regardless of whether such
holders have exchanged their certificates representing KFB 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 KFB
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 KFB Common Stock certificate, both
the Regions Common Stock certificate (together with all such undelivered
dividends or other distributions without interest) and any undelivered cash
payments to be paid for fractional share interests (without interest) shall be
delivered and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF KFB
Except as disclosed in the KFB Disclosure Memorandum, KFB hereby represents
and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. KFB is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Florida, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Material Assets. KFB 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 KFB.
5.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) KFB 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 required vote of the outstanding shares of KFB
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 KFB, subject to the approval of
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this Agreement by the required vote of the issued and outstanding shares of KFB
Common Stock. Subject to such requisite stockholder approval, this Agreement
represents a legal, valid, and binding obligation of KFB, enforceable against
KFB in accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, 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 KFB, nor the
consummation by KFB of the transactions contemplated hereby, nor compliance by
KFB with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of KFB's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset of any KFB Company under, any
Contract or Permit of any KFB Company, where such Default or Lien is reasonably
likely to have individually or in the Aggregate a Material Adverse Effect on
KFB, 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 KFB
Company or any of their Material Assets where such violation would have,
individually or in the Aggregate, a Material Adverse Effect on KFB.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on KFB, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
KFB of the Merger and the other transactions contemplated in this Agreement.
5.3 CAPITAL STOCK. (a) The authorized capital stock of KFB consists of (i)
4,000,000 shares of KFB Common Stock, of which 2,758,129 shares are issued and
outstanding as of the date of this Agreement and not more than 2,831,958 shares
will be issued and outstanding at the Effective Time, assuming the exercise of
outstanding options. All of the issued and outstanding shares of KFB Common
Stock are duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of KFB Common Stock has been
issued in violation of any preemptive rights of the current or past stockholders
of KFB. KFB has reserved 73,829 shares of KFB Common Stock for issuance under
the KFB Stock Plans, pursuant to which options to purchase not more than 73,829
shares of KFB Common Stock are outstanding as of the date of this Agreement.
(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 KFB 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 KFB or
contracts, commitments, understandings, or arrangements by which KFB is or may
be bound to issue additional shares of KFB capital stock or options, warrants,
or rights to purchase or acquire any additional shares of its capital stock.
5.4 KFB SUBSIDIARIES. KFB has disclosed in Section 5.4 of the KFB
Disclosure Memorandum all of the KFB Subsidiaries as of the date of this
Agreement. KFB or one of its Subsidiaries owns all of the issued and outstanding
shares of capital stock of each KFB Subsidiary. No equity securities of any KFB
Subsidiary are or may become required to be issued (other than to a KFB 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 KFB Subsidiary is bound to
issue (other than to a KFB 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 KFB Company is or may be bound to transfer any
shares of the capital stock of any KFB Subsidiary (other than to a KFB Company).
There are no Contracts relating to the rights of any KFB Company to vote or to
dispose of any shares of the capital stock of any KFB Subsidiary. All of the
shares of
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capital stock of each KFB Subsidiary held by a KFB Company are duly authorized,
validly issued, and fully paid and nonassessable under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the KFB Company free and clear of any Lien. Each KFB
Subsidiary is either a bank, a savings association or a corporation, and is duly
organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is chartered or 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 KFB 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 KFB. The only KFB Subsidiary that
is a depository institution is Liberty National. Liberty National is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits in which are insured by or the Savings
Association Insurance Fund.
5.5 FINANCIAL STATEMENTS. KFB has disclosed in Section 5.5 of the KFB
Disclosure Memorandum, and has delivered to Regions copies of, all KFB Financial
Statements prepared for periods ended prior to the date hereof and will deliver
to Regions copies of all KFB Financial Statements prepared subsequent to the
date hereof. The KFB 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 KFB Companies, which are
or will be, as the case may be, complete and correct and which have been or will
have been, as the case may be, maintained in accordance with good business
practices, and (ii) present or will present, as the case may be, fairly the
consolidated financial position of the KFB Companies as of the dates indicated
and the consolidated results of operations, changes in stockholders' equity, and
cash flows of the KFB 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 which were not or are not expected to
be Material in amount or effect).
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of KFB, no KFB
Company has any Material Liabilities that are reasonably likely to have,
individually or in the aggregate a Material Adverse Effect on KFB, except
Liabilities which are accrued or reserved against in the consolidated balance
sheet of KFB as of September 30, 1997 included in the KFB Financial Statements
or reflected in the notes thereto. No KFB Company has incurred or paid any
Liability since September 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 KFB.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30, 1997, except
as disclosed in the KFB Financial Statements delivered prior to the date of this
Agreement, to the Knowledge of KFB, (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 KFB, and (ii) the KFB 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 KFB provided in Article Seven of this Agreement.
5.8 TAX MATTERS. (a) All Tax returns required to be filed by or on behalf
of any of the KFB 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, except to the extent that all
such failures to file or untimely filings, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect on KFB, and all returns
filed are complete and accurate in all Material respects to the Knowledge of
KFB. All Taxes shown on filed returns have been paid. There is no audit
examination, deficiency, refund Litigation or penalties due or owed 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 KFB, except
to the extent reserved against in
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the KFB 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 KFB 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) To the Knowledge of KFB, adequate provision for any Taxes due or to
become due for any of the KFB Companies for the period or periods through and
including the date of the respective KFB Financial Statements has been made and
is reflected on such KFB Financial Statements.
(d) Each of the KFB 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 KFB.
(e) None of the KFB 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.
(f) There are no Liens with respect to Taxes upon any of the assets of the
KFB Companies.
(g) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the KFB Companies that occurred during or after any
taxable period in which the KFB Companies incurred a net operating loss that
carries over to any taxable period ending after December 31, 1996.
(h) No KFB Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
(i) All Material elections with respect to Taxes affecting the KFB
Companies as of the date of this Agreement have been or will be timely made as
set forth in Section 5.8 of the KFB 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.
(j) No KFB 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 KFB Financial
Statements made available prior to the date of this Agreement, the KFB 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 KFB Companies. All
Material tangible properties used in the businesses of the KFB Companies are in
good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with KFB's past practices. All Assets
which are material to the business of the KFB Companies, which are held under
leases or subleases by any of the KFB 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. (a) To the Knowledge of KFB, each KFB Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except for instances of non-compliance
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on KFB.
(b) To the Knowledge of KFB, there is no Litigation pending or to the
Knowledge of KFB threatened before any court, governmental agency, or authority,
or other forum in which any KFB Company or any of its Participation Facilities
has been or, with respect to threatened Litigation, may be named as a defendant
or
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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 (as defined below) or oil, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by any
KFB 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 KFB.
(c) To the Knowledge of KFB, There is no Litigation pending threatened
before any court, governmental agency, or board, or other forum in which any of
its Loan Properties (or KFB 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 KFB.
(d) To the Knowledge of KFB, 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 KFB.
(e) To the Knowledge of KFB, during the period of (i) any KFB Company's
ownership or operation of any of their respective current properties, (ii) any
KFB Company's participation in the management of any Participation Facility, or,
(iii) any KFB 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
(or potentially affecting) such properties, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
KFB. Prior to the period of (i) any KFB Company's ownership or operation of any
of their respective current properties, (ii) any KFB Company's participation in
the management of any Participation Facility, or (iii) any KFB Company's holding
of a security interest in a Loan Property, to the Knowledge of KFB, there were
no releases of Hazardous Material or oil in, on, under, or affecting any such
property, Participation Facility, or Loan Property, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on KFB.
5.11 COMPLIANCE WITH LAWS. KFB is duly registered as a bank holding
company under the BHC Act. Each KFB Company has in effect all Permits necessary
for it to own, lease, or operate its Material Assets and to carry on its
business as now conducted, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on KFB, 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 KFB. Except as disclosed in Section 5.11
of the KFB Disclosure Memorandum, none of the KFB Companies:
(a) is in violation of any Material 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 KFB; and
(b) has received any written 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 KFB
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 KFB; (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 KFB; or
(iii) requiring any KFB 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 Material manner relates to its capital adequacy, or
the capital adequacy of Liberty National, its credit or reserve policies,
its management, or the payment of dividends.
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5.12 LABOR RELATIONS. No KFB Company is the subject of any Litigation
asserting that it or any other KFB 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 KFB Company to bargain with any
labor organization as to wages or conditions of employment, nor is any KFB
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 KFB Company, pending or
threatened, or to its Knowledge, is there any activity involving any KFB
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS. (a) KFB has disclosed in Section 5.13 of the
KFB Disclosure Memorandum, and has delivered or made available to Regions prior
to the execution of this Agreement copies in each case of, all written 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
written health plans, all life insurance plans, and all other written employee
benefit plans or fringe benefit plans, including, without limitation, "employee
benefit plans" as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
any KFB 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 "KFB Benefit
Plans"). Any of the KFB 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 "KFB ERISA Plan." Any KFB 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 "KFB Pension Plan." On or
after September 26, 1980, neither KFB nor any KFB Company has had an "obligation
to contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)). The only "employee pension
benefit plan," as defined in Section 3(2) of ERISA, ever maintained by any KFB
Company that was intended to qualify under Section 401(a) of the Internal
Revenue Code, are the KFB, Inc. Employee Savings and Stock Ownership Plan and
the KFB, Inc. Pension Plan.
(b) KFB 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 KFB Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such KFB 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, 1991, (iii) annual reports or
returns, audited or unaudited financial statements, actuarial valuations and
reports, and summary annual reports prepared for any KFB 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 KFB Benefit Plans are in compliance in all Material respects with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws, the breach or violation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on KFB. Each KFB
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 KFB is not aware of any circumstances which will
or could result in revocation of any such favorable determination letter. Each
trust created under any KFB ERISA Plan has been determined to be exempt from Tax
under Section 501(a) of the Internal Revenue Code and KFB is not aware of any
circumstance which will or could result in revocation of such exemption. With
respect to each KFB Benefit Plan to the Knowledge of KFB, 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, to the Knowledge of KFB,
threatened Litigation relating to any KFB ERISA Plan. No KFB Company has engaged
in a transaction with respect to any KFB Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject any KFB
Company to a Material tax or penalty imposed by either
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Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA, that
individually or in the aggregate, are reasonably likely to have a Material
Adverse Effect on KFB.
(d) No KFB 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 KFB Pension Plan, (ii) no change in the actuarial assumptions with respect
to any KFB Pension Plan, and (iii) no increase in benefits under any KFB 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 KFB or materially adversely affect the funding status of any such
plan. Neither any KFB Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
KFB Company, or the single-employer plan of any entity which is considered one
employer with KFB 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 KFB Company
has provided, or is required to provide, security to a KFB 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 KFB Company with respect to any defined benefit plan currently
or formerly maintained by any of them or by any ERISA Affiliate.
(f) No KFB Company has any obligations for retiree health and retiree life
benefits under any of the KFB Benefit Plans and to the Knowledge of KFB, there
are no restrictions on the rights of such KFB Company to amend or terminate any
such plan without incurring any Liability thereunder.
(g) Except as set forth in Section 5.13(g) of the 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 KFB Company from
any KFB Company under any KFB Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any KFB 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 KFB Benefit Plans has been made to employees of any of the KFB
Companies prior to the date hereof which is not in accordance with the written
or otherwise preexisting terms and provisions of such plans. All KFB 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 KFB 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 Section 5.14 of the KFB
Disclosure Memorandum, none of the KFB Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $100,000, (ii) any Contract relating to the borrowing
of money by any KFB Company or the guarantee by any KFB 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
KFB 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 KFB with the
Securities and Exchange Commission (the "SEC") as of the date of this Agreement
if KFB were required to file a Form 10-K with the SEC (together with all
Contracts referred to in Section 5.9 of this Agreement, the "KFB Contracts").
None of the KFB Companies is in Default under any KFB Contract which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on KFB.
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5.15 LEGAL PROCEEDINGS. Except to the extent specifically reserved against
in the KFB Financial Statements dated prior to the date of this Agreement, there
is no Litigation instituted or pending, or, to the Knowledge of KFB, 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
KFB Company, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, if adversely determined, individually or in the
aggregate, a Material Adverse Effect on KFB, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any KFB Company, that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on KFB. Section 5.15
of the KFB Disclosure Memorandum provides a list of all Litigation in which a
KFB company is a named defendant.
5.16 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument,
or other writing furnished or to be furnished by any KFB 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
KFB 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 KFB Company or any Affiliate thereof for inclusion in the Proxy Statement to
be mailed to KFB's stockholders in connection with the Stockholders' Meeting,
and any other documents to be filed by a KFB 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 KFB, 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 KFB Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
5.17 TAX, ACCOUNTING, AND REGULATORY MATTERS. Except as specifically
contemplated by this Agreement, no KFB 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 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 KFB, there exists no fact,
circumstance, or reason why the requisite Consents referred to in Section 9.1(b)
of this Agreement cannot be received in a timely manner without imposition of
any condition of the type described in the second sentence of such Section
9.1(b).
5.18 STATE TAKEOVER LAWS. Each KFB Company has taken all necessary action
to exempt the transactions contemplated by this Agreement from any applicable
"moratorium," "control share," "fair price," "business combination," or other
anti-takeover laws and regulations of the State of Florida (collectively,
"Takeover Laws"), including those laws contained within Section 607 et seq. of
the FBCA.
5.19 ARTICLES OF INCORPORATION PROVISIONS. Each KFB 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 KFB Company
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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 KFB Company that may
be acquired or controlled by it.
5.20 SUPPORT AGREEMENTS. Each of the directors of KFB has executed and
delivered to Regions an agreement in substantially the form of Exhibit 1 to this
Agreement.
5.21 DERIVATIVES CONTRACTS. Neither KFB 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) and which might reasonably be expected to have a Material
Adverse Effect on KFB.
5.22 YEAR 2000. Except as disclosed in Section 5.22 of the KFB Disclosure
Memorandum, to the Knowledge of KFB, 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. KFB
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 KFB as follows:
6.1 ORGANIZATION, STANDING, AND POWER. Regions is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Material Assets. Regions is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions.
6.2 AUTHORITY; NO BREACH BY AGREEMENT. (a) Regions has the corporate power
and authority necessary to execute, deliver, and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect 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, receivership, conservatorship,
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, which is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions, or (iii) subject to receipt of the requisite approvals
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any Regions Company or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules of
the NASD, and other than Consents required from Regulatory
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Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, no
notice to, filing with, or Consent of, any public body or authority is necessary
for the consummation by Regions of the Merger and the other transactions
contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Regions consists as of
the date of this Agreement, of 240,000,000 shares of Regions Common Stock, of
which shares were issued and outstanding as of September 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 KFB 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 KFB 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, 1994, other than registration statements on Forms S-4 and S-8
(collectively, the "Regions SEC Reports"). The Regions SEC Reports (i) at the
time filed, complied in all Material respects with the applicable requirements
of the Securities Act and the Exchange Act, as the case may be, and (ii) did not
at the time they were filed (or if amended or superseded by a filing prior to
the date of this Agreement, then on the date of such filing) contain any untrue
statement of a Material fact or omit to state a Material fact required to be
stated in such Regions SEC Reports or necessary in order to make the statements
in such Regions SEC Reports, in light of the circumstances under which they were
made, not misleading.
(b) Each of the Regions Financial Statements (including, in each case, any
related notes) contained in the Regions SEC Reports, including any Regions SEC
Reports filed after the date of this Agreement until the Effective Time,
complied or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC), and fairly presented or will fairly present the consolidated financial
position of Regions and its Subsidiaries as at the respective dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be Material in amount or effect.
6.5 ABSENCE OF UNDISCLOSED LIABILITIES. To the Knowledge of Regions, no
Regions Company has any Material Liabilities that are reasonably likely to have
individually or in the aggregate a Material Adverse Effect on Regions, except
Liabilities which are accrued or reserved against in the consolidated balance
sheets of Regions as of September 30, 1997 included in the Regions Financial
Statements or reflected in the notes thereto. No Regions Company has incurred or
paid any Liability since September 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 September 30, 1997, except
as disclosed in the Regions Financial Statements filed with the SEC after such
date and prior to the date of this Agreement, there have been no events,
changes, or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions.
6.7 COMPLIANCE WITH LAWS. Regions is duly registered as a bank holding
company under the BHC Act. Each Regions Company has in effect all Permits
necessary for it to own, lease, or operate its Material Assets and to carry on
its business as now conducted, except for those Permits the absence of which is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions, and there has occurred
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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 Material 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 written 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 is 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 Material manner relates to its capital adequacy,
its credit or reserve policies, 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, nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any Regions Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions.
6.9 STATEMENTS TRUE AND CORRECT. No statement, certificate, instrument, or
other writing furnished or to be furnished by any Regions Company or any
Affiliate thereof to KFB 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 therein 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 KFB'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 KFB, 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 therein 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 TAX, ACCOUNTING, AND REGULATORY MATTERS. Except as specifically
contemplated by this Agreement, 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
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contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement. 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 from the date of this Agreement until the Effective Time or termination of
this Agreement (i) operate its business only in the usual, regular, and ordinary
course, (ii) preserve intact its business 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 KFB. Except as specifically contemplated or permitted by
this Agreement or as disclosed in the KFB Disclosure Memorandum, from the date
of this Agreement until the earlier of the Effective Time or the termination of
this Agreement, KFB covenants and agrees that it will not do or agree or commit
to do, or permit any of its Subsidiaries to do or agree or commit to do, any of
the following without the prior written consent of a duly authorized officer of
Regions:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any KFB 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 KFB Company to another KFB Company) in excess of an
aggregate of $50,000 (for the KFB Companies on a consolidated basis) except
in the ordinary course of the business of KFB Companies consistent with
past practices (which shall include, for KFB, 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 impose, or
suffer the imposition, on any share of stock held by any KFB 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 KFB Company, or declare or pay any dividend or
make any other distribution in respect of any KFB Common Stock; 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 KFB Common Stock or any other capital stock of any KFB 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 KFB
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of KFB Common Stock or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber any shares
of capital stock of any
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KFB Subsidiary (unless any such shares of stock are sold or otherwise
transferred to another KFB Company) or any Assets having in the aggregate a
book value in excess of $25,000 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 KFB
in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the employees or
officers of any KFB Company except as disclosed in Section 7.2(g) of the
KFB 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 KFB Disclosure Memorandum; enter into or amend any
severance agreements with officers of any KFB Company except as disclosed
in Section 7.2(g) of the KFB Disclosure Memorandum; grant any increase in
fees or other increases in compensation or other benefits to directors of
any KFB Company; or
(h) voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits; or
(i) enter into or amend any employment Contract between any KFB
Company and any Person (unless such amendment is required by Law) that the
KFB Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time
on or after the Effective Time; or
(j) except as disclosed in Section 7.2 of the KFB Disclosure
Memorandum, adopt any new employee benefit plan or program of any KFB
Company or make any Material change in or to any existing employee benefit
plans or programs of any KFB 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
(k) 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
(l) commence or settle any Material Litigation other than in
accordance with past practice; provided that, except to the extent
specifically reserved against in the KFB Financial Statements dated prior
to the date of this Agreement, no KFB Company shall settle any Litigation
involving any Liability of any KFB Company for Material money damages or
imposing Material restrictions upon the operations of any KFB Company; or
(m) except in the ordinary course of business, enter into or terminate
any Material Contract or make any change in any Material lease or Contract.
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: (i) it will not, without the prior written consent of
a duly authorized officer of KFB 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 KFB Common Stock; and (ii) it will
continue to conduct its business and the business of its Subsidiaries in a
manner designed in its reasonable judgment, to enhance the long-term value of
the Regions Common Stock and the business prospects to Regions.
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 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.
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7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and each Party shall deliver to the other Party
copies of all such reports filed by such Party 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, provided KFB has provided, on a
reasonably timely basis, all information concerning KFB 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 other applicable securities Laws in connection with the issuance
of the shares of Regions Common Stock upon consummation of the Merger. KFB shall
promptly furnish all information concerning it and the holders of its capital
stock as Regions may reasonably request in connection with such action. KFB
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) KFB
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 KFB 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 KFB
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 KFB 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 KFB 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 Nine of this Agreement,
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provided that nothing herein shall preclude either Party from exercising its
rights under this Agreement. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement.
8.5 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 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) KFB shall use its reasonable efforts to exercise its rights under
confidentiality agreements entered into with Persons which were considering an
acquisition transaction with KFB to preserve the confidentiality of the
information relating to KFB provided to such parties.
8.6 PRESS RELEASES. Prior to the Effective Time, KFB and Regions shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, however, that nothing in this Section
8.6 shall be deemed to prohibit any Party from making any disclosure which its
counsel advises as necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.7 CERTAIN ACTIONS. Except with respect to this Agreement and the
transactions contemplated hereby, no KFB Company nor any Affiliate thereof nor
any investment banker, attorney, accountant, or other representative
(collectively, "Representatives") retained by any KFB Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of KFB's Board of Directors as
advised in writing by counsel to such Board of Directors, no KFB 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 KFB 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. KFB shall
promptly notify Regions orally and in writing in the event that it receives any
inquiry or proposal relating to any such transaction. KFB 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 LLP 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 KFB Common Stock for
Regions Common Stock will not give rise to gain or loss to the stockholders of
KFB with respect to such exchange (except to the extent of any cash received),
and (iii) each of KFB 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 KFB 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.
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8.9 AGREEMENT OF AFFILIATES. KFB has disclosed in Section 8.9 of the KFB
Disclosure Memorandum each Person whom it reasonably believes is an "affiliate"
of KFB for purposes of Rule 145 under the 1933 Act. KFB 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 (except for pledges
that are made with recourse), transfer, or otherwise dispose of the shares of
KFB Common Stock held by such Person except as contemplated by such agreement or
by this Agreement and will not sell, pledge (except for pledges that are in
place as of the date of this Agreement), 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 KFB 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 KFB in exchange for shares of KFB Common Stock shall not be
transferable until such time as financial results covering at least 30 days of
combined operations of Regions and KFB 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 KFB 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 KFB Companies,
who at or after the Effective Time become employees of a Regions Company,
employee benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of Regions Common Stock except as set
forth in this Section 8.10), on terms and conditions which when taken as a whole
are substantially similar to those currently provided by the Regions Companies
to their similarly situated officers and employees. For purposes of
participation and vesting (but not accrual of benefits) under such employee
benefit plans, (i) service under any qualified defined benefit plans of KFB
shall be treated as service under Regions' qualified defined benefit plans, (ii)
service under any qualified defined contribution plans of KFB shall be treated
as service under Regions' qualified defined contribution plans, and (iii)
service under any other employee benefit plans of KFB shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause KFB and its Subsidiaries to honor all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.10 of the
KFB Disclosure Memorandum to Regions between any KFB 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 KFB 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
indemnify, defend, and hold harmless each person entitled to indemnification
from a KFB 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 Florida Law and KFB'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 KFB is required
to effectuate any indemnification, Regions shall cause KFB 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) above, 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 KFB 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 KFB elects not to assume such defense or
counsel for the
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Indemnified Parties advises in writing that there are Material substantive
issues which raise conflicts of interest between Regions or KFB and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Regions or KFB shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that (i) 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 (to the
extent reasonably appropriate under the circumstances) 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 Regions
shall not have any obligation hereunder to any Indemnified Party when and if a
court of competent jurisdiction shall determine, and such determination shall
have become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable Law.
8.12 STATE TAKEOVER LAWS. Each KFB Company shall take all necessary steps
to exempt the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Laws,
including those laws contained in Section 607 et seq. of the FBCA.
8.13 ARTICLES OF INCORPORATION PROVISIONS. Each KFB 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 KFB 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
KFB Company that may be directly or indirectly acquired or controlled by it.
ARTICLE 99
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 KFB 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 good faith
judgment of the Board of Directors of Regions would so materially adversely
impact the economic or business benefits of the transactions contemplated
by this Agreement so as to render inadvisable the consummation of the
Merger.
(d) Legal Proceedings. No court or governmental or Regulatory
Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
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preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of Regions Common Stock issuable
pursuant to the Merger shall have been received.
(f) Nasdaq/NMS Listing. The shares of Regions Common Stock issuable
pursuant to the Merger shall have been approved for listing on the
Nasdaq/NMS.
(g) Tax Matters. Each Party shall have received a copy of the Tax
Opinions referred to in Section 8.8 of this Agreement. Each Party shall
have delivered to the other a Certificate, dated as of the date of the Tax
Opinion, signed by its duly authorized officers, to the effect that, to the
best Knowledge and belief of such officers, the statement of facts and
representations made on behalf of the management of such Party, presented
to the legal counsel delivering the Tax Opinions were at the date of such
presentation, true, correct, and complete, and are on the date of such
Certificate, to the extent contemplated by the presentation, true, correct,
and complete, as though such presentation had been made on the date of such
Certificate.
9.2 CONDITIONS TO OBLIGATIONS OF REGIONS. The obligations of Regions to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Regions pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of KFB 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 KFB set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimis in amount). The
representations and warranties of KFB set forth in Sections 5.17, 5.18, and
5.19 of this Agreement shall be true and correct in all material respects.
There shall not exist inaccuracies in the representations and warranties of
KFB set forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.17, 5.18, and 5.19) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Material Adverse Effect on KFB; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "Material" or "Material Adverse Effect" or to the "Knowledge"
of KFB shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of KFB 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.
(c) Certificates. KFB 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
KFB'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 executive officers of
KFB shall have executed and delivered to Regions letters in substantially
the form of Exhibit 3 to this Agreement.
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(e) Legal Opinion. Regions shall have received a written opinion,
dated as of the Effective Time, of counsel to KFB, in substantially the
form of Exhibit 4 to this Agreement.
(f) Affiliate Agreements. Regions shall have received from each
affiliate of KFB the affiliates agreement referred to in Section 8.9 of
this Agreement.
(g) Pooling Treatment. KFB shall not have taken any action that would
prevent the Merger from qualifying 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 KFB. The obligations of KFB 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 KFB pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of Regions set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Regions set forth in Section 6.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Regions set forth in Section 6.10 of
this Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies in the representations and warranties of
Regions set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.10) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Regions; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not
to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Regions to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all Material respects.
(c) Certificates. Regions shall have delivered to KFB (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its
obligations set forth in Sections 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Regions' Board of Directors 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 KFB and
its counsel shall request.
(d) Fairness Opinion. KFB shall have received a letter from The
Carson Medlin Company or another financial adviser selected by KFB dated
not more than five (5) days prior to the date of the Proxy Statement to the
effect that in the opinion of such firm, the Exchange Ratio is fair to the
stockholders of KFB from a financial point of view.
(e) Legal Opinion. KFB 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.
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ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of KFB,
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 KFB; 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 KFB 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 KFB 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 KFB and Section 9.3(a) in
the case of Regions or in Material breach of any covenant or other
agreement contained in this Agreement) in the event of a Material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within thirty (30) days after the
giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of KFB fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the Laws of the State of
Florida at the KFB Stockholders' Meeting where the transactions were
presented to such stockholders for approval and voted upon; or
(e) By the Board of Directors of KFB or by the Board of Directors of
Regions in the event that the Merger shall not have been consummated by
August 31, 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 KFB and Section 9.3(a) in
the case of Regions or in Material breach of any covenant or other
agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the
Merger (other than as contemplated by Section 10.1(d) of this Agreement)
cannot be satisfied or fulfilled by the date specified in Section 10.1(e)
of this Agreement as the date after which such Party may terminate this
Agreement; or
10.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 10.1 of this Agreement, this Agreement shall
become void and have no effect, except that (i) the provisions of this Section
10.2 and Article Eleven and Section 8.5(b) of this Agreement shall survive any
such termination, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c),
or 10.1(f) of this Agreement shall not relieve the breaching Party from
Liability for an uncured willful breach of a representation, warranty, covenant,
or agreement giving rise to such termination. Each of the Support Agreements
shall be governed by its own terms as to its termination.
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10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles Two, Three, Four, and Eleven and Sections 8.9, and 8.11 of this
Agreement.
ARTICLE 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 executive 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, KFB, other than
the formation of a newly organized holding company for KFB in which the
shares of KFB 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.
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"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.
"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(b) of
this Agreement.
"EXHIBITS" 1 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FBCA" shall mean the Florida Business Corporation Act as amended.
"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.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title
II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations promulgated thereunder.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KFB BENEFIT PLANS" shall have the meaning set forth in Section 5.13
of this Agreement.
"KFB COMMON STOCK" shall mean the $.01 par value common stock of KFB.
"KFB COMPANIES" shall mean, collectively, KFB and all KFB
Subsidiaries.
"KFB DISCLOSURE MEMORANDUM" shall mean the written information
entitled "KFB 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.
"KFB FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of KFB as of
September 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 nine months ended
September 30, 1997, and for each of the fiscal years ended December 31,
1996, 1995, and 1994, included in the KFB Disclosure Memorandum, and (ii)
the consolidated balance sheets of KFB (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) with respect to periods ended subsequent to September
30, 1997.
"KFB STOCK PLANS" shall mean the stock plans of KFB listed in Section
5.13 of the KFB Disclosure Memorandum.
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"KFB SUBSIDIARIES" shall mean the Subsidiaries of KFB, which shall
include the KFB Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of KFB in the future and owned by KFB at the Effective
Time.
"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 (not
including outside 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.
"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.
"LIBERTY NATIONAL" shall mean Liberty National Bank, a national bank
and wholly-owned subsidiary of KFB.
"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, is likely to have a Material adverse impact on (i) the
financial position, business, results of operations or prospects 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,
savings associations, 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.
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"MERGER" shall mean the merger of KFB 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.
"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 KFB or Regions and "PARTIES" shall mean both
KFB 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 KFB 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 KFB.
"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 September 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 September 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
fiscal years ended December 31, 1996, 1995, and 1994, as filed by Regions
in SEC Documents and reflecting the acquisition of First National Bancorp
accounted for as a pooling of interests and (ii) the consolidated
statements of condition of Regions (including related notes and schedules,
if any) and related statements of income, changes in stockholders' equity,
and cash flows (including related notes and schedules, if any) included in
SEC Documents filed with respect to periods ended subsequent to September
30, 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
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Thrift Supervision, the Office of the Comptroller of the Currency, the
FDIC, all state regulatory agencies having jurisdiction over the Parties
and their respective Subsidiaries, the NASD, and the SEC.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all reports and registration statements
filed, or required to be filed, by a Party or any of its Subsidiaries with
any Regulatory Authority pursuant to the Securities Laws.
"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
KFB to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARY" OR COLLECTIVELY "SUBSIDIARIES" shall mean all those
corporations, banks, associations, or other entities of which the entity in
question owns or controls fifty percent (50%) or more of the outstanding
equity securities either directly or through an unbroken chain of entities
as to each of which fifty percent (50%) or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided,
however, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
"SUPPORT AGREEMENTS" shall mean the various Support Agreements, each
in substantially the form of Exhibit 1.
"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. Except as disclosed, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by KFB or Regions, each of KFB 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.
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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 KFB Common Stock, there shall be made no
amendment decreasing the consideration to be received by KFB 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 KFB, to waive or extend the time for the
compliance or fulfillment by KFB of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of Regions under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of Regions.
(b) Prior to or at the Effective Time, KFB, acting through its Board of
Directors, chief executive officer, or other authorized officer, shall have the
right to waive any Default in the performance of any term of this Agreement by
Regions, to waive or extend the time for the compliance or fulfillment by
Regions of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of KFB 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 KFB.
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>
KFB: KEY FLORIDA BANCORP, INC.
6001 26th Street
Bradenton, Florida 34207
Attention: Stephen R. Jonsson
President and Chief Executive Officer
Copy to Counsel: SMITH, MACKINNON, GREELEY,
BOWDOIN & EDWARDS, P.A.
Citrus Tower, Suite 800
255 South Orange Avenue
Orlando, Florida 32801
Telecopy Number: (407) 843-2448
Attention: John P. Greeley
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
</TABLE>
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Copy to Counsel: REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7099
Attention: Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
11.9 GOVERNING LAW. Except to the extent the laws of the State of Florida
apply to the Merger, this Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware, without regard to any
applicable conflicts of Laws.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
11.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: KEY FLORIDA BANCORP, INC.
By: /s/ LYNNE M. SCHOOLEY By: /s/ STEPHEN R. JONSSON
------------------------------------------------- -------------------------------------------------
Lynne M. Schooley Stephen R. Jonsson
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ SAMUEL E. UPCHURCH, JR. By: /s/ RICHARD D. HORSLEY
------------------------------------------------- -------------------------------------------------
Samuel E. Upchurch, Jr. Richard D. Horsley
Corporate Secretary Vice Chairman and Executive Financial Officer
[CORPORATE SEAL]
</TABLE>
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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
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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.
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"(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 Registrant has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
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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>
2.1 -- Agreement and Plan of Merger, dated as of November 25, 1997, by and between Key Florida Bancorp, Inc. and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 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 Purvis, Gray and Company
23.3 -- Consent of Varnadore Tyler & Hawthorne, P.A.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
23.6 -- 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.
99. -- Form of proxy.
</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
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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.
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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 27th day of January, 1998.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
BY: /s/ Richard D. Horsley
----------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard D. Horsley and Samuel E. Upchurch, Jr.
and each of them, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all amendments to this
registration statement, and to file the same with all exhibits thereto, and all
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney- in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- -------------------------- ---------------------------- ------------------
<S> <C> <C>
/s/ Carl E. Jones, Jr.
- -------------------------- President and Chief Executive January 27, 1998
Carl E. Jones, Jr. Officer and Director
(principal executive officer)
/s/ Richard D. Horsley
- -------------------------- Vice Chairman of the Board and January 27, 1998
Richard D. Horsley Executive Financial Officer
and Director
(principal financial officer)
/s/ Robert P. Houston
- -------------------------- Executive Vice President and January 27, 1998
Robert P. Houston Comptroller
(principal accounting officer)
</TABLE>
II-5
<PAGE> 100
<TABLE>
<S> <C> <C>
/s/ Sheila S. Blair
- -------------------------- Director January 27, 1998
Sheila S. Blair
/s/ William B. Boles, Sr.
- -------------------------- Director January 27, 1998
William B. Boles, Sr.
/s/ James B. Boone, Jr.
- -------------------------- Director January 27, 1998
James B. Boone, Jr.
/s/ Albert P. Brewer
- -------------------------- Director January 27, 1998
Albert P. Brewer
/s/ James S.M. French
- -------------------------- Director January 27, 1998
James S.M. French
/s/ Olin B. King
- -------------------------- Director January 27, 1998
Olin B. King
/s/ J. Stanley Mackin
- -------------------------- Chairman of the Board January 27, 1998
J. Stanley Mackin and Director
/s/ Henry E. Simpson
- -------------------------- Director January 27, 1998
Henry E. Simpson
/s/ Lee J. Styslinger, Jr.
- -------------------------- Director January 27, 1998
Lee J. Styslinger, Jr.
- -------------------------- Director
Robert J. Williams
</TABLE>
II-6
<PAGE> 101
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------ ------------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger, dated as of November 25, 1997, by and between Key Florida Bancorp, Inc.
and Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 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 Purvis, Gray and Company
23.3 -- Consent of Vaynadore Tyler & Hawthorne, P.A.
23.4 -- Consent of Lange, Simpson, Robinson & Somerville -- included in Exhibit 5.
23.5 -- Consent of Alston & Bird -- included in Exhibit 8.
23.6 -- 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.
99. -- Form of proxy.
</TABLE>
<PAGE> 1
EXHIBIT 5
[Letterhead of Lange, Simpson, Robinson & Somerville LLP]
January 27, 1998
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation
S-4 Registration Statement
Combination with Key Florida Bancorp, Inc.
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger of Key Florida Bancorp,
Inc. ("KFB") 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 SMHC upon consummation of the Merger.
The maximum number of shares of Regions to be issued in the Merger is estimated
to be 1,038,196.
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 LLP 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 LETTERHEAD]
404-881-7000
Fax: 404-881-4777
www.alston.com
Philip C. Cook Direct Dial (404) 881-7000
[FORM OF TAX OPINION]
January __, 1998
Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Key Florida Bancorp, Inc.
6001 26th Street
Bradenton, Florida 34207
Re: Proposed Merger of Key Florida Bancorp, Inc. with and into
Regions Financial Corporation
Ladies and Gentlemen:
We have acted as special tax counsel to Regions Financial Corporation
("Regions"), a corporation organized and existing under the laws of the State of
Delaware, in connection with the proposed merger of Key Florida Bancorp, Inc.
("KFB"), a corporation organized and existing under the laws of the Florida,
with and into Regions. The Merger (as defined below) will be effected pursuant
to the Agreement and Plan of Merger by and between KFB and Regions, dated as of
November 25, 1997 (the "Agreement"). As soon as practical following the Merger,
Liberty National Bank, a wholly-owned subsidiary of KFB, will be merged with and
into Regions' principal wholly-owned banking subsidiary (the "Bank Merger"). In
our capacity as counsel to Regions, our opinion as to certain of the federal
income tax consequences of the proposed Merger will be filed pursuant to Item
601(b)(8) of Regulation S-K of the Securities Act of 1933, as amended, as an
attachment to the Registration Statement on Form S-4 filed with the Securities
and Exchange Commission on the date hereof.
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
<PAGE> 2
Regions Financial Corporation
Key Florida Bancorp, Inc.
January __,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 __, 1998, including the Proxy
Statement/Prospectus for the Special Meeting of the
Stockholders of Key Florida Bancorp, Inc.; and
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are accurate.
We have also obtained such additional information and representations
as we have deemed relevant and necessary through consultation with various
officers and representatives of Regions and KFB and through certificates
provided by the management of Regions and the management of KFB.
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 greater Bradenton, Florida 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, KFB shall be merged into and with Regions in accordance with the
provisions of Sections 607.1101, 607.1103 and 607.1105 of the FBCA and with the
effect provided in Section 607.1106 of the FBCA and of Section 252 of the DGCL
and with the effect provided in Section 259 of the DGCL (the "Merger"). Regions
shall be the Surviving Corporation of the Merger and shall continue to be
governed by the Laws of the State of Delaware. The Merger shall be consummated
pursuant to the terms of the Agreement, which has been approved and adopted by
the Boards of Directors of KFB and Regions.
<PAGE> 3
Regions Financial Corporation
Key Florida Bancorp, Inc.
January __,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 KFB Common Stock (excluding shares held by
KFB 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
0.3666 of a share of Regions Common Stock (the "Exchange Ratio"), subject to
adjustment pursuant to the Agreement.
(3) Each of the shares of KFB Common Stock held by any KFB 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.
(4) Notwithstanding any other provision of the Agreement, each holder
of shares of KFB Common Stock exchanged pursuant to the Merger, or of options to
purchase shares of KFB 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 (as determined pursuant to
the Agreement) 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.
(5) At the Effective Time, all rights with respect to KFB Common Stock
pursuant to stock options or stock appreciation rights ("KFB Options") granted
by KFB under the KFB Stock Plans, which are outstanding at the Effective Time,
whether or not exercisable, shall be converted into and become rights with
respect to Regions Common Stock, and Regions shall assume each KFB Option, in
accordance with the terms of the KFB Stock Plan and stock option agreement by
which it is evidenced on substantially the same terms and conditions.
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 KFB will
be approximately equal to the fair market value of the KFB Common Stock
surrendered in exchange therefor.
<PAGE> 4
Regions Financial Corporation
Key Florida Bancorp, Inc.
January __,1998
Page 4
(2) There is no plan or intention on the part of the stockholders of
KFB who own five percent (5%) or more of KFB Common Stock, and to the best of
the knowledge of the management of KFB, there is no plan or intention on the
part of the remaining stockholders of KFB 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 KFB Common Stock outstanding immediately prior to the Effective Time. For
purposes of this assumption, shares of KFB 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 KFB
Common Stock as of the Effective Time. Moreover, shares of KFB Common Stock and
shares of Regions Common Stock held by KFB 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 KFB
stockholders.
(4) Regions has no plan or intention to dispose of any of the assets of
KFB acquired in the transaction, except the Bank Merger, dispositions made in
the ordinary course of business or transfers described in Section 368(a)(2)(C).
(5) The liabilities of KFB assumed by Regions and the liabilities to
which the transferred assets of KFB are subject were incurred by KFB in the
ordinary course of its business.
(6) Following the transaction, Regions will continue the historic
business of KFB or use a significant portion of KFB's historic business assets
in a business.
(7) Regions, KFB, and the stockholders of KFB 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 KFB or any
of its affiliates and Regions or any of its affiliates that was issued,
acquired, or will be settled at a discount.
<PAGE> 5
Regions Financial Corporation
Key Florida Bancorp, Inc.
January __,1998
Page 5
(9) KFB 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 KFB 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 KFB 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 KFB stockholders instead of issuing fractional
shares of Regions Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the transaction to the KFB stockholders in
exchange for their shares of KFB Common Stock. The fractional share interests of
each KFB stockholder will be aggregated, and no KFB 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
KFB will be separate consideration for, or allocable to, any of their shares of
KFB 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 KFB'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) KFB 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 KFB 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
<PAGE> 6
Regions Financial Corporation
Key Florida Bancorp, Inc.
January __,1998
Page 6
at least fifty percent (50%) of the fair market value of the stock of which is
owned by KFB, in the case of a first-tier subsidiary of KFB or by a controlled
corporation, in the case of a lower-tier subsidiary.
(14) Neither Regions nor KFB is an "investment company" as defined in
Section 368(a)(2)(F)(iii) and (iv).
(15) The Agreement represents the entire understanding of KFB 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 KFB (including the
representation that KFB 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 FBCA, the Merger will be a reorganization within the meaning of Section
368(a). KFB and Regions will each be "a party to a reorganization" within the
meaning of Section 368(b).
(2) The stockholders of KFB will recognize no gain or loss upon the
exchange of all of their KFB Common Stock solely for shares of Regions Common
Stock.
(3) The basis of the Regions Common Stock received by the KFB
stockholders in the Merger will, in each instance, be the same as the basis of
the KFB 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 KFB
stockholders will, in each instance, include the period during which the KFB
Common Stock surrendered in exchange therefor was held, provided that the KFB
Common Stock was held as a capital asset on the date of the exchange.
(5) The payment of cash to KFB 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). Generally, any gain or loss recognized
upon such exchange will be capital gain or loss, provided the fractional share
would constitute a capital asset in the hands of the exchanging stockholder.
<PAGE> 7
Regions Financial Corporation
Key Florida Bancorp, Inc.
January __,1998
Page 7
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 Bank Merger, 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, KFB
and the KFB 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:
----------------------------------------
Philip C. Cook
[LETTER.01]
<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 828,492 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
CONSENT OF PURVIS, GRAY AND COMPANY
We hereby consent to the use of our report dated March 7, 1997, relating to the
consolidated financial statements of Key Florida Bancorp, Inc. and Subsidiaries
for the year ended December 31, 1996, included in the registration statement on
Form S-4. We also consent to the reference to us under the heading "Experts" in
the Proxy Statement/Prospectus constituting part of such registration statement
on Form S-4.
January 28, 1998
Gainesville, Florida /s/ Purvis, Gray and Company
Purvis, Gray and Company
<PAGE> 1
EXHIBIT 23.3
[CPA ASSOCIATES, P.A. LOGO]
[CPA ASSOCIATES, P.A. LETTERHEAD]
CONSENT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Regions Financial Corporation of our report dated
February 9, 1996, relating to the financial statements of Liberty National Bank.
We also consent to the references to our Firm under the heading Experts in such
Registration Statement.
/s/ CPA Associates, P.A.
CPA Associates, P.A.
(Successor to the practice of
Varnadore, Tyler & Hawthorne, P.A.
Bradenton, Florida
January 28, 1998
<PAGE> 1
EXHIBIT 23.6
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
Key Florida Bancorp, Inc. 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
Tampa, Florida
January 28, 1998
<PAGE> 1
EXHIBIT 99
KEY FLORIDA BANCORP, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Harvey E. Anderson, and Roger P.
Conley, and each or any one of them, with full power of substitution, as Proxies
to represent and to vote as designated below, all the shares of common stock of
Key Florida Bancorp, Inc. (the "Company") held of record by the undersigned on
January 30, 1998, at the Special Meeting of Stockholders (the "Special Meeting")
to be held on , 1998, or any adjournments thereof.
1. Proposal to approve the Agreement and Plan of Merger, dated as of November
25, 1997 (the "Agreement"), by and between the Company and Regions Financial
Corporation ("Regions") pursuant to which the Company will merge with and
into Regions and each share of the Company's common stock (except for certain
shares held by the Company, Regions, or their respective subsidiaries) will
be converted into .3666 of a share of Regions common stock, and under such
other terms and conditions as are set forth in the Agreement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder, and in the discretion of the persons
named as Proxies on all other matters which may properly come before the Special
Meeting or any adjournment thereof. If no direction is made, this proxy will be
voted in favor of Proposal 1.
THIS PROXY REVOKES ALL PRIOR PROXIES WITH RESPECT TO THE SPECIAL MEETING AND
MAY BE REVOKED PRIOR TO ITS EXERCISE.
Please date and sign exactly as name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: , 1998
--------------------
--------------------------------
(Print Name of Stockholder)
--------------------------------
(Signature of Stockholder)
--------------------------------
(Print Name of Stockholder)
--------------------------------
(Signature of Stockholder)
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
