<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
First Commercial Corporation
----------------------------
(Name of Issuer)
Common Stock, $3.00 par value per share
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(Title of Class of Securities)
319825105
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(CUSIP Number)
Richard D. Horsley
Vice Chairman and Executive Financial Officer
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
(205) 326-7100
--------------
(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
February 8, 1998
---------------------------------
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-l(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
THE INFORMATION REQUIRED ON THE REMAINDER OF THIS COVER PAGE SHALL NOT BE
DEEMED TO BE "FILED" FOR THE PURPOSE OF SECTION 18 OF THE SECURITIES EXCHANGE
ACT OF 1934 ("ACT") OR OTHERWISE SUBJECT TO THE LIABILITIES OF THAT SECTION OF
THE ACT BUT SHALL BE SUBJECT TO ALL OTHER PROVISIONS OF THE ACT (HOWEVER, SEE
THE NOTES).
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<TABLE>
<S> <C>
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CUSIP No.: 319825105
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1. Name of Reporting Person: Regions Financial Corporation
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S.S. or I.R.S. Identification No. of Above Person:
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I.R.S. Identification No. 63-0589368
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2. Check the Appropriate Box if a Member of a Group (See Instructions):
a. [ ] b. [ ]
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3. SEC Use Only
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4. Source of Funds (see Instructions): [WC; OO]
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5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e): [ ]
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6. Citizenship or Place of Organization: Delaware
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7. Sole Voting Power: *
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Number of 8. Shared Voting Power: 0*
Shares Beneficially ------------------------------------------------
Owned by
Each Reporting 9. Sole Dispositive Power: *
Person With --------------------------------------------
10. Shared Dispositive Power: 0*
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11. Aggregate Amount Beneficially Owned by Each Reporting Person: *
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12. Check Box if the Aggregate Amount in Row 11 Excludes Certain Shares
(See Instructions): [ ]
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13. Percent of Class Represented by Amount in Row 11: 16.6%**
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14. Type of Reporting Person (See Instructions): CO
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</TABLE>
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* The shares that are the subject of this filing are purchasable by Regions
Financial Corporation ("Regions") upon exercise of an option (the "Option")
issued to Regions on February 8, 1998, and described in Item 4 of this report.
Prior to the exercise of the Option, Regions is not entitled to any rights as a
stockholder of First Commercial Corporation ("FCC") as to the shares covered by
the Option. The Option may only be exercised upon the happening of certain
events referred to in Item 4, none of which has occurred as of the date hereof.
Regions expressly disclaims beneficial ownership of any of the shares of common
stock of FCC which are purchasable by Regions upon exercise of the Option.
** The percentage indicated represents the percentage of the total
outstanding shares of common stock of FCC as of February 8, 1998, taking into
consideration the 7,480,450 shares of FCC common stock issuable pursuant to the
Option. For the reasons discussed in the footnote above, Regions expressly
disclaims beneficial ownership of any of the shares of common stock of FCC
which are purchasable by Regions upon exercise of the Option.
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<PAGE> 4
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock of FCC, $3.00 par value per
share (together with any associated preferred stock purchase rights, "FCC Common
Stock"). FCC is an Arkansas corporation whose principal executive offices are
located at 400 West Capital Avenue, Second Floor, Little Rock, Arkansas 72201.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is being filed by Regions, a Delaware chartered bank
holding company whose principal executive offices are located at 417 North 20th
Street, Birmingham, Alabama 35203.
To the best of Regions' knowledge, during the last five years, neither
Regions nor any of its directors or executive officers has been convicted in
any criminal proceedings (excluding traffic violations or similar misdemeanors)
nor has Regions or any of its directors or executive officers been a party to
any civil proceeding of a judicial or administrative body of competent
jurisdiction resulting in a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
Attached hereto is an appendix to Item 2 setting forth certain
additional information concerning the directors and executive officers of
Regions.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
It is presently anticipated that shares of FCC Common Stock as
described in Item 4 would be purchased with working capital funds of Regions.
ITEM 4. PURPOSE OF TRANSACTION.
Pursuant to an Agreement and Plan of Merger, dated as of February 8,
1998 (the "Agreement"), by and between Regions and FCC, and in consideration
thereof, FCC issued an option to Regions on February 8, 1998 (the "Option") to
purchase, under certain conditions, up to 7,480,450 shares of FCC Common Stock
subject to adjustment under certain circumstances at a purchase price of $59.00
per share, subject to adjustment pursuant to anti-dilution provisions (the
"Purchase Price"). The Option was issued to Regions pursuant to a Stock Option
Agreement, dated as of February 8, 1998 (the "Option Agreement"), between
Regions and FCC.
The Agreement provides, among other things, for the merger of FCC with
and into Regions, with Regions as the corporation surviving from the merger
(the "Merger"). Upon consummation of the Merger, which is subject to the
approval of the FCC and Regions stockholders, regulatory approvals, and the
satisfaction or waiver of various other terms and conditions, each share of FCC
Common Stock (including any associated preferred stock purchase rights, but
excluding shares held by FCC, or Regions, or any of their respective
subsidiaries, in each case other than in a fiduciary capacity or as a result of
debts previously contracted and shares subject to dissenters' rights) issued
and outstanding shall be converted into 1.7 shares, subject to possible
adjustment under certain circumstances as set forth in the Agreement, of the
common stock of Regions, $.625 par value per share ("Regions Common Stock")
(the "Exchange Ratio").
Under the Agreement, FCC has the right to terminate the Agreement
during the ten-day period commencing two days after the Determination Date (as
defined in the Agreement) if (i) the Average Closing Price (as defined in the
Agreement) of Regions Common Stock is less than the product of .80 and the
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<PAGE> 5
Starting Price (as defined in the Agreement), and (ii) (a) the quotient
obtained by dividing the Average Closing Price by the Starting Price (such
number being referred to herein as the "Regions Ratio") shall be less than (b)
the quotient obtained by dividing the Index Price (as defined in the Agreement)
on the Determination Date by the Index Price on the Starting Date (as defined
in the Agreement) and subtracting 0.15 from the quotient. Regions has the
right to elect to adjust the Exchange Ratio in accordance with the terms of the
Agreement, and thereby eliminate FCC's right to terminate the Agreement.
If (i) Regions is not in material breach of the Option Agreement or
the Agreement, and (ii) no injunction against delivery of the shares covered by
the Option is in effect, Regions may exercise the Option in whole or in part,
at any time and from time to time following the happening of certain events
(each a "Purchase Event") and prior to the termination of the Option,
including, among others:
(A) FCC shall have authorized, recommended, publicly proposed or
publicly announced an intention to authorize, recommend or
propose, or entered into an agreement with any person (other
than Regions or any subsidiary of Regions) to effect (each an
"Acquisition Transaction") (1) a merger, consolidation or
similar transaction involving FCC or its subsidiaries (with
certain exceptions), (2) the sale, lease, exchange or other
disposition of 20 percent or more of the consolidated assets
of FCC and its subsidiaries, or (3) the issuance, sale or
other disposition of 20 percent or more of the voting
securities of FCC or any of its subsidiaries; or
(B) any third party (other than Regions or any subsidiary of
Regions) acquires, or obtains the right to acquire, beneficial
ownership of 20 percent or more of the outstanding shares of
FCC Common Stock;
provided, the Option will terminate upon the earliest of: (i) the Effective
Time; (ii) termination of the Agreement (other than as a result of a willful
breach of any representation or warranty or breach of any covenant by FCC (each
a "Default Termination")) prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event (as defined below) (A) the commencement by any third
party of a tender or exchange offer to purchase 15 percent or more of the
outstanding shares of FCC Common Stock, or (B) the occurrence of certain
circumstances surrounding the failure of the stockholders of FCC to approve the
Agreement, the failure to hold a meeting of the FCC stockholders to approve the
Agreement, or the withdrawal or modification in a manner adverse to Regions, of
the recommendation of FCC's Board of Directors with respect to the Agreement
(each a "Preliminary Purchase Event"); (iii) 12 months after the termination of
the Agreement by Regions pursuant to a Default Termination; or (iv) 12 months
after termination of the Agreement following the occurrence of a Purchase Event
or a Preliminary Purchase Event.
The Option Agreement also sets forth that:
(i) a holder's (including Regions') Total Profit relating
to the Option may not exceed $130 million and, if it otherwise would
exceed such amount, the holder, at its sole election, shall either (A)
reduce the number of shares of FCC Common Stock subject to the Option,
(B) deliver to FCC for cancellation Option Shares previously purchased
by Regions, (C) pay cash to FCC, or (D) any combination of the
foregoing, so that the holder's actually realized Total Profit shall
not exceed $130 million after taking into account the foregoing
actions; and
(ii) the Option may not be exercised for a number of
shares of FCC Common Stock as would, as of the date of exercise,
result in a Notional Total Profit of more than $130 million;
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provided, that nothing in this clause (ii) shall restrict any exercise
of the Option permitted hereby on any subsequent date.
For purposes of the Option Agreement, the term "Total Profit" shall
mean the aggregate sum (prior to the payment of taxes) of the following: (i)
the amount received by the holder pursuant to FCC's repurchase of the Option
(or any portion thereof) pursuant to terms set forth in the Option Agreement;
(ii) (A) the amount received by the holder pursuant to FCC's repurchase of
Option Shares under the Option Agreement, less (B) the holder's purchase price
for such Option Shares; (iii) (A) the net cash amounts received by the holder
pursuant to the sale of Option Shares (or any other securities into which such
Option Shares shall be converted or exchanged) to any unaffiliated person, less
(B) the holder's purchase price of such Option Shares; and (iv) any amounts
received by the holder on the transfer of the Option (or any portion thereof)
to any unaffiliated person.
For purposes of the Option Agreement, the term "Notional Total Profit"
with respect to any number of shares of FCC Common Stock as to which Regions
may propose to exercise the Option shall be the Total Profit determined as of
the date of such proposed exercise, assuming that the Option were exercised on
such date for such number of shares and assuming that such shares, together
with all other Option Shares held by Regions and its affiliates as of such
date, were sold for cash at the closing sale price per share of FCC Common
Stock as quoted on the Nasdaq National Market (or, if FCC Common Stock is not
then quoted on the Nasdaq National Market, the highest bid price per share as
quoted on the principal trading market or securities exchange on which such
shares are traded as reported by a recognized source chosen by Regions) as of
the close of business on the preceding trading day (less customary brokerage
commissions).
At the request of Regions at any time, beginning on the first
occurrence of certain events (each a "Repurchase Event"), including, among
others, the acquisition by a third party of 50 percent or more of the
outstanding shares of FCC Common Stock, and ending upon the earlier of 18
months immediately thereafter or termination of the Option, FCC will repurchase
from Regions (i) the Option, and (ii) all shares of FCC Common Stock purchased
by Regions pursuant to the Option Agreement, at a specified price.
Upon the occurrence of certain events set forth in the Option
Agreement generally relating to the merger of FCC with, or sale by FCC of
substantially all of its assets to, a third party (other than Regions or a
subsidiary of Regions), the Option must be converted into, or exchanged for, an
option, at the election of Regions, of another corporation or FCC (the
"Substitute Option"). The terms of any such Substitute Option are set forth in
the Option Agreement.
A copy of the Agreement and the Option Agreement is incorporated by
reference herein as Exhibits 1 and 2, respectively, and the foregoing summary
is qualified in its entirety by reference thereto.
ITEM 5. INTEREST IN SECURITIES OF FCC.
The 7,480,450 shares of FCC Common Stock which are purchasable by
Regions upon exercise of the Option are equal to approximately 19.9 percent of
FCC Common Stock, based on the 37,590,428 shares of FCC Common Stock issued and
outstanding on February 8, 1998, before taking into consideration the 7,480,450
shares of FCC Common Stock that would be issued pursuant to the Option.
The Option contains anti-dilution provisions which provide that the
number of shares of FCC Common Stock issuable upon exercise of the Option and
the Purchase Price will be adjusted upon the
Page 6 of 11
<PAGE> 7
happening of certain events, including the payment of a stock dividend or other
distribution in FCC Common Stock or the subdivision or reclassification of FCC
Common Stock, as set forth in the Option Agreement. If any additional shares
of FCC Common Stock are issued after the date of the Option Agreement other
than those described in the preceding sentence and shares issued upon exercise
of the Option, the number of shares subject to the Option (taking into account
the shares previously issued pursuant to the Option), shall be adjusted so that
such number of shares following such issuance shall not exceed the lesser of
(i) 19.9 percent of the number of shares of FCC Common Stock then issued and
outstanding without giving effect to the Option, and (ii) that minimum number
of shares of FCC Common Stock which when aggregated with any other shares of
FCC Common Stock beneficially owned by Regions or any Affiliate thereof would
cause the provisions of certain Arkansas takeover laws to be applicable to the
Merger.
Regions expressly disclaims any beneficial ownership of the shares of
FCC Common Stock which are purchasable by Regions upon exercise of the Option
because the Option is exercisable only in the circumstances referred to in Item
4 above, none of which has occurred as of this date.
Other than as set forth in this Item 5 and except with respect to
1,426 shares of FCC Common Stock held by a Regions subsidiary in a fiduciary
capacity, to the best of Regions' knowledge (i) neither Regions nor any
subsidiary or affiliate of Regions or any of its or their executive officers or
directors beneficially owns any shares of FCC Common Stock, and (ii) there have
been no transactions in the shares of FCC Common Stock effected during the past
60 days by Regions, nor to the best of Regions' knowledge, by any subsidiary or
affiliate of Regions or any of its or their executive officers or directors.
No other person is known by Regions to have the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the
sale of, the FCC Common Stock obtainable by Regions upon exercise of the
Option.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF FCC.
Other than the Agreement, including the Option Agreement, a copy of
which (excluding certain exhibits) is incorporated by reference herein, to the
best of Regions' knowledge there are at present no contracts, arrangements,
understandings or relationships (legal or otherwise) among the persons named in
Item 2 above and between such persons and any person with respect to any
securities of FCC.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The Agreement and the Option Agreement are filed herewith as Exhibits
1 and 2, respectively.
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SIGNATURE.
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
REGIONS FINANCIAL CORPORATION
Date: February 18, 1998 By: /s/ Richard D. Horsley
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Richard D. Horsley
Vice Chairman and Executive Financial
Officer
Page 8 of 11
<PAGE> 9
APPENDIX TO ITEM 2
<TABLE>
<CAPTION>
Principal occupation or employment,
Position with Regions name of business, principal business,
Name Financial Corporation and principal business address
- ---------------------- --------------------- --------------------------------------
<S> <C> <C>
Carl E. Jones, Jr. President and Chief President and Chief Executive Officer
Executive Officer Regions
417 North 20th Street
Birmingham, Alabama 35202
J. Stanley Mackin Chairman of the Board Chairman of the Board
Regions and Regions Bank
417 North 20th Street
Birmingham, Alabama 35202
Sheila S. Blair Director Executive Director
Greater Birmingham Foundation
(community foundation)
Post Office Box 131027
Birmingham, Alabama 35213
William R. Boles, Sr. Director Attorney
Boles, Boles & Ryan (law firm)
1805 Tower Drive
Monroe, Louisiana 71201-4937
James B. Boone, Jr. Director Chairman of the Board
Boone Newspapers, Inc.
(newspaper publishing, management and
ownership)
Post Office Box 2370
Tuscaloosa, Alabama 35403
Albert P. Brewer Director Professor of Law and Government,
Samford University
(educational institution)
800 Lakeshore Drive
Birmingham, Alabama 35229
James S.M. French Director Chairman and President
Dunn Investment Co.
(construction, construction materials,
investments)
Post Office Box 247
Birmingham, Alabama 35201
</TABLE>
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<TABLE>
<CAPTION>
Principal occupation or employment,
Position with Regions name of business, principal business,
Name Financial Corporation and principal business address
- ---- --------------------- ------------------------------
<S> <C> <C>
Olin B. King Director Chairman and CEO
SCI Systems, Inc. (diversified
electronics manufacturer)
Post Office Box 1000
Huntsville, Alabama 35804
Henry E. Simpson Director Attorney,
Lange, Simpson, Robinson & Somerville
(law firm)
1700 First Alabama Bank Building
417 North 20th Street
Birmingham, Alabama 35203
Lee J. Styslinger, Jr. Director Chairman
ALTEC Industries, Inc.
(manufacturer of mobile utility
equipment)
Post Office Box 10264
Birmingham, Alabama 35202
Richard D. Horsley Director Vice Chairman of the Board and
Executive Financial Officer
Regions and Regions Bank
417 North 20th Street
Birmingham, Alabama 35202
Robert J. Williams Director Chairman and Chief Executive Officer
Terminix Services, Inc.
(pest control company)
P.O. Box 16667
Mobile, Alabama 36616
Joe M. Hinds, Jr. Regional President Regional President
Regions
417 North 20th Street
Birmingham, Alabama 35202
</TABLE>
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<TABLE>
<CAPTION>
Principal occupation or employment,
Position with Regions name of business, principal business,
Name Financial Corporation and principal business address
- ---- --------------------- ------------------------------
<S> <C> <C>
Sam P. Faucett Regional President Regional President
Regions
417 North 20th Street
Birmingham, Alabama 35202
Wilbur B. Hufham Regional President Regional President
Regions
417 North 20th Street
Birmingham, Alabama 35202
William E. Jordan Regional President Regional President
Regions
417 North 20th Street
Birmingham, Alabama 35202
Peter D. Miller Regional President Regional President
Regions
417 North 20th Street
Birmingham, Alabama 35202
</TABLE>
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<PAGE> 1
EXHIBIT 1
FINAL
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST COMMERCIAL CORPORATION
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF FEBRUARY 8, 1998
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TABLE OF CONTENTS
<TABLE>
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PAGE
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Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Execution of Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 - TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 3 - MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Shares Held by FCC or Regions . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4 Dissenting Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.5 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6 Conversion of Stock Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4 - EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Rights of Former FCC Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF FCC . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 FCC Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.12 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.14 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.15 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.16 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.17 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.18 Accounting, Tax, and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
5.19 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.20 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.21 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.22 Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.23 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF REGIONS . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . 19
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Regions Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.5 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 21
6.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.9 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.12 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.13 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.14 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.15 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.16 Accounting, Tax, and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . 26
6.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.18 Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.19 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . 27
7.1 Affirmative Covenants of Both Parties . . . . . . . . . . . . . . . . . . . . . . 27
7.2 Negative Covenants of FCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.3 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.4 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 8 - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.1 Registration Statement; Joint Proxy Statement; Stockholder Approvals . . . . . . . 30
8.2 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . 31
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 31
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.10 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.11 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.12 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
8.13 Agreement of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.14 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.15 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.16 Certain Modifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.17 Pending FCC Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . 37
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . 37
9.2 Conditions to Obligations of Regions . . . . . . . . . . . . . . . . . . . . . . . 39
9.3 Conditions to Obligations of FCC . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 10 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . 44
ARTICLE 11 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.12 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.13 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
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<PAGE> 5
LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
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<S> <C>
1. Form of Stock Option Agreement. (Section 1.4).
2. Form of Affiliate Agreement. (Sections 8.13, 9.2(d)).
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of February 8, 1998, by and between FIRST COMMERCIAL
CORPORATION ("FCC"), a corporation organized and existing under the Laws of the
State of Arkansas, with its principal office located in Little Rock, Arkansas;
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 FCC and Regions are of the opinion that
the transactions described herein are in the best interests of the parties to
this Agreement and their respective stockholders. This Agreement provides for
the acquisition of FCC by Regions pursuant to the merger (the "Merger") of FCC
with and into Regions. At the effective time of the Merger, the outstanding
shares of the capital stock of FCC shall be converted into shares of the common
stock of Regions (except as provided herein). As a result, stockholders of FCC
shall become stockholders of Regions, and each of the subsidiaries of FCC shall
continue to conduct its business and operations as a subsidiary of Regions.
The transactions described in this Agreement are subject to the approvals of
the stockholders of FCC, the stockholders of Regions, the Board of Governors of
the Federal Reserve System, and certain 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 qualify for treatment as a pooling of interests.
Immediately after the execution and delivery of this Agreement, as
a condition and inducement to Regions' willingness to enter into this
Agreement, FCC and Regions are entering into a stock option agreement (the
"Stock Option Agreement"), in substantially the form of Exhibit 1, pursuant to
which FCC is granting to Regions an option to purchase shares of FCC Common
Stock.
Certain terms used in this Agreement are defined in Section 11.1
of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, FCC shall be merged with and into Regions in
accordance with the provisions of Section 4-27-1107 of the ABCA and with the
effect provided in Section 4-
<PAGE> 7
27-1106 of the ABCA and Section 252 of the DGCL and with the effect provided in
Section 259 of the DGCL (the "Merger"). Regions shall be the Surviving
Corporation resulting from the Merger and shall continue to be governed by the
Laws of the State of Delaware. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of FCC and Regions.
1.2 TIME AND PLACE OF CLOSING. The consummation of the Merger
(the "Closing") shall take place at 9:00 A.M. on the date that the Effective
Time occurs (or the immediately preceding day if the Effective Time is earlier
than 9:00 A.M.), or at such other time as the Parties, acting through their
duly authorized officers, may mutually agree. The place of Closing shall be at
such location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and the other transactions
contemplated by this Agreement shall become effective on the date and at the
time the Arkansas Articles of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of Arkansas and the Delaware
Certificate of Merger shall become effective with the Secretary of State of the
State of Delaware (the "Effective Time"). Subject to the terms and conditions
hereof, unless otherwise mutually agreed upon in writing by the duly authorized
officers of each Party, the Parties shall use their reasonable efforts to cause
the Effective Time to occur on or before the 15th business day (as designated
by Regions) following the last to occur of (i) the effective date (including
expiration of any applicable waiting period) of the last required Consent of
any Regulatory Authority having authority over and approving or exempting the
Merger, and (ii) the date on which the stockholders of Regions and FCC approve
the matters relating to this Agreement required to be approved by such
stockholders by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately after the
execution of this Agreement and as a condition hereto, FCC is executing and
delivering to Regions the Stock Option 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
individuals elected in accordance with the terms of the Supplemental Letter,
shall serve as the directors of the Surviving Corporation from and
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<PAGE> 8
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 officers of FCC as thereafter
elected, shall serve as the officers of the Surviving Corporation from and
after the Effective Time in accordance with the Bylaws of the Surviving
Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any
action on the part of Regions or FCC, or the stockholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of Regions Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued
and outstanding from and after the Effective Time.
(b) Each share of FCC Common Stock (including any
associated Preferred Stock Purchase Rights, but excluding shares held by
any FCC Company or any Regions Company, 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 1.7 shares
of Regions Common Stock (subject to adjustment pursuant to Section
10.1(g) of this Agreement, the "Exchange Ratio").
3.2 ANTI-DILUTION PROVISIONS. In the event FCC changes the
number of shares of FCC Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization,
or similar transaction 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, recapitalization, or similar
transaction 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 FCC OR REGIONS. Each of the shares of FCC
Common Stock held by any FCC Company or by any Regions Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 DISSENTING STOCKHOLDERS. Any holder of shares of FCC Common
Stock who perfects such holder's dissenters' rights of appraisal in accordance
with and as contemplated by Sections 4-27-1301 et seq. of the ABCA shall be
entitled to receive the value of such shares in cash as determined pursuant to
such provision of Law; provided, however, that no such payment shall be made to
any dissenting stockholder unless and until such dissenting stockholder has
- 3 -
<PAGE> 9
complied with the applicable provisions of the ABCA and surrendered to FCC the
certificate or certificates representing the shares for which payment is being
made. In the event that after the Effective Time a dissenting stockholder of
FCC fails to perfect, or effectively withdraws or loses, such holder's right to
appraisal of and payment for such holder's shares, Regions shall issue and
deliver the consideration to which such holder of shares of FCC Common Stock is
entitled under this Article 3 (without interest) upon surrender by such holder
of the certificate or certificates representing shares of FCC Common Stock held
by such holder. FCC will establish an escrow account with an amount sufficient
to satisfy the maximum aggregate payment that may be required to be paid to
dissenting stockholders. Upon satisfaction of all claims of dissenting
stockholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to the Surviving Corporation.
3.5 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of shares of FCC Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of Regions Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Regions
Common Stock multiplied by the market value of one share of Regions Common
Stock at the Effective Time. The market value of one share of Regions Common
Stock at the Effective Time shall be the last sale price of Regions Common
Stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source selected by Regions) on the
last trading day preceding the Effective Time. No such holder will be entitled
to dividends, voting rights, or any other rights as a stockholder in respect of
any fractional shares.
3.6 CONVERSION OF STOCK RIGHTS.
(a) At the Effective Time, each award, option, or other
right to purchase or acquire shares of FCC Common Stock pursuant to stock
options, stock appreciation rights, or stock awards ("FCC Rights") granted by
FCC under the FCC 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 FCC Right, in
accordance with the terms of the FCC Stock Plan and stock option agreement by
which it is evidenced, except that from and after the Effective Time, (i)
Regions and its Compensation Committee shall be substituted for FCC and the
Committee of FCC's Board of Directors (including, if applicable, the entire
Board of Directors of FCC) administering such FCC Stock Plan, (ii) each FCC
Right assumed by Regions may be exercised solely for shares of Regions Common
Stock (or cash in the case of stock appreciation rights), (iii) the number of
shares of Regions Common Stock subject to such FCC Right shall be equal to the
number of shares of FCC Common Stock subject to such FCC Right immediately
prior to the Effective Time multiplied by the Exchange Ratio, and (iv) the per
share exercise price (or similar threshold price, in the case of stock awards)
under each such FCC Right shall be adjusted by dividing the per share exercise
(or threshold) price under each such FCC Right by the Exchange Ratio and
rounding up to the nearest cent. Notwithstanding the provisions of clause
(iii) of the preceding sentence, Regions shall not be obligated to issue any
fraction of a share of Regions Common Stock upon exercise of FCC Rights and any
fraction of a share of Regions Common Stock that otherwise would be subject to
a converted FCC Right shall
- 4 -
<PAGE> 10
represent the right to receive a cash payment equal to the product of such
fraction and the difference between the market value of one share of Regions
Common Stock and the per share exercise price of such Right. The market value
of one share of Regions Common Stock shall be the last sale price of Regions
Common Stock on the Nasdaq NMS (as reported by The Wall Street Journal or, if
not reported thereby, any other authoritative source selected by Regions) on
the last trading day preceding the Effective Time. In addition,
notwithstanding the provisions of clauses (iii) and (iv) of the first sentence
of this Section 3.6, each FCC Right which is an "incentive stock option" shall
be adjusted as required by Section 424 of the Internal Revenue Code, so as not
to constitute a modification, extension, or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. Regions agrees to take
all necessary steps to effectuate the foregoing provisions of this Section 3.6.
(b) As soon as reasonably practicable after the Effective
Time, Regions shall deliver to the participants in each FCC Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants pursuant to such FCC Stock Plan shall continue in effect on the same
terms and conditions (subject to the adjustments required by Section 3.6(a)
after giving effect to the Merger), and Regions shall comply with the terms of
each FCC Stock Plan to ensure, to the extent required by, and subject to the
provisions of, such FCC Stock Plan, that FCC Rights which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. At or prior to the Effective
Time, Regions shall take all corporate action necessary to reserve for issuance
sufficient shares of Regions Common Stock for delivery upon exercise of FCC
Rights assumed by it in accordance with this Section 3.6. 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. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the 1934 Act, where applicable, Regions shall administer the
FCC Stock Plan assumed pursuant to this Section 3.6 in a manner that complies
with Rule 16b-3 promulgated under the 1934 Act.
(c) All restrictions or limitations on transfer with
respect to FCC Common Stock awarded under the FCC Stock Plans or any other
plan, program, or arrangement of any FCC 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.
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<PAGE> 11
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time,
Regions and FCC shall cause the exchange agent selected by Regions (the
"Exchange Agent") to mail to the former stockholders of FCC appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
FCC Common Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent). After the Effective Time, each holder of shares of FCC
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which the holder thereof has perfected dissenters' rights of
appraisal as contemplated by Section 3.4 of this Agreement) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.5 of this
Agreement, each holder of shares of FCC 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 FCC Common Stock is entitled as a result of the
Merger until such holder surrenders such holder's certificate or certificates
representing the shares of FCC Common Stock for exchange as provided in this
Section 4.1. The certificate or certificates of FCC Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any
other provision of this Agreement notwithstanding, neither the Surviving
Corporation nor the Exchange Agent shall be liable to a holder of FCC 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 FCC STOCKHOLDERS. At the Effective Time,
the stock transfer books of FCC shall be closed as to holders of FCC Common
Stock immediately prior to the Effective Time and no transfer of FCC 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 FCC Common
Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement or as to which the holder thereof has perfected dissenters' rights of
appraisal as contemplated by Section 3.4 of this Agreement) shall from and
after the Effective Time represent for all purposes only the right to receive
the consideration provided in Sections 3.1 and 3.5 of this Agreement in
exchange therefor, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior
to the Effective Time which have been declared or made by FCC in respect of
such shares of FCC Common Stock in accordance with the terms of this Agreement
and which remain unpaid at the Effective Time. To the extent permitted by Law,
former stockholders of record of FCC 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 FCC Common
Stock are converted, regardless of whether such holders have exchanged their
certificates representing FCC Common Stock for certificates
- 6 -
<PAGE> 12
representing Regions Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by Regions on
the Regions Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement, but beginning 30 days after
the Effective Time 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 FCC
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 FCC Common Stock certificate, both
the Regions Common Stock certificate (together with all such undelivered
dividends or other distributions without interest) and any undelivered
dividends and cash payments to be paid for fractional share interests (without
interest) shall be delivered and paid with respect to each share represented by
such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FCC
FCC hereby represents and warrants to Regions as follows:
5.1 ORGANIZATION, STANDING, AND POWER. FCC is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Arkansas, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its Material Assets.
FCC 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 FCC.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) FCC 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
FCC, subject to the approval of this Agreement by the holders of a majority of
the outstanding shares of FCC Common Stock entitled to be cast thereon, which
is the only stockholder vote required for approval of this Agreement and
consummation of the Merger by FCC. Subject to such requisite stockholder
approval, this Agreement represents a legal, valid, and binding obligation of
FCC, enforceable against FCC 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
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<PAGE> 13
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 FCC, nor the consummation by FCC of the transactions contemplated hereby,
nor compliance by FCC with any of the provisions hereof or thereof, will (i)
conflict with or result in a breach of any provision of FCC's Second Amended
and Restated 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 FCC Company under, any Contract or
Permit of any FCC Company, where such Default or Lien, or any failure to obtain
such Consent, is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FCC, or (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b) of this Agreement, violate any Law or
Order applicable to any FCC Company or any of their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents, filings,
or notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FCC, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by FCC of the Merger and the other transactions
contemplated in this Agreement.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of FCC consists, as of
the date of this Agreement, of (i) 50,000,000 shares of FCC Common Stock, of
which 37,590,428 shares are issued and outstanding as of the date of this
Agreement and, except for shares of FCC Common Stock issuable in connection
with the transaction referenced in Section 8.17 of this Agreement, not more
than 38,527,511 shares will be issued and outstanding at the Effective Time,
and (ii) 400,000 shares of FCC Preferred Stock, of which no shares are issued
and outstanding as of the date of this Agreement and no shares will be issued
and outstanding as of the Effective Time. All of the issued and outstanding
shares of FCC Common Stock are duly and validly issued and outstanding and are
fully paid and nonassessable under the ABCA. None of the outstanding shares of
FCC Common Stock has been issued in violation of any preemptive rights of the
current or past stockholders of FCC.
(b) Except as set forth in Section 5.3(a) of this
Agreement or Section 5.3(b) of the FCC Disclosure Memorandum, or as provided
pursuant to the Stock Option Agreement or the FCC Rights Agreement, there are
no shares of capital stock or other equity securities of FCC outstanding and no
outstanding Rights relating to the capital stock of FCC.
5.4 FCC SUBSIDIARIES. FCC has disclosed in Section 5.4 of the
FCC Disclosure Memorandum all of the FCC Subsidiaries as of the date of this
Agreement. Except as set forth in
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Section 5.4 of the FCC Disclosure Memorandum, FCC or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of each FCC
Subsidiary. No equity securities of any FCC Subsidiary are or may become
required to be issued (other than to another FCC Company) by reason of any
Rights, and there are no Contracts by which any FCC Subsidiary is bound to
issue (other than to another FCC Company) additional shares of its capital
stock or Rights or by which any FCC Company is or may be bound to transfer any
shares of the capital stock of any FCC Subsidiary (other than to another FCC
Company). There are no Contracts relating to the rights of any FCC Company to
vote or to dispose of any shares of the capital stock of any FCC Subsidiary.
All of the shares of capital stock of each FCC Subsidiary held by a FCC Company
are duly authorized, validly issued, and fully paid and, except as provided in
statutes pursuant to which depository institution Subsidiaries are organized,
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the FCC Company
free and clear of any Lien. Except as set forth in Section 5.4 of the FCC
Disclosure Memorandum, each FCC Subsidiary is either a bank or a corporation,
and is duly organized, validly existing, and (as to corporations) in good
standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each FCC 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 FCC. Each FCC Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or Savings Association Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) FCC has filed and made available to Regions all
forms, reports, and documents required to be filed by FCC with the SEC since
December 31, 1993 (collectively, the "FCC SEC Reports"). The FCC SEC Reports
(i) at the time filed, complied in all Material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, and (ii) did
not at the time they were filed (or if amended or 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 FCC SEC Reports or necessary in order to make the
statements in such FCC SEC Reports, in light of the circumstances under which
they were made, not misleading. Except for FCC Subsidiaries that are
registered as a broker, dealer, or investment advisor or filings required due
to fiduciary holdings of the FCC Subsidiaries, none of FCC's Subsidiaries is
required to file any forms, reports, or other documents with the SEC.
(b) Each of the FCC Financial Statements (including, in
each case, any related notes) contained in the FCC SEC Reports, including any
FCC 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
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prepared 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 FCC 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.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No FCC Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FCC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of FCC as of
September 30, 1997, included in the FCC Financial Statements or reflected in
the notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to September 30, 1997. No FCC 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 FCC.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1997, except as disclosed in the FCC Financial Statements, (i) there have been
no events, changes, or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on FCC, and
(ii) the FCC Companies have conducted their respective businesses in the
ordinary and usual course (excluding the incurrence of expenses in connection
with this Agreement and the transactions contemplated hereby).
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of any of the FCC 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, to the Knowledge of FCC, all Tax Returns filed
are complete and accurate in all Material respects. All Tax Returns for
periods ending on or before the date of the most recent fiscal year end
immediately preceding the Effective Time will be timely filed or requests for
extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation
with respect to any Taxes, that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on FCC, except to the extent reserved against in the FCC
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) Except as set forth in Section 5.8(b) of the FCC
Disclosure Memorandum, none of the FCC 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
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under examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the FCC Companies for the period or periods through and including
the date of the respective FCC Financial Statements has been made and is
reflected on such FCC Financial Statements.
(d) Each of the FCC 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 FCC.
(e) Except as set forth in Section 5.8(e) of the FCC
Disclosure Memorandum, none of the FCC 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 Material Liens with respect to Taxes
upon any of the Assets of the FCC Companies.
(g) Except as set forth in Section 5.8(g) of the FCC
Disclosure Memorandum, there has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the FCC Companies that occurred during
or after any Taxable Period in which the FCC Companies incurred a net operating
loss that carries over to any Taxable Period ending after December 31, 1996.
(h) No FCC Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible corporations.
(i) After the date of this Agreement, no Material
election with respect to Taxes will be made without the prior consent of
Regions, which consent will not be unreasonably withheld.
(j) No FCC Company has or has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty
or convention between the United States and such foreign country.
5.9 ASSETS. The FCC Companies have good and marketable title,
free and clear of all Liens, to all of their respective Assets. All tangible
properties used in the businesses of the FCC Companies are in good condition,
reasonable wear and tear excepted, and are usable in the ordinary course of
business consistent with FCC's past practices. All Assets which are Material
to
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FCC's business on a consolidated basis, held under leases or subleases by any
of the FCC Companies, are held under valid Contracts enforceable in accordance
with their respective terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or other Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceedings
may be brought), and each such Contract is in full force and effect. The FCC
Companies currently maintain insurance in amounts, scope, and coverage
reasonably necessary for their operations. None of the FCC Companies has
received notice from any insurance carrier that (i) such insurance will be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. The Assets of the FCC Companies include all Assets required to
operate the business of the FCC Companies as presently conducted.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of FCC, each FCC Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except those violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FCC.
(b) There is no Litigation pending or, to the Knowledge
of FCC, threatened before any court, governmental agency, or authority, or
other forum in which any FCC Company or any of its Participation Facilities has
been or, with respect to threatened Litigation, may reasonably be expected to
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material, whether or not occurring at, on,
under, or involving a site owned, leased, or operated by any FCC 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 FCC.
(c) There is no Litigation pending, or to the Knowledge
of FCC, threatened before any court, governmental agency, or board, or other
forum in which any of its Loan Properties (or FCC in respect of such Loan
Property) has been or, with respect to threatened Litigation, may reasonably be
expected to be named as a defendant or potentially responsible party (i) for
alleged noncompliance (including by any predecessor) with any Environmental Law
or (ii) relating to the release into the environment of any Hazardous Material,
whether or not occurring at, on, under, or involving a 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 FCC.
(d) To the Knowledge of FCC, 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 FCC.
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(e) To the Knowledge of FCC, during the period of (i) any
FCC Company's ownership or operation of any of their respective current
properties, (ii) any FCC Company's participation in the management of any
Participation Facility, or (iii) any FCC Company's holding of a security
interest in a Loan Property, there have been no releases of Hazardous Material
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 FCC. Prior to the period of (i) any FCC Company's
ownership or operation of any of their respective current properties, (ii) any
FCC Company's participation in the management of any Participation Facility, or
(iii) any FCC Company's holding of a security interest in a Loan Property, to
the Knowledge of FCC, there were no releases of Hazardous Material 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 FCC.
5.11 COMPLIANCE WITH LAWS. FCC is duly registered as a bank
holding company under the BHC Act. Each FCC 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 FCC, 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 FCC. None of the FCC Companies:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except
for violations which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FCC; and
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any FCC
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FCC, (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 FCC, or
(iii) requiring any FCC Company (x) to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
5.12 LABOR RELATIONS. Except as set forth in Section 5.12 of the
FCC Disclosure Memorandum, no FCC Company is the subject of any Litigation
asserting that it or any other FCC 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 FCC Company to bargain with any
labor organization as to wages or conditions of employment, nor is any FCC
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
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other labor dispute involving any FCC Company, pending or threatened, or to the
Knowledge of FCC, is there any activity involving any FCC Company's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) FCC has disclosed to Regions in writing prior to the
execution of the Agreement and in Section 5.13 of the FCC Disclosure
Memorandum, and has delivered or made available to Regions prior to the
execution of this Agreement correct and complete copies in each case of, all
Material FCC Benefits Plans. For purposes of this Agreement, "FCC Benefit
Plans" means all pension, retirement, profit-sharing, deferred compensation,
stock option, employee stock ownership, severance pay, vacation, bonus, or
other incentive plan, all other written employee programs or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, "employee benefit plans" as that term is defined in Section 3(3) of
ERISA maintained by, sponsored in whole or in part by, or contributed to by,
any FCC 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. Any of the FCC 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 "FCC ERISA Plan."
Any FCC 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 "FCC Pension Plan." Neither FCC nor any FCC Company
has 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)).
Each "employee pension benefit plan," as defined in Section 3(2) of ERISA, ever
maintained by any FCC Company that was intended to qualify under Section 401(a)
of the Internal Revenue Code and with respect to which any FCC Company has any
Liability, is disclosed as such in Section 5.13 of the FCC Disclosure
Memorandum.
(b) FCC 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 FCC
Benefit Plans (including insurance contracts), and all amendments thereto, (ii)
with respect to any such FCC Benefit Plans or amendments, all determination
letters, Material rulings, Material opinion letters, Material information
letters, or Material advisory opinions issued by the Internal Revenue Service,
the United States Department of Labor, or the Pension Benefit Guaranty
Corporation after December 31, 1994, (iii) annual reports or returns, audited
or unaudited financial statements, actuarial valuations and reports, and
summary annual reports prepared for any FCC Benefit Plan with respect to the
most recent plan year, and (iv) the most recent summary plan descriptions and
any Material modifications thereto.
(c) All FCC Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws, the breach or violation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FCC. Each FCC
ERISA Plan which is intended to be qualified under Section 401(a) of the
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Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and FCC is not aware of any circumstances which will
or could reasonably result in revocation of any such favorable determination
letter. Each trust created under any FCC ERISA Plan has been determined to be
exempt from Tax under Section 501(a) of the Internal Revenue Code and FCC is
not aware of any circumstance which will or could reasonably result in
revocation of such exemption. With respect to each FCC Benefit Plan to the
Knowledge of FCC, no event has occurred which will or could reasonably 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 that is reasonably
likely, individually or in the aggregate, to have a Material Adverse Effect on
FCC. There is no Material pending or, to the Knowledge of FCC, threatened
Litigation relating to any FCC ERISA Plan.
(d) No FCC Company has engaged in a transaction with
respect to any FCC Benefit Plan that, assuming the Taxable Period of such
transaction expired as of the date of this Agreement, would subject any FCC
Company to a Material tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FCC. Neither FCC nor any administrator or fiduciary of any FCC
Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner which could subject FCC to
any direct or indirect Liability (by indemnity or otherwise) for breach of any
fiduciary, co-fiduciary, or other duty under ERISA, where such Liability,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on FCC. No oral or written representation or communication with
respect to any aspect of the FCC Benefit Plans has been made to employees of
any FCC Company which is not in accordance with the written or otherwise
preexisting terms and provisions of such plans, where any Liability with
respect to such representation or disclosure is reasonably likely to have a
Material Adverse Effect on FCC.
(e) Since the date of the most recent actuarial
valuation, there has been (i) no Material change in the financial position or
funded status of any FCC Pension Plan, (ii) no change in the actuarial
assumptions with respect to any FCC Pension Plan, and (iii) no increase in
benefits under any FCC Pension Plan as a result of plan amendments or changes
in applicable Law, any of which is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on FCC. Neither any FCC Pension
Plan nor any "single-employer plan," within the meaning of Section 4001(a)(15)
of ERISA, currently or formerly maintained by any FCC Company, or the
single-employer plan of any entity which is considered one employer with FCC
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (a "FCC ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. All contributions with respect
to a FCC Pension Plan or any single-employer plan of a FCC ERISA Affiliate have
or will be timely made and there is no lien or expected to be a lien under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. No FCC Company has provided, or is
required to provide, security to a FCC Pension Plan or to any single-employer
plan of a FCC ERISA Affiliate pursuant to Section 401(a)(29) of the Internal
Revenue Code. All premiums required to be paid under
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ERISA Section 4006 have been timely paid by FCC, except to the extent any
failure would not have a Material Adverse Effect on FCC.
(f) No Liability under Title IV of ERISA has been or is
expected to be incurred by any FCC Company with respect to any defined benefit
plan currently or formerly maintained by any of them or by any FCC ERISA
Affiliate that has not been satisfied in full (other than Liability for Pension
Benefit Guaranty Corporation premiums, which have been paid when due, except to
the extent any failure would not have a Material Adverse Effect on FCC).
(g) Except as set forth in Section 5.13 of the FCC
Disclosure Memorandum, no FCC Company has any obligations for retiree health
and retiree life benefits under any of the FCC Benefit Plans other than with
respect to benefit coverage mandated by applicable Law.
(h) Except as set forth in Section 5.13 of the FCC
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will, by themselves,
(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 FCC Company from any FCC Company under any FCC
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any FCC Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
5.14 MATERIAL CONTRACTS. Except as set forth in Section 5.14 of
the FCC Disclosure Memorandum, none of the FCC 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 FCC Company or the guarantee
by any FCC Company of any such obligation (other than Contracts evidencing
deposit liabilities, purchases of federal funds, fully-secured repurchase
agreements, and Federal Home Loan Bank advances of depository institution
Subsidiaries, trade payables, and Contracts relating to borrowings or
guarantees made in the ordinary course of business), and (iii) any other
Contract or amendment thereto that would be required to be filed as an exhibit
to a Form 10-K filed by FCC with the SEC as of the date of this Agreement that
has not been filed as an exhibit to FCC's Form 10-K filed for the fiscal year
ended December 31, 1996, or in another SEC Document and identified to Regions
(together with all Contracts referred to in Sections 5.9 and 5.13(a) of this
Agreement, the "FCC Contracts"). With respect to each FCC Contract: (i) the
Contract is in full force and effect; (ii) no FCC Company is in Default
thereunder, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FCC; (iii) no
FCC Company has repudiated or waived any Material provision of any such
Contract; and (iv) no other party to any such Contract is, to the Knowledge of
FCC, in Default in any respect, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FCC, or has repudiated or waived any Material provision thereunder. Except for
Federal Home Loan Bank advances, all of the indebtedness of any FCC Company for
money borrowed is prepayable at any time by such FCC Company without penalty or
premium.
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5.15 LEGAL PROCEEDINGS.
(a) There is no Litigation instituted or pending, or, to
the Knowledge of FCC, threatened against any FCC Company, or against any Asset,
employee benefit plan, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
FCC, nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any FCC Company, that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on FCC.
(b) Section 5.15(b) of the FCC Disclosure Memorandum
includes a summary report of all Litigation as of the date of this Agreement to
which any FCC Company is a party and which names a FCC Company as a defendant
or cross-defendant and where the maximum exposure is estimated to be $250,000
or more.
5.16 REPORTS. Since January 1, 1994, or the date of organization
if later, each FCC Company has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with any Regulatory Authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FCC. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all Material respects with all applicable Laws.
5.17 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any FCC Company or any Affiliate thereof
regarding FCC or such Affiliate 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 FCC
Company or any Affiliate thereof for inclusion in the Joint Proxy Statement to
be mailed to Regions' and FCC's stockholders in connection with the
Stockholders' Meetings will, when first mailed to the stockholders of Regions
and FCC, 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 Joint Proxy Statement or any amendment thereof or supplement
thereto, at the time of the Stockholders' Meetings, 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' Meetings. All documents that any FCC Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all
Material respects with the provisions of applicable Law.
5.18 ACCOUNTING, TAX, AND REGULATORY MATTERS. No FCC Company or
any Affiliate thereof has taken or agreed to take any action, and FCC has no
Knowledge of any fact or
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circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to
in Section 9.1(b) of this Agreement or result in the imposition of a condition
or restriction of the type referred to in the last sentence of such Section.
5.19 STATE TAKEOVER LAWS. Each FCC 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
Arkansas (collectively, "Takeover Laws").
5.20 CHARTER PROVISIONS. Each FCC Company has taken all action
so that the entering into of this Agreement and the consummation of the Merger
and the other transactions contemplated by this Agreement do not and will not
result in the grant of any rights to any Person under the Articles of
Incorporation, Bylaws, or other governing instruments of any FCC 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 FCC Company that may be directly or indirectly acquired or controlled by
it.
5.21 RIGHTS AGREEMENT. FCC has taken all necessary action
(including, if required, redeeming all of the outstanding Preferred Stock
Purchase Rights or amending or terminating the FCC Rights Agreement) so that
the entering into of this Agreement, the acquisition of shares pursuant to, or
other exercise of rights under, the Stock Option Agreement and consummation of
the Merger and the other transactions contemplated hereby do not and will not
result in any Person becoming able to exercise any Preferred Stock Purchase
Rights under the FCC Rights Agreement or enabling or requiring the Preferred
Stock Purchase Rights to be separated from the shares of FCC Common Stock to
which they are attached or to be triggered or to become exercisable.
5.22 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for FCC's own account, or for the account of
one or more the FCC Subsidiaries or their customers, were entered into (i) in
accordance with prudent business practices and all applicable Laws, and (ii)
with counterparties believed to be financially responsible.
5.23 YEAR 2000. FCC has disclosed to Regions a complete and
accurate copy of FCC's plan, including an estimate of the anticipated
associated costs, for implementing modifications to FCC's hardware, software,
and computer systems, chips, and microprocessors, to ensure proper execution
and accurate processing of all date-related data, whether from years in the
same century or in different centuries. Between the date of this Agreement and
the Effective Time, FCC shall endeavor to continue its efforts to implement
such plan.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to FCC 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, subject to the approval of this Agreement and the issuance of
the shares of Regions Common Stock pursuant to the Merger by the holders of a
majority of the outstanding shares of Regions Common Stock entitled to vote
thereon, which is the only stockholder vote required for the consummation of
the Merger by Regions. Subject to such requisite stockholder approval, 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, (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any Regions Company under, any Contract or Permit of any Regions
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions, or (iii) subject to receipt of the requisite Consents
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any Regions Company or any of their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other
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than Consents required from Regulatory Authorities, and other than notices to
or filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, or under the HSR Act,
and other than Consents, filings, or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, no notice to, filing with, or Consent of,
any public body or authority is necessary for the consummation by Regions of
the Merger and the other transactions contemplated in this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of Regions
consists, as of the date of this Agreement, of 240,000,000 shares of Regions
Common Stock, of which 136,696,150 shares were issued and outstanding and
322,221 shares were held as treasury shares as of December 31, 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 FCC
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 FCC Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive
rights of the current or past stockholders of Regions.
6.4 REGIONS SUBSIDIARIES. Regions or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of each Regions
Subsidiary. No equity securities of any Regions Subsidiary are or may become
required to be issued (other than to another Regions Company) by reason of any
Rights, and there are no Contracts by which any Regions Subsidiary is bound to
issue (other than to another Regions Company) additional shares of its capital
stock or Rights or by which any Regions Company is or may be bound to transfer
any shares of the capital stock of any Regions Subsidiary (other than to
another Regions Company). There are no Contracts relating to the rights of any
Regions Company to vote or to dispose of any shares of the capital stock of any
Regions Subsidiary. All of the shares of capital stock of each Regions
Subsidiary held by a Regions Company are fully paid and, except as provided in
statutes pursuant to which depository institution Subsidiaries are organized,
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the Regions
Company free and clear of any Lien. Each Regions Subsidiary is either a bank
or a corporation, and is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each Regions Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Regions. Each Regions Subsidiary
that is a depository institution is an "insured institution" as defined in the
Federal Deposit Insurance Act and applicable regulations thereunder, and the
deposits in which are insured by the Bank Insurance Fund or Savings Association
Insurance Fund.
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<PAGE> 26
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Regions has filed and made available to FCC all
forms, reports, and documents required to be filed by Regions with the SEC
since December 31, 1993 (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 1933 Act and the 1934 Act, as the case may be,
and (ii) did not at the time they were filed (or if amended or 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. Except for Regions Subsidiaries
that are registered as a broker, dealer, or investment advisor or filings
required due to fiduciary holdings of the Regions Subsidiaries, none of Regions
Subsidiaries is required to file any forms, reports, or other documents with
the SEC.
(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.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Regions Company has
any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Regions as of
September 30, 1997, included in the Regions Financial Statements or reflected
in the notes thereto and except for Liabilities incurred in the ordinary course
of business subsequent to September 30, 1997. 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.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September 30,
1997, except as disclosed in the Regions Financial Statements delivered prior
to the date of this Agreement, (i) there have been no events, changes or
occurrences which have had, or are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions, and (ii) the Regions
Companies have conducted their respective businesses in the ordinary and usual
course (excluding
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<PAGE> 27
the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of any of the Regions Companies have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, and, to the Knowledge of Regions, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation
with respect to any Taxes, that is reasonably likely to result in a
determination that would have, individually or in the aggregate, a Material
Adverse Effect on Regions, except to the extent reserved against in the Regions
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 Regions Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the Regions Companies for the period or periods through and
including the date of the respective Regions Financial Statements has been made
and is reflected on such Regions Financial Statements.
(d) Each of the Regions 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 Regions.
(e) None of the Regions 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 Material Liens with respect to Taxes
upon any of the Assets of the Regions Companies.
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(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Regions Companies that occurred
during or after any Taxable Period in which the Regions Companies incurred a
net operating loss that carries over to any Taxable Period ending after
December 31, 1996.
(h) No Regions Company has filed any consent under
Section 341(f) of the Internal Revenue Code concerning collapsible
corporations.
(i) After the date of this Agreement, no Material
election with respect to Taxes will be made without the prior consent of FCC,
which consent will not be unreasonably withheld.
(j) No Regions 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.
6.9 ASSETS. The Regions Companies have good and marketable
title, free and clear of all Liens, to all of their respective Assets. All
tangible properties used in the businesses of the Regions Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with Regions' past practices. All Assets which
are Material to Regions' business on a consolidated basis, held under leases or
subleases by any of the Regions Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other Laws affecting the enforcement of creditors' rights
generally and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceedings may be brought), and each such Contract is in full
force and effect. The Regions Companies currently maintain insurance similar
in amounts, scope, and coverage reasonably necessary for their operations.
None of the Regions Companies has received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. The Assets of the Regions Companies
include all Assets required to operate the business of the Regions Companies as
presently conducted.
6.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Regions, each Regions Company,
its Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except those violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Regions.
(b) There is no Litigation pending or, to the Knowledge
of Regions, threatened before any court, governmental agency, or authority, or
other forum in which any Regions Company or any of its Participation Facilities
has been or, with respect to threatened Litigation, may reasonably be expected
to be named as a defendant (i) for alleged noncompliance
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(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material, whether or not
occurring at, on, under, or involving a site owned, leased, or operated by any
Regions 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 Regions.
(c) There is no Litigation pending or, to the Knowledge
of Regions, threatened before any court, governmental agency, or board, or
other forum in which any of its Loan Properties (or Regions in respect of such
Loan Property) has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, or involving a 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 Regions.
(d) To the Knowledge of Regions, 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 Regions.
(e) To the Knowledge of Regions, during the period of (i)
any Regions Company's ownership or operation of any of their respective current
properties, (ii) any Regions Company's participation in the management of any
Participation Facility, or (iii) any Regions Company's holding of a security
interest in a Loan Property, there have been no releases of Hazardous Material
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 Regions. Prior to the period of (i) any Regions
Company's ownership or operation of any of their respective current properties,
(ii) any Regions Company's participation in the management of any Participation
Facility, or (iii) any Regions Company's holding of a security interest in a
Loan Property, to the Knowledge of Regions, there were no releases of Hazardous
Material 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 Regions.
6.11 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 are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, and there has occurred no Default under any
such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions. None
of the Regions Companies:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except
for violations which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions; and
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(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Regions
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, where such
noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, (ii) threatening to
revoke any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions,
or (iii) requiring any Regions Company (x) to enter into or consent to
the issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
6.12 LABOR RELATIONS. No Regions Company is the subject of any
Litigation asserting that it or any other Regions 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 Regions Company
to bargain with any labor organization as to wages or conditions of employment,
nor is any Regions 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 Regions Company, pending or threatened, or to the Knowledge of Regions, is
there any activity involving any Regions Company's employees seeking to certify
a collective bargaining unit or engaging in any other organization activity.
6.13 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Regions, threatened against any Regions
Company, or against any Asset, employee benefit plan, interest, or right of any
of them, that is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Regions Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions.
6.14 REPORTS. Since January 1, 1994, or the date of organization
if later, each Regions Company has timely filed all reports and statements,
together with any amendments required to be made with respect thereto, that it
was required to file with any Regulatory Authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all Material respects with all applicable Laws.
6.15 STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by any Regions Company or any Affiliate thereof
regarding Regions or such Affiliate 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,
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or omit to state any Material fact required to be stated thereunder or
necessary to make the statements therein not misleading. None of the
information supplied or to be supplied by any Regions Company or any Affiliate
thereof for inclusion in the Joint Proxy Statement to be mailed to FCC's and
Regions' stockholders in connection with the Stockholders' Meetings, will,
when first mailed to the stockholders of FCC and Regions, 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 Joint Proxy Statement or any amendment thereof or supplement thereto, at
the time of the Stockholders' Meetings, 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' Meetings. 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.
6.16 ACCOUNTING, TAX, AND REGULATORY MATTERS. No Regions Company
or any Affiliate thereof has taken or agreed to take any action, and Regions
has no Knowledge of any fact or circumstance that is reasonably likely to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of
a condition or restriction of the type referred to in the last sentence of such
Section.
6.17 EMPLOYEE BENEFIT PLANS. All Regions Plans have complied
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 Regions. For
purposes of this Agreement, the term "Regions Plan" means each bonus, incentive
compensation, severance pay, medical or other insurance program, retirement
plan, or other employee benefit plan program, agreement, or arrangement
sponsored, maintained, or contributed to by Regions or any trade or business,
whether or not incorporated, that together with Regions or any of its
Subsidiaries would be deemed a "single employer" under Section 414 of the
Internal Revenue Code (a "Regions ERISA Affiliate") or under which Regions or
any Regions ERISA Affiliate has any Liability or obligation. No Liability
under Title IV of ERISA has been incurred by Regions or any Regions ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a Material risk to Regions or any Regions ERISA Affiliate of incurring
any such Liability. With respect to any Regions Plan that is subject to Title
IV of ERISA, full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Internal Revenue Code, of all amounts that Regions or
any Regions ERISA Affiliate is required to pay under Section 412 of the
Internal Revenue Code or under the terms of the Regions Plans, and no
accumulated funding deficiency (within the meaning of Section 412 of the
Internal Revenue Code) exists with respect to any Regions Plan. There are no
Material actions, suits, or claims pending, or, to the Knowledge of Regions,
threatened or anticipated relating to any Regions Plan.
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There has been no Material adverse change in the financial position or funded
status of any Regions Plan that is subject to Title IV of ERISA since the date
of the information relating to the financial position and funded status of each
such plan contained in the most recent Regions Form 10-K filed with the SEC.
6.18 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for Regions' own account, or for the account
of one or more the Regions Subsidiaries or their customers, were entered into
(i) in accordance with prudent business practices and all applicable Laws, and
(ii) with counterparties believed to be financially responsible.
6.19 YEAR 2000. Regions has disclosed to FCC a complete and
accurate copy of Regions' plan, including an estimate of the anticipated
associated costs, for implementing modifications to Regions' hardware,
software, and computer systems, chips, and microprocessors, to ensure proper
execution and accurate processing of all date-related data, whether from years
in the same century or in different centuries. Between the date of this
Agreement and the Effective Time, Regions shall endeavor to continue its
efforts to implement such plan.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF BOTH PARTIES. Unless the prior
written consent of the other Party shall have been obtained, and except as
otherwise expressly contemplated herein, each Party shall and shall cause each
of its Subsidiaries to (i) operate its business only in the usual, regular, and
ordinary course, (ii) preserve intact its business organization and Assets and
maintain its rights and franchises, (iii) use its reasonable efforts to
maintain its current employee relationships, and (iv) take no action which
would (a) adversely affect the ability of any Party to obtain any Consents
required for the transactions contemplated hereby without imposition of a
condition or restriction of the type referred to in the last sentence of
Section 9.1(b) of this Agreement, or (b) adversely affect the ability of any
Party to perform its covenants and agreements under this Agreement; provided
that in the case of Regions, the provisions of this Section 7.1 (other than the
provisions of clause (iv) above) shall not be deemed to preclude Regions from
continuing to implement its program of acquiring unaffiliated depository and
nondepository institutions.
7.2 NEGATIVE COVENANTS OF FCC. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
FCC 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 the chief executive officer or
chief financial officer of Regions, which consent shall not be unreasonably
withheld:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of any FCC Company or, except as expressly
contemplated by this Agreement, the FCC Rights Agreement, or
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(b) incur, guarantee, or otherwise become responsible
for, any additional debt obligation or other obligation for borrowed
money (other than indebtedness of a FCC Company to another FCC Company)
in excess of an aggregate of $1,000,000 (for the FCC Companies on a
consolidated basis), except in the ordinary course of the business
consistent with past practices (which shall include, for FCC Subsidiaries
that are depository institutions, creation of deposit liabilities,
purchases of federal funds, advances from the Federal Reserve Bank or
Federal Home Loan Bank, and entry into repurchase agreements fully
secured by U.S. government or agency securities), or impose, or suffer
the imposition, on any Asset of any FCC Company of any Lien or permit any
such Lien to exist (other than in connection with deposits, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and Liens in effect as of
the date hereof that are disclosed in the FCC Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities convertible
into any shares, of the capital stock of any FCC Company, or declare or
pay any dividend or make any other distribution in respect of FCC's
capital stock, provided that FCC may (to the extent legally and
contractually permitted to do so), but shall not be obligated to, declare
and pay regular quarterly cash dividends on the shares of FCC Common
Stock at a rate of $0.28 per share with usual and regular record and
payment dates in accordance with past practice as disclosed in Section
7.2(c) of the FCC Disclosure Memorandum and such dates may not be changed
without the prior written consent of Regions; provided, that,
notwithstanding the provisions of Section 1.3 of this Agreement, the
Parties shall cooperate in selecting the Effective Time to ensure that,
with respect to the quarterly period in which the Effective Time occurs,
the holders of FCC Common Stock do not receive both a dividend in respect
of their FCC Common Stock and a dividend in respect of Regions Common
Stock or fail to receive any dividend; or
(d) except for this Agreement, or pursuant to the Stock
Option Agreement or pursuant to the exercise of Rights outstanding as of
the date of this Agreement and pursuant to the terms thereof in existence
on the date of this 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 FCC Common Stock or any other
capital stock of any FCC 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 FCC Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of FCC Common
Stock, or sell, lease, mortgage, or otherwise dispose of or otherwise
encumber (i) any shares of capital stock of any FCC Subsidiary (unless
any such shares of stock are sold or otherwise transferred to another FCC
Company) or (ii) any Asset other than in the ordinary course of business
for reasonable and adequate consideration; or
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(f) except for purchases of U.S. Treasury securities or
U.S. Government agency securities, which in either case have maturities
of three years or less, purchase any securities or make any Material
investment, either by purchase of stock or securities, contributions to
capital, Asset transfers, or purchase of any Assets, in any Person other
than a wholly-owned FCC Subsidiary, or otherwise acquire direct or
indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution Subsidiary in its fiduciary capacity,
(iii) the creation of new wholly-owned Subsidiaries organized to conduct
or continue activities otherwise permitted by this Agreement, or (iv),
subject to the provisions of Section 8.17 of this Agreement, that certain
Plan and Agreement of Merger, dated as of April 15, 1997, by and between
FCC and Kemmons Wilson, Inc. ("KW") (the "KW Agreement"); or
(g) grant any increase in compensation or benefits to the
employees or officers of any FCC Company, except in accordance with past
practice and consistent with budget data previously provided to Regions
or as required by Law; pay any severance or termination pay or any bonus
other than pursuant to written policies or written Contracts in effect on
the date of this Agreement; enter into or amend any severance agreements
with officers of any FCC Company; grant any Material increase in fees or
other increases in compensation or other benefits to directors of any FCC
Company except in accordance with past practice; or voluntarily
accelerate the vesting of any stock options or other stock-based
compensation or employee benefits; or
(h) enter into or amend any employment Contract between
any FCC Company and any Person (unless such amendment is required by Law)
that the FCC Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered),
at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any FCC
Company or make any Material change in or to any existing employee
benefit plans of any FCC Company other than any such change that is
required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than as necessary for
the prudent operation of its business or settle any Litigation involving
any Liability of any FCC Company for Material money damages or
restrictions upon the operations of any FCC Company; or
(l) except in the ordinary course of business, modify,
amend, or terminate any Material Contract or waive, release, compromise,
or assign any Material rights or claims.
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7.3 ADVERSE CHANGES IN CONDITION. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to it
or any of its Subsidiaries which (i) is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on it or (ii) would cause or
constitute a Material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.4 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC, such financial
statements will fairly present the consolidated financial position of the
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in stockholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
Material). As of their respective dates, such reports filed with the SEC will
comply in all Material respects with the Securities Laws and will not contain
any untrue statement of a Material fact or omit to state a Material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; JOINT PROXY STATEMENT; STOCKHOLDER
APPROVALS. As soon as reasonably practicable after execution of this
Agreement, Regions shall file the Registration Statement with the SEC, and
shall use its reasonable efforts to cause the Registration Statement to become
effective under the 1933 Act and take any action required to be taken under the
applicable state Blue Sky or securities Laws in connection with the issuance of
the shares of Regions Common Stock upon consummation of the Merger. FCC shall
furnish all information concerning it and the holders of its capital stock as
Regions may reasonably request in connection with such action. FCC shall call
a Stockholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and such other related matters as it
deems appropriate. Regions shall call a Stockholders' Meeting, to be held as
soon as reasonably practicable after the Registration Statement is declared
effective by the SEC, for the purpose of voting upon approval of this Agreement
and the issuance of shares of Regions Common Stock pursuant to the Merger and
such other related matters as it deems appropriate. In connection with the
Stockholders' Meetings, (i) Regions and FCC shall prepare and file with the SEC
a Joint Proxy Statement and mail such Joint Proxy Statement to their respective
stockholders, (ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Joint
Proxy Statement, (iii) the Boards of Directors of Regions and FCC shall
recommend to their respective stockholders the approval of the matters
submitted for approval, and (iv) the
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Boards of Directors and officers of Regions and FCC shall use their reasonable
efforts to obtain such stockholders' approvals, provided that each of Regions
and FCC may withdraw, modify, or change in an adverse manner to the other Party
its recommendations if the Board of Directors of such Party, after having
consulted with and based upon the advice of outside counsel, determines in good
faith that the failure to so withdraw, modify, or change its recommendation
could constitute a breach of the fiduciary duties of such Party's Board of
Directors under applicable Law. In addition, nothing in this Section 8.1 or
elsewhere in this Agreement shall prohibit accurate disclosure by either Party
of information that is required to be disclosed in the Registration Statement
or the Joint Proxy Statement or in any other document required to be filed with
the SEC (including, without limitation, a Solicitation/Recommendation Statement
on Schedule 14D-9) or otherwise required to be publicly disclosed by applicable
Law or regulations or rules of the NASD.
8.2 EXCHANGE LISTING. Regions shall use its reasonable efforts
to list, prior to the Effective Time, on the Nasdaq NMS, subject to official
notice of issuance, the shares of Regions Common Stock to be issued to the
holders of FCC Common Stock pursuant to the Merger.
8.3 APPLICATIONS. Regions shall promptly prepare and file, and
FCC shall cooperate in the preparation and, where appropriate, filing of,
applications with all Regulatory Authorities having jurisdiction over the
transactions contemplated by this Agreement seeking the requisite Consents
necessary to consummate the transactions contemplated by this Agreement.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to
the conditions of this Agreement, Regions shall execute and file the Delaware
Certificate of Merger with the Secretary of State of the State of Delaware and
the Arkansas Articles of Merger with the Secretary of State of the State of
Arkansas in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated by this Agreement, including, 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 referred to in Article 9 of this Agreement; provided, that
nothing herein shall preclude either Party from exercising its rights under
this Agreement. Each Party shall use, and shall cause each of its Subsidiaries
to use, its reasonable efforts to obtain all Consents necessary or desirable
for the consummation of the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep
the other Party advised of all Material developments relevant to its business
and to consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it and
its Subsidiaries and of their respective financial and legal conditions as the
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other Party reasonably requests, provided that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations. No investigation by a Party
shall affect the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions 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 or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as
soon as practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent,
either a Material breach of any representation, warranty, covenant, or
agreement of the other Party or which has had or is reasonably likely to have a
Material Adverse Effect on the other Party.
(d) Neither Party nor any of their respective
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the attorney-client or similar privilege with respect to
such information or contravene any Law, rule, regulation, Order, judgment,
decree, fiduciary duty, or agreement entered into prior to the date of this
Agreement. The Parties will use their reasonable efforts to make appropriate
substitute disclosure arrangements, to the extent practicable, in circumstances
in which the restrictions of the preceding sentence apply.
8.7 PRESS RELEASES. Prior to the Effective Time, Regions and
FCC shall consult with each other as to the form and substance of any press
release or other public disclosure materially related to this Agreement or any
other transaction contemplated hereby; provided, that nothing in this Section
8.7 shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's
disclosure obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and
the transactions contemplated hereby, no FCC Company nor any Affiliate thereof
nor any Representatives thereof retained by any FCC Company shall directly or
indirectly solicit or engage in negotiations concerning any Acquisition
Proposal, or provide any confidential information or assistance to, or have any
discussions with, any Person with respect to an Acquisition Proposal.
Notwithstanding the foregoing, FCC may, and may authorize and permit its
Representatives to, provide Persons with confidential information, have
discussions or negotiations with, or otherwise facilitate an effort or attempt
by such Person to make or implement an Acquisition Proposal not solicited in
violation of this Agreement if FCC's Board of Directors, after having consulted
with, and based upon the advice of, outside counsel, determines in good faith
that the failure to take such actions could constitute a breach of the
fiduciary duties of FCC's Board of Directors under applicable
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Law; provided, that FCC shall promptly advise Regions following the receipt of
any Acquisition Proposal and the Material details thereof; and, provided
further, that prior to delivery of confidential information relating to FCC or
access to FCC's books, records, or properties in connection therewith, the
other Person shall have entered into a confidentiality agreement substantially
similar to the Confidentiality Agreement previously entered into between FCC
and Regions. Nothing contained in this Section 8.8 shall prohibit the Board of
Directors of FCC from complying with Rule 14e-2, promulgated under the 1934
Act. FCC shall (i) immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause of all its Representatives not to engage in any of the
foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
take no action which would cause the Merger not, to qualify for treatment as a
pooling of interests for accounting purposes or as a "reorganization" within
the meaning of Section 368(a) of the Internal Revenue Code for federal income
tax purposes.
8.10 STATE TAKEOVER LAWS. Each FCC 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.
8.11 CHARTER PROVISIONS. Each FCC 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 FCC
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 FCC Company that may be directly or indirectly acquired or
controlled by it.
8.12 RIGHTS AGREEMENT. FCC shall take all necessary action
(including, if required, redeeming all of the outstanding Preferred Stock
Purchase Rights or amending or terminating the FCC Rights Agreement) so that
the entering into of this Agreement, the acquisition of shares pursuant to the
Stock Option Agreement, and consummation of the Merger and the other
transactions contemplated hereby do not and will not result in any Person
becoming able to exercise any Preferred Stock Purchase Rights under the FCC
Rights Agreement or enabling or requiring the Preferred Stock Purchase Rights
to be separated from the shares of FCC Common Stock to which they are attached
or to be triggered or to become exercisable.
8.13 AGREEMENT OF AFFILIATES. FCC has disclosed in Section 8.13
of the FCC Disclosure Memorandum each Person whom it reasonably believes may be
deemed an "affiliate" of FCC for purposes of Rule 145 under the 1933 Act. FCC
shall use its reasonable efforts to cause each such Person to deliver to
Regions not later than 30 days prior to the Effective Time, a written
agreement, in substantially the form of Exhibit 2, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of FCC
Common Stock held by such Person except as contemplated by such agreement or by
this Agreement and will not sell, pledge, transfer,
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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 FCC 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 FCC in exchange for shares of
FCC Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of Regions and FCC 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 8.13 (and Regions
shall be entitled to place restrictive legends upon certificates for shares of
Regions Common Stock issued to affiliates of FCC pursuant to this Agreement to
enforce the provisions of this Section 8.13). 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.
8.14 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, but in no event earlier than the consolidation of FCC's depository
institution Subsidiaries with Regions' depository institution Subsidiaries,
Regions shall provide generally to officers and employees of the FCC Companies,
who at or after the Effective Time become employees of a Regions Company (the
"Continuing Employees"), employee benefits under employee benefit plans 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 FCC shall be treated as service under
Regions' qualified defined benefit plans, (ii) service under any qualified
defined contribution plans of FCC shall be treated as service under Regions'
qualified defined contribution plans, and (iii) service under any other
employee benefit plans of FCC shall be treated as service under any similar
employee benefit plans maintained by Regions. Regions shall cause the Regions
welfare benefit plans that cover the Continuing Employees after the Effective
Time to (i) waive any waiting period and restrictions and limitations for
preexisting conditions or insurability, and (ii) cause any deductible,
co-insurance, or maximum out-of-pocket payments made by the Continuing
Employees under FCC's welfare benefit plans to be credited to such Continuing
Employees under the Regions welfare benefit plans, so as to reduce the amount
of any deductible, co-insurance, or maximum out-of-pocket payments payable by
the Continuing Employees under the Regions welfare benefit plans. The
continued coverage of the Continuing Employees under the employee benefits
plans maintained by FCC and/or any FCC Subsidiary immediately prior to the
Effective Time during a transition period shall be deemed to provide the
Continuing Employees with benefits that are no less favorable than those
offered to other employees of Regions and its Subsidiaries, provided that after
the Effective Time there is no Material reduction (determined on an overall
basis) in the benefits provided under the FCC employee benefit plans. Except
as expressly provided in the Supplemental Letter, Regions also shall cause FCC
and its Subsidiaries to honor all employment, severance, consulting, and other
compensation Contracts disclosed in Section 8.14 of the FCC Disclosure
Memorandum to Regions between any FCC Company and any current or former
director, officer, or employee thereof, and all provisions of the FCC Benefit
Plans. To the extent that Regions has agreed to cause FCC or the appropriate
FCC
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Subsidiary to honor the Contracts as set forth in the preceding sentence (the
"FCC Compensation Contracts"), Regions acknowledges that the Merger constitutes
a "Change of Control" for all purposes pursuant to any such FCC Compensation
Contracts. In addition, Regions acknowledges that each employee who is a party
to any such FCC Compensation Contract will, during the first year following
consummation of the Merger, have "Good Reason" to terminate employment
thereunder.
8.15 INDEMNIFICATION.
(a) From and after the Effective Time, in the event of
any threatened or actual claim, action, suit, proceeding, or investigation,
whether civil, criminal, or administrative, including, without limitation, any
such claim, action, suit, proceeding or investigation in which any person who
is now, or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer of FCC or any FCC
Subsidiary (the "Indemnified Parties") is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer, or employee
of FCC, any of the FCC Subsidiaries, or any of their respective predecessors or
(ii) this Agreement or any of the transactions contemplated hereby, whether in
any case asserted or arising before or after the Effective Time, Regions shall
indemnify and hold harmless, as and to the fullest extent permitted by Law,
each such Indemnified Party against any Liability (including reasonable
attorneys' fees and expenses in advance of the final disposition of any claim,
suit, proceeding, or investigation to each Indemnified Party to the fullest
extent permitted by Law upon receipt of any undertaking required by applicable
Law), judgments, fines, and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding, or investigation,
and in the event of any such threatened or actual claim, action, suit,
proceeding, or investigation (whether asserted or arising before or after the
Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to them; provided, however, that (a) Regions shall have the right
to assume the defense thereof and upon such assumption Regions shall not be
liable to any Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by any Indemnified Party in connection
with the defense thereof, except that if Regions elects not to assume such
defense or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of interest
between Regions and the Indemnified Parties, the Indemnified Parties may retain
counsel reasonably satisfactory to them, and Regions shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties, (b) Regions
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld), and (c) Regions
shall have no obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law. Regions' obligations under this Section 8.15(a) continue in full force
and effect for a period of six years after the Effective Time; provided,
however, that all rights to indemnification in respect of any claim (a "Claim")
asserted or made within such period shall continue until the final disposition
of such Claim.
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(b) Regions agrees that all rights to indemnification and
all limitations on Liability existing in favor of the directors, officers, and
employees of FCC and its Subsidiaries (the "Covered Parties") as provided in
their respective Articles of Incorporation, Bylaws, or similar governing
instruments as in effect as of the date of this Agreement with respect to
matters occurring prior to the Effective Time shall survive the Merger and
shall continue in full force and effect, and shall be honored by such entities
or their respective successors as if they were the indemnifying party
thereunder, without any amendment thereto, for a period of six years after the
Effective Time; provided, however, that all rights to indemnification in
respect of any Claim asserted or made within such period shall continue until
the final disposition of such Claim; provided, further, however, that nothing
contained in this Section 8.15(b) shall be deemed to preclude the liquidation,
consolidation, or merger of FCC or any FCC Subsidiary, in which case all of
such rights to indemnification and limitations on Liability shall be deemed to
so survive and continue notwithstanding any such liquidation, consolidation, or
merger. Without limiting the foregoing, in any case in which approval by
Regions is required to effectuate any indemnification, Regions shall direct, at
the election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
Regions and the Indemnified Party.
(c) Regions, from and after the Effective Time, will
directly or indirectly cause the persons who served as directors or officers of
FCC at or before the Effective Time to be covered by FCC's existing directors'
and officers' liability insurance policy (provided that Regions may substitute
therefor policies of at least the same coverage and amounts containing terms
and conditions which are not less advantageous than such policy). Such
insurance coverage, shall commence at the Effective Time and will be provided
for a period of no less than three years after the Effective Time.
(d) If Regions or any of its successors or assigns shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving Person of such consolidation or merger or shall transfer all or
substantially all of its Assets to any Person, then and in each case, proper
provision shall be made so that the successors and assigns of Regions shall
assume the obligations set forth in this Section 8.15.
(e) The provisions of this Section 8.15 are intended to
be for the benefit of and shall be enforceable by, each Indemnified Party, his
or her heirs and representatives.
8.16 CERTAIN MODIFICATIONS. Regions and FCC shall consult with
respect to their loan, litigation, and real estate valuation policies and
practices (including loan classifications and levels of reserves) and FCC shall
make such modifications or changes to its policies and practices, if any, prior
to the Effective Time, as may be mutually agreed upon. Regions and FCC also
shall consult with respect to the character, amount, and timing of
restructuring and Merger-related expense charges to be taken by each of the
Parties in connection with the transactions contemplated by this Agreement and
shall take such charges in accordance with GAAP as may be mutually agreed upon
by the Parties. Neither Party's representations, warranties, and covenants
contained in this Agreement shall be deemed to be inaccurate or breached in any
respect as a consequence of any modifications or charges undertaken solely on
account of this Section 8.16.
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8.17 PENDING FCC ACQUISITION. Each of Regions and FCC shall use
its reasonable efforts to modify or amend (or cause to be modified or amended)
this Agreement or the KW Agreement as necessary or appropriate to ensure that
each of the acquisition of FCC by Regions and the acquisition of KW by FCC
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code. Any such amendments or modifications shall be made as
soon as reasonably practicable after the date of this Agreement. In
determining whether the condition precedent set forth in Section 5.01(m) of the
KW Agreement has been satisfied, FCC shall take into account the advice and
counsel of Regions and its professional advisors, and shall not agree to the
final form of Exhibits C-1 and C-2 without the prior consent of Regions (which
consent of Regions shall not be unreasonably withheld).
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and to consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(a) STOCKHOLDER APPROVALS. The stockholders of FCC shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required
by Law, by the provisions of any governing instruments, and by the rules
of the NASD. The stockholders of Regions shall have approved this
Agreement and the consummation of the transaction contemplated hereby,
including the Merger and the issuance of shares of Regions Common Stock
pursuant to the Merger, as and to the extent required by Law, by the
provisions of any governing instruments, and by the rules of the NASD.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or
made and shall be in full force and effect and all waiting periods
required by Law shall have expired. No Consent obtained from any
Regulatory Authority which is necessary to consummate the transactions
contemplated hereby shall be conditioned or restricted in a manner
(excluding requirements relating to the raising of additional capital or
the disposition of Assets or deposits) 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.
(c) CONSENTS AND APPROVALS. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing
of any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent obtained
which is
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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,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act
relating to the issuance or trading of the shares of Regions Common Stock
issuable pursuant to the Merger shall have been received.
(f) EXCHANGE LISTING. The shares of Regions Common Stock
issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq NMS, subject to official notice of issuance.
(g) TAX MATTERS. Each Party shall have received a written
opinion or opinions from Alston & Bird LLP, in a form reasonably
satisfactory to such Party (the "Tax Opinion"), to the effect that (i)
the Merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, (ii) the exchange in the Merger of
FCC Common Stock for Regions Common Stock will not give rise to gain or
loss to the stockholders of FCC with respect to such exchange (except to
the extent of any cash received), (iii) the tax basis of the Regions
Common Stock received by holders of FCC Common Stock in the Merger will
be the same as the tax basis of the FCC Common Stock surrendered in
exchange for the Regions Common Stock (reduced by an amount allocable to
a fractional share for which cash is received), and (iv) the holding
period of the Regions Common Stock received by holders who exchange their
FCC Common Stock for Regions Common Stock in the Merger will be the same
as the holding period of the FCC Common Stock surrendered in exchange
therefor. In rendering such Tax Opinion, such counsel shall be entitled
to rely upon representations of officers of FCC and Regions reasonably
satisfactory in form and substance to such counsel.
(h) POOLING LETTER. Each Party shall have received a letter,
dated as of the Effective Time, in a form reasonably acceptable to such
Party, from Ernst & Young LLP to the effect that the Merger will qualify
for pooling-of-interests accounting treatment.
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<PAGE> 44
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 FCC
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 FCC 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 FCC set forth
in Sections 5.18, 5.19, 5.20, and 5.21 of this Agreement shall be true
and correct in all Material respects. There shall not exist inaccuracies
in the representations and warranties of FCC set forth in this Agreement
(including the representations and warranties set forth in Sections 5.3,
5.18, 5.19, 5.20, and 5.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on FCC; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material, "Material," "Material Adverse Effect," or variations thereof,
or to the "Knowledge" of FCC or to a matter being "known" by FCC shall be
deemed not to include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of FCC 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. FCC 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 Section 9.2(a) and 9.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions
duly adopted by FCC'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) AFFILIATE AGREEMENTS. Regions shall have received
from each affiliate of FCC the affiliates agreement referred to in
Section 8.12 of this Agreement, to the extent necessary to assure in the
reasonable judgment of Regions that the transactions contemplated hereby
will qualify for pooling-of-interests accounting treatment.
(e) RIGHTS AGREEMENT. None of the events described in
Sections 11(a)(ii) or 13 of the FCC Rights Agreement shall have occurred,
and the Preferred Stock Purchase
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<PAGE> 45
Rights shall not have become non-redeemable or exercisable for capital
stock of Regions upon consummation of the Merger.
9.3 CONDITIONS TO OBLIGATIONS OF FCC. The obligations of FCC 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 FCC 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 minimis in amount). The representations and warranties of Regions
set forth in Section 6.16 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 6.16) 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," "Material,"
"Material Adverse Effect," or variations thereof, or to the "Knowledge"
of Regions or to a matter being "known" by Regions shall be deemed not to
include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of Regions to be performed and
complied with pursuant to this Agreement and the other agreements
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all Material respects.
(c) CERTIFICATES. Regions shall have delivered to FCC
(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 Section 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, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as FCC
and its counsel shall request.
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<PAGE> 46
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of FCC or Regions, 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 FCC; 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 FCC and Section
9.3(a) of this Agreement in the case of Regions or in Material breach of
any covenant or other agreement contained in this Agreement) in the event
of an inaccuracy of any representation or warranty of the other Party
contained in this Agreement which cannot be or has not been cured within
30 days after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the
ability to refuse to consummate the Merger under the applicable standard
set forth in Section 9.2(a) of this Agreement in the case of FCC 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 FCC and Section
9.3(a) in the case of Regions) in the event of a Material breach by the
other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required for
consummation of the Merger and the other transactions contemplated hereby
shall have been denied by final nonappealable action of such authority or
if any action taken by such authority is not appealed within the time
limit for appeal, or (ii) the stockholders of Regions or FCC fail to vote
their approval of the matters submitted for the approval by such
stockholders at the Stockholders' Meetings where the transactions were
presented to such stockholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by December 31,
1998, 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
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<PAGE> 47
under the applicable standard set forth in Section 9.2(a) of this
Agreement in the case of FCC and Section 9.3(a) of this Agreement in the
case of Regions or in Material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger
cannot be satisfied or fulfilled by the date specified in Section 10.1(e)
of this Agreement; or
(g) By the Board of Directors of FCC, if it determines by
a vote of a majority of the members of its entire Board, at any time
during the ten-day period commencing two days after the Determination
Date, if both of the following conditions are satisfied:
(1) the Average Closing Price shall be less
than the product of (i) 0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing
the Average Closing Price by the Starting Price (such number being
referred to herein as the "Regions Ratio") shall be less than (ii)
the quotient obtained by dividing the Index Price on the
Determination Date by the Index Price on the Starting Date and
subtracting 0.15 from the quotient in this clause (2)(ii) (such
number being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If FCC refuses to
consummate the Merger pursuant to this Section 10.1(g), it shall give
prompt written notice thereof to Regions; provided, that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, Regions shall have the option to elect
to increase the Exchange Ratio to equal the lesser of (i) the quotient
(rounded to the nearest one-ten-thousandth) obtained by dividing (1) the
product of 0.80, the Starting Price, and the Exchange Ratio (as then in
effect) by (2) the Average Closing Price, and (ii) the quotient (rounded
to the nearest one-ten-thousandth) obtained by dividing (1) the product
of the Index Ratio and the Exchange Ratio (as then in effect) by (2) the
Regions Ratio. If Regions makes an election contemplated by the
preceding sentence, within such five-day period, it shall give prompt
written notice to FCC of such election and the revised Exchange Ratio,
whereupon no termination shall have occurred pursuant to this Section
10.1(g) and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be
deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 10.1(g).
For purposes of this Section 10.1(g), the following terms
shall have the meanings indicated:
"Average Closing Price" shall mean the average of the daily
last sales prices of Regions Common Stock as reported on the
Nasdaq NMS (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as chosen by
Regions) for the ten consecutive full trading days in which such
shares are traded on the Nasdaq NMS ending at the close of trading
on the Determination Date.
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<PAGE> 48
"Determination Date" shall mean the later of the date on
which (i) the Consent of the Board of Governors of the Federal
Reserve System (without regard to any requisite waiting period
thereof) to the Merger shall be received and (ii) the FCC and
Regions stockholders approve the Merger at the Stockholders'
Meetings.
"Index Group" shall mean the 17 bank holding companies
listed below, the common stocks of all of which shall be publicly
traded and as to which there shall not have been, since the
Starting Date and before the Determination Date, any public
announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in
transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies
are removed from the Index Group, the weights (which shall be
determined based upon the number of outstanding shares of common
stock) shall be redistributed proportionately for purposes of
determining the Index Price. The 17 bank holding companies and
the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
---------------------------- --------------
<S> <C>
AmSouth Bancorporation 4.07%
BB&T Corporation 6.78
Compass Bancshares, Inc. 3.34
Fifth Third Bancorp 7.84
First American Corporation 2.96
First Security Corporation 5.86
First Tennessee National Corporation 3.25
First Virginia Banks, Inc. 2.62
Hibernia Corporation 6.62
Huntington Bancshares, Inc. 9.68
Mercantile Bancorporation, Inc. 6.60
SouthTrust Corporation 5.05
Star Banc Corporation 4.32
Summit Bancorp 8.91
SunTrust Banks, Inc. 10.67
Union Planters Corporation 3.45
Wachovia Corporation 7.99
---------------------------- -------
Total 100.00%
=======
</TABLE>
"Index Price" on a given date shall mean the weighted
average (weighted in accordance with the factors listed above) of
the last sales prices of the companies composing the Index Group.
"Starting Date" shall mean the last full trading day
preceding the announcement by press release of the Merger.
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<PAGE> 49
"Starting Price" shall mean the last sale price per share of
Regions Common Stock as reported on the Nasdaq NMS (as reported by
The Wall Street Journal or, if not reported thereby, another
authoritative source as chosen by Regions) on the Starting Date.
If any company belonging to the Index Group or Regions
declares or effects a stock dividend, reclassification, recapitalization,
split-up, combination, exchange of shares, or similar transaction between
the date of this Agreement and the Determination Date, the prices for the
common stock of such company or Regions shall be appropriately adjusted
for the purposes of applying this Section 10.1(g).
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement and the Supplemental Letter shall become void and have no effect,
except that (i) the provisions of this Section 10.2 and Article 11 and Section
8.6(b) of this Agreement shall survive any such termination and abandonment,
and (ii) a termination pursuant to Sections 10.1(b), 10.1(c), or 10.1(f) of
this Agreement shall not relieve the breaching Party from Liability for an
uncured willful breach of a representation, warranty, covenant, or agreement
giving rise to such termination. The Stock Option Agreement shall be governed
by its own terms.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The
respective representations, warranties, obligations, covenants, and agreements
of the Parties shall not survive the Effective Time except this Section 10.3
and Articles 2, 3, 4, and 11 and Sections 8.13 and 8.15 of this Agreement.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"ABCA" shall mean the Arkansas Business Corporation Act of
1987, Title 4, Chapter 27 of the Arkansas Code of 1987 Annotated, as
amended.
"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
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<PAGE> 50
with such Person; (ii) any officer, director, partner, employer, or
direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person; or (iii) any other Person for which a
Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger,
including Exhibit 2 (and excepting the Stock Option Agreement) delivered
pursuant hereto and incorporated herein by reference.
"ARKANSAS ARTICLES OF MERGER" shall mean the Articles of Merger to
be executed by Regions and filed with the Secretary of State of the State
of Arkansas relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"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.
"CONFIDENTIALITY AGREEMENTS" shall mean those certain
Confidentiality Agreements, entered into prior to the date of this
Agreement, between FCC and Regions.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of
any kind or character, or other document to which any Person is a party
or that is binding on any Person or its capital stock, Assets, or
business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract, Order,
or Permit, or (iii) any occurrence of any event that with or without the
passage of time or the giving of notice would give rise to a right to
terminate or revoke, change the current terms of, or renegotiate, or to
accelerate, increase, or impose any Liability under, any Contract, Order,
or Permit, where, in any such event, such Default is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on a
Party.
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<PAGE> 51
"DELAWARE CERTIFICATE OF MERGER" shall mean the certificate of
merger to be executed by Regions and filed with the Secretary of State of
the State of Delaware, relating to the Merger as contemplated by Section
1.1 of this Agreement.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface, or subsurface strata) and
which are administered, interpreted, or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXHIBITS" 1 and 2, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FCC COMMON STOCK" shall mean the $3.00 par value common stock of
FCC.
"FCC COMPANIES" shall mean, collectively, FCC and all FCC
Subsidiaries.
"FCC DISCLOSURE MEMORANDUM" shall mean the written information
entitled "FCC Disclosure Memorandum" delivered prior to the execution of
this Agreement to Regions describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section or subsection of this Agreement
under which such disclosure is being made. Information disclosed with
respect to one Section or subsection shall be deemed to be disclosed for
all purposes hereunder. The inclusion of any matter in this document
shall not be deemed an admission or otherwise to imply that any such
matter is Material for purposes of this Agreement.
"FCC FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any)
of FCC 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 three years
ended December 31, 1996, 1995, and 1994, as filed by FCC in SEC
Documents, and (ii) the consolidated
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<PAGE> 52
statements of condition of FCC (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.
"FCC PREFERRED STOCK" shall mean the $1.00 par value preferred
stock of FCC.
"FCC RIGHTS AGREEMENT" shall mean that certain Rights Agreement,
dated September 18, 1990, between FCC and First Commercial Trust Company,
N.A. (as successor to First Commercial Bank, N.A.), as Rights Agent.
"FCC STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans of FCC.
"FCC SUBSIDIARIES" shall mean the Subsidiaries of FCC, which shall
include the FCC Subsidiaries described in Section 5.4 of this Agreement
and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of FCC in the future and owned by FCC at the
Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"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.
"JOINT PROXY STATEMENT" shall mean the joint proxy statement used
by Regions and FCC to solicit the approval of their respective
stockholders of the transactions contemplated by this Agreement, which
shall include the prospectus of Regions relating to the issuance of the
Regions Common Stock to holders of FCC Common Stock.
"KNOWLEDGE" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean the
personal knowledge of the
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<PAGE> 53
chairman, president, chief financial officer, chief accounting officer,
chief credit officer, general counsel, or any 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 those promulgated,
interpreted, or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or expense
(including costs of investigation, collection, and defense), claim,
deficiency, guaranty, or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection
or deposit in the ordinary course of business) of any type, whether
accrued, absolute or contingent, liquidated or unliquidated, matured or
unmatured, or otherwise.
"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
property Taxes not yet due and payable, and (ii) for depository
institution Subsidiaries of a Party, pledges to secure deposits, and
other Liens incurred in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or
the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"LOAN PROPERTY" shall mean any property owned, leased, or operated
by the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security or other interest (including an
interest in a fiduciary capacity), and, where required by the context,
includes the owner or operator of such property, but only with respect to
such property.
"MATERIAL" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change,
or occurrence which, individually or together with any other event,
change, or occurrence, has a Material adverse impact on (i) the financial
condition, results of operations, or business 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
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<PAGE> 54
contemplated by this Agreement, provided that "Material Adverse Effect"
shall not be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in GAAP or regulatory
accounting principles generally applicable to banks and their holding
companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, and (d) the Merger
and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"NASDAQ NMS" shall mean the National Market System of The Nasdaq
Stock Market.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates in
the management (including, but not limited to, participating in a
fiduciary capacity) and, where required by the context, said term means
the owner or operator of such facility or property, but only with respect
to such facility or property.
"PARTY" shall mean either FCC or Regions, and "PARTIES" shall mean
both FCC 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.
"PREFERRED STOCK PURCHASE RIGHTS" shall mean the preferred stock
purchase rights issued pursuant to the FCC Rights Agreement.
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<PAGE> 55
"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 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 three
years ended December 31, 1996, 1995, and 1994, as filed by Regions in SEC
Documents, and (ii) the consolidated statements of condition of Regions
(including related notes and schedules, if any) and related statements of
income, changes in stockholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 1997.
"REGIONS SUBSIDIARIES" shall mean the Subsidiaries of Regions and
any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Regions in the future and owned by Regions at
the Effective Time.
"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Regions under the 1933 Act with respect to the shares of Regions Common
Stock to be issued to the stockholders of FCC in connection with the
transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of
the Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Federal Deposit Insurance Corporation,
the Office of Thrift Supervision, all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries, the
NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
"SEC" shall mean the United States Securities and Exchange
Commission.
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<PAGE> 56
"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act
of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.
"STOCK OPTION AGREEMENT" shall mean the stock option agreement by
and between FCC and Regions, in substantially the form of Exhibit 1.
"STOCKHOLDERS' MEETINGS" shall mean the respective meetings of the
stockholders of Regions and FCC to be held pursuant to Section 8.1 of
this Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either directly
or through an unbroken chain of entities as to each of which 50% or more
of the outstanding equity securities is owned directly or indirectly by
its parent; provided, there shall not be included any such entity
acquired through foreclosure or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity.
"SUPPLEMENTAL LETTER" shall mean the supplemental letter of even
date herewith between the Parties relating to certain understandings and
agreements in addition to those included in this Agreement.
"SURVIVING CORPORATION" shall mean Regions as the surviving
corporation resulting from the Merger.
"TAX" OR "TAXES" shall mean all federal, state, local, and foreign
taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use,
transfer, license, payroll, franchise, severance, stamp, occupation,
windfall profits, environmental, federal highway use, commercial rent,
customs duties, capital stock, paid-up capital, profits, withholding,
Social Security, single business and unemployment, disability, real
property, personal property, registration, ad valorem, value added,
alternative or add-on minimum, estimated, or other tax or governmental
fee of any kind whatsoever, imposed or required to be withheld by the
United States or any state, local, or foreign government or subdivision
or agency thereof, including any interest, penalties, or additions
thereto.
"TAXABLE PERIOD" shall mean any period prescribed by any
governmental authority, including the United States or any state, local,
or foreign government or subdivision or agency thereof for which a Tax
Return is required to be filed or Tax is required to be paid.
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<PAGE> 57
"TAX RETURN" shall mean any report, return, information
return, or other information required to be supplied to a taxing
authority in connection with Taxes, including any return of an affiliated
or combined or unitary group that includes a Party or its Subsidiaries.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
<TABLE>
<S> <C>
Average Closing Price Section 10.1(g)
Claim Section 8.15(a)
Closing Section 1.2
Covered Party Section 8.15(b)
Determination Date Section 10.1(g)
Effective Time Section 1.3
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(b)
FCC Benefit Plans Section 5.13(a)
FCC Contracts Section 5.14
FCC ERISA Affiliate Section 5.13(e)
FCC ERISA Plan Section 5.13(a)
FCC Rights Section 3.6(a)
FCC Pension Plan Section 5.13(a)
FCC SEC Reports Section 5.5(a)
Indemnified Party Section 8.15
Index Group Section 10.1(g)
Index Price Section 10.1(g)
Index Ratio Section 10.1(g)
KW Section 7.2(f)
KW Agreement Section 7.2(f)
Merger Section 1.1
Regions ERISA Affiliate Section 6.17
Regions Ratio Section 10.1(g)
Regions SEC Reports Section 6.5(a)
Starting Date Section 10.1(g)
Starting Price Section 10.1(g)
Takeover Laws Section 5.19
Tax Opinion Section 9.1(g)
</TABLE>
(c) Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
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<PAGE> 58
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration, and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that each of the Parties shall bear
and pay one-half of the printing costs incurred in connection with the printing
of the Registration Statement and the Joint Proxy Statement.
(b) Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated damages for the willful
breach by a Party of the terms of this Agreement or otherwise limit the rights
of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Keefe, Bruyette & Woods,
Inc. as to FCC and except for J. P. Morgan Securities, Inc. as to Regions, each
of the Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his, her, or its representing or being retained
by or allegedly representing or being retained by FCC or Regions, each of FCC
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 (including any
provision of the Confidentiality Agreements which would act to preclude Regions
(or any Holder as defined in the Stock Option Agreement from exercising its
rights under the Stock Option Agreement) to the extent that the Stock Option
Agreement is in force and effect, but excluding the Supplemental Letter).
Nothing in this Agreement expressed or implied, is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Sections 8.13 and 8.15 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after stockholder approval of this Agreement has been obtained; provided, that
the provisions of this Agreement relating to the manner or basis in which
shares of FCC Common Stock will be exchanged for Regions Common Stock shall not
be amended (except in accordance with Section 10.1(g) of this Agreement) after
the Stockholders' Meetings without the requisite approval of the holders of the
issued and outstanding shares of Regions Common Stock and FCC Common Stock, as
the case may be, entitled to vote thereon.
- 53 -
<PAGE> 59
11.6 WAIVERS.
(a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, chief financial
officer, or other authorized officer, shall have the right to waive any Default
in the performance of any term of this Agreement by FCC, to waive or extend the
time for the compliance or fulfillment by FCC 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, FCC, acting
through its Board of Directors, chief executive officer, chief financial
officer, or other authorized officer, shall have the right to waive any Default
in the performance of any term of this Agreement by Regions, to waive or extend
the time for the compliance or fulfillment by Regions of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of FCC 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 FCC.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be or
construed as a further or continuing waiver of such condition or breach or a
waiver of any other condition or of the breach of any other term of this
Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by the Parties and their respective successors
and assigns.
11.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
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 delivered:
- 54 -
<PAGE> 60
<TABLE>
<S> <C>
FCC: First Commercial Corporation
400 West Capital Avenue
Second Floor
Little Rock, Arkansas 72201
Telecopy Number: (501) 371-6525
Attention: C. Barnett Grace
Chairman, President, and
Chief Executive Officer
Copy to Counsel: Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Telecopy Number: (202) 942-5999
Attention: Steven Kaplan
Regions: Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive
Financial Officer
Copy to Counsel: Regions Financial Corporation
417 N. 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7751
Attention: Samuel E. Upchurch, Jr.
General Counsel
</TABLE>
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without regard
to any applicable conflicts of Laws, except to the extent that the Laws of the
State of Arkansas relate to the consummation of the Merger.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 61
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty
or ambiguity herein shall be construed or resolved against any Party, whether
under any rule of construction or otherwise. No Party to this Agreement shall
be considered the draftsman. The Parties acknowledge and agree that this
Agreement has been reviewed, negotiated, and accepted by all Parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and
intentions of the Parties.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
- 56 -
<PAGE> 62
IN WITNESS WHEREOF, each of the Parties has caused this Agreement
to be executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: FIRST COMMERCIAL CORPORATION
By: /s/ Donna Rogers By: /s/ C. Barnett Grace
------------------------------------------- ---------------------------------------------
Donna Rogers C. Barnett Grace
Secretary Chairman, President, and Chief
Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ Samuel E. Upchurch, Jr. By: /s/ Carl E. Jones, Jr.
------------------------------------------ ----------------------------------------------
Samuel E. Upchurch, Jr. Carl E. Jones, Jr.
Corporate Secretary President and Chief Executive Officer
[CORPORATE SEAL]
</TABLE>
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<PAGE> 1
EXHIBIT 2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered
into as of February 8, 1998, by and between First Commercial Corporation, an
Arkansas corporation ("Issuer"), and Regions Financial Corporation, a Delaware
corporation ("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement
and Plan of Merger, dated as of February 8, 1998 (the "Merger Agreement"),
providing for, among other things, the merger of Issuer with and into Grantee,
with Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree
as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 7,480,450 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $3.00 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to $59.00; provided, however,
that in no event shall the number of shares of Issuer Common Stock for which
this Option is exercisable exceed the lesser of (i) 19.9% of the Issuer's
issued and outstanding shares of Issuer Common Stock without giving effect to
any shares subject to or issued pursuant to the Option and (ii) that minimum
number of shares of Issuer Common Stock which when aggregated with any other
shares of Issuer Common Stock beneficially owned by Grantee or any Affiliate
thereof would cause the provisions of any Takeover Laws of the ABCA to be
applicable to the Merger. Each Option Share to be issued upon exercise of the
Option shall be accompanied by and be deemed to represent a Preferred Stock
Purchase Right.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter defined),
as applicable, shall not be in material breach of its agreements or covenants
contained in this Agreement or the Merger Agreement, and (ii) no preliminary or
permanent injunction or other order against the delivery of shares covered by
the Option issued by any court of competent jurisdiction in the United States
shall be in effect, Holder may exercise the Option, in whole or in part, at any
time and from time to time following the occurrence of a Purchase Event and
prior to the termination of the Option. The Option shall terminate and be of
no further force and effect upon the earliest
<PAGE> 2
to occur of (A) the Effective Time, (B) termination of the Merger Agreement in
accordance with the terms thereof prior to the occurrence of a Purchase Event
or a Preliminary Purchase Event (other than a termination of the Merger
Agreement by Grantee pursuant to (i) Section 10.1(b) thereof (but only if such
termination was a result of a willful breach by Issuer) or (ii) Section 10.1(c)
thereof (each a "Default Termination")), (C) 12 months after a Default
Termination, and (D) 12 months after any termination of the Merger Agreement
following the occurrence of a Purchase Event or a Preliminary Purchase Event.
Any purchase of shares upon exercise of the Option shall be subject to
compliance with applicable law, including, without limitation, the Bank Holding
Company Act of 1956, as amended (the "BHC Act"). The term "Holder" shall mean
the holder or holders of the Option from time to time, and which initially is
the Grantee. The rights set forth in Section 8 shall terminate when the right
to exercise the Option terminates (other than as a result of a complete
exercise of the Option) as set forth herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer
shall have authorized, recommended, publicly proposed or publicly
announced an intention to authorize, recommend or propose, or entered
into an agreement with any person (other than Grantee or any Subsidiary
of Grantee) to effect an Acquisition Transaction (as defined below). As
used herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries and transactions involving Issuer or any Subsidiary in which
the voting securities of Issuer outstanding immediately prior thereto
continue to represent (by either remaining outstanding or being converted
into securities of the surviving entity or the parent thereof) at least
75% of the combined voting power of the voting securities of the Issuer
or the surviving entity or the parent thereof outstanding immediately
after the consummation of the transaction), (B) except as permitted
pursuant to Section 7.1 of the Merger Agreement, the disposition, by
sale, lease, exchange or otherwise, of Assets of Issuer or any of its
Subsidiaries representing in either case 20% or more of the consolidated
assets of Issuer and its Subsidiaries, or (C) the issuance, sale or other
disposition of (including by way of merger, consolidation, share exchange
or any similar transaction) securities representing 20% or more of the
voting power of Issuer or any of its Subsidiaries (any of the foregoing,
an "Acquisition Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the Exchange Act), other than a group of which Grantee or any of its
Subsidiaries is a member, shall have been formed which beneficially owns
or has the right to acquire beneficial ownership of, 20% or more of the
then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
- 2 -
<PAGE> 3
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act of 1933, as amended (the "Securities Act") with
respect to, a tender offer or exchange offer to purchase any shares of
Issuer Common Stock such that, upon consummation of such offer, such
person would own or control 15% or more of the then-outstanding shares of
Issuer Common Stock (such an offer being referred to herein as a "Tender
Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held
for the purpose of voting on the Merger Agreement, such meeting shall not
have been held or shall have been canceled prior to termination of the
Merger Agreement, or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Grantee the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case
after it shall have been publicly announced that any person (other than
Grantee or any Subsidiary of Grantee) shall have (A) made a proposal to
engage in an Acquisition Transaction, (B) commenced a Tender Offer or
filed a registration statement under the Securities Act with respect to
an Exchange Offer, or (C) filed an application (or given a notice),
whether in draft or final form, under any federal or state statute or
regulation (including a notice filed under the HSR Act and an application
or notice filed under the BHC Act, the Bank Merger Act, or the Change in
Bank Control Act of 1978) seeking the Consent to an Acquisition
Transaction from any federal or state governmental or regulatory
authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 30 business days from the Notice Date
for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
in connection with such purchase, Issuer shall cooperate with Holder in the
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $130 million and, if it otherwise would
exceed such amount, Holder, at its sole election, shall either (A) reduce
the number of shares of Issuer Common Stock subject to the Option, (B)
deliver to Issuer for cancellation without consideration Option Shares
previously purchased by Holder, (C) pay cash to Issuer, or (D) any
combination of the
- 3 -
<PAGE> 4
foregoing, so that Holder's actually realized Total Profit (together with
the Total Profit realized by all other Holders) shall not exceed $130
million after taking into account the foregoing actions; and
(ii) the Option be exercised for a number of shares of
Issuer Common Stock as would, as of the date of exercise, result in
Holder's (taking into account all other Holders) Notional Total Profit
(as defined below) of more than $130 million; provided, that nothing in
this clause (ii) shall restrict any exercise of the Option permitted
hereby on any subsequent date.
As used in this Agreement, the term "Total Profit" shall mean the aggregate sum
(prior to the payment of taxes) of the following: (i) the amount received by
Holder pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8; (ii) (x) the amount received by Holder pursuant to
Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with respect to any
number of shares of Issuer Common Stock as to which Holder may propose to
exercise the Option shall be the Total Profit determined as of the date of such
proposed exercise, assuming that the Option were exercised on such date for
such number of shares and assuming that such shares, together with all other
Option Shares held by Holder and its affiliates as of such date, were sold for
cash at the closing sale price per share of Issuer Common Stock as quoted on
the Nasdaq National Market (or, if Issuer Common Stock is not then quoted on
the Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) as of the close of
business on the preceding trading day (less customary brokerage commissions).
The provisions of this Section 3(e) shall apply to any Substitute
Option (as defined below).
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
- 4 -
<PAGE> 5
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to purchase the balance of
the shares of Issuer Common Stock purchasable hereunder, and (ii) Holder shall
deliver to Issuer a letter agreeing that Holder shall not offer to sell or
otherwise dispose of such Option Shares in violation of applicable federal and
state law or of the provisions of this Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF FEBRUARY 8,
1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that: (i) the references in the above legend to
resale restrictions of the Securities Act shall be removed by delivery of
substitute certificate(s) without such reference if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act; (ii) the references in the above legend to the provisions of
this Agreement shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in
compliance with the provisions of this Agreement and under circumstances that
do not require the retention of such reference; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Issuer. This Agreement has
been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to authorize
and reserve and to permit it to issue, and, at all times from the date
hereof until the obligation to deliver Issuer Common Stock upon the
exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Issuer Common Stock
necessary for
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Holder to exercise the Option, and Issuer will take all necessary
corporate action to authorize and reserve for issuance all additional
shares of Issuer Common Stock or other securities which may be issued
pursuant to Section 7 upon exercise of the Option. The shares of Issuer
Common Stock to be issued upon due exercise of the Option, including all
additional shares of Issuer Common Stock or other securities which may be
issuable pursuant to Section 7, upon issuance pursuant hereto, shall be
duly and validly issued, fully paid, and nonassessable, and shall be
delivered free and clear of all liens, claims, charges, and encumbrances
of any kind or nature whatsoever, including any preemptive rights of any
shareholder of Issuer.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction, if any, so that Holder shall receive, upon exercise
of the Option, the number and class of shares or other securities or property
that Holder would have received in respect of Issuer Common Stock if the Option
had been exercised immediately prior to such event, or the record date
therefor, as applicable. If any additional shares of Issuer Common Stock are
issued after the date of this Agreement (other than pursuant to an event
described in the first sentence of this Section 7(a) or pursuant to this
Option), the number of shares of Issuer Common Stock subject to the Option
shall be adjusted so that, after such issuance, it, together with any shares of
Issuer Common Stock previously issued pursuant hereto, shall not exceed the
lesser of (i) 19.9% of the number of shares of Issuer Common Stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option and (ii) that minimum number of shares of Issuer Common
Stock which when aggregated with any other shares of Issuer Common Stock
beneficially owned by Grantee or any Affiliate thereof would cause the
provisions of any Takeover Laws of the ABCA to be applicable to the Merger.
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<PAGE> 7
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one
of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer Common Stock immediately
prior to such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the merged company; or (iii) to
sell or otherwise transfer all or substantially all of its Assets to any
person, other than Grantee or one of its Subsidiaries, then, and in each such
case, the agreement governing such transaction shall make proper provisions so
that the Option shall, upon the consummation of any such transaction and upon
the terms and conditions set forth herein, be converted into, or exchanged for,
an option (the "Substitute Option"), at the election of Grantee, of either (x)
the Acquiring Corporation (as defined below) or (y) any person that controls
the Acquiring Corporation (in each case, such person being referred to as the
"Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee. The Substitute Option Issuer
shall also enter into an agreement with the then-holder or holders of the
Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal
to the Assigned Value (as hereinafter defined) multiplied by the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Purchase
Price multiplied by a fraction in which the numerator is the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable and
the denominator is the number of shares for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (y) Issuer in a merger in which Issuer is the
continuing or surviving person, and (z) the transferee of all or any
substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
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<PAGE> 8
(iii) "Assigned Value" shall mean the highest of (x) the
price per share of the Issuer Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than Grantee),
(y) the price per share of the Issuer Common Stock to be paid by any
person (other than the Grantee) pursuant to an agreement with Issuer, and
(z) the highest last sale price per share of Issuer Common Stock quoted
on the Nasdaq NMS (or if Issuer Common Stock is not quoted on the Nasdaq
NMS, the highest bid price per share on any day as quoted on the
principal trading market or securities exchange on which such shares are
traded as reported by a recognized source chosen by Grantee) within the
six-month period immediately preceding the agreement; provided, that in
the event of a sale of less than all of Issuer's assets, the Assigned
Value shall be the sum of the price paid in such sale for such assets and
the current market value of the remaining assets of Issuer as determined
by a nationally recognized investment banking firm selected by Grantee
(or by a majority in interest of the Grantees if there shall be more than
one Grantee (a "Grantee Majority")) and reasonably acceptable to Issuer,
divided by the number of shares of the Issuer Common Stock outstanding at
the time of such sale. In the event that an exchange offer is made for
the Issuer Common Stock or an agreement is entered into for a merger or
consolidation involving consideration other than cash, the value of the
securities or other property issuable or deliverable in exchange for the
Issuer Common Stock shall be determined by a nationally recognized
investment banking firm selected by Grantee and reasonably acceptable to
Issuer (or if applicable, Acquiring Corporation). (If there shall be
more than one Grantee, any such selection shall be made by a Grantee
Majority.)
(iv) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the last sale price of the shares of the Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls
or is controlled by such merger person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make
a cash payment to Grantee equal to the excess of (i) the value of the
Substitute Option without giving effect to the limitation in this clause (f)
over (ii) the value of the Substitute Option after giving effect to the
limitation in this clause (f). This difference in value shall be determined by
a nationally recognized investment banking firm selected by Grantee (or a
Grantee Majority) and reasonably acceptable to the Acquiring Corporation.
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions
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<PAGE> 9
that may be necessary so that the provisions of this Section 7 are given full
force and effect (including, without limitation, any action that may be
necessary so that the shares of Substitute Common Stock are in no way
distinguishable from or have lesser economic value than other shares of common
stock issued by the Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10, and 11 shall apply,
with appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock"
shall be deemed to be references to "Substitute Option Issuer," "Substitute
Option," "Substitute Purchase Price" and "Substitute Common Stock,"
respectively.
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to Section 3(e) and to the last sentence of Section
3(a), at the request of Holder at any time commencing upon the first occurrence
of a Repurchase Event (as defined in Section 8(d)) and ending 18 months
immediately thereafter, Issuer shall repurchase from Holder the Option and all
shares of Issuer Common Stock purchased by Holder pursuant hereto with respect
to which Holder then has beneficial ownership. The date on which Holder
exercises its rights under this Section 8 is referred to as the "Request Date."
Such repurchase shall be at an aggregate price (the "Section 8 Repurchase
Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any
shares of Issuer Common Stock acquired by Holder pursuant to the Option
with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
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<PAGE> 10
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the
ongoing option to revoke its request for repurchase pursuant to Section 8, in
whole or in part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
Consent and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such Consent). If any governmental or regulatory agency or authority
disapproves of any part of Issuer's proposed repurchase pursuant to this
Section 8, Issuer shall promptly give notice of such fact to Holder. If any
governmental or regulatory agency or authority prohibits the repurchase in part
but not in whole, then Holder shall have the right (i) to revoke the repurchase
request or (ii) to the extent permitted by such agency or authority, determine
whether the repurchase should apply to the Option and/or Option Shares and to
what extent to each, and Holder shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was exercisable
at the Request Date less the sum of the number of shares covered by the Option
in respect of which payment has been made pursuant to Section 8(a)(ii) and the
number of shares covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination under the
preceding sentence within five business days of receipt of notice of
disapproval of the repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of termination
of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest last
sale price per share of Issuer Common Stock quoted on the Nasdaq NMS (or if
Issuer Common Stock is not quoted on the Nasdaq NMS, the highest bid price per
share as quoted on the principal trading market or securities exchange on which
such shares are traded as reported by a recognized source chosen by Holder)
during the 60 business days preceding the Request Date; provided, however, that
in the event of a sale of less than all of Issuer's Assets, the Applicable
Price shall be the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by an
independent nationally recognized investment banking firm selected by Holder
and reasonably acceptable to Issuer (which determination shall be conclusive
for all purposes of this Agreement), divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. If the consideration
to be offered, paid or received pursuant to either of the foregoing clauses (i)
or (ii) shall be other than in cash, the value of such consideration shall be
determined in good faith by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer, which
determination shall be conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if (i) any
person (other than Grantee or any subsidiary of Grantee shall have acquired
beneficial ownership (as such term is defined in Rule 13d-3 promulgated under
the Exchange Act), or the right to acquire beneficial
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<PAGE> 11
ownership, or any "group" (as such term is defined under the Exchange Act)
shall have been formed which beneficially owns or has the right to acquire
beneficial ownership of 50% or more of the then-outstanding shares of Issuer
Common Stock, or (ii) any of the transactions described in Section 7(b)(i),
7(b)(ii), or 7(iii) shall be consummated.
9. REGISTRATION RIGHTS.
(a) Issuer shall, subject to the conditions of subparagraph (c)
below, if requested by any Holder, including Grantee and any permitted
transferee ("Selling Holder"), as expeditiously as possible prepare and file a
registration statement under the Securities Laws if necessary in order to
permit the sale or other disposition of any or all shares of Issuer Common
Stock or other securities that have been acquired by or are issuable to Selling
Holder upon exercise of the Option in accordance with the intended method of
sale or other disposition stated by Holder in such request (it being understood
and agreed that any such sale or other disposition shall be effected on a
widely distributed basis so that, upon consummation thereof, no purchaser or
transferee shall beneficially own more than 5% of the shares of Issuer Common
Stock then outstanding), including, without limitation, a "shelf" registration
statement under Rule 415 under the Securities Act or any successor provision,
and Issuer shall use its best efforts to qualify such shares or other
securities for sale under any applicable state securities laws. Each such
Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option, but
prior to the termination of the Option, proposes to register any shares of
Issuer Common Stock under the Securities Laws in connection with an
underwritten public offering of such Issuer Common Stock, Issuer will promptly
give written notice to Holder of its intention to do so and, upon the written
request of Holder given within 30 days after receipt of any such notice (which
request shall specify the number of shares of Issuer Common Stock intended to
be included in such underwritten public offering by Selling Holder), Issuer
will use all reasonable efforts to cause all such shares, the holders of which
shall have requested participation in such registration, to be so registered
and included in such underwritten public offering; provided, that Issuer may
elect to not cause any such shares to be so registered (i) if the underwriters
in good faith determine that the inclusion of such shares would interfere with
the successful marketing of the shares of Issuer Common Stock for the account
of Issuer, or (ii) in the case of a registration solely to implement a dividend
reinvestment or similar plan, an employee benefit plan or a registration filed
on Form S-4 or any successor form, or a registration filed on a form which does
not permit registrations of resales; provided, further, that such election
pursuant to clause (i) may only be made once. If some but not all the shares
of Issuer Common Stock, with respect to which Issuer shall have received
requests for registration pursuant to this subparagraph (b), shall be excluded
from such registration, Issuer shall make appropriate allocation of shares to
be registered among Selling Holders and any other person (other than Issuer or
any person exercising demand registration rights in connection with such
registration) who or which is permitted to register their shares of Issuer
Common Stock in connection with such registration pro rata in the proportion
that the number of shares requested to be registered by each Selling Holder
bears to the total number of shares requested to be registered by all persons
then desiring to have Issuer Common Stock
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<PAGE> 12
registered for sale (other than Issuer or any person exercising demand
registration rights in connection with such registration).
(c) Issuer shall use all reasonable efforts to cause the
registration statement referred to in subparagraph (a) above to become
effective and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement effective, provided,
that Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days, provided Issuer
shall in good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer.
Notwithstanding anything to the contrary contained herein, Issuer shall not be
required to register Option Shares under the Securities Laws pursuant to
subparagraph (a) above:
(i) prior to the occurrence of a Purchase Event and
following the termination of the Option;
(ii) more than twice;
(iii) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which the
Selling Holders concerned were afforded the opportunity to register such
shares under the Securities Laws and such shares were registered as
requested; and
(iv) unless a request therefor is made to Issuer by
Selling Holders holding at least 15% or more of the aggregate number of
Option Shares then outstanding or the right to acquire at least 15% of
the Option Shares.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement after the
expiration of 120 days from the effective date of such registration statement.
Issuer shall use all reasonable efforts to make any filings, and take all
steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares, provided,
that Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so consent to
such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of Issuer's counsel), accounting expenses, printing expenses, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph (a) or (b) above (including the
related offerings and sales by Selling Holders) and all other qualifications,
notifications or exemptions pursuant to subparagraph (a) or (b) above.
Underwriting discounts and commissions relating to Option Shares and any other
expenses
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<PAGE> 13
incurred by such Selling Holders in connection with any such registration
(including expenses of Selling Holders' counsel) shall be borne by such
Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby agrees to indemnify the Selling Holders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in any registration statement or
prospectus (including any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission to state therein a 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, except insofar as
such expenses, losses, claims, damages or liabilities of such indemnified party
are caused by any untrue statement or alleged untrue statement or any omission
or alleged omission made in reliance upon and in conformity with, information
furnished in writing to Issuer by such indemnified party expressly for use
therein, and Issuer and each officer, director and controlling person of Issuer
shall be indemnified by such Selling Holder, or by such underwriter, as the
case may be, for all such expenses, losses, claims, damages and liabilities
caused by any untrue, or alleged untrue, statement or omission made in reliance
upon, and in conformity with, information furnished in writing to Issuer by
such holder or such underwriter, as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of
such action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this subparagraph (e), except to the extent such failure to notify
materially prejudices the indemnifying party. In case notice of commencement
of any such action shall be given to the indemnifying party as above provided,
the indemnifying party shall be entitled to participate in and, to the extent
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense of such action at its own expense, with counsel chosen by it
and reasonably satisfactory to such indemnified party. The indemnified party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
(other than reasonable costs of investigation) shall be paid by the indemnified
party unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party falls to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and expenses
of such counsel; provided, however, that the indemnifying party shall not be
liable for the expenses of more than one firm of counsel for all indemnified
parties in any jurisdiction. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
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<PAGE> 14
If the indemnification provided for in this subparagraph (e)
is unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such party otherwise entitled
to be indemnified, shall contribute to the amount paid or payable by such party
to be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, all Selling Holders and the underwriters from the
offering of the securities and also the relative fault of Issuer, all Selling
Holders and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The amount paid or
payable by a party as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, that in no case shall
any Selling Holder be responsible, in the aggregate, for any amount in excess
of the net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to subparagraph
(a) or (b) above, Issuer and each Selling Holder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) Issuer shall use its best efforts to comply with all
reporting requirements and will do all such other things as may be necessary to
permit the expeditious sale at any time of any Option Shares by Holder in
accordance with and to the extent permitted by any rule or regulation
promulgated by the SEC from time to time, including, without limitation, Rules
144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized for
quotation or trading or listing on the Nasdaq NMS or any other securities
exchange or any automated quotations system maintained by a self-regulatory
organization, Issuer, upon the request of Holder, will promptly file an
application, if required, to authorize for quotation or trading or listing the
shares of Issuer Common Stock or other securities to be acquired upon exercise
of the Option on the Nasdaq NMS or any other securities exchange or any
automated quotations system maintained by a self-regulatory organization and
will use its best efforts to obtain approval, if required, of such quotation or
listing as soon as practicable.
11. DIVISION OF OPTION. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of
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<PAGE> 15
different denominations entitling the holder thereof to purchase in the
aggregate the same number of shares of Issuer Common Stock purchasable
hereunder. The terms "Agreement" and "Option" as used herein include any other
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement executed and delivered shall
constitute an additional contractual obligation on the part of Issuer, whether
or not the Agreement so lost, stolen, destroyed or mutilated shall at any time
be enforceable by anyone.
12. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 9, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h) and other than
as provided in the Merger Agreement) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or a federal or state governmental or regulatory
agency or authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase,
the full number of shares of Issuer Common Stock as provided in Sections 3 and
8 (as adjusted pursuant to Section 7), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser number
of shares as may be permissible without any amendment or modification hereof.
(d) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard
to any applicable conflicts of law rules.
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<PAGE> 16
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(f) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Merger Agreement(or at such other address for a party as shall be specified by
like notice).
(g) COUNTERPARTS. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(i) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
(k) CONFIDENTIALITY AGREEMENTS. The parties hereto agree that
this Agreement supersedes any provision of the Confidentiality Agreements that
could be interpreted to preclude the exercise of any rights or the fulfillment
of any obligations under this Agreement, and that none of the provisions
included in the Confidentiality Agreements will act to preclude Holder from
exercising the Option or exercising any other rights under this Agreement or
act to preclude Issuer from fulfilling any of its obligations under this
Agreement.
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<PAGE> 17
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
<TABLE>
<S> <C>
ATTEST: FIRST COMMERCIAL CORPORATION
By: /s/ Donna Rogers By: /s/ C. Barnett Grace
------------------------------------------ ----------------------------------------------
Donna Rogers C. Barnett Grace
Secretary Chairman, President, and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ Samuel E. Upchurch, Jr. By: /s/ Carl E. Jones, Jr.
------------------------------------------ ----------------------------------------
Samuel E. Upchurch, Jr. Carl E. Jones, Jr.
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
</TABLE>
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