<PAGE> 1
As filed with the Securities and Exchange Commission on November 19, 1999
Registration No.
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
----------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
417 North 20th Street
Birmingham, AL 35203
(205) 944-1300
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
Samuel E. Upchurch, Jr.
General Counsel and Corporate Secretary
417 North 20th Street
Birmingham, AL 35203
(205) 326-7860
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
----------------------
Copies to:
<TABLE>
<S> <C> <C>
CHARLES C. PINCKNEY FRANK M. CONNER III STEVEN J. EISEN
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD LLP BAKER, DONELSON, BEARMAN & CALDWELL, P.C.
SOMERVILLE LLP 601 PENNSYLVANIA AVENUE, N.W. NASHVILLE CITY CENTER SUITE 1700
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, SUITE 250 511 UNION STREET
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 NASHVILLE, TN 37219-1750
(205) 250-5000 (202) 508-3303 (615) 726-5600
</TABLE>
--------------------
Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
--------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit* offering price* registration fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 1,231,542 $14.432313 $17,774,000 $4,941.17
=======================================================================================================================
</TABLE>
*Calculated in accordance with Rule 457(f), based on the total shareholders'
equity of the company being acquired at September 30, 1999.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a),
shall determine.
<PAGE> 2
PROXY STATEMENT PROSPECTUS
LCB CORPORATION REGIONS FINANCIAL CORPORATION
1,231,542 SHARES OF COMMON STOCK
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
The Boards of Directors of LCB Corporation and Regions Financial
Corporation have approved a merger agreement that provides for the acquisition
of LCB Corporation by Regions with Regions as the surviving corporation in the
merger. Regions is a regional bank holding company headquartered in Birmingham,
Alabama. Regions has banking operations in Alabama, Arkansas, Florida, Georgia,
Louisiana, South Carolina, Tennessee, and Texas. Regions has assets of about
$41.2 billion, deposits of about $29.8 billion, and stockholders' equity of
about $3.0 billion.
If the merger is completed, LCB Corporation stockholders will receive
15.789 shares of Regions common stock for each share of LCB Corporation common
stock they own. Regions stockholders will continue to own their existing shares
of Regions common stock after the merger. Shares of Regions common stock are
traded on the Nasdaq National Market under the trading symbol "RGBK."
We cannot complete the merger unless the stockholders of LCB Corporation
approve the merger agreement that contains the terms of the merger. LCB
Corporation has scheduled a special meeting for its stockholders to vote on the
merger.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting of the stockholders, please take the time to vote by completing and
mailing the enclosed proxy card. If you sign, date and mail your proxy card
without indicating how you want to vote, your shares of LCB Corporation common
stock represented by that proxy will be counted as a vote in favor of the
merger agreement. If you do not return your card, the effect will be a vote
against the merger agreement.
The date, time, and place of the special meeting of stockholders is as
follows:
9:00 a.m., _______, 1999
Main Office, Lincoln County Bank, 302 East College Street,
Fayetteville, Tennessee 37334
This Proxy Statement-Prospectus provides you with detailed information
about the proposed merger. You can also get information about Regions from
documents filed with the Securities and Exchange Commission. We encourage you
to read this entire document carefully. Your Board of Directors strongly
supports the merger and recommends that you vote in favor of the merger
agreement.
SHARES OF REGIONS COMMON STOCK ARE NOT DEPOSITS, SAVINGS ACCOUNTS OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATORS HAVE APPROVED THE REGIONS COMMON STOCK TO BE ISSUED UPON COMPLETION
OF THE MERGER OR DETERMINED IF THIS PROXY STATEMENT-PROSPECTUS IS ACCURATE OR
ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Proxy Statement-Prospectus is dated _______, 1999, and was first mailed to
stockholders on or about _______, 1999.
<PAGE> 3
We have not authorized anyone to give any information or make any
representation about the merger or our companies that differs from, or adds to,
the information in this Proxy Statement-Prospectus or in Regions' documents
that are publicly filed with the Securities and Exchange Commission. Therefore,
if anyone does give you different or additional information, you should not
rely on it.
If you are in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers to exchange or buy, the securities offered by this
Proxy Statement-Prospectus or to ask for proxies, or if you are a person to
whom it is unlawful to direct such activities, then the offer presented by this
Proxy Statement-Prospectus does not extend to you.
The information contained in this Proxy Statement-Prospectus speaks only
as of its date unless the information specifically indicates that another date
applies.
Information in this Proxy Statement-Prospectus about Regions Financial
Corporation has been supplied by Regions, and information about LCB Corporation
has been supplied by LCB Corporation.
<PAGE> 4
LCB CORPORATION
302 EAST COLLEGE STREET, FAYETTEVILLE, TENNESSEE, 37334
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD _______, 1999
LCB Corporation will hold a special meeting of stockholders at Lincoln
County Bank's main office, located at 302 East College Street, Fayetteville,
Tennessee, 37334 on _______, 1999, at 9:00 a.m., local time. At the Special
Meeting the following matters will be presented for stockholder vote:
1. Merger. The Agreement and Plan of Merger, dated as of July 8, 1999, by
and between LCB Corporation and Regions Financial Corporation. If the agreement
is approved and the merger is completed, (1) LCB Corporation will merge with
and into Regions with Regions as the surviving corporation and (2) each share
of LCB Corporation common stock (excluding certain shares held by LCB
Corporation, Regions, or their respective subsidiaries and excluding all shares
held by stockholders who perfect their dissenters' rights) will be converted
into 15.789 shares of Regions common stock, with cash to be paid in lieu of any
remaining fractional share interest, all as described more fully in the
accompanying Proxy Statement-Prospectus; and
2. Other Business. Such other business as may properly come before the
special meeting, including adjourning the special meeting to permit, if
necessary, further solicitation of proxies.
Only stockholders of record at the close of business on _______, 1999,
will receive notice of and may vote at the special meeting or any adjournment
or postponement thereof.
You have a right to dissent from the merger and obtain payment of the fair
value of your LCB Corporation shares in cash by complying with the applicable
provisions of Tennessee law, which are attached to the accompanying Proxy
Statement-Prospectus as Appendix B.
Your Board of Directors unanimously recommends that you vote FOR the
proposals listed above.
We urge you to sign and return the enclosed proxy as promptly as possible,
whether or not you plan to attend the special meeting in person. The proxy may
be revoked by the person executing the proxy by filing with the Secretary of
LCB Corporation an instrument of revocation or a duly executed proxy bearing a
later date or by electing to vote in person at the special meeting.
By Order of the Board of Directors
Mary Jane Caldwell
Corporate Secretary
_______, 1999
<PAGE> 5
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
SUMMARY..........................................................................................................
The Companies ..........................................................................................
The Merger .............................................................................................
Comparative Per Share Market Price Information..........................................................
Reasons for the Merger .................................................................................
The Special Meeting ....................................................................................
Recommendations to Stockholders ........................................................................
Record Date; Voting Power ..............................................................................
Vote Required ..........................................................................................
Conditions to Completion of the Merger .................................................................
Termination of the Merger Agreement ....................................................................
Federal Income Tax Consequences ........................................................................
Accounting Treatment ...................................................................................
Interests of Persons in the Merger That Are Different from Yours .......................................
Dissenters' Appraisal Rights ...........................................................................
Regulatory Approvals ...................................................................................
Comparative Per Share Data..............................................................................
Selected Financial Data.................................................................................
THE SPECIAL MEETING..............................................................................................
General.................................................................................................
Record Date; Vote Required..............................................................................
THE MERGER.......................................................................................................
General.................................................................................................
Background of the Merger................................................................................
LCB Corporation's Reasons for the Merger................................................................
Regions' Reasons for the Merger.........................................................................
Effective Time of the Merger............................................................................
Distribution of Regions Stock Certificates and Payment For Fractional Shares............................
Conditions to Consummation of the Merger................................................................
Regulatory Approvals....................................................................................
Waiver, Amendment, and Termination of the Merger Agreement..............................................
Conduct of Business Pending the Merger..................................................................
Management Following the Merger.........................................................................
Interests of Certain Persons in the Merger..............................................................
Dissenting Stockholders.................................................................................
Federal Income Tax Consequences of the Merger...........................................................
Accounting Treatment....................................................................................
Expenses and Fees.......................................................................................
Resales of Regions Common Stock.........................................................................
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS...................................................................
Antitakeover Provisions Generally.......................................................................
Authorized Capital Stock................................................................................
Amendment of Certificate or Articles of Incorporation and Bylaws........................................
Classified Board of Directors and Absence of Cumulative Voting..........................................
Removal of Directors....................................................................................
Limitations on Director Liability.......................................................................
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
Indemnification.........................................................................................
Special Meetings of Stockholders........................................................................
Actions by Stockholders Without a Meeting...............................................................
Stockholder Nominations.................................................................................
Mergers, Consolidations, and Sales of Assets Generally..................................................
Business Combinations with Certain Persons..............................................................
Dissenters' Rights......................................................................................
Stockholders' Rights to Examine Books and Records.......................................................
Dividends...............................................................................................
COMPARATIVE MARKET PRICES AND DIVIDENDS..........................................................................
LCB CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS...................................................................
INFORMATION ABOUT LCB CORPORATION................................................................................
Business and Properties.................................................................................
Competition.............................................................................................
Legal Proceedings.......................................................................................
Management..............................................................................................
Transactions with Management............................................................................
Voting Securities and Principal Stockholders............................................................
INFORMATION ABOUT REGIONS........................................................................................
General.................................................................................................
Recent Developments.....................................................................................
SUPERVISION AND REGULATION.......................................................................................
General.................................................................................................
Payment of Dividends....................................................................................
Capital Adequacy........................................................................................
Prompt Corrective Action................................................................................
FDIC Insurance Assessments..............................................................................
DESCRIPTION OF REGIONS COMMON STOCK..............................................................................
STOCKHOLDER PROPOSALS............................................................................................
FORWARD LOOKING STATEMENTS.......................................................................................
EXPERTS..........................................................................................................
OPINIONS.........................................................................................................
WHERE YOU CAN FIND MORE INFORMATION..............................................................................
INDEX TO LCB CORPORATION FINANCIAL STATEMENTS.................................................................... F-1
APPENDIX A-Agreement and Plan of Merger.......................................................................... A-1
APPENDIX B-Copy of Chapter 23 of the Tennessee Business Corporation Act,
pertaining to dissenters' rights............................................................................ B-1
</TABLE>
<PAGE> 7
SUMMARY
This summary highlights selected information from this Proxy
Statement-Prospectus. It does not contain all of the information that is
important to you. You should carefully read this entire document and the
documents to which we have referred in order to understand fully the merger and
to obtain a more complete description of the legal terms of the merger. Each
item in this summary includes a page reference that directs you to a more
complete description in this document of the topic discussed.
THE COMPANIES (PAGES 60 AND 65)
REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
(205) 944-1300
Regions is a regional bank holding company headquartered in Birmingham,
Alabama and incorporated in Delaware. Regions provides banking and other
financial services. Regions has banking operations in Alabama, Arkansas,
Florida, Georgia, Louisiana, South Carolina, Tennessee, and Texas. As of
September 30, 1999, Regions' total assets were about $41.2 billion, deposits
were about $29.8 billion and stockholders' equity was about $3.0 billion.
The section of this Proxy Statement-Prospectus under the caption "Where
You Find More Information" at page 74 refers you to places where you can find
more information about Regions.
LCB CORPORATION
302 East College Street
Fayetteville, Tennessee, 37334
(931) 433-7041
LCB Corporation is a bank holding company headquartered in Fayetteville,
Tennessee and incorporated in Tennessee. LCB Corporation owns Lincoln County
Bank and the Bank of Huntland, which are commercial banks serving customers
primarily in Lincoln and Franklin Counties in Middle Tennessee. As of September
30, 1999, LCB Corporation's total assets were about $175 million, deposits were
about $154 million, and stockholders' equity was about $18 million.
THE MERGER (PAGE 12)
LCB Corporation will merge into Regions Financial Corporation. Regions
will be the surviving corporation in the merger. When the merger is completed,
you will receive 15.789 shares of Regions stock for each share of LCB
Corporation common stock that you own. You will not receive a fraction of a
share. Instead, you will receive a cash payment for any fraction of a share to
which you may become entitled.
If you elect to dissent from the merger under Tennessee law and follow the
required procedures, you will receive a cash payment for your shares of LCB
Corporation common stock instead of receiving Regions common stock. More
information about your rights to dissent from the merger, and the procedures
you must follow should you choose to do so, is included under the heading "The
Merger -- Dissenting Stockholders" at page 21.
<PAGE> 8
We have attached the merger agreement to this Proxy Statement-Prospectus
as Appendix A. We encourage you to read the merger agreement. It is the legal
document that establishes the terms and conditions of the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION
Shares of Regions are quoted on the Nasdaq National Market under the
trading symbol "RGBK." Shares of LCB Corporation are not quoted on any
established market. On July 7, 1999, the last full trading day prior to the
public announcement of the merger, Regions stock closed at $38.94 per share. On
_______, 1999, the last practicable date before we mailed this Proxy
Statement-Prospectus, Regions stock closed at $_______ per share.
There have been no recent sales of LCB Corporation common stock.
Based on the exchange ratio in the merger, which is 15.789 shares of
Regions common stock for each share of LCB Corporation common stock, the market
value of the consideration that LCB Corporation stockholders will receive in
the merger for each share of LCB Corporation common stock would be $614.82
based on Regions' July 7, 1999 closing price and $_______ based on Regions'
_______, 1999 closing price. Of course, the market price of Regions common
stock will fluctuate prior to and after completion of the merger, while the
exchange ratio is fixed. Therefore, you should obtain current stock price
quotations for Regions common stock.
REASONS FOR THE MERGER (PAGE 14)
Before deciding to approve and recommend the merger, your Board of
Directors considered the financial condition and prospects of LCB Corporation,
information about Regions, the financial terms of the merger, the likelihood
the bank regulators will approve the merger, the federal income tax
consequences of the merger, the advice of your Board's legal and financial
advisors, and other factors. Your Board of Directors decided the merger is
advisable and is in your best interests as stockholders.
To review the background of and reasons for the merger in greater detail,
please see the discussion under the headings "The Merger--Background of the
Merger" and "The Merger--LCB Corporation's Reasons for the Merger" at pages 13
and 14.
THE SPECIAL MEETING (PAGE 11)
The LCB Corporation special meeting will be held at Lincoln County Bank's
main office, 302 East College Street, Fayetteville, Tennessee, 37334, at 9:00
a.m. on _______, 1999. At the special meeting, LCB Corporation stockholders
will be asked to approve the merger agreement.
RECOMMENDATIONS TO STOCKHOLDERS (PAGE 14)
Your Board of Directors believes that the merger is fair to you and in
your best interests. The Board unanimously recommends that you vote "FOR" the
proposal to approve the merger agreement.
RECORD DATE; VOTING POWER (PAGE 12)
You can vote at the LCB Corporation Special Meeting if you owned LCB
Corporation common stock as of the close of business on _______, 1999, the
record date. On that date, 78,000 shares of LCB
2
<PAGE> 9
Corporation common stock were outstanding and therefore are allowed to vote at
the special meeting. You will be able to cast one vote for each share of LCB
Corporation common stock you owned on _______, 1999.
Regions stockholders will not vote on the merger.
VOTE REQUIRED (PAGE 12)
For the special meeting to be held, a quorum must be present. A quorum is
established when a majority of shares of LCB Corporation common stock are
represented at the special meeting either in person or by proxy. To approve the
merger, LCB Corporation stockholders who hold a majority of the outstanding
shares of common stock on the record date must vote for the merger. If you do
not vote, this will have the same effect as a vote against the merger.
All together, the directors and officers of LCB Corporation hold
approximately 65.1% of the votes entitled to be voted at the LCB Corporation
special meeting. The members of your Board of Directors have agreed to vote all
of their shares in favor of the merger.
CONDITIONS TO COMPLETION OF THE MERGER (PAGE 17)
The completion of the merger depends on a number of conditions being met,
including the following:
- - LCB Corporation stockholders approving the merger;
- - Receipt of all required regulatory approvals and the expiration of any
regulatory waiting periods;
- - The absence of any governmental or court order blocking completion of the
merger, or of any proceedings by a government body trying to block it;
- - Receipt of an opinion of counsel that the U.S. federal income tax treatment
to you the stockholders and to LCB Corporation in the merger will generally
be tax-free as we have described it to you in this Proxy Statement-
Prospectus; and
- - Filing with the National Association of Securities Dealers, Inc. of
Regions' notification for listing of additional shares on the Nasdaq
National Market for the shares of Regions common stock to be issued in the
merger.
In cases where the law permits, a party to the merger agreement could
elect to waive a condition that has not been satisfied and complete the merger
although it is entitled not to. We cannot be certain whether or when any of the
conditions we've listed will be satisfied (or waived, where permissible), or
that the merger will be completed.
TERMINATION OF THE MERGER AGREEMENT (PAGE 18)
We can agree at any time to terminate the merger agreement without
completing the merger, even if you, the stockholders, have already voted to
approve it.
In addition, either of us can terminate the merger agreement in the
following circumstances:
3
<PAGE> 10
- - After a final decision by a governmental authority to prohibit the merger,
or after the rejection of an application for a governmental approval
required to complete the merger;
- - If the merger is not completed by March 31, 2000;
- - If the LCB Corporation stockholders do not approve the merger; or
- - If the other party violates, in a significant way as described in the
merger agreement, and does not properly cure any of its representations,
warranties or obligations under the merger agreement and the party seeking
termination is not in violation of the merger agreement.
FEDERAL INCOME TAX CONSEQUENCES (PAGE 24)
We have structured the merger with the intent that you will not recognize
any gain or loss for U.S. federal income tax purposes in the merger when you
exchange all of your shares of LCB Corporation common stock for shares of
Regions common stock in the merger, except in connection with cash received
instead of fractional shares. We have conditioned the merger on our receipt of
legal opinions that this will be the case, but these opinions will not bind the
Internal Revenue Service, which could take a different view.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN LCB CORPORATION STOCKHOLDERS,
INCLUDING THE TYPES OF LCB CORPORATION STOCKHOLDERS DISCUSSED ON PAGE 24, AND
WILL NOT APPLY TO ANY LCB CORPORATION STOCKHOLDER WHO DISSENTS FROM THE MERGER
UNDER TENNESSEE LAW. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE MERGER TO
YOU CAN BE COMPLICATED. YOUR INDIVIDUAL TAX CONSEQUENCES WILL DEPEND ON YOUR
SPECIFIC SITUATION AND MANY VARIABLES NOT WITHIN OUR CONTROL. YOU SHOULD
CONSULT YOUR OWN TAX ADVISOR FOR A FULL UNDERSTANDING OF THE MERGER'S TAX
CONSEQUENCES.
ACCOUNTING TREATMENT (PAGE 25)
We expect the merger to qualify for purchase accounting treatment, meaning
that the assets and liabilities of LCB Corporation will be recorded at their
estimated fair values and added to those of Regions.
INTERESTS OF PERSONS IN THE MERGER THAT ARE DIFFERENT FROM YOURS (PAGE 21)
Some of the officers of LCB Corporation have benefit and compensation
plans that provide them with interests in the merger that are different from,
or in addition to, their interests as stockholders of LCB Corporation. In
particular, members of LCB Corporation's Board and its officers are entitled to
indemnification under the merger agreement.
For more information concerning these matters, please refer to the
discussion under the heading "The Merger-Interests of Certain Persons in the
Merger" on page 21.
DISSENTERS' APPRAISAL RIGHTS (PAGE 34)
Tennessee law permits you to dissent from the merger and to have the fair
value of your stock appraised by a court and paid to you in cash. To do this,
you must follow certain procedures, including
4
<PAGE> 11
the filing of certain notices and refraining from voting your shares in favor
of the merger. If you dissent from the merger, your shares of LCB Corporation
common stock will not be exchanged for shares of Regions common stock in the
merger, and your only right will be to receive the appraised value of your
shares in cash.
REGULATORY APPROVALS (PAGE 18)
We cannot complete the merger unless we obtain the approval of the Board
of Governors of the Federal Reserve System. The U.S. Department of Justice has
input into the Federal Reserve Board's approval process. Federal law requires
us to wait for up to 30 days before completing the merger after the Federal
Reserve Board has approved it, which the Federal Reserve Board may shorten to
15 days.
In addition, the merger is subject to the approval of or notice to the
Commissioner of Financial Institutions of the state of Tennessee.
We have filed all of the required notices with these regulatory
authorities. The Federal Reserve Board has issued its approval of the merger.
While we do not know of any reason why we should not obtain the remaining
regulatory approval in a timely manner, we cannot be certain when, or if, we
will obtain it.
COMPARATIVE PER SHARE DATA
The following table shows information about our companies' income per
share, dividends per share and book value per share, and similar information
reflecting the merger of our two companies (which is referred to as "pro forma"
information). In presenting the comparative pro forma information for certain
time periods, we assumed that our companies had been merged throughout those
periods.
In presenting the comparative pro forma information, we also assumed that
Regions will record LCB Corporation assets and liabilities at their estimated
fair values and add them to the assets and liabilities of Regions for
accounting and financial reporting purposes (a method which is referred to as
the "purchase" method of accounting).
The information listed as "equivalent pro forma" was computed by
multiplying the pro forma amounts by the exchange ratio of 15.789. It is
intended to reflect the fact that LCB Corporation stockholders will be
receiving 15.789 shares of Regions common stock for each share of LCB
Corporation common stock exchanged in the merger.
The pro forma information, while helpful in illustrating the financial
attributes of the combined company under one set of assumptions, does not
attempt to predict or suggest future results. Also, the information we've set
forth for the nine-month period ended September 30, 1999 does not indicate what
the results will be for the full 1999 fiscal year.
The information in the following table is based on the historical
financial information of our companies. See "Where You Can Find More
Information" at page 74 and "Index to LCB Corporation Financial Statements" at
page F-1.
5
<PAGE> 12
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
----------------- 1998
1999 1998 -------------------------
(Unaudited) (Unaudited except Regions
historical)
<S> <C> <C> <C>
NET INCOME PER COMMON SHARE
Regions historical ..................... $ 1.78 $ 1.34 $ 1.92
Regions historical-diluted ............. 1.76 1.32 1.88
LCB historical.......................... 25.38 26.12 37.95
LCB historical-diluted.................. 25.38 26.12 37.95
Regions and LCB pro forma combined(1) .. 1.78 1.92
Regions and LCB pro forma combined
- diluted(1) .......................... 1.76 1.89
LCB pro forma equivalent(2) ............ 28.10 30.31
LCB pro forma equivalent
- diluted(2) .......................... 27.79 29.84
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical ..................... .75 .69 .92
LCB historical.......................... 31.50 15.00 15.00
LCB pro forma equivalent(3) ............ 11.84 10.89 14.53
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical ..................... 13.77
LCB historical.......................... 227.87
Regions and LCB pro forma combined(1) .. 13.86
LCB pro forma equivalent(2) ............ 218.84
</TABLE>
(1) Represents the combined results of Regions and LCB Corporation as if the
merger were consummated on January 1, 1998 (or September 30, 1999, in the
case of Book Value Per Share Data), and were accounted for as a purchase.
(2) Represents pro forma combined information multiplied by the Exchange Ratio
of 15.789 shares of Regions common stock for each share of LCB Corporation
common stock.
(3) Represents historical dividends declared per share by Regions multiplied
by the Exchange Ratio of 15.789 shares of Regions common stock for each
share of LCB Corporation common stock.
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each of
our companies.
The information in the following tables is based on the historical
financial information of our companies. All of the summary financial
information provided in the following tables should be read in connection with
this historical financial information and with the more detailed financial
information we have provided in this Proxy Statement-Prospectus, which you can
find beginning at page F-1 and in the documents of Regions incorporated by
reference. See "Where You Can Find More Information" at page 74. The financial
information as of or for the interim periods ended September 30, 1999 and 1998
has not been audited and, in the respective opinions of management, reflects
all adjustments (consisting only of normal recurring adjustments) necessary for
a fair presentation of such data. In addition the financial information of LCB
Corporation as of and for the fiscal period ended December 31, 1998 has not
been audited, and, in the opinion of management, reflects all adjustments
(consisting only of normal recurring adjustments) necessary for a fair
presentation of such data.
6
<PAGE> 13
Selected Historical Financial Data of Regions
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------------- ---------------------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total interest income .... $ 2,096,563 $ 1,932,506 $ 2,597,786 $ 2,276,584 $ 1,954,283 $ 1,750,427 $ 1,385,512
Total interest expense ... 1,031,252 948,247 1,272,968 1,097,376 942,459 861,242 598,160
Net interest income ...... 1,065,311 984,259 1,324,818 1,179,208 1,011,824 889,185 787,352
Provision for loan
losses .............. 75,389 41,482 60,505 89,663 46,026 37,493 22,058
Net interest income
after loan loss
provision ........... 989,922 942,777 1,264,313 1,089,545 965,798 851,692 765,294
Total noninterest income
before security
gains (losses) ....... 398,137 340,835 467,695 406,484 341,792 280,834 251,837
Security gains (losses) .. 41 3,127 7,002 498 3,311 (697) 681
Total noninterest
expense .............. 788,019 839,939 1,103,708 901,776 837,034 720,825 653,506
Income tax expense ....... 203,754 152,095 213,590 197,222 156,008 134,529 115,853
Net income ............... 396,327 294,705 421,712 397,529 317,859 276,475 248,453
PER SHARE DATA:
Net income ............... $ 1.78 $ 1.34 $ 1.92 $ 1.89 $ 1.64 $ 1.45 $ 1.36
Net income--diluted ..... 1.76 1.32 1.88 1.86 1.61 1.43 1.34
Cash dividends ........... .75 .69 .92 .80 .70 .66 .60
Book value ............... 13.77 13.38 13.61 12.75 11.82 10.74 9.58
OTHER INFORMATION:
Average number of
shares outstanding .. 222,697 220,220 220,114 209,781 194,241 190,896 182,903
Average number of
shares outstanding,
--diluted .......... 225,350 223,935 223,781 213,750 197,751 193,579 185,110
STATEMENT OF CONDITION
DATA (PERIOD END):
Total assets.............. $41,229,164 $35,076,264 $36,831,940 $31,414,058 $26,993,344 $24,419,249 $22,184,508
Securities ............... 9,499,770 7,696,008 7,969,137 6,315,923 5,742,375 5,618,839 5,143,226
Loans, net of unearned
income .............. 27,511,472 23,852,206 24,365,587 21,881,123 18,395,552 16,156,312 14,726,649
Total deposits ........... 29,804,048 27,184,895 28,350,066 25,011,021 22,019,412 19,982,533 18,048,906
Long-term debt ........... 371,148 424,176 571,040 445,529 570,545 762,521 766,774
Stockholders' equity ..... 3,019,937 2,957,653 3,000,401 2,679,821 2,274,563 2,047,398 1,785,026
PERFORMANCE RATIOS:
Return on average
assets(1) ........... 1.36% 1.17% 1.24%(a) 1.35% 1.25%(b) 1.19% 1.23%
Return on average
stockholders'
equity(1) ........... 17.16 13.79 14.62(a) 15.38 14.71(b) 14.30 14.88
Net interest margin(1) ... 4.01 4.28 4.25 4.41 4.36 4.27 4.33
Efficiency (2) ........... 53.23 54.00 60.82(a) 57.78 61.84(b) 61.61 62.89
Dividend payout .......... 42.13 51.49 47.92 42.33 42.68 45.52 44.12
ASSET QUALITY RATIOS:
Net charge-offs to
average loans, net
of unearned income(1) .34% .22% .28% .27% .18% .15% .18%
Problem assets to net
loans and other
real estate (3) ..... .67 .67 .60 .78 .63 .69 .91
Nonperforming assets to
net loans and other
real estate (4) ..... .96 .90 1.15 .91 .83 .81 .98
Allowance for loan losses
to loans, net of
unearned income ..... 1.20 1.36 1.29 1.39 1.38 1.43 1.41
Allowance for loan losses
to nonperforming
assets (4) .......... 125.57 150.72 112.27 151.89 166.41 177.53 144.04
</TABLE>
7
<PAGE> 14
Selected Historical Financial Data of Regions - Continued
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets ................. 7.93% 8.51% 8.47% 8.75% 8.50% 8.36% 8.23%
Average loans to average deposits 90.56 86.91 86.93 84.94 82.42 82.23 75.90
Tier 1 risk-based capital (5) .... 9.42 10.66 10.26 10.48 10.81 11.14 10.69
Total risk-based capital (5) ..... 11.17 12.74 12.17 12.93 13.59 14.61 14.29
Tier 1 leverage (5) .............. 6.67 7.39 7.40 7.52 7.44 7.49 8.21
</TABLE>
- -------------------
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
respectively. The minimum leverage ratio of Tier 1 capital to total assets
is 3% to 5%. The ratios for prior periods have not been restated to
reflect the combination with First National Bancorp and First Commercial
Corporation, accounted for as a pooling of interests, or any other
pooling-of-interests transactions.
(a) Ratios for 1998 excluding $80.7 million (after tax) for nonrecurring
merger and consolidation charges are as follows: Return on average assets
- 1.48%, Return on average stockholders' equity - 17.42%, and Efficiency -
54.13%.
(b) Ratios for 1996 excluding $20.2 million (after-tax) charge for SAIF
assessment and merger expenses are as follows: Return on average assets -
1.33%, Return on average stockholders' equity - 15.64%, and Efficiency -
60.93%.
8
<PAGE> 15
Selected Historical Financial Data of LCB Corporation
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
(Unaudited) (Unaudited)
(In thousands, except per share data and ratios)
<S> <C>
INCOME STATEMENT DATA:
Total interest income............. $ 11,868 $ 11,357 $ 15,363 $ 13,628 $ 12,994 $ 12,055 $ 10,503
Total interest expense ........... 4,354 4,251 5,774 5,505 5,348 4,777 3,609
Net interest income............... 7,514 7,106 9,589 8,123 7,646 7,278 6,894
Provision for loan losses......... 143 16 16 113 305 324 370
Net interest income after
loan loss provision.......... 7,371 7,090 9,573 8,010 7,341 6,954 6,524
Total noninterest income excluding
security gains............... 960 991 1,442 1,490 1,237 1,340 1,497
Security gains.................... 12 69 161 13 4 7 1
Total noninterest expense......... 5,102 4,972 6,713 5,523 4,787 4,787 4,887
Income tax expense................ 1,261 1,097 1,463 1,228 1,255 1,069 1,022
Minority interest................. -- 44 40 114 95 94 86
Net income........................ 1,980 2,037 2,960 2,648 2,445 2,351 2,027
PER SHARE DATA:
Net income........................ $ 25.38 $ 26.12 $ 37.95 $ 33.95 $ 31.35 $ 30.14 $ 25.99
Cash dividends.................... 31.50 15.00 15.00 15.00 7.00 6.00 6.00
Book value........................ 227.87 233.36 243.91 220.59 200.40 176.35 144.19
OTHER INFORMATION:
Average number of shares outstanding 78 78 78 78 78 78 78
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets...................... $175,418 $167,765 $180,961 $157,357 $151,980 $141,385 $129,808
Securities........................ 37,378 33,439 33,405 32,954 29,403 22,604 20,449
Federal funds sold................ 4,876 6,333 12,985 7,711 14,785 10,090 7,175
Loans, net of unearned income..... 114,489 111,078 112,575 100,272 90,587 94,921 89,710
Allowance for Loan Losses......... 1,781 1,665 1,442 1,618 1,570 1,503 1,651
Total deposits.................... 154,103 145,847 158,363 137,410 134,426 125,904 116,487
Long-term debt.................... 600 890 890 -- 5 10 615
Stockholders' equity.............. 17,774 18,202 19,025 17,206 15,631 13,755 11,247
PERFORMANCE RATIOS:
Return on average assets(1)....... 1.51% 1.69% 1.81% 1.72% 1.67% 1.77% 1.60%
Return on average stockholders'
equity(1).................... 14.38 15.38 16.34 16.18 16.77 18.53 18.48
Net interest margin(1)............ 6.33 6.78 6.72 5.81 5.80 6.07 6.08
Efficiency (2).................... 61.15 61.01 60.07 58.06 55.78 57.67 60.92
Dividend payout................... 124.11 57.43 39.53 44.18 22.33 19.91 23.09
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1).... (.23)% (.04)% .18% 0.07% .25% .51% .12%
Problem assets to net loans and
other real estate (3)........ .68 .96 .96 .56 .66 .78 1.93
Nonperforming assets to net loans
and other real estate (4).... 1.70 1.58 1.41 .95 1.04 1.06 2.21
Allowance for loan losses to loans,
net of unearned income....... 1.56 1.50 1.28 1.61 1.73 1.58 1.84
Allowance for loan losses to
nonperforming assets (4)..... 86.00 95.14 90.58 169.42 166.67 149.11 83.01
</TABLE>
9
<PAGE> 16
Selected Historical Financial Data of LCB Corporation - Continued
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------- --------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
(Unaudited) (Unaudited)
(In thousands, except per share data and ratios)
<S> <C> <C> <C> <C> <C> <C> <C>
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets.................. 10.49% 11.02% 11.07% 10.65% 9.94% 9.57% 8.66%
Average loans to average deposits. 73.51 75.34 75.48 71.68 73.54 79.38 77.26
Tier 1 risk-based capital (5)..... 13.84 14.15 14.49 16.43 15.05 n/a n/a
Total risk-based capital (5)...... 15.10 15.40 15.74 17.69 16.30 n/a n/a
Tier 1 leverage (5)............... 9.88 10.53 10.90 11.59 10.49 n/a n/a
</TABLE>
(1) Interim period ratios are annualized.
(2) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses)
from security transactions.
(3) Problem assets include loans on a nonaccrual basis, restructured loans,
and foreclosed properties.
(4) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due, and foreclosed properties.
(5) The required minimum Tier 1 and total capital ratios are 4% and 8%,
respectively. The minimum leverage ratio of Tier 1 capital to total assets
is 3% to 5%.
10
<PAGE> 17
THE SPECIAL MEETING
GENERAL
This Proxy Statement-Prospectus is being furnished to the stockholders of
LCB Corporation in connection with the solicitation by the LCB Corporation
Board of Directors of proxies for use at a special meeting of stockholders. At
the special meeting, LCB Corporation stockholders will be asked to vote upon a
proposal to approve the agreement and plan of merger dated as of July 8, 1999,
by and between LCB Corporation and Regions Financial Corporation.
The special meeting will be held at _______9:00 a.m., local time, on
_______, 1999, at the main office of Lincoln County Bank, located at 302 East
College Street, Fayetteville, Tennessee, 37334.
LCB Corporation stockholders are requested promptly to sign, date, and
return the accompanying proxy card to LCB Corporation in the enclosed
postage-paid, addressed envelope. A stockholder's failure to return a properly
executed proxy card or to vote at the special meeting will have the same effect
as a vote against the merger agreement.
Any LCB Corporation stockholder who has delivered a proxy may revoke it at
any time before it is voted by giving notice of revocation in writing or
submitting to LCB Corporation a signed proxy card bearing a later date,
provided that such notice or proxy card is actually received by LCB Corporation
before the vote of stockholders or in open meeting prior to the taking of the
stockholder vote at the special meeting. Any notice of revocation should be
sent to LCB Corporation, 302 East College Street, Fayetteville, Tennessee,
37334, Attention: Mary Jane Caldwell, Corporate Secretary. A proxy will not be
revoked by death of the stockholder executing the proxy, or if the stockholder
becomes incompetent after submitting a signed proxy, unless, before the vote,
notice of such death or incapacity is filed with the Secretary. The shares of
LCB Corporation common stock represented by properly executed proxies received
at or prior to the special meeting and not subsequently revoked will be voted
as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES REPRESENTED
BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE MERGER AGREEMENT AND IN
THE DISCRETION OF THE PROXY HOLDER AS TO ANY OTHER MATTERS THAT PROPERLY MAY
COME BEFORE THE SPECIAL MEETING. IF NECESSARY, AND UNLESS CONTRARY INSTRUCTIONS
ARE GIVEN OR YOU HAVE VOTED AGAINST THE MERGER, THE PROXY HOLDER ALSO MAY VOTE
IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING TO PERMIT FURTHER
SOLICITATION OF PROXIES IN ORDER TO OBTAIN SUFFICIENT VOTES TO APPROVE THE
MERGER AGREEMENT. As of the date of this Proxy Statement-Prospectus, LCB
Corporation is unaware of any other matter to be presented at the special
meeting.
LCB Corporation will solicit proxies by mail, and possibly by telephone or
telegram or in person by the directors, officers, and employees of LCB
Corporation, who will receive no additional compensation for such solicitation
but may be reimbursed for out-of-pocket expenses. Brokerage houses, nominees,
fiduciaries, and other custodians will be requested to forward solicitation
materials to beneficial owners and will be reimbursed for their reasonable
out-of-pocket expenses.
LCB Corporation stockholders should not forward any stock certificates
with their proxy cards.
11
<PAGE> 18
RECORD DATE; VOTE REQUIRED
LCB Corporation's Board of Directors has established the close of business
on _______, 1999, as the record date for determining the LCB Corporation
stockholders entitled to notice of and to vote at the special meeting. Only LCB
Corporation stockholders of record as of the record date will be entitled to
vote at the special meeting. As of the record date, there were approximately 25
holders of 78,000 shares of the $1.00 par value Class A common stock of LCB
Corporation outstanding and entitled to vote at the special meeting. Each share
is entitled to one vote. For information as to persons known by LCB Corporation
to beneficially own more than 5.0% of the outstanding shares of LCB Corporation
common stock as of the record date, see " Information About LCB Corporation-
Voting Securities and Principal Stockholders" at page 64.
The presence, in person or by proxy, of a majority of the outstanding
shares of LCB Corporation common stock is necessary to constitute a quorum of
the stockholders. A quorum must be present before a vote on the merger
agreement can be taken at the special meeting. For these purposes, shares of
LCB Corporation common stock that are present, or represented by proxy, at the
special meeting will be counted for quorum purposes regardless of whether the
holder of the shares or proxy fails to vote on the merger agreement for any
reason, including broker nonvotes. Generally, a broker who holds shares of LCB
Corporation common stock in "street" name on behalf of a beneficial owner lacks
authority to vote such shares in the absence of specific voting instructions
from the beneficial owner.
Once a quorum is established, approval of the merger agreement requires
the affirmative vote of the holders of a majority of the outstanding shares of
LCB Corporation common stock entitled to vote at the special meeting. If you
sign, date and mail your proxy card without indicating how you want to vote,
your shares represented by that proxy will be voted in favor of the merger.
Your failure to vote, in person or by proxy, for any reason, including failure
to return a properly executed proxy, an abstention, or a broker nonvote, has
the same effect as a vote against the merger agreement.
The directors and executive officers of LCB Corporation and their
affiliates beneficially owned, as of the record date, 50,750 shares (or
approximately 65.1% of the outstanding shares) of LCB Corporation common stock.
The directors of LCB Corporation have agreed to vote those shares of LCB
Corporation common stock over which they have voting control (other than in a
fiduciary capacity) in favor of the merger. The directors and executive
officers of Regions and their affiliates beneficially owned, as of the record
date, no shares of LCB Corporation common stock. As of the record date, no
subsidiary of either LCB Corporation or Regions held any shares of LCB
Corporation common stock in a fiduciary capacity for others.
THE MERGER
The following material describes certain aspects of the merger of LCB
Corporation with and into Regions. This description does not purport to be
complete and is qualified in its entirety by reference to the Appendices
hereto, including the merger agreement, which is attached as Appendix A to this
Proxy Statement-Prospectus and incorporated herein by reference. All
stockholders are urged to read the Appendices in their entirety.
12
<PAGE> 19
GENERAL
The merger agreement provides generally for the acquisition of LCB
Corporation by Regions pursuant to the merger of LCB Corporation into Regions.
Regions will be the surviving corporation in the merger.
On the date and at the time that the merger becomes effective, each share
of LCB Corporation common stock (excluding shares held by LCB Corporation,
Regions, or their respective subsidiaries, other than shares LCB Corporation,
Regions, or their subsidiaries hold in a fiduciary capacity or as a result of
debts previously contracted, and excluding all shares held by stockholders who
perfect their dissenters' rights) issued and outstanding at the effective time
of the merger will be converted into 15.789 shares of the $.625 par value
common stock of Regions. Each share of Regions common stock outstanding
immediately prior to the effective time of the merger will remain outstanding
and unchanged as a result of the merger.
No fractional shares of Regions common stock will be issued in connection
with the merger. Instead of issuing fractional shares, Regions will make a cash
payment equal to the fractional part of a share which a LCB Corporation
stockholder would otherwise receive multiplied by the closing price of Regions
common stock on the Nasdaq National Market (as reported by The Wall Street
Journal, or, if not reported thereby, by another authoritative source selected
by Regions), on the last trading day prior to the time we complete the merger.
BACKGROUND OF THE MERGER
For the past decade, LCB Corporation's subsidiary Lincoln County Bank has
been the leader in deposit size, loan portfolio size, and asset size in the
financial industry in Lincoln County, Tennessee. Also during this decade, every
other local financial institution has become affiliated with an out-of-county
or out-of-state institution, leaving LCB Corporation as the only locally owned
financial institution. This situation, together with an improved economy in
Lincoln County and Franklin County, Tennessee, resulted in favorable financial
performances when compared with LCB Corporation's peers.
The Board of Directors of LCB Corporation was well aware its two
subsidiary banks, Lincoln County Bank in Fayetteville and Bank of Huntland in
Franklin County, would be very marketable due to the market share each held in
their respective communities and the geographic location of both counties in
Tennessee. The proximity of both counties to the growing North Alabama market
enhanced the value to LCB Corporation's shareholders.
Regions was well aware of the success that LCB Corporation had achieved in
the past several years as a result of the friendship of Joe Hinds, Jr.,
regional President of Regions' north region, and Charles Gleghorn, Chairman of
LCB Corporation. Mr. Hinds had expressed on several occasions over the years
Regions' potential interest in a combination with LCB Corporation and had asked
Mr. Gleghorn on other occasions about the possibility of the two companies
beginning merger discussions. During the first few months of 1999, Mr. Gleghorn
began to evaluate the concept of LCB Corporation merging with Regions. The
Board of Directors of LCB Corporation was aware of this process.
Mr. Gleghorn and the Board of Directors decided during the first half of
April 1999 to contact
13
<PAGE> 20
only one institution as a possible merger candidate, Regions. Mr. Gleghorn
contacted Joe Hinds the last week of April 1999 to begin discussing this
possibility.
Mr. Gleghorn met with Mr. Hinds and other Regions executives Carl E.
Jones, Jr., Chief Executive Officer, and Richard Horsley, Executive Financial
Officer, during the first week of June 1999 to discuss the merger possibility.
The details of the merger were negotiated, and the Board of Directors of LCB
Corporation voted to enter into an Agreement and Plan of Merger with Regions.
Both parties signed the merger agreement as of July 8, 1999.
LCB CORPORATION'S REASONS FOR THE MERGER.
In approving the merger, the LCB Corporation directors considered a number
of factors. Without assigning any relative or specific weights to the factors,
the LCB Corporation Board of Directors considered the following material
factors:
- - the Board's familiarity with and review of LCB Corporation's business,
operations, earnings, and financial condition;
- - the Board's review, based in part on the presentation by LCB Corporation's
management regarding its due diligence of Regions, of the business,
operations, earnings and financial conditions of Regions on both a
historical and prospective basis, the enhanced opportunities for operating
efficiencies (particularly in terms of integration of operations, data
processing and support functions) that could result from the merger, the
enhanced opportunities for growth that the merger would make possible and
the respective contributions the parties would bring to a combined
institution;
- - The Board's belief that the terms of the merger agreement are attractive
in that the agreement allows LCB Corporation's stockholders to become
stockholders in Regions, an institution whose recent earnings performance
has been strong;
- - the Board's review of alternatives to the merger (including the
alternatives of remaining independent and growing internally, remaining
independent for a period of time and then selling the company, and
remaining independent and growing through future acquisitions);
- - the Board's review of possible affiliation partners of LCB Corporation
other than Regions, the prospects of such other possible affiliation
partners, and the likelihood of any such affiliation;
- - the Board's belief, based upon an analysis of the anticipated financial
effects of the merger, that upon consummation of the merger, Regions and
its banking subsidiaries would be well capitalized institutions, the
financial positions of which would be in excess of all applicable
regulatory capital requirements;
- - the Board's belief that, in light of the reasons discussed above, Regions
was the most attractive choice as a long term affiliation partner of LCB
Corporation;
- - the expectation that the merger will generally be a tax-free transaction
of LCB Corporation and its stockholders to the extent such stockholders
receive shares of Regions common stock;
14
<PAGE> 21
- - the current and prospective economic and regulatory environment and
competitive constraints facing the banking and financial institutions in
LCB Corporation's market area; and
- - the recent business combinations involving financial institutions, either
announced or completed, during the past year in the United States, the
State of Tennessee, and contiguous states and the effect of such
combinations on competitive conditions in LCB Corporation's market area.
The terms of the merger were the result of arms-length negotiations
between representatives of LCB Corporation and representatives of Regions.
Based upon the consideration of the foregoing factors, the Board of Directors
of LCB Corporation unanimously approved the merger as being in the best
interests of LCB Corporation and its stockholders. Each member of the Board of
Directors of LCB Corporation has agreed to vote those shares of LCB Corporation
common stock over which such member has voting authority (other than in a
fiduciary capacity) in favor of the merger.
LCB Corporation's Board of Directors unanimously recommends that LCB
Corporation stockholders vote FOR approval of the agreement and plan of merger.
REGIONS' REASONS FOR THE MERGER
In approving the agreement and plan of merger and the merger, the Regions
Board considered a number of factors concerning the benefits of the merger,
including the following:
- - Information Concerning LCB Corporation: The Regions Board considered
information concerning the business, operations, earnings, asset quality,
and financial condition of LCB Corporation, and aspects of the LCB
Corporation franchise, including the market position of LCB Corporation in
each of the markets in which it operates and the compatibility of the
community bank orientation of the operations of LCB Corporation to that of
Regions. The Regions Board concluded that LCB Corporation is a sound, well
managed financial institution which is well positioned in its market areas
and which presents an attractive opportunity for Regions to add to its
franchise as an adjunct to its Middle Tennessee and North Alabama markets.
- - Financial Terms of the Merger: The Regions Board considered various
financial aspects of the merger as reported by Regions' management
including (1) the anticipated effect of the merger on Regions' per share
earnings (with the merger anticipated to have no significant effect on
Regions' earnings per share), (2) the anticipated effect of the merger on
Regions' book value per share (with the merger anticipated not to dilute
significantly Regions' book value per share), (3) a comparison of LCB
Corporation to selected peer banks and a comparison of pricing aspects of
the merger to pricing characteristics of other merger transactions
involving financial institutions, and (4) the anticipated accounting
treatment of the merger as a purchase.
- - Nonfinancial Terms of the Merger. The Regions Board considered various
nonfinancial aspects of the merger, including the treatment of the merger
as a tax-free exchange of LCB Corporation common stock for Regions common
stock for federal income tax purposes and the likelihood of the merger
being approved by applicable regulatory authorities without undue
conditions or delay.
15
<PAGE> 22
The foregoing discussion of the information and factors considered by the
Regions Board is not intended to be exhaustive but includes all material
factors considered by the Regions Board. In reaching its determination to
approve the merger and the merger agreement, the Regions Board did not assign
any relative or specific weights to the foregoing factors, and individual
directors may have given differing weights to different factors. After
deliberating with respect to the merger, and considering, among other things,
the matters discussed above, the Regions Board determined that the merger is in
the best interests of Regions and its stockholders and unanimously approved the
merger agreement.
EFFECTIVE TIME OF THE MERGER
After all conditions to the merger are satisfied or waived, the merger
will become effective when Regions files certain certificates with the
Secretaries of State of Delaware and Tennessee. The effective time of the
merger will occur on the date and at the time that the such certificates are
filed and declared effective. Unless otherwise agreed upon by Regions and LCB
Corporation, and subject to the satisfaction or waiver of the conditions to the
obligations of the parties to effect the merger, the parties will use their
reasonable efforts to cause the effective time of the merger to occur not later
than the last business day of the month in which the last of the following
events occur: (1) the effective date (including the expiration of any
applicable waiting period) of the last federal or state regulatory approval
required for the merger and (2) the date on which the agreement and plan of
merger is approved by the requisite vote of LCB Corporation stockholders; or
such later date within 30 days thereof as may be specified by Regions.
No assurance can be provided that the necessary stockholder and regulatory
approvals can be obtained or that other conditions precedent to the merger can
or will be satisfied. Regions and LCB Corporation anticipate that all
conditions to consummation of the merger will be satisfied so that the merger
can be consummated during the fourth quarter of 1999. However, delays in the
consummation of the merger could occur.
The Board of Directors of either Regions or LCB Corporation generally may
terminate the merger agreement if the merger is not consummated by March 31,
2000, unless the failure to consummate by that date is the result of a breach
of the merger agreement by the party seeking termination. See "-Conditions to
Consummation of the Merger" and "-Waiver, Amendment, and Termination of the
Agreement" at page __.
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the effective time of the merger, Regions will cause an
exchange agent selected by Regions to mail to the former LCB Corporation
stockholders a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of LCB
Corporation common stock for certificates representing shares of Regions common
stock.
LCB CORPORATION STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon surrender to
the Exchange Agent of certificates for LCB Corporation common stock, together
with a properly completed letter of transmittal, there will be issued and
mailed to each holder of LCB Corporation common stock surrendering such items a
certificate or certificates representing the number of shares of Regions common
stock to which such holder is entitled, if any, and a check for the amount to
be paid instead of any fractional share interest, without interest. After the
effective time of the merger, to the extent permitted by law, LCB Corporation
stockholders of record as of the effective time will be entitled to vote at any
meeting of holders of Regions common stock
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the number of whole shares of Regions common stock into which their LCB
Corporation common stock has been converted, regardless of whether such
stockholders have surrendered their LCB Corporation common stock certificates.
No dividend or other distribution payable after the effective time of the
merger with respect to Regions common stock, however, will be paid to the
holder of any unsurrendered LCB Corporation certificate until the holder duly
surrenders such certificate. Upon such surrender, all undelivered dividends and
other distributions and, if applicable, a check for the amount to be paid
instead of any fractional share interest will be delivered to such stockholder,
in each case without interest.
After the effective time of the merger, a LCB Corporation stockholder will
be unable to transfer shares of LCB Corporation common stock. If certificates
representing shares of LCB Corporation common stock are presented for transfer
after the effective time of the merger, they will be canceled and exchanged for
the shares of Regions common stock and a check for the amount due instead of
fractional shares, if any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the merger is subject to a number of conditions,
including, but not limited to:
- - approval from the Board of Governors of the Federal Reserve System and the
expiration of all applicable waiting periods associated with such
approval, without any conditions or restrictions (excluding requirements
relating to the raising of additional capital or the disposition of assets
or deposits) that would, in the reasonable good faith judgment of Regions'
Board of Directors, so materially adversely impact the economic or
business benefits of the transactions contemplated by the merger agreement
that consummation of the merger would not be advisable;
- - the approval by the holders of the requisite number of shares of LCB
Corporation common stock;
- - the absence of any action by any court or governmental authority
restricting, prohibiting, or making illegal the completion of the merger
and the other transactions contemplated by the merger agreement;
- - the receipt of a satisfactory opinion of counsel that the merger qualifies
for federal income tax treatment as a reorganization under Section 368(a)
of the Code, with the effects described under "-Federal Income Tax
Consequences of the Merger" at page 24, including, among others, that the
exchange of LCB Corporation common stock for Regions common stock will not
give rise to recognition of gain or loss to LCB Corporation stockholders,
except to the extent of any cash received; and
- - filing with the NASD notification for listing of additional shares on the
Nasdaq National Market for the shares of Regions common stock to be issued
in the merger.
Completion of the merger also is subject to the satisfaction or waiver of
various other conditions specified in the agreement and plan of merger which
are customary in transactions of this nature, including, among others: (1) the
delivery by Regions and LCB Corporation of opinions of their respective counsel
and certificates executed by their respective duly authorized officers as to
the satisfaction of certain conditions and obligations set forth in the
agreement and plan of merger, (2) as of the effective time of the merger, the
accuracy of certain representations and warranties and the compliance in all
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material respects with the agreements and covenants of each party, and (3) the
receipt by LCB Corporation and Regions of all other consents necessary to
complete the merger or to prevent any material default under any contract or
permit.
REGULATORY APPROVALS
The merger may not proceed in the absence of receipt of the requisite
regulatory approvals. There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals. It is also possible
that any such approval may be accompanied by a conditional requirement which
causes such approvals to fail to satisfy the conditions set forth in the
agreement and plan of merger. Applications for the approvals described below
have been submitted to the appropriate regulatory agencies.
Regions and LCB Corporation are not aware of any material governmental
approvals or actions that are required for consummation of the merger, except
as described below. Should any other approval or action be required, it
presently is contemplated that such approval or action would be sought.
The merger requires the prior approval of the Federal Reserve Board,
pursuant to Section 3 of the Bank Holding Company Act of 1956. In granting its
approval under Section 3 of the Bank Holding Company Act, the Federal Reserve
Board must take into consideration, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. The relevant statutes
prohibit the Federal Reserve Board from approving the merger (1) if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or attempt to monopolize the business of banking in any part of the
United States or (2) if its effect in any section of the country may be to
substantially lessen competition or to tend to create a monopoly, or if it
would be a restraint of trade in any other manner, unless the Federal Reserve
Board finds that any anticompetitive effects are clearly outweighed by the
public interest and the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. Under the Bank Holding
Company Act, the merger may not be consummated until the 30th day following the
date of Federal Reserve Board approval, which may be shortened by the Federal
Reserve Board to the 15th day, during which time the United States Department
of Justice may challenge the transaction on antitrust grounds. The commencement
of any antitrust action would stay the effectiveness of the Federal Reserve
Board's approval, unless a court specifically orders otherwise.
The merger also is subject to review of the Tennessee Commissioner of
Financial Institutions.
WAIVER, AMENDMENT, AND TERMINATION OF THE MERGER AGREEMENT
Prior to the effective time of the merger, and to the extent permitted by
law, any provision of the agreement and plan of merger generally may be (1)
waived by the party benefitted by the provision or (2) amended by a written
agreement between Regions and LCB Corporation upon approval of their respective
Boards of Directors; provided, however, that after approval by the LCB
Corporation stockholders, no amendment that pursuant to the Tennessee Business
Corporation Act requires further approval of the LCB Corporation stockholders,
including decreasing the consideration to be received by LCB Corporation
stockholders, may be made without the further approval of such stockholders.
The agreement and plan of merger may be terminated, and the merger
abandoned, at any time prior to the effective time of the merger, either before
or after approval by LCB Corporation stockholders, under certain circumstances,
including:
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- - by mutual consent of the Boards of Directors of Regions and LCB
Corporation;
- - by the Board of Directors of either party upon final denial of any
required consent of any regulatory authority, if such denial is
nonappealable or was not appealed within the time limit for appeal;
- - by the Board of Directors of either party, if the holders of the requisite
number of shares of LCB Corporation common stock shall not have approved
the merger;
- - by the Board of Directors of either party (provided the terminating party
is not in material breach of any representation, warranty, covenant, or
agreement included in the merger agreement), in the event of any inaccuracy
in any representation or warranty by the other party which meets certain
standards specified in the agreement and plan of merger and cannot be or
has not been cured within 30 days after the giving of written notice to the
breaching party;
- - by the Board of Directors of either party (provided the terminating party
is not in material breach of any representation or warranty included in
the merger agreement), in the event of a breach by the other party of any
covenant or agreement included in the agreement and plan of merger that
cannot be cured within 30 days after giving notice to the breaching party;
and
- - by the Board of Directors of either party if the merger shall not have
been consummated by March 31, 2000, but only if the failure to consummate
the merger by such date has not been caused by the terminating party's
breach of the agreement and plan of merger.
If the agreement and plan of merger is terminated, the parties will have
no further obligations, except with respect to certain provisions, including
those providing for payment of expenses and restricting disclosure of
confidential information. Further, termination generally will not relieve the
parties from the consequences of any uncured willful breach of the agreement
and plan of merger giving rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of LCB Corporation and Regions generally has agreed to operate its
business only in the usual, regular, and ordinary course, and to preserve
intact its business organizations and assets and maintain its rights and
franchises. Each has also agreed to take no action which would materially
adversely affect the ability of either party to obtain any consents required
for the merger or to perform its covenants and agreements under the agreement
and plan of merger and to complete the merger. However, Regions and its
subsidiaries are not prevented from discontinuing or disposing of any of its
assets or business. Nor is Regions prevented from acquiring or agreeing to
acquire any other entity or any assets thereof, if such action is, in the
judgment of Regions, desirable in the conduct of the business of Regions and
its subsidiaries.
LCB Corporation. In addition, LCB Corporation has agreed not to take
certain actions relating to the operation of its business and the business of
its subsidiaries before the merger is completed without the prior written
consent of Regions, which Regions has agreed shall not be unreasonably
withheld. The actions LCB Corporation has agreed not to take and to cause its
subsidiaries not to take are in the general categories of:
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- - amending its charter, bylaws, or other governing instruments;
- - incurring indebtedness;
- - acquiring any of its outstanding shares or making distributions in respect
to its outstanding shares, except for regular dividends computed at an
annual rate of $18.00 per share of LCB common stock;
- - issuing additional securities;
- - reclassifying capital stock or selling or encumbering assets;
- - acquiring or investing in other entities;
- - increasing employees' salaries and benefits or accelerating the vesting of
any stock-based compensation or employee benefits;
- - selling, leasing, disposing of or encumbering any of its assets including
the capital stock of its subsidiaries, loans and real estate;
- - entering into or amending employment contracts;
- - adopting employee benefit plans or amending existing plans;
- - changing accounting methods or practices;
- - commencing or settling litigation; or
- - entering into, modifying, amending, or terminating material contracts
except in the ordinary course of business.
The specific agreements not to take certain actions of such character,
including the exceptions and contractually permitted actions, are set forth in
the merger agreement, which is attached as Appendix A. See Article 7 of the
agreement and plan of merger.
In addition, LCB Corporation has agreed not to solicit, directly or
indirectly, any acquisition proposal from any other person or entity. LCB
Corporation also has agreed not to negotiate with respect to any such proposal,
provide nonpublic information to any party making such a proposal, or enter
into any agreement with respect to any such proposal, except in compliance with
the fiduciary obligations of its Board of Directors. In addition, LCB
Corporation has agreed to use reasonable efforts to cause its advisors and
other representatives not to engage in any of the foregoing activities.
MANAGEMENT FOLLOWING THE MERGER
Upon consummation of the merger, the present officers and directors of
Regions will retain their respective positions with Regions. Information
pertaining to the directors and executive officers of
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Regions, executive compensation, certain relationships and related
transactions, and other related matters is included in Regions' Annual Report
on Form 10-K for the year ended December 31, 1998, incorporated herein by
reference. See "Where You Can Find More Information" at page 74.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The merger agreement generally provides that Regions will indemnify and
hold harmless each person entitled to indemnification from LCB Corporation or
any of its subsidiaries to the full extent permitted by Tennessee law and by
LCB Corporation's charter or bylaws as in effect on the date of the merger
agreement, and that such rights will continue in full force and effect for six
years from the effective time of the merger with respect to matters occurring
at or prior to the effective time.
The merger agreement also provides that, after the effective time of the
merger, Regions will provide generally to officers and employees of LCB
Corporation and its subsidiaries who, at or after the effective time, become
officers or employees of Regions or its subsidiaries, employee benefits under
employee benefit plans (other than stock option or other plans involving the
potential issuance of Regions common stock) on terms and conditions that, taken
as a whole, are substantially similar to those currently provided by Regions
and its subsidiaries to their similarly situated officers and employees. For
purposes of participation and vesting (but not benefit accrual) under such
employee benefit plans, service with LCB Corporation or its subsidiaries prior
to the effective time of the merger will be treated as service with Regions or
its subsidiaries. The merger agreement further provides that Regions will cause
LCB Corporation to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between LCB Corporation
or its subsidiaries and any current or former director, officer, or employee,
and all provisions for vested amounts earned or accrued through the effective
time of the merger under LCB Corporation's benefit plans.
As of the record date, directors and executive officers of LCB Corporation
owned no shares of Regions common stock.
DISSENTING STOCKHOLDERS
According to the provisions of Chapter 23 of the Tennessee Business
Corporation Act, if the merger is completed, any holder of LCB Corporation
common stock who (1) gives to LCB Corporation, prior to the vote at the special
meeting with respect to the approval of the merger agreement, written notice of
such stockholder's intent to demand payment for such stockholder's shares, and
(2) does not vote in favor thereof, shall be entitled to receive, upon
compliance with the statutory requirements summarized below, the fair value of
such stockholder's shares as of the Effective Date, excluding any appreciation
or depreciation in anticipation of the merger.
A stockholder of record may assert dissenters' rights as to fewer than all
the shares registered in such stockholder's name only if the stockholder
dissents with respect to all shares beneficially owned by any one beneficial
stockholder and such stockholder notifies LCB Corporation in writing of the
name and address of each person on whose behalf the stockholder asserts
dissenters' rights. The rights of a partial dissenter are determined as if the
shares as to which the stockholder dissents and such holder's other shares were
registered in the names of different stockholders. A beneficial stockholder may
assert dissenters' rights as to shares held on his behalf only if he dissents
with respect to all shares of which he is the beneficial stockholder or over
which he has power to direct the vote. A beneficial stockholder
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asserting dissenters' rights to shares held on such stockholder's behalf shall
notify LCB Corporation in writing of the name and address of the record
stockholder of the shares, if known.
The written notice requirement referred to above will not be satisfied
under the Tennessee statutory provisions by merely voting against approval of
the merger agreement by proxy or in person at the special meeting. In addition
to not voting in favor of the merger agreement, a stockholder wishing to
preserve the right to dissent and seek appraisal must give a separate written
notice of such stockholder's intent to demand payment for such stockholder's
shares if the merger is effected, as hereinabove provided.
Any written notice of intent to demand payment pursuant to Chapter 23 of
the Tennessee Business Corporation Act should be addressed as follows: LCB
Corporation, 302 East College Street, Fayetteville, Tennessee, 37334,
Attention: Corporate Secretary.
If the merger is authorized at the special meeting, LCB Corporation must
deliver a written dissenters' notice to all holders of LCB Corporation common
stock who satisfied the foregoing requirements. The dissenters' notice must be
sent within ten days after the effective date and must (1) state where the
demand for payment must be sent and where certificates for shares of LCB
Corporation common stock must be deposited, (2) inform holders of
uncertificated shares to what extent transfer of these shares will be
restricted after the demand for payment is received, (3) supply a form for
demanding payment that includes the date of the first announcement to news
media or to stockholders of the terms of the merger and requires that the
person asserting dissenters' rights certify whether or not such person, or if a
nominee asserting dissenters' rights on behalf of a beneficial stockholder, the
beneficial stockholder acquired beneficial ownership of the shares before that
date, (4) set a date by which LCB Corporation must receive the demand for
payment (which date may not be less than one month nor more than two months
after the dissenters' notice is delivered), and (5) be accompanied by a copy of
Chapter 23 of the Tennessee Business Corporation Act if not previously
provided.
A stockholder of record who receives the dissenters' notice must demand
payment, certify whether such holder (or the beneficial stockholder on whose
behalf such holder is asserting dissenters' rights) acquired beneficial
ownership of the shares before the date set forth in the dissenters' notice,
and deposit such holder's certificates in accordance with the dissenters'
notice. Such stockholder will retain all other rights of a stockholder until
those rights are canceled or modified by the consummation of the merger. A
stockholder who does not comply substantially with the requirements that such
holder demand payment and deposit such holder's share certificates where
required, each by the date set in the dissenters' notice, is not entitled to
payment for such stockholders' shares under Chapter 23. A demand for payment
may not be withdrawn unless the surviving corporation consents to the
withdrawal.
Except as described below, as soon as the merger is completed, or upon
receipt of a payment demand, the surviving corporation resulting from the
merger must pay to each dissenting stockholder who complied with the payment
demand and deposit requirements described above the amount the surviving
corporation estimates to be the fair value of such stockholder's shares, plus
accrued interest from the effective date. Such payment must be accompanied by
(1) certain recent LCB Corporation financial statements, (2) the surviving
corporation's estimate of the fair value of the shares and an explanation how
the fair value was calculated, (3) an explanation of how the interest was
calculated, (4) a statement of the dissenter's right to demand additional
payment under Section 48-23-209 of the Tennessee Business Corporation Act, and
(5) a copy of Chapter 23 of the Tennessee Business Corporation Act if not
previously provided.
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The surviving corporation may elect to withhold such payment from a
dissenter as to any shares of which such dissenter (or the beneficial owner on
whose behalf such dissenter is asserting dissenters' rights) was not the
beneficial owner on the date set forth in the dissenters' notice as the date of
the first announcement to news media or to stockholders of the terms of the
proposed merger, unless the beneficial ownership of the shares devolved upon
him by operation of law from a person who was the beneficial owner on the date
of the first announcement. To the extent the surviving corporation elects to
withhold payment, it shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to accept it
in full satisfaction of such dissenter's demand. The surviving corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the fair value and interest were calculated, and
a statement of the dissenter's right to demand additional payment under Section
48-23-209.
Section 48-23-209 of the Tennessee Business Corporation Act provides that
a dissenting stockholder may notify the surviving corporation in writing of
such stockholder's own estimate of the fair value of such stockholder's shares
and the interest due, and may demand payment of such stockholder's estimate
(less any payment already received), if (1) such stockholder believes that the
amount offered by the surviving corporation is less than the fair value of such
stockholder's shares or that the interest due has been calculated incorrectly,
(2) the surviving corporation fails to make payment under Section 48-23-206 or
to offer payment under Section 48-23-208 within two months after the date set
for demanding payment; or (3) the corporation has failed to effect the merger
and does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within two months after the date
set for demanding payment. A dissenting stockholder waives the right to demand
payment under Section 48-23-209 unless such stockholder notifies the surviving
corporation in writing within one month after the surviving corporation makes
or offers payment for the shares.
If a demand for payment under Section 48-23-209 remains unsettled, the
surviving corporation must commence a proceeding in the Circuit Court of
Lincoln County, Tennessee, within two months after receiving the demand for
additional payment and must petition the court to determine the fair value of
the shares and accrued interest. If the surviving corporation does not commence
the proceeding within those two months, it is required to pay each dissenting
stockholder whose demand remains unsettled the amount demanded. The surviving
corporation is required to make all dissenting stockholders whose demands
remain unsettled parties to the proceeding and to serve a copy of the petition
upon all such parties. The court may appoint appraisers to receive evidence and
to recommend a decision on fair value. Each dissenter made a party to the
proceeding is entitled to judgment for the amount, if any, by which the court
finds the fair value of such dissenter's shares, plus interest, exceeds the
amount paid by the surviving corporation.
The court in an appraisal proceeding commenced under these provisions must
determine the costs of the proceeding, excluding fees and expenses of attorneys
and experts for the respective parties, and must assess those costs against the
surviving corporation, except that the court may assess the costs against all
or some of the dissenting stockholders to the extent the court finds they acted
arbitrarily, vexatiously, or not in good faith in demanding payment under
Section 48-23-209. The court also may assess the fees and expenses of attorneys
and experts for the respective parties against the surviving corporation if the
court finds the surviving corporation did not substantially comply with the
requirements of specified provisions of Chapter 23 of the Tennessee Business
Corporation Act, or against either the surviving corporation or a dissenting
stockholder if the court finds that such party acted arbitrarily, vexatiously,
or not in good faith with respect to the rights provided by Chapter 23 of the
Tennessee Business Corporation Act.
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If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the surviving corporation,
the court may award to these counsel reasonable fees to be paid out of the
amounts awarded the dissenters who were benefitted.
In a proceeding commenced by dissenters to enforce the liability under
Section 48-23-301(a) of a corporation that has failed to commence an appraisal
proceeding within the sixty-day period, the court shall assess the costs of the
proceeding and the fees and expenses of dissenters' counsel against the
surviving corporation and in favor of the dissenters.
The foregoing is a summary of the material rights of a dissenting
stockholder of LCB Corporation, but is qualified in its entirety by reference
to Chapter 23 of the Tennessee Business Corporation Act, included in Appendix B
to this Proxy Statement-Prospectus. It is not intended to give any right of
dissent or payment to any stockholder and should not be so read. Stockholders'
rights of dissent and payment are limited to those provided by law. Any LCB
Corporation stockholder who intends to exercise the right to dissent from
consummation of the merger should carefully review the text of such provisions
and should also consult with such holder's attorney. No further notice of the
events giving rise to dissenters' rights or any steps associated therewith will
be furnished to LCB Corporation stockholders, except as indicated above or
otherwise required by law.
Any dissenting LCB Corporation stockholder who perfects such holder's
right to be paid the value of such holder's shares will recognize taxable gain
or loss upon receipt of cash for such shares for federal income tax purposes.
See "-Federal Income Tax Consequences of the Merger."
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
THE FOLLOWING IS A DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO HOLDERS OF LCB CORPORATION COMMON STOCK. THIS
DISCUSSION DOES NOT ADDRESS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE
RELEVANT TO A STOCKHOLDER IN LIGHT OF THE STOCKHOLDER'S PARTICULAR
CIRCUMSTANCES OR TO THOSE LCB CORPORATION STOCKHOLDERS SUBJECT TO SPECIAL
RULES, SUCH AS STOCKHOLDERS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES, THOSE WHO RECEIVED THEIR LCB CORPORATION COMMON STOCK AS COMPENSATION,
THOSE WHO HOLD LCB CORPORATION COMMON STOCK AS PART OF A "STRADDLE" OR
"CONVERSION TRANSACTION," THOSE WHO DO NOT HOLD THEIR LCB CORPORATION COMMON
STOCK AS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 1221 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED, OR THOSE STOCKHOLDERS WHO ARE TAX EXEMPT
ENTITIES, INSURANCE COMPANIES, SECURITIES DEALERS, OR FINANCIAL INSTITUTIONS.
THIS DISCUSSION ALSO DOES NOT ADDRESS ANY ASPECTS OF STATE, LOCAL, OR FOREIGN
TAXATION. THIS DISCUSSION IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS
NOW IN EFFECT, ALL OF WHICH ARE SUBJECT TO CHANGE (POSSIBLY WITH RETROACTIVE
EFFECT) BY LEGISLATION, ADMINISTRATIVE ACTION, OR JUDICIAL DECISION. NO RULING
HAS BEEN OR WILL BE REQUESTED FROM THE INTERNAL REVENUE SERVICE ON ANY MATTER
RELATING TO THE TAX CONSEQUENCES OF THE MERGER.
Consummation of the merger is conditioned upon receipt by Regions and LCB
Corporation of an opinion from Alston & Bird LLP, special counsel to Regions,
concerning the material federal income tax consequences of the merger. Based
upon the assumption that the merger is consummated in accordance with the
agreement and plan of merger and upon factual statements and factual
representations made by Regions and LCB Corporation, it is such firm's opinion
that:
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1. The merger will constitute a reorganization within the meaning of
Section 368(a) of the Code, and LCB Corporation and Regions will each be "a
party to a reorganization" within the meaning of Section 368(b) of the Internal
Revenue Code.
2. No gain or loss will be recognized by holders of LCB Corporation common
stock upon the exchange in the merger of all of their LCB Corporation common
stock solely for shares of Regions common stock (except with respect to any
cash received in lieu of fractional share interests in Regions common stock).
3. The aggregate tax basis of the Regions common stock received by the LCB
Corporation stockholders in the merger will, in each instance, be the same as
the aggregate tax basis of the LCB Corporation common stock surrendered in
exchange therefor, less the basis of any fractional share of Regions common
stock settled by cash payment.
4. The holding period of the Regions common stock received by the LCB
Corporation stockholders in the merger will, in each instance, include the
holding period of the LCB Corporation common stock surrendered in exchange
therefor, provided that such LCB Corporation common stock is held as a capital
asset at the effective time of the merger.
5. The payment of cash to LCB Corporation stockholders in lieu of
fractional share interests of Regions common stock will be treated for federal
income tax purposes as if the fractional shares were distributed as part of the
exchange and then were redeemed by Regions. These cash payments will be treated
as having been received as distributions in full payment in exchange for the
stock redeemed, as provided in Section 302(a) of the Internal Revenue Code.
6. Where solely cash is received by a LCB Corporation stockholder in
exchange for LCB Corporation common stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of such holder's LCB Corporation common stock, subject to the
provisions and limitations of Section 302 of the Internal Revenue Code.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN, OR OTHER TAX
CONSEQUENCES OF THE MERGER. LCB CORPORATION STOCKHOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED
TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX REPORTING REQUIREMENTS AND TAX
CONSEQUENCES UNDER STATE, LOCAL, AND FOREIGN LAW.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a "purchase,"
as that term is used pursuant to generally accepted accounting principles, for
accounting and financial reporting purposes. Under the purchase method of
accounting, the assets and liabilities of LCB Corporation as of the effective
time of the merger will be recorded at their estimated respective fair values
and added to those of Regions. Financial statements of Regions issued after the
effective time will reflect such values and will not be restated retroactively
to reflect the historical financial position or results of operations of LCB
Corporation.
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EXPENSES AND FEES
The merger agreement provides, in general, that each of the parties will
bear and pay its own expenses in connection with the transactions contemplated
by the merger agreement, including fees and expenses of its own financial or
other consultants, investment bankers, accountants, and counsel, except that
Regions will bear and pay the filing fees and one-half of the printing costs in
connection with the registration statement and this Proxy Statement-Prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions common stock to be issued to LCB Corporation stockholders in
the merger has been registered under the Securities Act of 1933, but that
registration does not cover resales of those shares by persons who control, are
controlled by, or are under common control with, LCB Corporation (such persons
are referred to hereinafter as "affiliates" and generally include executive
officers, directors, and 10% stockholders) at the time of the Special Meeting.
Affiliates may not sell shares of Regions common stock acquired in connection
with the merger, except pursuant to an effective registration statement under
the Securities Act or in compliance with Rule 145 promulgated under the
Securities Act or in accordance with a legal opinion satisfactory to Regions
that such sale or transfer is otherwise exempt from the Securities Act
registration requirements.
Rule 145 promulgated under the Securities Act restricts the sale of
Regions common stock received in the merger by affiliates and certain of their
family members and related interests. Under the rule, during the one-year
period following the effective time of the merger, affiliates of LCB
Corporation may resell publicly the Regions common stock received by them in
the merger subject to certain limitations as to the amount of Regions common
stock sold in any three-month period and as to the manner of sale, and subject
to the timeliness of Regions' periodic reporting obligations with the
Securities and Exchange Commission. After the one-year period and within two
years following the effective time of the merger, affiliates of LCB Corporation
who are not affiliates of Regions may effect such resales subject only to the
timeliness of Regions' periodic reporting requirements. After two years, such
affiliates of LCB Corporation who are not affiliates of Regions may resell
their shares without restriction. Persons who are affiliates of Regions after
the effective time of the merger may publicly resell the Regions common stock
received by them in the merger subject to similar limitations and subject to
certain filing requirements specified in SEC Rule 144. Affiliates will receive
additional information regarding the effect of Rule 145 on their ability to
resell Regions common stock received in the merger. Affiliates also would be
permitted to resell Regions common stock received in the merger pursuant to an
effective registration statement under the Securities Act or an available
exemption from the Securities Act registration requirements. This Proxy
Statement-Prospectus does not cover any resales of Regions common stock
received by persons who may be deemed to be affiliates of LCB Corporation or
Regions.
Each person who LCB Corporation reasonably believes will be an affiliate
of LCB Corporation has delivered to Regions a written agreement providing that
such person generally will not sell, pledge, transfer, or otherwise dispose of
any Regions common stock to be received by such person upon consummation of the
merger, except in compliance with the Securities Act and the rules and
regulations promulgated thereunder.
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EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the merger, holders of LCB Corporation common stock will be
exchanging their shares of a Tennessee corporation governed by the Tennessee
Business Corporation Act and LCB Corporation's charter, as amended, and bylaws,
for shares of Regions, a Delaware corporation governed by the Delaware General
Corporation Law and Regions' certificate of incorporation and bylaws. Certain
significant differences exist between the rights of LCB Corporation
stockholders and those of Regions stockholders. The material differences are
summarized below. In particular, Regions' certificate of incorporation and
bylaws contain several provisions that under certain circumstances may have an
antitakeover effect in that they could impede or prevent an acquisition of
Regions unless the potential acquirer has obtained the approval of Regions'
Board of Directors. The following discussion is necessarily general; it is not
intended to be a complete statement of all differences affecting the rights of
stockholders and their respective entities, and it is qualified in its entirety
by reference to the Tennessee Business Corporation Act and the Delaware General
Corporation Law as well as to Regions' certificate of incorporation and bylaws
and LCB Corporation's charter and bylaws.
ANTITAKEOVER PROVISIONS GENERALLY
We refer to the provisions of Regions' certificate of incorporation and
bylaws described below under the headings, "-Authorized Capital Stock,"
"-Amendment of Certificate or Articles of Incorporation and Bylaws,"
"-Classified Board of Directors and Absence of Cumulative Voting," "-Removal of
Directors," "-Limitations on Director Liability," "-Special Meetings of
Stockholders," "-Actions by Stockholders Without a Meeting," "-Stockholder
Nominations," and "-Mergers, Consolidations, and Sales of Assets Generally,"
and the provisions of the Delaware General Corporation Law described under the
heading "-Business Combinations With Certain Persons," as protective
provisions. In general, one purpose of the protective provisions is to assist
Regions' Board of Directors in playing a role in connection with attempts to
acquire control of Regions, so that the Board can advance and protect the
interests of Regions and its stockholders as appropriate under the
circumstances, including, if the Board determines that a sale of control is in
their best interests, by enhancing the Board's ability to maximize the value to
be received by the stockholders upon such a sale.
Although Regions' management believes the protective provisions are,
therefore, beneficial to Regions' stockholders, the protective provisions also
may tend to discourage some takeover bids. As a result, Regions' stockholders
may be deprived of opportunities to sell some or all of their shares at prices
that represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the protective provisions discourage
undesirable proposals, Regions may be able to avoid those expenditures of time
and money.
The protective provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of Regions
common stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the protective
provisions may decrease the market price of Regions common stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The protective provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the Board of Directors and
management. Furthermore, the protective provisions may make it more difficult
for Regions' stockholders to replace the Board of Directors or management, even
if a majority of the stockholders believes such replacement is in the best
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<PAGE> 34
interests of Regions. As a result, the protective provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
Regions. Regions' certificate of incorporation authorizes the issuance of
up to 500,000,000 shares of Regions common stock and 5,000,000 shares of
preferred stock. At September 30, 1999, 224,170,794 shares of Regions common
stock were issued, including 4,882,066 treasury shares, and 219,288,728 shares
were outstanding. Regions' Board of Directors may authorize the issuance of
additional shares of Regions common stock or preferred stock without further
action by Regions' stockholders, unless such action is required in a particular
case by applicable laws or regulations or by any stock exchange upon which
Regions' capital stock may be listed. Regions' certificate of incorporation
does not provide preemptive rights to Regions stockholders.
The authority to issue additional shares of Regions capital stock provides
Regions with the flexibility necessary to meet its future needs without the
delay resulting from seeking stockholder approval. The authorized but unissued
shares of Regions common stock will be issuable from time to time for any
corporate purpose, including, without limitation, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. Such shares could be used
to dilute the stock ownership of persons seeking to obtain control of Regions.
In addition, the sale of a substantial number of shares of Regions common stock
to persons who have an understanding with Regions concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of Regions
common stock (or the right to receive Regions common stock) to Regions
stockholders, may have the effect of discouraging or increasing the cost of
unsolicited attempts to acquire control of Regions. Regions has committed not
to issue shares of preferred stock for any anti-takeover purpose, including any
purpose to make a change in control of Regions more costly or difficult.
LCB Corporation. LCB Corporation's charter authorizes the issuance of up
to 100,000 shares of Class A common stock, of which 78,000 shares were issued
and outstanding as of the record date, and 1,000 shares of Class B common
stock, of which no shares are outstanding.
According to the Tennessee Business Corporation Act, LCB Corporation's
Board of Directors may authorize the issuance of additional shares of LCB
Corporation common stock without further action by LCB Corporation's
stockholders. LCB Corporation's charter, as amended, does not provide the
stockholders of LCB Corporation with preemptive rights to purchase or subscribe
to any unissued authorized shares of LCB Corporation common stock or any option
or warrant for the purchase thereof.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware General Corporation Law generally provides that the
approval of a corporation's board of directors and the affirmative vote of a
majority of (1) all shares entitled to vote thereon and (2) the shares of each
class of stock entitled to vote thereon as a class is required to amend a
corporation's certificate of incorporation, unless the certificate specifies a
greater voting requirement. Regions' certificate of incorporation states that
its provisions regarding authorized capital stock, election, classification,
and removal of directors, the approval required for certain business
combinations, meetings of stockholders, and amendment of Regions' certificate
of incorporation and bylaws may be amended or repealed only by the affirmative
vote of the holders of at least 75% of the outstanding shares of Regions common
stock.
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Regions' certificate of incorporation also provides that the Board of
Directors has the power to adopt, amend, or repeal the bylaws. Any action taken
by the stockholders with respect to adopting, amending, or repealing any bylaws
may be taken only upon the affirmative vote of the holders of at least 75% of
the outstanding shares of Regions common stock.
LCB Corporation. The Tennessee Business Corporation Act generally provides
that a Tennessee corporation's charter may be amended by the affirmative vote
of a majority of the shares entitled to vote thereon, unless the charter
provides for a higher or lower voting requirement. LCB Corporation's charter
does not include special provisions relating to amendment of the charter.
The Board of Directors has the power to adopt, amend, or repeal the
bylaws, by majority vote upon 10 days written notice of the proposed amendment.
Under the Tennessee Business Corporation Act, the stockholders have the right
to adopt, amend, or repeal the bylaws.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
Regions. Regions' certificate of incorporation provides that Regions'
Board of Directors is divided into three classes, with each class to be as
nearly equal in number as possible. The directors in each class serve
three-year terms of office.
The effect of Regions having a classified Board of Directors is that only
approximately one-third of the members of the Board are elected each year;
consequently, two annual meetings are effectively required for Regions'
stockholders to change a majority of the members of the Board.
Pursuant to Regions' certificate of incorporation, each stockholder
generally is entitled to one vote for each share of Regions stock held and is
not entitled to cumulative voting rights in the election of directors. With
cumulative voting, a stockholder has the right to cast a number of votes equal
to the total number of such holder's shares multiplied by the number of
directors to be elected. The stockholder has the right to cast all of such
holder's votes in favor of one candidate or to distribute such holder's votes
in any manner among any number of candidates. Directors are elected by a
plurality of the total votes cast by all stockholders. With cumulative voting,
it may be possible for minority stockholders to obtain representation on the
Board of Directors. Without cumulative voting, the holders of more than 50% of
the shares of Regions common stock generally have the ability to elect 100% of
the directors. As a result, the holders of the remaining Regions common stock
effectively may not be able to elect any person to the Board of Directors. The
absence of cumulative voting, therefore, could make it more difficult for a
stockholder who acquires less than a majority of the shares of Regions common
stock to obtain representation on Regions' Board of Directors.
LCB Corporation. LCB Corporation's charter does not provide for a
classified board of directors. Holders of LCB Corporation common stock are not
afforded cumulative voting rights.
REMOVAL OF DIRECTORS
Regions. Under Regions' certificate of incorporation, any director or the
entire Board of Directors may be removed only for cause and only by the
affirmative vote of the holders of at least 75% of Regions' voting stock.
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LCB Corporation. According to the Tennessee Business Corporation Act and
LCB Corporation's charter, one or more of the directors may be removed by the
stockholders with or without cause. Removal may be effected only at a meeting
of stockholders of which notice of the purpose has been given, and requires
that the number of votes cast for removal exceeds the number of votes cast
against removal.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. Regions' certificate of incorporation provides that a director of
Regions will have no personal liability to Regions or its stockholders for
monetary damages for breach of fiduciary duty as a director, except for
liability for (1) any breach of the director's duty of loyalty to the
corporation or its stockholders, (2) acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (3) the
payment of certain unlawful dividends and the making of certain unlawful stock
purchases or redemptions, or (4) any transaction from which the director
derived an improper personal benefit.
Although this provision does not affect the availability of injunctive or
other equitable relief as a remedy for a breach of duty by a director, it does
limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the
likelihood of stockholder derivative litigation against directors and may
discourage or deter stockholders or management from bringing a lawsuit against
directors for breach of their duties, even though such action, if successful,
might have benefited Regions and its stockholders. The SEC has taken the
position that similar provisions added to other corporations' certificates of
incorporation would not protect those corporations' directors from liability
for violations of the federal securities laws.
LCB Corporation. The Tennessee Business Corporation Act limits a
director's liability in substantially the same manner and with substantially
the same effect as in the case of Regions.
INDEMNIFICATION
Regions. Regions' certificate of incorporation provides that Regions will
indemnify its officers, directors, employees, and agents to the full extent
permitted by the Delaware General Corporation Law. Under Section 145 of the
Delaware General Corporation Law as currently in effect, other than in actions
brought by or in the right of Regions, such indemnification would apply if it
were determined in the specific case that the proposed indemnitee acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of Regions and, with respect to any criminal proceeding,
if such person had no reasonable cause to believe that the conduct was
unlawful. In actions brought by or in the right of Regions, such
indemnification probably would be limited to reasonable expenses (including
attorneys' fees) and would apply if it were determined in the specific case
that the proposed indemnitee acted in good faith and in a manner such person
reasonably believed to be in or not opposed to the best interests of Regions,
except that no indemnification may be made with respect to any matter as to
which such person is adjudged liable to Regions, unless, and only to the extent
that, the court determines upon application that, in view of all the
circumstances of the case, the proposed indemnitee is fairly and reasonably
entitled to indemnification for such expenses as the court deems proper. To the
extent that any director, officer, employee, or agent of Regions has been
successful on the merits or otherwise in defense of any action, suit, or
proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
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LCB Corporation. The Tennessee Business Corporation Act and LCB
Corporation's bylaws provide for indemnification of its directors, officers,
employees, and agents in substantially the same manner and with substantially
the same effect as in the case of Regions.
SPECIAL MEETINGS OF STOCKHOLDERS
Regions. Regions' certificate of incorporation and bylaws provide that
special meetings of stockholders may be called at any time, but only by the
chief executive officer, the secretary, or the Board of Directors of Regions.
Regions stockholders do not have the right to call a special meeting or to
require that Regions' Board of Directors call such a meeting. This provision,
combined with other provisions of the Certificate and the restriction on the
removal of directors, would prevent a substantial stockholder from compelling
stockholder consideration of any proposal (such as a proposal for a business
combination) over the opposition of Regions' Board of Directors by calling a
special meeting of stockholders at which such stockholder could replace the
entire Board with nominees who were in favor of such proposal.
LCB Corporation. Under LCB Corporation's bylaws, a special meeting of LCB
Corporation stockholders may be called by the board of directors or by any
three or more stockholders who hold in the aggregate 25% or more of the
outstanding shares of LCB Corporation common stock.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. Regions' certificate of incorporation provides that any action
required or permitted to be taken by Regions stockholders must be effected at a
duly called meeting of stockholders and may not be effected by any written
consent by the stockholders. These provisions would prevent stockholders from
taking action, including action on a business combination, except at an annual
meeting or special meeting called by the Board of Directors, chief executive
officer, or secretary, even if a majority of the stockholders were in favor of
such action.
LCB Corporation. Under the Tennessee Business Corporation Act and LCB
Corporation's bylaws, any action requiring or permitting stockholder approval
may be approved by written consent of stockholders holding all of the shares of
LCB Corporation common stock outstanding.
STOCKHOLDER NOMINATIONS
Regions. Regions' certificate of incorporation and bylaws provide that any
nomination by stockholders of individuals for election to the Board of
Directors must be made by delivering written notice of such nomination to the
Secretary of Regions not less than 14 days nor more than 50 days before any
meeting of the stockholders called for the election of directors; provided,
however, that if less than 21 days notice of the meeting is given to
stockholders, the nomination notice must be delivered to the Secretary of
Regions not later than the seventh day following the day on which notice of the
meeting was mailed to stockholders. The nomination notice must set forth
certain background information about the persons to be nominated, including
information concerning (1) the name, age, business, and, if known, residential
address of each nominee, (2) the principal occupation or employment of each
such nominee, and (3) the number of shares of Regions capital stock
beneficially owned by each such nominee. The Board of Directors is not required
to nominate in the annual proxy statement any person so proposed; however,
compliance with this procedure would permit a stockholder to nominate the
individual at the
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stockholders' meeting, and any stockholder may vote such holder's shares in
person or by proxy for any individual such holder desires.
LCB Corporation. LCB Corporation's bylaws provide that nominations for
director may be made by the board of directors or by any shareholder. Any
nomination other than on behalf of the existing management of the corporation
must be made in writing not less than 14 nor more than 50 days prior to the
stockholder meeting at which directors are to be elected. The written
nomination must include basic biographical information about the nominee as
specified in the bylaws.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. Regions' certificate of incorporation generally requires the
affirmative vote of the holders of at least 75% of the outstanding voting stock
of Regions to effect (1) any merger or consolidation with or into any other
corporation, or (2) any sale or lease of any substantial part of the assets of
Regions to any party that beneficially owns 5.0% or more of the outstanding
shares of Regions voting stock, unless the transaction was approved by Regions'
Board of Directors before the other party became a 5.0% beneficial owner or is
approved by 75% or more of the Board of Directors after the party becomes such
a 5.0% beneficial owner. In addition, the Delaware General Corporation Law
generally requires the approval of a majority of the outstanding voting stock
of Regions to effect (1) any merger or consolidation with or into any other
corporation, (2) any sale, lease, or exchange of all or substantially all of
Regions property and assets, or (3) the dissolution of Regions. However,
pursuant to the Delaware General Corporation Law, Regions may enter into a
merger transaction without stockholder approval if (1) Regions is the surviving
corporation, (2) the agreement of merger does not amend in any respect Regions'
certificate of incorporation, (3) each share of Regions stock outstanding
immediately prior to the effective date of the merger is to be an identical
outstanding or treasury share of Regions after the effective date of the
merger, and (4) either no shares of Regions common stock and no shares,
securities, or obligations convertible into such stock are to be issued or
delivered under the plan of merger, or the authorized unissued shares or the
treasury shares of Regions common stock to be issued or delivered under the
plan of merger plus those initially issuable upon conversion of any other
shares, securities, or obligations to be issued or delivered under such plan do
not exceed 20% of the shares of Regions common stock outstanding immediately
prior to the effective date of the merger.
LCB Corporation. The Tennessee Business Corporation Act generally requires
approval of a majority of the outstanding shares of a corporation's voting
stock to approve a merger, consolidation, share exchange, sale of all or
substantially all of the corporation's assets, or similar corporate
transaction.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware General Corporation Law places
certain restrictions on "business combinations" (as defined in Section 203 to
include, generally, mergers, sales and leases of assets, issuances of
securities, and similar transactions) by Delaware corporations with an
"interested stockholder" (as defined in Section 203 to include, generally, the
beneficial owner of 15% or more of the corporation's outstanding voting stock).
Section 203 generally applies to Delaware corporations, such as Regions, that
have a class of voting stock listed on a national securities exchange,
authorized for quotation on an interdealer quotation system of a registered
national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
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Regions has not specifically elected to avoid the application of Section
203. As a result, Section 203 generally would prohibit a business combination
by Regions or a subsidiary with an interested stockholder within three years
after the person or entity becomes an interested stockholder, unless (1) prior
to the time when the person or entity becomes an interested stockholder,
Regions' Board of Directors approved either the business combination or the
transaction pursuant to which such person or entity became an interested
stockholder, (2) upon consummation of the transaction in which the person or
entity became an interested stockholder, the interested stockholder held at
least 85% of the outstanding Regions voting stock (excluding shares held by
persons who are both officers and directors and shares held by certain employee
benefit plans), or (3) once the person or entity becomes an interested
stockholder, the business combination is approved by Regions' Board of
Directors and by the holders of at least two-thirds of the outstanding Regions
voting stock, excluding shares owned by the interested stockholder.
LCB Corporation. Although corporations organized under Tennessee law are
generally subject to the Tennessee Business Combination Act, the Tennessee
Control Share Acquisition Act, the Tennessee Investor Protection Act, and the
Tennessee Greenmail Act, these statutes are not applicable to LCB Corporation.
The Tennessee Business Combination Act provides that a party beneficially
owning 10% or more of the voting power of any class or series of then
outstanding shares entitled to vote generally in the election of directors of a
corporation (an "interested shareholder") cannot engage in a business
combination with the corporation for a period of five years following such
interested shareholder's share acquisition date, unless the transaction either
(1) is approved by the holders of at least two-thirds of the voting stock of the
corporation not beneficially owned by such interested shareholder at a meeting
called for such purpose no earlier than five years after such interested
shareholder's share acquisition date or (2) satisfies certain fairness criteria
specified in the Tennessee Business Corporation Act. The Tennessee Business
Combination Act exempts transactions with interested shareholders if the
transaction is approved by the corporation's board of directors prior to the
time when the person became an interested shareholder. The Tennessee Business
Combination Act also exempts transactions under certain other circumstances.
The Tennessee Investor Protection Act imposes certain filing and
disclosure requirements on tender offers and covered share purchases that meet
jurisdictional requirements of the act. However, the Tennessee Investor
Protection Act does not apply to bank holding companies that, like LCB
Corporation, are subject to U.S. federal regulation.
The Tennessee Control Share Acquisition Act (the "TCSAA") generally
restricts voting rights of shares acquired in certain control share
acquisitions. Generally, if a person acquires in one or a series of related
transactions an amount of stock equal to one-fifth or more of all of the voting
power of a Tennessee corporation subject to such provisions in a "control share
acquisition" (as defined in the TCSAA), such shares have only such voting
rights as are accorded them by resolution adopted by the majority of
stockholders of the corporation. The TCSAA defines "control shares" for
purposes of such act and establishes the procedures under which an acquiring
person obtains stockholder action with respect to voting rights of control
shares. LCB Corporation has not elected in its charter to become subject to
this legislation.
The Tennessee Greenmail Act (the "TGA") provides that it is unlawful for
any Tennessee corporation which has a class of voting stock registered or
traded on a national securities exchange or registered with the Commission
pursuant to Section 12(g) of the Exchange Act or any subsidiary of such
corporation to
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purchase, directly or indirectly, any of its shares at a price above the market
value of such shares from any person who holds more than 3% of the class of the
securities to be purchased if such person has held such shares for less than
two years, unless the purchase has been approved by the affirmative vote of a
majority of the outstanding shares of each class of voting stock of the
corporation, or, alternatively, unless the corporation makes an offer of at
least equal value per share to all holders of such class. The TGA does not
apply to purchases of LCB Corporation common stock.
DISSENTERS' RIGHTS
Regions. The rights of dissenting stockholders of Regions are governed by
the Delaware General Corporation Law. Pursuant thereto, except as described
below, any stockholder has the right to dissent from any merger of which
Regions could be a constituent corporation. No appraisal rights are available,
however, for (1) the shares of any class or series of stock that is either
listed on a national securities exchange, quoted on the Nasdaq National Market,
or held of record by more than 2,000 stockholders or (2) any shares of stock of
the constituent corporation surviving a merger if the merger did not require
the approval of the surviving corporation's stockholders, unless, in either
case, the holders of such stock are required by an agreement of merger or
consolidation to accept for that stock something other than: (a) shares of
stock of the corporation surviving or resulting from the merger or
consolidation; (b) shares of stock of any other corporation that will be listed
at the effective date of the merger on a national securities exchange, quoted
on the Nasdaq National Market, or held of record by more than 2,000
stockholders; (c) cash in lieu of fractional shares of stock described in
clause (a) or (b) immediately above; or (d) any combination of the shares of
stock and cash in lieu of fractional shares described in clauses (a) through
(c) immediately above. Because Regions common stock is quoted on the Nasdaq
National Market and is held of record by more than 2,000 stockholders, unless
the exception described immediately above applies, holders of Regions common
stock do not have dissenters' rights.
LCB Corporation. A summary of the pertinent provisions of the Tennessee
Business Corporation Act pertaining to dissenters' rights is set forth under
the caption "The Merger--Dissenting Stockholders" at page 21, and such
provisions are included as Appendix B.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
Regions. The Delaware General Corporation Law provides that a stockholder
may inspect books and records upon written demand under oath stating the
purpose of the inspection, if such purpose is reasonably related to such
person's interest as a stockholder.
LCB Corporation. Pursuant to the Tennessee Business Corporation Act, upon
written notice of a demand to inspect corporate records and demonstration of a
proper purpose, a stockholder is entitled to inspect specified corporate
records, including accounting records, minutes of stockholder meetings and
certain resolutions adopted at director meetings, and stockholder records.
DIVIDENDS
Regions. The Delaware General Corporation Law provides that, subject to
any restrictions in the corporation's certificate of incorporation, dividends
may be declared from the corporation's surplus, or, if there is no surplus,
from its net profits for the fiscal year in which the dividend is declared and
the preceding fiscal year. Dividends may not be declared, however, if the
corporation's capital has been diminished to an amount less than the aggregate
amount of all capital represented by the issued and
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outstanding stock of all classes having a preference upon the distribution of
assets. Substantially all of the funds available for the payment of dividends
by Regions are derived from its subsidiary depository institutions. There are
various statutory limitations on the ability of Regions' subsidiary depository
institutions to pay dividends to Regions. See "Supervision and
Regulation-Payment of Dividends" at page 68.
LCB Corporation. Pursuant to the Tennessee Business Corporation Act, a
board of directors may from time to time make distributions to its
stockholders, subject to restrictions in its charter, provided that no
distribution may be made if, after giving it effect, (1) the corporation would
not be able to pay its debts as they become due in the usual course of
business, or (2) the corporation's total assets would be less than the sum of
its total liabilities plus (unless the charter permits otherwise) the amount
that would be needed, if the corporation were to be dissolved at the time of
the distribution, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those receiving the
distribution.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions common stock is quoted on the Nasdaq National Market under the
symbol "RGBK." LCB Corporation common stock is not traded in any established
market. The following table sets forth, for the indicated periods, the high and
low closing sale prices for Regions common stock as reported on the Nasdaq
National Market and the cash dividends declared per share of Regions and LCB
Corporation common stock. The amounts indicated for Regions have been adjusted
to reflect a 2-for-1 stock split effected by Regions on June 13, 1997. For the
indicated period there have been no transactions in LCB Corporation common
stock of which management is aware.
<TABLE>
<CAPTION>
REGIONS LCB CORPORATION
PRICE RANGE CASH DIVIDENDS CASH DIVIDENDS
----------- DECLARED DECLARED
HIGH LOW PER SHARE PER SHARE
---- --- -------- ---------
<S> <C> <C> <C> <C>
1997
First Quarter................. $30.94 $25.69 $.20 $15.00
Second Quarter................ 33.25 27.38 .20 --
Third Quarter................. 39.13 32.06 .20 --
Fourth Quarter................ 44.75 36.56 .20 --
1998
First Quarter ................ 43.50 37.94 .23 15.00
Second Quarter................ 45.25 38.66 .23 --
Third Quarter ................ 42.69 33.81 .23 --
Fourth Quarter ............... 40.69 30.25 .23 --
1999
First Quarter................. 41.44 34.63 .25 --
Second Quarter................ 39.13 34.72 .25 --
Third Quarter................. 38.94 29.81 .25 31.50
Fourth Quarter (through
_______, 1999) ...........
</TABLE>
On _______, 1999, the last reported sale price of Regions common stock as
reported on the Nasdaq National Market, was $ _______. On July 7, 1999, the last
business day prior to public announcement of the proposed merger, the last
reported sale price of Regions common stock as reported on the Nasdaq National
Market, was $38.94.
The holders of Regions common stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971.
Although Regions currently intends to continue to pay quarterly cash dividends
on the Regions common stock, there can be no assurance that Regions' dividend
policy will remain unchanged after completion of the merger. The declaration
and payment of dividends thereafter will depend upon business conditions,
operating results, capital and reserve requirements, and the Board of
Directors' consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions. Regions' subsidiary depository institutions
are subject to certain legal restrictions on the amount of dividends they are
permitted to pay. See "Supervision and Regulation-Payment of Dividends."
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<PAGE> 43
LCB Corporation has paid regular cash dividends out of current earnings.
While LCB Corporation expects to continue to pay regular dividends if the
merger is not completed, payment of future dividends will depend on business
conditions, operating results, capital and reserve requirements, and other
relevant factors.
37
<PAGE> 44
LCB CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides certain information concerning the financial
condition and results of operations of LCB Corporation (LCB) for three years
ended December 31, 1998, and as of September 30, 1999 and 1998 and for the nine
months periods then ended. The financial position and results of operations of
LCB were due primarily to its banking subsidiaries, Lincoln County Bank and
Bank of Huntland. Management's discussion should be read in conjunction with
the financial statements and accompanying notes presented elsewhere in this
Proxy Statement-Prospectus.
YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 AND YEAR
ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
OVERVIEW
Net Income for 1998 totaled $2,960,000 compared to $2,648,000 for 1997 and
$2,445,000 for 1996. The increase in net income of $312,000 from 1998 to 1997
was primarily due to an increase in net interest income of $1,466,000 offset by
an increase in non-interest expense of $1,190,000.
Return on average assets was 1.81% and return on average equity was 16.34% for
1998, compared to 1.72% and 16.18%, respectively, for 1997 and 1.67% and
16.77%, respectively, for 1996.
The net interest margin, the percentage of net interest income to average
earning assets, increased in 1998, from 5.81% to 6.72%. The net interest margin
of 6.72% in 1998 is favorable to LCB and is a reflection of the continued
healthy spread between rates on deposits and yields on investments and loans.
RESULTS OF OPERATIONS
Net Interest Income. LCB's primary source of revenue is net interest income.
Net interest income is the difference between interest earned on interest
earning assets and interest paid on interest bearing sources of funds. Net
interest income is determined primarily by the level of interest earning assets
and the various rate spreads between the interest earning assets and their
funding sources.
Net interest income for 1998 was $9,589,000, compared to $8,123,000 for 1997 and
$7,646,000 for 1996. The increases of $1,466,000 from 1997 to 1998 and $477,000
from 1996 to 1997 were due to higher levels of average earning assets and
increase yields on those earning assets. LCB's net interest margin for 1998,
1997 and 1996 was 6.72%, 5.81% and 5.80%, respectively.
Provision for Loan Losses. The provision for loan losses charged to operating
expense is the result of a continuing review and assessment of the loan
portfolio, taking into consideration the history of charge-offs in the loan
portfolio by category, the current economic conditions in the lending area, the
payment history, ability to repay and strength of collateral of specific
borrowers, and other relevant factors. The 1998 provision was $16,000, compared
to $113,000 in 1997 and $305,000 in 1996. Actual charge-offs, net of
recoveries, were $192,000 in 1998, $65,000 in 1997 and $238,000 in 1996.
Non-interest income. Non-interest income in 1998 totaled $1,603,000 compared to
$1,503,000 in 1997 and $1,241,000 in 1996. The largest component of
non-interest income is service charges and fees which totaled $1,336,000 in
1998, $1,247,000 in 1997 and $1,053,000 in 1996. Also included in the
non-interest income totals are securities gains in the amount of $161,000,
$13,000 and $4,000, in 1998, 1997 and 1996, respectively.
Non-Interest Expenses. Non-interest expenses were $6,713,000 in 1998, compared
to $5,523,000 in 1997 and $4,787,000 in 1996. Salaries and related benefits
increased to $3,698,000 in 1998 and $2,808,000 in 1997 from $2,609,000 in 1996.
Occupancy expense remained virtually
38
<PAGE> 45
unchanged during 1998 as compared to 1997, but were higher than in 1996.
Operating and processing costs constitute the majority of the other non-interest
expense.
Income Taxes. LCB's effective tax rate was 33.1% in 1998, 31.7% in 1997 and
33.9% in 1996. The effective rate is less than the highest statutory rate
primarily because of tax-free income from municipal investments.
ANALYSIS OF FINANCIAL CONDITION
Investment Securities. Total investment securities at December 31, 1998 totaled
$33,405,000 compared to $32,954,000 in 1997. The investment securities portfolio
is used as a source of liquidity and a means of managing interest rates and
interest rate sensitivity. In addition, the portfolio serves as a source of
collateral on certain deposits. All of the investment securities portfolio is
classified as available for sale.
Securities Portfolio. The carrying amount of securities at the dates indicated
is set forth in the table below:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1998 1997
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Government............. $ 1,712 5.13% $ 2,209 6.70%
U.S. Agencies............... 16,607 49.71 17,672 53.63
Obligations of States &
Political Subdivisions.... 15,017 44.95 13,004 39.46
Other Securities............ 69 0.21 69 0.21
------- ------ ------- ------
Total............. $33,405 100.00% $32,954 100.00%
======= ====== ======= ======
</TABLE>
Investment Securities Maturity Distribution. The estimated fair market value of
debt securities available for sale (in thousands) at December 31, 1998, by
contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
ONE YEAR ONE TO OVER FIVE
OR LESS FIVE YEARS YEARS TOTAL
-------- ---------- --------- --------
<S> <C> <C> <C> <C>
Total Investment Securities...... $3,223 $13,665 $16,517 $33,405
====== ====== ====== ======
</TABLE>
39
<PAGE> 46
Loans. Net loans outstanding at December 31, 1998, totaled $112,575,000
compared to $100,272,000 in 1997, an increase of $12,303,000, or 12.3%.
The following table sets forth the composition of LCB's loan portfolio by type
of loan at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1998 1997
------------------ ------------------
PERCENT PERCENT
BALANCE OF TOTAL BALANCE OF TOTAL
------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
TYPE OF LOAN:
Commercial Loans........... $ 8,485 7.63% $ 9,123 9.25%
Real Estate
Loans -- Other........... 68,993 62.08 63,836 64.70
Real Estate Loans --
Construction............. 13,289 11.96 7,514 7.62
Consumer Loans............. 16,424 14.78 14,349 14.54
Agricultural Loans......... 5,580 5.02 5,315 5.39
Other Loans................ 963 0.87 1,328 1.35
------- ------ ------- ------
TOTAL LOANS...... 113,734 102.34% $101,465 102.85%
------- ------ ------- ------
Less:
Allowance for Loan
Losses................ 1,442 1.30% 1,618 1.64%
Unearned Premium on
Loans................. 1,159 1.04% 1,193 1.21%
------- ------ ------- ------
TOTAL LOANS,
NET........... $111,133 100.00% $98,654 100.00%
======= ====== ======= ======
</TABLE>
Real estate loans is the largest category of loans, comprising 74.0% and 72.3%
of net loans at December 31, 1998 and 1997, respectively.
Non-performing Assets. Non-accrual loans, foreclosed assets and troubled debt
restructurings are included in non-performing assets. Total non-performing
assets increased $637,000 during 1998 to $1,592,000 at December 31, 1998.
Non-accrual loans are loans on which the accrual of interest income has been
discontinued and previously accrued interest has been reversed because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past due
principal and interest, interest income is recorded on the cash basis.
40
<PAGE> 47
The following table sets forth information with respect to non-performing
assets identified by LCB, including non-accrual loans, other real estate owned
and accruing loans past due ninety days or more at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1998 1997
----- -----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
NONACCRUAL LOANS:
Real Estate Loans................................. $ 700 $ 164
Consumer Loans.................................... -- --
Commercial Loans.................................. 386 396
------ -----
TOTAL NONACCRUAL LOANS.................. 1,086 560
------ -----
ACCRUING LOANS PAST DUE NINETY DAYS OR MORE:
Real Estate Loans................................. 383 233
Consumer Loans.................................... -- --
Commercial Loans.................................. 94 72
------ -----
TOTAL ACCRUING LOANS PAST DUE NINETY
DAYS OR MORE.......................... 477 305
------ -----
Total Non-Performing Loans........................ 1,563 865
Other Real Estate Owned........................... 29 90
------ -----
TOTAL NON-PERFORMING ASSETS............. $1,592 $ 955
====== =====
Non-Performing assets to net loans and other real
estate.......................................... 1.41% 0.95%
Allowance for loan losses to total loans at end of
period.......................................... 1.28% 1.61%
Allowance for loan losses to non-performing
assets.......................................... 90.58% 169.42%
</TABLE>
Allowance for Loan Losses. Inherent in LCB's lending activities is the risk that
loan losses will be experienced and that the risk of loss will vary with the
type of loan being made and the creditworthiness of the borrower over the term
of the loan. To reflect the currently perceived risk of loss associated with
LCB's loan portfolio, provisions are made to the allowance for loan losses. The
allowance is created by direct charges against income and is available for loan
losses. The amount of the allowance for loan losses and the provisions for loan
losses are evaluated quarterly, based on management's estimate of risk in the
overall loan portfolio and the estimated exposure on individual loans. In
evaluating the adequacy of the allowance and the amount of the provision,
consideration is given to such factors as: management's evaluation of specific
loans; the level and composition of classified loans; historical loss
experience; results of examinations of regulatory agencies and an internal asset
review process; expectations of future national and local economic conditions
and their impact on particular industries and the individual borrowers; the
market value of collateral and strength of available guaranties; concentrations
of credit; and other judgmental factors. LCB maintains an allowance for loan
losses which it believes is adequate to absorb reasonably foreseeable losses in
the loan portfolio.
The allowance for loan losses decreased $176,000 from December 31, 1997 to
1998, to $1,442,000 and was 1.28% of total loans. The 1997 balance in the
allowance for loan losses was $1,618,000 or 1.61% of total loans.
41
<PAGE> 48
The following table summarizes the loan loss experience for each of the periods
indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1998 1997
------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE AT BEGINNING OF YEAR.................... $1,618 $1,570
PROVISION CHARGED TO EXPENSE.................... 16 113
CHARGE-OFFS:
Real Estate Loans............................... (108) (53)
Installment Loans............................... (--) (94)
Commercial Loans................................ (219) (123)
------ ------
TOTAL CHARGE-OFFS ................... (327) (270)
------ ------
RECOVERIES:
Real Estate Loans............................... 1 100
Installment Loans............................... -- 32
Commercial Loans................................ 134 73
------ ------
TOTAL RECOVERIES...................... 135 205
------ ------
NET LOAN (CHARGE-OFFS)................ (192) (65)
------ ------
BALANCE AT END OF PERIOD.............. $1,442 $1,618
====== ======
Net loan charge-offs to average loans........... 0.18% 0.07%
</TABLE>
Deposits. Total deposits at December 31, 1997 were $158,363,000, an increase of
$20,953,000 from the December 31, 1997 total of $137,410,000. Increases
occurred in the balance of all deposit types.
Demand deposits increased $6,936,000 or 36% in 1998 and totaled $26,046,000 at
the end of 1998. Demand deposits represent 16% of total deposits as of December
31, 1998.
Transaction and NOW accounts increased from $25,481,000 at December 31, 1997 to
$27,611,000 at December 1999. Transaction and NOW accounts account for 17% of
total deposits as of December 1999.
Money market and other savings deposits increased $1,124,000 or 8% since
December of 1997. Money market and other savings deposits account balances
account for 10% of total deposits.
The largest category of deposits are time deposits of $100,000 or less which
were $62,221,000, an increase $4,745,000 over 1997. This category represented
39% of total deposits at December 31, 1998.
Time deposits of $100,000 or more were $26,543,000 at December 31, 1998, which
comprised 17% of total deposits. These deposits consist primarily of deposits
from local customers with which LCB has other banking relationships. LCB had no
brokered deposits at December 31, 1997.
Liquidity. Liquidity involves LCB's ability to raise funds to support asset
growth or to reduce assets, meet deposit withdrawals and other borrowing needs,
maintain reserve requirements and otherwise operate the company on an ongoing
basis.
As shown in the accompanying 1998 statement of cash flows, cash and cash
equivalents increased by $9,313,000 from December 31, 1997 to December 31,
1998. Net cash provided by operating activities increased to $3.3 million
primarily due to high levels of net income. Net cash used in investing
activities of $14.8 million were the result of growth in the loan portfolio.
Net cash provided by financing activities provided $20.8 million of funding
sources for 1998. The net cash provided by financing activities consisted
primarily of a net increase in deposits of $21 million.
42
<PAGE> 49
Capital Resources. LCB maintains adequate capital for regulatory purposes and
has sufficient capital to absorb the risks inherent in the business. Risk-based
capital requirements have been established that weight different assets
according to the level of risk associated with those types of assets. The table
below summarizes LCB's capital levels at the dates indicated:
<TABLE>
<CAPTION>
DECEMBER 31,
------------- REGULATORY
1998 1997 MINIMUMS
----- ----- ----------
<S> <C> <C> <C>
Tier I Capital to Average Assets........... 10.90% 11.59% 3%
Tier I Capital to Risk Weighted Assets..... 14.49 16.43 4
Total Capital to Risk Weighted Assets...... 15.74 17.69 8
</TABLE>
43
<PAGE> 50
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED
TO NINE MONTHS ENDED SEPTEMBER 30, 1998
OVERVIEW
Net income for the nine months ended September 30, 1999 totaled $1,980,000
compared to $2,037,000 for the same period in 1998.
Return on average assets was 1.51% and return on average equity was 14.38% for
the nine months ended September 30, 1999 compared to 1.69% and 15.38%,
respectively, for the comparable period in 1998.
RESULTS OF OPERATIONS
Net Interest Income. LCB's primary source of revenue is net interest income.
Net interest income is the difference between interest earned on interest
earning assets and interest paid on interest bearing sources of funds. Net
interest income is determined primarily by the level of interest earning assets
and the various rate spreads between the interest earning assets and their
funding sources.
Net interest income for the nine-month period ended September 30, 1999 totaled
$7,514,000, an increase of $408,000 or 5.7% from the $7,106,000 total for the
comparable period in 1998. The increase in net interest income was attributable
to an increase in total interest income of $511,000, which was partially offset
by an increase in total interest expense of $103,000.
Net interest margin, the ratio of net interest income to average earning
assets, for the nine months ended September 30, 1999, decreased to 6.33%, a
decrease of 45 basis points from September 30, 1998. The decrease in net
interest margin in 1999 is a result of a lower base lending rate.
Provision for Possible Loan Losses. As of September 30, 1999, the provision for
possible loan losses totaled $143,000 compared to $16,000 for the same
nine-month period in 1998. The increase in the provision in the nine months
ended September 30, 1999 funded an increase in the level of the reserve
necessitated by the increase in the volume of loans.
Non-Interest Income. Non-interest income for the nine-month period ended
September 30, 1999 totaled $972,000 compared to $1,060,000 for the same period
in 1998. The decrease resulted from lower service charges and gains on the sale
of securities.
Non-Interest Expense. For the nine-month period ended September 30, 1999, total
non-interest expenses totaled $5,102,000 an increase of $130,000 or 2.6%
compared to the same period in 1997. The increase resulted from a $113,000 or
4.1% increase in salary and employee benefits.
Income Taxes. LCB's effective tax rate was 38.9% for the nine month period
ended September 30, 1999 compared to 35.0% for the same period in 1998. The
effective tax rate is less than the highest statutory rate primarily because of
the receipt of tax-free income from municipal investments.
ANALYSIS OF FINANCIAL CONDITIONS
Investment Securities. Total investment securities at September 30, 1999 were
$37,378,000 and all were classified as available for sale. The composition of
the portfolio, effectively managed, limits LCB's exposure to changes in
interest rates and economic conditions as they occur.
44
<PAGE> 51
Securities Portfolio. The carrying amount of securities as of September 30,
1999 and 1998 is set forth in the table below:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------------------------------
1999 1998
----------------- -----------------
AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Government............. $ 250 0.67% $ 2,216 6.63%
U.S. Agencies............... 22,288 59.63 17,846 53.37
Obligations of States &
Political Subdivisions.... 14,715 39.37 13,308 39.79
Other Securities............ 125 0.33 69 0.21
------- ------ ------- ------
Total............. $37,378 100.00% $33,439 100.00%
======= ====== ======= ======
</TABLE>
Loans and Non-Performing Assets. The loan portfolio is the largest component of
LCB's earning assets. As of September 30, 1999, loans outstanding were
$114,489,000 compared to $111,078,000 for the same period in 1998.
The following table sets forth the composition of LCB's loan portfolio by type
of loan at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------------------------------
1999 1998
------------------ ------------------
PERCENT PERCENT
BALANCE OF TOTAL BALANCE OF TOTAL
------- -------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
TYPE OF LOAN:
Commercial Loans........... $ 8,417 7.47% $ 9,875 9.02%
Real Estate
Loans -- Other........... 66,908 59.36 66,981 61.22
Real Estate Loans --
Construction............. 14,618 12.97 11,949 10.92
Consumer Loans............. 18,020 15.99 16,266 14.87
Agricultural Loans......... 6,207 5.51 5,992 5.47
Other Loans................ 1,196 1.06 1,254 1.15
-------- ------ -------- ------
TOTAL LOANS...... 115,366 102.36% 112,317 102.65%
-------- ------ -------- ------
Less:
Allowance for Loan
Losses................ 1,781 1.58% 1,665 1.52%
Unearned Premium on
Loans................. 877 0.78% 1,239 1.13%
-------- ------ -------- ------
TOTAL LOANS,
NET........... $112,708 100.00% $109,413 100.00%
======== ====== ======== ======
</TABLE>
The largest segment of LCB's loan portfolio is real estate loans that represent
approximately 72.3% of net loans as of September 30, 1999. As of September 30,
1998, real estate loans comprised 72.1% of net loans.
Non-accrual loans are loans as to which the accrual of interest income has been
discontinued and previously accrued interest has been reversed, because the
borrower's financial condition has deteriorated to the extent that the
collection of principal and interest is doubtful. Until the loan is returned to
performing status, generally as the result of the full payment of all past due
principal and interest, interest income is recorded on the cash basis.
45
<PAGE> 52
The following table sets forth information with respect to non-performing
assets identified by LCB, including non-accrual loans, other real estate owned
and accruing loans past due ninety days or more at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------
1999 1998
---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
NONACCRUAL LOANS:
Real Estate Loans................................. $ 277 $ 483
Consumer Loans.................................... -- --
Commercial Loans.................................. -- 579
------ ------
TOTAL NONACCRUAL LOANS.................. 277 1,062
------ ------
ACCRUING LOANS PAST DUE NINETY DAYS OR MORE:
Real Estate Loans................................. 1,129 517
Consumer Loans.................................... -- --
Commercial Loans.................................. 41 171
------ ------
TOTAL ACCRUING LOANS PAST DUE NINETY
DAYS OR MORE.......................... 1,170 688
------ ------
Total Non-Performing Loans........................ 1,447 1,750
Other Real Estate Owned........................... 508 --
----- -----
TOTAL NON-PERFORMING ASSETS............. $1,955 $1,750
====== ======
Non-Performing assets to net loans and other real
estate.......................................... 1.70% 1.58%
Allowance for loan losses to total loans at end of
period.......................................... 1.56% 1.50%
Allowance for loan losses to non-performing
assets.......................................... 86.00% 95.14%
</TABLE>
Allowance for Loan Losses. The allowance for loan losses increased $116,000
from September 30, 1998 to 1999, to $1,781,000 and was 1.56% of total loans.
The September 1998 balance in the allowance for loan losses was $1,665,000 or
1.50% of total loans.
46
<PAGE> 53
The following table summarizes the loan loss experience for each of the periods
indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30,
---------------
1999 1998
------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE AT BEGINNING OF YEAR......................... $1,442 $1,618
PROVISION CHARGED TO EXPENSE......................... 143 16
CHARGE-OFFS:
Real Estate Loans.................................... (25) (1)
Installment Loans.................................... (--) (--)
Commercial Loans..................................... (91) (84)
------ ------
TOTAL CHARGE-OFFS.......................... (116) (85)
------ ------
RECOVERIES:
Real Estate Loans.................................... 31 1
Installment Loans.................................... -- --
Commercial Loans..................................... 281 115
------ ------
TOTAL RECOVERIES........................... 312 116
------ ------
NET LOAN (CHARGE-OFFS) RECOVERIES.......... 196 31
------ ------
BALANCE AT END OF PERIOD................... $1,781 $1,665
====== ======
Net loan charge-offs (recoveries) to average loans... (0.23)% (0.04)%
</TABLE>
Deposits. Total deposits at September 30, 1999 were $154,103,000, an increase
of $8,256,000 or 5.7% over the balance at September 30, 1997. LCB has
experienced good deposit growth in all categories of deposits.
Demand deposits have increased $1,880,000 since September 1998 to $21,248,000.
Demand deposits represent 14% of total deposits.
Transaction and NOW accounts increased from $24,997,000 at September 30, 1998
to $26,072,000 at September 1999. Transaction and NOW accounts account for 17%
of total deposits as of September 1999.
Money market and other savings deposits increased $1,765,000 or 12% since
September of 1998. Money market and other savings deposits account balances
account for 11% of total deposits.
Time deposits of $100,000 or less totaled $63,207,000 and represented 41% of
total deposits. This category of deposit increased $2,059,000 from $61,148,000
at September 1998.
Time deposits of $100,000 or more were $26,885,000 at September 30, 1999 and
represented 17% of total deposits. These deposits consist primarily of deposits
from local customers with which LCB has other banking relationships. LCB had no
brokered deposits at September 30, 1999.
Liquidity. Liquidity is the ability of LCB to fund the needs of its borrowers,
depositors and creditors. LCB's management maintains a strategy that provides
adequate liquidity and manages interest rate risk. LCB's liquidity sources,
including cash flows from sales, maturities and paydowns of loans and
investment securities, federal funds purchased, securities sold under
agreements to repurchase and a base of core deposits, are considered adequate
to meet liquidity needs for normal operations.
47
<PAGE> 54
Capital Resources. LCB is required to comply with the risk-based capital
guidelines adopted by the FDIC. Those guidelines apply weighing factors, which
vary according to the level of risk associated with each asset category. As of
September 30, 1999, LCB exceeds all minimum capital ratios.
The table below summarizes LCB's capital levels at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------- REGULATORY
1999 1998 MINIMUMS
----- ----- ----------
<S> <C> <C> <C>
Tier I Capital to Average Assets........... 9.88% 10.53% 3%
Tier I Capital to Risk Weighted Assets..... 13.84 14.15 4
Total Capital to Risk Weighted Assets...... 15.10 15.40 8
</TABLE>
48
<PAGE> 55
INFORMATION ABOUT LCB CORPORATION
LCB Corporation is a bank holding company organized under the laws of the
state of Tennessee with its principal executive office located in Fayetteville,
Tennessee. LCB Corporation operates principally through Lincoln County Bank and
the Bank of Huntland, which are state-chartered commercial banks providing a
range of consumer and commercial banking services through 10 offices in Lincoln
and Franklin counties in Middle Tennessee. At September 30, 1999, LCB
Corporation had total consolidated assets of approximately $175 million, total
consolidated deposits of approximately $154 million, and total consolidated
stockholders' equity of approximately $18 million. LCB Corporation's principal
executive office is located at 302 East College Street, Fayetteville, Tennessee,
37334 and its telephone number at such address is (931) 433-7041.
BUSINESS AND PROPERTIES
LCB Corporation's two subsidiary banks conduct their business as
commercial banks, with special emphasis in retail banking, including the
acceptance of checking and savings deposits, and the making of commercial, real
estate, personal, home improvement, automobile and other installment and term
loans. They also offer other customary bank services to their customers.
LCB has its principal offices in its headquarters building at 302 E.
College, Fayetteville, Tennessee, which is owned and occupied by Lincoln County
Bank and also serves as the main office of Lincoln County Bank. Lincoln County
Bank owns, except as indicated, the following properties which house its main
office and branches:
1. Main Office, 302 E. College, Fayetteville, TN
Two-story building, two vaults, one drive-in operation,
one ATM
2. LCB Corporation's Operations Center, 219 E. College,
Fayetteville, TN Three-story building with one vault
3. Storage Building, Edison Street, Fayetteville, TN
2,400 sq. ft.
4. LCB Mortgage, 2280 Thornton Taylor Pkwy., Fayetteville, TN
3.400 sq. ft.-one story building housing the mortgage
operations.
5. West College Branch, 202 West College, Fayetteville, TN
3,300 sq. ft. building with one vault, one ATM, and drive-in
(owned by WCS Corporation, Inc. See "--Transactions with
Management" at page __.)
6. Park City Branch, 2754 Huntsville Hwy., Fayetteville, TN
3,200 sq. ft. building, one vault, one ATM, drive-in
7. Petersburg Branch, 3283 Lewisburg Hwy., Petersburg, TN One
story building, one vault, no ATM, drive-in
The Bank of Huntland operates from its headquarters, which it owns, at
517 Main Street, Huntland, Tennessee. It owns its main office and branch
quarters at
60
<PAGE> 56
the following locations:
1. Main Office, 517 Main Street, Huntland, TN
6,200 sq. ft. one floor, one vault, one ATM, one drive-in
2. Old Bank building, 100 Banks Street, Huntland, TN 2,470 sq.
ft. building, one vault, one drive-in
3. Vacant lot, Huntland, TN 2.22 acres in Huntland city limits
LCB Corporation owns a tract of unimproved property which it acquired from
Lincoln County Bank, which may be used in the future by the bank.
61
<PAGE> 57
COMPETITION
LCB Corporation encounters competition in its market areas for the
provision of depository institution financial services from a number of
sources, including bank holding companies and commercial banks, savings and
loan associations and other thrift institutions, credit unions, other financial
institutions, and financial intermediaries that operate in LCB Corporation's
market area. Regional interstate banking laws and other recent federal and
state laws have resulted in increased competition from both conventional
banking institutions and other businesses offering financial services and
products. LCB Corporation's subsidiary banks also compete for interest bearing
funds with a number of other financial intermediaries and nontraditional
consumer investment alternatives, including brokerage firms, consumer finance
companies, commercial finance companies, credit unions, money market funds, and
federal, state, and municipal issuers of short term obligations. Many of these
competitors have greater financial resources than the banks. At September 30,
1999, there were approximately 12 commercial banks and 2 credit unions
competing with LCB Corporation in its market area.
LEGAL PROCEEDINGS
LCB Corporation and its subsidiary banks are not parties to any material
legal proceedings other than ordinary routine litigation incidental to their
business.
MANAGEMENT
The following table presents information about the directors and executive
officers of LCB Corporation and its subsidiary banks. Unless otherwise
indicated, each person has sole voting and investment powers over the indicated
shares. Information relating to beneficial ownership of LCB Corporation common
stock is based upon "beneficial ownership" concepts set forth in rules
promulgated under the Exchange Act. Under such rules a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting power,"
which includes the power to vote or to direct the voting of such security, or
"investment power," which includes the power to dispose or to direct the
disposition of such security. Under the rules, more than one person may be
deemed to be a beneficial owner of the same securities. A person is also deemed
to be a beneficial owner of any security of which that person has the right to
acquire beneficial ownership within 60 days from the record date. The footnotes
to the table indicate how many shares each person has the right to acquire
within 60 days of the record date.
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<PAGE> 58
<TABLE>
<CAPTION>
PRESENT OCCUPATION POSITION AND DIRECTOR OR NUMBER OF SHARES
AND PRINCIPAL OFFICES HELD EXECUTIVE BENEFICIALLY OWNED
OCCUPATION FOR WITH LCB OFFICER AT THE RECORD DATE
NAME LAST FIVE YEARS AND BANKS SINCE AND PERCENT OF CLASS
- --------------------- --------------- --------- ----- --------------------
<S> <C> <C> <C> <C> <C>
Tom S. Bigham, III Dentistry Director 1983 5,000 6.4%
Barry Buckley Banking President and 1997 0 0
Director of Lincoln
County Bank
Hugh G. Counts Photography Director 1983 8,600 11.0
Hardy B. Ferrell Sheet Metal Director 1983 3,800 4.9
Fabricating
Charles E. Gleghorn Banking Chairman and 1983 16,750 21.5
Chief Executive
Officer
Ray G. Groce Paving and Road Director 1991 5,000 6.4
Construction
Contracting
Daniel T. McGee Livestock Farming Director 1983 1,000 1.2
David R. Owens Hardware, Agricultural Director 1992 5,000 6.4
Supply and Warehousing
Frank D. Wyatt Law Director 1983 8,000 10.3
Richard M. Knott Banker President and 1987 0 0
Director of
Bank of
Huntland
</TABLE>
TRANSACTIONS WITH MANAGEMENT
In the ordinary course of business, LCB Corporation's subsidiary banks
have loans, deposits and other transactions with LCB Corporation's executive
officers, directors, and organizations with which such persons are associated.
Such transactions are on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with others. The aggregate amount of loans to the aforementioned persons and
company(s) in which they have a 10% or more ownership interest as of September
30, 1999, were approximately $3,277,000.
WCS Corporation, Inc. owns the West College branch of Lincoln County Bank.
WCS is owned by the directors.
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<PAGE> 59
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of LCB Corporation common stock, as of the
record date.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
- -------------- ------------------- -------------------- ---------
<S> <C> <C> <C> <C>
Class A Common Tom S. Bigham, III 5,000 Direct 6.4%
6 Holman Road
Fayetteville, TN 37334
Class A Common Hugh G. Counts 6,600 Direct 11.0
204 Jeffrey Road 2,000 Indirect
Fayetteville, TN 37334
Class A Common Charles E. Gleghorn 11,750 Direct 21.5
2022 Wells Hill Road 5,000 Indirect
Fayetteville, TN 37334
Class A Common Ray G. Groce 5,000 Direct 6.4
28 Possum Hollow Road
Fayetteville, TN 37334
Class A Common L. Paul Monks Estate 5,000 Direct 6.4
273 Old Huntsville Road
Fayetteville, TN 37334
Class A Common David R. Owens 5,000 Direct 6.4
338 Limestone Road
Elora, TN 37328
Class A Common Frank D. Wyatt 8,000 Direct 10.3
301 North Elk Avenue
Fayetteville, TN 37334
</TABLE>
(1) The information shown above is based upon information furnished by the
named persons. Information relating to beneficial ownership is based upon
"beneficial ownership" concepts set forth in rules promulgated under the
Exchange Securities Act. Under such rules a person is deemed to be a
"beneficial owner" of a security if that person has or shares "voting
power," which includes the power to vote or to direct the voting of such
security, or "investment power," which includes the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right to
acquire beneficial ownership within 60 days. Under the rules, more than
one person may be deemed to be a beneficial owner of the same securities,
and a person may be deemed to be a beneficial owner of securities as to
which he or she has no beneficial interest.
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<PAGE> 60
INFORMATION ABOUT REGIONS
GENERAL
Regions is a regional bank holding company organized and existing under
the laws of the state of Delaware and headquartered in Birmingham, Alabama,
with approximately 742 banking offices located in Alabama, Arkansas, Florida,
Georgia, Louisiana, South Carolina, Tennessee, and Texas as of September 30,
1999. At that date, Regions had total consolidated assets of approximately
$41.2 billion, total consolidated deposits of approximately $29.8 billion, and
total consolidated stockholders' equity of approximately $3.0 billion. Regions
has banking-related subsidiaries engaged in mortgage banking, credit life
insurance, leasing, and securities brokerage activities with offices in various
Southeastern states. Through its subsidiaries, Regions offers a broad range of
banking and banking-related services.
Regions was organized under the laws of the state of Delaware and
commenced operations in 1971 under the name First Alabama Bancshares, Inc. In
1994, the name of First Alabama Bancshares, Inc. was changed to Regions
Financial Corporation. Regions' principal executive offices are located at 417
North 20th Street, Birmingham, Alabama 35203, and its telephone number at such
address is (205) 944-1300.
Regions continually evaluates business combination opportunities and
frequently conducts due diligence activities in connection with possible
business combinations. As a result, business combination discussions and, in
some cases, negotiations frequently take place, and future business
combinations involving cash, debt, or equity securities can be expected. Any
future business combination or series of business combinations that Regions
might undertake may be material, in terms of assets acquired or liabilities
assumed, to Regions' financial condition. Recent business combinations in the
banking industry have typically involved the payment of a premium over book and
market values. This practice could result in dilution of book value and net
income per share for the acquirer.
Additional information about Regions and its subsidiaries is included in
documents incorporated by reference in this Proxy Statement-Prospectus. See
"Where You Can Find More Information" at page 74.
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<PAGE> 61
RECENT DEVELOPMENTS
Since December 31, 1998, and as of the date of this Proxy
Statement-Prospectus, Regions has completed the acquisitions of four financial
institutions and has entered into a definitive agreement to acquire one other
financial institution in addition to the merger. Certain aspects of the
completed and other pending acquisitions are presented in the following table:
<TABLE>
<CAPTION>
CONSIDERATION
-------------------
APPROXIMATE
-------------------------
ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
----------- ------------- -------- ---- ---------
(In millions)
Recently Completed Acquisitions:
<S> <C> <C> <C> <C>
Meigs County Bancshares, Inc., located in Decatur, $ 114 $ 20 Regions Pooling
Tennessee Common of
Stock Interests
Bullsboro BancShares, Inc., located in Newnan 101 31 Regions Pooling
Georgia Common of
Stock Interests
VB&T Bancshares Corp., located in Valdosta, 76 19 Regions Pooling
Georgia Common of
Stock Interests
Arkansas Banking Company, located in Jonesboro, Arkansas 355 58 Regions Purchase
Common
Stock
Other Pending Acquisitions
Minden Bancshares, Inc., located in Minden, Louisiana 332 87 Regions Purchase
Common
Stock
</TABLE>
- ---------------
(1) Calculated as of the date of consummation in the case of the completed
acquisitions and as of the date of announcement of the transaction in the
case of pending acquisitions.
Consummation of the other pending acquisitions is subject to the approval
of certain regulatory agencies and approval of the stockholders of the
institutions to be acquired. Moreover, the closing of each transaction is
subject to various contractual conditions precedent. No assurance can be given
that the conditions precedent to consummating the transactions will be
satisfied in a manner that will result in their consummation.
If the other pending acquisitions and the merger had been consummated on
September 30, 1999, as of that date Regions' total consolidated assets would
have been increased by approximately $550 million to approximately $41.8
billion; its total consolidated deposits would have increased by approximately
$431 million to approximately $30.2 billion; and its total consolidated
stockholders' equity would have increased by approximately $104 million to
approximately $3.1 billion.
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<PAGE> 62
SUPERVISION AND REGULATION
The following discussion sets forth certain of the material elements of
the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to Regions and LCB Corporation.
Additional information is available in Regions' Annual Report on Form 10-K for
the fiscal year ended December 31, 1998. See "Where You Can Find More
Information" at page 74.
GENERAL
Regions and LCB Corporation are both bank holding companies registered
with the Board of Governors of the Federal Reserve System under the Bank
Holding Company Act. As such, Regions and LCB Corporation and their non-bank
subsidiaries are subject to the supervision, examination, and reporting
requirements of the Bank Holding Company Act and the regulations of the Federal
Reserve Board.
The Bank Holding Company Act requires every bank holding company to obtain
the prior approval of the Federal Reserve Board before: (1) it may acquire
direct or indirect ownership or control of any voting shares of any bank if,
after such acquisition, the bank holding company will directly or indirectly
own or control more than 5.0% of the voting shares of the bank; (2) it or any
of its subsidiaries, other than a bank, may acquire all or substantially all of
the assets of any bank; or (3) it may merge or consolidate with any other bank
holding company.
The Bank Holding Company Act further provides that the Federal Reserve
Board may not approve any transaction that would result in a monopoly or would
be in furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any section of the United States, or the
effect of which may be substantially to lessen competition or to tend to create
a monopoly in any section of the country, or that in any other manner would be
in restraint of trade, unless the anticompetitive effects of the proposed
transaction are clearly outweighed by the public interest in meeting the
convenience and needs of the community to be served. The Federal Reserve Board
is also required to consider the financial and managerial resources and future
prospects of the bank holding companies and banks concerned and the convenience
and needs of the community to be served.
The Bank Holding Company Act generally prohibits Regions and LCB
Corporation from engaging in activities other than banking or managing or
controlling banks or other permissible subsidiaries and from acquiring or
retaining direct or indirect control of any company engaged in any activities
other than those activities determined by the Federal Reserve Board to be so
closely related to banking or managing or controlling banks as to be a proper
incident thereto. In determining whether a particular activity is permissible,
the Federal Reserve Board must consider whether the performance of such an
activity reasonably can be expected to produce benefits to the public, such as
greater convenience, increased competition, or gains in efficiency, that
outweigh possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. Each of the subsidiary banks of Regions and LCB Corporation is a
member of the Federal Deposit Insurance Corporation (the "FDIC"), and as such,
its deposits are insured by the FDIC to the extent provided by law. Each such
subsidiary bank is also subject to numerous state and federal statutes and
regulations that
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<PAGE> 63
affect its business, activities, and operations, and each is supervised and
examined by one or more state or federal bank regulatory agencies.
The Bank and all of Regions' subsidiary banks that are state-chartered
banks are subject to supervision and examination by the FDIC and the state
banking authorities of the states in which they are located. Regions'
subsidiary banks that are nationally chartered are subject to regulation,
supervision, and examination by the OCC and the FDIC. The federal banking
regulator for each of the subsidiary banks, as well as the appropriate state
banking authority for each of the subsidiary banks that is a state chartered
bank, regularly examines the operations of the subsidiary banks and is given
authority to approve or disapprove mergers, consolidations, the establishment
of branches, and similar corporate actions. The federal and state banking
regulators also have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law.
PAYMENT OF DIVIDENDS
Regions and LCB Corporation are legal entities separate and distinct from
their banking and other subsidiaries. The principal sources of cash flow of
both Regions and LCB Corporation, including cash flow to pay dividends to their
respective stockholders, are dividends from their subsidiary banks. There are
statutory and regulatory limitations on the payment of dividends by these
subsidiary banks to Regions and LCB Corporation, as well as by Regions and LCB
Corporation to their stockholders.
As to the payment of dividends, the Bank and all of Regions'
state-chartered banking subsidiaries are subject to the respective laws and
regulations of the state in which the bank is located, and to the regulations
of the FDIC.
If, in the opinion of a federal banking regulatory agency, an institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the depository
institution, could include the payment of dividends), such agency may require,
after notice and hearing, that such institution cease and desist from such
practice. The federal banking agencies have indicated that paying dividends
that deplete an institution's capital base to an inadequate level would be an
unsafe and unsound banking practice. Under current federal law, an insured
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-Prompt Corrective
Action." Moreover, the Federal Reserve Board and the FDIC have issued policy
statements which provide that bank holding companies and insured banks should
generally pay dividends only out of current operating earnings.
At September 30, 1999, under dividend restrictions imposed under federal
and state laws, the subsidiary banks of Regions, without obtaining governmental
approvals, could declare aggregate dividends to Regions of approximately $309
million.
The payment of dividends by Regions and LCB Corporation and their
subsidiary banks may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
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<PAGE> 64
CAPITAL ADEQUACY
Regions, LCB Corporation, and their respective subsidiary banks are
required to comply with the capital adequacy standards established by the
Federal Reserve Board in the case of Regions and LCB Corporation the FDIC or
the OCC in the case of each of their subsidiary banks. There are two basic
measures of capital adequacy for bank holding companies that have been
promulgated by the Federal Reserve Board: a risk-based measure and a leverage
measure. All applicable capital standards must be satisfied for a bank holding
company to be considered in compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets. Assets and off-balance sheet items are
assigned to broad risk categories, each with appropriate weights. The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance sheet items.
The minimum guideline for the ratio of total capital ("Total Capital") to
risk-weighted assets (including certain off-balance-sheet items, such as
standby letters of credit) is 8.0%. At least half of the Total Capital must be
composed of common equity, undivided profits, minority interests in the equity
accounts of consolidated subsidiaries, qualifying noncumulative perpetual
preferred stock, and a limited amount of cumulative perpetual preferred stock,
less goodwill and certain other intangible assets ("Tier 1 Capital"). The
remainder may consist of certain subordinated debt, other preferred stock, and
a limited amount of loan loss reserves. The minimum guideline for Tier 1
Capital is 4.0% of risk-weighted assets. At September 30, 1999, Regions'
consolidated Total Capital Ratio was 11.17% and its Tier 1 Capital Ratio
(i.e., the ratio of Tier 1 Capital to risk-weighted assets) was 9.42%, and
LCB Corporation's consolidated Total Capital Ratio was 15.10% and its Tier 1
Capital Ratio was 13.84%.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio of Tier 1 Capital to average assets, less goodwill and certain
other intangible assets (the "Leverage Ratio"), of 3.0% for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3.0%, plus an additional cushion of 100
to 200 basis points above the stated minimums. The guidelines also provide that
bank holding companies experiencing internal growth or making acquisitions will
be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve Board has indicated that it will consider a
"tangible Tier 1 Capital leverage ratio" (deducting all intangibles) and other
indicators of capital strength in evaluating proposals for expansion or new
activities. At September 30, 1999 Regions' Leverage Ratio was 6.67% and LCB
Corporation's Leverage Ratio was 9.88%.
Each of Regions' and LCB Corporation's subsidiary banks is subject to
risk-based and leverage capital requirements adopted by the FDIC or the OCC,
which are substantially similar to those adopted by the Federal Reserve Board.
Each of the subsidiary banks was in compliance with applicable minimum capital
requirements as of September 30, 1999. Neither Regions, LCB Corporation, nor
any of their subsidiary banks has been advised by any federal banking agency of
any specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition
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<PAGE> 65
on the taking of brokered deposits, and to certain other restrictions on its
business. As described below, substantial additional restrictions can be
imposed upon FDIC-insured depository institutions that fail to meet applicable
capital requirements. See "-Prompt Corrective Action."
The Federal Reserve Board, the Office of the Comptroller of the Currency,
and the FDIC also have recently adopted final regulations requiring regulators
to consider interest rate risk (when the interest rate sensitivity of an
institution's assets does not match the sensitivity of its liabilities or its
off- balance-sheet position) in the evaluation of a bank's capital adequacy.
The bank regulatory agencies' methodology for evaluating interest rate risk
requires banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures.
PROMPT CORRECTIVE ACTION
Current federal law establishes a system of prompt corrective action to
resolve the problems of undercapitalized institutions. Under this system the
federal banking regulators have established five capital categories ("well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized") and must take certain
mandatory supervisory actions, and are authorized to take other discretionary
actions, with respect to institutions in the three undercapitalized categories,
the severity of which will depend upon the capital category in which the
institution is placed. Generally, subject to a narrow exception, current
federal law requires the banking regulator to appoint a receiver or conservator
for an institution that is critically undercapitalized. The federal banking
agencies have specified by regulation the relevant capital level for each
category.
Under the final agency rule implementing the prompt corrective action
provisions, an institution that (1) has a Total Capital ratio of 10% or
greater, a Tier 1 Capital ratio of 6.0% or greater, and a Leverage Ratio of
5.0% or greater and (2) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be "well capitalized." An institution with
a Total Capital ratio of 8.0% or greater, a Tier 1 Capital ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be
"adequately capitalized." A depository institution that has a Total Capital
ratio of less than 8.0%, a Tier 1 Capital ratio of less than 4.0%, or a
Leverage Ratio of less than 4.0% is considered to be "undercapitalized." A
depository institution that has a Total Capital ratio of less than 6.0%, a Tier
1 Capital ratio of less than 3.0%, or a Leverage Ratio of less than 3.0% is
considered to be "significantly undercapitalized," and an institution that has
a tangible equity capital to assets ratio equal to or less than 2.0% is deemed
to be "critically undercapitalized." For purposes of the regulation, the term
"tangible equity" includes core capital elements counted as Tier 1 Capital for
purposes of the risk-based capital standards plus the amount of outstanding
cumulative perpetual preferred stock (including related surplus), minus all
intangible assets with certain exceptions. A depository institution may be
deemed to be in a capitalization category that is lower than is indicated by
its actual capital position if it receives an unsatisfactory examination
rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
A bank holding company must guarantee that a subsidiary depository institution
meet its capital restoration plan, subject to certain limitations. The
obligation of a controlling bank holding company to fund a capital restoration
plan is limited to the lesser of 5.0% of an undercapitalized subsidiary's
assets or the amount required to meet regulatory capital requirements. An
undercapitalized institution is also generally prohibited from increasing its
average total assets, making acquisitions, establishing any branches, or
engaging in any new line of business, except in accordance with an
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<PAGE> 66
accepted capital restoration plan or with the approval of the FDIC. In
addition, the appropriate federal banking agency is given authority with
respect to any undercapitalized depository institution to take any of the
actions it is required to or may take with respect to a significantly
undercapitalized institution as described below if it determines "that those
actions are necessary to carry out the purpose" of the law.
At September 30, 1999, all of the subsidiary banks of Regions and LCB
Corporation had the requisite capital levels to qualify as well capitalized.
FDIC INSURANCE ASSESSMENTS
The FDIC currently uses a risk-based assessment system for insured
depository institutions that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The
risk-based assessment system, which went into effect on January 1, 1994,
assigns an institution to one of three capital categories: (1) well
capitalized; (2) adequately capitalized; and (3) undercapitalized. These three
categories are substantially similar to the prompt corrective action categories
described above, with the "undercapitalized" category including institutions
that are undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the final risk-based assessment system, there are nine
assessment risk classifications (i.e., combinations of capital groups and
supervisory subgroups) to which different assessment rates are applied.
All of Regions' subsidiary banks are now assessed at the well-capitalized
level where the premium rate is currently zero. Like all insured banks, all of
Regions' subsidiary banks also must pay a quarterly assessment of approximately
$.02 per $100 of assessable deposits to pay off bonds that were issued in the
late 1980's by a government corporation, the financing corporation, to raise
funds to cover costs of the savings and loan crisis.
The FDIC may terminate an institution's insurance of deposits upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 500,000,000 shares of Regions common stock
and 5,000,000 shares of preferred stock. At September 30, 1999, 224,170,794
shares of Regions common stock were issued, including 4,882,066 treasury
shares, and 219,288,728 shares were outstanding. At that date no preferred
stock was issued. No other class of stock is authorized.
Holders of Regions common stock are entitled to receive such dividends as
may be declared by the Board of Directors out of funds legally available
therefor. The ability of Regions to pay dividends is affected by the ability of
its subsidiary institutions to pay dividends, which is limited by applicable
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<PAGE> 67
regulatory requirements and capital guidelines. At September 30, 1999, under
such requirements and guidelines, Regions' subsidiary institutions had $309
million of undivided profits legally available for the payment of dividends.
See "Supervision and Regulation-Payment of Dividends" at page 68.
For a further description of Regions common stock, see "Effect of the
Merger on Rights of Stockholders" at page 27.
STOCKHOLDER PROPOSALS
Regions expects to hold its next annual meeting of stockholders after the
merger during May 2000. Under SEC rules, proposals of Regions stockholders
intended to be presented at that meeting must be received by Regions at its
principal executive offices by December 9, 1999, for consideration by Regions
for possible inclusion in such proxy statement.
FORWARD LOOKING STATEMENTS
This Proxy Statement-Prospectus and documents incorporated in it may
include forward looking statements which reflect Regions' current views with
respect to future events and financial performance. Such forward looking
statements are based on general assumptions and are subject to various risks,
uncertainties, and other factors that may cause actual results to differ
materially from the views, beliefs, and projections expressed in such
statements. Some factors are specific to Regions, including:
- - The cost and other effects of material contingencies, including litigation
contingencies and other contingencies related to acquired operations.
- - Regions' ability to expand into new markets and to maintain profit margins
in the face of pricing pressures.
- - Possible changes in the credit worthiness of Regions' customers and the
possible impairment of collectibility of loans to certain customers
resulting from the impact of Year 2000 issues on customers' operations and
cashflows needed to service indebtedness.
- - The ability of Regions to achieve the earnings expectations related to the
acquired operations of recently-completed and pending acquisitions, which
in turn depends on a variety of factors, including:
- the ability of Regions to achieve the anticipated cost savings and
revenue enhancements with respect to the acquired operations.
- the assimilation of the acquired operations to Regions' corporate
culture, including the ability to instill Regions' credit practices
and efficient approach to the acquired operations.
- the continued growth of the acquired entities' markets consistent
with recent historical experience.
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Other factors which may affect Regions apply to the financial services industry
more generally, including:
- - Possible changes in economic and business conditions that may affect the
prevailing interest rates, the prevailing rates of inflation, or the
amount of growth, stagnation, or recession in the global, U.S., and
southeastern U.S. economies, the value of investments, collectibility of
loans, and the profitability of business entities.
- - Possible changes in monetary and fiscal policies, laws, and regulations,
and other activities of governments, agencies, and similar organizations.
- - The effects of easing of restrictions on participants in the financial
services industry, such as banks, securities brokers and dealers,
investment companies, and finance companies, and attendant changes in
patterns and effects of competition in the financial services industry.
The words "believe", "expect", "anticipate", "project", and similar
expressions signify forward looking statements. Readers are cautioned not to
place undue reliance on any forward looking statements made by or on behalf of
Regions. Any such statement speaks only as of the date the statement was made.
Regions undertakes no obligation to update or revise any forward looking
statements.
EXPERTS
The consolidated financial statements of Regions at December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,
incorporated by reference in this Registration Statement, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
which is included in the Annual Report to Stockholders which is incorporated by
reference in its Annual Report on Form 10-K for the year ended December 31,
1998. The financial statements audited by Ernst & Young LLP have been
incorporated herein by reference in reliance on their report given on their
authority as experts in accounting and auditing.
OPINIONS
The legality of the shares of Regions common stock to be issued in the
merger will be passed upon by Lange, Simpson, Robinson & Somerville LLP,
Birmingham, Alabama. Henry E. Simpson, partner in the law firm of Lange,
Simpson, Robinson & Somerville LLP, is a member of the Board of Directors of
Regions. As of _______, 1999, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville LLP owned an aggregate of _______ shares of Regions
common stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird LLP, Atlanta, Georgia.
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WHERE YOU CAN FIND MORE INFORMATION
Regions files annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any reports, statements
or other information that Regions files with the SEC at the SEC's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. These filings are also available at the Internet world wide
web site maintained by the SEC at "http://www.sec.gov."
Regions filed a Registration Statement on Form S-4 (the "Registration
Statement") to register with the SEC the Regions common stock to be issued to
LCB Corporation stockholders in the merger. This Proxy Statement-Prospectus is
a part of that Registration Statement and constitutes a prospectus of Regions.
As allowed by SEC rules, this Proxy Statement-Prospectus does not contain all
the information you can find in Regions' Registration Statement or the exhibits
to that Registration Statement.
SEC regulations allow Regions to "incorporate by reference" information
into this Proxy Statement-Prospectus, which means that Regions can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is
considered part of this Proxy Statement-Prospectus, except for any information
superseded by information contained directly in this Proxy Statement-Prospectus
or in later filed documents incorporated by reference in this Proxy
Statement-Prospectus.
This Proxy Statement-Prospectus incorporates by reference the documents
set forth below that Regions has previously filed with the SEC. These documents
contain important information about Regions and its finances. Some of these
filings have been amended by later filings, which are also listed.
<TABLE>
<CAPTION>
REGIONS SEC FILINGS (FILE NO. 0-6159) PERIOD/AS OF DATE
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q/A Quarters ended March 31 and
June 30, 1999.
Quarterly Report on Form 10-Q Quarter ended September 30, 1999.
Current Report on Form 8-K October 18, 1999.
</TABLE>
Regions also incorporates by reference additional documents that may be
filed with the SEC between the date of this Proxy Statement-Prospectus and the
consummation of the merger or the termination of the merger agreement. These
include periodic reports, such as Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as well as proxy
statements.
Regions has supplied all information contained or incorporated by
reference in this Proxy Statement-Prospectus relating to Regions, and LCB
Corporation has supplied all such information relating to LCB Corporation.
If you are a stockholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through Regions, the
SEC or the SEC's Internet web site as described above.
Documents incorporated by reference are available from Regions without
charge, excluding all exhibits, except that if Regions has specifically
incorporated by reference an exhibit in this Proxy Statement-Prospectus, the
exhibit will also be available without charge. Stockholders may obtain
74
<PAGE> 70
documents incorporated by reference in this Proxy Statement-Prospectus by
requesting them in writing or by telephone from Regions at the following
address:
Regions Financial Corporation
417 North 20th Street
Birmingham, AL 35203
Attention: Shareholder Relations
Telephone: (205) 326-7090
You should rely only on the information contained or incorporated by
reference in this Proxy Statement-Prospectus. We have not authorized anyone to
provide you with information that is different from what is contained in this
Proxy Statement-Prospectus. This Proxy Statement-Prospectus is dated _______
1999. You should not assume that the information contained in this Proxy
Statement-Prospectus is accurate as of any date other than that date. Neither
the mailing of this Proxy Statement-Prospectus to stockholders nor the issuance
of Regions common stock in the merger creates any implication to the contrary.
75
<PAGE> 71
<TABLE>
INDEX TO LCB CORPORATION FINANCIAL STATEMENTS (UNAUDITED)
<S> <C>
Consolidated Statements of Financial Condition as of
December 31, 1998 and 1997 (Unaudited)..................................................................F-2
Consolidated Statements of Income for the Years
Ended December 31, 1998, 1997, and 1996 (Unaudited).....................................................F-3
Consolidated Statements of Shareholders'
Equity for the Years Ended December 31, 1998, 1997, and 1996 (Unaudited)................................F-4
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1998, 1997, and 1996 (Unaudited).....................................................F-5
Notes to Unaudited Consolidated Financial Statements.......................................................F-6
Consolidated Statements of Financial Condition
as of September 30, 1999 and 1998 (Unaudited)...........................................................F-7
Consolidated Statements of Income for
the Nine Months Ended September 30, 1999 and 1998 (Unaudited)...........................................F-8
Consolidated Statement of Shareholders' Equity
for the Nine Months Ended September 30, 1999 (Unaudited)................................................F-9
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 (Unaudited)...............................................F-10
Notes to Unaudited Consolidated Interim Financial Statements...............................................F-11
</TABLE>
F-1
<PAGE> 72
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LCB CORPORATION
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 12,449,000 $ 8,410,000
Interest-bearing deposits at banks.......................... 1,052,000 --
Federal funds sold.......................................... 12,985,000 7,711,000
Securities available-for-sale............................... 33,405,000 32,954,000
Loans....................................................... 113,734,000 101,465,000
Unearned income........................................... (1,159,000) (1,193,000)
------------ ------------
Loans, net of unearned income............................. 112,575,000 100,272,000
Allowance for loan losses................................. (1,442,000) (1,618,000)
------------ ------------
NET LOANS......................................... 111,133,000 98,654,000
Premises and equipment, net................................. 4,382,000 4,579,000
Foreclosed real estate...................................... 29,000 90,000
Other assets................................................ 5,526,000 4,959,000
------------ ------------
TOTAL ASSETS...................................... $180,961,000 $157,357,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing.................................... $ 26,046,000 $ 19,110,000
Interest-bearing....................................... 132,317,000 118,300,000
------------ ------------
TOTAL DEPOSITS.................................... 158,363,000 137,410,000
Other short-term borrowings............................... 110,000 --
Other long-term borrowings................................ 890,000 --
Other liabilities......................................... 2,517,000 2,142,000
------------ ------------
TOTAL LIABILITIES................................. 161,880,000 139,552,000
Minority interest in subsidiary bank........................ 56,000 599,000
SHAREHOLDERS' EQUITY
Common stock -- par value $1.00 per share, 80,000 shares
issued and 78,000 shares outstanding................... 80,000 80,000
Capital surplus........................................... 763,000 763,000
Retained earnings......................................... 18,067,000 16,277,000
Accumulated other comprehensive income.................... 230,000 201,000
Less: Treasury stock at cost.............................. (115,000) (115,000)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY........................ 19,025,000 17,206,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $180,961,000 $157,357,000
============ ============
</TABLE>
See notes to unaudited consolidated financial statements
F-2
<PAGE> 73
CONSOLIDATED STATEMENTS OF INCOME
LCB CORPORATION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans............................ $13,050,000 $11,131,000 $10,857,000
Interest and dividends on available-for-sale
securities:
US Treasury and US Government Obligations.......... 1,232,000 1,274,000 907,000
Tax-exempt securities.............................. 606,000 613,000 567,000
Interest on federal funds sold........................ 397,000 510,000 597,000
Interest on deposits in banks......................... 28,000 100,000 66,000
Other interest income................................. 50,000 -- --
----------- ----------- -----------
TOTAL INTEREST INCOME......................... 15,363,000 13,628,000 12,994,000
----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits.................................. 5,732,000 5,505,000 5,347,000
Interest on other borrowings.......................... 42,000 -- 1,000
----------- ----------- -----------
TOTAL INTEREST EXPENSE........................ 5,774,000 5,505,000 5,348,000
----------- ----------- -----------
Net interest income..................................... 9,589,000 8,123,000 7,646,000
Provision for loan losses............................... 16,000 113,000 305,000
----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES..... 9,573,000 8,010,000 7,341,000
NONINTEREST INCOME
Service charges on deposits........................... 772,000 781,000 782,000
Commissions and fees.................................. 564,000 466,000 271,000
Realized gain on available-for-sale securities........ 161,000 13,000 4,000
Other non-interest income............................. 106,000 243,000 184,000
----------- ----------- -----------
TOTAL NONINTEREST INCOME...................... 1,603,000 1,503,000 1,241,000
----------- ----------- -----------
NONINTEREST EXPENSES
Salaries and employee benefits........................ 3,698,000 2,808,000 2,609,000
Occupancy and equipment expense....................... 880,000 818,000 715,000
Other non-interest expenses........................... 2,135,000 1,897,000 1,463,000
----------- ----------- -----------
TOTAL NONINTEREST EXPENSES.................... 6,713,000 5,523,000 4,787,000
----------- ----------- -----------
Income before income taxes and minority interest........ 4,463,000 3,990,000 3,795,000
Income tax expense...................................... 1,463,000 1,228,000 1,255,000
Minority interest in net income of consolidated
subsidiary............................................ 40,000 114,000 95,000
----------- ----------- -----------
NET INCOME.................................... $ 2,960,000 $ 2,648,000 $ 2,445,000
=========== =========== ===========
Basic earnings per common share......................... $ 37.95 $ 33.95 $ 31.35
=========== =========== ===========
Weighted average common shares outstanding.............. 78,000 78,000 78,000
=========== =========== ===========
</TABLE>
See notes to unaudited consolidated financial statements
F-3
<PAGE> 74
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
LCB CORPORATION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON CAPITAL RETAINED COMPREHENSIVE TREASURY
STOCK SURPLUS EARNINGS INCOME STOCK TOTAL
------- -------- ----------- ------------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1996....................... $80,000 $763,000 $12,900,000 $127,000 $(115,000) $13,755,000
Comprehensive income:
Net income............... 2,445,000 2,445,000
Unrealized losses on
available-for-sale
securities............ (23,000) (23,000)
------- -------- ----------- -------- --------- -----------
Comprehensive
income -- 1996........... 2,445,000 (23,000) 2,422,000
Dividends declared......... (546,000) (546,000)
------- -------- ----------- -------- --------- -----------
Balance at December 31,
1996..................... 80,000 763,000 14,799,000 104,000 (115,000) 15,631,000
Comprehensive income:
Net income............... 2,648,000 2,648,000
Unrealized gains on
available-for-sale
securities............ 97,000 97,000
------- -------- ----------- -------- --------- -----------
Comprehensive
income -- 1997........... 2,648,000 97,000 2,745,000
Dividends declared......... (1,170,000) (1,170,000)
------- -------- ----------- -------- --------- -----------
Balance at December 31,
1997..................... 80,000 763,000 16,277,000 201,000 (115,000) 17,206,000
Comprehensive income:
Net income............... 2,960,000 2,960,000
Unrealized gain on
available-for-sale
securities............ 29,000 29,000
------- -------- ----------- -------- --------- -----------
Comprehensive
income -- 1998........... 2,960,000 29,000 2,989,000
Dividends declared......... (1,170,000) (1,170,000)
------- -------- ----------- -------- --------- -----------
Balance at December 31,
1998..................... $80,000 $763,000 $18,067,000 $230,000 $(115,000) $19,025,000
======= ======== =========== ======== ========= ===========
</TABLE>
See notes to unaudited consolidated financial statements
F-4
<PAGE> 75
CONSOLIDATED STATEMENTS OF CASH FLOWS
LCB CORPORATION
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income.......................................... $ 2,960,000 $ 2,648,000 $ 2,445,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation........................................ 364,000 397,000 318,000
Provision for loan losses........................... 16,000 113,000 305,000
Minority interest in net income of consolidated
subsidiary....................................... 40,000 114,000 95,000
Realized security (gains)........................... (161,000) (13,000) (4,000)
(Increase) in other assets.......................... (265,000) (206,000) (138,000)
Increase in other liabilities....................... 375,000 748,000 154,000
------------ ------------ -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES... 3,329,000 3,801,000 3,175,000
------------ ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) in loans............................. (12,495,000) (9,816,000) 4,096,000
Purchase of minority interest....................... (885,000) -- --
Net (increase) in available-for-sale securities..... (261,000) (3,441,000) (6,818,000)
Net (increase) in interest-bearing deposits in other
banks............................................ (1,052,000) -- --
Net (increase) in premises and equipment............ (167,000) (719,000) (1,806,000)
Proceeds from sale of foreclosed real estate........ 61,000 -- 299,000
------------ ------------ -----------
NET CASH USED IN INVESTING ACTIVITIES....... (14,799,000) (13,976,000) (4,229,000)
------------ ------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits............................ 20,953,000 2,984,000 8,522,000
Net increase in short-term borrowings............... 110,000 -- --
Proceeds from long-term borrowings.................. 1,000,000 -- --
Payments of long-term borrowings.................... (110,000) (5,000) (5,000)
Cash dividends...................................... (1,170,000) (1,170,000) (546,000)
------------ ------------ -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES... 20,783,000 1,809,000 7,971,000
------------ ------------ -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS......................................... 9,313,000 (8,366,000) 6,917,000
Cash and cash equivalents at beginning of year........ 16,121,000 24,487,000 17,570,000
------------ ------------ -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR.............. $ 25,434,000 $ 16,121,000 $24,487,000
============ ============ ===========
</TABLE>
See notes to unaudited consolidated financial statements
F-5
<PAGE> 76
LCB CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated financial statements do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. All normal, recurring adjustments which, in the
opinion of management, are necessary for a fair presentation of financial
statements, have been included.
F-6
<PAGE> 77
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
LCB CORPORATION
SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks..................................... $ 7,728,000 $ 7,501,000
Interest-bearing deposits at banks.......................... 1,507,000 911,000
Federal funds sold.......................................... 4,876,000 6,333,000
Securities available-for-sale............................... 37,378,000 33,439,000
Loans....................................................... 115,366,000 112,317,000
Unearned income........................................... (877,000) (1,239,000)
------------ ------------
Loans, net of unearned income............................. 114,489,000 111,078,000
Allowance for loan losses................................. (1,781,000) (1,665,000)
------------ ------------
NET LOANS......................................... 112,708,000 109,413,000
Premises and equipment, net................................. 4,388,000 4,450,000
Foreclosed real estate...................................... 508,000 --
Other assets................................................ 6,325,000 5,718,000
------------ ------------
TOTAL ASSETS...................................... $175,418,000 $167,765,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing.................................... $ 21,248,000 $ 19,368,000
Interest-bearing....................................... 132,855,000 126,479,000
------------ ------------
TOTAL DEPOSITS.................................... 154,103,000 145,847,000
Other short-term borrowings............................... -- 110,000
Other long-term borrowings................................ 600,000 890,000
Other liabilities......................................... 2,941,000 2,650,000
------------ ------------
TOTAL LIABILITIES................................. 157,644,000 149,497,000
Minority interest in subsidiary bank...................... -- 66,000
SHAREHOLDERS' EQUITY
Common stock -- par value $1.00 per share, 80,000 shares
issued and 78,000 shares outstanding................... 80,000 80,000
Capital surplus............................................. 763,000 763,000
Retained earnings........................................... 17,590,000 17,144,000
Accumulated other comprehensive income...................... (544,000) 330,000
Less: Treasury stock at cost................................ (115,000) (115,000)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY........................ 17,774,000 18,202,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........ $175,418,000 $167,765,000
============ ============
</TABLE>
See notes to unaudited consolidated interim financial statements
F-7
<PAGE> 78
CONSOLIDATED STATEMENTS OF INCOME
LCB CORPORATION
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans................................ $ 9,988,000 $ 9,651,000
Interest and dividends on investment securities:
US Treasury and US Government Obligations.............. 990,000 931,000
Tax-exempt securities.................................. 506,000 449,000
US equity securities................................... 46,000 --
Interest on federal funds sold............................ 301,000 285,000
Interest on deposits in banks............................. 37,000 28,000
Other interest income..................................... -- 13,000
----------- -----------
TOTAL INTEREST INCOME............................. 11,868,000 11,357,000
----------- -----------
INTEREST EXPENSE
Interest on deposits...................................... 4,321,000 4,228,000
Interest on other borrowings.............................. 33,000 23,000
----------- -----------
TOTAL INTEREST EXPENSE............................ 4,354,000 4,251,000
----------- -----------
Net interest income......................................... 7,514,000 7,106,000
Provision for loan losses................................... 143,000 16,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES......... 7,371,000 7,090,000
NONINTEREST INCOME
Service charges on deposits............................... 543,000 581,000
Commissions and fees...................................... 371,000 330,000
Realized gains on available-for-sale securities........... 12,000 69,000
Other non-interest income................................. 46,000 80,000
----------- -----------
TOTAL NONINTEREST INCOME.......................... 972,000 1,060,000
----------- -----------
NONINTEREST EXPENSES
Salaries and employee benefits............................ 2,845,000 2,732,000
Premises and equipment expense............................ 650,000 648,000
Other operating expenses.................................. 1,607,000 1,592,000
----------- -----------
TOTAL NONINTEREST EXPENSES........................ 5,102,000 4,972,000
----------- -----------
Income before income taxes and minority interest............ 3,241,000 3,178,000
Income tax expense.......................................... 1,261,000 1,097,000
Minority interest in net income of consolidated
subsidiary................................................ -- 44,000
----------- -----------
NET INCOME........................................ $ 1,980,000 $ 2,037,000
=========== ===========
Basic earnings per common share............................. $ 25.38 $ 26.12
=========== ===========
Weighted average common shares outstanding.................. 78,000 78,000
=========== ===========
</TABLE>
See notes to unaudited consolidated interim financial statements
F-8
<PAGE> 79
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
LCB CORPORATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
COMMON RETAINED COMPREHENSIVE TREASURY
STOCK SURPLUS EARNINGS INCOME STOCK TOTAL
------- -------- ----------- ------------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1999....................... $80,000 $763,000 $18,067,000 $ 230,000 $(115,000) $19,025,000
Comprehensive income*:
Net income............... 1,980,000 1,980,000
Unrealized loss on
available-for-sale
securities.......... (774,000) (774,000)
------- -------- ----------- --------- --------- -----------
Comprehensive income....... 1,980,000 (774,000) 1,206,000
Dividends declared......... (2,457,000) (2,457,000)
------- -------- ----------- --------- --------- -----------
Balance at September 30,
1999..................... $80,000 $763,000 $17,590,000 $(544,000) $(115,000) $17,774,000
======= ======== =========== ========= ========= ===========
</TABLE>
- ---------------
* Comprehensive income for the nine months ended September 30, 1998 was
$2,166,000.
See notes to unaudited consolidated interim financial statements
F-9
<PAGE> 80
CONSOLIDATED STATEMENTS OF CASH FLOWS
LCB CORPORATION
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 1,980,000 $ 2,037,000
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation.............................................. 254,000 264,000
Provision for loan losses................................. 143,000 16,000
Minority interest in net income of consolidated
subsidiary............................................. -- 44,000
Realized security (gains)................................. (12,000) (69,000)
(Increase) in other assets................................ (799,000) (451,000)
Increase in other liabilities............................. 424,000 508,000
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES......... 1,990,000 2,349,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) in loans................................... (2,197,000) (10,775,000)
Purchase of minority interest............................. (56,000) (885,000)
Net (increase) in available-for-sale securities........... (4,735,000) (287,000)
Net (increase) in interest-bearing deposits in other
banks.................................................. (455,000) (911,000)
Net (increase) in premises and equipment.................. (260,000) (135,000)
Proceeds from sale of foreclosed real estate.............. -- 90,000
------------ ------------
NET CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES...................................... (7,703,000) (12,903,000)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits....................... (4,260,000) 8,437,000
Net (decrease) increase in short-term borrowings.......... (110,000) 110,000
Proceeds from long-term borrowings........................ -- 1,000,000
Payments of long-term borrowings.......................... (290,000) (110,000)
Cash dividends............................................ (2,457,000) (1,170,000)
------------ ------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES...................................... (7,117,000) 8,267,000
------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS..................................... (12,830,000) (2,287,000)
Cash and cash equivalents at beginning of period............ 25,434,000 16,121,000
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $ 12,604,000 $ 13,834,000
============ ============
</TABLE>
See notes to unaudited consolidated interim financial statements
F-10
<PAGE> 81
LCB CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited consolidated interim financial statements do not
include information or footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. All normal, recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
financial statements, have been included.
NOTE 2. AGREEMENT TO MERGE WITH REGIONS
An Agreement and Plan of Merger between LCB Corporation and Regions
Financial Corporation was signed on July 8, 1999. The Agreement provides for a
merger of the companies in a stock for stock exchange accounted for as a
purchase. On the effective date of the merger each share of LCB Corporation
stock will be exchanged for shares of Regions stock. The merger is contingent
upon regulatory and shareholder approval.
F-11
<PAGE> 82
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
LCB CORPORATION
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF JULY 8, 1999
A-1
<PAGE> 83
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties.....................................................
Preamble....................................................
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER...............
1.1 Merger...............................................
1.2 Time and Place of Closing............................
1.3 Effective Time.......................................
1.4 Execution of Support Agreements......................
ARTICLE 2 -- TERMS OF MERGER................................
2.1 Certificate of Incorporation.........................
2.2 Bylaws...............................................
2.3 Directors and Officers...............................
ARTICLE 3 -- MANNER OF CONVERTING SHARES....................
3.1 Conversion of Shares.................................
3.2 Anti-Dilution Provisions.............................
3.3 Shares Held by LCB or Regions........................
3.4 Dissenting Stockholders..............................
3.5 Fractional Shares....................................
ARTICLE 4 -- EXCHANGE OF SHARES.............................
4.1 Exchange Procedures..................................
4.2 Rights of Former LCB Stockholders....................
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF LCB..........
5.1 Organization, Standing, and Power....................
5.2 Authority; No Breach By Agreement....................
5.3 Capital Stock........................................
5.4 LCB Subsidiaries.....................................
5.5 Financial Statements.................................
5.6 Absence of Undisclosed Liabilities...................
5.7 Absence of Certain Changes or Events.................
5.8 Tax Matters..........................................
5.9 Assets...............................................
5.10 Environmental Matters................................
5.11 Compliance with Laws.................................
5.12 Labor Relations......................................
5.13 Employee Benefit Plans...............................
5.14 Material Contracts...................................
5.15 Legal Proceedings....................................
5.16 Reports..............................................
5.17 Statements True and Correct..........................
5.18 Tax and Regulatory Matters...........................
5.19 State Takeover Laws..................................
5.20 Charter Provisions...................................
5.21 Support Agreements...................................
5.22 Derivatives..........................................
5.23 Year 2000............................................
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS......
6.1 Organization, Standing, and Power....................
6.2 Authority; No Breach By Agreement....................
6.3 Capital Stock........................................
</TABLE>
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<TABLE>
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6.4 Regions Subsidiaries.................................
6.5 SEC Filings; Financial Statements....................
6.6 Absence of Undisclosed Liabilities...................
6.7 Absence of Certain Changes or Events.................
6.8 Compliance with Laws.................................
6.9 Legal Proceedings....................................
6.10 Reports..............................................
6.11 Statements True and Correct..........................
6.12 Tax and Regulatory Matters...........................
6.13 Derivatives..........................................
6.14 Year 2000............................................
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.......
7.1 Affirmative Covenants of Both Parties................
7.2 Negative Covenants of LCB............................
7.3 Adverse Changes in Condition.........................
7.4 Reports..............................................
ARTICLE 8 -- ADDITIONAL AGREEMENTS..........................
8.1 Registration Statement; Proxy Statement; Stockholder
Approval...............................................
8.2 Exchange Listing.....................................
8.3 Applications.........................................
8.4 Filings with State Offices...........................
8.5 Agreement as to Efforts to Consummate................
8.6 Investigation and Confidentiality....................
8.7 Press Releases.......................................
8.8 Certain Actions......................................
8.9 Tax Treatment........................................
8.10 State Takeover Laws..................................
8.11 Charter Provisions...................................
8.12 Agreement of Affiliates..............................
8.13 Employee Benefits and Contracts......................
8.14 Indemnification......................................
8.15 Certain Modifications................................
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE................................................
9.1 Conditions to Obligations of Each Party..............
9.2 Conditions to Obligations of Regions.................
9.3 Conditions to Obligations of LCB.....................
ARTICLE 10 -- TERMINATION...................................
10.1 Termination.........................................
10.2 Effect of Termination...............................
10.3 Non-Survival of Representations and Covenants.......
ARTICLE 11 -- MISCELLANEOUS.................................
11.1 Definitions.........................................
11.2 Expenses............................................
11.3 Brokers and Finders.................................
11.4 Entire Agreement....................................
11.5 Amendments..........................................
11.6 Waivers.............................................
11.7 Assignment..........................................
11.8 Notices.............................................
11.9 Governing Law.......................................
</TABLE>
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11.10 Counterparts........................................
11.11 Captions............................................
11.12 Interpretations.....................................
11.13 Enforcement of Agreement............................
11.14 Severability........................................
Signatures..................................................
</TABLE>
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LIST OF EXHIBITS
<TABLE>
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EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S> <C>
1. -- Form of Support Agreement. (sec.sec. 1.4, 5.21).
2. -- Form of Affiliate Agreement. (sec.sec. 8.12, 9.2(d)).
3. -- Form of Claims Letter. (sec. 9.2(e)).
4. -- Opinion of LCB Counsel (sec. 9.2(f)).
5. -- Opinion of Regions Counsel (sec. 9.3(d)).
</TABLE>
[EXHIBITS OMITTED]
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of July 8, 1999, by and between LCB CORPORATION ("LCB"), a corporation
organized and existing under the Laws of the State of Tennessee, with its
principal office located in Fayetteville, Tennessee; 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 LCB 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 LCB by Regions pursuant to the merger (the "Merger") of LCB with
and into Regions. At the effective time of the Merger, the outstanding shares of
the capital stock of LCB shall be converted into shares of the common stock of
Regions (except as provided herein). As a result, stockholders of LCB shall
become stockholders of Regions, and each of the subsidiaries of LCB 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 LCB, 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 for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code.
As a condition and inducement to Regions' willingness to enter into this
Agreement, each of LCB's directors is executing and delivering to Regions an
agreement (a "Support Agreement"), in substantially the form of Exhibit 1.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, 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, LCB shall be merged with and into Regions in accordance with the
provisions of Section 48-21-102 of the TBCA 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 LCB 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 Tennessee
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Tennessee and the Delaware Certificate of
Merger reflecting the Merger shall become effective with the Secretary of State
of the State of Delaware (the "Effective Time"). Subject to the terms and
conditions hereof, unless otherwise mutually agreed upon by the duly authorized
officers of each Party, the Parties shall use their reasonable efforts to cause
the Effective Time to occur on the last business day of the month in which the
last of the following occurs: (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
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stockholders of LCB approve the matters relating to this Agreement required to
be approved by such stockholders by applicable Law; or such later day within 30
days thereof as may be specified by Regions.
1.4 Execution of Support Agreements. Immediately prior to the execution of
this Agreement and as a condition hereto, each of the directors and Barry T.
Buckley is executing and delivering to Regions a Support Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 Directors and Officers. The directors of Regions in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of Regions in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of Regions or LCB, 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 LCB Common Stock (excluding shares held by any LCB
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 15.789 shares of
Regions Common Stock (the "Exchange Ratio").
3.2 Anti-Dilution Provisions. In the event LCB changes the number of
shares of LCB Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend or similar recapitalization with
respect to such stock, the Exchange Ratio shall be proportionately adjusted. In
the event Regions changes the number of shares of Regions Common Stock issued
and outstanding prior to the Effective Time as a result of a stock split, stock
dividend, or similar recapitalization with respect to such stock and the record
date therefor (in the case of a stock dividend) or the effective date thereof
(in the case of a stock split or similar recapitalization for which a record
date is not established) shall be prior to the Effective Time, the Exchange
Ratio shall be proportionately adjusted.
3.3 Shares Held by LCB or Regions. Each of the shares of LCB Common Stock
held by any LCB 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 LCB Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Section 48-23-201 et seq. of the TBCA shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of
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Law; provided, that no such payment shall be made to any dissenting stockholder
unless and until such dissenting stockholder has complied with the applicable
provisions of the TBCA. In the event that a dissenting stockholder of LCB fails
to perfect, or effectively withdraws or loses, his right to appraisal and of
payment for his shares, such Person shall not have the right to receive payment
in cash for his shares and, instead, as of the Effective Time the shares of LCB
Common Stock held by such Person shall be converted into and exchanged for that
number of shares of Regions Common Stock determined under Section 3.1 of this
Agreement and the delivery of certificates representing such Regions Common
Stock and any dividends or other distributions in respect thereof to which such
holder may be entitled shall be governed by Section 4.1 of this Agreement.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of LCB 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.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, Regions and
LCB shall cause the exchange agent selected by Regions (the "Exchange Agent") to
mail to the former stockholders of LCB appropriate transmittal materials (which
shall specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of LCB Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After the
Effective Time, each holder of shares of LCB Common Stock (other than shares to
be canceled pursuant to Section 3.3 of this Agreement or as to which dissenters'
rights of appraisal have been perfected) issued and outstanding at the Effective
Time promptly upon surrender the certificate or certificates representing such
shares to the Exchange Agent, shall receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends and other 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 LCB 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). Until so surrendered, each outstanding
certificate of LCB Common Stock shall be deemed for all purposes, other than as
provided below with respect to the payment of dividends or other distributions
payable to the holders of shares of Regions Common Stock, to represent the
consideration into which the number of shares of LCB Common Stock represented
thereby prior to the Effective Time shall have been converted. Regions shall not
be obligated to deliver the consideration to which any former holder of LCB
Common Stock is entitled as a result of the Merger until such holder surrenders
such holder's certificate or certificates representing the shares of LCB Common
Stock for exchange as provided in this Section 4.1. The certificate or
certificates of LCB 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, LCB, nor the Exchange Agent
shall be liable to a holder of LCB 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 LCB Stockholders. At the Effective Time, the stock
transfer books of LCB shall be closed as to holders of LCB Common Stock
immediately prior to the Effective Time and no transfer of LCB 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
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representing shares of LCB Common Stock (other than shares to be canceled
pursuant to Sections 3.3 and 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 LCB in respect of such shares
of LCB 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 LCB 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 LCB Common Stock are
converted, regardless of whether such holders have exchanged their certificates
representing LCB Common Stock for certificates representing Regions Common Stock
in accordance with the provisions of this Agreement. Whenever a dividend or
other distribution is declared by Regions on the Regions Common Stock, the
record date for which is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of Regions Common Stock
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of Regions Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of LCB 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 LCB
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 LCB
LCB hereby represents and warrants to Regions as follows:
5.1 Organization, Standing, and Power. LCB is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Tennessee, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Material Assets. LCB 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 LCB.
5.2 Authority; No Breach By Agreement.
(a) LCB 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 LCB, subject to the approval
of this Agreement by the holders of a majority of the shares of LCB Common Stock
present at the Stockholders Meeting, which is the only stockholder vote required
for approval of this Agreement and consummation of the Merger by LCB. Subject to
such requisite stockholder approval, this Agreement represents a legal, valid,
and binding obligation of LCB, enforceable against LCB 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 LCB, nor the
consummation by LCB of the transactions contemplated hereby, nor compliance by
LCB with any of the provisions hereof, will (i) conflict with or result in a
breach of any provision of LCB's Articles of Incorporation or Bylaws, or (ii)
constitute or result in a Default under, or require any Consent pursuant to, or
result in the creation of any Lien on any Asset
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of any LCB Company under, any Contract or Permit of any LCB 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 LCB, 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 LCB 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 or both 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 LCB, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by LCB of the Merger and the other transactions contemplated in
this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of LCB consists, as of the date of this
Agreement, of 100,000 shares of LCB Common Stock, of which 78,000 shares are
issued and outstanding as of the date of this Agreement and not more than 78,000
shares will be issued and outstanding at the Effective Time and 1,000 shares of
LCB Class B common stock, of which no shares are issued and outstanding as of
the date of this Agreement and no shares will be issued and outstanding at the
Effective Time. All of the issued and outstanding shares of LCB Common Stock are
duly and validly issued and outstanding and are fully paid and nonassessable
under the TBCA. None of the outstanding shares of LCB Common Stock has been
issued in violation of any preemptive rights of the current or past stockholders
of LCB.
(b) Except as set forth in Section 5.3(a) of this Agreement or Section
5.3(b) of the LCB Disclosure Memorandum, there are no shares of capital stock or
other equity securities of LCB outstanding and no outstanding Rights relating to
the capital stock of LCB.
5.4 LCB Subsidiaries. LCB has disclosed in Section 5.4 of the LCB
Disclosure Memorandum all of the LCB Subsidiaries as of the date of this
Agreement. LCB or one of its Subsidiaries owns all of the issued and outstanding
shares of capital stock of each LCB Subsidiary. No equity securities of any LCB
Subsidiary are or may become required to be issued (other than to another LCB
Company) by reason of any Rights, and there are no Contracts by which any LCB
Subsidiary is bound to issue (other than to another LCB Company) additional
shares of its capital stock or Rights or by which any LCB Company is or may be
bound to transfer any shares of the capital stock of any LCB Subsidiary (other
than to another LCB Company). There are no Contracts relating to the rights of
any LCB Company to vote or to dispose of any shares of the capital stock of any
LCB Subsidiary. All of the shares of capital stock of each LCB Subsidiary held
by a LCB Company are fully paid and, nonassessable under the applicable
corporation or banking Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the LCB Company free and clear of any
Lien. Each LCB 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 LCB 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 LCB. Each LCB Subsidiary that is
a depository institution is an "insured depository 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 Financial Statements. LCB has disclosed in Section 5.5 of the LCB
Disclosure Memorandum, and has delivered to Regions copies of, all LCB Financial
Statements prepared for periods ended prior to the date hereof and will deliver
to Regions copies of all LCB Financial Statements prepared subsequent to the
date
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hereof. The LCB Financial Statements (as of the dates thereof and for the
periods covered thereby) (i) are or, if dated after the date of this Agreement,
will be in accordance with the books and records of the LCB Companies, which are
or will be, as the case may be, complete and correct and which have been or will
have been, as the case may be, maintained in accordance with past business
practices, and (ii) present or will present, as the case may be, fairly the
consolidated financial position of the LCB Companies as of the dates indicated
and the consolidated results of operations, changes in stockholders' equity, and
cash flows of the LCB Companies for the periods indicated, in accordance with
GAAP (subject to any exceptions as to consistency specified therein or as may be
indicated in the notes thereto or, in the case of interim financial statements,
to normal recurring year-end adjustments which were not or are not expected to
be Material in amount or effect).
5.6 Absence of Undisclosed Liabilities. No LCB Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on LCB, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of LCB as of March 31, 1999, included in the
LCB Financial Statements or reflected in the notes thereto and except for
Liabilities incurred in the ordinary course of business subsequent to March 31,
1999. No LCB Company has incurred or paid any Liability since March 31, 1999,
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 LCB.
5.7 Absence of Certain Changes or Events. Since March 31, 1999, except as
disclosed in the LCB Financial Statements delivered prior to the date of the
Agreement or as otherwise disclosed in the LCB Disclosure Memorandum, (i) there
have been no events, changes, or occurrences which have had, or are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
LCB, and (ii) the LCB Companies have not taken any action, or failed to take any
action, prior to the date of this Agreement, which action or failure, if taken
after the date of this Agreement, would represent or result in a material breach
or violation of any of the covenants and agreements of LCB provided in Article 7
of this Agreement, other than conducting the process that has led up to the
execution and consummation of this Agreement.
5.8 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the LCB
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,
1998, and, to the Knowledge of LCB, 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 LCB, except to the extent
reserved against in the LCB 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 LCB 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
LCB Companies for the period or periods through and including the date of the
respective LCB Financial Statements has been made and is reflected on such LCB
Financial Statements.
(d) Each of the LCB Companies is in compliance with, and its records
contain the information and documents (including properly completed IRS Forms
W-9) necessary to comply with, in all material respects, 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.
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(e) None of the LCB 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 LCB Companies.
(g) There has not been an ownership change, as defined in Internal Revenue
Code Section 382(g), of the LCB Companies that occurred during or after any
Taxable Period in which the LCB Companies incurred a net operating loss that
carries over to any Taxable Period ending after December 31, 1998.
(h) No LCB 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 LCB 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 LCB 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 LCB Companies are in good condition, reasonable
wear and tear excepted, and are usable in the ordinary course of business
consistent with LCB's past practices. All Assets which are Material to LCB's
business on a consolidated basis, held under leases or subleases by any of the
LCB 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 LCB Companies currently
maintain insurance in amounts, scope, and coverage reasonably necessary for
their operations. None of the LCB 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. There are presently
no claims pending under such policies of insurance and no notices have been
given by any LCB Company under such policies. The Assets of the LCB Companies
include all Material Assets required to operate the business of the LCB
Companies as presently conducted.
5.10 Environmental Matters.
(a) Each LCB Company, its Participation Facilities, and, to the Knowledge
of LCB, its Loan Properties are, and have been, in compliance with all
Environmental Laws, except those instances of non-compliance which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on LCB.
(b) There is no Litigation pending or, to the Knowledge of LCB, threatened
before any court, governmental agency, or authority, or other forum in which any
LCB 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 LCB 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 LCB.
(c) There is no Litigation pending, or to the Knowledge of LCB, threatened
before any court, governmental agency, or authority, or other forum in which any
of its Loan Properties (or LCB 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
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Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on LCB.
(d) To the Knowledge of LCB, 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 LCB.
(e) To the Knowledge of LCB, during the period of (i) any LCB Company's
ownership or operation of any of their respective current properties, (ii) any
LCB Company's participation in the management of any Participation Facility, or
(iii) any LCB 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 LCB.
Prior to the period of (i) any LCB Company's ownership or operation of any of
their respective current properties, (ii) any LCB Company's participation in the
management of any Participation Facility, or (iii) any LCB Company's holding of
a security interest in a Loan Property, to the Knowledge of LCB, 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
LCB.
5.11 Compliance with Laws. LCB is duly registered as a bank holding
company under the BHC Act. Each LCB 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 LCB, 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 LCB. None of the LCB 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 LCB; 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 LCB 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 LCB, (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 LCB, or (iii) requiring any LCB Company (x) to enter into
or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any
Board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any material manner relates to its capital
adequacy, its credit or reserve policies, its management, or the payment of
dividends.
5.12 Labor Relations. No LCB Company is the subject of any Litigation
asserting that it or any other LCB 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 LCB Company to bargain with any
labor organization as to wages or conditions of employment, nor is any LCB
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 LCB Company, pending or
threatened, or to the Knowledge of LCB, is there any activity involving any LCB
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.
5.13 Employee Benefit Plans.
(a) LCB has disclosed to Regions in writing prior to the execution of the
Agreement and in Section 5.13 of the LCB 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 LCB Benefits Plans.
For purposes of this Agreement, "LCB Benefit Plans" means all written pension,
retirement, profit-sharing, deferred
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compensation, stock option, employee stock ownership, severance pay, vacation,
bonus, or other incentive plan, all other written employee programs or
agreements, all medical, vision, dental, or other written health plans, all life
insurance plans, and all other written employee benefit plans or fringe benefit
plans, including written "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 LCB 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 LCB
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 "LCB ERISA
Plan." Any LCB 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 "LCB Pension Plan." Neither LCB nor any LCB 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 LCB Company that was intended to qualify under Section 401(a)
of the Internal Revenue Code, is disclosed as such in Section 5.13 of the LCB
Disclosure Memorandum.
(b) LCB 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 LCB Benefit Plans
(including insurance contracts), and all amendments thereto, (ii) with respect
to any such LCB 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 LCB 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 LCB 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 LCB. Each LCB ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code has
received a favorable determination letter from the Internal Revenue Service, and
LCB is not aware of any circumstances likely to result in revocation of any such
favorable determination letter. Each trust created under any LCB ERISA Plan has
been determined to be exempt from Tax under Section 501(a) of the Internal
Revenue Code and LCB is not aware of any circumstance which will or could
reasonably result in revocation of such exemption. With respect to each LCB
Benefit Plan to the Knowledge of LCB, 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 LCB. There is no Material pending or, to the
Knowledge of LCB, threatened Litigation relating to any LCB ERISA Plan.
(d) No LCB Company has engaged in a transaction with respect to any LCB
Benefit Plan that, assuming the Taxable Period of such transaction expired as of
the date of this Agreement, would subject any LCB 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 LCB. Neither LCB nor any
administrator or fiduciary of any LCB 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 LCB 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 LCB. No oral or written
representation or communication with respect to any aspect of the LCB Benefit
Plans has been made to employees of any LCB 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 LCB.
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(e) No LCB Pension Plan has any "unfunded current liability," as that term
is defined in Section 302(d)(8)(A) of ERISA, and the fair market value of the
Assets of any such plan exceeds the plan's "benefit liabilities," as that term
is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no Material change in the financial position or
funded status of any LCB Pension Plan, (ii) no change in the actuarial
assumptions with respect to any LCB Pension Plan, and (iii) no increase in
benefits under any LCB 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 LCB. Neither any LCB Pension Plan
nor any "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any LCB Company, or the
single-employer plan of any entity which is considered one employer with LCB
under Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (a "LCB 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 LCB Pension Plan or any single-employer plan of a LCB 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 LCB Company has provided, or is required to
provide, security to a LCB Pension Plan or to any single-employer plan of a LCB
ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code. All
premiums required to be paid under ERISA Section 4006 have been timely paid by
LCB, except to the extent any failure would not have a Material Adverse Effect
on LCB.
(f) No Liability under Title IV of ERISA has been or is expected to be
incurred by any LCB Company with respect to any defined benefit plan currently
or formerly maintained by any of them or by any LCB 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 LCB).
(g) No LCB Company has any obligations for retiree health and retiree life
benefits under any of the LCB Benefit Plans other than with respect to benefit
coverage mandated by applicable Law.
(h) 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 LCB Company from any LCB Company under any LCB Benefit Plan
or otherwise, (ii) increase any benefits otherwise payable under any LCB 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 LCB
Disclosure Memorandum, none of the LCB Companies, nor any of their respective
Assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $50,000, (ii) any Contract relating to the borrowing
of money by any LCB Company or the guarantee by any LCB 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 LCB with the SEC as of the date of
this Agreement if LCB were required to file a Form 10-K with the SEC (together
with all Contracts referred to in Sections 5.9 and 5.13(a) of this Agreement,
the "LCB Contracts"). With respect to each LCB Contract: (i) the Contract is in
full force and effect; (ii) no LCB 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 LCB; (iii) no LCB 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 LCB, 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 LCB, or has repudiated or waived
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any Material provision thereunder. Except for Federal Home Loan Bank advances,
all of the indebtedness of any LCB Company for money borrowed is prepayable at
any time by such LCB Company without penalty or premium.
5.15 Legal Proceedings.
(a) There is no Litigation instituted or pending, or, to the Knowledge of
LCB, threatened against any LCB 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 LCB, nor are
there any Orders of any Regulatory Authorities, other governmental authorities,
or arbitrators outstanding against any LCB Company, that are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on LCB.
(b) Section 5.15(b) of the LCB Disclosure Memorandum includes a summary
report of all Litigation as of the date of this Agreement to which any LCB
Company is a party and which names a LCB Company as a defendant or
cross-defendant.
5.16 Reports. Since December 31, 1994, or the date of organization if
later, each LCB 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 LCB. 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 LCB Company or any Affiliate thereof regarding LCB 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 LCB Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to LCB's stockholders
in connection with the Stockholders' Meeting will, when first mailed to the
stockholders of LCB, be false or misleading with respect to any Material fact,
or contain any misstatement of Material fact, or omit to state any Material fact
required to be stated thereunder or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Proxy Statement or any amendment thereof or supplement thereto,
at the time of the Stockholders' Meeting, be false or misleading with respect to
any Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to correct any Material statement in any earlier
communication with respect to the solicitation of any proxy for the
Stockholders' Meeting. All documents that any LCB 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 Tax and Regulatory Matters. Except as specifically contemplated by
this Agreement, no LCB Company or any Affiliate thereof has taken or agreed to
take any action, and LCB has no Knowledge of any fact or circumstance that is
reasonably likely to (i) prevent the transactions contemplated hereby, including
the Merger, from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, or (ii) materially impede or delay receipt
of any Consents of Regulatory Authorities referred to in Section 9.1(b) of this
Agreement. To the Knowledge of LCB there exists no fact, circumstance, or reason
why the requisite Consents referred to in Section 9.1(b) of this Agreement
cannot be received in a timely manner without imposition of any condition of the
type described in the last sentence of such Section 9.1(b).
5.19 State Takeover Laws. Each LCB 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 Tennessee (collectively,
"Takeover Laws") including those Laws contained within Sections 48-103-101 et
seq. of the TBCA.
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5.20 Charter Provisions. Each LCB 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 LCB 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 LCB Company that may
be directly or indirectly acquired or controlled by it.
5.21 Support Agreements. Each of the directors of LCB has executed and
delivered to Regions a Support Agreement in substantially the form as Exhibit 1
to this Agreement.
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 LCB's own account, or for the account of
one or more the LCB 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. To the Knowledge of LCB, all critical computer software
necessary for the conduct of its business (the "Software") has been tested and
is designed to be used prior to, during, and after the calendar year 2000 A.D.,
and critical Software will operate during each such time period without error
relating to the year 2000, specifically including any error relating to, or the
product of, date data which represents or references different centuries or more
than one century. LCB further represents and warrants that critical Software has
been tested and accepts, calculates, sorts, extracts and otherwise processes
date inputs and date values, and returns and displays date values, in a
consistent manner regardless of the dates used, whether before, on, or after
January 1, 2000.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to LCB as follows:
6.1 Organization, Standing, and Power. Regions is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Material Assets. Regions is
duly qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Regions.
6.2 Authority; No Breach By Agreement.
(a) Regions has the corporate power and authority necessary to execute,
deliver, and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery, and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Regions. This Agreement
represents a legal, valid, and binding obligation of Regions, enforceable
against Regions in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement by Regions, nor
the consummation by Regions of the transactions contemplated hereby, nor
compliance by Regions with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of Regions' Certificate of Incorporation
or Bylaws, (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
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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 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 500,000,000 shares of Regions Common Stock, of
which 223,910,093 shares were issued and outstanding and 888 shares were held as
treasury shares as of March 31, 1999. 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 LCB 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 LCB 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 depository 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.
6.5 SEC Filings; Financial Statements.
(a) Regions has filed and made available to LCB all forms, reports, and
documents required to be filed by Regions with the SEC since January 1 of the
second fiscal year preceding the date of this Agreement (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
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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
March 31, 1999, 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 March 31, 1999. No Regions Company has incurred or paid
any Liability since March 31, 1999, 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 March 31, 1999, 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 the incurrence of expenses in connection with this Agreement and the
transactions contemplated hereby).
6.8 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
(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.
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6.9 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.
6.10 Reports. Since December 31, 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.
6.11 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, or omit to state any Material fact required to be
stated thereunder or necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by any Regions Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to LCB's
stockholders in connection with the Stockholders' Meeting, will, when first
mailed to the stockholders of LCB, be false or misleading with respect to any
Material fact, or contain any misstatement of Material fact, or omit to state
any Material fact required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any Material fact, or omit to state any Material fact
required to be stated thereunder or necessary to correct any Material statement
in any earlier communication with respect to the solicitation of any proxy for
the Stockholders' Meeting. All documents that any 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.
6.12 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 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.
6.13 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.
6.14 Year 2000. Regions has disclosed to LCB 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.
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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 the foregoing
shall not prevent any Regions Company from discontinuing or disposing of any of
its Assets or business, or from acquiring or agreeing to acquire any other
Person or any Assets thereof, if such action is, in the judgment of Regions,
desirable in the conduct of the business of Regions and its Subsidiaries.
7.2 Negative Covenants of LCB. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, LCB
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 Regions, which consent shall not be unreasonably
withheld:
(a) amend the Articles of Incorporation, Bylaws, or other governing
instruments of any LCB Company, or
(b) incur, guarantee, or otherwise become responsible for, any
additional debt obligation or other obligation for borrowed money (other
than indebtedness of a LCB Company to another LCB Company) in excess of an
aggregate of $100,000 (for the LCB Companies on a consolidated basis),
except in the ordinary course of the business consistent with past
practices (which shall include, for LCB 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 LCB
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
LCB 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 LCB Company, or declare or pay any dividend or
make any other distribution in respect of LCB's capital stock, provided
that LCB may (to the extent legally and contractually permitted to do so),
but shall not be obligated to, declare and pay regular annual cash
dividends on the shares of its common stock at a rate not in excess of
$18.00 per share with usual and regular record and payment dates in
accordance with past practice; provided further that any dividend declared
by the Board of Directors of LCB for the annual period during which the
Effective Time occurs shall be declared prior to the Effective Time and
shall be payable in an amount determined by the Board of Directors of LCB
not in excess of $18.00 multiplied by a fraction the numerator of which
shall be the number of dividend record dates for quarterly dividends
payable on shares for Regions Common Stock elapsed since the last dividend
record date for the annual dividend payable on shares of LCB Common Stock
and the denominator of which shall be four; or
(d) except for this 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 LCB Common Stock or any
other capital stock of any LCB Company, or any stock appreciation rights,
or any
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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 LCB
Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of LCB Common Stock, or sell,
lease, mortgage, or otherwise dispose of or otherwise encumber (i) any
shares of capital stock of any LCB Subsidiary (unless any such shares of
stock are sold or otherwise transferred to another LCB Company) or (ii) any
Asset other than in the ordinary course of business for reasonable and
adequate consideration and other than dispositions in the ordinary course
of business of (i) investment securities, (ii) loans, including
dispositions thereof through loan participation agreements, and (iii) other
real estate owned by any LCB Company; or
(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 LCB 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, or (iii) the
creation of new wholly-owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any LCB Company, except 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 LCB Company; grant any
increase in fees or other increases in compensation or other benefits to
directors of any LCB Company; 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 LCB
Company and any Person (unless such amendment is required by Law) that the
LCB 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 LCB Company or make any
Material change in or to any existing employee benefit plans of any LCB
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 provided, however that LCB Companies may continue
to provide bonuses under currently existing benefit plans consistent with
past practices; 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 LCB Company for Material money damages or restrictions upon the
operations of any LCB 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.
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.
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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; Proxy Statement; Stockholder Approval. 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. LCB shall furnish all information
concerning it and the holders of its capital stock as Regions may reasonably
request in connection with such action. LCB 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. In connection
with the Stockholders' Meeting, (i) LCB shall mail the Proxy Statement to all
its stockholders, (ii) the Parties shall furnish to each other all information
concerning them that they may reasonably request in connection with such Proxy
Statement, (iii) the Board of Directors of LCB shall recommend to its
stockholders the approval of the matters submitted for approval, and (iv) the
Board of Directors and officers of LCB shall use their reasonable efforts to
obtain such stockholders' approval, provided that each of Regions and LCB 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 LCB'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 LCB of information that is
required to be disclosed in the Registration Statement or the 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 LCB
Common Stock pursuant to the Merger.
8.3 Applications. Regions shall promptly prepare and file, and LCB 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 Tennessee Articles of Merger with the Secretary of State of the State of
Tennessee in connection with the Closing.
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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 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 LCB 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 LCB Company nor any Affiliate thereof nor
any Representatives thereof retained by any LCB 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, LCB 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 LCB'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
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breach of the fiduciary duties of LCB's Board of Directors under applicable Law;
provided, that LCB 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 LCB or access to
LCB's books, records, or properties in connection therewith. Nothing contained
in this Section 8.8 shall prohibit the Board of Directors of LCB from complying
with Rule 14e-2, promulgated under the 1934 Act. LCB 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 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 "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code for federal income tax
purposes.
8.10 State Takeover Laws. Each LCB 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 LCB 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 LCB 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 LCB Company
that may be directly or indirectly acquired or controlled by it.
8.12 Agreement of Affiliates. LCB has disclosed in Section 8.12 of the LCB
Disclosure Memorandum each Person whom it reasonably believes may be deemed an
"affiliate" of LCB for purposes of Rule 145 under the 1933 Act. LCB 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 LCB Common Stock held by such
Person except as contemplated by such agreement or by this Agreement and will
not sell, pledge, transfer, or otherwise dispose of the shares of Regions Common
Stock to be received by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder. Shares of Regions Common Stock issued to such affiliates
of LCB in exchange for shares of LCB Common Stock shall not be transferable,
regardless of whether each such affiliate has provided the written agreement
referred to in this Section 8.12 (and Regions shall be entitled to place
restrictive legends upon certificates for shares of Regions Common Stock issued
to affiliates of LCB pursuant to this Agreement to enforce the provisions of
this Section 8.12). 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.
8.13. Employee Benefits and Contracts. Following the Effective Time,
Regions shall provide generally to officers and employees of the LCB Companies,
who at or after the Effective Time become employees of a Regions Company,
employee benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of Regions Common Stock except as set
forth in this Section 8.13), 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 LCB
shall be treated as service under Regions' qualified defined benefit plans, (ii)
service under any qualified defined contribution plans of LCB shall be treated
as service under Regions' qualified defined contribution plans, and (iii)
service under any other employee benefit plans of LCB shall be treated as
service under any similar employee benefit plans maintained by Regions. Regions
also shall cause LCB and its Subsidiaries to honor all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.13 of the
LCB Disclosure Memorandum to Regions between any LCB Company and any current or
former director, officer, or employee thereof, and all provisions for vested
benefits or other vested amounts earned or accrued through the Effective Time
under the LCB Benefit Plans.
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8.14 Indemnification.
(a) Subject to the conditions set forth in paragraph (b) below, for a
period of six (6) years after the Effective Time, Regions shall indemnify,
defend, and hold harmless each Person entitled to indemnification from a LCB
Company (each, an "Indemnified Party") against all Liabilities arising out of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement) to the full
extent permitted by Tennessee Law, in each case as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the defense of
any Litigation; provided, however, that all rights to indemnification in respect
of any claim asserted or made against an Indemnified Party within such six- (6)
year period shall continue until the final disposition of such claim. Without
limiting the foregoing, in any case in which approval by LCB is required to
effectuate any indemnification, Regions shall cause LCB to direct, at the
election of the Indemnified Party, that the determination of any such approval
shall be made by independent counsel mutually agreed upon between Regions and
the Indemnified Party.
(b) Any Indemnified Party wishing to claim indemnification under paragraph
(a) above, upon learning of any such Liability or Litigation, shall promptly
notify Regions thereof. In the event of any such Litigation (whether arising
before or after the Effective Time), (i) Regions or LCB shall have the right to
assume the defense thereof and Regions shall not be liable to such Indemnified
Parties for any legal expenses of other counsel or any other expenses
subsequently incurred by such Indemnified Parties in connection with the defense
thereof (employing counsel reasonably satisfactory to the Indemnified Parties),
except that if Regions or LCB elects not to assume such defense or counsel for
the Indemnified Parties advises in writing that there are Material substantive
issues which raise conflicts of interest between Regions or LCB and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and Regions or LCB shall pay all reasonable fees and expenses of such
counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that (i) Regions shall be obligated pursuant to
this paragraph (b) to pay for only one firm of counsel for all Indemnified
Parties in any jurisdiction, unless counsel for any Indemnified Party advises in
writing that there are Material substantive issues which raise conflicts of
interest between the Indemnified Parties, (ii) the Indemnified Parties will
cooperate (to the extent reasonably appropriate under the circumstances) in the
defense of any such Litigation, and (iii) Regions shall not be liable for any
settlement effected without its prior written consent; and provided further that
Regions shall not have any obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall determine, and such determination
shall have become final, that the indemnification of such Indemnified Party in
the manner contemplated hereby is prohibited by applicable Law.
(c) 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 8.14.
(d) The provisions of this Section 8.14 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party, his or her heirs and
representatives.
8.15 Certain Modifications. Regions and LCB shall consult with respect to
their loan, litigation, and real estate valuation policies and practices
(including loan classifications and levels of reserves) and LCB 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 LCB 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 or deemed to have a
Material Adverse Effect on LCB as a consequence of any modifications or charges
undertaken solely on account of this Section 8.15.
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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 Approval. The stockholders of LCB shall have approved
this Agreement, and the consummation of the transactions contemplated
hereby, including the Merger, as and to the extent required by Law and by
the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent 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 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
from Alston & Bird LLP, in a form reasonably satisfactory to such Party
(the "Tax Opinion"), dated the date of the Effective Time, substantially to
the effect that (i) the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, (ii) no gain or
loss will be recognized by holders of LCB Common Stock who exchange all of
their LCB Common Stock solely for Regions Common Stock pursuant to the
Merger (except with respect to any cash received in lieu of a fractional
share interest in Regions Common Stock), (iii) the tax basis of the Regions
Common Stock received by holders of LCB Common Stock who exchange all of
their LCB Common Stock solely for Regions Common Stock in the Merger will
be the same as the tax basis of the LCB Common Stock surrendered in
exchange for the
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Regions Common Stock (reduced by an amount allocable to a fractional share
interest in Regions Common Stock for which cash is received), and (iv) the
holding period of the Regions Common Stock received by holders who exchange
all of their LCB Common Stock solely for Regions Common Stock in the Merger
will be the same as the holding period of the LCB Common Stock surrendered
in exchange therefor, provided that such LCB Common Stock is held as a
capital asset at the Effective Time. In rendering such Tax Opinion, such
counsel shall be entitled to rely upon representations of officers of LCB
and Regions reasonably satisfactory in form and substance to such counsel.
(h) Consummation of NAB Acquisition. The satisfaction or waiver of
all of the conditions to consummation of the transactions contemplated by
that certain Agreement and Plan of Reorganization by and between North
Alabama Bank and Regions dated as of July 8, 1999.
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 LCB 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 LCB 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 LCB set forth in Sections 5.18, 5.19, and
5.20 of this Agreement shall be true and correct in all Material respects.
There shall not exist inaccuracies in the representations and warranties of
LCB set forth in this Agreement (including the representations and
warranties set forth in Sections 5.3, 5.18, 5.19, and 5.20) such that the
aggregate effect of such inaccuracies has, or is reasonably likely to have,
a Material Adverse Effect on LCB; 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 LCB or to a matter being
"known" by LCB shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of LCB 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. LCB 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
LCB'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 LCB the affiliates agreement referred to in Section 8.12 of
this Agreement.
(e) Claims Letters. Each of the directors and executive officers of
LCB shall have executed and delivered to Regions, letters in substantially
the form of Exhibit 3.
(f) Legal Opinion. Regions shall have received a written opinion,
dated as of the Effective Time, of counsel to LCB, in substantially the
form of Exhibit 4.
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9.3 Conditions to Obligations of LCB. The obligations of LCB 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 LCB 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 6.12 of
this Agreement shall be true and correct in all Material respects. There
shall not exist inaccuracies in the representations and warranties of
Regions set forth in this Agreement (including the representations and
warranties set forth in Sections 6.3 and 6.12) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a
Material Adverse Effect on Regions; provided that, for purposes of this
sentence only, those representations and warranties which are qualified by
references to "material," "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 LCB (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 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 LCB and its counsel shall request.
(d) Legal Opinion. LCB shall have received a written opinion, dated
as of the Effective Time, of counsel to Regions, in substantially the form
of Exhibit 5.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of LCB,
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 LCB; 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 LCB 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 LCB 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
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forth in Section 9.2(a) of this Agreement in the case of LCB 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 LCB fail to vote their approval of the matters submitted
for the approval by such stockholders at the Stockholders' Meeting 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 March 31, 2000, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of LCB 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 Regions, at any time prior to the
45th day after execution of this Agreement without any Liability in the
event that the review of the Assets, business, financial condition, results
of operations, and prospects of LCB undertaken by Regions during such time
period or any of the disclosures contained in the LCB Disclosure Memorandum
causes the Board of Directors of Regions to determine, in its reasonable
good faith judgment, that a fact or circumstance exists or is likely to
exist or result which materially and adversely impacts one or more of the
economic benefits to Regions of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
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 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.
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 8.12 and 8.14 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:
"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.
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"Affiliate" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 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
the Exhibits delivered pursuant hereto and incorporated herein by
reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such
Person's business, directly or indirectly, in whole or in part, whether or
not carried on the books and records of such Person, and whether or not
owned in the name of such Person or any Affiliate of such Person and
wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"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.
"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 through 5, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
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"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.
"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 chairman, president, or chief financial officer 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.
"LCB Common Stock" shall mean the $1.00 par value Class A common stock
of LCB.
"LCB Companies" shall mean, collectively, LCB and all LCB
Subsidiaries.
"LCB Disclosure Memorandum" shall mean the written information
entitled "LCB 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 not be deemed to be disclosed for any other
purpose 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.
"LCB Financial Statements" shall mean (i) the consolidated statements
of condition (including related notes and schedules, if any) of LCB as of
March 31, 1999 and as of December 31, 1998 and 1997, and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for the three months ended
March 31, 1999 and for each of the three years ended December 31, 1998,
1997, and 1996, included in the LCB Disclosure Memorandum, and (ii) the
consolidated statements of condition of LCB (including related notes and
schedules, if any) and related statements of income, changes in
stockholders' equity, and cash flows (including related notes and
schedules, if any) with respect to periods ended subsequent to March 31,
1999.
"LCB Subsidiaries" shall mean the Subsidiaries of LCB, which shall
include the LCB Subsidiaries described in Section 5.4 of this Agreement and
any corporation, bank, savings association, or other organization acquired
as a Subsidiary of LCB in the future and owned by LCB at the Effective
Time.
"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.
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"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 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 LCB or Regions, and "PARTIES" shall mean
both LCB and Regions.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"Proxy Statement" shall mean the proxy statement used by LCB to
solicit the approval of its 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 LCB Common Stock.
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"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 March 31, 1999 and as of December 31, 1998 and 1997, and the
related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) for the three months
ended March 31, 1999 and for each of the three years ended December 31,
1998, 1997, and 1996, 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 March 31, 1999.
"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 LCB 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.
"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.
"Stockholders' Meeting" shall mean the meeting of the stockholders of
LCB 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.
"Surviving Corporation" shall mean Regions as the surviving
corporation resulting from the Merger.
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"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.
"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.
"TBCA" shall mean the Tennessee Business Corporation Act, as amended.
"TBL" shall mean the Tennessee Banking Law, as amended.
"Tennessee 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
Tennessee relating to the Merger as contemplated by Section 1.1 of this
Agreement.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
<TABLE>
<S> <C>
Closing..................................................... Section 1.2
Effective Time.............................................. Section 1.3
Exchange Agent.............................................. Section 4.1
Exchange Ratio.............................................. Section 3.1(b)
Indemnified Party........................................... Section 8.14
LCB Benefit Plans........................................... Section 5.13(a)
LCB Contracts............................................... Section 5.14
LCB ERISA Affiliate......................................... Section 5.13(e)
LCB ERISA Plan.............................................. Section 5.13(a)
LCB Pension Plan............................................ Section 5.13(a)
LCB SEC Reports............................................. Section 5.5(a)
Merger...................................................... Section 1.1
Regions SEC Reports......................................... Section 6.5(a)
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."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the Parties
shall bear and pay all direct costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including filing,
registration, and application fees, printing fees, and fees and expenses of its
own financial or other consultants, investment bankers, accountants, and
counsel, except that Regions shall bear and pay the filing fees payable in
connection with the Registration Statement and the Proxy Statement and one-half
of the printing costs incurred in connection with the printing of the
Registration Statement and the Proxy Statement.
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(b) Nothing contained in this Section 11.2 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party of the
terms of this Agreement or otherwise limit the rights of the nonbreaching Party.
11.3 Brokers and Finders. Each of the Parties represents and warrants that
neither it nor any of its officers, directors, employees, or Affiliates has
employed any broker or finder or incurred any Liability for any financial
advisory fees, investment bankers' fees, brokerage fees, commissions, or
finders' fees in connection with this Agreement or the transactions contemplated
hereby. In the event of a claim by any broker or finder based upon his, her, or
its representing or being retained by or allegedly representing or being
retained by LCB or Regions, each of LCB 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, other than the
Confidentiality Agreement, which shall remain in effect. 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 8.12 and 8.14 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
LCB Common Stock will be exchanged for Regions Common Stock shall not be amended
after the Stockholders' Meeting without the requisite approval of the holders of
the issued and outstanding shares of Regions Common Stock and LCB Common Stock,
as the case may be, entitled to vote thereon.
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 LCB, to waive or extend the time for the compliance or
fulfillment by LCB 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 except that any unfulfilled
conditions shall be deemed to have been waived at the Effective Time.
(b) Prior to or at the Effective Time, LCB, 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 LCB 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 LCB except
that any unfulfilled conditions shall be deemed to have been waived at the
Effective Time.
(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
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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:
<TABLE>
<S> <C>
LCB: LCB CORPORATION
P.O. Box 677
Fayetteville, Tennessee 37334
Telecopy Number: (931) 433-8959
Attention: Charles E. Gleghorn
Chairman and Chief Executive Officer
Copy to Counsel: BAKER, DONELSON, BEARMAN & CALDWELL,
A PROFESSIONAL CORPORATION
Nashville City Center
Suite 1700
511 Union Street
Nashville, Tennessee 37219-1750
Attention: Steven J. Eisen
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
Tennessee 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.
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
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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.
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: LCB CORPORATION
By: /s/ MARY JANE CALDWELL By: /s/ CHARLES E. GLEGHORN
- ----------------------------------------------------- -----------------------------------------------------
Mary Jane Caldwell Charles E. Gleghorn
Secretary Chairman and Chief Executive Officer
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ SAMUEL E. UPCHURCH, JR. By: /s/ RICHARD D. HORSLEY
- ----------------------------------------------------- -----------------------------------------------------
Samuel E. Upchurch, Jr. Richard D. Horsley
Corporate Secretary Vice Chairman
[CORPORATE SEAL]
</TABLE>
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APPENDIX B
TENNESSEE CODE ANNOTATED
TITLE 48 CORPORATIONS AND ASSOCIATIONS
FOR-PROFIT BUSINESS CORPORATIONS
CHAPTER 23 DISSENTERS' RIGHTS
48-23-101. DEFINITIONS
As used in this chapter, unless the context otherwise requires:
(1) "Beneficial shareholder" means the person who is a beneficial
owner of shares held by a nominee as the record shareholder;
(2) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under sec. 48-23-102 and who exercises that right when and
in the manner required by part 2 of this chapter;
(4) "Fair value", with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the corporate
action that gave rise to the shareholder's right to dissent until the date
of payment, at the average auction rate paid on United States treasury
bills with a maturity of six (6) months (or the closest maturity thereto)
as of the auction date for such treasury bills closest to such effective
date;
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation; and
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
48-23-102. RIGHT TO DISSENT
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of the shareholder's shares in the event of, any of the following
corporate actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If shareholder approval is required for the merger by sec.
48-21-104 or the charter and the shareholder is entitled to vote on the
merger; or
(B) If the corporation is a subsidiary that is merged with its
parent under sec. 48-21-105;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than in the usual and regular
course of business, if the shareholder is entitled to vote on the sale or
exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all
or substantially all of the net proceeds of the sale will be distributed to
the shareholders within one (1) year after the date of sale;
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(4) An amendment of the charter that materially and adversely affects
rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution
through issuance of shares or other securities with similar voting
rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share, if the fractional share is to be acquired for cash
under sec. 48-16-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the charter, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for the
shareholder's shares under this chapter may not challenge the corporate action
creating the shareholder's entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder may
dissent as to any shares of a security which, as of the date of the effectuation
of the transaction which would otherwise give rise to dissenters' rights, is
listed on an exchange registered under sec. 6 of the Securities Exchange Act of
1934, as amended, or is a "national market system security," as defined in rules
promulgated pursuant to the Securities Exchange Act of 1934, as amended.
48-23-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in the record shareholder's name only if the record
shareholder dissents with respect to all shares beneficially owned by any one
(1) person and notifies the corporation in writing of the name and address of
each person on whose behalf the record shareholder asserts dissenters' rights.
The rights of a partial dissenter under this subsection are determined as if the
shares as to which the partial dissenter dissents and the partial dissenter's
other shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares of
any one (1) or more classes held on the beneficial shareholder's behalf only if
the beneficial shareholder:
(1) Submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) Does so with respect to all shares of the same class of which the
person is the beneficial shareholder or over which the person has power to
direct the vote.
48-23-201. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights under sec.
48-23-102 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this chapter and be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under sec. 48-23-102 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in sec. 48-23-203.
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(c) A corporation's failure to give notice pursuant to this section will
not invalidate the corporate action.
48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under sec.
48-23-102 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights must:
(1) Deliver to the corporation, before the vote is taken, written
notice of the shareholder's intent to demand payment for the shareholder's
shares if the proposed action is effectuated; and
(2) Not vote the shareholder's shares in favor of the proposed action.
No such written notice of intent to demand payment is required of any
shareholder to whom the corporation failed to provide the notice required
by sec. 48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for the shareholder's shares under this chapter.
48-23-203. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under sec.
48-23-102 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of sec. 48-23-202.
(b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was authorized by the shareholders or effectuated,
whichever is the first to occur, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the principal terms
of the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not the person asserting dissenters'
rights acquired beneficial ownership of the shares before that date;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than one (1) nor more than two (2)
months after the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has
not previously sent a copy of this chapter to the shareholder pursuant to
sec. 48-23-201.
48-23-204. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in sec. 48-23-203
must demand payment, certify whether the shareholder acquired beneficial
ownership of the shares before the date required to be set forth in the
dissenters' notice pursuant to sec. 48-23-203(b)(3), and deposit the
shareholder's certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits the shareholder's
share certificates under subsection (a) retains all other rights of a
shareholder until these rights are cancelled or modified by the effectuation of
the proposed corporate action.
(c) A shareholder who does not demand payment or deposit the shareholder's
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for the shareholder's shares under this
chapter.
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(d) A demand for payment filed by a shareholder may not be withdrawn unless
the corporation with which it was filed, or the surviving corporation, consents
thereto.
48-23-205. SHARE RESTRICTIONS
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effectuated or the restrictions released under sec. 48-23-207.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the effectuation of the proposed corporate
action.
48-23-206. PAYMENT
(a) Except as provided in sec. 48-23-208, as soon as the proposed corporate
action is effectuated, or upon receipt of a payment demand, whichever is later,
the corporation shall pay each dissenter who complied with sec. 48-23-204 the
amount the corporation estimates to be the fair value of each dissenter's
shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial
statements, if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under sec.
48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent
a copy of this chapter to the shareholder pursuant to sec. 48-23-201 or
sec. 48-23-203.
48-23-207. FAILURE TO TAKE ACTION
(a) If the corporation does not effectuate the proposed action that gave
rise to the dissenters' rights within two (2) months after the date set for
demanding payment and depositing share certificates, the corporation shall
return the deposited certificates and release the transfer restrictions imposed
on uncertificated shares.
(b) If, after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under sec. 48-23-203 and repeat the payment demand
procedure.
48-23-208. AFTER-ACQUIRED SHARES
(a) A corporation may elect to withhold payment required by sec. 48-23-206
from a dissenter unless the dissenter was the beneficial owner of the shares
before the date set forth in the dissenters' notice as the date of the first
announcement to news media or to shareholders of the principal terms of the
proposed corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after effectuating the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall pay this
amount to each dissenter who agrees to accept it in full satisfaction of the
dissenter's demand. The corporation shall send with its offer a statement of its
estimate of the fair value of the shares, an explanation of how the interest was
calculated, and a statement of the dissenter's right to demand payment under
sec. 48-23-209.
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48-23-209. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER
(a) A dissenter may notify the corporation in writing of the dissenter's
own estimate of the fair value of the dissenter's shares and amount of interest
due, and demand payment of the dissenter's estimate (less any payment under
sec. 48-23-206), or reject the corporation's offer under sec. 48-23-208 and
demand payment of the fair value of the dissenter's shares and interest due, if:
(1) The dissenter believes that the amount paid under sec. 48-23-206
or offered under sec. 48-23-208 is less than the fair value of the
dissenter's shares or that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under sec. 48-23-206 within
two (2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action,
does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within two (2) months after
the date set for demanding payment.
(b) A dissenter waives the dissenter's right to demand payment under this
section unless the dissenter notifies the corporation of the dissenter's demand
in writing under subsection (a) within one (1) month after the corporation made
or offered payment for the dissenter's shares.
48-23-301. COURT ACTION
(a) If a demand for payment under sec. 48-23-209 remains unsettled, the
corporation shall commence a proceeding within two (2) months after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the two-month period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(b) The corporation shall commence the proceeding in a court of record
having equity jurisdiction in the county where the corporation's principal
office (or, if none in this state, its registered office) is located. If the
corporation is a foreign corporation without a registered office in this state,
it shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced
under subsection (b) is plenary and exclusive. The court may appoint one (1) or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of
the dissenter's shares, plus accrued interest, exceeds the amount paid by
the corporation; or
(2) For the fair value, plus accrued interest, of the dissenter's
after-acquired shares for which the corporation elected to withhold payment
under sec. 48-23-208.
48-23-302. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under sec. 48-23-301
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
assess the costs against the corporation, except that the court may assess costs
against all or some
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of the dissenters, in amounts the court finds equitable, to the extent the court
finds the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under sec. 48-23-209.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the court finds equitable against:
(1) The corporation and in favor of any or all dissenters if the court
finds the corporation did not substantially comply with the requirements of
part 2 of this chapter; or
(2) Either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall be
personally liable to the corporation or its stockholders for monetary
damages, for breach of fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the corporation or
its stockholders; (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law; (iii) under
Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the Registrant
to indemnify its officers and directors under certain circumstances. The
pertinent provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable cause to
believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
II-1
<PAGE> 127
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
"(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
"(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by a majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or (2) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (3) by the
stockholders.
"(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such
expenses (including attorneys' fees) incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
II-2
<PAGE> 128
"(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under this section.
"(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as he
would have with respect to such constituent corporation if its separate
existence had continued.
"(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan
shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
"(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
"(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or
indemnification brought under this section or under any bylaw, agreement,
vote of stockholders or disinterested directors, or otherwise. The Court
of Chancery may summarily determine a corporation's obligation to advance
expenses (including attorneys' fees)."
The Registrant has purchased a directors' and officers' liability insurance
contract which provides, within stated limits, reimbursement either to a
II-3
<PAGE> 129
director or officer whose actions in his capacity result in liability, or to
the Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on
inside information, illegal payments, dishonesty, accounting of securities
profits in violation of Section 16(b) of the Securities Exchange Act of 1934
and acts within the scope of the Pension Reform Act of 1974.
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- --------------------------------------------------------------------------------------------------------
<S> <C>
2.1 -- Agreement and Plan of Merger, dated as of July 8, 1999, by and between LCB Corporation and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference from S-4
Registration Statement of Regions Financial Corporation, file no. 333-86975.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-86975.
5. -- Form of opinion re: legality.
8. -- Form of opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2. -- Consent of Lange, Simpson, Robinson & Somerville LLP - to be included in Exhibit 5.
23.3 -- Consent of Alston & Bird LLP-to be included in Exhibit 8.
24.1 -- Power of Attorney
99. -- Form of proxy.
</TABLE>
ITEM 22. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
B. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
II-4
<PAGE> 130
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
C.(1) The undersigned Registrant hereby undertakes as follows: that prior
to any public reoffering of the securities registered hereunder through use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
D. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 131
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Birmingham, State of
Alabama on this the 17th day of November, 1999.
REGISTRANT:
REGIONS FINANCIAL CORPORATION
BY: /s/ Richard D. Horsley
------------------------------
Richard D. Horsley
Vice Chairman of the Board and
Executive Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
*
- ------------------------- President and Chief Executive November 17, 1999
Carl E. Jones, Jr. Officer and Director
(principal executive officer)
/s/ Richard D. Horsley
- ------------------------- Vice Chairman of the Board and November 17, 1999
Richard D. Horsley Executive Financial Officer
and Director
(principal financial officer)
*
- ------------------------- Executive Vice President and November 17, 1999
Robert P. Houston Comptroller
(principal accounting officer)
<PAGE> 132
*
- --------------------------- Director November 17, 1999
Sheila S. Blair
*
- --------------------------- Director November 17, 1999
James B. Boone, Jr.
*
- --------------------------- Director November 17, 1999
James S.M. French
*
- --------------------------- Director November 17, 1999
Olin B. King
*
- --------------------------- Chairman of the Board November 17, 1999
J. Stanley Mackin and Director
*
- --------------------------- Director November 17, 1999
Michael W. Murphy
*
- --------------------------- Director November 17, 1999
Henry E. Simpson
*
- --------------------------- Director November 17, 1999
Lee J. Styslinger, Jr.
*
- --------------------------- Director November 17, 1999
W. Woodrow Stewart
*
- --------------------------- Director November 17, 1999
John H. Watson
*
- --------------------------- Director November 17, 1999
Robert J. Williams
*
- --------------------------- Director November 17, 1999
C. Kemmons Wilson, Jr.
* By /s/ Richard D. Horsley as attorney-in-fact November 17, 1999
pursuant to a power of attorney.
<PAGE> 133
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ------------------------------------------------------------------------------------------- ------------
<S> <C>
2.1 -- Agreement and Plan of Merger, dated as of July 8, 1999, by and between LCB Corporation and
Regions Financial Corporation -- included as Appendix A to the Proxy Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation -- incorporated by reference
from S-4 Registration Statement of Regions Financial Corporation, file no. 333-86975.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by reference from S-4 Registration
Statement of Regions Financial Corporation, file no. 333-86975.
5. -- Form of opinion re: legality.
8. -- Form of opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2. -- Consent of Lange, Simpson, Robinson & Somerville LLP - to be included in Exhibit 5.
23.3 -- Consent of Alston & Bird LLP-to be included in Exhibit 8.
24.1 -- Power of Attorney
99. -- Form of proxy.
</TABLE>
<PAGE> 1
EXHIBIT 5
[Letterhead of Lange, Simpson, Robinson & Somerville LLP]
November ___, 1999
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Regions Financial Corporation
S-4 Registration Statement
Acquisition of LCB Corporation
Ladies and Gentlemen:
We have acted as counsel for Regions Financial Corporation, a Delaware
corporation ("Regions") in connection with the merger of LCB Corporation
("LCB Corporation") with and into Regions (the "Merger") and in connection
with the registration of shares of common stock of Regions, par value $.625 per
share ("Regions Common Stock"), on Form S-4 under the Securities Act of 1933.
The Merger provides for issuance of shares of common stock of Regions, par value
$.625 per share, to the stockholders of LCB Corporation upon consummation of
the Merger. The number of shares of Regions to be issued in the Merger
is 1,231,542.
We have examined and are familiar with the registration statement on Form
S-4 filed with the Securities and Exchange Commission, as such registration
statement has been amended to date. We have examined and are familiar with the
records relating to the organization of Regions and the documents and records
as we have deemed relevant for purposes of rendering this opinion.
Based on the foregoing it is our opinion that upon satisfaction of the
conditions precedent to consummation of the Merger, or waiver of such conditions
capable of being waived, and upon consummation of the Merger, the shares of
Regions Common Stock issued pursuant to the Merger will be duly authorized,
validly issued and outstanding, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof.
We hereby consent to the filing of this opinion as an exhibit to the
registration statement and to the reference to Lange, Simpson, Robinson &
Somerville LLP under the caption "Opinions" in the proxy statement/prospectus
forming a part of the registration statement.
Very truly yours,
<PAGE> 1
EXHIBIT 8
ALSTON&BIRD LLP
3605 Glenwood Avenue, Suite 310
P. O. Drawer 31107
Raleigh, NC 27622-1107
919-420-2200
Fax: 919-420-2260
www.alston.com
JASPER L. CUMMINGS, JR.
DIRECT DIAL: 919-420-2208
E-MAIL: [email protected]
November __, 1999
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Re: Registration Statement on Form S-4 (the "Registration
Statement") with respect to shares issued pursuant to the
Agreement and Plan of Merger by and between LCB Corporation
("LCB") and Regions Financial Corporation ("Regions") dated
as of July 8, 1999 (the "Agreement").
Ladies and Gentlemen:
We have acted as counsel to Regions Financial Corporation ("Regions")
in connection with the registration of ___ shares of its Common Stock, par
value $__ per share (the "Regions Common Stock"), issuable pursuant to the
Agreement and Plan of Merger, as set forth in the Registration Statement that
is being filed on the date hereof by Regions with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"). This opinion is provided pursuant to the
requirements of Item 21(a) of Form S-4 and Item 601(b)(8) of Regulation S-K.
All capitalized terms not otherwise defined herein shall have the meanings
given to them in the Agreement and Plan of Merger.
In the Merger, LCB Corporation ("LCB"), a Tennessee corporation, will
merge into Regions, a Delaware corporation, pursuant to Tennessee law, and each
outstanding share of LCB Common Stock (the only class outstanding) is to be
converted into 15.789 shares of Regions Common Stock. Cash will be paid in lieu
of issuance of fractional shares. LCB shareholders are entitled by state law to
dissent to the Merger.
In giving this opinion we have reviewed, and with your permission we
have relied upon the representations and warranties contained in or the facts
described in the Agreement and Plan of Merger, the Registration Statement, and
certificates dated November __, 1999 in which officers of LCB and officers of
Regions make certain representations on behalf of LCB and Regions regarding the
Merger (which statements we have neither investigated nor verified) ("Tax
Certificates"). We also have reviewed
<PAGE> 2
November __, 1999
Page 2
such other documents as we have considered necessary and appropriate for the
purposes of this opinion.
In giving this opinion we have with your permission assumed that the
statements in the Tax Certificates will be true as of the Effective Date, and
that any representation or statement made "to the best of knowledge" or
similarly qualified is correct without such qualification. As to all matters in
which a person or entity has represented that such person or entity either is
not a party to, or does not have, or is not aware of, any plan or intention,
understanding or agreement, we have assumed that there is in fact no such plan,
intention, understanding or agreement. We also assume that (a) the Merger will
be consummated in accordance with the Agreement, and (b) LCB's only outstanding
stock (as that term is used in ss.?368 of the Internal Revenue Code) is the LCB
Common Stock.
Based on the foregoing, and subject to the limitations herein, we are
of the opinion that under existing law, upon consummation of the Merger in
accordance with the Agreement, for Federal income tax purposes:
(1) The Merger will constitute a "reorganization" within the meaning of
Section 368(a) of the Code.
(2) No gain or loss will be recognized by the shareholders of LCB upon
the receipt of Regions Common Stock (including any fractional share
interest to which they may be entitled) solely in exchange for their
shares of LCB Common Stock.
(3) The aggregate adjusted basis of the Regions Common Stock (including
any fractional share interest to which they may be entitled) to be
received by the shareholders of LCB will be the same as the aggregate
adjusted basis of the LCB Common Stock surrendered in exchange
therefor.
(4) The holding period of the Regions Common Stock (including any
fractional share interest to which they may be entitled) to be
received by the shareholders of LCB in the Merger will include the
holding period of the LCB Common Stock surrendered in exchange
therefor, provided the LCB Common Stock was held as a capital asset
by the shareholder of LCB on the date of the exchange.
(5) Cash received by a dissenting shareholder of LCB will be treated as
having been received by such shareholder as a distribution in
redemption of his or her LCB stock, subject to the provisions and
limitations of section 302 of the Code.
(6) The payment of cash to LCB shareholders in lieu of fractional share
interests of Regions common stock will be treated for Federal income
tax purposes as if the fractional shares were distributed as part of
the exchange
<PAGE> 3
November __, 1999
Page 3
and then were redeemed by Regions. These cash payments will be
treated as distributions in full payment in exchange for the stock
redeemed as provided in section 302(a) of the Code.
We express no opinion as to the laws of any jurisdiction other than
the United States of America. Further, our opinion is limited to the specific
conclusions set forth above, and no other opinions are expressed or implied.
The opinions stated with respect to shares of LCB Common Stock do not address
all aspects of Federal income taxation that may be relevant to a shareholder in
light of the shareholder's particular circumstances or to those LCB
shareholders subject to special rules, such as shareholders who are not
citizens or residents of the United States, those who received their LCB common
stock as compensation directly or through the exercise of stock options, those
who hold LCB common stock as part of a "straddle" or "conversion transaction,"
those who do not hold their LCB common stock as a capital asset with the
meaning of section 1221 of the Internal Revenue Code of 1986, as amended, or
those shareholders who are tax exempt entities, insurance companies, securities
dealers, or financial institutions. This discussion also does not discuss any
aspects of state, local, or foreign taxation.
This opinion represents our best legal judgment, but it is not binding
on any governmental agency and is not a guarantee of result. Changes to the
Code, regulations, the rulings thereunder, or changes by the courts in the
interpretation of the authorities relied upon, may be applied retroactively and
may affect the opinions expressed herein. Any material defect in any assumption
or representation on which we have relied would adversely affect our opinions.
We furnish this opinion to you solely to support the discussion set
forth under the headings "SUMMARY Federal Income Tax Consequences", "THE MERGER
- - The Federal Income Tax Consequences of the Merger" and "OPINIONS" in the
Registration Statement, and we do not consent to its use for any other purpose.
We hereby consent to be named in the Registration Statement under the foregoing
headings and to the filing of a copy of this opinion as Exhibit 8 to the
Registration statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by
<PAGE> 4
November __, 1999
Page 4
Section 7 of the Securities Act, or the rules and regulations of the Commission
thereunder.
Very truly yours,
ALSTON & BIRD LLP
Jasper L. Cummings, Jr.
A partner of the firm
JLC/jm
Enclosure
WDC01/38223v1
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Regions Financial
Corporation for the registration of up to 1,231,542 shares of its common stock
and to the incorporation by reference therein of our report dated March 11,
1999, with respect to the consolidated financial statements of Regions Financial
Corporation incorporated by reference in its Annual Report (Form 10-K) for the
year ended December 31, 1998, filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Birmingham, Alabama
November 18, 1999
<PAGE> 1
EXHIBIT 24.1
REGIONS FINANCIAL CORPORATION
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned directors and officers
of REGIONS FINANCIAL CORPORATION (the "Corporation") hereby constitute and
appoint Richard D. Horsley and Samuel E. Upchurch, Jr., and each of them, the
true and lawful agent and attorney-in-fact of the undersigned, with full power
of substitution and resubstitution, and with full power and authority in said
agents and attorneys-in-fact, and in any one of them, to sign for the
undersigned and in their respective names as directors and officers of the
Corporation, one or more Registration Statements to be filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, relating
to the acquisition of LCB Corporation by Regions Financial Corporation and to
sign any and all amendments to such Registration Statements.
SIGNATURE TITLE DATE
- ------------------------ ----------------------------- -----------------
/s/ Carl E. Jones, Jr.
- ------------------------ President and Chief Executive July 21, 1999
Carl E. Jones, Jr. Officer and Director
(principal executive officer)
/s/ Richard D. Horsley
- ------------------------ Vice Chairman of the Board and July 21, 1999
Richard D. Horsley Executive Financial Officer
and Director
(principal financial officer)
/s/ Robert P. Houston
- ------------------------ Executive Vice President and July 21, 1999
Robert P. Houston Comptroller
(principal accounting officer)
/s/ Sheila S. Blair
- -------------------------- Director July 21, 1999
Sheila S. Blair
/s/ James B. Boone, Jr.
- -------------------------- Director July 21, 1999
James B. Boone, Jr.
/s/ James S.M. French
- -------------------------- Director July 21, 1999
James S.M. French
/s/ Olin B. King
- -------------------------- Director July 21, 1999
Olin B. King
/s/ J. Stanley Mackin
- -------------------------- Chairman of the Board July 21, 1999
J. Stanley Mackin and Director
/s/ Michael W. Murphy
- -------------------------- Director July 21, 1999
Michael W. Murphy
/s/ Henry E. Simpson
- -------------------------- Director July 21, 1999
Henry E. Simpson
/s/ Lee J. Styslinger, Jr.
- -------------------------- Director July 21, 1999
Lee J. Styslinger, Jr.
/s/ W. Woodrow Stewart
- -------------------------- Director July 21, 1999
W. Woodrow Stewart
/s/ John H. Watson
- -------------------------- Director July 21, 1999
John H. Watson
/s/ Robert J. Williams
- -------------------------- Director July 21, 1999
Robert J. Williams
/s/ C. Kemmons Wilson, Jr.
- -------------------------- Director July 21, 1999
C. Kemmons Wilson, Jr.
<PAGE> 1
EXHIBIT 99
LCB CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints ,
, and , and each or any one of them, with full power
of substitution, as Proxies to represent and to vote as designed below, all the
shares of common stock of LCB Corporation (the "Company") held of record by the
undersigned on , 1999, at the Special Meeting of Stockholders (the
"Special Meeting") to be held on , 1999, or any adjournments
thereof.
1. Proposal to approve the Agreement and Plan of Merger, dated as of July 8,
1999, (the "Agreement"), by and between the Company and Regions Financial
Corporation ("Regions") pursuant to which the Company will merge with and
into Regions and each share of the Company's common stock (except for certain
shares held by the Company, Regions, or their respective subsidiaries) will
be converted into 15.789 shares of Regions common stock, subject to possible
adjustment, and under such other terms and conditions as are set forth in the
Agreement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER, AND IN THE DISCRETION OF THE PERSONS NAMED AS
PROXIES ON ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING
OR ANY ADJOURNMENT THEREOF. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN
FAVOR OF PROPOSAL 1.
(Continued and to be signed on other side)
(Continued from other side)
This Proxy revokes all prior proxies with respect to the Special Meeting and may
be revoked prior to its exercise.
Please date and sign exactly as name appears on your stock certificate. When
shares are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated:
------------------------, 1999
------------------------------
(Print Name of Stockholder)
------------------------------
(Signature of Stockholder)
------------------------------
(Print Name of Stockholder)
------------------------------
(Signature of Stockholder)
PLEASE MARK, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE.
