As filed with the Securities and Exchange Commission on October 29, 2001.
Registration No. 333-70920
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
PRE-EFFECTIVE
AMENDMENT
NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
----------------------
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
417 North 20th Street
Birmingham, AL 35203
(205) 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:
CHARLES C. PINCKNEY FRANK M. CONNER III WILLIAM T. LUEDKE IV
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD LLP BRACEWELL & PATTERSON LLP
SOMERVILLE LLP 601 PENNSYLVANIA AVENUE, N.W. 711 LOUISIANA STREET, SUITE 2900
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, TENTH FLOOR HOUSTON, TEXAS 77002
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 (713) 221-2900
(205) 250-5000 (202) 756-3300
--------------------
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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
--------------------
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.
PROXY STATEMENT PROSPECTUS
FIRST BANCSHARES OF TEXAS, INC. REGIONS FINANCIAL CORPORATION
UP TO 1,108,758 SHARES OF COMMON STOCK
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of First Bancshares of Texas, Inc., a bank
holding company headquartered in Houston, Texas, and Regions Financial
Corporation, a bank holding company and financial holding company headquartered
in Birmingham, Alabama, have agreed on a merger of First Bancshares and Regions.
Regions will be the surviving corporation in the merger.
If the merger is completed, you will receive .589 of a share of Regions
common stock for each share of First Bancshares common stock you own, subject to
possible adjustment. The .589 of a share multiple, as it may be adjusted, is
referred to as the "exchange ratio." Regions stockholders will continue to own
their existing shares of Regions common stock after the merger.
Regions common stock is quoted on the Nasdaq National Market under the
symbol "RGBK." Based on the closing price of Regions common stock on October 26,
2001, of $28.14 and the .589 exchange ratio, you will receive approximately
$16.57 worth of Regions common stock for each share of First Bancshares common
stock you own. The .589 exchange ratio is subject to possible adjustment in
limited circumstances as described in this proxy statement-prospectus. The
actual value of the Regions common stock received by First Bancshares
stockholders in the merger will depend on the market value of Regions common
stock at the time we complete the merger.
First Bancshares has scheduled a special meeting for its stockholders
to vote on the merger, to be held at 9:00 a.m., local time, on November 20,
2001, at 2001 Kirby Drive, Suite 808, Houston, Texas, 77019. We cannot complete
the merger unless the stockholders of First Bancshares approve it.
This proxy statement-prospectus provides you with detailed information
about the proposed merger. You can also get information about Regions from other
documents filed with the Securities and Exchange Commission. We encourage you to
read this entire document carefully.
ALSO, YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE
13 OF THIS PROXY STATEMENT-PROSPECTUS.
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.
The date of this proxy statement-prospectus is October 31, 2001. It is first
being mailed on or about October 31, 2001.
HOW TO OBTAIN ADDITIONAL INFORMATION
This proxy statement-prospectus incorporates important business and
financial information about Regions Financial Corporation that is not included
in or delivered with this document. This information is described on page 60
under the caption "Where You Can Find More Information." A copy of each of the
following documents previously filed by Regions with the Securities and
Exchange Commission accompanies this proxy statement-prospectus:
Annual Report on Form 10-K for the year ended December 31, 2000
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001
Quarterly Report on Form 10-Q for the quarter ended June 30, 2001
Current Report on Form 8-K filed January 18, 2001
Current Report on Form 8-K filed February 26, 2001
Current Report on Form 8-K filed March 5, 2001
Current Report on Form 8-K filed March 30, 2001
Current Report on Form 8-K filed October 25, 2001
You can obtain additional copies of this information without charge from Regions
by writing or calling:
Regions Financial Corporation
417 North 20th Street
Birmingham, AL 35203
Attention: Shareholder Relations
Telephone: (205) 326-7090
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST THE
INFORMATION BY NOVEMBER 13, 2001.
FIRST BANCSHARES OF TEXAS, INC.
2001 KIRBY DRIVE, SUITE 808, HOUSTON, TEXAS, 77019
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 20, 2001
First Bancshares of Texas, Inc. will hold a Special Meeting of
Stockholders at First Bancshares' main office, located at 2001 Kirby Drive,
Suite 808, Houston, Texas, 77019 on November 20, 2001, 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 August 3,
2001, by and between First Bancshares and Regions Financial Corporation. If the
agreement is approved and the merger is completed, (1) First Bancshares will
merge with and into Regions with Regions as the surviving corporation and (2)
each share of First Bancshares common stock (excluding certain shares held by
First Bancshares, Regions, or their respective subsidiaries and excluding all
shares held by stockholders who perfect their dissenters' rights) will be
converted into .589 of a share of Regions common stock, subject to possible
adjustment, with cash to be paid instead 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.
Stockholders of record at the close of business on October 19, 2001,
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 First Bancshares shares in cash by complying with the
applicable provisions of Texas law, which are attached to the accompanying proxy
statement-prospectus as Appendix C.
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
Corporate Secretary of First Bancshares 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 Melville
Corporate Secretary
October 31, 2001
TABLE OF CONTENTS
SUMMARY.......................................................................................................1
The Companies.............................................................................................1
The Merger................................................................................................1
Comparative Per Share Market Price Information............................................................2
Reasons for the Merger....................................................................................2
Fairness Opinion of First Bancshares' Financial Advisor...................................................2
The Special Meeting.......................................................................................3
Recommendations to Stockholders...........................................................................3
Voting Rights at the Special Meeting......................................................................3
Stockholder Vote Required.................................................................................3
Share Ownership of Management and Certain Stockholders....................................................3
Effective Time............................................................................................3
Exchange of Stock Certificates............................................................................4
Regulatory Approvals and Other Conditions to Completion of the Merger.....................................4
Termination and Amendment of the Merger Agreement.........................................................4
Federal Income Tax Consequences...........................................................................5
Accounting Treatment......................................................................................5
Interests of Certain Persons in the Merger That May Be Different from Yours...............................5
Dissenters' Appraisal Rights..............................................................................5
Certain Differences in Stockholders' Rights...............................................................6
Comparative Per Share Data................................................................................6
Selected Financial Data...................................................................................8
RISK FACTORS.................................................................................................13
General..................................................................................................13
Risks Relating to the Merger.............................................................................13
THE SPECIAL MEETING..........................................................................................14
General..................................................................................................14
Record Date; Vote Required...............................................................................15
THE MERGER...................................................................................................16
General..................................................................................................16
Possible Adjustment of Exchange Ratio....................................................................16
Background of the Merger.................................................................................17
First Bancshares' Reasons for the Merger.................................................................19
Regions' Reasons for the Merger..........................................................................20
Opinion of First Bancshares' Financial Advisor...........................................................21
Effective Time of the Merger.............................................................................26
Distribution of Regions Stock Certificates and Payment For Fractional Shares.............................26
Conditions to Completion of the Merger...................................................................27
Regulatory Approvals.....................................................................................28
Waiver, Amendment, and Termination of the Merger Agreement...............................................28
Conduct of Business Pending the Merger...................................................................29
Management Following the Merger..........................................................................30
Interests of Certain Persons in the Merger...............................................................30
Dissenting Stockholders..................................................................................31
Federal Income Tax Consequences of the Merger............................................................34
Accounting Treatment.....................................................................................35
Expenses and Fees........................................................................................35
Resales of Regions Common Stock..........................................................................35
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS...............................................................36
Antitakeover Provisions Generally........................................................................36
Authorized Capital Stock.................................................................................37
Amendment of Certificate or Articles of Incorporation and Bylaws.........................................38
Classified Board of Directors and Absence of Cumulative Voting...........................................38
Removal of Directors.....................................................................................39
Limitations on Director Liability........................................................................39
Indemnification..........................................................................................40
Special Meetings of Stockholders.........................................................................40
Actions by Stockholders Without a Meeting................................................................41
Stockholder Nominations..................................................................................41
Mergers, Consolidations, and Sales of Assets Generally...................................................41
Business Combinations with Certain Persons...............................................................42
Dissenters' Rights.......................................................................................42
Stockholders' Rights to Examine Books and Records........................................................43
Dividends................................................................................................43
COMPARATIVE MARKET PRICES AND DIVIDENDS......................................................................45
INFORMATION ABOUT FIRST BANCSHARES...........................................................................47
Business and Properties..................................................................................47
Competition..............................................................................................48
Legal Proceedings........................................................................................48
Management...............................................................................................48
Transactions with Management.............................................................................49
Voting Securities and Principal Stockholders.............................................................49
INFORMATION ABOUT REGIONS....................................................................................51
General..................................................................................................51
Recent Developments......................................................................................51
SUPERVISION AND REGULATION...................................................................................53
General..................................................................................................53
Payment of Dividends.....................................................................................54
Capital Adequacy.........................................................................................55
Prompt Corrective Action.................................................................................56
FDIC Insurance Assessments...............................................................................57
DESCRIPTION OF REGIONS COMMON STOCK..........................................................................58
STOCKHOLDER PROPOSALS........................................................................................58
FORWARD LOOKING STATEMENTS...................................................................................58
EXPERTS......................................................................................................59
OPINIONS.....................................................................................................60
WHERE YOU CAN FIND MORE INFORMATION..........................................................................60
APPENDIX A-Agreement and Plan of Merger.....................................................................A-1
APPENDIX B-Opinion of Hoefer & Arnett, Incorporated ........................................................B-1
APPENDIX C-Copy of Articles 5.11, 5.12, and 5.13, Texas Business Corporation Act,
pertaining to dissenters' rights..........................................................................C-1
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 all other
documents to which we refer in this document in order to understand fully the
merger and to obtain a more complete description of the legal terms of the
merger. See "Where You Can Find More Information" on page 60. 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 47 AND 51)
FIRST BANCSHARES OF TEXAS, INC.
2001 Kirby Drive, Suite 808
Houston, Texas, 77019
(713) 522-5970
First Bancshares is incorporated in Texas and is a bank holding
company. First Bancshares owns First Bank of Texas, a commercial bank which
serves customers in Harris, Hamilton, and Montgomery Counties. As of June 30,
2001, First Bancshares' total assets were about $169.2 million, deposits were
about $151.8 million, and stockholders' equity was about $13.1 million.
REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
(205) 944-1300
Regions is incorporated in Delaware and is a regional bank holding
company and financial holding company. Through its subsidiaries, Regions
provides banking and other financial services. Regions has banking operations in
Alabama, Arkansas, Florida, Georgia, Louisiana, South Carolina, Tennessee, and
Texas. As of June 30, 2001, Regions' total assets were about $45.1 billion,
deposits were about $31.2 billion, and stockholders' equity was about $3.8
billion.
THE MERGER (PAGE 16)
If we complete the merger, Regions will be the surviving corporation.
When the merger is completed, you will receive .589 of a share of Regions stock
for each share of First Bancshares stock that you own, subject to possible
adjustment. You will not receive any fraction of a share of Regions common
stock. Instead, you will receive a cash payment for any fraction of a share of
Regions common stock to which you may become entitled.
If you elect to dissent from the merger under Texas law and follow the
required procedures, you will receive a cash payment for your shares of First
Bancshares common stock instead of receiving Regions common stock in the merger.
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" on page 31.
The exchange ratio of .589 of a share of Regions common stock for each
share of First Bancshares common stock could be adjusted under limited
circumstances. If the average of the daily last sales prices
1
of Regions common stock over a five trading day period following the mailing of
this proxy statement-prospectus is less than $26.00 or greater than $36.00, then
the exchange ratio will be adjusted under a formula included in the merger
agreement. The intent of the formula is that you will not bear the risk of a
sharp decline, and likewise will not realize the benefit of a sharp increase, in
the price of Regions common stock between the date of the merger agreement and
approximately November 7, 2001. The adjustment mechanism is explained in detail
under the heading "The Merger--Possible Adjustment of Exchange Ratio" on page
16.
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 (PAGE 45)
Shares of Regions are quoted on the Nasdaq National Market under the
symbol "RGBK." Shares of First Bancshares are not quoted on any established
market. On August 10, 2001, the last full trading day prior to the public
announcement of the merger, Regions stock closed at $32.00 per share. As of that
date the last known price of First Bancshares stock was $13.50 per share on
August 7, 2001. On October 26, 2001, Regions stock closed at $28.14 per share
and the last known price of First Bancshares stock was $17.00 per share on
September 4, 2001.
Based on the exchange ratio of .589 of a share, the market value of the
consideration that First Bancshares stockholders will receive in the merger for
each share of First Bancshares common stock would be $18.85 based on Regions'
August 10, 2001 closing price and $16.57 based on Regions' October 26, 2001
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
will be fixed on or about November 7, 2001. Therefore, you should obtain current
stock price quotations for Regions common stock.
REASONS FOR THE MERGER (PAGE 19)
First Bancshares and Regions believe that the merger will result in a
company with expanded opportunities for profitable growth. In addition, we
anticipate that the combined resources of First Bancshares and Regions will
improve our ability to compete in First Bancshares' market area.
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--First Bancshares' Reasons for the Merger" on pages
17 and 19.
FAIRNESS OPINION OF FIRST BANCSHARES' FINANCIAL ADVISOR (PAGE 21)
In deciding to approve the merger, the First Bancshares board of
directors considered the opinion of its financial advisor Hoefer & Arnett,
Incorporated that as of the date of the opinion the exchange ratio was fair to
the First Bancshares stockholders from a financial point of view. We have
attached this opinion as Appendix B to this proxy statement-prospectus. You
should read it carefully.
2
THE SPECIAL MEETING (PAGE 13)
The First Bancshares special meeting will be held at First Bancshares'
main office, 2001 Kirby Drive, Suite 808, Houston, Texas, 77019, at 9:00 a.m. on
November 20, 2001. At the special meeting, First Bancshares stockholders will be
asked to approve the merger agreement.
RECOMMENDATIONS TO STOCKHOLDERS (PAGE 19)
The First Bancshares board of directors has approved the merger
agreement and the merger and believes that the merger is fair to you and in your
best interests. The board of directors unanimously recommends that you vote
"FOR" the proposal to approve the merger agreement and the merger.
VOTING RIGHTS AT THE SPECIAL MEETING (PAGE 15)
You can vote at the First Bancshares special meeting if you owned First
Bancshares common stock as of the close of business on October 19, 2001, the
record date. On that date, 1,737,864 shares of First Bancshares 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 First Bancshares common stock
you owned on October 19, 2001. Participants in the First Bancshares employee
stock ownership plan are entitled to direct the trustees of the plan how to vote
the shares of First Bancshares' common stock held by the plan. A separate
request for voting instructions directing the trustees how to vote the shares
held by the First Bancshares employee stock ownership plan will be sent to the
participants in the plan.
Regions stockholders will not vote on the merger.
STOCKHOLDER VOTE REQUIRED (PAGE 15)
To approve the merger, First Bancshares stockholders who hold on the
record date a majority of the outstanding shares of common stock entitled to
vote on the merger agreement must vote for the merger. If you do not vote, this
will have the same effect as a vote against the merger.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS (PAGE 47)
All together, the directors and officers of First Bancshares, their
immediate family members and entities they control can cast about 38.04% of the
votes entitled to be cast at the First Bancshares special meeting. The members
of the First Bancshares board of directors have agreed to vote all of shares
over which they have voting authority (other than as a fiduciary) in favor of
the merger.
EFFECTIVE TIME (PAGE 26)
The merger will become final at the time specified in the Certificate
of Merger reflecting the merger to be filed with the Secretary of State of the
state of Delaware and the Articles of Merger reflecting the merger to be filed
with the Secretary of State of the state of Texas. If First Bancshares
stockholders approve the merger at the special meeting, and Regions obtains all
required regulatory approvals, we currently anticipate that the merger will be
completed during the fourth quarter of 2001. First Bancshares and
3
Regions cannot assure you that we can obtain the necessary stockholder and
regulatory approvals or that the other conditions to completion of the merger
can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES (PAGE 26)
Promptly after the merger is completed, you will receive a letter and
instructions on how to surrender your First Bancshares stock certificates in
exchange for Regions stock certificates. You will need to carefully review and
complete these materials and return them as instructed along with your stock
certificates for First Bancshares common stock. You should not send First
Bancshares, Regions, or Regions' transfer agent any stock certificates until you
receive these instructions.
REGULATORY APPROVALS AND OTHER CONDITIONS TO COMPLETION OF THE MERGER (PAGE 27)
Regions is required to notify and obtain approvals from certain
government regulatory agencies before the merger may be completed, including the
Federal Reserve and other federal and state banking regulators. We expect that
Regions will obtain all required regulatory approvals, but we cannot assure you
that these regulatory approvals will be obtained.
In addition to the required regulatory approvals, the merger will be
completed only if certain conditions, including, but not limited to the
following, are met or, if waivable, waived:
- First Bancshares stockholders approve the merger agreement and the
merger at the special meeting;
- First Bancshares and Regions each receive an opinion of counsel that
the merger will qualify as a tax-free reorganization; and
- neither Regions nor First Bancshares has breached in any material
respect any of its representations or obligations under the merger
agreement.
In addition to these conditions, the merger agreement, attached to this
proxy statement-prospectus as Appendix A, describes other conditions that must
be met before the merger may be completed.
In cases where the law permits, either Regions or First Bancshares
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 have listed will be satisfied (or waived, where
permissible), or that the merger will be completed.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT (PAGE 28)
Regions and First Bancshares may agree to terminate the merger
agreement and elect not to complete the merger at any time before the merger is
completed.
Each of the parties also can terminate the merger agreement in certain
other circumstances, including if the merger is not completed by March 31, 2002.
However, a party may not terminate the merger agreement for this reason if the
merger has not been completed because of a breach of the merger agreement by the
party seeking termination.
4
In addition, the parties may also terminate the merger agreement if
other circumstances occur which are described in the agreement, attached to this
proxy statement-prospectus as Appendix A.
The merger agreement may be amended by the written agreement of First
Bancshares and Regions. The parties may amend the merger agreement without
stockholder approval, even if First Bancshares stockholders have already
approved the merger. However, First Bancshares stockholders must approve any
amendments that would modify, in a material respect, the type or amount of
consideration that they will receive in the merger.
FEDERAL INCOME TAX CONSEQUENCES (PAGE 34)
We expect that you will not recognize any gain or loss for U.S. federal
income tax purposes when you exchange all of your shares of First Bancshares
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 a legal opinion that this will be the case, but
this opinion will not bind the Internal Revenue Service, which could take a
different view.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN FIRST BANCSHARES
STOCKHOLDERS, INCLUDING THE TYPES OF FIRST BANCSHARES STOCKHOLDERS DISCUSSED ON
PAGE 34, AND WILL NOT APPLY TO ANY FIRST BANCSHARES STOCKHOLDER WHO DISSENTS
FROM THE MERGER UNDER TEXAS LAW. DETERMINING THE ACTUAL TAX CONSEQUENCES OF THE
MERGER TO YOU CAN BE COMPLICATED. THEY 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 35)
Regions expects to account for the merger as a purchase transaction for
accounting and financial reporting purposes, meaning that the assets and
liabilities of First Bancshares will be recorded at their estimated fair values
and added to those of Regions. Therefore, the financial statements of Regions
issued after the merger will reflect these values from First Bancshares and will
not be restated retroactively to reflect the historical financial position or
results of operations of First Bancshares.
INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM YOURS
(PAGE 30)
Some of the officers of First Bancshares have benefit and compensation
plans and employment contracts that provide them with interests in the merger
that are different from, or in addition to, their interests as stockholders of
First Bancshares. In particular, members of First Bancshares' board of directors
and its officers are entitled to indemnification under the merger agreement. The
First Bancshares board of directors was aware of these interests and considered
them in approving and recommending the merger.
For more information about these matters, please refer to the
discussion under the heading "The Merger-Interests of Certain Persons in the
Merger" on page 30.
DISSENTERS' APPRAISAL RIGHTS (PAGE 42)
Texas 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 the filing of certain notices and
refraining from voting your shares in favor of the merger. If you dissent from
the
5
merger, your shares of First Bancshares 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.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS (PAGE 36)
When the merger is completed you will automatically become a Regions
stockholder, unless you receive cash in the merger as a result of exercising
your dissenters' rights. The rights of Regions stockholders differ from the
rights of First Bancshares stockholders in certain significant ways. Many of
these differences have to do with provisions in Regions' certificate of
incorporation, bylaws, and Delaware law. Certain of these provisions are
intended to make a takeover of Regions more difficult if the Regions board of
directors does not approve it.
COMPARATIVE PER SHARE DATA
The following table shows information about Regions' and First
Bancshares' income per share, dividends per share and book value per share, and
similar information reflecting the merger of Regions and First Bancshares (which
is referred to as "pro forma" information). In presenting the comparative pro
forma information for certain time periods, we assumed that Regions and First
Bancshares had been merged throughout those periods.
In presenting the comparative pro forma information, we also assumed
that Regions will record First Bancshares 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 .589 of a share. It
is intended to reflect the fact that First Bancshares stockholders will be
receiving .589 of a share of Regions common stock for each share of First
Bancshares common stock exchanged in the merger. This may not be the actual
exchange ratio, since the exact ratio will not be determined until on or about
November 7, 2001.
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 have set
forth for the six-month period ended June 30, 2001 does not indicate what the
results will be for the full 2001 fiscal year.
The information in the following table is based on the historical
financial information of Regions and First Bancshares. See "Where You Can Find
More Information" on page 60.
6
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------------- ------------
2001 2000 2000
-------- -------- --------
(Unaudited) (Unaudited except Regions
and FBOT historical)
NET INCOME PER COMMON SHARE
Regions historical ........................................... $ 1.06 $ 1.23 $ 2.39
Regions historical - diluted ................................. 1.05 1.22 2.38
FBOT historical .............................................. .29 .62 1.08
FBOT historical - diluted .................................... .27 .52 .90
Regions and FBOT pro forma combined(1) ....................... 1.06 2.39
Regions and FBOT pro forma combined
- diluted(1) ............................................ 1.05 2.38
FBOT pro forma equivalent(2) ................................. .62 1.41
FBOT pro forma equivalent
- diluted(2) ............................................ .62 1.40
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical ........................................... .56 .54 1.08
FBOT historical .............................................. .20 .20 .40
FBOT pro forma equivalent(3) ................................. .33 .64
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical ........................................... 16.81 14.55 15.73
FBOT historical .............................................. 7.86 6.67 7.47
Regions and FBOT pro forma combined(1) ....................... 16.81
FBOT pro forma equivalent(2) ................................. 9.90
(1) Represents the combined results of Regions and First Bancshares as if
the merger were completed on January 1, 2000 (or June 30, 2001, 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 .589 of a share of Regions common stock for each share of
First Bancshares common stock. The exchange ratio is subject to
adjustment under certain conditions if the average of the closing sales
prices of Regions common stock over a specified period is less than
$26.00 or greater than $36.00. See "The Merger--Possible Adjustment of
Exchange Ratio." The presentation of pro forma equivalent information
would be affected by any increase in the exchange ratio.
(3) Represents historical dividends declared per share by Regions
multiplied by the exchange ratio of .589 of a share of Regions common
stock for each share of First Bancshares common stock.
7
(4) The exchange ratio is subject to adjustment if the average closing
price of Regions common stock over a specified period is less than
$26.00 per share or greater than $36.00 per share. The combined and
equivalent pro forma per share data assuming illustrative exchange
ratios of .558 (corresponding to an assumed average closing price of
$38.00) and .638 (corresponding to an assumed average closing price of
$24.00) are as follows:
Exchange Ratio
----------------------------------------------------------------------------
.558 .638
---------------------------------- ------------------------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
June 30, 2001 December 31, 2000 June 30, 2001 December 31, 2000
------------- ----------------- ------------- ------------------
(Unaudited)
NET INCOME PER COMMON SHARE
Regions and FBOT pro forma combined ........... $ 1.06 $ 2.39 $ 1.06 $ 2.39
Regions and FBOT pro forma combined -
diluted .................................. 1.05 2.38 1.05 2.38
FBOT pro forma equivalent ..................... .59 1.33 .68 1.52
FBOT pro forma equivalent - diluted ........... .59 1.33 .67 1.52
DIVIDENDS DECLARED PER COMMON
SHARE
FBOT pro forma equivalent ..................... .31 .60 .36 .69
BOOK VALUE PER COMMON SHARE
(PERIOD END)
Regions and FBOT pro forma combined ........... 16.81 16.81
FBOT pro forma equivalent ..................... 9.38 10.72
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each
of Regions and First Bancshares.
The information in the following tables is based on the historical
financial information of Regions and First Bancshares. 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 incorporated by reference in this proxy
statement-prospectus, which you can find in the documents of Regions
incorporated by reference. See "Where You Can Find More Information" on page 60.
The financial information as of or for the interim periods ended June 30, 2001
and 2000 has not been audited and in the respective opinions of management
reflects all adjustments (consisting only of normal recurring adjustments)
necessary to a fair presentation of such data.
8
Selected Historical Financial Data of Regions
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------------------- ------------------------------
2001 2000 2000 1999
------------ ------------ ------------ ------------
(Unaudited)
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .......................... $ 1,601,688 $ 1,572,816 $ 3,234,243 $ 2,854,686
Total interest expense ......................... 903,402 870,009 1,845,446 1,428,831
Net interest income ............................ 698,286 702,807 1,388,797 1,425,855
Provision for loan losses ...................... 57,490 56,981 127,099 113,658
Net interest income after
loan loss provision ....................... 640,796 645,826 1,261,698 1,312,197
Total noninterest income before
security gains (losses) ................... 417,329 344,393 641,138 536,981
Security gains (losses) ........................ 467 (39,951) (39,928) 160
Total noninterest expense ...................... 724,087 543,922 1,121,182 1,064,312
Income tax expense ............................. 98,954 135,048 214,203 259,640
Net income ..................................... 235,551 271,298 527,523 525,386
PER SHARE DATA:
Net income ..................................... $ 1.06 $ 1.23 $ 2.39 $ 2.37
Net income -diluted ............................ 1.05 1.22 2.38 2.35
Cash dividends ................................. .56 .54 1.08 1.00
Book value ..................................... 16.81 14.55 15.73 13.89
OTHER INFORMATION:
Average number of shares outstanding ........... 221,273 220,782 220,762 221,617
Average number of shares outstanding
- diluted .................................. 223,573 221,987 221,989 223,967
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ................................... $ 45,139,089 $ 42,901,514 $ 43,688,293 $ 42,714,395
Securities ..................................... 7,713,087 9,245,683 8,994,171 10,913,044
Loans, net of unearned income .................. 30,962,953 30,390,990 31,376,463 28,144,675
Total deposits ................................. 31,159,282 32,508,901 32,022,491 29,989,094
Long-term debt ................................. 4,936,855 2,370,148 4,478,027 1,750,861
Stockholders' equity ........................... 3,826,360 3,187,435 3,457,944 3,065,112
PERFORMANCE RATIOS:
Return on average assets(1) .................... 1.07%(a) 1.29%(b) 1.23%(c) 1.33%
Return on average stockholders'
equity(1) ................................. 13.29(a) 17.45(b) 16.31(c) 17.13
Net interest margin(1) ......................... 3.63 3.63 3.55 3.94
Efficiency (2) ................................. 62.49(a) 51.37(b) 54.35(c) 53.60
Dividend payout ................................ 52.83 43.90 45.19 42.19
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ................. .32% .23% .31% .37%
Problem assets to net loans and
other real estate (3) ..................... .98 .71 .76 .68
Nonperforming assets to net loans
and other real estate (4) ................. 1.11 .93 .87 .93
Allowance for loan losses to loans,
net of unearned income .................... 1.24 1.20 1.20 1.20
Allowance for loan losses to
nonperforming assets (4) .................. 111.56 128.99 137.07 128.70
YEAR ENDED DECEMBER 31,
------------------------------------------------
1998 1997 1996
------------ ------------ ------------
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .......................... $ 2,597,786 $ 2,276,584 $ 1,954,283
Total interest expense ......................... 1,272,968 1,097,376 942,459
Net interest income ............................ 1,324,818 1,179,208 1,011,824
Provision for loan losses ...................... 60,505 89,663 46,026
Net interest income after
loan loss provision ....................... 1,264,313 1,089,545 965,798
Total noninterest income before
security gains (losses) ................... 467,695 406,484 341,792
Security gains (losses) ........................ 7,002 498 3,311
Total noninterest expense ...................... 1,103,708 901,776 837,034
Income tax expense ............................. 213,590 197,222 156,008
Net income ..................................... 421,712 397,529 317,859
PER SHARE DATA:
Net income ..................................... $ 1.92 $ 1.89 $ 1.64
Net income -diluted ............................ 1.88 1.86 1.61
Cash dividends ................................. .92 .80 .70
Book value ..................................... 13.61 12.75 11.82
OTHER INFORMATION:
Average number of shares outstanding ........... 220,114 209,781 194,241
Average number of shares outstanding
- diluted .................................. 223,781 213,750 197,751
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ................................... $ 36,831,940 $ 31,414,058 $ 26,993,344
Securities ..................................... 7,969,137 6,315,923 5,742,375
Loans, net of unearned income .................. 24,365,587 21,881,123 18,395,552
Total deposits ................................. 28,350,066 25,011,021 22,019,412
Long-term debt ................................. 571,040 445,529 570,545
Stockholders' equity ........................... 3,000,401 2,679,821 2,274,563
PERFORMANCE RATIOS:
Return on average assets(1) .................... 1.24%(d) 1.35% 1.25%(e)
Return on average stockholders'
equity(1) ................................. 14.62(d) 15.38 14.71(e)
Net interest margin(1) ......................... 4.25 4.41 4.36
Efficiency (2) ................................. 60.82(d) 57.78 61.84(e)
Dividend payout ................................ 47.92 42.33 42.68
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ................. .28% .27% .18%
Problem assets to net loans and
other real estate (3) ..................... .60 .78 .63
Nonperforming assets to net loans
and other real estate (4) ................. 1.15 .91 .83
Allowance for loan losses to loans,
net of unearned income .................... 1.29 1.39 1.38
Allowance for loan losses to
nonperforming assets (4) .................. 112.27 151.89 166.41
9
Selected Historical Financial Data of Regions - Continued
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------
(Unaudited)
(In thousands, except per share data and ratios)
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets ..................... 8.06% 7.37% 7.54% 7.74% 8.47% 8.75% 8.50%
Average loans to average deposits .... 99.98 90.96 94.63 91.35 86.93 84.94 82.42
Tier 1 risk-based capital (5) ........ 8.78 9.23 9.14 9.51 10.26 10.48 10.81
Total risk-based capital (5) ......... 12.18 11.10 11.44 11.42 12.17 12.93 13.59
Tier 1 leverage (5) .................. 6.69 6.83 6.90 6.95 7.40 7.52 7.44
-------------------
(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 combinations with First National Bancorp and First Commercial
Corporation, accounted for as poolings of interests, or any other
pooling-of-interests transactions.
(a) Ratios for June 30, 2001 excluding $17.8 million (after tax) for merger
and other nonrecurring charges are as follows: Return on average assets -
1.15%; Return on average stockholders' equity - 14.30%, and Efficiency -
60.48%.
(b) Ratios for June 30, 2000 excluding $44.0 million (after tax) for gain on
sale of credit card portfolio and $26.2 million (after tax) for loss on
sale of securities are as follows: Return on average assets - 1.20%;
Return on average stockholders' equity - 16.30%, and Efficiency - 54.85%.
(c) Ratios for 2000 excluding $44.0 million (after tax) for gain on sale of
credit card portfolio and $26.2 million (after tax) for loss on sale of
securities are as follows: Return on average assets - 1.19%, Return on
average stockholders' equity - 15.76%, and Efficiency - 56.19%.
(d) 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%.
(e) 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%.
10
Selected Historical Financial Data of First Bancshares
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
-------- --------- --------- --------- --------- --------- ---------
(Unaudited)
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .................. $ 5,591 $ 5,236 $ 10,825 $ 9,533 $ 8,686 $ 9,801 $ 13,627
Total interest expense ................. 2,132 1,899 4,064 3,374 3,202 4,071 6,483
Net interest income .................... 3,459 3,337 6,761 6,159 5,484 5,730 7,144
Provision (benefit) for loan losses .... 61 -- -- 94 (300) 40 175
Net interest income after loan
loss provision (benefit) .......... 3,398 3,337 6,761 6,065 5,784 5,690 6,969
Total noninterest income excluding
security gains (losses) ........... 1,303 1,270 2,523 2,396 1,979 5,673 3,554
Security gains (losses) ................ -- -- 17 (46) 140 236 (44)
Total noninterest expense .............. 4,090(a) 3,209 7,036 6,486 6,061 6,929 7,828
Income tax expense ..................... 149 453 630 358 723 1,790 873
Net income ............................. 462(a) 945 1,635 1,571 1,119 2,880 1,778
PER SHARE DATA:
Net income ............................. $ .29 $ .62 $ 1.08 $ .98 $ .63 $ 1.51 $ .81
Net income - diluted ................... .27 .52 .90 .83 .54 1.31 .72
Cash dividends ......................... .20 .20 .40 .40 .40 .20 .20
Book value ............................. 7.86 6.67 7.47 6.35 6.61 7.24 6.60
OTHER INFORMATION:
Average number of shares outstanding ... 1,591 1,524 1,520 1,596 1,769 1,901 2,182
Average number of shares outstanding,
- diluted .......................... 1,741 1,824 1,820 1,896 2,069 2,201 2,482
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ........................... $169,150 $147,322 $ 150,116 $ 140,440 $ 131,642 $ 115,600 $ 180,104
Securities ............................. 58,091 50,026 49,303 52,076 51,629 54,006 109,482
Loans, net of unearned income .......... 85,892 76,612 79,559 74,400 64,413 49,161 49,693
Allowance for loan losses .............. 857 815 825 802 800 892 813
Total deposits ......................... 151,828 133,625 135,655 119,347 118,144 97,301 164,261
Long-term debt ......................... 1,900 1,000 2,005 1,200 -- 975 925
Stockholders' equity ................... 13,103 10,152 11,321 9,687 11,030 13,538 12,758
PERFORMANCE RATIOS:
Return on average assets(1) ............ .58% 1.27% 1.13% 1.15% .91% 1.95% .88%
Return on average stockholders'
equity(1) ......................... 7.95 19.23 15.17 15.17 9.11 21.90 12.92
Net interest margin(1) ................. 4.99 5.45 5.45 4.74 4.77 5.36 4.64
Efficiency (2) ......................... 87.00 69.65 75.79 76.66 78.08 60.98 74.39
Dividend payout ........................ 70.56 32.28 37.25 38.57 60.05 13.09 21.73
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ......... .03% (.02)% (.03)% .13% (.37)% (.08)% (1.77)%
Problem assets to net loans and
other real estate (3) ............. .02 .03 .19 .09 .62 1.30 .95
Nonperforming assets to net loans
and other real estate (4) ......... .02 .03 .19 .09 .62 1.30 .95
Allowance for loan losses to loans,
net of unearned income ............ 1.00 1.06 1.04 1.08 1.24 1.81 1.64
Allowance for loan losses to
nonperforming assets (4) .......... 579.05 550.68 557.43 1,215.15 201.51 142.04 174.46
11
Selected Historical Financial Data of First Bancshares - Continued
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
----------------- --------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------
(Unaudited)
(In thousands, except per share data and ratios)
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets........................... 7.35% 6.61% 7.23% 7.61% 9.94% 8.89% 6.81%
Average loans to average deposits.......... 56.93 54.18 60.38 58.45 52.72 37.79 23.77
Tier 1 risk-based capital (5).............. 11.05 12.96 10.79 11.96 15.23 24.32 17.86
Total risk-based capital (5)............... 11.81 12.97 11.63 12.92 16.41 26.05 19.10
Tier 1 leverage (5)........................ 6.60 8.02 6.89 7.13 7.90 10.95 6.53
-------------------
(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%.
(a) In connection with the exercise of outstanding stock options and stock
appreciation rights in May 2001, First Bancshares recognized compensation
expense of $600,000.
12
RISK FACTORS
GENERAL
If the merger is completed, you will receive shares of Regions common
stock in exchange for your shares of First Bancshares common stock unless you
dissent from the merger. You should be aware of particular risks and
uncertainties that are applicable to an investment in Regions common stock.
Specifically, there are risks and uncertainties that bear on Regions' future
financial results and that may cause Regions' future earnings and financial
condition to be less than Regions' expectations.
Some of the risks and uncertainties involved in an investment in
Regions common stock relate to economic conditions generally and would affect
other financial institutions in similar ways. These aspects are discussed in
this proxy statement-prospectus under the heading "Forward-Looking Statements"
on page 58. This section addresses particular risks and uncertainties that are
specific to Regions.
RISKS RELATING TO THE MERGER
FIRST BANCSHARES STOCKHOLDERS MAY RECEIVE SHARES OF REGIONS COMMON STOCK
VALUED AT LESS THAN $26.00 PER SHARE AT THE TIME WE COMPLETE THE MERGER. The
exchange ratio of .589 of a share may be increased based on the average of the
daily last sales prices of Regions common stock over the five full trading days
following the mailing of this proxy statement-prospectus. If such average is
less than $26.00, then the exchange ratio will be increased based on a formula
in the merger agreement. See "The Merger-Possible Adjustment of Exchange Ratio."
However, the exact value of Regions common stock on the date we complete the
merger will not be known until that date. If the market price of Regions common
stock on the date we complete the merger is lower than the average of the daily
last sales prices of Regions common stock used to determine the exchange ratio,
the value of each share of Regions common stock you receive in exchange for your
shares of First Bancshares common stock may be less than $26.00 on the date we
complete the merger or the date you receive your Regions stock certificate. The
trading price of Regions common stock could fluctuate depending upon any number
of reasons, including those specific to Regions and those that influence the
trading prices of equity securities generally. You should be aware that the
value of the Regions common stock you receive in the merger may be less at the
time we complete the merger than at the time the exchange ratio becomes fixed,
whether or not the exchange ratio is adjusted.
REGIONS MAY NOT BE ABLE TO SUCCESSFULLY ASSIMILATE THE OPERATIONS OF
FIRST BANCSHARES' OR OTHER CONTEMPORANEOUS OR FUTURE ACQUIRED ENTITIES INTO
REGIONS' OPERATIONS. Based on its past history, it is likely that Regions will
make acquisitions of other financial institutions both contemporaneously with
the merger and after the merger is completed. These acquisitions involve the
assimilation of companies that have previously operated independently of each
other. Successful assimilation of the operations of First Bancshares' and other
acquired entities will depend primarily on Regions' ability to consolidate
operations, systems and procedures and to reduce costs. Regions may not be able
to assimilate such operations without encountering difficulties, including the
loss of key employees and customers and unexpected problems with operations,
personnel, or technology.
REGIONS' ACQUISITION STRATEGY COULD POSE RISKS OF FUTURE STOCKHOLDER
DILUTION OR REDUCTION OF CAPITAL, WHICH IN TURN COULD REDUCE THE VALUE OF AN
INVESTMENT IN REGIONS COMMON STOCK. Regions has grown
13
through acquisitions in recent years, and Regions from time to time evaluates
strategic opportunities in the banking industry and in the related financial
services industries. If Regions makes acquisitions in the future, one or more of
those possible future acquisitions could be material to Regions. Regions may
issue common stock to pay for those future acquisitions, which could dilute the
ownership interest of all Regions stockholders at the time of any such
acquisition. Regions may also use cash or other liquid assets or incur debt to
complete future acquisitions. In those events, Regions could become more
susceptible to economic downturns and competitive pressures.
THE SPECIAL MEETING
GENERAL
This proxy statement-prospectus is being furnished to the stockholders
of First Bancshares of Texas, Inc. in connection with the solicitation by the
First Bancshares board of directors of proxies for use at a special meeting of
stockholders, at which First Bancshares stockholders will be asked to vote upon
a proposal to approve the agreement and plan of merger dated as of August 3,
2001, by and between First Bancshares and Regions Financial Corporation.
Participants in the First Bancshares employee stock ownership plan are entitled
to direct the trustees of the Plan how to vote the shares of First Bancshares'
common stock held by the plan. A separate request for voting instructions
directing the trustees how to vote the shares held by the First Bancshares
employee stock ownership plan will be sent to the participants in the plan.
The special meeting will be held at 9:00 a.m., local time, on November
20, 2001, at the main offices of First Bancshares, located at 2001 Kirby Drive,
Suite 808, Houston, Texas, 77019.
First Bancshares stockholders are requested promptly to sign, date, and
return the accompanying proxy card to First Bancshares 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. Participants in the First Bancshares
employee stock ownership plan are requested to promptly complete and return
the voting directive instructing the trustees how to vote the shares of First
Bancshares common stock held by the plan.
Any First Bancshares stockholder who has delivered a proxy may revoke
it at any time before it is voted by giving notice of revocation in writing or
submitting to First Bancshares a signed proxy card bearing a later date,
provided that such notice or proxy card is actually received by First Bancshares
before the special meeting or in open meeting prior to the taking of the
stockholder vote at the special meeting. Any notice of revocation should be sent
to First Bancshares of Texas, Inc., 2001 Kirby Drive, Suite 808, Houston, Texas,
77019, Attention: Mary Melville, 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
First Bancshares 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
14
MERGER AGREEMENT. As of the date of this proxy statement-prospectus, First
Bancshares is unaware of any other matter to be presented at the special
meeting.
First Bancshares will solicit proxies by mail, and possibly by
telephone or telegram or in person by the directors, officers, and employees of
First Bancshares, who will receive no additional compensation for such
solicitation but may be reimbursed for out-of-pocket expenses. Brokerage houses,
nominees, fiduciaries, and other custodians will be requested to forward
solicitation materials to beneficial owners and will be reimbursed for their
reasonable out-of-pocket expenses.
First Bancshares stockholders should not forward any stock certificates
with their proxy cards.
RECORD DATE; VOTE REQUIRED
First Bancshares' board of directors has established the close of
business on October 19, 2001, as the record date for determining the First
Bancshares stockholders entitled to notice of and to vote at the special
meeting. Only First Bancshares 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 120 record holders of 1,737,864 shares of the $1.00 par value
common stock of First Bancshares outstanding and entitled to vote at the special
meeting. Each share is entitled to one vote. For information as to persons known
by First Bancshares to beneficially own more than 5.0% of the outstanding shares
of First Bancshares common stock as of the record date, see "Information About
First Bancshares- Voting Securities and Principal Stockholders."
The presence, in person or by proxy, of a majority of the outstanding
shares of First Bancshares common stock entitled to vote at the special meeting
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 First Bancshares 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 First Bancshares 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
First Bancshares common stock entitled to vote at the special meeting. A 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 First Bancshares and their
affiliates possessed or shared the power to vote, as of the record date, 661,129
shares (or approximately 38.04% of the outstanding shares) of First Bancshares
common stock. The directors of First Bancshares have agreed to vote those shares
of First Bancshares common stock over which they have voting control (other than
as a fiduciary) in favor of the merger. The directors and executive officers of
Regions and their affiliates beneficially owned, as of the record date, no
shares of First Bancshares common stock. As of that date, no subsidiary of
either First Bancshares or Regions held any shares of First Bancshares common
stock as a fiduciary for others.
15
THE MERGER
The following material describes certain aspects of the merger of First
Bancshares 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.
GENERAL
The merger agreement provides generally for the acquisition of First
Bancshares by Regions pursuant to the merger of First Bancshares with and into
Regions, with Regions as the surviving corporation resulting from the merger.
On the date and at the time that the merger becomes effective, each
share of First Bancshares common stock (excluding shares held by First
Bancshares, Regions, or their respective subsidiaries, in each case other than
shares held as a fiduciary 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 .589 of a share of the $.625 par value common stock of Regions, subject to
possible adjustment as described below under the caption "--Possible Adjustment
of Exchange Ratio." Each share of Regions common stock outstanding immediately
prior to the effective 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 Regions issuing fractional shares, each
First Bancshares stockholder will receive a cash payment equal to the fractional
part of a share which the stockholder would otherwise receive multiplied by the
most recent last sale price of Regions common stock on the Nasdaq National
Market (as reported by The Wall Street Journal, or, if not reported thereby, by
another authoritative source selected by Regions), as of the time we complete
the merger.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
If we complete the merger, you will receive .589 of a share of Regions
common stock in exchange for each of your shares of First Bancshares common
stock unless this exchange ratio is adjusted as described below.
If the average of the daily last sales prices of Regions common stock
for the five consecutive full trading days following the mailing of this proxy
statement-prospectus (the "average closing price") is less than $26.00 or
greater than $36.00, then the exchange ratio will be adjusted as follows:
If the average closing price is less than $26.00, then the exchange
ratio shall be increased to the quotient (rounded to the nearest one-thousandth)
obtained by dividing:
the product of $26.00 and the exchange ratio (as then in effect)
by
the "average closing price."
16
If the average closing price is greater than $36.00, then the exchange
ratio shall be decreased to the quotient (rounded to the nearest one-thousandth)
obtained by dividing:
the product of $36.00 and the exchange ratio (as then in effect)
by
the "average closing price."
This adjustment formula reflects the parties' intention that, for the
period of time between the date of the merger agreement and the approximate date
of the mailing of this proxy statement-prospectus, First Bancshares'
stockholders will not bear the risk of a decline in the market value of Regions
common stock below $26.00 per share, and will not realize the benefit of an
increase in the market value of Regions common stock above $36.00 per share,
both as measured by the "average closing price" over such five-trading-day
period. This formula is intended to result in you receiving, in exchange for
each share of First Bancshares common stock you own, Regions common stock having
a minimum value that approximates $15.31 and a maximum value that approximates
$21.20 as of the time of the mailing of this proxy statement-prospectus. You
should understand that these amounts are only approximations, because of the
likely difference between the "average closing price" and the trading price of
Regions common stock on any given date.
The operation of the formula can be illustrated by the following three
scenarios.
- If the "average closing price" over such five-trading-day
period were $24.00, then the "average closing price" would be
less than $26.00 so the exchange ratio would be adjusted, and
the new exchange ratio computed pursuant to the formula would
be .638.
- If the "average closing price" over such five-trading-day
period were equal to or greater than $26.00 and equal to or
less than $36.00, then there would be no adjustment and the
exchange ratio would remain at .589.
- If the "average closing price" over such five-trading-day
period were $38.00, then the "average closing price" would be
greater than $36.00 so the exchange ratio would be adjusted,
and the new exchange ratio computed pursuant to the formula
would be .558.
The actual market value of a share of Regions common stock at the time
we complete the merger and at the time certificates for those shares are
delivered following surrender and exchange of certificates for shares of First
Bancshares common stock may be more or less than the "average closing price"
computed prior to the special meeting as described above. Therefore, you bear
the risk of any decline in the market value of Regions common stock after the
exchange ratio becomes fixed, which will occur on or about November 7, 2001. We
urge you to obtain current market quotations for Regions common stock. See
"Comparative Market Prices and Dividends."
BACKGROUND OF THE MERGER
17
For the last several years and in the normal course of business, First
Bancshares has received inquiries regarding its level of interest in either
acquisition or affiliation with other financial institutions. During these
years, the banking and financial services industry has witnessed significant
developments including increasing use of technology, escalating costs of
providing products and services, and expanding competition from other financial
service institutions.
As the board of directors analyzed the developing market and the
dynamics of First Bancshares, several factors came to light. Based on historical
data and pro forma financials, the continuing asset growth of First Bank of
Texas had created a need for additional capital. Between year-end 1997 and
year-end 2000, First Bank of Texas experienced a 29.86% increase in assets.
During the first six months of 2001, the asset growth was approximately 12.7%.
Since asset size is the basis for capital requirements, it was clear that
capital would have to be increased.
Another factor considered by the directors was the growth of the
northwest Harris County market. There was significant increase not only in
individual customers but also in the number and size of small businesses. As
these small businesses grew, their borrowing needs also increased. Due to the
$2.0 million limitation on the indebtedness to any one borrower caused by its
capital structure, First Bank of Texas was increasingly forced to offer a
limited response to its larger customers. As a result, many customers chose to
go to a financial institution with a larger lending limit.
Changes in the banking laws in recent years have resulted in
competition not only from traditional commercial banks but also from savings
banks and credit unions as well as brokerage companies. All of these types of
institutions are now directly competing with commercial banks for customers of
all sizes. Increasingly, the customer base of First Bank of Texas is becoming
more sophisticated in financial matters and requires an even larger array of
services and products.
As First Bank of Texas has attempted to keep pace with the
technological requirements of the financial world, this has required significant
expense and the development of additional products and services. Increasingly,
the average customer of First Bank of Texas is expecting services with a higher
degree of technology.
The need for additional capital, upgraded technology, and enhanced
products and services caused the directors basically to choose between diluting
the current stockholders by selling more stock to raise additional capital or
finding a partner for First Bancshares. While the fiduciary responsibility of
the board dictated that it pay particular attention to the financial strength of
any other party, it was also extremely important to the directors that any
partner have a culture that would blend with both the customers and employees of
the bank.
The board of directors of First Bancshares sought professional advice
in June 2000 when it retained SAMCO Capital Markets, a division of Service Asset
Management Company ("SAMCO"), as an advisor. The board of directors authorized
SAMCO to contact several financial institutions that management, in
18
conjunction with SAMCO, had identified as possible merger partners, to solicit
indications of possible interest in affiliating with First Bancshares. One of
the institutions initially solicited was Regions, which expressed an interest in
pursuing further discussions. After further discussions with Regions'
representatives, the board of directors concluded that the transaction with
Regions was in the best interests of both First Bancshares and its stockholders,
and First Bancshares and Regions proceeded to negotiate a definitive merger
agreement. The board of directors approved the merger agreement, and it was
executed as of August 3, 2001.
FIRST BANCSHARES' REASONS FOR THE MERGER.
In approving the merger, the directors of First Bancshares considered a
number of factors. Without assigning any relative or specific weights to the
factors, the First Bancshares board of directors considered the following
material factors:
- the information presented to the directors by the management of First
Bancshares concerning the business, operations, management earnings,
asset quality, financial condition and future prospects of First
Bancshares and Regions;
- the financial terms of the merger, including the relationship of the
merger price to the prices received by other comparable banking
organizations in other financial institution mergers;
- the nonfinancial terms of the merger, including the treatment of the
merger as a tax-free exchange of First Bancshares common stock for
Regions common stock for federal and state income tax purposes;
- the opinion rendered by First Bancshares' financial advisor to the
effect that, from a financial point of view, the exchange of First
Bancshares common stock for Regions common stock on the terms and
conditions set forth in the merger agreement is fair to the holders of
First Bancshares common stock;
- the increased liquidity that stockholders of First Bancshares will
receive with respect to Regions common stock, which is publicly traded
on the Nasdaq National Market; as there is no current public market for
First Bancshares common stock;
- the prospects for First Bancshares continuing to operate as an
independent community-based banking organization, including increasing
capital requirements, competitive and regulatory burdens, and
technological challenges facing community banks;
- the potential for increased dividends;
- the partial protection afforded to stockholders of First Bancshares in
the event of a decline in the market value of the Regions common stock;
and
- the non-economic terms of the transaction, such as the impact on
existing customers and employees.
The foregoing discussion of the information and factors considered by
the First Bancshares board of directors is not intended to be exhaustive but
includes all material factors considered by the board of directors. In reaching
its determination to approve the merger and the merger agreement, the First
Bancshares board of directors 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 First
Bancshares board of directors determined that the merger is in the best
interests of First Bancshares and its
19
stockholders and unanimously approved the merger agreement. Each member of the
board of directors of First Bancshares has agreed to vote those shares of First
Bancshares common stock over which such member has voting authority (other than
as a fiduciary) in favor of the merger and the merger agreement.
The terms of the merger were the result of arms-length negotiations
between representatives of First Bancshares and representatives of Regions.
Based upon the consideration of the foregoing factors, the board of directors of
First Bancshares unanimously approved the merger as being in the best interests
of First Bancshares and its stockholders.
First Bancshares' board of directors unanimously recommends that First
Bancshares stockholders vote "FOR" approval of the merger agreement.
REGIONS' REASONS FOR THE MERGER.
In approving the merger agreement and the merger, the Regions board of
directors considered a number of factors concerning the benefits of the merger,
including the following:
- Information Concerning First Bancshares: The Regions board of directors
considered information concerning the business, operations, earnings,
asset quality, and financial condition of First Bancshares, and aspects
of the First Bancshares franchise, including the market position of
First Bancshares in each of the markets in which it operates and the
compatibility of the community bank orientation of the operations of
First Bancshares to that of Regions. The Regions board of directors
concluded that First Bancshares 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
in the Texas market.
- Financial Terms of the Merger: The Regions board of directors
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 First Bancshares 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 accounting treatment of the merger as a purchase.
- Nonfinancial Terms of the Merger: The Regions board of directors
considered various nonfinancial aspects of the merger, including the
treatment of the merger as a tax-free exchange of First Bancshares
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.
The foregoing discussion of the information and factors considered by
the Regions board of directors is not intended to be exhaustive but includes all
material factors considered by the Regions board of directors. In reaching its
determination to approve the merger and the merger agreement, the Regions board
of directors 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 of directors
determined that the merger is in the best interests of Regions and its
stockholders and unanimously approved the merger and the merger agreement.
20
OPINION OF FIRST BANCSHARES' FINANCIAL ADVISOR
First Bancshares has retained Hoefer & Arnett, Incorporated to act as
financial advisor in connection with the merger. As part of this engagement,
Hoefer & Arnett agreed to render to First Bancshares' board of directors an
opinion with respect to the fairness to the stockholders of the consideration to
be received in the merger from a financial point of view.
First Bancshares' board of directors retained Hoefer & Arnett to render
a fairness opinion because Hoefer & Arnett is a nationally recognized investment
banking firm with substantial expertise in transactions similar to the proposed
transaction and is familiar with First Bancshares and its business. The firm is
a member of the National Association of Securities Dealers (NASD) with direct
access to inter-dealer markets in NASD automated quotation (NASDAQ) and
over-the-counter (OTC) securities, and makes markets in securities under its
symbol "HOFR." As part of its investment banking activities, Hoefer & Arnett is
regularly engaged in the independent valuation of financial institutions and
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Hoefer & Arnett has not
previously provided investment banking and financial advisory services to First
Bancshares.
At a meeting of First Bancshares' board of directors on August 3, 2001,
Hoefer & Arnett rendered to First Bancshares' board of directors a verbal
opinion that, as of such date, and subject to various assumptions and matters
considered, the terms of the proposed merger of First Bancshares with and into
Regions were fair to the holders of shares of the common stock of First
Bancshares from a financial point of view. Hoefer & Arnett has confirmed its
August 3, 2001 oral opinion by delivery of its written opinion to First
Bancshares' board of directors, dated the date of this proxy
statement-prospectus, that based upon and subject to various assumptions,
matters considered and limitations described therein, the terms of the proposed
merger of First Bancshares with and into Regions are fair to the holders of
shares of the common stock of First Bancshares from a financial point of view.
The full text of the Hoefer & Arnett opinion as of the date hereof,
which sets forth certain assumptions made, matters considered, and limits on the
review undertaken, is attached hereto as Appendix B. You are urged to read the
Hoefer & Arnett opinion in its entirety.
No limitations were imposed by First Bancshares' board of directors
upon Hoefer & Arnett with respect to the investigations made or procedures
followed in rendering its opinion. Hoefer & Arnett's opinion is based on the
financial analysis described below. Hoefer & Arnett' s opinion is for the use
and benefit of First Bancshares' board of directors in connection with its
consideration of the proposed transaction. Hoefer & Arnett' s opinion is not
intended to be and does not constitute a recommendation to any First Bancshares
stockholder as to how such stockholder should vote with respect to the proposed
transaction. Hoefer & Arnett' s opinion does not address First Bancshares'
underlying business decision to proceed with the proposed transaction.
In arriving at its opinion, Hoefer & Arnett reviewed and analyzed,
among other things, the following:
- the merger agreement;
21
- annual reports to stockholders of First Bancshares for the years ended
December 31, 1999 and December 31, 2000, quarterly reports of condition
and income for the quarters ended June 30, 2000, September 30, 2000,
December 31, 2000, March 31, 2001 and June 30, 2001;
- financial statements for Regions included in its annual reports on Form
10-K for the years ended December 31, 1999 and December 31, 2000,
quarterly reports on Form 10-Q for quarters ended June 30, 2000,
September 30, 2000, December 31, 2000, March 31, 2001 and June 30,
2001;
- financial analyses and forecasts for First Bancshares prepared by
management;
- Hoefer & Arnett held discussions with senior management of First
Bancshares concerning its past and current operations, financial
condition and prospects, as well as the results of regulatory
examinations;
- selected investment research reports on and earnings estimates for
Regions;
- certain other publicly available financial and other information
concerning First Bancshares and Regions;
- the nature and financial terms of certain other merger and acquisition
transactions involving banks and bank holding companies; and
- such other financial studies, analyses and investigations as it deemed
appropriate for purposes of its opinion.
In conducting its review and in arriving at its opinion, Hoefer &
Arnett relied upon and assumed the accuracy and completeness of the financial
and other information provided to it or publicly available, and did not attempt
to independently verify the same. Hoefer & Arnett relied upon the management of
First Bancshares as to the reasonableness of the financial and operating
forecasts, and projections (and the assumptions and bases therefor) provided to
it, and Hoefer & Arnett assumed that such forecasts and projections reflect the
best currently available estimates and judgments of First Bancshares management.
Hoefer & Arnett also assumed, without independent verification, that the
aggregate allowance for loan losses set forth in the financial statements of
First Bancshares and Regions is adequate to cover such losses. Hoefer & Arnett
did not make or obtain any evaluations or appraisals of the properties of First
Bancshares or Regions, nor did it examine any individual loan credit files. For
purposes of its opinion, Hoefer & Arnett assumed that the reorganization will
have the tax, accounting and legal effects described in the Agreement and
relied, as to legal matters, exclusively on counsel to First Bancshares and
Regions, as to the accuracy of the disclosures set forth in the agreement.
Hoefer & Arnett's opinion as expressed herein is limited to the fairness, from a
financial point of view, to the holders of shares of common stock of First
Bancshares with respect to the terms of the proposed merger of First Bancshares
with and into Regions.
As a matter of policy, First Bancshares does not publicly disclose
internal management forecasts, projections or estimates of the type furnished to
Hoefer & Arnett in connection with its analysis of the financial terms of the
proposed transaction, and such forecasts and estimates were not prepared with a
view towards public disclosure. These forecasts and estimates were based on
numerous variables and assumptions which are inherently uncertain and which may
not be within the control of the management of First Bancshares, including
without limitation to, the general economic, regulatory and competitive
22
conditions. Accordingly, actual results could vary materially from those set
forth in such forecasts and estimates.
As more fully discussed below, Hoefer & Arnett considered such
financial and other factors as Hoefer & Arnett deemed appropriate under the
circumstances, including among others the following:
- the historical and current financial position and results of operations
of First Bancshares and Regions, including interest income, interest
expense, net interest income, net interest margin, provision for loan
losses, noninterest income, noninterest expense, earnings, dividends,
internal capital generation, book value, intangible assets, return on
assets, return on stockholders' equity, capitalization, the amount and
type of nonperforming assets, loan losses and the reserve for loan
losses, all as set forth in the financial statements for First
Bancshares and Regions;
- the assets and liabilities of First Bancshares and Regions, including
the loan, investment and mortgage portfolios, deposits, other
liabilities, historical and current liability sources and costs and
liquidity; and
- Hoefer & Arnett's assessment of general economic, market and financial
conditions and its experience in other transactions, as well as its
experience in securities valuation and its knowledge of the banking
industry generally.
Hoefer & Arnett's opinion is necessarily based upon conditions as they
existed and can be evaluated on the date of its opinion and the information made
available to it through that date.
In connection with rendering its opinion to First Bancshares' board of
directors, Hoefer & Arnett performed a variety of financial analyses that are
summarized below. Hoefer & Arnett believes that its analyses must be considered
as a whole and that selecting portions of such analyses and the factors
considered therein, without considering all factors and analyses, could create
an incomplete view of the analyses and the processes underlying its opinion. The
preparation of a fairness opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analysis or summary
description. In its analyses, Hoefer & Arnett made numerous assumptions with
respect to industry performance, business and economic conditions, and other
matters, many of which are beyond the control of First Bancshares and Regions.
Any estimates contained in Hoefer & Arnett's analyses are not necessarily
indicative of future results or values, which may be significantly more or less
favorable than such estimates. Estimates of values of companies do not purport
to be appraisals or necessarily reflect the prices at which companies or their
securities may actually be sold. Except as described below, none of the
financial analyses performed by Hoefer & Arnett was assigned a greater
significance by Hoefer & Arnett than any other.
The following is a summary of the financial analyses performed by
Hoefer & Arnett in connection with providing its opinion.
Summary of Proposal. Hoefer & Arnett reviewed the terms of the proposed
merger as described in the agreement. Pursuant to the agreement, each share of
First Bancshares common stock, excluding shares held by any First Bancshares
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 of the merger shall be converted into .589 of a share of Regions
common stock (subject to adjustment as set forth in the following proviso, the
"exchange ratio"); provided that (1) in the event the average closing
23
price is greater than $36.00, the exchange ratio shall be equal to the quotient
(rounded to the nearest thousandth) obtained by dividing (a) the product of
$36.00 and the exchange ratio (as then in effect) by (b) the average closing
price and (2) in the event the average closing price is less than $26.00, the
exchange ratio shall be equal to the quotient (rounded to the nearest
thousandth) obtained by dividing (a) the product of $26.00 and the exchange
ratio (as then in effect) by (b) the average closing price.
Based on 1,737,864 common shares outstanding at First Bancshares, an
exchange ratio of .589 and a market price of $32.00 for Regions, Regions will
issue 1,023,602 shares to stockholders of First Bancshares for a total
transaction value of $32,755,264 or $18.85 per share. A per share price of
$18.85 represents a price to stated book value at June 30, 2001 of 2.50x, a
price to 2000 earnings of 17.51 and a price to total assets of 19.37%.
Analysis of Selected Bank Transactions. Hoefer & Arnett reviewed
certain information relating to selected bank mergers and acquisitions announced
between January 1, 2001 and July 31, 2001 in which the acquired banking
organization was located in Texas (the "selected transactions"). It compared
financial performance ratios at First Bancshares with financial performance
ratios of the banking organizations making up the selected transactions and it
compared the pricing multiples to be paid for First Bancshares with those paid
in the selected transactions. This data was obtained from SNL Securities.
At June 30, 2001, total assets at First Bancshares equaled $169.1
million, which was larger than the median asset size of $89.4 million for the
selected transactions. For the last twelve months ended December 31, 2000, First
Bancshares reported a return on average assets (ROAA) of 0.99% and a return on
average equity (ROAE) of 11.24%. These figures were below the median ratios of
1.22% and 12.68% for ROAA and ROAE, respectively, for the selected transactions.
At June 30, 2001, First Bancshares' equity to assets ratio equaled 7.75%, which
was below the median of 8.96% for the selected transactions.
On the basis of the pricing multiples for the selected transactions,
Hoefer & Arnett calculated a range of purchase prices as a multiple of tangible
book value and earnings, and as a percentage of assets. The chart below shows
the low, high and median for the selected transactions and the resulting price
range for First Bancshares.
Pricing Multiples for Per Share Value
Selected Transactions for First Bancshares
-------------------------------- ----------------------------------
Low High Median Low High Median
----- ----- ------ ------ ------ ------
Price/Book Value 1.31x 3.51x l.66x $ 9.88 $26.47 $12.52
Price/Earnings 9.05 49.53 12.81 9.77 53.49 13.83
Price/Assets 13.55% 23.54% 18.41% $13.19 $22.91 $17.92
Based on the median multiples, this analysis resulted in a range of
imputed values for First Bancshares' common stock of between $12.52 and $17.92,
which is below the transaction value of $18.85 per share.
Present Value Analysis. Hoefer & Arnett calculated the present value of
theoretical future earnings of First Bancshares and compared the transaction
value to the calculated present value of one share of First Bancshares' common
stock on a stand-alone basis. Based on projected earnings for First Bancshares
for 2001 through 2005, a discount rate of 12%, and including a residual value,
the stand-alone present value of First Bancshares' common stock equaled $13.59,
which is below the transaction value of $18.85 per share.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis,
Hoefer & Arnett estimated the net present value of the future streams of
after-tax cash flow that First Bancshares could produce to
24
benefit a potential acquiror, referred to below as dividendable net income.
Based on projected earnings for First Bancshares for 2001 through 2005, Hoefer &
Arnett calculated assumed after-tax distributions to a potential acquiror such
that its tier 1 leverage ratio would be maintained at 7.00%. Hoefer & Arnett
calculated the sum of (1) the estimated terminal values per share of First
Bancshares' common stock based on assumed multiples to First Bancshares'
projected 2005 tangible equity and earnings using the multiples to be paid in
the proposed transaction for First Bancshares, plus (2) the assumed 2001 to 2005
dividendable net income streams per share, discounted to present values at an
assumed discount rate of 12%. This discounted cash flow analysis indicated
implied values of $12.03 per share and $15.97 per share.
Pro Forma Analysis. Hoefer & Arnett compared the changes in the amount
of earnings, book value and dividends attributable to one share of First
Bancshares common stock before the merger with the amounts attributable to the
shares of Regions common stock for which such shares of First Bancshares would
be exchanged under the Agreement.
Hoefer & Arnett's analysis analyzed a purchase price of $32.8 million
or $18.85 per share, an exchange ratio of 0.589 to 1 (based upon the closing
share price of Regions common stock on July 31, 2001 of $32.00) and included
pre-tax merger savings of $680,000. On an equity per share basis, First
Bancshares common stockholders are projected to experience appreciation ranging
from 27.12% to 28.88% in the years 2002 through 2005. First Bancshares common
stockholders are projected to experience earnings per share appreciation ranging
from 8.88% to 13.77% in the years 2002 through 2005. On a dividend per share
basis, First Bancshares common stockholders are projected to experience
appreciation of 3.44% in 2002 and slight dilution in subsequent years.
Stock Trading History. Hoefer & Arnett reviewed and analyzed the
historical trading prices and volumes for Regions common stock. In the previous
twelve months, the price for Regions common stock has ranged from a low of
$19.875 to a high of $32.99. A current market price of $32.00 results in a price
to book value of 1.90x and a price to trailing 12 months earnings multiple of
14.41x. The average volume of shares traded on a daily basis is 611,000.
Other Analysis. Hoefer & Arnett reviewed selected investment research
reports on and earnings estimates for Regions. Hoefer & Arnett prepared an
overview of the historical financial performance of First Bancshares and
Regions.
The opinion expressed by Hoefer & Arnett was based upon market,
economic and other relevant considerations as they existed and have been
evaluated as of the date of the opinion. Events occurring after the date of
issuance of the opinion, including but not limited to, changes affecting the
securities markets, the results of operations or material changes in the assets
or liabilities of First Bancshares could materially affect the assumptions used
in preparing the opinion.
In its engagement letter with Hoefer & Arnett, First Bancshares agreed
to pay Hoefer & Arnett $25,000 to review the terms of the transaction and to
render a fairness opinion in connection with the merger.
The foregoing description of the opinion of Hoefer & Arnett is
qualified in its entirety by reference to the full text of such opinion, which
is attached hereto as Appendix B.
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EFFECTIVE TIME OF THE MERGER
After all conditions to the merger are satisfied or waived, Regions
will file a certificate of merger with the Secretary of State of Delaware, and
Regions and First Bancshares will file articles of merger with the Secretary of
State of Texas. The merger will become effective on the date and at the time
specified in such filings, or, if later, the date and time when both the
Delaware certificate of merger has been filed by the Delaware Secretary of State
and a certificate of merger has been issued by the Texas Secretary of State.
Unless otherwise agreed upon by Regions and First Bancshares, and subject to the
satisfaction or waiver of the conditions to the obligations of the parties to
complete the merger, the parties will use their reasonable efforts to complete
the merger not later than the last business day of the month during 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 merger
agreement is approved by the requisite vote of First Bancshares stockholders.
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
merger can or will be satisfied. Regions and First Bancshares anticipate that
all conditions to completion of the merger will be satisfied so that the merger
can be completed during the fourth quarter of 2001. However, delays in the
completion of the merger could occur.
The board of directors of either Regions or First Bancshares generally
may terminate the merger agreement if the merger is not completed by March 31,
2002, unless the failure to complete by that date is the result of a breach of
the merger agreement by the party seeking termination. See "-Conditions to
Completion of the Merger" and "-Waiver, Amendment, and Termination of the
Agreement."
DISTRIBUTION OF REGIONS STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
Promptly after the effective time of the merger, Regions will cause an
exchange agent selected by Regions to mail to the former stockholders of First
Bancshares a form letter of transmittal, together with instructions for the
exchange of such stockholders' certificates representing shares of First
Bancshares common stock for certificates representing shares of Regions common
stock.
FIRST BANCSHARES STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE THE FORM LETTER OF TRANSMITTAL AND INSTRUCTIONS. Upon
surrender to the exchange agent of certificates for First Bancshares common
stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of First Bancshares 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, First Bancshares stockholders of record as of the effective time will be
entitled to vote at any meeting of holders of Regions common stock the number of
whole shares of Regions common stock into which their First Bancshares common
stock has been converted, regardless of whether such stockholders have
surrendered their First Bancshares 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 First Bancshares 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.
26
After the effective time of the merger, a First Bancshares stockholder
will be unable to transfer shares of First Bancshares common stock. If a
certificate representing shares of First Bancshares common stock is presented
for transfer after the completion of the merger, it will be canceled and
exchanged for shares of Regions common stock and a check for the amount due, if
any, instead of a fractional share.
CONDITIONS TO COMPLETION OF THE MERGER
Completion of the merger is subject to a number of conditions,
including, but not limited to:
- the approval of the merger 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 as to render inadvisable the
completion of the merger;
- the approval of the merger agreement by the holders of the requisite
number of shares of First Bancshares common stock;
- the absence of any action by any court, or governmental authority, or
regulatory authority with appropriate jurisdiction prohibiting,
restraining, or making illegal the completion of the merger and the
other transactions contemplated by the merger agreement; and
- 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," including, among
others, that the exchange of First Bancshares common stock for Regions
common stock will not give rise to recognition of gain or loss to First
Bancshares stockholders, except to the extent of any cash received.
Completion of the merger also is subject to the satisfaction or waiver
of various other conditions specified in the merger agreement which are
customary in transactions of this nature, including, among others: (1) the
delivery by Regions and First Bancshares of certificates executed by their
respective duly authorized officers as to the satisfaction of certain conditions
and obligations set forth in the merger agreement and (2) as of the effective
time of the merger, the accuracy under the standard set forth in the merger
agreement of certain representations and warranties and the compliance in all
material respects with the agreements and covenants of each party.
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 merger
agreement. Applications for the approvals described below have been submitted to
the appropriate regulatory agencies.
Regions and First Bancshares are not aware of any material governmental
approvals or actions that are required for completion 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.
27
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 outweighed clearly by the public
interest and the probable effect of the transaction in meeting the convenience
and needs of the communities to be served. Under the Bank Holding Company Act,
the merger may not be completed 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 the review of the Texas Department of
Banking.
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 merger agreement generally may be (1) waived by the
party benefitted by the provision or (2) amended by a written agreement between
Regions and First Bancshares approved by their respective boards of directors;
provided, however, that after approval by the First Bancshares stockholders, no
amendment that pursuant to the Texas Business Corporation Act requires further
approval of the First Bancshares stockholders, including decreasing the
consideration to be received by First Bancshares stockholders, may be made
without the further approval of such stockholders.
The merger agreement may be terminated, and the merger abandoned, at
any time prior to the effective time of the merger, either before or after
approval by First Bancshares stockholders, under certain circumstances,
including:
- by mutual consent of the boards of directors of Regions and First
Bancshares;
- 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 First Bancshares common stock shall not
have approved the merger agreement;
- 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 merger agreement and
cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party;
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- 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 merger
agreement 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 completed by March 31, 2002, but only if the failure to complete
the merger by such date has not been caused by the terminating party's
breach of the merger agreement.
If the merger agreement is terminated, the parties will have no further
obligations, except with respect to certain provisions, including those
providing for payment of expenses and restricting disclosure of confidential
information. Further, termination generally will not relieve the parties from
the consequences of any uncured willful breach of the merger agreement giving
rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of First Bancshares and Regions generally has agreed to operate
its business only in the usual, regular, and ordinary course, and to use its
reasonable best efforts 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 merger agreement 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. In addition, the merger agreement includes certain other
restrictions applicable to the conduct of the business of First Bancshares prior
to completion of the merger, as described below.
First Bancshares. First Bancshares has agreed not to take certain
actions relating to the operation of its business pending completion of the
merger without the prior written consent of Regions, which Regions has agreed it
will not unreasonably withhold. The actions First Bancshares has agreed not to
take are subject in some cases to exceptions for actions in the ordinary course
of business consistent with First Bancshares 's past practice or subject to
exceptions expressly recognized in the merger agreement. The specific agreements
not to take certain actions, 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 merger agreement. The actions First Bancshares
has agreed not to take are in the general categories of:
- amending its articles of incorporation, bylaws, or other governing
instruments;
- incurring indebtedness in excess of $500,000 or incurring material
liens;
- acquiring any of its outstanding shares of stock or the shares of stock
of its subsidiaries or making distributions in respect to its
outstanding shares, except of the payment of regular dividends
consistent with past practice;
- issuing additional securities;
- reclassifying capital stock or selling or encumbering assets;
29
- increasing employees' salaries and benefits or accelerating the vesting
of any stock-based compensation or employee benefits;
- 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 or terminating material contracts.
In addition, First Bancshares has agreed not to solicit, directly or
indirectly, encourage, or facilitate any acquisition proposal from any other
person or entity. First Bancshares also has agreed not to negotiate with respect
to any such proposal, provide nonpublic information to any party making such a
proposal, or enter into any agreement with respect to any such proposal, except
in compliance with the fiduciary obligations of its board of directors. In
addition, First Bancshares has agreed to use reasonable efforts to cause its
officers, directors, affiliates, advisors, and other representatives not to
engage in any of the foregoing activities.
MANAGEMENT FOLLOWING THE MERGER
Upon completion 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 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, 2000, incorporated herein by reference. See "Where You Can Find
More Information."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
W. Allen Gage, the chairman of the board and president of First
Bancshares, has entered into a three year consulting agreement with First Bank
of Texas and Regions. The consulting agreement provides that Mr. Gage will serve
as vice chairman of the board and vice president of First Bank of Texas from the
effective date of the merger through August 31, 2002. On August 31, 2002, Mr.
Gage shall cease serving as vice president but will continue to serve as vice
chairman of First Bank of Texas. During this three year period, Mr. Gage will be
paid based on an annual salary of $250,000, and he will be subject to covenants
not to compete with First Bank of Texas. Pursuant to the consulting agreement,
Mr. Gage will terminate his previous employment agreement with First Bancshares
upon the effectiveness of the merger.
Jim McCutchen, the president of First Bank of Texas, has entered into
an employment agreement with First Bank of Texas and Regions. Pursuant to the
employment agreement, Mr. McCutchen will serve as President of First Bank of
Texas for a period of one year after the effectiveness of the merger. During
this one year period, Mr. McCutchen will be paid based on an annual salary of
$96,000, and he will be subject to covenants not to compete with First Bank of
Texas.
30
The merger agreement generally provides that Regions will indemnify and
hold harmless each person entitled to indemnification from First Bancshares or
any of its subsidiaries to the full extent permitted by law, 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 requires Regions to use commercially
reasonable efforts to maintain in effect for a period of three years after the
effective time of the merger First Bancshares existing directors' and officers'
liability insurance policy with respect to claims arising from acts or events
which occurred prior to the effective time of the merger. Regions may substitute
policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous.
The merger agreement also provides that, after the effective time of
the merger, Regions will provide generally to officers and employees of First
Bancshares 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 First Bancshares 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
First Bancshares to honor all employment, severance, consulting, and other
compensation contracts previously disclosed to Regions between First Bancshares
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 First Bancshares' benefit plans.
As of the record date, directors and executive officers of First
Bancshares owned no shares of Regions common stock.
DISSENTING STOCKHOLDERS
Pursuant to the provisions of the Texas Business Corporation Act, if
the merger is consummated, any holder of First Bancshares common stock who (1)
gives to First Bancshares, prior to the special meeting, written objection to
the merger, and (2) does not vote in favor of the merger, shall be entitled to
receive, upon compliance with the statutory requirements summarized below, the
fair value of such holder's shares as of the day immediately preceding the
special meeting, excluding any appreciation or depreciation in anticipation of
the merger.
The written objection requirement referred to above will not be
satisfied under the Texas 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, a stockholder wishing to preserve
the right to dissent and seek appraisal must give a separate written objection
to the merger, setting out that the stockholder intends to exercise the right of
dissent if the merger is effected. The written objection must also include the
stockholder's address to which notice of the effectiveness of the merger is to
be sent by the surviving corporation. Any written objection with notice of
intent to exercise the right of dissent should be addressed as follows: First
Bancshares of Texas, Inc., 2001 Kirby Drive, Suite 808, Houston, Texas, 77019,
Attention: Corporate Secretary.
31
If the merger is effected, within ten days thereafter, Regions, as the
surviving corporation, must deliver or mail to all holders of First Bancshares
common stock who satisfied the foregoing requirements a written notice that the
merger has been effected.
A stockholder of record who receives such notice must make written
demand for payment of the fair value of such holder's shares within ten days
after the delivery or mailing of the notice. Such written demand must state the
number and class of the shares owned by the stockholder and the fair value of
the shares as estimated by the stockholder. Pursuant to the Texas Business
Corporation Act, any stockholder failing to make the written demand within the
ten day period shall be bound by the terms of the merger.
Upon receiving a demand for payment from any dissenting stockholder,
Regions as the surviving corporation shall make an appropriate notation in its
stockholder records. Within 20 days after demanding payment for shares, the
holder of any certificate representing such shares must submit the certificate
to Regions for notation thereon that such demand has been made. Failure to do
so, at the option of Regions, will terminate such stockholder's rights for
valuation and payment of his shares, unless a court of competent jurisdiction
for good and sufficient cause otherwise directs.
Within 20 days after receipt by Regions of a stockholder's written
demand for payment, Regions must mail or deliver to such stockholder a written
notice that either:
- accepts the amount declared in the demand and agrees to pay that amount
within 90 days after the effective date of the merger and upon
surrender of the stockholder's certificate representing the shares; or
- states Regions' estimate of the fair value of the shares and offers to
pay the amount of that estimate within 90 days after the effective date
of the merger and upon surrender of the stockholder's certificate
representing the shares.
If within 60 days after the effective date of the merger the value of
the shares is agreed upon between Regions and a dissenting stockholder, Regions
is to make payment for the shares within 90 days after the effective date of the
merger and upon surrender of the stockholder's certificate representing the
shares. Upon payment of the agreed value, the stockholder shall cease to have
any interest in the shares.
If a dissenting stockholder and Regions have not agreed upon the fair
value of the shares within 60 days after the effective date of the merger, then
either the stockholder or Regions may file a petition in any court of competent
jurisdiction in Harris County, Texas, asking for a finding and determination of
the fair value of the shares. If filed by a stockholder, service of the petition
shall be had upon Regions as the surviving corporation and Regions must within
10 days after service file with the clerk of court a list with the names and
addresses of all stockholders who have demanded payment and not reached
agreement as to the fair value. If filed by Regions, the petition must be
accompanied by such a list. The clerk of court shall give notice to Regions and
all stockholders named on the list of the time and place fixed for the hearing
of the petition.
After the hearing of the petition, the court shall determine the
stockholders who have complied with the statutory requirements and have become
entitled to the valuation of and payment for their shares, and the court shall
appoint one or more qualified appraisers to determine the value. The appraisers
may examine the books and records of First Bancshares, and shall afford the
interested parties a reasonable
32
opportunity to submit pertinent evidence. The appraisers are to make a
determination of the value upon such examination as they deem proper.
The appraisers shall file a report of the value in the office of the
clerk of court, notice of which shall be given to the parties in interest. The
parties in interest may submit exceptions to the report, which will be heard
before the court upon the law and the facts. The court shall adjudge the fair
value of the shares of the stockholders entitled to payment for their shares and
shall direct the payment thereof by Regions as the surviving corporation,
together with interest beginning 91 days after the effective date of the merger.
However, the judgment shall be payable only upon and simultaneously with
surrender of the certificates representing the shares, duly endorsed. Upon
Regions' payment of the judgment, the dissenting stockholders shall cease to
have any interest in the shares.
The court shall allow the appraisers a reasonable fee as court costs,
and all court costs shall be allotted among the parties in the manner that the
court determines to be fair and equitable, with the respective parties to bear
their own attorneys fees.
Any stockholder who has demanded payment for such holder's shares may
withdraw such demand at any time before payment or before any petition has been
filed for valuation by the court. A demand may not be withdrawn after payment
or, unless Regions consents, after such a petition has been filed in court.
After a demand has been withdrawn, the stockholder and all claiming under the
stockholder shall be conclusively presumed to have approved the merger and shall
be bound thereby.
The foregoing is a summary of the material rights of a dissenting
stockholder of First Bancshares, but is qualified in its entirety by reference
to Articles 5.11, 5.12, and 5.13 of the Texas Business Corporation Act, included
in Appendix C to this proxy statement-prospectus. It is not intended to expand
or alter any right of dissent or payment to any stockholder and should not be so
read. Stockholders' rights of dissent and payment are limited to those provided
by law. Any First Bancshares stockholder who intends to exercise the right to
dissent from the merger should carefully review the text of such provisions and
should also consult with such holder's attorney. No further notice of the events
giving rise to dissenters' rights or any steps associated therewith will be
furnished to First Bancshares stockholders, except as indicated above or
otherwise required by law.
Any dissenting First Bancshares 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 FIRST BANCSHARES COMMON STOCK. THIS
DISCUSSION MAY NOT APPLY TO SPECIAL SITUATIONS, SUCH AS FIRST BANCSHARES
STOCKHOLDERS, IF ANY, WHO HOLD FIRST BANCSHARES COMMON STOCK OTHER THAN AS A
CAPITAL ASSET, WHO RECEIVED FIRST BANCSHARES COMMON STOCK UPON THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, WHO HOLD FIRST BANCSHARES
COMMON STOCK AS PART OF A "STRADDLE" OR "CONVERSION TRANSACTION," OR WHO ARE
INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL INSTITUTIONS OR FOREIGN
PERSONS, AND DOES NOT DISCUSS ANY ASPECTS OF STATE, LOCAL, OR FOREIGN TAXATION.
THIS DISCUSSION IS BASED UPON LAWS, REGULATIONS, RULINGS AND DECISIONS NOW IN
EFFECT AND ON PROPOSED REGULATIONS, ALL OF WHICH ARE SUBJECT TO CHANGE (POSSIBLY
WITH RETROACTIVE EFFECT) BY
33
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.
Completion of the merger is conditioned upon receipt by Regions and
First Bancshares 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 completed in accordance with the
merger agreement and upon factual statements and factual representations made by
Regions and First Bancshares, it is such firm's opinion that:
1. The merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986 (the "Code").
2. No gain or loss will be recognized by holders of First Bancshares
common stock who exchange in the merger of all of their First Bancshares common
stock solely for Regions common stock pursuant to the merger (except with
respect to any cash received in lieu of fractional share interests in Regions
common stock).
3. The tax basis of the Regions common stock received (including
fractional shares deemed received and redeemed) by holders of First Bancshares
common stock who exchange all of their First Bancshares common stock solely for
Regions common stock in the merger will be the same as the tax basis of the
First Bancshares common stock surrendered in exchange for the Regions common
stock (reduced by an amount allocable to a fractional share interest in Regions
common stock deemed received and redeemed).
4. The holding period of the Regions common stock received (including
fractional shares deemed received and redeemed) by holders of First Bancshares
common stock who exchange all of their First Bancshares common stock solely for
Regions common stock in the merger will be the same as the holding period of the
First Bancshares common stock surrendered in exchange therefor, provided that
such First Bancshares common stock is held as a capital asset at the effective
time of the merger.
5. The payment of cash to holders of First Bancshares common stock 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 Regions common stock redeemed, as provided in Section 302(a) of the Code.
6. Where solely cash is received by a holder of First Bancshares common
stock in exchange for First Bancshares common stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of such holder's First Bancshares common stock, subject to the
provisions and limitations of Section 302 of the Code.
THE TAX OPINION DOES NOT ADDRESS ANY STATE, LOCAL, FOREIGN, OR OTHER
TAX CONSEQUENCES OF THE MERGER. FIRST BANCSHARES 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.
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ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a
"purchase," as that term is used pursuant to accounting principles generally
accepted in the United States, for accounting and financial reporting purposes.
Under the purchase method of accounting, the assets and liabilities of First
Bancshares 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 First Bancshares.
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 all of the filing fees and one-half of the
printing costs in connection with this proxy statement-prospectus.
RESALES OF REGIONS COMMON STOCK
The Regions common stock to be issued to First Bancshares 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, First Bancshares (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 First Bancshares 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 First Bancshares 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
First Bancshares 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 First Bancshares or Regions.
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Each person who First Bancshares reasonably believes is an affiliate of
First Bancshares 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 completion of the
merger, except in compliance with the Securities Act and the rules and
regulations promulgated thereunder.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the merger, holders of First Bancshares common stock
will be exchanging their shares of a Texas corporation governed by the Texas
Business Corporation Act and First Bancshares' articles of incorporation, 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 First
Bancshares 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 Texas Business Corporation Act and
the Delaware General Corporation Law as well as to Regions' certificate of
incorporation and bylaws and First Bancshares' articles of incorporation and
bylaws.
ANTITAKEOVER PROVISIONS GENERALLY
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," are referred to herein as the "protective
provisions." In general, one purpose of the protective provisions is to assist
Regions' board of directors in playing a role in connection with attempts to
acquire control of Regions, so that the board of directors can further and
protect the interests of Regions and its stockholders as appropriate under the
circumstances, including, if the board of directors determines that a sale of
control is in their best interests, by enhancing the board of directors' 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.
36
The protective provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of Regions
common stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the protective
provisions may decrease the market price of Regions common stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The protective provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of Regions through replacing the board of directors and
management. Furthermore, the protective provisions may make it more difficult
for Regions' stockholders to replace the board of directors or management, even
if a majority of the stockholders believes such replacement is in the best
interests of Regions. As a result, the protective provisions may tend to
perpetuate the incumbent board of directors and management.
AUTHORIZED CAPITAL STOCK
Regions. The 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 June 30, 2001, 229,133,874 shares of Regions common stock were issued,
including 1,500,000 treasury shares, and 227,633,874 shares were issued and
outstanding. No shares of preferred stock have been issued. Regions' board of
directors may authorize the issuance of additional shares of Regions common
stock or preferred stock without further action by Regions' stockholders, unless
such action is required in a particular case by applicable laws or regulations
or by any stock exchange upon which Regions' capital stock may be listed. The
certificate 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.
First Bancshares. First Bancshares' authorized capital stock consists
of 100,000,000 shares of First Bancshares common stock, and 10,000,000 shares of
preferred stock issuable in series as determined by the board of directors of
First Bancshares. As of the record date, there were 1,737,864 shares of First
Bancshares common stock issued and outstanding, and no shares of First
Bancshares preferred stock were issued and outstanding.
Pursuant to the Texas Business Corporation Act, First Bancshares' board
of directors may authorize the issuance of additional shares of First Bancshares
common stock or preferred stock without further action by First Bancshares'
stockholders. First Bancshares' articles of incorporation, as amended, do not
provide the stockholders of First Bancshares with preemptive rights to purchase
or subscribe to any unissued authorized shares of First Bancshares common stock
or preferred stock or any option or warrant for the purchase thereof.
37
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. The 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 the 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.
The 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.
First Bancshares. The Texas Business Corporation Act generally provides
that a Texas corporation's articles of incorporation may be amended by the
affirmative vote of at least two-thirds of the shares entitled to vote thereon,
unless the articles of incorporation provide for a higher or lower voting
requirement. First Bancshares' articles of incorporation include special
provisions relating to amendment of the articles of incorporation which allow
the affirmative vote of a majority of the shares entitled to vote to amend the
articles of incorporation.
The board of directors has the power to adopt, amend, or repeal the
bylaws by a majority vote, subject to the right of the stockholders by majority
vote to adopt, amend, or repeal the bylaws by majority vote.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
Regions. The 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 of directors are elected
each year; consequently, two annual meetings are effectively required for
Regions' stockholders to change a majority of the members of the board of
directors.
Pursuant to the 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
38
board of directors. The absence of cumulative voting, therefore, could make it
more difficult for a stockholder who acquires less than a majority of the shares
of Regions common stock to obtain representation on Regions' board of directors.
First Bancshares. First Bancshares' articles of incorporation do not
provide for a classified board of directors. Holders of First Bancshares common
stock are not afforded cumulative voting rights.
REMOVAL OF DIRECTORS
Regions. Under the 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.
First Bancshares. Pursuant to First Bancshares' bylaws, any director or
the entire board of directors may be removed, with or without cause, by a vote
of the holders of a majority of the shares entitled to vote on the election of
directors.
LIMITATIONS ON DIRECTOR LIABILITY
Regions. The 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
benefitted Regions and its stockholders. The SEC has taken the position that
similar provisions added to other corporations' certificates of incorporation
would not protect those corporations' directors from liability for violations of
the federal securities laws.
First Bancshares. The Texas Miscellaneous Corporation Laws Act provides
for, and First Bancshares' articles of incorporation include, a similar
provision, although somewhat more limited, limiting a director's personal
liability for money damages arising out of a breach of duty.
INDEMNIFICATION
Regions. The 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
39
had no reasonable cause to believe that the conduct was unlawful. In actions
brought by or in the right of Regions, such indemnification probably would be
limited to reasonable expenses (including attorneys' fees) and would apply if it
were determined in the specific case that the proposed indemnitee acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of Regions, except that no indemnification may be made with
respect to any matter as to which such person is adjudged liable to Regions,
unless, and only to the extent that, the court determines upon application that,
in view of all the circumstances of the case, the proposed indemnitee is fairly
and reasonably entitled to indemnification for such expenses as the court deems
proper. To the extent that any director, officer, employee, or agent of Regions
has been successful on the merits or otherwise in defense of any action, suit,
or proceeding, as discussed herein, whether civil, criminal, administrative, or
investigative, such person must be indemnified against reasonable expenses
incurred by such person in connection therewith.
First Bancshares. The Texas Business Corporation Act and First Bancshares'
articles of incorporation 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 of incorporation 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 of directors with nominees who were in favor of such
proposal.
First Bancshares. Under First Bancshares' bylaws, a special meeting of
First Bancshares stockholders may be called by the president, board of
directors, or the holders of not less than 10.0% of the shares entitled to vote
at the meeting.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
Regions. The 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.
First Bancshares. Under the Texas Business Corporation Act and First
Bancshares' bylaws, any action requiring or permitting stockholder approval may
be approved by written consent of stockholders holding all of the shares of
First Bancshares common stock outstanding.
40
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 (the
"Nomination Notice") to the Secretary of Regions not less than 14 days nor more
than 50 days before any meeting of the stockholders called for the election of
directors; provided, however, that if less than 21 days notice of the meeting is
given to stockholders, the Nomination Notice must be delivered to the Secretary
of Regions not later than the seventh day following the day on which notice of
the meeting was mailed to stockholders. The Nomination Notice must set forth
certain background information about the persons to be nominated, including
information concerning (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
stockholders' meeting, and any stockholder may vote such holder's shares in
person or by proxy for any individual such holder desires.
First Bancshares. First Bancshares' articles of incorporation and
bylaws do not provide for special nominating procedures for election of
directors.
MERGERS, CONSOLIDATIONS, AND SALES OF ASSETS GENERALLY
Regions. The 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.
First Bancshares. The Texas Business Corporation Act generally requires
approval of at least two-thirds 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.
The corporation's board of directors by resolution may require a different
percentage of votes necessary for
41
approval. First Bancshares articles of incorporation provide that a majority of
the outstanding shares of voting stock may approve such a transaction.
BUSINESS COMBINATIONS WITH CERTAIN PERSONS
Regions. Section 203 of the Delaware General Corporation Law ("Section
203") places certain restrictions on "business combinations" (as defined in
Section 203 to include, generally, mergers, sales and leases of assets,
issuances of securities, and similar transactions) by Delaware corporations with
an "interested stockholder" (as defined in Section 203 to include, generally,
the beneficial owner of 15% or more of the corporation's outstanding voting
stock). Section 203 generally applies to Delaware corporations, such as Regions,
that have a class of voting stock listed on a national securities exchange,
authorized for quotation on an interdealer quotation system of a registered
national securities association, or held of record by more than 2,000
stockholders, unless the corporation expressly elects in its certificate of
incorporation or bylaws not to be governed by Section 203.
Regions has not specifically elected to avoid the application of
Section 203. As a result, Section 203 generally would prohibit a business
combination by Regions or a subsidiary with an interested stockholder within
three years after the person or entity becomes an interested stockholder, unless
(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 completion 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.
First Bancshares. Certain corporations in Texas are subject to the
Texas Business Combination Law, which imposes similar restrictions on certain
business combinations between the corporation and an interested stockholder.
First Bancshares is subject to the Texas Business Combination Law.
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
instead of fractional shares of stock described in clause (a) or (b) immediately
above; or (d) any combination of the shares of stock and cash instead 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
42
of record by more than 2,000 stockholders, unless the exception described
immediately above applies, holders of Regions common stock do not have
dissenters' rights.
First Bancshares. A summary of the pertinent provisions of the Texas
Business Corporation Act pertaining to dissenters' rights is set forth under the
caption "The Merger--Dissenting Stockholders," and such provisions are included
as Appendix C.
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.
First Bancshares. Pursuant to the Texas Business Corporation Act, upon
written notice of a demand to inspect corporate records and demonstration of a
proper purpose, a stockholder who has held shares of First Bancshares common
stock for at least six months or holds 5% or more of the outstanding shares of
First Bancshares common stock 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 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."
First Bancshares. Pursuant to the Texas Business Corporation Act, a
board of directors may from time to time make distributions to its stockholders,
subject to restrictions in its articles of incorporation, provided that no
distribution may be made if, after giving it effect, (1) the corporation would
be insolvent, or (2) the distribution exceeds the corporation's surplus. There
are no specific restrictions regarding payment of dividends contained in First
Bancshares' articles of incorporation. Substantially all of the funds available
for the payment of dividends by First Bancshares are derived from its banking
subsidiary, First Bank of Texas. There are various statutory limitations on the
ability of First Bank of Texas to pay dividends to First Bancshares.
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COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions common stock is quoted on the Nasdaq National Market under the
symbol "RGBK." First Bancshares 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, the high and low prices of First Bancshares common stock based
on the transactions known to First Bancshares management, and the cash dividends
declared per share of Regions and First Bancshares common stock. For the
indicated period there has been only a very limited number of transactions in
First Bancshares common stock and all such transactions have involved limited
numbers of shares.
REGIONS FIRST BANCSHARES
PRICE RANGE CASH DIVIDENDS CASH DIVIDENDS
DECLARED DECLARED
HIGH LOW PER SHARE HIGH LOW PER SHARE
---- --- --------- ---- --- ---------
1999
First Quarter................. $ 41.44 $ 34.63 $ .25 $15.75 $14.00 $.10
Second Quarter................ 39.13 34.72 .25 14.62 12.50 .10
Third Quarter................. 38.94 29.81 .25 13.25 12.87 .10
Fourth Quarter................ 31.25 23.38 .25 13.37 12.87 .10
2000
First Quarter ................ 24.31 18.44 .27 13.62 13.00 .10
Second Quarter................ 24.50 19.19 .27 13.37 12.00 .10
Third Quarter ................ 24.81 19.94 .27 13.75 11.25 .10
Fourth Quarter ............... 27.81 20.31 .27 15.62 13.50 .10
2001
First Quarter................. 32.00 26.75 .28 15.00 14.62 .10
Second Quarter................ 32.00 28.00 .28 15.00 14.75 .10
Third Quarter................. 32.35 26.85 .28 13.25 17.50 .10
Fourth Quarter (through
October 26, 2001) ............ 26.34 29.22 .28 17.00 17.00 --
On October 26, 2001, the last reported sale price of Regions common
stock as reported on the Nasdaq National Market, was $28.14, and the price of
First Bancshares common stock in the last known transaction was $17.00, on
September 4, 2001. On August 10, 2001, 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 $32.00, and the price
of First Bancshares common stock in the last known transaction was $13.50, on
August 7, 2001.
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
44
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."
The holders of First Bancshares' common stock are entitled to receive
dividends when and if declared by the board of directors out of funds legally
available therefor. First Bancshares has paid regular quarterly cash dividends
since October of 1993. Pursuant to the merger agreement, First Bancshares may
only declare and pay dividends consistent with past practices. There can be no
assurance that First Bancshares will continue to pay dividends. The declaration
and payment of dividends depends upon business conditions, operating results,
capital and reserve requirements, and the board of directors' consideration of
other relevant factors.
First Bancshares is a legal entity separate and distinct from its
subsidiaries and its revenues depend in significant part on the payment of
dividends from First Bank of Texas. First Bank of Texas is subject to certain
legal restrictions on the amount of dividends it is permitted to pay.
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INFORMATION ABOUT FIRST BANCSHARES
First Bancshares is a bank holding company organized under the laws of
the state of Texas with its principal executive office located in Houston,
Texas. First Bancshares operates principally through First Bank of Texas, which
is a state-chartered commercial bank and which provides a range of consumer and
commercial banking services through six offices in Harris, Hamilton, and
Montgomery Counties. At June 30, 2001, First Bancshares had total consolidated
assets of approximately $169.2 million, total consolidated deposits of
approximately $151.8 million, and total consolidated stockholders' equity of
approximately $13.1 million. First Bancshares' principal executive office is
located at 2001 Kirby Drive, Suite 808, Houston, Texas, 77019 and its telephone
number at such address is (713) 522-5970.
BUSINESS AND PROPERTIES
First Bancshares was organized as a bank holding company for First Bank
in 1980. First Bancshares offers a diversified range of commercial and retail
banking services for customers located principally in Harris, Hamilton and
Montgomery Counties. First Bancshares' customer base is composed primarily of
individuals who either work or reside in First Bancshares' market areas and
commercial enterprises engaged in a wide range of businesses throughout First
Bancshares' market areas.
Through its banking subsidiary, First Bancshares provides its customers
with a variety of banking services, including checking accounts, savings
accounts, certificates of deposit, bank-by-mail and 24-hour depository
facilities, cashier's checks, travelers checks, savings bonds, consumer loans,
automobile loans, commercial loans, real estate loans, home improvement loans
and safe deposit boxes.
In addition to its corporate headquarters at 2001 Kirby Drive, Suite
808, Houston, Texas, First Bancshares conducts business at six banking
locations. First Bancshares owns all of the buildings in which its banking
centers are located. The corporate headquarters in Houston are leased. The lease
term of the Houston location expires in September of 2002. The expiration date
does not include renewal option periods that may be available.
The following table sets forth specific information on First
Bancshares' headquarters location and each of its six full-service banking
offices:
46
DEPOSITS AT
LOCATION ADDRESS JUNE 30, 2001
-------- ------- -------------
(In thousands)
Hamilton 101 E. Henry, Hamilton, Texas $21,903
Houston 2001 Kirby Drive, Suite 808, Houston, Texas (1)
Magnolia 18934 FM 1488, Magnolia, Texas 17,951
Pinehurst 32323 SH 249, Pinehurst, Texas 5,438
Spring 7801 Louetta, Spring, Texas 20,320
Tomball (Main Office) 810W. Main, Tomball, Texas 83,270
Tomball 28597 Tomball Parkway, Tomball, Texas 3,839
(1) The Houston location is the corporate headquarters of First Bancshares. It
is not a branch of First Bank of Texas, and banking activities are not conducted
at this location.
COMPETITION
First Bancshares encounters vigorous 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 First Bancshares'
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.
First Bank of Texas also competes 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 First Bank of Texas. At June 30, 2001, there
were approximately 24 commercial banks, one savings bank, and two credit unions
competing with First Bank of Texas in the bank's market area.
LEGAL PROCEEDINGS
First Bancshares and First Bank of Texas 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 First Bancshares. Unless otherwise indicated, each person
has sole voting and investment powers over the indicated shares. Information
relating to beneficial ownership of First Bancshares 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.
47
POSITION AND
PRESENT OCCUPATION OFFICES HELD DIRECTOR OR NUMBER OF SHARES
AND PRINCIPAL WITH FIRST EXECUTIVE BENEFICIALLY OWNED
OCCUPATION FOR BANCSHARES OF OFFICER AT THE RECORD DATE
NAME LAST FIVE YEARS TEXAS AND FIRST BANK(1) SINCE AND PERCENT OF CLASS
--------------------- ------------------ ----------------------- ----------- --------------------
W. Allen Gage Banking Chairman, Chief 1991 550,129 31.66%(2)
Executive Officer,
and President of First
Bancshares; Chairman
and Chief Executive
Officer of First Bank
Kenneth E. Goates Banking Director 1992 48,000 2.76
James C. Lederer Attorney Director 1993 35,000 2.01
Mary Melville Banking Vice President and 1990 288,129 16.58(2)
Secretary of First
Bancshares; Executive
Vice President and
Director of First Bank
Joan Luce Banking Vice President and 1999 N/A
Treasurer of First
Bancshares; Executive
Vice President and
Director of First Bank
(1) Unless otherwise indicated, position is with First Bancshares.
(2) Includes 260,129 shares held by the First Bancshares Employee Stock
Ownership Plan of which Mr. Gage and Ms. Melville are trustees.
TRANSACTIONS WITH MANAGEMENT
In the ordinary course of business, First Bank of Texas has loans, deposits
and other transactions with its 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 such persons and any company in which they have a 10% or more ownership
interest as of June 30, 2001, were approximately $120,000.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of First Bancshares common stock, as of the
record date.
48
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
------------------- -------------------- ------------------ ---------
W. Allen Gage 550,129 31.66%(2)
2001 Kirby Suite 808
Houston, TX 77019
First Bancshares Employee 260,129 14.97
Stock Ownership Plan
2001 Kirby, Suite 808
Houston, TX 77019
(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 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.
(2) Includes 260,129 shares held by First Bancshares Employee Stock Ownership
Plan of which Mr. Gage is a trustee.
49
INFORMATION ABOUT REGIONS
GENERAL
Regions is a regional bank holding company and financial holding
company organized and existing under the laws of the state of Delaware and
headquartered in Birmingham, Alabama, with more than 670 banking offices located
in Alabama, Arkansas, Florida, Georgia, Louisiana, South Carolina, Tennessee,
and Texas as of June 30, 2001. At that date, Morgan Keegan & Company, Inc.,
Regions' broker-dealer subsidiary, had 140 offices in 14 states. As of June 30,
2001, Regions had total consolidated assets of approximately $45.1 billion,
total consolidated deposits of approximately $31.8 billion, and total
consolidated stockholders' equity of approximately $3.8 billion. Regions has
banking-related subsidiaries engaged in mortgage banking, credit life insurance,
and leasing, with offices in various Southeastern states. Through Morgan Keegan
and its banking-related subsidiaries, Regions offers a broad range of banking
and financial 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" on page 59. A copy of each of the
documents listed on page 59 under "Regions SEC Filings" accompanies this proxy
statement-prospectus.
RECENT DEVELOPMENTS
Since December 31, 2000, and as of the date of this proxy
statement-prospectus, Regions has completed the acquisitions of Morgan Keegan,
Inc. and Rebsamen Insurance, Inc. and has entered into a definitive agreement to
acquire one financial institution in addition to First Bancshares. Certain
aspects of the completed and other pending acquisition are presented in the
following table:
50
CONSIDERATION
----------------------------------------------------
APPROXIMATE
-------------------------
ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
----------- ------------- -------- ---- ----------
(In millions)
Recently Completed Acquisition
Morgan Keegan, Inc., located in Memphis, Tennessee $ 2,008 $ 783 Regions Purchase
Common
Stock
and Cash
Rebsamen Insurance, Inc., located in Little Rock, Not
Arkansas 32 Reported Cash Purchase
Other Pending Acquisition
Park Meridian Financial Corporation, located in 284 50 Regions Purchase
Charlotte, North Carolina Common
Stock
---------------
(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.
Completion of the other pending acquisition is subject to the approval of
certain regulatory agencies and approval of the stockholders of the institution
to be acquired. Moreover, the closing of the transaction is subject to various
contractual conditions precedent. No assurance can be given that the conditions
precedent to consummating the transaction will be satisfied in a manner that
will result in their completion.
If the other pending acquisition and the merger had been consummated on
June 30, 2001, as of that date Regions' total consolidated assets would have
been increased by approximately $430 million to approximately $45.6 billion; its
total consolidated deposits would have increased by approximately $358 million
to approximately $31.5 billion; and its total consolidated stockholders' equity
would have remained at approximately $3.8 billion.
REGIONS' THIRD QUARTER OPERATING RESULTS
For the third quarter ended September 30, 2001, Regions reported net
income of $135.2 million or $.59 per share (or $.59 per diluted share),
representing a 6% increase in net income (and a 2% increase on a per share
basis) over the same period of 2000. For the nine months ended September 30,
2001, Regions reported net income of $370.8 million or $1.66 per share (or
$1.64 per diluted share), representing an 8% decrease on a per-share basis in
net income over the comparable period of 2000. As of September 30, 2001,
Regions had total consolidated assets of approximately $45.7 billion, total
consolidated deposits of approximately $30.6 billion, and total consolidated
stockholders' equity of approximately $3.9 billion. The return on average total
assets for the nine months ended September 30, 2001 was 1.11%, and the return
on average stockholders' equity was 13.44%. At September 30, 2001, the ratio of
stockholders' equity to total assets was 8.64%.
51
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 First Bancshares.
Additional information is available in Regions' Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, a copy of which accompanies this proxy
statement-prospectus. See "Where You Can Find More
Information."
GENERAL
Regions and First Bancshares 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 First Bancshares 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 as well as other applicable state laws.
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 prohibits bank holding companies that have
not become financial holding companies 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.
As a financial holding company, however, Regions has authority to
engage in a range of activities that are financial in nature and that were not
previously permissible for banks and bank holding companies. Subject to the
regulations of the Federal Reserve Board, a financial holding company may engage
directly or through a subsidiary in the statutorily authorized activities of
securities dealing, underwriting, and market making, insurance underwriting and
agency activities, merchant banking, and insurance company portfolio
investments, and in any activity that the Federal Reserve Board determines by
rule or order to be financial in nature or incidental to such financial
activity. Merchant banking activities are subject to certain limitations and may
become subject to more stringent capital requirements than other activities.
52
Under the Bank Holding Company Act, as amended by the
Gramm-Leach-Bliley Act effective in 2000, securities brokerage firms and
insurance companies may acquire banks and bank holding companies and become
financial holding companies. The Gramm-Leach-Bliley Act provides for coordinated
regulation of integrated financial holding companies, providing generally for
"umbrella" regulation of financial holding companies by the Federal Reserve
Board, and for functional regulation of banking activities by bank regulators,
securities activities by securities regulators, and insurance activities by
insurance regulators.
As of the date of this proxy statement-prospectus, Regions Bank is
Regions' only subsidiary bank and First Bank of Texas is First Bancshares' only
subsidiary bank. Regions Bank and First Bank of Texas are each a member of the
Federal Deposit Insurance Corporation (the "FDIC"), and therefore the deposits
of each are insured by the FDIC to the extent provided by law. Regions Bank and
First Bank of Texas are also subject to numerous state and federal statutes and
regulations that affect their businesses, activities, and operations.
As an Alabama state bank that recently became a member of the federal
reserve system, Regions Bank is subject to supervision and examination by the
Federal Reserve Board and the State Banking Department of Alabama. First Bank of
Texas is subject to supervision and examination by the FDIC and the Texas
Department of Banking. The applicable federal and state banking regulators
regularly examine the operations of the banks and have authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The federal and state banking regulators also have the power
to prevent the continuance or development of unsafe or unsound banking practices
or other violations of law.
PAYMENT OF DIVIDENDS
Regions and First Bancshares are legal entities separate and distinct
from their banking and other subsidiaries. The principal sources of cash flow of
both Regions and First Bancshares, 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 First Bancshares, as well as by Regions and
First Bancshares to their stockholders.
As to the payment of dividends, Regions Bank is subject to the laws and
regulations of the state of Alabama and to the regulations of the Federal
Reserve Board., First Bank of Texas is subject to the laws and regulations of
the state of Texas, 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.
53
At June 30, 2001, under dividend restrictions imposed under federal and
the respective state laws, without obtaining governmental approvals, Regions
Bank could declare aggregate dividends to Regions of approximately $340 million,
and First Bank of Texas could declare aggregate dividends to First Bancshares of
approximately $567,000.
The payment of dividends by Regions and First Bancshares and their
subsidiary banks may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Regions, First Bancshares, and their respective subsidiary banks are
required to comply with the capital adequacy standards established by their
primary federal regulator, the Federal Reserve Board in the case of Regions,
Regions Bank, and First Bancshares and the FDIC in the case of First Bank of
Texas. 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%. At June 30, 2001, Regions' consolidated Total Capital Ratio was 12.18%
and its Tier 1 Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted
assets) was 8.78%, and First Bancshares' consolidated Total Capital Ratio was
11.81% and its Tier 1 Capital Ratio was 11.05%.
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 June 30, 2001, Regions' Leverage Ratio was 6.69% and First
Bancshares' Leverage Ratio was 6.60%.
54
Each of Regions Bank and First Bank of Texas is subject to risk-based
and leverage capital requirements applicable to banks as adopted by its
respective primary federal regulator, which are substantially similar to those
adopted by the Federal Reserve Board applicable to bank holding companies. Each
of the subsidiary banks was in compliance with applicable minimum capital
requirements as of June 30, 2001. Neither Regions, First Bancshares, 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 on the taking of brokered
deposits, and 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 and the FDIC also have 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 banks and other depository
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 appropriate federal banking
regulator to appoint a receiver or conservator for a depository 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, a depository 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." A depository
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 a depository 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
55
in a capitalization category that is lower than is indicated by its actual
capital position if it receives an unsatisfactory examination rating.
A depository 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. Although the prompt corrective action system does not apply to holding
companies of banks and other depository institutions, 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 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 June 30, 2001, the subsidiary banks of Regions and First Bancshares
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.
The FDIC recently has proposed changes to its assessment system that
are designed to require premium payments by a greater number of banks and other
FDIC-insured depository institutions and that also would provide rebates to some
institutions. If any of these changes were to take effect, the assessment
obligations of the subsidiary banks of Regions and First Bancshares could
change.
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.
56
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 June 30, 2001, 229,133,874
shares of Regions common stock were issued, including 1,500,000 treasury shares,
and 227,633,874 shares were issued and 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
regulatory requirements and capital guidelines. At June 30, 2001, under such
requirements and guidelines, Regions' subsidiary institutions had $340 million
of undivided profits legally available for the payment of dividends. See
"Supervision and Regulation-Payment of Dividends."
For a further description of Regions common stock, see "Effect of the
Merger on Rights of Stockholders."
STOCKHOLDER PROPOSALS
Regions expects to hold its next annual meeting of stockholders after
the merger during May 2002. 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 11, 2001, 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.
- 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.
57
- the continued growth of the acquired entities' markets
consistent with recent historical experience.
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, 2000
and 1999, and for each of the three years in the period ended December 31, 2000,
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 on Form 10-K for the year ended December
31, 2000. The financial statements audited by Ernst & Young LLP have been
incorporated herein by reference in reliance on their report given on their
authority as experts in accounting and auditing.
The consolidated financial statements of First Bancshares, incorporated
by reference in this Registration Statement, have been audited by Hereford,
Lynch, Sellars & Kirkham, P.C., independent auditors, for the periods indicated
in their report thereon which is included therein. The financial statements
audited by Hereford, Lynch, Sellars & Kirkham, P.C. have been incorporated by
reference herein 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 October 26, 2001, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville LLP owned an aggregate of 239,732 shares of Regions common
stock. Certain legal matters in connection with the merger will be passed upon
for First Bancshares by Bracewell & Patterson, L.L.P., Houston, Texas.
58
Certain tax consequences of the transaction have been passed upon by
Alston & Bird LLP, Atlanta, Georgia.
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 room at 450 Fifth Street, N.W., Washington, D.C., 20549, and at
the SEC's public reference rooms in 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
First Bancshares 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. A copy of each
of these documents, which contain important information about Regions and its
finances, accompanies this proxy statement-prospectus.
REGIONS SEC FILINGS (FILE NO. 0-6159) PERIOD/AS OF DATE
Annual Report on Form 10-K Year ended December 31, 2000
Quarterly Reports on Form 10-Q Quarters ended March 31 and June 30, 2001
Current Reports filed on Form 8-K January 18, February 26, March 5,
March 30, and October 25, 2001
Regions also incorporates by reference additional documents that may be
filed with the SEC between the date of this proxy statement-prospectus and the
date of the special meeting. 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 First
Bancshares has supplied all such information relating to First Bancshares.
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.
59
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 October 31,
2001. 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.
There may be changes in the affairs of Regions or First Bancshares since the
date of this proxy statement-prospectus which are not reflected in this
document.
We have not authorized anyone to give any information or make any
representation about the merger or Regions and First Bancshares 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.
60
APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
FIRST BANCSHARES OF TEXAS, INC.
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF AUGUST 3, 2001
A-1
TABLE OF CONTENTS
PAGE
----
Parties............................................................... A-5
Preamble.............................................................. A-5
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER......................... A-5
1.1 Merger...................................................... A-5
1.2 Time and Place of Closing................................... A-5
1.3 Effective Time.............................................. A-5
1.4 Execution of Support Agreements............................. A-6
ARTICLE 2 -- TERMS OF MERGER.......................................... A-6
2.1 Certificate of Incorporation................................ A-6
2.2 Bylaws...................................................... A-6
2.3 Directors and Officers...................................... A-6
ARTICLE 3 -- MANNER OF CONVERTING SHARES.............................. A-6
3.1 Conversion of Shares........................................ A-6
3.2 Anti-Dilution Provisions.................................... A-6
3.3 Shares Held by FBOT or Regions.............................. A-7
3.4 Dissenting Stockholders..................................... A-7
3.5 Fractional Shares........................................... A-7
ARTICLE 4 -- EXCHANGE OF SHARES....................................... A-7
4.1 Exchange Procedures......................................... A-7
4.2 Rights of Former FBOT Stockholders.......................... A-8
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF FBOT................... A-8
5.1 Organization, Standing, and Power........................... A-8
5.2 Authority; No Breach of Agreement........................... A-9
5.3 Capital Stock............................................... A-9
5.4 FBOT Subsidiaries........................................... A-10
5.5 Financial Statements........................................ A-10
5.6 Absence of Undisclosed Liabilities.......................... A-10
5.7 Absence of Certain Changes or Events........................ A-10
5.8 Tax Matters................................................. A-11
5.9 Assets...................................................... A-11
5.10 Environmental Matters....................................... A-12
5.11 Compliance with Laws........................................ A-12
5.12 Labor Relations............................................. A-13
5.13 Employee Benefit Plans...................................... A-13
5.14 Material Contracts.......................................... A-15
5.15 Legal Proceedings........................................... A-15
5.16 Reports..................................................... A-16
5.17 Statements True and Correct................................. A-16
5.18 Tax and Regulatory Matters.................................. A-16
5.19 Intellectual Property....................................... A-16
5.20 State Takeover Laws......................................... A-16
5.21 Charter Provisions.......................................... A-17
5.22 Support Agreements.......................................... A-17
5.23 Derivatives................................................. A-17
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS................ A-17
6.1 Organization, Standing, and Power........................... A-17
6.2 Authority; No Breach of Agreement........................... A-17
6.3 Capital Stock............................................... A-18
6.4 Regions Subsidiaries........................................ A-18
A-2
PAGE
----
6.5 SEC Filings; Financial Statements........................... A-18
6.6 Absence of Undisclosed Liabilities.......................... A-19
6.7 Absence of Certain Changes or Events........................ A-19
6.8 Compliance with Laws........................................ A-19
6.9 Legal Proceedings........................................... A-19
6.10 Reports..................................................... A-20
6.11 Statements True and Correct................................. A-20
6.12 Tax and Regulatory Matters.................................. A-20
6.13 Derivatives................................................. A-20
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION................. A-20
7.1 Affirmative Covenants of Both Parties....................... A-20
7.2 Negative Covenants of FBOT.................................. A-21
7.3 Adverse Changes in Condition................................ A-22
7.4 Reports..................................................... A-22
ARTICLE 8 -- ADDITIONAL AGREEMENTS.................................... A-22
Registration Statement; Proxy Statement; Stockholder
8.1 Approval.................................................... A-22
8.2 Applications................................................ A-23
8.3 Filings with State Offices.................................. A-23
8.4 Agreement as to Efforts to Consummate....................... A-23
8.5 Investigation and Confidentiality........................... A-23
8.6 Press Releases.............................................. A-24
8.7 No Solicitation............................................. A-24
8.8 Tax Treatment............................................... A-24
8.9 Agreement of Affiliates..................................... A-24
8.10 Employee Benefits and Contracts............................. A-25
8.11 Indemnification............................................. A-25
8.12 Exemption for Liability Under Section 16(b)................. A-26
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE........ A-27
9.1 Conditions to Obligations of Each Party..................... A-27
9.2 Conditions to Obligations of Regions........................ A-28
9.3 Conditions to Obligations of FBOT........................... A-28
ARTICLE 10 -- TERMINATION............................................. A-29
10.1 Termination................................................. A-29
10.2 Effect of Termination....................................... A-29
10.3 Non-Survival of Representations and Covenants............... A-30
ARTICLE 11 -- MISCELLANEOUS........................................... A-30
11.1 Definitions................................................. A-30
11.2 Expenses.................................................... A-36
11.3 Brokers and Finders......................................... A-36
11.4 Entire Agreement............................................ A-36
11.5 Amendments.................................................. A-37
11.6 Waivers..................................................... A-37
11.7 Assignment.................................................. A-37
11.8 Notices..................................................... A-38
11.9 Governing Law............................................... A-38
11.10 Counterparts................................................ A-38
11.11 Captions.................................................... A-38
11.12 Interpretations............................................. A-38
11.13 Enforcement of Agreement.................................... A-39
11.14 Severability................................................ A-39
Signatures............................................................ A-39
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LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1. -- Form of Support Agreement. (sec. 1.4).
2. -- Form of Affiliate Agreement. (sec. 8.11).
[Exhibits omitted]
A-4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of August 3, 2001, by and between FIRST BANCSHARES OF TEXAS, INC.
("FBOT"), a corporation organized and existing under the Laws of the State of
Texas, with its principal office located in Houston, Texas; 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 FBOT and Regions believe 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
FBOT by Regions pursuant to the merger of FBOT with and into Regions. At the
effective time of the merger, the outstanding shares of the capital stock of
FBOT shall be converted into shares of the common stock of Regions (except as
provided herein). As a result, stockholders of FBOT shall become stockholders of
Regions, and each of the subsidiaries of FBOT 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 FBOT, 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 and that this Agreement
shall constitute a "plan of reorganization" for purposes of Sections 354 and 361
of the Internal Revenue Code.
As a condition and inducement to Regions' willingness to enter into this
Agreement, FBOT's directors are 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, and intending to be
legally bound hereby, 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, FBOT shall be merged with and into Regions in accordance with
the provisions of Section 5.01 of the TBCA and Sections 252 and 258 of the DGCL
and with the effect provided in Section 5.06 of the TBCA and Section 259 of the
DGCL, respectively (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 FBOT 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 Texas
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Texas and the Delaware Certificate of Merger
reflecting the Merger shall become effective with the Secretary of State of the
State of Delaware (the "Effective
A-5
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 stockholders of
FBOT 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.
1.4 Execution of Support Agreements. Simultaneously with the execution of
this Agreement and as a condition hereto, the directors of FBOT are 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 FBOT, 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 FBOT Common Stock, excluding shares held by any FBOT
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 .589 of a share
of Regions Common Stock (subject to adjustment as set forth in the
following proviso, the "Exchange Ratio"); provided that (i) in the event
the Average Closing Price is greater than $36.00, the Exchange Ratio shall
be equal to the quotient (rounded to the nearest thousandth) obtained by
dividing (A) the product of $36.00 and the Exchange Ratio (as then in
effect) by (B) the Average Closing Price and (ii) in the event the Average
Closing Price is less than $26.00, the Exchange Ratio shall be equal to the
quotient (rounded to the nearest thousandth) obtained by dividing (A) the
product of $26.00 and the Exchange Ratio (as then in effect) by (B) the
Average Closing Price.
3.2 Anti-Dilution Provisions. In the event FBOT changes the number of
shares of FBOT Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, reverse 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, reverse 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
A-6
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 FBOT or Regions. Each of the shares of FBOT Common
Stock held by any FBOT 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 FBOT Common Stock who
perfects such holder's dissenters' rights of appraisal in accordance with and as
contemplated by Sections 5.11, 5.12, and 5.13 of the TBCA shall be entitled to
receive the value of such shares in cash as determined pursuant to such
provision of Law; provided, however, that no such payment shall be made to any
dissenting stockholder unless and until such dissenting stockholder has complied
with the applicable provisions of the TBCA and surrendered to the Surviving
Corporation the certificate or certificates representing the shares for which
payment is being made. In the event that after the Effective Time a dissenting
stockholder of FBOT fails to perfect, or effectively withdraws or loses, such
holder's right to appraisal and of payment for such holder's shares, Regions
shall issue and deliver the consideration to which such holder of shares of FBOT
Common Stock is entitled under this Article 3 (without interest) upon surrender
by such holder of the certificate or certificates representing shares of FBOT
Common Stock held by such holder. FBOT will establish an escrow account with an
amount sufficient to satisfy the maximum aggregate payment that may be required
to be paid to dissenting stockholders. Upon satisfaction of all claims of
dissenting stockholders, the remaining escrowed amount, reduced by payment of
the fees and expenses of the escrow agent, will be returned to FBOT or the
Surviving Corporation.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of FBOT Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of Regions Common Stock shall receive, in lieu thereof, cash (without interest)
in an amount equal to a 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 at the close
of regular trading on the Nasdaq NMS (as reported by The Wall Street Journal or,
if not reported thereby, any other authoritative source agreed to by FBOT and
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.
(a) As soon as reasonably practicable after the Effective Time,
Regions and FBOT shall cause the exchange agent selected by Regions (the
"Exchange Agent") to mail to the former stockholders of FBOT appropriate
transmittal materials (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates theretofore representing
shares of FBOT Common Stock shall pass, only upon proper delivery of such
certificates to the Exchange Agent). After the Effective Time, each holder
of shares of FBOT Common Stock (other than shares to be canceled pursuant
to Section 3.3 of this Agreement or as to which dissenters' rights of
appraisal as contemplated by Section 3.4 of this Agreement have been
perfected and not withdrawn or forfeited under Section 5.12 of the TBCA)
issued and outstanding at the Effective Time promptly upon surrender of 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 FBOT Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates
A-7
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 FBOT
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 FBOT 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 FBOT Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's certificate or certificates
representing the shares of FBOT Common Stock for exchange as provided in
this Section 4.1. The certificate or certificates of FBOT 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, FBOT, nor the Exchange Agent shall be liable to a holder of
FBOT 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 FBOT Stockholders. At the Effective Time, the stock
transfer books of FBOT shall be closed as to holders of FBOT Common Stock
immediately prior to the Effective Time and no transfer of FBOT Common Stock by
any such holder shall thereafter be made or recognized. Until surrendered for
exchange in accordance with the provisions of Section 4.1 of this Agreement,
each certificate theretofore representing shares of FBOT Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement or as to
which dissenters' rights of appraisal as contemplated by Section 3.4 of this
Agreement have been perfected and not withdrawn or forfeited under Section 5.12
of the TBCA) 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 FBOT in respect of such shares of FBOT 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 FBOT Common Stock at
the Effective Time (other than holders of shares as to which dissenters' rights
of appraisal as contemplated by Section 3.4 of this Agreement have been
perfected and not withdrawn or forfeited under Section 5.12 of the TBCA) 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 FBOT Common Stock are converted, regardless of whether such
holders have exchanged their certificates representing FBOT 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 FBOT
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 FBOT 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 FBOT
FBOT hereby represents and warrants, except as specifically disclosed in a
section of the FBOT Disclosure Memorandum corresponding to the relevant section
of this Article 5, to Regions as follows:
5.1 Organization, Standing, and Power. FBOT is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Texas, and has the corporate power and authority to carry on its business as now
conducted and to own, lease, and operate its Material Assets. FBOT is duly
qualified or
A-8
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 FBOT.
5.2 Authority; No Breach of Agreement.
(a) FBOT 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 (including valid authorization
and adoption of this Agreement by FBOT's duly constituted Board of
Directors) in respect thereof on the part of FBOT, subject to the approval
of this Agreement by the holders of a majority of the outstanding shares of
FBOT Common Stock entitled to vote thereon, which is the only stockholder
vote required for approval of this Agreement and consummation of the Merger
by FBOT. Subject to such requisite stockholder approval, this Agreement
represents a legal, valid, and binding obligation of FBOT, enforceable
against FBOT 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 FBOT, nor
the consummation by FBOT of the transactions contemplated hereby, nor
compliance by FBOT with any of the provisions hereof, will (i) conflict
with or result in a breach of any provision of FBOT's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any FBOT Company under, any Contract or Permit of any FBOT
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 FBOT, 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 FBOT Company or any of their respective Material
Assets, which violation is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on FBOT.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, 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 FBOT, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by FBOT of the Merger and the other
transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of FBOT consists, as of the date of
this Agreement, of 96,068,268 shares of FBOT Common Stock, of which, as of
the date of this Agreement, (i) 1,737,864 shares were issued and
outstanding, 34,487 shares held in treasury and (ii) no shares of FBOT
Common Stock were issuable pursuant to outstanding awards under FBOT's
Stock Plans, and not more than 1,737,864 shares of FBOT Common Stock will
be issued and outstanding at the Effective Time. All of the issued and
outstanding shares of FBOT Common Stock are duly and validly issued and
outstanding and are fully paid and, except as expressly provided otherwise
under applicable Law, nonassessable under the TBCA. None of the outstanding
shares of FBOT Common Stock has been issued in violation of any preemptive
rights of the current or past stockholders of FBOT.
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(b) Except as set forth in Section 5.3(a) of this Agreement or Section
5.3(b) of the FBOT Disclosure Memorandum, there are no shares of capital
stock or other equity securities of FBOT outstanding and no outstanding
Rights relating to the capital stock of FBOT.
5.4 FBOT Subsidiaries. FBOT has disclosed in Section 5.4 of the FBOT
Disclosure Memorandum all of the FBOT Subsidiaries as of the date of this
Agreement. FBOT or one of its Subsidiaries owns all of the issued and
outstanding shares of capital stock of each FBOT Subsidiary. No equity
securities of any FBOT Subsidiary are or may become required to be issued (other
than to another FBOT Company) by reason of any Rights, and there are no
Contracts by which any FBOT Subsidiary is bound to issue (other than to another
FBOT Company) additional shares of its capital stock or Rights or by which any
FBOT Company is or may be bound to transfer any shares of the capital stock of
any FBOT Subsidiary (other than to another FBOT Company). There are no Contracts
relating to the rights of any FBOT Company to vote or to dispose of any shares
of the capital stock of any FBOT Subsidiary. All of the shares of capital stock
of each FBOT Subsidiary held by a FBOT Company are fully paid and, except as
expressly provided otherwise under applicable Law, nonassessable under the
applicable corporate or banking Law of the jurisdiction in which such Subsidiary
is incorporated or organized and are owned by the FBOT Company, except as set
forth in Section 5.4 of the FBOT Disclosure Memorandum, free and clear of any
Lien. Each FBOT Subsidiary is either a bank, a limited liability company, or a
corporation, and is duly organized, validly existing, and (if applicable) 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 FBOT 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 FBOT. Each FBOT 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 to the fullest
extent permitted by Law.
5.5 Financial Statements. FBOT has disclosed in Section 5.5 of the FBOT
Disclosure Memorandum, and has delivered to Regions copies of, all FBOT
Financial Statements prepared for periods ended prior to the date of this
Agreement and will deliver to Regions copies of all FBOT Financial Statements
prepared subsequent to the date of this Agreement. The FBOT 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 FBOT 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
FBOT Companies as of the dates indicated and the consolidated results of
operations, changes in stockholders' equity, and cash flows of the FBOT
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 FBOT Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FBOT, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of FBOT as of
March 31, 2001, included in the FBOT Financial Statements or reflected in the
notes thereto, Liabilities incurred in the ordinary course of business
subsequent to March 31, 2001, and Liabilities to be incurred in connection with
the transactions contemplated by this Agreement. No FBOT Company has incurred or
paid any Liability since March 31, 2001, except for such Liabilities incurred or
paid in the ordinary course of business consistent with past business practices
and which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on FBOT.
5.7 Absence of Certain Changes or Events. Since March 31, 2001, except as
disclosed in the FBOT Financial Statements delivered prior to the date of this
Agreement or as otherwise disclosed in the FBOT
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Disclosure Memorandum, 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 FBOT.
5.8 Tax Matters.
(a) Since December 31, 1994, all Tax Returns required to be filed by
or on behalf of any of the FBOT 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, 2000, and 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 FBOT, except to the extent reserved
against in the FBOT Financial Statements dated prior to the date of this
Agreement. All Taxes due with respect to completed and settled examinations
or concluded Litigation with respect to Taxes have been paid.
(b) None of the FBOT 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 Material Taxes due or to become due for
any of the FBOT Companies for the period or periods through and including
the date of the respective FBOT Financial Statements has been made in
accordance with GAAP and is reflected on such FBOT Financial Statements.
(d) Each of the FBOT Companies is in Material 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.
(e) None of the FBOT 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 FBOT Companies.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the FBOT Companies that occurred during or
after any Taxable Period in which the FBOT Companies incurred a net
operating loss that carries over to any Taxable Period ending after
December 31, 2000.
(h) 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.
(i) No FBOT 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.
(j) No FBOT Company has filed any consent under Section 341(f) of the
Internal Revenue Code concerning collapsible corporations.
5.9 Assets. The FBOT Companies have good and marketable title, free and
clear of all Liens, to all of their respective Assets other than such defects
and liens which are not reasonably likely to have a Material Adverse Effect on
FBOT. All tangible properties used in the businesses of the FBOT Companies are
in good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with FBOT's past practices, except as
would not be reasonably likely to have a Material Adverse Effect on FBOT.
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All Assets which are Material to FBOT's business on a consolidated basis, held
under leases or subleases by any of the FBOT 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 FBOT Companies currently maintain
insurance in amounts, scope and coverage reasonably necessary for their
operations. None of the FBOT Companies has received notice from any insurance
carrier that (i) such insurance will be canceled or that coverage thereunder
will be Materially reduced or eliminated, or (ii) premium costs with respect to
such policies of insurance will be substantially increased. The Assets of the
FBOT Companies include all Material Assets required to operate the business of
the FBOT Companies as presently conducted.
5.10 Environmental Matters.
(a) Each FBOT Company, its Participation Facilities, and 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 FBOT.
(b) There is no Litigation pending or, to the Knowledge of FBOT,
threatened before any court, governmental agency, or authority, or other
forum in which any FBOT 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 FBOT
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 FBOT.
(c) There is no Litigation pending, or to the Knowledge of FBOT,
threatened before any court, governmental agency, or board, or other forum
in which any of its Loan Properties (or FBOT in respect of such Loan
Property) has been or, with respect to threatened Litigation, may
reasonably be expected to be named as a defendant or potentially
responsible party (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release
into the environment of any Hazardous Material, whether or not occurring
at, on, under, or involving a Loan Property, except for such Litigation
pending or threatened that is not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on FBOT.
(d) To the Knowledge of FBOT, 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 FBOT.
(e) To the Knowledge of FBOT, during the period of (i) any FBOT
Company's ownership or operation of any of their respective current
properties, (ii) any FBOT Company's participation in the management of any
Participation Facility, or (iii) any FBOT 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 FBOT. Prior to the period
of (i) any FBOT Company's ownership or operation of any of their respective
current properties, (ii) any FBOT Company's participation in the management
of any Participation Facility, or (iii) any FBOT Company's holding of a
security interest in a Loan Property, to the Knowledge of FBOT, 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 FBOT.
5.11 Compliance with Laws. FBOT is duly registered as a bank holding
company under the BHC Act. Each FBOT Company has in effect all Permits necessary
for it to own, lease, or operate its Material Assets
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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 FBOT, 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 FBOT. None
of the FBOT Companies:
(a) is in violation of any Material Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on FBOT; and
(b) has received any written notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any FBOT
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 FBOT, (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 FBOT, or
(iii) requiring any FBOT 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 FBOT Company is the subject of any Litigation
asserting that it or any other FBOT 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 FBOT Company to bargain with any
labor organization as to wages or conditions of employment, nor is any FBOT
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 FBOT Company, pending
or, to the Knowledge of FBOT, threatened, or to the Knowledge of FBOT, is there
any activity involving any FBOT Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.13 Employee Benefit Plans.
(a) FBOT has disclosed in Section 5.13 of the FBOT 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 FBOT Benefit Plans. For purposes of this Agreement, "FBOT Benefit
Plans" means all Material written pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance
pay, vacation, bonus, or other incentive plan, all other Material written
employee programs or agreements, all medical, vision, dental, or other
written health plans, all life insurance plans, and all other Material
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
FBOT 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
FBOT 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 "FBOT ERISA Plan." Any FBOT ERISA Plan which is also subject to
Section 412 of the Internal Revenue Code or Section 302 of ERISA, is
referred to herein as a "FBOT Pension Plan." Neither FBOT nor any FBOT
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 FBOT 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 FBOT Disclosure Memorandum.
(b) FBOT 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
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arrangements for such FBOT Benefit Plans (including insurance contracts),
and all amendments thereto, (ii) with respect to any such FBOT Benefit
Plans or amendments, the most recent determination letters, and all
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 FBOT 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 FBOT Benefit Plans are in compliance with the applicable terms
of ERISA, the Internal Revenue Code, and any other applicable Laws, other
than instances of noncompliance which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FBOT. Each
FBOT 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 to the Knowledge of FBOT, there are
no circumstances likely to result in revocation of any such favorable
determination letter. Each trust created under any FBOT ERISA Plan has been
determined to be exempt from Tax under Section 501(a) of the Internal
Revenue Code and FBOT is not aware of any circumstance which will or could
reasonably result in revocation of such exemption. With respect to each
FBOT Benefit Plan to the Knowledge of FBOT, 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 FBOT. There is no
Material pending or, to the Knowledge of FBOT, threatened Litigation
relating to any FBOT ERISA Plan.
(d) No FBOT Company has engaged in a transaction with respect to any
FBOT Benefit Plan that, assuming the Taxable Period of such transaction
expired as of the date of this Agreement, would subject any FBOT 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 FBOT. Neither FBOT nor, any administrator or fiduciary of any FBOT
Benefit Plan (or any agent of any of the foregoing) has engaged in any
transaction, or acted or failed to act in any manner with respect to any
FBOT Benefit Plan which could subject FBOT 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 FBOT. No oral or written representation or communication with respect to
any aspect of the FBOT Benefit Plans has been made to employees of any FBOT
Company which is not in conformity with the written or otherwise
preexisting terms and provisions of such plans, where any Liability
resulting from such non-conformity is reasonably likely to have a Material
Adverse Effect on FBOT.
(e) No FBOT 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 is equal to or exceeds the actuarial present
value of all accrued benefits under such plans (whether vested or not),
based upon the actuarial assumptions used to prepare the most recent
actuarial reports for such plans and to the Knowledge of FBOT, since the
date of the most recent actuarial valuation, no event has occurred which
would be reasonably expected to change any such funded status in a way that
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FBOT. Neither any FBOT Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently maintained by any FBOT Company, or the single-employer plan of
any entity which is considered one employer with FBOT under Section 4001 of
ERISA or Section 414 of the Internal Revenue Code or Section 302 of ERISA
(whether or not waived) (a "FBOT ERISA Affiliate") has an "accumulated
funding deficiency" within the meaning of Section 412 of the Internal
Revenue Code or Section 302 of ERISA. All required contributions with
respect to any FBOT Pension Plan or any single-employer plan of an FBOT
ERISA Affiliate have been 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
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Section 4971. No FBOT Company has provided, or is required to provide,
security to an FBOT Pension Plan or to any single-employer plan of an FBOT
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 FBOT, except to the extent any failure to timely pay would
not have a Material Adverse Effect on FBOT.
(f) No Liability under Title IV of ERISA has been or is expected to be
incurred by any FBOT Company with respect to any defined benefit plan
currently or formerly maintained by any of them or by any FBOT 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 for Liabilities that, individually or in the aggregate, would
not have a Material Adverse Effect on FBOT).
(g) No FBOT Company has any obligations for retiree health and retiree
life benefits under any of the FBOT 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, golden
parachute, or otherwise) becoming due to any director or any employee of
any FBOT Company from any FBOT Company under any FBOT Benefit Plan or
otherwise, other than by operation of Law, (ii) increase any benefits
otherwise payable under any FBOT 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 FBOT
Disclosure Memorandum, none of the FBOT 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 FBOT Company or the guarantee by any FBOT 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 FBOT with the SEC as of the date of
this Agreement if FBOT 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 "FBOT Contracts"). With respect to each FBOT Contract: (i) the Contract is
in full force and effect; (ii) no FBOT 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 FBOT; (iii) no FBOT 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 FBOT, 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 FBOT, or has
repudiated or waived any Material provision thereunder. Except for Federal Home
Loan Bank advances, all of the indebtedness of any FBOT Company for money
borrowed is prepayable at any time by such FBOT Company without penalty or
premium.
5.15 Legal Proceedings.
(a) There is no Litigation instituted or pending, or, to the Knowledge
of FBOT, threatened against any FBOT Company, or against any Asset,
interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on FBOT, nor
are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any FBOT Company, that are
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on FBOT.
(b) Section 5.15(b) of the FBOT Disclosure Memorandum includes a
summary report of all Litigation as of the date of this Agreement to which
any FBOT Company is a party and which names a FBOT Company as a defendant
or cross-defendant.
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5.16 Reports. Since December 31, 1996, or the date of organization if
later, each FBOT 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 FBOT.
5.17 Statements True and Correct. None of the information supplied or to
be supplied by any FBOT Company or any Affiliate thereof regarding FBOT or such
Affiliate for inclusion in the Registration Statement to be filed by Regions
with the SEC will, when the Registration Statement becomes effective, 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, in
light of the circumstances under which they were made, not misleading. None of
the information supplied or to be supplied by any FBOT Company or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to FBOT's stockholders
in connection with the Stockholders' Meeting will, when first mailed to the
stockholders of FBOT, 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, 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
FBOT 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. No FBOT Company or any Affiliate thereof
has taken or agreed to take any action, and FBOT has no Knowledge of any fact or
circumstance that is reasonably likely to (i) prevent 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
FBOT 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.
5.19 Intellectual Property. All of the Intellectual Property rights of
FBOT and the FBOT Subsidiaries are in full force and effect and, if applicable,
constitute legal, valid, and binding obligations of the respective parties
thereto, and there have not been, and, to the Knowledge of FBOT, there currently
are not, any Defaults thereunder by FBOT or a FBOT Subsidiary. FBOT or a FBOT
Subsidiary owns or is the valid licensee of all such Intellectual Property
rights free and clear of all Liens or claims of infringement, except for such
Liens or claims of infringement which would not reasonably be expected to have a
Material Adverse Effect on FBOT. Neither FBOT nor any of the FBOT Subsidiaries
nor, to the Knowledge of FBOT, their respective predecessors has infringed the
Intellectual Property rights of others and, to the Knowledge of FBOT, none of
the Intellectual Property rights as used in the business conducted by FBOT or
the FBOT Subsidiaries infringes upon or otherwise violates the rights of any
Person, nor has any Person asserted a claim of such infringement, in each case,
except as would not reasonably be expected to have a Material Adverse Effect on
FBOT. Neither FBOT nor any of the FBOT Subsidiaries is obligated to pay any
royalties to any Person with respect to any such Intellectual Property other
than in the ordinary course of business. FBOT or a FBOT Subsidiary owns or has
the valid right to use all of the Intellectual Property rights which it is
presently using, or in connection with performance of any Material Contract to
which it is a party. No officer, director, or employee of FBOT or the FBOT
Subsidiaries is party to any Contract which requires such officer, director, or
employee to assign any interest in any Intellectual Property or keep
confidential any trade secrets, proprietary data, customer information, or other
business information or which restricts or prohibits such officer, director, or
employee from engaging in activities competitive with any Person, in each case,
other than with FBOT or any of the FBOT Subsidiaries.
5.20 State Takeover Laws. Subject to FBOT's right to alter its
recommendation in accordance with the proviso set forth in the fourth sentence
of Section 8.1 of this Agreement, each FBOT Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from any
applicable "morato-
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rium," "control share," "fair price," "business combination," or other
anti-takeover laws and regulations of the State of Texas (collectively,
"Takeover Laws").
5.21 Charter Provisions. Each FBOT 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 or
Bylaws or, subject to FBOT's right to alter its recommendation in accordance
with the proviso set forth in the fourth sentence of Section 8.1 of this
Agreement, restrict or impair the ability of Regions to vote, or otherwise to
exercise the rights of a stockholder with respect to, shares of any FBOT Company
that may be directly or indirectly acquired or controlled by it.
5.22 Support Agreements. Each of the directors of FBOT has executed and
delivered to Regions a Support Agreement in substantially the form attached as
Exhibit 1 to this Agreement.
5.23 Derivatives. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for FBOT's own account, or for the account of
one or more the FBOT 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.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to FBOT 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 of 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 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.
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(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 227,501,610 shares were issued and outstanding as of April 30, 2001. 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 FBOT
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, except as expressly provided otherwise under applicable Law,
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 FBOT 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, except as expressly
provided otherwise under applicable Law, nonassessable under the applicable
corporate or banking 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 to the fullest extent permitted by Law.
6.5 SEC Filings; Financial Statements.
(a) Regions has filed and made available to FBOT all forms, reports,
and documents required to be filed by Regions with the SEC since January 1
of the second complete 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
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
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broker, dealer, or investment adviser 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, 2001, included in the Regions Financial Statements or reflected in the
notes thereto, Liabilities incurred in the ordinary course of business
subsequent to March 31, 2001, and Liabilities to be incurred in connection with
the transactions contemplated by the Agreement. No Regions Company has incurred
or paid any Liability since March 31, 2001, 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, 2001, except as
disclosed in the Regions Financial Statements delivered prior to the date of
this Agreement, there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions.
6.8 Compliance with Laws. Regions is duly registered as a financial
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.
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
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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, 1996, 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,
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 FBOT's stockholders in connection with the
Stockholders' Meeting, will, when first mailed to the stockholders of FBOT,
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, 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 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 Regions there exists no fact, circumstance, or
reason why the requisite Consents referred to in Section 9.1(b) of this
Agreement cannot be received in a timely manner.
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 of 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.
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) use its reasonable efforts to 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, 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
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any Assets thereof, if such action is, in the reasonable good faith judgment of
Regions, desirable in the conduct of the business of Regions and its
Subsidiaries.
7.2 Negative Covenants of FBOT. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, except as
specifically contemplated by this Agreement, FBOT 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 FBOT 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 FBOT Company to another FBOT Company) in excess of
an aggregate of $500,000 (for the FBOT Companies on a consolidated basis),
except in the ordinary course of business consistent with past practices
(which shall include entry into repurchase agreements or other fully
secured securities), or impose, or suffer the imposition, on any Asset of
any FBOT Company of any Material Lien, except in the ordinary course of
business consistent with past practices; or
(c) except as contemplated by Section 7.1 of this Agreement,
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 FBOT Company, or declare or pay any dividend or
make any other distribution in respect of FBOT's capital stock[; provided
that FBOT may (to the extent legally able to do so), but shall not be
obligated to declare and pay regular quarterly cash dividends on the FBOT
Common Stock in an amount per share and with the usual and regular record
and payment dates as disclosed in Section 7.2(c) of the FBOT Disclosure
Memorandum, and provided, that, notwithstanding the provisions of Section
1.3 of this Agreement, the Parties shall cooperate in selecting the
Effective Time to ensure that, with respect to the quarterly period in
which the Effective Time occurs, the holders of FBOT Common Stock do not
become entitled to receive both a dividend in respect of their FBOT Common
Stock and a dividend in respect of their Regions Common Stock or fail to be
entitled to receive any dividends]; 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, (i) issue, sell,
pledge, encumber, authorize the issuance of, (ii) enter into any Contract
to issue, sell, pledge, encumber, or authorize the issuance of, or (iii)
otherwise permit to become outstanding, any additional shares of FBOT
Common Stock or any capital stock of any FBOT Company, or any stock
appreciation rights, or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital stock of any
FBOT Company or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of FBOT Common Stock (other than
upon the exercise of existing Rights), or sell, lease, mortgage, or
otherwise dispose of or otherwise encumber (i) any shares of capital stock
of any FBOT Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another FBOT 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 consistent with past practice; or
(f) (i) grant any increase in compensation or benefits to the
employees, officers, or directors of any FBOT Company, except as required
by Law, (ii) 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, (iii) enter into or amend any severance agreements with
officers of any FBOT Company, (iv) grant any increase in fees or other
increases in compensation or other benefits to directors of any FBOT
Company; or (v) voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits; or
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(g) enter into or amend any employment Contract between any FBOT
Company and any Person (unless such amendment is required by Law) that the
FBOT Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered and in
accordance with the FBOT Benefit Plans), at any time on or after the
Effective Time; or
(h) adopt any new employee benefit plan of any FBOT Company or make
any Material change in or to any existing employee benefit plans of any
FBOT Company other than any such change that is required by Law or that, in
the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan; or
(i) make any significant change in any Tax or accounting methods,
Material elections, 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
(j) commence any Litigation other than as deemed necessary or
advisable in the good faith judgment of management for the prudent
operation of its business or settle any Litigation involving any Liability
of any FBOT Company for Material money damages or restrictions upon the
operations of any FBOT Company; or
(k) 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; 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.
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.
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. FBOT shall furnish all information
concerning it and the holders of its capital stock as Regions may reasonably
request for inclusion in the Registration Statement. FBOT 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) FBOT shall
prepare and file with the SEC a Proxy Statement and mail such Proxy Statement to
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 FBOT shall recommend to its
stockholders the approval of the matters submitted for approval, and (iv) the
Board of Directors and officers of FBOT shall use its reasonable efforts to
obtain such stockholders' approval, provided that FBOT may withdraw, modify, or
change in an adverse manner to Regions its recommendations if the Board of
Directors of FBOT, 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
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reasonably constitute a breach of the fiduciary duties of FBOT'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 FBOT 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 Applications. As soon as reasonably practicable after the execution of
this Agreement, Regions shall prepare and file, and FBOT shall cooperate in the
preparation and, where appropriate, filing of, applications with all Regulatory
Authorities having jurisdiction over the transactions contemplated by this
Agreement seeking the requisite Consents necessary to consummate the
transactions contemplated by this Agreement. Regions shall use all reasonable
efforts to obtain the requisite Consents of all Regulatory Authorities as soon
as reasonably practicable after the filing of the appropriate applications.
Regions will promptly furnish to FBOT copies of applications filed with all
Regulatory Authorities and copies of written communications received by Regions
from any Regulatory Authorities with respect to the transactions contemplated
hereby.
8.3 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 Texas Articles of Merger with the Secretary of State of the State of Texas
in connection with the Closing.
8.4 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
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 as promptly as practicable all Consents
necessary or desirable for the consummation of the transactions contemplated by
this Agreement.
8.5 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party 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 to the extent required by, and in
accordance with confidentiality agreements between the Parties, 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
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likely to have a Material Adverse Effect on the other Party; provided,
however, that the giving of such notice shall not be dispositive of the
occurrence of such breach or a Material Adverse Effect.
(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.
8.6 Press Releases. Prior to the Effective Time, Regions and FBOT shall
consult with each other as to the form and substance of any press release
Materially related to this Agreement or any other transaction contemplated
hereby; provided, that nothing in this Section 8.6 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.
8.7 No Solicitation. Except with respect to this Agreement and the
transactions contemplated hereby, FBOT agrees that it shall not, and shall use
its reasonable efforts to cause its officers, directors, agents, Affiliates, and
Representatives not to, directly or indirectly, initiate, solicit, encourage or
knowingly facilitate (including by way of furnishing confidential information)
any inquiries or the making of any Acquisition Proposal. Notwithstanding
anything herein to the contrary, FBOT and its Board of Directors shall be
permitted (i) to the extent applicable, to comply with Rule 14d-9 and Rule 14e-2
promulgated under the 1934 Act with regard to an Acquisition Proposal, (ii) to
engage in any discussions or negotiations with, or provide any information to,
any Person in response to an unsolicited bona fide written Acquisition Proposal
by any such Person, if and only to the extent that (a) FBOT's Board of Directors
concludes in good faith and consistent with its fiduciary duties to FBOT's
stockholders under applicable Law that such Acquisition Proposal could
reasonably be expected to result in a Superior Proposal, (b) prior to providing
any information or data to any Person in connection with an Acquisition Proposal
by any such Person, FBOT's Board of Directors receives from such Person an
executed confidentiality agreement containing terms at least as stringent as
those contained in the FBOT Confidentiality Agreement, and (c) prior to
providing any information or data to any Person or entering into discussions or
negotiations with any Person, FBOT's Board of Directors notifies Regions
promptly of such inquiries, proposals, or offers received by, any such
information requested from, or any such discussions or negotiations sought to be
initiated or continued with, any of its Representatives indicating, in
connection with such notice, the name of such Person and the Material terms and
conditions of any inquiries, proposals or offers. FBOT agrees that it will
promptly keep Regions informed of the status and terms of any such proposals or
offers and the status and terms of any such discussions or negotiations. FBOT
agrees that it will, and will cause its officers, directors and Representatives
to, immediately cease and cause to be terminated any activities, discussions, or
negotiations existing as of the date of this Agreement with any parties
conducted heretofore with respect to any Acquisition Proposal. FBOT agrees that
it will use reasonable best efforts to promptly inform its directors, officers,
key employees, agents, and Representatives of the obligations undertaken in this
Section 8.7. Nothing in this Section 8.7 shall (i) permit FBOT to terminate this
Agreement (except as specifically provided in Article 10 of this Agreement) or
(ii) affect any other obligation of Regions or FBOT under this Agreement.
8.8 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.
8.9 Agreement of Affiliates. FBOT has disclosed in Section 8.9 of the FBOT
Disclosure Memorandum each Person whom it reasonably believes may be deemed an
"affiliate" of FBOT for purposes of Rule 145 under the 1933 Act. FBOT shall use
its reasonable efforts to cause each such Person to deliver to Regions not later
than the Effective Time, a written agreement, in substantially the form of
Exhibit 3, providing that such Person will not sell, pledge, transfer, or
otherwise dispose of the shares of FBOT Common Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or
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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 FBOT in exchange for shares of
FBOT Common Stock shall not be transferable, regardless of whether each such
affiliate has provided the written agreement referred to in this Section 8.9
(and Regions shall be entitled to place restrictive legends upon certificates
for shares of Regions Common Stock issued to affiliates of FBOT pursuant to this
Agreement to enforce the provisions of this Section 8.9), except as provided
herein. Regions shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of Regions
Common Stock by such affiliates.
8.10 Employee Benefits and Contracts. Following the Effective Time,
Regions shall provide generally to officers and employees of the FBOT Companies,
who at or after the Effective Time become employees of a Regions Company
("Continuing Employees"), employee benefits under employee benefit plans (other
than stock option or other plans involving the potential issuance of Regions
Common Stock except as set forth in this Section 8.10), on terms and conditions
which when taken as a whole are substantially similar to those currently
provided by the Regions Companies to their similarly situated officers and
employees. For purposes of participation and vesting (but not accrual of
benefits) under such employee benefit plans, (i) service under any qualified
defined benefit plans of FBOT shall be treated as service under Regions'
qualified defined benefit plans, (ii) service under any qualified defined
contribution plans of FBOT shall be treated as service under Regions' qualified
defined contribution plans, and (iii) service under any other employee benefit
plans of FBOT shall be treated as service under any similar employee benefit
plans maintained by Regions. Regions shall cause the Regions welfare benefit
plans that cover the Continuing Employees after the Effective Time to (i) waive
any waiting period and restrictions and limitations for preexisting conditions
or insurability, and (ii) cause any deductible, co-insurance, or maximum
out-of-pocket payments made by the Continuing Employees under FBOT's welfare
benefit plans to be credited to such Continuing Employees under the Regions
welfare benefit plans, so as to reduce the amount of any deductible,
co-insurance, or maximum out-of-pocket payments payable by the Continuing
Employees under the Regions welfare benefit plans. The continued coverage of the
Continuing Employees under the employee benefits plans maintained by FBOT and/or
any FBOT Subsidiary immediately prior to the Effective Time during a transition
period shall be deemed to provide the Continuing Employees with benefits that
are no less favorable than those offered to other employees of Regions and its
Subsidiaries, provided that after the Effective Time there is no Material
reduction (determined on an overall basis) in the benefits provided under the
FBOT employee benefit plans. Regions also shall cause FBOT and its Subsidiaries
to honor all employment, severance, consulting, and other compensation Contracts
disclosed in Section 8.10 of the FBOT Disclosure Memorandum to Regions between
any FBOT 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 FBOT Benefit Plans. Regions
shall be responsible for the fees related to the termination of the FBOT Benefit
Plans.
8.11 Indemnification.
(a) From and after the Effective Time, in the event of any threatened
or actual claim, action, suit, proceeding, or investigation, whether civil,
criminal, or administrative, including, without limitation, any such claim,
action, suit, proceeding or investigation in which any person who is now,
or has been at any time prior to the date of this Agreement, or who becomes
prior to the Effective Time, a director or officer of FBOT or any FBOT
Subsidiary (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of,
or pertaining to (i) the fact that he is or was a director, officer, or
employee of FBOT, any of the FBOT Subsidiaries, or any of their respective
predecessors, or (ii) this Agreement or any of the transactions
contemplated hereby, whether in any case asserted or arising before or
after the Effective Time, Regions shall indemnify and hold harmless, as and
to the fullest extent permitted by Law, each such Indemnified Party against
any Liability (including reasonable attorneys' fees and expenses in advance
of the final disposition of any claim, suit, proceeding, or investigation
to each Indemnified Party to the fullest extent permitted by Law upon
receipt of any undertaking required by applicable Law), judgments, fines,
and amounts paid in settlement in connection with any such threatened or
actual claim, action, suit, proceeding, or investigation, and in the event
of any
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such threatened or actual claim, action, suit, proceeding, or investigation
(whether asserted or arising before or after the Effective Time), the
Indemnified Parties may retain counsel reasonably satisfactory to them;
provided, however, that (a) Regions shall have the right to assume the
defense thereof and upon such assumption Regions shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Regions elects not to assume such
defense or counsel for the Indemnified Parties reasonably advises the
Indemnified Parties that there are issues which raise conflicts of interest
between Regions and the Indemnified Parties, the Indemnified Parties may
retain counsel reasonably satisfactory to them, and Regions shall pay the
reasonable fees and expenses of such counsel for the Indemnified Parties,
(b) Regions shall not be liable for any settlement effected without its
prior written consent (which consent shall not be unreasonably withheld),
and (c) Regions shall have no obligation hereunder to any Indemnified Party
when and if a court of competent jurisdiction shall ultimately determine,
and such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable Law. Regions' obligations under this Section
8.11(a) continue in full force and effect for a period of six years after
the Effective Time; provided, however, that all rights to indemnification
in respect of any claim (a "Claim") asserted or made within such period
shall continue until the final disposition of such Claim.
(b) Regions agrees that all rights to indemnification and all
limitations on Liability existing in favor of the directors, officers, and
employees of FBOT and its Subsidiaries (the "Covered Parties") as provided
in their respective Articles of Incorporation, Bylaws, or similar governing
instruments as in effect as of the date of this Agreement with respect to
matters occurring prior to the Effective Time shall survive the Merger and
shall continue in full force and effect, and shall be honored by such
entities or their respective successors as if they were the indemnifying
party thereunder, without any amendment thereto, for a period of six years
after the Effective Time; provided, however, that all rights to
indemnification in respect of any Claim asserted or made within such period
shall continue until the final disposition of such Claim; provided,
further, however, that nothing contained in this Section 8.11(b) shall be
deemed to preclude the liquidation, consolidation, or merger of FBOT or any
FBOT Subsidiary, in which case all of such rights to indemnification and
limitations on Liability shall be deemed to so survive and continue
notwithstanding any such liquidation, consolidation, or merger. Without
limiting the foregoing, in any case in which approval by Regions is
required to effectuate any indemnification, Regions shall direct, at the
election of the Indemnified Party, that the determination of any such
approval shall be made by independent counsel mutually agreed upon between
Regions and the Indemnified Party.
(c) Regions, from and after the Effective Time, will directly or
indirectly cause the persons who served as directors or officers of FBOT at
or before the Effective Time to be covered by FBOT's existing directors'
and officers' liability insurance policy (provided that Regions may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy). Such insurance coverage, shall commence at the Effective Time and
will be provided for a period of no less than three years after the
Effective Time.
(d) If Regions or any of its successors or assigns shall consolidate
with or merge into any other Person and shall not be the continuing or
surviving Person of such consolidation or merger or shall transfer all or
substantially all of its Assets to any Person, then and in each case,
proper provision shall be made so that the successors and assigns of
Regions shall assume the obligations set forth in this Section 8.11.
(e) The provisions of this Section 8.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or
her heirs and representatives.
8.12 Exemption from Liability Under Section 16(b). FBOT shall take all
such steps as may be required to cause the transactions contemplated by Section
3.1 of this Agreement and any other dispositions of FBOT equity securities
(including derivative securities) in connection with this Agreement by each
individual who is a director or officer of FBOT to be exempt under Rule 16b-3
promulgated under the 1934 Act.
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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 FBOT shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, 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 after the Effective Time
and 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) which is then in effect which prohibits,
restrains, 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, and no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing.
(f) Tax Opinion. 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 FBOT Common Stock who exchange all of
their FBOT 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 (including fractional shares deemed received and
redeemed) by holders of FBOT Common Stock who exchange all of their FBOT
Common Stock solely for Regions Common Stock in the Merger will be the same
as the tax basis of the FBOT Common Stock surrendered in exchange for the
Regions Common Stock (reduced by an amount allocable to a fractional share
interest in Regions Common Stock deemed received and redeemed), and (iv)
the holding period of the Regions Common Stock received (including
fractional shares deemed received and redeemed) by holders who exchange all
of their FBOT Common Stock solely for Regions Common Stock in the Merger
will be the same as the holding period of the FBOT
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Common Stock surrendered in exchange therefor, provided that such FBOT
Common Stock is held as a capital Asset at the Effective Time. In rendering
such Tax Opinions, such counsel shall be entitled to rely upon
representations of officers of FBOT and Regions reasonably satisfactory in
form and substance to such counsel.
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), representations and warranties of FBOT set forth in this Agreement
shall be accurate 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 speak as of the date of this Agreement
or some other date shall speak only as of such date). The representations
and warranties of FBOT 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 FBOT set forth in Sections 5.18,
5.20, and 5.21 of this Agreement shall be true and correct in all Material
respects. There shall not exist inaccuracies in the representations and
warranties of FBOT set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.18, 5.20, and
5.21 of this Agreement) such that the aggregate effect of such inaccuracies
has, or is reasonably likely to have, a Material Adverse Effect on FBOT;
provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "Material," "Material
Adverse Effect," or variations thereof, or to the "Knowledge" of FBOT or to
a matter being "known" by FBOT shall be deemed not to include such
qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of FBOT 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. FBOT shall have delivered to Regions (i) a
certificate, dated as of the Effective Time and signed on FBOT's behalf by
its duly authorized officers, to the effect that the conditions set forth
in Sections 9.2(a) and 9.2(b) of this Agreement have been satisfied, and
(ii) certified copies of resolutions duly adopted by (1) FBOT's 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, and (2) FBOT's
stockholders evidencing the approval of this Agreement, all in such
reasonable detail as Regions and its counsel shall request.
9.3 Conditions to Obligations of FBOT. The obligations of FBOT 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 FBOT pursuant to Section 11.6(b) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.3(a), the representations and warranties of Regions set forth in this
Agreement shall be accurate 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 speak as of the date of this Agreement
or some other 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 of this Agreement) 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 Adverse Effect," or
variations thereof, or to the
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"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 FBOT (i) a
certificate, dated as of the Effective Time and signed on Regions' behalf
by its duly authorized officers, to the effect that the conditions set
forth in Sections 9.3(a) and 9.3(b) of this Agreement have been satisfied,
and (ii) certified copies of resolutions duly adopted by Regions' Board of
Directors 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 FBOT and its counsel shall request.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the stockholders of FBOT,
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 FBOT; 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 FBOT 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 FBOT and
Section 9.3(a) of this Agreement in the case of Regions; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of FBOT and Section 9.3(a) in
the case of Regions or in Material breach of any covenant or other
agreement contained in this Agreement) in the event of a Material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 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 (ii) the stockholders of
FBOT fail to vote their approval of this Agreement at the Stockholders'
Meeting where this Agreement was 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, 2002, 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).
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, and none of
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Regions, FBOT, any of their respective Subsidiaries, or any of the officers or
directors of any of them, shall have any Liability of any nature whatsoever
hereunder or in conjunction with the transactions contemplated hereby, except
that (i) the provisions of Section 8.5(b) of this Agreement, this Section 10.2,
Section 10.3, and Article 11 of this Agreement shall survive any such
termination and abandonment, and (ii) a termination of this Agreement shall not
relieve the breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement of such Party contained in this
Agreement. The Stock Option Agreement shall be governed by its terms as to its
termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time, except for those covenants and
agreements which by their terms apply in whole or in part after the Effective
Time.
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.
"Affiliate" of a Person shall mean any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled
by or under common control with such Person.
"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.
"Average Closing Price" shall mean the average of the daily last
sales prices of Regions Common Stock as reported on the Nasdaq NMS (as
reported by The Wall Street Journal or, if not reported thereby, another
authoritative source agreed to by FBOT and Regions) for the five
consecutive full trading days in which such shares are traded on the
Nasdaq NMS following the mailing of the Proxy Statement for the
Stockholders' Meeting.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956,
as amended.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement, dated March 23, 2001, by and between FBOT and Regions.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
commitment, contract, indenture, instrument, lease, understanding, or
undertaking of any kind or character 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
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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., and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Exhibits" 1 and 2, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or
document without being attached hereto.
"FBOT Common Stock" shall mean the $1.00 par value common stock of
FBOT.
"FBOT Companies" shall mean, collectively, FBOT and all FBOT
Subsidiaries.
"FBOT Disclosure Memorandum" shall mean the written information
entitled "FBOT 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 Section or subsection of this Agreement. 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.
"FBOT Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any)
of FBOT as of March 31, 2001, and as of December 31, 2000, and 1999, 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, 2001 and for each of the three years ended
December 31, 2000, 1999, and 1998, included in the FBOT Disclosure
Memorandum, and (ii) the consolidated statements of condition of FBOT
(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, 2001.
"FBOT Stock Plans" shall mean the existing stock option and other
stock-based compensation plans of FBOT, including, without limitation,
the stock option plans and programs of any Persons acquired by FBOT or a
FBOT Subsidiary.
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"FBOT Subsidiaries" shall mean the Subsidiaries of FBOT, which
shall include the FBOT Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of FBOT in the future and owned by
FBOT at the Effective Time.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws), and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products that are or become regulated under any applicable
local, state, or federal Law (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.
"Intellectual Property" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software (including any source
or object codes therefor or documentation relating thereto), trade
secrets, franchises, know-how, inventions and other intellectual
property rights.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"Investment Company" shall have the meaning set forth in the
Investment Company Act.
"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, rule, or
statute applicable to a Person or its Assets, Liabilities, or business,
including those promulgated, interpreted, or enforced by any Regulatory
Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, or guaranty of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or
otherwise.
"Lien" shall mean any mortgage, pledge, reservation, restriction
(other than a restriction on transfers arising under the Securities
Laws), security interest, or claim, lien, or encumbrance of any nature
whatsoever of, on, or with respect to any property or property interest,
other than (i) Liens for property Taxes not yet due and payable, and
(ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits, and other Liens incurred in the ordinary course of the
banking business.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability, 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.
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"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, investment banks, broker-dealers, 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, (d)
general economic or market conditions or the securities industry in
general, and (e) this Agreement or the announcement thereof.
"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, and
the rules and regulations promulgated thereunder.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Texas Articles of Merger" shall mean the Articles of Merger
executed by Regions and filed with the Secretary of State of the State
of Texas relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"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, as such term is defined in CERCLA (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 FBOT or Regions, and "Parties" shall mean
both FBOT and Regions.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, or permit from governmental authorities that is
required for the operation of a Party's respective businesses.
"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 FBOT 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 FBOT Common Stock.
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"Reasonable Efforts" shall mean the reasonable best efforts of a
Party, but shall not require any Party to take any commercially
unreasonable action.
"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, 2001 and as of December 31, 2000 and 1999,
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, 2001 and for each of the three years ended
December 31, 2000, 1999, and 1998, 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, 2001.
"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 FBOT 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, the Internal Revenue Service, 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, with respect to any Person, securities, or
obligations convertible into or exercisable for, or giving any Person
any right to subscribe for or acquire, or any options, calls, or
commitments relating to, or any stock appreciation right or other
instrument the value of which is determined in whole or in part by
reference to the market price or value of, shares of capital stock of
such Person.
"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 the
SEC.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act, the Investment Advisers Act, 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 FBOT 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
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any such entity acquired through foreclosure or any such entity the
equity securities of which are owned or controlled in a fiduciary
capacity.
"Superior Proposal" means, with respect to FBOT, any written
Acquisition Proposal made by a Person other than Regions which is for
(i) (a) a merger, reorganization, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution, or
similar transaction involving FBOT as a result of which either (1)
FBOT's stockholders prior to such transaction (by virtue of their
ownership of FBOT's shares) in the aggregate cease to own at least 50%
of the voting securities of the entity surviving or resulting from such
transaction (or the ultimate parent entity thereof) or (2) the
individuals comprising the Board of Directors of FBOT prior to such
transaction do not constitute a majority of the board of directors of
such ultimate parent entity, (b) a sale, lease, exchange, transfer, or
other disposition of at least 50% of the Assets of FBOT and its
Subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, or (c) the acquisition, directly or indirectly, by
a Person of beneficial ownership of 25% or more of the common stock of
FBOT whether by merger, consolidation, share exchange, business
combination, tender, or exchange offer or otherwise, and (ii) which is
otherwise on terms which the Board of Directors of FBOT in good faith
concludes (after consultation with its financial advisors and outside
counsel), taking into account, among other things, all legal, financial,
regulatory, and other aspects of the proposal and the Person making the
proposal, (a) would, if consummated, result in a transaction that is
more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement, and (b) is reasonably capable of being
completed.
"Support Agreement" shall mean the various support agreements, each
in substantially the form of Exhibit 1.
"Surviving Corporation" shall mean Regions as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean all federal, state, local, and foreign
taxes, levies, imposts, duties, or other like 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 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
related interest and penalties, or additions thereto.
"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.
"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.
"TBCA" shall mean the Texas Business Corporation Act.
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(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
Claim....................................................... Section
8.11(a)
Closing..................................................... Section 1.2
Continuing Employees........................................ Section 8.10
Covered Parties............................................. Section
8.11(b)
Effective Time.............................................. Section 1.3
Exchange Agent.............................................. Section 4.1
Exchange Ratio.............................................. Section 3.1(b)
FBOT Benefit Plans.......................................... Section
5.13(a)
FBOT Contracts.............................................. Section
5.14(a)
FBOT ERISA Affiliate........................................ Section
5.13(e)
FBOT ERISA Plan............................................. Section
5.13(a)
FBOT Options................................................ Section 3.6(a)
FBOT Pension Plan........................................... Section
5.13(a)
Indemnified Parties......................................... Section
8.11(a)
Merger...................................................... Section 1.1
FBOT SEC Reports............................................ Section 5.5(a)
Regions SEC Reports......................................... Section 6.5(a)
Takeover Laws............................................... Section 5.20
Tax Opinion................................................. Section 9.1(f)
(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.
(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
except for SAMCO Capital Markets, a Division of Service Asset Management Company
and Hoefer & Arnett, Inc., each as to FBOT, 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 FBOT or Regions, each of FBOT
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 FBOT Disclosure Memorandum) constitutes the entire
agreement between the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
A-36
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 for in Sections 8.9 and 8.11 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, 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
FBOT Common Stock will be exchanged for Regions Common Stock or cash shall not
be amended after the Stockholders' Meeting without the requisite approval of the
holders of the issued and outstanding shares of FBOT Common Stock 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 FBOT, to waive or extend the
time for the compliance or fulfillment by FBOT 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, FBOT, 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 FBOT 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 FBOT 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 Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
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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:
FBOT:
First Bancshares of Texas, Inc.
2001 Kirby Drive
Suite 808
Houston, Texas 77019
Telecopy Number: (713) 521-3296
Attention: W. Allen Gage
Chairman of the Board, President
and Chief Executive Officer
Copy to Counsel:
Bracewell & Patterson
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Telecopy Number: (713) 222-3256
Attention: William T. Luedke IV
Regions:
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7571
Attention: Richard D. Horsley
Vice Chairman and Executive
Financial Officer
Copy to Counsel:
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35203
Telecopy Number: (205) 326-7751
Attention: Samuel E. Upchurch, Jr.
General Counsel
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 principles of conflicts of Laws, except to the extent that the Laws
of the State of Texas 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.
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11.13 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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.
ATTEST: FIRST BANCSHARES OF TEXAS, INC
By: /s/ MARY MELVILLE By: /s/ W. ALLEN GAGE
------------------------------------------------- -------------------------------------------------
Mary Melville W. Allen Gage
Corporate Secretary Chairman of the Board, President
and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: FIRST BANCSHARES OF TEXAS, INC.
By: /s/ SAMUEL E. UPCHURCH, JR. By: /s/ CARL E. JONES, JR.
------------------------------------------------- -------------------------------------------------
Samuel E. Upchurch, Jr. Carl E. Jones, Jr.
Corporate Secretary President and Chief Executive Officer
[CORPORATE SEAL]
A-39
APPENDIX B
HOEFER & ARNETT
INCORPORATED
INVESTMENT BANKERS
207 JEFFERSON SQUARE
AUSTIN, TEXAS 78731
(512) 495-9690
FAX: (512) 495-9894
October 31, 2001
Members of the Board of Directors
First Bancshares of Texas, Inc.
2001 Kirby, Suite 808
Houston, Texas 77019
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the shareholders of First Bancshares of
Texas, Inc., Houston, Texas ("FBOT") of the terms of the proposed merger of FBOT
with and into Regions Financial Corporation, Birmingham, Alabama ("Regions") in
accordance with the terms and conditions of the Agreement and Plan of Merger,
dated August 3, 2001 (the "Agreement"). Pursuant to the Agreement, and subject
to the terms and conditions therein, each share of FBOT Common Stock, excluding
shares held by any FBOT Company or any Regions Company, in each case other then
in a fiduciary capacity or as a result of debts previously contracted, issued
and outstanding at the Effective Time shall be converted into .589 of a share of
Regions Common Stock (subject to adjustment as set forth in the following
proviso, the "Exchange Ratio"); provided that (i) in the event the Average
Closing Price is greater than $36.00, the Exchange Ratio shall be equal to the
quotient (rounded to the nearest thousandth) obtained by dividing (A) the
product of $36.00 and the Exchange Ratio (as then in effect) by (B) the Average
Closing Price and (ii) in the event the Average Closing Price is less than
$26.00, the Exchange Ratio shall be equal to the quotient (rounded to the
nearest thousandth) obtained by dividing (A) the product of $26.00 and the
Exchange Ratio (as then in effect) by (B) the Average Closing Price.
As part of its investment banking business, Hoefer & Arnett, Incorporated
is regularly engaged in the valuation of bank, bank holding company and thrift
securities in connection with mergers, acquisitions, underwritings, sales and
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. We have not previously
provided investment banking and financial advisory services to FBOT.
In arriving at our opinion, we have reviewed and analyzed, among other
things, the following: (i) the Agreement and Plan of Merger dated August 2,
2001; (ii) Annual Reports to Shareholders of FBOT for the years ended December
31, 1999 and December 31, 2000, Quarterly reports of condition and income for
the quarters ended June 30, 2000, September 30, 2000, December 31, 2000, March
31, 2001 and June 30, 2001; (iii) financial statements for Regions included in
its Annual Reports on Form 10-K for the years ended December 31, 1999 and
December 31, 2000, Quarterly reports on Form 10-Q for June 30, 2000, September
30, 2000, December 31, 2000, March 31, 2001 and June 30, 2001; (iv) certain
other publicly available financial and other information concerning FBOT and
Regions; and (v) the nature and terms of certain other merger and acquisition
transactions we believe relevant to our inquiry. We have held discussions with
senior management of FBOT concerning its past and current operations, financial
condition and prospects, as well as
B-1
the results of regulatory examinations. We have conducted such other financial
studies, analyses and investigations, as we deemed appropriate for purposes of
this opinion.
In conducting our review, we have relied upon and assumed the accuracy and
completeness of the financial and other information provided to us or publicly
available, and we have not assumed any responsibility for independent
verification of the same. We have relied upon the management of FBOT as to the
reasonableness of the financial and operating forecasts, projections (and the
assumptions and bases therefor) provided to us, and we have assumed that such
forecasts and projections reflect the best currently available estimates and
judgments of the management of FBOT. We have also assumed, without assuming any
responsibility for the independent verification of same, that the aggregate
allowance for loan losses for FBOT and Regions is adequate to cover such losses.
We have not made or obtained any evaluations or appraisals of the property of
FBOT or Regions, nor have we examined any individual loan credit files. For
purposes of this opinion, we have assumed that the transaction will have the
tax, accounting and legal effects described in the Agreement and assumed the
accuracy of the disclosures set forth in the Agreement. Our opinion as expressed
herein is limited to the fairness, from a financial point of view, to the
holders of shares of common stock of FBOT of the terms of the proposed merger of
FBOT with and into Regions and does not address FBOT's underlying business
decision to proceed with the transaction.
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including among others the following: (i)
the historical and current financial position and results of operations of FBOT
and Regions, including interest income, interest expense, net interest income,
net interest margin, provision for loan losses, non-interest income,
non-interest expense, earnings, dividends, internal capital generation, book
value, intangible assets, return on assets, return on shareholders' equity,
capitalization, the amount and type of non-performing assets, loan losses and
the reserve for loan losses, all as set forth in the financial statements for
FBOT and Regions; (ii) the assets and liabilities of FBOT and Regions, including
the loan, investment and mortgage portfolios, deposits, other liabilities,
historical and current liability sources and costs and liquidity; and (iii) the
nature and terms of certain other merger and acquisition transactions involving
banks and bank holding companies. We have also taken into account our assessment
of general economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuation and our
knowledge of the banking industry generally. Our opinion is necessarily based
upon conditions as they exist and can be evaluated on the date hereof and the
information made available to us through the date hereof.
Based upon and subject to the foregoing, we are of the opinion as
investment bankers that, as of the date hereof, the terms of the proposed merger
of FBOT with and into Regions are fair, from a financial point of view, to the
holders of shares of common stock of FBOT.
Our opinion is directed to the Board of Directors of FBOT for its
information and assistance in connection with its consideration of the financial
terms of the transaction contemplated by the Agreement and does not constitute a
recommendation to any shareholder of FBOT as to how such shareholder should vote
on the proposed transaction. We hereby consent to the reference to our firm in
the proxy statement related to the transaction and to the inclusion of our
opinion as an exhibit to the proxy statement related to the transaction.
Very truly yours,
/s/ Hoefer & Arnett, Incorporated
Hoefer & Arnett, Incorporated
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APPENDIX C
VERNON'S TEXAS STATUTES AND CODES ANNOTATED
BUSINESS CORPORATION ACT
PART FIVE
ARTICLE 5.11. RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN
CORPORATE ACTIONS
A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and
the shareholder holds shares of a class or series that was entitled to vote
thereon as a class or otherwise;
(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise
provided in the articles of incorporation) of all, or substantially all,
the property and assets, with or without good will, of a corporation if
special authorization of the shareholders is required by this Act and the
shareholders hold shares of a class or series that was entitled to vote
thereon as a class or otherwise;
(3) Any plan of exchange pursuant to Article 5.02 of this Act in which
the shares of the corporation of the class or series held by the
shareholder are to be acquired.
B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in which
there is a single surviving or new domestic or foreign corporation, or from any
plan of exchange, if:
(1) the shares held by the shareholder are part of a class or series,
shares of which are on the record date fixed to determine the shareholders
entitled to vote on the plan of merger or plan of exchange:
(a) listed on a national securities exchange;
(b) listed on the Nasdaq Stock Market (or successor quotation
system) or designated as a national market security on an interdealer
quotation system by the National Association of Securities Dealers,
Inc., or successor entity; or
(c) held of record by not less than 2,000 holders;
(2) the shareholder is not required by the terms of the plan of merger
or plan of exchange to accept for the shareholder's shares any
consideration that is different than the consideration (other than cash in
lieu of fractional shares that the shareholder would otherwise be entitled
to receive) to be provided to any other holder of shares of the same class
or series of shares held by such shareholder; and
(3) the shareholder is not required by the terms of the plan of merger
or the plan of exchange to accept for the shareholder's shares any
consideration other than:
(a) shares of a domestic or foreign corporation that, immediately
after the effective time of the merger or exchange, will be part of a
class or series, shares of which are:
(i) listed, or authorized for listing upon official notice of
issuance, on a national securities exchange;
(ii) approved for quotation as a national market security on an
interdealer quotation system by the National Association of
Securities Dealers, Inc., or successor entity; or
(iii) held of record by not less than 2,000 holders;
(b) cash in lieu of fractional shares otherwise entitled to be
received; or
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(c) any combination of the securities and cash described in
Subdivisions (a) and (b) of this subsection.
ARTICLE 5.12. PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE
ACTIONS
A. Any shareholder of any domestic corporation who has the right to dissent
from any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following procedures:
(1)(a) With respect to proposed corporate action that is submitted to
a vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action,
setting out that the shareholder's right to dissent will be exercised if
the action is effective and giving the shareholder's address, to which
notice thereof shall be delivered or mailed in that event. If the action is
effected and the shareholder shall not have voted in favor of the action,
the corporation, in the case of action other than a merger, or the
surviving or new corporation (foreign or domestic) or other entity that is
liable to discharge the shareholder's right of dissent, in the case of a
merger, shall, within ten (10) days after the action is effected, deliver
or mail to the shareholder written notice that the action has been
effected, and the shareholder may, within ten (10) days from the delivery
or mailing of the notice, make written demand on the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may
be, for payment of the fair value of the shareholder's shares. The fair
value of the shares shall be the value thereof as of the day immediately
preceding the meeting, excluding any appreciation or depreciation in
anticipation of the proposed action. The demand shall state the number and
class of the shares owned by the shareholder and the fair value of the
shares as estimated by the shareholder. Any shareholder failing to make
demand within the ten (10) day period shall be bound by the action.
(b) With respect to proposed corporate action that is approved
pursuant to Section A of Article 9.10 of this Act, the corporation, in
the case of action other than a merger, and the surviving or new
corporation (foreign or domestic) or other entity that is liable to
discharge the shareholder's right of dissent, in the case of a merger,
shall, within ten (10) days after the date the action is effected, mail
to each shareholder of record as of the effective date of the action
notice of the fact and date of the action and that the shareholder may
exercise the shareholder's right to dissent from the action. The notice
shall be accompanied by a copy of this Article and any articles or
documents filed by the corporation with the Secretary of State to effect
the action. If the shareholder shall not have consented to the taking of
the action, the shareholder may, within twenty (20) days after the
mailing of the notice, make written demand on the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case
may be, for payment of the fair value of the shareholder's shares. The
fair value of the shares shall be the value thereof as of the date the
written consent authorizing the action was delivered to the corporation
pursuant to Section A of Article 9.10 of this Act, excluding any
appreciation or depreciation in anticipation of the action. The demand
shall state the number and class of shares owned by the dissenting
shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the twenty
(20) day period shall be bound by the action.
(2) Within twenty (20) days after receipt by the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may
be, of a demand for payment made by a dissenting shareholder in accordance
with Subsection (1) of this Section, the corporation (foreign or domestic)
or other entity shall deliver or mail to the shareholder a written notice
that shall either set out that the corporation (foreign or domestic) or
other entity accepts the amount claimed in the demand and agrees to pay
that amount within ninety (90) days after the date on which the action was
effected, and, in the case of shares represented by certificates, upon the
surrender of the certificates duly endorsed, or shall contain an estimate
by the corporation (foreign or domestic) or other entity of the fair value
of the shares, together with an offer to pay the amount of that estimate
within ninety (90) days after the date on which the action was effected,
upon receipt of notice within sixty (60) days after that date from the
shareholder that the shareholder agrees to accept that amount and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed.
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(3) If, within sixty (60) days after the date on which the corporate
action was effected, the value of the shares is agreed upon between the
shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall
be made within ninety (90) days after the date on which the action was
effected and, in the case of shares represented by certificates, upon
surrender of the certificates duly endorsed. Upon payment of the agreed
value, the shareholder shall cease to have any interest in the shares or in
the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition in any court of competent jurisdiction in the county
in which the principal office of the domestic corporation is located, asking for
a finding and determination of the fair value of the shareholder's shares. Upon
the filing of any such petition by the shareholder, service of a copy thereof
shall be made upon the corporation (foreign or domestic) or other entity, which
shall, within ten (10) days after service, file in the office of the clerk of
the court in which the petition was filed a list containing the names and
addresses of all shareholders of the domestic corporation who have demanded
payment for their shares and with whom agreements as to the value of their
shares have not been reached by the corporation (foreign or domestic) or other
entity. If the petition shall be filed by the corporation (foreign or domestic)
or other entity, the petition shall be accompanied by such a list. The clerk of
the court shall give notice of the time and place fixed for the hearing of the
petition by registered mail to the corporation (foreign or domestic) or other
entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The appraisers
shall have power to examine any of the books and records of the corporation the
shares of which they are charged with the duty of valuing, and they shall make a
determination of the fair value of the shares upon such investigation as to them
may seem proper. The appraisers shall also afford a reasonable opportunity to
the parties interested to submit to them pertinent evidence as to the value of
the shares. The appraisers shall also have such power and authority as may be
conferred on Masters in Chancery by the Rules of Civil Procedure or by the order
of their appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to payment.
The judgment shall be payable to the holders of uncertificated shares
immediately but to the holders of shares represented by certificates only upon,
and simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as court
costs, and all court costs shall be allotted between the parties in the manner
that the court determines to be fair and equitable.
E. Shares acquired by the existing, surviving, or new corporation (foreign
or domestic) or other entity, as the case may be, pursuant to the payment of the
agreed value of the shares or pursuant to payment of the judgment entered for
the value of the shares, as in this Article provided, shall, in the case of a
merger, be
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treated as provided in the plan of merger and, in all other cases, may be held
and disposed of by the corporation as in the case of other treasury shares.
F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action. If
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article, any
shareholder who fails to comply with the requirements of this Article shall not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.
ARTICLE 5.13. PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS
A. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act shall not thereafter be entitled to
vote or exercise any other rights of a shareholder except the right to receive
payment for his shares pursuant to the provisions of those articles and the
right to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective shares for which
payment has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the corporation, terminate such shareholder's rights under Articles
5.12 and 5.16 of this Act unless a court of competent jurisdiction for good and
sufficient cause shown shall otherwise direct. If uncertificated shares for
which payment has been demanded or shares represented by a certificate on which
notation has been so made shall be transferred, any new certificate issued
therefor shall bear similar notation together with the name of the original
dissenting holder of such shares and a transferee of such shares shall acquire
by such transfer no rights in the corporation other than those which the
original dissenting shareholder had after making demand for payment of the fair
value thereof.
C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 of this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section B
of this Article the corporation shall terminate the shareholder's rights under
Article 5.12 or 5.16 of this Act, as the case may be, or if no petition asking
for a finding and determination of fair value of such shares by a court shall
have been filed within the time provided in Article 5.12 or 5.16 of this Act, as
the case may be, or if after the hearing of a petition filed pursuant to Article
5.12 or 5.16, the court shall determine that such shareholder is not entitled to
the relief provided by those articles, then, in any such case, such shareholder
and all persons claiming under him shall be conclusively presumed to have
approved and ratified the corporate action from which he dissented and shall be
bound thereby, the right of such shareholder to be paid the fair value of his
shares shall cease, and his status as a shareholder shall be restored without
prejudice to any corporate proceedings which may have been taken during the
interim, and such shareholder shall be entitled to receive any dividends or
other distributions made to shareholders in the interim.
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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
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of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall
deem proper.
"(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
"(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though less
than a quorum, or (2) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion,
or (3) by the stockholders.
"(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized
in this section. Such expenses (including attorneys' fees) incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
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"(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under this section.
"(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
"(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries;
and a person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in
this section.
"(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
"(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a
corporation's obligation to advance expenses (including attorneys'
fees)."
The Registrant has purchased a directors' and officers' liability
insurance contract which provides, within stated limits, reimbursement either to
a
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director or officer whose actions in his capacity result in liability, or to the
Registrant, in the event it has indemnified the director or officer. Major
exclusions from coverage include libel, slander, personal profit based on inside
information, illegal payments, dishonesty, accounting of securities profits in
violation of Section 16(b) of the Securities Exchange Act of 1934 and acts
within the scope of the Pension Reform Act of 1974.
ITEM 21. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
2.1 -- Agreement and Plan of Merger, dated as of August 3, 2001, by
and between First Bancshares of Texas, Inc. and Regions
Financial Corporation -- included as Appendix A to the Proxy
Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation --
incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-86975.
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. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Lange, Simpson, Robinson & Somerville LLP - included
in Exhibit 5.
23.3 -- Consent of Alston & Bird LLP - included in Exhibit 8.
23.4 -- Consent of Hereford, Lynch, Sellars & Kirkham, P.C..
23.5 -- Consent of Hoefer & Arnett Incorporated.
24.1 -- Power of Attorney.
99. -- Form of proxy.
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
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Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
C.(1) The undersigned Registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder through
use of a prospectus which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The Registrant undertakes that every prospectus: (i) that is filed
pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet
the requirements of Section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
D. The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
E. The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to the 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 25th day of October, 2001.
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
amendment to the registration statement has been signed by the following persons
in the capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
*
--------------------------- Chairman, President and Chief October 25, 2001
Carl E. Jones, Jr. Executive Officer and Director
(principal executive officer)
/s/ Richard D. Horsley
--------------------------- Vice Chairman of the Board and October 25, 2001
Richard D. Horsley Executive Financial Officer
and Director
(principal financial officer)
*
--------------------------- Executive Vice President and October 25, 2001
D. Bryan Jordan Comptroller
(principal accounting officer)
*
----------------------------- Director October 25, 2001
Sheila S. Blair
*
----------------------------- Director October 25, 2001
James B. Boone, Jr.
*
----------------------------- Director October 25, 2001
James S.M. French
*
----------------------------- Director October 25, 2001
Olin B. King
*
----------------------------- Director October 25, 2001
Allen C Morgan, Jr.
----------------------------- Director
Michael W. Murphy
*
----------------------------- Director October 25, 2001
Henry E. Simpson
----------------------------- Director
Lee J. Styslinger, Jr.
*
----------------------------- Director October 25, 2001
W. Woodrow Stewart
*
----------------------------- Director October 25, 2001
John H. Watson
*
----------------------------- Director October 25, 2001
C. Kemmons Wilson, Jr.
* By /s/ Richard D. Horsley as attorney-in-fact October 25, 2001
pursuant to a power of attorney.
13
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
2.1 -- Agreement and Plan of Merger, dated as of August 3, 2001, by
and between First Bancshares of Texas, Inc. and Regions
Financial Corporation -- included as Appendix A to the Proxy
Statement/Prospectus.
4.1 -- Certificate of Incorporation of Regions Financial Corporation --
incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-86975.
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. -- Opinion re: legality.
8. -- Opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Lange, Simpson, Robinson & Somerville LLP - included
in Exhibit 5.
23.3 -- Consent of Alston & Bird LLP - included in Exhibit 8.
23.4 -- Consent of Hereford, Lynch, Sellars & Kirkham, P.C..
23.5 -- Consent of Hoefer & Arnett Incorporated.
24.1 -- Power of Attorney.
99. -- Form of proxy.