1
As filed with the Securities and Exchange Commission on August 31, 2001.
Registration No.
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
----------------------
Regions Financial Corporation
(Exact Name of Registrant as Specified in its Charter)
----------------------
Delaware 6711 63-0589368
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
417 North 20th Street
Birmingham, AL 35203
(205) 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 STEPHEN M. LYNCH
LANGE, SIMPSON, ROBINSON & ALSTON & BIRD LLP ROBINSON, BRADSHAW & HINSON, P.A.
SOMERVILLE LLP 601 PENNSYLVANIA AVENUE, N.W. 101 NORTH TRYON STREET
417 NORTH 20TH STREET, SUITE 1700 NORTH BUILDING, 10TH FLOOR SUITE 1900
BIRMINGHAM, AL 35203 WASHINGTON, D.C. 20004 CHARLOTTE, NC 28246
(205) 250-5000 (202) 756-3300 (704) 377-8355
--------------------
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. [ ]
--------------------
CALCULATION OF REGISTRATION FEE
Title of each Proposed maximum Proposed maximum
class of securities Amount to be offering price aggregate Amount of
to be registered registered per unit* offering price* registration fee
-------------------------------------------------------------------------------------------------------------------------
Common Stock 2,011,200 $24.882444 $50,043,572 $12,510.89
=======================================================================================================================
*Calculated in accordance with Rule 457(f), based on the average of the high and
low reported sale prices of the common stock of the company being acquired on
August 30, 2001.
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.
2
PROXY STATEMENT PROSPECTUS
PARK MERIDIAN REGIONS FINANCIAL CORPORATION
FINANCIAL CORPORATION UP TO _______ SHARES OF COMMON STOCK
MERGER PROPOSED - YOUR VOTE IS VERY IMPORTANT
The boards of directors of Park Meridian Financial Corporation, a bank
holding company headquartered in Charlotte, North Carolina, and Regions
Financial Corporation, a bank holding company and financial holding company
headquartered in Birmingham, Alabama, have agreed on a merger of Park Meridian
and Regions. Regions will be the surviving corporation in the merger. Regions
common stock is traded on the Nasdaq National Market under the symbol "RGBK" and
Park Meridian common stock is traded on the OTC bulletin board under the symbol
"PMFN."
If the merger is completed, you will receive .55 of a share of Regions
common stock for each share of Park Meridian common stock you own, subject to
possible upward adjustment. Regions stockholders will continue to own their
existing shares of Regions common stock after the merger.
The .55 exchange ratio is subject to possible upward adjustment in
limited circumstances as described in this proxy statement-prospectus. The
actual value of the Regions common stock received by Park Meridian shareholders
in the merger will depend on the market value of Regions common stock at the
time we complete the merger. On _________, 2001, the closing price of Regions
common stock was $_______, and based on that price and the .55 exchange ratio, a
share of Park Meridian common stock would have an equivalent value of $______ in
the merger. The last reported sale price of Park Meridian common stock prior to
the announcement of the merger was $14.50.
Park Meridian has scheduled a special meeting for its shareholders to
vote on the merger, to be held at 9:30 a.m., local time, on _______, at Myers
Park Country Club, 2415 Roswell Avenue, Charlotte, North Carolina 28209. We
cannot complete the merger unless the shareholders of Park Meridian approve it.
Because the affirmative vote of a majority of the outstanding shares is
necessary to approve the merger, if you do not vote or if you abstain, that will
have the effect of a vote against the merger. YOUR BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE MERGER.
This proxy statement-prospectus provides you with detailed information
about the proposed merger. You can also get information about Regions and Park
Meridian from 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
12 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 _______, 2001. It is first being
mailed on or about _______, 2001.
3
HOW TO OBTAIN ADDITIONAL INFORMATION
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT REGIONS FINANCIAL CORPORATION AND PARK MERIDIAN
FINANCIAL CORPORATION THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS DOCUMENT.
THIS INFORMATION IS DESCRIBED ON PAGE 59 UNDER THE CAPTION "WHERE YOU CAN FIND
MORE INFORMATION." YOU CAN OBTAIN FREE COPIES OF THIS INFORMATION FROM REGIONS
OR PARK MERIDIAN BY WRITING OR CALLING:
Regions Financial Corporation Park Meridian Financial Corporation
417 North 20th Street Post Office Box 11816
Birmingham, AL 35203 Charlotte, NC 28220
Attention: Shareholder Relations Attention: Joseph M. Dodson, Chief
Telephone: (205) 326-7090 Financial Officer
Telephone: (704) 366-7275
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST
THE INFORMATION BY _______, 2001.
4
PARK MERIDIAN FINANCIAL CORPORATION
POST OFFICE BOX 11816, CHARLOTTE, NORTH CAROLINA, 28220
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD _______, 2001
Park Meridian Financial Corporation will hold a special meeting of
shareholders at Myers Park Country Club, located at 2415 Roswell Avenue,
Charlotte, North Carolina, 28209 on _______, 2001, at 9:30 a.m., local time. At
the special meeting the following matters will be presented to the shareholders:
1. Merger. The plan of merger included in the Agreement and Plan of
Merger dated as of June 26, 2001, by and between Park Meridian and Regions
Financial Corporation. If the plan of merger is approved and the merger is
completed, (1) Park Meridian will merge with and into Regions with Regions as
the surviving corporation and (2) each share of Park Meridian common stock
(excluding certain shares held by Park Meridian, Regions, or their respective
subsidiaries and excluding all shares held by shareholders who perfect their
dissenters' rights) will be converted into .55 of a share of Regions common
stock, subject to possible upward 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.
Shareholders of record at the close of business on _______, 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 Park Meridian shares in cash by complying with the applicable
provisions of North Carolina 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 Park Meridian 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
Henry A. Harkey Kevin T. Kennelly
Chairman of the Board President and Chief
Executive Officer
_______, 2001
5
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 Park Meridian's Financial Advisor....................................2
The Special Meeting......................................................................3
Recommendations to Shareholders..........................................................3
Voting Rights at the Special Meeting.....................................................3
Shareholder Vote Required................................................................3
Share Ownership of Management and Certain Shareholders...................................3
Effective Time...........................................................................3
Exchange of Stock Certificates...........................................................4
Regulatory Approvals and Other Conditions to Completion of the Merger....................4
Termination of the Agreement and Plan of Merger..........................................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..................................................................7
RISK FACTORS.....................................................................................12
General.................................................................................12
Risks Relating to the Merger............................................................12
THE SPECIAL MEETING..............................................................................13
General.................................................................................13
Record Date; Vote Required..............................................................14
THE MERGER.......................................................................................14
General.................................................................................15
Possible Adjustment of Exchange Ratio...................................................15
Treatment of Park Meridian Options......................................................16
Background of the Merger................................................................17
Park Meridian's Reasons for the Merger..................................................17
Regions' Reasons for the Merger.........................................................19
Opinion of Park Meridian's Financial Advisor............................................19
Effective Time of the Merger............................................................23
Distribution of Regions Stock Certificates and Payment For Fractional Shares............23
Conditions to Completion of the Merger..................................................24
Regulatory Approvals....................................................................24
Waiver, Amendment, and Termination of the Agreement and Plan of Merger..................25
Conduct of Business Pending the Merger..................................................26
Management Following the Merger.........................................................27
Interests of Certain Persons in the Merger..............................................27
Dissenting Shareholders.................................................................29
Federal Income Tax Consequences of the Merger...........................................32
Accounting Treatment....................................................................33
Expenses and Fees.......................................................................33
6
Resales of Regions Common Stock.........................................................33
Stock Option Agreement..................................................................34
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS...................................................38
Antitakeover Provisions Generally.......................................................39
Authorized Capital Stock................................................................39
Amendment of Certificate or Articles of Incorporation and Bylaws........................40
Classified Board of Directors and Absence of Cumulative Voting..........................41
Removal of Directors....................................................................41
Limitations on Director Liability.......................................................41
Indemnification.........................................................................42
Special Meetings of Stockholders........................................................43
Actions by Stockholders Without a Meeting...............................................43
Stockholder Nominations.................................................................43
Mergers, Consolidations, and Sales of Assets Generally..................................44
Business Combinations with Certain Persons..............................................44
Dissenters' Rights......................................................................45
Stockholders' Rights to Examine Books and Records.......................................45
Dividends...............................................................................46
COMPARATIVE MARKET PRICES AND DIVIDENDS..........................................................47
INFORMATION ABOUT PARK MERIDIAN..................................................................49
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF PARK MERIDIAN....................................49
INFORMATION ABOUT REGIONS........................................................................50
General.................................................................................50
Recent Developments.....................................................................50
SUPERVISION AND REGULATION.......................................................................52
General.................................................................................52
Payment of Dividends....................................................................53
Capital Adequacy........................................................................54
Prompt Corrective Action................................................................55
FDIC Insurance Assessments..............................................................56
DESCRIPTION OF REGIONS COMMON STOCK..............................................................56
STOCKHOLDER PROPOSALS............................................................................57
FORWARD LOOKING STATEMENTS.......................................................................57
EXPERTS..........................................................................................58
OPINIONS.........................................................................................59
WHERE YOU CAN FIND MORE INFORMATION..............................................................59
APPENDIX A--Agreement and Plan of Merger........................................................A-1
APPENDIX B--Opinion of The Orr Group ...........................................................B-1
APPENDIX C--Copy of Article 13 of the North Carolina Business Corporation Act,
pertaining to dissenters' rights...........................................................C-1
7
SUMMARY
This summary highlights selected information from this proxy
statement-prospectus. It does not include 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" (page 59). 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 49 AND 50)
PARK MERIDIAN FINANCIAL CORPORATION
6826 Morrison Boulevard
Charlotte, North Carolina, 28211
Telephone: (704) 366-7275
Park Meridian is incorporated in North Carolina and is a bank holding
company. Park Meridian owns Park Meridian Bank, a commercial bank which serves
customers primarily in Mecklenburg County in North Carolina. As of June 30,
2001, Park Meridian's total assets were about $298 million, deposits were about
$206 million, and stockholders' equity was about $24 million.
REGIONS FINANCIAL CORPORATION
417 North 20th Street
Birmingham, Alabama 35203
Telephone: (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 14)
If all of the conditions to completing the merger are satisfied or
waived, Park Meridian will merge with Regions Financial Corporation. Regions
will be the surviving corporation in the merger. When the merger is completed,
you will receive .55 of a share of Regions stock for each share of Park Meridian
stock that you own, subject to upward adjustment as described below. 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 to which you become entitled.
The agreement and plan of merger protects you as shareholders against a
decline in the trading price of Regions stock below $29.00 per share between the
date of the agreement and the date of the special meeting. If the "average
price," meaning the average of the daily volume weighted average stock prices of
Regions common stock over the period of ten consecutive full trading days ending
at the close of trading on the second full trading day before the date of the
special meeting, is less than $29.00, then the exchange ratio will be increased
to the fraction computed by (1) multiplying the exchange ratio then in effect by
1
8
$29.00, and then (2) dividing that amount by the average price. This mechanism
is explained in greater detail under the heading "The Merger--Possible
Adjustment of Exchange Ratio" at page 15. This adjustment mechanism is intended
to result in you receiving, in exchange for each share of Park Meridian common
stock you own, Regions common stock having a value of at least $15.95, based on
the average price over that ten-day period prior to the special meeting.
However, this adjustment mechanism does not protect against any decline in
Regions' stock price that might occur after the ten-trading-day average is
computed.
If you elect to dissent from the merger under North Carolina law and
follow the required procedures, you will receive a cash payment for your shares
of Park Meridian common stock instead of receiving Regions common stock. More
information about your rights to dissent from the merger, and the procedures you
must follow should you choose to do so, is included under the heading "The
Merger -- Dissenting Shareholders" at page 29.
We have attached the agreement and plan of merger to this proxy
statement-prospectus as Appendix A. We encourage you to read the entire
agreement. It is the legal document that establishes the terms and conditions of
the merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION (PAGE 47)
Shares of Regions are quoted on the Nasdaq National Market under the
symbol "RGBK." Shares of Park Meridian are traded on the OTC bulletin board
system under the symbol "PMFN." On June 26, 2001, the last full trading day
prior to the public announcement of the merger, Regions stock closed at $31.33
per share. As of that date, the last reported sale price of Park Meridian common
stock was $14.50 per share. On _______, 2001, Regions stock closed at $_______
per share and the last reported sale price of Park Meridian common stock was
$_______ per share.
Based on an exchange ratio in the merger of .55, the market value of
the consideration that Park Meridian shareholders will receive in the merger for
each share of Park Meridian common stock would be $17.23 based on Regions' June
26, 2001 closing price and $_______ based on Regions' _______, 2001 closing
price. The exchange ratio will become fixed as of the end of trading on the
second full trading day before the date of the special meeting. Because the
market price of Regions common stock continuously fluctuates, we urge you to
obtain current stock price quotations for Regions common stock.
REASONS FOR THE MERGER (PAGE 17)
Park Meridian and Regions believe that the merger will result in a
company with expanded opportunities for profitable growth. In addition, we
anticipate that the expansion of Regions' banking franchise into North Carolina
will improve Regions' ability to compete in the evolving and competitive
financial services industry.
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" at page 17, "The Merger--Park Meridian's Reasons for the Merger" at
page 17, and "The Merger--Regions' Reasons for the Merger" at page 19.
FAIRNESS OPINION OF PARK MERIDIAN'S FINANCIAL ADVISOR (PAGE 19)
In deciding to approve the merger, the Park Meridian board of directors
considered the opinion of its financial advisor, The Orr Group, that, as of the
date of the opinion, the exchange ratio was fair to the Park
2
9
Meridian shareholders from a financial point of view. We have attached this
opinion as Appendix B to this proxy statement-prospectus. You should read it
carefully.
THE SPECIAL MEETING (PAGE 13)
The Park Meridian special meeting will be held at Myers Park Country
Club, 2415 Roswell Avenue, Charlotte, North Carolina, 28209, at 9:30 a.m. local
time on _______, 2001. At the special meeting, Park Meridian shareholders will
be asked to approve the agreement and plan of merger.
RECOMMENDATIONS TO SHAREHOLDERS (PAGE 17)
The Park Meridian board of directors has unanimously approved the
agreement and plan of merger 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 IN FAVOR OF THE MERGER BY MARKING YOUR PROXY CARD "FOR" THE
PROPOSAL TO APPROVE THE AGREEMENT AND PLAN OF MERGER.
VOTING RIGHTS AT THE SPECIAL MEETING (PAGE 14)
You can vote at the Park Meridian special meeting if you owned Park
Meridian common stock as of the close of business on _______, 2001, the record
date. On that date, _______ shares of Park Meridian 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 Park Meridian common stock you owned
on _______, 2001.
Regions stockholders will not vote on the merger.
SHAREHOLDER VOTE REQUIRED (PAGE 14)
To approve the merger, Park Meridian shareholders who hold a majority
of the outstanding shares of common stock on the record date must vote for the
merger. If you do not vote or if you abstain, this will have the same effect as
a vote against the merger.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN SHAREHOLDERS (PAGE 49)
All together, the directors and officers of Park Meridian, their
immediate family members and entities they control can cast about _______% of
the votes entitled to be cast at the Park Meridian special meeting. The members
of the Park Meridian board of directors have agreed to vote all of the shares
over which they have voting authority, other than as a fiduciary, in favor of
the merger.
EFFECTIVE TIME (PAGE 23)
When all conditions of the merger have been satisfied or waived, we
will file a certificate of merger reflecting the merger with the Secretary of
State of the state of Delaware and articles of merger reflecting the merger with
the Secretary of State of the state of North Carolina. The merger will be final
when both the certificate of merger has been declared effective by the Delaware
Secretary of State and the articles of merger have been declared effective by
the North Carolina Secretary of State. If Park Meridian shareholders 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. Park Meridian and Regions cannot assure you that we can
obtain the necessary shareholder and regulatory approvals or that the other
conditions to completion of the merger can or will be satisfied.
3
10
EXCHANGE OF STOCK CERTIFICATES (PAGE 23)
Promptly after the merger is completed, you will receive a letter and
instructions on how to surrender your Park Meridian 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 Park Meridian common stock. You should not send Park Meridian,
Regions, or Regions' transfer agent any stock certificates until you receive
these instructions.
REGULATORY APPROVALS AND OTHER CONDITIONS TO COMPLETION OF THE MERGER (PAGE 24)
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:
- Park Meridian shareholders approve the agreement and plan of merger at
the special meeting;
- Park Meridian and Regions each receive an opinion of counsel that the
merger will qualify as a tax-free reorganization; and
- neither Regions nor Park Meridian has breached in any material respect
any of its representations or obligations under the agreement and plan
of merger.
In addition to these conditions, the agreement and plan of merger,
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 Park Meridian 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 OF THE AGREEMENT AND PLAN OF MERGER (PAGE 25)
Regions and Park Meridian may agree to terminate the agreement and plan
of merger and elect not to complete the merger at any time before the merger is
completed.
Each of the parties also can unilaterally terminate the agreement and
plan of merger in limited circumstances, including if the merger is not
completed by December 31, 2001. However, a party may not terminate the agreement
and plan of merger for this reason if the merger has not been completed because
of a breach of the agreement and plan of merger by the party seeking
termination.
In addition, the parties may also terminate the agreement and plan of
merger if other circumstances occur which are described in the agreement,
attached to this proxy statement-prospectus as Appendix A.
4
11
The agreement and plan of merger may be amended by the written
agreement of Park Meridian and Regions. The parties may amend the agreement and
plan of merger without shareholder approval, even if Park Meridian shareholders
have already approved the agreement and plan of merger. However, Park Meridian
shareholders must approve any amendments that would modify, in a material
respect, the terms and conditions of the merger, the manner of converting Park
Meridian common stock into Regions common stock in the merger, or the identity
of the surviving corporation.
FEDERAL INCOME TAX CONSEQUENCES (PAGE 32)
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 Park Meridian 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 will not
bind the Internal Revenue Service, which could take a different view.
THIS TAX TREATMENT MAY NOT APPLY TO CERTAIN PARK MERIDIAN SHAREHOLDERS,
INCLUDING THE TYPES OF PARK MERIDIAN SHAREHOLDERS DISCUSSED ON PAGE 32, AND WILL
NOT APPLY TO ANY PARK MERIDIAN SHAREHOLDER WHO DISSENTS FROM THE MERGER UNDER
NORTH CAROLINA 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 33)
Regions expects to account for the merger as a purchase transaction for
accounting and financial reporting purposes, meaning that the assets and
liabilities of Park Meridian 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 Park Meridian and will not be
restated retroactively to reflect the historical financial position or results
of operations of Park Meridian.
INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM YOURS
(PAGE 27)
Some of the officers of Park Meridian 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 shareholders of
Park Meridian. In particular, they hold outstanding options under Park
Meridian's existing stock option plan, which will immediately vest and be
converted into stock options to acquire Regions stock after the merger. Also,
members of Park Meridian's board of directors and its officers are entitled to
indemnification under the agreement and plan of merger. The Park Meridian 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 27.
DISSENTERS' APPRAISAL RIGHTS (PAGE 45)
North Carolina law permits you to dissent from the merger and to have
the fair value of your stock 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 merger, your
shares
5
12
of Park Meridian 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 38)
When the merger is completed you will automatically become a Regions
stockholder. The rights of Regions stockholders differ from the rights of Park
Meridian shareholders 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 Park
Meridian's income per share, dividends per share and book value per share, and
similar information reflecting the merger of Regions and Park Meridian (which is
referred to as "pro forma" information). In presenting the comparative pro forma
information for certain time periods, we have assumed that Regions and Park
Meridian had been merged throughout those periods.
In presenting the comparative pro forma information, we also assumed
that Regions will record Park Meridian 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 .55. It is intended
to reflect the fact that Park Meridian shareholders will be receiving .55 of a
share of Regions common stock for each share of Park Meridian common stock
exchanged in the merger. This may not be the actual exchange ratio, since the
exact ratio will not be determined until shortly before the special meeting.
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 our companies. See "Where You Can Find More
Information" on page 59.
6
13
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
-------------------- -------------
2001 2000 2000
------ ------ ------
(Unaudited) (Unaudited except Regions
and Park Meridian historical)
NET INCOME PER COMMON SHARE
Regions historical .................................... $ 1.06 $ 1.23 $ 2.39
Regions historical - diluted .......................... 1.05 1.22 2.38
Park Meridian historical .............................. .52 .43 .90
Park Meridian historical - diluted .................... .51 .42 .88
Regions and Park Meridian pro forma combined(1) ....... 1.07 2.39
Regions and Park Meridian pro forma combined -
diluted(1) ..................................... 1.05 2.38
Park Meridian pro forma equivalent(2) ................. .59 1.31
Park Meridian pro forma equivalent -
diluted(2) ..................................... .58 1.31
DIVIDENDS DECLARED PER COMMON SHARE
Regions historical .................................... .56 .54 1.08
Park Meridian historical .............................. -- -- --
Park Meridian pro forma equivalent(3) ................. .31 .59
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions historical .................................... 16.81 15.73
Park Meridian historical .............................. 8.70 8.04
Regions and Park Meridian pro forma combined(1) ....... 16.81
Park Meridian pro forma equivalent(2) ................. 9.25
(1) Represents the combined results of Regions and Park Meridian 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 .55 of a share of Regions common stock for each share of Park
Meridian common stock. The exchange ratio is subject to upward
adjustment under certain conditions if the average of the daily
weighted average trading prices of Regions common stock over a
specified period is less than $29.00. 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 .55 of a share of Regions common
stock for each share of Park Meridian common stock.
(4) The combined and equivalent pro forma per share data assuming an
alternative exchange ratio of .638, which corresponds to an assumed
average price of Regions common stock of $25.00, are as follows:
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
(Unaudited)
NET INCOME PER COMMON SHARE
Regions and Park Meridian pro forma combined..................... $ 1.07 $2.39
Regions and Park Meridian pro forma combined -
diluted...................................................... 1.05 2.38
Park Meridian pro forma equivalent............................... .68 1.52
Park Meridian pro forma equivalent - diluted..................... .67 1.52
DIVIDENDS DECLARED PER COMMON SHARE
Park Meridian pro forma equivalent............................... .36 .69
BOOK VALUE PER COMMON SHARE (PERIOD END)
Regions and Park Meridian pro forma combined..................... 16.81
Park Meridian pro forma equivalent............................... 10.72
SELECTED FINANCIAL DATA
The following tables show summarized historical financial data for each
of Regions and Park Meridian.
The information in the following tables is based on the historical
financial information of our companies. All of the summary financial information
provided in the following tables should be read in connection with the
historical financial information and with the more detailed financial
information in the documents of Regions and Park Meridian incorporated by
reference. See "Where You Can Find More Information" on page 59. 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.
7
14
Selected Historical Financial Data of Regions
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------------------- ----------------------------------------------------
2001 2000 2000 1999 1998
------------ ------------ ------------ ------------ ------------
(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 $ 2,597,786
Total interest expense ................. 903,402 870,009 1,845,446 1,428,831 1,272,968
Net interest income .................... 698,286 702,807 1,388,797 1,425,855 1,324,818
Provision for loan losses .............. 57,490 56,981 127,099 113,658 60,505
Net interest income after
loan loss provision ............... 640,796 645,826 1,261,698 1,312,197 1,264,313
Total noninterest income before
security gains (losses) ........... 417,329 344,393 641,138 536,981 467,695
Security gains (losses) ................ 467 (39,951) (39,928) 160 7,002
Total noninterest expense .............. 724,087 543,922 1,121,182 1,064,312 1,103,708
Income tax expense ..................... 98,954 135,048 214,203 259,640 213,590
Net income ............................. 235,551 271,298 527,523 525,386 421,712
PER SHARE DATA:
Net income ............................. $ 1.06 $ 1.23 $ 2.39 $ 2.37 $ 1.92
Net income-diluted ..................... 1.05 1.22 2.38 2.35 1.88
Cash dividends ......................... .56 .54 1.08 1.00 .92
Book value ............................. 16.81 14.55 15.73 13.89 13.61
OTHER INFORMATION:
Average number of shares outstanding ... 221,273 220,782 220,762 221,617 220,114
Average number of shares outstanding
- diluted .......................... 223,573 221,987 221,989 223,967 223,781
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ........................... $ 45,139,089 $ 42,901,514 $ 43,688,293 $ 42,714,395 $ 36,831,940
Securities ............................. 7,713,087 9,245,683 8,994,171 10,913,044 7,969,137
Loans, net of unearned income .......... 30,962,953 30,390,990 31,376,463 28,144,675 24,365,587
Total deposits ......................... 31,159,282 32,508,901 32,022,491 29,989,094 28,350,066
Long-term debt ......................... 4,936,855 2,370,148 4,478,027 1,750,861 571,040
Stockholders' equity ................... 3,826,360 3,187,435 3,457,944 3,065,112 3,000,401
PERFORMANCE RATIOS:
Return on average assets(1) ............ 1.07%(a) 1.29%(b) 1.23%(c) 1.33% 1.24%(d)
Return on average stockholders'
equity(1) ......................... 13.29(a) 17.45(b) 16.31(c) 17.13 14.62(d)
Net interest margin(1) ................. 3.63 3.63 3.55 3.94 4.25
Efficiency(2) .......................... 62.49(a) 51.37(b) 54.35(c) 53.60 60.82(d)
Dividend payout ........................ 52.83 43.90 45.19 42.19 47.92
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ......... .32% .23% .31% .37% .28%
Problem assets to net loans and
other real estate(3) .............. .98 .71 .76 .68 .60
Nonperforming assets to net loans
and other real estate(4) .......... 1.11 .93 .87 .93 1.15
Allowance for loan losses to loans,
net of unearned income ............ 1.24 1.20 1.20 1.20 1.29
Allowance for loan losses to
nonperforming assets(4) ........... 111.56 128.99 137.07 128.70 112.27
YEAR ENDED DECEMBER 31,
------------------------------
1997 1996
------------ ------------
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .................. $ 2,276,584 $ 1,954,283
Total interest expense ................. 1,097,376 942,459
Net interest income .................... 1,179,208 1,011,824
Provision for loan losses .............. 89,663 46,026
Net interest income after
loan loss provision ............... 1,089,545 965,798
Total noninterest income before
security gains (losses) ........... 406,484 341,792
Security gains (losses) ................ 498 3,311
Total noninterest expense .............. 901,776 837,034
Income tax expense ..................... 197,222 156,008
Net income ............................. 397,529 317,859
PER SHARE DATA:
Net income ............................. $ 1.89 $ 1.64
Net income-diluted ..................... 1.86 1.61
Cash dividends ......................... .80 .70
Book value ............................. 12.75 11.82
OTHER INFORMATION:
Average number of shares outstanding ... 209,781 194,241
Average number of shares outstanding
- diluted .......................... 213,750 197,751
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ........................... $ 31,414,058 $ 26,993,344
Securities ............................. 6,315,923 5,742,375
Loans, net of unearned income .......... 21,881,123 18,395,552
Total deposits ......................... 25,011,021 22,019,412
Long-term debt ......................... 445,529 570,545
Stockholders' equity ................... 2,679,821 2,274,563
PERFORMANCE RATIOS:
Return on average assets(1) ............ 1.35% 1.25%(e)
Return on average stockholders'
equity(1) ......................... 15.38 14.71(e)
Net interest margin(1) ................. 4.41 4.36
Efficiency(2) .......................... 57.78 61.84(e)
Dividend payout ........................ 42.33 42.68
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ......... .27% .18%
Problem assets to net loans and
other real estate(3) .............. .78 .63
Nonperforming assets to net loans
and other real estate(4) .......... .91 .83
Allowance for loan losses to loans,
net of unearned income ............ 1.39 1.38
Allowance for loan losses to
nonperforming assets(4) ........... 151.89 166.41
8
15
Selected Historical Financial Data - Continued
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------
(Unaudited)
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%.
9
16
Selected Historical Financial Data of Park Meridian
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------- ------------------------------------------
2001 2000 2000 1999 1998
---------- ---------- ---------- ---------- ----------
(Unaudited)
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .................... $ 10,944 $ 9,972 $ 21,499 $ 14,763 $ 11,694
Total interest expense ................... 7,301 6,041 13,453 8,658 6,686
Net interest income ...................... 3,643 3,931 8,046 6,105 5,008
Provision for loan losses ................ 230 429 833 407 420
Net interest income after
loan loss provision ................. 3,413 3,502 7,213 5,698 4,588
Total noninterest income excluding
security gains (losses) ............. 1,241 758 1,620 1,597 1,701
Security gains (losses) .................. 52 (5) (5) 71 50
Total noninterest expense ................ 2,563 2,530 5,195 4,455 4,061
Income tax expense ....................... 708 548 1,162 902 676
Net income ............................... 1,435 1,177 2,471 2,009 1,602
PER SHARE DATA:
Net income ............................... $ .52 $ .43 $ .90 $ .74 $ .60
Net income -- diluted .................... .51 .42 .88 .70 .57
Cash dividends ........................... -- -- -- -- --
Book value ............................... 8.70 8.04 8.04 6.62 6.72
OTHER INFORMATION:
Average number of shares outstanding ..... 2,772 2,744 2,754 2,729 2,672
Average number of shares outstanding,
-- diluted ........................... 2,837 2,824 2,814 2,854 2,819
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ............................. $ 298,222 $ 266,989 $ 285,733 $ 228,054 $ 181,493
Securities ............................... 57,396 62,113 64,349 63,284 55,156
Loans, net of unearned income ............ 217,589 182,998 194,390 149,838 107,417
Allowance for loan losses ................ (2,885) (2,426) (2,763) (1,997) (1,626)
Total deposits ........................... 205,785 183,404 197,258 159,022 134,358
Long-term debt ........................... 33,000 57,000 57,000 10,000 15,000
Stockholders' equity ..................... 24,355 19,361 22,236 18,131 18,273
PERFORMANCE RATIOS:
Return on average assets(1) .............. 1.00% .96% .95% 1.01% 1.05%
Return on average stockholders'
equity(1) ........................... 12.35 12.54 12.45 10.78 9.44
Net interest margin(1) ................... 2.88 3.03 3.37 3.41 3.66
Efficiency(2) ............................ 51.92 54.00 53.80 56.80 59.64
Dividend payout .......................... -- -- -- -- --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ........... .06% -- .04% .03% .09%
Problem assets to net loans and
other real estate(3) ................ -- -- -- -- --
Nonperforming assets to net loans
and other real estate(4) ............ .19 .06% -- -- .11
Allowance for loan losses to loans,
net of unearned income .............. 1.33 1.33 1.42 1.33 1.51
Allowance for loan losses to
nonperforming assets(4) ............. 685.54 2,353.04 -- -- 1,402.08
YEAR ENDED DECEMBER 31,
--------------------------
1997 1996
---------- ----------
(In thousands, except per share data and ratios)
INCOME STATEMENT DATA:
Total interest income .................... $ 8,913 $ 6,395
Total interest expense ................... 4,929 3,484
Net interest income ...................... 3,984 2,911
Provision for loan losses ................ 305 300
Net interest income after
loan loss provision ................. 3,679 2,611
Total noninterest income excluding
security gains (losses) ............. 1,210 1,120
Security gains (losses) .................. 13 (2)
Total noninterest expense ................ 3,223 2,535
Income tax expense ....................... 575 418
Net income ............................... 1,104 776
PER SHARE DATA:
Net income ............................... $ .47 $ .38
Net income -- diluted .................... .44 .37
Cash dividends ........................... -- --
Book value ............................... 5.89 5.73
OTHER INFORMATION:
Average number of shares outstanding ..... 2,368 2,030
Average number of shares outstanding,
-- diluted ........................... 2,493 2,116
STATEMENT OF CONDITION DATA
(PERIOD END):
Total assets ............................. $ 136,543 $ 96,827
Securities ............................... 44,038 26,157
Loans, net of unearned income ............ 80,616 58,639
Allowance for loan losses ................ (1,291) (980)
Total deposits ........................... 100,674 82,130
Long-term debt ........................... 5,000 --
Stockholders' equity ..................... 14,952 9,307
PERFORMANCE RATIOS:
Return on average assets(1) .............. .98% .95%
Return on average stockholders'
equity(1) ........................... 8.59 8.97
Net interest margin(1) ................... 3.88 3.90
Efficiency(2) ............................ 61.74 62.95
Dividend payout .......................... -- --
ASSET QUALITY RATIOS:
Net charge-offs to average loans,
net of unearned income(1) ........... -- .35%
Problem assets to net loans and
other real estate(3) ................ -- --
Nonperforming assets to net loans
and other real estate(4) ............ -- .07
Allowance for loan losses to loans,
net of unearned income .............. 1.60% 1.74
Allowance for loan losses to
nonperforming assets(4) ............. -- 2,390.79
10
17
Selected Historical Financial Data of Park Meridian - Continued
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
------------------ ------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------ ------
(Unaudited)
LIQUIDITY AND CAPITAL RATIOS:
Average stockholders' equity to
average assets ....................... 8.27% 7.61% 7.66% 9.37% 11.15% 11.40% 10.63%
Average loans to average deposits ...... 100.17 103.86 104.41 91.11 90.97 82.73 79.60
Tier 1 risk-based capital(5) ........... 10.80 10.51 10.36 11.89 14.38 15.18 13.29
Total risk-based capital(5) ............ 11.98 11.72 11.61 13.05 15.69 16.50 14.54
Tier 1 leverage(5) ..................... 9.45 8.85 8.61 10.05 11.65 13.43 10.27
---------------
(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%.
11
18
RISK FACTORS
GENERAL
If the merger is completed, you will receive shares of Regions common
stock in exchange for your shares of Park Meridian 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 57. This section addresses particular risks and uncertainties that are
specific to Regions.
RISKS RELATING TO THE MERGER
PARK MERIDIAN SHAREHOLDERS MAY RECEIVE SHARES OF REGIONS COMMON STOCK
VALUED AT LESS THAN $29.00 AT THE CLOSING OF THE MERGER. The exchange ratio of
.55 may be increased based on the average of the daily volume weighted average
trading prices of Regions common stock over the ten full trading days ending on
the second full trading day prior to the date of the special meeting. If, and
only if, such average is less than $29.00, then the exchange ratio will be
increased based on a formula in the agreement and plan of merger. 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 volume weighted average
trading 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 Park Meridian common stock may be less than $29.00 on the date we
complete the merger or the date you receive your stock certificate for Regions
common stock. 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.
REGIONS MAY NOT BE ABLE TO SUCCESSFULLY ASSIMILATE PARK MERIDIAN'S
OPERATIONS INTO REGIONS' OPERATIONS. The merger involves the assimilation of two
companies that have previously operated independently of each other. Successful
assimilation of Park Meridian's operations will depend primarily on Regions'
ability to consolidate operations, systems and procedures and to reduce costs.
Regions may not be able to assimilate Park Meridian's operations without
encountering difficulties, including the loss of key employees and customers and
unexpected problems with operations, personnel, or technology. In addition,
Regions currently does not have banking operations in North Carolina, and
Regions may not be successful in entering this new market.
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 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
12
19
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 shareholders
of Park Meridian Financial Corporation in connection with the solicitation by
the Park Meridian board of directors of proxies for use at a special meeting of
shareholders, at which Park Meridian shareholders will be asked to vote to
approve the agreement and plan of merger by and between Park Meridian and
Regions.
The special meeting will be held at 9:30 a.m., local time, on _______,
2001, at Myers Park Country Club, located at 2415 Roswell Avenue, Charlotte,
North Carolina, 28209.
Park Meridian shareholders are requested promptly to sign, date, and
return the accompanying proxy card to Park Meridian in the enclosed
postage-paid, addressed envelope. Item number 1 on the proxy card is the
proposal to approve the agreement and plan of merger by and between Park
Meridian and Regions. To vote in favor of the merger by proxy you must vote
"FOR" item number 1 on the proxy card, sign the proxy card, and return it before
the special meeting. A shareholder'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.
Any Park Meridian shareholder 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 Park Meridian a signed proxy card bearing a later date, provided
that such notice or proxy card is actually received by Park Meridian before the
special meeting or in open meeting prior to the taking of the shareholder vote
at the special meeting. Any notice of revocation should be sent to Park Meridian
Financial Corporation, Post Office Box 11816, Charlotte, North Carolina, 28220,
Attention: Pamela Brady, Corporate Secretary. A proxy will not be revoked by
death of the shareholder executing the proxy, or if the shareholder becomes
incompetent after submitting a signed proxy, unless, before the vote, notice of
such death or incapacity is filed with Park Meridian's Corporate Secretary. The
shares of Park Meridian common stock represented by properly executed proxies
received at or prior to the special meeting and not subsequently revoked will be
voted as directed in such proxies. IF INSTRUCTIONS ARE NOT GIVEN, SHARES
REPRESENTED BY PROXIES RECEIVED WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND
PLAN OF MERGER 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 AGREEMENT AND PLAN OF MERGER. As of the date of this proxy
statement-prospectus, Park Meridian is unaware of any other matter to be
presented at the special meeting.
Park Meridian will solicit proxies by mail, and possibly by telephone
or telegram or in person by the directors, officers, and employees of Park
Meridian, who will receive no additional compensation for such solicitation but
may be reimbursed for out-of-pocket expenses. Park Meridian may also engage the
firm of
13
20
Georgeson Shareholder Communications, Inc., which has previously served as a
proxy solicitation agent for Park Meridian, to provide certain solicitation
services. Georgeson would be compensated at its usual and customary rates, which
are estimated to be approximately $10,000. 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.
Park Meridian shareholders should not forward any stock certificates
with their proxy cards.
RECORD DATE; VOTE REQUIRED
Park Meridian's board of directors has established the close of
business on _______, 2001, as the record date for determining the Park Meridian
shareholders entitled to notice of and to vote at the special meeting. Only Park
Meridian shareholders of record as of the record date will be entitled to vote
at the special meeting. As of the record date, there were approximately _______
holders of _______ shares of the $.01 par value common stock of Park Meridian
outstanding and entitled to vote at the special meeting. Each share is entitled
to one vote. For information as to persons known by Park Meridian to
beneficially own more than 5.0% of the outstanding shares of Park Meridian
common stock as of the record date, see "Voting Securities and Principal
Shareholders of Park Meridian."
The presence, in person or by proxy, of a majority of the outstanding
shares of Park Meridian common stock is necessary to constitute a quorum of the
shareholders. A quorum must be present before a vote on the merger can be taken
at the special meeting. For these purposes, shares of Park Meridian 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 for any reason, including broker nonvotes.
Generally, a broker who holds shares of Park Meridian common stock in "street"
name on behalf of a beneficial owner lacks authority to vote such shares in the
absence of specific voting instructions from the beneficial owner.
Once a quorum is established, approval of the agreement and plan of
merger requires the affirmative vote of the holders of a majority of the
outstanding shares of Park Meridian 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.
The directors and executive officers of Park Meridian and their
affiliates possessed or shared the power to vote, as of the record date, _______
shares, or approximately _______% of the outstanding shares, of Park Meridian
common stock. The directors of Park Meridian have agreed to vote those shares of
Park Meridian 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 Park Meridian common stock. As of that date, no subsidiary of either
Park Meridian or Regions held any shares of Park Meridian common stock as a
fiduciary for others.
THE MERGER
The following material describes certain aspects of the merger of Park
Meridian 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 agreement and plan of merger, which is attached as Appendix A to
14
21
this proxy statement-prospectus and incorporated herein by reference. All
shareholders are urged to read the Appendices in their entirety.
GENERAL
The agreement and plan of merger provides generally for the acquisition
of Park Meridian by Regions pursuant to the merger of Park Meridian 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 Park Meridian common stock (excluding shares held by Park Meridian,
Regions, or their respective subsidiaries, in each case other than shares held
in a fiduciary capacity or as a result of debts previously contracted, and
excluding all shares held by shareholders who perfect their dissenters' rights)
issued and outstanding at the time we complete the merger will be converted into
.55 of a share of the $.625 par value common stock of Regions, subject to
possible upward adjustment as described below under the caption "--Possible
Adjustment of Exchange Ratio." Each share of Regions common stock outstanding
immediately prior to the time we complete 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
Park Meridian shareholder will receive a cash payment equal to the fractional
part of a share which the shareholder would otherwise receive multiplied by the
last sale price of Regions common stock on the Nasdaq National Market (as
reported by The Wall Street Journal, or, if not reported thereby, by another
authoritative source selected by Regions), on the last trading day prior to the
date we complete the merger.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
If we complete the merger, you will receive .55 of a share of Regions
common stock in exchange for each of your shares of Park Meridian common stock
unless this exchange ratio is adjusted as described below.
If the average of the daily volume weighted averages of the trading
prices of Regions common stock for the 10 consecutive full trading days ending
at the close of trading on the second full trading day immediately prior to the
special meeting (the "average price") is less than $29.00, then the exchange
ratio will be adjusted as follows:
The exchange ratio shall be equal to the quotient obtained by dividing:
the product of $29.00 and the exchange ratio (as then in
effect)
by
the "average price."
This adjustment formula reflects the parties' intention that, for the
period of time between the date of the agreement and plan of merger and the date
of the special meeting, Park Meridian's shareholders will not bear the risk of a
decline in the market value of Regions common stock below $29.00 per share, as
measured by the "average price" over the ten-trading-day period described above.
This formula is intended to result in you receiving, in exchange for each share
of Park Meridian common stock you own, Regions common
15
22
stock having a minimum value that approximates $15.95 as of the time of the
special meeting. You should understand that this minimum amount is only an
approximation, because of the likely difference between the trading price of
Regions common stock on the date of the special meeting and the "average price"
of Regions common stock computed as described above for use in the adjustment
formula.
The operation of the formula can be illustrated by the following
examples. If the "average price" over such ten-trading-day period were $28.00
and the last sale price of Regions common stock on the date of the special
meeting were $27.50, then the following would result:
- The "average price" would be less than $29.00 so the exchange
ratio would be adjusted upward.
- The new exchange ratio computed pursuant to the formula would
be .5696.
- The value of the Regions common stock you would receive for
each share of Park Meridian common stock would equal $15.95
based on the "average price" of $28.00 but would equal $15.66
as of the date of the special meeting, based on the last sale
price of $27.50.
If the example were changed slightly to assume the same "average price"
of $28.00 but a last sale price of Regions common stock on the date of the
special meeting of $28.50 instead of $27.50, the value of the Regions common
stock you would receive for each share of Park Meridian common stock would equal
$16.23 as of the date of the special meeting.
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 Park
Meridian common stock may be more or less than the "average price" computed
prior to the special meeting as described above. We urge you to obtain current
market quotations for Regions common stock. See "Comparative Market Prices and
Dividends."
TREATMENT OF PARK MERIDIAN OPTIONS
The agreement and plan of merger provides that all rights with respect
to Park Meridian common stock pursuant to stock options or stock appreciation
rights granted by Park Meridian under its stock option plans which are
outstanding at the time we complete the merger, whether or not then exercisable,
will be converted into and will become rights with respect to Regions common
stock, and Regions will assume each of such options in accordance with the terms
of the plan under which it was issued and the agreement by which it is
evidenced. After the time we complete the merger, those options will become
options to purchase Regions common stock, with the exercise price and number of
shares of Regions common stock purchasable thereunder adjusted to reflect the
exchange ratio, as it may be adjusted. Those options that were issued as
incentive stock options will be adjusted in accordance with Section 424 of the
Internal Revenue Code in order to avoid certain tax consequences for the option
holder.
The executive officers or directors of Park Meridian held in the
aggregate exercisable options to purchase 254,114 shares of Park Meridian common
stock, as of the date of this proxy statement-prospectus.
16
23
BACKGROUND OF THE MERGER
For several years, the board of directors of Park Meridian has been
aware of emerging trends in the banking industry - the increasing incidence of
consolidation and geographic expansion, increased emphasis and reliance on
automation and technology, increased specialization of products and services,
and increased competition from non-bank financial institutions. The languishing
stock prices of most community banks have also been of concern to the board.
With these trends in mind, the board and management have periodically reviewed
and discussed, on a preliminary, informal basis, strategic plans for Park
Meridian.
During the second week of March 2001, representatives of Regions
contacted management of Park Meridian to schedule a meeting to discuss a
possible transaction involving Regions and Park Meridian. On March 19, 2001,
representatives of Regions met with Park Meridian's management in Charlotte,
North Carolina. At this meeting, representatives of Regions expressed a desire
to explore a possible acquisition of Park Meridian by Regions.
On May 9, 2001, Regions delivered a letter expressing its preliminary
interest in acquiring Park Meridian in a stock-for-stock merger, and presented
an outline of a proposed transaction. Regions and Park Meridian entered into a
confidentiality agreement dated May 14, 2001, under which Regions agreed not to
disclose any nonpublic information provided to it by Park Meridian and not to
make a public announcement of a proposal to acquire Park Meridian or purchase
any Park Meridian shares for two years unless invited to do so by Park
Meridian's board.
Park Meridian's board held a special meeting on May 17, 2001 and
authorized Park Meridian management to proceed with further negotiations. At
that point, at the advice of counsel, Park Meridian's board authorized
management to retain the services of a third-party financial advisor to advise
the board as to the fairness, from a financial point of view, of the proposed
transaction. On May 29, 2001, Park Meridian engaged The Orr Group to evaluate
the fairness, from a financial point of view, of the proposed merger to Park
Meridian's shareholders.
The parties and their respective counsel continued discussions,
negotiations, and due diligence reviews. At a special meeting on June 24, 2001,
Park Meridian's board met and reviewed and discussed the terms of the proposed
merger with Park Meridian's management and its financial advisor and counsel.
After considering the material factors described below, including the opinion of
Park Meridian's financial advisor, Park Meridian's board unanimously approved
the agreement and plan of merger with Regions and authorized it to be executed
on behalf of Park Meridian. Park Meridian and Regions executed the agreement and
plan of merger on June 26, 2001.
PARK MERIDIAN'S REASONS FOR THE MERGER
In approving the merger, the directors of Park Meridian considered a
number of factors. Without assigning any relative or specific weights to the
factors, the Park Meridian board of directors considered the following material
factors:
- the information presented to the directors by the management of Park
Meridian concerning the business, operations, earnings, asset quality,
and financial condition of Park Meridian and Regions;
- the financial terms of the merger, including the relationship of the
merger price to the book value and earnings per share of Park Meridian
common stock and the protection against a decline in the market value
of Regions common stock;
17
24
- the nonfinancial terms of the merger, including the treatment of the
merger as a tax-free exchange of Park Meridian common stock for Regions
common stock for federal and state income tax purposes;
- the likelihood of the merger being approved by applicable regulatory
authorities without undue conditions or delay;
- the opinion rendered by Park Meridian's financial advisor to the effect
that, from a financial point of view, the exchange of Park Meridian
common stock for Regions common stock on the terms and conditions set
forth in the agreement and plan of merger was as of such date fair to
the holders of Park Meridian common stock;
- the fact that shareholders of Park Meridian will receive shares of
Regions common stock, which is publicly traded on the Nasdaq National
Market, while the current public market for Park Meridian common stock
on the OTC bulletin board is not as liquid as is generally the case on
the Nasdaq National Market;
- their belief that affiliation with a larger holding company will
provide the opportunity to realize economies of scale and increase
efficiencies of operations to the benefit of shareholders and customers
and enhance the development of new products and services, the
development and provision of which are becoming increasingly difficult
to address by smaller banks;
- the potential benefits and opportunities for employees of Park
Meridian, as a result of both employment in a larger enterprise and
Regions' benefit plans and policies; and
- their belief that growth of Park Meridian without affiliation with a
larger holding company would likely be limited because of Park
Meridian's need for increasing capital resources to support that
growth.
The foregoing discussion of the information and factors considered by
the Park Meridian 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 agreement and plan of merger,
the Park Meridian 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
Park Meridian board of directors determined that the merger is in the best
interests of Park Meridian and its shareholders and unanimously approved the
agreement and plan of merger and the merger. Each member of the board of
directors of Park Meridian has agreed to vote those shares of Park Meridian
common stock over which such member has voting authority, other than as a
fiduciary, in favor of the merger and the agreement and plan of merger.
The terms of the merger were the result of arms-length negotiations
between representatives of Park Meridian and representatives of Regions. Based
upon the consideration of the foregoing factors, the board of directors of Park
Meridian unanimously approved the merger as being in the best interests of Park
Meridian and its shareholders.
18
25
PARK MERIDIAN'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT PARK
MERIDIAN SHAREHOLDERS VOTE IN FAVOR OF THE MERGER BY VOTING "FOR" APPROVAL OF
THE AGREEMENT AND PLAN OF MERGER UNDER ITEM NUMBER 1 ON THE PROXY CARD.
REGIONS' REASONS FOR THE MERGER
In approving the agreement and plan of merger and the merger, the
Regions board of directors considered a number of factors concerning the
benefits of the merger, including the following:
- Information Concerning Park Meridian: The Regions board of directors
considered information concerning the business, operations, earnings,
asset quality, and financial condition of Park Meridian, and aspects of
the Park Meridian franchise, including the market position of Park
Meridian in the market in which it operates and the compatibility of
the community bank orientation of the operations of Park Meridian to
that of Regions. The Regions board of directors concluded that Park
Meridian is a sound, well managed financial institution which is well
positioned in its market area and which presents an attractive
opportunity for Regions to expand its franchise into North Carolina as
an adjunct to its franchise in neighboring states.
- 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 Park Meridian to selected peer banks and a
comparison of pricing aspects of the merger to pricing characteristics
of other merger transactions involving financial institutions, and (4)
the anticipated accounting treatment of the merger as a purchase.
- Nonfinancial Terms of the Merger. The Regions board of directors
considered various nonfinancial aspects of the merger, including the
treatment of the merger as a tax-free exchange of Park Meridian 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 agreement and plan of merger, 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 agreement and plan of merger and
the merger.
OPINION OF PARK MERIDIAN'S FINANCIAL ADVISOR
Park Meridian retained The Orr Group on May 29, 2001, to evaluate, and
report to the board of directors of Park Meridian with respect to, the fairness,
from a financial point of view, to the shareholders of Park Meridian of the
terms of the proposed Park Meridian merger with Regions. On June 24, 2001, The
Orr Group presented its written opinion to the board of Park Meridian.
19
26
The full text of The Orr Group's opinion, which has been updated
through August 20, 2001, is attached as Appendix B hereto. This opinion includes
important information regarding the procedures followed, assumptions made,
matters considered and qualification and limitation on the review undertaken by
The Orr Group in connection with its opinion. Park Meridian's shareholders are
urged to read the opinion in its entirety.
The Orr Group's opinion to Park Meridian's board of directors on the
Park Meridian merger is directed only to the Park Meridian exchange ratio. The
Orr Group's opinion does not constitute a recommendation to any shareholder of
Park Meridian as to how such shareholder should vote at the Park Meridian
special meeting.
Park Meridian selected The Orr Group as its investment banker on the
basis of its expertise in merger and acquisition advisory services. The Orr
Group is an investment banking firm whose principals have over 75 years of
combined banking experience and have been involved with over 40 bank related
mergers and acquisitions.
Park Meridian imposed no limitations on The Orr Group with respect to
rendering its opinion.
In arriving at its opinion, The Orr Group reviewed, among other things:
(1) the agreement and plan of merger; (2) certain publicly available information
concerning Park Meridian and Regions, including Annual Reports on Form 10-KSB of
Park Meridian and Annual Reports on Form 10-K of Regions for each of the years
in the three year period ended December 31, 2000, and the Quarterly Report on
Form 10-QSB for Park Meridian and the Quarterly Report on Form 10-Q for Regions
for the quarter ended June 30, 2001; (3) certain available financial forecasts
concerning the business and operations of Park Meridian and Regions,
respectively; and (4) certain publicly available information with respect to
other companies that The Orr Group believes to be comparable in certain respects
to Park Meridian and Regions and the trading markets for such other companies'
securities.
In The Orr Group's review and analysis, The Orr Group assumed and
relied upon the accuracy and completeness of all of the financial and other
information that was provided to The Orr Group or publicly available, and has
not attempted independently to verify nor assumed responsibility for verifying
any such information. With respect to the financial projections, The Orr Group
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of Park Meridian or Regions, as the
case may be, and The Orr Group expresses no opinion with respect to such
forecasts or the assumptions on which they are based. The Orr Group has not made
or obtained or assumed any responsibility for making or obtaining any
independent evaluations or appraisals of any of the assets (including properties
and facilities) or liabilities of Park Meridian or Regions.
The following summary does not purport to be a complete description of
the analyses performed or the matters considered by The Orr Group in arriving at
its opinion.
In addressing the fairness, from a financial point of view, of the
consideration to be issued by Regions to the shareholders of Park Meridian, The
Orr Group addressed certain issues relating to the financial fairness of the
proposed merger, including: (1) how the merger compares to similar bank
transactions; (2) the financial impact of the merger to the current shareholders
of Park Meridian; and (3) whether Regions' operations and currency are of
similar value to other acquirors in similar transactions. To address the impact
of the proposed merger transaction, The Orr Group reviewed analyses of recently
announced bank acquisitions, Park Meridian's contribution to the new combined
entity, The Orr Group's analysis of
20
27
stockholders' claims on the new entity, a present value analysis of Park
Meridian's common stock on a stand-alone basis, and Regions' operations and
stock compared to its peers. In summary, The Orr Group reached the conclusions
that the proposed merger transaction is comparable to similar bank transactions,
the financial impact to the current shareholders of Park Meridian is positive
and fair, and Regions' operations and stock are well within the range of
comparable acquirors in the industry.
The Orr Group employed a variety of methodologies in its analyses,
including analyses of the financial impact of the transaction based on a pro
forma contribution analysis, a shareholder's claims analysis, and a discounted
dividend analysis. The pro forma contribution analysis looked at the financial
impact of the Park Meridian merger on certain balance sheet and income statement
items. Such analysis included calculations, among others, that showed the
percentage contributions of Park Meridian and Regions to the total equity
capital of the combined entities would be .6% and 99.4%, respectively; and the
percent of contribution to market capitalization at August 20, 2001 would be .6%
by Park Meridian and 99.4% by Regions.
Shareholder's Claims Analysis. In its shareholder's claims analysis,
The Orr Group calculated an earnings per share claims analysis and concluded
that the merger would result in an increase of 21.3% in the expected 2001
earnings per share of $1.00 for Park Meridian. The Orr Group also performed a
dividend claims analysis as part of its shareholder's claims analysis and
concluded that, based on Regions' second quarter dividend of $.28 per share of
Regions' common stock, the new equivalent dividend per share for Park Meridian
would increase from 0 to $.15.
Discounted Dividend Analysis. The Orr Group's discounted dividend
analysis compared the value of Park Meridian's current share value to the value
it will receive in the exchange for share of Regions common stock. Park Meridian
provided The Orr Group estimated earnings data for 2001 and 2002 and the basis
for these estimates. The Orr Group discounted the dividends at rates of 13%,
15%, and 17% and assumed a take-out value at the end of year five based on
price-to-earnings multiples of 13, 15, and 17. The discounted values ranged from
a low of $11.50 per share to a high of $17.50 per share. The analysis revealed
that the offer from Regions, $17.38 per share (based on the last sale price of
Regions common stock on August 17, 2001), is higher than the stock price of
holding the share of Park Meridian common stock.
Comparable Bank Transactions Analysis. The Orr Group reviewed 25
comparable bank transactions announced since June 30, 2000 involving sellers
with assets between $200-$750 million. The Orr Group noted the prices paid in
these mergers as a multiple of book values and earnings, as well as reviewing
other data, including the amount of total assets, the return on average assets
and the return on average earnings of the acquired institutions. The Orr Group
then compared this data to corresponding information regarding Park Meridian and
the value to be received by Park Meridian shareholders in the proposed merger.
The comparable bank transactions showed a range of transaction values
as multiples of book value per share of a low of 1.1 times to a high of 3.7
times and an average of 2.0 times. The range of transaction values as multiples
of earnings per share revealed a low of 10.8 times, a high of 45.3 times and an
average of 17.5 times. The Park Meridian acquisition multiple of book value was
2.0 times and the multiple of earnings per share was 17.6 times.
As The Orr Group noted, no company or transaction used in the above
analyses as a comparison is identical to Park Meridian, Regions or the proposed
merger. Accordingly, an analysis of the results of the
21
28
foregoing comparisons necessarily involves complex considerations and judgments
concerning differences in the financial growth and operating characteristics of
Park Meridian, Regions, and the companies to which they are being compared, as
well as other factors that could affect the public trading value of the
companies. Mathematical analysis in and of itself does not necessarily provide
meaningful intercompany comparisons.
The Orr Group will be paid a fee in connection with the proposed
merger. The payment of that fee is contingent upon completion of the merger. In
addition, Park Meridian has agreed to reimburse legal and other reasonable
expenses and to indemnify The Orr Group and its affiliates, directors, agents,
employees and controlling persons in connection with certain matters related to
rendering its opinion, including liabilities under securities laws.
THE WRITTEN FAIRNESS OPINION OF THE ORR GROUP TO PARK MERIDIAN IS ATTACHED AS
APPENDIX B TO THIS PROXY STATEMENT-PROSPECTUS AND IS INCORPORATED HEREIN BY
REFERENCE. THIS DESCRIPTION OF THE FAIRNESS OPINION IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO APPENDIX B. PARK MERIDIAN SHAREHOLDERS ARE URGED TO READ THE
OPINION IN ITS ENTIRETY FOR A DESCRIPTION OF THE PROCEDURES FOLLOWED,
ASSUMPTIONS MADE, MATTERS CONSIDERED, AND QUALIFICATIONS AND LIMITATIONS ON THE
REVIEW UNDERTAKEN BY THE ORR GROUP IN CONNECTION WITH RENDERING ITS OPINION.
22
29
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
articles of merger with the Secretary of State of North Carolina. The merger
will be 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
declared effective by the Delaware Secretary of State and the North Carolina
articles of merger have been accepted for filing by the North Carolina Secretary
of State. Unless otherwise agreed upon by Regions and Park Meridian, 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
agreement and plan of merger is approved by the requisite vote of Park Meridian
shareholders.
No assurance can be provided that the necessary shareholder and
regulatory approvals can be obtained or that other conditions precedent to the
merger can or will be satisfied. Regions and Park Meridian 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 Park Meridian generally may
terminate the agreement and plan of merger if the merger is not completed by
December 31, 2001, unless the failure to complete by that date is the result of
a breach of the agreement and plan of merger 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 we complete the merger, Regions will cause an exchange
agent selected by Regions to mail to the former shareholders of Park Meridian a
form letter of transmittal, together with instructions for the exchange of such
shareholders' certificates representing shares of Park Meridian common stock for
certificates representing shares of Regions common stock.
PARK MERIDIAN SHAREHOLDERS 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 Park Meridian common stock, together with
a properly completed letter of transmittal, there will be issued and mailed to
each holder of Park Meridian 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 we complete
the merger, to the extent permitted by law, Park Meridian shareholders of record
as of the time we complete the merger 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 Park Meridian common stock has been converted, regardless
of whether such shareholders have surrendered their Park Meridian common stock
certificates. No dividend or other distribution payable after the time we
complete the merger with respect to Regions common stock, however, will be paid
to the holder of any unsurrendered Park Meridian certificate until the holder
duly surrenders such certificate. Upon such surrender, all undelivered dividends
23
30
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 shareholder,
in each case without interest.
After the time we complete the merger, a Park Meridian shareholder will
be unable to transfer shares of Park Meridian common stock. If a certificate
representing shares of Park Meridian 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:
- approval from the Board of Governors of the Federal Reserve System and
the expiration of all applicable waiting periods associated with such
approval, without any conditions or restrictions (excluding
requirements relating to the raising of additional capital or the
disposition of assets or deposits) that would, in the reasonable good
faith judgment of Regions' board of directors, so materially adversely
impact the economic or business benefits of the transactions
contemplated by the agreement and plan of merger as to render
inadvisable the completion of the merger;
- the approval by the holders of the requisite number of shares of Park
Meridian common stock;
- the absence of any action by any court, or governmental authority, or
regulatory authority with appropriate jurisdiction restricting,
prohibiting, or making illegal the completion of the merger and the
other transactions contemplated by the agreement and plan of merger;
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 Park Meridian common stock for Regions common stock
will not give rise to recognition of gain or loss to Park Meridian
shareholders, except to the extent of any cash received instead of
fractional shares.
Completion of the merger also is subject to the satisfaction or waiver
of various other conditions specified in the agreement and plan of merger which
are customary in transactions of this nature. Such conditions include the
delivery by Regions and Park Meridian of certificates executed by their
respective duly authorized officers as to the satisfaction of certain conditions
and obligations set forth in the agreement and plan of merger. Also, the
accuracy of certain representations and warranties and the compliance in all
material respects with the agreements and covenants of each party are conditions
to completion of the merger.
REGULATORY APPROVALS
The merger may not proceed in the absence of the requisite regulatory
approvals. There can be no assurance that such regulatory approvals will be
obtained or as to the timing of such approvals. It is also possible that any
such approval may be accompanied by a conditional requirement which causes such
approvals to fail to satisfy the conditions set forth in the agreement and plan
of merger. Applications for the approvals described below have been submitted to
the appropriate regulatory agencies.
24
31
Regions and Park Meridian 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.
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 review and approval of the North Carolina
Commissioner of Banks.
WAIVER, AMENDMENT, AND TERMINATION OF THE AGREEMENT AND PLAN OF MERGER
Prior to the time we complete the merger, and to the extent permitted
by law, any provision of the agreement and plan of merger generally may be (1)
waived by the party benefited by the provision or (2) amended by a written
agreement between Regions and Park Meridian approved by their respective boards
of directors; provided, however, that after approval by the Park Meridian
shareholders, no amendment that pursuant to the North Carolina Business
Corporation Act requires further approval of the Park Meridian shareholders,
including modifying the terms and conditions of the merger or the identity of
the surviving corporation, may be made without the further approval of such
shareholders.
The agreement and plan of merger may be terminated, and the merger
abandoned, at any time prior to the time we complete the merger, either before
or after approval by Park Meridian shareholders, under certain circumstances,
including:
- by mutual consent of the boards of directors of Regions and Park
Meridian;
- 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 Park Meridian common stock do not approve
the agreement and plan of merger at the Park Meridian special meeting;
- 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 agreement and plan of merger),
25
32
in the event of any inaccuracy in any representation or warranty by the
other party which meets certain standards specified in the agreement
and cannot be or has not been cured within 30 days after the giving of
written notice to the breaching party;
- 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 agreement and plan of merger), in the event of a
material breach by the other party of any covenant or agreement
included in the 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 December 31, 2001, but only if the failure to
complete the merger by such date has not been caused by the terminating
party's breach of the agreement and plan of merger.
If the agreement and plan of merger is terminated, the parties will
have no further obligations, except with respect to certain provisions,
including those providing for payment of expenses and restricting disclosure of
confidential information. Further, termination generally will not relieve the
parties from the consequences of any uncured willful breach of the agreement and
plan of merger giving rise to such termination.
CONDUCT OF BUSINESS PENDING THE MERGER
Each of Park Meridian 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,
unless required to do so by law, which would materially adversely affect the
ability of either party to obtain any consents required for the merger or to
perform its covenants and agreements under the agreement and plan of merger and
to complete the merger. However, Regions and its subsidiaries are not prevented
from discontinuing or disposing of any of its assets or business. Nor is Regions
prevented from acquiring or agreeing to acquire any other entity or any assets
thereof, if such action is, in the judgment of Regions, desirable in the conduct
of the business of Regions and its subsidiaries. In addition, the agreement and
plan of merger includes certain other restrictions applicable to the conduct of
the business of Park Meridian prior to completion of the merger, as described
below.
Park Meridian. Park Meridian 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 Park Meridian has agreed not to take are
subject in some cases to exceptions for actions in the ordinary course of
business consistent with Park Meridian's past practice or subject to exceptions
expressly recognized in the agreement and plan of merger. The specific
agreements not to take certain actions, including the exceptions and
contractually permitted actions, are set forth in the agreement and plan of
merger, which is attached as Appendix A. See Article 7 of the agreement and plan
of merger. The actions Park Meridian has agreed not to take are in the general
categories of:
- amending its articles of incorporation, bylaws, or other governing
instruments or the governing instruments of its subsidiaries;
- incurring indebtedness in excess of $500,000 or incurring material
liens;
26
33
- acquiring any of its outstanding shares of stock or the shares of stock
of its subsidiaries or making distributions with respect to its
outstanding shares;
- issuing additional securities;
- reclassifying capital stock or selling or encumbering assets;
- 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, Park Meridian has agreed not to solicit, directly or
indirectly, encourage, or knowingly facilitate any acquisition proposal from any
other person. Park Meridian also has agreed not to negotiate with any other
person with respect to any such proposal, provide nonpublic information to any
party making such a proposal, unless its board of directors concludes in good
faith and consistent with its fiduciary duties that such proposal could
reasonably be expected to result in an acquisition proposal that is superior to
the proposed merger with Regions. In such a case, Park Meridian's board must
notify Regions, prior to providing information to, or entering into negotiations
with, such other person, of the name of the person making the proposal and the
material terms of the proposal. In addition, Park Meridian 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" on page 59.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The agreement and plan of merger generally provides that Regions will
indemnify and hold harmless each person entitled to indemnification from Park
Meridian or any of its subsidiaries to the full extent permitted by law, for a
period of six years from the time we complete the merger with respect to matters
occurring at or prior to the time we complete the merger.
27
34
The agreement and plan of merger also provides that, after the time we
complete the merger, Regions will provide generally to officers and employees of
Park Meridian 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 Park Meridian or its subsidiaries prior to
the time we complete the merger will be treated as service with Regions or its
subsidiaries. The agreement and plan of merger further provides that Regions
will cause Park Meridian to honor all employment, severance, consulting, and
other compensation contracts previously disclosed to Regions between Park
Meridian or its subsidiaries and any current or former director, officer, or
employee, and all provisions for vested amounts earned or accrued through the
time we complete the merger under Park Meridian's benefit plans.
Kevin T. Kennelly, President of Park Meridian and Park Meridian Bank,
and Regions have agreed that, contingent upon completion of the merger, Mr.
Kennelly's existing employment agreement with Park Meridian Bank will be amended
to provide that he will continue employment with Regions after the merger.
Pursuant to the amendment, for a period of at least five years after the merger
Mr. Kennelly will be entitled to an annual base salary and bonus of at least
$200,000.
Bryan F. Kennedy III, Executive Vice President of Park Meridian Bank,
and Regions have agreed that, contingent upon completion of the merger, Mr.
Kennedy's existing employment agreement with Park Meridian Bank will be amended
to provide that he will continue employment with Regions after the merger.
Pursuant to the amendment, for a period of at least three years after the merger
Mr. Kennedy will be entitled to an annual base salary and bonus of at least
$175,000.
The amended employment agreements will also provide that both Mr.
Kennelly and Mr. Kennedy will be entitled to participate in all of Regions'
executive incentive compensation programs and all savings and retirement plans,
policies, and programs applicable generally to other employees of Regions
holding comparable positions. In addition, upon completion of the merger Mr.
Kennelly will be granted 15,000 stock options and Mr. Kennedy will be granted
10,000 stock options under Regions' long term incentive plan. The options will
vest ratably over the first, second, and third year following the merger. In
both cases the options will have an exercise price equal to the fair market
value of Regions common stock on the date of the grant. Park Meridian's board
reviewed the terms of these amended employment agreements at its June 24 meeting
to consider the merger with Regions and approved each of the agreements subject
to the completion of the merger.
As described above under " -Treatment of Park Meridian Options," the
agreement and plan of merger also provides that all rights with respect to Park
Meridian common stock pursuant to stock options or stock appreciation rights
granted by Park Meridian under its stock option and other stock-based
compensation plans which are outstanding at the time we complete the merger,
whether or not then exercisable, will immediately vest, will be converted into
and will become rights with respect to Regions common stock, and Regions will
assume each of such options in accordance with its terms.
As of the record date, directors and executive officers of Park
Meridian owned no shares of Regions common stock.
28
35
DISSENTING SHAREHOLDERS
Article 13 of the North Carolina Business Corporation Act (a copy of
which is attached as Appendix C to this proxy statement-prospectus) governs the
rights of Park Meridian shareholders who may desire to dissent from the merger
and obtain a cash payment for the fair value of their Park Meridian common
stock.
If the merger is completed, any holder of record of Park Meridian
common stock who
- gives to Park Meridian written notice of such holder's intent to demand
payment for such holder's shares, which notice must be given by the
shareholder and actually received by Park Meridian prior to the vote at
the special meeting on the agreement and plan of merger, and
- does not vote in favor of the agreement and plan of merger, and
- complies in all respects with the statutory requirements summarized
below
shall be entitled to receive, in cash, the fair value of such holder's shares
plus interest accrued from the effective date of the merger to the date of
payment. The "fair value" of such shares as finally determined under such
statutory requirements may be more or less than the value of the Regions common
stock that will be paid in respect of Park Meridian shares held by
non-dissenting shareholders in the Merger. Failure to follow the prescribed
statutory requirements precisely may result in loss of the right to dissent and
receive payment.
For purposes of the governing statute and this discussion of the North
Carolina dissent procedure, the term "Corporation" refers to Park Meridian prior
to the effective date of the merger or Regions as the surviving corporation
after the effective date of the merger, as the case may be.
A shareholder of record may assert dissenters' rights as to fewer than
all the shares registered in such holder's name only if such holder dissents
with respect to all shares beneficially owned by any one person and such holder
notifies the Corporation in writing of the name and address of each person on
whose behalf such holder asserts dissenters' rights. The rights of a partial
dissenter are determined as if the shares as to which such holder dissents and
such holder's other shares were registered in the names of different
shareholders. A beneficial owner may assert dissenters' rights as to shares held
on his behalf only if he: (1) submits to the Corporation the record
shareholder's written consent to the dissent not later than the time the
beneficial shareholder asserts dissenters' rights and (2) asserts dissenters'
rights with respect to all shares of which he is the beneficial owner.
The written notice requirement referred to above will not be satisfied
under the North Carolina statutory provisions by merely voting against approval
of the agreement and plan of merger by proxy or in person at the special
meeting. In addition to not voting in favor of the agreement and plan of merger,
a shareholder wishing to preserve the right to dissent and seek appraisal must
give, and the Corporation must receive before the vote on the merger is taken, a
separate written notice of such holder's intent to demand payment for such
holder's shares if the merger is completed, as provided by statute and described
in this summary of the statute.
29
36
Any written notice of intent to demand payment satisfying the
requirements discussed above should be addressed as follows: Park Meridian
Financial Corporation, Post Office Box 11816, Charlotte, North Carolina 28220,
Attention: Kevin T. Kennelly.
If the merger is approved at the special meeting, the Corporation must
deliver a written notice of such approval, referred to as the dissenters'
notice, to all holders of Park Meridian common stock who satisfied the foregoing
requirements within 10 days of such approval.
Any shareholder who receives such dissenters' notice and elects to
dissent must file with the Corporation, within a time period to be selected by
the Corporation but not fewer than 30 days or more than 60 days after the date
the dissenters' notice is mailed, a notice of such election. The dissenting
shareholder should give notice of election to dissent by completing the form for
demanding payment that will be included with the dissenter's notice. Any
shareholder failing to file such election to dissent within the period set forth
shall be bound by the terms of the merger. Any shareholder filing an election to
dissent must deposit such holder's certificates for certificated shares with the
Corporation simultaneously with the filing of the election to dissent.
At the completion of the merger or within 30 days after the
Corporation's receipt of a payment demand, the Corporation shall pay each
dissenting shareholder who has made demand, as described in the preceding
paragraph, an amount the Corporation estimates to be the fair market value for
such shares, plus interest accrued to the date of payment. The Corporation may
not wait for a final agreement on value before making payment, and the
shareholder has the immediate use of the amount determined by the Corporation to
represent fair value without waiting for the conclusion of appraisal
proceedings. The payment shall be accompanied by specified financial
information. If the dissenting shareholder decides to accept the payment in full
satisfaction, the holder shall cease to have any interest in such shares.
Under certain circumstances a dissenting shareholder may notify the
Corporation in writing of the holder's own estimate of the fair value of the
holder's shares and amount of interest due, and demand payment of the amount in
excess of the payment made by the Corporation. A dissenting shareholder may take
this action if:
- the holder believes that the amount paid by the Corporation is less
than the fair value of the holder's shares or that the interest due is
incorrectly calculated;
or
- the Corporation fails to make timely payment of its calculation of the
fair value of the holder's shares; or
or
- the Corporation, having failed to effectuate the proposed merger, does
not return the deposited certificates within 60 days after the date set
for demanding payment.
A dissenting shareholder waives this right to demand payment unless the
holder notifies the Corporation of his demand in writing either within 30 days
after the Corporation made payment for the holder's shares or within 30 days
after the Corporation has failed to perform timely. The failure to notify
30
37
the Corporation of the holder's demand within such 30-day period shall be deemed
as a withdrawal of the holder's dissent and demand for payment.
If a demand for payment made pursuant to the previous paragraph remains
unsettled, the dissenting shareholder may commence a proceeding within 60 days
after the earlier of the date the Corporation made payment of its determination
of the shares' fair value and accrued interest or the date of the dissenting
shareholder's payment demand for the holder's determination of the shares' fair
value and accrued interest. The dissenting shareholder should file a complaint
with the Superior Court Division of the General Court of Justice to determine
the fair value of the shares and accrued interest. The failure to take action
within such 60-day period shall be deemed as a withdrawal of the holder's
dissent and demand for payment.
The court shall have the discretion to make all dissenting shareholders
(whether or not residents of North Carolina) whose demands remain unsettled
parties to the proceeding as in an action against their shares. All parties must
be served with a copy of the complaint in a specified manner.
The jurisdiction of the court is plenary and exclusive. The court may
appoint one or more persons as appraisers to receive evidence and recommend a
decision on the question of fair value. The appraisers shall have such power and
authority as is specified in the order of their appointment or an amendment
thereof. The parties are entitled to the same discovery rights as parties in
other civil proceedings. The proceeding shall be tried as in other civil
actions. However, because Park Meridian is a public corporation, there is no
right to a trial by jury.
Each dissenting shareholder made party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds the fair value of his
shares, plus interest, exceeds the amount paid by the Corporation. Upon payment
of the judgment, the dissenting shareholder shall cease to have any interest in
such shares.
The court in an appraisal proceeding shall determine all costs of the
proceeding, including reasonable compensation and expenses of appraisers
appointed by the court, and shall assess the costs as it finds equitable. The
court may also assess the fees and expenses of counsel and experts for the
respective parties, in amounts the court finds equitable. If the court finds the
Corporation did not substantially comply with the requirements of notifying
shareholders that the proposed merger would create dissenters' rights, the fees
and expenses of counsel and experts may be assessed against the Corporation and
in favor of any or all dissenting shareholders. If the court finds that a party
acted arbitrarily, vexatiously or not in good faith, the fees and expenses of
counsel and experts may be assessed against that party. If the court finds that
the services of counsel for any dissenting shareholder were of substantial
benefit to other dissenting shareholders similarly situated, and that the fees
for those services should not be assessed against the Corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenting shareholders who were benefited.
The foregoing is a summary of the material rights of a dissenting
shareholder of Park Meridian, but is qualified in its entirety by reference to
the pertinent provisions of the North Carolina Business Corporation Act,
included as Appendix C to this proxy statement--prospectus. Any Park Meridian
shareholder who intends to dissent from approval of the agreement and plan of
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
Park Meridian shareholders, except as indicated above or otherwise required by
law.
31
38
Any dissenting Park Meridian shareholder 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 PARK MERIDIAN COMMON STOCK. THIS
DISCUSSION MAY NOT APPLY TO SHAREHOLDERS WHO HAVE SPECIAL SITUATIONS, SUCH AS
PARK MERIDIAN SHAREHOLDERS, IF ANY, WHO HOLD PARK MERIDIAN COMMON STOCK OTHER
THAN AS A CAPITAL ASSET, WHO RECEIVED PARK MERIDIAN COMMON STOCK UPON THE
EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, WHO HOLD PARK
MERIDIAN COMMON STOCK AS PART OF A "STRADDLE" OR "CONVERSION TRANSACTION," OR
WHO ARE INSURANCE COMPANIES, SECURITIES DEALERS, FINANCIAL INSTITUTIONS OR
FOREIGN PERSONS. THIS DISCUSSION DOES NOT ADDRESS 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 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
Park Meridian 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
agreement and plan of merger and upon factual statements and factual
representations made by Regions and Park Meridian, 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 Park Meridian
common stock who exchange all of their Park Meridian 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 Park Meridian
common stock who exchange all of their Park Meridian common stock solely for
Regions common stock in the merger will be the same as the tax basis of the Park
Meridian 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 Park Meridian
common stock who exchange all of their Park Meridian common stock solely for
Regions common stock in the merger will be the same as the holding period of the
Park Meridian common stock surrendered in exchange therefor, provided that such
Park Meridian common stock is held as a capital asset at the effective time of
the merger.
5. The payment of cash to holders of Park Meridian 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
32
39
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 Park Meridian common
stock in exchange for Park Meridian common stock pursuant to the exercise of
dissenters' rights, such cash will be treated as having been received in
redemption of such holder's Park Meridian 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. PARK MERIDIAN SHAREHOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF THE PROPOSED
TRANSACTION TO THEM INDIVIDUALLY, INCLUDING TAX REPORTING REQUIREMENTS AND TAX
CONSEQUENCES UNDER STATE, LOCAL, AND FOREIGN LAW.
ACCOUNTING TREATMENT
It is anticipated that the merger will be accounted for as a
"purchase," as that term is used pursuant to 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 Park
Meridian as of the time we complete 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 Park Meridian.
EXPENSES AND FEES
The agreement and plan of merger provides, in general, that each of the
parties will bear and pay its own expenses in connection with the transactions
contemplated by the agreement, including fees and expenses of its own financial
or other consultants, investment bankers, accountants, and counsel, except that
Regions will bear and pay 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 Park Meridian shareholders 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, Park Meridian (such persons are
referred to hereinafter as "affiliates" and generally include executive
officers, directors, and 10% shareholders) 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 time we complete the merger, affiliates of Park Meridian 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
33
40
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 time we complete the merger, affiliates of Park Meridian 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 Park Meridian who are not affiliates of Regions may resell their
shares without restriction. Persons who are affiliates of Regions after the time
we complete 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 Park Meridian or Regions.
Each person who Park Meridian reasonably believes is an affiliate of
Park Meridian 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
STOCK OPTION AGREEMENT
As an inducement and a necessary condition to Regions entering into the
agreement and plan of merger, Park Meridian and Regions entered into an option
agreement, pursuant to which Park Meridian granted Regions an option entitling
it to purchase up to 556,816 shares (representing approximately 19.9% of the
shares of Park Meridian common stock issued and outstanding before giving effect
to the issuance of additional shares of Park Meridian common stock pursuant to
the exercise of such option) of Park Meridian common stock under the
circumstances described below, at a cash price per share equal to $13.50,
subject to possible adjustment in certain circumstances. In no event, however,
shall Regions' total profit (defined in the option agreement generally as the
net amount realizable by Regions upon transfer or sale of the shares acquired
upon exercise of the option or of the option itself, including, without
limitation, transfer of the option back to Park Meridian) exceed $2.0 million.
This description of the option agreement and the option does not purport to be
complete and is qualified in its entirety by reference to the option agreement,
which is filed as an exhibit to the registration statement of which this proxy
statement-prospectus forms a part.
Exercise of the Option. Regions may exercise the option, in whole or in
part, at any time, from time to time, if, but only if, a purchase event (as
explained below) occurs prior to the option's termination. However, Regions
cannot exercise the option if any court of competent jurisdiction in the United
States has issued a preliminary or permanent injunction or other order against
the delivery of the shares of Park Meridian common stock covered by the option
and the injunction or order is in effect. Also, Regions cannot exercise the
option if Regions is in material breach of any of the agreements or covenants
included in the option agreement or the agreement and plan of merger. As defined
in the option agreement, a "purchase event" that would give Regions the right to
exercise the option means any of the following events:
34
41
- without Regions' prior written consent, Park Meridian authorizing,
recommending, publicly proposing, or publicly announcing an intention
to authorize, recommend or propose or entering into an agreement with
any third party to effect any of the following:
- a merger, consolidation, or similar transaction involving Park
Meridian or any of its subsidiaries
(other than transactions solely between Park
Meridian's subsidiaries and transactions involving
Park Meridian or any of Park Meridian's subsidiaries
in which the voting securities of Park Meridian
outstanding immediately prior thereto continue to
represent at least 75% of the combined voting power
of the voting securities of Park Meridian or the
surviving entity or the parent thereof outstanding
immediately after the completion of the transaction),
- the disposition, by sale, lease, exchange, or otherwise, of
20% or more of the consolidated assets of Park Meridian and
its subsidiaries, except as permitted by the agreement and
plan of merger, or
- the issuance, sale, or other disposition (including by way of
merger, consolidation, share exchange, or any similar
transaction) of securities representing 20% or more of the
voting power of Park Meridian or any of its subsidiaries; or
- any person (other than Regions or any subsidiary of Regions) acquiring
beneficial ownership (as such term is defined in Rule 13d-3 promulgated
under the Securities Exchange Act of 1934), or the right to acquire
beneficial ownership of, or the formation of any "group" (as defined
under the Exchange Act), other than a group of which Regions or any
Regions subsidiary is a member, that beneficially owns or has the right
to acquire beneficial ownership of 20% or more of the outstanding
shares of Park Meridian common stock.
After the occurrence of a purchase event, Regions may assign the option
agreement and its rights thereunder in whole or in part.
Termination of the Option. The option will terminate upon the earliest
of the following:
- the time we complete the merger;
or
- 12 months after termination of the agreement and plan of merger by
Regions pursuant to a "default termination," meaning a termination of
the agreement under certain circumstances involving generally a willful
breach by Park Meridian of a representation or warranty contained in
the agreement and plan of merger or a material breach by Park Meridian
of a covenant contained in the agreement;
or
- 12 months after termination of the agreement and plan of merger
following the occurrence of a preliminary purchase event or a purchase
event;
35
42
As defined in the option agreement, a "preliminary purchase event"
includes either of the following events:
- commencement or filing of a registration statement under the
Securities Act by any third party of a tender offer or
exchange offer to purchase any shares of Park Meridian common
stock such that, upon completion of such offer, such person
would own or control 15% or more of the then outstanding
shares of Park Meridian common stock; or
- failure of the holders of Park Meridian common stock to
approve the agreement and plan of merger at the Park Meridian
special meeting, the failure to hold the Park Meridian special
meeting or another shareholder meeting for the purpose of
voting on the agreement and plan of merger, or the
cancellation of such meeting prior to termination of the
agreement and plan of merger, or the withdrawal or
modification by the Park Meridian board of directors in a
manner adverse to Regions of the recommendation of the Park
Meridian board with respect to the agreement and plan of
merger, in each case, after public announcement that a third
party (1) made a proposal to engage in an acquisition
transaction, (2) commenced a tender offer or filed a
registration statement under the Securities Act with respect
to an exchange offer, or (3) filed an application or gave a
notice in draft or final form under any federal or state
statute or regulation for approval or consent to engage in an
acquisition transaction.
or
- termination of the agreement and plan of merger, other than a default
termination, in accordance with the terms thereof prior to the
occurrence of a preliminary purchase event or a purchase event.
Substitute Option. The option agreement includes provisions that
entitle Regions to request a substitute option under the circumstances described
below. These provisions are intended to ensure that the value of the option to
Regions will not be diminished if Park Meridian agrees to an acquisition
transaction in which Park Meridian is not the surviving corporation, in which
the value of Park Meridian's common shares is fundamentally altered, or in which
Park Meridian's business is transferred to another party.
Regions may request a substitute option if Park Meridian agrees to one
of the following:
- a merger or consolidation with a party other than Regions in which Park
Meridian does not survive,
- a merger in which Park Meridian is the surviving corporation but Park
Meridian's common shares end up representing less than 50% of the
ownership interests of the merged company, or
- a sale of all or substantially all of Park Meridian's assets.
The substitute option provisions require that, while the option is
outstanding, any agreement by Park Meridian relating to one of these
transactions must allow Regions to receive a new option when the transaction is
completed and must require the acquiring corporation, or any person controlling
the
36
43
acquiring corporation, as applicable, to enter into a new option agreement with
Regions. The new option is referred to as a "substitute option" because it
substitutes for the existing option.
In connection with the issuance of a substitute option, Regions can
select the common shares of any of the following to be subject to the option,
although not all may apply to any particular transaction:
- the continuing or surviving person of a consolidation or merger with
Park Meridian in which Park Meridian does not survive,
- Park Meridian in a merger in which Park Meridian is the surviving
corporation,
- the transferee of all or substantially all of the assets of Park
Meridian or any of its significant subsidiaries, or
- any person that controls any of the entities described above.
The substitute option shall have the same terms as the option, provided
that, if the terms of the substitute option cannot, for legal reasons, be the
same as the option, such terms shall be as similar as possible and in no event
less advantageous to Regions. The substitute option will be exercisable for a
number of shares and at an exercise price calculated based upon a formula
intended to reflect the value assigned to Park Meridian's common stock, or
assets as the case may be, in the acquisition transaction.
If the exercise price of the original option is less than the market or
offer price for shares of Park Meridian's common stock, the adjustments
discussed above will result in the substitute option having a higher financial
value, measured at the time of exercise, than the original option-subject in
all cases to the $2.0 million limit on total profit. The board of directors of
Park Meridian considered this feature and believed it to be appropriate because
it concluded that $2.0 million in total profit represented an appropriate
amount to increase the likelihood that the merger will be completed and to
compensate Regions for its efforts and its expenses and losses if the merger is
not completed.
Park Meridian's Contingent Repurchase Obligation. Upon the occurrence
of a repurchase event (as explained below) that occurs prior to the exercise or
termination of the option, at the request of Regions, delivered within 18 months
of the repurchase event, Park Meridian will, subject to regulatory restrictions,
be obligated to repurchase the option and any shares of Park Meridian common
stock purchased pursuant to the option agreement at a specified price.
As defined in the option agreement, a "repurchase event" includes
either of the following events:
- any person (other than Regions or any Regions subsidiary) shall have
acquired beneficial ownership (as such term is defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934), or the right to
acquire beneficial ownership, or any "group" (as such term is defined
under the Exchange Act) shall have been formed which beneficially owns
or has the right to acquire beneficial ownership of 50% or more of the
then outstanding shares of Park Meridian common stock, or
- Park Meridian completes a transaction of one of the three types
described above as would give rise to a substitute option.
37
44
Registration Rights. Upon the occurrence of certain events, Park
Meridian has agreed to file with the SEC and to cause to become effective
certain registration statements under the Securities Act with respect to
dispositions by Regions and its assigns of all or part of the option and/or any
shares of Park Meridian common stock into which the option is exercisable.
Adjustment of Option Terms. In the event of any change in Park Meridian
common stock by reason of a stock dividend, stock split, split-up,
recapitalization, combination, exchange of shares, or similar transaction, the
type and number of securities subject to the option, and the purchase price
therefor shall be adjusted appropriately. In the event that any additional
shares of Park Meridian common stock are issued (other than pursuant to an event
described in the preceding sentence), the number of shares of Park Meridian
common stock subject to the option will be adjusted so that, after such
issuance, it, together with any shares of Park Meridian common stock previously
issued pursuant to the option agreement, equals the lesser of (1) 19.9% of the
number of shares of Park Meridian common stock then issued and outstanding,
without giving effect to any shares subject to or issued pursuant to the option,
and (2) that minimum number of shares of Park Meridian common stock which, when
aggregated with any other shares of Park Meridian common stock beneficially
owned by Regions or any affiliate of Regions, would cause the provisions of any
North Carolina takeover laws to be applicable to Regions' ownership of Park
Meridian common stock.
Purpose of Option Agreement. The option agreement is intended to have
the effect of discouraging persons who might now or at any other time prior to
the time we complete the merger be interested in acquiring all or a significant
interest in Park Meridian from considering or proposing such an acquisition,
even if such persons were prepared to offer or pay consideration to the Park
Meridian shareholders which had a current higher market price than the shares of
Regions common stock to be received per share of Park Meridian common stock
pursuant to the agreement and plan of merger. The existence of the option
agreement could significantly increase the cost to a potential acquiror of
acquiring Park Meridian compared to its cost had Park Meridian not entered into
the option agreement. Such increased cost might discourage a potential acquiror
from considering or proposing an acquisition or might result in a potential
acquiror proposing to pay a lower per share price to acquire Park Meridian
common stock than it might otherwise have proposed to pay.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
As a result of the merger, holders of Park Meridian common stock will
be exchanging their shares of a North Carolina corporation governed by the North
Carolina Business Corporation Act and Park Meridian's 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 Park Meridian shareholders 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 Park Meridian shareholders and Regions stockholders and
their respective entities, and it is qualified in its entirety by reference to
the North Carolina Business Corporation Act and the Delaware General Corporation
Law as well as to Regions' certificate of incorporation and bylaws and Park
Meridian's articles of incorporation and bylaws.
38
45
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.
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
39
46
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 antitakeover purpose, including any
purpose to make a change in control of Regions more costly or difficult.
Park Meridian. Park Meridian's authorized capital stock consists of
25,000,000 shares of Park Meridian common stock, which is the only class of
capital stock authorized and of which _______ shares were issued and outstanding
as of the record date.
Pursuant to the North Carolina Business Corporation Act, Park
Meridian's board of directors may authorize the issuance of additional shares of
Park Meridian common stock without further action by Park Meridian's
shareholders. Park Meridian's articles of incorporation do not provide the
shareholders of Park Meridian with preemptive rights to purchase or subscribe to
any unissued authorized shares of Park Meridian common stock or any option or
warrant for the purchase thereof.
AMENDMENT OF CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS
Regions. The Delaware General Corporation Law generally provides that
the approval of a corporation's board of directors and the affirmative vote of a
majority of (1) all shares entitled to vote thereon and (2) the shares of each
class of stock entitled to vote thereon as a class is required to amend a
corporation's certificate of incorporation, unless the certificate specifies a
greater voting requirement. 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 and actions of stockholders, and amendments 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.
Park Meridian. The North Carolina Business Corporation Act provides
that a corporation's board of directors may adopt certain minor amendments to a
corporation's articles of incorporation without a shareholder vote. Other
proposed amendments to the articles of incorporation must be submitted to the
shareholders by the board of directors and must be approved by (1) a majority of
the votes entitled to be cast on the amendment by any voting group with respect
to which the amendment would create dissenters' rights; and (2) for shares
entitled to vote as a separate voting group, a majority of the shares voted,
provided that a quorum of the voting group is present. The Park Meridian
articles do not contain any special provisions regarding their amendment.
40
47
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 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.
Park Meridian. As is the case with Regions, Park Meridian's articles of
incorporation provide for a classified board of directors, with one-third of the
total number of directors, or as close to one-third as possible, elected each
year for a three-year term. Holders of Park Meridian 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.
Park Meridian. Pursuant to Park Meridian's bylaws, any or all of the
directors may be removed by the shareholders with or without cause. The vote
required for removal of any director is that the number of shares voted for
removal exceed the number of shares voted against removal. A director may not be
removed by vote of the shareholders at a meeting unless the notice of the
meeting states that the purpose, or one of the purposes of the meeting, is the
removal of the director.
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
41
48
law, (3) the payment of certain unlawful dividends and the making of certain
unlawful stock purchases or redemptions, or (4) any transaction from which the
director derived an improper personal benefit.
Although this provision does not affect the availability of injunctive
or other equitable relief as a remedy for a breach of duty by a director, it
does limit the remedies available to a stockholder who has a valid claim that a
director acted in violation of such director's duties, if the action is among
those as to which liability is limited. This provision may reduce the likelihood
of stockholder derivative litigation against directors and may discourage or
deter stockholders or management from bringing a lawsuit against directors for
breach of their duties, even though such action, if successful, might have
benefited Regions and its stockholders. The SEC has taken the position that
similar provisions added to other corporations' certificates of incorporation
would not protect those corporations' directors from liability for violations of
the federal securities laws.
Park Meridian. Under the North Carolina Business Corporation Act, a
corporation, through its articles of incorporation or bylaws or by contract or
resolution, may eliminate or limit a director's personal liability to the
corporation or its shareholders for any monetary damages for breach of duty,
except for (1) acts or omissions that the director at the time of such breach
knew or believed were clearly in conflict with the best interests of the
corporation, (2) unlawful distributions, (3) any transaction from which the
director derived an improper personal benefit, or (4) a proceeding by or in the
right of the corporation in which the director was adjudged liable to the
corporation. Park Meridian's articles of incorporation provide that to the
fullest extent permitted by the North Carolina Business Corporation Act, a
director of Park Meridian shall not be personally liable to Park Meridian or its
shareholders for monetary damages for breach of his or her duty as a director.
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 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.
Park Meridian. The North Carolina Business Corporation Act and Park
Meridian's bylaws provide for indemnification of its directors in substantially
the same manner and with substantially the same effect as in the case of
Regions.
42
49
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.
Park Meridian. Under Park Meridian's bylaws, a special meeting of Park
Meridian shareholders may be called by the president, the secretary, or the
board of directors.
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.
Park Meridian. Under the North Carolina Business Corporation Act and
Park Meridian's bylaws, any action requiring or permitting shareholder approval
may be approved by written consent of shareholders holding all of the shares of
Park Meridian common stock outstanding and entitled to vote.
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.
Park Meridian. Park Meridian's articles of incorporation and bylaws do
not provide for special nominating procedures for election of directors.
43
50
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
agreement and plan of merger, or the authorized unissued shares or the treasury
shares of Regions common stock to be issued or delivered under the agreement and
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.
Park Meridian. The North Carolina Business Corporation Act provides
that, unless a corporation's governance documents provide otherwise, certain
business combinations (including mergers) require the approval of a majority of
the outstanding shares of each voting group of the corporation entitled to vote
on the subject transaction. Neither the articles nor the bylaws of Park Meridian
require a greater vote.
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
44
51
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.
Park Meridian. North Carolina has two antitakeover statutes in force,
The North Carolina Shareholder Protection Act and The North Carolina Control
Share Acquisition Act. These statutes restrict business combinations with, and
the accumulation of shares of voting stock of, certain North Carolina
corporations. In accordance with the provisions of these statutes, Park Meridian
has elected not to be covered by the restrictions imposed by these statutes. As
a result, such statutes do not apply to Park Meridian.
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
of record by more than 2,000 stockholders, unless the exception described
immediately above applies, holders of Regions common stock will not have
dissenters' rights. Holders of Regions common stock do not have dissenters'
rights in connection with the Park Meridian merger.
Park Meridian. A summary of the pertinent provisions of the North
Carolina Business Corporation Act pertaining to dissenters' rights is set forth
under the caption "The Merger--Dissenting Shareholders," 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.
Park Meridian. The North Carolina Business Corporation Act provides
that a shareholder who has owned shares for at least six months may inspect and
copy books and records upon written demand made in good faith and for a proper
purpose, if the demand describes with reasonable particularity the shareholder's
purpose and the books and records to be inspected and the books and records are
directly connected to the shareholder's stated purpose.
45
52
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."
Park Meridian. Subject to any restrictions in a North Carolina
corporation's articles, the corporation's board of directors may declare
dividends so long as after giving effect to each dividend declaration, (1) the
corporation can pay its debts as they become due, and (2) the corporation's
total assets are greater than the sum of its liabilities plus the amount that
would be needed to satisfy the liquidation preference of any shares that are
superior to the shares receiving the dividend. As with Regions, substantially
all of the funds available for payment of dividends by Park Meridian are derived
from its subsidiaries, including Park Meridian Bank. Payment of dividends by
Park Meridian Bank to Park Meridian is subject to the statutory restrictions
applicable to depository institutions. Park Meridian's articles place no
restriction on the ability of its board of directors to declare dividends.
46
53
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions common stock is quoted on the Nasdaq National Market under the
symbol "RGBK." Park Meridian common stock is traded on the OTC bulletin board
under the symbol "PMFN." 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 last-reported sale
prices of Park Meridian common stock based on the information reported in the
over-the-counter market, and the cash dividends declared per share of Regions
common stock.
REGIONS PARK MERIDIAN
PRICE RANGE CASH DIVIDENDS PRICE RANGE
DECLARED
HIGH LOW PER SHARE HIGH LOW
---- --- --------- ---- ---
1999
First Quarter................. $ 41.44 $ 34.63 $ .25 $ 19.00 $ 15.50
Second Quarter................ 39.13 34.72 .25 16.50 15.75
Third Quarter................. 38.94 29.81 .25 16.50 14.75
Fourth Quarter................ 31.25 23.38 .25 16.00 13.50
2000
First Quarter ................ 24.31 18.44 .27 14.13 8.88
Second Quarter................ 24.50 19.19 .27 13.50 10.25
Third Quarter ................ 24.81 19.94 .27 12.13 9.53
Fourth Quarter ............... 27.81 20.31 .27 10.13 8.63
2001
First Quarter................. 32.00 26.75 .28 12.50 9.13
Second Quarter................ 32.00 28.00 .28 16.50 12.25
Third Quarter (through
_______, 2001) ...........
On _______, 2001, the last reported sale price of Regions common stock
as reported on the Nasdaq National Market, was $ _______, and the last reported
sale price of Park Meridian common stock was $_______. On June 26, 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 $31.33, and the last reported sale price of Park Meridian common
stock was $14.50.
The holders of Regions common stock are entitled to receive dividends
when and if declared by the board of directors out of funds legally available
therefor. Regions has paid regular quarterly cash dividends since 1971. Although
Regions currently intends to continue to pay quarterly cash dividends on the
Regions common stock, there can be no assurance that Regions' dividend policy
will remain unchanged after completion of the merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the board of directors'
consideration of other relevant factors.
Regions is a legal entity separate and distinct from its subsidiaries
and its revenues depend in significant part on the payment of dividends from its
subsidiary financial institutions. Regions' subsidiary depository institutions
are subject to certain legal restrictions on the amount of dividends they are
permitted to pay. See "Supervision and Regulation-Payment of Dividends."
47
54
Park Meridian's dividend policy, as adopted by its board of directors
and in effect since 1997, provides that the board will determine dividends based
on growth, profit and Park Meridian's overall financial condition, giving
consideration to expected capital needs. Pursuant to this policy, the board has
to date determined not to declare dividends.
48
55
INFORMATION ABOUT PARK MERIDIAN
Park Meridian is a bank holding company organized under the laws of the
state of North Carolina with its principal executive office located in
Charlotte, North Carolina. Park Meridian operates principally through Park
Meridian Bank, which is a state-chartered commercial bank and which provides a
range of consumer and commercial banking services through its main office in
Charlotte, North Carolina and two branch offices in Mecklenburg County. At June
30, 2001, Park Meridian had total consolidated assets of approximately $298
million, total consolidated deposits of approximately $206 million, and total
consolidated stockholders' equity of approximately $24 million. Park Meridian's
principal executive office is located at 6826 Morrison Boulevard, Charlotte,
North Carolina, 28211 and its telephone number at such address is (704)
366-7275.
Additional information with respect to Park Meridian and Park Meridian
Bank is included in documents incorporated by reference in this proxy
statement-prospectus. Copies of such documents, including Park Meridian's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2000, and Park
Meridian's Quarterly Reports on Form 10-QSB for the quarter ended March 31 and
June 30, 2001, accompany this proxy statement-prospectus.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS OF PARK MERIDIAN
The following table sets forth certain information concerning the
beneficial owners of more than 5.0% of Park Meridian common stock, as of the
record date.
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS (1)
-------------- ------------------- -------------------- ---------
Common Stock Samuel H. McMahon, Jr. [199,326](2)
$.01 Par Value 5210 Carmel Road
Charlotte, N.C. 28226
(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 Securities Exchange Act of 1934. Under such rules a person is
deemed to be a "beneficial owner" of a security if that person has or
shares "voting power," which includes the power to vote or to direct
the voting of such security, or "investment power," which includes the
power to dispose or to direct the disposition of such security. A
person is also deemed to be a beneficial owner of any security of which
that person has the right to acquire beneficial ownership within 60
days. Under the rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed to
be a beneficial owner of securities as to which he or she has no
beneficial interest. The shares of Park Meridian common stock issuable
upon exercise of outstanding options held by a person are assumed to be
outstanding for the purpose of determining the percentage of shares
beneficially owned by that person.
(2) Includes 109,932 shares held of record by Mr. McMahon's spouse, the
beneficial ownership of which Mr. McMahon disclaims.
49
56
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."
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 Park Meridian. Certain aspects
of the completed and other pending acquisitions are presented in the following
table:
50
57
CONSIDERATION
------------------
APPROXIMATE
-------------------------
ACCOUNTING
INSTITUTION ASSET SIZE(1) VALUE(1) TYPE TREATMENT
------------- -------- ---- ---------
(In millions)
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,
Arkansas 32 Not
Reported Cash Purchase
Other Pending Acquisition
First Bancshares of Texas, located in Houston, Texas 147 33 Regions Purchase
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.
Consummation of the other pending acquisition is subject to the
approval of certain regulatory agencies and approval of the stockholders of the
institutions to be acquired. Moreover, the closing of each transaction is
subject to various contractual conditions precedent. No assurance can be given
that the conditions precedent to consummating the transaction will be satisfied
in a manner that will result in its consummation.
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.
51
58
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 Park Meridian.
Additional information is available in Regions' Annual Report on Form 10-K for
the fiscal year ended December 31, 2000. See "Where You Can Find More
Information" on page 55.
GENERAL
Regions and Park Meridian 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 Park Meridian 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. Also,
Regions is a financial holding company under the Bank Holding Company Act.
The Bank Holding Company Act requires every bank or financial 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
59
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 Park Meridian Bank is Park Meridian's only
subsidiary bank. Regions Bank and Park Meridian Bank are each a member of the
Federal Deposit Insurance Corporation (the "FDIC"), and as such, its deposits
are insured by the FDIC to the extent provided by law. Regions Bank and Park
Meridian Bank 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. Park Meridian
Bank is subject to supervision and examination by the FDIC and the North
Carolina Commissioner of Banks. 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 Park Meridian are legal entities separate and distinct from
their banking and other subsidiaries. The principal sources of cash flow of both
Regions and Park Meridian, including cash flow to pay dividends to their
respective stockholders and shareholders, are dividends from their respective
subsidiary bank. There are statutory and regulatory limitations on the payment
of dividends by the subsidiary banks to Regions and Park Meridian, as well as by
Regions and Park Meridian to their stockholders and shareholders.
As to the payment of dividends, Regions Bank and Park Meridian Bank are
subject to the respective laws and regulations of the state in which the bank is
located, and to the regulations of the FDIC.
If, in the opinion of a federal banking regulatory agency, an
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete an institution's capital base to an inadequate level would be an
unsafe and unsound banking practice. Under current federal law, an insured
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-Prompt Corrective
Action." Moreover, the Federal Reserve Board and the FDIC have issued policy
statements which provide that bank holding companies and insured banks should
generally pay dividends only out of current operating earnings.
53
60
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.
The payment of dividends by Regions and Park Meridian 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, Park Meridian, and their respective subsidiary banks are
required to comply with the capital adequacy standards established by the
Federal Reserve Board in the case of Regions and Park Meridian and the FDIC in
the case of each of their subsidiary banks. There are two basic measures of
capital adequacy for bank holding companies that have been promulgated by the
Federal Reserve Board: a risk-based measure and a leverage measure. All
applicable capital standards must be satisfied for a bank holding company to be
considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance sheet
items are assigned to broad risk categories, each with appropriate weights. The
resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance sheet items.
The minimum guideline for the ratio of total capital ("Total Capital")
to risk-weighted assets (including certain off-balance-sheet items, such as
standby letters of credit) is 8.0%. At least half of the Total Capital must be
composed of common equity, undivided profits, minority interests in the equity
accounts of consolidated subsidiaries, qualifying noncumulative perpetual
preferred stock, and a limited amount of cumulative perpetual preferred stock,
less goodwill and certain other intangible assets ("Tier 1 Capital"). The
remainder may consist of certain subordinated debt, other preferred stock, and a
limited amount of loan loss reserves. The minimum guideline for Tier 1 Capital
is 4.0%. 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 Park Meridian's consolidated Total Capital Ratio was
11.98% and its Tier 1 Capital Ratio was 10.80%.
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 Park
Meridian's Leverage Ratio was 9.45%.
54
61
Each of Regions' and Park Meridian's subsidiary banks is subject to
risk-based and leverage capital requirements adopted by the FDIC, which are
substantially similar to those adopted by the Federal Reserve Board. Each of the
subsidiary banks was in compliance with applicable minimum capital requirements
as of June 30, 2001. Neither Regions, Park Meridian, 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 to certain other restrictions on its business. As described below,
substantial additional restrictions can be imposed upon FDIC-insured depository
institutions that fail to meet applicable capital requirements. See "-Prompt
Corrective Action."
The Federal Reserve Board and the FDIC also have recently adopted final
regulations requiring regulators to consider interest rate risk (when the
interest rate sensitivity of an institution's assets does not match the
sensitivity of its liabilities or its off- balance-sheet position) in the
evaluation of a bank's capital adequacy. The bank regulatory agencies'
methodology for evaluating interest rate risk requires banks with excessive
interest rate risk exposure to hold additional amounts of capital against such
exposures.
PROMPT CORRECTIVE ACTION
Current federal law establishes a system of prompt corrective action to
resolve the problems of undercapitalized institutions. Under this system the
federal banking regulators have established five capital categories ("well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized") and must take certain
mandatory supervisory actions, and are authorized to take other discretionary
actions, with respect to institutions in the three undercapitalized categories,
the severity of which will depend upon the capital category in which the
institution is placed. Generally, subject to a narrow exception, current federal
law requires the banking regulator to appoint a receiver or conservator for an
institution that is critically undercapitalized. The federal banking agencies
have specified by regulation the relevant capital level for each category.
Under the final agency rule implementing the prompt corrective action
provisions, an institution that (1) has a Total Capital ratio of 10% or greater,
a Tier 1 Capital ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (2) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be "well capitalized." An institution with a
Total Capital ratio of 8.0% or greater, a Tier 1 Capital ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be "adequately
capitalized." A depository institution that has a Total Capital ratio of less
than 8.0%, a Tier 1 Capital ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be "undercapitalized." A depository institution that
has a Total Capital ratio of less than 6.0%, a Tier 1 Capital ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be "significantly
undercapitalized," and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards plus the amount of outstanding cumulative perpetual
preferred stock (including related surplus), minus all intangible assets with
certain exceptions. A depository institution may be deemed to be in a
capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
55
62
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency. A
bank holding company must guarantee that a subsidiary depository institution
meet its capital restoration plan, subject to certain limitations. The
obligation of a controlling bank holding company to fund a capital restoration
plan is limited to the lesser of 5.0% of an undercapitalized subsidiary's assets
or the amount required to meet regulatory capital requirements. An
undercapitalized institution is also generally prohibited from increasing its
average total assets, making acquisitions, establishing any branches, or
engaging in any new line of business, except in accordance with an 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, Regions Bank and Park Meridian Bank 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 may terminate an institution's insurance of deposits upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
DESCRIPTION OF REGIONS COMMON STOCK
Regions is authorized to issue 500,000,000 shares of Regions common
stock and 5,000,000 shares of preferred stock. At 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
56
63
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 Shareholders."
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 the proxy statement relating to that meeting.
Park Meridian will only hold its 2002 annual meeting if we do not
complete the merger. In the event that Park Meridian does hold an annual meeting
in 2002, proposals of Park Meridian shareholders intended to be presented at
that meeting must be received by Park Meridian at its principal executive
offices by December 16, 2001 for consideration by Park Meridian for possible
inclusion in the proxy statement relating to that meeting.
FORWARD LOOKING STATEMENTS
The information contained in this proxy statement-prospectus, including
information incorporated by reference in this document, contains forward-looking
statements concerning the financial condition, results of operations and
business of Regions following the completion of the proposed merger with Park
Meridian, the anticipated financial and other benefits of the proposed merger
and Regions' current views with respect to future events and financial
performance. Regions' management believes that these forward-looking statements
are reasonable, however, you should not place undue reliance on these statements
as they are based only on current expectations and 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. Such forward-looking statements are made in good faith by
Regions pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.
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.
Some factors which may affect the accuracy of the forward-looking
statements apply generally to the financial services industry, including:
- the easing of restrictions on participants in the financial services
industry, such as banks, securities brokers and dealers, investment
companies, and finance companies, may increase Regions' competitive
pressures;
57
64
- possible changes in interest rates may increase Regions' funding costs
and reduce Regions' earning asset yields, thus reducing margins;
- possible changes in general economic and business conditions in the
United States and the Southeast in general and in the communities we
serve in particular may lead to a deterioration in credit quality,
thereby increasing Regions' provisioning costs, or a reduced demand for
credit, thereby reducing earning assets;
- possible changes in trade, monetary and fiscal policies, laws, and
regulations, and other activities of governments, agencies, and similar
organizations, including changes in accounting standards, may have an
adverse effect on Regions' business; and
- possible changes in consumer and business spending and saving habits
could have an effect on Regions' ability to increase assets and to
attract deposits.
Other factors which may affect the accuracy of the forward-looking statements
are specific to Regions, including:
- the cost and other effects of material contingencies, including
litigation contingencies;
- the ability to expand into new markets and to maintain profit margins
in the face of pricing pressures;
- the ability to keep pace with technological changes;
- the ability to develop competitive new products and services in a
timely manner and the acceptance of such products and services by
Regions' customers and potential Regions customers;
- the ability to effectively manage interest rate risk, credit risk and
operational risk;
- the ability to manage fluctuations in the value of Regions' assets and
liabilities and off-balance sheet exposures so as to maintain
sufficient capital liquidity to support Regions' business;
- the matters described under "Risk Factors," and
- the ability to achieve the earnings expectations related to the
businesses that we have recently acquired or may acquire in the future
(including the Park Meridian transaction), which in turn depends on a
variety of factors, including: the ability to achieve in a timely
manner anticipated cost savings and revenue enhancements with respect
to acquired operations; the assimilation of acquired operations to the
Regions corporate culture, including the ability to instill Regions'
credit practices and efficient approach to acquired operations; the
ability to retain existing customers and employees of acquired
operations; and the continued growth of the markets that the acquired
entities serve, consistent with recent historical experience.
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
58
65
Statement, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon which is included in Regions' 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 Park Meridian Financial
Corporation as of December 31, 2000 and for the year then ended have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The 1999 and 1998 financial statements incorporated in this proxy
statement-prospectus by reference to the Annual Report on Form 10-KSB for the
year ended December 31, 2000, have been so incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
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 _______, 2001, attorneys in the law firm of Lange, Simpson,
Robinson & Somerville LLP owned an aggregate of _______ shares of Regions common
stock.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird LLP, Washington, D.C.
WHERE YOU CAN FIND MORE INFORMATION
Regions and Park Meridian file 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 and Park Meridian file
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 has filed a Registration Statement on Form S-4 (the
"Registration Statement") to register with the SEC the Regions common stock to
be issued to Park Meridian shareholders 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.
59
66
SEC regulations allow Regions and Park Meridian to "incorporate by
reference" information into this proxy statement-prospectus, which means that
Regions and Park Meridian 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 and Park Meridian have previously filed with the
SEC. These documents contain important information about Regions and Park
Meridian and their finances.
REGIONS SEC FILINGS PERIOD/AS OF DATE
(FILE NO. 0-6159)
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, and
March 30, 2001
PARK MERIDIAN SEC FILINGS PERIOD/AS OF DATE
(FILE NO. 01-31277)
Annual Report on Form 10-KSB Year ended December 31, 2000
Quarterly Reports on Form 10-QSB Quarters ended March 31 and June 30, 2001
Current Reports filed on Form 8-K February 26 and March 19, 2001
All documents filed by Regions and Park Meridian pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 between the
date of this proxy statement-prospectus and the date of the Park Meridian
special meeting are also deemed to be incorporated by reference in this proxy
statement-prospectus. These documents include periodic reports, such as Annual
Reports on Form 10-K or Form 10-KSB, Quarterly Reports on Form 10-Q or Form
10-QSB, 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 Park
Meridian has supplied all such information relating to Park Meridian.
If you are a shareholder, 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.
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 _______ ,
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 shareholders 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 Park Meridian since the date
of this proxy statement-prospectus which are not reflected in this document.
60
67
We have not authorized anyone to give any information or make any
representation about the merger or our companies that differs from, or adds to,
the information in this proxy statement-prospectus or in Regions' documents that
are publicly filed with the SEC. 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.
61
68
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PARK MERIDIAN FINANCIAL CORPORATION
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF JUNE 26, 2001
A-1
69
TABLE OF CONTENTS
PAGE
----
Parties.....................................................
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
1.5 Execution of the Stock Option Agreement............. 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 Park Meridian or Regions............. A-7
3.4 Dissenting Stockholders............................. A-7
3.5 Fractional Shares................................... A-7
3.6 Conversion of Stock Rights.......................... A-7
ARTICLE 4 -- EXCHANGE OF SHARES............................. A-8
4.1 Exchange Procedures................................. A-8
4.2 Rights of Former Park Meridian Stockholders......... A-9
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF PARK
MERIDIAN.................................................. A-9
5.1 Organization, Standing, and Power................... A-9
5.2 Authority; No Breach of Agreement................... A-9
5.3 Capital Stock....................................... A-10
5.4 Park Meridian Subsidiaries.......................... A-10
5.5 SEC Filings; Financial Statements................... A-11
5.6 Absence of Undisclosed Liabilities.................. A-11
5.7 Absence of Certain Changes or Events................ A-12
5.8 Tax Matters......................................... A-12
5.9 Assets.............................................. A-12
5.10 Environmental Matters............................... A-13
5.11 Compliance with Laws................................ A-14
5.12 Labor Relations..................................... A-14
5.13 Employee Benefit Plans.............................. A-14
5.14 Material Contracts.................................. A-16
5.15 Legal Proceedings................................... A-17
5.16 Reports............................................. A-17
5.17 Statements True and Correct......................... A-17
5.18 Tax and Regulatory Matters.......................... A-17
5.19 Intellectual Property............................... A-17
5.20 State Takeover Laws................................. A-18
5.21 Charter Provisions.................................. A-18
5.22 Support Agreements.................................. A-18
5.23 Derivatives......................................... A-18
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF REGIONS...... A-18
6.1 Organization, Standing, and Power................... A-18
6.2 Authority; No Breach of Agreement................... A-18
A-2
70
PAGE
----
6.3 Capital Stock....................................... A-19
6.4 Regions Subsidiaries................................ A-19
6.5 SEC Filings; Financial Statements................... A-20
6.6 Absence of Undisclosed Liabilities.................. A-20
6.7 Absence of Certain Changes or Events................ A-20
6.8 Compliance with Laws................................ A-20
6.9 Legal Proceedings................................... A-21
6.10 Reports............................................. A-21
6.11 Statements True and Correct......................... A-21
6.12 Tax and Regulatory Matters.......................... A-21
6.13 Derivatives......................................... A-22
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION....... A-22
7.1 Affirmative Covenants of Both Parties............... A-22
7.2 Negative Covenants of Park Meridian................. A-22
7.3 Adverse Changes in Condition........................ A-23
7.4 Reports............................................. A-23
ARTICLE 8 -- ADDITIONAL AGREEMENTS.......................... A-24
8.1 Registration Statement; Proxy Statement; Stockholder
Approval............................................... A-24
8.2 Applications........................................ A-24
8.3 Filings with State Offices.......................... A-24
8.4 Agreement as to Efforts to Consummate............... A-24
8.5 Investigation and Confidentiality................... A-25
8.6 Press Releases...................................... A-25
8.7 No Solicitation..................................... A-25
8.8 Tax Treatment....................................... A-26
8.9 Agreement of Affiliates............................. A-26
8.10 Employee Benefits and Contracts..................... A-26
8.11 Indemnification..................................... A-27
8.12 Exemption for Liability Under Section 16(b)......... A-28
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO
CONSUMMATE................................................ A-28
9.1 Conditions to Obligations of Each Party............. A-28
9.2 Conditions to Obligations of Regions................ A-29
9.3 Conditions to Obligations of Park Meridian.......... A-30
ARTICLE 10 -- TERMINATION................................... A-30
10.1 Termination......................................... A-30
10.2 Effect of Termination............................... A-31
10.3 Non-Survival of Representations and Covenants....... A-31
ARTICLE 11 -- MISCELLANEOUS................................. A-31
11.1 Definitions......................................... A-31
11.2 Expenses............................................ A-38
11.3 Brokers and Finders................................. A-38
11.4 Entire Agreement.................................... A-38
11.5 Amendments.......................................... A-38
11.6 Waivers............................................. A-38
11.7 Assignment.......................................... A-39
11.8 Notices............................................. A-39
11.9 Governing Law....................................... A-39
11.10 Counterparts........................................ A-40
11.11 Captions............................................ A-40
11.12 Interpretations..................................... A-40
11.13 Enforcement of Agreement............................ A-40
11.14 Severability........................................ A-40
Signatures.................................................. A-41
A-3
71
LIST OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
1. -- Form of Support Agreement. (sec. 1.4).
2. -- Form of Stock Option Agreement. (sec. 1.4).
3. -- Form of Affiliate Agreement. (sec. 8.11).
[Exhibits Omitted]
A-4
72
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of June 26, 2001, by and between PARK MERIDIAN FINANCIAL CORPORATION
("Park Meridian"), a corporation organized and existing under the Laws of the
State of North Carolina, with its principal office located in Charlotte, North
Carolina; and REGIONS FINANCIAL CORPORATION ("Regions"), a corporation organized
and existing under the Laws of the State of Delaware, with its principal office
located in Birmingham, Alabama.
PREAMBLE
The Boards of Directors of Park Meridian and Regions are of the opinion
that the transactions described herein are in the best interests of the parties
to this Agreement and their respective stockholders. This Agreement provides for
the acquisition of Park Meridian by Regions pursuant to the merger of Park
Meridian with and into Regions. At the effective time of the merger, the
outstanding shares of the capital stock of Park Meridian shall be converted into
shares of the common stock of Regions (except as provided herein). As a result,
stockholders of Park Meridian shall become stockholders of Regions, and each of
the subsidiaries of Park Meridian 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 Park Meridian, 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, (i) Park Meridian's directors and certain executive officers are
executing and delivering to Regions an agreement (a "Support Agreement"), in
substantially the form of Exhibit 1, and (ii) Park Meridian and Regions are
entering into a stock option agreement (the "Stock Option Agreement"), in
substantially the form of Exhibit 2.
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, Park Meridian shall be merged with and into Regions in
accordance with the provisions of Sections 55-11-01 and 55-11-07 of the NCBCA
and Sections 252 and 258 of the DGCL and with the effect provided in Section 55-
11-06 of the NCBCA 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 Park Meridian 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 North
Carolina Articles of Merger reflecting the Merger shall
A-5
73
become effective with the Secretary of State of the State of North Carolina and
the Delaware Certificate of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Delaware (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon by the duly authorized officers of each Party, the Parties shall use their
reasonable efforts to cause the Effective Time to occur on the last business day
of the month in which the last of the following occurs: (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger and (ii) the date on which the stockholders of Park
Meridian 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 and certain executive
officers of Park Meridian are executing and delivering to Regions a Support
Agreement.
1.5 Execution of the Stock Option Agreement. Simultaneously with the
execution of this Agreement and as a condition hereto, Park Meridian is
executing and delivering to Regions the Stock Option Agreement.
ARTICLE 2
TERMS OF MERGER
2.1 Certificate of Incorporation. The Certificate of Incorporation of
Regions in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation after the Effective
Time until otherwise amended or repealed.
2.2 Bylaws. The Bylaws of Regions in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 Directors and Officers. The directors of Regions in office immediately
prior to the Effective Time, together with such additional 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 Park Meridian, 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 Park Meridian Common Stock, excluding shares held by
any Park Meridian 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 cease to be outstanding
and shall be converted into .55 of a share of Regions Common Stock (subject
to adjustment as set forth in the following proviso, the "Exchange Ratio");
provided that in the event the Average Price is less than $29.00, the
Exchange Ratio shall be equal to the quotient obtained by dividing (i) the
product of $29.00 and the Exchange Ratio (as then in effect) by (ii) the
Average Price.
3.2 Anti-Dilution Provisions. In the event Park Meridian changes the
number of shares of Park Meridian 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
A-6
74
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 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 Park Meridian or Regions. Each of the shares of Park
Meridian Common Stock held by any Park Meridian 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 Park Meridian Common
Stock who perfects such holder's dissenters' rights of appraisal in accordance
with and as contemplated by Article 13 of the NCBCA 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 NCBCA 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 Park Meridian 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 Park
Meridian Common Stock is entitled under this Article 3 (without interest) upon
surrender by such holder of the certificate or certificates representing shares
of Park Meridian Common Stock held by such holder.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of Park Meridian 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
Park Meridian 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.
3.6 Conversion of Stock Rights.
(a) At the Effective Time, all rights with respect to Park Meridian
Common Stock pursuant to stock options or stock appreciation rights ("Park
Meridian Options") granted by Park Meridian under the Park Meridian Stock
Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to
Regions Common Stock, and Regions shall assume each Park Meridian Option,
in accordance with the terms of the Park Meridian Stock Plan and stock
option agreement by which it is evidenced. From and after the Effective
Time, (i) each Park Meridian Option assumed by Regions may be exercised
solely for shares of Regions Common Stock (or cash in the case of stock
appreciation rights), (ii) the number of shares of Regions Common Stock
subject to such Park Meridian Option shall be equal to the number of shares
of Park Meridian Common Stock subject to such Park Meridian Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
and (iii) the per share exercise price under each such Park Meridian Option
shall be adjusted by dividing the per share exercise price under each such
Park Meridian Option by the Exchange Ratio and rounding down to the nearest
cent. It is intended that the foregoing assumption shall be undertaken in a
manner that will not constitute a "modification" as defined in Section 424
of the Internal Revenue Code, as to any stock option which is an "incentive
stock option." Park Meridian and Regions agree to take all necessary steps
to effectuate the foregoing provisions of this Section 3.6.
(b) As soon as reasonably practicable after the Effective Time,
Regions shall file a registration statement on Form S-3 or S-8, as the case
may be (or any successor or other appropriate forms), with
A-7
75
respect to the shares of Regions Common Stock subject to such options and
shall use its reasonable efforts to maintain the effectiveness of such
registration statement (and maintain the current status of the prospectus
or prospectuses therein) for so long as such options remain outstanding.
(c) As soon as reasonably practicable after the Effective Time,
Regions shall deliver to the participants in each of the Park Meridian
Stock Plans an appropriate notice setting forth such participant's rights
pursuant thereto and the grants pursuant to such Park Meridian Stock Plan
shall continue in effect on the same terms and conditions (subject to the
adjustments required by Section 3.6(a) of this Agreement after giving
effect to the Merger), and Regions shall comply with the terms of each of
the Park Meridian Stock Plans to ensure, to the extent required by, and
subject to the provisions of, such Park Meridian Stock Plan, that Park
Meridian Options that qualified as incentive stock options prior to the
Effective Time continue to qualify as incentive stock options after the
Effective Time. At or prior to the Effective Time, Regions shall take all
corporate action necessary to reserve for issuance sufficient shares of
Regions Common Stock for delivery upon exercise of Park Meridian Options
assumed by it in accordance with this Section 3.6.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures.
(a) As soon as reasonably practicable after the Effective Time,
Regions and Park Meridian shall cause the exchange agent selected by
Regions (the "Exchange Agent") to mail to the former stockholders of Park
Meridian appropriate transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of Park Meridian Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, Regions shall cause each holder of shares of Park
Meridian 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 Article 13 of the NCBCA) issued and
outstanding at the Effective Time promptly upon surrender of the
certificate or certificates representing such shares to the Exchange Agent,
to 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 Park Meridian Common Stock issued
and outstanding at the Effective Time also shall receive, upon surrender of
the certificate or certificates representing such shares, cash in lieu of
any fractional share of Regions Common Stock to which such holder may be
otherwise entitled (without interest). Until so surrendered, each
outstanding certificate of Park Meridian 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 Park Meridian 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 Park Meridian
Common Stock is entitled as a result of the Merger until such holder
surrenders such holder's certificate or certificates representing the
shares of Park Meridian Common Stock for exchange as provided in this
Section 4.1. The certificate or certificates of Park Meridian 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, Park Meridian, nor the Exchange Agent shall be
liable to a holder of Park Meridian Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.
(b) In the event any Park Meridian Common Stock certificate shall have
been lost, stolen, or destroyed, upon the making of an affidavit of that
fact by the person claiming such certificate to be lost, stolen, or
destroyed and, if required by Regions, the posting by such person of a bond
in such amount as Regions may reasonably direct as indemnity against any
claim that may be made against it with respect to
A-8
76
such certificate, the Exchange Agent shall issue in exchange for such lost,
stolen, or destroyed certificate, the consideration deliverable in respect
thereof pursuant to this Agreement.
4.2 Rights of Former Park Meridian Stockholders. At the Effective Time,
the stock transfer books of Park Meridian shall be closed as to holders of Park
Meridian Common Stock immediately prior to the Effective Time and no transfer of
Park Meridian 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 Park Meridian 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 Article 13 of the NCBCA) 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 Park Meridian in respect of
such shares of Park Meridian 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 holders of record of Park Meridian 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 Article 13 of the NCBCA) 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 Park
Meridian Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Park Meridian 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 Park
Meridian 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 Park Meridian 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 PARK MERIDIAN
Park Meridian hereby represents and warrants, except as specifically
disclosed in a section of the Park Meridian Disclosure Memorandum corresponding
to the relevant section of this Article 5, to Regions as follows:
5.1 Organization, Standing, and Power. Park Meridian is a corporation duly
incorporated, validly existing, and in good standing under the Laws of the State
of North Carolina, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and operate its Material Assets.
Park Meridian 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 Park Meridian.
5.2 Authority; No Breach of Agreement.
(a) Park Meridian 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
A-9
77
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 Park
Meridian's duly constituted Board of Directors) in respect thereof on the
part of Park Meridian, subject to the approval of this Agreement by the
holders of a majority of the outstanding shares of Park Meridian Common
Stock, which is the only stockholder vote required for approval of this
Agreement and consummation of the Merger by Park Meridian. Subject to such
requisite stockholder approval, this Agreement (which for this purpose only
does not include the Stock Option Agreement) represents a legal, valid, and
binding obligation of Park Meridian, enforceable against Park Meridian 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 Park
Meridian, nor the consummation by Park Meridian of the transactions
contemplated hereby, nor compliance by Park Meridian with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provision of Park Meridian'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 Park Meridian
Company under, any Contract or Permit of any Park Meridian 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 Park Meridian, 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 Park Meridian 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 Park Meridian.
(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 Park
Meridian, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Park Meridian of the Merger
and the other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Park Meridian consists, as of the
date of this Agreement, of 25,000,000 shares of Park Meridian Common Stock,
of which, as of the date of this Agreement, (i) 2,798,073 shares were
issued and outstanding and (ii) 354,278 shares of Park Meridian Common
Stock were issuable pursuant to outstanding awards under Park Meridian's
Stock Plans, and not more than 3,152,351 shares of Park Meridian Common
Stock will be issued and outstanding at the Effective Time. All of the
issued and outstanding shares of Park Meridian 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 NCBCA.
None of the outstanding shares of Park Meridian Common Stock has been
issued in violation of any preemptive rights of the current or past
stockholders of Park Meridian.
(b) Except as set forth in Section 5.3(a) of this Agreement or Section
5.3(b) of the Park Meridian Disclosure Memorandum, there are no shares of
capital stock or other equity securities of Park Meridian outstanding and
no outstanding Rights relating to the capital stock of Park Meridian.
5.4 Park Meridian Subsidiaries. Park Meridian has disclosed in Section 5.4
of the Park Meridian Disclosure Memorandum all of the Park Meridian Subsidiaries
as of the date of this Agreement. Park Meridian or one of its Subsidiaries owns
all of the issued and outstanding shares of capital stock of each Park Meridian
Subsidiary. No equity securities of any Park Meridian Subsidiary are or may
become required to be
A-10
78
issued (other than to another Park Meridian Company) by reason of any Rights,
and there are no Contracts by which any Park Meridian Subsidiary is bound to
issue (other than to another Park Meridian Company) additional shares of its
capital stock or Rights or by which any Park Meridian Company is or may be bound
to transfer any shares of the capital stock of any Park Meridian Subsidiary
(other than to another Park Meridian Company). There are no Contracts relating
to the rights of any Park Meridian Company to vote or to dispose of any shares
of the capital stock of any Park Meridian Subsidiary. All of the shares of
capital stock of each Park Meridian Subsidiary held by a Park Meridian 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 Park
Meridian Company free and clear of any Lien. Each Park Meridian 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 Park Meridian
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 Park Meridian. Each Park Meridian 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 SEC Filings; Financial Statements.
(a) Park Meridian and each Park Meridian Subsidiary has filed and made
available to Regions all forms, reports, and documents required to be filed
by Park Meridian or such Park Meridian Subsidiary with the SEC since
December 31, 1996 (collectively, the "Park Meridian SEC Reports"). The Park
Meridian SEC Reports (i) at the time filed, complied in all Material
respects with the applicable requirements of the Securities Laws, 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 Park Meridian SEC Reports or
necessary in order to make the statements in such Park Meridian SEC
Reports, in light of the circumstances under which they were made, not
misleading.
(b) Each of the Park Meridian Financial Statements (including, in each
case, any related notes) contained in the Park Meridian SEC Reports,
including any Park Meridian 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 requirements of the Securities
Laws with respect thereto, was prepared or will be prepared in accordance
with GAAP 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 Park Meridian
and its Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, except
that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not
expected to be Material in amount or effect.
5.6 Absence of Undisclosed Liabilities. No Park Meridian Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Park Meridian, except Liabilities which
are accrued or reserved against in the consolidated balance sheets of Park
Meridian as of March 31, 2001, included in the Park Meridian 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
Park Meridian 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 Park
Meridian.
A-11
79
5.7 Absence of Certain Changes or Events. Since March 31, 2001, except as
disclosed in the Park Meridian Financial Statements delivered prior to the date
of this Agreement or as otherwise disclosed in the Park Meridian 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 Park Meridian.
5.8 Tax Matters.
(a) Since December 31, 1994, all Tax Returns required to be filed by
or on behalf of any of the Park Meridian 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 Park Meridian, except to the extent
reserved against in the Park Meridian 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 Park Meridian 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 Park Meridian Companies for the period or periods through and
including the date of the respective Park Meridian Financial Statements has
been made in accordance with GAAP and is reflected on such Park Meridian
Financial Statements.
(d) Each of the Park Meridian 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 Park Meridian 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 Park Meridian Companies.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the Park Meridian Companies that occurred
during or after any Taxable Period in which the Park Meridian 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 Park Meridian 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 Park Meridian Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible corporations.
5.9 Assets. The Park Meridian 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
A-12
80
Material Adverse Effect on Park Meridian. All tangible properties used in the
businesses of the Park Meridian Companies are in good condition, reasonable wear
and tear excepted, and are usable in the ordinary course of business consistent
with Park Meridian's past practices, except as would not be reasonably likely to
have a Material Adverse Effect on Park Meridian. All Assets which are Material
to Park Meridian's business on a consolidated basis, held under leases or
subleases by any of the Park Meridian 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 Park Meridian Companies currently maintain insurance in amounts, scope and
coverage reasonably necessary for their operations. None of the Park Meridian
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 Park Meridian Companies
include all Material Assets required to operate the business of the Park
Meridian Companies as presently conducted.
5.10 Environmental Matters.
(a) Each Park Meridian Company, and to the Knowledge of Park Meridian,
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 Park Meridian.
(b) There is no Litigation pending or, to the Knowledge of Park
Meridian, threatened before any court, governmental agency, or authority,
or other forum in which any Park Meridian 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 Park Meridian 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 Park Meridian.
(c) To the Knowledge of Park Meridian, there is no Litigation pending,
or, threatened before any court, governmental agency, or board, or other
forum in which any of its Loan Properties (or Park Meridian 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 Park Meridian.
(d) To the Knowledge of Park Meridian, 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 Park Meridian.
(e) To the Knowledge of Park Meridian, during the period of (i) any
Park Meridian Company's ownership or operation of any of their respective
current properties, (ii) any Park Meridian Company's participation in the
management of any Participation Facility, or (iii) any Park Meridian
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 Park Meridian. Prior to the period of (i) any Park Meridian Company's
ownership or operation of any of their respective current properties, (ii)
any Park Meridian Company's participation in the management of any
Participation Facility, or (iii) any Park Meridian Company's holding of a
security interest in a Loan Property, to the Knowledge of Park Meridian,
there were no releases of Hazardous Material in, on, under, or affecting
any such
A-13
81
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 Park Meridian.
5.11 Compliance with Laws. Park Meridian is duly registered as a bank
holding company under the BHC Act. Each Park Meridian 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 Park Meridian, 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 Park
Meridian. None of the Park Meridian 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 Park Meridian; 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 Park
Meridian 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 Park Meridian, (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 Park
Meridian, or (iii) requiring any Park Meridian 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 Park Meridian Company is the subject of any
Litigation asserting that it or any other Park Meridian 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 Park Meridian Company
to bargain with any labor organization as to wages or conditions of employment,
nor is any Park Meridian 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 Park Meridian Company, pending or, to the Knowledge of Park
Meridian, threatened, or to the Knowledge of Park Meridian, is there any
activity involving employees of any Park Meridian Company seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.13 Employee Benefit Plans.
(a) Park Meridian has disclosed in Section 5.13 of the Park Meridian
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 Park Meridian Benefit Plans. For purposes of this Agreement, "Park
Meridian 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 Park Meridian 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 Park Meridian 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 "Park
Meridian ERISA Plan." Any Park Meridian 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 "Park Meridian Pension Plan." Neither Park Meridian
nor any Park Meridian Company has an "obligation to contribute"
A-14
82
(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 Park
Meridian 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 Park
Meridian Disclosure Memorandum.
(b) Park Meridian has delivered or made available to Regions prior to
the execution of this Agreement correct and complete copies of the
following documents: (i) all trust agreements or other funding arrangements
for such Park Meridian Benefit Plans (including insurance contracts), and
all amendments thereto, (ii) with respect to any such Park Meridian 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 Park Meridian 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 Park Meridian 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 Park Meridian. Each Park Meridian 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 Park Meridian, there are no circumstances
likely to result in revocation of any such favorable determination letter.
Each trust created under any Park Meridian ERISA Plan has been determined
to be exempt from Tax under Section 501(a) of the Internal Revenue Code and
Park Meridian is not aware of any circumstance which will or could
reasonably result in revocation of such exemption. With respect to each
Park Meridian Benefit Plan to the Knowledge of Park Meridian, 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 Park
Meridian. There is no Material pending or, to the Knowledge of Park
Meridian, threatened Litigation relating to any Park Meridian ERISA Plan.
(d) No Park Meridian Company has engaged in a transaction with respect
to any Park Meridian Benefit Plan that, assuming the Taxable Period of such
transaction expired as of the date of this Agreement, would subject any
Park Meridian 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 Park Meridian. Neither Park
Meridian nor, any administrator or fiduciary of any Park Meridian 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 Park Meridian
Benefit Plan which could subject Park Meridian 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 Park Meridian. No oral or written representation or communication with
respect to any aspect of the Park Meridian Benefit Plans has been made to
employees of any Park Meridian 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 Park Meridian.
(e) No Park Meridian 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 Park Meridian, 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
A-15
83
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Park Meridian. Neither any Park Meridian Pension Plan nor
any "single-employer plan," within the meaning of Section 4001(a)(15) of
ERISA, currently maintained by any Park Meridian Company, or the single-
employer plan of any entity which is considered one employer with Park
Meridian under Section 4001 of ERISA or Section 414 of the Internal Revenue
Code or Section 302 of ERISA (whether or not waived) (a "Park Meridian
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 Park Meridian Pension
Plan or any single-employer plan of an Park Meridian ERISA Affiliate have
been timely made and there is no lien either existing or expected under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax under
Internal Revenue Code Section 4971. No Park Meridian Company has provided,
or is required to provide, security to an Park Meridian Pension Plan or to
any single-employer plan of an Park Meridian ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code. All premiums required to
be paid by Park Meridian under ERISA Section 4006 have been timely paid by
Park Meridian, except to the extent any failure to timely pay would not
have a Material Adverse Effect on Park Meridian.
(f) No Liability under Title IV of ERISA has been or is expected to be
incurred by any Park Meridian Company with respect to any defined benefit
plan currently or formerly maintained by any of them or by any Park
Meridian 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 reasonably be expected to have a Material Adverse
Effect on Park Meridian).
(g) No Park Meridian Company has any obligations for retiree health
and retiree life benefits under any of the Park Meridian 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 other payment) becoming due to any director or any employee
of any Park Meridian Company from any Park Meridian Company under any Park
Meridian Benefit Plan or otherwise, other than by operation of Law, (ii)
increase any benefits otherwise payable under any Park Meridian Benefit
Plan, or (iii) result in any acceleration of the time of payment or vesting
of any such benefit.
5.14 Material Contracts. Except for Contracts filed as exhibits to Park
Meridian's Form 10-K for the fiscal year ended December 31, 2000, and as
exhibits to Form 10-Q for the period ended March 31, 2001, as of the date of
this Agreement, none of the Park Meridian 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 $75,000, (ii) any Contract relating to the borrowing
of money by any Park Meridian Company or the guarantee by any Park Meridian
Company of any such obligation (other than Contracts pertaining to fully-secured
repurchase agreements, and 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 Park Meridian with the SEC that has not been filed as an
exhibit to Park Meridian's Form 10-K filed for the fiscal year ended December
31, 2000 or on another SEC Document and identified to Regions (together with all
Contracts referred to in Sections 5.9 and 5.13 (a) of this Agreement, the "Park
Meridian Contracts"). With respect to each Park Meridian Contract: (i) the
Contract is in full force and effect; (ii) no Park Meridian 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 Park Meridian;
(iii) no Park Meridian 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 Park Meridian, in Default in any Material respect, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Park Meridian. All of the
A-16
84
indebtedness of any Park Meridian Company for money borrowed is prepayable at
any time by such Park Meridian Company without penalty or premium.
5.15 Legal Proceedings.
(a) There is no Litigation instituted or pending, or, to the Knowledge
of Park Meridian, threatened against any Park Meridian 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 Park
Meridian, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Park
Meridian Company, that are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Park Meridian.
(b) Section 5.15(b) of the Park Meridian Disclosure Memorandum
includes a summary report of all Litigation as of the date of this
Agreement to which any Park Meridian Company is a party and which names a
Park Meridian Company as a defendant or cross-defendant.
5.16 Reports. Since December 31, 1996, or the date of organization if
later, each Park Meridian 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 Park Meridian.
5.17 Statements True and Correct. None of the information supplied or to
be supplied by any Park Meridian Company or any Affiliate thereof regarding Park
Meridian 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 Park
Meridian Company or any Affiliate thereof for inclusion in the Proxy Statement
to be mailed to Park Meridian's stockholders in connection with the
Stockholders' Meeting will, when first mailed to the stockholders of Park
Meridian, 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 Park Meridian
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 Park Meridian Company or any Affiliate
thereof has taken or agreed to take any action, and Park Meridian 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 Park Meridian 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
Park Meridian and the Park Meridian Subsidiaries are in full force and effect
and, to the extent Park Meridian or any of the Park Meridian Subsidiaries
license the right to use such Intellectual Property, such licenses constitute
legal, valid, and binding obligations of the respective parties thereto, and
there have not been, and, to the Knowledge of Park Meridian, there currently are
not, any Defaults thereunder by Park Meridian or a Park Meridian Subsidiary.
Park Meridian or a Park Meridian 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 Park Meridian.
Neither Park Meridian nor any of the Park Meridian Subsidiaries nor, to the
Knowledge of Park Meridian, their respective predecessors has infringed the
Intellectual Property rights of others and, to the Knowledge of Park Meridian,
A-17
85
none of the Intellectual Property rights as used in the business conducted by
Park Meridian or the Park Meridian 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 Park Meridian. Neither Park Meridian nor any of the
Park Meridian 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. Park Meridian or a Park Meridian 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 Park Meridian or the Park Meridian
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 Park Meridian or any of the Park Meridian Subsidiaries.
5.20 State Takeover Laws. Subject to Park Meridian's right to withdraw or
alter its recommendation in accordance with the proviso set forth in the fourth
sentence of Section 8.1 of this Agreement, each Park Meridian Company has taken
all necessary action to exempt the transactions contemplated by this Agreement
from any applicable "moratorium," "control share," "fair price," "business
combination," or other anti-takeover laws and regulations of the State of North
Carolina (collectively, "Takeover Laws") including the relevant provisions of
Article 9A of the NCBCA.
5.21 Charter Provisions. Each Park Meridian 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 Park Meridian's right to withdraw or
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 Park Meridian Company that may be directly or
indirectly acquired or controlled by it.
5.22 Support Agreements. Each of the directors of Park Meridian 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 Park Meridian's own account, or for the
account of one or more the Park Meridian 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 Park Meridian 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
A-18
86
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 (which for this purpose only does not include
the Stock Option Agreement) represents a legal, valid, and binding
obligation of Regions, enforceable against Regions in accordance with its
terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the
equitable remedy of specific performance or injunctive relief is subject to
the discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by Regions,
nor the consummation by Regions of the transactions contemplated hereby,
nor compliance by Regions with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Regions'
Certificate of Incorporation or Bylaws, (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any Regions Company under, any
Contract or Permit of any Regions Company, where such Default or Lien, or
any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions, or
(iii) subject to receipt of the requisite Consents referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any
Regions Company or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other 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 Park
Meridian 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 Park Meridian 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 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
A-19
87
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 Park Meridian 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
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
A-20
88
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 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 Park Meridian's stockholders in connection with the
Stockholders' Meeting, will, when first mailed to the stockholders of Park
Meridian, 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,
A-21
89
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)
except as may be required by Law, 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 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 Park Meridian. 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, Park Meridian 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 Park Meridian 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 Park Meridian Company to another Park Meridian
Company) in excess of an aggregate of $500,000 (for the Park Meridian
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 Park Meridian 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 Park Meridian Company, or declare or pay any
dividend or make any other distribution in respect of Park Meridian's
capital stock; provided that Park Meridian may (to the extent legally able
to do so), but shall not be obligated to declare and pay regular quarterly
cash dividends on the Park Meridian 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 Park Meridian 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 Park Meridian Common Stock do not become entitled to receive
both a dividend in respect of their Park Meridian Common Stock and a
dividend in respect of their Regions Common Stock or fail to be entitled to
receive any dividends; or
A-22
90
(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 Park
Meridian Common Stock or any capital stock of any Park Meridian 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
Park Meridian Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Park Meridian
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 Park Meridian Subsidiary (unless any such
shares of stock are sold or otherwise transferred to another Park Meridian
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 Park Meridian 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 Park Meridian Company; (iv) grant any
increase in fees or other increases in compensation or other benefits to
directors of any Park Meridian Company; or (v) voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits; or
(g) enter into or amend any employment Contract between any Park
Meridian Company and any Person (unless such amendment is required by Law)
that the Park Meridian Company does not have the unconditional right to
terminate without Liability (other than Liability for services already
rendered and in accordance with the Park Meridian Benefit Plans), at any
time on or after the Effective Time; or
(h) adopt any new employee benefit plan of any Park Meridian Company
or make any Material change in or to any existing employee benefit plans of
any Park Meridian 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 Park Meridian Company for Material money damages or Material
restrictions upon the operations of any Park Meridian 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.
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.
A-23
91
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. Park Meridian shall furnish all
information concerning it and the holders of its capital stock as Regions may
reasonably request for inclusion in the Registration Statement. Park Meridian
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) Park
Meridian shall prepare and file with the SEC a Proxy Statement and mail such
Proxy Statement to its stockholders, (ii) each Party shall furnish to the other
all information concerning them that such other Party may reasonably request in
connection with such Proxy Statement, (iii) the Board of Directors of Park
Meridian shall recommend to its stockholders the approval of the matters
submitted for approval, and (iv) the Board of Directors of Park Meridian shall
use its reasonable efforts to obtain such stockholders' approval, provided that
Park Meridian may withdraw, modify, or change in an adverse manner to Regions
its recommendations if the Board of Directors of Park Meridian, 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 reasonably constitute a breach of the fiduciary duties of Park Meridian'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 Park
Meridian 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 Park Meridian 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 Park Meridian 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 North Carolina Articles of Merger with the Secretary of State of the State
of North Carolina 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. Subject to the terms and conditions of 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.
A-24
92
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 copies of
all work papers containing confidential information received from the other
Party.
(c) Each Party agrees to give the other Party notice as soon as
practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of
its investigation and which represents, or is reasonably likely to
represent, either a Material breach of any representation, warranty,
covenant, or agreement of the other Party or which has had or is reasonably
likely to have a Material Adverse Effect on the other Party; 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 Park Meridian
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, Park Meridian 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, Park Meridian 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) Park Meridian's Board of Directors concludes in good faith and consistent
with its fiduciary duties to Park Meridian'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, Park Meridian's
Board of Directors receives from such Person an executed confidentiality
agreement containing terms at least as stringent as those contained in the Park
Meridian Confidentiality Agreement, and (c) prior to providing any information
or data to any Person or entering into discussions or negotiations with any
Person, Park Meridian'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
A-25
93
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. Park Meridian 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. Park Meridian 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. Park Meridian
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 Park Meridian to terminate this Agreement (except as specifically
provided in Article 10 of this Agreement) or (ii) affect any other obligation of
Regions or Park Meridian 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. Park Meridian has disclosed in Section 8.9 of
the Park Meridian Disclosure Memorandum each Person whom it reasonably believes
may be deemed an "affiliate" of Park Meridian for purposes of Rule 145 under the
1933 Act. Park Meridian 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 Park
Meridian Common Stock held by such Person except as contemplated by such
agreement or by this Agreement and will not sell, pledge, transfer, or otherwise
dispose of the shares of Regions Common Stock to be received by such Person upon
consummation of the Merger except in compliance with applicable provisions of
the 1933 Act and the rules and regulations thereunder. Shares of Regions Common
Stock issued to such affiliates of Park Meridian in exchange for shares of Park
Meridian 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 Park Meridian
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 Park Meridian
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 Park Meridian shall be treated as service under
Regions' qualified defined benefit plans, (ii) service under any qualified
defined contribution plans of Park Meridian shall be treated as service under
Regions' qualified defined contribution plans, and (iii) service under any other
employee benefit plans of Park Meridian 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 (a) waive any waiting period and restrictions and limitations
for preexisting conditions or insurability, and (b) cause any deductible,
co-insurance, or maximum out-of-pocket payments made by the Continuing Employees
under Park Meridian'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 Park Meridian and/or any Park Meridian 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,
A-26
94
provided that after the Effective Time there is no Material reduction
(determined on an overall basis) in the benefits provided under the Park
Meridian employee benefit plans. Regions also shall cause Park Meridian and its
Subsidiaries to honor all employment, severance, consulting, and other
compensation Contracts disclosed in Section 8.10 of the Park Meridian Disclosure
Memorandum to Regions between any Park Meridian 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 Park Meridian Benefit Plans. Regions shall be responsible for the fees
related to the termination of the Park Meridian 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 Park Meridian or any
Park Meridian 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 Park Meridian, any of the Park Meridian
Subsidiaries, or any of their respective predecessors, or (ii) this
Agreement or any of the transactions contemplated hereby, whether in any
case asserted or arising before or after the Effective Time, Regions shall
indemnify and hold harmless, as and to the fullest extent permitted by Law,
each such Indemnified Party against any Liability (including reasonable
attorneys' fees and expenses in advance of the final disposition of any
claim, suit, proceeding, or investigation to each Indemnified Party to the
fullest extent permitted by Law upon receipt of any undertaking required by
applicable Law), judgments, fines, and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit,
proceeding, or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding, or investigation (whether asserted
or arising before or after the Effective Time), the Indemnified Parties may
retain counsel reasonably satisfactory to them; provided, however, that (a)
Regions shall have the right to assume the defense thereof and upon such
assumption Regions shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred
by any Indemnified Party in connection with the defense thereof, except
that if Regions elects not to assume such defense or counsel for the
Indemnified Parties reasonably advises the Indemnified Parties that there
are issues which raise conflicts of interest between Regions and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to them, and Regions shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (b) Regions shall not
be liable for any settlement effected without its prior written consent
(which consent shall not be unreasonably withheld), and (c) Regions shall
have no obligation hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine, and such
determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable Law. Regions' obligations under this Section
8.11(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 Park Meridian 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, and by their respective successors as if such successors
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
Park Meridian or any Park Meridian
A-27
95
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 Park
Meridian at or before the Effective Time to be covered by Park Meridian'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). Park Meridian 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 Park Meridian equity
securities (including derivative securities) in connection with this Agreement
by each individual who is a director or officer of Park Meridian to be exempt
under Rule 16b-3 promulgated under the 1934 Act.
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 Park Meridian 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
A-28
96
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 Park Meridian Common Stock who
exchange all of their Park Meridian 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 Park Meridian Common Stock who
exchange all of their Park Meridian Common Stock solely for Regions Common
Stock in the Merger will be the same as the tax basis of the Park Meridian
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 Park Meridian Common
Stock solely for Regions Common Stock in the Merger will be the same as the
holding period of the Park Meridian Common Stock surrendered in exchange
therefor, provided that such Park Meridian 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 Park
Meridian 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 Park Meridian 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 Park Meridian 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 Park Meridian 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 Park Meridian 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 Park Meridian; 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 Park Meridian or to a matter being "known" by Park Meridian
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of Park Meridian to be performed and complied with
pursuant to this Agreement and the other agreements
A-29
97
contemplated hereby prior to the Effective Time shall have been duly
performed and complied with in all Material respects.
(c) Certificates. Park Meridian shall have delivered to Regions (i) a
certificate, dated as of the Effective Time and signed on Park Meridian'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)
Park Meridian'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) Park Meridian'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 Park Meridian. The obligations of Park
Meridian 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 Park Meridian 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 "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 Park Meridian (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 Park
Meridian 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 Park
Meridian, 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 Park Meridian; or
A-30
98
(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 Park Meridian 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 Park Meridian
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 Park Meridian 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
Park Meridian 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 December 31, 2001, 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 Regions, Park
Meridian, 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.
A-31
99
"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 Price" shall mean the average of the daily volume weighted
averages of the trading 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 Park
Meridian and Regions) for the ten consecutive full trading days in which
such shares are traded on the Nasdaq NMS ending at the close of trading
on the second full trading day prior to the date of 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 May 14, 2001, by and between Park Meridian 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 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.
A-32
100
"Exhibits" 1 through 3, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"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.
A-33
101
"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 a Material adverse
impact, arising from an event, change, or occurrence which, individually
or together with any other event, change, or occurrence 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.
"NCBCA" shall mean the North Carolina Business Corporation Act.
"North Carolina Articles of Merger" shall mean the Articles of
Merger executed by Regions and filed with the Secretary of State of the
State of North Carolina 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.
"Park Meridian Common Stock" shall mean the $.01 par value common
stock of Park Meridian.
"Park Meridian Companies" shall mean, collectively, Park Meridian
and all Park Meridian Subsidiaries.
"Park Meridian Disclosure Memorandum" shall mean the written
information entitled "Park Meridian 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.
"Park Meridian Financial Statements" shall mean (i) the
consolidated statements of condition (including related notes and
schedules, if any) of Park Meridian 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 Park Meridian in SEC Documents, and (ii) the consolidated
statements of condition of Park
A-34
102
Meridian (including related notes and schedules, if any) and related
statement of income, change 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.
"Park Meridian Stock Plans" shall mean the existing stock option
and other stock-based compensation plans of Park Meridian, including,
without limitation, the stock option plans and programs of any Persons
acquired by Park Meridian or a Park Meridian Subsidiary.
"Park Meridian Subsidiaries" shall mean the Subsidiaries of Park
Meridian, which shall include the Park Meridian Subsidiaries described
in Section 5.4 of this Agreement and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of Park
Meridian in the future and owned by Park Meridian at the Effective Time.
"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 Park Meridian or Regions, and "Parties"
shall mean both Park Meridian and Regions.
"Permit" shall mean any federal, state, local, or 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 Park
Meridian 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 Park Meridian Common Stock.
"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,
A-35
103
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 Park
Meridian 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.
"Stock Option Agreement" shall mean that certain stock option
agreement by and between Park Meridian and Regions substantially in the
form of Exhibit 2.
"Stockholders' Meeting" shall mean the meeting of the stockholders
of Park Meridian to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 50% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
50% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, there shall not be included any such
entity acquired through foreclosure or any such entity the equity
securities of which are owned or controlled in a fiduciary capacity.
"Superior Proposal" means, with respect to Park Meridian, any
written Acquisition Proposal made by a Person other than Regions which
(i) is for (a) a merger, reorganization, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution, or
similar transaction involving Park Meridian as a result of which either
(1) Park Meridian's stockholders prior to such transaction (by virtue of
their ownership of Park Meridian'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 Park
Meridian 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 Park Meridian 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 Park Meridian 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 Park Meridian 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 (including the impact of the Stock Option
A-36
104
Agreement) and the Person making the proposal, (1) 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
(2) 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.
(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)
Indemnified Parties......................................... Section 8.11(a)
Merger...................................................... Section 1.1
Park Meridian Benefit Plans................................. Section 5.13(a)
Park Meridian Contracts..................................... Section 5.14(a)
Park Meridian ERISA Affiliate............................... Section 5.13(e)
Park Meridian ERISA Plan.................................... Section 5.13(a)
Park Meridian Options....................................... Section 3.6(a)
Park Meridian Pension Plan.................................. Section 5.13(a)
Park Meridian 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."
A-37
105
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
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 Park Meridian or Regions, each of Park Meridian 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 Park Meridian 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 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 8.12 and 8.14 of this
Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
stockholder approval of this Agreement has been obtained; provided, that the
provisions of this Agreement relating to the manner or basis in which shares of
Park Meridian 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 Park Meridian
Common Stock entitled to vote thereon and Section 8.11 of this Agreement may not
be amended after the Effective Time in a manner adverse to any director or
officer of Park Meridian without such director's or officer's written consent.
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 Park Meridian, to waive or
extend the time for the compliance or fulfillment by Park Meridian 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, Park Meridian, 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 Park Meridian under this
Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be
A-38
106
effective unless in writing signed by a duly authorized officer of Park
Meridian 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.
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:
Park Meridian:
Park Meridian Financial Corporation
6826 Morrison Boulevard
Charlotte, North Carolina 28211
Telecopy Number: (704) 366-8165
Attention: Kevin T. Kennelly
President and Chief Executive Officer
Copy to Counsel:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Telecopy Number: (704) 373-3955
Attention: Stephen M. Lynch
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 North Carolina relate to the consummation of the Merger.
A-39
107
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, because such
Party may be considered the draftsman. The Parties acknowledge and agree that
this Agreement has been reviewed, negotiated, and accepted by all Parties and
their attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and intentions
of the Parties.
11.13 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
A-40
108
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: PARK MERIDIAN FINANCIAL CORPORATION
By: /s/ BRYAN F. KENNEDY III By: /s/ KEVIN T. KENNELLY
------------------------------------------------- -------------------------------------------------
Bryan F. Kennedy III Kevin T. Kennelly
Executive Vice President President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ SAMUEL E. UPCHURCH, JR. By: /s/ CARL E. JONES, JR.
------------------------------------------------- -------------------------------------------------
Samuel E. Upchurch, Jr. Carl E. Jones, Jr.
Corporate Secretary President and Chief Executive Officer
[CORPORATE SEAL]
A-41
109
APPENDIX B
[Letterhead of The Orr Group]
August 20, 2001
Park Meridian Financial Corporation
P.O. Box 11816
Charlotte, NC 28220
Members of the Board:
You have requested our opinion as investment bankers as to the fairness,
from a financial point of view, to the stockholders, ("Stockholders"), of Park
Meridian Financial Corporation (the "Company") of the consideration to be
received by such stockholders in the proposed merger (the "Merger") of the
Company with Regions Financial Corporation ("Acquiror") pursuant to the Plan of
Merger of Park Meridian Financial Corporation with and into Regions Financial
Corporation (the "Merger Agreement"), between the Company and Acquiror. Upon the
effectiveness of the Merger, each issued and outstanding share of the Company's
Common Stock will be converted into .55 shares of the Acquiror's common stock.
In connection with rendering our opinion, we have reviewed and analyzed,
among other things, the following: (i) the Merger Agreement; (ii) certain
publicly available information concerning the Company and Acquiror, including
the Annual Reports on Form 10-KSB of the Company for each of the years in the
three year period ended December 31, 1998-2000 and the Annual Reports on Form
10-K of the Acquiror for each of the years in the three year period ended
December 31, 1998-2000, the Quarterly Reports on Form 10-QSB of the Company and
the Quarterly Reports on Form 10-Q of the Acquiror for the quarters ended March
31 and June 30, 2001, (iii) certain available financial forecasts concerning the
business and operations of the Company and Acquiror that were prepared by
management of the Company and Acquiror, respectively, and (iv) certain publicly
available information with respect to other companies that we believe to be
comparable in certain respects to the Company and Acquiror and the trading
markets for such other companies' securities. We have held discussions with
certain officers and employees of the Company and Acquiror to discuss the past
and current business operations, financial condition and prospects of the
Company and Acquiror, as well as matters we believe relevant to our inquiry. We
have also considered other information, financial studies, analyses,
investigations and financial, economic and market criteria that we deemed
relevant.
In our review and analysis, we have assumed and relied upon the accuracy
and completeness of all of the financial and other information provided us, or
that is publicly available, and have not attempted independently to verify nor
assumed responsibility for verifying any such information. With respect to the
financial projections, we have assumed that they have been reasonably prepared
on bases reflecting the best currently available estimates and judgments of the
Company or Acquiror, as the case may be, and we express no opinion with respect
to such forecasts or the assumptions on which they are based. We have not made
or obtained or assumed any responsibility for making or obtaining any
independent evaluations or appraisals of any of the assets (including properties
and facilities) or liabilities of the Company or Acquiror.
In conducting our analysis and arriving at our opinion as expressed herein,
we have considered such financial and other factors that we have deemed
appropriate under the circumstances, including the following: (i) the historical
and current financial position and results of operations of the Company and
Acquiror; (ii) the historical and current market for the equity securities of
the Company, Acquiror and other companies that we believe to be comparable in
certain respects to the Company or Acquiror; (iii) the nature and terms of
certain other acquisition transactions that we believe to be relevant; and (iv)
the current and historical relationships between the trading levels of the
Company's common stock and the Acquiror's common stock. We have taken into
account our assessment of general economic, market and financial conditions and
our knowledge of the banking industry, as well as our experience in connection
with similar transactions and securities valuation generally.
B-1
110
Our opinion is based upon conditions as they exist and can be evaluated on
the date hereof. Our opinion expressed below does not imply any conclusion as to
the likely trading range for the Acquiror's Common Stock following the
consummation of the Merger, which may vary depending upon, among other factors,
changes in interest rates, dividend rates, market conditions, general economic
conditions and factors that generally influence the price of securities. Our
opinion does not address the Company's underlying business decision to effect
the Merger. Our opinion is directed only to the fairness, from a financial point
of view, of the Merger Consideration and does not constitute a recommendation
concerning how holders of the Company's common stock should vote with respect to
the Merger Agreement. The Orr Group was not requested to solicit third-party
offers to acquire all of the Company immediately preceding or in connection with
the process resulting in the proposed Merger. The Orr Group did not participate
in the discussions and negotiations with respect to the proposed Merger. The Orr
Group will receive a fee from the Company for delivery of this fairness opinion.
In rendering our opinion we have assumed that in the course of obtaining
the necessary regulatory approvals for the Merger no restrictions will be
imposed that would have a material adverse affect on the contemplated benefits
of the Merger to the Company following the Merger. We understand that the Merger
will qualify as a tax-free reorganization under the Internal Revenue Code and
that, for accounting purposes, the Merger will be accounted for as a purchase.
Subject to the foregoing, it is our opinion that, as of the date hereof,
the Merger consideration to be received by the Company's Stockholders is fair to
such Stockholders from a financial point of view.
Very truly yours,
Laney G. Orr, III
Managing Director
B-2
111
ARTICLE 13 OF THE NORTH CAROLINA BUSINESS CORPORATION ACT
ARTICLE 13
DISSENTER'S RIGHTS
PART I. RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SEC. 55-13-01. DEFINITIONS
In this Article:
(1) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action, or the surviving or acquiring corporation by
merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under G.S. 55-13-02 and who exercises that right when and
in the manner required by G.S. 55-13-20 through 55-13-28.
(3) "Fair value," with respect to a dissenter's shares, means the
value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would
be inequitable.
(4) "Interest" means interest from the effective date of the corporate
action until the date of payment, at a rate that is fair and equitable
under all the circumstances, giving due consideration to the rate currently
paid by the corporation on its principal bank loans, if any, but not less
than the rate provided in G.S. 24-1.
(5) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of
shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial
owner of shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
SEC. 55-13-02. RIGHT TO DISSENT
(a) In addition to any rights granted under Article 9, a shareholder is
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(1) Consummation of a plan of merger to which the corporation (other
than a parent corporation in a merger whose shares are not affected under
G.S. 55-11-04) is a party unless (i) approval by the shareholders of that
corporation is not required under G.S. 55-11-03(g) or (ii) such shares are
then redeemable by the corporation at a price not greater than the cash to
be received in exchange for such shares;
(2) Consummation of a plan of share exchange to which the corporation
is a party as the corporation whose shares will be acquired, unless such
shares are then redeemable by the corporation at a price not greater than
the cash to be received in exchange for such shares;
(3) Consummation of a sale or exchange of all, or substantially all,
of the property of the corporation other than as permitted by G.S.
55-12-01, including a sale in dissolution, but not including a sale
pursuant to court order or a sale pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed in
cash to the shareholders within one year after the date of sale;
(4) An amendment of the articles of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it (i)
alters or abolishes a preferential right of the shares;
C-1
112
(ii) creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares; (iii) alters or abolishes a preemptive right of
the holder of the shares to acquire shares or other securities; (iv)
excludes or limits the right of the shares to vote on any matter, or to
cumulate votes; (v) reduces the number of shares owned by the shareholder
to a fraction of a share if the fractional share so created is to be
acquired for cash under G.S. 55-6-04; or (vi) changes the corporation into
a nonprofit corporation or cooperative organization; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the articles of incorporation, bylaws, or a resolution of the board
of directors provides that voting or nonvoting shareholders are entitled to
dissent and obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this Article may not challenge the corporate action creating his
entitlement, including without limitation a merger solely or partly in exchange
for cash or other property, unless the action is unlawful or fraudulent with
respect to the shareholder or the corporation.
(c) Notwithstanding any other provision of this Article, there shall be no
right of shareholders to dissent from, or obtain payment of the fair value of
the shares in the event of, the corporate actions set forth in subdivisions (1),
(2), or (3) of subsection (a) of this section if the affected shares are any
class or series which, at the record date fixed to determine the shareholders
entitled to receive notice of and to vote at the meeting at which the plan of
merger or share exchange or the sale or exchange of property is to be acted on,
were (i) listed on a national securities exchange or designated as a national
market system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc., or (ii) held by at least 2,000 record
shareholders. This subsection does not apply in cases in which either:
(1) The articles of incorporation, bylaws, or a resolution of the
board of directors of the corporation issuing the shares provide otherwise;
or
(2) In the case of a plan of merger or share exchange, the holders of
the class or series are required under the plan of merger or share exchange
to accept for the shares anything except:
a. Cash;
b. Shares, or shares and cash in lieu of fractional shares of the
surviving or acquiring corporation, or of any other corporation which,
at the record date fixed to determine the shareholders entitled to
receive notice of and vote at the meeting at which the plan of merger or
share exchange is to be acted on, were either listed subject to notice
of issuance on a national securities exchange or designated as a
national market system security on an interdealer quotation system by
the National Association of Securities Dealers, Inc., or held by at
least 2,000 record shareholders; or
c. A combination of cash and shares as set forth in
sub-subdivisions a. and b. of this subdivision.
SEC. 55-13-03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the corporation in writing of
the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares
held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(2) He does so with respect to all shares of which he is the
beneficial shareholder.
C-2
113
SEC. 55-13-04 TO 55-13-19. RESERVED FOR FUTURE CODIFICATION PURPOSES
PART 2. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
SEC. 55-13-20. NOTICE OF DISSENTERS' RIGHTS
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, the meeting notice
must state that shareholders are or may be entitled to assert dissenters' rights
under this Article and be accompanied by a copy of this Article.
(b) If corporate action creating dissenters' rights under G.S. 55-13-02 is
taken without a vote of shareholders, the corporation shall no later than 10
days thereafter notify in writing all shareholders entitled to assert
dissenters' rights that the action was taken and send them the dissenters'
notice described in G.S. 55-13-22.
(c) If a corporation fails to comply with the requirements of this section,
such failure shall not invalidate any corporate action taken; but any
shareholder may recover from the corporation any damage which he suffered from
such failure in a civil action brought in his own name within three years after
the taking of the corporate action creating dissenters' rights under G.S.
55-13-02 unless he voted for such corporate action.
SEC. 55-13-21. NOTICE OF INTENT TO DEMAND PAYMENT
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is submitted to a vote at a shareholders' meeting, a shareholder who
wishes to assert dissenters' rights:
(1) Must give to the corporation, and the corporation must actually
receive, before the vote is taken written notice of his intent to demand
payment for his shares if the proposed action is effectuated; and
(2) Must not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a)
is not entitled to payment for his shares under this Article.
SEC. 55-13-22. DISSENTERS' NOTICE
(a) If proposed corporate action creating dissenters' rights under G.S.
55-13-02 is authorized at a shareholders' meeting, the corporation shall mail by
registered or certified mail, return receipt requested, a written dissenters'
notice to all shareholders who satisfied the requirement of G.S. 55-13-21.
(b) The dissenters' notice must be sent no later than 10 days after
shareholder approval, or if no shareholder approval is required, after approval
of the board of directors, of the corporate action creating dissenters' rights
under 6.S.55-13-02, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment;
(4) Set a date by which the corporation must receive the payment
demand, which date may not be fewer than 30 nor more than 60 days after the
date the subsection (a) notice is mailed; and
(5) Be accompanied by a copy of this Article.
SEC. 55-13-23. DUTY TO DEMAND PAYMENT
(a) A shareholder sent a dissenters' notice described in G.S. 55-13-22 must
demand payment and deposit his share certificates in accordance with the terms
of the notice.
C-3
114
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this Article.
SEC. 55-13-24. SHARE RESTRICTION
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is taken or the restrictions released under G.S. 55-13-26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
SEC. 55-13-25. PAYMENT
(a) As soon as the proposed corporate action is taken, or within 30 days
after receipt of a payment demand, the corporation shall pay each dissenter who
complied with G.S. 55-13-23 the amount the corporation estimates to be the fair
value of his shares, plus interest accrued to the date of payment.
(b) The payment shall be accompanied by:
(1) The corporation's most recent available balance sheet as of the
end of a fiscal year ending not more than 16 months before the date of
payment, an income statement for that year, a statement of cash flows for
that year, and the latest available interim financial statements, if any;
(2) An explanation of how the corporation estimated the fair value of
the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under G.S.
55-13-28; and
(5) A copy of this Article.
SEC. 55-13-26. FAILURE TO TAKE ACTION
(a) If the corporation does not take the proposed action within 60 days
after the date set for demanding payment and depositing share certificates, the
corporation shall return the deposited certificates and release the transfer
restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under G.S. 55-13-22 and repeat the payment demand procedure.
SEC. 55-13-27. RESERVED FOR FUTURE CODIFICATION PURPOSES
SEC. 55-13-28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH CORPORATION'S PAYMENT
OR FAILURE TO PERFORM
(a) A dissenter may notify the corporation in writing of his own estimate
of the fair value of his shares and amount of interest due, and demand payment
of the amount in excess of the payment by the corporation under G.S. 55-13-25
for the fair value of his shares and interest due, if;
(1) The dissenter believes that the amount paid under G.S. 55-13-25 is
less than the fair value of his shares or that the interest due is
incorrectly calculated;
(2) The corporation fails to make payment under G.S. 55-13-25; or
C-4
115
(3) The corporation, having failed to take the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within 60 days after the date set for
demanding payment.
(b) A dissenter waives his rights to demand payment under this section
unless he notifies the corporation of his demand in writing (i) under
subdivision (a)(1) within 30 days after the corporation made payment for his
shares or (ii) under subdivisions (a)(2) and (a)(3) within 30 days after the
corporation has failed to perform timely. A dissenter who fails to notify the
corporation of his demand under subsection (a) within such 30-day period shall
be deemed to have withdrawn his dissent and demand for payment.
SEC. 55-13-29. RESERVED FOR FUTURE CODIFICATION PURPOSES
PART 3. JUDICIAL APPRAISAL OF SHARES
SEC. 55-13-30. COURT ACTION
(a) If a demand for payment under G.S. 55-13-28 remains unsettled, the
dissenter may commence a proceeding within 60 days after the earlier of (i) the
date payment is made under G.S. 55-13-25, or (ii) the date of the dissenter's
payment demand under G.S. 55-13-28 by filing a complaint with the Superior Court
Division of the General Court of Justice to determine the fair value of the
shares and accrued interest. A dissenter who takes no action within the 60-day
period shall be deemed to have withdrawn his dissent and demand for payment.
(a)(1) Repealed by Session Laws 1997-202, s.4, effective October 1, 1997.
(b) Reserved for future codification purposes.
(c) The court shall have the discretion to make all dissenters (whether or
not residents of this State) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties must be served
with a copy of the complaint. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the superior court in which the proceeding is
commenced under subsection (a) is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The parties are entitled to
the same discovery rights as parties in other civil proceedings. The proceeding
shall be tried as in other civil actions. However, in a proceeding by a
dissenter in a corporation that was a public corporation immediately prior to
consummation of the corporate action giving rise to the right of dissent under
G.S. 55-13-02, there is no right to a trial by jury.
(e) Each dissenter made a party to the proceeding is entitled to judgment
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation.
SEC. 55-13-31. COURT COSTS AND COUNSEL FEES
(a) The court in an appraisal proceeding commenced under G.S. 55-13-30
shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court, and shall assess
the costs as it finds equitable.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amount the court finds equitable:
(1) Against the corporation and in favor of any or all dissenters if
the court finds the corporation did not substantially comply with the
requirements of G.S. 55-13-20 through 55-13-28; or
(2) Against either the corporation or a dissenter, in favor of either
or any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this Article.
C-5
116
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
C-6
117
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of the Certificate of Incorporation of the Registrant
provides:
"(a) The corporation shall indemnify its officers, directors,
employees, and agents to the full extent permitted by the General
Corporation Law of Delaware. (b) No director of the corporation shall
be personally liable to the corporation or its stockholders for
monetary damages, for breach of fiduciary duty as a director, except
for liability (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law; (iii) under Section 174 of the Delaware General
Corporation Law; or (iv) for any transaction from which the director
derived an improper personal benefit."
Section 145 of the Delaware General Corporation law empowers the
Registrant to indemnify its officers and directors under certain circumstances.
The pertinent provisions of that statute read as follows:
"(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had reasonable cause
to believe that his conduct was unlawful.
"(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request
II-1
118
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent
that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which the Court of Chancery or such other court shall
deem proper.
"(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
"(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by a majority vote of the directors who
are not parties to such action, suit or proceeding, even though less
than a quorum, or (2) if there are no such directors, or if such
directors so direct, by independent legal counsel in a written opinion,
or (3) by the stockholders.
"(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized
in this section. Such expenses (including attorneys' fees) incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
"(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
II-2
119
"(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under this section.
"(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
"(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with
respect to an employee benefit plan, its participants or beneficiaries;
and a person who acted in good faith and in a manner he reasonably
believed to be in the interest of the participants and beneficiaries of
an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in
this section.
"(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
"(k) The Court of Chancery is hereby vested with exclusive
jurisdiction to hear and determine all actions for advancement of
expenses or indemnification brought under this section or under any
bylaw, agreement, vote of stockholders or disinterested directors, or
otherwise. The Court of Chancery may summarily determine a
corporation's obligation to advance expenses (including attorneys'
fees)."
The Registrant has purchased a directors' and officers' liability
insurance contract which provides, within stated limits, reimbursement either to
a
II-3
120
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 June 26, 2001, by
and between Park Meridian Financial Corporation and Regions
Financial Corporation -- included as Appendix A to the Proxy
Statement/Prospectus.
2.2 -- Stock Option Agreement, dated as of June 26, 2001, by and between
Park Meridian Financial Corporation and Regions Financial
Corporation.
4.1 -- Certificate of Incorporation of Regions Financial Corporation --
incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-86975.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by
reference from S-4 Registration Statement of Regions Financial
Corporation, file no. 333-86975.
5. -- Form of opinion re: legality.
8. -- Form of opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Lange, Simpson, Robinson & Somerville LLP - to be
included in Exhibit 5.
23.3 -- Consent of Alston & Bird LLP-to be included in Exhibit 8.
23.4 -- Consent of KPMG LLP.
23.5 -- Consent of PricewaterhouseCoopers LLP.
23.6 -- Consent of The Orr Group.
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 Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification
II-4
121
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
122
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Birmingham,
State of Alabama on this the 30th day of August, 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
registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATE
--------- ----- ----
*
--------------------------- Chairman, President and Chief August 30, 2001
Carl E. Jones, Jr. Executive Officer and Director
(principal executive officer)
/s/ Richard D. Horsley
--------------------------- Vice Chairman of the Board and August 30, 2001
Richard D. Horsley Executive Financial Officer
and Director
(principal financial officer)
*
--------------------------- Executive Vice President and August 30, 2001
D. Bryan Jordan Comptroller
(principal accounting officer)
123
*
----------------------------- Director August 30, 2001
Sheila S. Blair
*
----------------------------- Director August 30, 2001
James B. Boone, Jr.
*
----------------------------- Director August 30, 2001
James S.M. French
*
----------------------------- Director August 30, 2001
Olin B. King
*
----------------------------- Director August 30, 2001
Allen C Morgan, Jr.
----------------------------- Director
Michael W. Murphy
*
----------------------------- Director August 30, 2001
Henry E. Simpson
----------------------------- Director
Lee J. Styslinger, Jr.
*
----------------------------- Director August 30, 2001
W. Woodrow Stewart
*
----------------------------- Director August 30, 2001
John H. Watson
*
----------------------------- Director August 30, 2001
C. Kemmons Wilson, Jr.
* By /s/ Richard D. Horsley as attorney-in-fact August 30, 2001
pursuant to a power of attorney.
124
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- ------------------------------------------------------------------
2.1 -- Agreement and Plan of Merger, dated as of June 26, 2001, by
and between Park Meridian Financial Corporation and Regions
Financial Corporation -- included as Appendix A to the Proxy
Statement/Prospectus.
2.2 -- Stock Option Agreement, dated as of June 26, 2001, by and between
Park Meridian Financial Corporation and Regions Financial
Corporation.
4.1 -- Certificate of Incorporation of Regions Financial Corporation --
incorporated by reference from S-4 Registration Statement of
Regions Financial Corporation, file no. 333-86975.
4.2 -- By-laws of Regions Financial Corporation -- incorporated by
reference from S-4 Registration Statement of Regions Financial
Corporation, file no. 333-86975.
5. -- Form of opinion re: legality.
8. -- Form of opinion re: tax matters.
23.1 -- Consent of Ernst & Young LLP.
23.2 -- Consent of Lange, Simpson, Robinson & Somerville LLP - to be
included in Exhibit 5.
23.3 -- Consent of Alston & Bird LLP-to be included in Exhibit 8.
23.4 -- Consent of KPMG LLP.
23.5 -- Consent of PricewaterhouseCoopers LLP.
23.6 -- Consent of The Orr Group.
24.1 -- Power of Attorney.
99. -- Form of proxy.