SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Regions Financial Corporation
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
THE INFORMATION IN THIS JOINT PROXY STATEMENT/PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. WE MAY NOT ISSUE THE COMMON STOCK TO BE ISSUED IN CONNECTION WITH
THE MERGER DESCRIBED IN THIS JOINT PROXY STATEMENT/PROSPECTUS UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRELIMINARY DRAFT DATED APRIL 13, 2004, SUBJECT TO COMPLETION
(Regions Financial Logo) (Union Planters Corporation Logo)
---------------------
PROPOSED MERGER -- YOUR VOTE IS VERY IMPORTANT
The boards of directors of Regions Financial Corporation and Union Planters
Corporation have each unanimously approved a strategic merger designed to create
a financial institution with a larger and more competitive presence in the
mid-Southeast region of the U.S. and other markets we serve, with a leading
regional banking, brokerage and mortgage business. We believe the combined
company will create substantially more stockholder value than could be achieved
by either company individually. After completion of the merger, we expect that
current Regions stockholders will own approximately 59% of the combined company
and Union Planters shareholders will own approximately 41% of the combined
company. We will combine our companies by merging each into a newly-formed
company, which we call "New Regions," and which will be renamed "Regions
Financial Corporation" in the merger.
IF THE MERGER IS COMPLETED, REGIONS STOCKHOLDERS WILL RECEIVE 1.2346 SHARES
OF NEW REGIONS COMMON STOCK FOR EACH SHARE OF REGIONS COMMON STOCK HELD
IMMEDIATELY PRIOR TO THE MERGER. UNION PLANTERS SHAREHOLDERS WILL RECEIVE ONE
SHARE OF NEW REGIONS COMMON STOCK FOR EACH SHARE OF UNION PLANTERS COMMON STOCK
HELD IMMEDIATELY PRIOR TO THE MERGER.
REGIONS UNION PLANTERS
COMMON COMMON
STOCK STOCK
CLOSING PRICE CLOSING PRICE
------------- --------------
January 22, 2004 (the day prior to announcement of the $37.75 $31.36
merger)...................................................
[--], 2004.................................................. $ [--] $ [--]
You should obtain current market quotations for both Regions common stock
and Union Planters common stock. Regions common stock is listed on the New York
Stock Exchange under the symbol "RF." Union Planters common stock is listed on
the New York Stock Exchange under the symbol "UPC."
The merger will generally be tax-free to both Regions stockholders and Union
Planters shareholders except for taxes on cash received instead of fractional
New Regions shares.
We cannot complete the merger unless the Regions stockholders and Union
Planters shareholders approve it. Regions will hold a stockholders' meeting and
Union Planters will hold a shareholders' meeting to vote on this merger
proposal. YOUR VOTE IS IMPORTANT. Whether or not you plan to attend your
meeting, please take the time to submit your proxy with voting instructions in
accordance with the instructions contained in this document. If you do not vote,
it will have the same effect as voting against the merger. The places, dates and
times of the meetings are as follows:
FOR REGIONS STOCKHOLDERS: FOR UNION PLANTERS SHAREHOLDERS:
[--], 2004 [--], 2004
Regions Bank Operations Center Union Planters Bank, National Association
201 Milan Parkway 6200 Poplar Avenue, Main Floor
Birmingham, Alabama 35209 Memphis, Tennessee 38119
REGIONS' BOARD OF DIRECTORS UNANIMOUSLY UNION PLANTERS' BOARD OF DIRECTORS UNANIMOUSLY
RECOMMENDS THAT REGIONS STOCKHOLDERS VOTE RECOMMENDS THAT UNION PLANTERS SHAREHOLDERS VOTE
FOR ADOPTION OF THE MERGER AGREEMENT FOR APPROVAL OF THE MERGER AGREEMENT.
This document describes the meetings, the merger, the documents related to
the merger, and other related matters. PLEASE READ THIS ENTIRE DOCUMENT
CAREFULLY. You can also obtain information about our companies from documents
that we have filed with the Securities and Exchange Commission.
-------------------------------------------------- --------------------------------------------------
Carl E. Jones, Jr. Jackson W. Moore
Chairman of the Board, President and Chairman, President and Chief Executive Officer
Chief Executive Officer Union Planters Corporation
Regions Financial Corporation
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE NEW REGIONS COMMON STOCK TO BE ISSUED
UNDER THIS JOINT PROXY STATEMENT/PROSPECTUS OR DETERMINED IF THIS JOINT PROXY
STATEMENT/PROSPECTUS IS ACCURATE OR ADEQUATE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES TO BE ISSUED IN THE MERGER ARE NOT SAVINGS OR DEPOSIT ACCOUNTS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
The date of this joint proxy statement/prospectus is [--], 2004, and it is
first being mailed or otherwise delivered to Regions stockholders and Union
Planters shareholders on or about [--], 2004.
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about Regions and Union Planters from documents that are not included in or
delivered with this document. You can obtain documents incorporated by reference
in this document, other than certain exhibits to those documents, by requesting
them in writing or by telephone from the appropriate company at the following
addresses:
REGIONS FINANCIAL CORPORATION UNION PLANTERS CORPORATION
417 North 20th Street 6200 Poplar Avenue
Birmingham, Alabama 35202 Memphis, Tennessee 38119
Attention: Jenifer Goforth Attention: Richard W. Trigger
Investor Relations Investor Relations
Telephone: (205) 944-1300 Telephone: (901) 580-5977
You will not be charged for any of these documents that you request.
Regions stockholders and Union Planters shareholders requesting documents should
do so by [--], 2004 in order to receive them before the meetings.
See "WHERE YOU CAN FIND MORE INFORMATION" on page [--].
VOTE ELECTRONICALLY OR BY TELEPHONE
Regions stockholders of record may submit their proxies:
- through the internet, by visiting the website indicated on their proxy
card and following the instructions; or
- by telephone, by calling the toll-free number indicated on their proxy
card on a touch-tone phone and following the recorded instructions.
Union Planters shareholders of record may submit their proxies:
- through the internet, by visiting the website indicated on their proxy
card and following the instructions; or
- by telephone, by calling the toll-free number indicated on their proxy
card on a touch-tone phone and following the recorded instructions.
REGIONS FINANCIAL CORPORATION
417 NORTH 20TH STREET
BIRMINGHAM, ALABAMA 35202
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [--], 2004
Regions Financial Corporation will hold its annual meeting of stockholders
at Regions Bank Operations Center, 201 Milan Parkway, Birmingham, Alabama 35209
at [--], local time, on [--], 2004 to consider and vote upon the following
matters:
- a proposal to adopt the Agreement and Plan of Merger, dated as of January
22, 2004, by and between Union Planters Corporation and Regions Financial
Corporation, pursuant to which Union Planters and Regions will each be
merged with and into a newly-formed holding company, New Regions
Financial Corporation;
- electing the four nominees for director named in the attached joint proxy
statement/prospectus as directors of Regions, to serve as directors with
terms expiring at the 2007 annual meeting of stockholders, in each case
until their successors are duly elected and qualified. If the merger is
completed, the board of directors of New Regions will be reconstituted to
consist of thirteen directors from Regions and thirteen directors from
Union Planters, as described in the accompanying joint proxy
statement/prospectus;
- ratifying the appointment of Ernst & Young LLP as Regions' independent
auditors for the year 2004;
- a stockholder proposal which the board of directors and management oppose
regarding the required stockholder vote for election of directors;
- a proposal to approve the adjournment of the Regions annual meeting, if
necessary or appropriate, to solicit additional proxies; and
- such other business as may properly come before the Regions meeting or
any adjournment or postponement thereof.
In the merger, New Regions will be the surviving corporation, and each
share of Regions common stock will be converted into 1.2346 shares of New
Regions common stock and each share of Union Planters common stock will be
converted into one share of New Regions common stock. Your attention is directed
to the joint proxy statement/prospectus accompanying this notice for a complete
discussion of the merger and the related transactions. A copy of the merger
agreement is included as Appendix A to the accompanying joint proxy
statement/prospectus.
The Regions board of directors has fixed the close of business on [--],
2004 as the record date for the Regions annual meeting. This means that Regions
stockholders of record at such time are entitled to notice of, and to vote at,
the Regions annual meeting or any adjournment or postponement of the annual
meeting. A complete list of Regions stockholders entitled to vote at the Regions
annual meeting will be made available for inspection by any Regions stockholder
for ten days prior to the Regions annual meeting at the principal executive
offices of Regions and at the time and place of the Regions annual meeting. In
order for the merger agreement to be adopted, the holders of a majority of the
Regions shares outstanding and entitled to vote thereon must vote in favor of
adoption of the merger agreement.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SUBMIT YOUR
PROXY WITH VOTING INSTRUCTIONS. TO SUBMIT YOUR PROXY BY MAIL, PLEASE COMPLETE,
SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
SELF-ADDRESSED, STAMPED ENVELOPE. Alternatively, you may use the toll-free
telephone number indicated on the proxy card to vote by telephone or visit the
website indicated on the proxy card to vote on the internet. This will not
prevent you from voting in person, but it will help to secure a quorum and avoid
added solicitation costs. Any holder of Regions common stock who is present at
the Regions annual meeting may vote in person instead of by proxy, thereby
canceling any previous proxy. In any event, a proxy may be revoked in writing at
any time before the Regions annual meeting.
THE REGIONS BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT REGIONS STOCKHOLDERS VOTE "FOR"
ADOPTION OF THE MERGER AGREEMENT, ELECTION OF THE NOMINEES FOR DIRECTOR,
RATIFYING THE APPOINTMENT OF ERNST & YOUNG LLP AND THE PROPOSAL TO ADJOURN THE
ANNUAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES. THE
REGIONS BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT REGIONS STOCKHOLDERS VOTE
"AGAINST" THE STOCKHOLDER PROPOSAL REGARDING THE REQUIRED STOCKHOLDER VOTE FOR
ELECTION OF DIRECTORS.
BY ORDER OF THE BOARD OF DIRECTORS,
--------------------------------------
Samuel E. Upchurch, Jr.
Corporate Secretary
Birmingham, Alabama
[--], 2004
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY
CARD, OR VOTE VIA PHONE OR THE INTERNET PROMPTLY, WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING.
TABLE OF CONTENTS
PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 1
SUMMARY..................................................... 4
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF
REGIONS................................................... 11
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF UNION
PLANTERS.................................................. 13
SELECTED COMBINED CONDENSED CONSOLIDATED UNAUDITED PRO FORMA
FINANCIAL DATA............................................ 15
COMPARATIVE PER SHARE DATA.................................. 17
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... 19
REGIONS ANNUAL MEETING...................................... 21
Matters To Be Considered.................................. 21
Proxies................................................... 21
Solicitation of Proxies................................... 22
Record Date............................................... 22
Voting Rights and Vote Required........................... 23
Recommendation of the Board of Directors.................. 23
Attending the Meeting..................................... 24
Participants in the Regions 401(k) Plan................... 24
Voting by Telephone or the Internet....................... 24
THE UNION PLANTERS ANNUAL MEETING........................... 25
Matters to Be Considered.................................. 25
Proxies................................................... 25
Solicitation of Proxies................................... 26
Record Date............................................... 26
Voting Rights and Vote Required........................... 27
Recommendation of the Board of Directors.................. 27
Attending the Meeting..................................... 28
Participants in Union Planters' 401(k) Retirement Savings
Plan................................................... 28
Voting by Telephone or the Internet....................... 28
INFORMATION ABOUT THE COMPANIES............................. 29
THE MERGER.................................................. 30
General................................................... 30
Structure................................................. 30
Background of the Merger.................................. 31
Regions' Reasons for the Merger; Recommendation of
Regions' Board of Directors............................ 34
Union Planters' Reasons for the Merger; Recommendation of
Union Planters' Board of Directors..................... 37
Opinions of Financial Advisors............................ 39
Opinion of UBS Securities LLC to Regions.................. 39
Opinion of Morgan Stanley & Co. Incorporated to Union
Planters............................................... 47
Board of Directors and Management of New Regions Following
the Merger............................................. 52
Union Planters' Directors and Officers Have Financial
Interests in the Merger................................ 53
Regions' Directors and Officers Have Financial Interests
in the Merger.......................................... 57
Distribution of New Regions Certificates.................. 59
Fractional Shares......................................... 59
Public Trading Markets.................................... 60
PAGE
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New Regions Dividends..................................... 60
Absence of Appraisal Rights............................... 60
Regulatory Approvals Required for the Merger.............. 60
THE MERGER AGREEMENT........................................ 63
Terms of the Merger....................................... 63
Treatment of Options...................................... 63
Fractional Shares......................................... 64
Closing and Effective Time of the Merger.................. 64
Representations, Warranties, Covenants and Agreements..... 64
Declaration and Payment of Dividends...................... 65
Redemption of Union Planters Series E Preferred Stock..... 65
Agreement Not to Solicit Other Offers..................... 65
Corporate Governance...................................... 66
Expenses and Fees......................................... 66
Restructuring Efforts..................................... 66
Conditions to Completion of the Merger.................... 67
Possible Alternative Merger Structure..................... 67
Amendment, Waiver and Termination of the Merger
Agreement.............................................. 67
Resales of New Regions Stock by Affiliates................ 69
New Regions Employee Benefit Plans........................ 69
ACCOUNTING TREATMENT........................................ 70
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER...... 71
DESCRIPTION OF NEW REGIONS CAPITAL STOCK.................... 73
General................................................... 73
Common Stock.............................................. 73
Preferred Stock........................................... 73
COMPARISON OF STOCKHOLDERS' RIGHTS.......................... 74
General................................................... 74
Authorized Capital........................................ 74
Number of Directors....................................... 75
Vacancies................................................. 76
Special Meetings of the Board............................. 76
Stockholder Rights Plans.................................. 76
Classified Board of Directors and Cumulative Voting....... 77
Removal of Directors...................................... 77
Special Meetings of Stockholders.......................... 77
Actions by Stockholders without a Meeting................. 77
Amendment of Certificate of Incorporation and Bylaws...... 78
Statutory Provisions...................................... 79
Stockholder Approval of Business Combinations with
Interested Stockholders................................ 80
Stockholder Nominations................................... 80
Stockholder Proposals..................................... 81
Notice of Stockholders Meetings........................... 81
Limitations on Director Liability......................... 82
Indemnification........................................... 82
STOCK REPURCHASES........................................... 83
PAGE
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LITIGATION.................................................. 83
COMPARATIVE MARKET PRICES AND DIVIDENDS..................... 84
PRO FORMA FINANCIAL INFORMATION............................. 85
VALIDITY OF COMMON STOCK.................................... 97
EXPERTS..................................................... 97
OTHER MATTERS TO BE CONSIDERED AT THE REGIONS MEETING....... 98
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF............. 99
Security Ownership of Certain Beneficial Owners........... 99
Security Ownership of Directors and Management............ 99
Section 16(a) Beneficial Ownership Reporting Compliance... 100
PROPOSAL 2 -- ELECTION OF DIRECTORS......................... 100
Information on Directors.................................. 100
The Board and Committees of the Board..................... 102
AUDIT COMMITTEE REPORT...................................... 104
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS............... 106
Stock Options............................................. 107
Long-Term Incentive Plan Awards in 2003................... 108
Retirement Plans.......................................... 108
Change of Control Agreements.............................. 109
Directors' Compensation................................... 110
Compensation Committee Interlocks and Insider
Participation.......................................... 111
REPORT OF THE COMPENSATION COMMITTEE REGARDING EXECUTIVE
COMPENSATION.............................................. 112
Financial Performance..................................... 114
Other Transactions........................................ 114
Code of Ethics............................................ 115
PROPOSAL 3 -- RATIFICATION OF SELECTION OF INDEPENDENT
AUDITORS.................................................. 115
General................................................... 115
Audit Fees, Audit-Related Fees, Tax Fees, and All Other
Fees................................................... 115
PROPOSAL 4 -- ADJOURNMENT OF ANNUAL MEETING................. 116
The Proposal.............................................. 116
Board of Directors' Recommendation........................ 116
PROPOSAL 5 -- STOCKHOLDER PROPOSAL.......................... 116
The Proposal.............................................. 116
Board of Directors' Recommendation........................ 117
OTHER MATTERS TO BE CONSIDERED AT THE UNION PLANTERS
MEETING................................................... 118
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF............. 119
Security Ownership of Directors and Management............ 119
Section 16(a) Beneficial Ownership Reporting Compliance... 120
PROPOSAL 2 -- ELECTION OF DIRECTORS......................... 120
Information About Union Planters Directors and Nominees... 120
Meetings and Committees of the Union Planters Board of
Directors.............................................. 123
AUDIT COMMITTEE REPORT...................................... 125
COMPENSATION/NOMINATIONS/CORPORATE GOVERNANCE COMMITTEE
REPORT.................................................... 127
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS............... 130
PAGE
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Stock Options............................................. 131
AGGREGATED OPTIONS EXERCISES IN 2003 AND FISCAL YEAR-END
OPTION VALUES............................................. 133
Employment Contracts and Termination, Severance, and
Change of Control Arrangements......................... 134
Executive Benefit Plans................................... 136
Directors' Compensation................................... 136
Compensation Committee Interlocks and Insider
Participation.......................................... 137
Certain Relationships and Transactions.................... 137
Financial Performance..................................... 137
PROPOSAL 3 -- RATIFICATION OF SELECTION OF INDEPENDENT
ACCOUNTANTS............................................... 138
Audit Fees, Audit-Related Fees, Tax Fees and All Other
Fees................................................... 138
PROPOSAL 4 -- ADJOURNMENT OF ANNUAL MEETING................. 139
The Proposal.............................................. 139
Board of Directors' Recommendation........................ 139
PROPOSAL 5 -- SHAREHOLDER PROPOSAL.......................... 139
Proposal.................................................. 139
Recommendation of the Board of Directors and Management
Response............................................... 140
STOCKHOLDER PROPOSALS....................................... 142
Regions 2005 Annual Meeting Stockholder Proposals......... 142
Union Planters 2005 Annual Meeting Shareholder
Proposals.............................................. 142
New Regions 2005 Annual Meeting Stockholder Proposals..... 142
WHERE YOU CAN FIND MORE INFORMATION......................... 144
APPENDICES:
APPENDIX A
Agreement and Plan of Merger, dated as of January 22,
2004, by and between Union Planters Corporation and
Regions Financial Corporation.......................... A-1
APPENDIX B
Opinion of UBS Securities LLC............................. B-1
APPENDIX C
Opinion of Morgan Stanley & Co. Incorporated.............. C-1
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHAT AM I BEING ASKED TO VOTE ON?
A: You are being asked to vote on a merger
agreement entered into between Regions Financial Corporation and Union
Planters Corporation (referred to in this joint proxy statement/prospectus
as the merger agreement). In the merger, Regions and Union Planters will
each be merged into a newly-formed holding company, New Regions Financial
Corporation.
In addition, as a Regions stockholder or Union Planters shareholder, you
are being asked to vote on customary proposals at the Regions or Union
Planters annual meeting, as the case may be, including voting for
directors, ratifying the independent auditor and voting on stockholder
proposals.
Q: HOW DOES MY BOARD OF DIRECTORS RECOMMEND I
VOTE ON THE MERGER?
A: The board of directors of Regions unanimously
recommends that you vote "FOR" adoption of the merger agreement. The board
of directors of Union Planters unanimously recommends that you vote "FOR"
approval of the merger agreement.
Q: WHY IS MY BOARD OF DIRECTORS RECOMMENDING
THAT I VOTE FOR ADOPTION OR APPROVAL OF THE MERGER AGREEMENT?
A: Your board of directors believes the merger is a
unique strategic opportunity to combine two strong companies into a single,
integrated market leader whose scale and capital is expected to create
greater short- and long-term growth and stockholder value.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: In the merger, each share of Regions common
stock will be converted into the right to receive 1.2346 shares of common
stock of New Regions, and each share of Union Planters common stock will be
converted into the right to receive one share of common stock of New
Regions.
Q: WHAT VOTE OF REGIONS STOCKHOLDERS AND UNION
PLANTERS SHAREHOLDERS IS REQUIRED TO ADOPT OR APPROVE THE MERGER AGREEMENT?
A: The affirmative vote of the holders of at least a
majority of the outstanding shares of each of Regions and Union Planters
entitled to vote on adoption or approval of the merger agreement is
required to adopt or approve the merger agreement.
Q: CAN THE NUMBER OF SHARES OF NEW REGIONS
COMMON STOCK TO BE ISSUED IN THE MERGER FOR EACH SHARE OF REGIONS COMMON
STOCK OR UNION PLANTERS COMMON STOCK CHANGE BETWEEN NOW AND THE TIME THE
MERGER IS COMPLETED?
A: No. The exchange ratio is a fixed ratio.
Therefore the number of shares of New Regions common stock to be received in
exchange for shares of Regions common stock and Union Planters common stock
will not fluctuate. The number of shares of New Regions common stock you
will receive will not change if the trading price of shares of Regions
common stock or Union Planters common stock changes between now and the
time that the merger is completed.
See "THE MERGER AGREEMENT--Terms of the Merger" beginning on page [--].
Q: HOW MUCH OF THE COMBINED COMPANY WILL
REGIONS STOCKHOLDERS AND UNION PLANTERS SHAREHOLDERS OWN AFTER THE MERGER?
A: After the merger, former Regions stockholders
will own approximately 59%, and former Union Planters shareholders will own
approximately 41%, of the New Regions common stock (based on shares
outstanding as of [--], 2004).
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this document,
indicate on your proxy card how you want your shares to be voted. Then
complete, sign, date and mail your proxy card in the enclosed postage paid
return envelope as soon as possible. Alternatively, you may vote by
telephone or the internet. This will enable your shares to be represented
and voted at
1
the Regions annual meeting or the Union Planters annual meeting, as the
case may be.
Q: WHY IS MY VOTE IMPORTANT?
A: The failure of a Regions stockholder or a
Union Planters shareholder to vote for the merger agreement, by proxy or in
person, will have the same effect as a vote against the merger agreement.
The merger must be approved by the holders of a majority of the outstanding
shares of Regions common stock and Union Planters common stock entitled to
vote at the respective meetings. In addition, if you do not return your
proxy card or vote by telephone, the internet or in person at the
appropriate annual meeting, it will be more difficult for Regions and Union
Planters to obtain the necessary quorum to hold their meetings.
Regions stockholders and Union Planters shareholders are also being asked
to vote on a number of additional items at their respective annual
meetings, including the election of directors, the ratification of
independent accountants and stockholder proposals. It is important that
Regions stockholders and Union Planters shareholders vote on these matters
as well.
Q: IF MY SHARES ARE HELD IN STREET NAME BY MY
BROKER, WILL MY BROKER AUTOMATICALLY VOTE MY SHARES FOR ME?
A: Your broker will not be able to vote your shares
for the adoption or approval of the merger agreement without instructions
from you. You should instruct your broker to vote your shares, following
the directions your broker provides. Please check the voting form used by
your broker to see if it offers telephone or internet voting.
Q: WHAT IF I FAIL TO INSTRUCT MY BROKER?
A: If you fail to instruct your broker to vote your
shares with respect to the adoption or approval of the merger agreement,
and the broker submits an unvoted proxy, the resulting broker non-vote will
be counted toward a quorum at the respective meeting, but it will have the
same effect as a vote against the merger agreement.
Q: CAN I ATTEND THE MEETING AND VOTE MY SHARES IN
PERSON?
A: Yes. Regions stockholders and Union
Planters shareholders are invited to attend their respective meeting.
Holders of shares of Regions common stock and Union Planters common stock of
record can vote in person at their respective meeting. If a broker holds
your shares in street name, then you are not the holder of record and you
must ask your broker how you can vote at the annual meeting in person.
Q: CAN I CHANGE MY VOTE?
A: Yes. If you have not voted through your
broker, there are three ways you can change your vote after you have
submitted your proxy (whether by mail, phone or the internet):
- First, you may send a written notice to the person to whom you submitted
your proxy stating that you would like to revoke your proxy.
- Second, you may complete and submit a new proxy card or vote again by
telephone or the internet. The latest vote actually received by Regions
or Union Planters, as the case may be, before the annual meetings will be
counted, and any earlier votes will be revoked.
- Third, you may attend the Regions or Union Planters annual meeting, as
the case may be, and vote in person. Any earlier proxy will thereby be
revoked. However, simply attending the meeting without voting will not
revoke your proxy.
If you have instructed a broker to vote your shares, you must follow the
directions you receive from your broker in order to change or revoke your
vote.
Q: IF I AM A REGIONS STOCKHOLDER OR UNION
PLANTERS SHAREHOLDER, SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock
certificates at this time. If we complete the merger, Regions stockholders
and Union Planters shareholders will then need to exchange their Regions
and Union Planters stock certificates for New Regions stock
2
certificates. We will send you instructions for exchanging Regions and
Union Planters stock certificates at that time.
Q: WHEN DO YOU EXPECT TO COMPLETE THE MERGER?
A: We expect to complete the merger in mid-
2004. However, we cannot assure you when or if the merger will occur. We
must first obtain the approvals of our stockholders and shareholders at the
meetings and the necessary regulatory approvals.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: Regions stockholders should call the Regions
Investor Relations Department at (205) 944-1300 with any questions about
the merger and related transactions. Union Planters shareholders should
call the Union Planters Investor Relations Department at (901) 580-6000
with any questions about the merger and related transactions.
3
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT. IT DOES
NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. WE URGE YOU TO
READ CAREFULLY THE ENTIRE DOCUMENT AND THE OTHER DOCUMENTS TO WHICH WE REFER IN
ORDER TO FULLY UNDERSTAND THE MERGER AND THE RELATED TRANSACTIONS. SEE "WHERE
YOU CAN FIND MORE INFORMATION" ON PAGE [--]. EACH ITEM IN THIS SUMMARY REFERS TO
THE PAGE OF THIS DOCUMENT ON WHICH THAT SUBJECT IS DISCUSSED IN MORE DETAIL.
REGIONS STOCKHOLDERS WILL RECEIVE 1.2346 SHARES OF NEW REGIONS COMMON STOCK PER
SHARE OF REGIONS COMMON STOCK (PAGE [--]).
As a result of the merger, each Regions stockholder will receive 1.2346
shares of New Regions common stock for each share of Regions common stock held
immediately prior to the merger. We sometimes refer to this 1.2346-to-1 ratio as
the Regions exchange ratio. New Regions will not issue any fractional shares.
Regions stockholders entitled to a fractional share will instead receive an
amount in cash based on the closing sale price of Regions common stock on the
trading day immediately prior to the date on which the merger is completed,
divided by the Regions exchange ratio.
EXAMPLE: IF YOU HOLD 110 SHARES OF REGIONS COMMON STOCK, YOU WILL RECEIVE
135 SHARES OF NEW REGIONS COMMON STOCK AND A CASH PAYMENT FOR THE 0.8 OF A SHARE
THAT YOU OTHERWISE WOULD HAVE RECEIVED (I.E., 110 SHARES X 1.2346 = 135.8
SHARES).
UNION PLANTERS SHAREHOLDERS WILL RECEIVE ONE SHARE OF NEW REGIONS COMMON STOCK
PER SHARE OF UNION PLANTERS COMMON STOCK (PAGE [--]).
As a result of the merger, each Union Planters shareholder will receive one
share of New Regions common stock for each share of Union Planters common stock
held immediately prior to the merger. We sometimes refer to this 1-to-1 ratio as
the Union Planters exchange ratio.
EXAMPLE: IF YOU HOLD 110 SHARES OF UNION PLANTERS COMMON STOCK, YOU WILL
RECEIVE 110 SHARES OF NEW REGIONS COMMON STOCK.
The Regions exchange ratio and the Union Planters exchange ratio are both
fixed ratios; therefore the number of shares of New Regions common stock to be
received in exchange for shares of Regions common stock or Union Planters common
stock, as the case may be, will not fluctuate. The number of shares of New
Regions common stock to be received by holders of Regions common stock and Union
Planters common stock in the merger will not change if the trading price of
Regions common stock or Union Planters common shares changes between now and the
time the merger is completed.
The exchange ratios were determined through arm's length negotiations of
the terms of the merger agreement, and were based on our assessment of the
relative contributions of both companies to the business, operations, financial
condition and prospects of the combined company.
Upon completion of the merger, we expect that former Regions stockholders
will own approximately 59% of the combined company and former Union Planters
shareholders will own approximately 41% of the combined company.
COMPARATIVE MARKET PRICES AND SHARE INFORMATION (PAGES [--] AND [--])
Regions common stock is quoted on the New York Stock Exchange under the
symbol "RF." Union Planters common stock is quoted on the New York Stock
Exchange under the symbol "UPC." The following table sets forth the closing sale
prices per share of Regions common stock and Union Planters common stock in each
case as reported on the New York Stock Exchange on January 22, 2004, the last
trading day before we announced the merger, and on [--], 2004, the last
practicable trading day before the distribution of this document.
REGIONS UNION PLANTERS
COMMON COMMON
STOCK STOCK
------- --------------
January 22, 2004....... $37.75 $31.36
[--], 2004............. $ [--] $ [--]
THE MARKET PRICES OF BOTH REGIONS COMMON STOCK AND UNION PLANTERS COMMON STOCK
WILL FLUCTUATE PRIOR TO THE MERGER. THEREFORE, YOU SHOULD OBTAIN CURRENT MARKET
QUOTATIONS FOR REGIONS COMMON STOCK AND UNION PLANTERS COMMON STOCK.
We expect that the market price of New Regions shares following the
completion of the
4
merger will approximate the market price of Regions common stock immediately
prior to the merger divided by the Regions exchange ratio, 1.2346. On this
basis, if the merger would have been completed on --, 2004, this estimated price
per share would have equaled $--. At the time the merger is completed, we expect
that this estimated price per share will be substantially the same as the price
per share of Union Planters common stock immediately prior to the merger.
Regions may from time to time repurchase shares of Regions common stock and
Union Planters may from time to time repurchase shares of Union Planters common
stock. The merger agreement permits both Regions and Union Planters to continue
to repurchase their own shares in accordance with their respective previously
announced repurchase plans. We provide this information to you to help you
assess whether the repurchase of shares may have an impact on the market price
of one or both of our stocks. See "STOCK REPURCHASES" on page [--].
REGIONS' FINANCIAL ADVISOR HAS PROVIDED AN OPINION TO THE REGIONS BOARD OF
DIRECTORS AS TO THE FAIRNESS OF THE REGIONS EXCHANGE RATIO, FROM A FINANCIAL
POINT OF VIEW, TO REGIONS STOCKHOLDERS (PAGE [--])
In deciding to approve the merger, the Regions board of directors
considered the opinion of its financial advisor, UBS Securities LLC, which we
refer to as UBS in this document, which was given to the Regions board of
directors on January 22, 2004, that, as of the date of such opinion, the Regions
exchange ratio pursuant to the merger agreement was fair from a financial point
of view to the holders of Regions common stock. A copy of this opinion is
attached to this document as Appendix B. Regions stockholders should read the
opinion completely and carefully to understand the assumptions made, matters
considered and limitations on the review undertaken by UBS in providing its
opinion.
UNION PLANTERS' FINANCIAL ADVISOR HAS PROVIDED AN OPINION TO THE UNION PLANTERS
BOARD OF DIRECTORS AS TO THE FAIRNESS OF THE UNION PLANTERS EXCHANGE RATIO, FROM
A FINANCIAL POINT OF VIEW, TO UNION PLANTERS SHAREHOLDERS (PAGE [--])
In deciding to approve the merger, the Union Planters board of directors
considered the opinion of its financial advisor, Morgan Stanley & Co.
Incorporated, which we refer to in this document as Morgan Stanley, which was
given to the Union Planters board of directors on January 22, 2004, that, as of
the date of such opinion, the Union Planters exchange ratio pursuant to the
merger agreement was fair from a financial point of view to the holders of Union
Planters common stock. A copy of this opinion is attached to this document as
Appendix C. Union Planters shareholders should read the opinion completely and
carefully to understand the assumptions made, matters considered and limitations
of the review undertaken by Morgan Stanley in providing its opinion.
TAX-FREE TRANSACTION TO REGIONS STOCKHOLDERS AND UNION PLANTERS SHAREHOLDERS
(PAGE [--])
The merger has been structured to qualify as a tax-free reorganization for
federal income tax purposes, and it is a condition to our respective obligations
to complete the merger that Regions and Union Planters each receive a legal
opinion that the merger will so qualify. In addition, in connection with the
filing of the registration statement of which this document is a part, Regions
and Union Planters have each received a legal opinion to the same effect.
Accordingly, holders of Regions common stock and Union Planters common stock
generally will not recognize any gain or loss for federal income tax purposes on
the exchange of their common stock for New Regions common stock in the merger,
except for any gain or loss that may result from the receipt by Regions
stockholders of cash instead of a fractional share of New Regions common stock.
THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED ABOVE MAY NOT APPLY TO SOME
HOLDERS OF REGIONS COMMON STOCK OR UNION PLANTERS COMMON STOCK, INCLUDING
CERTAIN HOLDERS SPECIFICALLY REFERRED TO ON PAGE [--]. YOUR TAX CONSEQUENCES
WILL DEPEND ON YOUR INDIVIDUAL SITUATION. ACCORDINGLY, WE STRONGLY URGE YOU TO
CONSULT YOUR TAX ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE
MERGER IN YOUR PARTICULAR CIRCUMSTANCES, AS WELL AS ANY TAX CONSEQUENCES THAT
MAY ARISE FROM THE LAWS OF ANY OTHER TAXING JURISDICTION.
5
OUR REASONS FOR THE MERGER (PAGES [--] AND [--])
Our companies are proposing to merge because we believe that:
- by combining with each other we can create a stronger company that will
provide significant benefits to our stockholders and customers alike;
- by bringing our customers and banking products together we can do a
better job of increasing our combined revenues and earnings than we could
if we did not merge; and
- the merger will strengthen the combined company's position as a
competitor in the financial services industry, which is rapidly changing
and growing more competitive.
REGIONS' BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE
MERGER AGREEMENT, ELECTION OF THE NOMINATED DIRECTORS, APPOINTMENT OF ERNST &
YOUNG LLP AS INDEPENDENT AUDITORS AND THE PROPOSAL TO ADJOURN THE ANNUAL
MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES, AND
"AGAINST" THE STOCKHOLDER PROPOSAL REGARDING THE REQUIRED STOCKHOLDER VOTE FOR
ELECTION OF DIRECTORS (PAGE [--])
Regions' board of directors believes that the merger is in the best
interests of Regions and its stockholders and has unanimously approved the
merger agreement. Regions' board of directors unanimously recommends that
Regions stockholders vote "FOR" adoption of the merger agreement. In addition,
Regions' board of directors unanimously recommends that Regions stockholders
vote "FOR" election of the directors, ratifying Ernst & Young LLP as independent
auditors and the proposal to adjourn the annual meeting, if necessary or
appropriate, to solicit additional proxies. Regions' board of directors
unanimously recommends that Regions stockholders vote "AGAINST" the stockholder
proposal regarding the required stockholder vote for election of directors which
would provide that directors must receive a majority of the shares entitled to
vote in order to be elected to the board of directors.
UNION PLANTERS' BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF
THE MERGER AGREEMENT, ELECTION OF THE NOMINATED DIRECTORS, APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS AND THE PROPOSAL TO
ADJOURN THE ANNUAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL
PROXIES, AND "AGAINST" THE SHAREHOLDER PROPOSAL REGARDING SENIOR EXECUTIVE
COMPENSATION (PAGE [--]) (PAGE [--])
Union Planters' board of directors believes that the merger is in the best
interests of Union Planters and its shareholders and has unanimously approved
the merger agreement. Union Planters' board of directors unanimously recommends
that Union Planters shareholders vote "FOR" approval of the merger agreement. In
addition, Union Planters' board unanimously recommends that Union Planters
shareholders vote "FOR" election of the directors, ratifying
PricewaterhouseCoopers LLP as independent accountants and the proposal to
adjourn the annual meeting, if necessary or appropriate, to solicit additional
proxies. Union Planters' board of directors unanimously recommends that Union
Planters shareholders vote "AGAINST" the shareholder proposal regarding senior
executive compensation which requests that Union Planters change its current
system of executive compensation.
CERTAIN DIRECTORS AND OFFICERS HAVE ECONOMIC INTERESTS IN THE MERGER (PAGES [--]
AND [--])
Certain executive officers and directors of Regions and Union Planters have
economic interests in the merger in addition to their interests as stockholders.
Each of the Regions board of directors and the Union Planters board of directors
considered these interests in its decision to approve the merger agreement.
The executive officers of Regions and Union Planters have agreements that
contain change in control provisions that will be triggered by the completion of
the merger. These agreements provide enhanced severance benefits in the event of
certain types of employment terminations following a change in control (which
will include the completion of the merger).
Notwithstanding the existing agreements, both Carl E. Jones, Jr., Chairman,
President and Chief Executive Officer of Regions, and Jackson W. Moore,
Chairman, President and Chief Executive Officer of Union Planters, have waived
certain change in control rights in their agreements.
6
Messrs. Jones and Moore will participate in the management of New Regions as
discussed in "THE MERGER -- Board of Directors and Management of New Regions
Following the Merger." Mr. Moore's existing employment agreement with Union
Planters has been revised to reflect the management succession plan and his
waiver is conditioned on the implementation of this plan.
Other interests of directors and executive officers of Regions and Union
Planters may include rights under stock-based benefit programs and awards,
rights to continued directorship with New Regions after the merger and rights to
continued indemnification and insurance coverage by New Regions after the merger
for acts or omissions occurring prior to the merger.
NEW REGIONS DIVIDENDS
New Regions stockholders will be entitled to receive dividends when and if
declared by the New Regions board of directors out of funds legally available
for dividends. New Regions currently intends to pay a cash dividend of $0.333
per share per quarter following the merger, which is consistent with the current
dividend rate paid by Regions and Union Planters. The New Regions board of
directors will periodically consider the payment of dividends, taking into
account New Regions' financial condition and level of net income, New Regions'
future prospects, economic conditions, industry practices and other factors,
including applicable banking laws and regulations and tax treatment of
dividends. Until the merger is completed, Regions is restricted by the merger
agreement from declaring dividends of more than $0.4116 per share per quarter
and Union Planters is restricted from declaring dividends of more than $0.3334
per share per quarter.
NEITHER REGIONS STOCKHOLDERS NOR UNION PLANTERS SHAREHOLDERS HAVE APPRAISAL
RIGHTS (PAGE [--])
Regions is incorporated under Delaware law and Union Planters is
incorporated under Tennessee law. Under Delaware and Tennessee law, neither the
stockholders of Regions nor the shareholders of Union Planters have any right to
a court determination, in a proceeding known as an appraisal, of the fair value
of their shares in connection with the merger.
INFORMATION ABOUT THE COMPANIES (PAGE [--])
REGIONS FINANCIAL CORPORATION
Regions Financial Corporation, headquartered in Birmingham, Alabama, is a
full-service provider of banking, securities brokerage, mortgage and insurance
products and services. As of December 31, 2003, Regions had $48.6 billion in
assets and stockholders' equity of $4.5 billion. Based on assets, Regions is one
of the top 25 financial holding companies in the United States. Its banking
subsidiary, Regions Bank, operates more than 680 offices across a nine-state
geographic footprint in the Southern U.S. and Texas. Its securities brokerage
subsidiary, Morgan Keegan & Co., Inc., provides investment and brokerage
services from more than 140 offices.
Regions' principal executive officers are located at 417 North 20th Street,
Birmingham, Alabama 35202 and its telephone number is (205) 944-1300.
UNION PLANTERS CORPORATION
Union Planters Corporation, headquartered in Memphis, Tennessee, with total
assets of approximately $31.9 billion at December 31, 2003, is the largest bank
holding company in Tennessee and among the 30 largest bank holding companies in
the United States. Union Planters Bank, National Association, its principal
banking subsidiary, was founded in 1869 and operates branches in 12 states:
Alabama, Arkansas, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana,
Mississippi, Missouri, Tennessee and Texas. Union Planters offers a full range
of commercial and consumer financial solutions through a network of 717 banking
offices, 925 ATMs and the resources of specialized business units.
Union Planters' principal executive offices are located at 6200 Poplar
Avenue, Memphis, Tennessee 38119 and its telephone number is (901) 850-6000.
NEW REGIONS FINANCIAL CORPORATION
Regions and Union Planters formed New Regions solely for the purpose of
effecting the merger. To date, New Regions has not conducted any activities
other than those incident to its formation and the preparation of this joint
proxy statement/prospectus. New Regions is jointly owned by Regions and Union
Planters. Upon
7
completion of the merger, Regions and Union Planters each will be merged with
and into New Regions. New Regions will be the surviving corporation in the
merger and will continue its corporate existence under the laws of the State of
Delaware under the name "Regions Financial Corporation."
New Regions' principal executive offices are located at 417 North 20th
Street, Birmingham, Alabama 35202 and its telephone number is (205) 944-1300.
THE MERGER (PAGE [--])
We encourage you to read the merger agreement, which is attached as
Appendix A.
The merger agreement provides for the following transactions:
- Regions will merge with and into a newly-formed Delaware holding company,
New Regions Financial Corporation, with New Regions as the surviving
company. Each share of Regions common stock outstanding prior to the
merger will automatically be converted in the merger into the right to
receive 1.2346 shares of New Regions common stock.
- Immediately after the Regions merger, Union Planters will merge with and
into New Regions, with New Regions as the surviving company. Each share
of Union Planters common stock outstanding prior to the merger will
automatically be converted in the merger into the right to receive one
share of New Regions common stock.
The combined company will be renamed "Regions Financial Corporation." In
this document, we refer to these mergers collectively as "the merger."
THE MERGER IS EXPECTED TO OCCUR BY MID-2004 (PAGE [--])
The merger will occur only after all of the conditions to its completion
have been satisfied or waived. Currently, we anticipate that the merger will be
completed in mid-2004.
CONDITIONS THAT MUST BE SATISFIED OR WAIVED FOR THE MERGER TO OCCUR (PAGE [--])
As more fully described in this document and the merger agreement, the
completion of the merger depends on a number of conditions being satisfied or
waived, including receipt of stockholder and regulatory approvals and tax
opinions.
We cannot be certain when, or if, the conditions to the merger will be
satisfied or waived, or that the merger will be completed.
TERMINATION OF THE MERGER AGREEMENT (PAGE [--])
We may agree to terminate the merger agreement before completing the
merger, even after adoption or approval of the merger agreement by our
stockholders, as long as the termination is approved by each of our boards of
directors.
In addition, either of us may decide to terminate the merger agreement,
even after adoption or approval of the merger agreement by our stockholders, if
certain conditions in the merger agreement have not been met, such as obtaining
the necessary regulatory approvals, or the other party's material breach of a
representation or warranty. A termination fee may be payable for specified
terminations under the merger agreement, which generally relate to third party
acquisition proposals. The amount of the fee would be $320 million if paid by
Regions or $225 million if paid by Union Planters. This difference in amount
generally reflects the respective market capitalizations of Regions and Union
Planters.
BOARD OF DIRECTORS AND MANAGEMENT OF NEW REGIONS FOLLOWING THE MERGER (PAGE
[--])
Immediately after the merger is completed, the board of directors of New
Regions will consist of thirteen former Regions directors and thirteen former
Union Planters directors.
Carl E. Jones, Jr., currently Chairman of the Board, President and Chief
Executive Officer of Regions, will serve as Chairman of the Board and Chief
Executive Officer of New Regions. Jackson W. Moore, currently Chairman,
President and Chief Executive Officer of Union Planters, will serve as President
and Chief Executive Officer-Designate of New Regions. Mr. Moore will assume Mr.
Jones' duties as Chief Executive
8
Officer on July 1, 2005, and Mr. Moore will assume Mr. Jones' duties as Chairman
of the Board on July 1, 2006. Mr. Moore's planned succession to Mr. Jones is a
result of Mr. Jones' desire to retire from his positions with Regions within a
reasonable time after the merger is completed and at the time of his previously
planned retirement at age 65, and the parties' belief in the qualifications and
ability of Mr. Moore to successfully lead the combined company.
NEW REGIONS' POST-MERGER MANAGEMENT (PAGE [--])
Regions and Union Planters have designated other key members of the
combined company's senior management team, which includes Richard D. Horsley,
who is currently Vice Chairman and Chief Operating Officer of Regions, as Vice
Chairman and Chief Operating Officer of New Regions, Allen B. Morgan, Jr., who
is currently Vice Chairman of Regions and Chairman of Morgan Keegan & Company,
as Vice Chairman of New Regions and Chairman of the Board of Morgan Keegan; D.
Bryan Jordan, who is currently Executive Vice President and Chief Financial
Officer of Regions, as Chief Financial Officer of New Regions; Robert A. Goethe,
who is currently Chairman and Chief Executive Officer of Regions Mortgage, as
Chairman of Mortgage Banking; and Bobby L. Doxey, who is currently Senior
Executive Vice President and Chief Financial Officer of Union Planters, as
Senior Executive Vice President of New Regions. Mr. Doxey and Mr. Horsley will
co-lead the transition team.
ACCOUNTING TREATMENT OF THE MERGER BY NEW REGIONS (PAGE [--])
New Regions will account for the merger as a purchase by Regions of Union
Planters for financial reporting purposes.
A COMPARISON OF THE RIGHTS OF HOLDERS OF REGIONS COMMON STOCK AND HOLDERS OF
UNION PLANTERS COMMON STOCK; THE RIGHTS OF REGIONS STOCKHOLDERS AND UNION
PLANTERS SHAREHOLDERS WILL BE GOVERNED BY NEW GOVERNING DOCUMENTS AFTER THE
MERGER (PAGE [--])
The rights of Regions stockholders will change in only limited respects as
a result of the merger due to the similarity of the New Regions and Regions
governing documents and due to the fact that both companies are incorporated
under Delaware law. The rights of Union Planters shareholders will change as a
result of the merger due to the differences between Union Planters' and New
Regions' governing documents and due to the fact that Union Planters is
incorporated under Tennessee law and New Regions is incorporated under Delaware
law. This document contains descriptions of the stockholder rights under each of
the Regions, Union Planters and New Regions governing documents, and describes
the material differences among them.
REGULATORY APPROVALS WE MUST OBTAIN FOR THE MERGER (PAGE [--])
We cannot complete the merger unless we obtain the prior approval of the
Board of Governors of the Federal Reserve System. We have made or will make the
necessary filings with the Federal Reserve Board as well as various state
banking departments. We have made or will make filings with several other
regulatory agencies as well, including the National Association of Securities
Dealers and the New York Stock Exchange.
Although we do not know of any reason why we could not obtain these
regulatory approvals in a timely manner, we cannot be certain when or if we will
obtain them.
REGIONS WILL HOLD ITS ANNUAL MEETING ON [--], 2004 (PAGE [--])
The Regions annual meeting will be held on [--], 2004, at [--], local time,
at Regions Bank Operations Center, 201 Milan Parkway, Birmingham, Alabama 35209.
At the Regions annual meeting, Regions stockholders will be asked:
- To adopt the merger agreement;
- To approve the election of four nominee directors;
- To ratify the appointment of Ernst & Young LLP as Regions' independent
auditors for the year 2004;
- To vote upon a stockholder proposal which the board of directors and
management oppose regarding the required stockholder vote for election of
directors;
9
- To approve the adjournment of the Regions annual meeting, if necessary or
appropriate, to solicit additional proxies; and
- To act on such other business as may properly come before the Regions
annual meeting.
Record Date. Regions stockholders may cast one vote at the Regions annual
meeting for each share of Regions common stock that was owned at the close of
business on [--], 2004. At that date, there were [--] shares of Regions common
stock entitled to be voted at the annual meeting.
Required Vote. To adopt the merger agreement, the holders of a majority of
the outstanding shares of Regions common stock entitled to vote must vote in
favor of adoption of the merger agreement. Because adoption is based on the
affirmative vote of a majority of shares outstanding, a Regions stockholder's
failure to vote, a broker non-vote or an abstention will have the same effect as
a vote against the merger.
As of the Regions record date, directors and executive officers of Regions
and their affiliates had the right to vote [--] shares of Regions common stock,
or [--]% of the outstanding Regions common stock entitled to be voted at the
annual meeting. At that date, directors and executive officers of Union Planters
and their affiliates, including Union Planters, had the right to vote [--]
shares of Regions common stock entitled to be voted at the meeting, or [--]% of
the outstanding Regions common stock.
UNION PLANTERS WILL HOLD ITS ANNUAL MEETING ON [--], 2004 (PAGE [--])
The Union Planters annual meeting will be held on [--], 2004, at Union
Planters Bank, National Association, 6200 Poplar Avenue, Main Floor, Memphis,
Tennessee 38119, local time, at [--]. At the Union Planters annual meeting,
Union Planters shareholders will be asked:
- To approve the merger agreement;
- To approve the election of four Class II directors;
- To ratify the appointment of PricewaterhouseCoopers LLP as Union
Planters' independent accountants for the year 2004;
- To vote upon a shareholder proposal which the board of directors and
management oppose regarding senior executive compensation;
- To approve the adjournment of the Union Planters annual meeting, if
necessary or appropriate, to solicit additional proxies; and
- To act on such other matters as may be properly brought before the Union
Planters annual meeting.
Record Date. Union Planters shareholders may cast one vote at the Union
Planters annual meeting for each share of Union Planters common stock that was
owned at the close of business on [--], 2004. At that date, there were [--]
shares of Union Planters common stock entitled to be voted at the annual
meeting.
Required Vote. To approve the merger agreement, the holders of a majority
of the outstanding shares of Union Planters common stock entitled to be voted
must vote in favor of the merger agreement. Because approval is based on the
affirmative vote of a majority of shares outstanding, a Union Planters
shareholder's failure to vote, a broker non-vote or an abstention will have the
same effect as a vote against the merger.
As of the Union Planters record date, directors and executive officers of
Union Planters and their affiliates had the right to vote [--] shares of Union
Planters common stock, or [--]% of the outstanding Union Planters common stock
entitled to be voted at the annual meeting. At that date, directors and
executive officers of Regions and their affiliates, including Regions, had the
right to vote [--] shares of Union Planters common stock entitled to be voted at
the meeting, or [--]% of the outstanding Union Planters common stock.
10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF REGIONS
Set forth below are highlights from Regions' consolidated financial data as
of and for the years ended December 31, 1999 through 2003. You should read this
information in conjunction with Regions' consolidated financial statements and
related notes included in Regions' Annual Report on Form 10-K for the year ended
December 31, 2003, which is incorporated by reference in this joint proxy
statement/prospectus and from which this information is derived. See "WHERE YOU
CAN FIND MORE INFORMATION" on page [--].
AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
2003 2002(4) 2001 2000 1999
----------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
EARNINGS SUMMARY:
Total interest income................................. $ 2,219,130 $2,536,989 $3,055,637 $3,234,243 $2,854,686
Total interest expense................................ 744,532 1,039,401 1,630,144 1,845,446 1,428,831
----------- ---------- ---------- ---------- ----------
Net interest income................................... 1,474,598 1,497,588 1,425,493 1,388,797 1,425,855
Provision for loan losses............................. 121,500 127,500 165,402 127,099 113,658
----------- ---------- ---------- ---------- ----------
Net interest income after loan loss provision......... 1,353,098 1,370,088 1,260,091 1,261,698 1,312,197
Total non-interest income............................. 1,398,757 1,258,878 1,004,781 597,219 527,620
Total non-interest expense............................ 1,840,283 1,759,726 1,546,921 1,117,191 1,054,791
Income tax expense.................................... 259,731 249,338 209,017 214,203 259,640
----------- ---------- ---------- ---------- ----------
Net income............................................ $ 651,841 $ 619,902 $ 508,934 $ 527,523 $ 525,386
=========== ========== ========== ========== ==========
SHARE DATA:
Average number of shares outstanding.................. 222,106 224,312 224,733 220,762 221,617
Average number of shares outstanding, diluted......... 225,118 227,639 227,063 221,989 223,967
Net income per share.................................. $ 2.93 $ 2.76 $ 2.26 $ 2.39 $ 2.37
Net income per share -- diluted....................... $ 2.90 $ 2.72 $ 2.24 $ 2.38 $ 2.35
Cash dividend......................................... $ 1.24 $ 1.16 $ 1.12 $ 1.08 $ 1.00
Book value............................................ $ 20.06 $ 18.88 $ 17.54 $ 15.73 $ 13.89
BALANCE SHEET SUMMARY:
Securities available-for-sale......................... $ 9,056,861 $8,961,691 $7,813,109 $5,454,969 $6,858,765
Loans, net of unearned income......................... 32,184,323 30,985,774 30,885,348 31,376,463 28,144,675
Total assets.......................................... 48,597,996 47,938,840 45,382,712 43,688,293 42,714,395
Total deposits........................................ 32,732,535 32,926,201 31,548,323 32,022,491 29,989,094
Stockholders' equity.................................. 4,452,115 4,178,422 4,035,765 3,457,944 3,065,112
PERFORMANCE RATIOS:
Return on average assets.............................. 1.34% 1.34% 1.14%(a) 1.23%(b) 1.33%
Return on average stockholders' equity................ 15.06 15.27 13.49(a) 16.31(b) 17.13
Dividend payout....................................... 42.32 42.03 49.56 45.19 42.19
Average equity to average assets...................... 8.93 8.80 8.45 7.54 7.74
Net interest margin................................... 3.49 3.73 3.66 3.55 3.94
Efficiency(1)......................................... 63.13 63.35 62.21(a) 54.27(b) 53.38
ASSET QUALITY RATIOS:
Allowance for loan losses to loans, net of unearned
income.............................................. 1.41% 1.41% 1.36% 1.20% 1.20%
Allowance for loan losses to non-performing
loans(2)............................................ 158.53% 147.07% 116.62% 152.90% 135.22%
Non-performing loans(2)............................... $ 286,417 $ 297,249 $ 359,416 $ 246,249 $ 250,246
Non-performing loans to loans, net of unearned
income(2)........................................... 0.89% 0.96% 1.16% 0.78% 0.89%
Non-performing assets to total assets(3).............. 0.70% 0.74% 0.88% 0.63% 0.62%
---------------
(1) Noninterest expense divided by the sum of net interest income
(taxable-equivalent basis) and noninterest income net of gains (losses) from
security transactions. This ratio is commonly used by financial institutions
as a measure of productivity.
(2) Non-performing loans include loans on a nonaccrual basis, restructured loans
and loans 90 days or more past due.
11
(3) Nonperforming assets include loans on a nonaccrual basis, restructured
loans, loans 90 days or more past due and foreclosed properties.
(4) In 2002, Regions adopted Financial Accounting Standard No. 142, which
eliminated amortization of excess purchase price. See "Note 25 -- Recent
Accounting Pronouncements" to the consolidated financial statements
presented in the Regions 2003 Form 10-K incorporated by reference into this
joint proxy statement/prospectus.
The ratios disclosed in the following footnotes exclude certain non-recurring
items which management believes aid the reader in evaluating normalized trends:
(a) Ratios for 2001, excluding merger and other charges of $17.8 million (after
tax) are as follows: Return on average assets -- 1.18%; Return on average
stockholders' equity -- 13.96%; Efficiency -- 61.27%.
(b) Ratios for 2000, excluding $44 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%; Efficiency -- 56.10%.
12
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF UNION PLANTERS
Set forth below are highlights from Union Planters' consolidated financial
data as of and for the years ended December 31, 1999 through 2003. You should
read this information in conjunction with Union Planters' consolidated financial
statements and related notes included in Union Planters' Annual Report on Form
10-K for the year ended December 31, 2003, which is incorporated by reference in
this joint proxy statement/prospectus and from which this information is
derived. See "WHERE YOU CAN FIND MORE INFORMATION" on page [--].
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
2003 2002(3) 2001 2000 1999
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Net interest income............................... $ 1,196,598 $ 1,289,581 $ 1,276,080 $ 1,231,179 $ 1,256,531
Provision for losses on loans..................... (181,539) (197,901) (131,963) (77,062) (74,045)
Investment securities gains (losses).............. 8,203 23,027 9,582 381 2,128
Other noninterest income.......................... 757,139 728,742 702,399 539,054 490,788
Noninterest expense............................... (1,114,631) (1,076,538) (1,180,679) (1,082,936) (1,056,570)
----------- ----------- ----------- ----------- -----------
Earnings before income taxes...................... 665,770 766,911 675,419 610,616 618,832
Income taxes...................................... (167,657) (237,924) (231,869) (201,306) (208,834)
----------- ----------- ----------- ----------- -----------
Net earnings...................................... $ 498,113 $ 528,987 $ 443,550 $ 409,310 $ 409,998
PER COMMON SHARE DATA:
Net earnings
Basic........................................... $ 2.55 $ 2.61 $ 2.15 $ 2.01 $ 1.92
Diluted......................................... 2.52 2.59 2.13 2.00 1.90
Cash dividends.................................... 1.33 1.33 1.33 1.33 1.33
Book value........................................ 16.18 16.21 15.56 14.35 13.27
BALANCE SHEET DATA (AT PERIOD-END):
Total assets...................................... $31,910,729 $34,144,363 $33,197,604 $34,720,718 $33,280,353
Loans, net of unearned income..................... 21,996,037 22,774,732 23,163,039 23,957,494 21,446,400
Allowance for losses on loans..................... 330,826 350,931 341,930 335,452 342,300
Available for sale securities..................... 4,955,877 5,467,283 4,780,629 6,843,670 7,472,455
Total deposits.................................... 23,146,184 23,330,440 23,430,502 23,113,383 23,372,116
Short-term borrowings(1).......................... 2,451,285 3,637,610 3,076,679 6,086,986 5,422,504
Long-term debt(1)
Parent company.................................. 1,297,089 890,017 878,626 379,303 379,656
Subsidiary banks................................ 1,328,112 1,897,756 1,858,073 1,559,668 738,114
Total shareholders' equity........................ 3,065,639 3,226,282 3,223,741 2,920,054 2,776,109
Average assets.................................... 33,199,857 32,617,526 34,209,871 33,882,405 32,902,370
Average shareholders' equity...................... 3,164,381 3,203,027 3,100,945 2,807,672 2,980,664
Average shares outstanding (in thousands)
Basic........................................... 195,030 201,927 205,543 202,756 212,781
Diluted......................................... 197,383 204,609 208,043 204,983 215,975
PROFITABILITY AND CAPITAL RATIOS:
Return on average assets.......................... 1.50% 1.62% 1.30% 1.21% 1.25%
Return on average common equity................... 15.77 16.55 14.34 14.63 13.80
Net interest margin............................... 4.01 4.43 4.20 4.11 4.36
Net interest spread............................... 3.66 3.96 3.53 3.41 3.69
Loans/deposits (period-end)....................... 95.03 97.62 98.86 103.65 91.76
Common and preferred dividend payout ratio........ 52.47 51.05 61.92 66.62 69.93
Shareholders' equity/total assets (period-end).... 9.61 9.45 9.71 8.41 8.34
Average stockholders' equity/average total
assets.......................................... 9.53 9.82 9.06 8.29 9.06
Leverage ratio.................................... 7.89 7.47 7.56 6.53 6.65
Tier 1 capital/risk-weighted assets............... 9.60 9.40 9.75 8.63 9.50
Total capital/risk-weighted assets................ 15.60 13.89 14.47 11.47 12.69
13
AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
2003 2002(3) 2001 2000 1999
----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
CREDIT QUALITY RATIOS(2):
Allowance for losses on loans/period-end loans.... 1.50% 1.54% 1.48% 1.40% 1.60%
Nonperforming loans/total loans................... .95 1.16 1.02 0.58 0.64
Allowance for losses on loans/nonperforming
loans........................................... 158 133 144 242 251
Nonperforming assets/loans and foreclosed
properties...................................... 1.19 1.50 1.31 0.76 0.81
Provision for losses on loans/average loans....... .81 0.86 0.55 0.34 0.35
Net charge-offs/average loans..................... .89 0.82 0.53 0.36 0.46
---------------
(1) Reference is made to Note 9 to Union Planters' 2003 consolidated financial
statements for the components of short- and long-term debt.
(2) Exclusive of loans held for resale.
(3) In 2002, Union Planters adopted Statement of Financial Accounting Standards
No. 142, which required that goodwill no longer be amortized. See Note 1 to
the consolidated financial statements presented in Union Planters' Annual
Report on Form 10-K incorporated by reference into this joint proxy
statement/prospectus.
14
SELECTED COMBINED CONDENSED CONSOLIDATED UNAUDITED PRO FORMA FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following table shows information about our financial condition and
operations, including per share data and financial ratios, after giving effect
to the merger. This information is called pro forma information in this joint
proxy statement/prospectus. The table sets forth the information as if the
merger had become effective on December 31, 2003, with respect to financial
condition, and January 1, 2003, with respect to operations data. The pro forma
data in the tables assume that the merger is accounted for as an acquisition by
Regions of Union Planters using the purchase method of accounting. The pro forma
financial information includes adjustments to record the assets and liabilities
of Union Planters at their estimated fair values and is subject to further
adjustment as additional information becomes available and as additional
analyses are performed. The pro forma statements of operations do not include
the impact of restructuring and merger-related costs or amortization of certain
intangibles which are expected to be incurred subsequent to the merger. This
table should be read in conjunction with, and is qualified in its entirety by,
the historical financial statements, including the notes thereto, of Regions and
Union Planters which are incorporated by reference in this joint proxy
statement/prospectus and the more detailed pro forma financial information,
including the notes thereto, appearing elsewhere in this joint proxy
statement/prospectus. See "WHERE YOU CAN FIND MORE INFORMATION" on page [--] and
"PRO FORMA FINANCIAL INFORMATION" on page [--].
We anticipate that the merger will provide the combined company with
financial benefits that include reduced operating expenses. The pro forma
information does not reflect the benefits of expected cost savings,
opportunities to earn additional revenue or the costs and amortization referred
to in the preceding paragraph and, accordingly, does not attempt to predict or
suggest future results. It also does not necessarily reflect what the historical
results of the combined company would have been had our companies been combined
during these periods.
AS OF
DECEMBER 31, 2003
-----------------
(IN THOUSANDS)
SELECTED STATEMENT OF FINANCIAL CONDITION DATA:
Total assets................................................ $83,979,440
Securities available-for-sale............................... 14,012,738
Securities held-to-maturity................................. 30,943
Loans, net of unearned income............................... 54,541,743
Deposits.................................................... 56,000,552
Borrowed funds.............................................. 15,392,254
Stockholders' equity........................................ 10,540,418
15
FOR THE TWELVE MONTHS
ENDED
DECEMBER 31, 2003
---------------------
(IN THOUSANDS EXCEPT
PER SHARE DATA)
SELECTED STATEMENTS OF INCOME DATA:
Interest income............................................. $3,763,564
Interest expense............................................ 1,068,794
----------
Net interest income......................................... 2,694,770
Provision for loan losses................................... 303,039
----------
Net interest income after provision for loan losses......... 2,391,731
Non-interest income......................................... 2,280,681
Non-interest expense........................................ 3,139,052
----------
Income before income tax expense............................ 1,533,360
Income tax expense.......................................... 411,994
----------
Net income.................................................. $1,121,366
==========
WEIGHTED AVERAGE COMMON SHARES:
Basic....................................................... 469,976
Diluted..................................................... 475,314
PER COMMON SHARE DATA:
Basic earnings.............................................. $ 2.39
Diluted earnings............................................ 2.36
Book value.................................................. 22.73
FOR THE TWELVE MONTHS
ENDED
DECEMBER 31, 2003
---------------------
SELECTED FINANCIAL RATIOS(1):
Return on average assets(2)................................. 1.35%
Return on average stockholders' equity(3)................... 10.78
Stockholders' equity to total assets........................ 12.55
Efficiency ratio(4)......................................... 62.41
---------------
(1) Return on average assets and return on average stockholders' equity for the
periods presented were calculated assuming the merger was consummated on
January 1, 2003.
(2) Calculated by dividing pro forma net income by pro forma average assets for
the period reported.
(3) Calculated by dividing pro forma net income by pro forma average
stockholders' equity for the period reported.
(4) Efficiency ratio represents pro forma non-interest expense divided by the
sum of pro forma net interest income (taxable-equivalent basis) plus other
pro forma non-interest income, excluding securities gains.
16
COMPARATIVE PER SHARE DATA
The following table sets forth for Regions common stock and Union Planters
common stock certain historical, pro forma and pro forma-equivalent per share
financial information. The pro forma and pro forma equivalent per share
information gives effect to the merger as if the merger had been effective on
December 31, 2003, in the case of the book value data presented, and as if the
merger had become effective January 1, 2003, in the case of the net income and
dividends declared data presented. The pro forma data in the tables assume that
the merger is accounted for as an acquisition by Regions of Union Planters using
the purchase method of accounting. See "ACCOUNTING TREATMENT" on page [--]. The
information in the following table is based on, and should be read together
with, the historical financial information that we have presented in our prior
filings with the Securities and Exchange Commission and the pro forma financial
information that appears elsewhere in this document. See "WHERE YOU CAN FIND
MORE INFORMATION" on page [--] and "PRO FORMA FINANCIAL INFORMATION" on page
[--].
We anticipate that the merger will provide the combined company with
financial benefits that include reduced operating expenses. The pro forma
information does not reflect the benefits of expected cost savings,
opportunities to earn additional revenue, the impact of restructuring and
merger-related costs or the amortization of certain intangibles and,
accordingly, does not attempt to predict or suggest future results. It also does
not necessarily reflect what the historical results of the combined company
would have been had our companies been combined during these periods. The
Comparative Per Share Data Table for the year ended December 31, 2003 combines
the historical income per share data of Regions and subsidiaries and Union
Planters and subsidiaries giving effect to the merger as if the merger had
become effective January 1, 2003, using the purchase method of accounting and
giving effect to the related pro forma adjustments described in the accompanying
Notes to the Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements. Upon consummation of the merger, the operating results of Union
Planters will be reflected in the consolidated financial statements of Regions
on a prospective basis.
PER
UNION EQUIVALENT
REGIONS PLANTERS PRO FORMA REGIONS
HISTORICAL HISTORICAL COMBINED(1) SHARE(2)
---------- ---------- ----------- ----------
NET INCOME:
For the year ended December 31, 2003:
Basic.................................... $ 2.93 $ 2.55 $ 2.39(3) $ 2.95
Diluted.................................. 2.90 2.52 2.36(3) 2.91
CASH DIVIDENDS DECLARED:
For the year ended December 31, 2003....... 1.24 1.33 1.33(4) 1.64
BOOK VALUE:
As of December 31, 2003.................... 20.06(5) 16.18 22.73(6) 28.06
---------------
(1) The pro forma combined share amounts are equal to the per equivalent Union
Planters share amounts since Union Planters shareholders will receive one
share of New Regions common stock for each share of Union Planters common
stock.
(2) Per equivalent Regions share is pro forma combined multiplied by 1.2346.
(3) The pro forma net income per share amounts are calculated by totaling the
historical net income (adjusted for pro forma adjustments) of Regions and
Union Planters and dividing the resulting amount by the average pro forma
shares of Regions and Union Planters giving effect to the merger. The
average pro forma shares of Regions and Union Planters reflect Union
Planters' historical basic and diluted shares, plus historical basic and
diluted average shares of Regions as adjusted for an exchange ratio of
1.2346 of a share of New Regions common stock for each share of Regions
common stock. The pro forma net income per share amounts do not take into
consideration any
17
operating efficiencies or other factors, such as merger costs or
amortization of intangibles, that may be realized as a result of the merger.
(4) Pro forma cash dividends represents the Union Planters historical amount
since New Regions intends to pay dividends consistent with Union Planters'
pre-merger dividend rate.
(5) Regions historical book value per share as of December 31, 2003, as adjusted
for the exchange ratio of 1.2346 of a share of New Regions common stock for
each share of Regions common stock, is $16.25.
(6) Pro forma combined book value per share is calculated by dividing the
December 31, 2003 pro forma combined stockholders' equity of $10,540,418,000
by the 463,679,966 shares of New Regions common stock assumed to be issued
upon consummation of the merger. Note 2 of the pro forma combined condensed
consolidated financial statements provides the calculation of the
463,679,966 shares of New Regions common stock assumed to be issued upon
consummation of the merger.
18
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This document contains or incorporates by reference a number of
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 regarding Regions, Union Planters and New Regions,
and may include statements for the period following the completion of the
merger. You can find many of these statements by looking for words such as
"plan," "believe," "expect," "intend," "anticipate," "estimate," "project,"
"potential" or other similar expressions. Such statements include, but are not
limited to, statements about the benefits of the merger, including future
financial and operating results, New Regions', Regions' and Union Planters'
plans, objectives, expectations and intentions. Such statements involve risks
and uncertainties that may cause results to differ materially from those set
forth in these statements.
The ability of Regions, Union Planters and New Regions to predict results
or the actual effects of its plans and strategies is inherently uncertain and
the merger itself creates additional uncertainty. Accordingly, actual results
may differ materially from anticipated results. The following factors, among
others, could cause actual results to differ materially from those set forth in
the forward-looking statements:
- difficulties in obtaining required stockholder and regulatory approvals
for the merger on the terms and schedule proposed;
- increases in competitive pressure among financial institutions or from
non-financial institutions and their effects on pricing, spending,
third-party relationships and revenues;
- changes in the interest rate environment;
- changes in deposit flows, loan demand or real estate values;
- changes in accounting principles, policies or guidelines;
- legislative or regulatory changes in the U.S. and internationally;
- changes in general economic conditions, either nationally or in some or
all of the operating areas in which the combined company will be doing
business, or conditions in securities markets, or the banking industry;
- a materially adverse change in the financial condition of Regions, Union
Planters or New Regions;
- the level and timeliness of realization, if any, of expected cost savings
and revenue synergies from the merger;
- disruption from the merger making it more difficult to maintain
relationships with clients, employees or suppliers;
- difficulties related to the completion of the merger and the integration
of the businesses of Regions, Union Planters and New Regions, including
integration of information systems and retention of key personnel;
- other difficulties in effecting the proposed merger;
- lower than expected revenues following the merger; and
- other economic, competitive, governmental, regulatory, geopolitical, and
technological factors affecting operations, pricing and services.
Because such forward-looking statements are subject to assumptions and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Regions stockholders and Union
Planters shareholders are cautioned not to place undue reliance on such
statements, which speak only as of the date of this document or the date of any
document incorporated by reference.
19
All subsequent written and oral forward-looking statements concerning the
merger or other matters addressed in this document and attributable to Regions,
Union Planters or New Regions or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements contained or referred
to in this section. Regions, Union Planters and New Regions undertake no
obligation to update such forward-looking statements to reflect events or
circumstances after the date of this document or to reflect the occurrence of
unanticipated events.
20
REGIONS ANNUAL MEETING
This section contains information from Regions for Regions stockholders
about the annual stockholder meeting Regions has called to consider and adopt
the merger agreement, to elect directors and to consider other matters discussed
in this document. We are mailing this joint proxy statement/prospectus to you,
as a Regions stockholder, on or about [--], 2004. Together with this joint proxy
statement/prospectus, we are also sending to you a notice of the Regions annual
meeting, a form of proxy that our board of directors is soliciting for use at
the Regions annual meeting and at any adjournments or postponements of the
meeting and, if not previously sent to you, our 2003 Annual Report to
Stockholders. The Regions annual meeting will be held on [--], 2004 at [--]
local time at Regions Bank Operations Center, 201 Milan Parkway, Birmingham,
Alabama 35209.
MATTERS TO BE CONSIDERED
The matters to be considered at the Regions annual meeting are:
- a proposal to adopt the Agreement and Plan of Merger, dated as of January
22, 2004, by and between Union Planters Corporation and Regions Financial
Corporation, pursuant to which Union Planters and Regions each will be
merged with and into a newly-formed holding company, known as New Regions
Financial Corporation (Regions Proposal 1);
- electing the four nominees for director named in this joint proxy
statement/prospectus as directors, to serve as directors with terms
expiring at the 2007 annual meeting of stockholders, in each case until
their successors are duly elected and qualified. If the merger is
completed, the board of directors of New Regions will be reconstituted to
consist of thirteen directors from Regions and thirteen directors from
Union Planters, as described in this joint proxy statement/prospectus
(Regions Proposal 2);
- ratifying the appointment of Ernst & Young LLP as Regions' independent
auditors for the year 2004 (Regions Proposal 3);
- a proposal to approve the adjournment of the Regions annual meeting, if
necessary or appropriate, to solicit additional proxies (Regions Proposal
4);
- a stockholder proposal which the board of directors and management oppose
regarding the required stockholder vote for election of directors which
would provide that directors must receive a majority of the shares
entitled to vote in order to be elected to the board of directors
(Regions Proposal 5); and
- such other business as may properly come before the Regions annual
meeting or any adjournment or postponement thereof.
You may also be asked to vote on a proposal to adjourn or postpone the
Regions annual meeting. Regions could use any adjournment or postponement of the
Regions annual meeting for the purpose among others, of allowing more time to
solicit votes to approve the merger agreement.
PROXIES
You should complete and return the proxy card accompanying this document to
ensure that your vote is counted at the Regions annual meeting, regardless of
whether you plan to attend the Regions annual meeting. If you are a registered
stockholder (that is, you hold stock certificates registered in your own name),
you may also vote by telephone or through the internet, by following the
instructions described on your proxy card. If your shares are held in nominee or
"street name" you will receive separate voting instructions from your broker or
nominee with your proxy materials. Although most brokers and nominees offer
telephone and internet voting, availability and specific processes will depend
on their voting arrangements. You can revoke the proxy at any time before the
vote is taken at the Regions annual meeting by submitting to Regions' corporate
secretary written notice of revocation or a properly executed
21
proxy of a later date, or by attending the Regions annual meeting and voting in
person. Written notices of revocation and other communications about revoking
Regions proxies should be addressed to:
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35202
Attention: Samuel E. Upchurch, Jr.
Corporate Secretary
If your shares are held in street name, you should follow the instructions
of your broker regarding the revocation of proxies.
All shares represented by valid proxies that we receive through this
solicitation, and that are not revoked, will be voted in accordance with the
instructions on the proxy card. If you make no specification on your proxy card
as to how you want your shares voted before signing and returning it, your proxy
will be voted "FOR" adoption of the merger agreement, "FOR" approval of the
election of the nominated directors, "FOR" approval of the appointment of Ernst
& Young LLP as independent auditors, "FOR" the proposal to adjourn the annual
meeting, if necessary or appropriate, to solicit additional proxies and
"AGAINST" approval of the stockholder proposal relating to election of
directors. The Regions board of directors is currently unaware of any other
matters that may be presented for action at the Regions annual meeting. If other
matters properly come before the Regions annual meeting, or at any adjournment
or postponement thereof, we intend that shares represented by properly submitted
proxies will be voted, or not voted, by and at the discretion of the persons
named as proxies on the proxy card.
REGIONS STOCKHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR PROXY
CARDS. IF THE MERGER IS COMPLETED, REGIONS STOCKHOLDERS WILL NEED TO EXCHANGE
THEIR CURRENT STOCK CERTIFICATES FOR NEW REGIONS STOCK CERTIFICATES. UPON
COMPLETION OF THE MERGER, FORMER REGIONS STOCKHOLDERS WILL BE MAILED A
TRANSMITTAL FORM WITH INSTRUCTIONS ON HOW TO EXCHANGE THEIR REGIONS STOCK
CERTIFICATES FOR NEW REGIONS STOCK CERTIFICATES AND CASH INSTEAD OF FRACTIONAL
SHARES, IF APPLICABLE.
SOLICITATION OF PROXIES
We will bear the entire cost of soliciting proxies from you. In addition to
solicitation of proxies by mail, we will request that banks, brokers and other
record holders send proxies and proxy material to the beneficial owners of
Regions common stock and secure their voting instructions, if necessary. We will
reimburse the record holders for their reasonable expenses in taking those
actions. We have also made arrangements with D.F. King & Co., Inc. to assist us
in soliciting proxies and have agreed to pay them $10,000 plus reasonable
expenses for these services. If necessary, we may also use several of our
regular employees, who will not be specially compensated, to solicit proxies
from Regions stockholders, either personally or by telephone, telegram,
facsimile or letter.
RECORD DATE
The Regions board of directors has fixed the close of business on [--],
2004 as the record date for determining the Regions stockholders entitled to
receive notice of and to vote at the Regions annual meeting. At that time, [--]
shares of Regions common stock were outstanding, held by approximately [--]
holders of record. As of the record date:
- directors and executive officers of Regions and their affiliates had the
right to vote [--] shares of Regions common stock, representing less than
[--]% of the shares entitled to vote at the Regions annual meeting.
Regions currently expects that its directors and executive officers will
vote such shares "FOR" adoption of the merger agreement;
- subsidiaries of Regions, as fiduciaries, custodians or agents, held
approximately [--] shares of Regions common stock, representing
approximately [--]% of the shares entitled to vote at the Regions annual
meeting, and maintained sole or shared voting power over approximately
[--] of these shares; and
22
- directors and executive officers of Union Planters and their affiliates
had the right to vote [--] shares of Regions common stock, representing
less than [--]% of the shares entitled to vote at the Regions annual
meeting. Union Planters currently expects that its directors and
executive officers will vote such shares "FOR" adoption of the merger
agreement.
VOTING RIGHTS AND VOTE REQUIRED
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Regions common stock is necessary to
constitute a quorum at the annual meeting. Abstentions and broker non-votes will
be counted solely for the purpose of determining whether a quorum is present. An
unvoted proxy submitted by a broker is sometimes referred to as a broker
non-vote.
Adoption of the merger agreement (Regions Proposal 1) requires the
affirmative vote of the holders of a majority of the outstanding shares of
Regions common stock entitled to vote at the Regions annual meeting. Adoption of
Regions Proposal 2 relating to election of directors requires a plurality of the
votes cast at that meeting, meaning that the four nominees for directors with
the most votes, whose term will expire in 2007, will be elected. Adoption of
Regions Proposal 3 relating to ratification of Ernst & Young as independent
auditors requires that the votes cast in favor of the appointment exceed the
votes cast in opposition. Adoption of Regions Proposal 4 relating to the
adjournment of the annual meeting, if necessary or appropriate, to solicit
additional proxies requires that the votes cast in favor of the proposal exceed
the votes cast in opposition. Adoption of the stockholder proposal (Regions
Proposal 5) requires the vote of a majority of shares voted on the proposal. You
are entitled to one vote for each share of Regions common stock you held as of
the record date, including one vote for each nominee for the election of
directors.
BECAUSE THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF REGIONS COMMON STOCK ENTITLED TO VOTE AT THE REGIONS
ANNUAL MEETING IS NEEDED FOR US TO PROCEED WITH THE MERGER, THE FAILURE TO VOTE
BY PROXY OR IN PERSON WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE MERGER
AGREEMENT. ABSTENTIONS AND BROKER NON-VOTES ALSO WILL HAVE THE SAME EFFECT AS A
VOTE AGAINST THE MERGER. ACCORDINGLY, THE REGIONS BOARD OF DIRECTORS URGES
REGIONS STOCKHOLDERS TO COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE, OR TO VOTE BY
TELEPHONE OR THE INTERNET.
Abstentions and broker non-voters will have no effect on the vote on the
election of directors, the ratification of the appointment of Ernst & Young as
Regions' independent auditors for the fiscal year 2004, adoption of the proposal
to adjourn the annual meeting, if necessary or appropriate, to solicit
additional proxies or the stockholder proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Regions board of directors has unanimously adopted the merger
agreement. The Regions board of directors believes that the merger agreement and
the transactions it contemplates are consistent with, and will further, the
business strategies and goals, and are in the best interests of Regions and
Regions stockholders, and unanimously recommends that Regions stockholders vote
"FOR" approval of the merger agreement.
The Regions board of directors also unanimously recommends that you vote:
- "FOR" electing all nominees for director presented in Regions Proposal 2;
- "FOR" ratifying Ernst & Young LLP as Regions' independent auditors for
the fiscal year 2004 presented in Regions Proposal 3;
- "FOR" adjourning the annual meeting, if necessary or appropriate, to
solicit additional proxies presented in Regions Proposal 4; and
- "AGAINST" approval of the stockholder proposal presented in Regions
Proposal 5 which would provide that directors must receive a majority of
the shares entitled to vote in order to be elected to the board of
directors.
23
See "THE MERGER -- Regions' Reasons for the Merger; Recommendation of
Regions' Board of Directors" for a more detailed discussion of the Regions board
of directors' recommendation with regard to the merger agreement.
ATTENDING THE MEETING
If you want to vote your shares of Regions common stock held in street name
in person at the meeting, you will have to get a written proxy in your name from
the broker, bank or other nominee who holds your shares.
PARTICIPANTS IN THE REGIONS 401(K) PLAN
If you are a participant in the Regions 401(k) Plan, you will have received
with this joint proxy statement/prospectus voting instruction forms that reflect
all shares you may vote under this plan. Under the terms of this plan, the
trustee or administrator votes all shares held by the plan, but each participant
may direct the trustee or administrator how to vote the shares of Regions common
stock allocated to his or her plan account. If you own shares through this plan
and do not vote, the plan trustee or administrator will vote the shares in
accordance with the terms of the plan. The deadline for returning your voting
instructions is [--], 2004.
VOTING BY TELEPHONE OR THE INTERNET
Many stockholders of Regions have the option to submit their proxies or
voting instructions electronically by telephone or the internet instead of
submitting proxies by mail on the enclosed proxy card. Please note that there
are separate arrangements for using the telephone and the internet depending on
whether your shares are registered in Regions' stock records in your name or in
the name of a brokerage firm or bank. Regions stockholders should check their
proxy card or the voting instructions forwarded by their broker, bank or other
holder of record to see which options are available.
The telephone and internet procedures described below for submitting your
proxy or voting instructions are designed to authenticate stockholders'
identities, to allow stockholders to have their shares voted and to confirm that
their instructions have been properly recorded. Stockholders submitting proxies
or voting instructions via the internet should understand that there may be
costs associated with electronic access, such as usage charges from internet
access providers and telephone companies, that will be borne by the stockholder.
Regions holders of record may submit their proxies:
- by telephone, by calling the toll-free number indicated on their proxy
card and following the recorded instructions; or
- through the internet, by visiting the website indicated on their proxy
card and following the instructions.
24
THE UNION PLANTERS ANNUAL MEETING
This section contains information from Union Planters for Union Planters
shareholders about the annual shareholders meeting Union Planters has called to
consider and approve the merger agreement, to elect directors and to consider
other matters discussed in this document. We are mailing this joint proxy
statement/prospectus to you, as a Union Planters shareholder, on or about [--],
2004. Together with this joint proxy statement/prospectus, we are also sending
to you a notice of the Union Planters annual meeting, a form of proxy that our
board of directors is soliciting for use at the Union Planters annual meeting
and at any adjournments or postponements of the meeting and, if not previously
sent to you, our 2003 Annual Report to Shareholders. The Union Planters annual
meeting will be held on [--], 2004 at [--], local time at Union Planters Bank,
National Association, 6200 Poplar Avenue, Main Floor, Memphis, Tennessee 38119.
MATTERS TO BE CONSIDERED
The matters to be considered at the Union Planters annual meeting are:
- a proposal to approve the Agreement and Plan of Merger, dated as of
January 22, 2004, by and between Union Planters and Regions Financial
Corporation, pursuant to which Union Planters and Regions each will be
merged with and into a newly-formed holding company, New Regions
Financial Corporation (Union Planters Proposal 1);
- the election of four Class II directors of Union Planters. If the merger
is completed, the board of directors of New Regions will be reconstituted
to consist of thirteen directors from Regions and thirteen directors from
Union Planters, as described in this joint proxy statement/prospectus
(Union Planters Proposal 2);
- the ratification of the appointment of PricewaterhouseCoopers LLP as
Union Planters' independent accountants for the 2004 fiscal year (Union
Planters Proposal 3);
- a proposal to approve the adjournment of the Union Planters annual
meeting, if necessary or appropriate, to solicit additional proxies
(Union Planters Proposal 4);
- a shareholder proposal which the board of directors and management oppose
regarding senior executive compensation which requests that Union
Planters change its current system of executive compensation (Union
Planters Proposal 5); and
- such other business as may properly come before the Union Planters annual
meeting or any adjournment or postponement thereof.
You may also be asked to vote on a proposal to adjourn or postpone the
Union Planters annual meeting. Union Planters could use any adjournment or
postponement of the Union Planters annual meeting for the purpose among others,
of allowing more time to solicit votes to approve the merger agreement.
PROXIES
You should complete and return the proxy card accompanying this document to
ensure that your vote is counted at the annual meeting, regardless of whether
you plan to attend the annual meeting. If you are a registered shareholder (that
is, you hold stock certificates registered in your own name), you may also vote
by telephone or through the internet, by following the instructions described on
your proxy card. If your shares are held in nominee or "street name" you will
receive separate voting instructions from your broker or nominee with your proxy
materials. Although most brokers and nominees offer telephone and internet
voting, availability and specific processes will depend on their voting
arrangements. You can revoke the proxy at any time before the vote is taken at
the annual meeting by submitting to Union Planters' corporate secretary written
notice of revocation or a properly executed proxy of a later date, or by
25
attending the annual meeting and voting in person. Written notices of revocation
and other communications about revoking Union Planters proxies should be
addressed to:
Union Planters Corporation
6200 Poplar Avenue
Memphis, Tennessee 38119
Attention: E. James House, Jr.
Corporate Secretary
If your shares are held in street name, you should follow the instructions
of your broker regarding the revocation of proxies.
All shares represented by valid proxies that we receive through this
solicitation, and that are not revoked, will be voted in accordance with the
instructions on the proxy card. If you make no specification on your proxy card
as to how you want your shares voted before signing and returning it, your proxy
will be voted "FOR" the approval of the merger agreement, "FOR" approval of the
election of the nominated directors, "FOR" approval of the appointment of
PricewaterhouseCoopers LLP as independent accountants, "FOR" the proposal to
adjourn the annual meeting, if necessary or appropriate, to solicit additional
proxies and "AGAINST" adoption of the shareholder proposal relating to senior
executive compensation. The Union Planters board of directors is currently
unaware of any other matters that may be presented for action at the annual
meeting. If other matters properly come before the annual meeting, or at any
adjournment or postponement thereof, we intend that shares represented by
properly submitted proxies will be voted, or not voted, by and at the discretion
of the persons named as proxies on the proxy card.
UNION PLANTERS SHAREHOLDERS SHOULD NOT SEND STOCK CERTIFICATES WITH THEIR
PROXY CARDS. IF THE MERGER IS COMPLETED, UNION PLANTERS SHAREHOLDERS WILL NEED
TO EXCHANGE THEIR CURRENT STOCK CERTIFICATES FOR NEW REGIONS STOCK CERTIFICATES.
UPON COMPLETION OF THE MERGER, FORMER UNION PLANTERS SHAREHOLDERS WILL BE MAILED
A TRANSMITTAL FORM WITH INSTRUCTIONS ON HOW TO EXCHANGE THEIR UNION PLANTERS
STOCK CERTIFICATES FOR NEW REGIONS STOCK CERTIFICATES.
SOLICITATION OF PROXIES
We will bear the entire cost of soliciting proxies from you. In addition to
solicitation of proxies by mail, we will request that banks, brokers, and other
record holders send proxies and proxy material to the beneficial owners of Union
Planters common stock and secure their voting instructions, if necessary. We
will reimburse the record holders for their reasonable expenses in taking those
actions. We have also made arrangements with Morrow & Co., Inc. to assist us in
soliciting proxies and have agreed to pay them $9,500 plus reasonable expenses
for these services. If necessary, we may use several of our regular employees,
who will not be specially compensated, to solicit proxies from Union Planters
shareholders, either personally or by telephone, telegram, facsimile or letter.
RECORD DATE
The Union Planters board of directors has fixed the close of business on
[--], 2004 as the record date for determining the Union Planters shareholders
entitled to receive notice of and to vote at the Union Planters annual meeting.
At that time, [--] shares of Union Planters common stock were outstanding, held
by approximately [--] holders of record. As of the record date:
- directors and executive officers of Union Planters and their affiliates
had the right to vote [--] shares of Union Planters common stock,
representing less than [--]% of the shares entitled to vote at the Union
Planters annual meeting. Union Planters currently expects that its
directors and executive officers will vote such shares "FOR" approval of
the merger agreement; and
- subsidiaries of Union Planters, as fiduciaries, custodians or agents,
held approximately [--] shares of Union Planters common stock,
representing approximately [--]% of the shares entitled to vote at
26
the Union Planters annual meeting, and maintained sole or shared voting
power over approximately [--] of these shares.
VOTING RIGHTS AND VOTE REQUIRED
The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Union Planters common stock is necessary
to constitute a quorum at the Union Planters annual meeting. Abstentions and
broker non-votes will be counted for the purpose of determining whether a quorum
is present. An unvoted proxy submitted by a broker is sometimes referred to as a
broker non-vote.
Approval of the merger agreement (Union Planters Proposal 1) requires the
affirmative vote of the holders of a majority of the outstanding shares of Union
Planters common stock entitled to vote at the Union Planters annual meeting.
Adoption of Union Planters Proposal 2 relating to election of directors requires
a plurality of the votes cast at that meeting, meaning that the four nominees
for Class II directors with the most votes will be elected. Adoption of Union
Planters Proposal 3 relating to ratification of PricewaterhouseCoopers as
independent accountants requires that the votes cast in favor of the appointment
exceed the votes cast in opposition. Adoption of Union Planters Proposal 4
relating to the adjournment of the annual meeting, if necessary or appropriate,
to solicit additional proxies requires that the votes cast in favor of the
proposal exceed the votes cast in opposition. Adoption of the shareholder
proposal (Union Planters Proposal 5) requires the vote of a majority of shares
voted on the proposal. You are entitled to one vote for each share of Union
Planters common stock you held as of the record date, including one vote for
each nominee for the election of directors.
BECAUSE THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE
OUTSTANDING SHARES OF UNION PLANTERS COMMON STOCK ENTITLED TO VOTE AT THE UNION
PLANTERS ANNUAL MEETING IS NEEDED FOR US TO PROCEED WITH THE MERGER, THE FAILURE
TO VOTE BY PROXY OR IN PERSON WILL HAVE THE SAME EFFECT AS A VOTE AGAINST THE
MERGER AGREEMENT. ABSTENTIONS AND BROKER NON-VOTES ALSO WILL HAVE THE SAME
EFFECT AS A VOTE AGAINST THE MERGER. ACCORDINGLY, THE UNION PLANTERS BOARD OF
DIRECTORS URGES UNION PLANTERS SHAREHOLDERS TO COMPLETE, DATE, AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE OR TO VOTE BY TELEPHONE OR THE INTERNET.
Abstentions and broker non-voters will have no effect on the vote on the
election of directors, the ratification of the appointment of
PricewaterhouseCoopers as Union Planters' independent accountants for the fiscal
year 2004, adoption of the proposal to adjourn the annual meeting, if necessary
or appropriate, to solicit additional proxies or the stockholder proposal.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Union Planters board of directors has unanimously approved the merger
agreement. The Union Planters board of directors determined that the merger
agreement and the transactions it contemplates are advisable and in the best
interests of Union Planters and its shareholders and unanimously recommends that
Union Planters shareholders vote "FOR" approval of the merger agreement.
The Union Planters board of directors also unanimously recommends that you
vote:
- "FOR" electing all nominees for director presented in Union Planters
Proposal 2;
- "FOR" ratifying PricewaterhouseCoopers LLP as Union Planters' independent
accountants for the fiscal year 2004 presented in Union Planters Proposal
3;
- "FOR" adjourning the annual meeting, if necessary or appropriate, to
solicit additional proxies presented in Union Planters Proposal 4; and
- "AGAINST" approval of the shareholder proposal presented in Union
Planters Proposal 5 which requests that Union Planters change its current
system of executive compensation.
27
See "THE MERGER -- Union Planters' Reasons for the Merger; Recommendation
of Union Planters' Board of Directors" for a more detailed discussion of the
Union Planters board of directors' recommendation.
ATTENDING THE MEETING
If you want to vote your shares of Union Planters common stock held in
street name in person at the meeting, you will have to get a written proxy in
your name from the broker, bank or other nominee who holds your shares.
PARTICIPANTS IN UNION PLANTERS' 401(K) RETIREMENT SAVINGS PLAN
If you are a participant in the Union Planters 401(k) Retirement Savings
Plan, you will have received with this joint proxy statement/prospectus voting
instruction forms that reflect all shares you may vote under this plan. Under
the terms of this plan, the trustee or administrator votes all shares held by
the plan, but each participant may direct the trustee or administrator how to
vote the shares of Union Planters common stock allocated to his or her plan
account. If you own shares through this plan and do not vote, the plan trustee
or administrator will vote the shares in accordance with the terms of the plan.
The deadline for returning your voting instructions is [--], 2004.
VOTING BY TELEPHONE OR THE INTERNET
Many shareholders of Union Planters have the option to submit their proxies
or voting instructions electronically by telephone or the internet instead of
submitting proxies by mail on the enclosed proxy card. Please note that there
are separate arrangements for using the telephone and the internet depending on
whether your shares are registered in Union Planters' stock records in your name
or in the name of a brokerage firm or bank. Union Planters shareholders should
check their proxy card or the voting instructions forwarded by their broker,
bank or other holder of record to see which options are available.
The telephone and internet procedures described below for submitting your
proxy or voting instructions are designed to authenticate shareholders'
identities, to allow shareholders to have their shares voted and to confirm that
their instructions have been properly recorded. Shareholders submitting proxies
or voting instructions via the internet should understand that there may be
costs associated with electronic access, such as usage charges from internet
access providers and telephone companies, that will be borne by the shareholder.
Union Planters holders of record may submit their proxies:
- by telephone, by calling the toll-free number indicated on their proxy
card and following the recorded instructions; or
- through the internet, by visiting the website indicated on their proxy
card and following the instructions.
28
INFORMATION ABOUT THE COMPANIES
Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35202
(205) 944-1300
Regions Financial Corporation, headquartered in Birmingham, Alabama, is a
full-service provider of banking, securities brokerage, mortgage and insurance
products and services. As of December 31, 2003, Regions had $48.6 billion in
assets and stockholders' equity of $4.5 billion, making it one of the top 25
financial holding companies in the United States. Its banking subsidiary,
Regions Bank, operates more than 680 offices across a nine-state geographic
footprint in the Southeast U.S. and Texas. Its securities brokerage subsidiary,
Morgan Keegan & Co., Inc., provides investment and brokerage services from more
than 140 offices.
Regions Bank is subject to regulation and supervision by the state banking
authority of Alabama and by the Federal Reserve and the Federal Deposit
Insurance Corporation. As the holding company for Regions Bank, Regions is a
bank holding company and a financial holding company subject to regulation and
supervision by the Board of Governors of the Federal Reserve System.
Additional information about Regions and its subsidiaries is included in
documents incorporated by reference in this joint proxy statement/prospectus.
See "WHERE YOU CAN FIND MORE INFORMATION."
Union Planters Corporation
6200 Poplar Avenue
Memphis, Tennessee 38119
(901) 580-6000
Union Planters Corporation, headquartered in Memphis, Tennessee, with total
assets of approximately $31.9 billion at December 31, 2003, is the largest bank
holding company in Tennessee and among the 30 largest bank holding companies in
the United States. Union Planters Bank, National Association, its principal
banking subsidiary, was founded in 1869 and operates branches in 12 states:
Alabama, Arkansas, Florida, Illinois, Indiana, Iowa, Kentucky, Louisiana,
Mississippi, Missouri, Tennessee and Texas. Union Planters offers a full range
of commercial and consumer financial solutions through a network of 717 banking
offices, 925 ATMs and the resources of specialized business units.
Union Planters Bank is subject to regulation and supervision by the Office
of the Comptroller of the Currency and by the Federal Deposit Insurance
Corporation. As the holding company for Union Planters Bank, Union Planters is a
bank holding company subject to regulation and supervision by the Board of
Governors of the Federal Reserve System.
Additional information about Union Planters and its subsidiaries is
included in documents incorporated by reference in this joint proxy
statement/prospectus. See "WHERE YOU CAN FIND MORE INFORMATION."
New Regions Financial Corporation
417 North 20th Street
Birmingham, Alabama 35202
(205) 944-1300
Regions and Union Planters formed New Regions solely for the purpose of
effecting the merger. To date, New Regions has not conducted any activities
other than those incident to its formation and the preparation of this joint
proxy statement/prospectus. New Regions is jointly owned by Regions and Union
Planters. Upon completion of the merger, Regions and Union Planters each will be
merged with and into New Regions. New Regions will be the surviving corporation
and will continue its corporate existence under the laws of the State of
Delaware under the name "Regions Financial Corporation."
29
THE MERGER
The following discussion contains material information pertaining to the
merger. This discussion is subject, and qualified in its entirety by reference,
to the merger agreement and financial advisor opinions attached as Appendices to
this document. We encourage you to read and review those documents as well as
the discussion in this document.
GENERAL
This section provides material information about the merger of each of
Regions and Union Planters with and into New Regions and the circumstances
surrounding the merger. See "THE MERGER AGREEMENT," which contains additional
and more detailed information regarding the legal document that governs the
merger, including information about the conditions to completion of the merger
and the provisions for terminating or amending the merger agreement.
At the Regions annual meeting, Regions stockholders will be asked to
consider and vote upon a proposal to adopt the merger agreement. At the Union
Planters annual meeting, Union Planters shareholders will be asked to consider
and vote upon a proposal to approve the merger agreement. Adoption or approval
of the merger agreement will constitute adoption or approval of the transactions
it contemplates, including, among others, the merger of each of Regions and
Union Planters with and into New Regions, and the issuance of New Regions common
stock to the Regions stockholders and Union Planters shareholders in the merger.
STRUCTURE
The Regions board of directors and the Union Planters board of directors
have each unanimously approved the merger agreement, which provides for (1) the
merger of Regions with and into New Regions, with New Regions as the surviving
corporation and (2) immediately following the merger of Regions into New Regions
the merger of Union Planters with and into New Regions, with New Regions as the
surviving corporation. In this document, we refer to these mergers collectively
as "the merger." In the merger, New Regions will be renamed "Regions Financial
Corporation." Each share of Regions common stock outstanding prior to the merger
will be converted into the right to receive 1.2346 shares of the common stock of
New Regions. Each share of Union Planters common stock outstanding prior to the
merger will be converted into the right to receive one share of New Regions
common stock. We sometimes refer to these ratios as the "exchange ratios."
Shares of Regions common stock and Union Planters common stock issued and
outstanding immediately prior to the merger will be cancelled. The exchange
ratios were determined through arm's length negotiations of the terms of the
merger agreement, and were based on our assessment of the relative contributions
of both companies to the business, operations, financial condition and prospects
of the combined company.
As a result of the merger, Regions stockholders immediately prior to the
merger will own approximately 59%, and Union Planters shareholders immediately
prior to the merger will own approximately 41%, of the outstanding New Regions
common stock. These percentages are based on the number of shares of Regions
common stock issued and outstanding as of [--], 2004 and the number of shares of
Union Planters common stock issued and outstanding as of [--], 2004.
We are each merging into a new holding company to reflect and emphasize the
nature of the strategic partnership between Regions and Union Planters as a new
entity rather than an acquisition or takeover of one company by the other. The
choice of Regions and Union Planters to form a new holding company is not
expected to have any substantive impact on the market valuation of the combined
company following the completion of the merger as compared to alternative merger
structures, including a direct merger of either company into the other. For
financial reporting and accounting purposes, Regions will be considered the
acquiror and, accordingly, will reflect the merger as an acquisition of Union
Planters by Regions. See "SELECTED COMBINED CONDENSED CONSOLIDATED UNAUDITED PRO
FORMA FINANCIAL DATA" and "ACCOUNTING TREATMENT." From a valuation perspective,
it is anticipated that investors and the market will value the combined company
in the same manner that they
30
would have valued the combined company had it been created by means of a direct
merger of Regions and Union Planters (or a merger by one with a subsidiary of
the other) and that the valuation will not be affected by the new holding
company structure. We expect that the market price of New Regions shares
following the closing will approximate the market price of Regions common stock
immediately prior to the merger divided by the Regions exchange ratio, 1.2346.
On this basis, on [--], 2004, this estimated price per share would have equaled
$[--]. At the time the merger is completed, we expect that this estimated price
per share will be substantially the same as the price per share of Union
Planters common stock immediately prior to the merger.
New Regions will account for the merger as a purchase by Regions of Union
Planters for financial reporting purposes. The merger has been structured to
qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended for federal income tax purposes, and
it is a condition to our respective obligations to complete the merger that
Regions and Union Planters each receive a legal opinion to that effect. Regions
and Union Planters may alter the method of effecting the combination of the
companies, provided that such change does not alter or change the number of
shares of New Regions common stock into which shares of Regions common stock and
Union Planters common stock will be converted, adversely affect the tax
treatment of Regions or its stockholders or Union Planters or its shareholders
pursuant to the merger, or materially impede or delay completion of the merger.
BACKGROUND OF THE MERGER
Both Regions and Union Planters have strived to build multi-state community
banking organizations that continuously gain efficiency, spread costs over a
growing asset base, diversify risk over an expanding geographic base and provide
innovative products and services over a growing customer base. With these goals
in mind, during the past two years, the management and board of directors of
each company has regularly reviewed its strategic options to continue to
increase long-term stockholder value in light of further structural change and
consolidation in the U.S. banking and financial services industry.
As a consequence of Regions and Union Planters pursuing similar growth and
operational strategies in contiguous markets, as well as frequent business
interactions, participation in financial services industry professional
organizations and business relationships among the respective management teams
and boards of directors, Regions and Union Planters have become familiar with
each other's operations and strategic interests. From time-to-time, Carl E.
Jones, Jr. and Jackson W. Moore, the respective chief executive officers of
Regions and Union Planters, have had informal discussions regarding the
possibility of a strategic combination involving the two companies. In the
summer and fall of 2002, Messrs. Jones and Moore met on several occasions and
discussed preliminarily the possibility of a transaction involving the two
companies. These discussions focused on the potential benefits of combining the
two institutions. Messrs. Jones and Moore mutually determined that, in light of
the then-current market conditions and specific circumstances of the two
organizations, the time was not right for continued discussions.
In September 2003, Messrs. Jones and Moore both attended a non-business
related event and discussed briefly the future of the banking industry. That
meeting was followed by a conversation by telephone during which they agreed
that it would be beneficial to meet in person to discuss the future of their
respective companies in view of the current and anticipated business
environment, particularly with respect to local and national economic
conditions, the competitive environment for financial institutions generally and
the on-going consolidation within the industry. On October 3, 2003, Messrs.
Jones and Moore met to discuss the future of the financial services industry and
the strategic merits of a possible combination between the two respective
organizations and they determined that the timing was right to further consider
a potential transaction.
After this October 3, 2003 meeting, Messrs. Jones and Moore had several
conversations and meetings, including meetings on October 29 and November 11,
2003. During those discussions, Messrs. Jones and Moore discussed, among other
things, the cultural similarities between the companies, the complementary
operations of the two companies, the similar operating environments of the two
companies in compatible geographic markets and the bases on which the two
organizations could be combined, including the
31
advantages to the combined company of structuring a transaction with no material
premium and the positive long-term impact on returns for shareholders of both
companies. They also discussed a variety of governance issues, including Mr.
Moore's possible succession of Mr. Jones upon Mr. Jones' retirement. During this
timeframe, Mr. Jones advised certain members of the Regions Nominating and the
Corporate Governance Committee, and Mr. Moore advised the members of the Union
Planters Executive Committee, of the discussions between the two parties.
On November 25, 2003, Messrs. Jones and Moore, together with a limited
number of members of the senior management teams of the respective
organizations, met in Memphis, Tennessee, to share information and to discuss a
variety of operational issues, including enterprise risk, human resources,
information technology and accounting and financial matters. On that date,
Regions and Union Planters entered into a confidentiality agreement.
During December 2003 and January 2004, members of the respective senior
management teams of Regions and Union Planters communicated from time-to-time on
a variety of matters, and in particular, on the earnings prospects for the
respective organizations for 2004 and 2005. Also, during this time, Messrs.
Jones and Moore advised their respective boards of directors of the discussions.
In light of the discussion that Mr. Moore would succeed Mr. Jones as Chief
Executive Officer and eventually Chairman of the Board of a combined
organization, Mr. Jones believed that if discussions were to continue it was
appropriate for Regions directors to have an opportunity to meet with Mr. Moore.
As a result, Mr. Moore met with members of the Regions Nominating and Corporate
Governance Committee and certain other members of the board of directors on
January 13, 2004 in Birmingham, Alabama.
On January 15, 2004, the Union Planters board of directors held its
regularly scheduled January meeting during which Mr. Moore updated the board of
directors as to the status of his discussions with Mr. Jones, and Morgan
Stanley, Union Planters' financial advisor, discussed with the board of
directors certain strategic and financial aspects of a potential business
combination between Regions and Union Planters.
Over the Martin Luther King, Jr. holiday weekend of January 17 through 19,
2004, Regions and Union Planters conducted extensive, on-site due diligence
investigations of one another and exchanged drafts of a merger agreement and
related transactional agreements. Over the next few days, Messrs. Jones and
Moore, with the assistance of their financial advisors, agreed that they would
propose to their respective boards of directors that the two organizations
combine by forming a new holding company, with each share of Regions common
stock being converted into 1.2346 shares of that new holding company and each
share of Union Planters common stock being converted into one share of that new
holding company.
On January 21, 2004, the Regions board of directors held its regularly
scheduled January meeting. At the start of the meeting, Mr. Jones explained to
the board of directors that director C. Kemmons Wilson, Jr. is the
brother-in-law of Mr. Moore and that, if the board of directors so decided, Mr.
Wilson would not participate in the deliberations. In Mr. Wilson's absence the
board of directors unanimously decided that Mr. Wilson should participate in the
deliberations. At the meeting, Mr. Jones, as well as Richard D. Horsley, Vice
Chairman and Chief Operating Officer, and D. Bryan Jordan, Executive Vice
President and Chief Financial Officer, made presentations to the board of
directors with respect to the proposed transaction, outlining the strategic
rationale, including the benefits resulting from combining the two institutions,
certain governance matters for the combined organization, potential cost savings
and the other matters discussed below under "--Regions' Reasons for the Merger;
Recommendation of Regions' Board of Directors." Additionally, W. Woodrow
Stewart, the Chairman of the Risk Management Committee of Regions, provided a
report on management's report to the Risk Management Committee which occurred
the prior day with respect to the due diligence investigation that was conducted
on the operations of Union Planters.
At the meeting, representatives of UBS, Regions' financial advisor, made a
presentation with respect to the current environment in the financial services
industry and the various strategic opportunities available to Regions. UBS then
discussed a range of matters relating directly to the merger, including the
32
structure of the merger and the merger consideration, the respective fixed
exchange ratios and relevant business and financial information regarding the
two companies. UBS further discussed with the board the financial information it
reviewed and valuation methodologies and analyses that it used in evaluating the
transaction, all as more fully described in "-- Opinion of UBS Securities LLC to
Regions."
UBS also delivered its oral opinion, which it confirmed in writing as of
the date of the opinion, based on and subject to the assumptions, qualifications
and limitations set forth in its opinion, that the Regions exchange ratio was
fair to the holders of Regions common stock from a financial point of view. The
full text of the opinion of UBS is attached as Appendix B to this joint proxy
statement/prospectus.
Representatives of Regions' special counsel, Sullivan & Cromwell LLP,
reviewed with, and made a presentation to, the Regions board of directors on the
board's fiduciary obligations in the context of a merger involving Regions and
Union Planters. Sullivan & Cromwell LLP also reviewed the transaction structure
as proposed and the proposed definitive merger agreement and related documents.
After such presentations, the board of directors went into an executive
session at which various management and other issues were discussed, including
Regions management's role in the combined organization, Mr. Jones' and Mr.
Moore's employment arrangements (on which Sullivan & Cromwell LLP made a
presentation) and the special meeting that the Nominating and Corporate
Governance Committee of Regions had with Mr. Moore.
After further deliberations, the Regions board of directors directed
management to pursue the completion of the negotiations for the transaction and
the completion of the definitive documentation and voted to recess the meeting
until January 22, 2004.
On January 22, 2004, the Regions board of directors reconvened its meeting.
Mr. Jones updated the board on various matters, including meetings and
conference calls with the various rating agencies. Sullivan & Cromwell LLP also
updated the board on the status of various issues and the related transactions
and the finalization of the relevant documentation.
After further deliberations, the Regions board of directors determined that
the transactions contemplated by the merger agreement and related transactions
were consistent with, and would further, Regions' business strategies and goals
and were in the best interest of Regions and its stockholders. The Regions board
of directors unanimously voted to approve the merger agreement and related
transactions and authorized Mr. Jones to execute the merger agreement on
Regions' behalf.
On January 22, 2004, the Union Planters board of directors held a special
meeting to review and discuss the proposed merger, the proposed definitive
merger agreement and related documentation and the results of the due diligence
investigation of Regions. Mr. Moore reviewed the course of discussions with
Regions and outlined the strategic rationale for the proposed merger, including
the benefits resulting from combining the two institutions, governance issues
for the combined organization and other matters discussed below under "-- Union
Planters' Reasons for the Merger; Recommendation of Union Planters' Board of
Directors." Mr. Moore also disclosed to the board of directors that his
brother-in-law, Mr. Wilson, was a member of the Regions board of directors.
Union Planters' senior management reviewed the results of the due diligence
investigation of Regions and discussed the expected cost savings from the
transaction.
At the special board meeting, the Union Planters board of directors also
reviewed with Wachtell, Lipton, Rosen & Katz, special counsel to Union Planters,
the terms of the proposed definitive merger agreement and employment
arrangements with Mr. Moore and the legal and fiduciary standards applicable to
its consideration of the merger agreement and the transactions contemplated by
that agreement.
Representatives of Morgan Stanley then presented certain financial
information regarding Union Planters, Regions and the proposed merger and
delivered its oral opinion, which it confirmed in writing as of the date of the
opinion, based on and subject to the assumptions, qualifications, and
limitations set forth in its opinion, that the Union Planters exchange ratio
provided for in the merger agreement was fair to the
33
holders of Union Planters common stock from a financial point of view. The full
text of the Morgan Stanley opinion is attached as Appendix C to this joint proxy
statement/prospectus.
After additional discussions and questions, the Union Planters board of
directors determined that the transactions contemplated by the merger agreement
and related transactions were consistent with, and would further, Union
Planters' business strategies and goals, and were in the best interest of Union
Planters and its shareholders. The Union Planters board of directors noted that
the implied value of the merger consideration as of the close of trading on
January 22, 2004, was slightly less than the closing price of Union Planters
common stock on that date, but in view of the various factors discussed under
"-- Union Planters' Reasons for the Merger; Recommendation of the Union Planters
Board of Directors," concluded that the strategic combination would create a
strong company and provide significant benefits to Union Planters shareholders,
including greater shareholder value than would be expected if Union Planters
remained independent. The Union Planters board of directors then voted
unanimously to approve the merger agreement and related transactions and
authorized Mr. Moore to execute the merger agreement and related documents on
Union Planters' behalf.
On January 23, 2004, Regions and Union Planters publicly announced the
transaction by a joint press release before the start of trading on the New York
Stock Exchange.
REGIONS' REASONS FOR THE MERGER; RECOMMENDATION OF REGIONS' BOARD OF DIRECTORS
The Regions board of directors believes that the merger presents a
strategic opportunity to expand through a combination with a complementary
banking operation. The Regions board of directors, after consultation with
financial and other advisors, determined that the merger was consistent with the
strategic plans of Regions and was in the best interests of Regions and its
stockholders. In reaching its conclusion to approve the merger agreement and the
transactions contemplated thereby, the Regions board of directors considered a
number of factors, including the following:
- Its understanding of Regions' business, operations, financial condition,
earnings and prospects and of Union Planters' business, operations,
financial condition, earnings and prospects, taking into account Regions'
due diligence review of Union Planters.
- The complementary aspects of Regions, and Union Planters, businesses,
including Regions' strength in retail banking and securities brokerage
and Union Planters' strength in mortgage banking.
- The current and prospective environment in which Regions and Union
Planters operate, including national and local economic conditions, the
competitive environment for banks and other financial institutions
generally, the trend toward consolidation in the financial services
industry and the likely effect of these factors on Regions' potential
growth, development, productivity and profitability.
- Its belief that a combination with Union Planters would allow Regions
stockholders to participate in a combined company that would be the
largest bank in the mid-South region (which includes Alabama, Arkansas,
Georgia, Louisiana, Mississippi and Tennessee) in terms of deposits and
that the combined company would have better future prospects than Regions
was likely to achieve on a stand-alone basis.
- The board and management structure of the combined company provided for
under the merger agreement, including equal board representation from
both Union Planters and Regions, and Chief Executive Officer and Chairman
succession plans, as discussed in greater detail under "THE "MERGER
AGREEMENT -- Corporate Governance", and the staffing of the executive
officer positions of New Regions, as discussed in greater detail under
"THE MERGER -- Board of Directors and Management of New Regions Following
the Merger."
- Its review with its legal and financial advisors of the structure of the
merger and the financial and other terms of the merger, including the
Regions exchange ratio and the expectation that the merger will qualify
as a transaction of a type that is generally tax-free for U.S. federal
income tax purposes.
34
- That the synergies expected from the merger should result in expense
savings. In making this determination, annual pre-tax expense reductions
of $200 million, or 7% of the combined companies' operating expense base,
were identified by management following a due diligence review of the
businesses of Regions and Union Planters. Based on a mid-2004 closing,
these cost saving actions are expected to be substantially realized by
the end of 2006.
- That the merger is expected to be cash accretive to both companies in
2004 and at least 5% cash accretive in 2005. In addition, the transaction
is expected to be accretive to 2005 generally accepted accounting
principals, or "GAAP," earnings per share.
- That the complementary nature of the respective customer bases, business
products and skills of Regions and Union Planters should result in
enhanced revenue opportunities as products are cross-marketed and
distributed over broader customer bases.
- That Union Planters and Regions have complementary branch franchises,
which the Regions board of directors believed to present a desirable
strategic opportunity for expansion of its existing presence and market
share. In particular, the board of directors considered that:
- the combination of the two businesses would provide Regions with broader
coverage in its traditional market, the mid-South region;
- the resulting institution's branch network and franchise would be
concentrated in one of the fastest growing regions in the country; and
- Regions would increase its presence in desirable deposit markets,
including Florida and Texas.
- That the merger would provide the opportunity to expand Regions'
investment and securities brokerage business, Morgan Keegan, in Union
Planters' markets and locations, and provide access to additional
customers for Morgan Keegan.
- That Regions' name would survive in the merger and be used to brand the
combined company's banking business.
- That the corporate headquarters, and the headquarters of the banking
business, would remain in Birmingham, Alabama.
- The reports of management concerning the operations, financial condition
and prospects of Union Planters.
- The likelihood that the regulatory approvals needed to complete the
transaction will be obtained.
- The historical and current market prices of Regions common stock and
Union Planters common stock.
- The financial information and analyses presented by UBS to the Regions
board of directors, and the opinion delivered to the Regions board of
directors by UBS to the effect that, as of the date of its opinion and
based upon and subject to various assumptions, matters considered and
limitations described in the opinion, the Regions exchange ratio provided
for in the merger agreement was fair, from a financial point of view, to
the holders of Regions common stock.
- Union Planters' 2003 earnings results and modified earnings projections
for 2004.
- The anticipated pro forma contributions to estimated 2004 and 2005 GAAP
earnings per share (based on Institutional Brokerage System (I/B/E/S)
estimates) of approximately 38.4% and 61.6%, and 39.6% and 60.4%, for
Union Planters and Regions, respectively.
The Regions board of directors also considered potential risks associated
with the merger in connection with its deliberations of the proposed
transaction, including:
- The challenges of combining the businesses, assets and workforces of the
two companies, which could impact the post-merger success of the combined
company and the ability to achieve
35
anticipated cost savings and other expected synergies, in light of the
merger parties' past experience in integrating transactions. In this
regard, the Regions' board of directors considered that the combined
company would benefit from the continued participation of Regions'
directors and the strength of Regions' management team and that, because
a number of key senior management positions for the combined company had
already been decided, management would be better able to focus on
integration early in the process.
- The pre-tax charge of approximately $300 million that it is expected to
be taken by the combined company in connection with completing the
merger, reflecting a number of costs and expenses expected to be incurred
as a result of the transaction and integrating the two companies.
- That the fixed exchange ratios, by their nature, will not adjust to
compensate for changes in the stock price of Union Planters or Regions
prior to completion of the merger, and that neither company has any
price-based termination right under the merger agreement.
- The interests of Regions executive officers and directors with respect to
the merger apart from their interests as holders of Regions common stock,
and the risk that these interests might influence their decision with
respect to the merger. See "THE MERGER -- Regions' Directors and Officers
Have Financial Interests in the Merger."
- The risk that the terms of the merger agreement, including provisions
relating to the payment of a termination fee under specified
circumstances, although required by Union Planters as a condition to its
willingness to enter into the merger agreement, could have the effect of
discouraging other parties that might be interested in a transaction with
Regions from proposing such a transaction.
The Regions board of directors realizes that there can be no assurance
about future results, including results expected or considered in the factors
listed above, such as assumptions regarding growth rates, potential revenue
enhancements, anticipated cost savings and earnings accretion. However, the
Regions' board of directors concluded that the potential positive factors
outweighed the potential risks of completing the merger.
The foregoing discussion of the information and factors considered by the
Regions board of directors is not exhaustive, but includes all material factors
considered by the Regions board of directors. In view of the wide variety of
factors considered by the Regions board of directors in connection with its
evaluation of the merger and the complexity of such matters, the Regions board
of directors did not consider it practical to, nor did it attempt to, quantify,
rank or otherwise assign relative weights to the specific factors that it
considered in reaching its decision. The Regions board of directors conducted a
discussion of the factors described above, including asking questions of
Regions' management and Regions' legal and financial advisors, and reached a
unanimous decision that the merger was in the best interests of Regions and its
stockholders. In considering the factors described above, individual members of
the Regions board of directors may have given different weights to different
factors. The Regions board of directors relied on the experience and expertise
of its financial advisor for quantitative analysis of the financial terms of the
merger. See "THE MERGER -- Opinion of UBS Securities LLC to Regions." It should
be noted that this explanation of the Regions board of directors' reasoning and
all other information presented in this section is forward-looking in nature
and, therefore, should be read in light of the factors discussed under the
heading "CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS."
THE REGIONS BOARD OF DIRECTORS DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE ADVISABLE AND IN THE BEST INTERESTS OF
REGIONS AND ITS STOCKHOLDERS. THE REGIONS BOARD OF DIRECTORS ALSO DETERMINED
THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE
CONSISTENT WITH, AND IN FURTHERANCE OF, REGIONS' BUSINESS STRATEGIES AND GOALS.
ACCORDINGLY, THE REGIONS BOARD OF DIRECTORS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND UNANIMOUSLY RECOMMENDS THAT REGIONS STOCKHOLDERS VOTE "FOR"
ADOPTION OF THE MERGER AGREEMENT.
36
UNION PLANTERS' REASONS FOR THE MERGER; RECOMMENDATION OF UNION PLANTERS' BOARD
OF DIRECTORS
The Union Planters board of directors believes the merger will create a new
force for banking and financial services in the combined mid-South region of
Alabama, Arkansas, Georgia, Louisiana, Mississippi and Tennessee. The combined
company would serve approximately 5 million customers, with a leading market
share in the mid-South region and meaningful positions in surrounding
high-growth markets. The Union Planters board of directors expects the combined
company to feature an extensive and convenient delivery network with more than
1,400 banking branches, 1,700 ATMs and over 140 brokerage offices.
The Union Planters board of directors reviewed and discussed the
transaction with Union Planters' management and its financial and legal advisors
in determining that the merger is in the best interests of Union Planters and
its shareholders. In reaching its conclusion to approve the merger agreement,
the Union Planters board of directors considered a number of factors, including
the following:
- Its understanding of the business, operations, financial condition,
earnings and prospects of Union Planters and of Regions, taking into
account Union Planters' due diligence investigation of Regions.
- The current and prospective environment in which Union Planters and
Regions operate, including national and local economic conditions, the
competitive environment for financial institutions generally and the
trend toward consolidation in the financial services industry.
- The anticipation that the combined company, with a balanced and
diversified business mix, increased growth opportunities and enhanced
scale, scope and profitability, would be better positioned to provide
Union Planters shareholders with an improved short- and long-term
shareholder value than Union Planters would be operating alone.
- The review by the Union Planters board of directors with its legal and
financial advisors of the structure of the merger and the financial and
other terms of the merger agreement, including the Union Planters
exchange ratio and the expectation of Union Planters' legal advisors that
the merger will qualify as a transaction of a type that is generally
tax-free to shareholders for U.S. federal income tax purposes.
- The board and management structure of the combined company provided for
under the merger agreement, including equal board representation from
both Union Planters and Regions, and Chief Executive Officer and Chairman
succession plans, as discussed in greater detail under "THE MERGER
AGREEMENT -- Corporate Governance."
- The complementary nature of the respective businesses and customer bases,
similar customer-oriented cultures and complementary geographies and
business lines, which could be expected to result in opportunities to
obtain synergies as products are cross-marketed and distributed over
broader customer bases and best practices, including Regions' strong
credit culture, are compared and applied across businesses.
- The pro forma ownership and financial contributions of each company,
including the pro forma contributions of each company to the combined
company's market capitalization (based on the closing common stock prices
of Union Planters and Regions on January 21, 2004, the shares outstanding
on that date and the exchange ratio) of approximately 41.3% and 58.7%,
respectively, the anticipated pro forma ownership of the combined company
to be held by Union Planters shareholders and Regions stockholders upon
completion of the merger of approximately 41% and 59%, respectively, and
the anticipated pro forma contributions to estimated 2004 and 2005 GAAP
earnings per share (based on I/B/E/S estimates) of approximately 38.6%
and 61.4%, and 39.5% and 60.5%, for Union Planters and Regions,
respectively.
- The expectation that the merger will be accretive to cash earnings in
2004 and accretive to GAAP earnings in 2005.
37
- The anticipated cost saving opportunities, currently estimated to be
approximately $200 million (or approximately 7% of the two companies'
combined operating expense base) on a pre-tax basis when fully phased in
over the three-year period following the merger.
- The reports of Union Planters management and the financial presentation
by Morgan Stanley to Union Planters' board of directors concerning the
operations, financial condition and prospects of Regions and the expected
financial impact of the merger on the combined company, including pro
forma assets, earnings, deposits and other financial metrics.
- The likelihood that the regulatory approvals needed to complete the
transaction will be obtained.
- The historical and current market prices of Regions common stock and
Union Planters common stock, as well as comparative valuation analyses
for the two companies prepared by Morgan Stanley.
- The fact that the headquarters of the broker-dealer and investment
services and mortgage banking businesses of New Regions will be
headquartered in Memphis, Tennessee.
- The opinion delivered to the Union Planters board of directors by Morgan
Stanley that, as of the date of the opinion and based upon and subject to
the considerations in its opinion, the Union Planters exchange ratio was
fair, from a financial point of view, to holders of Union Planters common
stock.
The Union Planters board of directors also considered potential risks
associated with the merger in connection with its deliberations of the proposed
transaction, including:
- The challenges of combining the businesses, assets and workforces of the
two companies, which could impact the post-merger success of the combined
company and the ability to achieve anticipated cost savings and other
expected synergies, in light of the merger parties' past experience in
integrating transactions, modest branch overlap and the three-year phase
in period for cost savings.
- The pre-tax charge of approximately $300 million that it is expected to
be taken by the combined company in connection with completing the
merger, reflecting a number of costs and expenses expected to be incurred
as a result of the transaction and integrating the two companies.
- That the fixed exchange ratios, by their nature, will not adjust to
compensate for changes in the stock price of Union Planters or Regions
prior to completion of the merger, and that neither company has any
price-based termination right under the merger agreement.
- The interests of Union Planters executive officers and directors with
respect to the merger apart from their interests as holders of Union
Planters common stock, and the risk that these interests might influence
their decision with respect to the merger. See "THE MERGER -- Union
Planters' Directors and Officers Have Financial Interests in the Merger."
- The risk that the terms of the merger agreement, including provisions
relating to the payment of a termination fee under specified
circumstances, although required by Regions as a condition to its
willingness to enter into the merger agreement, could have the effect of
discouraging other parties that might be interested in a transaction with
Union Planters from proposing such a transaction.
The discussion of the information and factors considered by the Union
Planters board of directors is not exhaustive, but includes all material factors
considered by the Union Planters board of directors. In view of the wide variety
of factors considered by the Union Planters board of directors in connection
with its evaluation of the merger and the complexity of these matters, the Union
Planters board of directors did not consider it practical to, nor did it attempt
to, quantify, rank or otherwise assign relative weights to the specific factors
that it considered in reaching its decision. The Union Planters board of
directors evaluated the factors described above, including asking questions of
Union Planters management and Union Planters legal and financial advisors, and
reached consensus that the merger was in the best interests of Union Planters
and Union Planters shareholders. In considering the factors described above,
individual members
38
of the Union Planters board of directors may have given different weights to
different factors. The Union Planters board of directors considered these
factors as a whole, and overall considered them to be favorable to, and to
support, its determination. It should be noted that this explanation of the
Union Planters board of directors' reasoning and all other information presented
in this section is forward-looking in nature and, therefore, should be read in
light of the factors discussed under the heading "CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS."
THE UNION PLANTERS BOARD OF DIRECTORS DETERMINED THAT THE MERGER, THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY ARE ADVISABLE AND IN
THE BEST INTERESTS OF UNION PLANTERS AND ITS SHAREHOLDERS. THE UNION PLANTERS
BOARD OF DIRECTORS ALSO DETERMINED THAT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY ARE CONSISTENT WITH, AND IN FURTHERANCE OF,
UNION PLANTERS' BUSINESS STRATEGIES. ACCORDINGLY, THE UNION PLANTERS BOARD OF
DIRECTORS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND UNANIMOUSLY RECOMMENDS
THAT UNION PLANTERS SHAREHOLDERS VOTE "FOR" APPROVAL OF THE MERGER AGREEMENT.
OPINIONS OF FINANCIAL ADVISORS
Regions engaged UBS as its financial advisor and Union Planters engaged
Morgan Stanley as its financial advisor in connection with the merger based on
their experience and expertise. UBS and Morgan Stanley are internationally
recognized investment banking firms that have substantial experience in
transactions similar to the merger.
OPINION OF UBS SECURITIES LLC TO REGIONS
On January 22, 2004, at a meeting of the Regions board of directors held to
approve the proposed merger, UBS delivered to the Regions board of directors a
written opinion dated January 22, 2004, to the effect that, as of that date and
based upon and subject to various assumptions, matters considered and
limitations described in the opinion, the Regions exchange ratio provided for in
the merger was fair, from a financial point of view, to the holders of Regions
common stock.
The full text of UBS' opinion describes the assumptions made, procedures
followed, matters considered and limitations on the review undertaken by UBS.
This opinion is attached as Appendix B and is incorporated into this joint proxy
statement/prospectus by reference. UBS' OPINION IS DIRECTED ONLY TO THE
FAIRNESS, FROM A FINANCIAL POINT OF VIEW, OF THE REGIONS EXCHANGE RATIO AND DOES
NOT ADDRESS ANY OTHER ASPECT OF THE MERGER OR ANY RELATED TRANSACTION. THE
OPINION DOES NOT ADDRESS THE RELATIVE MERITS OF THE MERGER AS COMPARED TO OTHER
BUSINESS STRATEGIES OR TRANSACTIONS THAT MIGHT BE AVAILABLE TO REGIONS OR THE
UNDERLYING BUSINESS DECISION OF REGIONS TO EFFECT THE MERGER. THE OPINION DOES
NOT CONSTITUTE A RECOMMENDATION TO ANY STOCKHOLDER AS TO HOW TO VOTE OR ACT WITH
RESPECT TO THE PROPOSED MERGER OR ANY OTHER MATTER. YOU ARE ENCOURAGED TO READ
THIS OPINION CAREFULLY IN ITS ENTIRETY. The summary of UBS' opinion below is
qualified in its entirety by reference to the full text of UBS' opinion.
UBS has consented to the inclusion of its opinion and to the inclusion of
the summary of its opinion in this joint proxy statement/prospectus. In giving
such consent, UBS does not concede that it comes within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the SEC thereunder, nor does it concede
that it is an expert within the meaning of the term "expert" as used in the
Securities Act or the rules and regulations of the SEC thereunder with respect
to any part of the registration statement on Form S-4 of which this joint proxy
statement/prospectus forms a part.
In arriving at its opinion, UBS:
- reviewed publicly available business and historical financial information
and other data relating to the business and financial prospects of
Regions and Union Planters, including publicly available consensus
financial forecasts and estimates relating to Regions and Union Planters
that were reviewed and discussed with UBS by Regions' management;
39
- reviewed the reported prices and trading activity for Regions common
stock and Union Planters common stock;
- reviewed internal financial information and other data relating to
Regions' and Union Planters' businesses and financial prospects,
including estimates and financial forecasts prepared by the managements
of Regions and Union Planters, that were provided to UBS by Regions' and
Union Planters' managements and were not publicly available;
- conducted discussions with members of the senior managements of Regions
and Union Planters concerning the respective businesses and financial
prospects of Regions and Union Planters;
- reviewed publicly available financial and stock market data with respect
to companies in lines of businesses that UBS believed to be generally
comparable to those of Regions and Union Planters;
- compared the financial terms of the merger with the publicly available
financial terms of other transactions that UBS believed to be generally
relevant;
- considered the pro forma effects of the merger on the combined financial
statements of Regions and Union Planters and reviewed estimates of cost
savings and other potential benefits prepared by the management of
Regions and reviewed and discussed with UBS by the managements of Regions
and Union Planters;
- reviewed drafts of the merger agreement; and
- conducted other financial studies, analyses and investigations, and
considered other information, as UBS deemed necessary or appropriate.
In addition, UBS was provided with Union Planters' internal financial
projections for fiscal year 2004, which were materially consistent with I/B/E/S
projections for fiscal year 2004. The UBS financial analyses relied upon I/B/E/S
projections and not the internal financial projections.
In connection with its review, with Regions' consent, UBS did not assume
any responsibility for independent verification of any of the information that
UBS was provided or reviewed for the purpose of its opinion and, with Regions'
consent, UBS relied on that information being complete and accurate in all
material respects. With respect to the financial forecasts, estimates, pro forma
effects and calculations of cost savings that it reviewed relating to Regions
and Union Planters, UBS was advised by the managements of Regions and Union
Planters and assumed, with Regions' consent, that they reflected the best then
available estimates and reasonable judgments as to the future performance of
Regions and Union Planters. In addition, UBS assumed, with Regions' approval,
that these future financial results would be achieved, and these cost savings
would be realized, at the times and in the amounts projected by the managements
of Regions and Union Planters. In rendering its opinion, UBS assumed, with
Regions' consent, that the merger will qualify as a tax-free reorganization for
U.S. federal income tax purposes. UBS also assumed, with Regions' consent, that
the final executed merger agreement would not differ in any material respect
from the draft merger agreement, dated January 22, 2004 that UBS examined prior
to rendering its opinion, and that each of Regions, Union Planters and New
Regions would comply with all terms of the merger agreement, without waiver,
modification or amendment in any material respect. UBS further assumed that all
governmental, regulatory or other consents and approvals necessary for the
completion of the merger would be obtained without any adverse effect on
Regions, Union Planters, New Regions or the merger.
In connection with its engagement, UBS was not authorized to, and it did
not, solicit indications of interest in a possible business combination with
Regions. UBS' opinion was necessarily based on economic, monetary, market and
other conditions as in effect on, and information made available to UBS as of,
the date of its opinion. UBS assumed no responsibility to update or revise its
opinion based upon circumstances or events occurring after the date of its
opinion. UBS was not asked to, and it did not, offer any opinion as to any terms
of the merger agreement or the form of the merger. In addition, at Regions'
direction, UBS did not make any independent evaluation or appraisal of any of
the assets or liabilities, contingent or otherwise, of Regions or Union
Planters, and was not furnished with any evaluation or
40
appraisal. UBS expressed no opinion as to what the value of New Regions common
stock would be when issued in the merger or the prices at which New Regions
common stock would trade or otherwise be transferable at any time.
In connection with rendering its opinion to the Regions board of directors,
UBS performed a variety of financial and comparative analyses, which are
summarized below. The following summary is not a complete description of all
analyses performed and factors considered by UBS in connection with its opinion.
The preparation of a financial opinion is a complex process involving subjective
judgments and is not necessarily susceptible to partial analysis or summary
description. With respect to the analysis of selected public companies and the
analysis of selected precedent transactions summarized below, no company or
transaction used as a comparison is either identical or directly comparable to
Regions, Union Planters or the merger. These analyses necessarily involve
complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the public trading or
acquisition values of the companies concerned.
UBS believes that its analyses and the summary below must be considered as
a whole and that selecting portions of its analyses and factors or focusing on
information presented in tabular format, without considering all analyses and
factors or the narrative description of the analyses, could create a misleading
or incomplete view of the processes underlying UBS' analyses and opinion. None
of the analyses performed by UBS was assigned greater significance or reliance
by UBS than any other. UBS arrived at its ultimate opinion based on the results
of all analyses undertaken by it and assessed as a whole. UBS did not draw, in
isolation, conclusions from or with regard to any one factor or method of
analysis.
The consensus estimates of the future performance of Regions and Union
Planters derived from public sources in or underlying UBS' analyses are not
necessarily indicative of future results or values, which may be significantly
more or less favorable than those estimates. In performing its analyses, UBS
considered industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Regions and Union
Planters. Estimates of the financial value of companies do not purport to be
appraisals or reflect the prices at which companies actually may be sold.
The Regions exchange ratio was determined through negotiation between
Regions and Union Planters and the decision to enter into the merger agreement
was solely that of the Regions board of directors. UBS' opinion and financial
analyses were only one of many factors considered by the Regions board of
directors in its evaluation of the merger and should not be viewed as
determinative of the views of the Regions board of directors or management with
respect to the merger or the Regions exchange ratio.
The following is a brief summary of the material financial analyses
performed by UBS and reviewed with the Regions board of directors in connection
with its opinion relating to the proposed merger. THE FINANCIAL ANALYSES
SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN ORDER TO
FULLY UNDERSTAND UBS' FINANCIAL ANALYSES, THE TABLES MUST BE READ TOGETHER WITH
THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT CONSTITUTE A COMPLETE
DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE DATA BELOW WITHOUT
CONSIDERING THE FULL NARRATIVE DESCRIPTION OF THE FINANCIAL ANALYSES, INCLUDING
THE METHODOLOGIES AND ASSUMPTIONS UNDERLYING THE ANALYSES, COULD CREATE A
MISLEADING OR INCOMPLETE VIEW OF UBS' FINANCIAL ANALYSES.
HISTORICAL MARKET-TO-MARKET EXCHANGE RATIO
UBS performed an exchange ratio analysis comparing the exchange ratio
derived from the closing prices per share for Regions common stock and Union
Planters common stock on January 20, 2004 and the average exchange ratios
derived from the daily closing prices per share of Regions common stock and
Union Planters common stock for each of the 10-day, 30-day, 60-day, 90-day,
1-year and 2-year periods
41
preceding January 20, 2004. UBS compared the exchange ratio offered for Regions
common stock to the historical exchange ratio for each of these periods. This
analysis yielded the following exchange ratios:
HISTORICAL EXCHANGE RATIO PERIOD EXCHANGE RATIO
-------------------------------- --------------
Average Closing Prices for 2-Year Period Prior to January
20, 2004.................................................. 1.1276x
Average Closing Prices for 1-Year Period Prior to January
20, 2004.................................................. 1.1350x
Average Closing Prices for 90-Day Period Prior to January
20, 2004.................................................. 1.1212x
Average Closing Prices for 60-Day Period Prior to January
20, 2004.................................................. 1.1366x
Average Closing Prices for 30-Day Period Prior to January
20, 2004.................................................. 1.1811x
Average Closing Prices for 10-Day Period Prior to January
20, 2004.................................................. 1.2025x
Closing Price on January 20, 2004........................... 1.1886x
Regions exchange ratio in merger............................ 1.2346x
CONTRIBUTION ANALYSIS
UBS also analyzed selected balance sheet, income statement and stock market
data of Regions and Union Planters to determine the estimated pro forma
ownership of the combined entity based on these contributions, and to determine
the implied exchange ratio that would be required to equate pro forma ownership
in a combined Regions/Union Planters with each institution's contribution of the
specified criteria.
For Union Planters, UBS utilized GAAP earnings per share, or EPS of $2.25
per share and Cash EPS (GAAP earnings per share plus amortization of intangibles
per share) of $2.32 per share for the calendar year 2004, based on Regions'
management guidance, and GAAP EPS of $2.53 per share and Cash EPS of $2.60 per
share for the calendar year 2005, based on consensus estimates of I/B/E/S
International, which provides a database of research analysts' estimates for
future earnings. For Regions, UBS utilized GAAP EPS of $3.06 per share and Cash
EPS (GAAP earnings per share plus amortization of intangibles per share) of
$3.06 per share for the calendar year 2004 and GAAP EPS of $3.32 per share and
Cash EPS of $3.32 per share for the calendar year 2005, each based on consensus
estimates of I/B/E/S International. As a memorandum to the analysis, UBS
allocated the full phase-in of after-tax
42
cost savings of the merger to Union Planters and then reviewed adjusted GAAP Net
Income and Cash Net Income for the calendar year 2005. The results of UBS'
analysis are set forth in the following table:
CONTRIBUTION ($MM) CONTRIBUTION (%)
------------------------------ ------------------ IMPLIED
UNION UNION EXCHANGE
REGIONS PLANTERS PRO FORMA REGIONS PLANTERS RATIO
------- -------- --------- ------- -------- --------
MARKET
CAPITALIZATION -- 1/20/04... $8,155 $5,839 $13,995 58.3% 41.7% 1.1886
GAAP NET INCOME:
2004E......................... 680 424 1,104 61.6 38.4 1.3674
2005E......................... 717 470 1,186 60.4 39.6 1.2985
Memo: 2005E Adjusted.......... 717 600 1,316 54.4 45.6 1.0174
CASH NET INCOME:
2004E......................... 683 437 1,118 60.9 39.1 1.3281
2005E......................... 717 483 1,200 59.8 40.2 1.2652
Memo: 2005E Adjusted.......... 717 612 1,330 53.9 46.1 0.9971
BALANCE SHEET -- 12/31/03
Total Loans................... 33,426 22,829 56,255 59.4 40.6 1.2462
Total Assets.................. 48,598 31,911 80,509 60.4 39.6 1.2962
Total Deposits................ 32,733 23,146 55,879 58.6 41.4 1.2036
Core Deposits................. 29,433 21,569 51,002 57.7 42.3 1.1614
Common Equity................. 4,452 3,056 7,508 59.3 40.7 1.2399
Tangible Common Equity........ 3,374 2,145 5,519 61.1 38.9 1.3388
COMPARABLE COMPANIES ANALYSIS
UBS compared selected financial information for Union Planters with
corresponding financial information of seven selected publicly held large
regional banking companies. These selected companies included the following
banks:
- AmSouth Bancorporation;
- BB&T Corporation;
- Compass Bancshares Inc.;
- National Commerce Financial Corporation;
- Regions Financial Corporation;
- SouthTrust Corporation; and
- SunTrust Banks Inc.
UBS selected these companies because they were publicly traded companies
that, for purposes of its analysis, UBS considered reasonably similar to Union
Planters in that these companies are large regional banks that operate in the
Southeast market. The selected companies may significantly differ from Regions
and Union Planters based on, among other things, their size, geographic coverage
area, customer focus and services.
UBS reviewed the market value, based on closing stock prices per share on
January 20, 2004, of the selected companies as a multiple of estimated calendar
years 2004 and 2005 EPS on a GAAP basis and on a cash basis, as well as book
value per share and tangible book value per share as of the most recent reported
quarter for each selected company and the results of this review are set forth
in the table below under the columns entitled "Peers Median," "Peers Low" and
"Peers High." UBS then compared the multiples derived from the selected
companies with corresponding multiples for Union Planters based on the closing
price of Union Planters common stock on January 20, 2004, as well as estimated
calendar years
43
2004 and 2005 EPS on a GAAP basis and on a cash basis, book value per share as
of December 31, 2003 and tangible book value per share as of December 31, 2003
for Union Planters. The financial data for Union Planters is set forth in the
table below under the column entitled "Union Planters Data," and the related
multiples are set forth in the table below under the column entitled "Union
Planters." As a memorandum to its review, UBS also performed the same analysis
for Regions using the financial data set forth in the table below under the
column entitled "Memo: Regions Data." The related multiples are set forth in the
table below under the column entitled "Memo: Regions." Financial data for the
selected companies, Regions and Union Planters were based on company press
releases, public filings, management guidance and consensus estimates from
I/B/E/S. This analysis indicated the following high, low and median price
multiples for the selected companies, as compared to the actual multiples for
Regions and Union Planters, as of January 20, 2004:
UNION MEMO:
PLANTERS UNION PEERS REGIONS MEMO:
DATA PLANTERS MEDIAN LOW HIGH DATA REGIONS
-------- -------- ------ ----- ----- ------- -------
Current price......................... $30.91 -- -- -- -- $36.74 --
PRICE TO(X):
GAAP
2004E............................... 2.25 13.70 13.50 12.00 15.10 3.06 12.00
2005E............................... 2.53 12.20 12.20 11.10 13.40 3.32 11.10
Cash
2004E............................... 2.32 13.30 13.30 12.00 14.40 3.06 12.00
2005E............................... 2.60 11.90 12.10 11.10 13.00 3.32 11.10
Book Value............................ 16.18 1.91 2.11 1.83 2.70 20.06 1.83
Tangible Book Value................... 11.35 2.72 3.08 2.42 3.71 15.20 2.42
OPERATING METRICS(%)
Net Interest Margin................... -- 3.90 3.61 3.09 4.22 -- 3.54
Efficiency Ratio...................... -- 60.80 52.40 51.60 62.10 -- 62.10
Fee Ratio............................. -- 38.30 36.30 31.90 45.50 -- 45.50
Cash Return on Average Asset.......... -- 1.21 1.44 1.14 1.81 -- 1.38
Cash Return on Average Equity......... -- 17.10 22.40 17.30 26.20 -- 19.70
ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS
Precedent Mergers: UBS reviewed eight transactions since April 1998
involving mergers in the banking industry with transaction values over $1.5
billion. UBS calculated the premium of the exchange ratio in the selected
transactions to the ratio of the stock price for the parties in the selected
transaction on the day prior to the announcement of the transaction and
calculated the resulting ownership percentages of the constituent shareholders
in the combined company. UBS calculated the premium of the Regions exchange
ratio in the merger to the ratio of the stock price per share for Regions and
Union Planters on January 20, 2004 and calculated the resulting ownership
percentages of the constituent shareholders in the combined company. UBS also
reviewed the selected transactions to determine the composition of the board of
directors of the combined company. Financial data for the selected mergers and
the merger were
44
based on company press releases and public filings at the time of the
announcement of the transaction. The results of this analysis are as follows:
PRO FORMA BOARD
TRANSACTION OF DIRECTORS
VALUE PREMIUM OWNERSHIP ---------------
DATE MERGER PARTNERS ($BN) (%) (%) (#) (%)
---- --------------------------------- ----------- ------- --------- ------ ------
TBD Regions/Union Planters........... 5.6 (3.7)* 59/41 13/13 50/50
04/15/2001 First Union Corporation/
Wachovia Corporation............. 13.6 6.6 73/27 9/9 50/50
10/04/2000 Firstar Corporation/
U.S. Bancorp..................... 21.2 21.4 51/49 14/11 56/44
03/20/2000 National Commerce
Bancorporation/
CCB Financial Corporation........ 1.9 25.0 53/47 10/10 50/50
03/14/1999 Fleet Financial Corporation/
BankBoston Corporation........... 16.3 15.5 60/40 12/10 55/45
07/01/1998 Star Banc Corporation/
Firstar Corporation.............. 7.4 27.1 50/50 18/14 56/44
06/08/1998 Norwest Corporation/
Wells Fargo & Company............ 34.6 9.3 49/51 12/12 50/50
04/13/1998 Banc One Corporation/
First Chicago NBD Corporation.... 29.5 6.4 58/42 11/11 50/50
04/13/1998 NationsBank Corporation/
BankAmerica Corporation.......... 66.6 -- 55/45 11/9 55/45
---------------
* Based on the closing stock price of Union Planters common stock of $30.91 as
of January 20, 2004 and an exchange ratio of 1.000x share of New Regions
common stock per share of Union Planters common stock, Union Planters would
receive a discount of 3.7% upon completion of the merger. Alternatively, based
on the closing stock price of Regions common stock of $36.74 as of January 20,
2004 and an exchange ratio of 1.2346x shares of New Regions common stock per
share of Regions common stock, Regions would receive a premium of 3.1% upon
completion of the merger.
UBS chose the selected mergers because they were business combinations
that, for purposes of the analysis, UBS considered to be reasonably comparable
and similar in structure to the merger. The selected mergers may differ
significantly from the merger based on, among other things, the size of the
transactions, the structure of the transactions and the dates that the
transactions were announced and consummated.
DISCOUNTED CASH FLOW ANALYSIS
Regions. As of January 20, 2004, UBS calculated the estimated present
value of the implied per share value of Regions common stock, using discount
rates ranging from 10% to 12%. UBS applied exit price-to-earnings multiples for
Regions ranging from 11.0x to 13.0x to 2009 estimated earnings to an I/B/E/S
consensus long-term EPS growth rate of 8.0% for the calendar years 2006-2009.
This analysis resulted in an estimated present value range of the implied
Regions common stock per share value of approximately $35.13 to $42.18. In its
calculation of the estimated present value of the implied per share value of
Regions common stock, UBS assumed that Regions would have cash net income of
$681 million in 2004, $717 million in 2005 and a growth rate of 8.0% after 2005.
UBS also assumed that Regions would have a target tangible common equity to
tangible asset value of 6.5% and an asset growth rate of 4.0%.
Union Planters. As of January 20, 2004, UBS calculated the estimated
present value of the implied per share value of Union Planters common stock,
using discount rates ranging from 10% to 12%. UBS
45
applied exit price-to-earnings multiples for Union Planters ranging from 11.0x
to 13.0x to 2009 estimated earnings to an I/B/E/S consensus long-term EPS growth
rate of 8.0% for the calendar years 2006-2009. This analysis resulted in an
estimated present value range of the implied Union Planters common stock per
share value of approximately $26.10 to $31.70. In its calculation of the
estimated present value of the implied per share value of Union Planters common
stock, UBS assumed that Union Planters would have a cash net income of $437
million in 2004, $483 million in 2005 and a growth rate of 8.0% after 2005. UBS
also assumed that Union Planters would have a target tangible common equity to
tangible asset value of 6.5% and an asset growth rate of 4.0%.
Discounted Cash Flow Valuation. Using the analysis above, the relative
stand-alone discounted cash flow valuations of Regions and Union Planters imply
an exchange ratio of approximately 1.34x and an exchange ratio of approximately
1.12x when the net present value of the forecasted synergies are ascribed to the
Union Planters valuation. In UBS' estimation of the present value of synergies,
it assumed a perpetual dividend growth rate of 3% and a discount rate of 11%,
based on Regions' management projections.
PRO FORMA MERGER ANALYSIS
In order to assess the future impact of the merger on Regions' projected
financial results, UBS analyzed the potential pro forma financial effects of the
merger on Regions' estimated EPS on a GAAP basis and a cash basis for the
calendar years 2004 and 2005. Based on the Regions exchange ratio, this analysis
indicated that the merger would be accretive to Regions' estimated EPS by 4.5%
on a GAAP basis in the calendar year 2005 and by 0.6% and 8.9% on a cash basis
in the calendar years 2004 and 2005, respectively, and be dilutive to Regions'
estimated EPS by 2.8% on a GAAP basis in the calendar year 2004, assuming the
timely realization of cost savings and other synergies projected by Regions' and
Union Planters' managements. The analysis also indicated that the merger could
increase estimated EPS on a GAAP basis and a cash basis to Union Planters
shareholders in calendar years 2004 and 2005. The estimates of achievable cost
savings and the timing of the realization of such cost savings are based on
numerous estimates, assumptions and judgments and are subject to significant
uncertainties. Actual results may vary, and variations in amounts and timing may
be material.
OTHER FACTORS
In rendering its opinion, UBS also reviewed and considered other factors,
including:
- cost savings projected to result from the merger;
- analysis of projected cost savings in other mergers in the banking
industry over the last ten years;
- internal rate of return analysis; and
- selected published equity research analysts' reports for Union Planters.
MISCELLANEOUS
Regions selected UBS as its financial advisor in connection with the merger
because UBS is an internationally recognized investment banking firm with
substantial experience in similar transactions and is familiar with Regions and
its business. UBS is continually engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, leveraged buyouts,
negotiated underwritings, competitive bids, secondary distributions of listed
and unlisted securities and private placements.
UBS and its predecessors and affiliates have provided services in the past
to Regions, for which services UBS and its predecessors and affiliates have
received customary compensation. In the ordinary course of business, UBS, its
predecessors and affiliates have traded, and may in the future trade, the
securities of Regions and Union Planters, and, following the merger, the
securities of New Regions for their own accounts and the accounts of their
customers and, accordingly, may at any time hold a long or short position in
those securities.
46
Under the terms of its engagement, Regions has agreed to pay UBS fees for
its financial advisory services in connection with the merger. In addition,
Regions has agreed to reimburse UBS for its reasonable expenses, including fees
and disbursements of counsel, and to indemnify UBS and related parties against
liabilities, including liabilities under federal securities laws, relating to,
or arising out of, its engagement. Regions has agreed to pay UBS an amount equal
to a percentage of the aggregate transaction value upon completion of the merger
(which amount would be equal to approximately $12.4 million if the merger had
been completed as of April 8, 2004). Regions has already paid $3 million to UBS,
which amount will be offset against the fee payable upon completion of the
merger.
OPINION OF MORGAN STANLEY & CO. INCORPORATED TO UNION PLANTERS
Pursuant to the terms of an engagement letter, Morgan Stanley was engaged
to provide financial advisory services to Union Planters. Union Planters
selected Morgan Stanley to act as its financial advisor based on Morgan
Stanley's qualifications, expertise and reputation, as well as its knowledge of
the business and affairs of Union Planters. On January 22, 2004, Morgan Stanley
delivered its oral opinion, subsequently confirmed in writing as of the same
date, to the Union Planters board of directors that, subject to and based on the
factors considered in its opinion, the Union Planters exchange ratio of one
share of New Regions common stock for each share of Union Planters common stock
pursuant to the merger agreement was fair, from a financial point of view, to
the holders of shares of Union Planters common stock.
The full text of Morgan Stanley's written opinion, dated as of January 22,
2004, which sets forth, among other things, the assumptions made, procedures
followed, matters considered and limitations on the review undertaken by Morgan
Stanley in rendering its opinion, is attached as Appendix C of this document.
Holders of Union Planters' common stock are urged to, and should, read this
opinion carefully and in its entirety. Morgan Stanley's opinion, directed to the
board of directors of Union Planters, addresses only the fairness from a
financial point of view of the Union Planters exchange ratio pursuant to the
merger agreement to the holders of shares of Union Planters common stock, and
does not address any other aspect of the merger or constitute a recommendation
to any Union Planters shareholder as to how to vote at the shareholder meeting.
This summary is qualified in its entirety by reference to the full text of the
opinion.
In arriving at its opinion, Morgan Stanley, among other things:
- reviewed certain publicly available financial statements and other
information of Union Planters and Regions;
- reviewed certain internal financial statements and other financial and
operating data concerning Union Planters and Regions prepared by the
managements of Union Planters and Regions, respectively, including among
other things, limited financial forecasts and profit plans for each
company;
- discussed the past and current operations and financial condition and the
prospects of Union Planters and Regions, including information relating
to certain strategic, financial and operational benefits anticipated from
the merger, with senior executives of Union Planters and Regions,
respectively;
- discussed the strategic rationale for the merger with senior management
of Union Planters and Regions;
- reviewed the pro forma impact of the merger on the combined company's
earnings per share, consolidated capitalization and financial ratios;
- reviewed the reported prices and trading activity of Union Planters
common stock and Regions common stock;
47
- compared the financial performance of Union Planters and Regions and the
prices and trading activity of Union Planters common stock and Regions
common stock with that of certain other comparable publicly-traded
companies and their securities;
- reviewed the financial terms, to the extent publicly available, of
certain precedent merger transactions;
- participated in discussions among representatives of Union Planters and
Regions and their financial and legal advisors;
- reviewed the draft merger agreement and certain related documents; and
- considered such other factors and performed such other analyses as Morgan
Stanley deemed appropriate.
Morgan Stanley assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by it for the purposes of
its opinion. With respect to the financial forecasts, profit plans, including
information regarding certain strategic, financial and operational benefits
anticipated from the merger, Morgan Stanley has assumed that they have been
reasonably prepared on bases reflecting the best available estimates and
judgments of the future financial performance of Union Planters and Regions. In
addition, Morgan Stanley relied on the assessments by the managements of Union
Planters and Regions of the strategic rationale of the merger. Morgan Stanley
assumed that the merger will be consummated in accordance with the terms of the
merger agreement, including, among other things, that the merger will be treated
as a tax-free reorganization pursuant to the Internal Revenue Code. Morgan
Stanley did not make any independent valuation or appraisal of the assets or
liabilities (including any hedge or derivative positions) of Union Planters and
Regions, nor was Morgan Stanley furnished with any such appraisals and Morgan
Stanley did not make any independent examination of the loan loss reserves or
examine any individual loan credit files of Union Planters and Regions. In
addition, Morgan Stanley assumed that in connection with the receipt of all
necessary government, regulatory or other consents and approvals for the merger,
no restrictions will be imposed that would have any material adverse effect on
Union Planters and Regions or on the benefits expected to be derived from the
merger. Morgan Stanley's opinion was necessarily based on financial, economic,
market and other conditions as in effect on, and the information made available
to it as of, the date of this opinion.
In addition, Morgan Stanley was provided with Union Planters' and Regions'
internal financial projections for fiscal year 2004, which were materially
consistent with I/B/E/S projections for fiscal year 2004. The Morgan Stanley
financial analyses relied upon I/B/E/S projections and not the internal
financial projections.
The following is a summary of the material financial analyses performed by
Morgan Stanley, in connection with preparing its oral opinion and its written
opinion letter, dated January 22, 2004. Some of these summaries of financial
analyses include information presented in tabular format. In order to understand
fully the financial analysis used by Morgan Stanley, the tables must be read
together with the text of each summary. The tables alone do not constitute a
complete description of the financial analyses.
UNION PLANTERS
Comparable Company Analysis. As part of its analysis, Morgan Stanley
compared financial information, including price to earnings ratios, of Union
Planters with companies that share certain characteristics with Union Planters.
This group, which are referred to in this discussion of Morgan Stanley's opinion
as the "peer group," included:
- National City Corporation
- SunTrust Banks, Inc.
- BB&T Corporation
- The PNC Financial Services Group, Inc.
48
- KeyCorp
- SouthTrust Corporation
- M&T Bank Corporation
- Comerica Incorporated
- AmSouth Bancorporation
- Marshall & Ilsley Corporation
- UnionBanCal Corporation
- Charter One Financial, Inc.
- NorthFork Bancorporation, Inc.
- National Commerce Financial Corporation
- First Tennessee National Corporation
- Zions Bancorporation
- Huntington Bancshares Incorporated
- Banknorth Group, Inc.
- Compass Bancshares, Inc.
Morgan Stanley compared, for the peer group and Union Planters, the market
price to 2004 "cash" earnings per share (GAAP earnings per share plus
amortization of intangibles per share) estimate from I/B/E/S, available as of
January 21, 2004.
The following table reflects these multiples:
PRICE/2004E CASH
EARNINGS
----------------
Union Planters (as of January 21, 2004)..................... 13.6x
Peer Group Mean............................................. 13.5x
Applying a range of Peer Group price-to-2004 cash earnings per share
multiples to Union Planters 2004 I/B/E/S cash earnings per share estimate
implied a range of values for Union Planters common stock of approximately $26
to $31 per share. Morgan Stanley noted that the closing price of Union Planters
common stock, as of January 21, 2004, was $31.16 per share. Based on the
exchange ratios of 1.2346x shares of New Regions common stock for Regions common
stock and 1.000x shares of New Regions common stock for Union Planters common
stock and the closing price of Regions common stock of $37.69 as of January 21,
2004, the implied value of the merger consideration was $30.53 per share of
Union Planters common stock.
No company used in the above analyses is identical to Union Planters or the
merger. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgments concerning financial and operating
characteristics of Union Planters and other factors that could affect the public
trading value of the companies to which they are being compared. Mathematical
analysis (such as determining the average or median) is not in itself a
meaningful method of using comparable company data.
Dividend Discount Analysis. Morgan Stanley performed a dividend discount
analysis to determine a range of implied present values of Union Planters common
stock, assuming Union Planters continued to operate as a stand-alone entity. The
range was determined by adding:
- the present value of an estimated future dividend stream for Union
Planters over the five-year period from 2004 through 2008, and
49
- the present value of an estimated "terminal value" of Union Planters
common stock at the end of the year 2008.
Morgan Stanley made the following assumptions in performing its analysis:
- a constant tangible common equity/tangible assets ratio of 7% for a
projected dividend stream,
- earnings projections were based on I/B/E/S estimates with an assumed
earnings growth rate of 6.7% for 2005 through 2008, consistent with the
I/B/E/S mean long-term growth estimate for Union Planters,
- "terminal value" of Union Planters common stock at the end of the period
was determined by applying two different price-to-cash earnings multiples
(11x and 13x) to year 2008 projected earnings, and
- the dividend stream and terminal values were discounted to present values
using a discount rate of 11%.
Based on the above assumptions, this analysis implied a fully diluted
stand-alone value of Union Planters common stock ranging from approximately $29
to $32 per share. As described above under "-- Comparable Company Analysis," as
of January 21, 2004, the implied value of the merger consideration was $30.53
per share of Union Planters common stock.
Contribution Analysis. Morgan Stanley compared Union Planters'
shareholders and Regions' stockholders' respective percentage ownership of the
combined company to Union Planters' and Regions' respective contribution (and
the implied ownership based on such contribution) to the combined company using
various financial metrics.
FINANCIAL METRICS UNION PLANTERS REGIONS
----------------- -------------- -------
Loans....................................................... 41% 59%
Total Assets................................................ 40% 60%
Total Deposits.............................................. 41% 59%
Tangible Book Value......................................... 39% 61%
2004 Estimated GAAP Earnings................................ 39% 61%
2004 Estimated Cash Earnings................................ 39% 61%
2004 Estimated GAAP Earnings with restructuring*............ 37% 63%
2005 Estimated GAAP Earnings................................ 39% 61%
2005 Estimated Cash Earnings................................ 40% 60%
---------------
* Assumes a $55 million pre-tax restructuring charge (representing the average
of estimated pre-tax charges of $50 million to $60 million announced by Union
Planters in its January 15, 2004 fourth quarter earnings press release) and a
tax rate of 35%
In addition, Morgan Stanley noted that the merger exchange ratios implied
that Union Planters shareholders would hold 41% of the pro forma ownership of
the combined company.
REGIONS
Dividend Discount Analysis. Morgan Stanley performed a dividend discount
analysis to determine a range of present values of Regions common stock,
excluding the effects of the merger. The range was determined by adding:
- the present value of an estimated future dividend stream for Regions over
the five-year period from 2004 through 2008, and
- the present value of the "terminal value" of Regions common stock at the
end of the year 2008.
50
Morgan Stanley made the following assumptions in performing its analysis:
- a constant tangible common equity/tangible assets ratio of 7% for a
projected dividend stream,
- earnings projections based on I/B/E/S estimates for 2004, with an assumed
earnings growth rate of 8.2% for 2005 through 2008, consistent with the
I/B/E/S mean long-term growth estimate for Regions,
- "terminal value" of Regions common stock at the end of the period
determined by applying a price-to-cash earnings multiple range (11 to
13x) to year 2008 projected earnings, and
- the dividend stream and terminal values discounted to present values
using a discount rate of 11%.
Based on the above assumptions, the fully diluted stand-alone value of
Regions common stock ranged from approximately $38 to $43 per share. As of
January 21, 2004, the market price per share of Regions common stock was $37.69.
Pro Forma Merger Analysis. Morgan Stanley analyzed the financial impact of
the merger on the estimated earnings per share for Regions and Union Planters
for the current holders of Union Planters common stock, using the estimated cost
savings expected by management to result from the merger as well as Regions
earnings estimates for 2004 through 2005 based on I/B/E/S estimates and I/B/E/S
long-term growth rate for 2005. This analysis indicated that the merger with
cost savings (phased in 15% in 2004 and 60% in 2005) would be dilutive to the
current estimate of Regions' 2004 GAAP earnings per share and accretive to
Regions' 2004 cash and 2005 GAAP and cash earnings per share as well as
accretive to the current estimate of Union Planters' 2004 and 2005 GAAP and cash
earnings per share.
Combined Value Dividend Discount Analysis. Using the same methodology as
described above under "-- Dividend Discount Analysis," Morgan Stanley performed
a dividend discount analysis assuming fully phased-in pre-tax savings of $200
million (phased in 15% in 2004, 60% in 2005, 85% in 2006 and 100% thereafter)
and an after-tax restructuring charge of $195 million. All other assumptions
were consistent with assumptions described above under "-- Dividend Discount
Analysis." Based on the above assumptions, this analysis implied a fully diluted
stand-alone value of Union Planters common stock ranging from approximately $31
to $36 per share, which is 10% higher than the stand-alone Dividend Discount
Analysis value of $29 to $32. The fully diluted stand-alone value of Regions
common stock ranged from approximately $39 to $44 per share, which is 3% higher
than the stand-alone Dividend Discount Analysis value of $38 to $43.
Morgan Stanley performed a variety of financial and comparative analyses
for the purpose of rendering its opinion. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to a partial analysis or
summary description. In arriving at its opinion, Morgan Stanley considered the
results of all of its analyses as a whole and did not attribute any particular
weight to any particular analysis or factor considered by it. Furthermore,
Morgan Stanley believes that selecting any portion of its analyses, without
considering all of its analyses, would create an incomplete view of the process
underlying its analyses and the opinion. In addition, Morgan Stanley may have
given various factors more or less weight than other factors and may have deemed
various assumptions more or less probable than other assumptions, so that the
ranges of valuations resulting from any particular analysis described above
should not be taken to be Morgan Stanley's view of the actual value of Union
Planters or Regions.
In performing its analyses, Morgan Stanley made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Union Planters or
Regions. Any estimates contained in the analyses performed by Morgan Stanley are
not necessarily indicative of future results or actual values, which may be
significantly more or less favorable than those suggested by such estimates.
Such analyses were prepared solely as a part of Morgan Stanley's analysis of the
fairness from a financial point of view of the Union Planters exchange ratio to
the holders of shares of Union Planters common stock pursuant to the merger
agreement and were provided to the Union Planters board of directors in
connection with the delivery of the Morgan Stanley
51
opinion. The analyses do not purport to be appraisals of value or to reflect the
prices at which Union Planters or Regions might actually trade. Further, the
analyses should not be viewed as the sole determining factors of the value of
Union Planters. In addition, as described above, the Morgan Stanley opinion was
one of the many factors taken into consideration by the Union Planters board of
directors in making its determination to approve the merger agreement. The Union
Planters exchange ratio pursuant to the merger agreement was determined through
arm's-length negotiations between Union Planters and Regions and was approved by
the Union Planters board of directors. Morgan Stanley did not recommend any
specific consideration to Union Planters or advise that any given consideration
constituted the only appropriate consideration for the transaction.
Morgan Stanley is an internationally recognized investment banking and
advisory firm. Morgan Stanley, as part of its investment banking business, is
continuously engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for corporate, estate and other purposes. In the past,
Morgan Stanley and its affiliates have provided financing services for Union
Planters and Regions and have received fees for the rendering of these services.
In the ordinary course of its business, Morgan Stanley and its affiliates may,
from time to time, trade in the securities and indebtedness of Union Planters or
Regions for its own accounts or the account of investment funds and other
clients under the management of Morgan Stanley and for the account of its
customers and, accordingly, may at any time hold a long or short position in
such securities or indebtedness for any such account. In addition, Morgan
Stanley and its affiliates may from time-to-time act as counterparty to either
Union Planters or Regions and have received compensation for such activities.
Pursuant to an engagement agreement with Union Planters, Morgan Stanley was
formally retained to provide financial advisory services and a financial letter
opinion in connection with the transaction, and Union Planters agreed to pay
Morgan Stanley fees for its services in connection with the merger. Union
Planters also agreed to reimburse Morgan Stanley for expenses incurred by Morgan
Stanley in performing its services. In addition, Union Planters has also agreed
to indemnify Morgan Stanley and its affiliates, their respective directors,
officers, agents and employees and each person, if any, controlling Morgan
Stanley or any of its affiliates against certain liabilities and expenses,
including liabilities under the U.S. federal securities laws, related to or
arising out of Morgan Stanley's engagement and any related transactions. Union
Planters has agreed to pay Morgan Stanley an amount equal to a percentage of the
aggregate transaction value upon completion of the merger (which amount would be
equal to approximately $12.4 million if the merger had been completed as of
April 8, 2004). Union Planters has already paid $3 million to Morgan Stanley,
which amount will be offset against the fee payable upon completion of the
merger.
BOARD OF DIRECTORS AND MANAGEMENT OF NEW REGIONS FOLLOWING THE MERGER
BOARD OF DIRECTORS OF NEW REGIONS.
Upon completion of the merger, the board of directors of New Regions will
consist of thirteen directors of Regions designated by Regions, and thirteen
directors of Union Planters designated by Union Planters. Regions and Union
Planters have each indicated that their current directors will be the directors
who will serve as directors of New Regions upon completion of the merger. The
former Regions directors and former Union Planters directors will be apportioned
among the three classes of the New Regions board of directors as equally as
possible. The first class of New Regions directors will serve until the 2005
annual meeting, the second class will serve until the 2006 annual meeting and
the third class will serve until the 2007 annual meeting, in each case subject
to the director's earlier resignation or removal.
EXECUTIVE OFFICERS OF NEW REGIONS
Carl E. Jones, Jr., Chairman of the Board, President and Chief Executive
Officer of Regions, will serve as Chairman of the Board and Chief Executive
Officer of New Regions following the merger, and Jackson W. Moore, Chairman,
President and Chief Executive Officer of Union Planters, will serve as
52
President and Chief Executive Officer-Designate of New Regions. Mr. Moore will
succeed Mr. Jones as Chief Executive Officer on July 1, 2005 and will succeed
Mr. Jones as Chairman of the Board on July 1, 2006 (or such earlier time as Mr.
Jones ceases to be the Chief Executive Officer or Chairman of New Regions). Mr.
Moore's planned succession to Mr. Jones is a result of Mr. Jones' desire to
retire from his positions with Regions within a reasonable time after the merger
is completed and at the time of his previously planned retirement at age 65, and
the parties' belief in the qualifications and ability of Mr. Moore to
successfully lead the combined company.
Regions and Union Planters have designated other key members of the
combined company's senior management team, which includes Richard D. Horsley,
who is currently Vice Chairman and Chief Operating Officer of Regions, as Vice
Chairman and Chief Operating Officer of New Regions; Allen B. Morgan, Jr., who
is currently Vice Chairman of Regions and Chairman of Morgan Keegan & Company,
as Vice Chairman of New Regions and Chairman of the Board of Morgan Keegan; D.
Bryan Jordan, who is currently Executive Vice President and Chief Financial
Officer of Regions, as Chief Financial Officer of New Regions; Robert A. Goethe,
who is currently Chairman and Chief Executive Officer of Regions Mortgage, as
Chairman of Mortgage Banking of New Regions; and Bobby L. Doxey, who is
currently Senior Executive Vice President and Chief Financial Officer of Union
Planters, as Senior Executive Vice President of New Regions. Mr. Doxey and Mr.
Horsley will co-lead the transition team.
Mr. Moore will oversee the consolidated banking operations and major
banking product lines, and will have the combined companies' six regional bank
presidents reporting to him: Jack Fleischauer of Regions, Adolfo Henriques of
Union Planters, Peter Miller of Regions, Steven Schenck of Union Planters,
Samuel Upchurch of Regions and John White, Jr. of Union Planters.
Information about the current Regions directors and executive officers can
be found in "PROPOSAL 2 -- Election of Directors." Information about the current
Union Planters directors and executive officers can be found in "PROPOSAL
2 -- Election of Directors." Regions' and Union Planters' Annual Reports on Form
10-K for the year ended December 31, 2003 are incorporated by reference into
this joint proxy statement/prospectus. See "WHERE YOU CAN FIND MORE
INFORMATION."
For more information see "THE MERGER -- Union Planters' Directors and
Officers Have Financial Interests in the Merger" and "THE MERGER -- Regions'
Directors and Officers Have Financial Interests in the Merger."
UNION PLANTERS' DIRECTORS AND OFFICERS HAVE FINANCIAL INTERESTS IN THE MERGER
Certain members of Union Planters' management and board of directors may be
deemed to have financial interests in the merger that are in addition to or
different from their financial interests as shareholders of Union Planters. The
Union Planters board of directors was aware of these financial interests and
considered them, among other matters, in approving the merger agreement.
UNION PLANTERS MANAGEMENT POSITIONS
The merger agreement provides that Jackson W. Moore, Union Planters'
current Chairman, President and Chief Executive Officer, will become the
President and Chief Executive Officer-Designate of New Regions upon the
completion of the merger; on July 1, 2005 (or such earlier date as Carl E.
Jones, Jr. may cease to serve as Chief Executive Officer of New Regions), Mr.
Moore will succeed Mr. Jones as Chief Executive Officer of New Regions; and on
July 1, 2006 (or such earlier date as Mr. Jones may cease to serve as Chairman
of New Regions), Mr. Moore will become Chairman and Chief Executive Officer of
New Regions. In addition, other members of Union Planters management will serve
in senior management positions at New Regions. For further information, see "THE
MERGER -- Board of Directors and Management of New Regions Following the Merger"
above and "THE MERGER AGREEMENT -- Corporate Governance" below.
53
EMPLOYMENT AGREEMENTS WITH UNION PLANTERS EXECUTIVES
Each of Mr. Moore, Bobby L. Doxey, Alan W. Kennebeck, Adolfo Henriques,
Steven J. Schenck and John V. White, Jr. has an employment agreement with Union
Planters.
JACKSON W. MOORE'S EMPLOYMENT AGREEMENT
Mr. Moore's employment agreement has been amended in connection with the
execution of the merger agreement, as described below, effective upon the
completion of the merger. The employment period under Mr. Moore's employment
agreement is a rolling three-year term that is currently scheduled to expire on
December 31, 2006, subject to automatic one-year extensions on December 31, 2004
and each December 31 thereafter, unless Union Planters provides at least 60 days
prior notice to Mr. Moore. In any case, the term of the agreement may not be
extended past the date on which Mr. Moore turns 65. If Union Planters provides
prior notice to Mr. Moore that it is electing not to extend the term of the
agreement, Mr. Moore may either remain until the end of the then-current term of
his agreement, or may choose to terminate the agreement and be paid a lump sum
severance amount equal to three times the sum of his highest base salary and
highest annual bonus earned in any year during his employment (Mr. Moore's
"final highest earnings"). In either case, all options, stock appreciation
rights, and other awards in the nature of rights that may be exercised, and all
awards of restricted stock, if any, issued to Mr. Moore under all stock
incentive plans of Union Planters would immediately vest and be exercisable and
all restrictions thereon would lapse.
Mr. Moore's employment agreement also provides that in the event of a
"change in control" of Union Planters (as defined in the agreement to include
certain business combinations, acquisitions of stock or assets of Union
Planters, or changes in the board of directors composition), Mr. Moore would
have the option to extend the term of his employment agreement for one
additional three-year period, beginning on the later of the date of the renewal
notice or the date on which the change in control occurs. During the extended
renewal term following a change in control, Mr. Moore may resign without penalty
upon 90 days prior notice and receive a lump sum severance payment equal to
three times his final highest earnings. In such case, all options, stock
appreciation rights, and other awards in the nature of rights that may be
exercised, and all awards of restricted stock, if any, issued to Mr. Moore under
all stock incentive plans of Union Planters would immediately vest and be
exercisable and all restrictions thereon would lapse. With respect to any
benefits paid, accrued or accelerated by virtue of a change in control, the
agreement requires Union Planters to make certain tax gross-up payments to fully
cover Mr. Moore's income tax and excise tax liabilities with respect to any such
benefits, including all tax liabilities associated with the gross-up payments.
JACKSON W. MOORE'S EMPLOYMENT AGREEMENT AMENDMENT
Union Planters and Regions entered into an amendment to Mr. Moore's
employment agreement (which will be entered into by New Regions prior to the
completion of the merger), dated as of January 22, 2004, that becomes effective
upon the completion of the merger. Under the amended employment agreement, Mr.
Moore agrees to serve, and New Regions agrees to appoint Mr. Moore to the
positions, and at the times, described above in "-- Union Planters Management
Positions."
Mr. Moore's amended employment agreement provides that, for purposes of the
agreement, a "change in control" will be deemed not to have occurred as a result
of the merger. This has the effect of eliminating, for purposes of this merger,
Mr. Moore's right to resign for any reason after the merger on 90 days prior
notice and to receive his full severance payments and benefits (described
above). Notwithstanding this change, in the event that any payments to Mr. Moore
are subject to an excise tax under Section 4999 of the Internal Revenue Code,
the amended employment agreement continues to provide for a gross-up payment to
compensate Mr. Moore for the payment of the excise tax. In addition, the
amendment will have no effect on the accelerated vesting of Mr. Moore's stock
options and restricted stock or under other plans or agreements with Union
Planters, which will occur as a result of the merger.
54
After the merger, if Mr. Moore is not appointed to the positions described
above in "-- Union Planters Management Positions," at the times stated above, or
is removed from the position of Chief Executive Officer prior to becoming
Chairman of the Board of Directors and Chief Executive Officer of New Regions
(in each case, other than as a result of Mr. Moore's termination for cause (as
defined in the employment agreement), his termination due to his death or
disability, or his voluntary resignation not in connection with the
non-appointments or removal described above), then Mr. Moore would be entitled
to the change in control rights described above under "-- Jackson W. Moore's
Employment Agreement." Mr. Moore would also be entitled to these benefits if
there occurs a change in control of New Regions.
In the event of (1) a termination by New Regions of Mr. Moore's employment
not described in the previous paragraph, and not in connection with a change in
control of New Regions, or (2) any removal by New Regions of Mr. Moore from the
position of Chief Executive Officer after his attaining the position of Chairman
and Chief Executive Officer (other than as a result of Mr. Moore's termination
for cause, or his termination due to his death or disability), Mr. Moore will
have the same rights to severance and benefits as if his current agreement with
Union Planters had not been renewed by Union Planters.
Under the amended employment agreement, Mr. Moore will be eligible for
participation in, and will receive, all pension and welfare benefits, fringe
benefits and perquisites with New Regions on a basis, at a level and in an
amount that, on a benefit-for-benefit basis, is no less favorable than the
benefits that were provided or made available to Mr. Moore with Union Planters
at the time of the signing of the amendment. Mr. Moore will perform his services
for New Regions in the reasonable vicinity of either Memphis, Tennessee or
Birmingham, Alabama.
In the event that Mr. Moore is not appointed to the positions described
above in "-- Union Planters Management Positions," at the times stated above, or
Mr. Moore is removed from the position of Chief Executive Officer prior to
becoming Chairman of the Board of Directors and Chief Executive Officer of New
Regions (other than for the specific reasons enumerated above), the estimated
three times lump sum cash severance payment under his employment agreement,
using his base salary on the date hereof and his annual bonuses though 2003,
would be approximately $5,725,000.
OTHER EXECUTIVES
Each of Messrs. Doxey's, Kennebeck's, Henriques', Schenck's and White's
employment agreements provide for specific payments to be paid to the executive
in the event his employment is terminated within some period after the date on
which a change in control occurs. The completion of the merger will be
considered a change in control under each of these employment agreements.
Messrs. Doxey's and Kennebeck's agreements generally provide that if the
executive is terminated without "cause" or for "good reason" (each as defined in
his employment agreement) within one year following the completion of the
merger, he will be entitled to a lump sum severance payment equal to one year's
base salary.
Mr. Henriques' employment agreement provides that upon the completion of
the merger, the employment term will automatically extend for two years and the
agreement further provides that, in the event of a termination of employment
without "cause" or for "good reason" (each as defined in the employment
agreement) within two years following the completion of the merger, Mr.
Henriques would be entitled to a lump sum severance payment equal to two times
his current base salary and a bonus equal to 75% of his then current base salary
for the year in which his employment was terminated, pro-rated to reflect the
portion of the year occurring prior to his date of termination.
Mr. Schenck's employment agreement provides that, in the event of a
termination of employment without "cause" or for "good reason" (each as defined
in the employment agreement) within two years following the completion of the
merger, Mr. Schenck would be entitled to a lump sum severance payment equal to
one year's current base salary and annual bonus.
Mr. White's employment agreement provides that if he is terminated without
"cause" or for "good reason" (each as defined in his employment agreement)
within three years following the completion of the
55
merger, he will be entitled to a lump sum severance payment equal to three times
the sum of his base salary and the highest annual bonus received by him during
the three calendar years immediately preceding the completion of the merger. Mr.
White will also be entitled to an excise tax gross-up on amounts he receives in
connection with the completion of the merger or such termination of employment.
In the event that within one year after the completion of the merger
Messrs. Doxey, Kennebeck, Henriques, Schenck and White are terminated without
cause or terminate their employment for good reason, the estimated lump sum cash
severance payments for the executive officers under their employment agreements,
using their base salary on the date hereof and their annual bonuses through
2003, would be approximately $350,000 for Mr. Doxey, $275,000 for Mr. Kennebeck,
$900,000 for Mr. Henriques, $450,000 for Mr. Schenck and $1,350,000 for Mr.
White.
STOCK OPTIONS AND OTHER EQUITY AWARDS
Union Planters stock option plans and agreements provide that all
outstanding unvested stock options to purchase Union Planters common stock will
vest upon the completion of the merger, which would be considered a "change of
control" for purposes of these stock options. New Regions has agreed to assume
all outstanding Union Planters stock options. At the time the merger is
completed, each outstanding Union Planters stock option will be converted into
an option to purchase New Regions common shares on the same terms as in effect
immediately prior to completion of the merger, except that the number of shares
of New Regions common stock issuable upon the exercise of the options and the
exercise price per share will be adjusted based on the Union Planters exchange
ratio, and all Union Planters stock options outstanding will become fully vested
and exercisable at the effective time of the merger due to the "change in
control" provisions discussed above. Accordingly, the completion of the merger
will accelerate the vesting of approximately [--] options held by Union
Planters' non-employee directors and approximately [--] options held by Union
Planters' executive officers to purchase shares of Union Planters common stock
that were not previously exercisable.
All restricted stock and stock units granted pursuant to Union Planters'
equity plans will also become fully vested, unrestricted and transferable at the
completion of the merger. Accordingly, the completion of the merger will
accelerate the vesting of approximately [--] shares of Union Planters restricted
stock and stock units held by non-employee directors of Union Planters and
approximately [--] shares of Union Planters restricted stock and stock units
held by executive officers of Union Planters.
OTHER BENEFIT PLANS
Pursuant to the terms of the Amended and Restated 1996 Deferred
Compensation Plan for Executives, as amended, participants in the plan will
become vested in all of their deferred compensation accounts under the plan upon
the completion of the merger, and the trust funding the plan will be fully
funded. Messrs. Moore, Doxey, Kennebeck, Henriques, Schenck and White each
participate in the plan.
Pursuant to the terms of the 2002 Senior Management Performance Incentive
Plan, upon the completion of the merger, participants in the plan will be
entitled to an annual bonus, pro-rated to reflect the portion of the plan year
occurring prior to the completion of the merger. Messrs. Moore, Doxey,
Henriques, Schenck and White each participate in the plan.
Mr. Moore has agreed to waive, for purposes of his supplemental executive
retirement agreement, or SERP, certain "change in control" rights that would
otherwise have been triggered by the merger; however, Mr. Moore will still be
entitled to receive his full unreduced normal retirement age SERP benefit in the
event (1) Mr. Moore is not appointed to the positions described above in
"-- Union Planters Management Positions" at the times stated above or is removed
from the position of Chief Executive Officer prior to becoming Chairman of the
Board of Directors and Chief Executive Officer of New Regions, (2) there is a
subsequent change in control of New Regions, (3) Mr. Moore involuntarily
terminates service with New Regions or voluntarily terminates service with New
Regions for good reason (as defined in the SERP agreement), (4) Mr. Moore
terminates service with New Regions as a result of
56
death or disability or (5) Mr. Moore terminates service with New Regions on or
after his normal retirement date at age 62. For further information, see
"-- Executive Benefit Plans".
BOARD OF DIRECTORS OF NEW REGIONS
Effective as of the completion of the merger, thirteen former members of
the Union Planters board of directors chosen by Union Planters will become
members of the board of directors of New Regions. From the date of the
completion of the merger through June 30, 2007, any vacancies on the New Regions
board of directors caused by the cessation of service of such former Union
Planters directors will be filled by a nominee proposed by a majority of the
remaining former Union Planters directors.
DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE
New Regions has agreed to indemnify and hold harmless present and former
directors or officers of Union Planters against any liability arising in whole
or in part out of or pertaining to (1) the fact the person was a director,
officer or employee of Union Planters or (2) the merger agreement or any of the
transactions contemplated thereby.
The merger agreement provides that, from and after the effective time of
the merger, New Regions will maintain directors' and officers' liability
insurance covering directors and officers of Union Planters for acts or
omissions or alleged acts or omissions occurring before the merger becomes
effective. New Regions may continue coverage under Union Planters' existing
directors' and officers' liability insurance policy or may substitute policies
with at least the same coverage and amounts with terms and conditions that are
at least as advantageous as Union Planters' existing policy, subject to a
maximum expenditure of 250% of the annual cost of coverage under Union Planters'
policy as of the date of the merger agreement.
REGIONS' DIRECTORS AND OFFICERS HAVE FINANCIAL INTERESTS IN THE MERGER
Certain members of Regions' management and board of directors may be deemed
to have financial interests in the merger that are in addition to or different
from their financial interests as stockholders of Regions. The Regions board of
directors was aware of these financial interests and considered them, among
other matters, in approving the merger agreement.
REGIONS MANAGEMENT POSITIONS
The merger agreement provides that Carl E. Jones, Jr., Regions' current
Chairman, President and Chief Executive Officer, will become the Chairman and
Chief Executive Officer of New Regions upon the completion of the merger, that
Mr. Jones will hold both positions through June 30, 2005 and that Mr. Jones will
continue to serve as Chairman through June 30, 2006. In addition, other members
of Regions management will serve in senior management positions at New Regions.
For further information, see "THE MERGER -- Board of Directors and Management of
New Regions Following the Merger" above and "THE MERGER AGREEMENT -- Corporate
Governance" below.
CHANGE IN CONTROL AGREEMENTS WITH REGIONS EXECUTIVES
Executive officers of Regions have change of control agreements that have
special employment and severance benefits that will be triggered by the merger.
Mr. Jones has agreed to waive all rights and benefits under his change of
control agreement that would have been triggered by the merger. The change of
control agreements provide that during the three year period following the
completion of the merger, the executive officer agrees to remain employed by
Regions, subject to the terms of the agreement, while Regions agrees that (1)
the authority, duties and responsibilities of each executive officer will be at
least commensurate with those in effect prior to the completion of the merger,
(2) the base salary of each executive officer may not be less than the base
salary in effect prior to the completion of the merger, and (3) the annual bonus
may not be less than the highest bonus in the three years preceding the
completion of the merger.
57
The change of control agreements also provide that if within three years of
the completion of the merger, Regions terminates an executive officer's
employment other than for cause (as defined in the employment agreement) or an
executive officer resigns for good reason (as defined in the employment
agreement, including resignation for any reason during the 30-day period
following the first anniversary of a change of control), Regions must pay the
executive officer a lump sum cash severance payment equal to any accrued
compensation and benefits plus an amount equal to three times the sum of his
base salary and highest annual bonus during 2001, 2002, 2003 or the year
preceding the year in which the termination occurs, and Regions must continue to
provide the officer or his beneficiaries welfare benefits coverage for three
years.
In the event that within three years after the completion of the merger the
executive officers are terminated without cause or terminate their employment
for good reason, the estimated lump sum cash severance payments for the
executive officers under the change of control agreements, using their base
salary on the date hereof and their annual bonuses through 2003, would be
approximately $2,875,000 for Mr. Richard D. Horsley, $5,400,000 for Mr. Allen B.
Morgan, Jr., $2,525,000 for Mr. John I. Fleischauer, Jr., $2,525,000 for Mr.
Peter D. Miller, and approximately $10,925,000 in the aggregate for the 7 other
executive officers. Mr. Jones would receive no cash severance payment under his
change of control agreement as a result of such a termination because he has
waived such benefits.
STOCK OPTIONS AND OTHER EQUITY AWARDS
The Regions board of directors has taken action to prevent the accelerated
vesting of unvested equity awards with respect to Regions common stock as a
result of the merger. New Regions has agreed to assume all outstanding Regions
stock options. At the time the merger is completed, each outstanding Regions
stock option will be converted into an option to purchase shares of New Regions
common stock on the same terms as in effect immediately prior to completion of
the merger, except that the number of shares of New Regions common stock
issuable upon the exercise of the options and the exercise price per share will
be adjusted based on the Regions exchange ratio.
OTHER BENEFIT PLANS
The Regions board of directors has taken action to prevent the accelerated
vesting of unvested benefits under the Supplemental Executive Retirement Plan
and Supplemental 401(k) Plan as a result of the merger.
BOARD OF DIRECTORS OF NEW REGIONS
Effective as of the completion of the merger, thirteen former members of
the Regions board of directors chosen by Regions will become members of the
board of directors of New Regions. From the date of the completion of the merger
through June 30, 2007, any vacancies on the New Regions board of directors
caused by the cessation of service of such former Regions directors will be
filled by a nominee proposed by a majority of the remaining former Regions
directors.
DIRECTORS AND OFFICERS INDEMNIFICATION AND INSURANCE
New Regions has agreed to indemnify and hold harmless present and former
directors or officers of Regions against any liability arising in whole or in
part out of or pertaining to (1) the fact the person was a director, officer or
employee of Regions or (2) the merger agreement or any of the transactions
contemplated thereby.
The merger agreement provides that, from and after the effective time of
the merger, New Regions will maintain directors' and officers' liability
insurance covering directors and officers of Regions for acts or omissions or
alleged acts or omissions occurring before the merger becomes effective. New
Regions may continue coverage under Regions' existing directors' and officers'
liability insurance policy or may substitute policies with at least the same
coverage and amounts with terms and conditions that are at least
58
as advantageous as Regions' existing policy, subject to a maximum expenditure of
250% of the annual cost of coverage under Regions' policy as of the date of the
merger agreement.
DISTRIBUTION OF NEW REGIONS CERTIFICATES
At or prior to the completion of the merger, New Regions will cause to be
deposited with the exchange agent certificates representing shares of New
Regions common stock for the benefit of the holders of certificates representing
shares of Regions common stock and Union Planters common stock and cash instead
of any fractional shares that would otherwise be issued to Regions stockholders
in the merger.
Promptly after the completion of the merger, New Regions will cause the
exchange agent to send transmittal materials to each holder of a Regions or
Union Planters stock certificate for use in exchanging Regions or Union Planters
stock certificates for certificates representing shares of New Regions common
stock and cash instead of fractional shares, if applicable. Holders of Regions
or Union Planters stock certificates should NOT surrender their Regions or Union
Planters stock certificates for exchange until they receive the letter of
transmittal and instructions. The exchange agent will deliver certificates for
New Regions common stock and/or a check instead of any fractional shares of New
Regions common stock once it receives the properly completed transmittal
materials together with certificates representing a holder's shares of Regions
common stock or Union Planters common stock, as applicable.
Regions or Union Planters stock certificates may be exchanged for New
Regions stock certificates with the exchange agent for up to six months after
the completion of the merger. At the end of that period, any New Regions stock
certificates and cash will be returned to New Regions. Any holders of Regions or
Union Planters stock certificates who have not exchanged their certificates will
be entitled to look only to New Regions, and only as general creditors of New
Regions, for New Regions stock certificates and any cash to be received instead
of fractional shares of New Regions common stock.
Starting 30 days after the merger, until you exchange your Regions or Union
Planters stock certificates for New Regions common stock certificates, you will
not be able to vote on any matter on which New Regions stockholders are entitled
to vote and you will not receive any dividends or other distributions in respect
of shares of New Regions common stock. Once you exchange your Regions or Union
Planters stock certificates for New Regions stock certificates, you will
receive, without interest, any dividends or distributions with a record date
after the effective time of the merger and payable with respect to your shares,
as well as any dividends with respect to Regions common stock or Union Planters
common stock declared before the effective time of the merger but unpaid.
If your Regions or Union Planters stock certificate has been lost, stolen
or destroyed you may receive a New Regions stock certificate upon the making of
an affidavit of that fact. New Regions may require you to post a bond in a
reasonable amount as an indemnity against any claim that may be made against New
Regions with respect to the lost, stolen or destroyed Regions or Union Planters
stock certificate.
After completion of the merger, there will be no further transfers on the
stock transfer books of Regions or Union Planters.
None of Regions, Union Planters or New Regions, nor any other person, will
be liable to any former holder of Union Planters common stock or Regions common
stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws. For a description of the
New Regions common stock and a description of the differences between the rights
of the holders of Regions common stock and Union Planters common stock, on the
one hand, and holders of New Regions common stock, on the other hand, see
"COMPARISON OF STOCKHOLDERS' RIGHTS."
FRACTIONAL SHARES
New Regions will not issue any fractional shares of New Regions common
stock. Instead, a Regions stockholder who would otherwise have received a
fraction of a share of New Regions common stock will receive an amount of cash
equal to the fraction of a share of New Regions common stock to which such
holder would otherwise be entitled multiplied by the closing sale price per
share of Regions common stock
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on the trading day immediately preceding the completion of the merger as
reported on the New York Stock Exchange, Inc. Composite Transactions Reporting
System and divided by the Regions exchange ratio.
PUBLIC TRADING MARKETS
Regions common stock is currently listed on the New York Stock Exchange
under the symbol "RF." Union Planters common stock is currently listed on the
New York Stock Exchange under the symbol "UPC." Upon completion of the merger,
Regions common stock and Union Planters common stock will be delisted from the
New York Stock Exchange and deregistered under the Securities Exchange Act of
1934, as amended. The newly issued New Regions common stock issuable pursuant to
the merger agreement will be listed on the New York Stock Exchange and is
expected to trade under the symbol "RF."
The shares of New Regions common stock to be issued in connection with the
merger will be freely transferable under the applicable securities laws, except
for shares issued to any stockholder who may be deemed to be an affiliate of
Regions or Union Planters, as discussed in "THE MERGER AGREEMENT -- Resales of
New Regions Stock by Affiliates."
See "STOCK REPURCHASES" for a description of Regions' and Union Planters'
public announcements regarding repurchasing their respective shares of common
stock.
NEW REGIONS DIVIDENDS
New Regions stockholders will be entitled to receive dividends when and if
declared by the New Regions board of directors out of funds legally available
for dividends. New Regions currently intends to pay a cash dividend of $0.333
per share per quarter following the merger, which is consistent with the current
dividend rate paid by Regions and Union Planters. The New Regions board of
directors will periodically consider the payment of dividends, taking into
account New Regions' financial condition and level of net income, New Regions'
future prospects, economic conditions, industry practices and other factors,
including applicable banking laws and regulations. Until the merger is
completed, Regions is restricted by the merger agreement from declaring
dividends of more than $0.4116 per share per quarter and Union Planters is
restricted from declaring dividends of more than $0.3334 per share per quarter.
ABSENCE OF APPRAISAL RIGHTS
Appraisal rights are statutory rights that enable stockholders who object
to extraordinary transactions, such as mergers, to demand that the corporation
pay the fair value for their shares as determined by a court in a judicial
proceeding instead of receiving the consideration offered to stockholders in
connection with the extraordinary transaction. Appraisal rights are not
available in all circumstances, and exceptions to such rights are set forth in
the laws of Delaware and Tennessee, which are the states of incorporation of
Regions and Union Planters, respectively. These exceptions are applicable with
respect to the rights of Regions stockholders and Union Planters shareholders in
the merger.
Neither Regions stockholders nor Union Planters shareholders are entitled
to appraisal rights under Delaware and Tennessee law, respectively, in
connection with the merger because shares of Regions common stock and shares of
Union Planters common stock are listed on the New York Stock Exchange.
REGULATORY APPROVALS REQUIRED FOR THE MERGER
We have agreed to use our reasonable best efforts to obtain the regulatory
approvals required to consummate the transactions contemplated by the merger
agreement. We refer to these approvals, along with the expiration of any
statutory waiting periods related to these approvals, as the "requisite
regulatory approvals." These include approval from the Board of Governors of the
Federal Reserve System, or Federal Reserve Board and various other federal and
state regulatory authorities. We filed our application with the Federal Reserve
Board on February 20, 2004. In addition to that application, we have filed or
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intend promptly to complete the filing of applications and notifications to
obtain the other requisite regulatory approvals.
The merger cannot proceed in the absence of the requisite regulatory
approvals. We cannot assure you as to whether or when the requisite regulatory
approvals will be obtained, and, if obtained, we cannot assure you as to the
date of receipt of any of these approvals or the absence of any litigation
challenging them. Likewise, we cannot assure you that the U.S. Department of
Justice, or "DOJ", or a state attorney general will not attempt to challenge the
merger on antitrust grounds, or, if such a challenge is made, as to the result
of that challenge. Regions and Union Planters believe that the merger does not
raise substantial antitrust or other significant regulatory concerns and that
they will be able to obtain all requisite regulatory approvals on a timely basis
without the imposition of any condition that would have a material adverse
effect on Regions or Union Planters.
We are not aware of any other material governmental approvals or actions
that are required prior to the parties' completion of the merger other than
those described below. We presently contemplate that if any additional
governmental approvals or actions are required, these approvals or actions will
be sought. However, we cannot assure you that any of these additional approvals
or actions will be obtained.
Federal Reserve Board. Completion of the merger is subject to approval by
the Federal Reserve Board pursuant to Sections 3 and 4 of the Bank Holding
Company Act of 1956, as amended. On February 20, 2004, we filed the required
application and notification with the Federal Reserve Board.
The Federal Reserve Board is prohibited from approving any transaction
under the applicable statutes that (1) would result in a monopoly or be in
furtherance of any combination or conspiracy to monopolize or to attempt to
monopolize the business of banking in any part of the United States or (2) whose
effect in any section of the United States may be to substantially lessen
competition, or to tend to create a monopoly or result in a restraint of trade,
unless the Federal Reserve Board finds that the anti-competitive effects of the
transaction are clearly outweighed in the public interest by the probable effect
of the transaction in meeting the convenience and needs of the communities to be
served.
In addition, in reviewing the merger, the Federal Reserve Board will
consider the financial and managerial resources of Regions and Union Planters
and their subsidiary banks, the convenience and needs of the communities to be
served, applicable overall capital and safety and soundness standards, the
effectiveness of each company in combating money laundering activities,
including in overseas branches, as well as Regions' and Union Planters'
regulatory status, including legal and regulatory compliance.
Under the Community Reinvestment Act of 1977, as amended, the Federal
Reserve Board will take into account our records of performance in meeting the
credit needs of our entire community, including low- and moderate-income
neighborhoods, served by our companies. Each of our banking subsidiaries has
received a "satisfactory" rating from its federal regulator in its most recent
Community Reinvestment Act examination with respect to this criterion.
Furthermore, the Bank Holding Company Act and Federal Reserve Board
regulations require published notice of, and the opportunity for public comment
on, the application submitted by New Regions for approval of the merger, and
authorize the Federal Reserve Board to hold a public hearing or meeting if the
Federal Reserve Board determines that a hearing or meeting would be appropriate.
Any hearing or meeting or comments provided by third parties could prolong the
period during which the application is under review by the Federal Reserve
Board.
Pursuant to the Bank Holding Company Act, a transaction approved by the
Federal Reserve Board may not be consummated until 30 days after such approval
is received, during which time the DOJ may challenge the merger on antitrust
grounds. With the approval of the Federal Reserve Board and the concurrence of
the DOJ, the waiting period may be reduced to no less than 15 days. The
commencement of an antitrust action would stay the effectiveness of such an
approval unless a court specifically ordered otherwise. In reviewing the merger,
the DOJ could analyze the merger's effect on competition differently than the
Federal Reserve Board, and thus it is possible that the DOJ could reach a
different conclusion than the Federal Reserve Board regarding the merger's
effects on competition. A determination by the
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DOJ not to object to the merger may not prevent the filing of antitrust actions
by private persons or state attorneys general.
Department of Justice, Federal Trade Commission and Other Antitrust
Authorities. The merger is subject to review by the DOJ or the United States
Federal Trade Commission, or "FTC", to determine whether it complies with
applicable antitrust law. Under the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, and its related rules, the merger cannot be
completed until both Regions and Union Planters file notification of the
proposed transaction with the DOJ and the FTC and the specified waiting periods
have expired or been terminated. Each of Regions and Union Planters has filed
its notification of the proposed transaction with the DOJ and the FTC. On April
8, 2004, the FTC granted early termination of the waiting period under the
Hart-Scott-Rodino Act with respect to the merger.
At any time before or after the acquisition is completed, the DOJ or the
FTC could take action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition or
seeking divestiture of substantial assets of Regions or Union Planters or their
subsidiaries. Private parties also may seek to take legal action under the
antitrust laws under some circumstances. Based upon an examination of
information available relating to the businesses in which the companies are
engaged, Regions and Union Planters believe that the completion of the merger
will not violate U.S. antitrust laws. However, Regions and Union Planters can
give no assurance that a challenge to the merger on antitrust grounds will not
be made, or, if such a challenge is made, that Regions and Union Planters will
prevail.
In addition, the merger may be reviewed by the state attorneys general in
the various states in which Regions and Union Planters operate. While Regions
and Union Planters believe there are substantial arguments to the contrary,
these authorities may claim that there is authority, under the applicable state
and federal antitrust laws and regulations, to investigate and/or disapprove the
merger under the circumstances and based upon the review set forth in applicable
state laws and regulations. There can be no assurance that one or more state
attorneys general will not attempt to file and antitrust action to challenge the
merger.
Other Regulatory Authorities. Applications or notifications are being
filed with various state and/or foreign regulatory authorities and
self-regulatory organizations, including the National Association of Securities
Dealers and the New York Stock Exchange, in connection with acquisitions or
changes in control of subsidiaries of Regions and/or Union Planters, including
banks, broker-dealers and mortgage lenders, that may be deemed to result from
the merger. Applications and notifications for insurance companies are being
filed in certain states in connection with the merger. In addition, the merger
may be reviewed by the attorneys general in the various states in which Regions
and Union Planters own banking subsidiaries. These authorities may be empowered
under applicable state laws and regulations to investigate or disapprove the
merger under the circumstances and based upon the review provided for in
applicable state laws and regulations.
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THE MERGER AGREEMENT
The following describes aspects of the proposed merger, including material
provisions of the merger agreement. The following description of the merger
agreement is subject, and qualified in its entirety by reference, to the merger
agreement, which is attached as Appendix A to this document and is incorporated
by reference into this document. We urge you to read the merger agreement
carefully and in its entirety.
TERMS OF THE MERGER
The Regions Merger. As the first step of the merger, Regions will merge
with and into New Regions. We refer to this merger as the "Regions merger." New
Regions will be the surviving corporation and will continue its corporate
existence under the laws of the State of Delaware under the name "Regions
Financial Corporation," and the separate corporate existence of Regions will
terminate. In the Regions merger, each share of Regions common stock outstanding
will be automatically converted into the right to receive 1.2346 shares of New
Regions common stock. All shares of Regions common stock converted into shares
of New Regions common stock will automatically be cancelled and retired as of
the effective time of the Regions merger. In addition, any shares of Regions
common stock held by either Regions or Union Planters, or any of their
respective subsidiaries, will be cancelled and retired.
The Union Planters Merger. As the second step of the merger, which will
occur immediately following the Regions merger, Union Planters will merge with
and into New Regions. We refer to this merger as the "Union Planters merger" and
the two mergers collectively as "the merger." New Regions will be the surviving
corporation, and will continue its corporate existence under the laws of the
State of Delaware, and the separate corporate existence of Union Planters will
terminate. In the Union Planters merger, each share of Union Planters common
stock outstanding (including the preferred stock purchase rights issued pursuant
to the Union Planters' rights plan) will be converted into the right to receive
one share of New Regions common stock. All shares of Union Planters common stock
converted into shares of New Regions common stock will automatically be
cancelled and retired as of the effective time of the Union Planters merger. In
addition, any shares of Union Planters common stock held by either Regions or
Union Planters, or any of their respective subsidiaries, will be cancelled and
retired.
TREATMENT OF OPTIONS
Each stock option or other rights to acquire Regions common stock granted
under Regions stock option plans, whether vested or unvested, that is
outstanding and unexercised immediately prior to the Regions merger will be
converted automatically into, and will become, a stock option to purchase New
Regions common stock, and will continue to be governed by the terms of the
Regions option plans. The Regions option plans will be assumed by New Regions.
In each case, (1) the number of shares of New Regions common stock subject to
the New Regions option will be equal to the product of the number of shares of
Regions common stock subject to the Regions option and the exchange ratio,
rounded to the nearest whole share, and (2) the exercise price per share of New
Regions common stock subject to the New Regions option will be equal to the
exercise price per share of Regions common stock under the Regions option
divided by the exchange ratio, rounded to the nearest whole cent. The duration
and other terms of each such Regions option will be substantially the same as
the prior Regions option. In any event, options that are incentive stock options
under the Internal Revenue Code will be adjusted in the manner prescribed by
law.
Each stock option or other rights to acquire Union Planters common stock
granted under Union Planters stock option and incentive plans, whether vested or
unvested, outstanding and unexercised immediately prior to the Union Planters
merger will be converted automatically into, and will become, a stock option to
purchase New Regions common stock and will continue to be governed by the terms
of the Union Planters stock plans. The Union Planters stock plans will be
assumed by New Regions. In each case, the number of shares of New Regions common
stock subject to the New Regions option will be equal to the number of shares of
Union Planters common stock subject to the Union Planters option, and the
exercise price per share of New Regions common stock subject to the New Regions
option will be
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equal to the exercise price per share of Union Planters common stock under the
Union Planters option. The duration and other terms of each such New Regions
option will be substantially the same as the prior Union Planters option. In any
event, options that are incentive stock options under the Internal Revenue Code
will be adjusted in the manner prescribed by law.
As soon as practicable following the completion of the merger, New Regions
has agreed to file a registration statement to register the issuance of the
shares of New Regions common stock upon the exercise of the assumed Regions and
Union Planters stock options and other rights.
FRACTIONAL SHARES
New Regions will not issue any fractional shares of New Regions common
stock. Instead, a Regions stockholder who would otherwise have received a
fraction of a share of New Regions common stock will receive an amount of cash
equal to the fraction of a share of New Regions common stock to which such
holder would otherwise be entitled multiplied by the closing sale price per
share of Regions common stock on the trading day immediately preceding the
completion of the merger as reported on the New York Stock Exchange, Inc.
Composite Transactions Reporting System and divided by the Regions exchange
ratio.
CLOSING AND EFFECTIVE TIME OF THE MERGER
The merger will be completed only if all of the following occur:
- the merger agreement is adopted by Regions stockholders;
- the merger agreement is approved by Union Planters shareholders;
- we obtain all required consents and approvals; and
- all other conditions to the merger discussed in this document and the
merger agreement are either satisfied or waived.
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS
The merger agreement contains reciprocal representations and warranties of
Regions, Union Planters and New Regions relating to their respective businesses
that are customary in merger transactions. With the exception of specified
representations that must be true and correct in all respects or all material
respects, no representation will be deemed untrue or incorrect as a consequence
of the existence or absence of any fact or event unless that fact or event has
had or is reasonably likely to have a material adverse effect on the company
making the representation.
Each of Regions, Union Planters and New Regions has made customary
agreements that place restrictions on it and its subsidiaries until the
effective time of the merger. In general, Regions, Union Planters and New
Regions and their respective subsidiaries are required to use their reasonable
best efforts to preserve intact their business organizations, assets, employees
and relationships with customers, suppliers, employees and business associates.
In addition, Regions, Union Planters and New Regions and their respective
subsidiaries are required to conduct their business in the ordinary course and
take no action that would adversely affect the ability of any party to obtain
any required consents, to perform its covenants and agreements under the merger
agreement or to complete the merger on a timely basis. Regions, Union Planters
and New Regions have also agreed to various specific restrictions relating to
the conduct of their respective businesses, including restrictions with respect
to selling stock of it or its subsidiaries, disposing or encumbering property or
assets, authorizing capital expenditures, incurring debt, changing compensation,
benefits or stock option plans of its employees and settling material claims and
litigation.
The merger agreement also contains mutual agreements relating to the
preparation of this joint proxy statement/prospectus, the holding of meetings of
Regions stockholders and Union Planters shareholders,
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access to information of the other party and public announcements with respect
to the transactions contemplated by the merger agreement.
DECLARATION AND PAYMENT OF DIVIDENDS
We have agreed that, until the merger is completed, we will each only pay
regular quarterly dividends or distributions. Under the merger agreement, prior
to the merger, Regions' dividends may not exceed $0.4116 per share per quarter
and Union Planters' dividends may not exceed $0.3334 per share per quarter. The
parties have also agreed to cause their dividend payment schedules to be the
same. The intent of this action is to coordinate our declaration of dividends so
that holders of Regions common stock or Union Planters common stock will not
receive two dividends, or fail to receive one dividend, for any quarter with
respect to their Regions common stock and/or Union Planters common stock and any
New Regions common stock any such holder receives in the merger.
REDEMPTION OF UNION PLANTERS SERIES E PREFERRED STOCK
On March 30, 2004, Union Planters redeemed its Series E preferred stock, as
required under the terms of the merger agreement.
AGREEMENT NOT TO SOLICIT OTHER OFFERS
Each of Regions and Union Planters has agreed that it will not, and will
cause its subsidiaries and its officers, directors, employees and agents not to:
- initiate, solicit, encourage or knowingly facilitate any inquiries or
proposals relating to any "acquisition proposal" (as defined below);
- engage or participate in any negotiations concerning, or provide any
confidential or nonpublic information or data to, or have or participate
in any discussions with, any person relating to an acquisition proposal;
or
- in the case of Union Planters, waive any provisions of or amend its
rights plan.
Under the merger agreement, however, if either Regions or Union Planters
receives an unsolicited bona fide written acquisition proposal, the recipient of
such proposal may furnish nonpublic information or data and participate in
negotiations or discussions to the extent that its board of directors
determines, in good faith, after receiving the advice of its outside financial
and legal advisors, that the failure to do so would violate its fiduciary duties
under applicable law.
Each of Regions and Union Planters has agreed to notify the other party
within one day of any such acquisition proposal, including describing the
substance, material terms and conditions of the acquisition proposal and
providing updates of any developments with respect to an acquisition proposal.
For purposes of the merger agreement, an "acquisition proposal" means,
other than transactions contemplated by the merger agreement, any proposal or
offer relating to the following involving Regions or Union Planters or any of
their material subsidiaries:
- any merger, consolidation, share exchange, business combination,
reorganization, recapitalization, liquidation, dissolution or other
similar transaction involving a party or any of its subsidiaries whose
assets, individually or in the aggregate, constitute more than 30% of the
consolidated assets of the party;
- any acquisition or purchase of 25% or more of the consolidated assets of
a party and its subsidiaries or 25% or more of any class of equity or
voting securities of a party or its subsidiaries whose assets,
individually or in the aggregate, constitute more than 25% of the
consolidated assets of the party; or
- any tender offer or exchange offer that, if consummated, would result in
such third party beneficially owning 25% or more of any class of equity
or voting securities of a party or its
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subsidiaries whose assets, individually or in the aggregate, constitute
more than 25% of the consolidated assets of the party.
CORPORATE GOVERNANCE
Unless otherwise determined by the affirmative vote of 66 2/3% of the full
New Regions board of directors:
- The headquarters of New Regions and its lead subsidiary bank will be
located in Birmingham, Alabama after the merger.
- New Regions' banking business unit will be headquartered in Birmingham,
Alabama.
- New Regions' broker-dealer and investment services and mortgage banking
business units will be headquartered in Memphis, Tennessee.
- During each year following the merger, the board of directors of New
Regions will hold at least two regular meetings in Birmingham, Alabama
and at least two regular meetings in Memphis, Tennessee.
In general, the New Regions certificate of incorporation and bylaws will be
substantially similar to the Regions certificate of incorporation and bylaws,
with only limited exceptions contemplated by the merger agreement or otherwise
agreed to by Regions and Union Planters. The New Regions bylaws provide that:
- Initially, Carl E. Jones, Jr., current Chairman of the Board, President
and Chief Executive Officer of Regions, will be Chairman of the Board and
Chief Executive Officer of New Regions, and that Jackson W. Moore,
current Chairman, President and Chief Executive Officer of Union
Planters, will be President and Chief Executive Officer-Designate of New
Regions. Mr. Moore will succeed Mr. Jones as Chief Executive Officer on
July 1, 2005 and as Chairman on July 1, 2006 (or such earlier time as Mr.
Jones ceases to serve in either of such positions).
- Following the merger, the board of directors of New Regions will be
comprised of 13 former Regions directors and 13 former Union Planters
directors. The former Regions directors and the former Union Planters
directors will be apportioned among the three classes of the board of
directors of New Regions in a manner as nearly equal as possible.
- Until June 30, 2007, vacancies on the board of directors will be filled
by a mechanism by which a majority of former Regions directors on the New
Regions board fill Regions director vacancies and a majority of former
Union Planters directors on the New Regions board fill Union Planters
director vacancies.
- Changes to succession or other corporate governance provisions described
above must be approved by the affirmative vote of 66 2/3% of the full
board of directors of New Regions.
EXPENSES AND FEES
In general, each party will be responsible for all expenses incurred by it
in connection with the negotiation and completion of the transactions
contemplated by the merger agreement. However, Regions and Union Planters will
each pay one-half of the costs incurred in connection with the preparation
(including printing) of this joint proxy statement/prospectus.
RESTRUCTURING EFFORTS
If either Regions fails to obtain its stockholders' approval or Union
Planters fails to obtain its shareholders' approval, each party is required to
use its reasonable best efforts to negotiate a restructuring of the merger,
without any obligation to alter the amount or kind of consideration in a way
that would be detrimental to it or its stockholders or shareholders, and/or
resubmit the transaction for stockholder or shareholder approval.
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CONDITIONS TO COMPLETION OF THE MERGER
Our respective obligations to consummate the merger are subject to the
fulfillment or waiver of certain conditions, including:
- the adoption or approval of the merger agreement by the holders of a
majority of the outstanding shares of Regions common stock and Union
Planters common stock;
- the receipt and effectiveness of all governmental and other approvals,
registrations and consents, and the expiration of all related waiting
periods required to consummate the merger;
- the absence of any law, statute, regulation, judgment, decree, injunction
or other order in effect by any court or other governmental entity that
prohibits completion of the transactions contemplated by the merger
agreement;
- the registration statement with respect to the New Regions common stock
to be issued pursuant to the merger has become effective under the
Securities Act and no stop order suspending the effectiveness of the
registration statement has been issued and no proceedings for that
purpose have been initiated or threatened by the SEC or any other
governmental entity;
- the shares of New Regions common stock to be issued in connection with
the merger have been authorized for listing on the New York Stock
Exchange;
- the truth and correctness of the representations and warranties of each
of us in the merger agreement, subject to certain specified exceptions,
and the performance by each of us in all material respects of our
obligations under the merger agreement and the receipt by each of us of
certificates from the other to that effect; and
- the receipt by each of Regions and Union Planters of a legal opinion with
respect to the U.S. federal income tax consequences of the merger.
We cannot provide assurance as to when or if all of the conditions to the
merger can or will be satisfied or waived by the appropriate party. As of the
date of this document, we have no reason to believe that any of these conditions
will not be satisfied.
POSSIBLE ALTERNATIVE MERGER STRUCTURE
The merger agreement provides that Regions and Union Planters may mutually
agree to change the structure of the merger. However, no change may be made
that:
- alters or changes the number of shares of New Regions common stock into
which shares of Regions common stock or Union Planters common stock will
be converted in the merger;
- adversely affects the tax treatment of Regions or Union Planters or their
respective stockholders or shareholders pursuant to the merger agreement;
or
- materially impedes or delays completion of the merger.
AMENDMENT, WAIVER AND TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be amended or modified, in accordance with
applicable law, by our written agreement. The provisions of the merger agreement
may be waived by the party benefited by those provisions.
The merger agreement may be terminated, and the merger abandoned, by us at
any time before the merger is scheduled to be completed if both of our boards of
directors vote to do so. In addition, the merger agreement may be terminated,
and the merger abandoned, by either of our boards of directors if:
- the merger is not completed by December 31, 2004, unless the failure to
consummate the merger is due to the failure to comply with any provision
contained in the merger agreement by the terminating party;
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- any governmental approval, consent or authorization required for the
completion of the merger is denied by final nonappealable action of such
authority;
- the board of directors of the other party failed to recommend, or
adversely modified its recommendation of, the merger agreement, failed to
comply with the covenants relating to the stockholders meetings, or
recommended a third party acquisition proposal;
- if either Regions stockholders or Union Planters shareholders vote
against the merger proposal, and the non-terminating party has engaged in
a substantial bad faith breach of its obligation to use its reasonable
best efforts to seek to restructure and/or resubmit the merger for
approval by its stockholders or shareholders; or
- the non-terminating party materially breaches any representation,
warranty, covenant or agreement contained in the merger agreement that
causes the failure of specified conditions to closing to occur and such
breach cannot be or has not been cured within 30 days after written
notice of such breach.
Effect of Termination. If the merger agreement is terminated, it will
become void and there will be no liability on the part of Regions or Union
Planters, except that:
- termination will not relieve a breaching party from liability for any
uncured willful breach giving rise to such termination;
- Regions and Union Planters, and their respective representatives, will
keep confidential and will not use any information obtained from the
other party for any purpose unrelated to the completion of the
transactions contemplated by the merger agreement. Regions and Union
Planters will also promptly return or destroy all copies of documents
containing confidential information and data regarding the other party;
and
- Regions or Union Planters will, under limited circumstances, pay the
termination fee described below.
Termination Fee. A termination fee is payable by Regions or Union Planters
in three different situations, as described below:
- If (1) the merger agreement is terminated because the merger is not
completed by December 31, 2004, the non-terminating party's board of
directors has failed to recommend the transaction or adversely changed
its recommendation or otherwise failed to comply with its stockholder
meeting and non-solicitation obligations under the merger agreement, (2)
the required stockholder vote is not obtained, and (3) a competing
acquisition proposal for the non-terminating party was announced before
such stockholder vote, then the termination fee will become payable to
the terminating party if the non-terminating party enters into a
definitive agreement or letter of intent with respect to, or consummates,
an acquisition proposal with a third party within 12 months of
termination.
- If (1) the merger agreement is terminated because the merger has not been
consummated by December 31, 2004 or because the non-terminating party has
not restructured the transaction or resubmitted the transaction to
stockholders in good faith, (2) a competing acquisition proposal for the
non-terminating party was announced before the agreement was terminated,
and (3) following the announcement of the competing proposal the
non-terminating party breached its agreement to restructure or resubmit
the transaction, or intentionally breached any representations,
warranties, covenants or agreements that cause the transaction not to be
consummated by December 31, 2004, then the termination fee will become
payable to the terminating party if and when the non-terminating party
enters into a definitive agreement or letter of intent with respect to,
or consummates, an acquisition proposal with a third party within 12
months of termination.
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- If the merger agreement is terminated because the non-terminating party's
board of directors has recommended or endorsed a competing acquisition
proposal, then the termination fee will become payable to the terminating
party upon termination.
The amount of the fee would be $320 million if paid by Regions or $225
million if paid by Union Planters. This difference in amount generally reflects
the respective market capitalizations of Regions and Union Planters. A party is
obligated to pay only one termination fee.
RESALES OF NEW REGIONS STOCK BY AFFILIATES
Affiliates of Regions and Union Planters, as defined under Rule 145 under
the Securities Act, generally may not sell their shares of New Regions common
stock acquired in the merger except pursuant to an effective registration
statement under the Securities Act or an applicable exemption from the
registration requirements of the Securities Act, including Rules 144 and 145
promulgated by the SEC under the Securities Act. Affiliates include directors,
executive officers, and beneficial owners of 10% or more of any class of capital
stock.
Pursuant to the merger agreement, Regions and Union Planters have provided
New Regions with a list of the persons who may be deemed to be affiliates of
Regions and Union Planters. Regions and Union Planters have also delivered a
letter of agreement from each of these persons by which that person agrees,
among other things, not to offer to sell, transfer or otherwise dispose of any
of the shares of New Regions common stock distributed to him or her pursuant to
the merger except in compliance with Rule 144 and Rule 145 under the Securities
Act, in a transaction that is otherwise exempt from the registration
requirements of the Securities Act, or in an offering registered under the
Securities Act. New Regions may place restrictive legends on its common stock
certificates that are issued to persons who are deemed to be affiliates of
Regions and Union Planters under the Securities Act.
This document does not cover any resales of New Regions common stock
received in the merger by any person who may be deemed an affiliate of Regions
and Union Planters.
NEW REGIONS EMPLOYEE BENEFIT PLANS
The merger agreement provides that after the completion of the merger, New
Regions may elect to provide compensation and benefits designed to cover all
similarly situated employees of New Regions, including employees of Regions and
Union Planters who became employees of New Regions after the merger, on a
uniform basis. Alternatively, New Regions may maintain for the benefit of such
employees the compensation and benefit plans maintained by Regions and Union
Planters, respectively, immediately prior to the completion of the merger.
The new plans instituted by New Regions will recognize, for purposes of
participation, vesting and benefit accrual (but not for benefit accrual with
respect to any plan in which such credit would result in a duplication of
benefits) all service with Regions and Union Planters as service with New
Regions. This recognition will not cause New Regions' tax-qualified defined
benefit pension plan (which is not open to new participants) to be opened to new
participants.
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ACCOUNTING TREATMENT
The merger will be accounted for as a "purchase" by Regions of Union
Planters, as that term is used under GAAP, for accounting and financial
reporting purposes. As a result, the historical financial statements of Regions
will become the historical financial statements of New Regions. The assets
(including identifiable intangible assets) and liabilities (including executory
contracts and other commitments) of Union Planters as of the effective time of
the merger will be recorded at their respective fair values and added to those
of Regions. Any excess of purchase price over the net fair values of Union
Planters assets and liabilities is recorded as goodwill (excess purchase price).
Financial statements of New Regions issued after the merger will reflect such
fair values and will not be restated retroactively to reflect the historical
financial position or results of operations of Union Planters. The results of
operations of Union Planters will be included in the results of operations of
New Regions beginning on the effective date of the merger. In the historical
financial statements of New Regions, all per share amounts related to periods
prior to the merger will be restated to give retroactive recognition to the
effect of 1.2346 shares of New Regions common stock being issued for each share
of Regions common stock.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of the material anticipated United States
federal income tax consequences of the merger to Regions stockholders and Union
Planters shareholders who hold their common stock as a capital asset. The
summary is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations thereunder, and published
administrative rulings and court decisions in effect as of the date hereof, all
of which are subject to change at any time, possibly with retroactive effect.
This summary is not a complete description of all of the consequences of the
merger and, in particular, may not address United States federal income tax
considerations applicable to stockholders subject to special treatment under
United States federal income tax law (including, for example, persons who are
not United States persons for United States federal income tax purposes,
financial institutions, dealers in securities, stockholders who received their
shares upon the exercise of an employee stock option or right or otherwise as
compensation and holders who hold Regions common stock or Union Planters common
stock as part of a hedge, straddle or conversion transaction). In addition, no
information is provided herein with respect to the tax consequences of the
merger under applicable state, local or foreign laws.
REGIONS STOCKHOLDERS AND UNION PLANTERS SHAREHOLDERS ARE URGED TO CONSULT
WITH THEIR TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF THE MERGER IN THEIR
PARTICULAR CIRCUMSTANCES, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER
THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
GENERAL
In connection with the filing of the registration statement, each of
Regions and Union Planters has received an opinion of Alston & Bird LLP, tax
counsel to Regions and Union Planters, dated the date hereof, addressing the
U.S. federal income tax consequences of the merger described below. Such opinion
has been rendered on the basis of facts, representations and assumptions set
forth or referred to in such opinion that are consistent with the expected state
of facts existing at the effective time of the Regions merger and the Union
Planters merger, as applicable. In rendering this opinion, Alston & Bird LLP has
required and relied upon factual representations contained in certificates of
officers of Regions, Union Planters and New Regions. The opinion is to the
effect that, for United States federal income tax purposes:
- Each of the Regions merger and the Union Planters merger will constitute
a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, Regions and New Regions will each be a party to the
reorganization within the meaning of Section 368(b) of the Internal
Revenue Code in respect of the Regions merger, and New Regions and Union
Planters will each be a party to the reorganization within the meaning of
Section 368(b) of the Internal Revenue Code in respect of the Union
Planters merger;
- No gain or loss will be recognized by Regions or New Regions as a result
of the Regions merger, or by New Regions or Union Planters as a result of
the Union Planters merger;
- No gain or loss will be recognized by the Regions stockholders who
receive New Regions common stock for their Regions common stock pursuant
to the Regions merger (except with respect to cash received instead of a
fractional share interest in New Regions common stock); and
- No gain or loss will be recognized by the holders of Union Planters
common stock who exchange their Union Planters common stock solely for
New Regions common stock pursuant to the Union Planters merger.
The respective obligations of Regions and Union Planters to consummate the
merger are conditioned upon the receipt by each of a further opinion of Alston &
Bird LLP dated the date of the closing of the merger and as further described
under "--Conditions to Completion of the Merger." In the event that either
Regions or Union Planters fails to receive such opinion, Regions or Union
Planters determines to waive its decision to consummate the merger relating
thereto, and the material U.S. federal income tax consequences to Regions
stockholders or Union Planters shareholders, as the case may be, are materially
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different from those described above, Regions or Union Planters, as the case may
be, will resolicit the Regions stockholders or the Union Planters shareholders,
respectively, prior to proceeding with completion of the merger. None of the tax
opinions to be delivered to the parties in connection with the merger as
described herein are binding on the Internal Revenue Service (the "IRS") or the
courts, and the parties do not intend to request a ruling from the IRS with
respect to the merger. Accordingly, there can be no assurance that the IRS will
not challenge the conclusions reflected in such opinions or that a court will
not sustain such challenge.
Based upon the current ruling position of the IRS, cash received by a
Regions stockholder instead of a fractional share interest in New Regions common
stock will be treated as received in redemption of such fractional share
interest, and a Regions stockholder should generally recognize capital gain or
loss for United States federal income tax purposes measured by the difference
between the amount of cash received and the portion of the tax basis of the
share of Regions common stock allocable to such fractional share interest. Any
such capital gain or loss will be a long-term capital gain or loss if the
holding period for such share of Regions common stock is greater than one year
at the effective time of the Regions merger. In the case of individual Regions
stockholders, any such long-term capital gain will be taxed at a maximum rate of
15%.
The aggregate tax basis of the shares of New Regions common stock received
by a Regions stockholder in the Regions merger, or by a Union Planters
shareholder in the Union Planters merger (including a fractional share interest
deemed received in the Regions merger and redeemed as described above) will be
the same as the stockholder's aggregate tax basis in the Regions common stock or
Union Planters common stock exchanged therefor. The holding period of a share of
New Regions common stock received in the Regions merger or the Union Planters
merger (including a fractional share interest deemed received in the Regions
merger and redeemed as described above) will include the holder's holding period
in the Regions common stock or the Union Planters common stock surrendered in
exchange therefor.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments in respect of Regions common stock or Union Planters common stock
may be subject to information reporting to the IRS and to a 28% backup
withholding tax. Backup withholding will not apply, however, to a payment to a
holder of Regions common stock or Union Planters common stock or other payee if
such stockholder or payee completes and signs the substitute Form W-9 that will
be included as part of the transmittal letter, or otherwise proves to the
combined company and the exchange agent that such stockholder or payee is exempt
from backup withholding.
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DESCRIPTION OF NEW REGIONS CAPITAL STOCK
In this section, we describe the material features and rights of the New
Regions capital stock after the merger. This summary is qualified in its
entirety by reference to applicable Delaware law, New Regions' certificate of
incorporation and New Regions' bylaws, as described below. See "WHERE YOU CAN
FIND MORE INFORMATION."
GENERAL
New Regions is currently authorized to issue 1.5 billion shares of common
stock having a par value of $0.01 per share and 10 million shares of preferred
stock having a par value of $1.00 per share. Each share of New Regions common
stock has the same relative rights as, and is identical in all respects to, each
other share of New Regions common stock.
As of [--], 2004, there were two shares of common stock of New Regions
outstanding, with one share held by each of Regions and Union Planters, no
shares of common stock of New Regions held in treasury and no shares of common
stock of New Regions reserved for issuance pursuant to employee benefit plans.
After giving effect to the merger on a pro forma basis, approximately [--]
million shares of New Regions common stock will be outstanding.
COMMON STOCK
Dividends. Subject to certain regulatory restrictions, New Regions can pay
dividends out of statutory surplus or from certain net profits if, as and when
declared by its board of directors. Funds for New Regions dividends will be
generally provided through dividends from its subsidiary institutions. The
payment of dividends by New Regions' subsidiary institutions is subject to
limitations which are imposed by law and applicable regulation. See "THE
MERGER -- New Regions Dividends." The holders of common stock of New Regions are
entitled to receive and share equally in such dividends as may be declared by
the board of directors of New Regions out of funds legally available therefor.
If New Regions issues preferred stock, the holders thereof may have a priority
over the holders of the common stock with respect to dividends.
Voting Rights. The holders of common stock of New Regions possess
exclusive voting rights in New Regions. They elect the New Regions board of
directors and act on such other matters as are required to be presented to them
under Delaware law, New Regions' organizational documents or as are otherwise
presented to them by the board of directors. Each holder of common stock is
entitled to one vote per share and does not have any right to cumulate votes in
the election of directors. If New Regions issues preferred stock, holders of the
preferred stock may also possess voting rights. Specified matters in New
Regions' certificate of incorporation require a 75% stockholder vote. See
"COMPARISON OF STOCKHOLDERS' RIGHTS -- Amendment of Certificate of Incorporation
and Bylaws" and "-- Stockholder Approval of Business Combinations with
Interested Stockholders."
Liquidation. In the event of liquidation, dissolution or winding up of New
Regions, the holders of its common stock would be entitled to receive, after
payment or provision for payment of all of its debts and liabilities, all of the
assets of New Regions available for distribution. If preferred stock is issued,
the holders thereof may have a priority over the holders of the New Regions
common stock in the event of liquidation or dissolution.
Preemptive Rights. Holders of New Regions common stock are not entitled to
preemptive rights with respect to any shares which may be issued.
PREFERRED STOCK
Shares of New Regions preferred stock may be issued with such designations,
powers, preferences and rights as the New Regions board of directors may from
time to time determine. The New Regions board of directors can, without
stockholder approval, issue preferred stock with voting, dividend, liquidation
and
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conversion rights which could dilute the voting strength of the holders of the
common stock and may assist management in impeding an unsolicited takeover or
attempted change in control.
COMPARISON OF STOCKHOLDERS' RIGHTS
GENERAL
Regions is incorporated under the laws of the State of Delaware and Union
Planters is incorporated under the laws of the State of Tennessee. As a result
of the merger, Regions' stockholders and Union Planters' shareholders will
become stockholders of New Regions, which is incorporated under and governed by
the laws of the State of Delaware. Thus, following the merger, the rights of
Regions stockholders and Union Planters shareholders who become New Regions
stockholders in the merger will be governed by the laws of the State of
Delaware.
In addition, following the merger, the rights of Regions stockholders and
Union Planters shareholders will be governed by New Regions' certificate of
incorporation and bylaws. New Regions' certificate of incorporation and bylaws
following the merger will be substantially similar to Regions' certificate of
incorporation and bylaws currently in effect, with limited differences described
below.
Set forth on the following pages is a summary comparison of material
differences between the rights of Regions stockholders under Regions'
certificate of incorporation, bylaws and Delaware law on the one hand, and the
rights of Union Planters shareholders under Union Planters' amended and restated
charter, bylaws and Tennessee law on the other hand. Because New Regions'
certificate of incorporation and bylaws, which will be in effect after the
merger, are substantially similar to Regions' certificate of incorporation and
bylaws currently in effect, in the absence of substantive differences we have
grouped Regions and New Regions under the same heading. We have also described
below the limited differences between the rights of Regions stockholders and New
Regions stockholders. The summary set forth below is not intended to provide a
comprehensive summary of Delaware or Tennessee law or of the companies'
governing documents. This summary is qualified in its entirety by reference to
the full text of New Regions' certificate of incorporation and bylaws, Regions'
certificate of incorporation and bylaws and Union Planters' amended and restated
charter and bylaws.
AUTHORIZED CAPITAL
UNION PLANTERS
The authorized capital stock of Union Planters consists of 300 million
shares of common stock, par value $5.00 per share, and 10 million shares of
preferred stock, without par value. At [--], 2004, [--] shares of Union Planters
common stock were issued, and outstanding, and [--] shares of Union Planters
common stock were held in treasury. No shares of Union Planters preferred stock
were issued and outstanding on [--], 2004.
Union Planters may issue, without a shareholder vote, shares of its
preferred stock, in one or more classes or series. Union Planters' board of
directors may determine, among other things, the distinctive designation and
number of shares comprising a series of preferred stock, the dividend rate or
rates on the shares of such series and the relation of such dividends to the
dividends payable on other classes of stock, whether the shares of such series
shall be convertible into or exchangeable for shares of any other class or
series of Union Planters' capital stock, the voting powers, if any, of such
series, and any other preferences, privileges, and powers of such series.
REGIONS
Regions' certificate of incorporation authorizes 500 million shares of
Regions common stock, par value $0.625 per share, and 5 million shares of
preferred stock, par value $1.00 per share. At [--], 2004, [--] shares of
Regions common stock were issued, including [--] treasury shares, and [--]
shares of Regions' common stock were outstanding. No shares of preferred stock
were issued and outstanding on [--], 2004.
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Regions may issue, without a stockholder vote, shares of its preferred
stock, in one or more classes or series. Regions' board of directors may
determine, among other things, the distinctive designation and number of shares
comprising a series of preferred stock, the dividend rate or rates on the shares
of such series and the relation of such dividends to the dividends payable on
other classes of stock, whether the shares of such series shall be convertible
into or exchangeable for shares of any other class or series of Regions' capital
stock, the voting powers, if any, of such series, and any other preferences,
privileges, and powers of such series. The voting rights of holders of preferred
stock are limited to the lesser of one vote per $100 in liquidation value or one
vote per share when voting as a class with the common stockholders. Holders of
preferred stock are not entitled to vote as a separate class except when the
preferred stock is adversely affected or for election of directors after a
default in the payment of dividends.
NEW REGIONS
New Regions' certificate of incorporation authorizes 1.5 billion shares of
New Regions common stock, par value $0.01 per share, and 10 million shares of
preferred stock, par value $1.00 per share. At [--], 2004, two shares of New
Regions common stock were issued and outstanding and no shares of preferred
stock were issued and outstanding.
New Regions may issue, without a stockholder vote, shares of its preferred
stock, in one or more classes or series. New Regions' board of directors may
determine, among other things, the distinctive designation and number of shares
comprising a series of preferred stock, the dividend rate or rates on the shares
of such series and the relation of such dividends to the dividends payable on
other classes of stock, whether the shares of such series shall be convertible
into or exchangeable for shares of any other class or series of New Regions'
capital stock, the voting powers, if any, of such series, and any other
preferences, privileges, and powers of such series. New Regions' certificate of
incorporation does not restrict the voting rights of preferred stock to one vote
per $100 liquidation value when voting as a class with the common stockholders,
and does not provide as a default that all series of preferred stock rank
equally and identically.
NUMBER OF DIRECTORS
UNION PLANTERS
Union Planters' amended and restated charter provides that the number of
directors may be fixed from time-to-time in the bylaws, provided that the number
of directors is not less than seven or more than 25 directors. Union Planters'
bylaws currently provide that the board of directors may not exceed 13
directors.
REGIONS
Regions' bylaws provide that the number of directors may be fixed by the
board of directors, provided that the number of directors is not less than three
directors.
NEW REGIONS
New Regions' bylaws provide that the number of directors may be fixed by
the board of directors, provided that the number of directors is not less than
three directors. New Regions' bylaws also provide that from the effective time
of the merger through June 30, 2007, New Regions' board of directors will have
an equal number of former Regions directors and former Union Planters directors.
The by-law provision governing the composition of New Regions' board of
directors through June 30, 2007 may be amended only by an affirmative vote of at
least 66 2/3% of the full board of directors. See "THE MERGER -- Board of
Directors and Management of New Regions Following the Merger" for a description
of New Regions' board of directors after the merger.
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VACANCIES
UNION PLANTERS
Union Planters' bylaws provide that vacancies on Union Planters' board of
directors may be filled by the Union Planters shareholders or board of
directors. If the number of directors remaining in office constitutes fewer than
a quorum, the vacancy may be filled by a vote of the majority of those directors
then in office.
REGIONS
Regions' certificate of incorporation and bylaws provide that vacancies on
Regions' board of directors may be filled only by Regions' board of directors.
NEW REGIONS
New Regions' bylaws provide that vacancies on New Regions' board of
directors may be filled only by New Regions' board of directors.
New Regions' bylaws also provide, however, that from the effective time of
the merger through June 30, 2007, any directorship vacated by a former director
of Regions will be filled by a nominee proposed to the nominating committee by a
majority of the remaining former directors of Regions. Similarly, any
directorship vacated by a former director of Union Planters will be filled by a
nominee proposed to the nominating committee chosen by a majority of the
remaining former directors of Union Planters. This bylaw provision may be
amended only by an affirmative vote of at least 66 2/3% of the full board of
directors.
SPECIAL MEETINGS OF THE BOARD
UNION PLANTERS
Special meetings of Union Planters' board of directors may be called for
any purpose or purposes, at any time, by the chairman of the board of directors,
the president, the executive vice president, the secretary, or any three or more
directors of Union Planters.
REGIONS/NEW REGIONS
Special meetings of Regions' and New Regions' board of directors may be
called for any purpose or purposes, at any time, by the chief executive officer,
the president, or the secretary on the written request of a majority of the
board of directors.
STOCKHOLDER RIGHTS PLANS
UNION PLANTERS
On January 19, 1999, Union Planters adopted a shareholder rights agreement,
which was amended on December 3, 2001, pursuant to which each issued share of
Union Planters common stock has attached to it one right to purchase, under
certain conditions, a fraction of a share of participating preferred stock of
Union Planters. On January 22, 2004, Union Planters and the rights agent under
the Union Planters rights agreement amended the rights agreement to prevent the
merger agreement and the merger from triggering the provisions of the rights
agreement and to eliminate the rights at the time of the effectiveness of the
merger.
REGIONS/NEW REGIONS
Regions does not have a stockholder rights plan. New Regions does not, and
will not as of the merger, have a stockholder rights plan.
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CLASSIFIED BOARD OF DIRECTORS AND CUMULATIVE VOTING
UNION PLANTERS
Union Planters' amended and restated charter provides that the 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.
Pursuant to Union Planters' amended and restated charter, directors are
elected by a plurality of the votes cast in an election and each stockholder
generally is entitled to one vote for each share of Union Planters common stock
held and is not entitled to cumulative voting rights in the election of
directors.
REGIONS/NEW REGIONS
Regions' and New Regions' certificates of incorporation provide that the
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. Stockholders are entitled to one vote for each share of
Regions' common stock, and directors are elected by a plurality of the votes
cast by all stockholders under Regions' certificate of incorporation.
Stockholders are not entitled to cumulative voting rights in the election of
directors.
REMOVAL OF DIRECTORS
UNION PLANTERS
Union Planters' amended and restated charter provides that a director may
be removed, with or without cause, only by an affirmative vote of the holders of
66 2/3% of the voting power of all shares of Union Planters' capital stock
entitled to vote.
REGIONS/NEW REGIONS
Regions' and New Regions' certificates of incorporation provide that 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 the outstanding common
stock.
SPECIAL MEETINGS OF STOCKHOLDERS
UNION PLANTERS
Union Planters' bylaws provide that special meetings of Union Planters
shareholders may be called for any purpose or purposes, at any time, by the
chairman of the board of directors, the president, the secretary or the holders
of not less than 10% of the shares entitled to vote at such meeting.
REGIONS/NEW REGIONS
Regions' and New 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. Stockholders
do not have the right to call a special meeting or to require that the board of
directors call such a meeting.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
UNION PLANTERS
Union Planters' bylaws provide that any action permitted to be taken by
shareholders may be taken without a meeting by unanimous written consent of
Union Planters shareholders entitled to vote.
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REGIONS/NEW REGIONS
Regions' and New Regions' certificate of incorporation and bylaws provide
that any action required or permitted to be taken by stockholders must be taken
at a duly called meeting of stockholders and may not be taken by stockholder
written consent.
AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS
UNION PLANTERS
Union Planters may amend its amended and restated charter in any manner
permitted by Tennessee law. The Tennessee Business Corporation Act provides that
a corporation's charter may be amended by a majority of votes entitled to be
cast on an amendment, subject to any condition the board of directors may place
on its submission of the amendment to the shareholders. Union Planters' amended
and restated charter requires a vote of 66 2/3% or more of the shares of capital
stock entitled to vote to amend the provisions governing directors and to remove
a director from office, whether with or without cause. A 66 2/3% vote is also
required to amend, alter or repeal the provisions relating to business
combinations.
Union Planters' board of directors may adopt, amend, or repeal Union
Planters' bylaws by a majority vote of the entire board of directors. The bylaws
may also be amended or repealed by the affirmative role of a majority of Union
Planters shareholders.
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
all shares entitled to vote thereon is required to amend a corporation's
certificate of incorporation, unless the certificate specifies a greater voting
requirement. Regions' certificate of incorporation states that its provisions
regarding authorized capital stock, directors, the approval required for
business combinations with interested stockholders, meetings of stockholders,
the prohibition on action of stockholders by written consent, 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.
Regions' certificate of incorporation also provides that the board of
directors has the power to adopt, amend, or repeal the bylaws. Any action taken
by the stockholders with respect to adopting, amending or repealing any bylaws
may be taken only upon the affirmative vote of the holders of at least 75% of
the outstanding shares of Regions common stock.
NEW REGIONS
Generally, the approval of the board of directors and the affirmative vote
of a majority of all shares entitled to vote is required to amend New Regions'
certificate of incorporation. New Regions' certificate of incorporation,
however, requires the affirmative vote of at least 75% of the outstanding shares
of New Regions common stock in order to amend or repeal the provisions related
to directors, business combinations with interested stockholders, the
prohibition on action of stockholders by written consent and the amendment of
the certificate of incorporation and bylaws. New Regions' certificate of
incorporation does not, unlike Regions' certificate of incorporation, require a
special 75% vote for amending or repealing the provisions regarding authorized
capital stock or meetings of stockholders.
New Regions' certificate of incorporation also provides that the board of
directors has the power to adopt, amend, or repeal the bylaws. Any action taken
by the stockholders with respect to adopting, amending or repealing any bylaws
may be taken only upon the affirmative vote of the holders of at least 75% of
the outstanding shares of New Regions common stock.
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STATUTORY PROVISIONS
UNION PLANTERS
Tennessee has three anti-takeover acts which are applicable to Union
Planters: the Tennessee Business Combination Act, the Tennessee Greenmail Act,
and the Tennessee Investor Protection Act. The Tennessee Control Share
Acquisition Act does not apply to Union Planters, because Union Planters'
amended and restated charter does not include a provision electing to be covered
by that act.
The Tennessee Business Combination Act generally prohibits a "business
combination" by Union Planters or a subsidiary with an "interested shareholder"
within five years after the shareholder becomes an interested shareholder. Union
Planters or a subsidiary can, however, enter into a business combination within
that period if, before the interested shareholder became such, Union Planters'
board of directors approved the business combination or the transaction in which
the interested shareholder became an interested shareholder.
After that five year moratorium, the business combination with the
interested shareholder can be consummated only if it satisfies certain fair
price criteria or is approved by 66 2/3% of the other shareholders.
For purposes of the Tennessee Business Combination Act, a "business
combination" includes mergers, share exchanges, sales and leases of assets,
issuances of securities, and similar transactions. An "interested shareholder"
is generally any person or entity that beneficially owns 10% or more of the
voting power of any outstanding class or series of Union Planters' stock.
The Tennessee Greenmail Act applies to a Tennessee corporation that has a
class of voting stock registered or traded on a national securities exchange or
registered with the SEC pursuant to Section 12(g) of the Exchange Act. Under the
Tennessee Greenmail Act, Union Planters may not purchase any of its shares at a
price above the market value of such shares from any person who holds more than
3% of the class of securities to be purchased if such person has held such
shares for less than two years, unless the purchase has been approved by the
affirmative vote of a majority of the outstanding shares of each class of voting
stock issued by Union Planters or Union Planters makes an offer, of at least
equal value per share, to all shareholders of such class.
The Tennessee Investor Protection Act generally requires the registration,
or an exemption from registration, before a person can make a tender offer for
shares of a Tennessee corporation which, if successful, would result in the
offer or beneficially owning more than 10% of any class. Registration requires
the filing with the Tennessee Commissioner of Commerce and Insurance of a
registration statement, a copy of which must be sent to the target company, and
the public disclosure of the material terms of the proposed offer. The Tennessee
Investor Protection Act also prohibits fraudulent and deceptive practices in
connection with takeover offers, and provides remedies for violations.
The Tennessee Investor Protection Act does not apply to an offer involving
a vote by holders of equity securities of the offered company, pursuant to its
certificate of incorporation, on a merger, consolidation or sale of corporate
assets in consideration of the issuance of securities of another corporation, or
on a sale of its securities in exchange for cash or securities of another
corporation. Also excluded from the Tennessee Investor Protection Act are tender
offers which are open on substantially equal terms to all shareholders, are
recommended by the board of directors of the target company and include full
disclosure of all terms.
REGIONS/NEW REGIONS
Section 203 of the Delaware General Corporation Law prohibits business
combinations, including mergers, sales and leases of assets, issuances of
securities and similar transactions by a corporation or a subsidiary, with an
interested stockholder, which is someone who beneficially owns 15% or more of a
79
corporation's voting stock, within three years after the person or entity
becomes an interested stockholder, unless:
- the transaction that caused the person to become an interested
stockholder was approved by the board of directors of the target prior to
the transaction;
- after the completion of the transaction in which the person becomes an
interested stockholder, the interested stockholder holds at least 85% of
the voting stock of the corporation not including (1) shares held by
persons who are both officers and directors of the issuing corporation
and (2) shares held by specified employee benefit plans;
- after the person becomes an interested stockholder, the business
combination is approved by the board of directors and holders of at least
66 2/3% of the outstanding voting stock, excluding shares held by the
interested stockholder; or
- the transaction is one of certain business combinations that are proposed
after the corporation had received other acquisition proposals and that
are approved or not opposed by a majority of certain continuing members
of the board of directors, as specified in the Delaware General
Corporation Law.
Neither Regions' nor New Regions' organizational documents contain an
election, as permitted by Delaware law, to be exempt from the requirements of
Section 203.
STOCKHOLDER APPROVAL OF BUSINESS COMBINATIONS WITH INTERESTED STOCKHOLDERS
UNION PLANTERS
Union Planters' amended and restated charter imposes super-majority voting
requirements on business combinations with owners of 10% or more of the
outstanding shares of capital stock of Union Planters entitled to vote. The
amended and restated charter provides that the affirmative vote of holders of
66 2/3% or more of the outstanding shares of Union Planters capital stock
entitled to vote is required to authorize any merger or consolidation of Union
Planters with or into, or any sale, lease, exchange, or other disposition of all
or substantially all of Union Planters' assets to, such a 10% owner of Union
Planters' capital stock.
REGIONS/NEW REGIONS
Regions' certificates of incorporation imposes super-majority voting
requirements on business combinations with owners of 5% or more of the
outstanding shares entitled to vote. The affirmative vote of holders of at least
75% of the outstanding shares of Regions entitled to vote is required to
authorize any merger or consolidation of Regions with or into, or any sale or
lease of all or a substantial part of Regions' assets to, such a 5% owner of
Regions common stock. This super-majority approval will not apply to a merger or
similar transaction in which the board of directors has approved a memorandum of
understanding with the other corporation prior to the time that the other
corporation becomes the beneficial owner of more than 5% of Regions' or New
Regions' stock, or after such acquisition of 5% of Regions' stock, if 75% or
more of the entire board of directors approves the transaction prior to
consummation.
STOCKHOLDER NOMINATIONS
UNION PLANTERS
Union Planters' amended and restated charter and bylaws do not address
shareholder nominations of members of the board of directors.
REGIONS
Regions' bylaws set forth the procedures by which a stockholder may
properly bring business, including nominations of members of the board of
directors, before a meeting of stockholders. The bylaws
80
of Regions provide an advance notice procedure for a stockholder to properly
bring business before an annual meeting. The stockholder must give advanced
written notice to the secretary of Regions not less than 90 days or more than
120 days before the anniversary date of the previous year's annual meeting;
provided, however, that in the event that the date of the annual meeting is more
than 30 days before or more than 60 days after the anniversary date of the
previous year's annual meeting, notice by the stockholder, to be timely, must be
received not less than 90 days or more than 120 days before the date of the
annual meeting or by the 10th day following the day on which public disclosure
of the annual meeting date was made. The notice must set forth background
information regarding the persons to be nominated as required by Regulation 14A
under the Exchange Act, and regarding the proposing stockholder, including
information concerning (1) the name and address of the stockholder, (2) the
class and number of shares of Regions' capital stock beneficially owned by each
such stockholder and (3) any arrangements or understandings between the
stockholder and the nominee. The board of directors is not required to nominate
in the annual proxy statement any person so proposed. Compliance with this
procedure would permit a stockholder to nominate the individual at the
stockholders' meeting, and any stockholder may vote in person or by proxy for
any individual that stockholder desires.
NEW REGIONS
The bylaws of New Regions include provisions similar to the bylaws of
Regions requiring advance notice of a stockholder's nomination of members of the
board of directors, except that to be timely such notice must be received by New
Regions not less than 120 days before the date of New Regions' previous year's
proxy statement. If no annual meeting was held the previous year and in any year
in which the date of the annual meeting is moved by more than 30 days from the
date of the previous year's annual meeting, the notice will be considered timely
if received not less than 120 days before the date of the annual meeting or by
the 10th day following the day on which public disclosure of the annual meeting
date was made. As is the case with Regions, the board of directors of New
Regions is not required to nominate in the annual proxy statement any person so
proposed.
STOCKHOLDER PROPOSALS
UNION PLANTERS
Holders of Union Planters common stock are entitled to submit proposals to
be presented at an annual meeting of Union Planters shareholders. Union
Planters' bylaws provide that any proposal of a shareholder which is to be
presented at any annual meeting of shareholders must be sent so that it is
received by Union Planters not less than 120 days in advance of the anniversary
date of the proxy statement issued in connection with the previous year's annual
meeting.
REGIONS/NEW REGIONS
Regions' and New Regions' procedures for stockholder proposals are
generally the same as Regions' and New Regions' procedures for stockholder
nominations. See "--Stockholder Nominations -- Regions" and "-- New Regions"
above.
NOTICE OF STOCKHOLDERS MEETINGS
UNION PLANTERS
Union Planters' bylaws require that written notice of a shareholder
meeting, stating the place, day, hour and purpose of the meeting and the person
or persons calling the meeting be delivered to each shareholder entitled to
vote, if by mail, not less than 10 or more than 60 days before the date of the
meeting, and if delivered personally, not less than 5 or more than 60 days
before the date of the meeting.
81
REGIONS/NEW REGIONS
Regions' and New Regions' bylaws require that written notice of a
stockholder meeting, stating the place, date, time and the nature of the
business to be considered at the meeting, be delivered to each stockholder
entitled to vote, not less than 10 or more than 50 days before the date of the
meeting.
LIMITATIONS ON DIRECTOR LIABILITY
UNION PLANTERS
Union Planters' amended and restated charter does not address the issue of
a director's liability to Union Planters. The Tennessee Business Corporation Act
provides that a director is not liable for any action, or failure to take action
if he or she discharges his or her duties (1) in good faith, (2) with the care
of an ordinarily prudent person in a like position under similar circumstances,
and (3) in a manner the director reasonably believes to be in the best interests
of Union Planters.
REGIONS/NEW REGIONS
Regions' and New Regions' certificates of incorporation provide that a
director will have no personal liability to the company 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 Regions or its
stockholders, (2) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (3) the payment of
unlawful dividends and the making of unlawful stock purchases or redemptions or
(4) any transaction from which the director derived an improper personal
benefit.
INDEMNIFICATION
UNION PLANTERS
Under the Tennessee Business Corporation Act, a corporation may indemnify
any director against liability if the director (1) conducted himself or herself
in good faith, (2) reasonably believed, in the case of conduct in his or her
official capacity with the corporation, that his or her conduct was in the best
interests of the corporation, (3) reasonably believed, in all other cases, that
his or her conduct was at least not opposed to the corporation's best interests,
and (4) in the case of any criminal proceeding, had no reasonable cause to
believe his or her conduct was unlawful.
Unless limited by its charter, a Tennessee corporation must indemnify,
against reasonable expenses incurred by him or her, a director who was wholly
successful, on the merits or otherwise, in defending any proceeding to which he
or she was a party because he or she is or was a director of the corporation.
Expenses incurred by a director in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding if three
conditions are met: (1) the director must furnish the corporation a written
affirmation of the director's good faith belief that he or she has met the
standard of conduct as set forth above, (2) the director must furnish the
corporation a written undertaking by or on behalf of a director to repay such
amount if it is ultimately determined that he or she is not entitled to be
indemnified by the corporation against such expenses, and (3) a determination
must be made that the facts then known to those making the determination would
not preclude indemnification.
Union Planters' amended and restated charter and bylaws provide for the
indemnification of its directors and officers to the fullest extent permitted by
Tennessee law.
REGIONS/NEW REGIONS
Regions' and New Regions' certificates of incorporation provide that
Regions and New Regions will indemnify their respective officers, directors,
employees, and agents to the fullest extent permitted by the Delaware General
Corporation Law. Under the Delaware General Corporation Law, other than in
actions brought by or in the right of Regions or New 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
82
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 or New
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 or New Regions, except that no indemnification may be made with respect
to any matter as to which such person is adjudged liable to Regions or New
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.
STOCK REPURCHASES
The merger agreement permits both Regions and Union Planters to continue to
repurchase their own shares in accordance with previously announced repurchase
plans.
Regions' board of directors has authorized the repurchase of up to 12.6
million shares of Regions common stock. During 2003, Regions repurchased 1.4
million shares in connection with its common stock repurchase program at a total
cost of $49.9 million. At December 31, 2003, 11.2 million shares were available
for repurchase under the current authorization. From January 1, 2004 through
March 11, 2004, Regions repurchased an additional 4.2 million shares of its
common stock at a total cost of $156.9 million. Included in the shares
repurchased subsequent to 2003 are 4.0 million shares that were repurchased
through an accelerated stock repurchase agreement entered into on March 9, 2004.
Subject to market conditions, Regions may in the future from time to time bid
for or repurchase shares of its common stock. The purchases may be made from
time to time in the open market or in privately negotiated transactions,
including accelerated share repurchase arrangements, depending on market
conditions and other factors.
Union Planters has been authorized by its board of directors to repurchase
shares of its common stock from time to time, and currently has remaining
authorization from its board of directors to repurchase approximately 24.7
million shares of Union Planters common stock. Subject to market conditions,
Union Planters may in the future from time to time bid for or repurchase shares
of its common stock. The purchases may be made from time to time in the open
market or in privately negotiated transactions, including accelerated share
repurchase arrangements, depending on market conditions and other factors.
We provide this information to you to help you assess whether the
repurchase of shares may have an impact on the market price of one or both of
our stocks.
LITIGATION
On January 27, 2004, a Regions stockholder filed a purported class action
complaint in the Circuit Court of Jefferson County, Alabama, on behalf of all
stockholders other than the defendants against Regions and the members of its
board of directors (except for C. Kemmons Wilson, Jr.) in connection with the
merger. In addition, two Union Planters shareholders separately filed purported
class action complaints in the Chancery Court of Tennessee on January 27, 2004
and January 28, 2004, against Union Planters and the members of its board of
directors in connection with the merger. Each of these complaints alleges that
the defendant board of directors breached its fiduciary duties in approving the
merger.
The lawsuits seek, among other things, to recover costs and to enjoin or
rescind the transactions contemplated by the merger agreement. In addition, the
lawsuits against Union Planters seek to recover unspecified damages.
83
Regions and Union Planters believe that these lawsuits are entirely without
merit and intend to defend against them vigorously.
COMPARATIVE MARKET PRICES AND DIVIDENDS
Regions common stock and Union Planters common stock are listed on the New
York Stock Exchange. The following table sets forth the high and low closing
prices of shares of Regions common stock and Union Planters common stock as
reported on the New York Stock Exchange, and the quarterly cash dividends
declared per share for the periods indicated.
REGIONS COMMON STOCK UNION PLANTERS COMMON STOCK(2)
----------------------------- --------------------------------
HIGH LOW DIVIDEND(1) HIGH LOW DIVIDEND(3)
------ ------ ----------- ------- ------- ------------
2002
First Quarter............. $34.86 $29.54 $0.29 $32.39 $29.33 $0.33
Second Quarter............ 38.40 33.61 0.29 33.63 31.39 0.33
Third Quarter............. 36.24 27.95 0.29 32.64 26.67 0.33
Fourth Quarter............ 35.47 27.10 0.29 29.94 23.65 0.33
2003
First Quarter............. $35.32 $29.83 $0.30 $29.90 $26.24 $0.33
Second Quarter............ 36.44 31.52 0.30 32.95 26.07 0.33
Third Quarter............. 36.75 33.30 0.32 33.11 31.19 0.33
Fourth Quarter............ 37.90 34.25 0.32 34.69 30.41 0.33
2004
First Quarter............. $39.75 $35.59 $0.41 $32.67 $28.84 $0.33
Second Quarter (through
[--] 2004)............. $ $ $ $ $ $
---------------
(1) Pursuant to the merger agreement, until the effective time of the merger,
Regions may not increase the rate of its quarterly dividends beyond $0.4116
per share per quarter.
(2) Union Planters data reflects a 3-for-2 stock split on June 7, 2002.
(3) Pursuant to the merger agreement, until the effective time of the merger,
Union Planters may not increase the rate of its quarterly dividends beyond
$0.3334 per share per quarter.
Regions stockholders and Union Planters shareholders are advised to obtain
current market quotations for Regions common stock and Union Planters common
stock. The market price of Regions common stock and Union Planters common stock
will fluctuate between the date of this joint proxy statement/prospectus and the
completion of the merger. No assurance can be given concerning the market price
of Regions common stock or Union Planters common stock before the effective date
of the registration statement, or the market price of New Regions common stock
after the effective date of the registration statement.
84
PRO FORMA FINANCIAL INFORMATION
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
The following Unaudited Pro Forma Combined Condensed Consolidated Statement
of Financial Condition combines the historical Consolidated Statement of
Financial Condition of Regions and its subsidiaries and the historical
Consolidated Statement of Financial Condition of Union Planters and its
subsidiaries giving effect to the merger as if it had occurred on December 31,
2003 as an acquisition by Regions of Union Planters using the purchase method of
accounting and giving effect to the related pro forma adjustments described in
the accompanying Notes to the Unaudited Pro Forma Combined Condensed
Consolidated Financial Statements.
The following Unaudited Pro Forma Combined Condensed Consolidated Statement
of Income for the year ended December 31, 2003, combines the historical
Consolidated Statements of Income of Regions and subsidiaries and Union Planters
and subsidiaries giving effect to the merger as if the merger had become
effective at January 1, 2003, as an acquisition by Regions of Union Planters
using the purchase method of accounting and giving effect to the related pro
forma adjustments described in the accompanying Notes to the Unaudited Pro Forma
Combined Condensed Consolidated Financial Statements.
The unaudited pro forma combined condensed consolidated financial
statements included herein are presented for informational purposes only. This
information includes various estimates and may not necessarily be indicative of
the financial position or results of operations that would have occurred if the
merger had been consummated on the date or at the beginning of the period
indicated or which may be attained in the future. The unaudited pro forma
combined condensed consolidated financial statements and accompanying notes
should be read in conjunction with and are qualified in their entirety by
reference to the historical financial statements and related notes thereto of
Regions and subsidiaries and Union Planters and subsidiaries, such information
and notes thereto incorporated by reference in this joint proxy
statement/prospectus.
We anticipate that the merger will provide the combined company with
financial benefits that include reduced operating expenses. The pro forma
information, while helpful in illustrating the financial characteristics of the
combined company under one set of assumptions, does not reflect the benefits of
expected cost savings, opportunities to earn additional revenue, the impact of
restructuring and merger-related costs or the amortization of certain
intangibles and, accordingly, does not attempt to predict or suggest future
results. It also does not necessarily reflect what the historical results of the
combined company would have been had our companies been combined during these
periods.
85
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION
AS OF DECEMBER 31, 2003
REGIONS UNION PLANTERS PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT COMBINED
----------- -------------- ---------- -----------
(IN THOUSANDS)
ASSETS
Cash and due from banks.................. $ 1,255,853 $ 961,986 $ 2,217,839
Interest-bearing deposits in other
banks.................................. 96,537 84,590 181,127
Securities held to maturity.............. 30,943 30,943
Securities available for sale............ 9,056,861 4,955,877 14,012,738
Trading account assets................... 816,074 343,089 1,159,163
Loans held for sale...................... 1,241,852 832,474 2,074,326
Fed funds sold and securities purchased
under agreements to resell............. 577,989 699,800 1,277,789
Margin receivables....................... 503,575 503,575
Loans, net of unearned income(Note 3).... 32,184,323 21,996,037 361,383 54,541,743
Allowance for loan losses................ (454,057) (330,826) (784,883)
Premises and equipment, net(Note 3)...... 629,638 513,496 (50,000) 1,093,134
Mortgage servicing rights(Note 3)........ 126,846 352,105 478,951
Excess purchase price(Note 3)............ 1,083,440 743,185 2,949,791 4,776,416
Core deposit intangible(Note 3).......... 4,068 113,573 263,889 381,530
Interest receivable...................... 194,501 168,418 362,919
Other assets(Note 3)..................... 1,249,553 476,925 (54,348) 1,672,130
----------- ----------- ---------- -----------
TOTAL ASSETS $48,597,996 $31,910,729 $3,470,715 $83,979,440
=========== =========== ========== ===========
LIABILITIES
Non-interest bearing deposits............ $ 5,717,747 $ 5,384,335 $11,102,082
Interest-bearing deposits(Note 3)........ 27,014,788 17,761,849 121,833 44,898,470
Fed funds purchased and securities sold
under agreements to repurchase......... 3,031,706 1,651,743 4,683,449
Other short-term borrowings.............. 1,395,332 799,542 2,194,874
Long-term borrowings(Note 3)............. 5,711,752 2,625,200 176,979 8,513,931
Other liabilities(Note 3)................ 1,274,556 622,421 149,239 2,046,216
----------- ----------- ---------- -----------
TOTAL LIABILITIES 44,145,881 28,845,090 448,051 73,439,022
STOCKHOLDERS' EQUITY
Convertible preferred stock(Note 2)...... 9,603 (9,603)
Common stock(Note 2)..................... 139,598 944,593 (1,079,554) 4,637
Surplus(Note 2).......................... 983,669 554,722 5,618,598 7,156,989
Undivided profits(Note 2)................ 3,329,023 1,590,355 (1,590,355) 3,329,023
Less: Treasury stock(Note 2)............. (49,944) 49,944
Less: Unearned stock compensation(Note
2)..................................... (13,771) (36,081) 36,081 (13,771)
Accumulated other comprehensive
income(Note 2)......................... 63,540 2,447 (2,447) 63,540
----------- ----------- ---------- -----------
TOTAL STOCKHOLDERS' EQUITY 4,452,115 3,065,639 3,022,664 10,540,418
----------- ----------- ---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY.............................. $48,597,996 $31,910,729 $3,470,715 $83,979,440
=========== =========== ========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED PRO FORMA COMBINED
CONDENSED
CONSOLIDATED FINANCIAL INFORMATION.
86
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 2003
REGIONS UNION PLANTERS PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENT COMBINED
---------- -------------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Interest income:
Interest and fees on loans(Note 4)........ $1,702,299 $1,296,035 $(87,569) $2,910,765
Interest on securities(Note 4)............ 373,120 217,369 1,008 591,497
Interest on loans held for sale........... 95,680 105,786 201,466
Interest on trading account assets........ 26,093 8,651 34,744
Other interest income..................... 21,938 3,154 25,092
---------- ---------- -------- ----------
Total interest income..................... 2,219,130 1,630,995 (86,561) 3,763,564
Interest expense:
Interest on deposits(Note 4)................ 430,353 290,230 (80,621) 639,962
Interest on short-term borrowings........... 101,075 29,720 130,795
Interest on long-term borrowings(Note 4).... 213,104 114,447 (29,514) 298,037
---------- ---------- -------- ----------
Total interest expense.................... 744,532 434,397 (110,135) 1,068,794
---------- ---------- -------- ----------
Net interest income....................... 1,474,598 1,196,598 23,574 2,694,770
Provision for loan losses................... 121,500 181,539 303,039
Non-interest income:
Securities gains.......................... 25,658 8,203 33,861
Brokerage and investment banking.......... 552,729 38,337 591,066
Trust department income................... 69,921 27,384 97,305
Service charges on deposit accounts....... 288,613 237,332 525,945
Mortgage servicing and origination fees... 111,573 344,254 455,827
Other non-interest income................. 350,263 226,414 576,677
---------- ---------- -------- ----------
Total non-interest income.............. 1,398,757 881,924 2,280,681
Non-interest expense:
Salaries and employee benefits............ 1,122,084 553,595 1,675,679
Net occupancy and equipment expense(Note
4)..................................... 187,194 183,777 (6,000) 364,971
Amortization of core deposit
intangible(Note 4)..................... 1,338 15,183 79,183 95,704
Other non-interest expense(Note 4)........ 529,667 478,658 (5,627) 1,002,698
---------- ---------- -------- ----------
Total non-interest expense............. 1,840,283 1,231,213 67,556 3,139,052
---------- ---------- -------- ----------
Income before income taxes................ 911,572 665,770 (43,982) 1,533,360
Applicable income taxes..................... 259,731 167,657 (15,394) 411,994
---------- ---------- -------- ----------
Net income.................................. $ 651,841 $ 498,113 $(28,588) 1,121,366
========== ========== ======== ==========
Net income applicable to common shares(Note
4)........................................ $ 651,841 $ 497,328 $(27,803) 1,121,366
========== ========== ======== ==========
Per share:
Net income................................ $ 2.93 $ 2.55 $ 2.39
Net income -- diluted..................... $ 2.90 $ 2.52 $ 2.36
Average shares outstanding(Note 4).......... 222,106 195,030 52,840 469,976
Average shares outstanding -- diluted(Note
4)........................................ 225,118 197,383 52,813 475,314
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE UNAUDITED PRO FORMA COMBINED
CONDENSED CONSOLIDATED FINANCIAL INFORMATION.
87
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2003
NOTE 1.
The merger will be accounted for as an acquisition by Regions of Union
Planters using the purchase method of accounting and, accordingly, the assets
and liabilities of Union Planters will be recorded at their respective fair
values on the date the merger is completed. The merger will be effected by the
issuance of New Regions $0.01 par value common stock to Regions stockholders and
Union Planters shareholders. Each share of Regions common stock will be
exchanged for 1.2346 shares of New Regions common stock, and each share of Union
Planters common stock will be exchanged for one share of New Regions common
stock. The shares of New Regions common stock issued to effect the merger will
be recorded at $31.27 per share. This amount was determined by averaging the
price of shares of Regions common stock over a four-day period surrounding the
date the merger was announced and dividing by the Regions exchange ratio.
The Pro Forma Combined Condensed Consolidated Statement of Financial
Condition combines the historical Consolidated Statement of Financial Condition
of Regions and its subsidiaries and the historical Consolidated Statement of
Financial Condition of Union Planters and its subsidiaries giving effect to the
merger as if it had occurred on December 31, 2003 as an acquisition by Regions
of Union Planters using the purchase method of accounting. The Pro Forma
Combined Condensed Consolidated Statement of Income for the year ended December
31, 2003, combines the historical Consolidated Statement of Income of Regions
and subsidiaries and Union Planters and subsidiaries giving effect to the merger
as if the merger had become effective at January 1, 2003, as an acquisition by
Regions of Union Planters using the purchase method of accounting. The pro forma
financial information includes estimated adjustments to record assets and
liabilities of Union Planters at their respective fair values. The pro forma
adjustments included herein are subject to change as additional information
becomes available and as additional analyses are performed.
The final allocation of the purchase price will be determined after the
merger is completed and additional analyses are performed to determine the fair
values of Union Planters' tangible and identifiable intangible assets and
liabilities as of the date the merger is completed. Changes in the fair value of
the net assets of Union Planters as of the date of the merger will change the
amount of purchase price allocable to excess purchase price. The further
refinement of exit costs will change the amount of excess purchase price
recorded. In addition, changes in Union Planters' shareholders' equity,
including net income, between January 1, 2004 and the date of the merger will
also change the amount of excess purchase price recorded. The final adjustments
may be materially different from the unaudited pro forma adjustments presented
herein.
The pro forma financial information for the merger is included only as of
and for the year ended December 31, 2003. The unaudited pro forma information is
not necessarily indicative of the results of operations or the combined
financial position that would have resulted had the merger been completed at the
beginning of the applicable periods presented, nor is it necessarily indicative
of the results of operations in future periods or the future financial position
of the combined company.
88
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2.
The pro forma financial information reflects the issuance of 463,679,966
shares of New Regions common stock on December 31, 2003, with an aggregate par
value of approximately $4.6 million. The table below provides the calculation of
the number of shares issued:
AS OF DECEMBER 31, 2003
-------------------------
Union Planters common shares outstanding................... 188,918,687
Union Planters convertible preferred shares................ 384,119
Conversion ratio......................................... 1.875 720,223
-----------
Regions common shares outstanding.......................... 223,356,484
Regions exchange ratio................................... 1.2346 275,755,915
-----------
Retirement of Regions treasury shares outstanding.......... (1,389,000)
Regions exchange ratio................................... 1.2346 (1,714,859)
----------- -----------
New Regions common stock issued............................ 463,679,966
===========
The calculation of the shares to be issued by New Regions includes the
assumption that the Union Planters outstanding Series E convertible preferred
stock will be converted into 1.875 shares of Union Planters common stock prior
to the merger. This assumption is used because the conversion value of the
preferred stock is in excess of the $25 liquidation value. In addition, the
calculation of shares issued by New Regions also assumes that the 1,389,000
shares of Regions treasury stock will be retired upon the merger.
The pro forma financial information also includes adjustments to
stockholders' equity for the elimination of Union Planters' accumulated other
comprehensive income of $2.4 million, the immediate vesting of Union Planters'
unearned stock compensation of $36.1 million and the elimination of Union
Planters' undivided profits of $1,590.4 million. All of these amounts have been
reclassified into surplus. In addition to these equity adjustments, $140.7
million was included in the purchase price for the estimated fair value of all
unexercised Union Planters' stock options assumed upon the merger and $17.0
million was included in the purchase price for estimated transaction costs. The
$140.7 million is a preliminary estimate based on the intrinsic value of the
options and the estimated time value of the options. The final estimate of fair
value of the Union Planters' stock options will be based on the Black-Scholes
option model.
89
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table provides a summary of pro forma adjustments to
stockholders' equity:
AS OF DECEMBER 31, 2003
--------------------------
(In millions, except share
and par value amounts)
Convertible preferred stock - conversion.................... $ (9.6)
Common stock adjustment
Shares of New Regions common stock issued................. 463,679,966
New Regions par value..................................... $ 0.01 4.6
------------
Less Union Planters common stock.......................... (944.6)
Less Regions common stock................................. (139.6)
---------
Common stock adjustment................................... (1,079.6)
---------
Surplus adjustment
Purchase price - Union Planters common shares(see Note 3)... 5,930.6
Purchase price - estimated fair value of Union Planters'
stock options............................................. 140.7
Purchase price - estimated transaction costs................ 17.0
Union Planters undivided profits.......................... 1,590.3
Union Planters unearned stock compensation................ (36.1)
Union Planters accumulated other comprehensive income..... 2.4
Union Planters preferred stock conversion................. 9.6
Union Planters stockholders' equity....................... (3,065.6)
Regions treasury stock retirement......................... (49.9)
Common stock adjustment................................... 1,079.6
---------
Surplus adjustment..................................... 5,618.6
---------
Undivided profit adjustment -- Union Planters............... (1,590.3)
Regions treasury stock retirement........................... 49.9
Unearned stock compensation adjustment - Union Planters
vesting................................................... 36.1
Elimination of Union Planters' accumulated other
comprehensive income...................................... (2.4)
---------
Total stockholders' equity adjustment..................... $ 3,022.7
=========
NOTE 3.
The purchase accounting adjustments included in the pro forma statement of
financial condition include adjustments to loans, interest-bearing deposits, and
long-term borrowings of $361.4 million, $121.8 million and $177.0 million,
respectively. These adjustments are based on preliminary valuations performed as
of December 31, 2003. The adjustments recorded for these assets and liabilities
on the merger date could vary significantly from the pro forma adjustments
included herein depending on changes in interest rates and the components of the
assets and liabilities.
A purchase accounting adjustment to property and equipment of $50.0 million
has been included in the pro forma statement of financial condition to reduce
these assets to their preliminary estimated fair value. Approximately $25.0
million relates to Union Planters' systems that may become unnecessary or
obsolete as New Regions eliminates redundant systems as part of the New Regions'
merger plan. The remaining $25.0 million relates to Union Planters' buildings
that may be unnecessary as a result of branch
90
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
consolidation and elimination of duplicate facilities. These amounts do not
include amounts related to Union Planters' recently announced restructuring and
represent estimates that are subject to change as management refines the New
Regions' merger plan.
In connection with the merger, the mortgage servicing rights valuation
assumptions used by Regions and Union Planters will be conformed. An analysis of
the impact of conforming valuation assumptions and estimation of the fair value
of such rights has not yet been completed; however, the companies believe that a
purchase accounting adjustment to Union Planters mortgage servicing rights may
result.
The table below provides the calculation of pro forma adjustments related
to intangible assets which are included in the Unaudited Pro Forma Combined
Condensed Statement of Financial Condition (in millions):
EXCESS CORE DEPOSIT OTHER UNIDENTIFIABLE
PURCHASE PRICE INTANGIBLE INTANGIBLES
-------------- ------------ --------------------
Establishment of intangible............... $3,692.9 $ 377.5 $ --
Elimination of Union Planters'
intangible.............................. (743.1) (113.6) (54.3)
-------- ------- ------
Pro forma adjustment.................... $2,949.8 $ 263.9 $(54.3)
======== ======= ======
The purchase accounting adjustments include a core deposit intangible asset
adjustment of $263.9 million. The adjustment includes the establishment of a
core deposit intangible asset of $377.5 million less Union Planters' recorded
core deposit intangible of $113.6 million. The $113.6 million core deposit
intangible is eliminated since the $377.5 million core deposit intangible
established represents the estimated intangible relating to all acquired
deposits including those for which Union Planters had previously established a
core deposit intangible. The $377.5 million was calculated by applying a premium
of 1.75% to Union Planters' non-interest bearing deposits, interest-bearing
transaction accounts and time deposits less than $100,000. The amortization of
the core deposit intangible in the pro forma statements of operations is assumed
to be over a seven year period using an accelerated method.
The purchase accounting adjustments also include a $54.3 million reduction
in other assets to eliminate other unidentifiable intangible assets of Union
Planters that arose from previously completed branch acquisitions. This
unidentifiable intangible asset is currently being amortized by Union Planters
in accordance with the transition provisions of Statement of Financial
Accounting Standards No. 147, Acquisitions of Certain Financial Institutions.
However, since Regions' acquisition of Union Planters will be a business
combination as defined by Statement of Financial Accounting Standards No. 141
("Statement 141"), Business Combinations, the criterion for intangible assets
established by Statement 141 must be evaluated. This unidentifiable intangible
asset is eliminated in the pro forma adjustments because it does not meet the
contractual-legal criterion or the separability criterion for intangible assets
established by Statement 141.
An analysis to determine if other identifiable intangible assets exist has
not yet been completed. Upon completion of this analysis, additional intangible
assets may be recorded which will affect the purchase price allocation.
The pro forma statement of financial condition includes an estimated $110.0
million adjustment to other liabilities for amounts allocated to liabilities
expected to be assumed in the acquisition. The estimated liabilities assumed in
the merger consist of personnel related costs which include involuntary
termination benefits for Union Planters' employees severed in connection with
the merger as well as relocation costs for continuing Union Planters' employees,
costs to cancel contracts that will provide no future benefit to the combined
company, and occupancy costs related to lease cancellation penalties for space
vacated in connection with the merger. Also included in the $110.0 million
estimated liability is the
91
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
establishment of a $25.0 million liability for investment banking fees, attorney
fees, accountant fees, and other transaction related costs.
The pro forma financial statements also include an adjustment to establish
a net deferred tax liability of $39.2 million which is based on 35% of all
purchase accounting adjustments to assets and liabilities with the exception of
excess purchase price. This deferred income tax adjustment is included in other
liabilities.
92
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table provides the calculation and allocation of the purchase
price used in the pro forma financial statements:
Purchase price:
New Regions shares issued to Union Planters common
shareholders........................................ 188,918,687
New Regions shares issued to Union Planters convertible
preferred shareholders.............................. 720,223 189,638,910
------------
Average Regions share price over four days surrounding
announcement of merger.............................. $ 38.61
Regions exchange ratio................................. 1.2346 $ 31.27
------------ ------------
Purchase price per Union Planters common share (in
millions)........................................... $ 5,930.6
Estimated fair value of Union Planters stock options... 140.7
Estimated transaction costs............................ 17.0
------------
Purchase price......................................... 6,088.3
Net assets acquired (in millions):
Union Planters' shareholders' equity................... $ 3,065.6
Less Union Planters' excess purchase price and other
intangibles......................................... (911.1) (2,154.5)
------------ ------------
Excess of purchase price over carrying value of net
assets acquired..................................... 3,933.8
Estimated adjustments to reflect fair value of assets
acquired and liabilities assumed:
Loans, net of unearned income.......................... (361.4)
Premises and equipment................................. 50.0
Estimated core deposit intangible
Union Planters' core deposits....................... $ 21,569.3
Premium rate........................................ 1.75% (377.5)
------------ ------------
Estimated liabilities assumed:
Personnel related................................... $ 55.0
Contract cancellations.............................. 16.0
Occupancy related................................... 14.0
Other............................................... 25.0 110.0
------------
Interest-bearing deposits.............................. 121.8
Long-term borrowings................................... 177.0
Deferred income taxes (included in other liabilities):
Loans............................................... $ 361.4
Premises and equipment.............................. (50.0)
Estimated core deposit intangible................... 377.5
Liabilities assumed................................. (110.0)
Interest-bearing deposits........................... (121.8)
Long-term borrowings................................ (177.0)
------------
Total............................................. 280.1
Less Union Planters' other intangibles.............. (167.9)
------------
Net increase in temporary differences............. $ 112.2
Income tax rate..................................... 35% 39.2
------------ ------------
Excess purchase price.................................. $ 3,692.9
============
93
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4.
The pro forma combined condensed statement of income for the year ended
December 31, 2003 includes adjustments for the amortization of the estimated
core deposit intangible, the estimated amortization of the unrealized loss on
Union Planters' debt securities, the estimated amortization of purchase
accounting adjustments made to loans, interest-bearing deposits, and long-term
borrowings, and the related tax effect of all the adjustments. The amortization
of the purchase accounting adjustments made to loans, interest-bearing deposits,
and long-term borrowings, as well as the accretion of the unrealized loss on
Union Planters' debt securities, was estimated based on weighted average
maturities at the sub-asset or sub-liability level. Overall, the weighted
average maturity assumptions for debt securities, loans, interest bearing
deposits, and long-term borrowings were 3.3 years, 6.4 years, 1.2 years, and 6.3
years, respectively. Purchase accounting adjustments were also included in the
pro forma combined condensed consolidated statements of income to reduce the
estimated depreciation resulting from premises and equipment write-downs and to
eliminate the amortization of Union Planters' other unidentifiable intangible
assets. The depreciation adjustment is included in net occupancy and equipment
expense, and the amortization adjustment is included in other non-interest
expense. The depreciation adjustment was based on an estimated useful life of 5
years for systems and 20 years for property. The pro forma net income available
to common shareholders was adjusted to add back the Union Planters' preferred
stock dividend since it is assumed that the preferred shares were converted to
common stock. The pro forma basic shares outstanding were also increased to
assume that the preferred shares were converted to common shares.
The estimated restructuring and merger related expenses discussed in Note 6
are not included in the pro forma statements of income since they will be
recorded in the combined results of operations as they are incurred after
completion of the merger and are not indicative of what the historical results
of the combined company would have been had the companies been actually combined
during the periods presented.
Additionally, New Regions is expected to realize approximately $200 million
in cost savings following the merger, which is expected to be phased in over a
three year period. These cost savings are not reflected in the pro forma
financial information.
94
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The adjustments reflected in the pro forma combined condensed consolidated
statement of income are presented in the table below:
YEAR ENDED
DECEMBER 31, 2003
-----------------
(IN MILLIONS)
Amortization of loan purchase accounting adjustment......... $(87.5)
Amortization of unrealized gain on Union Planters'
securities................................................ 1.0
Amortization of deposit purchase accounting adjustment...... 80.6
Amortization of long-term borrowings purchase accounting
adjustment................................................ 29.5
Depreciation adjustment related to premises and equipment
write-down................................................ 6.0
Remove amortization of Union Planters' other unidentifiable
intangible assets......................................... 5.6
Amortization of core deposit intangible established through
purchase accounting....................................... (94.4)
Remove amortization of Union Planters' core deposit
intangible................................................ 15.2
------
Net core deposit intangible amortization
adjustment.......................................... (79.2)
------
Reduction in income before income taxes..................... (44.0)
Income tax rate............................................. 35%
------
Income tax adjustment..................................... (15.4)
------
Reduction in net income..................................... $(28.6)
======
Net income available to common shareholders:
Reduction in net income................................... $(28.6)
Add preferred dividends................................... 0.8
------
Reduction in net income available to common
shareholders.......................................... $(27.8)
======
The pro forma weighted average shares outstanding for the year ended
December 31, 2003 were calculated as follows:
BASIC DILUTED
----------------- -----------------
(IN THOUSANDS) (IN THOUSANDS)
Union Planters' historical..................... 195,030 197,383
Regions' historical............................ 222,106 225,118
Exchange ratio................................. 1.2346 274,212 1.2346 277,931
------- -------
Increase for assumed converted preferred
stock(1)..................................... 734 --
------- -------
Pro forma average shares outstanding........... 469,976 475,314
======= =======
---------------
(1) The adjustment to pro forma basic shares outstanding represents the dilutive
effect of the Union Planters' convertible preferred stock. This preferred
stock is assumed to be converted to common stock in the pro forma financial
statements.
NOTE 5.
Following the merger, it is anticipated that New Regions will pay a cash
dividend of $0.333 per share per quarter, which is the current Union Planters
dividend rate. Consistent with this rate, Regions declared a special cash
dividend of $0.0816 per share payable on April 1, 2004, to stockholders of
record on March 18, 2004. This dividend will be in addition to Regions' recently
declared cash dividend of $0.33 per
95
REGIONS FINANCIAL CORPORATION AND UNION PLANTERS CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
share announced on January 22, 2004, resulting in a total quarterly cash
dividend of $0.4116 per share. Regions intends to maintain the dividend rate of
$0.4116 per share per quarter until the merger is completed.
NOTE 6.
In connection with the merger, Regions and Union Planters have begun to
develop their preliminary plans to consolidate the operations of Regions and
Union Planters. Over the next several months, the specific details of these
plans will be refined. Regions and Union Planters are currently in the process
of assessing the two companies' personnel, benefit plans, premises, equipment,
computer systems and service contracts to determine where we may take advantage
of redundancies or where it will be beneficial or necessary to convert to one
system. Certain decisions arising from these assessments may involve involuntary
termination of Union Planters' employees, vacating Union Planters' leased
premises, canceling contracts between Union Planters and certain service
providers and selling or otherwise disposing of certain premises, furniture and
equipment owned by Union Planters. The costs associated with such decisions will
be recorded as purchase accounting adjustments, which have the effect of
increasing the amount of the purchase price allocable to excess purchase price.
It is expected that all such costs will be identified and recorded within one
year of completion of the merger and all such actions required to effect these
decisions would be taken within one year after finalization of these plans. The
pro forma combined condensed consolidated statement of financial condition
includes a preliminary estimate of such costs of $160.0 million. The $160.0
million consists of a premises and equipment reduction of $50.0 million and
liabilities incurred of $110.0 million. See Note 3 for additional discussion.
In addition to decisions regarding Union Planters' employees and
activities, certain decisions may be made to involuntarily terminate Regions
employees, vacate Regions leased premises, cancel contracts and sell or
otherwise dispose of certain premises, furniture and equipment owned by Regions.
These exit and disposal costs would be recorded in accordance with FASB
Statement No. 146 in the results of operations of the combined company in the
period incurred. New Regions also expects to incur merger-related expenses in
the process of combining the operations of the two companies. These
merger-related expenses include system conversion costs, employee retention
arrangements and costs of incremental communications to customers and others. It
is expected that the exit and disposal costs along with the merger-related costs
will be incurred over a three-year period after completion of the merger.
Preliminarily, we estimate these restructuring and merger-related expenses will
be approximately $140.0 million. The $140.0 million estimate is not included in
the pro forma combined condensed consolidated statement of income since these
costs will be recorded in the combined results of operations as they are
incurred after completion of the merger and are not indicative of what the
historical results of New Regions would have been had Regions and Union Planters
been actually combined during the periods presented.
96
VALIDITY OF COMMON STOCK
The validity of New Regions common stock offered by this joint proxy
statement/prospectus will be passed upon for New Regions by Sullivan & Cromwell
LLP.
EXPERTS
The consolidated financial statements of Regions appearing in Regions'
Annual Report (Form 10-K) as of December 31, 2003 and 2002 and for each of the
years in the three-year period ended December 31, 2003, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements of Union Planters incorporated in
this registration statement of which this joint proxy statement/prospectus forms
a part by reference to Union Planters' Annual Report on Form 10-K for the year
ended December 31, 2003, 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.
Regions expects representatives of Ernst & Young LLP to attend the Regions
annual meeting, and Union Planters expects representatives of
PricewaterhouseCoopers LLP to attend the Union Planters annual meeting. These
representatives will have an opportunity to make a statement if they desire to
do so, and we expect that they will be available to respond to any appropriate
questions you may have.
97
OTHER MATTERS TO BE CONSIDERED AT THE REGIONS MEETING
Regions' annual stockholders meeting was previously scheduled for May 19,
2004. However, in light of the announcement of the merger on January 23, 2004,
Regions' board of directors concluded that it was prudent to postpone the annual
meeting.
The stockholders meeting at which the merger will be considered will also
be Regions' annual meeting of stockholders for 2004. Therefore, a number of
proposals requiring stockholder action in the ordinary course of Regions'
business also are being presented for consideration and voting. This portion of
the joint proxy statement/prospectus discusses these other proposals.
98
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of [--], 2004, Regions had issued [--] shares of common stock, of which
[--] were outstanding and [--] were held as treasury stock. Stockholders are
entitled to one vote for each share on all matters to come before the meeting.
Only stockholders of record at the close of business on [--], 2004, will be
entitled to vote at the meeting or any adjournment thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of [--], 2004, all Regions' affiliate banks beneficially held in a
fiduciary capacity for others under numerous trust relationships, [--] shares or
[--]% of Regions' outstanding common stock. Regions' affiliate bank trust
departments have sole voting power with respect to [--] of these shares or
[--]%, shared voting power with respect to [--] of these shares, sole
dispositive power with respect to [--] of these shares and shared dispositive
power with respect to [--] of these shares. No entity is known to Regions to be
the beneficial owner of more than five percent of any class of voting securities
of Regions.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table presents information about beneficial ownership of
Regions common stock by the directors and certain executive officers of Regions
as of the record date. Unless otherwise indicated, each person has sole voting
and investment powers over the indicated shares. A person is deemed to be a
beneficial owner of any security of which that person has the right to acquire
beneficial ownership within 60 days from the record date. The footnotes to the
table indicate how many shares each person has the right to acquire within 60
days of the record date. The shares of Regions common stock which are issuable
to a person listed below upon exercise of the vested portion of the outstanding
options are assumed to be outstanding for the purpose of determining the
percentage of shares beneficially owned by that person.
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP AS OF -- , 2004
-------------------------------
NAME OF BENEFICIAL OWNER/NUMBER IN GROUP NO. OF SHARES % OF CLASS
---------------------------------------- ----------------- -----------
DIRECTORS INCLUDING NOMINEES FOR DIRECTOR
James S.M. French........................................
Margaret H. Greene.......................................
Richard D. Horsley.......................................
Carl E. Jones, Jr. ......................................
Susan W. Matlock.........................................
Allen B. Morgan, Jr. ....................................
Malcolm Portera..........................................
Jon W. Rotenstreich......................................
W. Woodrow Stewart.......................................
Lee J. Styslinger III....................................
John H. Watson...........................................
C. Kemmons Wilson, Jr. ..................................
Harry W. Witt............................................
OTHER NAMED EXECUTIVE OFFICERS (SEE SUMMARY COMPENSATION
TABLE)
John I. Fleischauer, Jr. ................................
Peter D. Miller..........................................
DIRECTORS AND EXECUTIVE OFFICERS AS A GROUP 22 PERSONS...
---------------
* Less than 1%.
99
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Regions'
executive officers and directors to file reports of ownership and changes in
ownership of Regions' stock with the Securities and Exchange Commission.
Executive officers and directors are required by SEC regulations to furnish
Regions with copies of all Section 16(a) forms they file.
Based on a review of the forms filed during 2003, Regions believes that its
executive officers and directors complied with all applicable filing
requirements, except for the circumstances described in this paragraph. On
February 19, 2003, the compensation committee approved grants of stock options
and in some instances restricted stock to approximately 470 officers and
employees of Regions or its subsidiaries, including all officers subject to
Section 16(a) of the Exchange Act: William E. Askew, John I. Fleischauer, Jr.,
Robert A. Goethe, David C. Gordon, Richard D. Horsley, Ronald C. Jackson, Carl
E. Jones, Jr., D. Bryan Jordan, Peter D. Miller, Alan B. Morgan, Jr., E. Cris
Stone, and Samuel E. Upchurch, Jr. The effective date of such awards was
established as February 19, 2003. At that time, Regions had not established
procedures to accelerate notification of awards to officers subject to Section
16(a), and processed the notifications in due course along with notifications to
all other recipients. Regions commenced notifying recipients of the stock option
and restricted stock grants on March 3, 2003. Each of the recipients subject to
Section 16(a) filed Form 4 to report his grant on March 6, 2003.
PROPOSAL 2 -- ELECTION OF DIRECTORS
Regions recommends the election of Margaret H. Greene, Carl E. Jones, Jr.,
Susan W. Matlock, and John H. Watson as directors, to hold office for a term of
three years expiring with the annual meeting of stockholders to be held in 2007
or until their successors are elected and qualified. The proxy will be voted FOR
the nominees, unless otherwise directed. If any nominee is not available for
election, the proxies will be voted for such substitute nominee as the board of
directors may designate. Regions has no reason to believe that any substitute
nominee or nominees will be required. The proxies will not be voted for more
than four nominees.
INFORMATION ON DIRECTORS
The following table indicates the age, residence, principal occupation or
employment for the last five years of each nominee and each director whose term
of office continues after the meeting, the position and offices held with
Regions or its subsidiaries, the year the director was first elected, and the
year the director's term of office will expire.
PRESENT OCCUPATION YEAR FIRST YEAR TERM
NAME OF NOMINEE OR AND PRINCIPAL POSITION AND OFFICES HELD WITH ELECTED OF OFFICE
DIRECTOR, RESIDENCE, OCCUPATION FOR REGIONS AND AS WILL
AND AGE LAST FIVE YEARS SUBSIDIARIES DIRECTOR EXPIRE
-------------------- ---------------------- ------------------------------ ---------- ---------
James S.M. French Chairman and formerly Director, Regions 1986 2006
Birmingham, Alabama President, Dunn
63.................. Investment Co.
(Construction,
construction
materials,
investments)
Margaret H. Greene(1) President, Regulatory Director, Regions 2002 2007
Atlanta, Georgia and External Affairs,
52.................. BellSouth Corporation
(Telecommunications)
100
PRESENT OCCUPATION YEAR FIRST YEAR TERM
NAME OF NOMINEE OR AND PRINCIPAL POSITION AND OFFICES HELD WITH ELECTED OF OFFICE
DIRECTOR, RESIDENCE, OCCUPATION FOR REGIONS AND AS WILL
AND AGE LAST FIVE YEARS SUBSIDIARIES DIRECTOR EXPIRE
-------------------- ---------------------- ------------------------------ ---------- ---------
Richard D. Horsley Vice Chairman of the Director, Regions; Director 1982 2006
Birmingham, Alabama Board and Chief Regions Bank, Regions Agency,
61.................. Operating Officer, Inc., Regions Mortgage, Inc.,
Regions and Regions Regions Life Insurance Company
Bank and EFC Holdings Corporation
Carl E. Jones, Jr.(1) Chairman, President Director, Regions; Director 1997 2007
Birmingham, Alabama and Chief Executive Regions Bank, Regions Mortgage
63.................. Officer, Regions and Inc., Regions Interstate
Regions Bank, formerly Billing Service, Inc., and EFC
Regional President, Holdings Corporation
Regions
Susan W. Matlock(1) President, Birmingham Director, Regions 2002 2007
Birmingham, Alabama Entrepreneurial
57.................. Center, executive
director for office of
developing industries,
University of Alabama
at Birmingham (Higher
education, small
business incubation)
Allen B. Morgan, Jr. Chairman and Chief Chairman and Chief Executive 2001 2005
Memphis, Tennessee Executive Officer, Officer, Morgan Keegan &
61.................. Morgan Keegan, Inc. Company, Inc., Director,
and Morgan Keegan & Regions
Company, Inc.
Malcolm Portera Chancellor, University Director, Regions 2003 2006
Tuscaloosa, Alabama of Alabama System,
58.................. formerly President,
Mississippi State
University (Higher
education)
Jon W. Rotenstreich Jon Rotenstreich Director, Regions 2002 2005
New York, New York Consultants, formerly
60.................. TIG Holdings, Inc.
(Financial consulting)
W. Woodrow Stewart Attorney, Stewart, Director, Regions 1999 2006
Gainesville, Georgia Melvin & Frost, LLP
65..................
Lee J. Styslinger III Chief Executive Director, Regions 2003 2006
Birmingham, Alabama Officer, Altec, Inc.
43.................. (Manufacturer of
mobile utility
equipment)
John H. Watson(1) Chairman, Smith, Inc. Director, Regions 1999 2007
Dothan, Alabama (Heating and air
66.................. conditioning)
C. Kemmons Wilson, Jr. Principal, Kemmons Director, Regions 1999 2005
Memphis, Tennessee Wilson, Inc. (Real
57.................. estate development,
hotels, private
investments)
101
PRESENT OCCUPATION YEAR FIRST YEAR TERM
NAME OF NOMINEE OR AND PRINCIPAL POSITION AND OFFICES HELD WITH ELECTED OF OFFICE
DIRECTOR, RESIDENCE, OCCUPATION FOR REGIONS AND AS WILL
AND AGE LAST FIVE YEARS SUBSIDIARIES DIRECTOR EXPIRE
-------------------- ---------------------- ------------------------------ ---------- ---------
Harry W. Witt Retired, Deloitte & Director, Regions 2002 2005
Naples, Florida Touche (Certified
64.................. public accounting)
---------------
(1) Nominee for election at 2004 stockholders' meeting.
Of the directors or nominees for director, none is a "control person" of
Regions by virtue of stock ownership. The only persons who might be considered
"control persons" of Regions are Carl E. Jones, Jr., Chairman, President and
Chief Executive Officer and Richard D. Horsley, Vice Chairman and Chief
Operating Officer, who gain any control they may exercise by virtue of office.
Of the nominees and directors listed above, three also serve as directors
of other companies with a class of securities registered under the Securities
Exchange Act of 1934. James S.M. French serves as a director of Energen
Corporation, Hilb, Rogal and Hobbs Company, and Protective Life Corporation;
Carl E. Jones, Jr. serves as a director of Alabama Power Company; and Malcolm
Portera serves as a director of Alabama Power Company and Protective Life
Corporation.
THE BOARD AND COMMITTEES OF THE BOARD
Regions held six directors' meetings during 2003. All directors attended at
least 75% of the aggregate of the meetings held by the board and by committees
of which they were members except Margaret H. Greene, who attended 70% of such
meetings. Among other board committees, Regions has an audit committee, a
compensation committee, and a nominating and corporate governance committee that
meet regularly and as needed.
The board of directors has reviewed the relationships between directors and
Regions in light of the applicable independence standards of the New York Stock
Exchange. The purpose of the review was to determine whether any director,
either directly or indirectly, has a material relationship with Regions that
would preclude the director from being independent. As a result of the review,
the board has determined that each director is an independent director, other
than Carl E. Jones, Jr., Richard D. Horsley and Allen B. Morgan, Jr., who are
executive officers of Regions and/or its subsidiaries.
The board has established categorical standards to assist it in making the
determination whether a director is independent and in assessing the materiality
of the director's relationship with Regions. These standards will be
periodically reviewed and may be amended from time to time. The current
categorical standards are set forth as follows:
GROUP I -- RELATIONSHIPS THAT PRECLUDE A DIRECTOR'S INDEPENDENCE
If any of the following circumstances exist with respect to a director, the
director will be deemed not to be independent:
- within the last three years, the director has been an employee of
Regions, or a member of the director's immediate family has been an
executive officer of Regions;
- within the last three years, the director or a member of the director's
immediate family has received more than $100,000 per year in direct
compensation from Regions, other than director and committee fees and
pension or other forms of deferred compensation for prior service
(provided such compensation is not contingent in any way on continued
service);
- within the last three years, the director or a member of the director's
immediate family has been affiliated with or employed by a present or
former internal or external auditor of Regions;
- within the last three years, the director or a member of the director's
immediate family has been employed as an executive officer of another
company where any of Regions' present executives serve on that company's
compensation committee; or
102
- within the last three years, the director has been employed by, or a
member of the director's immediate family has been employed as an
executive officer of, a company that makes payments to, or receives
payments from, Regions for property or services in an amount which, in
any single fiscal year, has exceeded the greater of $1 million, or 2% of
such other company's consolidated gross revenues.
GROUP II -- RELATIONSHIPS DEEMED NOT MATERIAL FOR PURPOSES OF DIRECTOR
INDEPENDENCE
The relationships described in this group are considered not to be material
so as to impair a director's independence. A director whose independence is not
precluded by the Group I standards is presumed to be independent if he or she
has no direct or indirect relationship with Regions other than the following:
- the director or a company with which the director is affiliated is a
deposit customer of Regions Bank or a brokerage customer of Morgan Keegan
in the ordinary course of business, on terms and conditions not more
favorable than those afforded by Regions Bank and Morgan Keegan to other
similarly situated customers;
- the director or a company with which the director is affiliated is party
to a loan from Regions Bank that complies with Regulation O promulgated
by the Federal Reserve Board, that is, any loan made by Regions Bank on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other
persons, and which did not involve more than the normal risk of
collectibility or present other unfavorable features;
- the director is a partner, officer, or controlling shareholder of or is
otherwise affiliated with another company that does business with Regions
and the annual payments, excluding payments of principal and interest on
Regulation O compliant loans, to or from Regions in any year do not
exceed the greater of $500,000 or 1% of the annual revenue of the other
company for its most recently completed fiscal year; or
- the director is a partner, member, officer such as a managing director
occupying a comparable position or executive officer of a services firm
that provides accounting, consulting, legal, investment banking or
financial advisory services to Regions and the annual payments to such
firm from Regions do not exceed the greater of $500,000 or 1% of the
annual revenue of the firm for its most recently completed fiscal year.
All non-management directors meet the foregoing categorical independence
standards.
Regions' non-management directors met six times in 2003 in executive
session without any management directors present. James B. Boone, Jr. presided
over these executive sessions. As set forth in item 12 of Regions' declaration
of corporate governance principles, posted on Regions' website at
http://www.regions.com, Regions has established a mechanism for stockholders or
other interested parties to communicate with the directors. In particular, any
interested party who desires to communicate with non-management directors of
Regions may do so by directing the communication to the chair of the nominating
and corporate governance committee at the following address:
Regions Financial Corporation
Attention: Chair, Nominating and Corporate Governance Committee
c/o Office of the General Counsel
P.O. Box 10247
Birmingham, Alabama 35202
If confidential treatment is desired, the envelope should be marked
"Confidential Non-management Director Communication".
It is Regions' policy that directors attend the annual meeting of
stockholders. All directors attended Regions' 2003 annual meeting.
103
Audit Committee. The audit committee, which held eight meetings in 2003,
consists of Jon W. Rotenstreich, Harry W. Witt, and W. Woodrow Stewart.
Committee members satisfy the applicable independence requirements of the New
York Stock Exchange listing criteria, rules of the Securities and Exchange
Commission and Regions' audit committee charter. Duties of the committee include
reviewing with Regions' independent auditors, Ernst & Young LLP, the planning
and results of the auditing engagement, reviewing the activities and
recommendations of Regions' internal auditors, and reviewing the adequacy of
internal accounting controls.
Audit Committee Financial Expert. The board of directors has determined
that the audit committee includes at least one member, Harry W. Witt, who is an
audit committee financial expert within the meaning of the rules of the
Securities and Exchange Commission. Mr. Witt satisfies the requirements of an
independent director under the applicable director independence standards. In
addition, all audit committee members are financially literate, as required by
New York Stock Exchange rules.
Accounting or Audit-Related Complaints. The audit committee has
established procedures for the receipt, retention, and evaluation of complaints
and submissions concerning accounting and audit related matters, the features of
which include insulation from management, safeguards for protecting anonymity
and confidentiality of employee submissions, alternative methods for
submissions, dedication of resources for investigations, and the recording and
preservation of findings. The procedures are administered by the audit committee
and a limited number of individuals in Regions' corporate security and internal
audit areas. Availability of the procedures has been effectively published to
Regions' employees. Any interested party may communicate concerns regarding
accounting, internal accounting controls, or auditing matters directly to the
attention of the audit committee as follows:
By mail:
Regions Financial Corporation
Attention: Mr. Harry Witt
Chairman, Audit Committee
c/o Office of the General Counsel
P.O. Box 10247
Birmingham, Alabama 35202
By phone:
(800) 858-6199
AUDIT COMMITTEE REPORT
Regions' audited financial statements at and for the three year period
ended December 31, 2003, are included in Regions Annual Report on Form 10-K for
the 2003 fiscal year. Regions, acting through its management and board of
directors, has the primary responsibility for the financial statements and the
reporting process, including the systems of internal accounting controls. Ernst
& Young LLP, independent auditors engaged by Regions, are responsible for
expressing an opinion on the conformity of those audited financial statements
with accounting principles generally accepted in the United States.
The audit committee oversees Regions' financial reporting process on behalf
of the board of directors. In fulfilling its oversight responsibilities, the
committee has reviewed the audited financial statements with Regions'
management, including a discussion of the quality, not just the acceptability,
of the accounting principles, the reasonableness of significant judgments, and
the clarity of disclosures in the financial statements.
The audit committee has reviewed with Ernst & Young LLP their judgments as
to the quality, not just the acceptability, of Regions' accounting principles
and such other matters as are required to be discussed with the committee under
auditing standards generally accepted in the United States, including the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with
104
Audit Committees, as amended by Statement on Auditing Standards No. 89, Audit
Adjustments and Statement on Auditing Standards No. 90, Audit Committee
Communications.
The audit committee has discussed with Ernst & Young LLP their independence
in relation to Regions and Regions' management, including the matters addressed
in the written disclosures provided to Regions by Ernst & Young, as required by
Standard No. 1, Independence Discussions with Audit Committees, of the
Independence Standards Board, the standard-setting body governing the
independence of auditors in relation to their public company clients.
The audit committee has discussed with Regions' internal auditors and Ernst
& Young LLP the overall scope and plans for their respective audits. The
committee regularly meets with Regions' internal auditors and Ernst & Young,
with and without management present, to discuss the results of their
examinations, their evaluations of Regions' internal accounting and financial
reporting controls, and the overall quality of Regions' financial reporting.
In reliance on the reviews and discussions referred to above, the audit
committee recommended to the board of directors that the audited financial
statements be included in the Annual Report on Form 10-K for the year ended
December 31, 2003 for filing with the Securities and Exchange Commission.
The foregoing report of the audit committee is furnished by: Harry W. Witt,
committee chair, Jon W. Rotenstreich and W. Woodrow Stewart.
Compensation Committee. The compensation committee, which held eight
meetings during 2003, consists of James S.M. French, Susan W. Matlock, and C.
Kemmons Wilson, Jr.
The role of the compensation committee is to establish and monitor
compensation issues within the broad area of human resources management. The
compensation committee exercises administrative responsibility in working with
Regions' management on the development and clarification of Regions'
compensation philosophy, articulating reasons behind design of Regions' pay and
benefits programs and their relationship to corporate objectives and competitive
practices.
The functions of the compensation committee are recommending to the board
the compensation arrangements for executive management, approving compensation
arrangements for senior company officers, making recommendations to the board
concerning compensation plans in which officers are eligible to participate and
recommending to the board the establishment of or changes in benefit plans in
which officers are eligible to participate, and recommending to the board the
establishment of or changes in benefit plans in which officers and employees
participate (including the authority to make amendments to tax-qualified plans
in which officers participate). The charter of the compensation committee is
posted on Regions' website at http://www.regions.com. The members of the
compensation committee are independent in accordance with the applicable
director independence requirements of the New York Stock Exchange.
In discharging its responsibility, the compensation committee has, from
time to time, used the services of compensation consultants for guidance with
respect to competitive data and practices of other financial service
organizations.
Nominating and Corporate Governance Committee. The nominating and
corporate governance committee, which held five meetings during 2003, consists
of James B. Boone, Jr., James S.M. French, Susan W. Matlock, and C. Kemmons
Wilson, Jr. The role of the nominating and corporate governance committee is to
propose nominees for the Regions' board of directors including the current
nominees for election at the annual meeting. The committee also is responsible
for reviewing, revising and maintaining the corporate governance policies and
procedures of Regions. The charter of the nominating and corporate governance
committee is posted on Regions' website and can be accessed at
http://www.regions.com. The members of the nominating and corporate governance
committee are independent in accordance with the applicable director
independence requirements of the New York Stock Exchange.
The nominating and corporate governance committee is charged to identify
and review individuals believed to be qualified to become board members for
recommendation to the board. The committee will
105
consider and assess candidates consistent with criteria established by the board
and set forth in Regions' declaration of corporate governance principles. The
committee will consider all pertinent issues and factors bearing on the
qualifications of candidates in light of such criteria.
Regions' corporate governance principles affirm that the board seeks
members from diverse professional backgrounds who combine a broad spectrum of
experience and expertise with a reputation for integrity. Directors should have
experience in positions with a high degree of responsibility, be leaders in the
companies or institutions with which they are affiliated, and be selected based
upon contributions they can make to the board and management regardless of
gender or race. A director's qualifications to contribute as a member of the
board can be based on factors such as education, business experience, specific
areas of expertise, reputation, or standing in a particular field.
Regions' bylaws provide that a stockholder may nominate a candidate for
director and establish the procedures and requirements for such a nomination. In
general, a stockholder must submit to Regions' corporate secretary a notice of
the nomination not less than 90 days nor more than 120 days prior to the
anniversary date of the previous year's annual meeting. The notice must be
accompanied by all information relating to each nominee that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Exchange Act and Rule 14a-11 thereunder, including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected.
In light of the ability of a stockholder to nominate candidates for
director under the bylaws, the nominating and corporate governance committee has
not established a policy for considering nominees recommended by stockholders.
Likewise, the committee does not have a policy against considering director
candidates recommended by stockholders, and would evaluate any qualified
candidate for director under the applicable criteria without regard to the
source of the recommendation.
All of the nominees for directors being voted upon at Regions' annual
meeting are directors standing for re-election.
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
The following table is a summary of certain information concerning the
compensation earned by Regions' chief executive officer and each of the other
four most highly compensated executive officers during the last three fiscal
years.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION -------------------- -------
NAME AND PRINCIPAL ------------------------------ RESTRICTED STOCK LTIP ALL OTHER
POSITION YEAR SALARY BONUS STOCK(1) OPTIONS PAYOUTS COMPENSATION
------------------ ---- -------- ---------- ---------- ------- ------- ------------
Carl E. Jones, Jr. ............ 2003 $800,000 $1,200,000 $1,013,600 116,000 0 $194,522(2)
Chairman, President and 2002 798,846 1,212,000 1,544,750 200,000 0 182,405
Chief Executive Officer 2001 750,000 871,875 1,532,500 200,000 0 168,375
Richard D. Horsley............. 2003 430,000 507,938 633,500 75,000 0 123,329(3)
Vice Chairman and Chief 2002 396,077 453,309 617,900 80,000 0 133,899
Operating Officer 2001 357,000 375,388 558,100 80,000 0 130,525
Allen B. Morgan, Jr. .......... 2003 130,000 1,670,000 0 42,000 0 2,650(4)
President and CEO, 2002 130,000 1,370,000 0 0 0 2,500
Morgan Keegan & Co. 2001(5) 130,000 1,370,000 0 125,000 0 2,425
John I. Fleischauer, Jr. ...... 2003 375,000 442,969 633,500 75,000 0 52,834(6)
Regional President 2002 362,887 346,188 617,900 80,000 0 50,840
2001 320,000 334,404 558,100 80,000 0 41,795
Peter D. Miller................ 2003 375,000 442,969 633,500 75,000 0 58,173(7)
Regional President 2002 349,077 345,669 617,900 80,000 0 49,612
2001 310,000 266,009 558,100 80,000 0 42,051
106
---------------
(1) The terms of the restricted stock awards are determined by the compensation
committee. Under the terms of the currently outstanding restricted stock
awards, the named executive officer must remain employed with Regions for
the duration of the restrictive period at the same or higher level in order
for the shares to be released. During the restriction period, the named
executive officer is eligible to receive dividends and exercise voting
privileges on such restricted shares. If any of the restrictions are removed
at the discretion of the compensation committee, the named executive officer
will receive a stock certificate for some percentage or all of the awarded
restricted shares. The restricted shares are not transferable by the named
executive officer during the restriction period. The compensation committee
has the discretion to modify the terms of the restricted stock awards. The
restrictive period for the restricted stock is seven years from the date of
grant, but the restrictions will automatically lapse sooner if specified
performance criteria are met. The performance criteria relate to total
stockholder return objectives relative to a group of peer institutions.
(2) Includes $120,720 allocated to Mr. Jones in 2003 under the 401(k) plan;
$32,000 allocated to Mr. Jones in 2003 under the profit sharing plan; and
$41,802 representing the estimated term component of the premiums paid and
the estimated interest cost to Regions in 2003 resulting from premium
payments for a life insurance benefit plan for Mr. Jones. This plan serves
as an offset to an existing supplemental retirement plan.
(3) Includes $50,225 allocated to Mr. Horsley in 2003 under the 401(k) plan;
$17,164 allocated to Mr. Horsley in 2003 under the profit sharing plan; and
$55,940 representing the estimated term component of the premiums paid and
the estimated interest cost to Regions in 2003 resulting from premium
payments for a life insurance benefit plan for Mr. Horsley. This plan serves
as an offset to an existing supplemental retirement plan.
(4) Consists of $2,650 allocated to Mr. Morgan in 2003 under the 401(k) plan.
(5) Mr. Morgan became employed by Regions on March 30, 2001; all amounts were
accrued and paid after that date.
(6) Includes $37,846 allocated to Mr. Fleischauer in 2003 under the 401(k) plan
and $14,988 allocated to Mr. Fleischauer in 2003 under the profit sharing
plan.
(7) Includes $43,200 allocated to Mr. Miller in 2003 under the 401(k) plan and
$14,973 allocated to Mr. Miller in 2003 under the profit sharing plan.
STOCK OPTIONS
The following table presents information concerning individual grants of
options to purchase Regions' common stock made during 2003 to the named
executive officers.
OPTION GRANTS IN THE LAST FISCAL YEAR
NUMBER OF % OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE GRANT DATE
UNDERLYING OPTIONS TO EMPLOYEES PRICE (PER EXPIRATION PRESENT
NAME GRANTED(1) IN 2003 SHARE) DATE VALUE(2)
---- ------------------ --------------- ----------- ---------- ----------
Carl E. Jones, Jr. .......... 116,000 3.24% $31.675 2/19/10 $524,320
Richard D. Horsley........... 75,000 2.09 31.675 2/19/10 339,000
Allen B. Morgan, Jr. ........ 42,000 1.18 31.675 2/19/10 189,840
John I. Fleischauer, Jr. .... 75,000 2.09 31.675 2/19/10 339,000
Peter D. Miller.............. 75,000 2.09 31.675 2/19/10 339,000
---------------
(1) All options granted in 2003 become exercisable over a three year period,
with 50% exercisable after 12 months, 25% exercisable after 24 months, and
25% exercisable after 36 months, except that exercisability is delayed for
an additional 12 months to the extent the value of incentive stock options
107
(determined as of the date of grant) first exercisable in a calendar year
exceeds $100,000 as to any recipient.
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
depends on the excess of the stock price over the exercise price on the date
the option is exercised, so there is no assurance the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The estimated values under that model are based on the assumptions of
expected stock price volatility of .218, risk-free rate of return of 2.8%,
dividend yield of 3.69% and expected time to exercise of five years.
The following table presents information concerning exercises of stock
options to purchase Regions' common stock during 2003 and the number and value
of unexercised options and stock appreciation rights (SAR) held by the named
executive officers.
AGGREGATED OPTION/SAR EXERCISES IN 2003 AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS IN-THE-MONEY
SHARES AT 12-31-03 OPTIONS/SARS
ACQUIRED VALUE EXERCISABLE/ AT 12-31-03 EXERCISABLE/
NAME ON EXERCISE REALIZED(1) UNEXERCISABLE(2) UNEXERCISABLE(2)
---- ----------- ----------- ---------------- ------------------------
Carl E. Jones, Jr. ............ 13,761 $276,556 484,594/269,583 $4,673,480/$1,717,618
Richard D. Horsley............. 33,726 531,100 279,680/135,000 2,939,667/843,700
Allen B. Morgan, Jr. .......... 0 0 83,334/83,666 693,756/576,189
John I. Fleischauer, Jr. ...... 0 0 133,804/135,000 831,206/843,700
Peter D. Miller................ 0 0 254,466/135,000 2,771,929/843,700
---------------
(1) Value realized is calculated based on the difference between the exercise
price per share and the average of the high and low reported sale price per
share on the date of exercise.
(2) None of the currently exercisable options were granted with tandem SARs.
LONG-TERM INCENTIVE PLAN AWARDS IN 2003
No performance shares were awarded to Regions' named executive officers in
2003. Information concerning restricted stock awards during 2003 is included in
the summary compensation table on page --.
RETIREMENT PLANS
The named executive officers are covered by the Regions Financial
Corporation Retirement Plan, a qualified defined benefit retirement plan, as
complimented by retirement compensation agreements pursuant to its supplemental
executive retirement program.
108
The following table shows estimated annual benefits payable at retirement,
including both qualified plan benefits and supplemental benefits, based on
combinations of final compensation and age at retirement.
PENSION PLAN TABLE
AGE AT RETIREMENT
---------------------------------------------------------------
COMPENSATION 55 60 62 63 64 65
------------ -------- -------- -------- -------- -------- --------
$125,000.............. $ 50,000 $ 62,500 $ 67,500 $ 70,000 $ 72,500 $ 75,000
150,000.............. 60,000 75,000 81,000 84,000 87,000 90,000
175,000.............. 70,000 87,500 94,500 98,000 101,500 105,000
200,000.............. 80,000 100,000 108,000 112,000 116,000 120,000
250,000.............. 100,000 125,000 135,000 140,000 145,000 150,000
300,000.............. 120,000 150,000 162,000 168,000 174,000 180,000
350,000.............. 140,000 175,000 189,000 196,000 203,000 210,000
400,000.............. 160,000 200,000 216,000 224,000 232,000 240,000
450,000.............. 180,000 225,000 243,000 252,000 261,000 270,000
500,000.............. 200,000 250,000 270,000 280,000 290,000 300,000
550,000.............. 220,000 275,000 297,000 308,000 319,000 330,000
600,000.............. 240,000 300,000 324,000 336,000 348,000 360,000
650,000.............. 260,000 325,000 351,000 364,000 377,000 390,000
700,000.............. 280,000 350,000 378,000 392,000 406,000 420,000
750,000.............. 300,000 375,000 405,000 420,000 435,000 450,000
800,000.............. 320,000 400,000 432,000 448,000 464,000 480,000
Benefits are based on average compensation (limited to base salary) over
the three years prior to retirement. In 2003, compensation covered by the plans
for the five highest paid executive officers was as follows: Mr. Jones,
$800,000; Mr. Horsley, $430,000; Mr. Morgan, $130,000; Mr. Fleischauer,
$375,000; and Mr. Miller, $375,000, as reflected in the summary compensation
table on page -- . Benefits are payable as a single life annuity for single
participants and a joint and 50% survivor annuity for married participants.
Other forms of payment are available on an actuarially equivalent basis. Amounts
shown are subject to offset for company-sponsored long-term disability payments
and executive life insurance program cash values exceeding premiums paid.
Benefits are not offset by Social Security benefits. Benefits will be reduced or
eliminated if the participant terminates employment voluntarily before age 55.
CHANGE OF CONTROL AGREEMENTS
Certain executive officers of Regions, including the five executive
officers named in the summary compensation table, have change of control
agreements with Regions. The terms of the agreements, which are identical with
respect to all the signatories, are summarized as follows.
The change of control agreement provides to each signatory executive
officer certain protections in the event a "change of control" in Regions
occurs. For this purpose, the agreement defines "change of control" to include,
generally, the acquisition by any person or group of beneficial ownership of
more than 50% of the combined voting power of Regions; a change in composition
of the board of directors such that incumbent directors make up less than a
majority of the board; completion of a merger, consolidation or reorganization
(subject to exceptions for certain noncontrol transactions); and a liquidation
or dissolution of Regions or sale of all or substantially all of its assets. The
completion of the merger will constitute a change of control for purposes of the
agreements; provided, however, that Carl E. Jones, Jr. has agreed to waive this
provision and as a result the completion of the merger will not constitute a
change of control for Mr. Jones.
109
Commencing on the date of a change of control and for the three year period
following, each signatory executive officer agrees to remain employed by
Regions, subject to the terms of the agreement, and to devote reasonable time
and attention and reasonable best efforts to perform the responsibilities of the
position. Regions agrees that the authority, duties, and responsibilities of
each signatory executive officer shall be at least commensurate with those in
effect prior to the change of control.
Also, during such three year period, the base salary of each signatory
executive officer may not be less than the base salary in effect prior to the
change of control, and the bonus may not be less than the highest bonus in the
preceding three years. Each signatory executive will be entitled to participate
in all incentive and retirement plans on terms comparable to other peer
executives, and to participate in all welfare benefit plans on comparable terms.
During such three year period following a change of control, Regions may
terminate the employment of a signatory executive officer with or without
"cause," which is defined generally as willfully failing to perform reasonably
assigned duties, or engaging in illegal conduct or gross misconduct that
materially injures Regions. The signatory executive officer may terminate
employment with or without "good reason," which includes a reduction of the
officer's compensation, benefits, duties or status, a forced relocation or
material increase in travel requirements or other material breach of the
agreement by Regions.
If Regions terminates the officer's employment other than for cause, or if
the officer resigns for good reason (including resignation for any reason during
the 30-day period following the first anniversary of a change of control),
Regions must pay the executive officer accrued compensation and benefits plus an
amount equal to three times the sum of his base salary and highest annual bonus
during the three years preceding the year in which the change of control
occurred or the year preceding the year in which the termination occurs, and
Regions must continue to provide the officer or his beneficiaries welfare
benefits coverage for three years. If the executive officer's employment is
terminated by Regions for cause, or by reason of the officer's death,
disability, or resignation other than for good reason, Regions' liability is
limited to accrued compensation and benefits.
If any payment under the agreement causes the signatory executive officer
to become subject to the excise tax imposed under section 4999 of the Internal
Revenue Code, then Regions must make an additional payment sufficient to cover
such excise tax plus all income and excise tax imposed on such additional
payment.
DIRECTORS' COMPENSATION
In 2003, directors who are not employees of Regions or its subsidiaries
were paid an annual directors' fee retainer of $30,000, plus an additional
annual retainer of $5,000 for each committee of the board on which a director
serves, and an additional annual chairman's retainer of $2,000 for each
committee chairman. Directors who are employees of Regions or its subsidiaries
receive no fees for their services as directors.
Non-employee directors of Regions are eligible to participate in Regions'
directors' deferred stock investment plan, under which a participating director
may elect to defer receipt of some or all of the participant's retainer and
fees. Regions contributes 25% or the amount deferred by each participating
director. Deferred amounts and company contributions are credited to a
bookkeeping account for the director, which is designated in notional shares of
Regions common stock. Dividend equivalents, if any, are converted to additional
notional shares of common stock in the participant's account. At the end of the
deferral period, the participant's account is settled in actual shares of common
stock, plus cash for any fractional share. Receipt and taxability of benefits
are deferred until the later of the close of the year in which the participant
reaches age 65 or close of the year in which the participant terminates as a
director. During the deferral period, the participants' deferrals and Regions'
contributions are invested in Regions common stock, which is maintained in a
rabbi trust. For 2003, the amounts contributed by Regions as
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matching contributions for the participating directors whose terms continue
beyond the annual meeting, and the amounts of dividend equivalents credited
under the plan, were as follows:
MATCHING DIVIDEND
CONTRIBUTIONS EQUIVALENTS
PARTICIPATING DIRECTORS CREDITED CREDITED
----------------------- ------------- -----------
James S.M. French........................................... $10,500.00 $12,234.43
Margaret H. Greene.......................................... 8,750.00 1,002.69
Susan W. Matlock............................................ 12,081.25 945.92
Malcolm Portera............................................. 4,375.00 99.00
Jon W. Rotenstreich......................................... 10,000.00 1,600.44
W. Woodrow Stewart.......................................... 10,500.00 7,560.03
Lee J. Styslinger III....................................... 4,837.50 99.00
John H. Watson.............................................. 10,125.00 7,437.51
C. Kemmons Wilson, Jr....................................... 10,000.00 7,927.98
Harry W. Witt............................................... 10,250.00 1,606.10
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors who served on the compensation committee during 2003 were:
James S.M. French, chairman
Susan W. Matlock
C. Kemmons Wilson, Jr.
None of these committee members is or ever has been an officer or employee
of Regions or any of its subsidiaries.
During 2003, Samuel E. Upchurch, Jr., regional president of Regions, served
as a member of the board of directors of Altec, Inc., and Lee J. Styslinger III,
chief executive officer of Altec, Inc., served as a director of Regions.
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REPORT OF THE COMPENSATION COMMITTEE
REGARDING EXECUTIVE COMPENSATION
The compensation committee of the board of directors of Regions is
responsible for developing the Regions executive compensation philosophy. It is
the duty of the compensation committee to administer the philosophy and its
relationship with the compensation paid to the chief executive officer and each
of the other senior executives. The committee focuses on ensuring there is a
strong link between the success of the stockholders and the rewards of the
executives.
General. Regions recognizes the importance of annual and long-term
incentive compensation plans to attract and retain corporate officers and other
key employees and to motivate such persons to perform to the best of their
abilities. Regions' annual and long-term incentive programs are designed to
encourage achievement of corporate, strategic business unit, and individual
performance levels that foster overall profitability and stockholder value.
Regions' executive compensation programs incorporate both qualitative and
quantitative considerations. The total compensation of the executive officers of
Regions can be divided into three components: annual base salary, annual
incentive compensation, and long-term incentive compensation. Annual base salary
is intended to be competitive with executive base compensation paid by other
similar financial institutions. Annual incentive compensation is tied
quantitatively to the achievement by Regions of pre-determined, objective
financial performance goals, measured over one-year periods. Long-term incentive
compensation is primarily represented by equity-based awards, designed to reward
the executives with incremental value commensurate with long-term increases in
the value of Regions common stock. The compensation decisions of the committee
relative to Regions' principal executive officers, including the five officers
named above in the compensation tables, are described below as to each of the
three categories. Executive officers' compensation for 2003 was determined by
the committee in the first quarter of 2003.
Base Salary. Annual base salaries are generally set at competitive levels
with similar financial institutions. Specifically, the committee considers peer
group comparisons from survey data for other financial companies,
recommendations from an independent compensation consultant, and individual
performance assessments. For executives other than the chief executive officer,
the committee also considers the chief executive officer's recommendations. In
reaching a consensus on the base salary for each executive, the committee may or
may not assign weights to the various factors considered.
In evaluating and establishing the base salaries of the executive officers
for 2003, the committee, in conjunction with its independent compensation
consultant, surveyed the base salaries of the corresponding officers of other
bank holding companies in a survey group consisting of 17 companies closest to
Regions in asset size and deposit size, and also including the two other largest
bank holding companies headquartered in Alabama. The committee generally targets
the base salaries of the named executive officers to be commensurate in the
aggregate with the median of the base salaries of the corresponding executive
officers of the companies in the survey group, but also factors in an inherently
subjective assessment of the comparative contributions of the executive
personnel to Regions' continued financial and operating success. Based on data
as of January 1, 2003, the actual base salaries of Regions' named executive
officers group in the aggregate was slightly below median amounts indicated by
the survey comparison.
The survey comparison group used in establishing salaries for 2003 was not
the same as the group of companies that make up the S&P 500 Banks Index
presented in the Comparison of Five-Year Cumulative Total Return graph included
in this proxy statement. The committee believes the use of a smaller survey
group tailored by asset and deposit size is more valid for salary evaluation
purposes, even though not all the compensation survey companies are included in
the S&P 500 Banks Index, and even though many companies included in the S&P 500
Banks Index are not included in the compensation survey group.
Based on the survey comparison, advice of an independent compensation
consultant, recommendations from the chief executive officer (for officers other
than himself), and an inherently subjective assessment
112
of the comparative contributions of the executive personnel to Regions'
continued financial and operating success, the 2003 base salaries for the named
officers were determined by the committee.
Annual Incentive Compensation. In the first quarter of 2003, the
compensation committee approved Regions' 2003 annual performance goals and
target awards, expressed as a percentage of base pay, for executive officers.
The performance goals were primarily quantitative in nature and were weighted in
accordance with their overall importance in attaining Regions' annual profit
plan. The target award percentages were set to be generally comparable to annual
incentive compensation opportunities provided to similarly situated executives
of Regions' peer institutions. More specifically, the 2003 performance goals at
the corporate, regional, and departmental levels had the primary emphasis of
consolidated earnings per share growth. Regions exceeded target levels in
earnings per share goals for 2003, and, accordingly, the chief executive officer
and the other named officers received commensurate cash incentive awards,
calculated as a percentage of their base salaries based on this level of
performance goal achievement.
Long-Term Incentive Compensation. Regions' 1999 Long-Term Incentive Plan
("LTIP") permits the grant of long-term incentives in a variety of forms,
including stock options, performance shares and restricted stock. The committee
believes that it is desirable to increase management's equity ownership in
Regions in order to focus management's effort and commitment to build
profitability and stockholder value. The primary purpose of LTIP awards is to
encourage management to take long-term steps to achieve and sustain objectives
with respect to earnings per share and return on equity. Accordingly, with the
advice of its independent compensation consultant, the committee awarded LTIP
grants to the executive officers during 2003, consisting of stock options and
performance accelerated restricted stock.
In establishing the LTIP awards for the named officers, senior management
and other key employees, the committee reviewed with the chief executive officer
the recommended individual awards (for officers other than himself), considering
the scope of accountability, financial goals, and anticipated performance
requirements and contributions expected of the participants.
Compensation of Chief Executive Officer. In deliberating the compensation
of the chief executive officer, the committee follows similar methodology and
approach applied to executive compensation generally. Accordingly, the base
salary determination reflects the peer group survey comparison described above,
the annual incentive compensation is based on an objective formula and tied to
Regions' achievement of pre-determined, quantitative financial goals, and the
realization of long-term incentive compensation, by its nature, is aligned with
the realization of long-term stockholder value. As in the case of setting
executive compensation generally, the committee obtains advice from an
independent compensation consultant. Mr. Jones did not participate in
deliberations and decisions regarding his own compensation.
In setting the base salary for Mr. Jones in 2003, the committee considered
the range of base salaries of the chief executive officer position as reflected
in the survey comparison. In addition, the committee took into account other
factors, most notably, total compensation target, individual performance, and
general market factors as well as a subjective assessment of Mr. Jones' overall
contributions to Regions' financial and operating success. The committee set Mr.
Jones' base salary for 2003 at a level it concluded would be appropriate in
light of the circumstances the committee considered, while recognizing that his
base salary would remain in the low end of the range of salaries of chief
executives of comparable bank holding companies.
LTIP awards for Mr. Jones were set separately and independently of his
participation, based on ownership and total compensation objectives that
reflected data from selected peer companies, his total compensation, his
responsibilities as chief executive officer, and the committee's desire to set
appropriate long-term performance objectives.
113
Summary. The compensation committee of the board of directors remains
dedicated to ensuring that Regions' overall compensation program for its
executive officers, senior management and other key employees is appropriately
designed to:
- Attract, motivate, and retain outstanding contributors;
- Maintain a base salary structure that is competitive in Regions'
marketplace;
- Link annual incentive awards with specific performance targets that yield
superior results; and
- Provide long-term equity-based incentive awards that further align the
interests of Regions' management with those of its stockholders.
Section 162(m) of the Internal Revenue Code, as amended, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to a company's chief executive officer and four other most highly
compensated executive officers, as reported in its proxy statement. Qualifying
performance-based compensation is not subject to the deduction limit if certain
requirements are met. For 2003, the amounts of compensation of such executive
officers that exceeded $1,000,000 qualified as performance-based compensation
under the applicable requirements, with the result that no amounts were
nondeductible under section 162(m). It is the committee's intent to maximize the
deductibility of executive compensation while retaining the discretion necessary
to compensate executive officers in a manner commensurate with performance and
the competitive market of executive talent.
The compensation committee will continue to review and evaluate
compensation programs at least annually. When and where appropriate, the
committee will consult with independent compensation consultants, legal
advisors, and Regions' public accounting firm with respect to the proper design
of the program toward achieving Regions' objectives as set forth by the chief
executive officer and the Regions board of directors.
The foregoing report of the compensation committee is furnished by:
James S.M. French, chairman
Susan W. Matlock
C. Kemmons Wilson, Jr.
FINANCIAL PERFORMANCE
Set forth below is a graph comparing the yearly percentage change in the
cumulative total return of Regions common stock against the cumulative total
return of the S&P 500 Index, and the S&P 500 Banks Index for the past five
years. This presentation assumes that the value of the investment in Regions
common stock and in each index was $100 and that all dividends were reinvested.
Commencing in 2002, Regions has included the S&P 500 Banks Index in this
presentation to better reflect its present size and geographic coverage, and its
move in 2002 to a New York Stock Exchange listing of its common stock. For the
same reasons, Regions is no longer including the Nasdaq Banks Index in this
presentation.
(PERFORMANCE GRAPH)
PERIOD ENDING
---------------------------------------------------------------
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
Regions..................... $100.00 $ 64.00 $ 73.00 $ 83.00 $ 96.00 $111.00
S&P 500 Index............... 100.00 121.00 110.00 97.00 76.00 97.00
S&P 500 Banks............... 100.00 86.00 103.00 103.00 102.00 129.00
OTHER TRANSACTIONS
Directors and officers of Regions and their associates were customers of,
and had transactions with, Regions' affiliates in the ordinary course of
business during 2003; additional transactions may be expected
114
to take place in the ordinary course of business. Included in such transactions
are outstanding loans and commitments, all of which were made on substantially
the same terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons, and did not involve
more than the normal risk of collectibility or present other unfavorable
features.
Regions retained during 2003 and prior years and proposes to retain in the
future on behalf of Regions or certain of its subsidiaries the law firm Stewart,
Melvin & Frost, LLP, of which director W. Woodrow Stewart is a partner. During
2003, Regions or its subsidiaries paid legal fees of $191,760 to the firm of
Stewart, Melvin & Frost, LLP.
CODE OF ETHICS
The board of directors has adopted a code of ethics that applies to its
executive officers, including its chief executive officer, president, chief
financial officer, comptroller and other persons performing executive-level
functions. The code of ethics is posted on Regions' website and can be accessed
at http://www.regions.com.
PROPOSAL 3 -- RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
GENERAL
The audit committee has selected Ernst & Young LLP as Regions' independent
auditors for the 2004 fiscal year. The board of directors recommends that the
stockholders ratify the selection of Ernst & Young. Ernst & Young (or its
predecessor) has served as Regions' independent auditors since Regions'
inception in 1971.
Ernst & Young LLP has been engaged to provide auditing services and also to
provide tax services and general accounting advice. In making this selection,
the audit committee considered whether the engagement by Regions of Ernst &
Young for services other than audit services is compatible with Ernst & Young's
independence and concluded that the provision of the nonaudit services
referenced in the table below is compatible with maintaining the independence of
Ernst & Young.
A representative of the firm will be present at the stockholders' meeting
to make a statement if he or she so desires and to respond to appropriate
questions from stockholders.
AUDIT FEES, AUDIT-RELATED FEES, TAX FEES, AND ALL OTHER FEES
The aggregate fees and expenses paid to Ernst & Young LLP by Regions during
2003 and 2002 are set forth in the following table.
2003 2002
---------- ----------
Audit fees(1)............................................... $1,335,000 $1,405,000
Audit-related fees(2)....................................... 632,000 327,000
Tax fees(3)................................................. 1,375,000 3,956,000
All other fees(4)........................................... 487,000 663,000
---------- ----------
Total fees................................................ $3,829,000 $6,351,000
========== ==========
---------------
(1) Audit fees included fees and expenses associated with the annual audit, the
reviews of Regions' quarterly reports on Form 10-Q, regulatory filings, and
statutory audits of Regions and its subsidiaries.
(2) Audit-related fees and expenses primarily included accounting consultation,
assistance with securitizations or other accounting transactions and audits
of employee benefit plans.
(3) Tax fees and expenses included tax compliance services, tax advice, and tax
planning assistance. All tax fees were Permissible Tax fees. Tax compliance
fees and expenses were $1,327,000 for 2003 and $1,479,000 for 2002. Tax
consulting fees and expenses were $48,000 for 2003 and $2,477,000 for 2002.
115
(4) All other fees and expenses included primarily assistance with human
resources services and cash management services. No financial information
systems implementation and design services were rendered by Ernst & Young
during 2003 or 2002.
In accordance with the audit committee charter, as amended, the audit
committee must preapprove any engagement of Ernst & Young LLP for audit or
nonaudit services. The audit committee has delegated to its chairperson the
authority to preapprove permissible nonaudit services, provided the anticipated
fee for such service does not exceed $50,000. Any such approval of nonaudit
services pursuant to this delegation of the full audit committee's authority
must be presented to the audit committee at its next regular meeting. A request
for preapproval of services may be initiated by the comptroller of Regions, who
may consult with the coordinating partner of Ernst & Young for the audit
engagement.
PROPOSAL 4 -- ADJOURNMENT OF ANNUAL MEETING
THE PROPOSAL
Regions is asking its stockholders to vote on a proposal to adjourn the
Regions annual meeting, if necessary or appropriate, in order to allow for the
solicitation of additional proxies.
BOARD OF DIRECTORS' RECOMMENDATION
REGIONS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL.
PROPOSAL 5 -- STOCKHOLDER PROPOSAL
THE PROPOSAL
The United Brotherhood of Carpenters Pension Fund, 101 Constitution Avenue,
N.W., Washington, D.C. 20001, submitted the proposal set forth below, for
presentation for a vote at Regions' annual meeting. The proposal is required to
be included in this proxy statement by the rules of the Securities and Exchange
Commission. The board of directors and management of Regions do not endorse the
proposal, nor is the board of directors of Regions responsible in any way for
the contents of the proposal or the accompanying supporting statement. THE
REGIONS BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THIS STOCKHOLDER
PROPOSAL. The proponent beneficially owns 3,600 shares of Regions common stock.
The proposal is as follows:
Resolved: That the shareholders of Regions Financial Corporation
("Company") hereby request that the board of directors initiate the appropriate
process to amend the Company's governance documents (certificate of
incorporation or bylaws) to provide that nominees standing for election to the
board of directors must receive the vote of a majority of the shares entitled to
vote at an annual meeting of shareholders in order to be elected or re-elected
to the board of directors.
The proponent's supporting statement is as follows:
Our Company is incorporated in the State of Delaware. Delaware corporate
law provides that a company's certificate of incorporation or bylaws may specify
the number of votes that shall be necessary for the transaction of any business.
(8 Del. C. 1953, Section 216 -- Quorum and required vote for stock
corporations). Further, the law provides that in the absence of any such
specification in the certificate of incorporation or bylaws of the corporation,
directors "shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors." Our Company presently does not specify a vote
requirement other than a plurality for the elections of directors, so Company
directors are elected by a plurality of the vote.
We feel that it is appropriate and timely for the board to initiate a
change in the threshold vote required for a nominee to be elected to the board
of directors. While the governance change proposed
116
would entail a vote of the shareholders, the board of directors is positioned to
initiate the amendment process. We believe that in order to make corporate
director elections more meaningful at our Company, directors should have to
receive the vote of a majority of the shares entitled to be voted in a director
election. Under the present system, a director can be re-elected even if a
substantial majority of the votes cast is withheld from that director. For
example, if there are 100 million votes represented at a meeting and eligible to
be cast and 90 million of these votes are withheld from a given candidate, he or
she would still be elected with a plurality of the vote despite the fact that
90% of the votes cast withheld support for that nominee's election to the board.
We believe that a director candidate that does not receive a majority of the
vote cast should not be seated as a director.
It is our contention that the proposed majority vote standard for corporate
board elections is a fair and reasonable standard and adoption of such a
standard will strengthen the corporate governance processes at our Company. We
urge your support of this important governance reform.
BOARD OF DIRECTORS' RECOMMENDATION
Regions' board of directors unanimously recommends a vote against the
proposal. Section 216 of the Delaware General Corporation Law, while generally
permitting the certificate of incorporation or bylaws of a Delaware corporation
to specify the vote necessary for the transaction of any business, provides that
in the absence of such specification, "[d]irectors shall be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors...."
In seeking ultimately to require for the election of a director the vote of
a majority of the shares entitled to vote at an annual meeting, the proposal
would establish an arbitrarily high and potentially disruptive vote requirement.
This is evident given that the proposal's vote requirement and the requirement
for a quorum would be essentially the same. In practical effect, this would mean
that the vote required to elect a director could be substantially higher than a
majority of shares present in person or represented by proxy at the meeting. For
example, if 75% of the outstanding shares were represented at a meeting,
comfortably exceeding the quorum requirement, the election of a director under
the proposal would require the vote of more than two-thirds of the shares
represented at the meeting. Indeed, at its logical limit in the case of a
meeting with the minimum quorum, the proposal would require a 100% vote of the
shares present to elect a director.
Moreover, the proposal does not address what would occur if no candidate
receives the requisite majority vote. Under Delaware law and Regions' bylaws,
the possible scenarios include the prior director remaining in office until a
successor is elected and qualified, the board of directors electing a director
to fill a vacancy, or the position remaining vacant. All of these alternatives
are less democratic and, in the view of Regions' board of directors, less
desirable than the election of directors by plurality vote.
Finally, the proposal could prove impractical in a situation in which
multiple candidates are standing for election, because of the possibility that
the division of votes could result in no candidate receiving the requisite vote.
For these reasons, the board of directors of Regions believes that this
shareholder proposal would not improve Regions' corporate governance and is not
in the best interest of Regions' stockholders. Therefore, the board of directors
recommends a vote "AGAINST" this proposal.
117
OTHER MATTERS TO BE CONSIDERED AT THE UNION PLANTERS MEETING
Union Planters' annual shareholder meeting was previously scheduled for
April 15, 2004. However, in light of the announcement of the merger on January
23, 2004, Union Planters' board of directors concluded that it was prudent to
postpone the annual meeting.
The shareholder meeting at which the merger will be considered will also be
Union Planters' annual meeting of shareholders for 2004. Therefore, a number of
proposals requiring shareholder action in the ordinary course of Union Planters'
business also are being presented for consideration and voting. This portion of
the joint proxy statement/prospectus discusses these other proposals.
118
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of -- , 2004, Union Planters had issued -- shares of common
stock, all of which were outstanding. Union Planters shareholders are entitled
to one vote for each share on all matters to come before the meeting. Only
shareholders of record at the close of business on -- , 2004, or "the
record date," will be entitled to vote at the Union Planters' meeting or any
adjournment thereof.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of shares of Union Planters common stock by the directors and certain
executive officers as of the record date. Except as otherwise noted, the persons
named in the table below have sole voting and investment power with respect to
all shares shown as beneficially owned by them.
NUMBER OF SHARES OF PERCENTAGE OF SHARES
COMMON STOCK OF OUTSTANDING
NAME BENEFICIALLY OWNED(1)(2) COMMON STOCK(3)
---- ------------------------- --------------------
Albert M. Austin(4)..........................
Samuel W. Bartholomew, Jr. ..................
George W. Bryan..............................
Bobby L. Doxey(4)............................
James E. Harwood(4)..........................
Adolfo Henriques.............................
Parnell S. Lewis, Jr. .......................
Jackson W. Moore(4)..........................
Jorge M. Perez...............................
Lou Ann Poynter..............................
John R. Roberts..............................
Steven J. Schenck(4).........................
Michael S. Starnes...........................
Richard A. Trippeer, Jr. ....................
Robert R. Waller.............................
John V. White, Jr.(4)........................
Spence L. Wilson.............................
----------- -----------
Directors and Executive Officers as a group
(17 persons)............................... %
=========== ===========
---------------
* Indicates less than 1% of the shares of Union Planters common stock
outstanding as of -- , 2004.
(1) Includes shares of common stock owned by relatives or held in trusts or
partnerships for the benefit of relatives with respect to which named
persons disclaim any beneficial interest. The number of shares of common
stock beneficially owned by each person as of the record date includes
shares of common stock that such person had the right to acquire on or
within sixty (60) days after the record date, including, but not limited to,
upon the exercise of options.
(2) Beneficial ownership includes those shares a director or executive officer
has the power to vote, or the power to transfer.
(3) For each individual and group included in the table, percentage ownership is
calculated by dividing the number of shares beneficially owned by such
person as described above by the sum of the -- shares of common stock
outstanding on the record date and the number of shares of common stock that
such person had the right to acquire on or within sixty (60) days of the
record date, including, but not limited to, upon the exercise of options.
(4) Includes shares of common stock in the following amounts resulting from the
exercise of nonqualified options, the receipt of which shares has been
deferred pursuant to an Irrevocable Stock Option Deferral Agreement or
deferred pursuant to deferral requirement in connection with Section 162(m)
limitation: A.M. Austin (-- shares); B.L. Doxey (-- shares); J.E. Harwood
(-- shares); J.W. Moore (-- shares); S.J. Schenck (-- shares); and J.V.
White (-- shares).
119
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Union Planters directors and executive officers file reports with the
SEC indicating the number of shares of any class of our equity securities they
owned when they became a director or executive officer and, after that, any
changes in their ownership of our equity securities. These reports are required
by Section 16(a) of the Securities Exchange Act of 1934, as amended. Based on
our review of the reports, and except as set forth below, Union Planters
believes that during fiscal year 2003 all of our officers and directors complied
with the foregoing filing requirements. Albert Austin filed an amended Form 5 on
April 8, 2004, which included the late reporting of a distribution of shares of
Union Planters common stock to beneficiaries of certain trusts, of which Mr.
Austin serves as co-trustee, on April 2, 2003, March 12, 2003 and October 22,
2003, and the resulting transfer of a portion of these shares for a custodial
account for Albert M. Austin, III, trustee under the will of Elizabeth I.
Humphrey, on October 23, 2003.
PROPOSAL 2 -- ELECTION OF DIRECTORS
The Union Planters charter provides for a classified board of directors
that is divided into three classes. Each class has as equal a number of
directors as possible. The directors in each class serve a three-year term and
only one full class is elected at each annual meeting. You are being asked to
elect four Union Planters directors to serve in Class II for a term to expire at
the annual meeting to be held in 2007.
Union Planters recommends the election of Albert M. Austin, George W.
Bryan, Robert R. Waller and Spence L. Wilson. The board of directors has no
reason to believe that any nominee for director will not be available for
election. However, if a nominee is unavailable for election, the proxy holders
may vote for another nominee proposed by the Union Planters board of directors
or the board of directors may reduce the number of directors to be elected at
the annual meeting. Each nominee has agreed to be named in this joint proxy
statement/prospectus and to serve if elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS YOU VOTE FOR ALL OF THE UNION
PLANTERS DIRECTOR NOMINEES.
INFORMATION ABOUT UNION PLANTERS DIRECTORS AND NOMINEES
The following biographies show the age and principal occupations during the
past five years of each of the Union Planters directors, the date the director
was first elected to the Union Planters board of directors, and any
directorships held by the director with any other public company or any
registered investment company. Ages are shown as of February 20, 2004.
CLASS I DIRECTORS AND NOMINEES (TERM EXPIRES AT 2006 ANNUAL MEETING)
James E. Harwood (Age 67)
- Director of Union Planters since 1996
- President, Sterling Equities, Inc. (business management advisory
services) since November 1990
- Director of SCB Computer Technology*
Lou Ann Poynter (Age 57)
- Director of Union Planters since 2001
- Chairman and Chief Executive Officer, Hattiesburg Region of Union
Planters Bank, National Association from 1997 to 2000
- Executive Vice President, Union Planters Bank, National Association,
Southeast Region from 2000 to 2001
120
- Senior Executive Vice President, Union Planters and Union Planters Bank,
National Association, Mortgage Banking Division, since 2001
Michael S. Starnes (Age 58)
- Director of Union Planters since 2001
- Chairman, President and Chief Executive Officer, M.S. Carriers, Inc.
(transportation carrier) from 1978 to 2001
- President, M.S. Carriers, Inc., a wholly owned subsidiary of Swift
Transportation Corporation, since June 2001
- Director of Mid-America Apartment Communities*
- Director of Swift Transportation Corporation*
Richard A. Trippeer, Jr. (Age 64)
- Director of Union Planters since 1974
- Retired: President, R.A. Trippeer, Inc. (investments) from 1974 to 1989
CLASS II DIRECTORS AND NOMINEES (TERM EXPIRES AT 2007 ANNUAL MEETING)
Albert M. Austin (Age 76)
- Director of Union Planters since 1974
- Chairman, Cannon, Austin & Cannon, Inc. (real estate) since September
1989
George W. Bryan (Age 59)
- Director of Union Planters since 1986
- Retired: Senior Vice President, Sara Lee Corporation, Meat Group Division
(meat processing and packaging) from 1989 to 2000
- Chief Executive Officer, Sable Enterprises (investments) from 2000 to
2001
- Chief Executive Officer, Old Waverly Investments, LLC (investments) since
2001
- Director, TBC Corporation*
- Director, Buckeye Technologies Inc.*
Robert R. Waller, M.D. (Age 67)
- Director of Union Planters since 2001
- Retired: Professor of Ophthalmology, Mayo Medical School from 1980 to
2002
- President Emeritus, Mayo Clinic from 1998 to 2002
- Director of Hormel Foods Corporation*
Spence L. Wilson (Age 61)**
- Director of Union Planters since 1996
- President, Kemmons Wilson, Inc. (hotel development and management, resort
time-sharing, home building, subdivision development, and private
investment) since 1970
121
CLASS III DIRECTORS AND NOMINEES (TERM EXPIRES AT 2005 ANNUAL MEETING)
Samuel W. Bartholomew, Jr. (Age 59)
- Director of Union Planters since 2001
- Chairman and Chief Executive Officer, Stokes Bartholomew Evans & Petree,
P.A. (law firm) since 1977
Parnell S. Lewis, Jr. (Age 56)
- Director of Union Planters since 1996
- President of Anderson-Tully Company (hardwood lumber products) from 1993
to 1999
- Chief Executive Officer, River Investments, LLC (investments) from 1998
to 2001
- President and Chief Executive Officer, River Enterprises, Inc.
(investments) since 2003
Jackson W. Moore (Age 55)**
- Director of Union Planters since 1986
- President and Chief Operating Officer, Union Planters and Union Planters
Bank, National Association from 1994 to 2000
- Chairman, President and Chief Executive Officer, Union Planters and Union
Planters Bank, National Association since 2000
Jorge M. Perez (Age 54)
- Director of Union Planters since 2001
- President, The Related Group of Florida (real estate development) since
1979
John R. Roberts (Age 62)
- Director of Union Planters since 2001
- Retired: Managing Partner, Mid-South Region, Arthur Andersen LLP
(accounting) from 1993 to 1998
- Independent Consultant and Executive Director, Civic Progress, Inc.
(non-profit) since 2001
- Director of Energizer Holdings, Inc.*
---------------
* A corporation subject to the registration or reporting requirements of the
Securities Exchange Act of 1934 or registered as an investment company under
the Investment Company Act of 1940.
** S.L. Wilson is a brother-in-law of J.W. Moore, the Union Planters Chairman,
President and Chief Executive Officer.
The Union Planters' board of directors has reviewed the relationships
between the directors and Union Planters to determine whether any director,
directly or indirectly, has a material relationship with Union Planters that
would preclude the director from being independent. As a result of its review,
the board has determined that the following directors are independent, in
compliance with the New York Stock Exchange Listing Standards: James E. Harwood,
Michael S. Starnes, Richard A. Trippeer, Jr., Albert M. Austin, George W. Bryan,
Robert R. Waller, M.D., Samuel W. Bartholomew, Jr., Parnell S. Lewis, Jr., Jorge
M. Perez and John R. Roberts.
In general, the policy of Union Planters' board of directors is that a
director is presumed to be independent unless the director (or his or her
immediate family members) (i) is/was a current/former employee/executive of
Union Planters during the last three years, (ii) was a former employee/partner
of Union Planters' current or former independent auditors during the last three
years, (iii) is an owner, partner, employee, director of an entity with material
relationships (makes payments to, or receives
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payments from Union Planters which exceed the greater of $1 million, or 2% of
the entity's gross revenues) with Union Planters, either as a vendor or customer
(however, extensions of credit that comply with Regulation O shall be presumed
to be consistent with director independence as discussed below), (iv) receives
more than $100,000 per year in direct compensation from Union Planters other
than director and related fees and (v) serves on a board of directors or is
employed by a company whereby an executive officer of Union Planters serves on
the compensation committee, or equivalent, of the company employing the
director.
Union Planters follows the following guidelines when determining the impact
of a credit relationship on a director's independence. Extensions of credit that
comply with Regulation O shall be presumed to be consistent with director
independence. In other words, normal, arms length credit relationships entered
into in the ordinary course of business shall not negate director independence.
In addition, an extension of credit to a company, an executive officer of which
serves on Union Planters' board of directors, must meet the substantive
requirements of Regulation O in order to maintain the independence of such
director. Such loans must be made on substantially the same terms, including
interest rates and collateral, as and following credit-underwriting procedures
that are no less stringent than those prevailing at the time for comparable
transactions by Union Planters with other persons. Such loans also shall not
involve more than the normal risk of repayment or present other unfavorable
features and no event of default shall have occurred. The board of directors
must review any extension of credit of a director or his or her related
interests that has become criticized (or past-due) in order to determine the
impact that such classification has on the director's independence.
Additionally, in making the determination of independence, the board of
directors will consider any other activities or relationships which cause the
director to have the appearance of a material conflict of interest in the
performance of the director's duties to Union Planters. Such activities or
relationships might include business relationships with Union Planters,
including community/civic board membership which are supported by Union
Planters. Services provided by Union Planters to a director or his or her
relation interests shall be normal, arms length relationships entered into on
competitive terms and conditions.
Furthermore, Union Planters will not make any personal loans or other
extensions of credit to directors (or their immediate family members) or
executive officers (or their immediate family members) unless such extensions of
credit are allowed under rules established by the regulatory bodies, including
Regulation O issued by the banking regulatory agencies.
Annually, the Compensation/Nominations/Corporate Governance Committee will
make inquiries and gather other information of each director to assist in
determining each director's independence and will recommend to the board of
directors that the director be deemed either independent or not independent. The
board of directors based on this review and recommendation will make the final
determination.
MEETINGS AND COMMITTEES OF THE UNION PLANTERS BOARD OF DIRECTORS
The Union Planters board of directors met six times in 2003. In addition to
meetings of the full board of directors, directors also attended meetings of the
committees of the board of directors on which they serve. All of the directors
attended at least 75% of all the meetings of the Union Planters board of
directors and the committees on which they served during the fiscal year 2003.
It is the policy of Union Planters to encourage the members of its board of
directors to attend the annual meeting of shareholders. All of the members of
the board of directors attended the annual meetings of shareholders held for the
past several years, including the 2003 annual meeting of shareholders.
The Union Planters board of directors currently has the following standing
committees which meet on a regularly scheduled basis:
- Audit Committee;
- Compliance and Community Reinvestment Act Committee;
- Executive Committee;
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- Loan Committee; and
- Compensation/Nominations/Corporate Governance Committee.
In addition to the meetings of the full board of directors and committee
meetings, the non-management directors of Union Planters met in executive
sessions two times in 2003 with George W. Bryan presiding as the chair of these
meetings, to discuss certain affairs of Union Planters, including strategic
issues and management performance. The presiding director of these executive
sessions rotates among the various chairs of the board committees as established
by the Compensation/Nominations/Corporate Governance Committee.
The board has a policy, which is set forth in its Corporate Governance
Guidelines (available on Union Planters' website at
http://www.unionplanters.com), whereby any shareholder can communicate directly
with the board, including the presiding director of the executive sessions
discussed above, by following the procedures set forth by the board of directors
from time to time. Currently, shareholders should send all correspondence to
Union Planters Corporation, c/o Corporate Secretary, 6200 Poplar Avenue,
Memphis, Tennessee 38119. All such written correspondence, upon receipt, will be
immediately forwarded to the designated presiding director of the next scheduled
board executive session for review and consideration.
Audit Committee. During 2003, the Audit Committee of the Union Planters
board of directors held ten meetings. The Audit Committee operates under a
written charter, a copy of which may be viewed online on Union Planters' website
at http://www.unionplanters.com (under "Corporate Governance"). The Audit
Committee reviews its charter, which outlines the committee's goals, objectives,
duties and responsibilities, on an annual basis. The committee reports its
conclusions and activities to the full board regularly. The charter also allows
the members of the committee to retain and consult with independent advisors as
necessary, without board approval. The committee will continue to review and
amend its charter to improve and expand its effectiveness based on emerging best
practices and guidance from the New York Stock Exchange and the SEC, as needed.
The primary objectives of the Audit Committee are to assist the full board
of directors with oversight of the integrity of Union Planters' financial
statements and related financial information, including the adequacy and
effectiveness of the Union Planters' internal controls over financial reporting;
the selection and evaluation of the qualifications and independence of the
independent accountants; the performance of Union Planters' internal audit
function and independent accountants; and compliance by Union Planters with
legal and regulatory requirements and Union Planters' Code of Business Conduct
and Ethics.
The duties and responsibilities of the Audit Committee with respect to the
independent accountants include:
- the selection, appointment and retention of Union Planters' independent
accountants (subject to shareholder ratification);
- the review and approval of the annual audit plan of the independent
accountants, including the experience and qualifications of the senior
members of the audit team;
- the evaluation of the independence, qualifications and performance of the
independent accountants;
- the pre-approval of all auditing services and permitted non-audit
services and related fees provided by the independent accountants; and
- the establishment of procedures to evaluate Union Planters' hiring of
employees or former employees of the independent accountants.
Additionally, the Audit Committee evaluates the integrity of the financial
statements and the adequacy and effectiveness of internal controls over
financial reporting by:
- reviewing and holding discussions with management, the independent
accountants and internal auditors of Union Planters' unaudited quarterly
financial statements and annual audited financial
124
statements, management discussion and analysis of financial condition and
results of operations, earnings press releases, other financial
information provided to analysts and rating agencies and material written
communications between the independent accountants and management;
- reviewing and discussing with management and the independent accountants
significant financial reporting issues and judgments made in connection
with the preparation of Union Planters' financial statements and any
major issues as to the adequacy of internal controls;
- reviewing and discussing with management and the independent accountants
significant accounting or regulatory developments;
- discussing with management Union Planters' major financial risk exposures
and the steps management has taken to monitor and control such exposures;
- reviewing and discussing with the chief executive officer and chief
financial officer the certifications of periodic reports as required by
the SEC;
- discussing with management, the independent accountants and internal
auditors their assessments of the adequacy of Union Planters' internal
controls and any identified financial reporting, internal control or
other related weaknesses or deficiencies; and
- reviewing the activities of the internal audit department, including
review of the annual audit plan, risk assessment reports and the results
of the internal auditors' reviews, audits and management responses.
Each of the current members of the Audit Committee is considered to be
"independent" in compliance with the independence standards set forth in Union
Planters' corporate governance guidelines, the rules of the SEC, the FDIC
Improvement Act of 1991, and the New York Stock Exchange Listing Standards and
each are financially literate, as required by New York Stock Exchange Listing
Standards.
AUDIT COMMITTEE REPORT
The Audit Committee is composed of five directors who are independent as
defined under the rules of the New York Stock Exchange, which means that, among
other things, these directors are not part of the management of, or employed by,
Union Planters and are free from any relationship that would interfere with
their exercise of independent judgment as members of this committee and all
possess the level of financial literacy required by the New York Stock Exchange
Listing Standards. The board of directors of Union Planters has determined that
John R. Roberts is an audit committee financial expert as defined by Item 401(h)
of Regulation S-K. The committee operates under a written charter approved by
the board of directors.
The committee reviews Union Planters' financial reporting process on behalf
of the board of directors. In fulfilling its responsibilities, the committee has
reviewed and discussed the audited financial statements contained in Union
Planters' Annual Report on Form 10-K for the year ended December 31, 2003 with
Union Planters' management and the independent accountants. Management is
responsible for Union Planters' financial statements and the financial reporting
process, including internal controls. The independent accountants are
responsible for expressing an opinion on the conformity of those audited
financial statements with accounting principles generally accepted in the United
States of America.
The committee has discussed with the independent accountants the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended by Statement on Auditing
Standards No. 89, Audit Adjustments, and Statement on Auditing Standards No. 90,
Audit Committee Communications. In addition, the committee has discussed with
the independent accountants the accountants' independence from Union Planters
and its management including the matters in the written disclosures provided to
the committee as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees. The committee has also
considered whether the provision of non-audit services by the independent
accountants to Union Planters is
125
compatible with maintaining auditors' independence and has pre-approved any
non-audit services which may be performed by Union Planters' independent
accountants.
Based on the reviews and discussions referred to above, the Audit Committee
recommended to the board of directors, and the board of directors has approved
the inclusion of the audited financial statements in the Union Planters Annual
Report on Form 10-K for the year ended December 31, 2003, for filing with the
SEC.
AUDIT COMMITTEE
Parnell S. Lewis, Jr., Chair
George W. Bryan
James E. Harwood
John R. Roberts
Robert R. Waller
Compliance and Community Reinvestment Act Committee. The Compliance and
Community Reinvestment Act Committee held five meetings in 2003. This committee
monitors Union Planters Bank's overall regulatory compliance, with a specific
focus on the Community Reinvestment Act, and makes recommendations to the board
of directors concerning Union Planters Bank's progress under the Community
Reinvestment Act and the Home Mortgage Disclosure Act. This includes reviewing
Union Planters Bank's small business, small farm, and home mortgage lending
performance; equity investments; charitable contributions; and bank employee
service hours that qualify under the above mentioned regulations. A major focus
of this committee is overseeing the accuracy of the lending data reported to the
Office of the Comptroller of the Currency. The members of the Compliance and
Community Reinvestment Act Committee are Parnell S. Lewis, Jr., Jorge M. Perez,
Spence L. Wilson, John R. Roberts, Lou Ann Poynter, and James E. Harwood
(Chair).
Executive Committee. The Executive Committee held five meetings in 2003.
This committee is granted the power under the Bylaws of Union Planters to
exercise all of the authority of the board of directors with respect to all
matters other than certain actions which are not permitted under the Tennessee
Business Corporation Act. The members of the Executive Committee are Albert M.
Austin, Spence L. Wilson, Richard A. Trippeer, Jr., and Jackson W. Moore
(Chair).
Loan Committee. The Loan Committee held six meetings in 2003. This
committee monitors the activities of the overall lending function utilizing
information presented to it by management at regular quarterly meetings. This
includes, but is not limited to, review of trends in outstanding credit
relationships; key quality measures; significant borrowing relationships; large
problem loans; industry concentrations; all significant lending policies; and,
the adequacy of the allowance for loan losses. The committee also reviews
lending-related reports from the regulators, auditors, and internal personnel.
The members of the Loan Committee are Samuel W. Bartholomew, Jr., Jorge M.
Perez, Michael S. Starnes, Spence L. Wilson, Richard A. Trippeer, Jr., and
Albert M. Austin (Chair).
Compensation/Nominations/Corporate Governance Committee. The
Compensation/Nominations/Corporate Governance Committee held four meetings in
2003. The Compensation/Nominations/Corporate Governance Committee operates under
a written charter which may be viewed online on Union Planters' website at
http://www.unionplanters.com (under "Corporate Governance").
The duties and responsibilities of the Compensation/Nominations/Corporate
Governance Committee include:
- evaluating and approving Union Planters' executive officers benefit,
bonus, incentive compensation, severance, equity-based and other
compensation plans and policies;
- assisting the board of directors in identifying qualified candidates for
nomination to the board and recommending to the board of directors
nominees for the next annual meeting of shareholders;
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- reviewing, revising and maintaining Union Planters' Corporate Governance
Guidelines, including maintaining compliance with any new corporate
governance policies and procedures;
- reviewing and recommending to the board of directors all persons to be
elected as chairman, chief executive officer or president of Union
Planters;
- retaining and terminating any compensation consultant to be used to
assist in the evaluation of the chief executive officer or executive
compensation with the sole authority to approve the consultant's fees;
and
- reviewing and approving or make recommendations to the board of directors
with respect to the adoption of material changes in employee benefit
plans.
In identifying whether candidates are qualified for nomination and service
on the Union Planters' board of directors, at a minimum, the
Compensation/Nominations/Corporate Governance Committee will consider (i)
whether the individual is subject to a disqualifying factor as described in
Union Planters' Corporate Governance Guidelines (in determining independence),
(ii) the number of other boards and committees on which the individual serves,
(iii) whether the individual has reached the retirement age specified in Union
Planters' Corporate Governance Guidelines, (iv) whether the individual provides
the appropriate experience and expertise in light of the other members currently
serving on the board of directors and those whose terms are about to expire, and
(v) any other factors relating to the ability and willingness of the individual
to serve. The Compensation/Nominations/Corporate Governance Committee proposed
the current nominees for election to the Union Planters' board of directors at
the 2004 annual meeting of shareholders.
In addition, Union Planters has a policy to consider recommendations for
director nominees from its shareholders. Union Planters' policy requires that
the Compensation/Nominations/Corporate Governance Committee evaluate nominees
recommended by shareholders in the same manner as required by the corporate
governance policies and procedures described above and pursuant to the
committee's charter. All of the nominees for directors being voted upon at the
2004 annual meeting are directors standing for re-election. The
Compensation/Nominations/Corporate Governance Committee's policy is to consider
suggestions for board membership submitted by shareholders in accordance with
the following procedures: shareholders may nominate director candidates for
consideration by delivering notice to the Union Planters' Corporate Secretary at
the principal executive offices of Union Planters in accordance with the
provisions of Union Planters' bylaws and the provisions set forth in this joint
proxy statement/prospectus under "Stockholder Proposals -- Union Planters 2005
Annual Meeting Shareholder Proposals."
Each of the current members of each of the
Compensation/Nominations/Corporate Governance Committee is considered to be
"independent" in compliance with the independence standards set forth in Union
Planters' Corporate Governance Guidelines and the New York Stock Exchange
Listing Standards.
COMPENSATION/NOMINATIONS/CORPORATE GOVERNANCE COMMITTEE REPORT
Within the past three years, none of the committee members is or has been
an officer or employee of Union Planters or any of its subsidiaries or has
engaged in any business transaction with Union Planters or has any business
relationship with Union Planters that is required to be disclosed in this joint
proxy statement/prospectus. The committee makes recommendations to the board of
directors as to the amount and form of executive officer compensation and is
responsible for granting long-term incentives including stock options and
restricted stock.
Pay Philosophy. The compensation programs of Union Planters are designed
to align compensation with business objectives and performance, and to enable
Union Planters to attract, retain and reward executives who contribute to the
long-term success of Union Planters. The committee believes that executive pay
should be linked to performance. Therefore, Union Planters provides an executive
compensation program which includes base pay, annual cash bonus and long-term
incentive opportunities through the use of stock options and restricted stock.
127
Section 162(m) of the Internal Revenue Code imposes a limit, with certain
exceptions, on the amount that a publicly-held corporation may deduct in any
year for the compensation paid with respect to its five most highly compensated
executive officers. While the committee cannot predict with certainty how Union
Planters' compensation tax deduction might be affected, the committee attempts
to preserve the tax deductibility of all executive compensation while
maintaining flexibility with respect to Union Planters' compensation programs as
described in this report. Consistent with this intention, cash awards under the
2002 Senior Management Performance Incentive Plan and options and certain other
equity awards under the Amended and Restated 1992 Stock Incentive Plan are
intended to qualify as performance-based compensation as defined under Section
162(m) of the Internal Revenue Code so that they would be fully deductible.
Additionally, Union Planters requires certain officers to defer receipt of
restricted shares or certain cash special pay amounts if the receipt of the
shares or relevant cash special pay amounts would cause an officer's
compensation to exceed the Section 162(m) limitation.
Base Salary. Executive base salary is set annually based on job-related
experience, individual performance and pay levels of similar positions at 26
peer financial institutions. Union Planters targets base pay at the 50th
percentile of peer base pay. In determining compensation at peer financial
institutions, Union Planters analyzes information from independent surveys. The
surveys, which do not necessarily include the same financial institutions as
included in the S&P 500 Banks Index, are chosen based on similarity of the
surveyed financial institutions to Union Planters in terms of size, geographic
region, and scope of services. In 2003, base salary of the five highest paid
executive officers was generally comparable to the target 50th percentile of
peer financial institutions.
Annual Bonus. Under the 2002 Senior Management Performance Incentive Plan,
as applied in 2003, if actual earnings per share ("EPS") performance is within
the EPS targets established by the committee, the plan calculates a bonus based
on the target percentage of base salary that corresponds with actual EPS
performance. During 2003, EPS performance did not meet the EPS targets
established by the committee and, as a result, the committee did not approve any
bonus payments under the 2002 Senior Management Performance Incentive Plan for
the 2003 plan year.
LONG-TERM INCENTIVES
In order to link the interests of Union Planters' shareholders and senior
management, Union Planters maintains the Amended and Restated 1992 Stock
Incentive Plan. Stock options and restricted stock may be granted under the
plan. Awards are based on position and individual performance. Among other
conditions, stock options and restricted stock are granted subject to a vesting
schedule. Options may be exercised after vesting. However, to encourage
long-term share retention, shares acquired pursuant to option exercise must
generally be held at least one year, or any profits from sale must be repaid to
Union Planters.
For 2003, options were granted to the executive officers based on their
positions and a subjective assessment of individual performances. Generally,
equity-based incentive awards are targeted between the 50th and 75th percentiles
of the competitive market. Union Planters utilizes the same surveys and peer
financial institutions for this purpose as used in analyzing base salary and
takes into consideration options and restricted stock that have already been
granted.
2003 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
Many of the same philosophies used in determining compensation for other
officers of Union Planters are used in determining compensation for our chief
executive officer. The committee establishes each element of the chief executive
officer's pay based on his achievement of specific financial and non-financial
objectives. No specific weighting or formula is used to determine levels of
compensation. Additionally, the committee takes into consideration an analysis
of compensation at the peer financial institutions used to review compensation
of other officers of Union Planters.
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BASE SALARY
Jackson W. Moore's annual base salary in 2003 was $810,000. This level
positioned his base salary comparable to the 50th percentile of peer financial
institutions. Mr. Moore's base salary is set annually based on his individual
performance and pay levels of CEOs at the same 26 peer financial institutions
used in determining base salaries for other Union Planters officers.
ANNUAL BONUS
The committee determines the chief executive officer's annual bonus based
upon his performance relative to business objectives established at the
beginning of the year and specific corporate targets, which in 2003 were based
on EPS. Based on 2003 corporate performance, the committee did not award Mr.
Moore a bonus for 2003.
LONG-TERM INCENTIVES
Awards are made to executives based on their positions in the company and a
subjective assessment of individual performance. Generally, equity-based
incentive awards are targeted between the 50th and 75th percentiles of the
competitive market. Union Planters utilizes the same surveys and peer financial
institutions for this purpose as used in analyzing base salary and takes into
consideration options and restricted stock that have already been granted. For
2003, the committee granted 412,500 stock options and awarded 90,000 shares of
performance restricted stock to Mr. Moore as part of Union Planters' long-term
stock incentive plan.
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COMPENSATION/NOMINATIONS/CORPORATE GOVERNANCE COMMITTEE
George W. Bryan, Chair
Albert M. Austin
James E. Harwood
Parnell S. Lewis, Jr.
Michael S. Starnes
Robert R. Waller, M.D.
EXECUTIVE COMPENSATION AND OTHER TRANSACTIONS
The following table is a summary of certain information concerning the
compensation earned by Union Planters' chief executive officer and the other
four most highly compensated executive officers, which are referred to as the
Union Planters' named executive officers, during the last three fiscal years.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------------------------
OTHER
ANNUAL
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) BONUS ($) COMPENSATION (1)
--------------------------- ----------- ---------- --------- ----------------
J.W. Moore........................ 2003 810,000 0 226,884
Chairman, President and CEO 2002 760,000 1,100,000 136,228
of Union Planters and UPBNA 2001 700,000 560,000 202,889
B.L. Doxey........................ 2003 354,376 0 70,825
Senior Executive Vice 2002 329,167 325,500 37,702
President and CFO 2001 292,500 270,000 31,804
A. Henriques...................... 2003 420,000 0 83,208
Senior Executive Vice President, 2002 411,667 195,300 41,270
Southern Banking Group Chief 2001 383,333 280,000 37,775
Executive and Head of Commercial
Banking
S.J. Schenck...................... 2003 352,626 0 55,716
Senior Executive Vice President, 2002 329,167 195,300 28,316
Midwest Banking Group Chief 2001 277,083 255,000 23,244
Executive and Head of Credit
Improvement
J.V. White........................ 2003 352,626 0 61,540
Senior Executive Vice President, 2002 329,167 195,300 27,886
Central Banking Group Chief 2001 268,750 255,000 22,048
Executive and Head of Retail
Banking and Financial Services
LONG-TERM COMPENSATION
----------------------------------------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION AWARDS ($)(2) OPTIONS (#)(3) COMPENSATION ($)(4)
--------------------------- ------------- -------------- -------------------
J.W. Moore........................ 3,271,860 1,081,819 637,828
Chairman, President and CEO 1,700,310 1,219,412 356,589
of Union Planters and UPBNA -- 1,146,216 287,977
B.L. Doxey........................ 886,599 93,750 153,484
Senior Executive Vice 425,078 127,406 59,000
President and CFO -- 114,332 9,022
A. Henriques...................... 886,599 93,750 77,403
Senior Executive Vice President, 425,078 125,000 103,784
Southern Banking Group Chief -- 112,500 96,829
Executive and Head of Commercial
Banking
S.J. Schenck...................... 886,599 115,866 58,452
Senior Executive Vice President, 425,078 132,283 63,448
Midwest Banking Group Chief -- 112,500 59,813
Executive and Head of Credit
Improvement
J.V. White........................ 886,599 104,233 18,000
Senior Executive Vice President, 425,078 129,588 11,000
Central Banking Group Chief -- 114,033 8,266
Executive and Head of Retail
Banking and Financial Services
---------------
(1) Includes certain tax reimbursement payments in each year and, in the case of
J.W. Moore, perquisites received in 2003 and 2002, including automobile
expenses ($22,305 in 2003 and $23,216 in 2002) and financial planning
services ($33,361 in 2003 and $31,527 in 2002).
(2) Grants of restricted stock in 2003 were earned pursuant to the Executive
Performance Restricted Stock Plan based on exceeding targeted levels of
operating earnings per share since 2001. Grantees have the right to vote and
to receive dividends on restricted stock. Shares generally vest over 10 to
12 years (or to age 62 if earlier) in equal amounts annually and are subject
to forfeiture for certain conditions. The aggregate market value as of
December 31, 2003 (and number) of all shares of restricted stock that have
been granted through December 31, 2003, and have not been released (or
receipt deferred by) the Union Planters' named executive officers were as
follows: J.W. Moore -- $9,841,443.74 (312,526 shares), B.L.
Doxey -- $1,648,942 (52,364 shares), A. Henriques -- $1,625,829 (51,630
shares), S.J. Schenck -- $1,546,505 (49,111 shares) and J.V. White --
$1,606,431 (51,014 shares).
(3) Option grants include reload grants as follows: J.W. Moore (623,138 in 2003,
623,130 in 2002 and 603,696 in 2001), B.L. Doxey (0 in 2003, 1,821 in 2002
and 1,512 in 2001), S.J. Schenck (19,722 in 2003, 7,283 in 2002) and J.V.
White (8,297 in 2003, 3,730 in 2002 and 1,260 in 2001). Reload option
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grants are stock options granted upon the exercise of an option where the
option holder uses shares of company stock that he/she currently owns to pay
the option exercise cost. The number of reload options granted is equal to
the number of shares used to pay the exercise price, plus any shares
withheld for tax obligations. The exercise price of the reload option is the
market price of the company's stock on the reload grant date. The reload
option expiration date is the same date that the original option would have
expired.
(4) "All Other Compensation" for 2003 consists of: (i) 401(k) plan contributions
of $10,313 on behalf of J.W. Moore and $12,000 on behalf of each of B.L.
Doxey, A. Henriques, S.J. Schenck and J.V. White; (ii) nonqualified deferred
compensation plan matching contributions on behalf of J.W. Moore ($581,199),
B.L. Doxey ($141,484), A. Henriques ($47,119), and S.J. Schenck ($46,452)
and J.V. White ($6,000); and (iii) the "economic benefit" portion (i.e., the
term life cost) of the premium paid in 2003 by Union Planters for the
benefit of J.W. Moore ($46,316) and A. Henriques ($18,284) on certain life
insurance policies.
STOCK OPTIONS
The following table is a summary of the aggregate amount of options granted
to each of the Union Planters' named executive officers during 2003 and the
range of exercise prices for these options. A more detailed description of these
options appears in the second table below.
OPTION GRANTS IN THE LAST FISCAL YEAR
NUMBER OF SECURITIES UNDERLYING
AGGREGATE OPTIONS GRANTED
NAME INITIAL GRANTS (#) RELOADS (#) EXERCISE PRICE($)
---- ------------------ ----------- -----------------
J.W. Moore................................ 458,681 623,138 29.22 - 33.48
B.L. Doxey................................ 93,750 0 33.48
A. Henriques.............................. 93,750 0 33.48
S.J. Schenck.............................. 96,144 19,722 27.98 - 33.48
J.V. White................................ 95,936 8,297 28.47 - 33.69
131
The following table provides additional detail about the option grants
summarized in the preceding table.
INDIVIDUAL GRANTS
PERCENT OF TOTAL
NUMBER OF SECURITIES OPTIONS GRANTED
UNDERLYING OPTIONS TO ALL EMPLOYEES
GRANTED (1) IN 2003 (%) EXERCISE OR GRANT DATE
----------------------- ---------------- BASE PRICE EXPIRATION PRESENT
NAME INITIAL RELOAD (5) INITIAL RELOAD ($/SHARE) DATE VALUE ($)(4)
---- --------- ---------- ------- ------ ----------- ---------- ------------
J.W. Moore................... -- 311,611 -- 8.6 29.22 10/8/2012 1,302,534
21,692 -- 0.6 -- 29.22 1/8/2013 90,673
-- 146,869 -- 4.1 32.33 12/20/2010 475,856
-- 141,946 -- 4.0 32.33 10/8/2012 491,133
-- 3,077 -- 0.1 32.33 10/8/2012 10,646
-- 19,635 -- 0.5 32.33 1/8/2013 69,312
24,489 -- 0.7 -- 32.33 7/8/2013 87,916
412,500 -- 11.4 -- 33.48 10/14/2013 1,819,125
Total...................... 458,861(2) 623,138 12.7 17.3
========= ======== ==== ====
B.L. Doxey................... 93,750 -- 2.6 -- 33.48 10/14/2013 389,063
Total...................... 93,750(3) -- 2.6 --
========= ======== ==== ====
A. Henriques................. 93,750 -- 2.6 -- 33.48 10/14/2013 389,063
Total...................... 93,750(3) -- 2.6 --
========= ======== ==== ====
S.J. Schenck................. -- 9,848 -- 0.3 27.98 12/20/2010 32,794
854 -- 0 -- 27.98 1/24/2013 2,869
-- 9,874 -- 0.3 32.04 12/20/2010 36,238
1,540 -- 0 -- 32.04 7/24/2013 6,083
93,750 -- 2.6 -- 33.48 10/14/2013 389,063
Total...................... 96,144(3) 19,722(2) 2.6 0.6
========= ======== ==== ====
J.V. White................... -- 2,516 -- 0.1 28.47 5/1/2010 7,825
478 -- 0 -- 28.47 5/1/2013 1,568
93,750 -- 2.6 -- 33.48 10/14/2013 389,063
-- 5,781 -- 0.2 33.69 5/1/2010 21,621
1,708 -- 0.1 -- 33.69 11/3/2013 7,447
Total...................... 95,936(3) 8,297(2) 2.7 0.3
========= ======== ==== ====
---------------
(1) Generally, options may not be granted at less than the fair market value of
the underlying shares on the date of grant, and will expire no later than
ten years after the date of grant. Already owned shares of stock may be used
as the consideration for exercise of the option, and a reload option will
generally be granted in such cases. Generally, except in the event of
certain qualifying terminations of service or the surrender of shares to pay
the exercise price or tax withholding obligations with respect to an option,
shares acquired by option exercise must be held at least one year or any
profits from sale must be repaid to Union Planters. All options granted in
2003 have an exercise price equal to the underlying stock's fair market
value on the grant date. Union Planters does not grant stock appreciation
rights (SARs).
(2) Options granted in 2003 which vest immediately or in six months.
(3) Options granted in 2003 of which 1/3 vest twelve months after the date of
grant, an additional 1/3 vest 24 months after the date of grant and the
final 1/3 vest 36 months after the date of grant, except for increments
which otherwise would not vest until after age 62. Such increments vest
immediately.
132
(4) Present values were calculated using the Black-Scholes option pricing model.
The model was applied using the individual grant dates and the exercise
price and fair market value of Union Planters' common stock on the grant
date. It also assumed: (i) a risk-free rate of return based on the yield on
a U.S. Government Zero Coupon bond with a term equal to the term of the
stock grant which ranged from 3.50% to 4.78%; (ii) stock price volatility
calculated using daily closing prices of the common stock of Union Planters
for the expected term of the option ending on the grant date which ranged
from 17.02% to 21.44%; (iii) a constant dividend yield on the respective
grant dates based on the quarterly cash dividend rate per share paid by
Union Planters on its common stock; and (iv) that the options would be
exercised on the final day of their ten-year term. No discount from the
theoretical value was taken to reflect the one-year waiting period prior to
vesting, the restrictions on the transfer of the options, and the likelihood
that the options will be exercised in advance of the final day of their
term.
(5) These option grants occurred automatically under the "reload" features of
previously granted options, as to which the Union Planters named executive
officer surrendered previously-owned shares to pay the exercise price of the
option or to satisfy tax withholding obligations with respect to such
exercise.
AGGREGATED OPTIONS EXERCISES IN 2003 AND FISCAL YEAR-END OPTION VALUES
The following table shows the number and value of stock options (exercised
and unexercised) for the Union Planters named executive officers.
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#)(1)(3) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------------- ----------- ----------- ------------- ----------- -------------
J.W. Moore........... 738,589 3,621,814 1,390,124 336,016 1,191,591 0
B.L. Doxey........... 0 0 215,314 215,080 1,686,400 778,387
A. Henriques......... 0 0 238,017 214,583 1,503,189 778,038
S.J. Schenck......... 25,708 185,802 196,365 226,851 1,123,416 781,036
J.V. White........... 13,761 180,484 226,059 223,214 1,751,041 780,458
---------------
(1) Generally, except in the event of certain qualifying terminations of service
or the surrender of shares to pay the exercise price or tax withholding
obligations with respect to an option, shares acquired by option exercise
must be held at least one year or any profits from sale must be repaid to
Union Planters.
(2) Value is calculated as the difference between the closing market price of a
share of common stock on December 31, 2003 ($31.49 per share) and the
exercise price of the options. No value is reported if the exercise price of
the options exceeded the market price of a share of common stock on December
31, 2003.
(3) This column shows the number of shares underlying options exercised in 2003
by the Union Planters named executive officers. The actual number of shares
received by these individuals from options exercised in 2003 (net of shares
used to cover the exercise price and withheld to pay income tax) was:
NAME SHARES
---- -------
J.W. Moore.................................................. 115,451
B.L. Doxey.................................................. 0
A. Henriques................................................ 0
S.J. Schenck................................................ 5,986
J.V. White.................................................. 5,464
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EMPLOYMENT CONTRACTS AND TERMINATION, SEVERANCE, AND CHANGE OF CONTROL
ARRANGEMENTS
Each of Jackson W. Moore, Bobby L. Doxey, Adolfo Henriques, Steven J.
Schenck and John V. White, Jr. has an employment agreement with Union Planters.
Employment Agreement of our Chairman, President and Chief Executive
Officer. Mr. Moore's employment agreement, which was first entered into as of
December 1, 1989, was amended and restated as of April 17, 1997, amended on
September 26, 2000 and then further amended in connection with the execution of
the merger agreement, effective upon completion of the merger. For a discussion
of the recent amendment to Mr. Moore's employment agreement, see "Union
Planters' Directors and Officers Have Financial Interests in the
Merger -- Jackson W. Moore's Employment Agreement Amendment."
Mr. Moore's employment agreement provides for a minimum base salary for Mr.
Moore of $650,000, and entitles him to receive certain other employee benefits
and to participate in incentive bonus, stock option, and deferred compensation
plans.
The employment period under Mr. Moore's employment agreement is a rolling
three-year term that is currently scheduled to expire on December 31, 2006,
subject to automatic one-year extensions on December 31, 2004 and each December
31 thereafter, unless Union Planters provides at least 60 days prior notice to
Mr. Moore. In any case, the term of the agreement may not be extended after Mr.
Moore reaches age 65. If Union Planters provides prior notice to Mr. Moore that
it is electing not to extend the term of the agreement, Mr. Moore may either
remain until the end of the then-current term of his agreement, or may choose to
terminate the agreement and be paid a lump-sum severance amount equal to three
times the sum of his highest base salary and highest annual bonus earned in any
year during his employment ("final highest earnings"). In either case, all
options, stock appreciation rights, and other awards in the nature of rights
that may be exercised, and all awards of restricted stock, if any, issued to Mr.
Moore under all stock incentive plans of Union Planters (collectively,
"incentive awards") will immediately vest and be exercisable and all
restrictions thereon will lapse. In addition, Mr. Moore will have the right to
elect within 90 days after the effective date of his termination of employment,
either to receive a lump-sum cash-out of his stock options at the then-current
spread value or to have the right to exercise such options from the date of
termination through the remaining term of the options.
If termination of employment is for cause, Mr. Moore will be provided his
base salary through the date of termination plus any annual incentive bonus that
has been previously approved but not paid. In addition, Union Planters must, at
its election, either effect a lump-sum cash-out of Mr. Moore's stock options
(vested and unvested) at the then-current spread value, or declare all such
options to be immediately vested and exercisable by Mr. Moore within one year
from notice of his termination.
If termination of employment is due to death or disability, Mr. Moore will
be provided his base salary through the date of termination plus any annual
incentive bonus that has been previously approved but not paid, and will receive
a severance payment equal to three times his final highest earnings. In either
case, all incentive awards will immediately vest and be exercisable and all
restrictions thereon will lapse. In addition, Mr. Moore or his estate will have
the right to elect, within 90 days after the effective date of Mr. Moore's
termination of employment, either to receive a lump-sum cash-out of his stock
options at the then-current spread value or to have the right to exercise such
options from the date of termination through the remaining term of the options.
Mr. Moore's employment agreement also provides that in the event of a
"change in control" of Union Planters (as defined in the agreement to include
certain business combinations, acquisitions of stock or assets of Union
Planters, or changes in board of directors composition), Mr. Moore will have the
option to extend the term of his employment agreement for an additional
three-year period, beginning on the later of the date of the renewal notice or
the date on which the change in control occurs. Upon the commencement of any
such renewal term, any remaining period of the then-current term of the
employment agreement will be canceled. During the extended renewal term
following a change in control, Mr. Moore may resign without penalty upon 90 days
prior notice and receive a lump-sum severance payment equal to three times his
final highest earnings. Also, in the event of a change in control, all
134
deferred compensation, supplemental retirement benefits, and incentive awards
will immediately vest and be exercisable and all restrictions thereon will
lapse, and any stock or stock equivalents held in a deferred account on Mr.
Moore's behalf will become immediately payable. With respect to any benefits
paid, accrued or accelerated by virtue of a change in control, the agreement
requires Union Planters to make certain tax gross-up payments to cover Mr.
Moore's income tax and excise tax liabilities with respect to any such benefits,
including tax liabilities associated with the gross-up payments.
Other Employment Agreements. The employment agreements of the other Union
Planters named executive officers each specify a term and minimum base salary
for the named executive officer. The date on which the current term of each
named executive officer's employment expires is as follows: Mr. Doxey -- March
1, 2005; Mr. Henriques -- February 1, 2005; Mr. Schenck -- March 5, 2005; and
Mr. White -- May 1, 2005. The employment agreements of Messrs. Doxey, Schenck
and White provide that the term of the named executive officer's employment is
automatically extended for a one-year term unless prior notice of termination is
given. Mr. Henriques' employment agreement provides for an automatic extension
of his employment for a two-year term unless prior notice of termination is
given. The minimum annual base salary for each named executive officer is as
follows: Mr. Doxey -- $275,000; Mr. Henriques -- $330,000; Mr.
Schenck -- $225,000; and Mr. White -- $225,000. In addition to the minimum base
salary, each named executive officer is entitled to additional cash and non-cash
compensation generally based on performance.
Each of Messrs. Doxey's, Henriques', Schenck's and White's employment
agreements provide for specific payments to be paid to the named executive
officer in the event his employment is terminated within some period after the
date on which a "change in control" occurs. The completion of the merger will be
considered a change in control under each of these agreements.
Mr. Doxey's agreement generally provides that if he is terminated within
one year of the date on which a change of control occurs, he will be entitled to
the following: (1) any portion of his base salary that he had earned but had not
been paid through termination; (2) any prior year's annual bonus that he had
earned but had not been paid; (3) an additional lump-sum severance payment equal
to the base salary due for the remaining current term of his agreement, but not
less than one year's base salary; and (4) certain additional benefits to which
he is entitled under our plans and programs.
Mr. Henriques' agreement provides that in the event of a change in control,
his employment term will automatically extend for two years. Mr. Henriques'
agreement further provides that if he is terminated within two years of the date
on which a change of control occurs, he will be entitled to the following: (1) a
lump-sum severance payment equal to the base salary due for the remaining
current term of his agreement, but not less than two times his current base
salary; (2) any prior year's annual bonus that he had earned but had not been
paid and a prorated bonus equal to 75% of his then current base salary for the
year in which his employment was terminated; and (3) certain additional benefits
to which he is entitled under our plans and programs.
Mr. Schenck's agreement provides that if he is terminated within two years
of the date on which a change of control occurs, he will be entitled to the
following: (1) any portion of his base salary that he had earned but had not
been paid; (2) a lump-sum severance payment equal to his base salary and annual
bonuses due for the remaining current term of his agreement, but not less than
one year's current base salary and annual bonus; (3) any prior year's annual
bonus that he had earned but had not been paid; and (4) certain additional
benefits to which he is entitled under our plans and programs.
Mr. White's agreement provides that if he is terminated within three years
of the date on which a change in control occurs, he will be entitled to the
following: (1) a lump-sum severance payment equal to three times the sum of his
base salary and the highest annual bonus received by him during the three
calendar years immediately preceding the change in control and (2) certain
additional benefits to which he is entitled under our plans and programs. Mr.
White's agreement further provides that on each anniversary of the date on which
a change in control occurs, the three-year period will be automatically extended
for
135
an additional year unless either Union Planters or Mr. White give prior written
notice to the other party that the three-year period will not be extended.
EXECUTIVE BENEFIT PLANS
Union Planters maintains two executive benefit plans for selected
management employees. Eligibility is determined by the
Compensation/Nominations/Corporate Governance Committee, which is also
responsible for administering the plans.
The supplemental retirement plan provides a retirement income benefit at
age 62 equal to a percentage of final average earnings as defined in the plan,
with certain reductions described below. The benefit can be paid in either an
equivalent lump-sum amount or in annual or monthly installments. The plan is
nonqualified and unfunded, and the amounts payable thereunder are not offset for
social security or other amounts, except as described below.
Currently, Mr. Moore participates in the supplemental retirement plan.
Supplemental annual retirement benefits payable under the plan at age 62 are
equal to 65% of the sum of the executive's highest base salary and highest
annual bonus during any year of employment, less an amount calculated as the
present value of Union Planters' cost of funds related to premiums paid on a
split-dollar life insurance policy on the life of Mr. Moore and his spouse,
which premiums will be reimbursed in full to Union Planters from the cash value
of the policy. The annual supplemental retirement benefit under the plan is
reduced 6% per year for early retirement after age 55 but before age 62. In
addition, annual supplemental retirement benefits vest following a termination
or a change in control as defined in the plan and the agreement with Mr. Moore.
The estimated annual benefit payable to Mr. Moore under the plan if he were to
retire at age 62, and assuming no increase in his base salary or annual bonus
before then, is $1,241,500. However, he has elected to take this benefit in a
lump-sum at retirement, which will be discounted to present value and further
reduced by the present value of Union Planters' cost of funds related to
premiums paid on a split-dollar life insurance policy, as described above. Union
Planters ceased making premium payments under such life insurance policy after
July 30, 2002, to avoid any question that such premiums could be characterized
as a personal loan prohibited by Section 402 of the Sarbanes-Oxley Act of 2002.
Consequently, the death benefit of such policy to Mr. Moore's beneficiary, and
the premium reimbursement to Union Planters, will be substantially less than
originally intended.
Mr. Moore and Union Planters entered into a letter agreement to modify Mr.
Moore's supplemental retirement plan in connection with the execution of the
merger agreement, effective upon completion of the merger, to provide that a
"change of control" as defined in the plan and the agreement with Mr. Moore will
not be deemed to have occurred because of the merger. For further information
regarding Mr. Moore's waiver of certain "change in control" rights under the
supplemental executive retirement agreement, see "Union Planters' Directors and
Officers Have Financial Interests in the Merger -- Other Benefit Plans."
The deferred compensation plan allows participants to defer a portion of
their cash compensation into a nonqualified savings plan. The plan credits
interest annually equal to the greater of 120% of the mid-term applicable
federal rate or the Union Planters common stock total investment return. In
addition, Union Planters matches amounts deferred with up to a 25% company
contribution based on various salary levels. The plan returns the compensation
deferred plus interest earned upon termination of employment or earlier if
otherwise elected by the participant.
DIRECTORS' COMPENSATION
Directors who are employees of Union Planters or any of its subsidiaries
receive no fees for their services as directors. Directors who are not employees
of Union Planters or any of its subsidiaries receive an annual retainer of
$46,000 including service on committees of the board of directors. Committee
chairs receive an additional $4,000 annually. In addition, directors who are not
employees of Union Planters receive an annual grant of stock options worth
$40,000 in the aggregate, based on the Black-Scholes model for determining the
value per share of Union Planters common stock.
136
Individual directors may, at their option, defer the receipt of directors'
fees. Under alternatives available each year from 1987 through 2003, up to 100%
of a director's annual board of directors and committee fees were deferrable.
Such fees, plus interest, will be paid to the participating director or to his
beneficiaries, as applicable, in monthly payments for a maximum ten-year period
commencing on the earlier of (1) the death of the director; or (2) the later of
(a) age 65 or (b) completion of five years' participation in the fee deferral
program. Three directors elected to enter into such nonqualified deferred
compensation agreements for 2003. Beginning in 2002, individual directors could
elect to receive Union Planters nonqualified stock options in lieu of fees. Two
directors elected to receive such options for a portion or all of their 2003
fees. The number of options granted to each director was determined by dividing
the applicable fee amount by the Black-Scholes model for determining the value
per share of Union Planters common stock on the date of grant, January 2, 2003.
Such options vested immediately upon grant and will terminate ten years from
date of grant unless previously exercised.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The directors of the Union Planters Compensation/Nominations/Corporate
Governance Committee during 2003 were:
George W. Bryan
Albert M. Austin
James E. Harwood
Parnell S. Lewis, Jr.
Michael S. Starnes
Robert R. Waller, M.D.
None of these committee members is or ever has been an officer or employee
of Union Planters or any of its subsidiaries.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
During 2003 some of the directors and officers of Union Planters, and other
persons and entities with which they are affiliated, were customers of, and had
in the ordinary course of business banking transactions with, Union Planters'
subsidiary banks. All loans included in such transactions were made on
substantially the same terms, including interest rates and collateral
requirements, as those prevailing at the time for comparable transactions with
other persons and, in the opinion of management, did not involve more than the
normal risk of collectibility or present other unfavorable features.
Samuel W. Bartholomew, one of our directors, is a partner and shareholder
of Stokes Bartholomew Evans & Petree, P.A. and serves as its Chairman and Chief
Executive Officer. In 2003, Union Planters paid Stokes Bartholomew Evans &
Petree, P.A. for legal services but such amount did not exceed 5% of the law
firm's gross revenues for 2003.
FINANCIAL PERFORMANCE
The following graph and table set forth Union Planters cumulative
shareholder return (assuming reinvestment of dividends) as compared to the
Standard & Poor's 500 Index and the Standard & Poor's 500 Banks Index over a
five-year period beginning December 31, 1998. The stock price performance shown
on the graph and table below is not necessarily indicative of future price
performance.
(PERFORMANCE GRAPH)
12/31/98 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
Union Planters
Corporation............... $100.00 $ 91.45 $ 87.54 $115.40 $113.05 $131.86
S&P 500..................... 100.00 121.00 110.00 97.00 76.00 97.00
S&P 500 Banks Index......... 100.00 86.00 103.00 103.00 102.00 129.00
137
PROPOSAL 3 -- RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Union Planters' Audit Committee has appointed PricewaterhouseCoopers
LLP to serve as the independent public accountants of Union Planters for its
fiscal year ending December 31, 2004. The Audit Committee seeks to have the
shareholders ratify the appointment of PricewaterhouseCoopers.
PricewaterhouseCoopers has served as the independent public accountants of
Union Planters since 1985. Representatives of PricewaterhouseCoopers will be
present at the Union Planters' Annual Meeting to respond to questions and to
make a statement if they desire to do so. If the appointment of
PricewaterhouseCoopers is not ratified by the Union Planter shareholders, the
Audit Committee may appoint other independent public accountants and will seek
the shareholders' ratification of such appointment at a subsequent shareholders'
meeting called for that purpose.
THE AUDIT COMMITTEE UNANIMOUSLY RECOMMENDS YOU VOTE FOR THE RATIFICATION OF
THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT PUBLIC ACCOUNTANTS
FOR FISCAL YEAR 2004.
AUDIT FEES, AUDIT-RELATED FEES, TAX FEES AND ALL OTHER FEES
The following table shows the fees paid or accrued by Union Planters for
the audit and other services provided by PricewaterhouseCoopers for fiscal years
2003 and 2002.
2003 2002
---------- -----------
Audit Fees(1)............................................... $1,457,500 $ 1,043,256
Audit-Related Fees(2)....................................... 95,000 60,000
Tax Fees(3)................................................. 957,660 2,399,422
All Other Fees(4)........................................... -- 8,764,442
---------- -----------
Total Fees................................................ $2,510,160 $12,267,120
========== ===========
---------------
(1) Audit fees include audit of the consolidated financial statements of Union
Planters; required internal control attestation reports; consents and
"comfort letters" for SEC filings; statutory audits of certain subsidiaries
of Union Planters; selected consultations with management; and assistance
responding to SEC comment letters.
(2) Audit-related fees include agreed-upon procedure engagements; audits of
employee benefit plans; SAS 70 internal control reports; and other
audit-related services.
(3) Tax fees include federal, state and local tax compliance and planning; and
internal revenue service and state examination assistance.
(4) All other fees include financial information systems design and
implementation. These fees were paid to a unit of PricewaterhouseCoopers
that was sold effective October 1, 2002, at which time Union Planters
discontinued the use of PricewaterhouseCoopers for such services.
Additionally, the amounts for 2002 include fees of $1,300,260 for internal
audit outsourcing services which were discontinued in accordance with the
provisions of the Sarbanes-Oxley Act of 2002.
The Union Planters' Audit Committee is responsible for appointing, setting
compensation and overseeing the work performed by PricewaterhouseCoopers. The
Audit Committee has adopted policies and procedures regarding the pre-approval
of all audit and permissible non-audit services provided by
PricewaterhouseCoopers and these policies and procedures are available on Union
Planters' website at http://www.unionplanters.com.
Pre-approval is obtained either in advance of the engagement of
PricewaterhouseCoopers or pursuant to a pre-approval policy adopted by the Audit
Committee. The Audit Committee may pre-approve certain audit, audit-related, tax
and other services by PricewaterhouseCoopers for a period of twelve months. If a
project that has not been generally pre-approved, but requires pre-approval,
surfaces between meetings and the anticipated fee for such project is less than
$50,000, the Audit Committee has delegated authority to any two members of the
Audit Committee to provide the required pre-approval. If a project requiring
pre-
138
approval would be over $50,000, the entire Audit Committee must pre-approve the
service. The Audit Committee receives a quarterly schedule of all projects and
related billings currently underway with PricewaterhouseCoopers. The Audit
Committee also monitors the SEC's and New York Stock Exchange's requirements and
modifies their pre-approval process, policies and procedures as needed.
PROPOSAL 4 -- ADJOURNMENT OF ANNUAL MEETING
THE PROPOSAL
Union Planters is asking its shareholders to vote on a proposal to adjourn
the Union Planters annual meeting, if necessary or appropriate, in order to
allow for the solicitation of additional proxies.
BOARD OF DIRECTORS' RECOMMENDATION
UNION PLANTERS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE
PROPOSAL.
PROPOSAL 5 -- SHAREHOLDER PROPOSAL
PROPOSAL
The United Brotherhood of Carpenters and Joiners of America, 101
Constitution Avenue, N.W., Washington, D.C. 20001, submitted the proposal set
forth below, which may be presented for a vote at the annual meeting. The
proposal is required to be included in this proxy statement by the rules of the
Securities and Exchange Commission and is not endorsed by the board of directors
of Union Planters, nor is the board of directors responsible in any way for the
contents of the proposal or the accompanying statement. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST APPROVAL OF THIS SHAREHOLDER PROPOSAL. The
shareholdings of the proponent will be furnished upon request to the Corporate
Secretary of Union Planters. The proposal is as follows:
RESOLVED, that the shareholders of Union Planters Corporation (the
"Company") request that the Company's Board of Directors and Executive
Compensation Committee replace the current system of compensation for senior
executives with the following "Commonsense Executive Compensation" program
including the following features:
(1) Salary -- The chief executive officer's salary should be targeted at
the mean of salaries paid at peer group companies, not to exceed $1,000,000
annually. No senior executive should be paid more than the CEO.
(2) Annual Bonus -- The annual bonus paid to senior executives should be
based on well-defined quantitative (financial) and qualitative (non-financial)
performance measures. The maximum level of annual bonus should be a percentage
of the executive's salary level, capped at 100% of salary.
(3) Long-Term Equity Compensation -- Long-term equity compensation to
senior executives should be in the form of restricted shares, not stock options.
The restricted share program should utilize justifiable performance criteria and
challenging performance benchmarks. It should contain a vesting requirement of
at least three years. Executives should be required to hold all shares awarded
under the program for the duration of their employment. The value of the
restricted share grant should not exceed $1,000,000 on the date of grant.
(4) Severance -- The maximum severance payment to a senior executive should
be no more than one year's salary and bonus.
(5) Disclosure -- Key components of the executive compensation plan should
be outlined in the Compensation Committee's report to shareholders, with
variances from the Commonsense program explained in detail.
139
The Commonsense compensation program should be implemented in a manner that
does not violate any existing employment agreement or equity compensation plans.
The shareholder's supporting statement is as follows:
We believe that compensation paid to senior executives at most companies,
including ours, is excessive, unjustified, and contrary to the interests of the
Company, its shareholders, and other important corporate constituents. CEO pay
has been described as a "wasteland that has not been reformed." (Institutional
Shareholder Services senior vice-president, Wall Street Journal, "Executive Pay
Keeps Rising, Despite Outcry," October 3, 2003). As of 2002, the CEO-worker pay
gap of 282-to-1 was nearly seven times as large as the 1982 ratio of 42-to-1
according to the United for a Fair Economy's Tenth Annual CEO Compensation
Survey ("Executive Excess 2003 -- CEO's Win, Workers and Taxpayers Lose.")
We believe that it is long past time for shareholders to be proactive and
provide companies clear input on the parameters of what they consider to be
reasonable and fair executive compensation. We believe that executive
compensation should be designed to promote the creation of long-term corporate
value. The Commonsense executive compensation principles seek to focus senior
executives, not on quarterly performance numbers, but on long-term corporate
value growth, which should benefit all the important constituents of the
Company. We challenge our Company's leadership to embrace the ideas embodied in
the Commonsense proposal, which still offers executives the opportunity to build
personal long-term wealth but only when they generate long-term corporate value.
RECOMMENDATION OF THE BOARD OF DIRECTORS AND MANAGEMENT RESPONSE
UNION PLANTERS' BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE AGAINST THE SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
Union Planters' board of directors and the
Compensation/Nominations/Corporate Governance Committee strongly support the
concept of performance-based executive compensation that is designed to create
long-term corporate and shareholder value and is market competitive. The board
of directors believes that the current compensation program for Union Planters
executives aligns the interest of its executives with those of its shareholders
and is designed to produce long-term growth and shareholder value. For this
reason, the board of directors and the Compensation/Nominations/Corporate
Governance Committee as part of implementing Union Planters' compensation
program have taken into account many of the features described in the
shareholder proposal, including factoring the performance of the Company into
granting bonuses and equity-based compensation, providing for awards that vest
over several years to encourage long-term equity-holdings by executives,
requiring shares acquired pursuant to option exercises to be generally held at
least one year after exercise, limiting severance payments and ensuring detailed
disclosure of executive compensation.
As described in the Compensation/Nominations/Corporate Governance
Committee's report on executive compensation, Union Planters' executives' base
salaries are set based on job-related performance, individual performance and
pay levels of similar positions at 26 to 30 peer financial institutions, and
bonuses are based on both Union Planters' and the individual executive's
performance, as determined through specified measures of such performance. Union
Planters' equity compensation plans provide the
Compensation/Nominations/Corporate Governance Committee with the flexibility to
grant restricted stock based on the achievement of performance objectives, stock
option awards with multi-year vesting schedules and equity-based awards whose
value is ultimately determined by the future performance of Union Planters, as
measured by its share price.
In the opinion of Union Planters' board of directors and management, the
principal difference between the board of directors' and the
Compensation/Nominations/Corporate Governance Committee's current executive
compensation program and the shareholder proposal is the lack of flexibility
provided by the proposal. The board of directors and the
Compensation/Nominations/Corporate Governance Committee believe that restricting
potential incentive program features and capping compensation levels
140
for executives would unduly restrict the Compensation/Nominations/Corporate
Governance Committee's choice among performance-based compensation arrangements
and would place Union Planters at a significant competitive disadvantage in
recruiting and retaining executives. In addition, the shareholder proposal may
adversely affect Union Planters' ability to structure cash awards, stock options
and other equity-based awards to qualify as performance-based compensation as
defined under Section 162(m) of the Internal Revenue Code so that such awards
will be fully deductible, as more fully described in the
Compensation/Nominations/Corporate Governance Committee's report.
The board of directors and the Compensation/Nominations/Corporate
Governance Committee believe that it is important to have maximum flexibility
with respect to executive compensation to allow the
Compensation/Nominations/Corporate Governance Committee to select the mix of
compensation arrangements that best suits the goals that Union Planters seeks to
pursue through its executive compensation. In choosing the appropriate
compensation arrangements to use for its executives, the
Compensation/Nominations/Corporate Governance Committee must consider a variety
of factors, such as the goals the board of directors has established for Union
Planters and management, tax consequences of various compensation arrangements,
competitive practice of comparable financial institutions and prevailing pay
levels for similarly situated executives.
This shareholder proposal would limit the
Compensation/Nominations/Corporate Governance Committee's flexibility in
determining appropriate compensation arrangements by arbitrarily capping salary,
annual bonus opportunity, long-term equity compensation and severance payments
without reference to the many considerations that the
Compensation/Nominations/Corporate Governance Committee must take into account
in recruiting and retaining an effective and experienced management team. The
board of directors believes that limiting the Compensation/Nominations/Corporate
Governance Committee's ability to design executive compensation programs and set
competitive executive compensation levels in line with those for peer financial
institutions would place Union Planters at a significant competitive
disadvantage in the recruitment and retention of its valuable executives.
The board of directors believes that its current executive compensation
program meets the needs of Union Planters and its shareholders and is
appropriately linked to Union Planters' long-term corporate growth and
shareholder value by providing long-term incentives to executives and
maintaining the flexibility necessary to recruit and retain executives in a
competitive environment.
FOR THE REASONS DESCRIBED ABOVE, THE BOARD OF DIRECTORS BELIEVES THAT THIS
SHAREHOLDER PROPOSAL IS NOT IN THE BEST INTERESTS OF UNION PLANTERS AND ITS
SHAREHOLDERS AND THEREFORE RECOMMENDS A VOTE "AGAINST" APPROVAL OF THE PROPOSAL.
141
STOCKHOLDER PROPOSALS
REGIONS 2005 ANNUAL MEETING STOCKHOLDER PROPOSALS
If the merger occurs, there will be no Regions annual meeting of
stockholders next year. In that case, stockholder proposals must be submitted to
New Regions' Corporate Secretary in accordance with the procedures described
below. In case the merger is not completed, we include above information
relevant to a regularly scheduled 2005 Regions annual meeting of stockholders.
To be considered for inclusion in Regions' proxy statement and form of proxy
relating to the annual meeting of stockholders to be held in 2005, the corporate
secretary of Regions, at the address set forth on the first page of this joint
proxy statement/prospectus, not later than [--], 2005, must receive a
shareholder proposal. If such annual meeting is held on a date more than 30 days
from [--], 2005, a shareholder proposal must be received within a reasonable
time before Regions begins to print and mail its proxy solicitation materials
for such annual meeting. Any such proposal will be subject to 17 C.F.R.
sec. 240.14a-8 of the Rules and Regulations under the Securities Exchange Act of
1934, as amended.
The bylaws of Regions, a copy of which may be obtained from Regions, set
forth the procedures by which a stockholder may properly bring business before a
meeting of stockholders. The bylaws of Regions provide an advance notice
procedure for a shareholder to properly bring business before an annual meeting.
The stockholder must give written advance notice to the secretary of Regions not
less than 90 days or more than 120 days before the anniversary date of the
previous year's annual meeting; provided, however, that in the event that the
date of the annual meeting is more than 30 days before or more than 60 days
after the anniversary date of the previous year's annual meeting, notice by the
stockholder, to be timely, must be received not less than 90 days or more than
120 days before the date of the annual meeting or by the 10th day following the
day on which public disclosure of the annual meeting date was made.
UNION PLANTERS 2005 ANNUAL MEETING SHAREHOLDER PROPOSALS
If the merger occurs, there will be no Union Planters annual meeting of
shareholders next year. In that case, shareholder proposals must be submitted to
New Regions' Corporate Secretary in accordance with the procedures described
below. In case the merger is not completed, we include information relevant to a
regularly scheduled 2005 Union Planters annual meeting of shareholders. To be
considered for inclusion in Union Planters' proxy statement and form of proxy
relating to the annual meeting of shareholders to be held in 2005, the corporate
secretary of Union Planters, at the address set forth on the first page of this
joint proxy statement/prospectus, not later than [--], 2005, must receive a
shareholder proposal. If such annual meeting is held on a date more than 30 days
from [--], 2005, a shareholder proposal must be received within a reasonable
time before Union Planters begins to print and mail its proxy solicitation
materials for such annual meeting. Any such proposal will be subject to 17
C.F.R. sec. 240.14a-8 of the Rules and Regulations under the Exchange Act.
The bylaws of Union Planters, a copy of which may be obtained from Union
Planters, set forth the procedures by which a shareholder may properly bring
business before a meeting of shareholders. The bylaws of Union Planters provide
that any proposal of a shareholder which is to be presented at any annual
meeting of shareholders must be received by Union Planters at its principal
offices not less than 120 days in advance of the date of Union Planters' proxy
statement issued in connection with the previous year's annual meeting of
shareholders.
NEW REGIONS 2005 ANNUAL MEETING STOCKHOLDER PROPOSALS
If the merger is completed, Regions' stockholders and Union Planters
shareholders will become stockholders of New Regions. To be considered for
inclusion in New Regions' proxy statement and form of proxy relating to the
annual meeting of stockholders to be held in 2005, the corporate secretary of
New Regions, at 417 North 20th Street, Birmingham, Alabama 35202, not later than
[--], 2005, must receive a stockholder proposal. If such annual meeting is held
on a date more than 30 days from [--], 2005, a stockholder proposal must be
received within a reasonable time before New Regions begins to print and
142
mail its proxy solicitation materials for such annual meeting. Any such proposal
will be subject to 17 C.F.R. sec. 240.14a-8 of the Rules and Regulations under
the Exchange Act.
The bylaws of New Regions, a copy of which may be obtained from New
Regions, set forth the procedures by which a stockholder may properly bring
business before a meeting of stockholders. The bylaws of New Regions include
provisions similar to the bylaws of Regions requiring advance notice of a
stockholder proposal, except that to be timely such notice must be received by
New Regions not less than 120 days before the date of New Regions' previous
year's proxy statement. If no annual meeting was held the previous year and in
any year in which the date of the annual meeting is moved by more than 30 days
from the date of the previous year's annual meeting, the notice will be
considered timely if received not less than 120 days before the date of the
annual meeting or by the 10th day following the day on which public disclosure
of the annual meeting date was made.
143
WHERE YOU CAN FIND MORE INFORMATION
New Regions has filed with the SEC a registration statement under the
Securities Act that registers the distribution to Regions stockholders and Union
Planters shareholders of the shares of New Regions common stock to be issued in
connection with the merger. The registration statement, including the attached
exhibits and schedules, contains additional relevant information about New
Regions and New Regions' capital stock. The rules and regulations of the SEC
allow us to omit certain information included in the registration statement from
this document.
You may read and copy this information at the Public Reference Room of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the SEC's Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC also maintains an internet worldwide website that
contains reports, proxy statements and other information about issuers, like
Regions, Union Planters and New Regions, who file electronically with the SEC.
The address of the site is http://www.sec.gov. The reports and other information
filed by Regions and New Regions with the SEC are also available at Regions'
internet worldwide website. The address of the site is http://www.regions.com.
The reports and other information filed by Union Planters with the SEC are also
available at Union Planters' internet worldwide website. The address of the site
is http://www.unionplanters.com.
You should also be able to inspect reports, proxy statements and other
information about Regions, Union Planters or New Regions at the offices of the
New York Stock Exchange at 20 Broad Street, 17th Floor, New York, New York
10004.
The SEC allows Regions and Union Planters to incorporate by reference
information into this document. This means that Regions and Union Planters can
disclose important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference in this
document is considered to be a part of this document, except for any information
that is superseded by information that is included directly in this document.
This document incorporates by reference the documents listed below that
Regions and Union Planters previously filed with the SEC. They contain important
information about the companies and their financial condition.
REGIONS SEC FILINGS PERIOD OR DATE FILED
------------------- -----------------------------------------
Annual Report on Form 10-K............... Year ended December 31, 2003
Current Reports on Form 8-K.............. Filed on January 16, 2004, January 26,
2004, January 30, 2004 and February 11,
2004 (other than those portions furnished
under Item 9 or 12 of Form 8-K)
UNION PLANTERS SEC FILINGS PERIOD OR DATE FILED
-------------------------- -----------------------------------------
Annual Report on Form 10-K............... Year ended December 31, 2003
Current Reports on Form 8-K.............. Filed on January 15, 2004, January 20,
2004 and January 30, 2004 (other than
those portions furnished under Item 9 or
12 of Form 8-K)
In addition, Regions and Union Planters also incorporate by reference in
this document additional documents that either company may file with the SEC
between the date of this document and the date of the Regions annual meeting or
Union Planters annual meeting. These documents include periodic reports, such as
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K, as well as proxy statements.
Regions has supplied all information contained or incorporated by reference
in this document relating to Regions, as well as all pro forma financial
information, and Union Planters has supplied all information
144
relating to Union Planters. Regions and Union Planters have jointly supplied all
information contained or incorporated by reference in this joint proxy
statement/prospectus relating to New Regions.
Documents incorporated by reference are available from Regions and Union
Planters without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit in this
document. You can obtain documents incorporated by reference in this document by
requesting them in writing or by telephone from the appropriate company at the
following addresses:
REGIONS FINANCIAL CORPORATION UNION PLANTERS CORPORATION
Jenifer Goforth Richard W. Trigger
Investor Relations Investor Relations
417 North 20th Street 6200 Poplar Avenue
Birmingham, Alabama 35202 Memphis, Tennessee 38119
Phone: (205) 944-1300 Phone: (901) 580-5977
REGIONS STOCKHOLDERS AND UNION PLANTERS SHAREHOLDERS REQUESTING DOCUMENTS
SHOULD DO SO BY [--], 2004 TO RECEIVE THEM BEFORE THE MEETINGS. YOU WILL NOT BE
CHARGED FOR ANY OF THESE DOCUMENTS THAT YOU REQUEST. IF YOU REQUEST ANY
INCORPORATED DOCUMENTS FROM REGIONS OR UNION PLANTERS, REGIONS OR UNION PLANTERS
WILL MAIL THEM TO YOU BY FIRST CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS,
WITHIN ONE BUSINESS DAY AFTER IT RECEIVES YOUR REQUEST.
NEITHER REGIONS NOR UNION PLANTERS HAS AUTHORIZED ANYONE TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION ABOUT THE MERGER OR OUR COMPANIES THAT IS
DIFFERENT FROM, OR IN ADDITION TO, THAT CONTAINED IN THIS DOCUMENT OR IN ANY OF
THE MATERIALS THAT HAVE BEEN INCORPORATED INTO THIS DOCUMENT. THEREFORE, IF
ANYONE DOES GIVE YOU INFORMATION OF THIS SORT, YOU SHOULD NOT RELY ON IT. IF YOU
ARE IN A JURISDICTION WHERE OFFERS TO EXCHANGE OR SELL, OR SOLICITATIONS OF
OFFERS TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS DOCUMENT OR THE
SOLICITATION OF PROXIES IS UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT IS
UNLAWFUL TO DIRECT THESE TYPES OF ACTIVITIES, THEN THE OFFER PRESENTED IN THIS
DOCUMENT DOES NOT EXTEND TO YOU. THE INFORMATION CONTAINED IN THIS DOCUMENT
SPEAKS ONLY AS OF THE DATE OF THIS DOCUMENT UNLESS THE INFORMATION SPECIFICALLY
INDICATES THAT ANOTHER DATE APPLIES.
145
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UNION PLANTERS CORPORATION
AND
REGIONS FINANCIAL CORPORATION
DATED AS OF
JANUARY 22, 2004
TABLE OF CONTENTS
PAGE
----
PARTIES.................................................................... A-1
RECITALS................................................................... A-1
ARTICLE 1
TERMS OF FIRST STEP MERGER
1.1 First Step Merger........................................... A-1
1.2 First Effective Time........................................ A-1
1.3 Conversion of Regions Common Stock.......................... A-2
1.4 Cancellation of Newco Common Stock.......................... A-2
1.5 Cancellation of Shares Held by Union Planters or Regions.... A-2
1.6 Regions Stock Options and Other Equity-Based Awards......... A-2
1.7 Organizational Documents of Newco........................... A-4
ARTICLE 2
TERMS OF SECOND STEP MERGER
2.1 Second Step Merger.......................................... A-4
2.2 Time and Place of Closing................................... A-4
2.3 Effective Time.............................................. A-4
2.4 Conversion of Union Planters Common Stock................... A-4
2.5 Effects on Common Stock..................................... A-5
2.6 Union Planters Stock Options and Other Equity-Based A-5
Awards......................................................
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures......................................... A-7
3.2 Rights of Holders........................................... A-8
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Disclosure Letters.......................................... A-8
4.2 Standards................................................... A-9
4.3 Representations and Warranties of the Parties............... A-9
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
5.1 Conduct of Business Prior to Effective Time................. A-18
5.2 Forbearances................................................ A-19
5.3 Dividends................................................... A-20
5.4 Redemption of Union Planters Series E Preferred Stock....... A-21
5.5 Reasonable Best Efforts..................................... A-21
5.6 Shareholders' and Stockholders' Approvals................... A-21
5.7 Registration Statement; Joint Proxy Statement/Prospectus.... A-22
5.8 Listing of Newco Common Stock............................... A-22
5.9 Applications and Consents................................... A-22
5.10 Notification of Certain Matters............................. A-23
5.11 Investigation and Confidentiality........................... A-23
i
PAGE
----
5.12 Press Releases; Publicity................................... A-23
5.13 Acquisition Proposals....................................... A-24
5.14 Takeover Laws; No Rights Triggered.......................... A-24
5.15 Exemption from Liability Under Section 16(b)................ A-24
5.16 Agreement of Affiliates..................................... A-25
5.17 Employee Benefits and Contracts............................. A-25
5.18 Indemnification............................................. A-26
5.19 Corporate Governance........................................ A-27
5.20 Formation of Newco.......................................... A-28
5.21 Change of Method............................................ A-29
5.22 Restructuring Efforts....................................... A-29
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
6.1 Conditions to Obligations of Each Party..................... A-29
6.2 Conditions to Obligations of Regions........................ A-30
6.3 Conditions to Obligations of Union Planters................. A-30
ARTICLE 7
TERMINATION
7.1 Termination................................................. A-31
7.2 Effect of Termination....................................... A-31
ARTICLE 8
MISCELLANEOUS
8.1 Definitions................................................. A-32
8.2 Non-Survival of Representations and Covenants............... A-39
8.3 Expenses.................................................... A-39
8.4 Termination Fee............................................. A-39
8.5 Entire Agreement............................................ A-40
8.6 Amendments.................................................. A-40
8.7 Waivers..................................................... A-40
8.8 Assignment.................................................. A-40
8.9 Notices..................................................... A-41
8.10 Governing Law............................................... A-41
8.11 Counterparts................................................ A-41
8.12 Captions.................................................... A-41
8.13 Interpretations............................................. A-41
8.14 Severability................................................ A-42
8.15 Waiver of Jury Trial........................................ A-42
ii
LIST OF EXHIBITS
EXHIBIT DESCRIPTION
------- -----------
1. Amendment to Union Planters Rights Plan (Section
3.3(b)(iii))
2-A Form of Union Planters Affiliate Letter (Section 5.16)
2-B Form of Regions Affiliate Letter (Section 5.16)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of January 22, 2004, by and between UNION PLANTERS CORPORATION, a
Tennessee corporation ("Union Planters"), and REGIONS FINANCIAL CORPORATION, a
Delaware corporation ("Regions").
RECITALS
A. Approvals. The Boards of Directors of Union Planters and Regions have
determined that the transactions described herein are consistent with, and will
further, their respective business strategies and goals, and are in the best
interests of Union Planters and Regions, respectively, and their respective
shareholders and stockholders.
B. The Merger. This Agreement provides for a strategic business
combination through the merger of Regions with and into a newly-formed
Subsidiary of Regions and Union Planters to be organized under Delaware law
("Newco") with Newco as the surviving corporation, followed immediately
thereafter by the merger of Union Planters with and into Newco with Newco as the
surviving corporation.
C. Intention of the Parties. It is the intention of the Parties that the
First Step Merger and the Second Step Merger, for federal income Tax purposes
shall each 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.
D. Defined Terms. Certain capitalized terms used in this Agreement are
defined in Section 8.1 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
TERMS OF FIRST STEP MERGER
1.1 First Step Merger. Subject to the terms and conditions of this
Agreement, at the First Effective Time, Regions shall be merged with and into
Newco in accordance with the provisions of Section 251 of the DGCL (the "First
Step Merger"). Newco shall be the surviving corporation in the First Step Merger
and shall continue to be governed by the laws of the State of Delaware. Upon
consummation of the First Step Merger, the separate corporate existence of
Regions shall cease.
1.2 First Effective Time. Subject to the terms and conditions of this
Agreement, on or before the Closing Date, the Parties will cause articles of
merger to be filed with the Secretary of State of the State of Delaware (the
"Delaware Secretary") as provided in Section 251 of the DGCL to effect the First
Step Merger. The First Step Merger shall take effect when such articles of
merger are filed, or at such other time as may be specified therein (the "First
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 cause the First Effective Time to occur on the fifth business day
following the date on which satisfaction or waiver of the last of the conditions
set forth in Article 6 has occurred (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), or such earlier date mutually agreed upon by the
Parties.
A-1
1.3 Conversion of Regions Common Stock. At the First Effective Time, in
each case subject to Sections 1.3(c) and 1.5, by virtue of the First Step Merger
and without any action on the part of the Parties, Newco or the holder of any of
the following securities:
(a) Each share of Regions Common Stock that is Outstanding immediately
prior to the First Effective Time (other than shares of Regions Common
Stock held by either Party, any of their respective Subsidiaries or Newco
(in each case other than in a fiduciary or agency capacity or as a result
of debts previously contracted)) shall be converted into the right to
receive the number of shares of Newco Common Stock equal to the Exchange
Ratio.
(b) All shares of Regions Common Stock converted pursuant to this
Section 1.3 shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist as of the First Effective
Time, and each certificate previously representing any such shares of
Regions Common Stock (the "Old Regions Certificates") shall cease to have
any rights except it shall thereafter represent the right to receive with
respect to each underlying share of Regions Common Stock (i) a certificate
representing the number of whole shares of Newco Common Stock into which
the shares of Regions Common Stock represented by such Old Regions
Certificate have been converted pursuant to this Section 1.3, (ii) in
accordance with Section 1.3(c), cash in lieu of fractional shares of Newco
Common Stock represented by such Old Regions Certificate which have been
converted pursuant to this Section 1.3, and (iii) any dividends or
distributions which the holder thereof has the right to receive pursuant to
Section 3.1(a).
(c) Notwithstanding any other provision of this Agreement, each holder
of shares of Regions Common Stock exchanged pursuant to the First Step
Merger who would otherwise have been entitled to receive a fraction of a
share of Newco Common Stock (after taking into account all Old Regions
Certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest and rounded to the nearest cent) in an amount equal to
such fractional part of a share of Newco Common Stock (i) multiplied by the
closing sale price of Regions Common Stock on the NYSE Composite
Transaction Tape on the trading day immediately preceding the Closing Date
as reported by The Wall Street Journal or, if not reported therein, in
another authoritative source and (ii) divided by the Exchange Ratio.
(d) If, following the date of this Agreement and prior to the First
Effective Time, the outstanding shares of Regions Common Stock or Union
Planters Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities as a
result of a reorganization, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, or other similar change in
capitalization, then an appropriate and proportionate adjustment shall be
made to the Exchange Ratio.
1.4 Cancellation of Newco Common Stock. At and after the First Effective
Time, each share of Newco Common Stock issued and outstanding immediately prior
to the First Effective Time (other than any shares held by Union Planters or its
Subsidiaries) shall be cancelled and retired and shall resume the status of
authorized and unissued shares of Newco Common Stock, and no shares of Newco
Common Stock or other securities of Newco shall be issued in respect thereof.
1.5 Cancellation of Shares Held by Union Planters Or Regions. Each of the
shares of Regions Common Stock held by either Party, any of their respective
Subsidiaries or Newco (in each case other than in a fiduciary or agency capacity
or as a result of debts previously contracted) shall be cancelled and retired
and shall cease to exist at the First Effective Time and no consideration shall
be issued in exchange therefor.
1.6 Regions Stock Options and Other Equity-Based Awards.
(a) Each option to purchase shares of Regions Common Stock (a "Regions
Stock Option") granted under an equity compensation plan of Regions (a "Regions
Stock Plan"), whether vested or unvested, that is outstanding and unexercised
immediately prior to the First Effective Time shall cease, at the First
Effective Time, to represent a right to acquire shares of Regions Common Stock
and shall be converted at
A-2
the First Effective Time, without any action on the part of any holder of any
Regions Stock Option, into an option to purchase shares of Newco Common Stock (a
"Newco Stock Option") on the same terms and conditions (including any option
reload features relating to any Regions Stock Option outstanding on the date
hereof or granted after the date hereof in accordance with Section 5.2(b)) as
were applicable under such Regions Stock Option (but taking into account any
changes thereto, including any acceleration thereof, provided for in the
relevant Regions Stock Plan, or in the related award document by reason of the
transactions contemplated hereby). The number of shares of Newco Common Stock
subject to each such Newco Stock Option shall be equal to the number of shares
of Regions Common Stock subject to each such Regions Stock Option multiplied by
the Exchange Ratio, rounded, if necessary, to the nearest whole share of Newco
Common Stock, and such Regions Stock Option shall have an exercise price per
share (rounded to the nearest cent) equal to the per share exercise price
specified in such Regions Stock Option divided by the Exchange Ratio; provided
that, in the case of any Regions Stock Option to which Section 421 of the
Internal Revenue Code applies as of the First Effective Time (after taking into
account the effect of any accelerated vesting thereof, if applicable) by reason
of its qualification under Section 422 or Section 423 of the Internal Revenue
Code, the exercise price, the number of shares of Newco Common Stock subject to
such option and the terms and conditions of exercise of such option shall be
determined in a manner consistent with the requirements of Section 424(a) of the
Internal Revenue Code.
(b) At the First Effective Time, each Right consisting of, based on or
relating to shares of Regions Common Stock granted under an Regions Stock Plan,
other than Regions Stock Options (each, a "Regions Stock-Based Award"), whether
vested or unvested, contingent or accrued, which is outstanding immediately
prior to the First Effective Time shall cease, at the First Effective Time, to
represent a Right with respect to shares of Regions Common Stock and shall be
converted without any action on the part of any holder of a Right, at the First
Effective Time, into a Right consisting of, based on or relating to shares of
Newco Common Stock (a "Newco Stock-Based Award"), on the same terms and
conditions as were applicable under the Regions Stock-Based Awards (but taking
into account any changes thereto, including any acceleration thereof, provided
for in the relevant Regions Stock Plan or in the related award document by
reason of the transactions contemplated hereby). The number of shares of Newco
Common Stock subject to each such Newco Stock-Based Award shall be equal to the
number of shares of Regions Common Stock subject to the Regions Stock-Based
Award multiplied by the Exchange Ratio, rounded, if necessary, to the nearest
whole share of Newco Common Stock and, if applicable, such Newco Stock-Based
Award shall have an exercise price per share (rounded to the nearest cent) equal
to the per share exercise price specified in the Regions Stock Based Award
divided by the Exchange Ratio. Any dividend equivalents credited to the account
of each holder of an Regions Stock-Based Award as of the First Effective Time
shall remain credited to such holder's account immediately following the First
Effective Time, subject to adjustment in accordance with the foregoing (without
duplication to the increase in dividend announced by Regions on the date
hereof).
(c) As soon as practicable after the First Effective Time, Newco shall
deliver to the holders of Regions Stock Options and Regions Stock-Based Awards
any required notices setting forth such holders' rights pursuant to the relevant
Regions Stock Plans and award documents and stating that such Regions Stock
Options and Regions Stock-Based Awards have been assumed by Newco and shall
continue in effect on the same terms and conditions (subject to the adjustments
required by this Section 1.6 after giving effect to the Merger and the terms of
the relevant Regions Stock Plans).
(d) Following the First Effective Time, Newco may maintain the Regions
Stock Plans for purposes of granting future awards to individuals who were
employees of Regions at the First Effective Time. If so, the provisions of the
Regions Stock Plans, including the respective terms of such plans, will be
unchanged, except that all Rights issued by Newco pursuant to the Regions Stock
Plans following the First Effective Time shall be Rights in respect of Newco
Common Stock, and the number of shares of Newco Common Stock available for
future issuance pursuant to each Regions Stock Plan following the First
Effective Time (the "Available Regions Stock Plan Shares") shall be equal to the
number of shares of Regions Common Stock so available immediately prior to the
First Effective Time, multiplied by the Exchange Ratio, rounded, if necessary,
to the nearest whole share of Newco Common Stock.
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(e) Prior to the First Effective Time, Regions shall take all necessary
action and make all necessary arrangements for the adjustment of Regions Stock
Options and Regions Stock-Based Awards under this Section 1.6. Newco shall
reserve for future issuance a number of shares of Newco Common Stock at least
equal to the number of shares of Newco Common Stock that will be subject to
Newco Stock Options and Newco Stock-Based Awards as a result of the actions
contemplated by this Section 1.6, plus the number of Available Regions Stock
Plan Shares in the event that Newco maintains the Regions Stock Plans as
contemplated by this Section 1.6. As soon as practicable following the Effective
Time, Newco shall file a registration statement on Form S-8 or S-3, as the case
dictates (or any successor form, or if Form S-8 or S-3 is not available, other
appropriate forms), with respect to the shares of Newco Common Stock subject to
such Newco Stock Options and Newco Stock-Based Awards (and the Available Regions
Stock Plan Shares, as the case dictates) and shall maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Newco Stock Options and Newco Stock-Based Awards remain outstanding.
(f) Regions shall take such action as is necessary to provide that as of no
later than three business days prior to the Closing Date no further shares of
Regions Common Stock will be purchased under the Regions Dividend Reinvestment
Plan (the "Regions DRIP"); provided, that such cessation of further purchases
following the Closing Date shall be conditioned upon the consummation of the
Merger. Immediately prior to and effective as of the First Effective Time and
subject to the consummation of the Merger, Regions shall terminate the Regions
DRIP.
1.7 Organizational Documents of Newco. The Organizational Documents of
Newco in effect at the First Effective Time shall be as previously disclosed by
Regions in its Disclosure Letter, with such changes thereto as shall be mutually
agreed upon by Regions and Union Planters, until thereafter amended in
accordance with applicable Law and Newco's Organizational Documents.
ARTICLE 2
TERMS OF SECOND STEP MERGER
2.1 Second Step Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Union Planters shall be merged with and into
Newco in accordance with the provisions of Section 252 of the DGCL and Section
102 of the TBCA (the "Second Step Merger" and, together with the First Step
Merger, the "Merger"). Newco shall be the surviving corporation in the Second
Step Merger and shall continue to be governed by the Laws of the State of
Delaware. Upon consummation of the Second Step Merger, the separate corporate
existence of Union Planters shall cease.
2.2 Time and Place of Closing. The closings of the First Step Merger and
the Second Step Merger (the "Closing") shall take place sequentially (with the
Second Step Merger occurring immediately after the First Step Merger), on the
same day, at such time and place as Regions and Union Planters shall agree, on
the date when the First Effective Time and the Effective Time (as defined in
Section 2.3) is to occur (the "Closing Date"). The parties shall coordinate
filing to ensure the timing of the foregoing.
2.3 Effective Time. Subject to the terms and conditions of this
Agreement, on or before the Closing Date, the Parties will cause articles of
merger to be filed with the Delaware Secretary as provided in Section 251 of the
DGCL and with the Secretary of State of the State of Tennessee (the "Tennessee
Secretary") as provided in Section 102 of the TBCA to effect the Second Step
Merger. The Second Step Merger shall take effect when such articles of merger
are filed, or at such other time as may be specified therein (the "Effective
Time").
2.4 Conversion of Union Planters Common Stock. At the Effective Time, in
each case subject to Section 2.5, by virtue of the Second Step Merger and
without any action on the part of the Parties, Newco or the holder of any of the
following securities:
(a) Each share of Union Planters Common Stock (including the Union
Planters Shareholder Rights) that is Outstanding immediately prior to the
Effective Time (other than shares of Union
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Planters Common Stock held by either Party, any of their respective
Subsidiaries or Newco (in each case other than in a fiduciary or agency
capacity or as a result of debts previously contracted)) shall be converted
into the right to receive one share of Newco Common Stock.
(b) All shares of Union Planters Common Stock converted pursuant to
this Section 2.4 shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist as of the Effective Time,
and each certificate previously representing any such shares of Union
Planters Common Stock (the "Old Union Planters Certificates" and together
with the Old Regions Certificates, the "Old Certificates") shall cease to
have any rights except it shall thereafter represent the right to receive
with respect to each underlying share of Union Planters Common Stock (i) a
certificate representing the number of whole shares of Newco Common Stock
into which the shares of Union Planters Common Stock represented by such
Old Union Planters Certificate have been converted pursuant to this Section
2.4, and (ii) any dividends or distributions which the holder thereof has
the right to receive pursuant to Section 3.1(a).
(c) If, following the date of this Agreement and prior to the
Effective Time, the outstanding shares of Regions Common Stock or Union
Planters Common Stock shall have, except as provided for herein, been
increased, decreased, changed into or exchanged for a different number or
kind of shares or securities as a result of a reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar change in capitalization, then an appropriate
and proportionate adjustment shall be made to the number of shares of Newco
Common Stock that each share of Union Planters Common Stock shall represent
the right to receive upon conversion.
2.5 Effects on Common Stock.
(a) At and after the Effective Time, each share of Newco Common Stock
issued and outstanding immediately prior to the Closing Date shall remain an
issued and outstanding share of common stock of the Surviving Corporation and
shall not be affected by the Second Step Merger; provided that any shares of
Newco Common Stock held by Union Planters or its Subsidiaries prior to the
Effective Time shall be cancelled and retired and shall resume the status of
authorized and unissued shares of Newco Common stock, and no shares of Newco
Common Stock or other securities of Newco shall be issued in respect thereof.
(b) Each of the shares of Union Planters Common Stock held by either Party,
any of their respective Subsidiaries or Newco (in each case other than in a
fiduciary or agency capacity or as a result of debts previously contracted)
shall be cancelled and retired and shall cease to exist at the Effective Time
and no consideration shall be issued in exchange therefor.
2.6 Union Planters Stock Options and Other Equity-Based Awards.
(a) Each option to purchase shares of Union Planters Common Stock (a "Union
Planters Stock Option") granted under an equity compensation plan of Union
Planters (a "Union Planters Stock Plan"), whether vested or unvested, that is
outstanding and unexercised immediately prior to the Effective Time shall cease,
at the Effective Time, to represent a right to acquire shares of Union Planters
Common Stock and shall be converted at the Effective Time, without any action on
the part of any holder of any Union Planters Stock Option, into a Newco Stock
Option on the same terms and conditions (including any option reload features
relating to any Union Planters Stock Option outstanding on the date hereof or
granted after the date hereof in accordance with Section 5.2(b)) as were
applicable under such Union Planters Stock Option (but taking into account any
changes thereto, including any acceleration thereof, provided for in the
relevant Union Planters Stock Plan, or in the related award document by reason
of the transactions contemplated hereby). The number of shares of Newco Common
Stock subject to each such Newco Stock Option shall be equal to the number of
shares of Union Planters Common Stock subject to each such Union Planters Stock
Option, and such Newco Stock Option shall have an exercise price per share equal
to the per share exercise price specified in such Union Planters Stock Option;
provided that, in the case of any Union Planters Stock Option to which Section
421 of the Internal Revenue Code applies as of the First Effective Time (after
taking into account the effect of any accelerated vesting thereof, if
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applicable) by reason of its qualification under Section 422 or Section 423 of
the Internal Revenue Code, the exercise price, the number of shares of Newco
Common Stock subject to such option and the terms and conditions of exercise of
such option shall be determined in a manner consistent with the requirements of
Section 424(a) of the Internal Revenue Code.
(b) At the Effective Time, each Right consisting of, based on or relating
to shares of Union Planters Common Stock granted under a Union Planters Stock
Plan, other than Union Planters Stock Options (each, a "Union Planters
Stock-Based Award"), whether vested or unvested, contingent or accrued, which is
outstanding immediately prior to the Effective Time shall cease, at the
Effective Time, to represent a Right with respect to shares of Union Planters
Common Stock and shall be converted without any action on the part of any holder
of a Right, at the Effective Time, into a Newco Stock-Based Award, on the same
terms and conditions as were applicable under the Union Planters Stock-Based
Awards (but taking into account any changes thereto, including any acceleration
thereof, provided for in the relevant Union Planters Stock Plan or in the
related award document by reason of the transactions contemplated hereby). The
number of shares of Newco Common Stock subject to each such Newco Stock-Based
Award shall be equal to the number of shares of Union Planters Common Stock
subject to the Union Planters Stock-Based Award. Any dividend equivalents
credited to the account of each holder of a Union Planters Stock-Based Award as
of the Effective Time shall remain credited to such holder's account immediately
following the Effective Time, subject to adjustment in accordance with the
foregoing.
(c) As soon as practicable after the Effective Time, Newco shall deliver to
the holders of Union Planters Stock Options and Union Planters Stock-Based
Awards any required notices setting forth such holders' rights pursuant to the
relevant Union Planters Stock Plans and award documents and stating that such
Union Planters Stock Options and Union Planters Stock-Based Awards have been
assumed by Newco and shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 2.6 after giving effect to
the Merger and the terms of the relevant Union Planters Stock Plans).
(d) Following the Effective Time, Newco may maintain the Union Planters
Stock Plans for purposes of granting future awards to individuals who were
employees of Union Planters at the Effective Time. If so, the provisions of the
Union Planters Stock Plans, including the respective terms of such plans, will
be unchanged, except that all Rights issued by Newco pursuant to the Union
Planters Stock Plans following the Effective Time shall be Rights in respect of
Newco Common Stock, and the number of shares of Newco Common Stock available for
future issuance pursuant to each Union Planters Stock Plan following the
Effective Time (the "Available Union Planters Stock Plan Shares") shall be equal
to the number of shares of Union Planters Common Stock so available immediately
prior to the Effective Time.
(e) Prior to the Effective Time, Union Planters shall take all necessary
action for the adjustment of Union Planters Stock Options and Union Planters
Stock-Based Awards under this Section 2.6. Newco shall reserve for future
issuance a number of shares of Newco Common Stock at least equal to the number
of shares of Newco Common Stock that will be subject to Newco Stock Options and
Newco Stock-Based Awards as a result of the actions contemplated by this Section
2.6, plus the number of Available Union Planters Stock Plan Shares in the event
that Newco maintains the Union Planters Stock Plans as contemplated by this
Section 2.6. As soon as practicable following the Effective Time, Newco shall
file a registration statement on Form S-8 or S-3, as the case dictates (or any
successor form, or if Form S-8 or S-3 is not available, other appropriate
forms), with respect to the shares of Newco Common Stock subject to such Newco
Stock Options and Newco Stock-Based Awards (and the Available Union Planters
Stock Plan Shares, as the case dictates) and shall maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Newco Stock Options and Newco Stock-Based Awards remain outstanding.
(f) Union Planters shall take such action as is necessary to provide that
as of no later than three business days prior to the Closing Date no further
shares of Union Planters Common Stock will be purchased under the Union Planters
Dividend Reinvestment Plan (the "Union Planters DRIP"); provided,
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that such cessation of further purchases following the Closing Date shall be
conditioned upon the consummation of the Merger. Immediately prior to and
effective as of the First Effective Time and subject to the consummation of the
Merger, Union Planters shall terminate the Union Planters DRIP.
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures.
(a) At or prior to the First Effective Time, Newco shall deposit, or shall
cause to be deposited, with the Exchange Agent, for the benefit of the holders
of Old Certificates, for exchange in accordance with Article 1 and Article 2 and
this Article 3, certificates representing Newco Common Stock ("New
Certificates") (together with any dividends or distributions with respect
thereto and any cash to be paid hereunder in lieu of fractional shares of Newco
Common Stock (without any interest thereon), the "Exchange Fund") to be paid
pursuant to Article 1 and Article 2 and this Article 3 in exchange for
outstanding shares of Union Planters Common Stock and Regions Common Stock.
(b) As promptly as practicable after the Effective Time and the First
Effective Time, respectively, Newco shall send or cause to be sent to each
former holder of record of shares of Union Planters Common Stock and Regions
Common Stock immediately prior to the Effective Time and the First Effective
Time, respectively (each, a "Holder"), transmittal materials for use in
exchanging such Holder's Old Certificates for the consideration set forth in
Article 1 and Article 2 (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates theretofore representing such
shares of Union Planters Common Stock and Regions Common Stock shall pass, only
upon proper delivery of such certificates to the Exchange Agent). Newco shall
cause the New Certificates for shares of Newco Common Stock into which shares of
a Holder's Union Planters Common Stock or Regions Common Stock, as the case may
be, are converted at the Effective Time or dividends or distributions which such
Person shall be entitled to receive and any fractional share interests (in the
case of Regions Holders only), to be delivered to such Person upon delivery to
the Exchange Agent of Old Certificates representing such shares of Union
Planters Common Stock or Regions Common Stock, as the case may be, together with
the transmittal materials, duly executed and completed in accordance with the
instructions thereto. No interest will accrue or be paid on any such cash to be
paid pursuant to Article 1 and Article 2 and this Article 3 upon such delivery.
If any New Certificate is to be issued or any cash payment is to be made in a
name other than that in which the Old Certificate surrendered in exchange
therefor is registered, it shall be a condition of such exchange that the Person
requesting such exchange shall pay any transfer or other Taxes required by
reason of the issuance of such New Certificate or the making of such cash
payment in a name other than that of the registered Holder of the Old
Certificate surrendered, or shall establish to the satisfaction of Newco and the
Exchange Agent that any such Taxes have been paid or are not applicable. Any
Person who the Parties reasonably believe to be an "affiliate" of Union Planters
or Regions for purposes of Rule 145 of the 1933 Act shall not be entitled to
receive any New Certificate or payment pursuant to Article 1 or Article 2 or
this Article 3 until such Person shall have duly executed and delivered an
appropriate agreement as described in Section 5.16.
(c) Notwithstanding the foregoing, none of the Exchange Agent, any of the
Parties or any of their respective Subsidiaries shall be liable to any former
Holder of Union Planters Common Stock or Regions Common Stock for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
(d) If any Old Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Old
Certificate to be lost, stolen or destroyed and, if required by Newco or the
Exchange Agent, the posting by such Person of a bond in such reasonable amount
as Newco or the Exchange Agent may direct as indemnity against any claim that
may be made against it with respect to such Old Certificate, Newco or the
Exchange Agent shall, in exchange for the shares of Union Planters Common Stock
or Regions Common Stock represented by such lost, stolen or destroyed
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Old Certificate, issue or cause to be issued a New Certificate and pay or cause
to be paid the amounts, if any, deliverable in respect to the shares of Union
Planters Common Stock or Regions Common Stock, as the case may be, formerly
represented by such Old Certificate pursuant to this Agreement.
(e) Any portion of the Exchange Fund that remains unclaimed by the Holders
of Union Planters and Regions for six months after the Effective Time shall be
returned to Newco (together with any dividends or earnings in respect thereof).
Any Holders of Union Planters or Regions who have not theretofore complied with
this Article 3 shall thereafter be entitled to look only to Newco, and only as a
general creditor thereof, for payment of the consideration deliverable in
respect of each share of Union Planters Common Stock or Regions Common Stock
such Holder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
3.2 Rights of Holders. At the Effective Time, the stock transfer books of
Union Planters and Regions shall be closed and no transfer by any Holder shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 3.1, each Old Certificate (other than shares to
be cancelled pursuant to Section 1.5) shall from and after the Effective Time or
the First Effective Time, as the case may be, represent for all purposes only
the right to receive the consideration provided in Sections 1.3 and 2.4, as the
case may be, and any dividends or any other distributions with a record date
prior to the Effective Time which have been declared or made by Union Planters
in respect of such shares of Union Planters Common Stock or Regions in respect
of Regions Common Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. To the extent permitted by Law, Holders
shall be entitled to vote after the Effective Time at any meeting of Newco
stockholders the number of whole shares of Newco Common Stock into which their
respective shares of Union Planters Common Stock or Regions Common Stock, as the
case may be, are converted, regardless of whether such Holders have exchanged
their certificates representing Union Planters Common Stock or Regions Common
Stock, as the case may be, for New Certificates representing Newco Common Stock
in accordance with the provisions of this Agreement, but beginning 30 days after
the Effective Time no such Holder shall be entitled to vote on any matter until
such Holder surrenders such Old Certificate for exchange as provided in Section
3.1. Whenever a dividend or other distribution is declared by Newco on Newco
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
Newco Common Stock issuable pursuant to this Agreement, but beginning 30 days
after the Effective Time no dividend or other distribution payable to the
holders of record of Newco Common Stock as of any time subsequent to the
Effective Time shall be delivered to the Holder of an Old Certificate until such
Holder surrenders such Old Certificate for exchange as provided in Section 3.1.
However, upon surrender of the Old Certificate, both the New Certificate,
together with all such undelivered dividends or other distributions (without
interest) and any undelivered cash payments to be paid for fractional share
interests (without interest), shall be delivered and paid with respect to each
share represented by such New Certificate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Disclosure Letters. Prior to the execution and delivery of this
Agreement, each Party has delivered to the other Party a letter (its "Disclosure
Letter") setting forth, among other things, items the disclosure of which is
necessary or appropriate either in response to an express disclosure requirement
contained in a provision hereof or as an exception to one or more of such
Party's representations or warranties contained in Section 4.3 or to one or more
of its covenants contained in Article 5; provided, that (i) no such item is
required to be set forth in a Party's Disclosure Letter as an exception to any
representation or warranty of such Party if its absence would not result in the
related representation or warranty being deemed untrue or incorrect under the
standard established by Section 4.2, and (ii) the mere inclusion of an item in a
Party's Disclosure Letter as an exception to a representation or warranty shall
not be deemed an admission by that Party that such item represents a material
exception or fact, event or circumstance or that such item is reasonably likely
to result in a Material Adverse Effect with
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respect to such Party. Any disclosures made with respect to a subsection of
Section 4.3 shall be deemed to qualify (a) any subsections of Section 4.3
specifically referenced or cross-referenced and (b) other subsections of Section
4.3 to the extent it is clear (notwithstanding the absence of a specific cross
reference) from a reading of the disclosure that such disclosure (i) applies to
such other subsections and (ii) contains sufficient detail to enable a
reasonable Person to recognize the relevance of such disclosure to such other
subsections.
4.2 Standards.
(a) No representation or warranty of any Party hereto or Newco contained in
Section 4.3 (other than the representations and warranties in (i) Sections
4.3(b)(i), 4.3(c)(i) and (ii), and 4.3(r) which shall be true and correct in all
material respects with respect to it, and (ii) Sections 4.3(b)(ii)(A) and
4.3(e)(ii) which shall be true and correct in all respects) shall be deemed
untrue or incorrect, and no Party hereto or Newco shall be deemed to have
breached a representation or warranty, as a consequence of the existence or
absence of any fact, circumstance or event unless such fact, circumstance or
event, individually or taken together with all other facts, circumstances or
events inconsistent with any representation or warranty contained in Section
4.3, has had or is reasonably likely to have a Material Adverse Effect on such
Party or Newco.
(b) The term "Material Adverse Effect," as used with respect to a Party or
Newco, means an effect which (i) is materially adverse to the business,
properties, financial condition or results of operations of such Party and its
Subsidiaries, or Newco, taken as a whole, or (ii) materially impairs the ability
of such Party or Newco to consummate the Merger and the transactions
contemplated hereby on a timely basis; provided that, in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect to the
extent attributable to or resulting from (A) any changes in Laws, regulations or
interpretations of Laws or regulations generally affecting the banking, bank
holding company or financial holding company businesses, (B) any change in GAAP
or regulatory accounting requirements, generally affecting the banking, bank
holding company or financial holding company businesses, (C) events, conditions
or trends in economic, business or financial conditions generally affecting the
banking, bank holding company or financial holding company businesses
specifically, (D) changes in national or international political or social
conditions including the engagement by the United States in hostilities, whether
or not pursuant to the declaration of a national emergency or war, or the
occurrence of any military or terrorist attack upon or within the United States,
or any of its territories, possessions or diplomatic or consular offices or upon
any military installation, equipment or personnel of the United States, (E) the
effects of the actions expressly permitted or required by this Agreement or that
are taken with the prior informed written consent of the other Party and Newco
in contemplation of the transactions contemplated hereby, and (F) the
announcement of this Agreement and the transactions contemplated hereby.
4.3 Representations and Warranties of the Parties. Subject to and giving
effect to Sections 4.1 and 4.2 and except as set forth in the relevant
Disclosure Letter, Regions hereby represents and warrants to Union Planters and
Union Planters hereby represents and warrants to Regions, and Newco hereby
represents and warrants to Regions and Union Planters that:
(a) Organization, Standing, and Power; Subsidiaries. It, and each of
its Subsidiaries, is duly organized, validly existing, and (to the extent
applicable) in good standing under the Laws of the jurisdiction in which it
is organized. It, and each of its Subsidiaries, has the requisite corporate
power and authority to own, lease, and operate its properties and assets
and to carry on its business as now conducted. It, and each of its
Subsidiaries, is duly qualified or licensed to do business and (to the
extent applicable) 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. It has
made available to the other Party hereto a complete and correct copy of its
Organizational Documents, each as amended to the date hereof and as in full
force and effect as of the date hereof. A true and complete list of its
direct and indirect Subsidiaries as of the date hereof is set forth in
Section 4.3(a) of its Disclosure Letter.
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(b) Authority; No Breach of Agreement.
(i) It has, and Newco will have, the corporate power and authority
necessary to execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement, and the
consummation of the transactions contemplated hereby, including the
Merger, by it, have been duly and validly authorized by all necessary
corporate action (including valid authorization and unanimous adoption
of this Agreement by its duly constituted Board of Directors), subject
only to the receipt of (A) in the case of Union Planters, the approval
of this Agreement by the holders of a majority of the Outstanding shares
of Union Planters Common Stock (the "Union Planters Shareholder
Approval"), (B) in the case of Regions, approval of this Agreement by
the holders of a majority of the Outstanding shares of Regions Common
Stock (the "Regions Stockholder Approval") and (C) in the case of Newco,
approval of this Agreement and the transactions contemplated hereby by
Union Planters and Regions, as the sole stockholders of Newco (the
"Newco Stockholder Approval"). Subject to the Union Planters Shareholder
Approval in the case of Union Planters, the Regions Stockholder Approval
in the case of Regions, and the Newco Stockholder Approval in the case
of Newco and assuming due authorization, execution, and delivery of this
Agreement by the other Party and by Newco, this Agreement represents a
legal, valid, and binding obligation of it, enforceable against it 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).
(ii) Neither the execution and delivery of this Agreement by it,
nor the consummation by it of the transactions contemplated hereby, nor
compliance by it with any of the provisions hereof, will (A) conflict
with or result in a breach or violation of any provision of its
Organizational Documents, (B) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation or
acceleration of any Lien (with or without the giving of notice, the
lapse of time or both) on any material asset of it or its Subsidiaries
under, any Contract or Permit of it or its Subsidiaries, or any change
in the rights or obligations under any Contract, or (C) subject to
receipt of the Regulatory Consents and the expiration of any waiting
period required by Law, violate any Law, Order or governmental license
applicable to it or its Subsidiaries or any of their respective material
assets.
(iii) In the case of Union Planters only, it has taken all action
necessary or appropriate so that the entering into of this Agreement,
and the consummation of the transactions contemplated hereby
(individually or in conjunction with any other event), do not and will
not result in the ability of any Person to exercise any rights under the
Union Planters Rights Plan or enable or require the Union Planters
Shareholder Rights to separate from the shares of Union Planters Common
Stock to which they are attached or to be triggered or become
exercisable or unredeemable. No "Distribution Date" (as such term is
defined in the Union Planters Rights Plan) has occurred or will occur as
a result of the transactions contemplated hereby. Union Planters has
duly adopted an amendment to the Union Planters Rights Plan
substantially in the form attached hereto as Exhibit 1.
(iv) Other than in connection or compliance with the provisions of
the Securities Laws, and other than (A) the Regulatory Consents, (B)
notices to or filings with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation (the "PBGC") or both with respect to any
Compensation and Benefit Plans, and (C) as set forth in Section
4.3(b)(iv) of its Disclosure Letter, no notice to, application or filing
with, or Consent of, any Governmental Authority is necessary in
connection with the execution, delivery or performance of this Agreement
and the consummation by it of the Merger and the other transactions
contemplated by this Agreement.
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(c) Common Stock.
(i) In the case of Union Planters only, the authorized capital
stock of Union Planters consists of 300,000,000 shares of Union Planters
Common Stock and 10,000,000 shares of Union Planters Preferred Stock, of
which, as of the date of this Agreement, (A) 188,960,454 shares of Union
Planters Common Stock were issued and outstanding, (B) 389,910 shares of
Union Planters Series E Preferred Stock were issued and outstanding, and
(C) no shares of Union Planters Series F Preferred Stock were issued and
outstanding, and not more than 211,094,923 shares of Union Planters
Common Stock and no shares of Union Planters Series E Preferred Stock
will be issued and outstanding immediately prior to the Effective Time.
As of the date of this Agreement, no more than 18,668,648 shares of
Union Planters Common Stock were subject to Union Planters Stock Options
granted under Union Planters Stock Plans. As of the date of this
Agreement, there were no more than 21,406,507 shares of Union Planters
Common Stock subject to outstanding Rights under the Union Planters
Stock Plans. Except as set forth in this Section 4.3(c)(i), or as
contemplated by the Union Planters Rights Plan, the Union Planters DRIP
or as specifically set forth in Section 4.3(c)(i) of Union Planters'
Disclosure Letter (which shall set forth in detail (including exercise
prices) all outstanding (i) stock options, (ii) shadow stock units and
(iii) restricted stock and restricted stock units under Union Planters
Stock Plans), there are no shares of Union Planters Capital Stock or
other equity securities of Union Planters outstanding and no outstanding
Rights relating to the Union Planters Capital Stock, and no Person has
any Contract or any right or privilege (whether pre-emptive or
contractual) capable of becoming a Contract or Right for the purchase,
subscription or issuance of any securities of Union Planters. All of the
Outstanding shares of Union Planters Capital Stock are duly and validly
authorized, issued and outstanding and are fully paid and nonassessable.
None of the outstanding shares of Union Planters Capital Stock has been
issued in violation of any preemptive or similar rights of the current
or past shareholders of Union Planters.
(ii) In the case of Regions only, the authorized capital stock of
Regions consists of 500,000,000 shares of Regions Common Stock and
5,000,000 shares of Regions Preferred Stock, of which, as of the date of
this Agreement, (A) 221,967,484 shares of Regions Common Stock were
issued and outstanding, and (B) no shares of Regions Preferred Stock
were issued and outstanding, and not more than 241,981,028 shares of
Regions Common Stock will be issued and outstanding immediately prior to
the First Effective Time. As of the date of this Agreement, no more than
20,013,544 shares of Regions Common Stock were subject to Regions Stock
Options granted under the Regions Stock Plans. As of the date of this
Agreement, there were no more than 20,013,544 shares of Regions Common
Stock subject to outstanding Rights under the Regions Stock Plans.
Except as set forth in this Section 4.3(c)(ii), or as specifically set
forth in Section 4.3(c)(ii) of Regions' Disclosure Letter (which shall
set forth in detail (including exercise prices) all outstanding (i)
stock options, (ii) stock appreciation rights and (iii) restricted stock
and restricted stock units under Regions Stock Plans), there are no
shares of Regions Capital Stock or other equity securities of Regions
outstanding and no outstanding Rights relating to the Regions Capital
Stock, and no Person has any Contract or any right or privilege (whether
pre-emptive or contractual) capable of becoming a Contract or Right for
the purchase, subscription or issuance of any securities of Regions. All
of the Outstanding shares of Regions Capital Stock are duly and validly
authorized, issued and outstanding and are fully paid and nonassessable.
None of the outstanding shares of Regions Capital Stock has been issued
in violation of any preemptive or similar rights of the current or past
stockholders of Regions.
(iii) In the case of Newco only, the authorized capital stock of
Newco shall be as agreed by the Parties, of which, as of the First
Effective Time, 2 shares of Newco Common Stock will be issued and
outstanding and will be held equally by Regions and Union Planters. The
authorized capital stock of Newco immediately following consummation of
the First Step Merger (and prior to the Effective Time) will be as set
forth in the form of Newco Certificate of Incorporation. No
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change in such capitalization will occur prior to the Effective Time
except as provided in or contemplated by this Agreement. At the
Effective Time, no capital stock of Newco (and no Rights to acquire any
such capital stock) will be outstanding, except as contemplated by this
Agreement.
(iv) All the outstanding shares of capital stock of each of its
Subsidiaries owned by it or a Subsidiary of it have been duly authorized
and validly issued and are fully paid and (except, with respect to bank
Subsidiaries, as provided under applicable state Law) nonassessable, and
are owned by it or a Subsidiary of it free and clear of all Liens or
Rights. In the case of Newco only, Newco has, and will have prior to the
First Effective Time, no Subsidiaries or material investments of any
kind in any entity.
(v) In the case of Newco only, the shares of Newco Common Stock to
be issued in the Merger, when so issued in accordance with this
Agreement, will have been duly authorized and validly issued and will be
fully paid and nonassessable and not subject to any preemptive rights.
(d) SEC Filings; Financial Statements.
(i) Each Party has filed and made available to the other Party all
SEC Documents required to be filed by it with the SEC since December 31,
2000 (collectively, the "SEC Reports"). Its SEC Reports, including the
Financial Statements, exhibits and schedules contained therein, (A) at
the time filed, complied (and any SEC Reports filed after the date of
this Agreement will comply) in all material respects with the applicable
requirements of the Securities Laws, and (B) at the time they were filed
(or if amended or superseded by another SEC Report filed prior to the
date of this Agreement, then on the date of such filing), did not (and
any SEC Reports filed after the date of this Agreement will not) contain
any untrue statement of a material fact or omit to state a material fact
required to be stated in such SEC Reports or necessary in order to make
the statements made in such SEC Reports, in light of the circumstances
under which they were made, not misleading.
(ii) Each of its Financial Statements contained in its SEC Reports
(including any SEC Reports filed after the date of this Agreement)
complied (or, in the case of SEC Reports filed after the date of this
Agreement, will comply) in all material respects with the applicable
requirements of the Securities Laws with respect thereto, fairly
presented (or, in the case of SEC Reports filed after the date of this
Agreement, will fairly present) the consolidated financial position of
it and its Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods indicated, in
each case in accordance with GAAP consistently applied during the
periods indicated, except in each case as may be noted therein, and
subject to normal year-end audit adjustments and as permitted by Form
10-Q in the case of unaudited Financial Statements.
(iii) Its 2003 earnings press release issued on January 15, 2004 in
the case of Union Planters and on January 16, 2004 in the case of
Regions fairly presented the consolidated financial position of it and
its Subsidiaries as at the respective dates and the consolidated results
of its operations for the periods indicated, in each case in accordance
with GAAP consistently applied during the periods indicated, and did not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(e) Absence of Certain Changes or Events. Since September 30, 2003,
except as disclosed in its SEC Reports filed prior to the date of this
Agreement, (i) it and its Subsidiaries have conducted their respective
businesses only in the ordinary course of such businesses and (ii) there
have been no events, changes, developments or occurrences which have had,
or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on it.
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(f) Tax Matters. All Tax Returns required to be filed by or on behalf
of it or any of its Subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extension has been granted
and has not expired, and all such filed returns are complete and accurate
in all material respects. It has made available to the other Party true and
correct copies of the United States federal income Tax Returns filed by it
or its Subsidiaries for each of the three most recent fiscal years ended on
or before December 31, 2002. Except as disclosed in its SEC Reports filed
prior to the date of this Agreement, all Taxes attributable to it or any of
its Subsidiaries that are or were due or payable (without regard to whether
such Taxes have been assessed) have been paid in full or have been
adequately provided for on its consolidated balance sheet and consolidated
statement of earnings or income in accordance with GAAP. As of the date of
this Agreement and except as disclosed in its SEC Reports filed prior to
the date of this Agreement, there is no outstanding audit examination,
deficiency, refund or other Tax Litigation or outstanding waivers or
agreements extending the applicable statute of limitations for the
assessment or collection of any Taxes for any period with respect to any
Taxes of it or its Subsidiaries. All Taxes due with respect to completed
and settled examinations or concluded Litigation relating to it or any of
its Subsidiaries have been paid in full or have been recorded in accordance
with GAAP on its or its Subsidiaries' balance sheet and consolidated
statement of earnings or income. Neither it nor any of its Subsidiaries is
a party to a Tax sharing, indemnification or similar agreement or any
agreement pursuant to which it or any of its Subsidiaries has any
obligation to any Person (other than it or one of its Subsidiaries) with
respect to Taxes. The proper and accurate amounts have been withheld from
all employees, creditors, or third parties (and timely paid to the
appropriate Governmental Authority or set aside in an account for such
purposes) for all periods through the Effective Time in compliance with all
Tax withholding provisions of applicable federal, state, local and foreign
Laws (including income, social security and employment Tax withholding for
all types of compensation). Neither it nor any of its Subsidiaries has been
a party to any distribution occurring during the last three years in which
the parties to such distribution treated the distribution as one to which
Section 355 of the Internal Revenue Code applied. Neither it nor any of its
Subsidiaries is a party to any "listed transaction" as defined in Treasury
Regulation Section 1.6011-4(b)(2). No Liens for Taxes exist with respect to
it or its Subsidiaries, except for statutory Liens for Taxes not yet due
and payable or that are being contested in good faith and reserved for in
accordance with GAAP.
(g) Certain Actions. Neither it nor any of its Subsidiaries or any
Affiliates thereof has taken or agreed to take any action, and it 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 materially delay receipt of any Regulatory Consents. To its knowledge,
as of the date hereof, there exists no fact, circumstance, or reason that
would cause any Regulatory Consents not to be received in a timely manner.
(h) Environmental Matters. Except as described in the Disclosure
Letter: (i) no Hazardous Material is contained in or has been used at or
released from its Facilities other than in compliance with, and as would
not reasonably be expected to result in liability under, any Environmental
Laws; (ii) all Hazardous Materials used by it or stored on its Properties
have been disposed of in accordance with, and as would not reasonably be
expected to result in liability under, any Environmental Laws; (iii)
neither it nor any of its Subsidiaries is potentially liable as a
responsible party under any Environmental Law, including the federal
Comprehensive Environmental Response, Compensation and Liability Act, as
amended ("CERCLA"), or state analog statute, arising out of events
occurring prior to the Effective Time; (iv) there have not been in the
past, and are not now, any Hazardous Materials that have been released on
or under or are migrating to or from the Facilities or any Property; (v)
there have not been in the past, and are not now, any underground tanks or
physical structures or vessels holding Hazardous Materials at, on or under
any Property including treatment or storage tanks, sumps, lagoons, basins,
or water, gas or oil wells; (vi) there are no polychlorinated biphenyls
("PCBs") deposited, stored, disposed of or located on any Property or
Facilities or any equipment on any Property containing PCBs at levels in
excess of levels permitted by law; (vii) it and its Subsidiaries and
Affiliates are not subject to any consent orders, decrees, notices
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of violation, injunctions, directives or orders from any Governmental
Authority or any indemnity or other agreement with any third party relating
to obligations, costs or liabilities arising under any Environmental Law;
(viii) the Facilities and its and its Subsidiaries' activities and
operations have at all times complied with all Environmental Laws, (ix) it
and its Subsidiaries have received no notice of any noncompliance with, or
liability under, any Environmental Laws regarding the Facilities or any
Property or its past or present operations and (x) no claims, notices,
administrative actions, information requests or suits are pending or, to
its knowledge, threatened relating to any actual or potential violation,
liability or obligation by it or any of its Subsidiaries with respect to
any Environmental Laws.
(i) Compliance with Permits, Laws and Orders.
(i) It and each of its Subsidiaries has in effect all Permits and
has made all filings, applications, and registrations with Governmental
Authorities that are required for it to own, lease, or operate its
material assets and to carry on its business as now conducted and there
has occurred no Default under any Permit applicable to its business or
employees conducting its business.
(ii) Neither it nor any of its Subsidiaries is in Default under any
Laws or Orders applicable to it, its business or employees conducting
its business. Each of its Subsidiaries that is an insured depository
institution has a Community Reinvestment Act rating of "satisfactory" or
better.
(iii) Since January 1, 2000, neither it nor any of its Subsidiaries
has received any notification or communication from any Governmental
Authority, (A) asserting that it or any of its Subsidiaries is in
Default under any Permits, Laws or Orders, (B) threatening to revoke any
Permits, (C) requiring it or any of its Subsidiaries (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 resolution of its Board of Directors or similar
undertaking, which restricts the conduct of its business, or relates to
its capital adequacy, its credit or reserve policies, its management, or
the payment of dividends or any other policy or procedure, or (D)
threatening or contemplating revocation or limitation of, or which would
have the effect of revoking or limiting, Federal Deposit Insurance
Corporation ("FDIC") deposit insurance, and neither it nor any of its
Subsidiaries has received any notice from a Governmental Authority that
it is considering issuing any of the foregoing.
(iv) There (A) is no unresolved violation, criticism, or exception
by any Governmental Authority with respect to any report or statement
relating to any examinations or inspections of it or any of its
Subsidiaries and (B) have been no formal or informal inquiries by, or
disagreements or disputes with, any Governmental Authority with respect
to its or any of its Subsidiaries' business, operations, policies or
procedures since January 1, 2000.
(v) There is no Order, circumstance or condition relevant or
applicable to it that would prevent, or is reasonably likely to prevent,
Newco from satisfying the criteria for "financial holding company"
status under the BHC Act after the First Effective Time.
(j) Labor Relations. Neither it nor any of its Subsidiaries is the
subject of any Litigation asserting that it or any of its Subsidiaries 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
of its Subsidiaries to bargain with any labor organization as to wages or
conditions of employment, nor is it or any of its Subsidiaries 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 it or any of its
Subsidiaries pending or, to its knowledge, threatened, nor to its
knowledge, is there any activity involving it or any of its Subsidiaries'
employees seeking to certify a collective bargaining unit or engaging in
any other organization activity.
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(k) Employee Compensation and Benefit Plans.
(i) It has disclosed in Section 4.3(k) of its Disclosure Letter,
and has delivered or made available to the other Party prior to the date
of this Agreement correct and complete copies of, all of its
Compensation and Benefit Plans. Neither it nor any of its Subsidiaries
has an "obligation to contribute" (as defined in ERISA Section 4212) nor
have they ever had an obligation to contribute 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, that was
ever maintained by it or any of its Subsidiaries and that was intended
to qualify under Section 401(a) of the Internal Revenue Code, is
disclosed as such in Section 4.3(k) of its Disclosure Letter.
(ii) It has delivered or made available to the other Party prior to
the date of this Agreement correct and complete copies of the following
documents: (A) all trust agreements or other funding arrangements for
its Compensation and Benefit Plans (including insurance Contracts), and
all amendments thereto (all such trust agreements and other funding
arrangements are disclosed in Section 4.3(k) of its Disclosure Letter),
(B) with respect to any such Compensation and 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 PBGC after December 31, 1994,
(C) annual reports or returns, audited or unaudited financial
statements, actuarial valuations and reports, and summary annual reports
prepared for any Compensation and Benefit Plans with respect to the most
recent plan year, and (D) the most recent summary plan descriptions and
any material modifications thereto.
(iii) All of its Compensation and Benefit Plans are in compliance
with the applicable terms of ERISA, the Internal Revenue Code, and any
other applicable Laws. Except as disclosed in Section 4.3(k) of its
Disclosure Letter, each of its ERISA Plans 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
covering all Tax Law changes prior to the Economic Growth and Tax Relief
Reconciliation Act of 2001 and, to its knowledge, there are no
circumstances likely to result in revocation of any such favorable
determination letter. Except as disclosed in Section 4.3(k) of its
Disclosure Letter, each trust created under any of its ERISA Plans has
been determined to be exempt from Tax under Section 501(a) of the
Internal Revenue Code and it is not aware of any circumstance which will
or could reasonably result in revocation of such exemption. Any
voluntary employees' beneficiary association within the meaning of
Section 501(c)(9) of the Internal Revenue Code which provides benefits
under a Compensation and Benefit Plan has (i) received an opinion letter
from the Internal Revenue Service recognizing its exempt status under
Section 501(c)(9) of the Internal Revenue Code and (ii) filed a timely
notice with the Internal Revenue Service pursuant to Section 505(c) of
the Internal Revenue Code, and it is not aware of circumstances likely
to result in the loss of such exempt status under Section 501(c)(9) of
the Internal Revenue Code. There is no pending or, to its knowledge,
threatened Litigation relating to any of its ERISA Plans.
(iv) Neither it nor any of its Subsidiaries has engaged in a
transaction with respect to any of its Compensation and Benefit Plans
that, assuming the Taxable Period of such transaction expired as of the
date of this Agreement or the Effective Time, would subject it or any of
its Subsidiaries to a Tax or penalty imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA.
(v) Except as disclosed in Section 4.3(k) of its Disclosure Letter,
each of its Pension Plans had, as of the date of its most recent
actuarial valuation, assets measured at fair market value at least equal
to its "current liability," as that term is defined in Section 302(d)(7)
of ERISA. To its knowledge, since the date of the most recent actuarial
valuation, no event has occurred which would adversely change any such
funded status. None of its Pension Plans nor any "single-
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employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently maintained by it or any of its Subsidiaries, or the
single-employer plan of any entity which is considered one employer with
it under Section 4001 of ERISA or Section 414 of the Internal Revenue
Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning
of Section 412 of the Internal Revenue Code or Section 302 of ERISA. All
required contributions with respect to any of its Pension Plans or any
single-employer plan of any of its ERISA Affiliates have been timely
made and there is no lien, nor is there expected to be a lien, under
Internal Revenue Code Section 412(n) or ERISA Section 302(f) or Tax
under Internal Revenue Code Section 4971. Neither it nor any of its
Subsidiaries has provided, or is required to provide, security to any of
its Pension Plans or to any single-employer plan of any of its ERISA
Affiliates pursuant to Section 401(a)(29) of the Internal Revenue Code.
(vi) No Liability under Title IV of ERISA has been or is expected
to be incurred by it or any of its Subsidiaries with respect to any
defined benefit plan currently or formerly maintained by any of them or
by any of its ERISA Affiliates that has not been satisfied in full
(other than Liability for PBGC premiums, which have been paid when due).
(vii) Except as disclosed in Section 4.3(k) of its Disclosure
Letter, neither it nor any of its Subsidiaries has any obligations for
retiree health and retiree life benefits under any of its Compensation
and Benefit Plans other than with respect to benefit coverage mandated
by applicable Law.
(viii) There has been no amendment to, announcement by it or any of
its Subsidiaries relating to, or change in employee participation or
coverage under, any Compensation and Benefit Plan which would increase
the expense of maintaining such plan above the level of the expense
incurred therefor for the most recent fiscal year. None of the execution
and delivery of this Agreement, the shareholder or stockholder approval
of the transactions contemplated hereby or the consummation of the
transactions contemplated hereby (A) result in any payment (including
severance, golden parachute, or otherwise) becoming due to any director
or any employee of it or any of its Subsidiaries from it or any of its
Subsidiaries under any of its Compensation and Benefit Plans or
otherwise, other than by operation of Law, (B) increase any benefits
otherwise payable under any of its Compensation and Benefit Plans, (C)
result in any acceleration of the time of payment or vesting of any such
benefit, (D) limit or restrict the right of it to merge, amend or
terminate any of the Compensation and Benefit Plans or (E) result in
payments under any Compensation and Benefit Plans which would not be
deductible under Section 280G of the Internal Revenue Code.
(l) Material Contracts.
(i) Except for Contracts reflected as exhibits to its SEC Reports
filed prior to the date of this Agreement, as of the date of this
Agreement, neither it nor any of its Subsidiaries, nor any of their
respective assets, businesses, or operations, is a party to, or is bound
or affected by, or receives benefits under, (A) any Contract relating to
the borrowing of money by it or any of its Subsidiaries or the guarantee
by it or any of its Subsidiaries 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), (B) any Contract containing covenants that
limit the ability of it or any of its Subsidiaries to compete in any
line of business or with any Person, or that involve any restriction of
the geographic area in which, or method by which, it or any of its
Subsidiaries may carry on its business (other than as may be required by
Law or any Governmental Authority), (C) any other Contract or amendment
thereto that would be required to be filed as an exhibit to any SEC
Report (as described in Items 601(b)(4) and 601(b)(10) of Regulation S-K
under the 1933 Act) that has not been filed as an exhibit to or
incorporated by reference in its SEC Reports filed prior to the date of
this Agreement or (D) any Contract that involves expenditures or
receipts of it or any of its
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Subsidiaries in excess of $1,000,000 per year. With respect to each of
its Contracts that are (A) reflected as an exhibit to any SEC Report,
(B) would be required under Items 601(b)(4) and 601(b)(10) of Regulation
S-K under the 1933 Act to be filed as an exhibit to any of its SEC
Reports, or (C) that is disclosed in its Disclosure Letter: (w) each
such Contract is in full force and effect; (x) neither it nor any of its
Subsidiaries is in Default thereunder; (y) neither it nor any of its
Subsidiaries has repudiated or waived any material provision of any such
Contract; and (z) no other party to any such Contract is, to its
knowledge, in Default in any material respect.
(ii) All interest rate swaps, caps, floors, option agreements,
futures and forward contracts, and other similar risk management
arrangements, whether entered into for its own account or for the
account of one or more of its Subsidiaries or their respective
customers, were entered into (A) in accordance with prudent business
practices and all applicable Laws and (B) with counterparties believed
to be financially responsible, and each of them is enforceable against
it or its Subsidiaries 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), and is in full force
and effect. Neither it nor any of its Subsidiaries, nor to its
knowledge, any other party thereto, is in Default of any of its
obligations under any such agreement or arrangement. Its Financial
Statements disclose the value of such agreements and arrangements on a
mark-to-market basis in accordance with GAAP (including but not limited
to Financial Accounting Statement 133) and, since September 30, 2003,
there has not been a change in such value that, individually or in the
aggregate, has resulted in a Material Adverse Effect on it.
(m) Legal Proceedings. There is no Litigation pending or, to its
knowledge, threatened against it or any of its Subsidiaries, or against any
asset, interest, or right of any of them nor are there any Orders of any
Governmental Authority or arbitrators outstanding against it or any of its
Subsidiaries.
(n) Reports. Since January 1, 2000, or the date of organization if
later, it and each of its Subsidiaries has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Governmental Authority and
all other reports and statements required to be filed by them since January
1, 2000, including any report or statement required to be filed pursuant to
any Law have been so filed, and it and each of its Subsidiaries have paid
all fees and assessments due and payable in connection therewith.
(o) Intellectual Property.
(i) It and its Subsidiaries own, or are licensed or otherwise
possess sufficient legally enforceable rights to use, all Intellectual
Property (including the Technology Systems) that is used by it and its
Subsidiaries in their respective businesses as currently conducted.
Neither it nor any of its Subsidiaries has (A) licensed any Intellectual
Property owned by it or its Subsidiaries in source code form to any
Person or (B) entered into any exclusive agreements relating to
Intellectual Property owned by it or its Subsidiaries.
(ii) It and its Subsidiaries have not infringed or otherwise
violated the Intellectual Property rights of any third Person since
January 1, 2001. There is no claim asserted, or to its knowledge
threatened, against it and its Subsidiaries or any indemnitee thereof
concerning the ownership, validity, registerability, enforceability,
infringement, use or licensed right to use any Intellectual Property.
(iii) No third Person has infringed, misappropriated or otherwise
violated it or its Subsidiaries' Intellectual Property rights since
January 1, 2001. There are no claims asserted or threatened by it or its
Subsidiaries, or decided by them to be asserted or threatened, that (A)
a third Person infringed or otherwise violated any of their Intellectual
Property rights; or (B) a
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third Person's owned or claimed Intellectual Property interferes with,
infringes, dilutes or otherwise harms any of their Intellectual Property
rights.
(iv) It and its Subsidiaries have taken reasonable measures to
protect the confidentiality of all Trade Secrets that are owned, used or
held by them.
(p) State Takeover Laws. It has taken all action required to be taken
by it in order to exempt this Agreement and the transactions contemplated
hereby from, and this Agreement and the transactions contemplated hereby
are exempt from, the requirements of any "moratorium," "control share,"
"fair price," "affiliate transaction," "anti-greenmail," "business
combination" or other antitakeover Laws of any jurisdiction, including but
not limited to (i) in the case of Union Planters, Chapter 103 of Title 48
of the Tennessee Code, and (ii) in the case of Regions, Section 203 of the
DGCL (collectively, "Takeover Laws"). It has taken all action required to
be taken by it in order to make this Agreement and the transactions
contemplated hereby comply with, and this Agreement and the transactions
contemplated hereby do comply with, the requirements of any provisions of
its Organizational Documents concerning "business combination," "fair
price," "voting requirement," "constituency requirement" or other related
provisions, including but not limited to (i) in the case of Union Planters,
the provisions of Article Fourteenth of the Union Planters Amended and
Restated Charter and (ii) in the case of Regions, the provisions of Section
(7) of Article Seventh of the Regions Restated Certificate of
Incorporation.
(q) Brokers and Finders. Except for Morgan Stanley & Co., Inc. as to
Union Planters and UBS Securities LLC as to Regions (in each case pursuant
to engagement letters which have been set forth as an exhibit to their
respective Disclosure Letter), 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.
(r) Fairness Opinion. Prior to the execution of this Agreement, Union
Planters has received an opinion of Morgan Stanley & Co., Inc. and Regions
has received an opinion of UBS Securities LLC, each to the effect that as
of the date thereof and based upon and subject to the matters set forth
therein, (i) in the case of Regions, the Exchange Ratio is fair, from a
financial point of view, to the stockholders of Regions, and (ii) in the
case of Union Planters, the exchange of Union Planters Common Stock for
Newco Common Stock provided for in the Agreement is fair, from a financial
point of view, to the shareholders of Union Planters. Such opinions have
not been amended or rescinded as of the date of this Agreement.
(s) Insurance. It and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as its management
reasonably has determined to be prudent in accordance with industry
practices.
ARTICLE 5
COVENANTS AND ADDITIONAL AGREEMENTS
5.1 Conduct of Business Prior to Effective Time. During the period from
the date of this Agreement through the Effective Time, except as set forth in
its Disclosure Letter, except as expressly contemplated or permitted by this
Agreement and except as Consented to in writing by the other Party (which
Consent shall not be unreasonably withheld or delayed), each of the Parties and
Newco shall, and shall cause each of their respective Subsidiaries to, (a)
conduct its business in the ordinary course, (b) use reasonable best efforts to
maintain and preserve intact its business organization, assets, employees and
relationships with customers, suppliers, employees and business associates, and
(c) take no action that would adversely affect or delay the ability of either
Party to obtain any Required Consents, to perform its covenants and agreements
under this Agreement, or to consummate the transactions contemplated hereby on a
timely basis.
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5.2 Forbearances. During the period from the date of this Agreement
through the Effective Time, except as set forth in its Disclosure Letter and
except as expressly contemplated or permitted by this Agreement or as otherwise
indicated in this Section 5.2, neither Party nor Newco shall, and neither Party
nor Newco shall permit any of its Subsidiaries to, without the prior written
Consent of the other Party and Newco (which Consent shall not be unreasonably
withheld or delayed):
(a) amend the Organizational Documents of Regions, Union Planters, or
Newco (except as provided herein);
(b) except for Permitted Issuances and Permitted Repurchases and
except as provided in Section 5.3, (i) adjust, split, combine or reclassify
any capital stock, (ii) make, declare or pay any dividend, or make any
other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible (whether currently convertible or convertible only
after the passage of time or the occurrence of certain events) into or
exchangeable for any shares of its capital stock, (iii) grant or issue any
Rights (other than reload options issued in connection with the exercise of
stock options outstanding as of the date of this Agreement and as required
by any Contract, in each case as disclosed in its Disclosure Letter), (iv)
issue any additional shares of capital stock, or (v) make any change in any
instrument or Contract governing the terms of any of its securities;
(c) other than in the ordinary course of business or pursuant to
Contracts in force at the date of or permitted by this Agreement and other
than in satisfaction of debts previously contracted in good faith, make any
material investment in or acquisition of (either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of
any property or assets) any other Person other than its wholly owned
Subsidiaries;
(d) enter into any new line of business, or change its lending,
investment, underwriting, risk and asset liability management and other
banking and operating policies that are material to it and its
Subsidiaries, taken as a whole, except as required by applicable Law or any
regulations or policies imposed on it by any Governmental Authority;
(e) sell, transfer, mortgage, encumber or otherwise dispose of any
part of its business or any of its properties or assets to any Person other
than a wholly owned Subsidiary, or cancel, release or assign any
indebtedness to any Person other than a wholly owned Subsidiary or any
claims against any Person other than a Subsidiary, except in the ordinary
course of business or pursuant to Contracts in force as of the date of this
Agreement and disclosed in Section 5.2(e) of its Disclosure Letter;
(f) other than in the ordinary course of business: incur any
indebtedness for borrowed money; assume, guarantee, endorse or otherwise as
an accommodation become responsible for the obligations of any Person; or
make any loan or advance;
(g) other than in consultation with the other Party and Newco,
restructure or change its investment securities portfolio, its derivatives
portfolio or its interest rate exposure, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported,
in any material respect;
(h) other than in the ordinary course of business, terminate or waive
any material provision of any material Contract other than normal renewals
of Contracts without materially adverse changes, additions or deletions of
terms;
(i) other than as required by Compensation and Benefit Plans and
Contracts as in effect at the date of this Agreement or applicable law, (i)
increase in any manner the compensation or fringe benefits of any of its
officers, employees or directors other than with respect to employees who
are not directors or executive officers and then only in the ordinary
course of business consistent with past practice, (ii) pay any pension or
retirement allowance not required by any existing Compensation and Benefit
Plan or Contract to any such officers, employees or directors, (iii) become
a party to, amend or commit itself to any Compensation and Benefit Plan or
Contract (or any individual Contracts
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evidencing grants or awards thereunder) or employment agreement with or for
the benefit of any officer, employee or director other than with respect to
employees who are not directors or executive officers and then only in the
ordinary course of business consistent with past practice, or (iv)
accelerate the vesting of, or the lapsing of restrictions with respect to,
Rights pursuant to Regions Stock Plans in the case of Regions, and Rights
pursuant to Union Planters Stock Plans in the case of Union Planters;
(j) settle any Litigation, except for any Litigation involving solely
money damages in an amount, individually or in the aggregate for all such
settlements, that is not material to such Party and its Subsidiaries, taken
as a whole, or Newco and that does not involve or create precedent for
Litigation that is reasonably likely to be material to it and its
Subsidiaries taken as a whole;
(k) implement or adopt any change in its accounting principles,
practices or methods, including reserving methodologies, other than as may
be required by GAAP, regulatory accounting guidelines or applicable Law;
(l) file or amend any Tax Return except in the ordinary course of
business; settle or compromise any material Tax Liability; make, change or
revoke any material Tax election or change any method of Tax accounting,
except as required by applicable Law;
(m) knowingly take, or knowingly omit to take, any action that is
reasonably likely to result in any of the conditions to the Merger set
forth in Article 6 not being satisfied on a timely basis except as may be
required by applicable Law; provided, that nothing in this Section 5.2(m)
shall preclude any Party from exercising its respective rights under
Section 5.13;
(n) take any action that would reasonably be expected to prevent the
Merger from qualifying as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code; or
(o) agree to take any of the actions prohibited to it by this Section
5.2.
5.3 Dividends.
(a) Each Party agrees that, from and after the date of this Agreement until
the Effective Time, (i) Union Planters may (to the extent legally and
contractually permitted to do so), but shall not be obligated to, declare and
pay quarterly dividends on outstanding shares of Union Planters Common Stock at
a rate not to exceed $0.33 1/3 per share per quarter, (ii) Union Planters may
(to the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay dividends on outstanding shares of Union Planters
Series E Preferred Stock in accordance with the terms of its Organizational
Documents and applicable Law, (iii) Regions may (to the extent legally and
contractually permitted to do so), but shall not be obligated to, declare and
pay quarterly dividends on outstanding shares of Regions Common Stock, and may
increase the rate of such quarterly dividends up to an amount not to exceed
$0.4116 per share per quarter and (iv) its direct and indirect Subsidiaries may
(to the extent legally and contractually permitted to do so), but shall not be
obligated to, declare and pay dividends on their capital stock in cash, stock or
other property to the Parties or their wholly owned Subsidiaries and to the
holders of any trust preferred securities and of any REIT preferred securities
issued by Subsidiaries of the Parties.
(b) After the date of this Agreement, each Party shall coordinate with the
other with respect to the declaration of any dividends in respect of Regions
Common Stock and Union Planters Common Stock and the record dates and payment
dates relating thereto, it being the intention of the Parties that holders of
Union Planters Common Stock shall not receive two dividends, or fail to receive
one dividend, for any quarter with respect to their shares of Union Planters
Common Stock and any shares of Regions Common Stock any such holder receives in
exchange therefor in the Merger (i.e., if the Parties anticipated the Effective
Time occurring after the typical Union Planters dividend record date in May
(which would typically be declared in April but before the typical Regions
dividend record date in June (which would typically be declared in May), as
mutually agreed by the Parties, (i) either Union Planters would declare its
dividend in May with a record date in June corresponding to Regions' declaration
and record dates or
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(ii) Regions would declare its dividend in April with a record date in May
corresponding to Union Planters' declaration and record date).
5.4 Redemption of Union Planters Series E Preferred Stock. As promptly as
practicable, and in any event within 20 days of the date of this Agreement,
Union Planters shall take all action necessary to effect the redemption (subject
to the rights of the holders of shares of Union Planters Series E Preferred
Stock to convert such shares into shares of Union Planters Common Stock) of all
Outstanding shares of Union Planters Series E Preferred Stock in accordance with
the terms of the Union Planters Amended and Restated Charter and the applicable
provisions of the TBCA so that such redemption shall occur no later than 50 days
after the date of this Agreement. The Parties acknowledge and agree that the
redemption described in this Section 5.4 will require the approval of the Board
of Governors of the Federal Reserve System.
5.5 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement, the Parties and
Newco will use their reasonable best efforts to take, or cause to be taken, in
good faith, all actions, and to do, or cause to be done, all things necessary,
proper or desirable, or advisable under applicable Laws, including using its
reasonable best efforts to lift or rescind any Order adversely affecting its
ability to consummate the transactions contemplated hereby on a timely basis and
to cause to be satisfied the conditions in Article 6, to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby, and each will cooperate fully with and
furnish information to, the other Party and Newco to that end; provided that
nothing contained herein shall preclude any Party or Newco from exercising its
rights under this Agreement.
(b) Union Planters shall take all actions necessary or required to ensure
that the entering into of this Agreement, and the consummation of the
transactions contemplated hereby (individually or in conjunction with any other
event), do not and will not result in (i) Newco, Regions or any Affiliate of
Regions or any other Person becoming an "Acquiring Person" for purposes of the
Union Planters Rights Plan or the occurrence of a "Distribution Date" under the
Union Planters Rights Plan or (ii) the ability of any Person to exercise any
Union Planters Shareholder Rights under the Union Planters Rights Plan or enable
or require the Union Planters Shareholder Rights to separate from the shares of
Union Planters Common Stock to which they are attached or to be triggered or
become exercisable, distributable or unredeemable.
(c) Upon the terms and subject to the conditions of this Agreement and
prior to or in connection with the Closing, Union Planters, Regions and Newco
shall execute and the Parties and Newco shall cause to be filed the articles of
merger with the Tennessee Secretary and the Delaware Secretary.
(d) Each Party and Newco undertakes and agrees to use its reasonable best
efforts to cause the Merger, and to take no action which would reasonably be
expected to 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.
(e) The Parties and Newco shall consult with respect to the character,
amount and timing of restructuring charges to be taken by each of them in
connection with the transactions contemplated hereby and shall take such charges
in accordance with GAAP, as such Parties and Newco mutually agree upon.
5.6 Shareholders' and Stockholders' Approvals.
(a) Regions shall call a meeting of its stockholders to be held as soon as
reasonably practicable for the purpose of obtaining the Regions Stockholder
Approval and such other matters as the Board of Directors of Regions may direct,
and shall use its reasonable best efforts to cause such meeting to occur as soon
as reasonably practicable. The Board of Directors of Regions shall use its
reasonable best efforts to obtain the Regions Stockholder Approval.
(b) Union Planters shall call a meeting of its shareholders to be held as
soon as reasonably practicable for the purpose of obtaining the Union Planters
Shareholder Approval and such other matters as the Board of Directors of Union
Planters may direct, and shall use its reasonable best efforts to cause
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such meeting to occur as soon as reasonably practicable. The Board of Directors
of Union Planters shall use its reasonable best efforts to obtain the Union
Planters Shareholder Approval.
(c) Regions and Union Planters shall use their reasonable best efforts to
hold their respective stockholder and shareholder meetings on the same day.
5.7 Registration Statement; Joint Proxy Statement/Prospectus.
(a) Each Party and Newco agree to cooperate with the other Party and Newco,
and their Representatives, in the preparation of the Registration Statement and
the Joint Proxy Statement/Prospectus. Neither the Joint Proxy
Statement/Prospectus nor the Registration Statement shall be filed, and, prior
to the termination of this Agreement, no amendment or supplement to the Joint
Proxy Statement/Prospectus or the Registration Statement shall be filed, by
Newco, Regions or Union Planters without consultation with the other Party,
Newco and their counsel. Newco agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the 1933 Act as promptly
as practicable after filing thereof. The Parties and Newco agree to use all
reasonable efforts to obtain all Permits required by the Securities Laws to
carry out the transactions contemplated by this Agreement, and each Party and
Newco agree to furnish all information concerning them and the holders of their
capital stock as may be reasonably requested in connection with any such action.
(b) Each Party and Newco agree, as to themselves and their Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment and supplement thereto, if any,
become effective under the 1933 Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (ii) the Joint
Proxy Statement/Prospectus and any amendment or supplement thereto, at the date
of mailing to stockholders and at the times of the meetings of Regions
stockholders and Union Planters shareholders, will contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements, in light of the circumstances under which they were made, not
misleading, or necessary to correct any statement in any earlier statement in
the Joint Proxy Statement/Prospectus or any amendment or supplement thereto.
Each Party and Newco further agrees that if it shall become aware prior to the
Effective Time of any information furnished by it that would cause any of the
statements in the Joint Proxy Statement/Prospectus or the Registration Statement
to be false or misleading with respect to any material fact, or to omit to state
any material fact necessary to make the statements therein not false or
misleading, to promptly inform the other Party and Newco thereof and to take the
necessary steps to correct the Joint Proxy Statement/Prospectus or the
Registration Statement.
5.8 Listing of Newco Common Stock. Newco shall cause the shares of Newco
Common Stock to be issued in the Merger to be approved for listing on the NYSE,
subject to official notice of issuance, as promptly as practicable, and in any
event before the First Effective Time.
5.9 Applications and Consents.
(a) The Parties and Newco shall cooperate in seeking all Consents of
Governmental Authorities and other Persons necessary to consummate the
transactions contemplated hereby.
(b) Without limiting the foregoing, the Parties and Newco shall cooperate
with the other and use their reasonable best efforts to promptly (i) file
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System under the BHC Act, as amended, and obtaining approval of
such applications and notices, (ii) file any required applications or notices
with any foreign or state banking, insurance or other Regulatory Authorities and
obtaining approval of such applications and notices, (iii) make any notices to
or filings with the Small Business Administration, (iv) make any notices or
filings under the HSR Act, and (v) make any filings with and obtaining any
Consents in connection with compliance with the applicable provisions of the
rules and regulations of any applicable industry self-regulatory organization,
including approvals from the NASD and any relevant state regulator in connection
with a change of control of the Union Planters broker-dealers, or that are
required under consumer finance, mortgage banking and other similar Laws
(collectively, the "Regulatory Consents").
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(c) Each Party and Newco will promptly furnish to the other Party and Newco
copies of applications filed with all Governmental Authorities and copies of
written communications received by such Party and Newco from any Governmental
Authorities with respect to the transactions contemplated hereby. Each Party
agrees that it will consult with the other Party and Newco with respect to the
obtaining of all Regulatory Consents and other material Consents advisable to
consummate the transactions contemplated by this Agreement and each Party and
Newco will keep the other Party and Newco apprised of the status of material
matters relating to completion of the transactions contemplated hereby. All
documents that the Parties or their respective Subsidiaries and Newco are
responsible for filing with any Governmental Authority in connection with the
transactions contemplated hereby (including to obtain Regulatory Consents) will
comply as to form in all material respects with the provisions of applicable
Law.
5.10 Notification of Certain Matters. Each Party and Newco will give
prompt notice to the other Party and Newco (and subsequently keep the other
Party and Newco informed on a current basis) upon its becoming aware of the
occurrence or existence of any fact, event or circumstance that (a) is
reasonably likely to result in any Material Adverse Effect on it, or (b) would
cause or constitute a material breach of any of its representations, warranties,
covenants, or agreements contained herein; provided, that any failure to give
notice in accordance with the foregoing with respect to any breach shall not be
deemed to constitute the failure of any condition set forth in Sections 6.2(b)
or 6.3(b) to be satisfied, or otherwise constitute a breach of this Agreement by
the Party or Newco failing to give such notice, in each case unless the
underlying breach would independently result in a failure of the conditions set
forth in Section 6.2(a), 6.2(b), 6.3(a) or 6.3(b), to be satisfied or give rise
to such termination right.
5.11 Investigation and Confidentiality.
(a) Each Party and Newco shall permit the other Party and Newco 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 and Newco reasonably requests; provided, that such investigation shall be
reasonably related to the transactions contemplated hereby and shall not
interfere unnecessarily with normal operations; and provided further, that
neither Party nor any of their respective Subsidiaries nor Newco shall be
required to provide access to or to disclose information where such access or
disclosure would jeopardize the attorney-client or other privilege with respect
to such information or contravene any Law, Order, or Contract and the Parties
and Newco 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. No investigation by a Party or
Newco shall affect the representations and warranties of the other Party or
Newco.
(b) Each Party and Newco shall, and shall cause its Representatives to,
maintain the confidentiality of all confidential information furnished to it by
the other Party and Newco concerning its and its Subsidiaries' businesses,
operations, and financial positions to the extent required by, and in accordance
with the Confidentiality Agreement, 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 and Newco shall promptly return or certify the destruction of all
documents and copies and extracts thereof, and all work papers containing
confidential information received from the other Party and Newco.
5.12 Press Releases; Publicity. Prior to the Effective Time, the Parties
and Newco shall consult with each other as to the form and substance of any
press release or other public statement materially related to this Agreement and
the transactions contemplated hereby prior to issuing such press release or
public statement or making any other public disclosure related thereto;
provided, that nothing in this Section 5.12 shall be deemed to prohibit any
Party or Newco from making any disclosure necessary in order to satisfy such
Party or Newco's disclosure obligations imposed by Law or the NYSE or any other
self-regulatory organization.
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5.13 Acquisition Proposals.
(a) Each Party agrees that it will not, and will cause its Subsidiaries and
its and its Subsidiaries' officers, directors, Representatives and Affiliates
not to, directly or indirectly, (i) initiate, solicit, encourage or knowingly
facilitate inquiries or proposals with respect to, (ii) engage or participate in
any negotiations concerning, (iii) provide any confidential or nonpublic
information or data to, or have or participate in any discussions with, any
Person relating to, or (iv) in the case of Union Planters only, waive any
provisions of or amend the terms of the Union Planters Rights Plan to
facilitate, any Acquisition Proposal; provided that, in the event either Party
receives an unsolicited bona fide written Acquisition Proposal, such Party may,
and may permit its Subsidiaries and its and its Subsidiaries' Representatives
to, furnish or cause to be furnished nonpublic information or data and
participate in such negotiations or discussions to the extent that the Board of
Directors of such Party concludes in good faith (after receiving the advice of
its outside counsel and its financial advisors) that failure to take such
actions would result in a violation of its fiduciary duties under applicable
Law; provided further that, prior to providing any nonpublic information
permitted to be provided pursuant to the foregoing proviso, it shall have
entered into a confidentiality agreement with such third party on terms no less
favorable to it than the Confidentiality Agreement. Each Party will immediately
cease and cause to be terminated any activities, discussions or negotiations
conducted before the date of this Agreement with any Persons other than Union
Planters or Regions, as the case dictates, with respect to any Acquisition
Proposal. Each Party will promptly (within one day) advise the other Party
following receipt of any Acquisition Proposal or any inquiry which could
reasonably be expected to lead to an Acquisition Proposal, and the substance
thereof (including the identity of the Person making such Acquisition Proposal),
and will keep the other Party apprised of any related developments, discussions
and negotiations on a current basis. Each of the Parties shall use its
reasonable best efforts to enforce any existing confidentiality or standstill
agreements to which it or any of its Subsidiaries is a party in accordance with
the terms thereof.
(b) Nothing contained in this Agreement shall prevent a Party or its Board
of Directors from complying with Rule 14d-9 and Rule 14e-2 under the 1934 Act
with respect to an Acquisition Proposal; provided, that such Rules will in no
way eliminate or modify the effect that any action pursuant to such Rules would
otherwise have under this Agreement.
5.14 Takeover Laws; No Rights Triggered. If any Takeover Law may become,
or may purport to be, applicable to the transactions contemplated hereby, each
Party and Newco and the members of their respective Boards of Directors will
grant such approvals and take such actions as are necessary (other than any
action requiring the approval of its stockholders or shareholders (other than as
contemplated by Section 5.6)) so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
any Takeover Law on any of the transactions contemplated by this Agreement.
Union Planters shall take all action necessary to ensure that, so long as this
Agreement shall not have been terminated pursuant to the terms hereof, that no
Person shall become able to exercise any rights under the Union Planters Rights
Plan or enable or require the Union Planters Shareholder Rights to separate from
the shares of Union Planters Common Stock to which they are attached or to be
triggered or become exercisable or unredeemable as a result of entering into
this Agreement or consummating the transactions contemplated hereby. The Parties
and Newco agree that none of Union Planters' representations, warranties,
covenants or agreements set forth in this Agreement shall be deemed to be
inaccurate, untrue or breached in any respect for any purpose as a result of the
redemption of the Union Planters Shareholder Rights with the prior written
consent of Regions.
5.15 Exemption from Liability Under Section 16(b). Regions and Union
Planters agree that, in order to most effectively compensate and retain Union
Planters Insiders and Regions Insiders (as defined below) in connection with the
Merger, both prior to and after the Effective Time, it is desirable that Union
Planters Insiders and Regions Insiders not be subject to a risk of liability
under Section 16(b) of the 1934 Act to the fullest extent permitted by
applicable Law in connection with the conversion of shares of Union Planters
Common Stock and Union Planters Stock Options or Regions Common Stock and
Regions Stock Options into shares of Newco Common Stock in the Merger, and for
that compensatory
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and retentive purpose agree to the provisions of this Section 5.15. Assuming
Union Planters and Regions deliver to Newco in a reasonably timely fashion prior
to the Effective Time accurate information regarding those officers and
directors of Union Planters and Regions subject to the reporting requirements of
Section 16(a) of the 1934 Act (respectively, the "Union Planters Insiders" and
the "Regions Insiders"), the number of shares of Union Planters Common Stock or
Regions Common Stock held or to be held by each such Union Planters Insider or
Regions Insider expected to be exchanged for Newco Common Stock in the Merger,
and the number and description of Union Planters Stock Options and Union
Planters Stock-Based Awards or Regions Stock Options and Regions Stock-Based
Awards held by each such Union Planters Insider or Regions Insider and expected
to be converted into Newco Stock Options or Newco Stock-Based Awards, the Board
of Directors of Newco, or a committee of non-employee directors thereof (as such
term is defined for purposes of Rule 16b-3(d) under the 1934 Act), shall
reasonably promptly thereafter, and in any event prior to the Effective Time,
adopt a resolution providing in substance that the receipt by the Union Planters
Insiders and Regions Insiders of Newco Common Stock in exchange for shares of
Union Planters Common Stock and Regions Common Stock, and of Newco Stock Options
upon conversion of Union Planters Stock Options or Regions Stock Options, or
Newco Stock-Based Awards upon conversion of Union Planters Stock-Based Awards or
Regions Stock-Based Awards, in each case pursuant to the transactions
contemplated by this Agreement, are approved by such Board of Directors or by
such committee thereof, and are intended to be exempt from Liability pursuant to
Section 16(b) of the 1934 Act to the fullest extent permitted by applicable Law.
5.16 Agreement of Affiliates. Union Planters and Regions have disclosed
in Section 5.16 of their Disclosure Letters each Person whom they reasonably
believe may be deemed an "affiliate" of Union Planters or Regions, respectively,
for purposes of Rule 145 under the 1933 Act. Union Planters and Regions shall
use their reasonable efforts to cause each such Person to deliver to Newco not
later than the First Effective Time, a written agreement, in substantially the
form of Exhibit 2-A and 2-B, respectively.
5.17 Employee Benefits and Contracts.
(a) Following the Effective Time, Newco at its election shall either (i)
provide generally to officers and employees of Union Planters and its
Subsidiaries, who at or after the Effective Time become employees of Newco or
its Subsidiaries ("Union Planters Continuing Employees"), employee benefits
under Compensation and Benefit Plans maintained by Newco, on terms and
conditions which are the same as for similarly situated officers and employees
of Regions and its Subsidiaries, who at or after the Effective Time become
employees of Newco or its Subsidiaries ("Regions Continuing Employees"), or (ii)
maintain for the benefit of the Union Planters Continuing Employees, the
Compensation and Benefit Plans maintained by Union Planters immediately prior to
the First Effective Time; provided that Newco may amend any Compensation and
Benefit Plan maintained by Union Planters immediately prior to the First
Effective Time to comply with any Law or as necessary and appropriate for other
business reasons. Following the First Effective Time, Newco at its election
shall either (i) provide generally to Regions Continuing Employees, employee
benefits under Compensation and Benefit Plans maintained by Newco, on terms and
conditions which are the same as for similarly situated Union Planters
Continuing Employees, or (ii) maintain for the benefit of the Regions Continuing
Employees, the Compensation and Benefits Plans maintained by Regions immediately
prior to the First Effective Time; provided that Newco may amend any
Compensation and Benefit Plan maintained by Regions immediately prior to the
Effective Time to comply with any Law or as necessary and appropriate for other
business reasons. For purposes of this Section 5.17, Compensation and Benefit
Plans maintained by Regions or Union Planters are deemed to include Compensation
and Benefit Plans maintained by their respective Subsidiaries.
(b) For purposes of participation, vesting and benefit accrual (except not
for purposes of benefit accrual with respect to any plan in which such credit
would result in a duplication of benefits) under Newco's Compensation and
Benefit Plans, service with or credited by Union Planters or any of its
Subsidiaries or any of their predecessors or Regions or any of its Subsidiaries
or any of their predecessors shall be treated as service with Newco; provided
that this provision shall not cause Regions' tax-qualified defined benefit
pension plan (which is not open to new participants) to be opened to new
participants. To the extent permitted under applicable Law, Newco shall cause
welfare Compensation and Benefit Plans
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maintained by Newco that cover the Union Planters Continuing Employees or
Regions Continuing Employees ("Continuing Employees") after the Effective Time
to (i) waive any waiting period and restrictions and limitations for preexisting
conditions or insurability (except for pre-existing conditions that were
excluded, or restrictions or limitations that were applicable, under welfare
Compensation and Benefit Plans maintained by Union Planters or Regions), and
(ii) cause any deductible, co-insurance, or maximum out-of-pocket payments made
by the Union Planters Continuing Employees or Regions Continuing Employees under
welfare Compensation and Benefit Plans maintained by Union Planters or Regions,
respectively, to be credited to such Continuing Employees under welfare
Compensation and Benefit Plans maintained by Newco, so as to reduce the amount
of any deductible, co-insurance, or maximum out-of-pocket payments payable by
such Continuing Employees under welfare Compensation and Benefit Plans
maintained by Newco.
(c) From the First Effective Time or the Effective Time, as the case may
be, until December 31, 2005, Newco shall cause each medical Compensation and
Benefit Plan maintained by Union Planters or Regions, respectively, to continue
in effect for the benefit of the Union Planters Continuing Employees or Regions
Continuing Employees, respectively, so long as such Continuing Employees remain
eligible to participate and until they shall become eligible to become
participants in the corresponding medical Compensation and Benefit Plans
maintained by Newco (and, with respect to any such plan or program, subject to
complying with the eligibility requirements after taking into account the
service crediting and other provisions set forth above and subject to the right
of Newco to terminate such plan or program).
(d) Nothing in this Section 5.17 shall be interpreted as preventing Newco,
from and after the Effective Time, from amending, modifying or terminating any
Compensation and Benefit Plans maintained by Regions, Compensation and Benefit
Plans maintained by Union Planters, or other Contracts, arrangements,
commitments or understandings, in accordance with their terms and applicable
Law.
5.18 Indemnification.
(a) From and after the Effective Time or the First Effective Time, as the
case may be, in the event of any threatened or actual claim, action, suit,
proceeding, or investigation, whether civil, criminal, or administrative, 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 or the First Effective
Time, as the case may be, a director or officer of Union Planters or Regions or
any of their Subsidiaries (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 Union Planters, Regions, any of their 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 or the First Effective Time, as the case may be, Newco shall
indemnify and hold harmless, to the fullest extent permitted by applicable Law
each such Indemnified Party against any Liability (including advancement of
reasonable attorneys' fees and expenses prior to 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.
(b) Newco agrees that all rights to indemnification and all limitations on
Liability existing in favor of the directors, officers, and employees of Union
Planters, Regions and their Subsidiaries (the "Covered Parties") as provided in
their respective Organizational Documents as in effect as of the date of this
Agreement or in any indemnification agreement in existence on the date of this
Agreement with Union Planters, Regions or their Subsidiaries and disclosed in
Union Planters' Disclosure Letter or Regions' Disclosure Letter with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect, and shall be honored by such entities or
their respective successors as if they were the indemnifying party thereunder,
without any amendment thereto; provided, that nothing contained in this Section
5.18(b) shall be deemed to preclude any liquidation, consolidation, or merger of
any Union Planters or Regions Subsidiaries, in which case all of such rights to
indemnification and limitations on Liability shall be deemed to so survive and
continue notwithstanding
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any such liquidation, consolidation, or merger. Without limiting the foregoing,
in any case in which approval by Newco is required to effectuate any
indemnification, Newco 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 Newco and the Indemnified Party.
(c) Newco, from and after the Effective Time or the First Effective Time,
as the case may be, will directly or indirectly cause the Persons who served as
directors or officers of Union Planters and Regions immediately prior to the
Effective Time to be covered by Union Planters or Regions', respectively,
existing directors' and officers' liability insurance policy with respect to
acts or omissions occurring prior to the Effective Time or the First Effective
Time, as the case may be, which were committed by such officers and directors in
their capacity as such; provided, that (i) Newco may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are not less advantageous than such policy, (ii) in no event
shall Newco be required to expend more than 250% per year of coverage of the
amount currently expended by Union Planters and Regions per year of coverage as
of the date of this Agreement (the "Maximum Amount") to maintain or procure
insurance coverage pursuant hereto, and (iii) if notwithstanding the use of
reasonable best efforts to do so, Newco is unable to maintain or obtain the
insurance called for by this Section 5.18(c), Newco shall obtain as much
comparable insurance as available for the Maximum Amount. Such insurance
coverage shall commence at the Effective Time or the First Effective Time, as
the case may be, and will be provided for a period of no less than six years
after the Effective Time or the First Effective Time, as the case may be.
(d) Any Indemnified Party wishing to claim indemnification under Section
5.18(a), upon learning of any claim, action, suit, proceeding or investigation
described above, shall promptly notify Newco thereof; provided that the failure
so to notify shall not affect the obligations of Newco under Section 5.18(a)
unless and to the extent that Newco is prejudiced as a result of such failure.
(e) The provisions of this Section 5.18 are intended to be for the benefit
of and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
5.19 Corporate Governance.
(a) Newco's by-laws at the Effective Time shall contain a Section as set
forth below (and all actions shall be taken to give effect thereto). The
provisions of this by-law shall also be considered an agreement of the Parties
in this Agreement mutatis mutandi.
BY-LAW
SECTION . CEO POSITION AND SUCCESSION; BOARD COMPOSITION.
(a) The Board of Directors of Newco has resolved that, effective as of
the Effective Time (as defined in the Agreement and Plan of Merger, dated
as of January 22, 2004, by and between Regions Financial Corporation
("Regions") and Union Planters Corporation ("Union Planters"), as the same
may be amended from time to time (the "Merger Agreement")), Carl E. Jones,
Jr. shall serve as Chairman of the Board and Chief Executive Officer of
Newco and Jackson W. Moore shall become the President and Chief Executive
Officer-Designate of Newco. The Board of Directors of Newco has further
resolved that Jackson W. Moore shall be the successor to Carl E. Jones, Jr.
as the Chief Executive Officer of Newco, with such succession to become
effective on July 1, 2005 or any such earlier date as of which Carl E.
Jones, Jr. ceases for any reason to serve in the position of Chief
Executive Officer of Newco (the date of such succession, the "First
Succession Date"), and that Carl E. Jones, Jr. shall continue to serve as
Chairman of the Board following the First Succession Date until June 30,
2006. The Board of Directors has further resolved that Jackson W. Moore
shall be the successor to Carl E. Jones, Jr. as the Chairman of the Board
of Newco, with such succession to become effective on July 1, 2006 or any
such earlier date as of which Carl E. Jones, Jr. no longer serves as the
Chairman of the Board of Newco (the "Second Succession Date").
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(b) Effective as of the Effective Time, the Board of Directors of
Newco shall be comprised of 26 directors, of which thirteen shall be former
members of the Board of Directors of Regions chosen by Regions (the "Former
Regions Directors") and thirteen of which shall be former members of the
Board of Directors of Union Planters chosen by Union Planters (the "Former
Union Planters Directors") and the Former Regions Directors and the Former
Union Planters Directors shall be apportioned among the three classes of
the Board of Directors in a manner as nearly equal as possible. From and
after the Effective Time through June 30, 2007, all vacancies on the Board
of Directors of Newco created by the cessation of service of a Former
Regions Director shall be filled by a nominee proposed to the nominating
committee of the Board of Directors of Newco by a majority of the remaining
Former Regions Directors, and all vacancies on the Board of Directors of
Newco created by the cessation of service of a Former Union Planters
Director shall be filled by a nominee proposed to the nominating committee
of the Board of Directors of Newco by a majority of the remaining Former
Union Planters Directors, and all directors so nominated and appointed or
elected to the Board of Directors of Newco by the Former Regions Directors
shall be considered "Former Regions Directors" for purposes of this Section
and all directors so nominated and appointed or elected to the Board of
Directors of Newco by the Former Union Planters Directors shall be
considered "Former Union Planters Directors" for purposes of this Section
.
(c) The removal of Carl E. Jones, Jr. or Jackson W. Moore from, or the
failure to appoint or re-elect Carl E. Jones, Jr. or Jackson W. Moore to,
any of the positions specifically provided for in this Section , and any
amendment to or termination of any employment agreement with Carl E. Jones,
Jr. or Jackson W. Moore, prior to the Second Succession Date and any
determination not to nominate Carl E. Jones, Jr. or Jackson W. Moore as a
Director of Newco, prior to the Second Succession Date, shall each require
the affirmative vote of at least 66 2/3% of the full Board of Directors.
(d) The provisions of this Section may be modified, amended or
repealed, and any By-law provision inconsistent with the provisions of this
Section may be adopted, only by an affirmative vote of at least 66 2/3%
of the full Board of Directors. In the event of any inconsistency between
any provision of this Section and any other provision of these By-laws or
the Newco's other constituent documents, the provisions of this Section
are intended to control.
(b) The headquarters of Newco and the lead Subsidiary bank will be located
in Birmingham, Alabama and the following business units of Newco will be
headquartered in the following places: (A) banking shall be headquartered in
Birmingham, Alabama; and (B) broker-dealer and investment services and mortgage
banking shall be headquartered in Memphis, Tennessee unless otherwise determined
in each case by the affirmative vote of at least 66 2/3% of the full Newco Board
of Directors.
(c) As of the date hereof, Jackson W. Moore, Union Planters and Regions
shall enter into an amendment to Jackson W. Moore's employment agreement. Union
Planters and Jackson W. Moore shall also enter into an amendment to Jackson W.
Moore's Supplemental Executive Retirement Agreement. As of the date hereof, Carl
E. Jones, Jr. and Regions shall enter into an amendment to Carl E. Jones, Jr.'s
employment agreement. No amendment, waiver or change may be made to any of the
foregoing without the consent of Regions and Union Planters.
(d) During each year following the Effective Time, the Board of Directors
of Newco shall hold at least two regular meetings of the Board of Directors in
Birmingham, Alabama and at least two regular meetings in Memphis, Tennessee
unless otherwise determined by the affirmative vote of at least 66 2/3% of the
full Board of Directors.
5.20 Formation of Newco. As soon as practicable following the date of
this Agreement, Regions and Union Planters shall cause Newco to be duly
organized under Delaware law as a direct subsidiary of Regions and Union
Planters and to become a party to this Agreement by executing and delivering a
supplement hereto, and the representations, warranties, covenants and agreements
contained herein made with respect to, or on behalf of, Newco shall be deemed to
be made as of the effective time of Newco becoming a party hereto. The Parties
agree to cause Newco to comply with all of Newco's agreements,
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covenants and obligations under this Agreement and to promptly effect the Newco
Stockholder Approval. Prior to the Effective Time, the Board of Directors of
Newco shall consist of one Regions officer designated by Regions and one Union
Planters officer designated by Union Planters, and following the Effective Time,
the Board of Directors of Newco shall be constituted as provided in Section 5.19
above.
5.21 Change of Method. Union Planters and Regions shall be empowered,
upon their mutual agreement and without additional approval of their respective
Boards of Directors, at any time prior to the Effective Time, to change the
method of effecting the combination of Union Planters and Newco, and/or of
Regions and Newco (including the provisions of Article 1 and Article 2), if and
to the extent they both deem such change to be necessary, appropriate or
desirable; provided, however, that no such change shall (i) alter or change the
Exchange Ratio or the number of shares of Newco Common Stock received by Union
Planters shareholders in exchange for each share of Union Planters Common Stock,
(ii) adversely affect the tax treatment of Union Planters' shareholders or
Regions' stockholders pursuant to this Agreement, (iii) adversely affect the tax
treatment of Union Planters or Regions pursuant to this Agreement or (iv)
materially impede or delay the consummation of the transactions contemplated by
this Agreement in a timely manner. The Parties agree to reflect any such change
in an appropriate amendment to this Agreement executed by both Parties in
accordance with Section 8.6.
5.22 Restructuring Efforts. If either Regions or Union Planters shall
have failed to obtain the requisite vote or votes of its Holders for the
consummation of the transactions contemplated by this Agreement at a duly held
meeting of its Holders or at any adjournment or postponement thereof, each of
the parties shall in good faith use its reasonable best efforts to negotiate a
restructuring of the transaction provided for herein (it being understood that
neither Party shall have any obligation to alter or change the amount or kind of
the merger consideration in a manner adverse to such party or its Holders)
and/or to resubmit the transaction to their respective Holders for approval.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
6.1 Conditions to Obligations of Each Party. The respective obligations
of each Party and Newco 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 each Party pursuant to Section
8.7:
(a) Stockholder and Shareholder Approval. Union Planters shall have
obtained the Union Planters Shareholder Approval and Regions shall have
obtained the Regions Stockholder Approval.
(b) Regulatory Approvals. All Regulatory Consents required to
consummate the Merger (the "Required Consents") shall (i) have been
obtained or made and be in full force and effect and all waiting periods
required by Law shall have expired and (ii) not be subject to any term or
condition that would, after the Effective Time, have or be reasonably
likely to have, a Material Adverse Effect on Newco.
(c) No Orders or Restraints; Illegality. No Order issued by any
Governmental Authority (whether temporary, preliminary, or permanent)
preventing the consummation of the First Step Merger or the Second Step
Merger shall be in effect and no Law or Order shall have been enacted,
entered, promulgated or enforced by any Governmental Authority that
prohibits, restrains, or makes illegal the consummation of the First Step
Merger or the Second Step Merger.
(d) 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 or any other Governmental Authority
to suspend the effectiveness thereof shall have been initiated and be
continuing or be threatened.
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(e) Listing of Newco Common Stock. The shares of Newco Common Stock
to be issued to the holders of Union Planters Common Stock and Regions
Common Stock upon consummation of the Merger shall have been authorized for
listing on the NYSE, subject to official notice of issuance.
6.2 Conditions to Obligations of Regions. The obligations of Regions to
perform this Agreement and consummate the First Step Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Regions pursuant to Section 8.7:
(a) Representations and Warranties. The representations and
warranties of Union Planters and Newco set forth in this Agreement, after
giving effect to Sections 4.1 and 4.2, shall be true and correct as of the
date of this Agreement and as of the Closing Date as though made at and as
of the Closing Date (except that representations and warranties that by
their terms speak specifically as of the date of this Agreement or some
other date shall be true and correct as of such date) and Regions shall
have received certificates, dated the Closing Date, signed on behalf of
Union Planters by the Chief Executive Officer and Chief Financial Officer
of Union Planters and signed on behalf of Newco to such effect.
(b) Performance of Agreements and Covenants. Union Planters and Newco
shall have duly performed and complied with the agreements and covenants
required to be performed and complied with by it pursuant to this Agreement
prior to the Effective Time in all material respects and Regions shall have
received a certificate, dated the Closing Date, signed on behalf of Union
Planters by the Chief Executive Officer and Chief Financial Officer of
Union Planters, to such effect.
(c) Tax Opinion. Regions shall have received a written opinion from
Alston & Bird LLP in a form reasonably satisfactory to Regions, dated the
date of the Effective Time, substantially to the effect that, (i) each of
the First Step Merger and the Second Step Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) each of Regions and Newco will be a party to that reorganization
within the meaning of Section 368(b) of the Internal Revenue Code in
respect of the First Step Merger and each of Union Planters and Newco will
be a party to the reorganization in respect of the Second Step Merger, and
(iii) no gain or loss will be recognized by holders of Regions Common Stock
who exchange all of their Regions Common Stock solely for Newco Common
Stock pursuant to the First Step Merger. In rendering such opinion, such
counsel shall be entitled to rely upon representations of officers of
Regions reasonably satisfactory in form and substance to such counsel.
(d) Effective Time. All actions shall have been taken, and all
conditions satisfied, for the Effective Time to occur (unless the failure
to be so satisfied is a result of actions or omissions by Regions).
6.3 Conditions to Obligations of Union Planters. The obligations of Union
Planters to perform this Agreement and consummate the Second Step Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Union Planters pursuant to Section 8.7:
(a) Representations and Warranties. The representations and
warranties of Regions and Newco set forth in this Agreement, after giving
effect to Sections 4.1 and 4.2, shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made at and as of the
Closing Date (except that representations and warranties that by their
terms speak specifically as of the date of this Agreement or some other
date shall be true and correct as of such date) and Union Planters shall
have received certificates, dated the Closing Date, signed on behalf of
Regions by the Chief Executive Officer and Chief Financial Officer of
Regions and signed on behalf of Newco to such effect.
(b) Performance of Agreements and Covenants. Regions and Newco shall
have duly performed and complied with the agreements and covenants required
to be performed and complied with by it pursuant to this Agreement prior to
the Effective Time in all material respects and Union Planters shall have
received a certificate, dated the Closing Date, signed on behalf of Regions
by the Chief Executive Officer and Chief Financial Officer of Regions, to
such effect.
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(c) Tax Opinion. Union Planters shall have received a written opinion
from Alston & Bird LLP in a form reasonably satisfactory to Union Planters,
dated the date of the Effective Time, substantially to the effect that, (i)
each of the First Step Merger and the Second Step Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) each of Regions and Newco will be a party to that reorganization
within the meaning of Section 368(b) of the Internal Revenue Code in
respect of the First Step Merger and each of Union Planters and Newco will
be a party to the reorganization in respect of the Second Step Merger, and
(iii) no gain or loss will be recognized by holders of Union Planters
Common Stock who exchange all of their Union Planters Common Stock solely
for Newco Common Stock pursuant to the Second Step Merger. In rendering
such opinion, such counsel shall be entitled to rely upon representations
of officers of Union Planters reasonably satisfactory in form and substance
to such counsel.
(d) Consummation of the First Step Merger. The First Effective Time
shall have occurred and the First Step Merger shall have been consummated
and the covenant set forth in Section 5.19(a) shall have been satisfied in
all respects (unless the failure to be so satisfied is as a result of
actions or omissions by Union Planters).
ARTICLE 7
TERMINATION
7.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the Union Planters Shareholder Approval and Regions
Stockholder Approval, this Agreement may be terminated and the Merger abandoned
at any time prior to the First Effective Time:
(a) By mutual consent of the Board of Directors of both Parties; or
(b) By the Board of Directors of either Party in the event of a breach
of any representation, warranty, covenant or agreement contained in this
Agreement on the part of the other Party, which breach would result in, if
occurring or continuing on the Closing Date, the failure of the conditions
to the terminating Party's obligations set forth in Section 6.2 or 6.3, as
the case dictates, and 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
(c) By the Board of Directors of either Party in the event that any
Required Consent has been denied by final nonappealable action of such
authority; or
(d) By the Board of Directors of either Party in the event that the
Merger has not been consummated by December 31, 2004 (the "Termination
Date"), 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 7.1; or
(e) By the Board of Directors of either Party in the event that (i)
the Board of Directors of the other Party has failed to recommend that its
shareholders vote in favor of this Agreement or has withdrawn, modified or
qualified such recommendation in a manner adverse to the terminating Party,
(ii) the other Party has failed to substantially comply with its
obligations under Section 5.6 or 5.13, or (iii) the Board of Directors of
the other Party has recommended or endorsed an Acquisition Proposal; or
(f) By the Board of Directors of either Party, if it determines in
good faith by a majority vote that the other Party has substantially
engaged in bad faith in breach of its obligations under Section 5.22 of
this Agreement.
7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
become void and have no effect, and none of Regions, Union Planters, 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
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hereby, except that (a) the provisions of Sections 4.3(q) and 5.11(b), this
Section 7.2, and Article 8 shall survive any such termination and abandonment,
and (b) a termination of this Agreement shall not relieve the breaching Party
from Liability for any uncured willful breach of a representation, warranty,
covenant, or agreement of such Party contained in this Agreement.
ARTICLE 8
MISCELLANEOUS
8.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
"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.
"ACQUISITION PROPOSAL" shall mean, other than the transactions
contemplated by this Agreement, any offer, proposal or inquiry relating to,
or any third party indication of interest in, (i) any acquisition or
purchase, direct or indirect, of 25% or more of the consolidated assets of
a Party and its Subsidiaries or 25% or more of any class of equity or
voting securities of a Party or its Subsidiaries whose assets, individually
or in the aggregate, constitute more than 25% of the consolidated assets of
the Party, (ii) any tender offer (including a self-tender offer) or
exchange offer that, if consummated, would result in such third party
beneficially owning 25% or more of any class of equity or voting securities
of a Party or its Subsidiaries whose assets, individually or in the
aggregate, constitute more than 25% of the consolidated assets of the
Party, or (iii) a merger, consolidation, share exchange, business
combination, reorganization, recapitalization, liquidation, dissolution or
other similar transaction involving a Party or its Subsidiaries whose
assets, individually or in the aggregate, constitute more than 30% of the
consolidated assets of the Party.
"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.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"COMPENSATION AND BENEFIT PLAN" shall mean any pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, any
other employee program or agreement, any medical, vision, dental, or other
written health plan, any life insurance plan, and any other employee
benefit plan or fringe benefit plan, including any "employee benefit plan"
(as that term is defined in Section 3(3) of ERISA), maintained by,
sponsored in whole or in part by, or contributed to by a Party for the
benefit of its and its Subsidiaries' employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and
under which such employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries are eligible to participate
and, except for the purposes of Section 5.17, any employment, severance,
termination, consulting or retirement Contract with its or its
Subsidiaries' current or former employees.
"CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement, dated November 25, 2003, by and between Regions and Union
Planters.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
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"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, Law, 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, Law, 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, Law,
Order, or Permit.
"DGCL" shall mean the Delaware General Corporation Law, as amended.
"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 CERCLA, the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901, et seq., and any 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.
"ERISA PLAN" shall mean any Compensation and Benefit Plan which is an
"employee welfare benefit plan," as that term is defined in Section 3(1) of
ERISA, or an "employee pension benefit plan," as that term is defined in
Section 3(2) of ERISA.
"EXCHANGE AGENT" shall mean an exchange agent mutually agreed upon by
Regions and Union Planters, which may be an Affiliate of Regions.
"EXCHANGE RATIO" shall mean 1.2346.
"EXHIBITS" 1 through 2, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.
"FACILITIES" shall mean all buildings and improvements on the Property
of any Person and any of its Subsidiaries.
"FINANCIAL STATEMENTS" shall mean (i) the consolidated statements of
condition or balance sheets (including related notes and schedules, if any)
of a Party included in any SEC Report filed by a Party, and the related
statements of income, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in any SEC Report
filed by a Party, and (ii) the consolidated statements of condition or
balance sheets of a Party (including related notes and schedules, if any),
and related statement of income, change in shareholders' equity, and cash
flows (including related notes and schedules, if any) included in its SEC
Reports.
"GAAP" shall mean United States generally accepted accounting
principles, consistently applied during the periods involved.
"GOVERNMENTAL AUTHORITY" shall mean each Regulatory Authority and any
other domestic or foreign court, administrative agency, commission or other
governmental authority or instrumentality (including the staff thereof), or
any industry self-regulatory authority (including the staff thereof).
"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
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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, black mold 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 all patents, trademarks, trade
names, service marks, domain names, database rights, copyrights, and any
applications therefor, mask works, technology, know-how, Trade Secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material and all other intellectual
property or proprietary rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"JOINT PROXY STATEMENT/PROSPECTUS" shall mean the joint proxy
statement and prospectus and other proxy solicitation materials of Regions
and Union Planters constituting a part of the Registration Statement.
"LAW" shall mean any code, law (including common law), ordinance,
regulation, rule, or statute applicable to a Person or its assets,
Liabilities, or business, including those promulgated, interpreted, or
enforced by any Governmental 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, 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) in the case of depository
institution Subsidiaries of a Party, pledges to secure deposits.
"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, suit or notice (written or oral) by any Person alleging
potential Liability, but shall not include regular, periodic examinations
by Regulatory Authorities.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NEWCO COMMON STOCK" shall mean the common stock of Newco.
"NYSE" shall mean the New York Stock Exchange, Inc.
"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 Governmental Authority.
"ORGANIZATIONAL DOCUMENTS" shall mean the articles of incorporation,
certificate of incorporation, charter, by-laws or other similar governing
instruments, in each case as amended as of the date specified, of any
Person, including the Union Planters Amended and Restated Charter and the
Regions Restated Certificate of Incorporation.
"OUTSTANDING" shall mean, with respect to shares of capital stock of a
Party, shares of such capital stock that are issued and outstanding at a
particular time.
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"PARTY" shall mean either Regions or Union Planters, and "PARTIES"
shall mean both Regions and Union Planters.
"PENSION PLAN" shall mean any ERISA Plan which is also subject to
Section 412 of the Internal Revenue Code or Section 302 of ERISA.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, order or permit from Governmental Authorities that are
required for the operation of a Party's respective businesses.
"PERMITTED ISSUANCES" shall mean (a) in the case of Regions, (i)
issuances of Regions Common Stock upon exercise of Rights outstanding as of
the date hereof issued under the Regions Stock Plans, (ii) issuances of new
Rights pursuant to and in accordance with the Regions Stock Plans for up to
105% of the number by type (i.e., options, restricted stock) of Rights
issued by Regions during the twelve months prior to the date hereof,
provided that (A) such new issuances are in the ordinary course of business
and consistent with past practice in terms of the timing, type, terms and
amount of such issuances and (B) such Rights do not vest in connection with
the transactions contemplated by this Agreement, (iii) issuances of Regions
Common Stock in accordance with the Regions Stock Plans pursuant to Rights
outstanding as of the date hereof and (ii) Rights issued under (a)(ii)
above, and (iv) issuances of Regions Common Stock pursuant to the Regions
DRIP to the extent permitted hereunder; and (b) in the case of Union
Planters, (i) issuances of Union Planters Common Stock upon conversion of
Union Planters Series E Preferred Stock, (ii) issuances of Union Planters
Common Stock upon exercise of Rights outstanding as of the date hereof
issued under the Union Planters Stock Plans, (iii) issuances of new Rights
pursuant to and in accordance with the Union Planters Stock Plans for up to
105% of the number by type (i.e., options, restricted stock) of Rights
issued by Union Planters during the twelve months prior to the date hereof,
provided that (A) such issuances are in the ordinary course of business and
consistent with past practice in terms of the timing, type, terms and
amount of such issuances and (B) such Rights do not vest in connection with
the transactions contemplated by this Agreement, (iv) issuances of Union
Planters Common Stock pursuant to the Union Planters DRIP to the extent
permitted hereunder, and (v) issuances of Union Planters Common Stock in
accordance with the Union Planters Stock Plans pursuant to Rights
outstanding as of the date hereof and Rights issued under (b)(iii) above.
"PERMITTED REPURCHASES" shall mean (a) repurchases of Regions Capital
Stock or Union Planters Capital Stock in accordance with any stock
repurchase program announced prior to the date of this Agreement by a
Party, or any extension or renewal of such program, and (b) repurchases or
redemptions (including any cancellation upon conversion into Union Planters
Common Stock) of the issued and outstanding shares of Union Planters Series
E Preferred Stock in accordance with Section 5.4.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, including, 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.
"PROPERTY" shall mean all real property leased or owned by any Person
and its Subsidiaries, either currently or in the past.
"REGIONS CAPITAL STOCK" shall mean Regions Common Stock and Regions
Preferred Stock.
"REGIONS COMMON STOCK" shall mean the $0.625 par value per share
common stock of Regions.
"REGIONS PREFERRED STOCK" shall mean the $1.00 par value per share
preferred stock of Regions.
"REGIONS RESTATED CERTIFICATE OF INCORPORATION" shall mean the
restated certificate of incorporation of Regions in effect as of the date
of this Agreement and amended from time to time thereafter.
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"REGIONS STOCK PLAN" shall mean any equity compensation plan of
Regions.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by
Newco under the 1933 Act with respect to the shares of Newco Common Stock
to be issued to the shareholders of Union Planters and Regions 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, the PBGC, all state
regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NASD, the NYSE, and the SEC (including, in
each case, the staff thereof).
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, agent or other representative of a
Person.
"RIGHTS" shall mean, with respect to any Person, securities, or
obligations convertible into or exercisable or exchangeable for, or giving
any Person any right to subscribe for or acquire, or any options, calls,
restricted stock, deferred stock awards, stock units, phantom awards,
dividend equivalents, 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
or earnings of such Person, and shall include the Regions Stock Options,
Regions Stock-Based Awards, Union Planters Stock Options and Union Planters
Stock-Based Awards, but shall not include the Union Planters Shareholder
Rights.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, offering circulars, information 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 Company
Act, the Investment Advisers Act, the Trust Indenture Act of 1939, each as
amended, state securities and "Blue Sky" Laws, including in each case the
rules and regulations of any Governmental Authority promulgated thereunder.
"SUBSIDIARY" or "SUBSIDIARIES" shall have the meaning assigned in Rule
1-02(x) of Regulation S-X of the SEC; provided that 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.
"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, 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.
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"TBCA" shall mean the Tennessee Business Corporation Act, as amended.
"TECHNOLOGY SYSTEMS" shall mean the electronic data processing,
information, record keeping, communications, telecommunications, hardware,
third party software, networks, peripherals, portfolio trading and computer
systems, including any outsourced systems and processes, and Intellectual
Property which are used by Person and its Subsidiaries.
"TENNESSEE CODE" shall mean the Tennessee Code, as amended.
"TERMINATION FEE" shall mean $225,000,000 for any payments by Union
Planters, and $320,000,000 for any payments by Regions.
"TRADE SECRETS" means all trade secrets and confidential information
and know-how, including without limitation processes, schematics, business
methods, formulae, drawings, prototypes, models, designs, customer lists
and supplier lists.
"UNION PLANTERS AMENDED AND RESTATED CHARTER" shall mean the amended
and restated charter of Union Planters in effect as of the date of this
Agreement and as amended from time to time thereafter.
"UNION PLANTERS CAPITAL STOCK" shall mean the Union Planters Common
Stock and the Union Planters Preferred Stock.
"UNION PLANTERS COMMON STOCK" shall mean the $5.00 par value per share
common stock of Union Planters, together with the Union Planters
Shareholder Rights attached thereto pursuant to the Union Planters Rights
Plan.
"UNION PLANTERS PREFERRED STOCK" shall mean the preferred stock, no
par value, of Union Planters, including without limitation the Union
Planters Series E Preferred Stock and the Union Planters Series F Preferred
Stock.
"UNION PLANTERS RIGHTS PLAN" shall mean that certain Rights Agreement
dated as of January 19, 1999, by and between Union Planters and Union
Planters Bank, National Association, as Rights Agent, as amended by the
Amendment to Rights Agreement, dated as of December 3, 2001, by and between
Union Planters and American Stock Transfer & Trust Company as Rights Agent.
"UNION PLANTERS SERIES E PREFERRED STOCK" shall mean the Series E
Preferred Stock, no par value, of Union Planters.
"UNION PLANTERS SERIES F PREFERRED STOCK" shall mean the Series F
Preferred Stock, no par value, of Union Planters.
"UNION PLANTERS SHAREHOLDER RIGHTS" shall mean the preferred stock
purchase rights issued pursuant to the Union Planters Rights Plan.
(b) The terms set forth below shall have the meanings ascribed thereto in
the referenced sections:
Agreement................................................... Preamble
Available Regions Stock Plan Shares......................... Section 1.6(d)
Available Union Planters Stock Plan Shares.................. Section 2.6(d)
CERCLA...................................................... Section 4.3(h)
Closing..................................................... Section 2.2
Closing Date................................................ Section 2.2
Continuing Employees........................................ Section 5.17(b)
Covered Parties............................................. Section 5.18(b)
Delaware Secretary.......................................... Section 1.2
Disclosure Letter........................................... Section 4.1
Effective Time.............................................. Section 2.3
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ERISA Affiliate............................................. Section 4.3(k)(v)
Exchange Fund............................................... Section 3.1(a)
FDIC........................................................ Section 4.3(i)(iii)
First Effective Time........................................ Section 1.2
First Step Merger........................................... Section 1.1
First Succession Date....................................... Section 5.19(a)
Former Regions Directors.................................... Section 5.19(b)
Former Union Planters Directors............................. Section 5.19(b)
Holder...................................................... Section 3.1(b)
Indemnified Parties......................................... Section 5.18(a)
Material Adverse Effect..................................... Section 4.2(b)
Maximum Amount.............................................. Section 5.18(c)
Merger...................................................... Section 2.1
New Certificates............................................ Section 3.1(a)
Newco....................................................... Recitals
Newco Stock Option.......................................... Section 1.6(a)
Newco Stock-Based Award..................................... Section 1.6(b)
Newco Stockholder Approval.................................. Section 4.3(b)(i)(C)
Old Certificates............................................ Section 2.4(b)
Old Regions Certificates.................................... Section 1.3(b)
Old Union Planters Certificates............................. Section 2.4(b)
PBGC........................................................ Section 4.3(b)(iv)
PCBs........................................................ Section 4.3(h)
Regions..................................................... Preamble
Regions DRIP................................................ Section 1.6(f)
Regions Insiders............................................ Section 5.15
Regions Stock Option........................................ Section 1.6(a)
Regions Stock-Based Award................................... Section 1.6(b)
Regions Stockholder Approval................................ Section 4.3(b)(i)(B)
Regulatory Consents......................................... Section 5.9(b)
Required Consents........................................... Section 6.1(b)
Second Step Merger.......................................... Section 2.1
Second Succession Date...................................... Section 5.19(a)
SEC Reports................................................. Section 4.3(d)(i)
Takeover Laws............................................... Section 4.3(p)
Tennessee Secretary......................................... Section 2.3
Termination Date............................................ Section 7.1(d)
Union Planters.............................................. Preamble
Union Planters DRIP......................................... Section 2.6(f)
Union Planters Insiders..................................... Section 5.15
Union Planters Shareholder Approval......................... Section 4.3(b)(i)(A)
Union Planters Stock Option................................. Section 2.6(a)
Union Planters Stock Plan................................... Section 2.6(a)
Union Planters Stock-Based Award............................ Section 2.6(b)
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(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." The words "hereby," "herein,"
"hereof" or "hereunder," and similar terms are to be deemed to refer to this
Agreement as a whole and not to any specific section.
8.2 Non-Survival of Representations and Covenants. Except for Article 1,
Article 2 and Article 3, Sections 5.5(d), 5.11(b) and 5.19, and this Article 8,
the respective representations, warranties, obligations, covenants, and
agreements of the Parties and Newco shall be deemed only to be conditions of the
Merger and shall not survive the Effective Time.
8.3 Expenses.
(a) Except as otherwise provided in this Section 8.3 or in Section 8.4,
each of the Parties and Newco shall bear and pay all 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 the Parties shall each bear and
pay one-half of the filing fees payable in connection with the Registration
Statement and the Joint Proxy Statement/Prospectus and one half of the printing
costs incurred in connection with the printing of the Registration Statement and
the Joint Proxy Statement/Prospectus.
(b) Nothing contained in this Section 8.3 shall constitute or shall be
deemed to constitute liquidated damages for the willful breach by a Party or
Newco of the terms of this Agreement or otherwise limit the rights of the
non-breaching Party or Newco.
8.4 Termination Fee.
(a) In the event that (i) Regions or Union Planters, respectively, shall
terminate this Agreement pursuant to Sections 7.1(d) or 7.1(e)(i) or (ii), (ii)
the Union Planters Shareholder Approval shall not have been obtained by reason
of the failure to obtain the required vote at the Union Planters shareholders'
meeting where this Agreement was presented to such shareholders for approval and
voted upon or the Regions Stockholder Approval has not been obtained by reason
of the failure to obtain the required vote at the Regions stockholders' meeting
where this Agreement was presented to such stockholders for approval and voted
upon, (iii) at any time after the date of this Agreement and prior to such vote
there shall have been publicly announced an Acquisition Proposal with respect to
Union Planters or Regions, respectively, that has not been formally and
absolutely withdrawn or abandoned prior to such termination, and (iv) within 12
months following such termination an Acquisition Proposal with respect to Union
Planters or Regions, respectively, is consummated or a definitive agreement or
letter of intent is entered into by Union Planters or Regions, respectively,
with respect to an Acquisition Proposal, Union Planters or Regions,
respectively, shall pay Regions or Union Planters, respectively, the terminating
Party the Termination Fee within five business days after the date of the event
described in clause (iv), by wire transfer of immediately available funds.
(b) In the event that (i) either Party shall terminate this Agreement
pursuant to Sections 7.1(d) or 7.1(f), (ii) at any time after the date of this
Agreement and prior to such termination there shall have been publicly announced
an Acquisition Proposal with respect to the other Party that has not been
formally and absolutely withdrawn or abandoned prior to such termination, (iii)
following the announcement of such Acquisition Proposal, the other Party shall
have either (x) engaged in a bad faith breach of its obligations under Section
5.22 of this Agreement or (y) intentionally breached (and not cured after notice
thereof) any of its representations, warranties, covenants or agreements set
forth in this Agreement, which breach (in the case of this clause (y)) shall
have materially contributed to the failure of the Effective Time to occur on or
before the Termination Date, and (iv) within 12 months following such
termination an Acquisition Proposal with respect to such Party is consummated or
a definitive agreement or letter of intent is entered into by such Party with
respect to an Acquisition Proposal, such
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Party shall pay the terminating Party the Termination Fee within five business
days after the date of the event described in clause (iv), by wire transfer of
immediately available funds.
(c) In the event that either Party shall terminate this Agreement pursuant
to Sections 7.1(e)(iii), then, in each case, the other Party shall pay to the
terminating Party the Termination Fee on the date this Agreement is terminated,
by wire transfer of immediately available funds.
(d) The Parties hereby acknowledge that the agreements contained in this
Section 8.4 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, neither Party would enter into
this Agreement. In the event that either Party fails to pay when due any amount
payable under this Section 8.4, then (i) the defaulting Party shall reimburse
the other Party for all costs and expenses (including disbursements and
reasonable fees of counsel) incurred in connection with the collection of such
overdue amount, and (ii) the defaulting Party shall pay to the other Party
interest on such overdue amount (for the period commencing as of the date such
overdue amount was originally required to be paid and ending on the date such
overdue amount is actually paid in full) at a rate per annum equal to three
percent (3%) over the "prime rate" (as announced by Citibank, N.A.) in effect on
the date such overdue amount was originally required to be paid.
(e) A Party shall only be obligated to pay one Termination Fee.
8.5 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement (including the Disclosure Letters and Exhibits) constitutes the entire
agreement between the Parties and Newco 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 Newco or their
respective successors, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement except as provided in Sections 5.18 and 5.19.
8.6 Amendments. Before the Effective Time, this Agreement may be amended
by a subsequent writing signed by each of the Parties and Newco, whether before
or after the Union Planters Shareholder Approval or Regions Stockholder Approval
has been obtained, except to the extent that any such amendment would violate
applicable Law or would require the approval of the shareholders of Union
Planters or stockholders of Regions, unless such required approval is obtained.
8.7 Waivers.
(a) Prior to or at the Effective Time, either Party or Newco shall have the
right to waive any Default in the performance of any term of this Agreement by
the other Party or Newco, to waive or extend the time for the compliance or
fulfillment by the other Party or Newco of any and all of such other Party's or
Newco's obligations under this Agreement, and to waive any or all of the
conditions precedent to its obligations under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law. No
waiver by a Party or Newco shall be effective unless in writing signed by a duly
authorized officer of such Party or Newco.
(b) The failure of any Party or Newco at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party or Newco 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.
8.8 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party or Newco (whether by operation of Law or otherwise)
without the prior written consent of each other party. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by the parties and their respective successors and assigns.
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8.9 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:
Union Planters: Union Planters Corporation
6200 Poplar Avenue
Memphis, TN 38119
Telecopy Number: (901) 580-4406
Attention: Jackson W. Moore
Chief Executive Officer
Copy to Counsel: 6200 Poplar Avenue
Memphis, TN 38119
Telecopy Number: (901) 580-5770
Attention: E. James House, Jr., Esq.
General Counsel
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopy Number: (212) 403-2000
Attention: Edward D. Herlihy, Esq.
Regions: Regions Financial Corporation
417 North 20th Street
Birmingham, AL 35202
Telecopy Number: (205) 326-7818
Attention: Carl E. Jones, Jr.
Chief Executive Officer
Copy to Counsel: 417 North 20th Street
Birmingham, AL 35202
Telecopy Number: (205) 326-7751
Attention: R. Alan Deer, Esq.
General Counsel
Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004-2498
Telecopy Number: (212) 558-3588
Attention: H. Rodgin Cohen, Esq.
Mark J. Menting, Esq.
8.10 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 Tennessee relate to the consummation of the Merger.
8.11 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, and which counterparts
may be delivered by facsimile.
8.12 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
8.13 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party or Newco,
whether under any rule of construction or otherwise. No party to this Agreement
shall be considered the draftsman. The Parties and Newco acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and
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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
and Newco. Nothing contained herein shall require any Party or person to take
any action of any type in violation of applicable law.
8.14 Severability. If any term or provision of this Agreement is
determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions hereof, or the application of such
provision to Persons or circumstances other than those as to which it has been
held invalid or unenforceable, shall remain in full force and effect and in no
way be affected, impaired or invalidated thereby, so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any Party or Newco. Upon such determination, the
Parties and Newco shall negotiate in good faith in an effort to agree upon a
suitable and equitable substitute provision to effect the original intent of the
Parties and Newco. 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.
8.15 Waiver of Jury Trial. Each Party and Newco acknowledges and agrees
that any controversy which may arise under this Agreement is likely to involve
complicated and difficult issues, and therefore each Party and Newco hereby
irrevocably and unconditionally waives any right such Party and Newco may have
to a trial by jury in respect of any Litigation, directly or indirectly, arising
out of, or relating to, this Agreement, or the transactions contemplated by this
Agreement. Each Party and Newco certifies and acknowledges that (a) no
representative, agent or attorney of the other Party or Newco has represented,
expressly or otherwise, that such other Party or Newco would not, in the event
of Litigation, seek to enforce the foregoing waiver, (b) each Party and Newco
understands and has considered the implications of this waiver, (c) each Party
and Newco makes this waiver voluntarily, and (d) each Party and Newco has been
induced to enter into this Agreement by, among other things, the mutual waivers
and certifications in this Section 8.15.
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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
duly executed and delivered on its behalf by its duly authorized officers as of
the day and year first above written.
REGIONS FINANCIAL CORPORATION
By: /s/ CARL E. JONES, JR.
------------------------------------
Name: Carl E. Jones, Jr.
Title: Chief Executive Officer
UNION PLANTERS CORPORATION
By: /s/ JACKSON W. MOORE
------------------------------------
Name: Jackson W. Moore
Title: Chief Executive Officer
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EXHIBIT 1
AMENDMENT TO RIGHTS AGREEMENT
This Amendment to Rights Agreement (this "Amendment"), dated as of January
22, 2004, by and between UNION PLANTERS CORPORATION, a Tennessee corporation
(the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York
corporation ("Rights Agent"), further amends that certain Rights Agreement (the
"Rights Agreement"), dated as of January 19, 1999, by and between the Company
and Union Planters Bank, National Association, as amended by the Company and the
Rights Agent as of December 3, 2001. Unless otherwise defined herein,
capitalized terms used in this Amendment shall have the meanings ascribed to
them in the Rights Agreement.
WHEREAS, the Company's Board of Directors has approved, and the Company
intends to execute, an Agreement and Plan of Merger (as amended, supplemented,
modified or replaced from time to time, the "Merger Agreement"), dated as of
January 22, 2004, by and between the Company and Regions Financial Corporation,
a Delaware corporation ("Regions Financial"), pursuant to which the Company and
Regions Financial will be merged with and into a direct wholly owned subsidiary
of the Company and Regions Financial organized under Delaware law ("Newco"),
with Newco as the surviving corporation (the "Merger");
WHEREAS, the Board of Directors of the Company has determined that the
Merger Agreement and the terms and conditions set forth therein and the
transactions contemplated thereby, including, without limitation, the Merger,
are in the best interests of the Company and its shareholders;
WHEREAS, the Board of Directors of the Company has determined, in
connection with its contemplation of the Merger Agreement, that an amendment to
the Rights Agreement as set forth herein is necessary and desirable to exempt
the Merger Agreement and the transactions contemplated thereby, including,
without limitation, the Merger, from the application of the Rights Agreement as
set forth in this Amendment;
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company may,
and the Rights Agent shall, if the Company so directs, supplement or amend any
provisions of the Rights Agreement, subject to the limitations set forth in such
Section 26; and
WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company hereby
directs that the Rights Agreement should be amended as set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the Company and the Rights Agent hereby agree as follows:
A. Amendment of Section 1. Section 1 of the Rights Agreement is
supplemented to add the following definitions in the appropriate
alphabetical locations:
"Merger" shall mean the "Merger" as such term is defined in the
Merger Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of January 22, 2004, by and between the Company and Regions
Financial, as it may be amended, supplemented, modified or replaced from
time to time.
"Newco" shall mean a direct wholly owned subsidiary of the Company
and Regions Financial organized under Delaware law, into which the
Company and Regions Financial will merge in the Merger.
"Regions Financial" means Regions Financial Corporation, a Delaware
corporation.
1
B. Amendment of the Definition of "Acquiring Person". The definition
of "Acquiring Person" in Section 1 of the Rights Agreement is hereby
amended by adding the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the contrary,
neither Regions Financial, Newco nor any of their Affiliates or
Associates shall be deemed to be an Acquiring Person as a result,
directly or indirectly, of (i) the approval, execution, delivery or
performance of the Merger Agreement, (ii) the consummation of the Merger
or (iii) the consummation of any other transaction contemplated by the
Merger Agreement, including, without limitation, the exchange of common
stock of the Company for common stock of Newco pursuant to the Merger
Agreement."
C. Amendments to Section 3.
Section 3(b) of the Rights Agreement is hereby amended and
supplemented by adding the following sentence at the end thereof:
"Notwithstanding anything in this Rights Agreement to the contrary,
a Distribution Date shall not be deemed to have occurred as the result,
directly or indirectly, of (i) the approval, execution, delivery or
performance of the Merger Agreement, (ii) the consummation of the
Merger, (iii) the consummation of any other transaction contemplated by
the Merger Agreement, including, without limitation, the exchange of
common stock of the Company for common stock of Newco pursuant to the
Merger Agreement, or (iv) the public announcement of any of the
foregoing."
Section 3 of the Rights Agreement is amended to add the following
sentence at the end thereof as a new Section 3(e):
"(e) Nothing in this Rights Agreement shall be construed to give
any holder of Rights or any other Person any legal or equitable rights,
remedies or claims under this Rights Agreement, including but not
limited to under Section 11 hereof, by virtue of (i) the approval,
execution, delivery or performance of the Merger Agreement, (ii) the
consummation of the Merger, (iii) the consummation of any other
transaction contemplated by the Merger Agreement, including, without
limitation, the exchange of common stock of the Company for common stock
of Newco pursuant to the Merger Agreement, or (iv) the public
announcement of any of the foregoing."
D. Effective Date of Amendment. This Amendment shall be deemed
effective as of the date first written above, as if executed on such date.
E. Effect of Amendment. Except as expressly set forth herein, the
Rights Agreement shall not by implication or otherwise be supplemented or
amended by virtue of this Amendment, but shall remain in full force and
effect, as amended hereby. This Amendment shall be construed in accordance
with and as a part of the Rights Agreement, and all terms, conditions,
representations, warranties, covenants and agreements set forth in the
Rights Agreement and each other instrument or agreement referred to
therein, except as herein amended, are hereby ratified and confirmed.
F. Waiver of Notice. The Rights Agent and the Company hereby waive any
notice requirement with respect to each other under the Rights Agreement,
if any, pertaining to the matters covered by this Amendment.
G. Severability. If any term, provision, covenant or restriction of
this Amendment is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or
invalidated.
H. Governing Law. This Amendment shall be deemed to be a contract made
under the law of the Commonwealth of Kentucky and for all purposes shall be
governed by and construed in
2
accordance with the law of such Commonwealth applicable to contracts to be
made and performed entirely within such Commonwealth.
I. Counterparts. This Amendment may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute but
one and the same instrument.
J. Descriptive Headings. Descriptive headings of the several Sections
of this Amendment are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions of this
Amendment.
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
UNION PLANTERS CORPORATION
By: /s/ JACKSON W. MOORE
------------------------------------
Name: Jackson W. Moore
Title: Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST
COMPANY
By: /s/ JOSEPH WOLF
------------------------------------
Name: Joseph Wolf
Title: Vice President
4
EXHIBIT 2-A
FORM OF AFFILIATE LETTER
Newco
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Union Planters Corporation, a Tennessee corporation ("Union
Planters"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 ("Rule 145") of the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (including the rules and
regulations thereunder, the "Act"). I have been further advised that pursuant to
the terms of the Agreement and Plan of Merger, dated as of January 22, 2004 (the
"Merger Agreement"), by and between Union Planters and Regions Financial
Corporation, a Delaware corporation ("Regions"), Union Planters and Regions
shall be merged with and into a direct wholly owned subsidiary of Union Planters
and Regions organized under Delaware law ("Newco") with Newco as the surviving
corporation (the "Merger"), and each share of common stock, par value $5.00 per
share, of Union Planters ("Union Planters Common Stock") shall be converted into
the right to receive 1 shares of common stock, par value $[ ] per share, of
Newco ("Newco Common Stock"). I further understand that I may receive Newco
Common Stock as a result of the exercise of Union Planters Stock Options or
other similar Rights. All capitalized terms used in this letter but not defined
herein shall have the meanings ascribed thereto in the Merger Agreement.
I hereby represent, warrant and covenant to Newco that, in the event I
receive any Newco Common Stock as a result of the Merger:
1. The Newco Common Stock to be received by me as a result of the
Merger or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor, or any Union Planters Stock Option,
Right or other interest (all such shares and securities being referred to
herein as "Restricted Securities") will be taken for my own account, and
not for others, directly or indirectly, in whole or in part, and I will not
make any sale, transfer or other disposition of Restricted Securities in
violation of the Act.
2. I have carefully read this letter and discussed its requirements
and other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Restricted Securities to the extent I believed
necessary with my counsel or counsel for Union Planters.
3. I have been advised that the issuance of Newco Common Stock to me
pursuant to the Merger will be registered with the SEC under the Act.
However, I have also been advised that, since at the time the Merger will
be submitted for a vote of the shareholders of Union Planters I may be
deemed to have been an affiliate of Union Planters and the distribution by
me of Restricted Securities has not been registered under the Act, I may
not sell, transfer or otherwise dispose of Restricted Securities issued to
me as a result of the Merger unless (i) such sale, transfer or other
disposition has been registered under the Act, (ii) such sale, transfer or
other disposition is made in conformity with the volume and other
limitations of Rule 145, or (iii) in the opinion of counsel in form and
substance reasonably acceptable to Newco, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
4. I understand that Newco is under no obligation to register the
sale, transfer or other disposition of Restricted Securities by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
5. I also understand that stop transfer instructions will be given to
Newco's transfer agent with respect to Restricted Securities and that there
will be placed on the certificates for Restricted Securities issued to me,
or securities issued in substitution therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIES AND (B) MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT OR UNLESS (1) COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT, (2) IN CONFORMITY WITH THE VOLUME AND OTHER
LIMITATIONS OF RULE 145 UNDER SUCH ACT, OR (3) IN ACCORDANCE WITH A
LEGAL OPINION IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO NEWCO THAT
SUCH SALE OR TRANSFER IS OTHERWISE EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT."
6. I understand and agree that, unless the transfer by me of my
Restricted Securities has been registered under the Act or is a sale made
in conformity with the provisions of Rule 145, Newco reserves the right, in
its sole discretion, to put the following legend on the certificates issued
to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
7. I understand and agree that the legends set forth in paragraphs (5)
and (6) above shall be removed by delivery of substitute certificates
without such legend, and/or the issuance of a letter to Newco's transfer
agent removing such stop transfer instructions, and the above restrictions
on sale will cease to apply, if (A) one year (or such other period as may
be required by Rule 145(d)(2) under the Act or any successor thereto) shall
have elapsed from the Closing Date and the provisions of such Rule are then
available to me; (B) if two years (or such other period as may be required
by Rule 145(d)(3) under the Act or any successor thereto) shall have
elapsed from the Effective Date and the provisions of such Rule are then
available to me; or (C) I have delivered to Newco (i) a copy of a letter
from the staff of the SEC, an opinion of counsel in form and substance
reasonably satisfactory to Newco, or other evidence reasonably satisfactory
to Newco to the effect that such legend and/or stop transfer instructions
are not required for purposes of the Act or (ii) evidence or
representations reasonably satisfactory to Newco that the securities
represented by such certificates are being or have been transferred in a
transaction made in conformity with the provisions of Rule 145 or pursuant
to an effective registration under the Act.
8. By executing this letter, without limiting or abrogating the
agreements that I have made as set forth above, I am not admitting that I
am an "affiliate" of Union Planters as described in the first paragraph of
this letter or waiving any rights I may have to object to any claim that I
am such an "affiliate" on or after the date of this letter.
9. I understand and agree that the foregoing provisions also apply to
(i) my spouse, (ii) any relative of mine or my spouse occupying my home,
(iii) any trust or estate in which I, my spouse or any such relative owns
at least 10% beneficial interest or of which any of us serves as trustee,
executor or in any similar capacity, and (iv) any corporate or other
organization in which I, my spouse or any such relative owns at least 10%
of any class of equity securities or of the equity interest.
10. I understand and agree that this Letter Agreement will terminate
and be of no further force and effect if the Merger Agreement is terminated
in accordance with its terms.
11. This Letter Agreement shall be governed by the Laws of the State
of Delaware.
2
Very truly yours,
--------------------------------------
Name:
ACCEPTED this day of , 2004:
NEWCO
By:
--------------------------------------------------------
Name:
Title:
3
EXHIBIT 2-B
FORM OF AFFILIATE LETTER
Newco
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Regions Financial Corporation, a Delaware corporation
("Regions"), as the term "affiliate" is defined for purposes of paragraphs (c)
and (d) of Rule 145 ("Rule 145") of the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (including the rules and
regulations thereunder, the "Act"). I have been further advised that pursuant to
the terms of the Agreement and Plan of Merger, dated as of January 22, 2004 (the
"Merger Agreement"), by and between Union Planters Corporation, a Tennessee
corporation ("Union Planters") and Regions, Union Planters and Regions shall be
merged with and into a direct wholly owned subsidiary of Union Planters and
Regions organized under Delaware law ("Newco") with Newco as the surviving
corporation (the "Merger"), and each share of common stock, par value $0.625 per
share, of Regions ("Regions Common Stock") shall be converted into the right to
receive 1.2346 shares of common stock, par value $[ ] per share, of Newco
("Newco Common Stock"). I further understand that I may receive Newco Common
Stock as a result of the exercise of Regions Stock Options or other similar
Rights. All capitalized terms used in this letter but not defined herein shall
have the meanings ascribed thereto in the Merger Agreement.
I hereby represent, warrant and covenant to Newco that, in the event I
receive any Newco Common Stock as a result of the Merger:
1. The Newco Common Stock to be received by me as a result of the
Merger or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor, or any Regions Stock Option, Right or
other interest (all such shares and securities being referred to herein as
"Restricted Securities") will be taken for my own account, and not for
others, directly or indirectly, in whole or in part, and I will not make
any sale, transfer or other disposition of Restricted Securities in
violation of the Act.
2. I have carefully read this letter and discussed its requirements
and other applicable limitations upon my ability to sell, transfer or
otherwise dispose of Restricted Securities to the extent I believed
necessary with my counsel or counsel for Regions.
3. I have been advised that the issuance of Newco Common Stock to me
pursuant to the Merger will be registered with the SEC under the Act.
However, I have also been advised that, since at the time the Merger will
be submitted for a vote of the shareholders of Regions I may be deemed to
have been an affiliate of Regions and the distribution by me of Restricted
Securities has not been registered under the Act, I may not sell, transfer
or otherwise dispose of Restricted Securities issued to me as a result of
the Merger unless (i) such sale, transfer or other disposition has been
registered under the Act, (ii) such sale, transfer or other disposition is
made in conformity with the volume and other limitations of Rule 145, or
(iii) in the opinion of counsel in form and substance reasonably acceptable
to Newco, such sale, transfer or other disposition is otherwise exempt from
registration under the Act.
4. I understand that Newco is under no obligation to register the
sale, transfer or other disposition of Restricted Securities by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available.
5. I also understand that stop transfer instructions will be given to
Newco's transfer agent with respect to Restricted Securities and that there
will be placed on the certificates for Restricted Securities issued to me,
or securities issued in substitution therefor, a legend stating in
substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE (A) WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, APPLIES AND (B) MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT OR UNLESS (1) COVERED BY AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, (2) IN CONFORMITY WITH
THE VOLUME AND OTHER LIMITATIONS OF RULE 145 UNDER SUCH ACT, OR (3) IN
ACCORDANCE WITH A LEGAL OPINION IN FORM AND SUBSTANCE REASONABLY
ACCEPTABLE TO NEWCO THAT SUCH SALE OR TRANSFER IS OTHERWISE EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF SUCH ACT."
6. I understand and agree that, unless the transfer by me of my
Restricted Securities has been registered under the Act or is a sale made
in conformity with the provisions of Rule 145, Newco reserves the right, in
its sole discretion, to put the following legend on the certificates issued
to my transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145
PROMULGATED UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE
BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
7. I understand and agree that the legends set forth in paragraphs (5)
and (6) above shall be removed by delivery of substitute certificates
without such legend, and/or the issuance of a letter to Newco's transfer
agent removing such stop transfer instructions, and the above restrictions
on sale will cease to apply, if (A) one year (or such other period as may
be required by Rule 145(d)(2) under the Act or any successor thereto) shall
have elapsed from the Closing Date and the provisions of such Rule are then
available to me; (B) if two years (or such other period as may be required
by Rule 145(d)(3) under the Act or any successor thereto) shall have
elapsed from the Effective Date and the provisions of such Rule are then
available to me; or (C) I have delivered to Newco (i) a copy of a letter
from the staff of the SEC, an opinion of counsel in form and substance
reasonably satisfactory to Newco, or other evidence reasonably satisfactory
to Newco to the effect that such legend and/or stop transfer instructions
are not required for purposes of the Act or (ii) evidence or
representations reasonably satisfactory to Newco that the securities
represented by such certificates are being or have been transferred in a
transaction made in conformity with the provisions of Rule 145 or pursuant
to an effective registration under the Act.
8. By executing this letter, without limiting or abrogating the
agreements that I have made as set forth above, I am not admitting that I
am an "affiliate" of Regions as described in the first paragraph of this
letter or waiving any rights I may have to object to any claim that I am
such an "affiliate" on or after the date of this letter.
9. I understand and agree that the foregoing provisions also apply to
(i) my spouse, (ii) any relative of mine or my spouse occupying my home,
(iii) any trust or estate in which I, my spouse or any such relative owns
at least 10% beneficial interest or of which any of us serves as trustee,
executor or in any similar capacity, and (iv) any corporate or other
organization in which I, my spouse or any such relative owns at least 10%
of any class of equity securities or of the equity interest.
10. I understand and agree that this Letter Agreement will terminate
and be of no further force and effect if the Merger Agreement is terminated
in accordance with its terms.
11. This Letter Agreement shall be governed by the Laws of the State
of Delaware.
2
Very truly yours,
--------------------------------------
Name:
Accepted this day of , 2004:
NEWCO
By:
--------------------------------------------------------
Name:
Title:
3
ANNEX B
[UBS LETTERHEAD]
JANUARY 22, 2004
The Board of Directors
Regions Financial Corporation
417 North 20th Street
Birmingham, AL 35202
Dear Members of the Board:
We understand that Regions Financial Corporation, a financial holding
company and a Delaware corporation (the "Company"), is considering a transaction
whereby each of the Company and Union Planters Corporation, a financial holding
company and a Tennessee corporation ("UPC") will be merged (the "Merger") with
and into a newly-formed subsidiary of the Company and UPC to be organized under
Delaware law ("Newco"). Pursuant to the terms of the Agreement and Plan of
Merger, draft dated January 22, 2004 (the "Merger Agreement") by and between UPC
and the Company, each issued and outstanding share of the common stock of the
Company, par value of $0.625 per share ("Company Common Stock") (other than
certain shares specified in the Merger Agreement), will be converted into 1.2346
(the "Exchange Ratio") shares of common stock of Newco ("Newco Common Stock")
and each issued and outstanding share of the common stock of UPC, par value of
$5.00 per share ("UPC Common Stock") (other than certain shares specified in the
Merger Agreement), will be converted into 1.0000 share of Newco Common Stock.
The terms and conditions of the Merger are more fully set forth in the Merger
Agreement.
You have requested our opinion as to the fairness, from a financial point
of view, of the Exchange Ratio to the holders of Company Common Stock.
UBS Securities LLC ("UBS") has acted as financial advisor to the Board of
Directors of the Company in connection with the Merger and will receive a fee
for its services. UBS also will receive a fee upon delivery of this opinion. In
the past, UBS and its predecessors have provided investment banking services to
the Company and received customary compensation for the rendering of such
services. In the ordinary course of business, UBS, its successors and affiliates
have traded the securities of the Company and UPC, and may in the future trade
the securities of the Company, UPC and Newco for their own accounts and the
accounts of their customers and, accordingly, may at any time hold a long or
short position in any such securities.
Our opinion does not address the relative merits of the Merger as compared
to other business strategies or transactions that might be available to the
Company or the Company's underlying business decision to effect the Merger, nor
does our opinion constitute a recommendation to any stockholder of the Company
as to how such stockholder should vote or act with respect to the Merger or any
other matter. We have not been asked to, nor do we, offer any opinion as to any
terms of the Merger Agreement or the form of the Merger. We express no opinion
as to what the value of Newco Common Stock will be when issued pursuant to the
Merger Agreement or the prices at which it will trade or otherwise be
transferable at any time. In rendering this opinion, we have assumed, with your
consent, that the final executed form of the Merger Agreement will not differ in
any material respect from the Merger Agreement that we have examined, and that
UPC, the Company and Newco will comply with all the terms of the Merger
Agreement (without waiver, modification or amendment in any material respect).
We have not been authorized to and have not solicited indications of interest in
a possible business combination with the Company from any person.
In arriving at our opinion, we have, among other things: (i) reviewed
certain publicly available business and historical financial information and
other data relating to the business and financial prospects of the Company and
UPC, including certain publicly available consensus financial forecasts and
estimates relating to the Company and UPC that were reviewed and discussed with
the management of the
B-1
Company, (ii) reviewed the reported prices and trading activity for Company
Common Stock and UPC Common Stock, (iii) reviewed certain internal financial
information and other data relating to the business and financial prospects of
the Company and UPC, including estimates and financial forecasts prepared by the
managements of the Company and UPC, respectively, that were provided to us by
the Company and UPC, respectively, and not publicly available, (iv) conducted
discussions with members of the senior management of the Company and UPC
concerning the businesses and financial prospects of the Company and UPC; (v)
reviewed publicly available financial and stock market data with respect to
certain other companies in lines of business we believe to be generally
comparable to those of the Company and UPC, (vi) compared the financial terms of
the Merger with the publicly available financial terms of certain other
transactions that we believe to be generally relevant, (vii) considered certain
pro forma effects of the Merger on the combined financial statements of the
Company and UPC and reviewed certain estimates of synergies and other potential
benefits prepared by Company management and reviewed and discussed with the
management of UPC, (viii) reviewed drafts of the Merger Agreement and (ix)
conducted such other financial studies, analyses, and investigations, and
considered such other information as we deemed necessary or appropriate.
In connection with our review, with your consent, we have not assumed any
responsibility for independent verification of any of the information provided
to or reviewed by us for the purpose of this opinion and have, with your
consent, relied on such information being complete and accurate in all material
respects. In addition, at your direction, we have not made any independent
evaluation or appraisal of any of the assets or liabilities (contingent or
otherwise) of the Company or UPC, nor have we been furnished with any such
evaluation or appraisal. With respect to the financial forecasts, estimates, pro
forma effects and calculations of synergies and other potential benefits
referred to above, we have been advised by the management of the Company and UPC
and have assumed, at your direction, that they reflect the best currently
available estimates and reasonable judgments as to the future performance of the
Company and UPC. In addition, we have assumed with your approval that these
future financial results will be achieved and these synergies and other
potential benefits will be realized, at the times and in the amounts projected
by the management of the Company and UPC. In addition, we have also assumed,
with your consent, that the Merger will qualify as a tax-free reorganization for
U.S. federal income tax purposes. We have also assumed that all governmental,
regulatory or other consents and approvals necessary for the consummation of the
Merger will be obtained without any adverse effect on any of the Company, UPC,
Newco and the Merger. Our opinion is necessarily based on economic, monetary,
market and other conditions as in effect on, and the information made available
to us as of, the date hereof. We assume no responsibility to update or revise
our opinion based upon circumstances or events occurring after the date hereof.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to the
holders of Company Common Stock.
Very truly yours,
UBS SECURITIES LLC
By: /s/ MICHAEL E. MARTIN By: /s/ P. OLIVIER SARKOZY
------------------------------------------ ------------------------------------------
Name: Michael E. Martin Name: P. Olivier Sarkozy
Title: Managing Director Title: Managing Director
B-2
ANNEX C
[MORGAN STANLEY LETTERHEAD]
January 22, 2004
Board of Directors
Union Planters Corporation
6200 Poplar Avenue
Memphis, TN 38119
Members of the Board:
We understand that Union Planters Corporation ("Union Planters") and
Regions Financial Corporation ("Regions") propose to enter into an Agreement and
Plan of Merger, substantially in the form of the draft dated January 21, 2004
(the "Merger Agreement") which provides, among other things, for a strategic
business combination through the merger of Regions with and into a newly formed
subsidiary of Regions and Union Planters ("NewCo") (the "First Step Merger")
followed immediately thereafter by the merger of Union Planters with and into
NewCo (the "Second Step Merger" and together with the First Step Merger, the
"Combination"). Pursuant to the First Step Merger, each outstanding share of
common stock, par value $0.625 per share, of Regions (the "Regions Common
Stock"), other than shares held in the treasury or held by Union Planters or
NewCo (in each case other than in a fiduciary or agency capacity or as a result
of debts previously contracted) will be converted into the right to receive
1.2346 shares of common stock, par value $0.01 per share of NewCo (the "NewCo
Common Stock"). Pursuant to the Second Step Merger, each outstanding share of
common stock, par value $5.00 per share, of Union Planters (the "Union Planters
Common Stock") other than shares held by treasury or held by Regions or NewCo
(in each case other than in a fiduciary or agency capacity or as a result of
debts previously contracted) will be converted into the right to receive one
share (the "Exchange Ratio") of NewCo Common Stock. The terms and conditions of
the Combination are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Exchange Ratio pursuant to
the Merger Agreement is fair from a financial point of view to the holders of
shares of Union Planters Common Stock.
For purposes of the opinion set forth herein, we have:
(i) reviewed certain publicly available financial statements and other
information of Union Planters and Regions, respectively;
(ii) reviewed certain internal financial statements and other
financial and operating data concerning Union Planters and Regions prepared
by the managements of Union Planters and Regions, respectively, including,
among other things, financial forecast and profit plans for each company;
(iii) discussed the past and current operations and financial
conditions and the prospects of Union Planters and Regions, including
information relating to certain strategic, financial and operational
benefits anticipated from the Combination, with senior executives of Union
Planters and Regions, respectively;
(iv) discussed the strategic rationale for the merger with senior
management of Union Planters and Regions;
(v) reviewed the pro forma impact of the Combination on the combined
company's earnings per share, consolidated capitalization and financial
ratios;
(vi) reviewed the reported prices and trading activity for Union
Planters Common Stock and Regions Common Stock;
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(vii) compared the financial performance of Union Planters and Regions
and the prices and trading activity of Union Planters Common Stock and
Regions Common Stock with that of certain other comparable publicly-traded
companies and their securities;
(viii) reviewed the financial terms, to the extent publicly available,
of certain precedent merger or combination transactions;
(ix) participated in discussions and negotiations among
representatives of Union Planters and Regions and their financial and legal
advisors;
(x) reviewed the draft Merger Agreement and certain related documents;
and
(xi) considered such other factors and performed such other analyses
as we have deemed appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. With respect to the financial forecasts, profit plans, including
information regarding certain strategic, financial and operational benefits
anticipated from the combination, we have assumed that they have been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of Union Planters and Regions. In
addition, we have relied on the assessments by the managements of Union Planters
and Regions of the strategic rationale of the Combination. We have assumed that
the combination will be consummated in accordance with the terms of the Merger
Agreement, including, among other things, that the Combination will be treated
as a tax-free reorganization pursuant to the Internal Revenue Code of 1986, as
amended. We have not made any independent valuation or appraisal of the assets
or liabilities (including any hedge or derivative positions) of Union Planters
and Regions, nor have we been furnished with any such appraisals and we have not
made any independent examination of the loan loss reserves or examined any
individual loan credit files of Union Planters or Regions. In addition, we have
assumed that in connection with the receipt of all necessary government,
regulatory or other consents and approvals for the Combination, no restrictions
will be imposed that would have any material adverse effect on Union Planters or
Regions or on the benefits expected to be derived from the Combination. Our
opinion is necessarily based on financial, economic, market and other conditions
as in effect on, and the information made available to us as of, the date
hereof.
We have acted as financial advisor to the Board of Directors of Union
Planters in connection with this transaction and will receive a fee for our
services which is contingent upon the completion of the Combination. In the
ordinary course of our business, Morgan Stanley & Co. Incorporated ("Morgan
Stanley") and its affiliates may from time to time trade in the securities or
the indebtedness of Union Planters and Regions for its own account, the accounts
of investment funds and other clients under the management of Morgan Stanley and
for the accounts of its customers and accordingly, may at any time hold a long
or short position in such securities or indebtedness for any such account. In
addition, Morgan Stanley and its affiliates may from time to time act as a
counterparty to either Union Planters or Regions and have received compensation
for such activities. In the past, Morgan Stanley and its affiliates have
provided financial advisory and financing services for Union Planters and
Regions and have received fees for the rendering of these services.
It is understood that this letter is for the information of the Board of
Directors of the Company and may not be used for any other purpose without our
prior written consent, except that this opinion may be included in its entirety
in any filing made by Union Planters in respect to the Combination with the
Securities and Exchange Commission. In addition, this opinion does not in any
manner address the prices at which NewCo Common Stock will trade following
consummation of the Combination, and Morgan Stanley expresses no opinion or
recommendation as to how the shareholders of Union Planters should vote at the
shareholders' meeting in connection with the Combination.
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Based on and subject to the foregoing, we are of the opinion on the date
hereof that the Exchange Ratio pursuant to the Merger Agreement is fair from a
financial point of view to the holders of shares of Union Planters Common Stock.
Very truly yours,
MORGAN STANLEY & CO. INCORPORATED
By: /s/ JONATHAN M. PRUZAN
------------------------------------
Jonathan M. Pruzan
Managing Director
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