EXHIBIT 2.1
Final
AGREEMENT AND PLAN OF MERGER
By and Between
PALFED, INC.
and
REGIONS FINANCIAL CORPORATION
Dated as of September 23, 1997
TABLE OF CONTENTS
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Parties 1
Preamble 1
ARTICLE ONE - TRANSACTIONS AND TERMS OF MERGER 2
1.1 Merger 2
1.2 Time and Place of Closing 2
1.3 Effective Time 2
1.4 Execution of Stock Option Agreement and Support Agreements 2
ARTICLE TWO - TERMS OF MERGER 3
2.1 Certificate of Incorporation 3
2.2 Bylaws 3
2.3 Directors and Officers 3
ARTICLE THREE - MANNER OF CONVERTING SHARES 3
3.1 Conversion of Shares 3
3.2 Anti-Dilution Provisions 3
3.3 Shares Held by PALFED or Regions 4
3.4 Dissenting Stockholders 4
3.5 Fractional Shares 4
3.6 Conversion of Stock Options; Restricted Stock 4
ARTICLE FOUR - EXCHANGE OF SHARES 5
4.1 Exchange Procedures 5
4.2 Rights of Former PALFED Stockholders 6
ARTICLE FIVE - REPRESENTATIONS AND WARRANTIES OF PALFED 6
5.1 Organization, Standing, and Power 6
5.2 Authority; No Breach By Agreement 7
5.3 Capital Stock 7
5.4 PALFED Subsidiaries 8
5.5 Financial Statements 9
5.6 Absence of Undisclosed Liabilities 9
5.7 Absence of Certain Changes or Events 9
5.8 Tax Matters 9
5.9 Assets 11
5.10 Environmental Matters 11
5.11 Compliance With Laws 12
5.12 Labor Relations 13
5.13 Employee Benefit Plans 13
5.14 Material Contracts 15
5.15 Legal Proceedings 15
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5.16 Statements True and Correct 16
5.17 Tax, Accounting, and Regulatory Matters 16
5.18 State Takeover Laws 16
5.19 Articles of Incorporation Provisions 17
5.20 Support Agreements 17
5.21 Derivatives Contracts 17
5.22 Year 2000 17
ARTICLE SIX - REPRESENTATIONS AND WARRANTIES OF REGIONS 17
6.1 Organization, Standing, and Power 17
6.2 Authority; No Breach By Agreement 18
6.3 Capital Stock 18
6.4 SEC Filings; Financial Statements 19
6.5 Absence of Undisclosed Liabilities 19
6.6 Absence of Certain Changes or Events 19
6.7 Compliance With Laws 19
6.8 Legal Proceedings 20
6.9 Statements True and Correct 20
6.10 Tax, Accounting, and Regulatory Matters 21
ARTICLE SEVEN - CONDUCT OF BUSINESS PENDING CONSUMMATION 21
7.1 Covenants of Both Parties 21
7.2 Covenants of PALFED 21
7.3 Covenants of Regions 23
7.4 Adverse Changes in Condition 24
7.5 Reports 24
ARTICLE EIGHT - ADDITIONAL AGREEMENTS 24
8.1 Registration Statement; Proxy Statement; Stockholder Approval 24
8.2 Nasdaq/NMS Listing 25
8.3 Applications 25
8.4 Agreement as to Efforts to Consummate 25
8.5 Investigation and Confidentiality 25
8.6 Press Releases 26
8.7 Certain Actions 26
8.8 Tax Matters 26
8.9 Agreement of Affiliates 27
8.10 Employee Benefits and Contracts 27
8.11 Indemnification 28
8.12 State Takeover Laws 28
8.13 Articles of Incorporation Provisions 28
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ARTICLE NINE - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE 29
9.1 Conditions to Obligations of Each Party 29
9.2 Conditions to Obligations of Regions 30
9.3 Conditions to Obligations of PALFED 31
ARTICLE TEN - TERMINATION 32
10.1 Termination 32
10.2 Effect of Termination 34
10.3 Non-Survival of Representations and Covenants 34
ARTICLE ELEVEN - MISCELLANEOUS 34
11.1 Definitions 34
11.2 Expenses 41
11.3 Brokers and Finders 42
11.4 Entire Agreement 42
11.5 Amendments 42
11.6 Waivers 42
11.7 Assignment 43
11.8 Notices 43
11.9 Governing Law 43
11.10 Counterparts 44
11.11 Captions 44
11.12 Severability 44
Signatures 45
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LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
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1. Form of Stock Option Agreement. (Section 1.4).
2. Form of Support Agreement. (Section 1.4).
3. Form of agreement of affiliates of PALFED. (Section 8.9).
4. Form of Claims Letter. (Section 9.2).
5. Form of Opinion Letter of PALFED's Counsel. (Section 9.2).
6. Form of Opinion Letter of Regions' Counsel. (Section 9.3).
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and
entered into as of September 23, 1997, by and between PALFED, INC.
("PALFED"), a corporation organized and existing under the laws of the State
of South Carolina, with its principal office located in Aiken, South
Carolina, and REGIONS FINANCIAL CORPORATION ("Regions"), a corporation
organized and existing under the laws of the State of Delaware, with its
principal office located in Birmingham, Alabama.
Preamble
The Boards of Directors of PALFED and Regions are of the opinion
that the transactions described herein are in the best interests of the
parties and their respective stockholders. This Agreement provides for the
acquisition of PALFED by Regions pursuant to the merger of PALFED into and
with Regions. At the effective time of such merger, the outstanding shares
of the capital stock of PALFED shall be converted into shares of the common
stock of Regions (except as provided herein). As a result, stockholders of
PALFED shall become stockholders of Regions and each of the subsidiaries of
PALFED shall continue to conduct its business and operations as a
wholly-owned subsidiary of Regions. The transactions described in this
Agreement are subject to the approvals of the stockholders of PALFED, the
Board of Governors of the Federal Reserve System, and other applicable
federal and state regulatory authorities and the satisfaction of certain
other conditions described in this Agreement. It is the intention of the
parties to this Agreement that the merger (i) for federal income tax purposes
shall qualify as a "reorganization" within the meaning of Section 368(a) of
the Internal Revenue Code and (ii) for accounting purposes shall be accounted
for as a "pooling of interests."
As a condition and inducement to Regions' willingness to consummate
the transactions contemplated by this Agreement, prior to the execution of
this Agreement, PALFED and Regions are entering into a stock option agreement
(the "Stock Option Agreement"), in substantially the form of Exhibit 1 and
each of PALFED's directors will execute and deliver to Regions an agreement
(a "Support Agreement"), in substantially the form of Exhibit 2.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, and
for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
ARTICLE ONE
TRANSACTIONS AND TERMS OF MERGER
0.1 Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, PALFED shall be merged into and with
Regions in accordance with the provisions of Sections ▇▇-▇▇-▇▇▇, ▇▇-▇▇-▇▇▇
and ▇▇-▇▇-▇▇▇ of the SCBCA and with the effect provided in Section ▇▇-▇▇-▇▇▇
of the SCBCA and of Section 258 of the DGCL and with the effect provided in
Section 259 of the DGCL (the "Merger"). Regions shall be the Surviving
Corporation of the Merger and shall continue to be governed by the Laws of
the State of Delaware. The Merger shall be consummated pursuant to the terms
of this Agreement, which has been approved and adopted by the Boards of
Directors of PALFED and Regions.
1.2 Time and Place of Closing. The Closing will take place at
9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such
other time as the Parties, acting through their duly authorized officers, may
mutually agree. The place of Closing shall be at the offices of Regions, or
such other place as may be mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions
contemplated by this Agreement shall become effective on the date and at the
time the South Carolina Articles of Merger reflecting the Merger shall become
effective with the Secretary of State of the State of South Carolina and the
Delaware Certificate of Merger reflecting the Merger shall become effective
with the Secretary of State of the State of Delaware (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the duly authorized officers of each Party, the Parties
shall use their reasonable efforts to cause the Effective Time to occur on
the fifth business day following the last to occur of (i) the effective date
(including expiration of any applicable waiting period) of the last required
Consent of any Regulatory Authority having authority over and approving or
exempting the Merger, and (ii) the date on which the stockholders of PALFED
approve this Agreement to the extent such approval is required by applicable
Law; or such later date within 30 days thereof as may be specified by
Regions, provided that Regions may not delay the Effective Time pursuant to
the immediately preceding clause if such delay would cause the record date
for payment of the quarterly dividend to holders of Regions Common Stock for
the quarter in which the Effective Time occurs to occur prior to the
Effective Time that, absent such delay, would have occurred subsequent to the
Effective Time.
1.4 Execution of Stock Option Agreement and Support Agreements.
Immediately after the execution of this Agreement by the Parties and as a
condition hereto, PALFED is executing and delivering to Regions a stock
option agreement (the "Stock Option Agreement"), in substantially the form of
Exhibit 1 to this Agreement, pursuant to which PALFED is granting to Regions
an option to purchase shares of PALFED Common Stock and (ii) each of the
directors of PALFED is executing and delivering to Regions a support
agreement (the "Support Agreement") in substantially the form of Exhibit 2 to
this Agreement.
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ARTICLE TWO
TERMS OF MERGER
0.2 Certificate of Incorporation. The Certificate of
Incorporation of Regions in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation after
the Effective Time until otherwise amended or repealed.
0.3 Bylaws. The Bylaws of Regions in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
0.4 Directors and Officers. The directors of Regions in office
immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the directors of the
Surviving Corporation from and after the Effective Time in accordance with
the Bylaws of the Surviving Corporation. The officers of Regions in office
immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected, shall serve as the officers of the
Surviving Corporation from and after the Effective Time in accordance with
the Bylaws of the Surviving Corporation.
ARTICLE THREE
MANNER OF CONVERTING SHARES
0.5 Conversion of Shares. Subject to the provisions of this
Article 0, at the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, the shares of the constituent
corporations shall be converted as follows:
(a) Each share of Regions Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of PALFED Common Stock (excluding shares
held by PALFED or any of its Subsidiaries or by Regions or any of its
Subsidiaries, in each case other than in a fiduciary capacity or as a result
of debts previously contracted) issued and outstanding at the Effective Time
shall be converted into 0.70 of a share of Regions Common Stock, subject to
adjustment as provided in Section 10.1(g) of this Agreement (the "Exchange
Ratio").
0.6 Anti-Dilution Provisions. In the event PALFED changes the
number of shares of PALFED Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock, the Exchange Ratio shall be
proportionately adjusted. In the event Regions changes the number of shares
of Regions Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or
similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
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0.7 Shares Held by PALFED or Regions. Each of the shares of
PALFED Common Stock held by any PALFED Company or by any Regions Company, in
each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time
and no consideration shall be issued in exchange therefor.
3.4 Dissenting Stockholders. Any holder of shares of PALFED
Common Stock who perfects such holder's dissenters' rights of appraisal in
accordance with and as contemplated by Sections ▇▇-▇▇-▇▇▇ et seq. of the
SCBCA shall be entitled to receive the value of such shares in cash as
determined pursuant to such provision of Law; provided, however, that no such
payment shall be made to any dissenting stockholder unless and until such
dissenting stockholder has complied with the applicable provisions of the
SCBCA and surrendered to PALFED the certificate or certificates representing
the shares for which payment is being made. In the event that after the
Effective Time a dissenting stockholder of PALFED fails to perfect, or
effectively withdraws or loses, such holder's right to appraisal and of
payment for such holder's shares, Regions shall issue and deliver the
consideration to which such holder of shares of PALFED Common Stock is
entitled under this Article Three (without interest) upon surrender by such
holder of the certificate or certificates representing shares of PALFED
Common Stock held by such holder. PALFED will establish an escrow account
with an amount sufficient to satisfy the maximum aggregate payment that may
be required to be paid to dissenting stockholders. Upon satisfaction of all
claims of dissenting stockholders, the remaining escrowed amount, reduced by
payment of the fees and expenses of the escrow agent, will be returned to
PALFED.
0.5 Fractional Shares. Notwithstanding any other provision of
this Agreement, each holder of shares of PALFED Common Stock exchanged
pursuant to the Merger, or of options to purchase shares of PALFED Common
Stock, who would otherwise have been entitled to receive a fraction of a
share of Regions Common Stock (after taking into account all certificates
delivered by such holder) shall receive, in lieu thereof, cash (without
interest) in an amount equal to such fractional part of a share of Regions
Common Stock multiplied by the market value of one share of Regions Common
Stock at the Effective Time, in the case of shares exchanged pursuant to the
Merger, or the date of exercise, in the case of options. The market value of
one share of Regions Common Stock at the Effective Time or the date of
exercise, as the case may be, shall be the last sale price of such common
stock on the Nasdaq/NMS (as reported by The Wall Street Journal or, if not
reported thereby, any other authoritative source) on the last trading day
preceding the Effective Time, in the case of shares exchanged pursuant to the
Merger, and the date of exercise, in the case of options. No such holder
will be entitled to dividends, voting rights, or any other rights as a
stockholder in respect of any fractional shares.
0.6 Conversion of Stock Options; Restricted Stock.
(a) At the Effective Time, all rights with respect to
PALFED Common Stock pursuant to stock options or stock appreciation rights
("PALFED Options") granted by PALFED under the PALFED Stock Plans, which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to Regions Common Stock, and
Regions shall assume each PALFED Option, in accordance with the terms of the
PALFED
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Stock Plan and stock option agreement by which it is evidenced. From and
after the Effective Time, (i) each PALFED Option assumed by Regions may be
exercised solely for shares of Regions Common Stock (or cash in the case of
stock appreciation rights), (ii) the number of shares of Regions Common Stock
subject to such PALFED Option shall be equal to the number of shares of
PALFED Common Stock subject to such PALFED Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, and (iii) the per share
exercise price under each such PALFED Option shall be adjusted by dividing
the per share exercise price under each such PALFED Option by the Exchange
Ratio and rounding down to the nearest cent. It is intended that the
foregoing assumption shall be undertaken in a manner that will not constitute
a "modification" as defined in Section 424 of the Internal Revenue Code, as
to any stock option which is an "incentive stock option." PALFED agrees to
take all necessary steps to effectuate the foregoing provisions of this
Section 0.6.
(b) All restrictions or limitations on transfer with
respect to PALFED Common Stock awarded under the PALFED Stock Plans or any
other plan, program, or arrangement of any PALFED Company, to the extent that
such restrictions or limitations shall not have already lapsed, and except as
otherwise expressly provided in such plan, program, or arrangement, shall
remain in full force and effect with respect to shares of Regions Common
Stock into which such restricted stock is converted pursuant to Section 0.5
of this Agreement.
ARTICLE FOUR
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time,
Regions shall cause the exchange agent selected by Regions (the "Exchange
Agent") to mail to the former stockholders of PALFED appropriate transmittal
materials (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates theretofore representing shares of PALFED
Common Stock shall pass, only upon proper delivery of such certificates to
the Exchange Agent). After the Effective Time, each holder of shares of
PALFED Common Stock (other than shares to be canceled pursuant to Section 3.3
of this Agreement) issued and outstanding at the Effective Time shall
surrender the certificate or certificates representing such shares to the
Exchange Agent and shall promptly upon surrender thereof receive in exchange
therefor the consideration provided in Section 3.1 of this Agreement,
together with all undelivered dividends or distributions in respect of such
shares (without interest thereon) pursuant to Section 4.2 of this Agreement.
To the extent required by Section 3.5 of this Agreement, each holder of
shares of PALFED Common Stock issued and outstanding at the Effective Time
also shall receive, upon surrender of the certificate or certificates
representing such shares, cash in lieu of any fractional share of Regions
Common Stock to which such holder may be otherwise entitled (without
interest). Regions shall not be obligated to deliver the consideration to
which any former holder of PALFED Common Stock is entitled as a result of the
Merger until such holder surrenders such holder's certificate or certificates
representing the shares of PALFED Common Stock for exchange as provided in
this Section 4.1. The certificate or certificates of PALFED Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any
other provision of this Agreement notwithstanding, neither Regions, PALFED,
nor the Exchange Agent shall be liable to a holder of PALFED Common
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Stock for any amounts paid or property delivered in good faith to a public
official pursuant to any applicable abandoned property Law.
4.2 Rights of Former PALFED Stockholders. At the Effective Time,
the stock transfer books of PALFED shall be closed as to holders of PALFED
Common Stock immediately prior to the Effective Time, and no transfer of
PALFED Common Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions
of Section 4.1 of this Agreement, each certificate theretofore representing
shares of PALFED Common Stock (other than shares to be canceled pursuant to
Section 3.3 of this Agreement or as to which the holder thereof has perfected
dissenters' rights of appraisal as contemplated by Section 3.4 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.5
of this Agreement in exchange therefor. To the extent permitted by Law,
former stockholders of record of PALFED shall be entitled to vote after the
Effective Time at any meeting of Regions stockholders the number of whole
shares of Regions Common Stock into which their respective shares of PALFED
Common Stock are converted, regardless of whether such holders have exchanged
their certificates representing PALFED Common Stock for certificates
representing Regions Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by Regions
on the Regions Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other
distributions on all shares of Regions Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of Regions Common Stock as of any time subsequent to the Effective
Time shall be delivered to the holder of any certificate representing shares
of PALFED Common Stock issued and outstanding at the Effective Time until
such holder surrenders such certificate for exchange as provided in Section
4.1 of this Agreement. However, upon surrender of such PALFED Common Stock
certificate, both the Regions Common Stock 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 certificate.
ARTICLE FIVE
REPRESENTATIONS AND WARRANTIES OF PALFED
Except as disclosed in the PALFED Disclosure Memorandum, PALFED
hereby represents and warrants to Regions as follows:
5.1 Organization, Standing, and Power. PALFED is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of South Carolina, and has the corporate power and authority to carry
on its business as now conducted and to own, lease, and operate its Material
Assets. PALFED is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or
conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified
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or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PALFED.
5.2 Authority; No Breach by Agreement.
(a) PALFED has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, subject to
the approval of this Agreement by the holders of two-thirds of the
outstanding shares of PALFED Common Stock. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been or will be duly and
validly authorized by all necessary corporate action in respect thereof on
the part of PALFED, subject to the approval of this Agreement by the holders
of two-thirds of the issued and outstanding shares of PALFED Common Stock.
Subject to such requisite stockholder approval, this Agreement represents a
legal, valid, and binding obligation of PALFED, enforceable against PALFED in
accordance with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
by PALFED, nor the consummation by PALFED of the transactions contemplated
hereby, nor compliance by PALFED with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of PALFED's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any PALFED Company under, any Contract or Permit of any PALFED
Company, or (iii) subject to receipt of the requisite approvals referred to
in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any PALFED Company or any of their respective Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act, and other than Consents,
filings, or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on PALFED, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by PALFED of the Merger and the
other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of PALFED consists of
(i) 10,000,000 shares of PALFED Common Stock, of which 5,293,201 shares are
issued and outstanding as of the date of this Agreement and not more than
5,612,221 shares will be issued and outstanding at the
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Effective Time, assuming the exercise of outstanding options, and (ii)
5,000,000 shares of PALFED Preferred Stock of which no shares are issued and
outstanding and of which none shall be issued and outstanding at the
Effective Time. All of the issued and outstanding shares of PALFED Common
Stock are duly and validly issued and outstanding and are fully paid and
nonassessable. None of the outstanding shares of PALFED Common Stock has
been issued in violation of any preemptive rights of the current or past
stockholders of PALFED. PALFED has reserved 1,162,500 shares of PALFED
Common Stock for issuance under the PALFED Stock Plans, pursuant to which
options to purchase not more than 319,020 shares of PALFED Common Stock are
outstanding as of the date of this Agreement.
(b) Except as set forth in Section 5.3(a) of this
Agreement, there are no shares of capital stock or other equity securities of
PALFED outstanding and no outstanding options, warrants, scrip, rights to
subscribe to, calls, or commitments of any character whatsoever relating to,
or securities or rights convertible into or exchangeable for, shares of the
capital stock of PALFED or contracts, commitments, understandings, or
arrangements by which PALFED is or may be bound to issue additional shares of
PALFED capital stock or options, warrants, or rights to purchase or acquire
any additional shares of its capital stock.
5.4 PALFED Subsidiaries. PALFED has disclosed in Section 5.4 of
the PALFED Disclosure Memorandum all of the PALFED Subsidiaries as of the
date of this Agreement. PALFED or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each PALFED Subsidiary. No
equity securities of any PALFED Subsidiary are or may become required to be
issued (other than to a PALFED Company) by reason of any options, warrants,
scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of any such Subsidiary, and
there are no Contracts by which any PALFED Subsidiary is bound to issue
(other than to a PALFED Company) additional shares of its capital stock or
options, warrants, or rights to purchase or acquire any additional shares of
its capital stock or by which any PALFED Company is or may be bound to
transfer any shares of the capital stock of any PALFED Subsidiary (other than
to a PALFED Company). There are no Contracts relating to the rights of any
PALFED Company to vote or to dispose of any shares of the capital stock of
any PALFED Subsidiary. All of the shares of capital stock of each PALFED
Subsidiary held by a PALFED Company are duly authorized, validly issued, and
fully paid and nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the PALFED Company free and clear of any Lien. Each PALFED
Subsidiary is either a bank, a savings association or a corporation, and is
duly organized, validly existing, and in good standing under the Laws of the
jurisdiction in which it is chartered or incorporated or organized, and has
the corporate power and authority necessary for it to own, lease, and operate
its Assets and to carry on its business as now conducted. Each PALFED
Subsidiary is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of
its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PALFED. The only PALFED Subsidiary that is a depository
institution is Palmetto Federal. Palmetto Federal is an
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"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by
or the Savings Association Insurance Fund.
5.5 Financial Statements. PALFED has disclosed in Section 5.5 of
the PALFED Disclosure Memorandum, and has delivered to Regions copies of, all
PALFED Financial Statements prepared for periods ended prior to the date
hereof and will deliver to Regions copies of all PALFED Financial Statements
prepared subsequent to the date hereof. The PALFED Financial Statements (as
of the dates thereof and for the periods covered thereby) (i) are or, if
dated after the date of this Agreement, will be in accordance with the books
and records of the PALFED Companies, which are or will be, as the case may
be, complete and correct and which have been or will have been, as the case
may be, maintained in accordance with good business practices, and (ii)
present or will present, as the case may be, fairly the consolidated
financial position of the PALFED Companies as of the dates indicated and the
consolidated results of operations, changes in stockholders' equity, and cash
flows of the PALFED Companies for the periods indicated, in accordance with
GAAP (subject to any exceptions as to consistency specified therein or as may
be indicated in the notes thereto or, in the case of interim financial
statements, to normal recurring year-end adjustments which were not or are
not expected to be Material in amount or effect).
5.6 Absence of Undisclosed Liabilities. To the Knowledge of
PALFED, no PALFED Company has any Material Liabilities that are reasonably
likely to have, individually or in the aggregate a Material Adverse Effect on
PALFED, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of PALFED as of June 30, 1997 included in the
PALFED Financial Statements or reflected in the notes thereto. No PALFED
Company has incurred or paid any Liability since June 30, 1997, except for
such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate a Material Adverse Effect on PALFED.
5.7 Absence of Certain Changes or Events. Since June 30, 1997,
except as disclosed in the PALFED Financial Statements, (i) there have been
no events, changes, or occurrences which have had, or are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
PALFED, and (ii) the PALFED Companies have not taken any action, or failed to
take any action, prior to the date of this Agreement, which action or
failure, if taken after the date of this Agreement, would represent or result
in a Material breach or violation of any of the covenants and agreements of
PALFED provided in Article Seven of this Agreement.
5.8 Tax Matters.
(a) All Tax returns required to be filed by or on behalf
of any of the PALFED Companies have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, to the
Knowledge of PALFED, and all returns filed are complete and accurate to the
Knowledge of PALFED. All
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Taxes shown on filed returns have been paid. There is no audit examination,
deficiency, or refund Litigation with respect to any Taxes, that is
reasonably likely to result in a determination that would have, individually
or in the aggregate, a Material Adverse Effect on PALFED, except to the
extent reserved against in the PALFED Financial Statements dated prior to the
date of this Agreement. All Taxes and other Liabilities due with respect to
completed and settled examinations or concluded Litigation have been paid.
(b) None of the PALFED Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other
applicable Taxing authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the PALFED Companies for the period or periods through and
including the date of the respective PALFED Financial Statements has been
made and is reflected on such PALFED Financial Statements.
(d) Each of the PALFED Companies is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local
Tax Laws, and such records identify with specificity all accounts subject to
backup withholding under Section 3406 of the Internal Revenue Code, except
for such instances of noncompliance and such omissions as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on PALFED.
(e) None of the PALFED Companies has made any payments,
is obligated to make any payments, or is a party to any contract, agreement,
or other arrangement that could obligate it to make any payments that would
be disallowed as a deduction under Section 280G or 162(m) of the Internal
Revenue Code.
(f) There are no Liens with respect to Taxes upon any of
the assets of the PALFED Companies.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the PALFED Companies that occurred
during or after any taxable period in which the PALFED Companies incurred a
net operating loss that carries over to any taxable period ending after
December 31, 1996.
(h) No PALFED Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible corporations.
(i) All Material elections with respect to Taxes
affecting the PALFED Companies as of the date of this Agreement have been or
will be timely made as set forth in Section 5.8 of the PALFED Disclosure
Memorandum. After the date hereof, no election with
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respect to Taxes will be made without the prior written consent of Regions,
which consent will not be unreasonably withheld.
(j) No PALFED Company has or has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty
or convention between the United States and such foreign country.
5.9 Assets. Except as disclosed or reserved against in the
PALFED Financial Statements, the PALFED Companies have good and marketable
title, free and clear of all Liens, to all of their respective Assets that
are material to the business of the PALFED Companies. All Material tangible
properties used in the businesses of the PALFED Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with PALFED's past practices. All Assets which
are material to the business of the PALFED Companies, which are held under
leases or subleases by any of the PALFED Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect.
5.10 Environmental Matters.
(a) To the Knowledge of PALFED, each PALFED Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except those violations which are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PALFED.
(b) There is no Litigation pending or to the Knowledge of
PALFED threatened before any court, governmental agency, or authority, or
other forum in which any PALFED Company or any of its Participation
Facilities has been or, with respect to threatened Litigation, may be named
as a defendant (i) for alleged noncompliance (including by any predecessor)
with any Environmental Law or (ii) relating to the release into the
environment of any Hazardous Material (as defined below) or oil, whether or
not occurring at, on, under, or involving a site owned, leased, or operated
by any PALFED Company or any of its Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PALFED.
(c) There is no Litigation pending or to the Knowledge of
PALFED threatened before any court, governmental agency, or board, or other
forum in which any of its Loan Properties (or PALFED in respect of such Loan
Property) has been or, with respect to threatened Litigation, may be named as
a defendant or potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating to
the release into the environment of any Hazardous Material or oil, whether or
not occurring at, on, under, or involving a Loan Property, except for such
Litigation pending or
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threatened that is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PALFED.
(d) To the Knowledge of PALFED, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c),
except such as is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PALFED.
(e) To the Knowledge of PALFED, during the period of (i)
any PALFED Company's ownership or operation of any of their respective
current properties, (ii) any PALFED Company's participation in the management
of any Participation Facility, or, (iii) any PALFED Company's holding of a
security interest in a Loan Property, there have been no releases of
Hazardous Material or oil in, on, under, or affecting (or potentially
affecting) such properties, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PALFED. Prior
to the period of (i) any PALFED Company's ownership or operation of any of
their respective current properties, (ii) any PALFED Company's participation
in the management of any Participation Facility, or (iii) any PALFED
Company's holding of a security interest in a Loan Property, to the Knowledge
of PALFED, there were no releases of Hazardous Material or oil in, on, under,
or affecting any such property, Participation Facility, or Loan Property,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PALFED.
5.11 Compliance With Laws. PALFED is duly registered as a savings
and loan holding company under the HOLA. Each PALFED Company has in effect
all Permits necessary for it to own, lease, or operate its Assets and to
carry on its business as now conducted, except for those Permits the absence
of which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on PALFED, and there has occurred no Default under
any such Permit other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PALFED.
Except as disclosed in Section 5.11 of the PALFED Disclosure Memorandum, none
of the PALFED Companies:
(a) is in violation of any Material Laws, Orders, or
Permits applicable to its business or employees conducting its business,
except for violations which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on PALFED; and
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any PALFED
Company is not in compliance with any of the Material Laws or Material Orders
which such governmental authority or Regulatory Authority enforces, where
such noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PALFED; (ii) threatening to revoke
any Material Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PALFED; or
(iii) requiring any PALFED Company (x) to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, or the
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capital adequacy of Palmetto Federal, its credit or reserve policies, its
management, or the payment of dividends.
5.12 Labor Relations. No PALFED Company is the subject of any
Litigation asserting that it or any other PALFED Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act
or comparable state law) or seeking to compel it or any other PALFED Company
to bargain with any labor organization as to wages or conditions of
employment, nor is any PALFED Company a party to or bound by any collective
bargaining agreement, contract, or other agreement or understanding with a
labor union or labor organization, nor is there any strike or other labor
dispute involving any PALFED Company, pending or threatened, or to its
Knowledge, is there any activity involving any PALFED Company's employees
seeking to certify a collective bargaining unit or engaging in any other
organization activity.
5.13 Employee Benefit Plans.
(a) PALFED has disclosed in Section 5.13 of the PALFED
Disclosure Memorandum, and has delivered or made available to Regions prior
to the execution of this Agreement correct and complete copies in each case
of, all pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus, or other
incentive plan, all other written employee programs or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, "employee benefit plans" as that term is defined in Section 3(3)
of ERISA maintained by, sponsored in whole or in part by, or contributed to
by any PALFED Company for the benefit of employees, retirees, dependents,
spouses, directors, independent contractors, or other beneficiaries and under
which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate
(collectively, the "PALFED Benefit Plans"). Any of the PALFED Benefit Plans
which is an "employee welfare benefit plan," as that term is defined in
Section 3(l) of ERISA, or an "employee pension benefit plan," as that term is
defined in Section 3(2) of ERISA, is referred to herein as a "PALFED ERISA
Plan." Any PALFED ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j) of the Internal Revenue Code or Section 3(35) of
ERISA) is referred to herein as a "PALFED Pension Plan." On or after
September 26, 1980, neither PALFED nor any PALFED Company has had an
"obligation to contribute" (as defined in ERISA Section 4212) to a
"multiemployer plan" (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
The only "employee pension benefit plan," as defined in Section 3(2) of
ERISA, ever maintained by any PALFED Company that was intended to qualify
under Section 401(a) of the Internal Revenue Code, are the PALFED, Inc.
Employee Savings and Stock Ownership Plan and the PALFED, Inc. Pension Plan.
(b) PALFED has delivered or made available to Regions
prior to the execution of this Agreement correct and complete copies of the
following documents: (i) all trust agreements or other funding arrangements
for such PALFED Benefit Plans (including insurance contracts), and all
amendments thereto, (ii) with respect to any such PALFED Benefit Plans or
amendments, all determination letters, rulings, opinion letters, information
letters, or advisory
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opinions issued by the Internal Revenue Service, the United States Department
of Labor, or the Pension Benefit Guaranty Corporation after December 31,
1991, (iii) annual reports or returns, audited or unaudited financial
statements, actuarial valuations and reports, and summary annual reports
prepared for any PALFED Benefit Plan with respect to the most recent three
plan years, and (iv) the most recent summary plan descriptions and any
Material modifications thereto.
(c) All PALFED Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws, the breach or violation of which is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on PALFED.
Each PALFED ERISA Plan which is intended to be qualified under Section 401(a)
of the Internal Revenue Code has received a favorable determination letter
from the Internal Revenue Service, and PALFED is not aware of any
circumstances which will or could result in revocation of any such favorable
determination letter. Each trust created under any PALFED ERISA Plan has been
determined to be exempt from Tax under Section 501(a) of the Internal Revenue
Code and PALFED is not aware of any circumstance which will or could result
in revocation of such exemption. With respect to each PALFED Benefit Plan to
the Knowledge of PALFED, no event has occurred which will or could give rise
to a loss of any intended Tax consequences under the Internal Revenue Code or
to any Tax under Section 511 of the Internal Revenue Code. There is no
Material pending or, to the Knowledge of PALFED, threatened Litigation
relating to any PALFED ERISA Plan. No PALFED Company has engaged in a
transaction with respect to any PALFED Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject any PALFED Company to a Material tax or penalty imposed by either
Section 4975 of the Internal Revenue Code or Section 502(i) of ERISA in
amounts which are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PALFED.
(d) No PALFED Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no Material change in the
financial position of any PALFED Pension Plan, (ii) no change in the
actuarial assumptions with respect to any PALFED Pension Plan, and (iii) no
increase in benefits under any PALFED Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PALFED or
materially adversely affect the funding status of any such plan. Neither any
PALFED Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any PALFED
Company, or the single-employer plan of any entity which is considered one
employer with PALFED 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. No
PALFED Company has provided, or is required to provide, security to a PALFED
Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
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(e) No liability under Title IV of ERISA has been or is
expected to be incurred by any PALFED Company with respect to any defined
benefit plan currently or formerly maintained by any of them or by any ERISA
Affiliate.
(f) No PALFED Company has any obligations for retiree
health and retiree life benefits under any of the PALFED Benefit Plans.
(g) Except as set forth in Section 5.13(g) of the
Disclosure Memorandum, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result
in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, or otherwise) becoming due to any director or
any employee of any PALFED Company from any PALFED Company under any PALFED
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any PALFED Benefit Plan, or (iii) result in any acceleration of the time of
payment or vesting of any such benefit.
(h) No oral or written representation or communication
with respect to any aspect of the PALFED Benefit Plans has been made to
employees of any of the PALFED Companies prior to the date hereof which is
not in accordance with the written or otherwise preexisting terms and
provisions of such plans. All PALFED Benefit Plan documents and annual
reports or returns, audited or unaudited financial statements, actuarial
valuations, summary annual reports, and summary plan descriptions issued with
respect to the PALFED Benefit Plans are correct and complete and there have
been no changes in the information set forth therein.
5.14 Material Contracts. Except as disclosed in Section 5.14 of
the PALFED Disclosure Memorandum, none of the PALFED Companies, nor any of
their respective Assets, businesses, or operations, is a party to, or is
bound or affected by, or receives benefits under (i) any employment,
severance, termination, consulting, or retirement Contract providing for
aggregate payments to any Person in any calendar year in excess of $50,000,
(ii) any Contract relating to the borrowing of money by any PALFED Company or
the guarantee by any PALFED Company of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, and Federal Home Loan Bank advances,
trade payables, and Contracts relating to borrowings or guarantees made in
the ordinary course of business), (iii) any Contracts between or among PALFED
Companies; and (iv) any other Contract or amendment thereto that would be
required to be filed as an exhibit to a Form 10-K filed by PALFED with the
Securities and Exchange Commission (the "SEC") as of the date of this
Agreement if PALFED were required to file a Form 10-K with the SEC (together
with all Contracts referred to in Sections 5.9 and 5.13(a) of this Agreement,
the "PALFED Contracts"). None of the PALFED Companies is in Default under
any PALFED Contract which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on PALFED.
5.15 Legal Proceedings. Except to the extent specifically
reserved against in the PALFED Financial Statements dated prior to the date
of this Agreement, there is no Litigation instituted or pending, or, to the
Knowledge of PALFED, threatened (or unasserted but considered
-15-
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any PALFED Company, or against
any Asset, interest, or right of any of them, that is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on PALFED,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any PALFED Company, that are
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PALFED. Section 5.15 of the PALFED Disclosure Memorandum
provides a list of all Litigation in which a PALFED company is a named
defendant.
5.16 Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by any PALFED
Company or any Affiliate thereof to Regions pursuant to this Agreement or any
other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of Material fact or will omit to state a
Material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any PALFED Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by Regions
with the SEC will, when the Registration Statement becomes effective, be
false or misleading with respect to any Material fact, or contain any untrue
statement of a Material fact, or omit to state any Material fact required to
be stated thereunder or necessary to make the statements therein not
misleading. None of the information supplied or to be supplied by any PALFED
Company or any Affiliate thereof for inclusion in the Proxy Statement to be
mailed to PALFED's stockholders in connection with the Stockholders' Meeting,
and any other documents to be filed by a PALFED Company or any Affiliate
thereof with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, and with respect to the Proxy Statement, when first mailed to the
stockholders of PALFED, be false or misleading with respect to any Material
fact, or contain any misstatement of Material fact, or omit to state any
Material fact required to be stated thereunder or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the time of the Stockholders' Meeting, be
false or misleading with respect to any Material fact, or omit to state any
Material fact required to be stated thereunder or necessary to correct any
Material statement in any earlier communication with respect to the
solicitation of any proxy for the Stockholders' Meeting. All documents that
any PALFED Company or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all Material respects with the provisions of
applicable Law.
5.17 Tax, Accounting, and Regulatory Matters. No PALFED Company
or any Affiliate thereof has taken any action, or agreed to take any action,
or has any Knowledge of any fact or circumstance that is reasonably likely to
(i) prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) of this
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Agreement. To the Knowledge of PALFED, there exists no fact, circumstance,
or reason why the requisite Consents referred to in Section 9.1(b) of this
Agreement cannot be received in a timely manner without imposition of any
condition of the type described in the second sentence of such Section 9.1(b).
5.18 State Takeover Laws. Each PALFED Company has taken all
necessary action to exempt the transactions contemplated by this Agreement
from any applicable "moratorium," "control share," "fair price," "business
combination," or other anti-takeover laws and regulations of the State of
South Carolina (collectively, "Takeover Laws"), including those laws
contained within Title 35, Article 2 of the South Carolina Code.
5.19 Articles of Incorporation Provisions. Each PALFED Company
has taken all action so that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
(other than a Regions Company) under the Articles of Incorporation, Bylaws,
or other governing instruments of any PALFED Company or restrict or impair
the ability of Regions to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of any PALFED Company that may be
acquired or controlled by it.
5.20 Support Agreements. Each of the directors of PALFED has
executed and delivered to Regions an agreement in substantially the form of
Exhibit 2 to this Agreement.
5.21 Derivatives Contracts. Neither PALFED nor any of its
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or collar
financial contract, or any other interest rate or foreign currency protection
contract not included on its balance sheet which is a financial derivative
contract (including various combinations thereof).
5.22 Year 2000. Except as disclosed in Section 5.22 of the PALFED
Disclosure Memorandum, to the Knowledge of PALFED, all computer software
necessary for the conduct of its business (the "Software") is designed to be
used prior to, during, and after the calendar year 2000 A.D., and that the
Software will operate during each such time period without error relating to
the year 2000, specifically including any error relating to, or the product
of, date data which represents or references different centuries or more than
one century. PALFED further represents and warrants that the Software
accepts, calculates, sorts, extracts and otherwise processes date inputs and
date values, and returns and displays date values, in a consistent manner
regardless of the dates used, whether before, on, or after January 1, 2000.
ARTICLE SIX
REPRESENTATIONS AND WARRANTIES OF REGIONS
Regions hereby represents and warrants to PALFED as follows:
6.1 Organization, Standing, and Power. Regions is a corporation
duly organized, validly existing, and in good standing under the Laws of the
State of Delaware, and has the corporate power and authority to carry on its
business as now conducted and to own, lease, and
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operate its Material Assets. Regions is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of
the United States and foreign jurisdictions where the character of its Assets
or the nature or conduct of its business requires it to be so qualified or
licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Regions.
6.2 Authority; No Breach by Agreement.
(a) Regions has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The
execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated herein, including the Merger, have been duly
and validly authorized by all necessary corporate action in respect thereof
on the part of Regions. This Agreement represents a legal, valid, and binding
obligation of Regions, enforceable against Regions in accordance with its
terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
by Regions, nor the consummation by Regions of the transactions contemplated
hereby, nor compliance by Regions with any of the provisions hereof, will (i)
conflict with or result in a breach of any provision of Regions' Certificate
of Incorporation or Bylaws, or (ii) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien on
any Asset of any Regions Company under, any Contract or Permit of any Regions
Company, which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions, or (iii) subject to receipt
of the requisite approvals referred to in Section 9.1(b) of this Agreement,
violate any Law or Order applicable to any Regions Company or any of their
respective Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NASD, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, or under the HSR Act and other than Consents,
filings, or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on Regions, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Regions of the Merger and the
other transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of Regions
consists as of the date of this Agreement, of 240,000,000 shares of Regions
Common Stock, of which 136,722,928 shares were issued and outstanding as of
June 30, 1997. All of the issued and outstanding shares of Regions Common
Stock are, and all of the shares of Regions Common Stock to be issued in
exchange for shares of PALFED Common Stock upon consummation of the
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Merger, when issued in accordance with the terms of this Agreement, will be,
duly and validly issued and outstanding and fully paid and nonassessable
under the DGCL. None of the outstanding shares of Regions Common Stock has
been, and none of the shares of Regions Common Stock to be issued in exchange
for shares of PALFED Common Stock upon consummation of the Merger will be,
issued in violation of any preemptive rights of the current or past
stockholders of Regions.
6.4 SEC Filings; Financial Statements.
(a) Regions has filed all forms, reports, and documents
required to be filed by Regions with the SEC since December 31, 1994, other
than registration statements on Forms S-4 and S-8 (collectively, the "Regions
SEC Reports"). The Regions SEC Reports (i) at the time filed, complied in
all Material respects with the applicable requirements of the Securities Act
and the Exchange Act, as the case may be, and (ii) did not at the time they
were filed (or if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing) contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated in such
Regions SEC Reports or necessary in order to make the statements in such
Regions SEC Reports, in light of the circumstances under which they were
made, not misleading.
(b) Each of the Regions Financial Statements (including,
in each case, any related notes) contained in the Regions SEC Reports,
including any Regions SEC Reports filed after the date of this Agreement
until the Effective Time, complied or will comply as to form in all Material
respects with the applicable published rules and regulations of the SEC with
respect thereto, was or will be prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated
in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC), and fairly presented or
will fairly present the consolidated financial position of Regions and its
Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
Material in amount or effect.
6.5 Absence of Undisclosed Liabilities. No Regions Company has
any Material Liabilities, except Liabilities which are accrued or reserved
against in the consolidated balance sheets of Regions as of June 30, 1997
included in the Regions Financial Statements or reflected in the notes
thereto. No Regions Company has incurred or paid any Liability since June
30, 1997, except for such Liabilities incurred or paid in the ordinary course
of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Regions.
6.6 Absence of Certain Changes or Events. Since June 30, 1997,
except as disclosed in the Regions Financial Statements filed with the SEC
after such date and prior to the date of this Agreement, there have been no
events, changes, or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Regions.
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6.7 Compliance With Laws. Regions is duly registered as a bank
holding company under the BHC Act. Each Regions Company has in effect all
Permits necessary for it to own, lease, or operate its Assets and to carry on
its business as now conducted, except for those Permits the absence of which
is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Regions, and there has occurred no Default under
any such Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions. None
of the Regions Companies:
(a) is in violation of any Material Laws, Orders, or
Permits applicable to its business or employees conducting its business,
except for violations which are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Regions; and
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Regions
Company is not in compliance with any of the Material Laws or Material Orders
which such governmental authority or Regulatory Authority enforces, where
such noncompliance is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Regions; (ii) threatening to revoke
any Permits, the revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Regions; or
(iii) requiring any Regions Company (x) to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive,
commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking which restricts materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
6.8 Legal Proceedings. Except to the extent specifically
reserved against in the Regions Financial Statements dated prior to the date
of this Agreement, there is no Litigation instituted or pending, or, to the
Knowledge of Regions, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Regions Company, or against any Asset,
interest, or right of any of them, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding
against any Regions Company, that are reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Regions.
6.9 Statements True and Correct. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Regions
Company or any Affiliate thereof to PALFED pursuant to this Agreement or any
other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of Material fact or will omit to state a
Material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any Regions Company or any
Affiliate thereof for inclusion in the Registration Statement to be filed by
Regions with the SEC, will, when the Registration Statement becomes
effective, be false or misleading with respect to any Material fact, or
contain any untrue statement of a Material fact, or omit to state any
Material fact required to be stated thereunder or necessary to make the
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statements therein not misleading. None of the information supplied or to be
supplied by any Regions Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to PALFED's stockholders in connection with the
Stockholders' Meeting, and any other documents to be filed by any Regions
Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at
the respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the stockholders of PALFED, be false or
misleading with respect to any Material fact, or contain any misstatement of
Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of
the Proxy Statement or any amendment thereof or supplement thereto, at the
time of the Stockholders' Meeting, be false or misleading with respect to any
Material fact, or omit to state any Material fact required to be stated
thereunder or necessary to correct any statement in any earlier communication
with respect to the solicitation of any proxy for the Stockholders' Meeting.
All documents that any Regions Company or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all Material
respects with the provisions of applicable Law.
6.10 Tax, Accounting, and Regulatory Matters. No Regions Company
or any Affiliate thereof has taken any action, or agreed to take any action,
or has any Knowledge of any fact or circumstance that is reasonably likely to
(i) prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 9.1(b) of this Agreement. To
the Knowledge of Regions, there exists no fact, circumstance, or reason why
the requisite Consents referred to in Section 9.1(b) of this Agreement cannot
be received in a timely manner without imposition of any condition of the
type described in the second sentence of such Section 9.1(b).
ARTICLE SEVEN
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Covenants of Both Parties. Unless the prior written consent
of the other Party shall have been obtained, and except as otherwise
expressly contemplated herein, each Party shall and shall cause each of its
Subsidiaries to (i) operate its business only in the usual, regular, and
ordinary course, (ii) preserve intact its business organizations and Assets
and maintain its rights and franchises, and (iii) take no action which would
materially adversely affect the ability of any Party to (a) obtain any
Consents required for the transactions contemplated hereby, or (b) perform
its covenants and agreements under this Agreement in all Material respects
and to consummate the Merger; provided, that the foregoing shall not prevent
any Regions Company from discontinuing or disposing of any of its Assets or
business, or from acquiring or agreeing to acquire any other Person or any
Assets thereof, if such action is, in the judgment of Regions, desirable in
the conduct of the business of Regions and its Subsidiaries.
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7.2 Covenants of PALFED. Except as specifically contemplated or
permitted by this Agreement or as disclosed in the PALFED Disclosure
Memorandum, from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, PALFED covenants and
agrees that it will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following without the
prior written consent of a duly authorized officer of Regions, which consent
shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of any PALFED Company; or
(b) incur, guarantee, or otherwise become responsible
for, any additional debt obligation or other obligation for borrowed money
(other than indebtedness of a PALFED Company to another PALFED Company) in
excess of an aggregate of $500,000 (for the PALFED Companies on a
consolidated basis) except in the ordinary course of the business of PALFED
Companies consistent with past practices (which shall include, for PALFED,
creation of deposit liabilities, purchases of federal funds, advances from
the Federal Home Loan Bank or the Federal Reserve Bank, and entry into
repurchase agreements fully secured by U.S. government or agency securities),
or impose, or suffer the imposition, on any share of stock held by any PALFED
Company of any Lien or permit any such Lien to exist; or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any PALFED Company, or declare or pay any
dividend or make any other distribution in respect of any PALFED Common
Stock; provided that PALFED may (to the extent legally able to do so), but
shall not be obligated to, declare and pay regular cash dividends on the
PALFED Common Stock at a rate not in excess of $.03 (for the fourth quarter
of 1997) and $.04 (for any quarter thereafter), and in accordance with
PALFED's most recent past practices for cash dividends as disclosed in
Section 7.2(c) of the PALFED Disclosure Memorandum, provided that any
dividend declared or payable on the shares of PALFED Common Stock for the
quarterly period during which the Effective Time occurs shall, unless
otherwise agreed upon in writing by Regions and PALFED, be declared with a
record date prior to the Effective Time only if the normal record date for
payment of the corresponding quarterly dividend to holders of Regions Common
Stock is before the Effective Time; or
(d) except pursuant to the exercise of stock options
outstanding as of the date hereof and pursuant to the terms thereof in
existence on the date hereof, issue, sell, pledge, encumber, authorize the
issuance of, enter into any Contract to issue, sell, pledge, encumber, or
authorize the issuance of, or otherwise permit to become outstanding, any
additional shares of PALFED Common Stock or any other capital stock of any
PALFED Company, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
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(e) adjust, split, combine, or reclassify any capital
stock of any PALFED Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of PALFED Common Stock
or sell, lease, mortgage, or otherwise dispose of or otherwise encumber any
shares of capital stock of any PALFED Subsidiary (unless any such shares of
stock are sold or otherwise transferred to another PALFED Company) or any
Assets having in the aggregate a book value in excess of $250,000 other than
in the ordinary course of business for reasonable and adequate consideration;
or
(f) acquire direct or indirect control over, or invest in
equity securities of, any Person, other than in connection with (i)
foreclosures in the ordinary course of business, or (ii) acquisitions of
control by PALFED in its fiduciary capacity; or
(g) grant any increase in compensation or benefits to the
employees or officers of any PALFED Company except as disclosed in Section
7.2(g) of the PALFED Disclosure Memorandum or as required by Law; pay any
bonus except pursuant to the provisions of any applicable program or plan
adopted by its Board of Directors prior to the date of this Agreement and
disclosed in Section 7.2(g) of the PALFED Disclosure Memorandum; enter into
or amend any severance agreements with officers of any PALFED Company except
as disclosed in Section 7.2(g) of the PALFED Disclosure Memorandum; grant any
increase in fees or other increases in compensation or other benefits to
directors of any PALFED Company; or
(h) voluntarily accelerate the vesting of any stock
options or other stock-based compensation or employee benefits; or
(i) enter into or amend any employment Contract between
any PALFED Company and any Person (unless such amendment is required by Law)
that the PALFED Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered), at
any time on or after the Effective Time; or
(j) except as disclosed in Section 7.2 of the PALFED
Disclosure Memorandum, adopt any new employee benefit plan or program of any
PALFED Company or make any Material change in or to any existing employee
benefit plans or programs of any PALFED Company other than any such change
that is required by Law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan; or
(k) make any significant change in any accounting
methods, principles, or practices or systems of internal accounting controls,
except as may be necessary to conform to changes in regulatory accounting
requirements or GAAP; or
(l) commence or settle any Litigation other than in
accordance with past practice; provided that, except to the extent
specifically reserved against in the PALFED Financial Statements dated prior
to the date of this Agreement, no PALFED Company shall settle any Litigation
involving any Liability of any PALFED Company for money damages in excess of
$500,000 or restrictions upon the operations of any PALFED Company; or
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(m) except in the ordinary course of business, enter into
or terminate any Material Contract or make any change in any Material lease
or Contract.
7.3 Covenants of Regions. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement,
Regions covenants and agrees that: (i) it will not, without the prior written
consent of a duly authorized officer of PALFED amend the Certificate of
Incorporation or Bylaws of Regions, in each case, in any manner which is
adverse to, and discriminates against, the holders of PALFED Common Stock;
and (ii) it will continue to conduct its business and the business of its
Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the Regions Common Stock and the business prospects to
Regions.
7.4 Adverse Changes in Condition. Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to
it or any of its Subsidiaries which is reasonably likely to cause or
constitute a Material breach of any of its representations, warranties, or
covenants contained herein, and to use its reasonable efforts to prevent or
promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the
date of this Agreement and the Effective Time and each Party shall deliver to
the other Party copies of all such reports filed by such Party promptly after
the same are filed. If financial statements are contained in any such
reports filed with appropriate Regulatory Authorities, such financial
statements will fairly present the consolidated financial position of the
entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in stockholders' equity, and cash flows for
the periods then ended in accordance with GAAP (subject in the case of
interim financial statements to normal recurring year-end adjustments that
are not Material). As of their respective dates, such reports filed with the
SEC, will comply in all Material respects with the Securities Laws and will
not contain any untrue statement of a Material fact or omit to state a
Material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Any financial statements contained in any other reports to a
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
ARTICLE EIGHT
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Stockholder
Approval. As soon as reasonably practicable after the execution of this
Agreement, Regions shall file the Registration Statement with the SEC,
provided PALFED has provided, on a reasonably timely basis, all information
concerning PALFED necessary for inclusion in the Registration Statement, and
shall use its reasonable efforts to cause the Registration Statement to
become effective under the 1933 Act as soon as reasonably practicable after
the filing thereof and take any action required to be taken under other
applicable securities Laws in connection with the issuance of
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the shares of Regions Common Stock upon consummation of the Merger. PALFED
shall promptly furnish all information concerning it and the holders of its
capital stock as Regions may reasonably request in connection with such
action. PALFED shall call a Stockholders' Meeting, to be held within
forty-five (45) days after the Registration Statement is declared effective
by the SEC, for the purpose of voting upon approval of (i) this Agreement and
(ii) such other related matters as it deems appropriate. In connection with
the Stockholders' Meeting, (i) PALFED shall mail the Proxy Statement to all
of its stockholders, (ii) the Parties shall furnish to each other all
information concerning them that they may reasonably request in connection
with such Proxy Statement, (iii) the Board of Directors of PALFED shall
recommend (subject to compliance with their fiduciary duties as advised in
writing by counsel to such Board) to its stockholders the approval of this
Agreement, and (iv) the Board of Directors and officers of PALFED shall use
their reasonable efforts to obtain such stockholders' approval (subject to
compliance with their fiduciary duties as advised in writing by counsel to
such Board).
8.2 Nasdaq/NMS Listing. Regions shall file with the NASD a
notification for the listing on the Nasdaq/NMS relating to the proposed
issuance of the shares of Regions Common Stock to be issued to the holders of
PALFED Common Stock pursuant to the Merger.
8.3 Applications. As soon as reasonably practicable after
execution of this Agreement, Regions shall prepare and file, and PALFED shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. Regions shall use
all reasonable efforts to obtain the requisite Consents of all Regulatory
Authorities as soon as reasonably practicable after the filing of the
appropriate applications.
8.4 Agreement as to Efforts to Consummate. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated
by this Agreement, including, without limitation, using its reasonable
efforts to lift or rescind any Order adversely affecting its ability to
consummate the transactions contemplated herein and to cause to be satisfied
the conditions applicable to such Party referred to in Article Nine of this
Agreement. Each Party shall use, and shall cause each of its Subsidiaries to
use, its reasonable efforts to obtain all Consents necessary or desirable for
the consummation of the transactions contemplated by this Agreement.
8.5 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party will keep the
other Party advised of all Material developments relevant to its business and
to consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it and
its Subsidiaries and of their respective financial and legal conditions as
the other Party reasonably requests, provided that such investigation shall
be reasonably related to
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the transactions contemplated hereby and shall not interfere unreasonably
with normal operations. No investigation by a Party shall affect the
representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return all documents and copies
thereof, and all work papers containing confidential information received
from the other Party.
(c) PALFED shall use its reasonable efforts to exercise
its rights under confidentiality agreements entered into with Persons which
were considering an acquisition transaction with PALFED to preserve the
confidentiality of the information relating to PALFED provided to such
parties.
8.6 Press Releases. Prior to the Effective Time, PALFED and
Regions shall consult with each other as to the form and substance of any
press release or other public disclosure materially related to this Agreement
or any other transaction contemplated hereby; provided, however, that nothing
in this Section 8.6 shall be deemed to prohibit any Party from making any
disclosure which its counsel advises as necessary or advisable in order to
satisfy such Party's disclosure obligations imposed by Law.
8.7 Certain Actions. Except with respect to this Agreement and
the transactions contemplated hereby, no PALFED Company nor any Affiliate
thereof nor any investment banker, attorney, accountant, or other
representative (collectively, "Representatives") retained by any PALFED
Company shall directly or indirectly solicit any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties
of PALFED's Board of Directors as advised in writing by counsel to such Board
of Directors, no PALFED Company or any Affiliate or Representative thereof
shall furnish any non-public information that it is not legally obligated to
furnish, negotiate with respect to, or enter into any Contract with respect
to, any Acquisition Proposal, and shall direct and use its reasonable efforts
to cause all of its Representatives not to engage in any of the foregoing,
but PALFED may communicate information about such an Acquisition Proposal to
its stockholders if and to the extent that it is required to do so in order
to comply with its legal obligations. PALFED shall promptly notify Regions
orally and in writing in the event that it receives any inquiry or proposal
relating to any such transaction. PALFED shall immediately cease and cause to
be terminated as of the date of this Agreement any existing activities,
discussions, or negotiations with any Persons conducted heretofore with
respect to any of the foregoing.
8.8 Tax Matters. The Parties agree to use their reasonable
efforts to obtain written opinions of ▇▇▇▇▇▇ & Bird LLP to the effect that
(i) the Merger will constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, (ii) the exchange in the Merger of
PALFED Common Stock for Regions Common Stock will not give rise to gain or
loss
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to the stockholders of PALFED with respect to such exchange (except to the
extent of any cash received), (iii) the exchange or conversion by the holders
of PALFED Options with respect to Regions Common Stock, as contemplated by
Section 3.6 of this Agreement, will not give rise to any gain or loss to such
holder with respect to such exchange; and (iv) each of PALFED and Regions
will be a party to that reorganization within the meaning of Section 368(b)
of the Internal Revenue Code ("Tax Opinions"). In rendering such Tax
Opinions, counsel shall be entitled to rely upon representations of officers
of PALFED and Regions reasonably satisfactory in form and substance to such
counsel. Each of the Parties undertakes and agrees to use its reasonable
efforts to cause the Merger, and to take no action which would cause the
Merger not, to qualify for treatment as a "reorganization" within the meaning
of Section 368(a) of the Internal Revenue Code for Federal income tax
purposes.
8.9 Agreement of Affiliates. PALFED has disclosed in Section 0.9
of the PALFED Disclosure Memorandum each Person whom it reasonably believes
is an "affiliate" of PALFED for purposes of Rule 145 under the 1933 Act.
PALFED shall use its reasonable efforts to cause each such Person to deliver
to Regions not later than 30 days prior to the Effective Time a written
agreement, substantially in the form of Exhibit 30, providing that such
Person will not sell, pledge, transfer, or otherwise dispose of the shares of
PALFED Common Stock held by such Person except as contemplated by such
agreement or by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of Regions Common Stock to be received by
such Person upon consummation of the Merger except in compliance with
applicable provisions of the 1933 Act and the rules and regulations
thereunder and until such time as financial results covering at least 30 days
of combined operations of Regions and PALFED have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. Shares of Regions Common Stock issued to such affiliates of PALFED
in exchange for shares of PALFED Common Stock shall not be transferable until
such time as financial results covering at least 30 days of combined
operations of Regions and PALFED have been published within the meaning of
Section 201.01 of the SEC's Codification of Financial Reporting Policies,
regardless of whether each such affiliate has provided the written agreement
referred to in this Section 8.9 (and Regions shall be entitled to place
restrictive legends upon certificates for shares of Regions Common Stock
issued to affiliates of PALFED pursuant to this Agreement to enforce the
provisions of this Section 8.9). Regions shall not be required to maintain
the effectiveness of the Registration Statement under the 1933 Act for the
purposes of resale of Regions Common Stock by such affiliates.
8.10 Employee Benefits and Contracts. Following the Effective
Time, Regions shall provide generally to officers and employees of the PALFED
Companies, who at or after the Effective Time become employees of a Regions
Company, employee benefits under employee benefit plans (other than stock
option or other plans involving the potential issuance of Regions Common
Stock except as set forth in this Section 8.10), on terms and conditions
which when taken as a whole are substantially similar to those currently
provided by the Regions Companies to their similarly situated officers and
employees. For purposes of participation and vesting (but not accrual of
benefits) under such employee benefit plans, (i) service under any qualified
defined benefit plans of PALFED should be treated as service under Regions'
qualified defined benefit plans, (ii) service under any qualified defined
contribution plans of PALFED shall be treated as service under Regions'
qualified defined contribution plans, and (iii) service under any other
employee benefit plans of PALFED shall be
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treated as service under any similar employee benefit plans maintained by
Regions. Regions also shall cause PALFED and its Subsidiaries to honor all
employment, severance, consulting, and other compensation Contracts disclosed
in Section 0.10 of the PALFED Disclosure Memorandum to Regions between any
PALFED Company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the PALFED Benefit Plans.
8.11 Indemnification.
(a) Subject to the conditions set forth in paragraph (b)
below, for a period of six (6) years after the Effective Time, Regions shall
indemnify, defend, and hold harmless each person entitled to indemnification
from a PALFED Company (each, an "Indemnified Party") against all Liabilities
arising out of actions or omissions occurring at or prior to the Effective
Time (including, without limitation, the transactions contemplated by this
Agreement) to the full extent permitted by South Carolina Law and PALFED's
Articles of Incorporation and Bylaws, in each case as in effect on the date
hereof, including provisions relating to advances of expenses incurred in the
defense of any Litigation. Without limiting the foregoing, in any case in
which approval by PALFED is required to effectuate any indemnification,
Regions shall cause PALFED to direct, at the election of the Indemnified
Party, that the determination of any such approval shall be made by
independent counsel mutually agreed upon between Regions and the Indemnified
Party.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) above, upon learning of any such
Liability or Litigation, shall promptly notify Regions thereof. In the event
of any such Litigation (whether arising before or after the Effective Time),
(i) Regions or PALFED shall have the right to assume the defense thereof and
Regions shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Regions or PALFED elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between Regions or PALFED and the Indemnified Parties,
the Indemnified Parties may retain counsel satisfactory to them, and Regions
or PALFED shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received; provided,
however, that Regions shall be obligated pursuant to this paragraph (b) to
pay for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such Litigation, and (iii) Regions shall not be liable for any settlement
effected without its prior written consent; and provided further that PALFED
shall not have any obligation hereunder to any Indemnified Party when and if
a court of competent jurisdiction shall determine, and such determination
shall have become final, that the indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable Law.
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8.12 State Takeover Laws. Each PALFED Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement
from, or if necessary challenge the validity or applicability of, any
applicable Takeover Laws, including those laws contained in Title 35, Article
2 of the South Carolina Code.
8.13 Articles of Incorporation Provisions. Each PALFED Company
shall take all necessary action to ensure that the entering into of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby do not and will not result in the grant of any rights to
any Person under the Articles of Incorporation, Bylaws, or other governing
instruments of any PALFED Company or restrict or impair the ability of
Regions or any of its Subsidiaries to vote, or otherwise to exercise the
rights of a stockholder with respect to, shares of any PALFED Company that
may be directly or indirectly acquired or controlled by it.
ARTICLE NINE
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties
pursuant to Section 11.6 of this Agreement:
(a) Stockholder Approval. The stockholders of PALFED
shall have approved this Agreement and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law or by the provisions of any governing instruments.
(b) Regulatory Approvals. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be
in full force and effect and all waiting periods required by Law shall have
expired. No Consent so obtained which is necessary to consummate the
transactions as contemplated hereby shall be conditioned or restricted in a
manner which in the reasonable good faith judgment of the Board of Directors
of Regions would so materially adversely impact the economic benefits of the
transaction as contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(c) Consents and Approvals. Each Party shall have
obtained any and all other Consents required for consummation of the Merger
(other than those referred to in Section 9.1(b) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party which,
if not obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party. No Consent obtained
which is necessary to consummate the transactions contemplated hereby shall
be conditioned or restricted in a manner which in the reasonable judgment of
the Board of Directors of Regions would so materially adversely impact the
economic or business benefits of the transactions contemplated by this
Agreement so as to render inadvisable the consummation of the Merger.
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(d) Legal Proceedings. No court or governmental or
Regulatory Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated by
this Agreement.
(e) Registration Statement. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no
action, suit, proceeding, or investigation by the SEC to suspend the
effectiveness thereof shall have been initiated and be continuing, and all
necessary approvals under state securities Laws or the 1933 Act or 1934 Act
relating to the issuance or trading of the shares of Regions Common Stock
issuable pursuant to the Merger shall have been received.
(f) Nasdaq/NMS Listing. The shares of Regions Common
Stock issuable pursuant to the Merger shall have been approved for listing on
the Nasdaq/NMS.
(g) Tax Matters. Each Party shall have received a copy
of the Tax Opinions referred to in Section 8.8 of this Agreement. Each Party
shall have delivered to the other a Certificate, dated as of the date of the
Tax Opinion, signed by its duly authorized officers, to the effect that, to
the best Knowledge and belief of such officers, the statement of facts and
representations made on behalf of the management of such Party, presented to
the legal counsel delivering the Tax Opinions were at the date of such
presentation, true, correct, and complete, and are on the date of such
Certificate, to the extent contemplated by the presentation, true, correct,
and complete, as though such presentation had been made on the date of such
Certificate.
9.2 Conditions to Obligations of Regions. The obligations of
Regions to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Regions pursuant to Section 11.6(a) of
this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of PALFED
set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of PALFED set forth in Section 5.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimis in amount). The
representations and warranties of PALFED set forth in Sections 5.17, 5.18,
and 5.19 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of PALFED set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.17, 5.18, and
5.19) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on PALFED; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" shall be deemed not to include such qualifications.
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(b) Performance of Agreements and Covenants. Each and
all of the agreements and covenants of PALFED to be performed and complied
with pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied.
(c) Certificates. PALFED shall have delivered to Regions
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its duly authorized officers, to the effect that the conditions of its
obligations set forth in Sections 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
PALFED's Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Regions and its counsel
shall request.
(d) Claims Letters. Each of the directors and executive
officers of PALFED shall have executed and delivered to Regions letters in
substantially the form of Exhibit 4 to this Agreement.
(e) Legal Opinion. Regions shall have received a written
opinion, dated as of the Effective Time, of counsel to PALFED, in
substantially the form of Exhibit 5 to this Agreement.
(f) Affiliate Agreements. Regions shall have received
from each affiliate of PALFED the affiliates agreement referred to in Section
8.9 of this Agreement.
(g) Pooling Treatment. PALFED shall not have taken any
action that would prevent the Merger from qualifying for pooling-of-interests
accounting treatment under Accounting Principles Board Opinion No. 16 if
closed and consummated in accordance with this Agreement.
9.3 Conditions to Obligations of PALFED. The obligations of
PALFED to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by PALFED pursuant to Section 11.6(b) of
this Agreement:
(a) Representations and Warranties. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of Regions
set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Regions set forth in Section 6.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Regions set forth in Section 6.10 of
this Agreement shall be true and correct in all material respects. There
shall not exist inaccuracies
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in the representations and warranties of Regions set forth in this Agreement
(including the representations and warranties set forth in Sections 6.3 and
6.10) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Regions; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants. Each and
all of the agreements and covenants of Regions to be performed and complied
with pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied with
in all Material respects.
(c) Certificates. Regions shall have delivered to PALFED
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its duly authorized officers, to the effect that the conditions of its
obligations set forth in Sections 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
Regions' Board of Directors and stockholders evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, as appropriate, and the consummation of the
transactions contemplated hereby, all in such reasonable detail as PALFED and
its counsel shall request.
(d) Fairness Opinion. PALFED shall have received a
letter from Sterne, Agee & ▇▇▇▇▇, Inc. or another financial adviser selected
by PALFED dated not more than five (5) days prior to the date of the Proxy
Statement to the effect that in the opinion of such firm, the Exchange Ratio
is fair to the stockholders of PALFED from a financial point of view.
(e) Legal Opinion. PALFED shall have received a written
opinion, dated as of the Effective Time, of counsel to Regions, in
substantially the form of Exhibit 6 to this Agreement.
ARTICLE TEN
TERMINATION
10.1 Termination. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
stockholders of PALFED, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of
Regions and the Board of Directors of PALFED; or
(b) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth
in Section 9.2(a) of this Agreement in the case of PALFED and Section 9.3(a)
in the case of Regions or in Material breach of any covenant or other
agreement
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contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within thirty (30) days after the
giving of written notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of PALFED and Section 9.3(a) of this
Agreement in the case of Regions; or
(c) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth
in Section 9.2(a) of this Agreement in the case of PALFED and Section 9.3(a)
in the case of Regions or in Material breach of any covenant or other
agreement contained in this Agreement) in the event of a Material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within thirty (30) days after the
giving of written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required for consummation
of the Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any action taken
by such authority is not appealed within the time limit for appeal, or (ii)
the stockholders of PALFED fail to vote their approval of this Agreement and
the transactions contemplated hereby as required by the Laws of the State of
South Carolina at the PALFED Stockholders' Meeting where the transactions
were presented to such stockholders for approval and voted upon; or
(e) By the Board of Directors of PALFED or by the Board
of Directors of Regions in the event that the Merger shall not have been
consummated by April 30, 1998, in each case only if the failure to consummate
the transactions contemplated hereby on or before such date is not caused by
any breach of this Agreement by the Party electing to terminate pursuant to
this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth
in Section 9.2(a) of this Agreement in the case of PALFED and Section 9.3(a)
in the case of Regions or in Material breach of any covenant or other
agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the
Merger (other than as contemplated by Section 10.1(d) of this Agreement)
cannot be satisfied or fulfilled by the date specified in Section 10.1(e) of
this Agreement as the date after which such Party may terminate this
Agreement; or
(g) By the Board of Directors of PALFED, if it determines
by a vote of a majority of the members of its entire Board, at any time
during the five business-day period commencing on the day immediately
following the Determination Date, if the Average Closing Price shall be less
than $30.00; subject, however, to the following three sentences. If PALFED
refuses to consummate the Merger pursuant to this Section 10.1(g), it shall
give prompt written notice thereof to Regions; provided, that such notice of
election to terminate may be withdrawn
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at any time within the aforementioned five business-day period. During the
three business-day period commencing with its receipt of such notice, Regions
shall have the option to elect to increase the Exchange Ratio to equal the
quotient obtained by dividing (1) the product of $30.00 and the Exchange
Ratio (as then in effect) by (2) the Average Closing Price. If Regions makes
an election contemplated by the preceding sentence, within such three
business-day period, it shall give prompt written notice to PALFED of such
election and the revised Exchange Ratio, whereupon no termination shall have
occurred pursuant to this Section 10.1(g) and this Agreement shall remain in
effect in accordance with its terms (except as the Exchange Ratio shall have
been so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 10.1(g).
For purposes of this Section 10.1(g), the following terms shall
have the meanings indicated:
"Average Closing Price" shall mean the average of the
daily last sales prices of Regions Common Stock as reported on
the Nasdaq/NMS (as reported by The Wall Street Journal or, if not
reported thereby, another authoritative source as chosen by
Regions) for the ten consecutive full trading days in which such
shares are traded on the Nasdaq/NMS ending at the close of
trading on the Determination Date.
"Determination Date" shall mean the seventh full trading
day immediately preceding the date of the anticipated Closing.
10.2 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 10.1 of this Agreement, this Agreement
shall become void and have no effect, except that (i) the provisions of this
Section 10.2 and Article Eleven and Section 8.5(b) of this Agreement shall
survive any such termination, and (ii) a termination pursuant to Sections
10.1(b), 10.1(c), or 10.1(f) of this Agreement shall not relieve the
breaching Party from Liability for an uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. Each of the Support Agreements shall be governed by its own
terms as to its termination.
10.3 Non-Survival of Representations and Covenants. The
respective representations, warranties, obligations, covenants, and
agreements of the Parties shall not survive the Effective Time except this
Section 10.3 and Articles Two, Three, Four, and Eleven and Sections 8.9, and
8.11 of this Agreement.
ARTICLE ELEVEN
MISCELLANEOUS
11.1 Definitions. Except as otherwise provided herein, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
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"Acquisition Proposal" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party or
any of its Subsidiaries or the acquisition of a substantial equity interest
in, or a substantial portion of the assets of, such Party or any of its
Subsidiaries.
"Affiliate" of a Person shall mean (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by, or
under common control with such Person, (ii) any officer, director, partner,
employer, or direct or indirect beneficial owner of any ten percent (10%) or
greater equity or voting interest of such Person, or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"Agreement" shall mean this Agreement and Plan of Merger, including
each of the Support Agreements and the other Exhibits delivered pursuant
hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of 1956,
as amended.
"Business Combination" shall mean an acquisition of, merger or
combination with, share exchange involving any class of voting stock of, sale
of more than fifty percent (50%) of the consolidated assets by, or other
business combination involving, or tender offer for or sale or issuance of
any equity securities involving an acquisition by a third-party of more than
fifty percent (50%) of the voting stock of, PALFED, other than the formation
of a newly organized holding company for PALFED in which the shares of PALFED
Common Stock are exchanged for shares of the holding company on a basis that
does not cause the respective beneficial interests of each stockholder to
change or transactions with a Regions Company.
"Closing" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.2 of this Agreement.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant
to any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction,
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understanding, or undertaking of any kind or character, or other document to
which any Person is a party or that is binding on any Person or its capital
stock, Assets, or business.
"Default" shall mean (i) any breach or violation of or default under
any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a breach
or violation of or default under any Contract, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke, change
the current terms of, or renegotiate, or to accelerate, increase, or impose
any Liability under, any Contract, Order, or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"Effective Time" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.3 of this Agreement.
"Environmental Laws" shall mean all Laws which are administered,
interpreted, or enforced by the United States Environmental Protection Agency
and state and local agencies with jurisdiction over pollution or protection
of the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Plan" shall have the meaning provided in Section 5.12 of this
Agreement.
"Exchange Agent" shall have the meaning provided in Section 4.1 of
this Agreement.
"Exchange Ratio" shall have the meaning provided in Section 3.1(c)
of this Agreement.
"Exhibits" 1 through 6, 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.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., or
any similar federal, state, or local Law.
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"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR Act" shall mean Section 7A of the ▇▇▇▇▇▇▇ Act, as added by
Title II of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Internal Revenue Code" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"Knowledge" as used with respect to a Person shall mean the
knowledge after due inquiry of the chairman, president, chief financial
officer, chief accounting officer, chief credit officer, general counsel (not
including outside counsel), any assistant or deputy general counsel, or any
senior or executive vice president of such Person.
"Law" shall mean any code, law, ordinance, regulation, reporting, or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities, or business, including, without limitation, those promulgated,
interpreted, or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including,
without limitation, costs of investigation, collection, and defense), claim,
deficiency, guaranty, or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection or
deposit in the ordinary course of business) of any type, whether accrued,
absolute, or contingent, liquidated or unliquidated, matured or unmatured, or
otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, (ii) for depository institutions, pledges to
secure deposits and other Liens incurred in the ordinary course of the
banking business, and (iii) Liens which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on a Party.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability, but shall not include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities.
"Loan Property" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or Subsidiary
holds a security interest, and, where
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required by the context, includes the owner or operator of such property, but
only with respect to such property.
"Material" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, is likely to have a Material adverse impact on (i) the financial
position, business, results of operations or prospects of such Party and its
Subsidiaries, taken as a whole, or (ii) the ability of such Party to perform
its obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "material adverse
effect" shall not be deemed to include the impact of (a) changes in banking
and similar Laws of general applicability or interpretations thereof by
courts or governmental authorities, (b) changes in GAAP or regulatory
accounting principles generally applicable to banks, savings associations,
and their holding companies, (c) actions and omissions of a Party (or any of
its Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, or (d) the Merger and
compliance with the provisions of this Agreement on the operating performance
of the Parties.
"Merger" shall mean the merger of PALFED with and into Regions
referred to in Section 1.1 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
"Nasdaq/NMS" shall mean the National Market System of the National
Association of Securities Dealers, Inc. Automated Quotations System.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PALFED Benefit Plans" shall have the meaning set forth in Section
5.13 of this Agreement.
"PALFED Common Stock" shall mean the $1.00 par value common stock of
PALFED.
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"PALFED Companies" shall mean, collectively, PALFED and all PALFED
Subsidiaries.
"PALFED Disclosure Memorandum" shall mean the written information
entitled "PALFED Disclosure Memorandum" delivered prior to the date of this
Agreement, to Regions describing in reasonable detail the matters contained
therein and, with respect to each disclosure made therein, specifically
referencing each Section of this Agreement under which such disclosure is
being made.
"PALFED Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of PALFED as
of June 30, 1997, and as of December 31, 1996 and 1995, and the related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for the six months ended June
30, 1997, and for each of the three fiscal years ended December 31, 1996,
1995, and 1994, included in the PALFED Disclosure Memorandum, and (ii) the
consolidated balance sheets of PALFED (including related notes and schedules,
if any) and related statements of income, changes in stockholders' equity,
and cash flows (including related notes and schedules, if any) with respect
to periods ended subsequent to June 30, 1997.
"PALFED Preferred Stock" shall mean the no par value preferred stock
of PALFED.
"PALFED Stock Plans" shall mean the stock plans of PALFED listed in
Section 5.13 of the PALFED Disclosure Memorandum.
"PALFED Subsidiaries" shall mean the Subsidiaries of PALFED, which
shall include the PALFED Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of PALFED in the future and owned by
PALFED at the Effective Time.
"Palmetto Federal" shall mean Palmetto Federal Savings Bank of South
Carolina, a federal stock savings bank and wholly-owned subsidiary of PALFED.
"Participation Facility" shall mean any facility in which the Party
in question or any of its Subsidiaries participates in the management and,
where required by the context, includes the owner or operator or such
property, but only with respect to such property.
"Party" shall mean either PALFED or Regions and "Parties" shall mean
both PALFED and Regions.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party
or that is or may be binding upon or inure to the benefit of any Person or
its securities, Assets, or business.
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"Person" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in
a representative capacity.
"Proxy Statement" shall mean the proxy statement used by PALFED to
solicit the approval of its stockholders of the transactions contemplated by
this Agreement and shall include the prospectus of Regions relating to the
shares of Regions Common Stock to be issued to the stockholders of PALFED.
"Regions Common Stock" shall mean the $.625 par value common stock
of Regions.
"Regions Companies" shall mean, collectively, Regions and all
Regions Subsidiaries.
"Regions Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Regions as of June 30, 1997, and the restated consolidated statements of
condition (including related notes and schedules, if any) of Regions as of
December 31, 1996 and 1995, the related statements of income, changes in
stockholders' equity, and cash flows (including related notes and schedules,
if any) for the nine months ended June 30, 1997 and the related restated
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) for each of the three years
ended December 31, 1996, 1995, and 1994, as filed by Regions in SEC Documents
and reflecting the acquisition of First National Bancorp accounted for as a
pooling of interests and (ii) the consolidated statements of condition of
Regions (including related notes and schedules, if any) and related
statements of income, changes in stockholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to June 30, 1997.
"Regions Subsidiaries" shall mean the Subsidiaries of Regions.
"Registration Statement" shall mean the Registration Statement on
Form S-4, or other appropriate form, filed with the SEC by Regions under the
1933 Act 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 Thrift Supervision,
the Office of the Comptroller of the Currency, the FDIC, all state regulatory
agencies having jurisdiction over the Parties and their respective
Subsidiaries, the NASD, and the SEC.
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"SCBCA" shall mean the South Carolina Business Corporation Act.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a Party or any of its Subsidiaries with
any Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of any Regulatory Authority promulgated thereunder.
"South Carolina Code" shall mean the Code of Laws of South
Carolina, 1976.
"Stock Option Agreement" shall mean the Stock Option Agreement of
even date herewith issued to Regions by PALFED, substantially in the form of
Exhibit 1.
"Stockholders' Meeting" shall mean the meeting of the stockholders
of PALFED to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or adjournments thereof.
"Subsidiary" or collectively "Subsidiaries" shall mean all those
corporations, banks, associations, or other entities of which the entity in
question owns or controls fifty percent (50%) or more of the outstanding
equity securities either directly or through an unbroken chain of entities as
to each of which fifty percent (50%) or more of the outstanding equity
securities is owned directly or indirectly by its parent; provided, however,
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.
"Support Agreements" shall mean the various Support Agreements, each
in substantially the form of Exhibit 2.
"Surviving Corporation" shall mean Regions as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean any federal, state, county, local or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, of any nature whatsoever,
including interest, penalties, and additions imposed thereon or with respect
thereto.
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred
by it or on its behalf in connection with the
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transactions contemplated hereunder, including filing, registration and
application fees, printing fees, and fees and expenses of its own financial
or other consultants, investment bankers, accountants, and counsel, except
that Regions shall bear and pay the filing fees payable in connection with
the Registration Statement and the Proxy Statement and printing costs
incurred in connection with the printing of the Registration Statement and
the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated damages for the
willful breach by a Party of the terms of this Agreement or otherwise limit
the rights of the nonbreaching Party.
11.3 Brokers and Finders. Except for Sterne, Agee & ▇▇▇▇▇, Inc.
as to PALFED, each of the Parties represents and warrants that neither it nor
any of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby. In
the event of a claim by any broker or finder based upon his or its
representing or being retained by or allegedly representing or being retained
by PALFED or Regions, each of PALFED and Regions, as the case may be, agrees
to indemnify and hold the other Party harmless of and from any Liability in
respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements
or understandings with respect thereto, written or oral. Nothing in this
Agreement, expressed or implied, is intended to, or shall, confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Sections 8.9 and 8.11 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided,
however, that after any such approval by the holders of PALFED Common Stock,
there shall be made no amendment decreasing the consideration to be received
by PALFED stockholders without the further approval of such stockholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, Regions, acting
through its Board of Directors, chief executive officer, vice chairman, or
other authorized officer, shall have the right to waive any Default in the
performance of any term of this Agreement by PALFED, to waive or extend the
time for the compliance or fulfillment by PALFED of any and all of its
obligations under this Agreement, and to waive any or all of the conditions
precedent to the obligations of Regions under this Agreement, except any
condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly
authorized officer of Regions.
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(b) Prior to or at the Effective Time, PALFED, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Regions, to waive or extend the time for the
compliance or fulfillment by Regions of any and all of their obligations
under this Agreement, and to waive any or all of the conditions precedent to
the obligations of PALFED under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver
shall be effective unless in writing signed by a duly authorized officer of
PALFED.
11.7 Assignment. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests, or obligations hereunder
shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of, and be enforceable by, the Parties and their respective
successors and assigns.
11.8 Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if
delivered by hand, by facsimile transmission, by registered or certified
mail, postage pre-paid, or by courier or overnight carrier, to the persons at
the addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
received:
PALFED: PALFED, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Copy to Counsel: ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Regions: REGIONS FINANCIAL CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice Chairman and Executive Financial
Officer
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Copy to Counsel: REGIONS FINANCIAL CORPORATION
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇.
General Counsel and Corporate
Secretary
11.9 Governing Law. Except to the extent the laws of the State of
South Carolina apply to the Merger, this Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware, without
regard to any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.
ATTEST: PALFED, INC.
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: REGIONS FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Corporate Secretary Regional President
[CORPORATE SEAL]
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