<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
July 26, 1994
------------------------------------------------
Date of Report (Date of earliest event reported)
UNION PLANTERS CORPORATION
--------------------------------------------------
(Exact name of registrant as specified in charter)
TENNESSEE 0-6919 62-0859007
- - ------------------------ ------------- --------------------
(State of incorporation) (Commission (I.R.S. Employer
File Number) Identification No.)
UNION PLANTERS ADMINISTRATIVE CENTER
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (901) 383-6000
Not Applicable
-------------------------------------------------------------
(Former name or former address, if changed since last report).
<PAGE> 2
ITEM 5. OTHER INFORMATION
Union Planters Corporation (the Corporation) has entered into a definitive
agreement to acquire Grenada Sunburst System Corporation (GSSC). This
acquisition is considered probable and meets the test for a significant
subsidiary. Item 7 below presents the audited consolidated financial statements
of GSSC as of and for the three years ended December 31, 1993, and the
unaudited interim consolidated financial statements as of and for the three
months ended March 31, 1994. Reference is also made to the Corporation's
Current Report on Form 8-K dated May 19, 1994, as amended, which contains pro
forma financial statements reflecting completed and pending acquisitions, and
the Current Report on Form 8-K dated July 1, 1994, announcing the signing of a
definitive agreement to acquire GSSC. The Current Report on Form 8-K dated May
19, 1994 has been amended to include GSSC in the pro forma information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS
(c) Exhibits
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession
(a) Agreement and Plan of Reorganization dated as of July 1, 1994
between Union Planters Corporation, GSSC Acquisition Company,
Inc., Grenada Sunburst System Corporation, Sunburst Bank,
Mississippi and Sunburst Bank
23 Consents of Experts and Counsel
(a) Consent of KPMG Peat Marwick to incorporate their opinion into
various registration statements for benefit plans and dividend
reinvestment plan
(b) Consent of KPMG Peat Marwick to incorporate their opinion into
this Current Report on Form 8-K dated July 26, 1994
99 Additional Exhibits
(a) Grenada Sunburst System Corporation and Subsidiaries Consolidated
Financial Statements as of and for the Three Years Ended December 31,
1993
Page
------------
1. Consolidated Balance Sheets as of
December 31, 1993 and 1992 1
2. Consolidated Statements of Income for the
Years Ended December 31, 1993, 1992, and 1991 2
3. Consolidated Statements of Changes in
Stockholders' Equity for the Years Ended
December 31, 1993, 1992, and 1991 3
4. Consolidated Statements of Cash Flows for
the Years Ended December 31, 1993, 1992,
and 1991 4
5. Notes to Consolidated Financial Statements 5
2
<PAGE> 3
(b) Grenada Sunburst System Corporation and Subsidiaries Unaudited Interim
Consolidated Financial Statements as of and for the Three Months Ended
March 31, 1994
and 1993
Page
------------
1. Consolidated Balance Sheets, March 31, 1994,
December 31, 1993, and March 31, 1993 1
2. Consolidated Statements of Income, Quarters
Ended March 31, 1994 and 1993, and
December 31, 1993 2
3. Consolidated Statements of Changes in
Stockholders' Equity, Three Months Ended
March 31, 1994 and 1993 3
4. Consolidated Statements of Cash Flows, Three
Months Ended March 31, 1994 and 1993 4
5. Notes to Consolidated Financial Statements 5
3
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Union Planters Corporation
---------------------------------
Registrant
Date: July 26, 1994 /s/ M. Kirk Walters
--------------- ---------------------------------
M. Kirk Walters
Senior Vice President, Treasurer,
and Chief Accounting Officer
4
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EXHIBIT 2
Agreement and Plan of Reorganization dated as of July 1, 1994 between Union
Planters Corporation, GSSC Acquisition Company, Inc., and Grenada Sunburst
System Corporation, Sunburst Bank, Mississippi and Sunburst Bank.
<PAGE> 2
AGREEMENT AND PLAN OF REORGANIZATION
DATED July 1, 1994
Between
UNION PLANTERS CORPORATION and
GSSC ACQUISITION COMPANY, INC.
and
GRENADA SUNBURST SYSTEM CORPORATION,
SUNBURST BANK, MISSISSIPPI and
SUNBURST BANK
<PAGE> 3
TABLE OF CONTENTS
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AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . 3
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
ARTICLE 2
TERMS OF THE REORGANIZATION . . . . . . . . . . . . . . . . . 10
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------
2.2 Certificate of Incorporation, Bylaws, Directors, Officers and Name of the Surviving Corporation . 10
-----------------------------------------------------------------------------------------------
(a) Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------
(b) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
------
(c) Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------
(d) Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----
2.3 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
--------------------
2.4 Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
---------------------------
2.5 UPC's Right to Revise the Structure of the Transaction . . . . . . . . . . . . . . . . . . . . . . 11
------------------------------------------------------
2.6 Holding Period of UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
----------------------------------
2.7 GSSC Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------------
ARTICLE 3
DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . 14
3.1 Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------
(a) Satisfaction of Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 14
-------------------------------------
(b) Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
----------------------------
(c) Conversion of Shares of INTERIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-------------------------------
(d) Conversion and Cancellation of Shares of GSSC . . . . . . . . . . . . . . . . . . . . . . 15
---------------------------------------------
(e) Conversion and Exchange of GSSC Shares; Exchange Ratio . . . . . . . . . . . . . . . . . 15
------------------------------------------------------
(f) Mechanics of Payment of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------------------------
(g) Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
(h) Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
---------------------
(i) Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------------
(j) Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
-------------------------
(k) Appraisal Rights of GSSC Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------------------------
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-------------------------
3.3 Price Based Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-----------------------
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM . . . . . . . . . . . 23
4.1 Organization and Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
------------------------------------
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . 23
-----------------------------------------------------------------------------
4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------
4.4 Government and Shareholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------------------
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
--------------
4.6 UPC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------------
4.7 Exchange Act and Listing Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
--------------------------------
4.8 The UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------------------
4.9 Licenses, Franchise, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------
4.10 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------------------------
4.11 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------
4.12 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------
4.13 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------------------------
4.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------
4.15 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------------------------
4.16 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------------
4.17 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------
4.18 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-------
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF GSSC, SBM AND SBL . . . . . . . . . . . 32
5.1 Organization and Qualification of GSSC and Subsidiaries . . . . . . . . . . . . . . . . . . . . . 32
-------------------------------------------------------
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . 33
-----------------------------------------------------------------------------
5.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
------------
5.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
------------------------------
5.5 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-------------------
5.6 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-----------------
5.7 GSSC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
-------------------------
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------------------
5.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------
5.11 GSSC Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------
5.12 Condition of Fixed Assets and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
---------------------------------------
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
-----------
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------
5.15 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-------------------
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
---------
5.17 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
----------------------------
5.18 Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
---------------------
5.19 Capitalization of GSSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
----------------------
5.20 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
--------------
5.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
----------
5.22 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
----------------------------------
5.23 Allowance for Possible Loan or ORE Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-----------------------------------------
5.24 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
--------------------
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5.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
----------------------
5.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
------------------
5.27 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
--------------------------
5.28 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-------
5.29 Exchange Act and Listing Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
--------------------------------
5.30 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------------------------
ARTICLE 6
COVENANTS OF UPC . . . . . . . . . . . . . . . . . . . . 58
6.1 Proxy Statement; UPC Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
-----------------------------------------
6.2 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
--------------------
6.3 Reservation, Listing and Registration of UPC Common Stock under the Securities Laws . . . . . . . .59
-----------------------------------------------------------------------------------
6.4 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .60
-----------------
6.5 Conduct of Business; Notice of Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . .61
---------------------------------------------
ARTICLE 7
COVENANTS OF GSSC, SBM AND SBL . . . . . . . . . . . . . . . . 61
7.1 Proxy Statement; GSSC Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . .61
------------------------------------------
7.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
--------------------------------------------
7.3 Conduct of Business -- Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-----------------------------------------
7.4 Conduct of Business -- Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
--------------------------------------
ARTICLE 8
CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . 71
8.1 Conditions to the Obligations of GSSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
---------
(d) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
-------------
(e) Opinion of UPC's and INTERIM's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 73
--------------------------------------
(f) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
----------------
(g) Tax Opinion of McDonnell Boyd . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
-----------------------------
8.2 Conditions to the Obligations of UPC and INTERIM . . . . . . . . . . . . . . . . . . . . . . . . . 74
------------------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
---------
(d) Destruction of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
-----------------------
(e) Inspections Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
---------------------
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
--------------------------
(g) Opinion of GSSC's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
-------------------------
(h) Other Business Combinations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
--------------------------------
(i) Maintenance of Certain Covenants, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 78
-------------------------------------
(j) Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
----------------------
(k) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
-----------
(l) Pooling of Interests Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . 79
-----------------------------------------
(m) Receipt of Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
----------------------------
(n) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
----------------
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8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
----------------------------------------
(a) No Pending or Threatened Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
-------------------------------
(b) Governmental Approvals and Acquiescence Obtained . . . . . . . . . . . . . . . . . . . . 80
------------------------------------------------
(c) Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
----------------------
(d) GSSC Stockholder and UPC Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . 80
---------------------------------------------
ARTICLE 9
TERMINATION . . . . . . . . . . . . . . . . . . . . . 81
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
-----------
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
---------------------
ARTICLE 10
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . 84
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
-------
10.2 Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
-------------------------------------
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
-------------
10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
------------
10.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
------------
10.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
---------
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
----------------
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
------------
10.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
-------------------------------------
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
--------------
10.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
-------------------
10.12 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
-------------------
10.13 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
------------------
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
---------------
10.15 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 88
------------------------------------------
10.16 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
---------
10.17 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
-------------------
10.18 Materiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
-----------
</TABLE>
iv
<PAGE> 7
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement") dated this 1st day of July, 1994, by and between UNION PLANTERS
CORPORATION ("UPC"), a corporation chartered and existing under the laws of the
State of Tennessee which is registered both as a bank holding company and a
savings and loan holding company and whose principal offices are located at
7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee 38018; GSSC
ACQUISITION COMPANY, INC. ("INTERIM"), a corporation chartered and existing
under the laws of the State of Delaware, whose principal place of business is
located at 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee
38018, and which is a wholly-owned subsidiary of UPC; GRENADA SUNBURST SYSTEM
CORPORATION ("GSSC" or "Surviving Corporation" as the context may require), a
corporation chartered and existing under the laws of the State of Delaware
which is a registered bank holding company and whose principal offices are
located at 2000 Gateway, Grenada, Grenada County, Mississippi 38901; SUNBURST
BANK, MISSISSIPPI ("SBM"), a Mississippi banking corporation, chartered and
existing under the laws of the State of Mississippi, having its main office at
2000 Gateway, Grenada, Grenada County, Mississippi 38901, and which is a
wholly- owned subsidiary of GSSC; and SUNBURST BANK ("SBL"), a Louisiana
banking corporation, chartered and existing under the laws of the State of
Louisiana, having its main office at 8440 Jefferson Highway (Post Office Box
2710), Baton Rouge, East Baton Rouge Parish, Louisiana 70821, and which is a
wholly-owned subsidiary of GSSC.
UPC, INTERIM, GSSC, SBM and SBL are sometimes referred to herein as the
"Parties."
RECITALS
A. GSSC is the beneficial owner and holder of record of 3,465,440
shares of the common stock, $2.50 par value per share, of SBM which constitute
all of the shares of common stock of SBM issued and outstanding (the "SBM
Common Stock"), and 5,000,000 shares of the common stock, $1.00 par value per
share, of SBL which constitute all of the shares of common stock of SBL issued
and outstanding (the "SBL Common Stock") and desires to have itself, SBM and
SBL acquired by UPC on the terms and subject to the conditions set forth in
this Reorganization Agreement and the accompanying Plan of Merger (attached
hereto as Exhibit A) (the "Plan of Merger").
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 1
<PAGE> 8
B. UPC is the beneficial owner and holder of record of 1,000
shares of the common stock, $.01 par value per share, of INTERIM which
constitute all of the shares of common stock of INTERIM issued and outstanding
(the "INTERIM Common Stock"), and desires to acquire GSSC, SBM and SBL on the
terms and subject to the conditions set forth in this Reorganization Agreement
and the accompanying Plan of Merger.
C. The Boards of Directors of GSSC, SBM and SBL deem it desirable
and in the best interests of the stockholders of GSSC (the "GSSC Stockholders")
that INTERIM be merged with and into GSSC (which would survive the merger as
the Surviving Corporation, as defined herein) on the terms and subject to the
conditions set forth in this Reorganization Agreement and in the manner
provided in this Reorganization Agreement and the Plan of Merger (the
"Merger").
D. The Boards of Directors of UPC and INTERIM deem it desirable
and in the best interests of UPC and INTERIM and the shareholders of UPC (the
"UPC Shareholders") that INTERIM be merged with and into GSSC on the terms and
subject to the conditions set forth in this Reorganization Agreement and in the
manner provided in this Reorganization Agreement and the Plan of Merger.
E. The respective Boards of Directors of UPC, INTERIM, GSSC, SBM
and SBL have each adopted (or will each adopt) resolutions setting forth and
adopting this Reorganization Agreement and the Plan of Merger, and have
directed that this Reorganization Agreement and the Plan of Merger and all
resolutions adopted by said Boards of Directors and by the GSSC Stockholders
and the UPC Shareholders related to this Reorganization Agreement, be submitted
with appropriate applications to, and filed with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") and such other regulatory
agencies or authorities as may be necessary in order to obtain all governmental
authorizations required to consummate the proposed Merger and the transactions
contemplated in this Reorganization Agreement in accordance with this
Reorganization Agreement, the Plan of Merger and applicable law.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 2
<PAGE> 9
AGREEMENT
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Reorganization
Agreement, the following terms have the definitions indicated:
"AFFILIATE" of a party means any Person or other legal entity
directly or indirectly controlling, controlled by or under common Control, as
that term is defined herein, with that party.
"APPLICABLE ENVIRONMENTAL LAWS" shall have the meaning
assigned to such term in Section 5.15(a) of this Reorganization Agreement.
"AUDITED FINANCIAL STATEMENTS OF GSSC" shall have the meaning
assigned to such term in Section 5.7 of this Reorganization Agreement.
"BALANCE SHEET DATE" shall have the meaning assigned to such
term in Section 5.8 of this Reorganization Agreement.
"BHCA" shall mean the Bank Holding Company Act of 1956, as
amended.
"BROKERED DEPOSITS" shall mean all Deposits of SBM and SBL for
which SBM or SBL have paid a commission or an interest rate substantially above
that paid by SBM or SBL to the general depositors of SBM or SBL, respectively.
"BUSINESS DAY" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a federal or state holiday generally recognized
by banks in any of Mississippi, Louisiana or Tennessee.
"CERCLA" shall have the meaning set forth in Section 5.15(a)
of this Reorganization Agreement.
"CLOSING" shall have the meaning assigned to such term in
Section 3.1(a) of this Reorganization Agreement.
"CLOSING DATE" shall have the meaning assigned to such term in
Section 3.2 of this Reorganization Agreement.
"COMPTROLLER" shall mean the Office of the Comptroller of the
Currency, or any successor thereto.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 3
<PAGE> 10
"CONSIDERATION" shall mean the value to be received by the
GSSC Record Holders in exchange for their GSSC Common Stock, such value to be
determined as provided in Article 3, Section 3.1(e), of this Reorganization
Agreement.
"CONTROL" shall have the meaning assigned to such term in
Section 2(a)(2) of the Bank Holding Company Act of 1956, as amended.
"DELAWARE CODE" shall mean the Delaware Code (1974 Revision),
as amended.
"DEPOSITS" shall mean all deposits (including, but not limited
to, certificates of deposit, savings accounts, NOW accounts and checking
accounts) of SBM and SBL.
"EFFECTIVE DATE OF THE MERGER" shall mean that date on which
the Effective Time of the Merger shall have occurred.
"EFFECTIVE TIME OF THE MERGER" shall have the meaning assigned
in Section 3.3 of the Plan of Merger and Section 3.1(b) of this Reorganization
Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXCHANGE AGENT" shall mean Union Planters National Bank,
Memphis, Tennessee, acting through its Corporate Trust Department.
"EXCHANGE RATIO" shall have the meaning assigned to such term
in Section 3.1(e) of this Reorganization Agreement.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FEDERAL RESERVE" shall mean the Board of Governors of the
Federal Reserve System and shall include the Federal Reserve Bank of St. Louis
acting under delegated authority.
"FIXED ASSETS" shall mean the furniture, fixtures and
equipment of the referenced Party.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL APPROVALS" shall have the meaning assigned to
such term in Section 4.4 of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 4
<PAGE> 11
"GSSC" means Grenada Sunburst System Corporation, a
corporation chartered and existing under the laws of the State of Delaware
which is a registered bank holding company and whose principal offices are
located at 2000 Gateway, Grenada, Grenada County, Mississippi 38901.
"GSSC COMMON STOCK" has the meaning assigned to such term in
Section 3.1(d) of this Reorganization Agreement.
"GSSC COMPANIES" shall mean GSSC and all of its Subsidiaries,
including SBM, SBL, all SBM Subsidiaries and all SBL Subsidiaries.
"GSSC EMPLOYEE PLANS" shall mean any pension plans, profit
sharing plans, deferred compensation plans, stock option plans, cafeteria
plans, and any other such or related benefit plans or arrangements offered or
funded by GSSC or any GSSC Subsidiary, including, but not limited to SBM or
SBL, to or for the benefit of the officers, directors or employees of GSSC or
any GSSC Subsidiary.
"GSSC RECORD HOLDERS" means the holders of record of all of
the issued and outstanding shares of GSSC Common Stock immediately prior to the
Effective Time of the Merger.
"GSSC STOCKHOLDERS" shall have the meaning assigned to such
term in Recital C of this Reorganization Agreement.
"GSSC STOCKHOLDERS MEETING" shall mean the meeting of the GSSC
Stockholders to be held pursuant to Section 7.1 of this Reorganization
Agreement, including any adjournment or adjournments thereof.
"GSSC STOCK OPTIONS" shall have the meaning assigned to such
term in Section 2.7 of this Reorganization Agreement.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended and recodified.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in
Section 5.15(a) of this Reorganization Agreement.
"INDEX GROUP" shall have the meaning assigned to such term in
Section 3.3 of this Reorganization Agreement.
"INDEX PRICE" shall have the meaning assigned to such term in
Section 3.3 of this Reorganization Agreement.
"INTERIM" shall mean GSSC Acquisition Company, Inc., a
corporation chartered and existing under the laws of the State of
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 5
<PAGE> 12
Delaware, whose principal place of business is located at 7130 Goodlett Farms
Parkway, Memphis, Shelby County, Tennessee 38018, and which is a wholly-owned
subsidiary of UPC formed solely to effect the Merger.
"INTERIM COMMON STOCK" shall have the meaning assigned to such
term in Section 3.1(c) of this Reorganization Agreement.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended.
"LOFI" shall mean the State of Louisiana Office of Financial
Institutions.
"MERGER" shall, as described in Section 2.1 of this
Reorganization Agreement, mean the merger of INTERIM with and into GSSC, which
shall survive the Merger as the Surviving Corporation.
"MISSISSIPPI CODE" shall mean the Mississippi Code Annotated,
as amended.
"MISSISSIPPI COMMISSIONER" shall mean the Commissioner of
Banks of the State of Mississippi.
"MSBD" shall mean the Mississippi Department of Banking and
Consumer Finance.
"NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotation System or its successor, upon which shares of the
GSSC Common Stock are listed for trading.
"NYSE" shall mean the New York Stock Exchange, or its
successor, upon which shares of the UPC Common Stock are listed for trading.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"OFFICER" shall have the meaning set forth in Section 5.8(k)
of this Reorganization Agreement.
"ORE" shall have the meaning set forth in Section 5.23 of this
Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 6
<PAGE> 13
"OTS" shall mean the Office of Thrift Supervision, or any
successor thereto.
"PARTIES" shall mean GSSC, SBM, SBL, UPC and INTERIM
collectively; GSSC, SBM and SBL on the one hand, or UPC and INTERIM on the
other hand, may sometimes be referred to as a "PARTY."
"PENSION PLAN" shall mean any employee pension benefit plan as
such term is defined in Section 3(2) of ERISA which is maintained by the
referenced Party.
"PERSON" shall mean any natural person, fiduciary,
corporation, partnership, joint venture, association, business trust or any
other entity of any kind.
"PLAN OF MERGER" shall mean the Plan of Merger substantially
in the form of Exhibit A hereto which is incorporated by reference as part of
this Reorganization Agreement and which is to be executed by authorized
representatives of GSSC, UPC and INTERIM and filed with the Delaware Secretary
of State along with the Certificate of Merger in accordance with Title
8-Chapter 485- Section 251 of the Delaware Code and providing for the Merger of
INTERIM with and into GSSC as contemplated by Section 2.1 of this
Reorganization Agreement.
"PRICING PERIOD" shall have the meaning assigned to such term
in Section 3.1(e)(i) of this Reorganization Agreement.
"PROPERTY" shall have the meaning assigned to such term in
Section 5.15(a) of this Reorganization Agreement.
"PROXY STATEMENT" shall mean the proxy statement-prospectus to
be used by UPC and GSSC to solicit proxies with a view to securing the
approvals of the UPC Shareholders and GSSC Stockholders of this Reorganization
Agreement and the Plan of Merger and to register with the SEC the issuance of
the shares of UPC Common Stock to be issued by UPC to the GSSC Record Holders.
"REALTY" means the real property of GSSC, SBM or SBL owned or
leased by GSSC, SBM or SBL or any Subsidiary of GSSC, SBM or SBL.
"RECORDS" means all available records, minutes of meetings of
the Board of Directors, committees and stockholders of GSSC, and the Boards of
Directors and shareholders of SBM and SBL, original instruments and other
documentation, pertaining to GSSC, GSSC's consolidated assets (including plans
and specifications relating to the Realty), GSSC's consolidated
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 7
<PAGE> 14
liabilities, the GSSC Common Stock, the SBM Common Stock, the SBL Common Stock,
the Deposits and loans, and all other business and financial records which are
necessary or customary for use in the conduct of GSSC's, SBM's or SBL's
businesses by UPC and GSSC on and after the Effective Time of the Merger as
they were conducted prior to the Closing Date.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Reserve, the TDFI, the MSBD, the LOFI, the SEC, or any other state or federal
governmental or quasi-governmental entity which has, or may hereafter have,
jurisdiction over any of the transactions described in this Reorganization
Agreement.
"RELEASE" shall have the meaning assigned to such term in
Section 5.15(b)(i) of this Reorganization Agreement.
"REORGANIZATION" shall mean the Merger (as described in
Section 2.1(a) of this Reorganization Agreement) and the transactions
contemplated in this Reorganization Agreement and the Plan of Merger annexed
hereto as Exhibit A.
"REORGANIZATION AGREEMENT" means this Agreement and Plan of
Reorganization together with the Plan of Merger (Exhibit A) and all Exhibits
and Schedules annexed to, and incorporated by specific reference as a part of,
this Reorganization Agreement.
"SBL" means Sunburst Bank, a Louisiana banking corporation,
chartered and existing under the laws of the State of Louisiana, having its
main office at 8440 Jefferson Highway (Post Office Box 2710), Baton Rouge, East
Baton Rouge Parish, Louisiana 70821, and which is a wholly-owned subsidiary of
GSSC.
"SBL COMMON STOCK" shall have the meaning assigned to such
term in Recital A of this Reorganization Agreement.
"SBM" means Sunburst Bank, Mississippi, a Mississippi banking
corporation, chartered and existing under the laws of the State of Mississippi,
having its main office at 2000 Gateway, Grenada, Grenada County, Mississippi
38901, and which is a wholly- owned subsidiary of GSSC.
"SBM COMMON STOCK" shall have the meaning assigned to such
term in Recital A of this Reorganization Agreement.
"SEC" shall mean the Securities and Exchange Commission, or
any successor thereto.
"SEC DOCUMENTS" shall mean all reports, proxy statements and
registration statements filed, or required to be filed, by a Party or any of
its Subsidiaries pursuant to the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
<PAGE> 15
Securities Laws, whether filed, or required to be filed, with the SEC, the OTS,
the Comptroller, the FDIC, the Federal Reserve or with any other 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 the SEC promulgated thereunder, as well as any similar state
securities laws and any similar rules and regulations promulgated by the
applicable federal bank Regulatory Authorities.
"SUBSIDIARIES" shall mean all of those corporations, banks,
associations or other entities of which the entity in question owns or controls
5% or more of the outstanding voting equity securities either directly or
through an unbroken chain of entities as to each of which 5% or more of the
outstanding equity securities is owned directly or indirectly by its parent;
provided, however, that there shall not be included any such entity acquired
through foreclosure or in satisfaction of a debt previously contracted in good
faith, any such entity that owns or operates an automatic teller machine
interchange network, any such entity that is a joint venture of the parent or
of a Subsidiary of the parent, or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity or through a small
business investment corporation.
"SURVIVING CORPORATION" shall mean GSSC as the corporation
resulting from the consummation of the Merger as set forth in Section 2.1(a) of
this Reorganization Agreement and which shall continue to be the sole
shareholder of SBM and SBL subsequent to the Merger.
"TENNESSEE CODE" shall mean the Tennessee Code Annotated, as
amended.
"UPC" shall mean Union Planters Corporation, a registered
Tennessee-chartered bank holding company which is also registered as a savings
and loan holding company having its principal place of business in Memphis,
Shelby County, Tennessee.
"UPC COMMON STOCK" shall have the meaning set forth in Section
4.5 of this Reorganization Agreement.
"UPC FINANCIAL STATEMENTS" shall mean (i) the audited
consolidated balance sheets and related consolidated statements of earnings, of
changes in shareholders' equity, and of cash flows (including related notes) of
UPC and its Subsidiaries as of December 31, 1992 and 1993 and each subsequent
December 31 prior
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 9
<PAGE> 16
to the Effective Time of the Merger, and (ii) the related unaudited
consolidated balance sheets and related consolidated statements of earnings, of
changes in shareholders' equity, and of cash flows (including related notes) of
UPC and its Subsidiaries for each of the quarters ended or ending after
December 31, 1993, as filed by UPC in SEC Documents.
"UPC PREFERRED STOCK" shall have the meaning assigned to such
term in Section 4.5 of this Reorganization Agreement.
"UPC SHAREHOLDERS" shall have the meaning assigned to such
term in Recital D of this Reorganization Agreement.
"UPC SHAREHOLDERS MEETING" shall mean the meeting of the UPC
Shareholders to be held pursuant to Section 6.1 of this Reorganization
Agreement, including any adjournment or adjournments thereof.
ARTICLE 2
TERMS OF THE REORGANIZATION
2.1 The Merger. Subject to the satisfaction (or waiver)
of all of the conditions to the obligations of each of the Parties to this
Reorganization Agreement, at the Effective Time of the Merger, INTERIM shall be
merged with and into GSSC (the "Merger"), which latter corporation (the
"Surviving Corporation") shall survive the Merger and shall continue to be the
sole shareholder of SBM and SBL.
2.2 Certificate of Incorporation, Bylaws, Directors,
Officers and Name of the Surviving Corporation.
(a) Certificate of Incorporation. At the
Effective Time of the Merger, the Certificate of Incorporation of GSSC, as in
effect immediately prior to the Effective Time of the Merger, shall continue to
be the Certificate of Incorporation of GSSC as the Surviving Corporation,
unless and until the same shall be amended thereafter as provided by law and
the terms of such Certificate of Incorporation.
(b) Bylaws. At the Effective Time of the Merger,
the Bylaws of GSSC, as in effect immediately prior to the Effective Time of the
Merger, shall continue to be the Bylaws of GSSC as the Surviving Corporation,
unless and until amended or repealed as provided by law, its Certificate of
Incorporation and such Bylaws.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 10
<PAGE> 17
(c) Directors and Officers. The directors and
officers of GSSC in office immediately prior to the Effective Time of the
Merger shall continue thereafter to be the directors and officers of the
Surviving Corporation, to hold office as provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, unless and until their
successors shall have been elected or appointed and shall have qualified or
until they shall have been removed in the manner provided therein.
(d) Name. The name of GSSC as the Surviving
Corporation following the Merger shall remain unchanged and continue to be:
GRENADA SUNBURST SYSTEM CORPORATION
or such corporate name as GSSC shall elect to adopt.
2.3 Due Diligence Review. Each Party shall be entitled
to conduct a preliminary due diligence review of the Records and operations of
the other Party, including, but not limited to, a review of the Party's loan
portfolios, ORE and classified assets, investment portfolios and properties, to
verify the reasonableness of the other Party's earnings projections, growth
projections and sustained earnings prospects after consummation of the Merger
at reasonable growth rates; provided, however, that any review conducted by a
Party pursuant to the provisions of this Section 2.3 shall be completed within
thirty (30) days from the date of this Reorganization Agreement.
2.4 Availability of Information. Promptly after the
execution by the Parties of this Reorganization Agreement, each Party shall
provide to the other Party, its Officers, employees, agents, and
representatives access, on reasonable notice and during customary business
hours, to all of the Records, properties and facilities of the Party and shall
use its best efforts to cause its Officers, employees, agents and
representatives to cooperate with any of the reviewing Party's reasonable
requests for information which would be customary in order to conduct the
review provided for in Section 2.3 of this Reorganization Agreement. Each
Party shall keep all non-public information disclosed to it by the other Party
with respect to the transactions contemplated in this Reorganization Agreement
confidential pursuant to that certain Confidentiality Agreement dated June 21,
1994, and shall not disclose or use such information in any manner without the
prior written consent of the other Party.
2.5 UPC's Right to Revise the Structure of the
Transaction. UPC shall have the unilateral right to revise the structure of
the corporate Reorganization contemplated by this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 11
<PAGE> 18
Reorganization Agreement and the Plan of Merger in order to achieve tax
benefits or for any other reason which UPC may deem advisable; provided,
however, that UPC shall not have the right, without the approval of the Board
of Directors of GSSC, to make any revision to the structure of the
Reorganization which (i) changes the amount of Consideration which the GSSC
Record Holders are entitled to receive; (ii) changes the intended tax-free
effects of the Merger to UPC, INTERIM, GSSC, SBM, SBL or the GSSC Record
Holders; (iii) would permit UPC to pay the Consideration other than by delivery
of shares of UPC Common Stock registered with the SEC (in the manner described
in Section 6.1 of this Reorganization Agreement); or (iv) adversely affects the
economic benefits of the transaction from the perspective of the GSSC Record
Holders. UPC may exercise this right of revision by giving written Notice to
GSSC, SBM or SBL in the manner provided in Section 10.1 of this Reorganization
Agreement, which Notice shall be in the form of an amendment to this
Reorganization Agreement and/or the Plan of Merger or in the form of an Amended
and Restated Agreement and Plan of Reorganization and/or Plan of Merger.
2.6 Holding Period of UPC Common Stock. GSSC, SBM and SBL
hereby acknowledge and agree that, in order to qualify the Merger under the
Internal Revenue Code as a tax-free reorganization and for accounting purposes
as a pooling of interests under the rules and regulations promulgated by the
SEC, Accounting Principles Board Opinion No. 16 and GAAP, any GSSC Record
Holder who would be deemed an Affiliate of GSSC by GSSC at the time of Closing
under the Securities Laws and who accepts shares of UPC Common Stock as
Consideration for the cancellation, exchange and conversion of his shares of
GSSC Common Stock in connection with the Merger, shall be required by GSSC to
deliver, and GSSC shall use its best efforts to obtain, an agreement that the
Affiliate shall not (a) pledge, assign, sell, transfer, devise, otherwise
alienate or take any action which would eliminate or diminish the risk of
owning or holding the shares of UPC Common Stock to be received by such GSSC
Record Holder upon consummation of the Merger, nor (b) enter into any formal or
informal agreement to pledge, assign, sell or transfer, devise, or otherwise
alienate his right, title and interests in any of the shares of GSSC Common
Stock held prior to the Merger or UPC Common Stock to be delivered by UPC to
such GSSC Record Holder in connection with the Merger for a period of thirty
(30) days prior to Closing and until such time as UPC shall have publicly
released a statement of UPC's earnings reflecting the combined financial
results of operations of UPC and GSSC for a period of not less than thirty (30)
days subsequent to the Effective Time of the Merger. GSSC further acknowledges
and agrees that any UPC Common Stock Certificates issued in connection with the
Merger to GSSC Record Holders who would be deemed Affiliates of GSSC or UPC
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 12
<PAGE> 19
at the time of Closing under the Securities Laws shall be subject to and bear a
restrictive legend substantially in the form as follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE RULES AND REGULATIONS PROMULGATED BY
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") THEREUNDER. NO SALES,
TRANSFERS OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT (OTHER THAN A REGISTRATION STATEMENT ON SEC FORM S-4) OR UPON THE
PRIOR DELIVERY TO UNION PLANTERS CORPORATION ("UPC") OF AN OPINION
FROM LEGAL COUNSEL, SATISFACTORY TO UPC, IN FORM AND SUBSTANCE
SATISFACTORY TO UPC AND ITS LEGAL COUNSEL, STATING THAT SUCH SALE OR
OTHER DISPOSITION IS BEING MADE PURSUANT TO AND IN ACCORDANCE WITH THE
REQUIREMENTS OF SEC RULES 144 AND 145 OR IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT. NO SALE, TRANSFER, OR OTHER
DISPOSITION OF THESE SHARES MAY BE MADE UNTIL AFTER THE PUBLICATION OF
FINANCIAL RESULTS COVERING AT LEAST 30 DAYS OF POST MERGER COMBINED
OPERATIONS OF UPC AND GRENADA SUNBURST SYSTEM CORPORATION. NO
AGREEMENT MAY BE ENTERED INTO BY THE HOLDER OF THIS CERTIFICATE WHICH
WOULD ALLOW OR REQUIRE THE SALE, TRANSFER, OR OTHER DISPOSITION OF
THESE SHARES OR WHICH WOULD OTHERWISE REDUCE THE RISK BORNE BY THE
SHAREHOLDER NAMED ON THE REVERSE SIDE OF THIS CERTIFICATE SUBSEQUENT
TO THE CONSUMMATION OF THE MERGER DURING THE TIME PERIOD MENTIONED
ABOVE.
2.7 GSSC Stock Options and Treasury Stock. Except as
described in Schedule 2.7 hereto, as of the date of this Reorganization
Agreement, there are 14,478 validly issued and outstanding options to purchase
shares of GSSC Common Stock, which were issued by GSSC to certain officers of
GSSC and the GSSC Subsidiaries in connection with the GSSC Key Employees Stock
Plan and no other options, rights, warrants, scrip or similar rights to
purchase shares of GSSC Common Stock (collectively, the "GSSC Stock Options")
are (or have been) issued and outstanding by GSSC other than those which may be
issuable pursuant to GSSC's various stock option and incentive plans. It is
contemplated by the Parties hereto that all validly issued and outstanding GSSC
Stock Options outstanding immediately prior to the Effective Time of the Merger
would be automatically converted at the Effective Time of the Merger into
options to purchase shares of UPC Common Stock based on the Exchange Ratio.
Therefore, in the event and to the extent that there are any GSSC Stock Options
validly issued and outstanding at the time of Closing, such GSSC Stock Options
shall at the Effective Time of the Merger automatically, and without further
action on the part of anyone, be converted
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 13
<PAGE> 20
into options to purchase shares of UPC Common Stock on the same terms and
conditions attributable to the GSSC Stock Options to purchase shares of GSSC
Common Stock in effect as of the date of this Reorganization Agreement adjusted
in all respects by and in accordance with the Exchange Ratio (i.e. if an
existing GSSC Stock Option for the purchase of 10,000 shares of GSSC Common
Stock were exercisable at $22.375 per share of GSSC Common Stock and the
Exchange Ratio were 1.4206, then at the Effective Time of the Merger such
unexercised GSSC Stock Option would automatically convert into an option to
purchase 14,206 shares of UPC Common Stock at an exercise price of $15.75 per
share). As of the date of this Reorganization Agreement, GSSC has not
repurchased or accelerated the vesting period of any GSSC Stock Options other
than pursuant to the terms and conditions of the GSSC Key Employees Stock Plan,
nor will it repurchase or accelerate the purchase rights of any GSSC Stock
Options, and GSSC has not repurchased any shares of its capital stock. As of
the date of this Reorganization Agreement, there are no shares of GSSC Common
Stock held by GSSC as Treasury Stock, nor will there be any such shares at the
Effective Time of the Merger.
ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After
the transactions contemplated herein have been approved by the shareholders of
UPC and the stockholders of GSSC and the INTERIM, and each other condition to
the obligations of the Parties hereto, other than those conditions which are to
be satisfied by delivery of documents by any Party to any other Party, has been
satisfied or, if lawfully permitted, waived by the Party or Parties entitled to
the benefits thereof, a closing (the "Closing") will be held on the date (the
"Closing Date") and at the time of day and place referred to in Section 3.2 of
this Reorganization Agreement. At the Closing the Parties shall use their
respective best efforts to deliver the certificates, letters and opinions which
constitute conditions precedent to effecting the Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions to the obligations of such other Parties to consummate the Merger as
such other Parties may reasonably require. If all conditions to the
obligations of each of the Parties shall have been satisfied or lawfully waived
by the Party entitled to the benefits thereof, the Parties shall, at the
Closing, duly execute a Certificate of Merger for filing with the Secretary of
State of the State of Delaware and promptly thereafter GSSC and INTERIM
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
<PAGE> 21
shall take all steps necessary or desirable to consummate the Merger in
accordance with all applicable laws, rules and regulations and the Plan of
Merger. The Parties shall thereupon take such other and further actions as UPC
shall direct or as may be required by law or this Reorganization Agreement to
consummate the transactions contemplated herein.
(b) Effective Time of the Merger. Upon the
satisfaction of all conditions to Closing (except those conditions waived by
the Parties), the Merger shall become effective on the date and at the time of
filing of a Certificate of Merger with the Secretary of State of the State of
Delaware or at such later date and/or time as may be agreed upon by the Parties
and set forth in the Certificate of Merger so filed (the "Effective Time of the
Merger").
(c) Conversion of Shares of INTERIM. At the
Effective Time of the Merger, each share of $.01 par value common stock of
INTERIM (the "INTERIM Common Stock") issued and outstanding immediately prior
to the Effective Time of The Merger shall, by virtue of the Merger becoming
effective and without any further action on the part of anyone, be converted
into and become one share of the issued and outstanding common stock of the
Surviving Corporation.
(d) Conversion and Cancellation of Shares of
GSSC. At the Effective Time of the Merger, each share of $1.00 par value
common stock of GSSC (the "GSSC Common Stock") validly issued and outstanding
immediately prior to the Effective Time of the Merger shall, by virtue of the
Merger becoming effective and without any further action on the part of anyone,
be converted, exchanged and cancelled as provided in Section 3.1(e) hereof.
(e) Conversion and Exchange of GSSC Shares;
Exchange Ratio. At the Effective Time of the Merger, the outstanding shares of
GSSC Common Stock held by the GSSC Record Holders immediately prior to the
Effective Time of the Merger shall, without any further action on the part of
anyone, cease to represent any interest (equity, stockholder or otherwise) in
GSSC and shall automatically be converted exclusively into, and constitute only
the right of the GSSC Record Holders to receive in exchange for their shares of
GSSC Common Stock, whole shares of UPC Common Stock and a cash payment in
settlement of any remaining fractional share of UPC Common Stock in accordance
with the terms and conditions of this Section 3.1(e) and the Plan of Merger.
The shares of UPC Common Stock and the cash settlement of any remaining
fractional share of UPC Common Stock deliverable by UPC or INTERIM to the GSSC
Record Holders pursuant to the terms of this Reorganization Agreement are
sometimes collectively referred to herein as the "Consideration."
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 15
<PAGE> 22
The number of shares of UPC Common Stock to be exchanged for each share of GSSC
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger shall be based on an exchange ratio (the "Exchange Ratio") as
determined and set forth in this Section 3.1(e). The Exchange Ratio shall be
determined as follows:
(A) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than or equal to
$24.00 per share of UPC Common Stock but less than or equal to $29.25
per share of UPC Common Stock (the "Primary Collar"), the Exchange
Ratio shall be fixed at 1.4206 shares of UPC Common Stock for each
share of GSSC Common Stock validly issued and outstanding immediately
prior to the Effective Time of the Merger;
(B) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $29.25 per share
of UPC Common Stock but less than or equal to $31.25 per share of UPC
Common Stock (the "Upper Secondary Collar"), the Exchange Ratio shall
be based on (a) a fixed price of $41.55 per share of GSSC Common Stock
divided by (b) the Current Market Price Per Share of UPC Common Stock
for each share of GSSC Common Stock validly issued and outstanding
immediately prior to the Effective Time of the Merger;
(C) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $31.25 per share
of UPC Common Stock (the "Ceiling"), the Exchange Ratio shall be fixed
at 1.3296 shares of UPC Common Stock for each share or GSSC Common
Stock validly issued and outstanding immediately prior to the
Effective Time of the Merger; provided, however, that UPC would have
the right to either deliver shares of UPC Common Stock based on the
fixed Exchange Ratio of 1.3296 or to terminate the
transaction;provided, however, should UPC elect to terminate the
transaction under this provision, GSSC shall have the unilateral right
to reinstate the transaction by accepting in exchange for each share
of GSSC Common Stock validly issued and outstanding immediately prior
to the Effective Time of the Merger that number of shares of UPC
Common Stock at the Current Market Price Per Share sufficient to equal
$41.55 per share of GSSC Common Stock;
(D) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than or equal to
$22.00 per share of UPC Common Stock but less than $24.00 per share of
UPC Common Stock (the "Lower Secondary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 16
<PAGE> 23
Collar"), the Exchange Ratio shall be based on (a) a fixed price of
$34.09 per share of GSSC Common Stock divided by (b) the Current
Market Price Per Share of UPC Common Stock for each share of GSSC
Common Stock validly issued and outstanding immediately prior to the
Effective Time of the Merger; and
(E) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $22.00 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be fixed at
1.5495 shares of UPC Common Stock for each share of GSSC Common Stock
validly issued and outstanding immediately prior to the Effective Time
of the Merger; provided, however, that subject to the terms and
provisions of Section 3.3 of this Reorganization Agreement, GSSC shall
have the right to either accept the fixed Exchange Ratio of 1.5495 or
terminate the transaction in accordance with the terms and provisions
of Section 3.3 of this Reorganization Agreement,provided, however,
that should GSSC elect to terminate the transaction under this
provision and the Current Market Price Per Share of UPC Common Stock
should be greater than or equal to $18.50, UPC shall have the
unilateral right to reinstate the transaction by delivering in
exchange for each share of GSSC Common Stock validly issued and
outstanding immediately prior to the Effective Time of the Merger
shares of UPC Common Stock based on that number of shares of UPC
Common Stock at the Current Market Price Per Share sufficient to equal
$34.09 per share of GSSC Common Stock.
The Exchange Ratio as determined in this Section 3.1(e) shall be based on an
aggregate of no more than 9,600,000 shares of GSSC Common Stock being validly
issued and outstanding immediately prior to the Effective Time of the Merger
and, for purposes of this paragraph, counting all unexercised GSSC Stock
Options issued and outstanding immediately prior to the Effective Time of the
Merger as issued and outstanding shares of GSSC Common Stock so converted and
exchanged; provided, however, that no fractional shares of UPC Common Stock
shall be issued and if, after aggregating all of the shares of UPC Common Stock
to which a GSSC Record Holder is entitled based upon the Exchange Ratio, there
shall be a fractional share of UPC Common Stock remaining, such fractional
share shall be settled by a cash payment therefor pursuant to the Mechanics of
Payment of the Consideration set forth in Section 3.1(f) hereof, which shall be
calculated based upon the Current Market Price Per Share of one (1) full share
of UPC Common Stock.
(1) DEFINITION OF "CURRENT MARKET PRICE
PER SHARE." The "Current Market Price Per Share" shall be the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
<PAGE> 24
average closing price per share of the "last" real time trades (i.e.,
closing price) of the UPC Common Stock on the NYSE (as published in
The Wall Street Journal, Eastern Edition) for each of the twenty (20)
NYSE general market trading days on which the NYSE was open for
business next preceding the issuance of all necessary Regulatory
Approvals (the "Pricing Period"). In the event the UPC Common Stock
should not trade on one or more of the trading days during the Pricing
Period (a "No Trade Date"), any such No Trade Date shall be
disregarded in computing the average closing price per share of UPC
Common Stock and the average shall be based upon the "last" real time
trades and number of days on which the UPC Common Stock actually
traded during the Pricing Period.
(2) EFFECTS OF APPRAISAL RIGHTS ON THE
EXCHANGE RATIO. The Exchange Ratio shall be unaffected by appraisal
rights as granted under Delaware law because the GSSC Common Stock is
listed for trading on the NASDAQ National Market System, which is a
"national securities exchange" as defined in rules promulgated by the
SEC pursuant to the 1934 Act, and therefore, pursuant to Delaware Code
Section 8-503-262, no GSSC Record Holder may assert appraisal rights
in connection with the Merger or the transactions contemplated in this
Reorganization Agreement.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF GSSC OR
UPC. Should GSSC or UPC effect any stock splits, reverse stock
splits, stock dividends or similar changes in their respective capital
accounts subsequent to the date of this Reorganization Agreement but
prior to the Effective Time of the Merger, the Exchange Ratio shall be
adjusted in such a manner as the Board of Directors of UPC shall deem
in good faith to be fair and reasonable in order to give effect to
such changes subject to GSSC's Board of Directors' approval.
(f) Mechanics of Payment of Consideration. As
soon as reasonably practicable, but in any event no more than five (5) Business
Days after the Effective Time of the Merger, the Corporate Trust Department of
Union Planters National Bank, Memphis, Tennessee (the "Exchange Agent") shall
deliver to each of the GSSC Record Holders such materials and information
deemed necessary by the Exchange Agent to advise the GSSC Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the GSSC Common Stock in order for the GSSC Record
Holders to receive the Consideration. Such materials shall include, without
limitation, a Letter of Transmittal, an Instruction Sheet, and a return
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
<PAGE> 25
mailing envelope addressed to the Exchange Agent (collectively the "Stockholder
Materials"). All Stockholder Materials shall be sent by United States mail to
the GSSC Record Holders at the addresses set forth on a certified stockholder
list to be delivered by GSSC to UPC at the Closing (the "Stockholder List") and
shall also be made available at the Corporate Trust Department offices of the
Exchange Agent. As soon as reasonably practicable thereafter, the GSSC Record
Holders of all of the outstanding shares of GSSC Common Stock, shall be
requested by the Exchange Agent to deliver, or cause to be delivered, by United
States Postal Service, hand delivery or any other means of delivery selected by
such GSSC Record Holders, to the Exchange Agent, pursuant to the Stockholder
Materials, the certificates formerly evidencing and representing all of the
shares of GSSC Common Stock which were validly issued and outstanding
immediately prior to the Effective Time of the Merger, and the Exchange Agent
shall take prompt action to process such certificates formerly evidencing and
representing shares of GSSC Common Stock received by it (including the prompt
return of any defective submissions with instructions as to those actions which
may be necessary to remedy any defects). Upon receipt of the proper submission
of the certificate(s) formerly representing and evidencing ownership of the
shares of GSSC Common Stock, the Exchange Agent shall, on or prior to the 30th
day after the Effective Time of the Merger but as soon as practicable mail, to
the former GSSC Record Holders in exchange for the certificate(s) surrendered
by them, the Consideration to be delivered for each such GSSC Record Holder's
shares of GSSC Common Stock evidenced by the certificate or certificates which
were cancelled and converted exclusively into the right to receive the
Consideration upon the Merger becoming effective. After the Effective Time of
the Merger and until properly surrendered to the Exchange Agent, each
outstanding certificate or certificates which formerly evidenced and
represented the shares of GSSC Common Stock of a GSSC Record Holder, subject to
the provisions of this Section, shall be deemed for all corporate purposes to
represent and evidence only the right to receive the Consideration into which
such GSSC Record Holder's shares of GSSC Common Stock were converted and
aggregated at the Effective Time of the Merger. Unless and until the
outstanding certificate or certificates, which immediately prior to the
Effective Time of the Merger evidenced and represented the GSSC Record Holder's
GSSC Common Stock shall have been properly surrendered as provided above, the
Consideration payable to the GSSC Record Holder(s) of the cancelled shares as
of any time after the Effective Date shall not be delivered to the GSSC Record
Holder(s) of such certificate(s) until such certificates shall have been
surrendered in the manner required. Each GSSC Record Holder shall be
responsible for all federal, state and local taxes which may be incurred by
such holder on account of the receipt of any
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
<PAGE> 26
Consideration. The GSSC Record Holder(s) of any certificate(s) which shall
have been lost or destroyed may nevertheless, subject to the provisions of this
Section, receive the Consideration to which each such GSSC Record Holder is
entitled, provided that each such GSSC Record Holder shall deliver to UPC and
to the Exchange Agent: (i) a sworn statement certifying the fact of such loss
or destruction and specifying the circumstances thereof and (ii) a lost
instrument bond in form satisfactory to UPC and the Exchange Agent which has
been duly executed by a corporate surety satisfactory to UPC and the Exchange
Agent, indemnifying the Surviving Corporation, UPC, the Exchange Agent (and
their respective successors) to their satisfaction against any loss or expense
which any of them may incur as a result of such lost or destroyed certificates
being thereafter presented. Any costs or expenses which may arise from such
replacement procedure, including the premium on the lost instrument bond, shall
be for the account of the GSSC Record Holder.
(g) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of GSSC shall be closed and no transfer
of shares of GSSC Common Stock shall be made thereafter.
(h) Effects of the Merger. At the Effective Time
of the Merger, the separate existence of INTERIM shall cease, and INTERIM shall
be merged with and into GSSC which, as the Surviving Corporation, shall
thereupon and thereafter possess all of the assets, rights, privileges,
appointments, powers, licenses, permits and franchises of GSSC and INTERIM,
whether of a public or a private nature, and shall be subject to all of the
liabilities, restrictions, disabilities and duties of both GSSC and INTERIM.
(i) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
GSSC and INTERIM in and to every type of property, whether real, personal, or
mixed, whether tangible or intangible and wherever located, and to choses in
action shall be deemed to be vested in GSSC as the Surviving Corporation by
virtue of the Merger becoming effective and without any deed or other
instrument or act of transfer whatsoever.
(j) Assumption of Liabilities. At the Effective
Time of the Merger, the Surviving Corporation shall become and be liable for
all debts, liabilities, obligations and contracts of GSSC as well as those of
INTERIM, whether the same shall be matured or unmatured; whether accrued,
absolute, contingent or otherwise; and whether or not reflected or reserved
against in the balance sheets, other financial statements, books of account or
records of GSSC or INTERIM.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
<PAGE> 27
(k) Appraisal Rights of GSSC Stockholders.
Pursuant to the provisions of Section 8-503-262 of the Delaware Code, GSSC
Stockholders shall not be entitled to assert appraisal rights in connection
with the Merger or to seek those appraisal remedies afforded by the Delaware
Code because the GSSC Common Stock is listed for trading on the NASDAQ,
National Market System which is a "national securities exchange" as defined in
rules promulgated by the SEC pursuant to the 1934 Act, and therefore, pursuant
to Delaware Code Section 8-503-262, no GSSC Record Holder may assert appraisal
rights in connection with the Merger or the transactions contemplated in this
Reorganization Agreement.
(l) Reservation, Registration and Listing of
shares of UPC Common Stock. UPC shall reserve for issuance, register under the
applicable Securities Laws and apply for listing for trading on the NYSE a
sufficient number of shares of UPC Common Stock for the purpose of issuing
shares of UPC Common Stock to (i) the GSSC Record Holders in accordance with
the terms and conditions of this Section 3.1 and (ii) the holders of
outstanding GSSC Stock Options issued under the terms of the GSSC Key Employees
Stock Plan.
3.2 Time and Place of Closing. The Closing shall take
place at 10:00 a.m. on the Business Day next preceding the date on which the
Effective Time of the Merger is expected to occur, or at such other time as the
Parties, acting through their chief executive officers, presidents or chief
financial officers, may mutually agree (the "Closing Date"). The place of
Closing shall be at the Union Planters Administrative Center, Union Planters
Corporation Executive Offices (Fourth Floor), 7130 Goodlett Farms Parkway,
Memphis, Shelby County, Tennessee 38018. The Closing may be held at such other
time and place as may be mutually agreed upon by the Parties.
3.3 Price Based Termination. This Reorganization
Agreement may be terminated by GSSC without penalty, if the GSSC Board of
Directors so determines by a majority vote, if (a) the Current Market Price Per
Share of UPC Common Stock should be less than $18.50; or (b) should both of the
following conditions be satisfied:
(i) The Current Market Price Per Share of a share of UPC Common
Stock shall be less than $22.00; and
(ii) (A) The number obtained by dividing the Current Market Price
Per Share of UPC Common Stock by $26.75 (the closing price per share of UPC
Common Stock, as reported on the NYSE Composite Transactions Tape reporting
system on June 30, 1994), shall be less than (B) the number obtained by
dividing the average of the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
<PAGE> 28
Index Price (as defined below) for the Pricing Period by the Index Price on
June 30, 1994 (the last NYSE trading day immediately preceding the date of the
first public announcement of entry by the Parties into this Reorganization
Agreement) and subtracting 0.10 from the quotient in this clause (B); subject,
however, to the following three sentences.
In the event GSSC should elect to exercise its termination right
pursuant to the foregoing, it must give prompt written notice to UPC. Upon the
proper receipt of such notice, UPC shall (provided the Current Market Price Per
Share of UPC Common Stock is greater than or equal to $18.50) have the option
to increase the Consideration to be received by the GSSC Record Holders in the
Merger by adjusting the Exchange Ratio to equal the number (calculated to the
nearest one one-hundredth) obtained by dividing $34.09 (being the product of
$22.00 and the Exchange Ratio) by the Current Market Price Per Share of UPC
Common Stock (the "Maximum Exchange Ratio"). If UPC should so elect, it must
give prompt written notice to GSSC of such election and the adjusted Exchange
Ratio, whereupon no termination will be deemed to have occurred, and this
Reorganization Agreement shall remain in full force and effect in accordance
with its terms (except as the Exchange Ratio shall have been so modified).
For purposes of this provision of this Reorganization Agreement, the following
definitions shall apply:
"Index Group" means the fifteen (15) companies listed on Schedule 3.3
to this Reorganization Agreement. In the event that the common stock of any
such company should cease to be publicly traded or should a proposal to acquire
any such company be announced after June 30, 1994, such company shall be
removed from the Index Group.
"Index Price," on a given date, means the average of the closing
prices on such date of the common stocks of the companies comprising the Index
Group.
Prior to making any decision to terminate this Reorganization
Agreement, the GSSC Board of Directors shall consult with its financial and
other advisers and shall consider all financial and other information it should
deem relevant to its decision. The matter would not, however, be resubmitted
to the GSSC Record Holders after the GSSC Stockholder Meeting.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
<PAGE> 29
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM
As of the date hereof and as of the Effective Time of the
Merger, UPC and INTERIM represent and warrant to GSSC as follows:
4.1 Organization and Corporate Authority. UPC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee. INTERIM is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Each of UPC's material Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation. UPC,
INTERIM and all material UPC Subsidiaries (i) have the requisite corporate
power and authority to own, operate and lease their material properties and
carry on their businesses as they are currently being conducted; (ii) are in
good standing and are duly qualified to do business in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their business makes such qualification necessary and where the failure to so
qualify would individually or in the aggregate have a material adverse effect
on the condition (financial or otherwise), affairs, business, assets or
prospects of UPC and all UPC Subsidiaries, taken as a whole; and (iii) have in
effect all federal, state, local and foreign governmental authorizations,
permits and licenses necessary for them to own or lease their respective
properties and assets and to carry on their businesses as they are currently
being conducted. The corporate Charter and Bylaws of UPC and the Certificate
of Incorporation and Bylaws of INTERIM, as amended to date, are in full force
and effect as of the date of this Reorganization Agreement.
4.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) UPC and INTERIM have all requisite corporate
power and authority to execute and deliver this Reorganization Agreement and
the Plan of Merger and to consummate the transactions contemplated hereby and
thereby. This Reorganization Agreement and the Plan of Merger, and all other
agreements contemplated to be executed in connection herewith by UPC and
INTERIM, have been (or upon execution will have been) duly executed and
delivered by UPC and INTERIM, have been (or upon execution will have been)
effectively authorized by all necessary action, corporate or otherwise, and,
other than the approval of at least a majority of UPC Shareholders and of UPC
as sole stockholder of INTERIM and UPC's Board of Directors, no
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
<PAGE> 30
other corporate proceedings on the part of UPC or INTERIM are (or will be)
necessary to authorize such execution and delivery, and constitute (or upon
execution will constitute) legal, valid and enforceable obligations of UPC and
INTERIM, subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, and to the application of equitable principles and
judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Plan of Merger, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not result in a violation or breach of any of the terms
or provisions of, or constitute a default under (or an event which, with the
passage of time or the giving of notice or both, would constitute a default
under), or conflict with, or permit the acceleration of any obligation under,
any material mortgage, lease, covenant, agreement, indenture or other
instrument to which UPC, INTERIM or any material UPC Subsidiary is a party or
by which they or their property or any of their assets are bound; the corporate
Charter and Bylaws of UPC or the Certificate of Incorporation and Bylaws of
INTERIM; or any judgment, decree, order, regulatory letter of understanding or
award of any court, governmental body, authority or arbitrator by which UPC,
INTERIM or any material UPC Subsidiary is bound; or any permit, concession,
grant, franchise, license, law, statute, ordinance, rule or regulation
applicable to UPC, INTERIM or any material UPC Subsidiary or their properties;
or result in the creation of any lien, claim, security interest, encumbrance,
charge, restriction or right of any third party of any kind whatsoever upon the
property or assets of UPC, INTERIM or any material UPC Subsidiary, except that
the Government Approvals shall be required in order for UPC and INTERIM to
consummate the Merger.
4.3 No Legal Bar. Neither UPC nor INTERIM is a party to,
subject to or bound by any agreement, judgment, letter of understanding, order,
writ, prohibition, injunction or decree of any court or other governmental body
of competent jurisdiction or any law which would prevent the execution of this
Reorganization Agreement and the Plan of Merger by UPC or INTERIM, their
delivery to GSSC, SBM and SBL or the consummation of the transactions
contemplated hereby and thereby, and no action or proceeding is pending against
UPC or INTERIM in which the validity of this Reorganization Agreement or the
Plan of Merger, any of the transactions contemplated hereby or thereby or any
action which has been taken by any of the Parties in connection herewith or
therewith or in connection with any of the transactions contemplated hereby or
thereby is at issue.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
<PAGE> 31
4.4 Government and Shareholder Approvals. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any federal, state or local governmental authority is required to be made
or obtained by UPC or INTERIM in connection with the execution and delivery of
this Reorganization Agreement or the consummation of the transactions
contemplated hereby by UPC or INTERIM, except for the prior approval of the
Federal Reserve of the Merger under the Bank Holding Company Act of 1956, as
amended (collectively, the "Government Approval"). Neither UPC nor INTERIM is
aware of any facts, circumstances or reasons why such Government Approval
should not be forthcoming or which would prevent such approval from being
obtained. The transactions contemplated in this Reorganization Agreement,
including, but not limited to, the Merger and the issuance of shares of UPC
Common Stock by UPC is subject to approval of at least a majority of the UPC
Shareholders.
4.5 Capitalization. (a) The authorized capital stock of
UPC consists of 10,000,000 shares of preferred stock having no par value (the
"UPC Preferred Stock"), and 50,000,000 shares of common stock having a par
value of $5.00 per share (the "UPC Common Stock"). As of June 30, 1994, UPC
had issued and outstanding: 44,000 shares of $8.00 Nonredeemable Cumulative
Convertible Preferred Stock, Series B; 690,000 shares of 10-3/8% Increasing
Rate, Redeemable, Cumulative Preferred Stock, Series C; 253,655 shares of 9.5%
Redeemable, Cumulative Preferred Stock, Series D; and 3,107,922 shares of 8%
Cumulative, Convertible Preferred Stock, Series E. In addition, 250,000 shares
of UPC Preferred Stock have been reserved for issuance as Series A Preferred
Stock pursuant to the UPC Share Purchase Rights Agreement dated July 19, 1989,
between UPC and Union Planters National Bank as Rights Agent (the "UPC Share
Purchase Rights Agreement"). As of June 30, 1994, 21,814,022 shares of UPC
Common Stock were validly issued and outstanding.
As of the date hereof, UPC is the holder, directly or indirectly, of
all of the outstanding capital stock of its Subsidiaries, except for directors'
qualifying shares of Union Planters National Bank.
(b) The authorized capital stock of INTERIM consists
of 1,000 shares of common stock having a par value of $.01 per share (the
"INTERIM Common Stock") and no preferred stock. As of the date hereof, INTERIM
had issued all 1,000 shares of the authorized INTERIM Common Stock to UPC.
Therefore, UPC is the record holder and beneficial owner of all of the INTERIM
Common Stock outstanding. INTERIM was formed by UPC solely to effect the
Merger and has not incurred any material debts or liabilities.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 25
<PAGE> 32
4.6 UPC Financial Statements. Accompanying Schedule 4.6
hereto are true copies of the audited consolidated balance sheets of UPC as of
December 31, 1993, the audited consolidated balance sheets of UPC as of
December 31, 1992, and selected financial data for UPC as of December 31, 1993,
1992 and 1991, and the related consolidated statements of income and changes in
shareholders' equity and cash flows of UPC for the years ended December 31,
1993, 1992 and 1991 and the comparative interim (or annual) financial
statements for any subsequent quarter (or year) ending after December 31, 1993
and prior to the Closing Date. Such financial statements (i) were (or will be)
prepared from the books and records of UPC; (ii) were (or will be) prepared in
accordance with GAAP; (iii) accurately present (or will present) UPC's
consolidated financial condition and the consolidated results of its
operations, changes in shareholders' equity and cash flows at the relevant
dates thereof and for the periods covered thereby; (iv) in the opinion of UPC
do contain or reflect (or will contain and reflect) all necessary adjustments
and accruals for an accurate presentation of UPC's consolidated financial
condition and the consolidated results of UPC's operations and cash flows as
stated including any amendments thereto for the periods covered by such
financial statements; (v) in the opinion of UPC do contain and reflect (or will
contain and reflect) adequate provisions for loan losses, for ORE reserves and
for all reasonably anticipatable liabilities for all taxes (federal, state,
local or foreign) with respect to the periods then ended; and (vi) in the
opinion of UPC do contain and reflect (or will contain and reflect) adequate
provisions for all reasonably anticipated liabilities for Post Retirement
Benefits Other Than Pensions ("OPEB") pursuant to FASB 106 and 112.
4.7 Exchange Act and Listing Filings.
(a) The outstanding shares of UPC Common Stock are registered with
the SEC pursuant to the 1934 Act and UPC has filed with the SEC all forms and
reports required by law or by rule or regulation of the SEC to be filed by UPC
with the SEC, which forms and reports, taken as a whole, are true and correct
in all material respects, and do not misstate a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(b) The outstanding shares of UPC Common Stock are listed for trading
on the NYSE (under the symbol "UPC") pursuant to the listing rules of the NYSE
and UPC has filed with the NYSE all material forms and reports required by law
or by rule or regulation of the NYSE to be filed by UPC with the NYSE, which
forms and reports, taken as a whole, are true and correct in all material
respects, and do not misstate a material fact or omit to
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 26
<PAGE> 33
state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
4.8 The UPC Common Stock. All shares of UPC Common Stock
to be issued by UPC and delivered to the GSSC Record Holders in exchange for
all of the GSSC Common Stock validly issued and outstanding immediately prior
to the Effective Time of the Merger will be duly authorized, validly issued,
fully paid and non-assessable, and none of such shares of UPC Common Stock will
have been issued in violation of any preemptive rights of any UPC Shareholders.
The shares of UPC Common Stock to be delivered in payment of the Consideration
shall have in all respects such distinguishing characteristics as those of the
shares of UPC Common Stock outstanding immediately prior to the Effective Time
of the Merger.
4.9 Licenses, Franchise, Etc. UPC and all UPC
Subsidiaries hold all material licenses, franchises, permits and authorizations
necessary for the lawful conduct of their respective businesses. The benefits
of all of such material licenses, franchises, permits and authorizations are in
full force and effect and may continue to be enjoyed by UPC and all UPC
Subsidiaries subsequent to the Closing of the transactions contemplated herein
without any consent or approval. Neither UPC nor any UPC Subsidiary has
received notice of any proceeding for the suspension or revocation of any such
material license, franchise, permit, or authorization and no such proceeding is
pending or has been threatened by any governmental authority.
4.10 Absence of Certain Changes. Except as disclosed in
Schedule 4.10 or as provided for or contemplated in this Reorganization
Agreement, since December 31, 1993 (the "UPC Balance Sheet Date") there has not
been:
(a) any material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), prospects, operations, liquidity, income,
condition (financial or otherwise) or net worth of UPC;
(b) any amendment, modification or termination of
any contract or agreement, relating to UPC or any UPC Subsidiary to which UPC
or any UPC Subsidiary is a party which would have a material adverse effect
upon the financial condition or operations of UPC;
(c) any incurring of, assumption of, or taking
of, by UPC or any UPC Subsidiary, any property subject to, any liability,
except for liabilities incurred or assumed or property
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 27
<PAGE> 34
taken subsequent to the UPC Balance Sheet Date in the ordinary course of
business and in conformity with past practice; or
(d) except as described in the UPC Financial
Statements, any material alteration in the manner of keeping the books,
accounts or Records of UPC or any UPC Subsidiary, or in the accounting policies
or practices therein reflected, except as may be required by GAAP.
4.11 Tax Matters. Except as described in Schedule 4.11
hereto:
(a) all federal, state, local, and foreign tax
returns required to be filed by or on behalf of UPC and each UPC Subsidiary
have been timely filed or requests for extensions have been timely filed,
granted, and have not expired for periods ended on or before the date of this
Reorganization Agreement, and all returns filed are, and the information
contained therein is, complete and accurate. All tax obligations reflected in
such returns have been paid. As of the date of this Reorganization Agreement,
there is no audit examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that might result in a determination
materially adverse to UPC or any UPC Subsidiary except as fully reserved for in
the UPC Financial Statements. All taxes, interest, additions, and penalties
due with respect to completed and settled examinations or concluded litigation
have been paid.
(b) Neither UPC nor any UPC Subsidiary has executed
an extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect.
(c) Adequate provision for any federal, state,
local, or foreign taxes due or to become due for UPC and all UPC Subsidiaries
for all periods through and including December 31, 1993, has been made and is
reflected on the December 31, 1993 financial statements included in the UPC
Financial Statements, and have been and will continue to be made with respect
to periods ending after December 31, 1993.
(d) Deferred taxes of UPC and each UPC Subsidiary
have been and will continue to be provided for in accordance with GAAP.
(e) To the best knowledge of UPC and INTERIM,
neither the Internal Revenue Service nor any foreign, state, local or other
taxing authority is now asserting or threatening to assert against UPC or any
UPC Subsidiary any material
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 28
<PAGE> 35
deficiency or claim for additional taxes, or interest thereon or penalties in
connection therewith. All material income, payroll, withholding, property,
excise, sales, use, franchise and transfer taxes, and all other taxes, charges,
fees, levies or other assessments, imposed upon UPC by the United States or by
any state, municipality, subdivision or instrumentality of the United States or
by any other taxing authority, including all interest, penalties or additions
attributable thereto, which are due and payable by UPC or any UPC Subsidiary,
either have been paid in full, or have been properly accrued and reflected in
UPC's Financial Statements referred to in Section 4.6 of this Reorganization
Agreement.
4.12 Litigation. Except as set forth in Schedule 4.12
hereto, there is no action, suit or proceeding pending against UPC or any UPC
Subsidiary, or to the best knowledge of UPC or INTERIM threatened against or
affecting UPC, any UPC Subsidiary or any of their assets, before any court or
arbitrator or any governmental body, agency or official (i) that would, if
decided against UPC or any UPC Subsidiary, have a material adverse impact on
the business, properties, assets, liabilities, condition (financial or other)
or prospects of UPC and that are not reflected in the UPC Financial Statements
or (ii) by or on behalf of any employee employed or formerly employed by UPC or
any UPC Subsidiary.
4.13 Absence of Undisclosed Liabilities. Except as described
in Schedule 4.13 hereto, neither UPC nor any UPC Subsidiary has any obligation
or liability (contingent or otherwise) that is material to the financial
condition or operations of UPC or any UPC Subsidiary taken as a whole, or that,
when combined with all similar obligations or liabilities, would be material to
the financial condition or operations of UPC or any UPC Subsidiary taken as a
whole (i) except as disclosed in the UPC Financial Statements delivered to GSSC
prior to the date of this Reorganization Agreement or (ii) except obligations
or liabilities incurred in the ordinary course of its business consistent with
past practices or (iii) except as contemplated under this Reorganization
Agreement. Since December 31, 1993, neither UPC nor any UPC Subsidiary has
incurred or paid any obligation or liability which would be material to the
financial condition or operations of UPC or such UPC Subsidiary taken as a
whole, except for obligations paid in connection with transactions made by it
in the ordinary course of its business consistent with past practices, laws and
regulations applicable to UPC or any UPC Subsidiary.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 29
<PAGE> 36
4.14 Compliance with Laws. UPC and each UPC Subsidiary:
(a) Is in compliance with all laws, rules,
regulations, reporting and licensing requirements, and orders applicable to its
business or employees conducting its business (including, but not limited to,
those relating to consumer disclosure and currency transaction reporting) the
breach or violation of which would or could reasonably be expected to have a
material adverse effect on the financial condition or operations of UPC or any
UPC Subsidiary taken as a whole, or which would or could reasonably be expected
to subject UPC or any UPC Subsidiary or any of its directors or officers to
civil money penalties; and
(b) Has received no notification or communication
from any agency or department of federal, state or local government or any of
the Regulatory Authorities, or the staff thereof (i) asserting that UPC or any
UPC Subsidiary is not in compliance with any of the statutes, rules,
regulations, or ordinances which such governmental authority or Regulatory
Authority enforces, which, as a result of such noncompliance, would result in a
material adverse impact on UPC or any UPC Subsidiary, (ii) threatening to
revoke any license, franchise, permit or governmental authorization which is
material to the financial condition or operations of UPC or any UPC Subsidiary,
or (iii) requiring UPC or any UPC Subsidiary to enter into a cease and desist
order, consent, agreement or memorandum of understanding.
4.15 Material Contract Defaults. Neither UPC nor any UPC
Subsidiary is in default in any respect under any contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to which
it is a party or by which its respective assets, business, or operations may be
bound or affected or under which it or its respective assets, business, or
operations receives benefits, and which default is reasonably expected to have
either individually or in the aggregate a material adverse effect on UPC or any
UPC Subsidiary taken as a whole, and there has not occurred any event that,
with the lapse of time or the giving of notice or both, would constitute such a
default.
4.16 Statements True and Correct. None of the information
prepared by, or on behalf of, UPC or any UPC Subsidiary regarding UPC, INTERIM
or any other UPC Subsidiary included or to be included in the Proxy Statement
to be mailed to the GSSC Stockholders in connection with the GSSC Stockholders
Meeting, and any other documents to be filed with the SEC, or any other
Regulatory Authority in connection with the transaction contemplated herein,
will, at the respective times such documents
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 30
<PAGE> 37
are filed, and, with respect to the Proxy Statement, when first mailed to the
GSSC Stockholders, be false or misleading with respect to any material fact, or
omit to state any material fact 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 GSSC Stockholders Meeting, be false or misleading with
respect to any material fact, or omit to state any material fact necessary to
correct any statement in any earlier communication with respect to the
solicitation of any proxy for the GSSC Stockholders Meeting. All documents
which UPC or any UPC Subsidiary is responsible for filing with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of the Securities Laws and the
rules and regulations issued thereunder.
4.17 Disclosure. The information concerning, and the
representations or warranties made by UPC and/or INTERIM as set forth in this
Reorganization Agreement, or in any document, statement, certificate or other
writing furnished or to be furnished by UPC and/or INTERIM to GSSC, SBM and/or
SBL pursuant hereto, do not and will not contain any untrue statement of a
material fact or omit and will not omit to state a material fact required to be
stated herein or therein which is necessary to make the statements and facts
contained herein or therein, in light of the circumstances under which they
were or are made, not false or misleading. Copies of all documents heretofore
or hereafter delivered or made available to GSSC, SBM and SBL by UPC and/or
INTERIM pursuant hereto were or will be complete and accurate copies of such
documents.
4.18 Reports. Since December 31, 1989, UPC and its
Subsidiaries have filed all reports and statements, together with any
amendments required to be made with respect thereto, that they were required to
file with (i) any state banking authority; (ii) the Federal Reserve, including,
but not limited to, Reports on FR Y-6 and FR Y-9; (iii) the FDIC, (iv) the SEC,
including, but not limited to, Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and proxy statements; and (vi) any other applicable federal or
state securities or banking authorities (except, in the case of federal or
state securities authorities, filings that are not material). As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits and schedules thereto, complied in all material respects
with all of the requirements of their respective forms and all of the statutes,
rules and regulations enforced or promulgated by the Regulatory Authority with
which they were filed. All such reports were true and complete in all
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 31
<PAGE> 38
material respects and did not contain any untrue statement as stated including
any amendments thereto of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. UPC has
previously provided to GSSC true and correct copies of all such reports filed
by UPC and its Subsidiaries after December 31, 1989.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF GSSC, SBM AND SBL
As of the date hereof and as of the Effective Time of the Merger,
GSSC, SBM and SBL represent and warrant to UPC and INTERIM as follows:
5.1 Organization and Qualification of GSSC and
Subsidiaries. GSSC is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and (i) has all requisite
corporate power and authority to own, operate and lease its material properties
and to carry on its business as it is currently being conducted; (ii) is in
good standing and is duly qualified to do business in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
business makes such qualification necessary and where the failure to so qualify
would individually or in the aggregate have a material adverse effect on the
condition (financial or otherwise), affairs, business, assets or prospects of
GSSC and all GSSC Subsidiaries, taken as a whole; and (iii) is a registered
bank holding company under the BHCA. Each GSSC Subsidiary is duly chartered,
validly existing and in good standing under the laws of the state or
jurisdiction of its incorporation and (i) has all requisite corporate power and
authority to own, operate and lease its material properties and to carry on its
business as it is currently being conducted and (ii) is in good standing and is
duly qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business makes such
qualification necessary and where the failure to so qualify would individually
or in the aggregate have a material adverse effect on the condition (financial
or otherwise), affairs, business, assets or prospects of GSSC and all GSSC
Subsidiaries, taken as a whole. GSSC and each of its Subsidiaries have in
effect all federal, state, local and foreign governmental authorizations,
permits and licenses necessary for them to own or lease their respective
properties and assets and to carry on their business as such businesses are
currently being conducted. SBM is a Mississippi banking corporation, duly
organized, validly existing
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 32
<PAGE> 39
and in good standing under the laws of the State of Mississippi and engages
only in activities (and holds properties only of the types) permitted by the
Mississippi Code and the rules and regulations promulgated by the MSBD
thereunder or the FDIC for insured depository institutions. SBM's deposit
accounts are insured by the Bank Insurance Fund (the "BIF") or the Savings
Association Insurance Fund ("SAIF") as administered by the FDIC to the fullest
extent permitted under applicable law. SBL is a Louisiana banking corporation,
duly organized, validly existing and in good standing under the laws of the
State of Louisiana and engages only in activities (and holds properties only of
the types) permitted by the Civil Law of Louisiana and the rules and
regulations promulgated by the LOFI thereunder or the FDIC for insured
depository institutions. SBL's deposit accounts are insured by the BIF as
administered by the FDIC to the fullest extent permitted under applicable law.
5.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) GSSC, SBM and SBL have all requisite power
and authority to execute and deliver this Reorganization Agreement and the Plan
of Merger and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Reorganization Agreement and the Plan of
Merger and the consummation of the proposed transaction have been (or will have
been) duly authorized by majorities of the entire Boards of Directors of GSSC,
SBM and SBL and, except for the approval of the GSSC Stockholders, no other
corporate proceedings on the part of GSSC, SBM or SBL are (or upon approval by
their respective boards of directors will be) necessary to authorize the
execution and delivery of this Reorganization Agreement and the Plan of Merger
and the consummation of the transactions contemplated hereby and thereby. This
Reorganization Agreement, the Plan of Merger and all other agreements and
instruments herein contemplated to be executed by GSSC, SBM and SBL have been
(or upon execution will have been) duly executed and delivered by GSSC, SBM and
SBL and (subject to any requisite shareholder or stockholder approval hereof)
constitute (or upon execution will constitute) legal, valid and enforceable
obligations of GSSC, SBM and SBL, subject, as to enforceability, to applicable
bankruptcy, insolvency, receivership, conservatorship, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and to the application of equitable principles and judicial
discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Plan of Merger, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof will not result in a
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 33
<PAGE> 40
violation or breach of any of the terms or provisions of, or constitute a
default under (or an event which, with the passage of time or the giving of
notice, or both, would constitute a default under), or conflict with, or permit
the acceleration of, any obligation under any mortgage, lease, covenant,
agreement, indenture or other instrument to which GSSC or any GSSC Subsidiary
is a party or by which GSSC or any GSSC Subsidiary is bound; the Certificate of
Incorporation and Bylaws of GSSC or the Charter and Bylaws of SBM or the
Charter and Bylaws of SBL; or any judgment, decree, order, regulatory letter of
understanding or award of any court, governmental body, authority or arbitrator
by which GSSC or any GSSC Subsidiary is bound; or (subject to the receipt of
the Government Approvals) any permit, concession, grant, franchise, license,
law, statute, ordinance, rule or regulation applicable to GSSC or any GSSC
Subsidiary or the properties of any of them; or result in the creation of any
lien, claim, security interest, encumbrance, charge, restriction or right of
any third party of any kind whatsoever upon the properties or assets of GSSC or
any GSSC Subsidiary where any such violation, conflict, breach, default, lien,
termination, acceleration or creation described in this Section 5.2 would have,
individually or in the aggregate, a material adverse effect on the condition
(financial or other), affairs, business, assets, or prospects of GSSC and all
GSSC Subsidiaries, taken as a whole.
5.3 No Legal Bar. Neither GSSC, SBM nor SBL is a party
to, or subject to, or bound by, any agreement or judgment, order, letter of
understanding, writ, prohibition, injunction or decree of any court or other
governmental authority or body, or any law which would prevent the execution of
this Reorganization Agreement or the Plan of Merger by GSSC, SBM or SBL, the
delivery thereof to UPC and INTERIM, or the consummation of the transactions
contemplated hereby and thereby, and no action or proceeding is pending against
GSSC, SBM or SBL in which the validity of this Reorganization Agreement, the
transactions contemplated hereby or any action which has been taken by any of
the Parties in connection herewith or in connection with any of the
transactions contemplated hereby are at issue.
5.4 Government and Other Approvals. Except for the
Government Approvals described in Section 4.4, no consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
GSSC, SBM or SBL in connection with the execution and delivery of this
Reorganization Agreement or the consummation of the transactions contemplated
by this Reorganization Agreement nor is any consent or approval of this
Reorganization Agreement required from any landlord, licensor or other
non-governmental party which has granted rights to GSSC, SBM or SBL in order to
avoid forfeiture
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 34
<PAGE> 41
or impairment of such rights. Neither GSSC, SBM nor SBL is aware of any facts,
circumstances or reasons why such Government Approvals should not be
forthcoming or which would prevent such approvals from being obtained.
5.5 Compliance With Law. GSSC and all GSSC Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses, and GSSC, SBM and SBL as the
owners of the Realty have complied in all material respects with all applicable
statutes, laws, ordinances, rules and regulations of all federal, state and
local governmental bodies, agencies and subdivisions having, asserting or
claiming jurisdiction over GSSC's, SBM's or SBL's properties or over any other
part of GSSC's, SBM's or SBL's assets, liabilities or operations, the breach or
violation of which would have, individually or in the aggregate, a material
adverse effect on the condition (financial or other), affairs, business,
assets, or prospects of GSSC or any GSSC Subsidiary, taken as a whole. The
benefits of all of such licenses, franchises, permits and authorizations are in
full force and effect and may continue to be enjoyed by GSSC, SBM and SBL
subsequent to the Closing of the transactions contemplated herein without any
consent or approval. Neither GSSC nor any GSSC Subsidiary has received notice
of any proceeding for the suspension or revocation of any such license,
franchise, permit, or authorization and no such proceeding is pending or has
been threatened by any governmental authority.
5.6 Charter Documents. Included in Schedule 5.6 hereto
are true and correct copies of the Certificate of Incorporation and Bylaws of
GSSC and the Charter and Bylaws of SBM and SBL, respectively. The Certificate
of Incorporation and Bylaws of GSSC and the Charter and Bylaws of SBM and SBL,
as amended to date, are in full force and effect.
5.7 GSSC Financial Statements. Accompanying Schedule 5.7
hereto are true copies of the audited consolidated balance sheets of GSSC as of
December 31, 1993, the audited consolidated balance sheets of GSSC as of
December 31, 1992, and selected financial data for GSSC as of December 31,
1993, 1992 and 1991, and the related consolidated statements of income and
changes in stockholders' equity and cash flows of GSSC for the years ended
December 31, 1993, 1992 and 1991 (the "Audited Financial Statements of GSSC")
and the comparative interim (or annual) financial statements for any subsequent
quarter (or year) ending after December 31, 1993 and prior to the Closing Date.
Such financial statements (i) were (or will be) prepared from the books and
records of GSSC, SBM and SBL; (ii) were (or will be) prepared in accordance
with GAAP consistently applied; (iii) accurately present (or will present)
GSSC's consolidated
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 35
<PAGE> 42
financial condition and the consolidated results of its operations, changes in
stockholders' equity and cash flows at the relevant dates thereof and for the
periods covered thereby; (iv) in the opinion of GSSC do contain or reflect (or
will contain and reflect) all necessary adjustments and accruals for an
accurate presentation of GSSC's consolidated financial condition and the
consolidated results of GSSC's operations and cash flows as stated including
any amendments thereto for the periods covered by such financial statements;
(v) in the opinion of GSSC do contain and reflect (or will contain and reflect)
adequate provisions for loan losses, for ORE reserves and for all reasonably
anticipatable liabilities for all taxes (federal, state, local or foreign) with
respect to the periods then ended; and (vi) in the opinion of GSSC do contain
and reflect (or will contain and reflect) adequate provisions for all
reasonably anticipated liabilities for OPEB pursuant to FASB 106 and 112.
5.8 Absence of Certain Changes. Except as disclosed in
Schedule 5.8 or as provided for or contemplated in this Reorganization
Agreement, since December 31, 1993 (the "GSSC Balance Sheet Date") there has
not been:
(a) any transaction having a value in excess of
One Hundred Thousand Dollars ($100,000) by GSSC, SBM or SBL not in the ordinary
course of business and in conformity with past practice;
(b) any material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), prospects, operations, liquidity, income,
condition (financial or otherwise) or net worth of GSSC, SBM or SBL;
(c) any damage, destruction or loss, whether or
not covered by insurance, which has had or may have a material adverse effect
on any of the properties, business or prospects of GSSC, SBM or SBL or their
future use and operation by GSSC, SBM or SBL;
(d) any acquisition or disposition by GSSC, SBM
or SBL of any property or asset of GSSC, SBM or SBL, whether real or personal,
having a fair market value, singularly or in the aggregate, in an amount
greater than Fifty Thousand Dollars ($50,000), except in the ordinary course of
business and in conformity with past practice or with respect to the
disposition of repossessed or foreclosed assets at fair value;
(e) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind on any of the respective properties or assets
of GSSC, SBM or SBL, except to secure
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 36
<PAGE> 43
extensions of credit in the ordinary course of business and in conformity with
past practice;
(f) any amendment, modification or termination of
any contract or agreement, relating to GSSC, SBM or SBL, to which GSSC, SBM or
SBL is a party which would have a material adverse effect upon the financial
condition or operations of GSSC, SBM or SBL;
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director,
employee or agent of GSSC, SBM or SBL, or any bonus payment or similar
arrangement made to or with any of such officers, directors, employees or
agents, other than routine increases made in the ordinary course of business
not exceeding the greater of ten percent (10%) per annum or $6,000 for any of
them individually;
(h) any incurring of, assumption of, or taking
of, by GSSC, SBM or SBL, any property subject to, any liability, except for
liabilities incurred or assumed or property taken subsequent to the GSSC
Balance Sheet Date in the ordinary course of business and in conformity with
past practice;
(i) except as described in the Audited Financial
Statements of GSSC and the interim financial statements of GSSC, any material
alteration in the manner of keeping the books, accounts or Records of GSSC, SBM
or SBL, or in the accounting policies or practices therein reflected, except as
may be required by GAAP or the Federal Reserve or the FDIC;
(j) any release or discharge of any obligation or
liability of any person or entity related to or arising out of any loan made by
GSSC, SBM or SBL of any nature whatsoever, except in the ordinary course of
business and in conformity with past practice; or
(k) to the best of GSSC's, SBM's and SBL's
knowledge, information and belief any loan (except credit card loans, passbook
loans or home loans) by GSSC, SBM or SBL to any policy Officer, director or
known 2% stockholder of GSSC, SBM or SBL or any Affiliate of GSSC, SBM or SBL;
or to any member of the immediate family of such Officer, director or 2%
stockholder of GSSC, SBM or SBL or any Affiliate of GSSC; or to any Person in
which such Officer, director or 2% stockholder directly or indirectly owns
beneficially or of record ten percent (10%) or more of any class of equity
securities in the case of a corporation, or of any equity interest, in the case
of a partnership or other non-corporate entity; or to any trust or estate in
which such Officer, director or 2% stockholder has a
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 37
<PAGE> 44
ten percent (10%) or more beneficial interest; or as to which such Officer,
director or 2% stockholder serves as a trustee or in a similar capacity. As
used in this Section 5.8, "Officer" shall refer to a person who holds the title
of chairman, president, executive vice president, senior vice president,
controller, secretary, cashier or treasurer or who performs the normal duties
of such officer whether or not he or she is compensated for such service or has
an official title.
5.9 Deposits. None of SBM's or SBL's Deposits is a
Brokered Deposit or, with respect to SBM's or SBL's rights to the Deposits,
subject to any encumbrance, legal restraint or other legal process. To the
best of the knowledge, information and belief of GSSC, SBM and SBL, except as
set forth in Schedule 5.9, no portion of the Deposits represents a Deposit by
any Affiliate of GSSC, SBM or SBL.
5.10 Properties. Except as described in Schedule 5.10
hereto or in the opinion of GSSC, SBM and SBL adequately reserved against in
the Audited Financial Statements of GSSC, GSSC and each GSSC Subsidiary has
good and marketable title free and clear of all material liens, encumbrances,
charges, defaults, or equities of whatever character to all of the material
properties and assets, tangible or intangible, reflected in the Audited
Financial Statements of GSSC as being owned by GSSC or any GSSC Subsidiary as
of the dates thereof. All buildings, and all fixtures, equipment, and other
property and assets that are material to the business of GSSC and its
Subsidiaries on a consolidated basis, held under leases or subleases by GSSC or
any GSSC Subsidiary, are held under valid instruments 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 pending).
5.11 GSSC Subsidiaries. Schedule 5.11 hereto lists all of
the active and inactive GSSC Subsidiaries (including any SBM or SBL Subsidiary)
as of the date of this Reorganization Agreement and describes generally the
business activities conducted, or permitted to be conducted, by each GSSC
Subsidiary. No equity securities of any of the GSSC Subsidiaries are or may
become required to be issued (other than to GSSC, SBM or SBL) 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 GSSC Subsidiary, and there
are no contracts, commitments, understandings, or arrangements by which
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 38
<PAGE> 45
any GSSC Subsidiary is bound to issue (other than to GSSC) any additional
shares of its capital stock or options, warrants, or rights to purchase or
acquire any additional shares of its capital stock. All of the shares of
capital stock of each GSSC Subsidiary held by GSSC or by any GSSC Subsidiary
are fully paid and nonassessable and are owned by GSSC or such GSSC Subsidiary
free and clear of any claim, lien, or encumbrance of any nature whatsoever,
whether perfected or not.
5.12 Condition of Fixed Assets and Equipment. Except as
disclosed in Schedule 5.12 hereto, each item of GSSC's or SBM's or SBL's fixed
assets and equipment having a net book value in excess of Twenty Thousand
Dollars ($20,000) included in the Fixed Assets is in good operating condition
and repair, normal wear and tear excepted.
5.13 Tax Matters. Except as described in Schedule 5.13
hereto:
(a) all federal, state, local, and foreign tax
returns required to be filed by or on behalf of GSSC and each GSSC Subsidiary
have been timely filed or requests for extensions have been timely filed,
granted, and have not expired for periods ended on or before the date of this
Reorganization Agreement, and all returns filed are, and the information
contained therein is, complete and accurate in all material respects. All tax
obligations reflected in such returns have been paid. As of the date of this
Reorganization Agreement, there is no audit examination, deficiency, or refund
litigation or matter in controversy with respect to any taxes that might result
in a determination materially adverse to GSSC or any GSSC Subsidiary except as
fully reserved for in the Audited Financial Statements of GSSC. All taxes,
interest, additions, and penalties due with respect to completed and settled
examinations or concluded litigation have been paid.
(b) Neither GSSC nor any GSSC Subsidiary has
executed an extension or waiver of any statute of limitations on the assessment
or collection of any tax due that is currently in effect.
(c) To the best of the knowledge, information and
belief of GSSC, SBM and SBL, adequate provision for any federal, state, local,
or foreign taxes due or to become due for GSSC and all GSSC Subsidiaries for
all periods through and including December 31, 1993, has been made and is
reflected on the December 31, 1993 financial statements included in the Audited
Financial Statements of GSSC, and have been and will continue to be made with
respect to periods ending after December 31, 1993.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 39
<PAGE> 46
(d) Deferred taxes of GSSC and each GSSC Subsidiary
have been and will be provided for in accordance with GAAP.
(e) To the best knowledge of GSSC, SBM and SBL,
neither the Internal Revenue Service nor any foreign, state, local or other
taxing authority is now asserting or threatening to assert against GSSC or any
GSSC Subsidiary any deficiency or claim for additional taxes, or interest
thereon or penalties in connection therewith. All material income, payroll,
withholding, property, excise, sales, use, franchise and transfer taxes, and
all other taxes, charges, fees, levies or other assessments, imposed upon GSSC
by the United States or by any state, municipality, subdivision or
instrumentality of the United States or by any other taxing authority,
including all interest, penalties or additions attributable thereto, which are
due and payable by GSSC or any GSSC Subsidiary, either have been paid in full,
or have been properly accrued and reflected in the Audited Financial Statements
of GSSC referred to in Section 5.7 of this Reorganization Agreement.
5.14 Litigation. Except as set forth in Schedule 5.14
hereto or otherwise reflected in the Audited Financial Statements of GSSC,
there is no action, suit or proceeding pending against GSSC or any GSSC
Subsidiary, or to the best knowledge of GSSC, SBM or SBL threatened against or
affecting GSSC, any GSSC Subsidiary or any of their assets, before any court or
arbitrator or any governmental body, agency or official (i) that would, if
decided against GSSC or the GSSC Subsidiary, have a material adverse impact on
the business, properties, assets, liabilities, condition (financial or other)
or prospects of GSSC, SBM or SBL taken as a whole and that are not reflected in
the Audited Financial Statements of GSSC or (ii) by or on behalf of any
employee employed or formerly employed by GSSC or any GSSC Subsidiary.
5.15 Hazardous Materials. All statements made by GSSC and
any GSSC Subsidiaries in this Section 5.15 are made to the best of the
knowledge, information and belief of GSSC and such GSSC Subsidiaries. For
purposes of this Section 5.15, the term "knowledge, information and belief"
means that of the directors and officers of GSSC and all GSSC Subsidiaries and
includes their actual knowledge as well as that which could have been obtained
by a reasonably prudent person in exercise of reasonable inquiry; provided,
however, such inquiry shall not be construed to require a Phase I environmental
survey, unless under the specific facts and circumstances a reasonably prudent
person would do so.
(a) GSSC and all GSSC Subsidiaries have obtained
all permits, licenses and other authorizations which are required
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 40
<PAGE> 47
to be obtained by GSSC or its Subsidiaries with respect to the Property (as
defined herein) under all Applicable Environmental Laws (as defined herein)
except to the extent that failure to have such permits, licenses, or
authorizations would not have a material adverse effect on the consolidated
financial condition, operations, business or prospects of GSSC or any GSSC
Subsidiary. All Property controlled, directly or indirectly, by GSSC or any
GSSC Subsidiary is in compliance with the terms and conditions of all of such
permits, licenses and authorizations, and is also in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any Applicable Environmental
Laws or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except as described in detail in Schedule 5.15(a) hereto and except to the
extent that failure to have such permits, licenses, or authorizations would not
have a material adverse effect on the consolidated financial condition,
operations, business or prospects of GSSC or any GSSC Subsidiary. For purposes
hereof, the following terms shall have the following meanings:
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all federal, state,
local and municipal environmental laws, rules or regulations to the extent
applicable to the Property, including, but not limited to, (a) the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. ("CERCLA"); (b) the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq. "RCRA"; (c) the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; (d) the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; (e) the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1471 et seq.; (f) the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; (g) the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 et seq.; (h) the National Environmental Policy Act, 42
U.S.C. Section 4321 et seq.; (i) the Rivers and Harbours Act of 1899, 33 U.S.C.
Section 401 et seq.; (j) the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; (k) the Safe Drinking Water Act, 42 U.S.C. Section 300(f)
et seq.; (l) the Oil Pollution Act of 1990, 33 U.S.C. Section 01 et seq.; (m)
the Hazardous Waste Management Act of 1977, Sections 68-46-101 et seq. of the
Tennessee Code; (n) the Hazardous Waste Management Act of 1983, Sections
68-46-201 et seq. of the Tennessee Code; (o) the Hazardous Waste Reduction Act
of 1990, Sections 68-46-301 et seq. of the Tennessee Code; (p) the Petroleum
Underground Storage Tank Act, Sections 68-58-101 et seq. of the Tennessee Code;
(q) any amendments to the foregoing Acts as adopted from time to time on or
before the Closing; (r) all Mississippi and Louisiana laws comparable to the
laws set forth above; and (s) any rule, regulation, order, injunction,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 41
<PAGE> 48
judgment, declaration or decree implementing or interpreting any of the
foregoing Acts or laws, as amended.
"HAZARDOUS SUBSTANCES" shall mean any substance, material,
waste, or pollutant that is now (or prior to the Closing) listed, defined,
characterized or regulated as hazardous, toxic or dangerous under or pursuant
to any statute, law, ordinance, rule or regulation of any federal, state,
regional, county or local governmental authority having jurisdiction over the
Property of GSSC or any GSSC Subsidiary or its use or operation, including,
without limitation, (a) any substance, material, element, compound, mixture,
solution, waste, chemical or pollutant listed, defined, characterized or
regulated as hazardous, toxic or dangerous under any Applicable Environmental
Laws, (b) petroleum, petroleum derivatives or by-products, and other
hydrocarbons, (c) polychlorinated biphenyls (PCBs), asbestos and urea
formaldehyde, and (d) radioactive substances, materials or waste.
"PROPERTY" shall be deemed to include, but shall not be
limited to, all real property owned, controlled, leased or held by GSSC or a
GSSC Subsidiary, in whole or in part, solely or in a joint venture or other
business arrangement, either for operational or investment purposes, and
whether assigned, purchased, or obtained through foreclosure (or similar
action) or in satisfaction of debts previously contracted.
(b) In addition, except as set forth in Schedule
5.15(b) hereto:
(i) No notice, notification, demand,
request for information, citation, summons or order has been issued,
no complaint has been filed, no penalty has been assessed and no
investigation or review is pending by any governmental or other entity
with respect to any alleged failure by GSSC or any GSSC Subsidiary to
have any permit, license or authorization required in connection with
the conduct of the business of GSSC or any GSSC Subsidiary or with
respect to any generation, treatment, storage, recycling,
transportation, release or disposal, or any release as defined in 42
U.S.C. Section 9601(22) ("Release"), of any Hazardous Substances
generated by GSSC or any Affiliate of GSSC at the Property;
(ii) None of the Property has received
or held any Hazardous Substances in such amount and in such manner as
to constitute a violation of the Applicable Environmental Laws, and no
Hazardous Substances have been Released or disposed of on, in or under
any of the Property during or prior to GSSC's or any GSSC Subsidiary's
occupancy
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 42
<PAGE> 49
thereof, or during or prior to the occupancy thereof by any assignee
or sublessee of GSSC or any GSSC Subsidiary, except in compliance with
all Applicable Environmental Laws;
(iii) There are no Hazardous Substances
being stored at any Property or located in, on or upon, any Property
(including the subsurface thereof) or installed or affixed to
structures or equipment on the Property; and there are no underground
storage tanks for Hazardous Substances, active or abandoned, at any
Property; and
(iv) No Hazardous Substances have been
Released in a reportable quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or order, at, on
or under any Property.
(c) Neither GSSC nor any Affiliate of GSSC has
transported or arranged for the transportation of any Hazardous Substances to
any location which is listed on the National Priorities List under CERCLA,
listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the CERCLA Information System ("CERCLIS") or
on any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against
the owner of the Property for cleanup costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited to, claims
under CERCLA.
(d) Except as set forth in Schedule 5.15(d), no
Hazardous Substances have been generated, recycled, treated, stored, disposed
of or Released by, GSSC or any Affiliate of GSSC in violation of Applicable
Environmental Laws.
(e) No oral or written notification of a Release
of Hazardous Substances has been filed by or on behalf of GSSC or any Affiliate
of GSSC relating to the Property and no Property is listed or proposed for
listing on the National Priority List promulgated pursuant to CERCLA, on
CERCLIS or on any similar state list of sites requiring investigation or
clean-up.
(f) There are no liens arising under or pursuant
to any Applicable Environmental Laws on any Property, and no government actions
have been taken or, to the best knowledge of GSSC, threatened, or are in
process which could subject any of such properties to such liens and none of
the Property would be required to place any notice or restriction relating to
the presence of Hazardous Substances at any Property in any deed to such
Property.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 43
<PAGE> 50
(g) Except as described in Schedule 5.15(g)
hereto, there have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by or which are in the possession of
GSSC or any Affiliate of GSSC in relation to any Property, which have not been
made available to UPC.
(h) Neither GSSC, SBM nor SBL is aware of any
facts which might suggest that GSSC or any GSSC Subsidiary has engaged in any
management practice with respect to any of its past or existing borrowers which
could reasonably be expected to subject GSSC or any GSSC Subsidiary or the
Property to any liability, either directly or indirectly, under the principles
of law as set forth in United States v. Fleet Factors Corp., 901 F.2d 1550
(11th Cir. 1990).
5.16 Insurance. Except as described in Schedule 5.16
hereto, GSSC, SBM and SBL have paid all material amounts due and payable under
any insurance policies and guaranties applicable to GSSC, SBM and SBL and
GSSC's, SBM's and SBL's assets and operations; all such insurance policies and
guaranties are in full force and effect; GSSC, SBM and SBL and all of GSSC's,
SBM's and SBL's material assets, businesses, Realty and other material
properties are insured against fire, casualty, theft, liability, loss,
interruption, title and such other events against which it is customary to
insure, all such insurance policies being in amounts that are adequate and
consistent with past practice and experience; and the fidelity bonds in effect
as to which GSSC, SBM or SBL is a named insured are believed by GSSC to be
sufficient.
5.17 Labor and Employment Matters. Except as reflected
in Schedule 5.17 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which GSSC or any GSSC Subsidiary is a party or by
which any of them is bound; (ii) employment, profit sharing, deferred
compensation, bonus, stock option, purchase, retainer, consulting, retirement,
welfare or incentive plan or contract to which GSSC or any GSSC Subsidiary is a
party or by which it is bound; or (iii) plan or agreement under which "fringe
benefits" (including, but not limited to, vacation plans or programs, sick
leave plans or programs and related benefits) are afforded any of the employees
of GSSC or any GSSC Subsidiary. No party to any such agreement, plan or
contract is in default with respect to any material term or condition thereof,
nor has any event occurred which, through the passage of time or the giving of
notice, or both, would constitute a default thereunder or would cause the
acceleration of any obligation of any party thereto. Neither GSSC nor any GSSC
Subsidiary has received notice from any governmental agency of any alleged
violation of applicable laws that remains
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 44
<PAGE> 51
unresolved respecting employment and employment practices, terms and conditions
of employment and wages and hours. GSSC and each GSSC Subsidiary have complied
in all material respects with all applicable laws, rules and regulations
relating to the employment of labor, including those related to its employment
practices, employee disabilities, wages, hours, collective bargaining and the
payment and withholding of taxes and other sums as required by the appropriate
governmental authorities, except for failures to comply with such laws which
would not have a material adverse effect on the business or operations of GSSC
and the GSSC Subsidiaries taken as a whole, and GSSC and each GSSC Subsidiary
have withheld and paid to the appropriate governmental authorities or are
holding for payment not yet due to such authorities, all amounts required to be
withheld from the employees of GSSC and each GSSC Subsidiary and are not liable
for any arrears of wages, taxes, penalties or other sums for failure to comply
with any of the foregoing. Except as set forth in Schedule 5.17, there is no:
unfair labor practice complaint against GSSC or any GSSC Subsidiary pending
before the National Labor Relations Board or any state or local agency; pending
labor strike or other labor trouble affecting GSSC or any GSSC Subsidiary;
labor grievance pending against GSSC or any GSSC Subsidiary; pending
representation question respecting the employees of GSSC or any GSSC
Subsidiary; pending arbitration proceedings arising out of or under any
collective bargaining agreement to which GSSC or any GSSC Subsidiary is a
party, or to the best knowledge of GSSC, any basis for which a claim may be
made under any collective bargaining agreement to which GSSC or any GSSC
Subsidiary is a party.
5.18 Records and Documents. The Records of SBM are and
will be sufficient to enable SBM to continue conducting its business as a
Mississippi state banking corporation under similar standards as SBM has
heretofore conducted such business. The Records of SBL are and will be
sufficient to enable SBL to continue conducting its business as a Louisiana
state banking corporation under similar standards as SBL has heretofore
conducted such business.
5.19 Capitalization of GSSC. The authorized capital stock
of GSSC consists of 15,000,000 shares of common stock having a par value of
$1.00 per share (the "GSSC Common Stock"), no shares of preferred stock (the
"GSSC Preferred Stock") and no other class of equity security. As of the date
of this Reorganization Agreement, a total of 9,492,975 shares of GSSC Common
Stock were issued and outstanding, no shares of GSSC Common Stock were held by
GSSC as treasury stock and no shares of GSSC Preferred Stock were issued and
outstanding. All of the outstanding GSSC Common Stock is validly issued,
fully-paid and nonassessable and has not been issued in violation of any
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 45
<PAGE> 52
preemptive rights of any GSSC Stockholder. Except as described in Section 2.7
of this Reorganization Agreement or as described on Schedule 5.19 hereto, as of
the date hereof, there are no outstanding securities or other obligations which
are convertible into GSSC Common Stock or into any other equity or debt
security of GSSC, and there are no outstanding options, warrants, rights,
scrip, rights to subscribe to, calls or other commitments of any nature which
would entitle the holder, upon exercise thereof, to be issued GSSC Common Stock
or any other equity or debt security of GSSC. Accordingly, immediately prior
to the Effective Time of the Merger, there will be not more than 9,600,000
shares of GSSC Common Stock issued and outstanding. Except as set forth in
Schedule 5.19 hereto, GSSC owns and is the beneficial and record holder of, and
has good and freely transferable title to, all of the 3,465,440 shares of SBM
Common Stock outstanding, and recorded on the books and Records of SBM as being
held in its name, free and clear of all liens, charges or encumbrances, and
such stock is not subject to any voting trusts, agreements or similar
arrangements or other claims which could affect the ability of GSSC to freely
vote such stock in support of the transactions contemplated herein. Except as
set forth in Schedule 5.19 hereto, GSSC owns and is the beneficial and record
holder of, and has good and freely transferable title to, all of the 5,000,000
shares of SBL Common Stock outstanding, and recorded on the books and Records
of SBL as being held in its name, free and clear of all liens, charges or
encumbrances, and such stock is not subject to any voting trusts, agreements or
similar arrangements or other claims which could affect the ability of GSSC to
freely vote such stock in support of the transactions contemplated herein.
5.20 Sole Agreement. Except as described in Schedule 5.20
hereto, with the exception of this Reorganization Agreement, neither GSSC, SBM,
SBL nor any Subsidiary of any of them has been or is a party to: any letter of
intent or agreement to merge, to consolidate, to sell or purchase assets (other
than in the normal course of its business) or to any other agreement which
contemplates the involvement of GSSC, SBM or SBL or any Subsidiary of either
(or any of their assets) in any business combination of any kind; or any
agreement obligating GSSC, SBM or SBL to issue or sell or authorize the sale or
transfer of GSSC Common Stock or the capital stock of SBM or SBL. Except as
described in Schedule 5.20 hereto, there are no (nor will there be at the
Effective Time of the Merger any) shares of capital stock or other equity
securities of GSSC outstanding, except for shares of GSSC Common Stock
presently issued and outstanding, and there are no (nor will there be at the
Effective Time of the Merger any) outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to,
or securities or rights convertible into or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 46
<PAGE> 53
exchangeable for, shares of the capital stock of GSSC, SBM or SBL, or
contracts, commitments, understandings, or arrangements by which GSSC, SBM or
SBL is or may be bound to issue additional shares of their capital stock or
options, warrants, or rights to purchase or acquire any additional shares of
their capital stock. There are no (nor will there be at the Effective Time of
the Merger any) contracts, commitments, understandings, or arrangements by
which GSSC or any GSSC Subsidiary is or may be bound to transfer or issue to
any third party any shares of the capital stock of any GSSC Subsidiary, and
there are no (nor will there be at the Effective Time of the Merger any)
contracts, agreements, understandings or commitments relating to the right of
GSSC to vote or to dispose of any such shares.
5.21 Disclosure. The information concerning, and
representations and warranties made by, GSSC, SBM and SBL set forth in this
Reorganization Agreement, or in the schedules of GSSC hereto, or in any
document, statement, certificate or other writing furnished or to be furnished
by GSSC, SBM or SBL to UPC and INTERIM pursuant hereto, does not contain any
untrue statement of a material fact or omit and will not omit to state a
material fact required to be stated herein or therein necessary to make the
statements and facts contained herein or therein, in light of the circumstances
in which they were or are made, not false or misleading. Copies of all
documents heretofore or hereafter delivered or made available to UPC or INTERIM
by GSSC, SBM or SBL pursuant hereto were or will be complete and accurate
copies of such documents.
5.22 Absence of Undisclosed Liabilities. Except as described
in Schedule 5.22 hereto, to the best of the knowledge, information and belief
of GSSC, SBM and SBL neither GSSC nor any GSSC Subsidiary has any obligation or
liability (contingent or otherwise) that is material to the financial condition
or operations of GSSC or any GSSC Subsidiary, or that, when combined with all
similar obligations or liabilities, would be material to the financial
condition or operations of GSSC or any GSSC Subsidiary (i) except as disclosed
in the Audited Financial Statements of GSSC delivered to UPC prior to the date
of this Reorganization Agreement or (ii) except obligations or liabilities
incurred in the ordinary course of its business consistent with past practices
or (iii) except as contemplated under this Reorganization Agreement and the
schedules of GSSC hereto. Since December 31, 1993, neither GSSC nor any GSSC
Subsidiary has incurred or paid any obligation or liability which would be
material to the financial condition or operations of GSSC or such GSSC
Subsidiary, except for obligations paid by GSSC, SBM or SBL under the terms of
this Reorganization Agreement (all such obligations or payments are fully
described by GSSC in Schedule 5.22 hereto) or in connection with transactions
made by
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 47
<PAGE> 54
it in the ordinary course of its business consistent with past practices, laws
and regulations applicable to GSSC or any GSSC Subsidiary.
5.23 Allowance for Possible Loan or ORE Losses. To the
best of the knowledge, information and belief of GSSC, SBM and SBL, the
allowance for possible loan losses shown on the Audited Financial Statements of
GSSC is (with respect to periods ended on or before December 31, 1993) or will
be (with respect to periods ending subsequent to December 31, 1993) adequate in
all respects to provide for anticipated losses inherent in Loans outstanding or
for commitments to extend credit or similar off-balance- sheet items (including
accrued interest receivable) as of the dates thereof.
The allowance for possible losses on other real estate ("ORE") shown
on the Audited Financial Statements of GSSC is (with respect to periods ended
on or before December 31, 1993) or will be (with respect to periods ending
subsequent to December 31, 1993) adequate in all respects to provide for
anticipated losses inherent in ORE owned or held by GSSC or any GSSC Subsidiary
and the net book value of ORE on the Balance Sheet of the Audited Financial
Statements of GSSC is the fair value of the ORE determined in accordance with
Statement of Position 92-3.
5.24 Compliance with Laws. GSSC and each GSSC Subsidiary:
(a) To the best of the knowledge, information and
belief of the management of GSSC and each GSSC Subsidiary, is in compliance
with all laws, rules, regulations, reporting and licensing requirements, and
orders applicable to its business or employees conducting its business
(including, but not limited to, those relating to consumer disclosure and
currency transaction reporting) the breach or violation of which would or could
reasonably be expected to have a material adverse effect on the financial
condition or operations of GSSC or any GSSC Subsidiary, or which would or could
reasonably be expected to subject GSSC or any GSSC Subsidiary or any of its
directors or officers to civil money penalties; and
(b) Has received no notification or communication
from any agency or department of federal, state, or local government or any of
the Regulatory Authorities, or the staff thereof (i) asserting that GSSC or any
GSSC Subsidiary is not in compliance with any of the statutes, rules,
regulations, or ordinances which such governmental authority or Regulatory
Authority enforces, which, as a result of such noncompliance, would result in a
material adverse impact on GSSC or any GSSC Subsidiary, (ii) threatening to
revoke any license, franchise, permit, or governmental authorization which is
material to the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 48
<PAGE> 55
financial condition or operations of GSSC or any GSSC Subsidiary, or (iii)
requiring GSSC or any GSSC Subsidiary to enter into a cease and desist order,
consent, agreement, or memorandum of understanding.
5.25 Employee Benefit Plans.
(a) GSSC has previously provided to UPC true and
complete copies of each "employee pension benefit plan," as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA") which, to
the best of its knowledge, is subject to any provision of ERISA and covers any
employee, whether active or retired, of GSSC or any GSSC Subsidiary or any
other entity which is a member of a controlled group or is under common control
with GSSC or its Subsidiaries in the manner defined and further described in
Section 414(b), (c), or (m) of the Internal Revenue Code. Such plans are
hereinafter referred to collectively as the "Employee Pension Benefit Plans",
and each such Employee Pension Benefit Plan is listed in Schedule 5.25(a)
hereto. GSSC has also provided to UPC true and complete copies of all trust
agreements, collective bargaining agreements, and insurance contracts related
to such Employee Pension Benefit Plans.
To the best knowledge of GSSC and its Subsidiaries,
each Employee Pension Benefit Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code is so qualified and each trust
forming a part thereof is exempt from tax pursuant to Section 501(a) of the
Internal Revenue Code. Copies of the latest determination letters concerning
the qualified status of each Employee Pension Benefit Plan which is intended to
be qualified under Section 401(a) of the Internal Revenue Code have been
provided to UPC. Requests for determination letters relating to amendments
required to cause such Employee Pension Benefit Plans to be in compliance with
the Tax Equity and Fiscal Responsibility Act of 1982, the Deficit Reduction Act
of 1984 and the Retirement Equity Act of 1984 were timely filed and have been
received by GSSC and its Subsidiaries. Requests for determination letters
relating to any subsequent amendments to such plans which are currently pending
have been provided to UPC. All such requests were timely and properly filed
and appropriate notice of any such filing was timely and properly provided to
affected plan participants and beneficiaries.
To the best of the knowledge, information and belief
of GSSC, SBM and SBL, each of the Employee Pension Benefit Plans has been
operated in substantial conformity with the written provisions of the
applicable plan documents which have been delivered to UPC and in substantial
compliance with the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 49
<PAGE> 56
requirements prescribed by all statutes, orders, rules, and regulations
including, but not limited to, ERISA and the Internal Revenue Code, which are
applicable to such Employee Pension Benefit Plans. To the extent that the
operation of an Employee Pension Benefit Plan has deviated from the written
provisions of the plan, such operational deviations have been disclosed in
Schedule 5.25(a) hereto. All such deviations have been made in conformity with
applicable laws, including ERISA and the Internal Revenue Code.
With respect to Employee Pension Benefit Plans which
are subject to the annual report requirement of ERISA Section 103 or to the
annual return requirement of Internal Revenue Code Section 6047, all required
annual reports and annual returns, or such other documents as may have been
required as alternative means of compliance with the annual report requirement,
have been timely filed. Copies of all such annual returns/reports, including
all attachments and Schedules, for the three (3) plan years immediately
preceding the current date have been delivered to UPC. With respect to
Employee Pension Benefit Plans which complied with the annual return
requirement by satisfaction of an alternate compliance method, any documents
required to be filed with the Department of Labor in satisfaction of such
requirements have been provided to UPC.
With respect to all Employee Pension Benefit Plans
which are subject to the summary plan description requirement of ERISA Section
102, all such summary plan descriptions as were required to be filed with the
Department of Labor and distributed to participants and beneficiaries have been
timely filed and distributed. Copies of all such summary plan descriptions
have been delivered to UPC. No Employee Pension Benefit Plan constitutes a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
No Employee Pension Benefit Plan subject to Part III
of Subtitle B of ERISA or Section 412 of the Internal Revenue Code, or both,
has incurred an "accumulated funding deficiency" within the meaning of Internal
Revenue Code Section 412, whether or not waived. All required contributions to
all Employee Pension Benefit Plans have been timely made. Any penalties or
taxes which have been incurred by GSSC or its Subsidiaries or by any Employee
Pension Benefit Plan with respect to the timing or amount of payment of any
contribution to an Employee Pension Benefit Plan have been timely paid. The
limitations of Internal Revenue Code Section 415 have not been exceeded with
respect to any Employee Pension Benefit Plan or combination of such plans to
which such limitations apply.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 50
<PAGE> 57
No "reportable event" (as described in Section
4043(b) of ERISA) has occurred with respect to any Employee Pension Benefit
Plan. No Employee Pension Benefit Plan or any trust created thereunder, nor
any "disqualified person" with respect to the plan (as defined in Section 4975
of the Internal Revenue Code), has engaged in a "prohibited transaction", as
such term is defined in Section 4975 of the Internal Revenue Code, which could
subject such Employee Pension Benefit Plan, any such trust or any such
disqualified person (other than a person for whom neither GSSC nor any GSSC
Subsidiary is directly or indirectly responsible) to liability under Title I of
ERISA or to the imposition of any tax under Section 4975 of the Internal
Revenue Code.
No condition exists with regard to any Employee
Pension Benefit Plan which constitutes grounds for the termination of such plan
pursuant to Section 4042 of ERISA.
The fair market value of the assets of any Employee
Pension Benefit Plan which is subject to Title IV of ERISA (excluding for these
purposes any accrued but unpaid contributions) exceeded the present value of
all benefits accrued under any such plan, determined on a termination basis
using the assumptions established by the Pension Benefit Guaranty Corporation
as in effect on such date. Neither GSSC nor its Subsidiaries have incurred any
liability under Title IV of ERISA arising in connection with the termination
of, or complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA. The termination of any Internal Revenue Code
Section 401(a) qualified Employee Pension Benefit Plan previously terminated by
GSSC or any GSSC Subsidiary did not adversely affect the qualification of such
Employee Pension Benefit Plan. The distribution of the assets of any such
Employee Pension Benefit Plan was made or is currently being made in conformity
with the requirements of that Employee Pension Benefit Plan and of applicable
legal requirements and has not resulted in, will not result in, and is
reasonably not anticipated to result in the assessment of any tax, penalty, or
excise tax against such pension plan, its related trusts, the fiduciary and
administrators of the Employee Pension Benefit Plan, GSSC or its Subsidiaries,
or any disqualified person (as defined in Internal Revenue Code Section 4975)
with respect to the Employee Pension Benefit Plan.
Except as disclosed in Schedule 5.25(a) hereto, all
Employee Pension Benefit Plans were in effect for substantially all of calendar
year 1993. There has been no material amendment of any such plans (other than
amendments required to comply with applicable law) or material increase in the
cost of maintaining such plans or providing benefits
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 51
<PAGE> 58
thereunder on or after the last day of the plan year which ended in calendar
year 1993 for each such Employee Pension Benefit Plan.
GSSC has provided to UPC copies of the annual
actuarial valuation or allocation report for each Employee Pension Benefit Plan
for the three (3) plan years for such plan immediately preceding the current
date. With regard to Employee Pension Benefit Plans which are not intended to
be qualified under Section 401(a) of the Internal Revenue Code, copies of
financial statements or reports containing information regarding the expense of
maintaining any such Employee Pension Benefit Plan for the three (3) plan years
preceding the current date have been delivered to UPC.
(b) GSSC has furnished to UPC true and complete copies of
each "Employee Welfare Benefit Plan" as defined in Section 3(1) of ERISA,
which, to the best of its knowledge, is subject to any provision of ERISA and
covers any employee, whether active or retired, of GSSC or any GSSC Subsidiary
or members of a controlled group or entities under common control with GSSC or
its Subsidiaries in the manner defined and further described in Section 414(b),
(c), or (m) of the Internal Revenue Code. Such plans are hereinafter referred
to collectively as the "Employee Welfare Benefit Plans", and each such Employee
Welfare Benefit Plan is listed in Schedule 5.25(b) hereto.
GSSC has also provided to UPC true and complete
copies of documents establishing all funding instruments for such Employee
Welfare Benefit Plans, including but not limited to, trust agreements,
cafeteria plans (pursuant to Internal Revenue Code Section 125), and voluntary
employee beneficiary associations (pursuant to Internal Revenue Code Section
501(c)(9)). Each of the Employee Welfare Benefit Plans has been operated in
substantial conformity with the written provisions of the plan documents which
have been delivered to UPC and in compliance with the requirements prescribed
by all statutes, orders, rules, and regulations including, but not limited to,
ERISA and the Internal Revenue Code, which are applicable to such Employee
Welfare Benefit Plans. Any deviation in the operation of such plans from the
requirements of the plan documents or of applicable laws have been listed in
Schedule 5.25(b) hereto. GSSC has provided any notification required by law to
any participant covered under any Employee Welfare Benefit Plan which has
failed to comply with the requirements of any Internal Revenue Code section
which results in the imposition of a tax on benefits provided to such
participants under such plan.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 52
<PAGE> 59
With respect to all Employee Welfare Benefit Plans
which are subject to the annual report requirement of ERISA Section 103 or to
the annual return requirement of Internal Revenue Code Section 6039D, all
annual reports and annual returns as were required to be filed pursuant to such
sections have been timely filed. Copies of all such annual returns/reports,
including all attachments and Schedules, for the three (3) plan years
immediately preceding the current date for all plans subject to such
requirements have been delivered to UPC. With respect to all Employee Welfare
Benefit Plans which are subject to the summary plan description requirement of
ERISA Section 102, all such summary plan descriptions as were required to be
filed with the Department of Labor and distributed to participants and
beneficiaries have been timely filed and distributed. Copies of all such
summary plan descriptions have been delivered to UPC.
Except as disclosed in Schedule 5.25(b) hereto, all
Employee Welfare Benefit Plans which are in effect were in effect for
substantially all of calendar year 1993. Except as disclosed in Schedule
5.25(b) hereto, there has been with respect to such Employee Welfare Benefit
Plans no material amendment thereof or material increase in the cost thereof or
benefits payable thereunder on or after December 31, 1993.
To the best of the knowledge, information and belief
of GSSC, SBM and SBL, no Employee Welfare Benefit Plan or any trust created
thereunder, nor any "party in interest" with respect to the plan (as defined in
Section 3(14) of ERISA), has engaged in a "prohibited transaction", as such
term is defined in Section 406 of ERISA, which could subject such Employee
Welfare Benefit Plan, any such trust, or any party in interest (other than a
person for whom neither GSSC nor any GSSC Subsidiary is directly or indirectly
responsible) to the imposition of a penalty for such prohibited transaction
under Section 502(i) of ERISA. The Department of Labor has not assessed any
such penalty or served notice to GSSC or any of its Subsidiaries that such a
penalty may be imposed upon any Employee Welfare Benefit Plan.
Neither GSSC nor any GSSC Subsidiary has failed to
make any contribution to, or pay any amount due and owing by GSSC or an GSSC
Subsidiary under the terms of, an Employee Welfare Benefit Plan. Except as
disclosed in Section 5.25(b) hereto, no claims have been incurred with respect
to any Employee Welfare Benefit Plan which may, to the best knowledge,
information and belief of GSSC, constitute a liability for GSSC or any GSSC
Subsidiary after the application of any insurance, trust or other funds which
are applicable to the payment of such claims.
Except as disclosed in Schedule 5.25(b) hereto, to
the best knowledge, information and belief of GSSC, no condition
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 53
<PAGE> 60
exists that could subject any Employee Welfare Benefit Plan or any person
(other than a person for whom neither GSSC nor any GSSC Subsidiary is directly
or indirectly responsible) to liabilities, damages, losses, taxes, or sanctions
that arise under Section 4980B of the Internal Revenue Code or Sections 601
through 608 of ERISA for failure to comply with the continuation health care
coverage requirements of ERISA Sections 601 through 608 and Internal Revenue
Code Section 4980B with respect to any current or former employee of GSSC or
any GSSC Subsidiary, or the beneficiaries of such employee.
(c) GSSC has furnished to UPC true and complete copies
and/or descriptions of each plan or arrangement maintained or otherwise
contributed to by GSSC or any GSSC Subsidiary which is not an Employee Pension
Benefit Plan and is not an Employee Welfare Benefit Plan and which (exclusive
of base salary and base wages) provides for any form of current or deferred
compensation, bonus, stock option, profit sharing, retirement, group health or
insurance, welfare benefits, fringe benefits, or similar plan or arrangement
for the benefit of any employee or class of employees, whether active or
retired, or independent contractors of GSSC or any GSSC Subsidiary. Such plans
and arrangements shall collectively be referred to herein as "Benefit
Arrangements" and all such Benefit Arrangements of GSSC and GSSC's Subsidiaries
are listed on Schedule 5.25(c) hereto. Except as disclosed in Schedule 5.25(c)
hereto, there are no other benefit arrangements of the GSSC companies and all
Benefit Arrangements which are in effect were in effect for substantially all
of calendar year 1993. Except as disclosed in Schedule 5.25(c) hereto, there
has been with respect to Benefit Arrangements no material amendment thereof or
material increase in the cost thereof or benefits payable thereunder on or
after December 31, 1993. There has been no material increase in the base
salary and wage levels of GSSC or any GSSC Subsidiary and, except in the
ordinary course of business, no change in the terms or conditions of employment
(including severance benefits) compared, in each case, to those prevailing for
substantially all of calendar year 1993. Except as disclosed in Schedule
5.25(c) hereto, there has been no material increase in the compensation of, or
benefits payable to, any senior executive employee of GSSC or any GSSC
Subsidiary on or after December 31, 1993, nor has any employment, severance, or
similar contract been entered into with any such employee, nor has any
amendment to any such contract been made on or after December 31, 1993.
With respect to all Benefit Arrangements which are
subject to the annual return requirement of Internal Revenue Code Section
6039D, all annual returns as were required to be filed have been timely filed.
Copies of all such annual returns for
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 54
<PAGE> 61
the three (3) plan years immediately preceding the current date have been
delivered to UPC.
(d) Listed on Schedule 5.25(d) hereto are all Employee
Pension Benefit Plans, Employee Welfare Benefit Plans, and Benefit Arrangements
which provide compensation or benefits which become effective upon a change in
control of GSSC or any GSSC Subsidiary, including, but not limited to,
additional compensation or benefits, or acceleration in the amount or timing of
payment of compensation or benefits which had become effective prior to the
date of such acceleration. Except as disclosed in Schedule 5.25(d) hereto,
there is no Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or
Benefit Arrangement covering any employee of GSSC or any GSSC Subsidiary which
individually or collectively could give rise to the payment of any amount which
would constitute an "excess parachute payment", as such term is defined in
Section 280G of the Internal Revenue Code and Regulations proposed pursuant to
that section.
(e) Except as described in Schedule 5.25(e) hereto, each
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement and each personal services contract, fringe benefit, consulting
contract or similar arrangement with or for the benefit of any officer,
director, employee, or other person may be terminated by GSSC (or by GSSC as
the Surviving Corporation) within a period of no more than thirty (30) days
following the effective time of the merger, without payment of any amount as a
penalty, bonus, premium, severance pay, or other compensation for such
termination. No limitation on the right to terminate any such plan has been
communicated by GSSC or its Subsidiaries to employees, former employees, or
retirees who are or may be participants in or beneficiaries of such plans or
arrangements. Except as described in Schedule 5.25(e) hereto, each Employee
Pension Benefit Plan which is qualified under Section 401(a) of the Internal
Revenue Code as a qualified defined benefit pension plan permits the reversion
of excess assets to the employer maintaining the plan or its successors or
assigns upon a plan termination and such provision has been included in the
Employee Pension Benefit Plan for the period required under ERISA Section
4044(d).
(f) Except as disclosed in Schedule 5.25(f) hereto,
neither GSSC nor any GSSC Subsidiary has received notice from any governmental
agency of any alleged violation of applicable laws or of any prospective audit
or other investigation for the purpose of reviewing compliance with applicable
laws with respect to any Employee Pension Benefit Plan, Employee Welfare
Benefit Plan or Benefit Arrangement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 55
<PAGE> 62
Except as disclosed in Schedule 5.25(f) hereto, no
suits, actions or claims have been filed in any court of law or with any
governmental agency regarding the operation of any Employee Pension Benefit
Plan, Employee Welfare Benefit Plan, or Benefit Arrangement and no such
additional suits, actions, or claims are, to the best information, knowledge
and belief of GSSC, anticipated to be filed.
5.26 Material Contracts. Except as reflected in the
Audited Financial Statements of GSSC, or as described in Schedule 5.26 hereto,
neither GSSC nor any GSSC Subsidiary, nor any of their respective assets,
businesses, or operations, is as of the date of this Reorganization Agreement a
party to, or is bound or obligated by, or receives benefits under any contract
or agreement or amendment thereto that in each case would (assuming that each
were a reporting company under the 1934 Act, whether or not it is so
registered) be required to be filed as an exhibit to an Annual Report on Form
10-K filed by GSSC as of the date of this Reorganization Agreement that has not
already been filed as an exhibit to GSSC's Form 10-K filed for the fiscal year
ended December 31, 1993, or in any other SEC Document filed prior to the date
of this Reorganization Agreement. Set forth on Schedule 5.26 hereto is an
accurate and complete list and true and complete copies of all contracts to
which GSSC, SBM or SBL are a party and having a value in excess of $100,000.
5.27 Material Contract Defaults. To the best of the
knowledge, information and belief of GSSC, SBM and SBL, neither GSSC nor any
GSSC Subsidiary is in default in any respect under any contract, agreement,
commitment, arrangement, lease, insurance policy, or other instrument to which
it is a party or by which its respective assets, business, or operations may be
bound or affected or under which it or its respective assets, business, or
operations receives benefits, and which default is reasonably expected to have
either individually or in the aggregate a material adverse effect on GSSC or
any GSSC Subsidiary on a consolidated basis, and there has not occurred any
event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
5.28 Reports. Since December 31, 1989, GSSC, SBM and SBL
have filed all reports and statements, together with any amendments required to
be made with respect thereto, that they were required to file with (i) the MSBD
or the LOFI; (ii) the Federal Reserve, including, but not limited to, Reports
on FR Y-6 and FR Y-9; (iii) the FDIC, (iv) the SEC, including, but not limited
to, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and proxy
statements; and (vi) any other applicable federal or state securities or
banking authorities (except, in the case of federal or state securities
authorities, filings that
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 56
<PAGE> 63
are not material). As of their respective dates, each of such reports and
documents, including the financial statements, exhibits and schedules thereto,
complied in all material respects with all of the requirements of their
respective forms and all of the statutes, rules, and regulations enforced or
promulgated by the Regulatory Authority with which they were filed. All such
reports were true and complete in all material respects and did not contain any
untrue statement as stated including any amendments thereto of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. GSSC has previously provided to UPC true and
correct copies of all such reports filed by GSSC, SBM or SBL after December 31,
1989.
5.29 Exchange Act and Listing Filings.
(a) The outstanding shares of GSSC Common Stock are registered
with the SEC pursuant to the 1934 Act and GSSC has filed with the SEC all
material forms and reports required by law to be filed by GSSC with the SEC,
which forms and reports, taken as a whole, are true and correct in all material
respects, and do not misstate a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.
(b) The outstanding shares of GSSC Common Stock are listed for
trading on the NASDAQ (under the symbol "GSSC") pursuant to the listing rules
of the NASDAQ and GSSC has filed with the NASDAQ all material forms and reports
required by law to be filed by GSSC with the NASDAQ, which forms and reports,
taken as a whole, are true and correct in all material respects, and do not
misstate a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
5.30 Statements True and Correct. None of the information
prepared by, or on behalf of, GSSC or any GSSC Subsidiary regarding GSSC, SBM
or any other GSSC Subsidiary included or to be included in the Proxy Statement
to be mailed to GSSC's Stockholders in connection with the GSSC Stockholders
Meeting, and any other documents to be filed with the SEC, or any other
Regulatory Authority in connection with the transactions contemplated herein,
at the respective times such documents are filed, and, with respect to the
Proxy Statement, when first mailed to the GSSC Stockholders, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 57
<PAGE> 64
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 GSSC Stockholders Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for the GSSC Stockholders Meeting. All documents which GSSC or any GSSC
Subsidiary is responsible for filing with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable law,
including applicable provisions of the Securities Laws and the rules and
regulations issued thereunder.
ARTICLE 6
COVENANTS OF UPC
6.1 Proxy Statement; UPC Shareholder Approval. UPC shall
call the UPC Shareholders Meeting to be held as soon as reasonably practicable
after the date of this Reorganization Agreement and the Federal Reserve shall
have entered its Order approving the transactions contemplated in this
Reorganization Agreement, for the purpose of (i) approving this Reorganization
Agreement and the Plan of Merger, and (ii) such other related matters as it
deems appropriate. In connection with the UPC Shareholders Meeting, (i) UPC
shall, with GSSC's assistance, prepare a Proxy Statement to be filed with the
SEC and with any other appropriate Regulatory Authority; shall mail or cause to
be mailed such Proxy Statement to the UPC Shareholders and shall provide GSSC
the opportunity to review and comment on the Proxy Statement at least five (5)
business days prior to the filing of the Proxy Statement with the Regulatory
Authorities for prior review and at least five (5) business days prior to the
mailing of the Proxy Statement to the UPC Shareholders; (ii) the Parties shall
furnish to each other all information concerning them that the other Party may
reasonably request in connection with the preparation of such Proxy Statement;
(iii) the Board of Directors of UPC shall recommend (subject to compliance with
its legal and fiduciary duties as advised by counsel) to UPC Shareholders the
approval of this Reorganization Agreement and the Plan of Merger; and (iv) UPC
shall use its best efforts, subject to compliance with its legal and fiduciary
duty as advised by counsel, to obtain such UPC Shareholders' approvals.
6.2 Regulatory Approvals. Within sixty (60) days after
execution of this Reorganization Agreement, UPC shall file any and all
applications with the appropriate government Regulatory Authorities in order to
obtain the Government
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 58
<PAGE> 65
Approvals and shall take such other actions as may be reasonably required to
consummate the transactions contemplated in this Reorganization Agreement and
the Plan of Merger with reasonable promptness. UPC shall pay all fees and
expenses arising in connection with such applications for regulatory approval.
UPC agrees to provide the appropriate Regulatory Authorities with the
information required by such authorities in connection with UPC's applications
for regulatory approval and UPC agrees to use its best efforts to obtain such
regulatory approvals, and any other approvals and consents as may be required
for the Closing, as promptly as practicable; provided, however, that nothing in
this Section 6.2 shall be construed to obligate UPC to take any action to meet
any condition required to obtain prior regulatory approval if UPC shall, in
UPC's reasonable judgment, deem such condition to be unreasonable or
inconsistent with previous regulatory approvals received by UPC in transactions
of this type and to constitute a significant impediment upon UPC's ability to
carry on its business or acquisition programs or to require UPC to increase
UPC's capital ratios to amounts in excess of the Federal Reserve's minimum
capital ratio guidelines which may be in effect from time to time. UPC shall
not knowingly take any action, or omit to take any action during the term of
this Reorganization Agreement which would adversely affect the receipt by UPC
of the Government Approvals or adversely affect the ability of UPC to perform
its obligations under this Reorganization Agreement. Subject to the terms and
conditions of this Reorganization Agreement, UPC and INTERIM agree to use all
reasonable efforts and to take, or to cause to be taken, all actions, and to
do, or to cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective, with
reasonable promptness after the date of this Reorganization Agreement, the
transactions contemplated by this Reorganization Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining or other order adversely affecting the ability of the Parties to
consummate the transactions contemplated by this Reorganization Agreement. UPC
shall use, and shall cause each of its Subsidiaries to use, its best efforts to
obtain consents of all third parties and Regulatory Authorities necessary or
desirable for the consummation of each of the transactions contemplated by this
Reorganization Agreement.
6.3 Reservation, Listing and Registration of UPC Common Stock
under the Securities Laws. UPC shall reserve for issuance that number of
shares of UPC Common Stock necessary to (i) satisfy the Consideration to be
delivered to the GSSC Record Holders at the Effective Time of the Merger and
(ii) provide shares of UPC Common Stock which will be issued upon the exercise
of options granted under the GSSC Key Employees Stock Plan and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 59
<PAGE> 66
which are outstanding immediately prior to Effective Time of the Merger. UPC
shall cooperate with GSSC in the preparation of the GSSC Proxy Statement to be
used at the GSSC Stockholders Meeting (and which shall serve also as UPC's
prospectus with respect to UPC's issuance of shares of the UPC Common Stock)
and shall cause a registration statement on the appropriate form of the SEC to
be prepared and filed so as to cause any shares of UPC Common Stock which may
be delivered to the GSSC Record Holders in payment of the Consideration to be
registered under the 1933 Act and to be duly qualified under appropriate state
securities laws. UPC shall also list for trading on the NYSE the shares of UPC
Common Stock so delivered. Such reservation, registration, qualification and
listing shall be effected prior to the Closing. As soon as practicable after
the issuance of all Governmental Approvals, but no later than thirty days
following such date, UPC shall file with the SEC a Registration Statement on
Form S-8 to register the shares of UPC Common Stock that will be issued to
holders of options granted under the GSSC Key Employees Stock Plan. UPC shall
use its best efforts to have such Registration Statement declared effective as
promptly as practicable.
6.4 Employee Benefits. Following the consummation of the
transactions contemplated herein, UPC shall not be obligated to make further
contributions to any of the Employee Plans or Benefit Arrangements of GSSC or
the GSSC Subsidiaries and all employees of GSSC and the GSSC Subsidiaries
immediately prior to the Effective Time of the Merger who shall continue as
employees of GSSC as the Surviving Corporation or as employees of any other UPC
Subsidiary will be afforded the opportunity to participate in any employee
benefit plans maintained by UPC or UPC's Subsidiaries, including but not
limited to, any "employee benefit plan," as that term is defined in ERISA, on
an equal basis with employees of UPC or any UPC Subsidiaries with comparable
positions, compensation, and tenure. Service with GSSC or with any GSSC
Subsidiary prior to the Effective Time of the Merger by former employees of
GSSC or any GSSC Subsidiary will be deemed service with UPC for purposes of
determining eligibility for participation and vesting in such employee benefit
plans of UPC and UPC's Subsidiaries. In its sole discretion, UPC may
elect to postpone until the first day of July next following the Effective Time
of the Merger the participation of the employees of GSSC and GSSC's
Subsidiaries in the employee benefit plans maintained by UPC or UPC's
Subsidiaries; provided, however, during any such postponement period, the GSSC
Employee Plans and all related employee benefit plans shall continue in full
force and effect, (including the continued receipt of all customary corporate
contributions in accordance with the past practice of GSSC, SBM and SBL for the
period prior to the termination of the plans), except as expressly modified or
amended by the terms of this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 60
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Reorganization Agreement, or until such time as the plans are replaced by
benefit plans maintained by UPC.
6.5 Conduct of Business; Notice of Adverse Change. UPC shall
not knowingly engage in any activity which would (i) prohibit UPC or INTERIM
from delivering the Consideration to the Exchange Agent at Closing; (ii)
prevent UPC or INTERIM from consummating the transactions contemplated in this
Reorganization Agreement; (iii) prevent or impede the ability of UPC to account
for the Merger as a pooling of interests on the financial statements of UPC;
and (iv) prevent or impede the ability of UPC, GSSC and the GSSC Record Holders
to accomplish the Merger as a tax-free reorganization and, except with respect
to cash received in lieu of a fractional share of UPC Common Stock, on a
tax-free basis to the GSSC Record Holders. Upon receipt of UPC Shareholder
Approval and the satisfaction (or lawful waiver by UPC) of all conditions
precedent, UPC shall vote the shares of INTERIM in favor of the Merger. UPC
shall notify GSSC in writing immediately upon becoming aware of any material
adverse change in the financial condition or prospects of UPC or of any event
which would prohibit UPC's performance under the terms of this Reorganization
Agreement.
ARTICLE 7
COVENANTS OF GSSC, SBM AND SBL
7.1 Proxy Statement; GSSC Stockholder Approval. GSSC shall
call the GSSC Stockholders Meeting to be held as soon as reasonably practicable
after the date of this Reorganization Agreement and the Federal Reserve shall
have entered its Order approving the transactions contemplated in this
Reorganization Agreement, for the purpose of (i) approving this Reorganization
Agreement and the Plan of Merger, and (ii) such other related matters as it
deems appropriate. In connection with the GSSC Stockholders Meeting, (i) GSSC
shall, with UPC's assistance, prepare the Proxy Statement to be filed with the
SEC and with any other appropriate Regulatory Authority; shall mail or cause to
be mailed such Proxy Statement to the GSSC Stockholders and shall provide UPC
the opportunity to review and comment on the Proxy Statement at least five (5)
business days prior to the filing of the Proxy Statement with the Regulatory
Authorities for prior review and at least five (5) business days prior to the
mailing of the Proxy Statement to the GSSC Stockholders; (ii) the Parties shall
furnish to each other all information concerning them that the other Party may
reasonably request in connection with the preparation of such Proxy Statement;
(iii) the Board of Directors of GSSC shall recommend (subject to compliance
with its legal and fiduciary duties as advised by counsel) to the GSSC
Stockholders
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 61
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the approval of this Reorganization Agreement and the Plan of Merger; and (iv)
GSSC shall use its best efforts, subject to compliance with its legal and
fiduciary duty as advised by counsel, to obtain such GSSC Stockholders'
approvals.
7.2 Conduct of Business -- Affirmative Covenants. Unless
the prior written consent of UPC shall have been obtained, which consent will
not be unreasonably withheld by UPC and shall be forthcoming by UPC within five
(5) Business Days from the submission of a written request by GSSC therefor
and, except as otherwise contemplated herein:
(a) Except as may be required by statute, rule or
regulation, GSSC, SBM and SBL shall, and shall cause each GSSC Subsidiary to:
(i) Operate its business only in the
usual, regular, and ordinary course;
(ii) Preserve intact its business
organizations and assets and to maintain its rights and franchises;
(iii) Take no action, unless otherwise
required by law, rules or regulation, that would (A) adversely affect
the ability of any of them or UPC to obtain any necessary approvals of
Regulatory Authorities required to consummate the transactions
contemplated by this Reorganization Agreement, or (B) adversely affect
the ability of such Party to perform its covenants and agreements
under this Reorganization Agreement;
(iv) Except as they may terminate in
accordance with their terms, keep in full force and effect, and not
default in any of their obligations under, all material contracts;
(v) Keep in full force and effect
insurance coverage with responsible insurance carriers which is
reasonably adequate in coverage and amount for companies the size of
GSSC or such GSSC Subsidiary and for the businesses and properties
owned by each and in which each is engaged, to the extent that such
insurance is reasonably available;
(vi) Use its best efforts to retain SBM's
and SBL's present customer base and to facilitate the retention of
such customers by SBM and SBL and their branches after the Effective
Time of the Merger; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 62
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(vii) Maintain, renew, keep in full force
and effect, and preserve its business organization and material rights
and franchises, permits and licenses, and to use its best efforts to
maintain positive relations with its present employees so that such
employees will continue to perform effectively and will be available
to GSSC, SBM, SBL or UPC and UPC's Subsidiaries at and after the
Effective Time of the Merger, and to use its best efforts to maintain
its existing, or substantially equivalent, credit arrangements with
banks and other financial institutions and to assure the continuance
of SBM's and SBL's customer relationships;
(b) GSSC, SBM and SBL agree to use their best
efforts to assist UPC in obtaining the Government Approvals necessary to
complete the transactions contemplated hereby and do not know of any reason why
such Government Approvals can not be obtained, and GSSC, SBM and SBL shall
provide to UPC or to the appropriate governmental authorities all information
reasonably required to be submitted in connection with obtaining such
approvals;
(c) GSSC, SBM and SBL, at their own cost and
expense, shall use their best efforts to secure all necessary consents and all
consents and releases, if any, required of GSSC, SBM, SBL or third parties and
shall comply with all applicable laws, regulations and rulings in connection
with this Reorganization Agreement and the consummation of the transactions
contemplated hereby;
(d) At all times to and including, and as of, the
Effective Time of the Merger, GSSC, SBM and SBL shall inform UPC in writing of
any and all facts necessary to amend or supplement the representations and
warranties made herein and the Schedules attached hereto as necessary so that
the information contained herein and therein will accurately reflect the
current status of GSSC, SBM and SBL; provided, however, that any such updates
to Schedules shall be required prior to the Closing only with respect to
matters which represent material changes to the Schedules and the information
contained therein; and provided further, that before such amendment, supplement
or update may be deemed to be a part of this Reorganization Agreement, UPC
shall have agreed in writing to each amendment, supplement or update to the
Schedules made subsequent to the date of this Reorganization Agreement as an
amendment to this Reorganization Agreement;
(e) On and after the Closing Date, GSSC, SBM and
SBL shall give such further assistance to UPC and shall execute, acknowledge
and deliver all such documents and instruments as UPC may reasonably request
and take such further action as may be
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 63
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necessary or appropriate effectively to consummate the transactions
contemplated by this Reorganization Agreement;
(f) Between the date of this Reorganization
Agreement and the Closing Date, GSSC, SBM and SBL shall afford UPC and its
authorized agents and representatives reasonable access during normal business
hours to the properties, operations, books, records, contracts, documents, loan
files and other information of, or relating to GSSC, SBM and SBL. GSSC, SBM
and SBL shall provide reasonable assistance to UPC in its investigation of
matters relating to GSSC, SBM and SBL; and
(g) Subject to the terms and conditions of this
Reorganization Agreement, GSSC, SBM and SBL agree to use all reasonable efforts
and to take, or to cause to be taken, all actions, and to do, or to cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective, with reasonable promptness after
the date of this Reorganization Agreement, the transactions contemplated by
this Reorganization Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining or other order
adversely affecting the ability of the Parties to consummate the transaction
contemplated by this Reorganization Agreement. GSSC shall use, and shall cause
each of its Subsidiaries to use, its best efforts to obtain consents of all
third parties and Regulatory Authorities necessary or desirable for the
consummation of each of the transactions contemplated by this Reorganization
Agreement.
7.3 Conduct of Business -- Negative Covenants. From the
date of this Reorganization Agreement until the earlier of the Effective Time
of the Merger or the termination of this Reorganization Agreement, GSSC, SBM
and SBL covenant and agree that they will neither do, nor agree or commit to
do, nor permit any GSSC Subsidiary to do or commit or agree to do, any of the
following without the prior written consent of the chief executive officer,
president, or chief financial officer of UPC, which consent will not be
unreasonably withheld, or except as expressly permitted by this Reorganization
Agreement:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Plan of Merger, amend its Certificate of
Incorporation or Bylaws; or
(b) Impose, or suffer the imposition, on any
share of capital stock held by it or by any of its Subsidiaries of any lien,
charge, or encumbrance, or permit any such lien, charge, or encumbrance to
exist; or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 64
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(c) (i) Repurchase, redeem, or otherwise acquire or
exchange, directly or indirectly, any shares of its capital stock or other
equity securities or any securities or instruments convertible into any shares
of its capital stock, or any rights or options to acquire any shares of its
capital stock or other equity securities, except in satisfaction of any
exercised GSSC Stock Options or as expressly permitted by this Reorganization
Agreement or the Plan of Merger; or (ii) split or otherwise subdivide its
capital stock; or (iii) recapitalize in any way; or (iv) declare a stock
dividend on the GSSC Common Stock; or (v) pay or declare a cash dividend or
make or declare any other type of distribution on the GSSC Common Stock except
as expressly permitted by Section 8.2(i)(vi) of this Reorganization Agreement
or the Plan of Merger; or
(d) Except as expressly permitted by this
Reorganization Agreement, acquire direct or indirect control over any
corporation, association, firm, organization or other entity, other than in
connection with (i) mergers, acquisitions or other transactions approved in
writing by UPC, (ii) internal reorganizations or consolidations involving
existing Subsidiaries, (iii) foreclosures in the ordinary course of business
and not knowingly exposing it to liability by reason of Hazardous Substances,
(iv) acquisitions of control in its fiduciary capacity, or (v) the creation of
new subsidiaries organized to conduct or continue activities otherwise
permitted by this Reorganization Agreement; or
(e) Except as expressly permitted by this
Reorganization Agreement or the Plan of Merger, to (i) issue, sell, agree to
sell, or otherwise dispose of or otherwise permit to become outstanding any
additional shares of GSSC Common Stock (except in satisfaction of any exercised
GSSC Stock Options), or any other capital stock of GSSC or of any GSSC
Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are directly sold or otherwise directly transferred to GSSC or any GSSC
Subsidiary, or are issued in connection with any of the above-described
securities encompassed in the GSSC Option Plans, or (ii) sell, agree to sell,
or otherwise dispose of any substantial part of the assets or earning power of
GSSC or of any GSSC Subsidiary; or (iii) sell, agree to sell, or otherwise
dispose of any asset of GSSC or any GSSC Subsidiary other than in the ordinary
course of business for reasonable and adequate consideration; or (iv) buy,
agree to buy or otherwise acquire a substantial part of the assets or earning
power of any other Person or entity; or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 65
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(f) Incur, or permit any GSSC Subsidiary to incur,
any additional debt obligation or other obligation for borrowed money other
than (i) in replacement of existing short-term debt with other short-term debt
of an equal or lesser amount, (ii) financing of banking related activities
consistent with past practices, or (iii) indebtedness of GSSC or any GSSC
Subsidiary to SBM, SBL or another GSSC Subsidiary in excess of an aggregate of
$50,000 (for GSSC and its Subsidiaries on a consolidated basis) except in the
ordinary course of the business of GSSC or such GSSC Subsidiary consistent with
past practices (and such ordinary course of business shall include, but shall
not be limited to, creation of deposit liabilities, entry into repurchase
agreements or reverse repurchase agreements, purchases or sales of federal
funds, Federal Reserve advances, FHLB advances, and sales of certificates of
deposit); or
(g) Except as expressly permitted by the terms of
this Reorganization Agreement, grant any increase in compensation or benefits
to any of its employees or officers, except in accordance with past practices
or as required by law; pay any bonus except in accordance with past practices;
enter into any severance agreements with any of its officers or employees;
grant any material increase in fees or other increases in compensation or other
benefits to any director of GSSC or of any GSSC Subsidiary; or effect any
change in retirement benefits for any class of its employees or officers,
unless such change is required by applicable law; or
(h) Except as expressly required by the terms of
this Reorganization Agreement, amend any existing employment contract between
it and any person having a salary thereunder in excess of $30,000 per year
(unless such amendment is required by law) to increase the compensation or
benefits payable thereunder; or to enter into any new employment contract with
any person having an annual salary thereunder in excess of $30,000 that GSSC,
SBM or SBL (or their respective successors) do 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 of the Merger; or
(i) Except as expressly required by the terms of
this Reorganization Agreement, adopt any new employee benefit plan or terminate
or make any material change in or to any existing employee benefit plan other
than any 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
(j) Enter into any new service contracts, purchase
or sale agreements or lease agreements having a value in
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 66
<PAGE> 73
excess of One Hundred Thousand Dollars ($100,000) to GSSC or any GSSC
Subsidiary; or
(k) Make any capital expenditure except for ordinary
purchases, repairs, renewals or replacements; or
(l) Enter into any transactions other than in the
ordinary course of business; or
(m) Other than in the ordinary course of business,
grant or commit to grant any new extension of credit to any officer, director
or known holder of 2% or more of the outstanding GSSC Common Stock, or to any
corporation, partnership, trust or other entity controlled by any such person,
if such extension of credit, together with all other credits then outstanding
to the same borrower and all affiliated persons of such borrower, would exceed
two percent (2%) of the capital of GSSC or amend the terms of any such credit
outstanding on the date hereof.
7.4 Conduct of Business -- Certain Actions.
(a) Except to the extent necessary to consummate the
transactions specifically contemplated by this Reorganization Agreement, GSSC,
SBM and SBL shall not, and shall use their respective best efforts to ensure
that their respective directors, officers, employees, and advisors do not,
directly or indirectly, institute, solicit, or knowingly encourage (including
by way of furnishing any information not legally required to be furnished) any
inquiry, discussion, or proposal, or participate in any discussions or
negotiations with, or provide any confidential or non-public information to,
any corporation, partnership, person or other entity or group (other than to
UPC or any UPC Subsidiary) concerning any "Acquisition Proposal" (as defined
below), except for actions reasonably considered by the Board of Directors of
GSSC, based upon the advice of outside legal counsel, to be required in order
to fulfill its fiduciary obligations. GSSC shall notify UPC immediately if any
Acquisition Proposal has been or should hereafter be received by GSSC, SBM or
SBL, such notice to contain, at a minimum, the identity of such persons, and,
subject to disclosure being consistent with the fiduciary obligations of GSSC's
Board of Directors, a copy of any written inquiry, the terms of any proposal or
inquiry, any information requested or discussions sought to be initiated, and
the status of any reports, negotiations or expressions of interest. For
purposes of this Section, "Acquisition Proposal" means any proposed tender
offer, agreement, understanding or other proposal pursuant to which any
corporation, partnership, Person or other entity or group, other than UPC or
any UPC Subsidiary, would directly or indirectly (i)
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 67
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acquire or participate in a merger, share exchange, consolidation or any other
business combination involving GSSC, SBM or SBL; (ii) acquire the right to vote
ten percent (10%) or more of the GSSC Common Stock, SBM Common Stock or SBL
Common Stock; (iii) acquire a significant portion of the assets or earning
power of GSSC, SBM or SBL; or (iv) acquire in excess of ten percent (10%) of
the outstanding GSSC Common Stock, SBM Common Stock or SBL Common Stock.
(b) As a condition of and as an inducement to UPC's
entering into this Reorganization Agreement, GSSC, SBM and SBL covenant,
acknowledge, and agree that it shall be a specific, absolute, and
unconditionally binding condition precedent to either GSSC's, SBM's or SBL's
entering into a letter of intent, agreement in principle, or definitive
agreement (whether or not considered binding, non-binding, conditional or
unconditional) with any third-party with respect to an Acquisition Proposal, or
supporting or indicating an intent to support an Acquisition Proposal, other
than this Reorganization Agreement and the transactions contemplated in this
Reorganization Agreement, regardless of whether GSSC, SBM or SBL has otherwise
complied with the provisions of Section 7.4(a) hereof, that GSSC or such
third-party which is a party to any Acquisition Proposal shall have paid UPC
the sum of Twelve Million and No/100 Dollars ($12,000,000), which sum
represents the (i) direct costs and expenses (including, but not limited to,
fees and expenses incurred by UPC's financial or other consultants, printing
costs, investment bankers, accountants, and counsel) incurred by or on behalf
of UPC in negotiating and undertaking to carry out the transactions
contemplated by this Reorganization Agreement; (ii) indirect costs and expenses
of UPC in connection with the transactions contemplated by this Reorganization
Agreement, including UPC's management time devoted to negotiation and
preparation for the transactions contemplated by this Reorganization Agreement;
and (iii) UPC's loss as a result of the transactions contemplated by this
Reorganization Agreement not being consummated. Accordingly, GSSC, SBM and SBL
hereby jointly and severally stipulate and covenant that prior to GSSC's, SBM's
or SBL's entering into a letter of intent, agreement in principle, or
definitive agreement, (whether binding or non-binding, conditional or
unconditional) with any third-party with respect to an Acquisition Proposal or
supporting or indicating an intent to support an Acquisition Proposal, either
GSSC or such third-party shall have paid to UPC the amount set forth above in
immediately available funds to satisfy the specific, absolute, and
unconditionally binding condition precedent imposed by this Section 7.4.
Notwithstanding anything in this Section 7.4(b) to the contrary, in the event
such Acquisition Proposal should be the result of an unsolicited offer or
takeover of GSSC, SBM or SBL, any sums due UPC by GSSC pursuant to the terms of
this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 68
<PAGE> 75
Section 7.4 shall be paid by GSSC to UPC at the closing of the transactions set
forth in such Acquisition Proposal and all obligations of UPC to hold the
Closing by the Target Date shall be tolled until such time as the transactions
set forth in any such Acquisition Proposal shall have been consummated or until
such time as the Acquisition Proposal shall have expired plus such reasonable
time as UPC shall require. UPC and INTERIM each acknowledges that under no
circumstances shall any officer or director of GSSC, SBM or SBL (unless such
officer or director shall have an interest in a potential acquiring party in
any Acquisition Proposal) be held personally liable to UPC or INTERIM for any
amount of the foregoing payment. On payment of such amount to UPC, UPC and
INTERIM shall have no cause of action or claim (either in law or equity)
whatsoever against GSSC, SBM or SBL, or any officer or director of GSSC, SBM or
SBL, with respect to or in connection with such Acquisition Proposal, this
Reorganization Agreement or the Plan of Merger.
(c) The requirements, conditions, and obligations
imposed by this Section 7.4 shall continue in full force and effect from the
date of this Reorganization Agreement until October 1, 1995, unless and until
the earlier of any of the following events shall occur, in which event,
thereafter neither GSSC, SBM nor SBL shall be obligated to pay the amount
required by this Section 7.4 as a condition precedent to such transaction:
(1) This Reorganization Agreement shall have been terminated (i)
mutually by the Parties pursuant to Section 9.1(a) of this
Reorganization Agreement; (ii) by UPC and INTERIM pursuant to
Section 9.1(b) of this Reorganization Agreement; (iii) by UPC
and INTERIM or GSSC, SBM and SBL pursuant to Section 9.1(c) of
this Reorganization Agreement; (iv) by UPC and INTERIM or
GSSC, SBM and SBL pursuant to Section 9.1(d) of this
Reorganization Agreement; (v) by UPC and INTERIM or GSSC, SBM
and SBL pursuant to Section 9.1(e) of this Reorganization
Agreement, and in the case of termination pursuant to Section
9.1(e), only on the basis of the failure to satisfy the
conditions enumerated in subparagraph (2) below; (vi) by UPC
and INTERIM pursuant to Section 9.1(f) of this Reorganization
Agreement; (vii) by UPC and INTERIM or GSSC, SBM and SBL
pursuant to Section 9.1(g) of this Reorganization Agreement;
(viii) by UPC and INTERIM pursuant to Section 9.1(h) of this
Reorganization Agreement; (ix) by UPC and INTERIM pursuant to
Section 9.1(i) of this Reorganization Agreement; and (x) by
UPC and INTERIM or GSSC, SBM and SBL pursuant to Section
9.1(j) or Section 9.1(k) of this Reorganization Agreement; or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 69
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(2) In the event the Merger should not be consummated as a result
of the failure to satisfy any of the following conditions:
(i) Material inaccuracy (without waiver thereof) of
representations and warranties of UPC as contemplated
by the provisions of Section 8.1(b) of this
Reorganization Agreement;
(ii) Noncompliance by UPC or INTERIM with their
respective obligations as required by the provisions
of Section 8.1(a) of this Reorganization Agreement;
(iii) The failure by UPC or INTERIM to effect all
corporate action necessary on their respective parts
as required by the provisions of Section 8.1 of this
Reorganization Agreement or to satisfy the conditions
set forth in Sections 8.1(d) or 8.1(g) of this
Reorganization Agreement;
(iv) The failure to receive the requisite approvals
as required by the provisions of Section 8.3(b) of
this Reorganization Agreement other than any such
failure arising out of any action or inaction on the
part of GSSC, SBM or SBL;
(v) The occurrence of material legal proceedings as
contemplated by the provisions of Section 8.3(a) of
this Reorganization Agreement;
(vi) The failure on the part of the appropriate
officers of UPC to deliver the certificates set forth
in Section 8.1(c) of this Reorganization Agreement,
or the failure on the part of counsel to UPC to
deliver the requisite opinion required by the
provisions of Section 8.1(e) of this Reorganization
Agreement; or
(vii) UPC shall have determined not to consummate the
Merger pursuant to Sections 8.2(d), 8.2(f), 8.2(i),
8.2(k) or 8.2(l).
(viii) The failure to receive the fairness opinion of
either (a) GSSC's independent financial adviser as
required by the provisions of Section 8.1(f) of this
Reorganization Agreement except if such failure is
based on the receipt by GSSC of an Acquisition
Proposal from a third party or (b)
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 70
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UPC's independent financial adviser as required by
Section 8.2(n) of this Reorganization Agreement;
(ix) The failure to receive the approval of the UPC
Shareholders as required by the provisions of Section
8.3(d) of this Reorganization Agreement;
(x) The failure of the registration statement to be
declared effective or if the registration statement
is subject to a stop order of the SEC or any state
securities commission as required by Section 8.3(c)
of this Reorganization Agreement and such failure is
based solely on a review by the SEC of the material
presented by UPC in the registration statement or an
action or inaction on the part of UPC; or
(xi) The failure of any Affiliate of GSSC to execute
an Affiliate Letter as required by Section 8.3(m) of
this Reorganization Agreement (unless such
requirement is waived by UPC) but only if the failure
of any Affiliates of GSSC to execute the Affiliate
Letter would not potentially disqualify the
transactions contemplated by this Reorganization
Agreement from qualifying for pooling-of-interests
accounting treatment.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of GSSC. Unless waived
in writing by GSSC, the obligation of GSSC to consummate the transaction
contemplated by this Reorganization Agreement is subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and
undertakings of UPC and INTERIM to be performed at or prior to the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed,
except for breaches of acts and undertakings which would not have, or would not
reasonably be expected to have, any material adverse effect on the business or
operations of UPC and the UPC Subsidiaries taken as a whole;
(b) Representations and Warranties. The
representations and warranties of UPC and INTERIM contained in Article 4 of
this Reorganization Agreement shall be true and complete, in all material
respects, on and as of the Effective
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 71
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Time of the Merger with the same effect as though made on and as of the
Effective Time of the Merger, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct in all
material respects as of such date and (ii) for breaches of representations and
warranties which would not have, or would not reasonably be expected to have, a
material adverse effect on the business or operations of UPC and the UPC
Subsidiaries taken as a whole;
(c) Documents. In addition to the other
deliveries of UPC or INTERIM described elsewhere in this Reorganization
Agreement, GSSC shall have received the following documents and instruments:
(i) a certificate signed by the
Secretary or an assistant secretary of UPC and INTERIM dated as of the
Closing Date certifying that:
(A) UPC's and INTERIM's respective
Boards of Directors, shareholders and stockholders have duly
adopted resolutions (copies of which shall be attached to such
certificate) approving the substantive terms of this
Reorganization Agreement (including the Plan of Merger) and
authorizing the consummation of the transactions contemplated
by this Reorganization Agreement and certifying that such
resolutions have not been amended or modified and remain in
full force and effect;
(B) each person executing this
Reorganization Agreement on behalf of UPC or INTERIM is an
officer of UPC or INTERIM, as the case may be, holding the
office or offices specified therein, with full power and
authority to execute this Reorganization Agreement and any and
all other documents in connection with the Merger, and that
the signature of each person set forth on such certificate is
his or her genuine signature;
(C) the charter documents of UPC
and INTERIM attached to such certificate remain in full force
and effect; and
(D) UPC and INTERIM are in good
standing under their respective corporate charters; and
(ii) a certificate signed respectively by
duly authorized officers of UPC and INTERIM stating that the
conditions set forth in Section 8.1(a) and Section 8.1(b) of this
Reorganization Agreement have been fulfilled;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 72
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(d) Consideration. GSSC shall have received a
certificate executed by an authorized officer of the Exchange Agent to the
effect that the Exchange Agent has received and holds in its possession proper
authorization to issue certificates evidencing shares of UPC Common Stock and
cash or other good funds sufficient to meet the obligations of UPC or INTERIM
to the GSSC Record Holders to deliver the Consideration under this
Reorganization Agreement and the Plan of Merger;
(e) Opinion of UPC's and INTERIM's Counsel. GSSC
shall have been furnished with an opinion of counsel to UPC and INTERIM, dated
as of the Closing Date, addressed to and in form and substance satisfactory to
GSSC, to the effect that:
(i) UPC is a Tennessee corporation duly
organized, validly existing and in good standing under the laws of the
State of Tennessee; and INTERIM is a Delaware corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware;
(ii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by UPC, and
INTERIM and (assuming this Reorganization Agreement is a binding
obligation of GSSC, SBM and SBL) constitutes a valid and binding
obligation of UPC and INTERIM enforceable in accordance with its
terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of
equitable principles and judicial discretion;
(iii) neither the execution and delivery
by UPC or INTERIM of this Reorganization Agreement nor the execution,
delivery and performance of any of the documents to be executed and
delivered by UPC or INTERIM in connection herewith violates or
conflicts with UPC's, or INTERIM's corporate charters or bylaws or, to
the best of the knowledge, information and belief (without making
special inquiry) of such counsel, any material contracts, agreements
or other commitments of UPC or INTERIM;
(iv) to the knowledge of such counsel
after due inquiry, no consent or approval by any Governmental
Authority which has not already been obtained is required for
execution and delivery by UPC and INTERIM of this Reorganization
Agreement or any of the documents to be executed and delivered by UPC
or INTERIM in connection herewith; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 73
<PAGE> 80
(v) the shares of UPC Common Stock to be
issued in the names of the GSSC Record Holders and delivered in
exchange for their GSSC Common Stock will be duly authorized, validly
issued, fully paid and non-assessable.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of UPC or INTERIM or appropriate government
officials; and (ii) in the case of matters of law governed by the laws of the
states in which they are not licensed, reasonably rely upon the opinions of
legal counsel duly licensed in such states and may be limited, in any event, to
Federal Law and the law of the State of Tennessee;
(f) Fairness Opinion. GSSC shall have received a
"fairness opinion" letter from its independent financial adviser to the effect
that, in the opinion of such adviser the Consideration to be received by the
GSSC Record Holders is fair to the GSSC Stockholders from a financial point of
view, and such "fairness opinion" shall not have been withdrawn prior to the
Closing Date, and GSSC shall have received an updated "fairness opinion" letter
from such advisers within five (5) days prior to the Closing Date reconfirming
the opinions provided in the initial "fairness opinion" letter; and
(g) Tax Opinion of McDonnell Boyd. GSSC shall
have received a written opinion substantially in the form of opinion set forth
in Schedule 8.1(g) hereto from the law firm of McDonnell Boyd to the effect
that the transactions contemplated by this Reorganization Agreement and the
Plan of Merger will constitute one or more tax-free reorganizations under
Section 368 of the Internal Revenue Code.
8.2 Conditions to the Obligations of UPC and INTERIM.
Unless waived in writing by UPC and INTERIM, the obligation of UPC and INTERIM
to consummate the transactions contemplated by this Reorganization Agreement is
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) Performance. Each of the material acts and
undertakings of GSSC, SBM and SBL to be performed at or before the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed,
except for breaches of acts and undertakings which would not have, or would not
reasonably be expected to have, any material adverse effect on the business or
operations of GSSC and the GSSC Subsidiaries taken as a whole;
(b) Representations and Warranties. The
representations and warranties of GSSC, SBM and SBL contained in Article 5 of
this Reorganization Agreement shall be true and correct, in all material
respects, on and as of the Effective
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 74
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Time of the Merger with the same effect as though made on and as of the
Effective Time of the Merger, except (i) for any such representations and
warranties made as of a specified date, which shall be true and correct in all
material respects as of such date and (ii) for breaches or representations and
warranties which would not have, or would not reasonably be expected to have, a
material adverse effect on the business or operations of GSSC and the GSSC
Subsidiaries taken as a whole;
(c) Documents. In addition to the documents
described elsewhere in this Reorganization Agreement, UPC shall have received
the following documents and instruments:
(i) a certificate signed by the
Secretary or an assistant secretary of GSSC and SBL, and a certificate
signed by the Cashier of SBM dated as of the Closing Date certifying
that:
(A) GSSC's, SBM'S and SBL's
respective Boards of Directors and stockholders and
shareholders have duly adopted resolutions (copies of which
shall be attached to such certificate) approving the
substantive terms of this Reorganization Agreement (including
the Plan of Merger) and authorizing the consummation of the
transactions contemplated by this Reorganization Agreement and
certifying that such resolutions have not been amended or
modified and remain in full force and effect;
(B) each person executing this
Reorganization Agreement on behalf of GSSC, SBM or SBL, is an
officer of GSSC, SBM or SBL, as the case may be, holding the
office or offices specified therein, with full power and
authority to execute this Reorganization Agreement and any and
all other documents in connection with the Merger, and that
the signature of each person set forth on such certificate is
his or her genuine signature;
(C) the charter documents of GSSC,
SBM and SBL attached to such certificate remain in full force
and effect; and
(D) GSSC, SBM and SBL are in good
standing under their respective corporate charters; and
(ii) a certificate signed by the
respective President, Chief Executive Officer or an Executive Vice
President of each of GSSC, SBM and SBL stating that the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 75
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conditions set forth in Section 8.2(a), Section 8.2(b) and 8.2(f) this
Reorganization Agreement have been satisfied;
(d) Destruction of Property. Between the date of
this Reorganization Agreement and the Closing Date, there shall have been no
damage to or destruction of real property, improvements or personal property of
GSSC, SBM or SBL which materially reduces the market value of such property,
and no zoning or other order, limitation or restriction imposed against the
same that might have a material adverse impact upon the operations, business or
prospects of GSSC, SBM or SBL; provided, however, that the availability of
insurance coverage shall be taken into account in determining whether there has
been such a material adverse impact or material reduction in market value. In
the event of such damage, destruction, order, limitation or restriction, UPC
and INTERIM may elect either (i) to close the contemplated transactions in
accordance with the terms of this Reorganization Agreement or (ii) to terminate
this Reorganization Agreement without penalty;
(e) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, GSSC, SBM and SBL shall
have afforded UPC and its authorized agents and representatives reasonable
access during normal business hours to the properties, operations, books,
records, contracts, documents, loan files and other information of or relating
to GSSC, SBM and SBL. GSSC, SBM and SBL shall have caused all GSSC, SBM or SBL
personnel to provide reasonable assistance to UPC in its investigation of
matters relating to GSSC, SBM and SBL;
(f) No Material Adverse Change. No material
adverse change in the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), prospects, operations,
liquidity, income, or condition (financial or otherwise) of GSSC, SBM and SBL
taken as a whole shall have occurred since the date of this Reorganization
Agreement. In the event of such a material adverse change with respect to
GSSC, SBM or SBL, UPC may elect either (i) to close the contemplated
transactions in accordance with the terms of this Reorganization Agreement or
(ii) to terminate this Reorganization Agreement without penalty;
(g) Opinion of GSSC's Counsel. UPC shall have
been furnished with an opinion of legal counsel to GSSC, SBM and SBL, dated the
Closing Date, addressed to and in form and substance satisfactory to UPC, to
the effect that:
(i) GSSC is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 76
<PAGE> 83
(ii) SBM is a Mississippi banking
corporation, duly organized, validly existing, and in good standing
under the laws of the State of Mississippi; SBL is a Louisiana banking
corporation, duly organized, validly existing, and in good standing
under the laws of the State of Louisiana;
(iii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by GSSC, SBM
and SBL and (assuming that this Reorganization Agreement is a binding
obligation of UPC and INTERIM and the Plan of Merger is a binding
obligation of UPC and INTERIM) constitutes a valid and binding
obligation of GSSC, SBM and SBL enforceable in accordance with its
terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of
equitable principles and judicial discretion; and
(iv) to the knowledge of such counsel
after due inquiry, no consent or approval, which has not already been
obtained, by any governmental authority is required for execution,
delivery and performance by GSSC, SBM or SBL of this Reorganization
Agreement or any of the documents to be executed and delivered by
GSSC, SBM and SBL in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of GSSC, SBM or SBL or appropriate government
officials; and (ii) in the case of matters of law governed by the laws of the
states in which they are not licensed, reasonably rely upon the opinions of
legal counsel duly licensed in such states and may be limited, in any event, to
Federal Law and the law of the State of Delaware;
(h) Other Business Combinations, Etc. Neither GSSC,
SBM nor SBL shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which GSSC, SBM or SBL would
merge; consolidate with; effect a business combination with; sell any
substantial part of GSSC's, SBM's or SBL's assets; acquire a significant part
of the shares or assets of any other Person or entity (financial or otherwise);
adopt any "poison pill" or other type of anti-takeover arrangement, any
shareholder rights provision, any "golden parachute" or similar program after
the date hereto which would have the effect of materially decreasing the value
of GSSC, SBM or SBL or the benefits of acquiring the GSSC Common Stock;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 77
<PAGE> 84
(i) Maintenance of Certain Covenants, Etc. At
the time of Closing (i) the total assets of GSSC shall be not less than
$2,300,000,000; (ii) the consolidated equity capital of GSSC shall have been
not less than $178,000,000 as of March 31, 1994, and shall have increased since
that date through normal earnings growth; (iii) the consolidated tangible
equity capital of GSSC shall have been not less than $171,000,000 as of March
31, 1994, and shall have increased since that date through normal earnings
growth; (iv) neither GSSC, SBM nor SBL shall have issued or repurchased from
the date hereof any additional equity or debt securities, or any rights to
purchase or repurchase such securities, except as set forth in this Agreement
(therefore, there shall be not more than 9,600,000 shares of GSSC Common Stock
validly issued and outstanding at the Effective Time of the Merger); (iv) from
December 31, 1993, there shall have been no extraordinary sale of assets, nor
any investment portfolio restructuring by either GSSC, SBM or SBL; (v) neither
GSSC, SBM nor SBL shall have issued or granted since December 31, 1993, through
the Closing Date any additional GSSC Stock Options other than stock options
which could be issued pursuant to the various GSSC stock option and incentive
plans consistent with the terms and conditions of this Reorganization
Agreement, and all validly issued and outstanding GSSC Stock Options shall have
been fully exercised prior to the Closing or tendered to GSSC for conversion
into options to purchase shares of UPC Common Stock as contemplated in Section
2.7 of this Reorganization Agreement and none shall have been repurchased by
GSSC, SBM or SBL prior to the Closing; (vi) from the date hereof, GSSC shall
not have declared or paid any cash dividends except its customary and
historical quarterly cash dividend prior to Closing; and (vii) the Merger can
be accounted for as a "pooling of interests" on the financial statements of
UPC. The criteria and calculations set forth above shall be determined in
accordance with GAAP assuming that GSSC, SBM and SBL shall have been operated
consistently in the normal course of their business; provided, however, that
the effects of any balance sheet expansion through abnormal, unusual,
nonrecurring or out of the ordinary borrowings or by the realization of
extraordinary or nonrecurring gains or other income from the disposition of
assets or liabilities or through similar transactions shall be eliminated from
the calculations;
(j) Non-Compete Agreements. Each member of the
Boards of Directors of GSSC, SBM and SBL shall have entered into a non-compete
agreement with UPC and GSSC substantially in the form of UPC's standard form of
non-compete agreement, a copy which is annexed hereto as Exhibit 8.2(j),
providing for a term of not less than two (2) years and covering the general
geographic region(s) in which GSSC, SBM and SBL currently operate and do
business or in which any of them have a present intention to do business;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 78
<PAGE> 85
(k) Tax Opinion. UPC shall have received a
written opinion from its counsel to the effect that the transactions
contemplated by this Reorganization Agreement and the Plan of Merger will
constitute one or more tax-free reorganizations under Section 368 of the
Internal Revenue Code;
(l) Pooling of Interests Accounting Treatment.
UPC shall have received (i) from Price Waterhouse, or other independent
accountants acceptable to UPC, a letter dated within five (5) days prior to the
Closing Date, in form and substance acceptable to UPC, stating the accountants'
opinion that, based upon the information furnished to them, the Merger should
be accounted for by UPC as a "pooling of interests" for financial statement
purposes and that such accounting treatment is in accordance with generally
accepted accounting principles and (ii) from GSSC's regularly retained
independent accountants or other independent accountants acceptable to UPC, a
letter dated within five (5) days prior to the Closing Date stating that, upon
a review of GSSC's books and records, the accountants are aware of no reason
why the business combination contemplated in this Reorganization Agreement to
which GSSC is a party should not be accounted for as a "pooling of interests"
under GAAP;
(m) Receipt of Affiliate Letters. Pursuant to
the provisions of Section 2.6 of this Reorganization Agreement, UPC shall have
received a written commitment in form and substance satisfactory to UPC and its
counsel (an "Affiliate Letter") from each GSSC Record Holder who would be
deemed by GSSC to be an Affiliate of GSSC at the time of Closing under the
Securities Laws and who accepts shares of UPC Common Stock as Consideration for
the cancellation, exchange and conversion of his shares of GSSC Common Stock
pursuant to the terms and conditions of this Reorganization Agreement,
committing to UPC that such GSSC Record Holder shall not pledge, assign, sell,
transfer, devise, otherwise alienate or take any action which would eliminate
or diminish the risk of owning or holding the shares of UPC Common Stock to be
received by such GSSC Record Holder upon consummation of the Merger, nor enter
into any formal or informal agreement to pledge, assign, sell or transfer,
devise, or otherwise alienate his right, title and interests in any of the
shares of UPC Common Stock to be delivered by UPC to such GSSC Record Holder
pursuant to the terms and conditions of this Reorganization Agreement until
such time as UPC shall have publicly released a statement of UPC's consolidated
earnings reflecting the combined financial results of operations of UPC and
GSSC for a period of not less than thirty (30) days subsequent to the Effective
Time of the Merger; and
(n) Fairness Opinion. UPC shall have received a
"fairness opinion" letter from its independent financial adviser
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 79
<PAGE> 86
to the effect that, in the opinion of such adviser, the Consideration to be
received by the GSSC Record Holders is fair to the UPC Shareholders from a
financial point of view, and such "fairness opinion" shall not have been
withdrawn prior to the Closing Date, and UPC shall have received an updated
"fairness opinion" letter from such advisers within five (5) days prior to the
Closing Date reinforcing the opinions provided in the initial "fairness
opinion" letter.
8.3 Conditions to Obligations of All Parties. The
obligation of each party to effect the transactions contemplated hereby shall
be subject to the fulfillment, at or prior to the Closing, of the following
conditions:
(a) No Pending or Threatened Claims. That no
claim, action, suit, investigation or other proceeding shall be pending or
threatened before any court or governmental agency which presents a substantial
risk of the restraint or prohibition of the transactions contemplated by this
Reorganization Agreement or the obtaining of material damages or other relief
in connection therewith;
(b) Governmental Approvals and Acquiescence
Obtained. The Parties hereto shall have received all applicable Governmental
Approvals for the consummation of the transactions contemplated herein and all
waiting periods incidental to such approvals or notices given shall have
expired;
(c) Registration Statement. The registration
statement which includes the Proxy Statement shall have been declared effective
and shall not be subject to a stop order of the SEC and, if the offer and sale
of UPC Common Stock in the Merger pursuant to this Reorganization Agreement is
subject to the Blue Sky laws of any state, shall not be subject to a stop order
of any state securities commission; and
(d) GSSC Stockholder and UPC Shareholder
Approval. This Reorganization Agreement and the Plan of Merger shall have been
approved by the GSSC Stockholders by vote of at least the number of GSSC
Stockholders as required by applicable law and the Certificate of Incorporation
of GSSC. This Reorganization Agreement and the Plan of Merger shall have been
approved by the UPC Shareholders by vote of at least the number of UPC
Shareholders as required by applicable law and the Charter of UPC and shall
have been approved by UPC as sole stockholder of INTERIM as required by
applicable law and the Certificate of Incorporation of INTERIM.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 80
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ARTICLE 9
TERMINATION
9.1 Termination. This Reorganization Agreement and the
Plan of Merger may be terminated at any time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties
pursuant to actions of their respective Boards of Directors;
(b) By UPC or INTERIM, should GSSC or any GSSC
Subsidiary fail to conduct its business pursuant to GSSC's, SBM's and SBL's
Covenants made in Article 7;
(c) By UPC or INTERIM or by GSSC, SBM or SBL in
the event the Closing shall not have occurred on or before March 31, 1995 (the
"Target Date"), unless the failure of the Closing to occur shall be due to the
failure of the Party seeking to terminate this Agreement to perform its
obligations hereunder in a timely manner. If UPC shall have filed any and all
applications to obtain the requisite Government Approvals within sixty (60)
days of the date hereof, and if the Closing shall not have occurred solely
because of a delay caused by a government regulatory agency or authority in its
review of the application before it, then GSSC, SBM and SBL shall, upon UPC's
written request, extend the Closing Date until such time as all Government
Approvals have been obtained and any stipulated waiting periods have expired;
(d) By either UPC or INTERIM or by GSSC, SBM or
SBL, upon written notice to the other Party, upon denial of any Governmental
Approval necessary for the consummation of the Merger (or should such approval
be conditioned upon a substantial deviation from the transactions contemplated);
provided, however, that either UPC or GSSC may, upon written notice to
the other, extend the term of this Reorganization Agreement for only
one sixty (60) day period to prosecute diligently and overturn such denial,
provided that such denial has been appealed within ten (10) business days of
the receipt thereof;
(e) By UPC or INTERIM in the event the conditions
set forth in Sections 8.2 or 8.3 are not satisfied in all material respects as
of the Closing Date, or by GSSC, SBM or SBL if the conditions set forth in
Section 8.1 or 8.3 are not satisfied in all material respects as of the Closing
Date, and such failure has not been waived prior to the Closing or it is
determined that no such Closing Date shall occur;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 81
<PAGE> 88
(f) By UPC or INTERIM in the event that there
shall have been, in UPC's good faith opinion, a material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), prospects, operations, liquidity,
income, condition (financial or otherwise) or net worth of GSSC, SBM or SBL
taken as a whole, or upon the occurrence of any event or circumstance which may
have the effect of limiting or restricting UPC's voting power or other rights
normally enjoyed by the registered holders of the GSSC Common Stock which are
the subject of the instant transaction;
(g) By UPC or INTERIM or GSSC, SBM or SBL in the
event that there shall have been a material breach of any obligation of the
other Party hereunder and such breach shall not have been remedied within
thirty (30) days after receipt by the breaching Party of written notice from
the other Party specifying the nature of such breach and requesting that it be
remedied;
(h) By UPC or INTERIM should GSSC or any GSSC
Subsidiary enter into any letter of intent or agreement with a view to being
acquired by, or effecting a business combination with any other Person; or any
agreement to merge, to consolidate, to combine, or, other than in the ordinary
course of business consistent with past practices, to sell a material portion
of its assets; or to be acquired in any other manner by any other Person; or,
other than in the ordinary course of business consistent with past practices,
to acquire a material amount of assets or a material equity position in any
other Person, whether financial or otherwise;
(i) By UPC or INTERIM should GSSC, SBM or SBL or
any GSSC Subsidiary enter into any formal agreement, letter of understanding,
memorandum or other similar arrangement with any bank regulatory authority
establishing a formal capital plan requiring GSSC, SBM or SBL to raise
additional capital or to sell a substantial portion of its assets;
(j) By GSSC, SBM or SBL in the event the Current
Market Price Per Share of the UPC Common Stock should be less than $22.00 per
share of UPC Common Stock; By UPC or INTERIM in the event the Current Market
Price Per Share of the UPC Common Stock should be greater than $31.25 per share
of UPC Common Stock; provided, however, any such termination of this
Reorganization Agreement by GSSC, SBM or SBL or by UPC or INTERIM pursuant to
this Section 9.1(j) shall be subject to the limitations imposed on the Parties
by Section 3.1(e) of this Reorganization Agreement;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 82
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(k) By either Party, within thirty (30) days from
the date of this Reorganization Agreement, in the event such Party, based on
the Party's opportunity to conduct a preliminary due diligence review of the
books, records and operations of the other Party as provided for in Section 2.3
of this Reorganization Agreement, in good faith determines in it sole
discretion that the results of the review conducted by such Party or its agents
do not support and reinforce the reviewing Party's preliminary expectations as
to the sustained growth and earnings prospects of the reviewed Party;
(l) By GSSC, SBM or SBL in the event that there
shall have been, in GSSC's good faith opinion, a material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), prospects, operations, liquidity,
income, condition (financial or otherwise) or net worth of UPC taken as a
whole, or upon the occurrence of any event or circumstance which may have the
effect of limiting or restricting the GSSC Record Holder's voting power or
other rights normally enjoyed by the registered holders of the UPC Common Stock
which are the subject of the instant transaction; or
(m) By GSSC, SBM or SBL should UPC or INTERIM or
any UPC Subsidiary enter into any formal agreement, letter of understanding,
memorandum or other similar arrangement with any bank regulatory authority
establishing a formal capital plan requiring UPC to raise additional capital or
to sell a substantial portion of its assets.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l) or (m) of
this Section 9.1, it shall give notice to the other Party, in writing, of its
election in the manner prescribed in Section 10.1 ("Notices") of this
Reorganization Agreement.
9.2 Effect of Termination. In the event that this
Reorganization Agreement should be terminated pursuant to Section 9.1 hereof,
all further obligations of the Parties under this Reorganization Agreement
shall terminate without further liability of any Party to another; provided,
however, that a termination under Section 9.1 hereof shall (i) not relieve any
Party of any liability for a breach of this Reorganization Agreement or for any
misstatement or misrepresentation made hereunder prior to such termination, or
be deemed to constitute a waiver of any available remedy for any such breach,
misstatement or misrepresentation; and (ii) shall not be deemed a termination
of the obligations of GSSC to UPC under Section 7.4 of this Reorganization
Agreement which are intended by the Parties hereto
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 83
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to survive a termination under Section 9.1 hereof, and any termination of this
Reorganization Agreement pursuant to Section 7.4 hereof shall give rise to
liability only to the extent therein provided.
ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. Any notice, request, demand and other
communication which either Party hereto may desire or may be required hereunder
to give shall be in writing and shall be deemed to be duly given if delivered
personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
If to GSSC, SBM or SBL:
Grenada Sunburst System Corporation
2000 Gateway
Post Office Box 947
Grenada, Mississippi 38902-0947
Fax: (601) 227-2070
Attn: James T. Boone, Chairman, President and
Chief Executive Officer
With a copy to: Thompson & Mitchell
One Mercantile Center
St. Louis, Missouri
Fax: (314) 231-1717
Attn: Gerard K. Sandweg, Jr., Esq.
If to UPC or INTERIM:
Union Planters Corporation
P.O. Box 387 (mailing address)
Memphis, Tennessee 38147
or 7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Fax: (901) 383-2877
Attn: Jackson W. Moore, President
Gary A. Simanson, Associate General Counsel
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the
date reflected in the proof or evidence of delivery, or if none, on the date
actually received.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 84
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10.2 Assignability and Parties in Interest. This
Reorganization Agreement shall not be assignable by any of the Parties hereto;
provided, however, that UPC may assign, set over and transfer all, or any part
of its rights and obligations under this Reorganization Agreement to any one or
more of its present or future Affiliates. This Reorganization Agreement shall
inure to the benefit of, and be binding only upon the Parties hereto and their
respective successors and permitted assigns and no other Persons.
10.3 Governing Law. This Reorganization Agreement shall
be governed by, and construed and enforced in accordance with, the internal
laws, and not the laws pertaining to choice or conflicts of laws, of the State
of Tennessee, unless and to the extent that federal law controls and in
accordance with the laws of the State of Delaware with respect to those
provisions of this Reorganization Agreement that reference the Delaware Code.
Any dispute arising between the Parties in connection with the transactions
which are the subject of this Reorganization Agreement shall be heard in a
court of competent jurisdiction located in Shelby County, Tennessee.
10.4 Counterparts. This Reorganization Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute but one and the same
instrument.
10.5 Best Efforts. GSSC, SBM, UPC and INTERIM each
agrees to use its best efforts to complete the transactions contemplated by
this Reorganization Agreement in accordance with the terms and provisions of
this Reorganization Agreement.
10.6 Publicity. The Parties agree that press releases
and other public announcements to be made by any of them with respect to the
transactions contemplated hereby shall be subject to mutual agreement.
Notwithstanding the foregoing, each of the Parties hereto may respond to
inquiries relating to this Reorganization Agreement and the transactions
contemplated hereby by the press, employees or customers without any notice or
further consent of the other Parties. Nothing in this Reorganization Agreement
shall be construed to prohibit GSSC or the Board of Directors of GSSC from
making any disclosure to the GSSC Stockholders which in the judgment of the
Board of Directors of GSSC (as advised by counsel) may be required in
connection with this Reorganization Agreement. GSSC shall promptly notify UPC
in writing if any such disclosure is made. Nothing in this Reorganization
Agreement shall be construed to prohibit UPC or the Board of Directors of UPC
from making any disclosure to the UPC Shareholders which in the judgment of the
Board of Directors of UPC (as advised by counsel) may be required in connection
with
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 85
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this Reorganization Agreement. UPC shall promptly notify GSSC in writing if
any such disclosure is made.
10.7 Entire Agreement. This Reorganization Agreement,
together with the Plan of Merger which is Exhibit A hereto, the Confidentiality
Agreement described in Section 2.4 herein, the Schedules, Annexes, Exhibits and
certificates required to be delivered hereunder and any amendments or addenda
hereafter executed and delivered in accordance with Section 10.9 hereof
constitute the entire agreement of the Parties hereto pertaining to the
transaction contemplated hereby and supersede all prior written and oral (and
all contemporaneous oral) agreements and understandings of the Parties hereto
concerning the subject matter hereof. The Schedules, Annexes, Exhibits and
certificates attached hereto or furnished pursuant to this Reorganization
Agreement are hereby incorporated as integral parts of this Reorganization
Agreement. Except as provided herein, by specific language and not by mere
implication, this Reorganization Agreement is not intended to confer upon any
other person not a Party to this Reorganization Agreement any rights or
remedies hereunder.
10.8 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any
way the validity or enforceability of the remaining portions or provisions
hereof in such jurisdiction or rendering that or any other portions or
provisions of this Reorganization Agreement invalid, illegal or unenforceable
in any other jurisdiction.
10.9 Modifications, Amendments and Waivers. At any time
prior to the Closing or termination of this Reorganization Agreement, the
Parties may, solely by written agreement executed by their duly authorized
officers:
(a) extend the time for the performance of any of
the obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations
and warranties made by the other Party contained in this Reorganization
Agreement or in the Annexes, Schedules or Exhibits hereto or any other document
delivered pursuant to this Reorganization Agreement;
(c) waive compliance with any of the covenants or
agreements of the other Party contained in this Reorganization Agreement; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 86
<PAGE> 93
(d) except as provided in Section 2.5 of this
Reorganization Agreement, amend or add to any provision of this Reorganization
Agreement or the Plan of Merger; provided, however, that no provision of this
Reorganization Agreement may be amended or added to except by an agreement in
writing signed by the Parties hereto or their respective successors in interest
and expressly stating that it is an amendment to this Reorganization Agreement.
10.10 Interpretation. The headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Reorganization Agreement.
10.11 Payment of Expenses. Except as set forth in Section
7.4 of this Reorganization Agreement, UPC and GSSC shall each pay its own fees
and expenses (including, without limitation, legal fees and expenses) incurred
by it in connection with the transactions contemplated hereunder.
10.12 Finders and Brokers. UPC, INTERIM, GSSC, SBM and SBL
represent and warrant to each other that except for the employment by GSSC of
The Robinson Humphrey Company, Inc. they have employed no broker or finder in
connection with the transactions described in this Reorganization Agreement
under an arrangement pursuant to which a fee is, or may be due to such broker
or finder as a result of the execution of this Reorganization Agreement or the
closing of the transactions contemplated herein. This section shall survive
the termination of this Reorganization Agreement.
10.13 Equitable Remedies. The Parties hereto agree that, in
the event of a breach of this Reorganization Agreement by GSSC, SBM or SBL, UPC
and INTERIM will be without an adequate remedy at law by reason of the unique
nature of GSSC, SBM and SBL. In recognition thereof, in addition to (and not
in lieu of) any remedies at law which may be available to UPC and INTERIM, UPC
and INTERIM shall be entitled to obtain equitable relief, including the
remedies of specific performance and injunction, in the event of a breach of
this Reorganization Agreement by GSSC, SBM or SBL, and no attempt on the part
of UPC or INTERIM to obtain such equitable relief shall be deemed to constitute
an election of remedies by UPC or INTERIM which would preclude UPC or INTERIM
from obtaining any remedies at law to which it would otherwise be entitled.
GSSC, SBM and SBL covenant that they shall not contend in any such proceeding
that UPC or INTERIM is not entitled to a decree of specific performance by
reason of having an adequate remedy at law. Nothing in this Section 10.13
shall be deemed to restrict any remedies which the Parties hereto may have
under law or equity.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 87
<PAGE> 94
10.14 Attorneys' Fees. If any Party hereto shall bring an
action at law or in equity to enforce its rights under this Reorganization
Agreement (including an action based upon a misrepresentation or the breach of
any warranty, covenant, agreement or obligation contained herein), the
prevailing Party in such action shall be entitled to recover from the other
Party its reasonable costs and expenses necessarily incurred in connection with
such action (including fees, disbursements and expenses of attorneys and costs
of investigation).
10.15 Survival of Representations and Warranties. All
representations and warranties made by the Parties hereto or in any instrument
or document furnished in connection herewith, shall survive the Closing and any
investigation at any time made by or on behalf of the Parties hereto and shall
expire at the Effective Time of the Merger except as to any matter which is
based upon willful fraud with respect to which the representations and
warranties set forth in this Reorganization Agreement shall expire on the
earlier of six months from the Effective Time of the Merger or the expiration
of the applicable statutes of limitation; provided, however, nothing herein
shall create any right of action as to any individual who has not personally
and individually engaged in any act of willful fraud giving rise to any breach
of the representations and warranties made by the Parties hereto. Nothing in
this Section 10.15 shall limit GSSC's, SBM's, SBL's, UPC's or INTERIM's rights
or remedies for misrepresentations, breaches of this Reorganization Agreement
or any other improper action or inaction by the other Party hereto prior to the
its termination. All obligations, agreements, covenants and undertakings of
the Parties hereto to be performed either in whole or in part after the
Effective Time of the Merger shall survive the Closing and shall not expire at
the Effective Time of the Merger.
10.16 No Waiver. No failure, delay or omission of or by any
Party in exercising any right, power or remedy upon any breach or default of
any other Party shall impair any such rights, powers or remedies of the Party
not in breach or default, nor shall it be construed to be a waiver of any such
right, power or remedy, or an acquiescence in any similar breach or default;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any Party
of any provisions of this Reorganization Agreement must be in writing and must
be executed by the Parties to this Reorganization Agreement and shall be
effective only to the extent specifically set forth in such writing.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 88
<PAGE> 95
10.17 Remedies Cumulative. All remedies provided in this
Reorganization Agreement, by law or otherwise, shall be cumulative and not
alternative.
10.18 Materiality. For purposes of this Reorganization
Agreement, any determination of materially shall be made based on the financial
condition of either GSSC and its Subsidiaries or UPC and its Subsidiaries taken
as a whole.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 89
<PAGE> 96
IN WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Reorganization Agreement or has caused this Reorganization
Agreement to be executed and delivered in its name and on its behalf by its
representative thereunto duly authorized, all as of the date first written
above.
GRENADA SUNBURST SYSTEM CORPORATION
By:
-------------------------------
James T. Boone
Its: Chairman of the Board
ATTEST:
- - ------------------------------
Edwin T. Coffer, Secretary
SUNBURST BANK, MISSISSIPPI
By:
-------------------------------
James T. Boone
Its: President and Chief
Executive Officer
ATTEST:
- - ------------------------------
Cashier
SUNBURST BANK
By:
-------------------------------
Jackson A. Huff
Its: President and Chief
Executive Officer
ATTEST:
- - ------------------------------
Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 90
<PAGE> 97
UNION PLANTERS CORPORATION
By:
-------------------------------
Jackson W. Moore
Its: President
ATTEST:
- - ------------------------------
Secretary
GSSC ACQUISITION COMPANY, INC.
By:
-------------------------------
Jackson W. Moore
Its: President
ATTEST:
- - ------------------------------
Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 91
<PAGE> 98
PLAN OF MERGER EXHIBIT A
SETTING FORTH THE PLAN OF MERGER
OF
GSSC ACQUISITION COMPANY, INC.
(A DELAWARE CORPORATION)
WITH AND INTO
GRENADA SUNBURST SYSTEM CORPORATION
(A DELAWARE CORPORATION)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the 1st day of July, 1994, by and between GRENADA SUNBURST SYSTEM CORPORATION
("GSSC"), a corporation chartered and existing under the laws of the State of
Delaware which is a registered bank holding company and whose principal offices
are located at 2000 Gateway (Post Office Box 947), Grenada, Grenada County,
Mississippi 38901; UNION PLANTERS CORPORATION ("UPC"), a corporation organized
and existing under the laws of the State of Tennessee having its principal
office at 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee 38018
and which is registered as a bank holding company under the Bank Holding
Company Act; and GSSC ACQUISITION COMPANY, INC. ("INTERIM"), a corporation
chartered and existing under the laws of the State of Delaware, whose principal
place of business is located at 7130 Goodlett Farms Parkway, Memphis, Shelby
County, Tennessee 38018, and which is a wholly-owned subsidiary of UPC. All of
the authorized, issued and outstanding shares of capital stock of INTERIM are
owned and held of record by UPC.
PREAMBLE
WHEREAS, UPC, INTERIM and GSSC have entered into an Agreement and Plan
of Reorganization dated the 1st day of July, 1994 ("Reorganization Agreement")
to which this Plan of Merger is Exhibit A and is incorporated by reference as
an integral part thereof providing for the merger of INTERIM with and into GSSC
(which would be the Surviving Corporation) as a result of which UPC would
become the beneficial owner and holder of record of all of the GSSC Common
Stock outstanding immediately prior to the Effective Time of the Merger for the
Consideration set forth in the Reorganization Agreement and this Plan of
Merger; and
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WHEREAS, As provided in the Reorganization Agreement, UPC has caused
INTERIM to join in this Plan of Merger by executing and delivering same; and
WHEREAS, The Boards of Directors of UPC, INTERIM and GSSC are each of
the opinion that the interests of their respective corporations and their
corporations' respective stockholders and shareholders would best be served if
INTERIM were to be merged with and into GSSC, which would survive the Merger,
on the terms and conditions provided in the Reorganization Agreement and in
this Plan of Merger, and as a result of such Merger becoming effective, the
Surviving Corporation would become a wholly-owned subsidiary of UPC.
NOW, THEREFORE, in consideration of the covenants and agreements of
the Parties contained herein, GSSC, UPC and INTERIM hereby make, adopt and
approve this Plan of Merger in order to set forth the terms and conditions for
the merger of INTERIM with and into GSSC (the "Merger").
ARTICLE I.
DEFINITIONS
1.1 As used in this Plan of Merger and in any amendments hereto,
all capitalized terms herein shall have the meanings assigned to such terms in
the Reorganization Agreement unless otherwise defined herein.
ARTICLE 2
CAPITALIZATION
2.1 GSSC ACQUISITION COMPANY, INC.. The authorized capital stock
of INTERIM consists of 1,000 shares of common stock having a par value of $.01
per share (the "INTERIM Common Stock") and no shares of preferred stock. As of
the date of this Plan of Merger, 1,000 shares of INTERIM Common Stock are
issued and outstanding, and no shares of INTERIM Common Stock are held by it as
treasury stock. All such issued and outstanding shares of INTERIM Common Stock
are owned beneficially and of record by UPC.
2.2 GRENADA SUNBURST SYSTEM CORPORATION The authorized capital
stock of GSSC consists of 15,000,000 shares of common stock having a par value
of $1.00 per share (the "GSSC Common Stock") and no shares of preferred stock
(the "GSSC Preferred Stock). As of the date hereof, 9,492,975 shares of GSSC
Common Stock were issued and outstanding, no shares of GSSC Common Stock were
held by GSSC as GSSC Treasury Stock and no shares of GSSC Preferred Stock were
issued and outstanding.
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PAGE 93
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ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent
corporation to the Merger is:
GSSC ACQUISITION COMPANY, INC.
and
GRENADA SUNBURST SYSTEM CORPORATION
3.2 Surviving Corporation. The Surviving Corporation shall be:
GRENADA SUNBURST SYSTEM CORPORATION
which subsequent to the Effective Time of the Merger shall continue to be
named:
GRENADA SUNBURST SYSTEM CORPORATION
3.3 Terms and Conditions of Merger. The Merger shall be
consummated only pursuant to, and in accordance with this Plan of Merger and
the Reorganization Agreement. Conditioned upon the satisfaction or waiver (by
the Party or Parties entitled to the benefits thereof) of all conditions
precedent to consummation of the Merger, the Merger shall become effective on
the date and at the time (the "Effective Time of the Merger") of the filing of
a Certificate of Merger with the Secretary of State of the State of Delaware,
or at such later time and/or date as may be agreed upon by the parties and set
forth in the Certificate of Merger. At the Effective Time of the Merger,
INTERIM shall be merged with and into GSSC which will survive the Merger, and
the separate existence of INTERIM shall cease thereupon, and without further
action, GSSC shall thereafter possess all of the assets, rights, privileges,
appointments, powers, licenses, permits and franchises of both GSSC and
INTERIM, whether of a public or private nature, and shall be subject to all of
the liabilities, restrictions, disabilities, and duties of both GSSC and
INTERIM.
3.4 Certificate of Incorporation. At the Effective Time of the
Merger, the Certificate of Incorporation of GSSC, as in effect immediately
prior to the Effective Time of the Merger, shall constitute the Certificate of
Incorporation of GSSC as the Surviving Corporation, unless and until the same
shall be amended thereafter as provided by law and the terms of such
Certificate of Incorporation.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of
GSSC, as in effect immediately prior to the Effective Time of the Merger, shall
continue to be its Bylaws as the
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Surviving Corporation, unless and until amended or repealed thereafter as
provided by law, its Certificate of Incorporation and such Bylaws.
3.6 Directors and Officers. The directors and officers of GSSC in
office immediately prior to the Effective Time of the Merger shall continue to
be the directors and officers of the Surviving Corporation, to hold office as
provided in the Certificate of Incorporation and Bylaws of the Surviving
Corporation, unless and until their successors shall have been elected or
appointed and shall have qualified or they shall have been removed as provided
therein.
3.7 Name. The name of GSSC as the Surviving Corporation following
the Merger, shall remain:
GRENADA SUNBURST SYSTEM CORPORATION
or such other name as GSSC shall thereafter adopt.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 Conversion of the INTERIM Common Stock. At the Effective Time
of the Merger, each share of $.01 par value common stock of INTERIM (the
"INTERIM Common Stock") issued and outstanding immediately prior to the
Effective Time of The Merger shall, by virtue of the Merger becoming effective
and without any further action on the part of anyone, be converted into and
become one share of the issued and outstanding common stock of the Surviving
Corporation.
4.2 Conversion and Cancellation of Shares of GSSC. At the
Effective Time of the Merger, each share of $1.00 par value common stock of
GSSC issued and outstanding immediately prior to the Effective Time of the
Merger shall, by virtue of the Merger becoming effective and without any
further action on the part of anyone, be converted, exchanged and cancelled as
provided in Section 4.3 hereof.
4.3 Exchange of GSSC Shares; Exchange Ratio. At the Effective
Time of the Merger, the outstanding shares of GSSC Common Stock held by the
GSSC Record Holders immediately prior to the Effective Time of the Merger
shall, without any further action on the part of anyone, cease to represent any
interest (equity, shareholder or otherwise) in GSSC and shall automatically be
converted exclusively into, and constitute only the right of the GSSC Record
Holders to receive in exchange for their shares of GSSC Common Stock, whole
shares of UPC Common
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Stock and a cash payment in settlement of any remaining fractional share of UPC
Common Stock in accordance with the terms and conditions of this Section 4.3.
The shares of UPC Common Stock and the cash settlement of any remaining
fractional share of UPC Common Stock deliverable by UPC or INTERIM to the GSSC
Record Holders pursuant to the terms of this Reorganization Agreement are
sometimes collectively referred to herein as the "Consideration."
The number of shares of UPC Common Stock to be exchanged for each share of GSSC
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger shall be based on an exchange ratio (the "Exchange Ratio") as
determined and set forth in this Section 4.3. The Exchange Ratio shall be
determined as follows:
(A) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than or equal to
$24.00 per share of UPC Common Stock but less than or equal to $29.25
per share of UPC Common Stock (the "Primary Collar"), the Exchange
Ratio shall be fixed at 1.4206 shares of UPC Common Stock for each
share of GSSC Common Stock validly issued and outstanding immediately
prior to the Effective Time of the Merger;
(B) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $29.25 per share
of UPC Common Stock but less than or equal to $31.25 per share of UPC
Common Stock (the "Upper Secondary Collar"), the Exchange Ratio shall
be based on (a) a fixed price of $41.55 per share of GSSC Common Stock
divided by (b) the Current Market Price Per Share of UPC Common Stock
for each share of GSSC Common Stock validly issued and outstanding
immediately prior to the Effective Time of the Merger;
(C) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $31.25 per share
of UPC Common Stock (the "Ceiling"), the Exchange Ratio shall be fixed
at 1.3296 shares of UPC Common Stock for each share or GSSC Common
Stock validly issued and outstanding immediately prior to the
Effective Time of the Merger; provided, however, that UPC would have
the right to either deliver shares of UPC Common Stock based on the
fixed Exchange Ratio of 1.3296 or to terminate the
transaction;provided, however, should UPC elect to terminate the
transaction under this provision, GSSC shall have the unilateral right
to reinstate the transaction by accepting in exchange for each share
of GSSC Common Stock validly issued and outstanding immediately prior
to the Effective
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Time of the Merger that number of shares of UPC Common Stock at the
Current Market Price Per Share sufficient to equal $41.55 per share of
GSSC Common Stock;
(D) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than or equal to
$22.00 per share of UPC Common Stock but less than $24.00 per share of
UPC Common Stock (the "Lower Secondary Collar"), the Exchange Ratio
shall be based on (a) a fixed price of $34.09 per share of GSSC Common
Stock divided by (b) the Current Market Price Per Share of UPC Common
Stock for each share of GSSC Common Stock validly issued and
outstanding immediately prior to the Effective Time of the Merger; and
(E) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $22.00 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be fixed at
1.5495 shares of UPC Common Stock for each share of GSSC Common Stock
validly issued and outstanding immediately prior to the Effective Time
of the Merger; provided, however, that subject to the terms and
provisions of Section 3.3 of this Reorganization Agreement, GSSC shall
have the right to either accept the fixed Exchange Ratio of 1.5495 or
terminate the transaction in accordance with the terms and provisions
of Section 3.3 of the Reorganization Agreement, provided, however,
that should GSSC elect to terminate the transaction under this
provision and the Current Market Price Per Share of UPC Common Stock
should be greater than or equal to $18.50, UPC shall have the
unilateral right to reinstate the transaction by delivering in
exchange for each share of GSSC Common Stock validly issued and
outstanding immediately prior to the Effective Time of the Merger
shares of UPC Common Stock based on that number of shares of UPC
Common Stock at the Current Market Price Per Share sufficient to equal
$34.09 per share of GSSC Common Stock.
The Exchange Ratio as determined in this Section 4.3 shall be based on an
aggregate of no more than 9,600,000 shares of GSSC Common Stock being validly
issued and outstanding immediately prior to the Effective Time of the Merger
and, for purposes of this paragraph, counting all unexercised GSSC Stock
Options issued and outstanding immediately prior to the Effective Time of the
Merger as issued and outstanding shares of GSSC Common Stock so converted and
exchanged; provided, however, that no fractional shares of UPC Common Stock
shall be issued and if, after aggregating all of the shares of UPC Common Stock
to which a GSSC Record Holder is entitled based upon the Exchange Ratio, there
shall be a fractional share of UPC Common Stock remaining, such
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PAGE 97
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fractional share shall be settled by a cash payment therefor pursuant to the
Mechanics of Payment of the Consideration set forth in Section 4.4 hereof,
which shall be calculated based upon the Current Market Price Per Share of one
(1) full share of UPC Common Stock.
(1) DEFINITION OF "CURRENT MARKET PRICE
PER SHARE." The "Current Market Price Per Share" shall be the average
closing price per share of the "last" real time trades (i.e., closing
price) of the UPC Common Stock on the NYSE (as published in The Wall
Street Journal, Eastern Edition) for each of the twenty (20) NYSE
general market trading days on which the NYSE was open for business
next preceding the issuance of all necessary Regulatory Approvals (the
"Pricing Period"). In the event the UPC Common Stock should not trade
on one or more of the trading days during the Pricing Period (a "No
Trade Date"), any such No Trade Date shall be disregarded in computing
the average closing price per share of UPC Common Stock and the
average shall be based upon the "last" real time trades and number of
days on which the UPC Common Stock actually traded during the Pricing
Period.
(2) EFFECTS OF APPRAISAL RIGHTS ON THE
EXCHANGE RATIO. The Exchange Ratio shall be unaffected by appraisal
rights as granted under Delaware law because the GSSC Common Stock is
listed for trading on the NASDAQ National Market System, which is a
"national securities exchange" as defined in rules promulgated by the
SEC pursuant to the 1934 Act, and therefore, pursuant to Delaware Code
Section 8-503-262, no GSSC Record Holder may assert appraisal rights
in connection with the Merger or the transactions contemplated in the
Reorganization Agreement.
(3) EFFECT OF STOCK SPLITS, REVERSE
STOCK SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF
GSSC OR UPC. Should GSSC or UPC effect any stock splits, reverse
stock splits, stock dividends or similar changes in their respective
capital accounts subsequent to the date of the Reorganization
Agreement but prior to the Effective Time of the Merger, the Exchange
Ratio shall be adjusted in such a manner as the Board of Directors of
UPC shall deem in good faith to be fair and reasonable in order to
give effect to such changes subject to GSSC's Board of Directors'
approval.
4.4 Mechanics of Payment of the Consideration. As soon as
reasonably practicable, but in any event no more than five (5) Business Days
after the Effective Time of the Merger, the Corporate Trust Department of Union
Planters National Bank, Memphis, Tennessee (the "Exchange Agent") shall deliver
to each
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PAGE 98
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of the GSSC Record Holders such materials and information deemed necessary by
the Exchange Agent to advise the GSSC Record Holders of the procedures required
for proper surrender of their certificates evidencing and representing shares
of the GSSC Common Stock in order for the GSSC Record Holders to receive the
Consideration. Such materials shall include, without limitation, a Letter of
Transmittal, an Instruction Sheet, and a return mailing envelope addressed to
the Exchange Agent (collectively the "Stockholder Materials"). All Stockholder
Materials shall be sent by United States mail to the GSSC Record Holders at the
addresses set forth on a certified stockholder list to be delivered by GSSC to
UPC at the Closing (the "Stockholder List") and shall also be made available at
the Corporate Trust Department offices of the Exchange Agent. As soon as
reasonably practicable thereafter, the GSSC Record Holders of all of the
outstanding shares of GSSC Common Stock, shall be requested by the Exchange
Agent to deliver, or cause to be delivered, by United States Postal Service,
hand delivery or any other means of delivery selected by such GSSC Record
Holders, to the Exchange Agent, pursuant to the Stockholder Materials, the
certificates formerly evidencing and representing all of the shares of GSSC
Common Stock which were validly issued and outstanding immediately prior to the
Effective Time of the Merger, and the Exchange Agent shall take prompt action
to process such certificates formerly evidencing and representing shares of
GSSC Common Stock received by it (including the prompt return of any defective
submissions with instructions as to those actions which may be necessary to
remedy any defects). Upon receipt of the proper submission of the
certificate(s) formerly representing and evidencing ownership of the shares of
GSSC Common Stock, the Exchange Agent shall, on or prior to the 30th day after
the Effective Time of the Merger but as soon as practicable mail, to the former
GSSC Record Holders in exchange for the certificate(s) surrendered by them, the
Consideration to be delivered for each such GSSC Record Holder's shares of GSSC
Common Stock evidenced by the certificate or certificates which were cancelled
and converted exclusively into the right to receive the Consideration upon the
Merger becoming effective. After the Effective Time of the Merger and until
properly surrendered to the Exchange Agent, each outstanding certificate or
certificates which formerly evidenced and represented the shares of GSSC Common
Stock of a GSSC Record Holder, subject to the provisions of this Section, shall
be deemed for all corporate purposes to represent and evidence only the right
to receive the Consideration into which such GSSC Record Holder's shares of
GSSC Common Stock were converted and aggregated at the Effective Time of the
Merger. Unless and until the outstanding certificate or certificates, which
immediately prior to the Effective Time of the Merger evidenced and represented
the GSSC Record Holder's GSSC Common Stock shall have been properly surrendered
as provided above, the
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Consideration payable to the GSSC Record Holder(s) of the cancelled shares as
of any time after the Effective Date shall not be delivered to the GSSC Record
Holder(s) of such certificate(s) until such certificates shall have been
surrendered in the manner required. Each GSSC Record Holder shall be
responsible for all federal, state and local taxes which may be incurred by
such holder on account of the receipt of any Consideration. The GSSC Record
Holder(s) of any certificate(s) which shall have been lost or destroyed may
nevertheless, subject to the provisions of this Section, receive the
Consideration to which each such GSSC Record Holder is entitled, provided that
each such GSSC Record Holder shall deliver to UPC and to the Exchange Agent:
(i) a sworn statement certifying the fact of such loss or destruction and
specifying the circumstances thereof and (ii) a lost instrument bond in form
satisfactory to UPC and the Exchange Agent which has been duly executed by a
corporate surety satisfactory to UPC and the Exchange Agent, indemnifying the
Surviving Corporation, UPC, the Exchange Agent (and their respective
successors) to their satisfaction against any loss or expense which any of them
may incur as a result of such lost or destroyed certificates being thereafter
presented. Any costs or expenses which may arise from such replacement
procedure, including the premium on the lost instrument bond, shall be for the
account of the GSSC Record Holder.
4.5 Stock Transfer Books. At the Effective Time of the Merger,
the stock transfer books of GSSC shall be closed and no transfer of shares of
GSSC Common Stock shall be made thereafter.
4.6 Effects of the Merger. At the Effective Time of the Merger,
the separate existence of INTERIM shall cease, and INTERIM shall be merged with
and into GSSC which, as the Surviving Corporation, shall thereupon and
thereafter possess all of the assets, rights, privileges, appointments, powers,
licenses, permits and franchises of GSSC and INTERIM, whether of a public or a
private nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of both GSSC and INTERIM.
4.7 Transfer of Assets. At the Effective Time of the Merger, all
rights, assets, licenses, permits, franchises and interests of GSSC and INTERIM
in and to every type of property, whether real, personal, or mixed, whether
tangible or intangible, and to choses in action shall be deemed to be vested in
GSSC as the Surviving Corporation by virtue of the Merger and without any deed
or other instrument or act of transfer whatsoever.
4.8 Assumption of Liabilities. At the Effective Time of the
Merger, the Surviving Corporation shall become and be liable for all debts,
liabilities, obligations and contracts of INTERIM
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 100
<PAGE> 107
as well as those of the Surviving Corporation, whether the same shall be
matured or unmatured; whether accrued, absolute, contingent or otherwise; and
whether or not reflected or reserved against in the balance sheets, other
financial statements, books of account or records of INTERIM or the Surviving
Corporation.
4.9 Appraisal Rights of GSSC Stockholders. Pursuant to the
provisions of Section 8-503-262 of the Delaware Code, GSSC Stockholders shall
not be entitled to assert appraisal rights in connection with the Merger or to
seek those appraisal remedies afforded by the Delaware Code because the GSSC
Common Stock is listed for trading on the NASDAQ National Market System, which
is a "national securities exchange" as defined in rules promulgated by the SEC
pursuant to the 1934 Act, and therefore, pursuant to Delaware Code Section
8-503-262, no GSSC Record Holder may assert appraisal rights in connection with
the Merger or the transactions contemplated in the Reorganization Agreement.
4.10 Approvals of Stockholders of GSSC, UPC and INTERIM. In order
to become effective, the Merger must be approved by the respective stockholders
of GSSC, UPC and of INTERIM at meetings to be called for that purpose by their
respective Boards of Directors, or by their unanimous action by written consent
complying fully with the laws of Delaware and Tennessee.
4.11 GSSC Stock Options. In the event and to the extent that there
are any GSSC Stock Options validly issued and outstanding at the time of
Closing, such GSSC Stock Options shall at the Effective Time of the Merger
automatically and without further action on the part of anyone be converted
into options to purchase shares of UPC Common Stock on the same terms and
conditions attributable to the GSSC Stock Options to purchase shares of GSSC
Common Stock adjusted by and in accordance with the Exchange Ratio as provided
in the Reorganization Agreement.
ARTICLE 5
AMENDMENTS AND WAIVERS
5.1 AMENDMENTS. To the extent permitted by law, this Plan of
Merger may be amended unilaterally by UPC and INTERIM as set forth in Section
2.5 and Section 10.9(d) of the Reorganization Agreement; provided, however,
that the provisions of Section 4.3 of this Plan of Merger relating to the
manner or basis upon which shares of GSSC Common Stock will be converted into
the exclusive right to receive the Consideration from UPC shall not be amended
in such a manner as to reduce the amount of the Consideration payable to the
GSSC Record Holders determined as provided in Section 4.3 of this Plan of
Merger nor shall this
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 101
<PAGE> 108
Plan of Merger be amended to permit UPC to utilize assets other than cash or
good funds to make payment of the Consideration as provided in Section 3.1(e)
of the Reorganization Agreement at any time after the GSSC Stockholders'
Meeting without the requisite approval (except as provided for in the
Reorganization Agreement) of the GSSC Record Holders, and that no amendment to
this Plan of Merger shall modify the requirements of regulatory approval as set
forth in Section 8.3(b) of the Reorganization Agreement.
5.2 AUTHORITY FOR AMENDMENTS AND WAIVERS. Prior to the
Effective Time of the Merger, UPC and INTERIM, acting through their respective
Boards of Directors or chief executive officers or presidents or other
authorized officers, shall have the right to amend this Plan of Merger to
postpone the Effective Time of the Merger to a date and time subsequent to the
time of filing of the Plan of Merger with the Delaware Secretary of State, to
waive any default in the performance of any term of this Plan of Merger by
GSSC, to waive or extend the time for the compliance or fulfillment by GSSC of
any and all of its obligations under this Plan of Merger, and to waive any or
all of the conditions precedent to the obligations of UPC and INTERIM under
this Plan of Merger, except any condition that, if not satisfied, would result
in the violation of any law or applicable governmental regulation. Prior to
the Effective Time of the Merger, GSSC, acting through its Board of Directors
or chief executive officer or president or other authorized officer, shall have
the right to amend this Plan of Merger to postpone the Effective Time of the
Merger to a date and time subsequent to the time of filing of the Plan of
Merger with the Delaware Secretary of State, to waive any default in the
performance of any term of this Plan of Merger by UPC or INTERIM, to waive or
extend the time for the compliance or fulfillment by UPC or INTERIM of any and
all of their obligations under this Plan of Merger, and to waive any or all of
the conditions precedent to the obligations of GSSC under this Plan of Merger
except any condition that, if not satisfied, would result in the violation of
any law or applicable governmental regulation.
ARTICLE 6
MISCELLANEOUS
6.1 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, or by registered or certified mail, postage
pre-paid to the persons at the addresses set forth below (or at such other
addresses or facsimile numbers as may hereafter be designated as provided
below), and shall be deemed to have been delivered as of the date received by
the Party to which, or to whom it is addressed:
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 102
<PAGE> 109
If to UPC or INTERIM:
Union Planters Corporation
P.O. Box 387 (mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Fax: (901) 383-2877
Attn: Mr. Jackson W. Moore, President
Gary A. Simanson,
Associate General Counsel
If to GSSC: Grenada Sunburst System Corporation
2000 Gateway
(P.O. Box 947)
Grenada, Mississippi 38902-0947
Fax: (601) 227-2070
Attn: Mr. James T. Boone, Chairman
President and Chief Executive Officer
With a copy to: Thompson & Mitchell
One Mercantile Center
St. Louis, Missouri
Fax: (314) 231-1717
Attn: Gerard K. Sandweg, Jr., Esq.
or at such other address as shall be furnished in writing by any of the Parties
to the others by notice given as provided in this section 6.1.
6.2 GOVERNING LAW. Except to the extent federal law shall be
controlling, this Plan of Merger shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware with respect to
those provisions of this Plan of Merger expressly required by Delaware law to
be included in this Plan of Merger, disregarding, however, the Delaware
conflicts of laws rules. In all other instances, this Plan of Merger shall be
governed by and construed and enforced in accordance with the laws of the State
of Tennessee disregarding, however, the Tennessee conflicts of laws rules.
6.3 CAPTIONS. The Captions heading the Sections in this Plan
of Merger are for convenience only and shall not affect the construction or
interpretation of this Plan of Merger.
6.4 COUNTERPARTS. This Plan of Merger may be executed in two
or more counterparts, each of which shall be deemed an
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 103
<PAGE> 110
original instrument, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger
to be duly executed and delivered by its duly authorized officers as of the
date first above written.
ATTEST: UNION PLANTERS CORPORATION
__________________________ By:___________________________
J. F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: GSSC ACQUISITION COMPANY, INC.
__________________________ By:___________________________
J. F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: GRENADA SUNBURST SYSTEM
CORPORATION
_____________________________ By:___________________________
Edwin T. Cofer James T. Boone
Its: Secretary Its: Chairman, President and
Chief Executive Officer
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 104
<PAGE> 1
EXHIBIT 23 (a)
Consent of KPMG Peat Marwick to incorporate their opinion into various
registration statements for benefit plans and dividend reinvestment plan.
<PAGE> 2
Exhibit 23(a)
Accountants' Consent
The Board of Directors
Grenada Sunburst System Corporation:
We consent to incorporation by reference in the registration statements (No.
33-27814) on Form S-3 (Nos. 33-23306, 33-35928, 33-53454 and 2-87392) on Form
S-8 of Union Planters Corporation of our report dated January 28, 1994, to the
consolidated balance sheets of Grenada Sunburst System Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993 which report appears in
the Current Report on Form 8-K dated July 26, 1994, of Union Planters
Corporation.
/s/ KPMG PEAT MARWICK
Memphis, Tennessee
July 26, 1994
<PAGE> 1
Exhibit 23(b)
Consent of KPMG Peat Marwick to incorporate their opinion into this Current
Report on Form 8-K dated July 26, 1994.
<PAGE> 2
Exhibit 23(b)
ACCOUNTANTS' CONSENT
The Board of Directors
Grenada Sunburst System Corporation:
We consent to the inclusion of our report dated January 28, 1994, with respect
to the consolidated balance sheets of Grenada Sunburst System Corporation and
subsidiaries as of December 31, 1993 and 1992, and the related consolidated
statements of income, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1993, which report appears in
the Form 8-K of Union Planters Corporation dated July 26, 1994.
/s/ KPMG PEAT MARWICK
Memphis, Tennessee
July 26, 1994
<PAGE> 1
EXHIBIT 99 (a)
Grenada Sunburst System Corporation and Subsidiaries Consolidated Financial
Statements as of and for the years ended December 31, 1993, 1992, and 1991.
<PAGE> 2
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(In thousands)
1993 1992
ASSETS --------- ---------
Cash and demand balances with banks (Note 3) $ 133,889 126,797
Interest bearing deposits with banks 28 20,030
Securities hele for sale (Note 4) 120,101 29,700
Investment securities (Market value of
approximately $301,240 and $303,312)(Note 4) 287,945 290,212
Mortgage-backed securities (Market value
of approximately $170,815 and $183,978)(Note 4) 167,532 179,473
Mortgages held for resale 73,956 63,072
Federal funds sold and securities
purchased under agreements to resell 25,000 0
Loans (Note 5) 1,569,547 1,207,599
Less: Unearned income 9,007 5,660
Allowance for credit losses (Note 6) 32,749 24,412
---------- ---------
Net loans 1,527,791 1,177,527
Premises and equipment, net (Note 8) 48,738 39,880
Other real estate 5,185 9,296
Accrued interest receivable 18,262 16,699
Other assets 27,771 17,930
--------- ----------
Total Assets $ 2,436,198 1,970,616
========= ==========
LIABILITIES
Deposits
Demand:
Non-interest bearing $ 419,641 317,397
Interest bearing 607,472 517,480
Savings 165,814 100,968
Time, $100,000 and over 247,538 201,255
Other time 759,342 639,471
--------- ---------
Total deposits 2,199,807 1,776,571
Federal funds purchased and securities
sold under agreements to repurchase (Note 7) 30,542 25,664
Other borrowed funds (Note 7) 12,941 3,892
Accrued interest payable 8,939 7,599
Other liabilities 9,897 11,152
--------- ---------
Total Liabilities 2,262,126 1,824,878
STOCKHOLDERS' EQUITY (Note 13)
Common stock, $1.00 par value, 15,000,000
authorized, 9,492,975 shares issued at
December 31, 1993, and 9,046,847 at
December 31, 1992 9,493 9,047
Paid in capital 31,842 22,953
Surplus 71,123 71,123
Undivided profits 61,614 42,615
-------- --------
Total Stockholders' Equity 174,072 145,738
-------- --------
Commitments and contingent liabilities (Note 14)
Total Liabilities and
Stockholders' Equity $ 2,436,198 1,970,616
========= ==========
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE> 3
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31,
(In thousands except per share data)
1993 1992 1991
-------- -------- --------
INTEREST INCOME
Loans including fees $122,482 103,751 114,269
Deposits with banks 108 916 2,373
Mortgages held for resale 4,096 3,689 1,479
Federal funds sold and securities
purchased under agreements to resell 490 970 2,185
Securities:
Taxable 27,501 27,887 34,399
Exempt from federal taxes 5,377 6,090 6,620
Dividends 1,535 1,520 1,213
------- ------- -------
Total Interest Income 161,589 144,823 162,538
INTEREST EXPENSE
Deposits:
Demand 14,093 14,463 16,858
Time, $100,000 and over 7,789 9,394 17,641
Other time and savings 36,828 38,046 51,724
Federal funds purchased and securities
sold under agreements to repurchase (Note 7) 943 1,098 1,574
Other borrowed funds 895 66 192
------- ------- -------
Total Interest Expense 60,548 63,067 87,989
------- ------- -------
Net interest income 101,041 81,756 74,549
Provision for credit losses (Note 6) 6,815 7,988 8,922
------- ------- -------
Net interest income after
provision for credit losses 94,226 73,768 65,627
NON-INTEREST INCOME
Service charges on deposit accounts 17,258 14,255 13,758
Other service charges,
commissions, and fees 10,665 7,703 5,029
Investment securities, net (237) 656 (767)
Fees from fiduciary activities 1,905 1,792 1,531
Other 1,244 929 457
------- ------- -------
Total Non-Interest Income 30,835 25,335 20,008
NON-INTEREST EXPENSE
Salaries 41,193 33,493 30,259
Employee benefits (Note 10) 7,540 6,026 6,278
Net occupancy expense (Note 8) 7,100 5,892 5,871
Furniture and equipment expense 7,307 5,961 5,450
FDIC deposit insurance expense 4,761 3,888 3,424
Other 21,461 19,366 17,592
------- ------- -------
Total Non-Interest Expense 89,362 74,626 68,874
------- ------- -------
Income before income taxes and
cumulative effect of a change
in accounting principle 35,699 24,477 16,761
Income taxes (Note 12) 11,087 6,250 3,999
------- ------- -------
Income before cumulative effect of
a change in accounting principle 24,612 18,227 12,762
Cumulative effect on prior years of
a change in accounting for income
taxes (Note 12) 781 0 0
------- ------- -------
Net Income $ 25,393 18,227 12,762
======= ======= =======
EARNINGS PER SHARE: (Note 13)
Income before cumulative effect $ 2.62 2.01 1.41
Cumulative effect of a change
in accounting principle $ 0.08 0.00 0.00
Net Income $ 2.70 2.01 1.41
DIVIDENDS PER SHARE (Note 13) $ 0.72 0.60 0.60
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE> 4
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
(In thousands)
Common Paid in Undivided Treasury
Stock Capital Surplus Profits Stock Total
------- -------- ------- -------- ------- -------
Balances January 1, 1991 $9,017 22,698 71,123 20,502 (51) 123,289
Net income 12,762 12,762
Net unrealized gain
on marketable equity
securities 951 951
Purchase of Treasury Stock (7) (7)
Sale of Treasury Stock 58 58
Cash dividend declared (5,421) (5,421)
Unearned compensation 30 255 (256) 29
------ ------- ------- ------- ------ -------
Balances January 1, 1992 $9,047 22,953 71,123 28,538 131,661
Net income 18,226 18,226
Net unrealized gain on
marketable equity
securities 1,250 1,250
Cash dividend declared (5,428) (5,428)
Unearned compensation 29 29
------ ------- ------- ------- ------ -------
Balances January 1, 1993 $9,047 22,953 71,123 42,615 0 145,738
Net income 25,393 25,393
Net unrealized gain on
marketable equity
securities 384 384
Cash dividend declared (6,835) (6,835)
Stock issued in exchange
for selected net assets
of Eastover Bank for
Savings (Note 2) 439 8,734 9,173
Stock issued under
compensation plan 7 155 162
Unearned compensation 57 57
------ ------- ------- ------- ------ -------
Balances December 31, 1993 $9,493 31,842 71,123 61,614 0 174,072
====== ======= ======= ======= ====== =======
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 5
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(In thousands)
<TABLE>
<CAPTION>
1993 1992 1991
-------- ------- -------
<S> <C> <C> <C>
Net cash flows from operating activities:
Net income $ 25,393 18,227 12,762
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Amortization of goodwill and intangible assets 949 862 867
Depreciation and amortization of premises and equipment 4,911 4,193 4,104
Net accretion of investment securities (1,378) (2,807) (4,278)
Accretion of loan fees and discounts (1,980) (1,596) (2,940)
Net increase in securities available for sale (90,401) (29,700) 0
Provision for possible credit losses 6,815 7,988 8,922
Provision for possible investment losses 0 0 1,013
Net increase in mortgages held for resale (10,884) (35,707) (27,365)
Other real estate provision 956 1,051 1,430
Gains on sales of other real estate (246) (28) (95)
Losses from sales of premises and equipment 44 17 84
(Increase) decrease in interest receivable 1,158 4,759 1,377
Increase (decrease) in interest payable (638) (3,317) (2,833)
(Gains) losses on sales of securities, net 237 (656) 767
Net decrease in trading account assets 0 0 10,118
(Gains) losses on trading account activity (183) 0 32
Other, net (7,880) 598 10,530
-------- -------- --------
Net cash provided (used) by operating activities (73,127) (36,116) 14,495
Cash flows from investing activities:
Net decrease in interest-bearing deposits with banks 20,002 22,524 (30,493)
Net (increase) decrease in federal funds sold and
securities purchased under agreements to resell (25,000) 30,950 (7,850)
Purchases of securities (95,045) (121,834) (171,633)
Maturities of securities 130,291 197,353 95,790
Sales of securities 10,560 9,242 41,447
Purchases of mortgage-backed securities (42,768) (97,290) (7,427)
Sales of mortgage-backed securities 16,749 14,923 12,482
Principal payments of mortgage-backed securities 119,928 68,201 30,535
Net increase in loans (115,707) (127,949) 16,237
Net increase in premises and equipment (4,413) (2,894) (4,930)
Proceeds from sales of premises and equipment 176 193 214
Proceeds from sales of other real estate 5,429 5,805 7,915
Net cash received from acquisition 35,922 0 0
--------- --------- --------
Net cash provided (used) by investing activities 56,124 (776) (17,713)
Cash flows from financing activities:
Net increase in demand and savings accounts 102,026 167,234 117,331
Net increase (decrease) in other deposits (74,998) (112,545) (33,296)
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase 4,878 825 (43,293)
Net increase (decrease) in other borrowed money (976) 3,731 (16,063)
Cash dividends paid (6,835) (5,428) (5,421)
Sale of Treasury Stock 0 0 51
-------- -------- --------
Net cash provided by financing activities 24,095 53,817 19,309
-------- -------- --------
Net increase in cash and due from banks 7,092 16,925 16,091
Cash and due from banks at the beginning of the period 126,797 109,872 93,781
-------- -------- --------
Cash and due from banks at the end of the period $ 133,889 126,797 109,872
======== ======== ========
Interest paid $ 59,208 66,384 90,822
Income taxes paid 13,038 7,750 3,290
Unrealized gain on marketable equity securities 384 1,250 951
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993, 1992 and 1991
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of Grenada Sunburst System
Corporation and Subsidiaries ("GSSC" or the "Company") are prepared in
conformity with generally accepted accounting principles and prevailing
practices within the banking industry. Management of the Company is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and income and expenses for the
periods reported. The Company, a multi-bank holding company, is engaged in the
business of banking and bank-related activities. The Company's subsidiaries are
subject to the regulations of certain federal and state agencies and undergo
periodic examinations by those regulatory agencies. The following is a summary
of the significant accounting and reporting policies used in preparing the
consolidated financial statements.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Grenada
Sunburst System Corporation and its wholly-owned subsidiaries: Sunburst Bank,
Mississippi; Sunburst Bank, Louisiana; and Sunburst Financial Group, Inc. All
significant intercompany accounts and transactions are eliminated in
consolidation.
MORTGAGES HELD FOR RESALE
Mortgages held for resale are carried at the lower of aggregate cost or
market as determined by outstanding commitments from investors or current
investor yield requirements calculated on the aggregate loan basis.
SECURITIES
When investment securities, primarily debt securities, are purchased, they
are classified as investment securities and are stated at cost adjusted for
amortization of premiums and accretion of discounts, as the Company has both
the intent and the ability to hold such securities on a long-term basis or
until maturity. Gains and losses from the sale of securities are recorded in
non-interest income using the specific identification method.
If it is the Company's intent at the time of purchase or during any
subsequent reporting period to sell securities prior to maturity, they are
stated at the lower of cost or aggregate market. Also, from time to time, the
Company might identify securities that it intends to use as a part of its
asset/liability strategy, and therefore that may be sold in response to changes
in interest rate and/or prepayment risks. These securities are reported at the
lower of cost or aggregate market at December 31, 1993 and shown as investments
held for sale.
Marketable equity securities are carried at market at the balance sheet
date. A valuation allowance is established by a charge to stockholders'
equity representing net unrealized losses on these securities as management
believes that the declines in market value are temporary.
Trading account securities are stated at market value and were not material
at any year end.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated depreciation.
Provisions for depreciation are computed principally on the straight-line
method over the estimated useful life of the assets. Costs of major additions
and improvements are capitalized and expenditures for maintenance and repairs
are charged to expense as incurred.
ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses is maintained at a level considered
adequate by management to absorb potential losses in the loan portfolio. The
provision for credit losses is based on management's evaluation of the loan
portfolio. Factors considered in management's evaluation are current and
anticipated future economic conditions, previous loan loss experience, industry
concentrations, and the overall quality of the loan portfolio. While
management uses available information to recognize losses on loans and real
estate owned, future additions to the allowance may be necessary based on
changes in economic conditions. In addition, various regulatory agencies, as
an integral part of their examination process, periodically review the
allowances for losses on loans and real estate owned. Such agencies may
require the Company to recognize additions to the allowances based on their
judgments about information available to them at the time of their examination.
INCOME RECOGNITION ON LOANS
Loans are reported at the principal amount outstanding, net of unearned
income and the allowance for credit losses. Unearned income on installment
loans is amortized to income using methods which approximate the interest
method. Management does not accrue interest on loans when it is determined
that the borrower is unable to meet its contractual obligation or where
interest or principal is 90 days or more past due, unless the loan is
adequately secured by way of collateralization, guarantees, or other security.
A loan may be designated as partially-accruing when the rate of interest has
been reduced because the borrower has experienced financial difficulties.
Interest income on such loans is recognized at the reduced interest rate.
Consumer loans that become approximately 120 days past due are generally
charged to the allowance for loan losses.
Loan origination and commitment fees and certain direct loan origination
costs are deferred and amortized as a yield adjustment to the related loans,
generally over the contractual life of the loans.
5
<PAGE> 7
RETIREMENT PLANS
The Company has a self-trusteed non-contributory defined benefit pension
plan covering substantially all employees with more than one year of service.
The Company's policy is to contribute to the pension plan the amount required
to fund the benefits expected to be earned for the current year and
amortization of amounts related to prior years using the projected asset credit
evaluation method. The difference between pension cost included in current
income and the funded amount is included in other assets or liabilities, as
appropriate.
The 401(k) deferred compensation plan permits eligible employees to make
contributions up to 6% of base compensation which are matched 50% by the
Company. The Company's contributions are invested in Company stock.
INCOME TAXES
The Company files a consolidated federal income tax return. Deferred
income taxes are provided for differences in the methods of reporting income
and expense in the consolidated financial statements and those reported for tax
purposes. Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standard No. 109 "Accounting for Income Taxes", and has reported the
cumulative effect of that change in the Consolidated Statement of Earnings (See
Note 12).
OTHER REAL ESTATE
Other real estate, principally consisting of foreclosed properties, is
carried at the lower of the recorded investment in the property or its fair
value. Any loss at foreclosure is charged to the allowance for credit losses.
Provisions for operating expenses of such properties and gains and losses on
their dispositions are included in non-interest expense.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of shares
outstanding during each year (See Note 13).
EXCESS COST RELATED TO ACQUISITIONS
The excess of the Company's cost over the fair value of net assets acquired
in purchased banks (deposit intangible and goodwill) is included in other
assets in the consolidated financial statements and is being amortized on a
straight-line basis over terms ranging from fourteen to fifteen years.
FIDUCIARY FEE INCOME
Income from providing trust services is recorded on the cash basis, which
does not materially differ from the accrual method.
RECLASSIFICATIONS
Certain 1991 and 1992 amounts have been reclassified to conform with 1993
presentation.
INTEREST RATE MANAGEMENT
The net differential to be paid or received on interest rate agreements
entered into to reduce the impact of changes in interest rates on identified
assets is recognized as a yield adjustment to the related asset over the life
of the agreements.
NOTE 2: BUSINESS COMBINATIONS
Effective March 1, 1993, GSSC, through its wholly-owned Mississippi banking
subsidiary, Sunburst Bank, acquired selected net assets of Eastover Bank for
Savings ("Eastover") in a transaction accounted for as a purchase.
Accordingly, the results of operations from this date, which are related to the
acquired assets, have been included in the Company's consolidated financial
statements. Approximately 439,000 shares of stock and $100,000 cash were issued
to Eastover in exchange for the selected net assets. The excess of the purchase
price over the fair value of the net assets acquired of $1,739,000 has been
recorded as core deposit intangible. The fair value of Eastover's selected net
assets at the date of acquisition are as follows: cash, $35,922,000:
securities, $123,797,000: loans, $241,584,000: property, plant, and equipment,
$9,415,000: other assets, $7,370,000: deposits, $396,208,000: and other
liabilities, $12,708,000.
Based on unaudited pro forma financial information provided by the seller,
net interest income after provision for credit losses would have been
$95,123,000 for 1993 and $86,398,000 for 1992. Net income would have been
$26,154,000 for 1993 and $22,654,000 for 1992 and earnings per share would have
been $2.78 for 1993 and $2.39 for 1992. This unaudited pro forma financial
information is presented as if the acquisition had occurred as of the beginning
of 1993 and 1992, and does not necessarily reflect the results of operations
that would have occurred had GSSC and Eastover constituted a single entity
during such periods.
6
<PAGE> 8
NOTE 3: REQUIRED CASH BALANCES
Aggregate average daily reserves of $36,303,000 were maintained for the
two-week reserve period ending December 31, 1993 to satisfy Federal regulatory
requirements. Under informal agreements, as compensation for check clearing
services, compensating balances of approximately $15,580,000 were maintained
with correspondent banks.
NOTE 4: SECURITIES
The book value and approximate market value of securities held for sale at
December 31, along with gross unrealized gains and losses, are as follows (in
thousands):
1993
---------------------------------------------
Gross Estimated
Amortized Unrealized Market
Cost Gains Losses Value
---------------------------------------------
Obligations of other U. S.
government agencies and
corporations $ 31,240 52 4 31,288
Other securities 29,700 0 0 29,700
Mortgage-backed securities 59,161 329 70 59,420
-------- ------ ------ --------
Total securities held
for sale $120,101 381 74 120,408
======== ====== ====== ========
1992
---------------------------------------------
Gross Estimated
Amortized Unrealized Market
Cost Gains Losses Value
---------------------------------------------
Other securities $ 29,700 0 0 29,700
======== ====== ====== ========
The amortized cost and estimated market value of securities held for sale
at December 31, 1993 and 1992, by contractual maturity, are shown below (in
thousands).
1993 1992
--------------------------- -------------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
--------------------------- -------------------------
Due in one year or less $ 35,992 35,988 29,700 29,700
Due after one year
through five years 20,000 20,000 0 0
Due after five years
through ten years 4,948 5,000 0 0
Mortgage-backed
securities 59,161 59,420 0 0
------- ------- ------- -------
Total 120,101 120,408 29,700 29,700
======= ======= ======= =======
The book value and approximate market value of investment securities at
December 31, were as follows (in thousands):
1993 1992
------------------------ ------------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
------------------------ ------------------------
U. S. Treasury $104,630 106,783 105,321 107,263
Obligations of other
U. S. Government
agencies and
corporations 73,599 73,707 52,965 54,278
Obligations of states
and political
subdivisions 73,205 82,657 83,109 91,718
Other investment
securities 36,511 38,093 48,817 50,053
------- ------- ------- -------
Total investment
securities 287,945 301,240 290,212 303,312
Mortgage-backed
securities:
FHLMC 81,064 82,530 87,482 89,637
FNMA 57,502 58,621 59,091 60,032
GNMA 15,877 16,454 11,507 12,255
Other 13,089 13,210 21,393 22,054
------- ------- ------- -------
Total Mortgage-backed
securities 167,532 170,815 179,473 183,978
------- ------- ------- -------
Total securities $455,477 472,055 469,685 487,290
======== ======= ======= =======
Included in other investment securities are marketable equity securities
with a cost of approximately $12,341,000 and $11,220,000, less a valuation
allowance of approximately $76,000 and $460,000, at December 31, 1993 and 1992,
respectively. Also included is stock in the FHLB of Dallas carried at cost of
$6,582,500 at December 31, 1993 and $4,458,300 at December 31, 1992.
Investment securities, including mortgage-backed securities, with an
aggregate book value of approximately $354,699,000 and $281,463,000, at
December 31, 1993 and 1992, respectively were sold under agreements to
repurchase, pledged to secure public deposits, and pledged for other purposes
as required by law.
Investments in general obligations of the State of Mississippi as of
December 31, 1993, had a book value of approximately $12,782,000 and a market
value of approximately $14,876,000.
The total difference in the book value and approximate market value of
total investment securities at December 31, 1993 and 1992, was represented by
gross unrealized gains of $17,554,000 and $18,305,000 and gross unrealized
losses of $976,000 and $700,000, respectively.
7
<PAGE> 9
The tables below show these gains and losses by type security as of December
31, 1993 and 1992 (in thousands):
1993
---------------------------------------------
Gross Estimated
Amortized Unrealized Market
Cost Gains Losses Value
---------------------------------------------
U. S. Treasury securities and
obligations of U.S. government
agencies and corporations $178,229 2,757 496 180,490
Obligations of states and
political subdivisions 73,205 9,555 103 82,657
Corporate securities 12,265 0 0 12,265
Mortgage-backed securities 167,532 3,658 375 170,815
Other debt securities 24,246 1,584 2 25,828
-------- ------ ------ -------
Totals $455,477 17,554 976 472,055
======== ====== ====== =======
1992
---------------------------------------------
Gross Estimated
Amortized Unrealized Market
Cost Gains Losses Value
---------------------------------------------
U. S. Treasury securities and
obligations of U.S. government
agencies and corporations $158,286 3,396 141 161,541
Obligations of states and
political subdivisions 83,109 8,728 119 91,718
Corporate securities 10,760 0 0 10,760
Mortgage-backed securities 179,473 4,747 242 183,978
Other debt securities 38,057 1,434 198 39,293
-------- ------ ---- -------
Totals $469,685 18,305 700 487,290
======== ====== ==== =======
The amortized cost and estimated market value of debt and equity securities
at December 31, 1993 and 1992, by contractual maturity, are shown below.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations with or without call or
prepayment penalties (in thousands).
1993 1992
--------------------------- -------------------------
Estimated Estimated
Amortized Market Amortized Market
Cost Value Cost Value
--------------------------- -------------------------
Due in one year or less $ 64,370 64,932 85,004 86,160
Due after one year
through five years 161,955 166,705 139,879 145,672
Due after five years
through ten years 19,590 21,941 20,475 23,054
Due after ten years 42,030 47,662 44,854 48,426
-------- ------- ------- -------
Total investment
securities 287,945 301,240 290,212 303,312
Mortgage-backed
securities 167,532 170,815 179,473 183,978
-------- ------- ------- -------
Total securities $455,477 472,055 469,685 487,290
======== ======= ======= =======
Proceeds from sales of investments in debt securities during 1993, 1992 and
1991 were $27,308,555, $20,792,580 and $48,643,631, respectively. Gross gains
of $86,534, $1,694,029 and $480,471 and gross losses of $40,376, $278,390 and
$1,150,034 were realized on those sales in 1993, 1992 and 1991, respectively.
8
<PAGE> 10
NOTE 5: LOANS
Loans outstanding at December 31, by major lending classification, were as
follows (in thousands):
1993 1992
---------- ----------
Commercial and industrial loans $ 392,437 322,964
Real estate:
Construction and land development 72,392 41,179
Secured by residential properties 417,651 340,907
Other real estate loans 337,101 248,654
Loans to individuals for household,
family, and other personal expenditures 261,683 190,200
Loans to finance agricultural production
and other loans to farmers 41,910 32,910
Loans for purchasing or carrying securities 6,063 4,898
All other loans 40,310 25,887
--------- ---------
Total loans 1,569,547 1,207,599
Unearned income 9,007 5,660
--------- ---------
1,560,540 1,201,939
Allowance for credit losses 32,749 24,412
--------- ---------
Net loans $1,527,791 1,177,527
========= =========
Non-accrual and restructured loans totaled approximately $4,023,000 and
$6,708,000 at December 31, 1993, and 1992, respectively. If interest had
earned at the original interest rates on these loans in 1993, income before
income taxes would have been increased by approximately $281,000. Interest
recognized on these loans was approximately $165,000 in 1993. There were no
commitments to lend additional funds to borrowers whose loans are classified as
non-accrual or restructured.
NOTE 6: ALLOWANCE FOR LOAN LOSSES
A summary of changes in the allowance for credit losses for the years ended
December 31, is as follows (in thousands):
1993 1992 1991
------------------------------------
Balance at beginning of year $24,412 19,547 16,324
Provision charged to operating expenses 6,815 7,988 8,922
Acquisitions 4,962 0 0
Deductions:
Loans charged off (4,830) (4,450) (7,693)
Recoveries 1,390 1,327 1,994
------- ------ ------
Net charge-offs (3,440) (3,123) (5,699)
------- ------ ------
Balance at end of year $32,749 24,412 19,547
======= ====== ======
9
<PAGE> 11
NOTE 7: SHORT-TERM AND OTHER BORROWINGS
Short-term and other borrowing data for the years ended December 31, 1993,
1992 and 1991, are as follows (in thousands):
Balance Weighted
Outstanding Average Rate
-------------------------------- ----------------
Maximum Average At During At
Month End Daily Year End Year Year End
-------------------------------- ----------------
1993
Federal funds purchased
and securities sold
under agreements to
repurchase $ 60,343 32,363 30,542 2.91% 2.93
FHLB advances 13,523 11,716 12,838 7.46% 7.66
Other long-term 110 83 103 3.00% 2.41
1992
Federal funds purchased
and securities sold
under agreements to
repurchase $ 53,384 32,964 25,664 3.33% 2.88
FHLB advances 4,000 1,128 3,781 4.13% 4.13
Other long-term 139 129 111 9.11% 4.68
1991
Federal funds purchased
and securities sold
under agreements to
repurchase $ 39,303 28,687 24,839 5.49% 4.03
Other short-term 20,302 3,265 161 5.89% 6.07
Federal funds purchased represent primarily overnight borrowings, while
securities sold under agreements to repurchase generally mature in less than
thirty days. Other short-term borrowings represent primarily interest-bearing
revolving U.S. Treasury accounts.
FHLB advances, net of unamortized discounts of $29,000 in 1993, are secured
under an agreement pledging the stock pf the FHLB and certain real estate
loans of the Company. Total eligible collateral under the agreement was
$509,000,000 in 1993 and $381,000,000 in 1992. All FHLB advances at December
31, 1993, had prepayment penalty provisions.
NOTE 8: PREMISES AND EQUIPMENT
Premises and equipment and accumulated depreciation thereon at December
31, are as follows (in thousands):
Estimated
Useful Lives - Years 1993 1992
-------------------- --------- --------
Land -- $ 9,009 7,528
Buildings 15-40 37,483 32,319
Furniture and equipment 5-12 36,197 30,035
Construction in progress -- 359 181
--------- -------
Total 83,048 70,063
Accumulated depreciation:
Buildings (13,040) (11,538)
Furniture and equipment (21,270) (18,645)
--------- -------
Premises and equipment, net $ 48,738 39,880
========= =======
Depreciation expense on premises and equipment for 1993, 1992, and 1991
was approximately $4,749,000, $3,987,000, and $3,950,000, respectively.
NOTE 9: RELATED PARTY TRANSACTIONS
From time to time, the Company provides credit to directors and executive
officers of the Company and their affiliates. In the opinion of management,
such transactions are made on substantially the same terms as those prevailing
at the time for comparable transactions with other persons and do not involve
more than the normal risk of collectibility or present other unfavorable
features.
Such loans were $16,031,000 and $13,758,000 at December 31, 1993 and 1992,
respectively. During 1993, new loans of $11,992,000 were made, and repayments
of $9,719,000 were received.
NOTE 10: EMPLOYEE BENEFITS
The Company maintains a non-contributory defined benefit plan (the Plan)
covering substantially all full-time employees who have completed at least one
year of service and who have attained the age of 21. The Company's policy is
to fund the pension plan based on both the legal requirements and tax
considerations.
10
<PAGE> 12
Net periodic pension cost for 1993, 1992, and 1991 included the following
components (in thousands):
1993 1992 1991
-------- -------- --------
Service cost $ 1,181 1,087 1,036
Interest cost 1,519 1,344 1,249
Actual return on plan assets (1,792) (1,564) (1,344)
Net amortization and deferral 225 174 (50)
-------- -------- --------
Pension expense $ 1,133 1,041 891
======== ======== ========
Pension expense also includes approximately $33,000 in 1993, $70,000 in
1992, and $62,000 in 1991 paid to employees who retired prior to adoption of
the Plan, and approximately $51,000 for 1993, $26,000 for 1992, and $131,000
for 1991, relating to the cost of funding supplemental retirement plans. The
Plan's funded status at December 31, was as follows (in thousands):
1993 1992 1991
--------- --------- --------
Actuarial present value of:
Vested benefit obligation $16,262 13,562 11,853
======== ======= ========
Accumulated benefit obligation 16,513 13,704 12,155
======== ======= ========
Plan assets at fair value 20,608 18,584 16,273
Projected benefit obligation 23,419 19,297 17,054
-------- --------- ---------
Plan projected benefit obligation
in excess of plan assets (2,811) (713) (781)
Unrecognized net obligation (1,007) (1,165) (1,324)
Unrecognized prior service cost 2,061 2,244 2,438
Unrecognized net (gain) loss 2,268 195 (232)
Contribution after measurement date 341 241 232
-------- --------- --------
Prepaid pension cost $ 852 802 333
======== ========= ========
The assumed weighted average discount rate used in determining the
acturarial present value of benefit obligations was 7.25%, 8% and 8% in 1993,
1992 and 1991, respectively. The rate of increase in future compensation levels
used in determining the actuarial present value of benefit obligations was
5.5%, 6% and 6% in 1993, 1992, and 1991, respectively. The expected long-term
rate of return on assets during 1993 and 1992 was 8.5%.
The Company has a 401(k) deferred compensation plan allowing eligible
employees to contribute up to 6% of their base compensation, as defined in the
plan. The Company matches 50% of the employee contribution, with the Company's
portion of the contribution approximately $561,000 in 1993, $309,000 in 1992,
and $386,000 in 1991, invested in company stock at prevailing market prices.
The Company issued 30,000 shares of common stock to a key employee in
1991. These shares are held in escrow and, subject to achievements of certain
performance goals, will vest over a ten year period. Related compensation
expense is recognized over the ten year period.
In December 1990, the financial accounting standards board (FASB) issued
SFAS No. 106 which establishes accounting standards for post retirement
benefits other than pensions, and focuses on post retirement health care
benefits. The requirements are effective for fiscal 1993. The Company has
made the decision to discontinue its practice of providing healthcare insurance
at no cost to retirees. Based on this new policy, the adoption of SFAS 106
would have an immaterial effect on the Company's financial position and
results of operations. The cost of retiree health care and life insurance
benefits, which was expensed annually, amounted to approximately $108,000 and
$123,000 for the years ended December 31, 1992 and 1991, respectively. There
was no cost for the year ended December 31, 1993.
NOTE 11: OTHER REAL ESTATE
A summary of changes in the valuation allowance for other real estate for
the years ended December 31, was as follows (in thousands):
1993 1992 1991
-------- -------- --------
Balances at beginning of year $2,115 2,240 1,332
Provision charged to operating
expense 956 1,051 1,430
Transfer (131) 0 0
Sales (1,211) (832) (870)
Market value adjustments (18) (344) 348
-------- --------- ---------
Balances at end of year $1,711 2,115 2,240
======== ========= =========
11
<PAGE> 13
Depreciation expense of leased other real estate properties was $142,000
for 1993, $206,000 for 1992 and $154,000 for 1991.
NOTE 12: INCOME TAXES
In February 1992, the Financial Accounting Standards Board issued
Statement of Financial Standards No. 109, "Accounting for Income Taxes".
Statement 109 requires a change from the deferred method of accounting for
income taxes of APB Opinion 11 to the asset and liability method of accounting
for income taxes. Under the asset and liability method of Statement 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Effective January 1, 1993, the Company adopted Statement 109 and has
reported the cumulative effect of that change in the method of accounting for
income taxes in the December 31, 1993 consolidated statement of earnings.
Pursuant to the deferred methods under APB Opinion 11, which was applied
in 1992 and prior years, deferred income taxes are recognized for income and
expense items that are reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable for the year of
the calculation. Under the deferred method, deferred taxes are not adjusted
for subsequent changes in tax rates.
As previously discussed, the Company adopted Statement 109 as of January
1, 1993. The cumulative effect of this change in accounting for income taxes
of $781,000 was determined as of January 1, 1993 and is reported separately in
the consolidated statement of earnings for the year ended December 31, 1993.
Prior years' financial statements have not been restated to apply the
provisions of Statement 109.
12
<PAGE> 14
Based on the Company's historical and current pretax earnings, management
believes that it is more likely than not that the Company will realize the
benefits of the Federal net operating loss carry forwards and minimum tax
credit carry forwards existing at December 31, 1993. Further, management also
believes that the existing Federal net deductible temporary differences will
reverse during future periods in which the Company generates Federal net
taxable income. Management is currently protesting certain state income tax
issues and believes that a portion of the deferred state tax assets will not be
realized. As such, the Company has established a valuation allowance for the
portion of deferred state deductible temporary differences where management
does not believe realization is more likely than not. There can be no
assurance, however, that the Company will generate any earnings or any specific
level of continuing earnings.
Total income tax expense for the year ended December 31, 1993 was
allocated as follows (in thousands):
Income from continuing operations $11,087
Cumulative transition adjustment (781)
-------
Total income tax expense $10,306
=======
Income tax expense consists of (in thousands):
Current Deferred Total
-------- -------- -------
Year ended December 31, 1993
Federal $10,635 (653) 9,982
State 1,203 (98) 1,105
-------- -------- --------
Totals $11,838 (751) 11,087
======== ======== ========
Year ended December 31, 1992
Federal $ 7,882 (3,106) 4,776
State 1,474 0 1,474
-------- -------- --------
Totals $ 9,356 (3,106) 6,250
======== ======== ========
Year ended December 31, 1991
Federal $ 5,040 (1,041) 3,999
State 0 0 0
-------- -------- --------
Totals $ 5,040 (1,041) 3,999
======== ======== ========
Income tax expense was $11,087,000 for the twelve months ending December
31, 1993, and differed from the amounts computed by applying the Federal income
tax rate of 35% as a result of the following (in thousands).
1993
--------
Computed "expected" tax expense: $12,495
Increase (reduction) in income
taxes resulting from:
Tax exempt interest (1,965)
Dividends exclusion (320)
State income taxes 718
Other, net 159
-------
Total tax expense $11,087
=======
The significant components of deferred income tax expense for the year ended
December 31, 1993 are as follows (in thousands):
Deferred tax expense (credits):
Provision for credit losses $(1,290)
Depreciation expense (7)
Net deferral of loan origination
fees and costs 87
Pension expense 89
Provision for valuation on ORE (361)
Gain/loss on sale of ORE 512
Securities gains (losses) (225)
Discount accretion - securities 209
Interest on IRS tax assessment 375
Core deposit 89
Mark to market on securities (191)
Other, net (38)
--------
Total $ (751)
========
13
<PAGE> 15
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1993 are presented below (in thousands).
Deferred tax assets:
Loans receivable, principally due to
allowance for possible credit loss
and deferred loan costs $12,354
Deferred liabilities, principally due
to compensation arrangements, interest
on Federal and State taxes, and non-
accruals 1,253
Other real estate, principally due to
provisions for possible losses 570
Capital losses 148
Net operating loss carry forwards 258
-------
Total gross deferred tax assets 14,583
Less: Valuation allowance 647
-------
Total gross deferred tax assets 13,936
=======
Deferred tax liabilities:
Property, plant and equipment,
principally due to differences in
depreciation 2,696
Pension costs 466
Deferred assets, principally due to core
deposits 860
Other assets, principally due to prepaid expenses 754
-------
Total gross deferred tax liabilities 4,776
-------
Net deferred tax assets $9,160
=======
The valuation allowance for deferred tax assets as of January 1, 1993 was
$499,000. Below are the changes in the valuation allowance for the year ended
December 31, 1993.
Beginning balance as of January 1, 1993 $499
Non-deductible capital losses 148
-----
Balance as of December 31, 1993 $647
=====
A reconciliation of income tax expense as reflected in the consolidated
statements of income and expense, calculated at the statutory rate of 34% in
1992 and 1991, is as follows (in thousands):
1992 1991
--------- ---------
Tax at statutory rate $8,322 5,699
Increase (reduction) in tax
resulting from:
Tax exempt interest (2,133) (2,262)
Dividend exclusion (337) (289)
State income taxes 973 0
Acquisition intangibles 85 54
Other, net 254 47
IRS tax assessment on prior years 0 966
Alternative minimum tax provision
(credit) in excess of regular tax (914) (216)
------ ------
Income tax expense $6,250 3,999
====== ======
The Company settled its audit with the Internal Revenue Service (IRS) for
the tax years 1988, 1989, 1990, and 1991. This settlement resulted in the
payment of $952,000 in additional taxes and $389,000 in interest.
The sources of timing differences and the resulting deferred income tax
expense (credits) for 1992 and 1991 follow (in thousands):
1992 1991
--------- ---------
Provision for credit losses $(1,679) (1,596)
Depreciation expense 10 2
Net deferral of loan origination fees
and costs (125) (177)
Alternative minimum tax credit
carry forward 0 594
Pension expense (38) (69)
Provision for valuation on ORE (357) (486)
Reserve for loss on investment
securities 0 (345)
Securities gains (losses) (173) 981
Other, net 170 271
Effect on deferred taxes of application
of alternative minimum tax (914) (216)
-------- --------
Total deferred tax expense $(3,106) (1,041)
======== ========
14
<PAGE> 16
NOTE 13: STOCKHOLDERS' EQUITY AND PER SHARE DATA
Dividends paid by the Company are provided primarily from dividends received
from the subsidiaries. Banking regulations limit the amount of dividends that
may be paid without prior approval of the agencies which regulate the Banks.
Earnings per share are based on the weighted average number of shares
outstanding of 9,421,119 in 1993, 9,046,847 in 1992 and 9,028,989 in 1991.
NOTE 14: COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company has various outstanding
commitments to extend credit and standby letters of credit which are not
reflected in the accompanying consolidated financial statements. In the
opinion of management, no significant credit losses will result from these
commitments. On December 31, 1993 and 1992 the Company had outstanding
approximately $24,723,000 and $25,449,000, respectively, in standby letters of
credit and commitments to extend approximately $159,212,000 and $97,126,000,
respectively, under outstanding lines of credit.
The Company, in the normal course of business, is a defendant in various
legal claims. Management and legal counsel are of the opinion that these
actions will not have a material effect on the Company's consolidated financial
position.
The Company is a party to financial instruments with off-balance-sheet
risks in the normal course of business both to meet the financing needs of its
customers and to reduce its own exposure to fluctuation in interest rates.
These financial instruments may extend to include commitments to extend credit,
options, standby letters of credit, interest rate caps or floors, or interest
rate swaps. These financial instruments help the Company in managing its
interest rate exposure and, to varying degrees, involve elements of credit and
interest rate risk in excess of the amount recognized in the balance sheets.
The contract or notional amounts of these instruments reflect the extent of
involvement the Company has in particular classes of financial instruments.
At December 31, 1993 the Company had entered into two interest rate swap
agreements to reduce the impact of changes in interest rates on its cost of
funds. These swaps had a notional principal amount of $16,000,000. Also
outstanding at December 31, 1993 was one interest rate cap with a total
contract or notional value of $6,000,000. The Company is exposed to
essentially the same credit risk in these contracts as in any other extension
of credit and attempts to manage this through credit approvals, limits and
other monitoring procedures.
15
<PAGE> 17
NOTE 15: CONDENSED PARENT COMPANY FINANCIAL INFORMATION
Condensed financial information of Grenada Sunburst System Corporation
(parent company only) is as follows (in thousands):
Condensed Balance Sheets
December 31,
1993 1992
---------- ----------
Assets
Cash and demand balances with banks $ 7 19
Securities purchased under agreements
to resell 2,570 3,376
Investment in subsidiaries 169,808 141,748
Other assets 5,894 4,576
-------- --------
Total Assets 178,279 149,719
======== ========
Liabilities - Other 4,207 3,981
Stockholders' Equity 174,072 145,738
-------- --------
Total Liabilities and Stockholders'
Equity $178,279 149,719
======== ========
16
<PAGE> 18
Condensed Statements of Income
For the Years Ended December 31,
1993 1992 1991
------- ------- -------
Income
Dividends received from subsidiaries $ 6,600 6,000 5,800
Other income 276 255 299
------- ------- -------
Total Income 6,876 6,255 6,099
Expenses 2,161 2,897 1,959
------- ------- -------
Income before equity in undistributed
earnings of subsidiaries and cumulative
effect of a change in accounting principle 4,715 3,358 4,140
Equity in undistributed earnings of
subsidiaries 20,763 14,869 8,622
------- ------- -------
Income before cumulative effect of a
change in accounting principle 25,478 18,227 12,762
Cumulative effect on prior years of
a change in accounting for
income taxes (85) 0 0
------- ------- -------
Net Income $25,393 18,227 12,762
======= ======= =======
17
<PAGE> 19
Condensed Statements of Cash Flows
For the Years Ended December 31,
1993 1992 1991
-------- -------- --------
Net Cash Flows From Operating Activities:
Net income $ 25,393 18,227 12,762
Adjustments to reconcile net income to
net cash provided (used) by operating
activities:
Earnings from subsidiaries (25,003) (19,119) (11,977)
Dividends received from subsidiaries 6,600 6,000 5,800
Other, net (166) 656 254
------- ------- -------
Net cash provided by operating
activities 6,824 5,764 6,839
Cash Flows From Investing Activities:
Net (increase) decrease in securities
purchased under agreements to resell 806 (349) (1,511)
Purchases of securities of non-affiliates (807) 0 0
Sale of treasury stock 0 0 51
------- ------- -------
Net cash used by investing activities (1) (349) (1,460)
Cash Flows From Financing Activities:
Cash dividends paid (6,835) (5,428) (5,421)
------- ------- -------
Net cash used by financial activities (6,835) (5,428) (5,421)
------- ------- -------
Net decrease in cash and demand balances
with banks (12) (13) (42)
Cash and demand balances with banks at the
beginning of the year 19 32 74
------- ------- -------
Cash and demand balances with banks at the
end of the year $ 7 19 32
======= ======= =======
18
<PAGE> 20
NOTE 16: FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments", requires that the Company disclose
estimated fair values for its financial instruments. Fair value estimates,
methods, and assumptions are set forth below for the Company's financial
instruments.
INVESTMENTS AND MORTGAGE-BACKED SECURITIES
The fair value of most investments and mortgage-backed securities is
estimated based on market prices or dealer quotes. See "Note 4: Securities",
for market values.
LOANS
Fair values are estimated for portfolios of loans with similar financial
characteristics. Loans are segregated by type such as commercial, mortgage and
consumer loans. Each loan category is further segregated into fixed and
variable interest rate terms and credit risk categories, as applicable.
The fair value of performing loans is calculated by discounting scheduled
cash flows through the estimated maturity using estimated market discount rates
that reflect the credit and interest rate risk inherent in the loan. Fair
values for non-performing loans is either based on recent external appraisals,
or where appraisals are not available, estimated cash flows are discounted
using a rate commensurate with the risk associated with the estimated cash
flows. Assumptions regarding credit risk, cash flows, and discount rates are
judgementally determined using available market information and specific
borrower information.
The following tables present information for loans:
December 31, 1993
(in thousands)
Average Discount Calculated
Book Maturity Rate Fair
Value (1) (2) Value
------------------------------------------------
Commercial $983,537 2.7 7.46% 989,864
Mortgage 250,353 7.2 6.24% 255,727
Consumer 335,657 1.3 7.67% 338,955
19
<PAGE> 21
December 31, 1992
(in thousands)
Average Discount Calculated
Book Maturity Rate Fair
Value (1) (2) Value
-----------------------------------------------
Commercial $775,093 3.3 7.21% 782,543
Mortgage 211,819 11.7 6.82% 217,300
Consumer 220,687 2.1 7.82% 236,656
(1) Average maturity represents the expected average cash flow period, which in
some instances is different than the stated maturity.
(2) Management has made estimates of fair value discount rates that it believes
to be reasonable. However, because there is no market for many of these
financial instruments, management has no basis to determine whether the fair
value presented above would be indicative of the value negotiated in an
actual sale.
DEPOSIT LIABILITIES
Under Statement 107, the fair value of deposits with no stated maturity,
such as non-interest bearing demand deposits, savings, NOW accounts, and money
market and checking accounts, is equal to the amount payable on demand as of
December 31, 1993. The fair value of certificates of deposit is based on the
discounted value of contractual cash flows. The discount rate is estimated
using the rates currently offered for deposits of similar maturities.
20
<PAGE> 22
December 31,
(in thousands)
1993 1992
--------------------------------------------
Calculated Calculated
Book Fair Book Fair
Value Value Value Value
--------------------------------------------
Demand:
Non-interest bearing $ 419,641 419,641 317,397 317,397
Interest bearing 607,472 607,472 517,480 517,480
Savings 165,814 165,814 100,968 100,968
Certificates of deposit:
Maturing in six months
or less 468,548 468,893 594,800 595,333
Maturing between six months
and one year 211,081 211,035 127,020 128,209
Maturing between one and
three years 155,491 156,341 55,963 57,418
Maturing beyond three years 171,760 179,095 62,943 66,474
INTEREST RATE SWAP AGREEMENTS AND INTEREST RATE CAPS
The fair value of interest rate swap agreements and interest rate caps is
the estimated amount the Company would receive or pay to terminate the
contracts or agreements, taking into account current interest rates and, when
appropriate, the current creditworthiness of the swap counterparties.
The notional amount, carrying amount, and estimated fair value for interest
rate swaps, financial futures and interest rate caps follow.
December 31, 1993
(in thousands)
Calculated
Notional Carrying Fair
Amount Amount Value
----------------------------------------
Interest rate swap agreements:
In a net payable position $ 6,000 300 (344)
In a net receivable position 10,000 (167) 1,839
Interest rate caps 6,000 0 0
21
<PAGE> 23
December 31, 1992
(in thousands)
Calculated
Notional Carrying Fair
Amount Amount Value
---------------------------------------
Interest rate swap agreements:
In a net payable position $ 6,000 25 (322)
Interest rate caps 10,500 0 0
COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT, AND FINANCIAL
GUARANTEES WRITTEN
The fair value of commitments to extend credit is estimated using the fees
currently charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of the
counterparties. For fixed rate loan commitments, fair value also considers the
difference between current levels of interest rates and the committed rates.
The fair value of financial guarantees written and letters of credit is based
on fees currently charged for similar agreements or on the estimated cost to
terminate them or otherwise settle the obligations with the counterparties.
The contract amount, carrying amount, and estimated fair value for commitments
to extend credit, standby letters of credit and financial guarantees written
follow.
December 31, 1993
(in thousands)
Calculated
Notional Carrying Fair
Amount Amount Value
---------------------------------------------
Commitments to extend credit $ 159,212 (365) 159,212
Standby letters of credit 24,723 0 24,723
December 31, 1992
(in thousands)
Calculated
Notional Carrying Fair
Amount Amount Value
---------------------------------------------
Commitments to extend credit $97,126 (178) 97,126
Standby letters of credit 25,449 0 25,449
22
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
KPMG PEAT MARWICK
THE BOARD OF DIRECTORS AND STOCKHOLDERS
GRENADA SUNBURST SYSTEM CORPORATION
We have audited the consolidated balance sheets of Grenada Sunburst System
Corporation and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1993.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. Our audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall finanical
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Grenada
Sunburst System Corporation and subsidiaries at December 31, 1993 and 1992, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1993, in conformity with generally
accepted accounting principles.
As discussed in Notes 1 and 12 to the financial statements, the Company
changed its method of accounting for income taxes in 1993 to adopt the
provisions of Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".
/s/ KPMG Peat Marwick
- - ---------------------
Memphis, Tennessee
January 28, 1994
23
<PAGE> 1
EXHIBIT 99 (b)
Grenada Sunburst System Corporation and Subsidiaries Unaudited Interm
Consolidated Financial Statements as of and for the three months ended
March 31, 1994 and 1993.
<PAGE> 2
PART I
FINANCIAL INFORMATION
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
Mar. 31, Dec.31, Mar. 31,
1994 1993 1993
--------- --------- ---------
ASSETS
Cash and demand balances with banks $ 138,601 133,889 135,049
Interest bearing deposits with banks 670 28 5,028
Securities available for sale 133,023 120,101 29,700
Investment securities (Market value of
approximately $290,512, $301,240,
and $389,196) 282,054 287,945 372,674
Mortgage-backed securities (Market
value of approximately $168,162,
$170,815 and $261,884) 168,408 167,532 257,042
Mortgages held for resale 41,768 73,956 34,605
Federal funds sold and securities
purchased under agreements to resell 40,500 25,000 34,626
Loans 1,597,741 1,569,547 1,482,850
Less: Unearned income 8,228 9,007 10,626
Allowance for credit losses 33,094 32,749 30,845
---------- --------- ----------
Net loans 1,556,419 1,527,791 1,441,379
Premises and equipment, net 49,218 48,738 49,367
Other real estate 4,480 5,185 9,484
Accrued interest receivable 17,847 18,262 19,022
Other assets 30,214 27,771 25,848
--------- ---------- ---------
Total Assets $ 2,463,202 2,436,198 2,413,824
========= ========== =========
LIABILITIES
Deposits
Demand:
Non-interest bearing $ 410,169 419,641 347,847
Interest bearing 625,661 607,472 629,644
Savings 176,051 165,814 138,441
Time, $100,000 and over 244,008 247,538 239,640
Other time 760,125 759,342 832,720
--------- --------- ---------
Total deposits 2,216,014 2,199,807 2,188,292
Federal funds purchased and securities
sold under agreements to repurchase 27,585 30,542 30,570
Other borrowed funds 15,704 12,941 13,634
Accrued interest payable 8,900 8,939 9,112
Other liabilities 16,988 9,897 12,402
--------- --------- ---------
Total Liabilities 2,285,191 2,262,126 2,254,010
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 15,000,000
authorized, 9,492,975 shares issued at
March 31, 1994, December 31, 1993 and
March 31, 1993 9,493 9,493 9,493
Paid in capital 31,842 31,842 31,842
Surplus 71,123 71,123 71,123
Undivided profits 65,553 61,614 47,356
-------- -------- --------
Total Stockholders' Equity 178,011 174,072 159,814
-------- -------- --------
Commitments and contingent liabilities
Total Liabilities and
Stockholders' Equity $ 2,463,202 2,436,198 2,413,824
========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE> 3
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
Quarter Ended
--------------------------------
Mar. 31, Dec. 31, Mar. 31,
1994 1993 1993
-------- -------- --------
INTEREST INCOME
Loans including fees $ 31,767 32,142 27,178
Deposits with banks 4 0 104
Mortgages held for resale 944 1,142 1,000
Federal funds sold and securities
purchased under agreements to resell 221 73 195
Securities:
Taxable 5,871 6,354 6,810
Exempt from federal taxes 1,250 1,308 1,412
Dividends 433 376 410
------- ------- -------
Total Interest Income 40,490 41,395 37,109
INTEREST EXPENSE
Deposits:
Demand 3,595 3,620 3,408
Time, $100,000 and over 1,955 2,026 1,815
Other time and savings 8,688 8,958 8,718
Federal funds purchased and securities
sold under agreements to repurchase 217 215 230
Other borrowed funds 258 259 114
------- ------- -------
Total Interest Expense 14,713 15,078 14,285
------- ------- -------
Net interest income 25,777 26,317 22,824
Provision for credit losses 800 1,315 2,085
------- ------- -------
Net interest income after
provision for credit losses 24,977 25,002 20,739
NON-INTEREST INCOME
Service charges on deposit accounts 4,261 4,524 3,762
Other service charges,
commissions, and fees 2,556 2,810 2,524
Investment securities, net (86) (106) (221)
Fees from fiduciary activities 483 441 477
Other 194 214 588
------- ------- -------
Total Non-Interest Income 7,408 7,883 7,130
NON-INTEREST EXPENSE
Salaries 10,636 10,822 9,172
Employee benefits 2,263 1,809 1,801
Net occupancy expense 1,790 1,892 1,529
Furniture and equipment expense 1,874 1,948 1,665
FDIC deposit insurance expense 1,213 1,188 1,076
Other 5,835 5,448 5,360
------- ------- -------
Total Non-Interest Expense 23,611 23,107 20,603
------- ------- -------
Income before income taxes and
cumulative effect of a change
in accounting principle 8,774 9,778 7,266
Income taxes 2,752 3,103 2,136
------- ------- -------
Income before cumulative effect of
a change in accounting principle 6,022 6,675 5,130
Cumulative effect on prior years of
a change to a different method of
accounting for income taxes 0 0 781
------- ------- -------
Net Income $ 6,022 6,675 5,911
======= ======= =======
EARNINGS PER SHARE:
Income before cumulative effect
of a change in accounting principle $0.63 0.71 0.56
Cumulative effect of a change
in accounting principle $0.00 0.00 0.08
Net Income $0.63 0.71 0.64
DIVIDENDS PER SHARE $0.20 0.20 0.15
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE> 4
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In thousands)
Common Paid in Undivided
Stock Capital Surplus Profits Total
------- -------- -------- -------- -------
Balances January 1, 1993 $9,047 22,953 71,123 42,615 145,738
Net income 5,911 5,911
Net unrealized gain
on equity securities 219 219
Cash dividend declared (1,424) (1,424)
Stock issued in exchange
for net assets of Eastover
Bank for Savings 439 8,734 9,173
Stock issued under compensaton
plan 7 155 162
Unearned compensation 35 35
------ ------ ------ ------- -------
Balances March 31, 1993 $9,493 31,842 71,123 47,356 159,814
------ ------ ------ ------- -------
Balances January 1, 1994 $9,493 31,842 71,123 61,614 174,072
Net income 6,022 6,022
Net unrealized loss on
securities available
for sale, net of tax (191) (191)
Cash dividend declared (1,899) (1,899)
Unearned compensation 7 7
------ ------ ------ ------ -------
Balances March 31, 1994 $9,493 31,842 71,123 65,553 178,011
====== ====== ====== ====== =======
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 5
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(In thousands)
1994 1993
-------- -------
Net cash flows from operating activities:
Net income $ 6,022 5,911
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization of goodwill and intangible assets 213 215
Depreciation and amortization of premises and equipment 1,240 1,149
Net accretion of investment securities (276) (573)
Accretion of loan fees and discounts (779) (360)
Provision for possible credit losses 800 2,085
Net (increase) decrease in mortgages held for resale 32,188 28,467
Other real estate provision 133 233
Gains on sales of other real estate (40) (70)
Losses from sales of premises and equipment (135) (2)
Decrease in interest receivable 415 398
Decrease in interest payable (39) (466)
Losses on sales of securities, net 86 221
Other, net 4,445 (2,740)
------- ------
Net cash provided by operating activities 44,273 34,468
Cash flows from investing activities:
Net decrease in interest-bearing deposits with banks (642) 15,002
Net increase in federal funds sold and securities
purchased under agreements to resell (15,500) (34,626)
Purchases of securities available for sale (19,880) 0
Principal prepayments on securities available for sale 19,223 0
Purchases of securities held to maturity (37,707) (59,206)
Maturities of securities held to maturity 24,664 9,603
Principal prepayments on securities held to maturity 6,933 770
Purchases of mortgage-backed securities held to maturity (33,689) (26,309)
Sales of mortgage-backed securities 0 16,749
Principal prepayments of mortgage-backed securities 32,546 22,730
Net increase in loans (28,840) (25,393)
Net increase in premises and equipment (1,764) (1,172)
Proceeds from sale of premises and equipment 186 2
Proceeds from sales of other real estate 796 1,002
Net cash received from Eastover acquisition 0 35,922
-------- --------
Net cash used by investing activities (53,674) (44,926)
Cash flows from financing activities:
Net increase in demand and savings accounts 18,953 25,031
Net decrease in other deposits (2,747) (9,519)
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase (2,957) 4,906
Net increase (decrease) in other borrowed money 2,763 (284)
Cash dividends paid (1,899) (1,424)
-------- --------
Net cash provided by financing activities 14,113 18,710
-------- --------
Net increase in cash and due from banks 4,712 8,252
Cash and due from banks at the beginning of the period 133,889 126,797
-------- --------
Cash and due from banks at the end of the period $138,601 135,049
======== ========
Unrealized gain on equity securities $ 0 219
Unrealized (loss) on securities
available for sale (192) 0
Securities transferred to the available
for sale category from the held to
maturity category 12,266 0
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 6
GRENADA SUNBURST SYSTEM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1994 and 1993
1. The accompanying unaudited consolidated financial statements
have been prepared in accordance with the accounting policies in effect as of
December 31, 1993, as set forth in the annual consolidated financial statement
of Grenada Sunburst System Corporation and subsidiaries ("GSSC", or the
"Company"). In the opinion of management, all adjustments necessary for a fair
presentation of the condensed consolidated financial statements have been
included and are of a normal recurring nature.
2. The results of operations for the three-month period ended March 31,
1994 are not necessarily indicative of the results to be expected for the full
year.
3. Per share data is based on weighted average shares of common stock
outstanding of 9,492,975 for the quarter ended March 31, 1994 and 9,201,559 for
the quarter ended March 31, 1993.
4. Effective March 1, 1993, GSSC, through its wholly owned Mississippi
banking subsidiary, Sunburst Bank, acquired selected net assets of Eastover
Bank for Savings ("Eastover") in a transaction accounted for as a purchase.
Had the acquisition occured on January 1, 1993, for the three months ended
March 31, 1993, net interest income for the Company would have increased by
approximately $3,140,000, net income would have increased by approximately
$897,000, and earnings per share would have increased by approximately $.08 per
share.
5. Effective January 1, 1994, GSSC adopted Financial Accounting
Standards Board ("FASB") SFAS No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". This statement requires investments to be
classified in three categories and to be accounted for as follows: (i) debt
securities which the Company has the positive intent and ability to hold to
maturity are classified as held-to-maturity and reported at amortized cost;
(ii) debt and equity securities that are bought and held principally for the
purpose of selling them in the near term are classified as trading sercurities
and reported at fair value, with unrealized gains and losses included in
earnings; and (iii) debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified as
available-for-sale securities and reported at fair value, with unrealized gains
and losses excluded from earnings and reported as a deduction from
stockholders' equity.
5
