<PAGE> 1
EARLE BANKSHARES, INC.
801 COMMERCE STREET (P.O. BOX 248)
EARLE, ARKANSAS 72331
May 13, 1994
TO THE SHAREHOLDERS OF EARLE BANKSHARES, INC.
You are cordially invited to attend a Special Meeting of Shareholders
of Earle Bankshares, Inc. ("EBI") to be held at the executive offices of EBI,
801 Commerce Street, Earle, Arkansas 72331, at 7:00 p.m. CDT, on Tuesday, June
21, 1994.
At the Special Meeting, you will have the opportunity to consider and vote on a
proposal to approve an Agreement and Plan of Reorganization dated as of
November 18, 1993 (the "Reorganization Agreement"), along with the Plan of
Merger annexed thereto as Exhibit A, pursuant to which EBI would be merged with
and into North Arkansas Bancshares, Inc. ("NABS"), a registered bank holding
company and a wholly-owned subsidiary of Union Planters Corporation ("UPC"),
Memphis, Tennessee. NABS would survive the merger. The Boards of Directors of
EBI, NABS and UPC have approved the Reorganization Agreement and the Plan of
Merger and the merger contemplated thereby.
Upon consummation of the merger, each outstanding share of EBI Common
Stock not subject to perfected dissenters' rights would be converted
exclusively into the right to receive in exchange therefor (i) a number of
whole shares of UPC Common Stock based on the average closing price per share
of UPC Common Stock on the New York Stock Exchange for the 10 trading days
immediately following the receipt of all requisite government approvals of the
merger ("Current Market Price") and (ii) a cash payment in settlement of any
remaining fractional share of UPC Common Stock. If the Current Market Price of
the UPC Common Stock is less than $24.00, EBI will have the right either (i) to
consummate the Merger at an exchange ratio (i.e., the number of shares of UPC
Common Stock to be received in exchange for each share of EBI Common Stock)
equal to 3.750, or (ii) not to consummate the merger; provided, however, that
UPC would have the right to reinstate the transaction by delivering shares of
UPC Common Stock having a value of approximately $90.00 per EBI share. If the
Current Market Price is greater than or equal to $24.00 but less than $30.00,
the exchange ratio will be equal to $90.00 divided by the Current Market Price.
If the Current Market Price is greater than or equal to $30.00, the exchange
ratio will be 3.000. As of the date hereof, no governmental approvals have been
received, but assuming all such approvals had been received on April 18, 1994,
the Current Market Price would have been $26.23 per share such that the value
of the UPC Common Stock entitled to be received for each outstanding share of
EBI Common Stock would have been approximately equal to $90.00.
The enclosed Notice of Special Meeting of Shareholders and the Prospectus and
Proxy Statement explain the merger and Reorganization Agreement and the Plan of
Merger and provide specific information relative to the Special Meeting.
Please read these materials carefully and thoughtfully consider the information
contained in them. Your vote is of great importance, as the approval of EBI's
shareholders is required to consummate the merger.
<PAGE> 2
Whether or not you plan to attend the Special Meeting, you are urged to
complete, sign and promptly return the enclosed Proxy Appointment Card to
assure that your shares will be voted at the Special Meeting. For your
convenience, there is included with this material a postage-paid addressed
envelope for returning your proxy card. No additional postage is required if
mailed in the United States.
The Board of Directors of EBI recommends that you vote "FOR'' the proposal being
considered.
Sincerely,
EARLE BANKSHARES, INC.
[SIG]
John E. Gregson
President
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME.
<PAGE> 3
EARLE BANKSHARES, INC.
801 COMMERCE STREET (P.O. BOX 248)
EARLE, ARKANSAS 72331
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 21, 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Earle
Bankshares, Inc. ("EBI") has been called by the Board of Directors of EBI and
will be held at the executive offices of EBI, 801 Commerce Street, Earle,
Arkansas 72331, on Tuesday, June 21, 1994, at 7:00 p.m. CDT for the following
purposes:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Reorganization dated as of November 18, 1993
(the "Reorganization Agreement"), by and between Union Planters
Corporation ("UPC"), a Tennessee-chartered bank holding company; North
Arkansas Bancshares, Inc. ("NABS"), a registered bank holding company
and wholly-owned subsidiary of UPC; Earle Bankshares, Inc. ("EBI"), an
Arkansas-chartered bank holding company; and First Southern Bank,
Earle, Arkansas ("First Southern"), an Arkansas-chartered banking
corporation and a wholly-owned subsidiary of EBI, together with the
Plan of Merger annexed to the Reorganization Agreement as Exhibit A.
The Reorganization Agreement and the Plan of Merger provide for the
merger (the "Merger") of EBI with and into NABS, whereupon the holders
of EBI's common stock, $10.00 par value per share, of record
immediately prior to the effective time of the Merger would receive
shares of UPC Common Stock in accordance with the exchange ratio
provided for in Section 3.1(e) of the Reorganization Agreement, for
each share of EBI common stock held. The Reorganization Agreement,
the Plan of Merger and the Merger are more fully described in the
accompanying Prospectus and Proxy Statement; and
2. To transact such other business as may properly come
before the Special Meeting or any adjournments or postponements
thereof. Management is not aware of any other business to be
transacted at the Special Meeting.
Shareholders of EBI have the right to dissent from the Merger pursuant
to, and in accordance with, Section 4-26-1007 of the Arkansas Code Annotated.
A copy of said section of the Arkansas Code Annotated accompanies this notice
as Appendix C to the Prospectus and Proxy Statement.
Whether or not you plan to attend the Special Meeting, please sign the
enclosed proxy appointment card and return it at once in the stamped return
envelope in order to ensure that your shares will be represented at the Special
Meeting. If you attend in person, your proxy appointment can be disregarded if
you wish and you may vote your own shares.
<PAGE> 4
Only holders of EBI common stock of record at the close of business on
May 6, 1994 will be entitled to receive notice of, and to vote at the Special
Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors
[SIG]
John E. Gregson
President
Earle, Arkansas
Dated: May 13, 1994
THE BOARD OF DIRECTORS OF EARLE BANKSHARES, INC., BY UNANIMOUS VOTE RECOMMENDS
THAT THE HOLDERS OF EARLE BANKSHARES, INC. COMMON STOCK VOTE TO APPROVE THE
REORGANIZATION AGREEMENT AND THE PLAN OF MERGER.
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE EBI THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED ENVELOPE
ACCOMPANIES THESE MATERIALS FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF
MAILED IN THE UNITED STATES.
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME.
<PAGE> 5
Filed Pursuant to Rule 424 (b)(1)
Registration No. 33-53545
PROSPECTUS
UNION PLANTERS CORPORATION
COMMON STOCK
PROXY STATEMENT
EARLE BANKSHARES, INC.
SPECIAL MEETING TO BE HELD JUNE 21, 1994
This Prospectus and Proxy Statement (the "Prospectus") relates to up to
400,000 shares of Common Stock having a par value of $5.00 per share (the "UPC
Common Stock") of Union Planters Corporation ("UPC"), a Tennessee-chartered
bank holding company and savings and loan holding company, to be issued to
shareholders of Earle Bankshares, Inc. ("EBI"), an Arkansas-chartered bank
holding company, in a merger (the "Merger") of EBI with and into North Arkansas
Bancshares, Inc. ("NABS"), a registered bank holding company and wholly-owned
subsidiary of UPC, pursuant to an Agreement and Plan of Reorganization dated as
of November 18, 1993, by and between UPC, NABS, EBI, and First Southern Bank,
Earle, Arkansas ("First Southern"), a wholly-owned Arkansas banking corporation
subsidiary of EBI (the "Reorganization Agreement"), and in accordance with the
Plan of Merger annexed thereto as Exhibit A (the "Plan of Merger").
Upon the Merger becoming effective, each outstanding share of EBI
Common Stock not subject to perfected dissenters' rights would be converted
exclusively into the right to receive in exchange therefor (i) a number of
whole shares of UPC Common Stock based on the average closing price per share
of UPC Common Stock on the New York Stock Exchange for the 10 trading days
immediately following the receipt of all requisite government approvals of the
Merger ("Current Market Price") and (ii) a cash payment in settlement of any
remaining fractional share of UPC Common Stock. If the Current Market Price of
UPC Common Stock is less than $24.00, EBI will have the right either (i) to
consummate the Merger with an exchange ratio (i.e., the number of shares of UPC
Common Stock to be received in exchange for each share of EBI Common Stock)
(the "Exchange Ratio") equal to 3.750, or (ii) not to consummate the Merger;
provided, however, that UPC would have the right to reinstate the transaction
by delivering shares of UPC Common Stock having a value of approximately $90.00
per EBI share. If the Current Market Price is greater than or equal to $24.00
but less than $30.00, the Exchange Ratio will be equal to $90.00 divided by the
Current Market Price. If the Current Market Price is greater than or equal to
$30.00, the Exchange Ratio will be 3.000. As of the date hereof, no
governmental approvals have been received, but, assuming that all such
approvals had been received on April 18, 1994, the Current Market Price would
have been $26.23 per share such that the value of the UPC Common Stock entitled
to be received for each outstanding share of EBI Common Stock would have been
approximately equal to $90.00.
No fractional shares of UPC Common Stock will be issued. Fractional
shares will be exchanged for cash based on a conversion formula more
particularly described in Section 3.1(e) of the Reorganization Agreement, a
copy of which is attached as Appendix B to this Prospectus.
Shares of the outstanding UPC Common Stock are now, and the UPC Common
Stock to be issued in connection with the Merger will be, listed for trading on
the New York Stock Exchange ("NYSE") under the symbol "UPC." The last reported
sale price of UPC Common Stock on the NYSE on May 12, 1994, was $26.00 per
share.
This Prospectus also constitutes a proxy statement and is furnished to
holders of record of EBI Common Stock in connection with the solicitation of
proxies by the EBI Board of Directors (the "EBI Board") for use at a Special
Meeting of EBI shareholders to be held at 7:00 p.m. CDT, on Tuesday, June 21,
1994, at EBI's executive offices, 801 Commerce Street, Earle, Crittenden
County, Arkansas 72331 and at any adjournments or postponements thereof (the
"Special Meeting"). At the Special Meeting, holders of EBI Common Stock of
record as of May 6, 1994, will consider and vote upon a proposal to approve
the Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit
A, upon consummation of which (i) each share of EBI Common Stock (except for
those shares held by any EBI shareholders with respect to which dissenters'
rights shall have been perfected in accordance with Arkansas law) would be
converted exclusively into the right to receive a number of shares of UPC
Common Stock based on the applicable Exchange Ratio (and cash in lieu of any
remaining fractional share based on a conversion formula more particularly
described in Section 3.1(e) of the Reorganization Agreement), and (ii) EBI
would be merged with and into NABS, with NABS surviving the Merger and
continuing to operate under the name of North Arkansas Bancshares, Inc.
All information contained in this Prospectus and Proxy Statement
pertaining to UPC and its subsidiaries has been supplied by UPC, and all
information pertaining to EBI or First Southern has been supplied by EBI. This
Prospectus and Proxy Statement and the accompanying proxy appointment cards are
first being mailed to shareholders of EBI on or about May 17, 1994.
THE SHARES OF UPC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
SAVINGS ASSOCIATION INSURANCE FUND, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS--PROXY STATEMENT IS MAY 13, 1994
<PAGE> 6
AVAILABLE INFORMATION
UPC is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by UPC can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
regional offices of the Commission located at Room 1228, 75 Park Place, New
York, New York 10007 and 500 West Madison Street, Chicago, Illinois 60661-2511.
Copies of such material can be obtained by mail from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such reports, proxy statements and other
information concerning UPC can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. UPC has filed with
the Commission a Registration Statement (No. 33-53545) on Form S-4 (together
with any amendments thereto, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the shares of
UPC Common Stock to be issued pursuant to the Reorganization Agreement. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the Exhibits thereto. Certain items were omitted in
accordance with the rules and regulations of the Commission. For further
information regarding UPC and the UPC Common Stock offered by this Prospectus,
reference is made to the complete Registration Statement, including all
amendments thereto and the schedules and exhibits filed as a part thereof.
Statements contained herein concerning provisions of documents are necessarily
summaries of the documents and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by UPC with the Commission
(Commission File Number 0-6919) pursuant to the Exchange Act are hereby
incorporated by reference in this Prospectus:
1. UPC's Annual Report on Form 10-K for the year ended
December 31, 1993;
2. UPC's Current Report on Form 8-K dated January 19,
1989, filed on February 1, 1989, in connection with
UPC's designation and authorization of its Series A
Preferred Stock;
3. UPC's Current Reports on Form 8-K dated February 8,
1994, April 14, 1994, April 15, 1994, and April 28,
1994; and
4. The description of UPC Common Stock contained in
UPC's Registration Statement under Section 12(b) of
the Exchange Act, and any amendment or report filed
for the purpose of updating such description.
UPC's Annual Report on Form 10-K for the year ended December 31, 1993
incorporates by reference specific portions of UPC's Annual Report to
Shareholders for that year (the "UPC Annual Report to Shareholders"), but does
not incorporate other portions of the UPC Annual Report to Shareholders. The
portion of the UPC Annual Report to Shareholders captioned "Letter to
Shareholders" and other portions of the UPC Annual Report to Shareholders not
specifically incorporated into UPC's Annual Report on Form 10-K are not
incorporated herein and are not a part of the Registration Statement.
All documents filed by UPC with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the shares of UPC
Common Stock offered hereby shall likewise be incorporated herein by reference
and shall become a part hereof from and after the time such documents are
filed. Any statement contained herein or in a document incorporated herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently-filed
document which also is incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
i
<PAGE> 7
ON THE WRITTEN OR ORAL REQUEST OF EACH PERSON TO WHOM THIS PROSPECTUS
IS DELIVERED, UPC WILL PROVIDE, WITHOUT CHARGE, A COPY OF ANY OR ALL OF THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS). WRITTEN OR TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED
TO GARY A. SIMANSON, ASSISTANT SECRETARY AND ASSOCIATE GENERAL COUNSEL, UNION
PLANTERS CORPORATION, P.O. BOX 387, MEMPHIS, TENNESSEE 38147, (901) 383-6590.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS DOCUMENT NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF UPC OR EBI SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . i
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Parties to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Special Meeting of EBI Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Votes Required; Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Reasons for the Merger; Recommendations of Boards of Directors . . . . . . . . . . . . . . . 3
Conditions; Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Management After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Shareholders' Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Market Prices of Common Stock; Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Recent Developments Affecting UPC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Recent Developments Affecting EBI. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Equivalent and Pro Forma Per Share Data . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Pro Forma Consolidated Financial Information . . . . . . . . . . . . . . . . . . . . . . . . 14
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Time and Place of Special Meeting; Solicitation of Proxies . . . . . . . . . . . . . . . . . 17
Votes Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Shareholders' Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Background of, and Reasons for, the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 19
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Effective Date and Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . 21
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conditions to Consummation of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
</TABLE>
ii
<PAGE> 8
<TABLE>
<S> <C>
Conduct of Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Waiver and Amendment; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Management After the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
NABS Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 26
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Resales of UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
CERTAIN REGULATORY CONSIDERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Prompt Corrective Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Dividend Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Support of Subsidiary Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
FDIC Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Recent Banking Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Depositor Preference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
DESCRIPTION OF UPC COMMON AND PREFERRED STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Preferred Stock of UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Certain Provisions That May Have an Anti-Takeover Effect . . . . . . . . . . . . . . . . . . 35
EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Removal of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Required Shareholder Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Method of Casting Votes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
EARLE BANKSHARES, INC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Market Price of EBI Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Certain Beneficial Holders of EBI Common Stock . . . . . . . . . . . . . . . . . . . . . . . 40
Holdings of EBI Common Stock by EBI Management . . . . . . . . . . . . . . . . . . . . . . . 40
EBI MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Results of Operations for the Years Ended December 31, 1993, 1992, and 1991 . . . . . . . . 41
Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
VALIDITY OF UPC COMMON STOCK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
iii
<PAGE> 9
INDEX TO APPENDICES
APPENDIX A -- Earle Bankshares, Inc. and Subsidiary
Financial Statements
APPENDIX B -- Agreement and Plan of Reorganization, along
with the Plan of Merger annexed thereto as
Exhibit A
APPENDIX C -- 1965 Arkansas Business Corporation Act --
Dissenters' Rights
iv
<PAGE> 10
SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF
ALL MATERIAL FACTS REGARDING UPC, EBI AND THE MATTERS TO BE CONSIDERED AT THE
SPECIAL MEETING, AND IS QUALIFIED IN ALL RESPECTS BY THE INFORMATION APPEARING
ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, THE APPENDICES
HERETO AND THE DOCUMENTS REFERRED TO HEREIN.
PARTIES TO THE MERGER
UNION PLANTERS CORPORATION ("UPC") is a multi-state bank holding
company and savings and loan holding company headquartered in Memphis,
Tennessee. At December 31, 1993, UPC had total consolidated assets of
approximately $6.3 billion, deposits of approximately $5.3 billion and
shareholders' equity of approximately $477 million. As of that date, UPC was
the third-largest independent bank holding company headquartered in Tennessee
as measured by consolidated deposits. Management's emphasis in recent years has
been to improve asset quality and maintain capital well in excess of regulatory
minimums. At December 31, 1993, UPC's ratio of nonperforming loans to total
loans was .76% and nonperforming assets to loans and foreclosed property was
.92%. UPC's allowance for losses on loans to total loans at such date was 2.74%
and UPC's allowance for losses on loans to nonperforming loans was 363%. Also
at such date, UPC's Tier 1 risk-based capital, total risk-based capital and
leverage ratios were 14.85%, 18.59% and 7.10%, respectively.
UPC conducts its business activities through its lead bank subsidiary,
Union Planters National Bank ("UPNB"), and through 35 community banks and three
savings and loan subsidiaries (collectively the "Community Banks") located in
Tennessee, Arkansas, Mississippi, Alabama and Kentucky (the "Community Bank
Group"). UPNB was founded in 1869 and operates 93 branches throughout
Tennessee with a presence in each of Memphis, Nashville, Knoxville and
Chattanooga, the major metropolitan markets in Tennessee. At December 31,
1993, UPNB had total consolidated assets of approximately $3.5 billion. UPNB
provides a diversified range of financial services in the communities in which
it operates, including consumer, commercial and corporate lending, retail
banking and mortgage banking. To enhance fee income, UPNB also is engaged in
mortgage servicing, investment management and trust services, the issuance and
servicing of credit and debit cards and the origination, packaging and
securitization of the government-guaranteed portions of Small Business
Administration (SBA) loans.
The Community Bank Group operates 149 branches and had at December 31,
1993, total combined assets of approximately $2.9 billion ($2.0 billion in
Tennessee, $474 million in Mississippi, $468 million in Arkansas, $24 million
in Alabama). All of the Community Banks have been acquired by UPC since 1986,
are located generally in nonmetropolitan towns and communities and provide
banking services and loan products to such communities, with an emphasis on
one-to-four-family residential mortgages and consumer and small commercial
lending. Of the 38 Community Banks, 21 have the largest deposit share and eight
have the second largest deposit share in their respective markets based on June
30, 1993 information, providing UPC with a strong competitive position in those
markets.
UPC believes that the Community Banks provide additional
diversification of the funding and revenue sources for UPC, and UPC intends to
continue expansion of the Community Bank Group. UPC believes that its strategy
of permitting the Community Banks to retain their names and boards of directors
as well as substantial autonomy in their day-to-day operations enables UPC to
be an attractive acquirer of community banking organizations and permits such
institutions to continue to grow within their markets without disruption. UPC
controls risk through centralized loan review and audit functions as well as
close monitoring of the financial performance of each Community Bank. UPC also
implements its asset and liability management strategy on a consolidated basis
and effects all trades for the investment portfolios of the Community Banks.
UPC seeks economies in the Community Bank Group through consolidation of
administrative and operational processes and is currently in the process of
converting all of the Community Banks to a common data processing system. This
system conversion should be completed by year-end 1994 and should permit UPC to
realize significant cost savings upon full implementation.
<PAGE> 11
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions by UPNB in the major markets of Tennessee
and through the acquisition of Community Banks that have a significant local
market share, primarily in communities located in Tennessee and contiguous
states. Future acquisitions may entail the payment by UPC of consideration in
excess of the book value of the underlying assets being acquired, may result in
the issuance of additional shares of UPC capital stock or the incurrence of
additional indebtedness by UPC, and could have a dilutive effect on the per
share earnings or book value of the UPC Common Stock. For information with
respect to acquisitions that have been consummated recently or that are
currently pending, see "Recent Developments."
UPC's corporate office is located at 7130 Goodlett Farms Parkway,
Memphis, Tennessee 38018, and its telephone number is (901) 383-6000.
Additional information about UPC is included in documents incorporated
by reference in this Prospectus and Proxy Statement. See "Incorporation of
Certain Documents by Reference."
EARLE BANKSHARES, INC. ("EBI") is a bank holding company chartered
under the laws of the State of Arkansas whose main office is located at 801
Commerce Street, Earle, Arkansas 72331 (telephone 501-735-8860). EBI's
principal subsidiary is First Southern Bank, Earle, Arkansas ("First
Southern"), a state bank chartered and existing under the laws of the State of
Arkansas. At December 31, 1993, First Southern was rendering banking services,
consisting primarily of traditional deposit and lending services, from three
banking offices located in Crittenden County, Arkansas. As of December 31,
1993, EBI's consolidated total assets and deposits were approximately $42.5
million and $34.7 million, respectively.
NORTH ARKANSAS BANCSHARES, INC. ("NABS") is a bank holding company
chartered under the laws of the State of Arkansas and a wholly-owned subsidiary
of UPC, with its principal office located at 300 South Church Street,
Jonesboro, Arkansas 72403 (telephone 501-933-2295). NABS currently has eight
banking subsidiaries, all located in the State of Arkansas, serving thirteen
(13) counties within that State. At the Effective Time of the Merger (as
defined below), EBI will, pursuant to the terms of the Reorganization Agreement
and the Plan of Merger annexed thereto as Exhibit A, merge with and into NABS,
with NABS surviving the Merger and continuing to operate as a wholly-owned
subsidiary of UPC under the name North Arkansas Bancshares, Inc.
SPECIAL MEETING OF EBI SHAREHOLDERS
A Special Meeting (the "Special Meeting") of the EBI shareholders will
be held on Tuesday, June 21, 1994, at 7:00 p.m. CDT, at EBI's executive
offices, 801 Commerce Street, Earle, Arkansas 72331, to consider and vote upon
a proposal to approve the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A. See "The Special Meeting."
VOTES REQUIRED; RECORD DATE
Only holders of EBI Common Stock of record at the close of business on
May 6, 1994 (the "Record Date") will be entitled to receive notice of, and to
vote at the Special Meeting. The affirmative votes of the holders of
two-thirds (2/3) of the total shares of EBI Common Stock outstanding on the
Record Date are required to approve the Reorganization Agreement and the Plan
of Merger annexed thereto as Exhibit A. As of May 6, 1994, there were 100,000
shares of EBI Common Stock entitled to vote.
The directors and executive officers of EBI (the "Management Group")
held, as of the Record Date, 63,934 shares, or 63.93% of the outstanding shares
of EBI Common Stock. EBI has been advised by all of the members of the
Management Group that these individuals intend to vote their shares in favor of
approval of the Reorganization Agreement and the Plan of Merger annexed thereto
as Exhibit A. See "The Special Meeting."
TERMS OF THE MERGER
Upon consummation of the Merger, each share of EBI Common Stock which
is outstanding immediately prior to the Effective Time of the Merger (except
for shares with respect to which dissenters' rights shall have been perfected
in accordance with Arkansas law) will be converted exclusively into the right
to receive in exchange
2
<PAGE> 12
therefor (i) a number of whole shares of UPC Common Stock based on the
average closing price per share of UPC Common Stock on the New York Stock
Exchange for the 10 trading days immediately following the receipt of all
requisite governmental approvals of the merger ("Current Market Price") and
(ii) a cash payment in settlement of any remaining fractional share of UPC
Common Stock. If the Current Market Price of UPC Common Stock is less than
$24.00, EBI will have the right either (i) to consummate the Merger at an
exchange ratio (i.e., the number of shares of UPC Common Stock to be received
in exchange for each share of EBI Common Stock) (the "Exchange Ratio") equal to
3.750, or (ii) not to consummate the Merger; provided, however, that UPC would
have the right to reinstate the transaction by delivering shares of UPC Common
Stock having a value of approximately $90.00 per EBI share. If the Current
Market Price is greater than or equal to $24.00 but less than $30.00, the
Exchange Ratio will be equal to $90.00 divided by the Current Market Price. If
the Current Market Price is greater than or equal to $30.00, the Exchange Ratio
will be 3.000. As of the date hereof, no governmental approvals have been
received, but, assuming that all such approvals had been received on April 18,
1994, the Current Market Price would have been $26.23 per share such that the
value of the UPC Common Stock entitled to be received for each outstanding
share of EBI Common Stock would have been approximately equal to $90.00.
If, after aggregation of all whole and fractional shares to which an
EBI Record Holder is entitled, a fractional share shall remain, such fractional
share will be exchanged for cash in an amount determined by multiplying the
fraction by the Current Market Price as provided for in Section 3.1(e) of the
Reorganization Agreement.
EFFECTIVE DATE
The Merger will become effective at the time Articles of Merger along
with the executed Plan of Merger are filed with the Arkansas Secretary of State
in accordance with the Arkansas Business Corporation Act of 1965, as amended
(the "Act"), or on such later date and at such later time as the Plan of Merger
may specify (the "Effective Time of the Merger"). Assuming the timely receipt
of all regulatory approvals, the expiration of all statutory waiting periods
and the satisfaction or waiver of all conditions in the Reorganization
Agreement, it is intended by the parties to the Reorganization Agreement that
the Articles of Merger along with the Plan of Merger will be filed so as to
become effective on or about August 1, 1994. There can be no assurance that
this expectation will be achieved. The effective date of the Merger will be
the day on which the Effective Time of the Merger occurs (the "Effective Date
of the Merger"). The parties to the Reorganization Agreement intend to close
the transactions contemplated therein approximately one business day prior to
the effectiveness of the Merger (the "Closing Date"). Holders of record of EBI
Common Stock immediately prior to the Effective Time of the Merger will be
entitled to receive the consideration for the Merger pursuant to the
Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit A.
REASONS FOR THE MERGER; RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors of EBI (the "EBI Board") recommends that EBI's
shareholders vote "FOR" approval of the Reorganization Agreement and the Plan
of Merger annexed thereto as Exhibit A. See "The Merger -- Background of and
Reasons for the Merger."
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is subject to various conditions, including
receipt of the approval of the EBI shareholders, receipt of the necessary
regulatory approvals and satisfaction of customary contractual closing
conditions.
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Reorganization Agreement include the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and the Arkansas State Bank Department (the "Arkansas Department").
Applications for such approvals have been submitted to each of the respective
regulatory agencies for the parties to consummate the Merger and are still
pending. There can be no assurance as to when, if or subject to what
conditions, such approvals will be granted. See "The Merger -- Conditions to
Consummation of the Merger," "-- Regulatory Approvals" and "-- Conduct of
Business Pending the Merger" and "Certain Regulatory Considerations."
3
<PAGE> 13
MANAGEMENT AFTER THE MERGER
After the Effective Time of the Merger, the persons who are serving as
directors and officers of NABS immediately prior thereto shall continue to be
the directors and officers of NABS as the surviving corporation and will hold
office as provided in the charter and bylaws of NABS unless and until their
successors have been duly elected or appointed and qualified. See "The Merger
- -- Management After the Merger."
SHAREHOLDERS' DISSENTERS' RIGHTS
Under the Act, holders of EBI Common Stock outstanding and entitled to
vote at the Special Meeting who do not vote for approval of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A and who comply
with certain notice and other requirements set forth in Section 4-26-1007 of
the Act will have the right to dissent from the Merger and to be paid cash for
the fair value of their shares as of the day prior to the date on which a vote
is taken approving the Merger. (A vote in favor of the Merger will disqualify
an EBI shareholder from exercising dissenters' rights). In order for a holder
of EBI Common Stock to perfect dissenters' rights, such holder must (i) not
vote his or her shares of EBI Common Stock "FOR'' approval of the
Reorganization Agreement and the Plan of Merger; (ii) deliver to EBI, prior to
or at the Special Meeting at which the Reorganization Agreement and the Plan of
Merger are submitted for shareholder vote, a written objection to the
Reorganization Agreement and the Plan of Merger; and (iii) within ten (10) days
after the date on which the vote is taken, make written demand to the surviving
corporation for the payment of the fair value of his or her shares. Neither
delivery of a proxy appointment directing a vote against the Reorganization
Agreement and the Plan of Merger nor a failure to vote for the Reorganization
Agreement and the Plan of Merger will effectively constitute such written
notice. Certain additional procedures must be followed in order for an EBI
shareholder to exercise dissenters' rights. Shareholders wishing to dissent
from the Reorganization Agreement and the Plan of Merger are urged to read
carefully "The Special Meeting -- Shareholders' Dissenters' Rights" and
Appendix C (containing a copy of the Section of the Act pertaining to
Dissenters' Rights) attached to this Prospectus and should consult with their
own legal advisors.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended for federal income tax purposes that the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended, (the "Code") and accordingly, for
federal income tax purposes, EBI shareholders will not realize or recognize
gain or loss (if any) upon receipt of UPC Common Stock in the Merger in
exchange for their shares of EBI Common Stock. EBI shareholders may recognize
gain or loss by reason of receiving cash in lieu of a fractional share or by
the exercise of Dissenters' Rights. See "The Merger -- Certain Federal Income
Tax Consequences."
ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "pooling of interests"
under generally accepted accounting principles ("GAAP") pursuant to Accounting
Principles Board Opinion No. 16 and the interpretations thereof.
4
<PAGE> 14
MARKET PRICES OF COMMON STOCK; DIVIDENDS
UPC Common Stock. The UPC Common Stock is listed and traded on the
New York Stock Exchange (symbol: UPC). The following table sets forth for the
periods indicated the high and low closing sale prices of the UPC Common Stock
on the New York Stock Exchange and the cash dividends declared per share for
the periods indicated:
<TABLE>
<CAPTION>
Price Range Cash Dividends
------------------------------------------ Declared Per
High Low Share
----------------- ----------------- -------------------
1994
<S> <C> <C> <C>
First Quarter $26.25 $23.13 $.21
Second Quarter through May 12 27.00 24.75 .21
----
Total $.42
====
1993
First Quarter $29.13 $22.50 $.18
Second Quarter 29.25 22.63 .18
Third Quarter 30.00 25.00 .18
Fourth Quarter 28.75 23.63 .18
----
Total $.72
====
1992
First Quarter $15.50 $13.75 $.15
Second Quarter 20.13 14.63 .15
Third Quarter 20.75 17.50 .15
Fourth Quarter 24.75 17.75 .15
----
Total $.60
====
</TABLE>
The last reported sale price of UPC Common Stock on the New York Stock
Exchange as of May 12, 1994, which was the last practicable date prior to the
mailing of this Prospectus, was $26.00 per share.
EBI Common Stock. The EBI Common Stock is not listed for trading on a
national securities exchange or otherwise publicly traded in any established
securities market. See "Earle Bankshares, Inc. -- Market Price of EBI Common
Stock."
5
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for UPC and EBI, on an historical basis,
selected unaudited consolidated financial data. The information for EBI has
been derived from financial statements, including the financial statements of
EBI appearing in Appendix A to this Prospectus. The information for UPC has
been derived from the financial statements of UPC, including the financial
statements of UPC incorporated by reference in this Prospectus, and should be
read in conjunction therewith and with the notes thereto. See "Incorporation
of Certain Documents by Reference." Historical results are not necessarily
indicative of results to be expected for any future period. In the opinion of
the managements of the respective companies, all adjustments necessary to
arrive at a fair statement of results of operations of UPC and EBI, have been
included.
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $232,667 $189,453 $152,015 $133,018 $121,995
Provision for losses on loans 9,689 18,557 24,835 19,166 49,229
Profits and commissions from trading activities 8,720 10,168 14,707 24,268 36,700
Investment securities gains (losses) 4,581 13,246 3,344 (341) (1,294)
Other noninterest income 73,436 61,543 53,099 47,375 43,281
Noninterest expense 224,480 199,218 164,771 160,805 177,833
Earnings (loss) before income taxes,
extraordinary item, and accounting changes 85,235 56,635 33,559 24,349 (26,380)
Applicable income taxes (benefit) 23,967 15,196 6,051 1,639 (4,111)
Earnings (loss) before extraordinary item
and accounting changes 61,268 41,439 27,508 22,710 (22,269)
Extraordinary item-defeasance of debt,
net of taxes (3,206) -- -- -- --
Accounting changes, net of taxes 5,001 -- -- -- --
Net earnings (loss) 63,063 41,439 27,508 22,710 (22,269)
PER COMMON SHARE DATA
Primary
Earnings (loss) before extraordinary
item and accounting changes $ 2.69 $ 2.10 $ 1.59 $ 1.20 $ (1.19)
Extraordinary item-defeasance of debt,
net of taxes (0.16) -- -- -- --
Accounting changes, net of taxes 0.25 -- -- -- --
Net earnings (loss) 2.78 2.10 1.59 1.20 (1.19)
Fully diluted
Earnings (loss) before extraordinary
item and accounting changes 2.49 2.02 1.58 1.20 (1.19)
Extraordinary item-defeasance of debt,
net of taxes (0.13) -- -- -- --
Accounting changes, net of taxes 0.21 -- -- -- --
Net earnings (loss) 2.57 2.02 1.58 1.20 (1.19)
Cash dividends 0.72 0.60 0.48 0.48 0.48
Book value 18.96 16.34 14.99 13.61 12.46
Book value assuming conversion of
convertible preferred stock 19.06 16.84 14.95 13.60 12.46
</TABLE>
6
<PAGE> 16
UPC SELECTED CONSOLIDATED FINANCIAL DATA (continued)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------
1993 1992 1991 1990 1989
-------- -------- -------- -------- --------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Total assets $6,318,186 $5,262,184 $3,786,839 $4,004,710 $4,002,614
Loans, net of unearned income 2,935,215 2,231,839 1,912,914 2,129,083 1,995,383
Allowance for losses on loans 80,442 64,290 47,934 50,921 46,871
Investment securities 2,617,053 2,198,103 1,147,803 1,155,266 1,019,759
Deposits 5,251,366 4,450,176 3,211,261 3,341,840 3,129,567
Long-term debt
Parent Company 114,729 74,292 38,163 44,662 34,500
Subsidiary Banks 160,501 2,864 3,922 4,103 39,021
Total shareholders' equity 477,300 356,211 269,446 237,035 240,591
Average assets 6,249,339 4,742,832 3,839,744 4,053,820 3,988,348
Average shareholders' equity 446,994 329,492 247,859 243,783 265,233
Average shares outstanding (in thousands)
Primary 19,622 16,765 16,632 18,641 18,761
Fully diluted 23,852 19,609 16,986 18,981 18,761
PROFITABILITY AND CAPITAL RATIOS
Before extraordinary item and accounting changes
Return on average assets 0.98% 0.87% 0.72% 0.56% NM
Return on average common equity 15.18 13.65 11.18 9.34 NM
Net earnings
Return on average assets 1.01% 0.87% 0.72% 0.56% NM
Return on average common equity 15.70 13.65 11.18 9.34 NM
Net interest income (taxable-equivalent)
to average earning assets 4.30 4.57 4.59 3.97 3.77
Loans/deposits 55.89 50.15 59.57 63.71 63.76
Common and preferred dividend payout ratio 34.07 38.93 32.71 40.81 NM
Equity/assets (period end) 7.55 6.77 7.12 5.92 6.01
Average shareholders' equity/average total assets 7.15 6.95 6.46 6.01 6.65
Tier 1 capital to risk-weighted assets(1) 14.85 13.81 12.19 9.57 NA
Total capital to risk-weighted assets(1) 18.59 16.33 14.93 12.17 NA
Leverage ratio(1) 7.10 6.85 6.94 5.71 5.76
ASSET QUALITY RATIOS
Allowance/period end loans 2.74% 2.88% 2.51% 2.39% 2.35%
Nonperforming loans/total loans(2) 0.76 1.70 1.37 0.98 0.88
Allowance/nonperforming loans 362.83 168.97 182.98 244.77 267.65
Nonperforming assets/loans and foreclosed
property(3) 0.92 1.99 1.90 1.62 1.26
Provision/average loans 0.35 0.86 1.23 0.93 2.50
Net charge-offs/average loans 0.37 0.83 1.38 1.10 2.25
- -----------
</TABLE>
(1) The risk-based capital ratios are based upon capital guidelines prescribed
by federal bank regulatory authorities. Under those guidelines, the
required minimum Tier 1 and total capital to risk-weighted assets ratios
are 4% and 8%, respectively. The required minimum leverage ratio of Tier
1 capital to total adjusted assets is 3% to 5%.
(2) Nonperforming loans include loans on nonaccrual status and restructured
loans.
(3) Nonperforming assets include nonperforming loans and foreclosed
properties.
NA- Not Available NM- Not Meaningful
7
<PAGE> 17
EBI SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1993 1992 1991 1990 1989
------ ---- ---- ---- ------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 2,905 $ 2,083 $ 1,761 $ 1,487 $ 1,360
Provision for loan losses -- -- 70 -- --
Noninterest income 343 320 350 259 317
Noninterest expense 2,024 1,465 1,215 1,163 971
Income before taxes 1,224 938 826 583 706
Provision for income taxes 472 356 254 157 236
Net income 752 582 572 426 470
PER COMMON SHARE DATA
Net income $ 7.58 $ 5.88 $ 5.78 $ 4.33 $ 4.83
Cash dividends 2.00 2.00 2.00 2.00 2.00
Dividend payout ratio 26.39% 34.01% 34.60% 46.19% 41.41%
Book value $ 65.91 $ 60.36 $ 56.49 $ 52.71 $ 52.02
Average common shares outstanding 99,195 99,000 99,000 98,354 97,251
BALANCE SHEET DATA (AT PERIOD END)
Investment securities $13,010 $ 7,321 $ 5,773 $ 6,625 $ 2,432
Loans, net of unearned income 17,909 21,339 22,338 18,116 17,372
Total assets 42,518 39,327 39,098 35,116 33,643
Deposits 34,723 32,867 33,202 29,481 28,173
Shareholders' equity 6,591 5,976 5,593 5,218 5,059
PROFITABILITY RATIOS
Return on average assets 1.89% 1.55% 1.61% 1.31% 1.52%
Return on average equity 11.93 9.81 10.36 8.22 9.56
ASSET QUALITY DATA
Allowance for loan losses $ 321 $ 310 $ 294 $ 228 $ 158
Net charge-offs (recoveries) (11) (16) 4 (70) (14)
Nonperforming loans (1) 208 230 246 202 298
Foreclosed assets (2) 249 263 277 -- --
Allowance for loan losses to
loans, net of unearned income 1.79% 1.45% 1.32% 1.26% .91%
Nonperforming assets to loans,
net of unearned income, and
foreclosed assets (3) 2.52 2.28 2.31 1.12 1.72
LIQUIDITY AND CAPITAL RATIOS
Loans, net of unearned
income to deposits 51.58% 64.93% 67.28% 61.45% 61.66%
Shareholders' equity
to total assets 15.50 15.20 14.31 14.86 15.04
</TABLE>
_______________________
(1) Nonperforming loans includes loans on nonaccrual status,
restructured loans and loans 90 days or more past due.
(2) Includes other real estate owned and other foreclosed
assets.
(3) Nonperforming assets includes nonperforming loans plus
foreclosed assets.
8
<PAGE> 18
RECENT DEVELOPMENTS AFFECTING UPC.
1994 First Quarter UPC Operating Results. The following table
presents certain information for the three-month periods ended March 31, 1994
and 1993. Reference is made to UPC's press release dated April 28, 1994, which
is included in UPC's Current Report on Form 8-K dated April 28, 1994. For
additional information, see "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (1)
1994 1993
------- --------
(Dollars in thousands, except per share data)
<S> <C> <C>
INCOME STATEMENT DATA
Net interest income $58,893 $57,581
Provision for losses on loans -- 2,823
Investment securities gains 100 880
Other noninterest income 19,814 18,906
Noninterest expense 54,234 54,637
Earnings before accounting changes 17,340 13,494
Accounting changes, net of
taxes -- 5,001
Net earnings 17,340 18,495
PER COMMON SHARE DATA
Earnings before accounting changes
- primary $ .70 $ .60
- fully diluted .65 .57
Net earnings - primary .70 .85
- fully diluted .65 .78
Cash dividends .21 .18
Book value 19.00 17.28
Book value - assuming
conversion of convertible
preferred stock 19.08 17.63
PROFITABILITY RATIOS
Return on average assets
Earnings before accounting changes 1.05% .90%
Net earnings 1.05 1.24
Return on average common equity
Earnings before accounting
changes 15.44 14.61
Net earnings 15.44 20.93
Net interest income
(tax-equivalent) as a percentage of
average earning assets 4.13 4.42
</TABLE>
9
<PAGE> 19
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, (1)
1993 1994
---- ----
(Dollars in thousands, except per share data)
<S> <C> <C>
ASSET QUALITY DATA
Allowance for losses on loans $ 87,099 $ 79,674
Nonperforming loans 24,312 41,610
Nonperforming assets 28,853 50,102
Loans 90 days or more
past due 4,365 4,776
Allowance for losses on loans to loans 2.82% 2.90%
Nonperforming loans to loans .79 1.51
Nonperforming assets to loans .93 1.82
Allowance/nonperforming loans 358.26 191.48
BALANCE SHEET DATA (AT PERIOD END)
Total assets $6,724,780 $ 6,212,882
Loans, net of unearned income 3,092,638 2,750,538
Investment securities
Amortized cost 2,807,745 2,722,881
Fair value 2,822,311 2,783,398
Total deposits 5,611,897 5,332,991
Long-term debt (2) 286,571 86,403
Total shareholders' equity 513,414 427,215
CAPITAL RATIOS
Equity/assets 7.63% 6.88%
Leverage 7.22 6.72
</TABLE>
______________________
(1) Interim period ratios are annualized
(2) Includes subsidiary banks' long-term debt (primarily Federal Home Loan
Bank advances) of $171.8 million and $12.1 million at March 31, 1994
and 1993, respectively.
10
<PAGE> 20
Recently Completed Acquisitions. Since December 31, 1993, UPC has
completed the acquisition of the following institutions (collectively, the
"Recently Completed Acquisitions"):
<TABLE>
<CAPTION>
METHOD OF
INSTITUTION ASSET-SIZE CONSIDERATION ACCOUNTING
- ----------- ----------- ------------- ----------
(In Millions)
<S> <C> <C> <C>
Mid-South Bancorp, Inc.
and its subsidiaries,
Simpson County Bank,
in Franklin, Kentucky;
Adairville Banking Company,
in Adairville, Kentucky;
First Citizens Bank,
in Franklin, Tennessee;
The Peoples Bank of Elk Valley,
in Fayetteville, Tennessee; and
General Trust Company, 839,542 shares Pooling of
in Nashville, Tennessee $ 185 UPC Common Stock Interests
First National Bancorp of Shelbyville, Inc.
and its subsidiary, First National Bank of 974,868 shares Pooling of
Shelbyville, in Shelbyville,Tennessee 164 UPC Common Stock Interests
Clin-Ark Bankshares, Inc.
and its subsidiary,
First National Bank, 227,786 shares Pooling of
Clinton, Van Buren County, Arkansas 48 UPC Common Stock Interests
Anderson County Bank
in Clinton, Anderson Approximately
County, Tennessee 18 $2.0 Million Cash Purchase
Tennessee Bancorp, Inc.
and its subsidiary,
Tennessee National Bank, Approximately
Columbia, Tennessee 92 $13.5 Million Cash Purchase
---
Total $507
===
</TABLE>
11
<PAGE> 21
Pending Acquisitions. Consistent with UPC's acquisition strategy, UPC
has entered into definitive agreements to acquire the following financial
institutions in addition to EBI (collectively, the "Pending Acquisitions") which
management considers probable and which are expected to be consummated by the
end of the third quarter of 1994:
<TABLE>
<CAPTION>
CONSIDERATION
-------------
INSTITUTION ASSET SIZE VALUE TYPE
- ----------- ---------- ----- ----
(IN MILLIONS)
<S> <C> <C> <C>
BNF BANCORP, Inc.
(formerly BANCFIRST
Corporation) and its
subsidiary BANKFIRST, a federal
savings bank UPC Common Stock (Approximately
Decatur, Alabama $262 $49 2,054,000 shares)
Liberty Bancshares, Inc.
and its subsidiary, UPC Common Stock
Liberty Federal Savings Bank, (Approximately 1,295,144
Paris, Tennessee 181 34 shares)
--- --
Totals $443 $83
=== ===
</TABLE>
If the Merger, the Pending Acquisitions and the Recently Completed
Acquisitions had been consummated at December 31, 1993, UPC's consolidated total
assets would have increased by approximately $1.0 billion to approximately $7.3
billion, and UPC's consolidated total deposits would have increased by
approximately $800 million to approximately $6.1 billion, based upon December
31, 1993, pro forma financial information. See "Pro Forma Consolidated
Financial Information" and the related pro forma financial information in UPC's
Current Report on Form 8-K dated April 15, 1994, and the historical financial
information included in UPC's 1993 Annual Report on Form 10-K, incorporated by
reference. See "Incorporation of Certain Documents by Reference."
RECENT DEVELOPMENTS AFFECTING EBI.
First Quarter EBI Operating Results. EBI reported net earnings of
$178,000 or $1.78 per share for the first quarter of 1994 compared to $119,000
or $1.20 per share for the first quarter of 1993. The significant increase in
the current earnings is a result of the discounts realized from the continued
early prepayment of loans purchased from the Resolution Trust Corporation
("RTC") which totaled approximately $183,000 for the first quarter of 1994
compared to approximately $15,000 for the first quarter of 1993.
Also, EBI reported consolidated assets of $43.0 million, consolidated
loans of $16.3 million and deposits of $35.5 million with shareholders' equity
of $6.8 million.
12
<PAGE> 22
EQUIVALENT AND PRO FORMA PER SHARE DATA
The following table presents selected comparative unaudited per share
data for (i) UPC Common Stock and EBI Common Stock on an historical basis; (ii)
UPC Common Stock on a pro forma basis for the Merger only and for the Merger,
all Recently Completed Acquisitions and the Pending Acquisitions; and (iii) EBI
Common Stock on an equivalent pro forma basis for the Merger only and for the
Merger and UPC's Recently Completed Acquisitions and Pending Acquisitions, for
the periods indicated. These data are not necessarily indicative of the
results of the future operations of either entity or the actual results that
would have occurred had the Merger been consummated January 1, 1993. The
information is derived from, and should be read in conjunction with the
consolidated historical financial statements of UPC (including related notes
thereto) which are incorporated by reference, the consolidated historical
financial statements of EBI set forth in Appendix A and the unaudited pro forma
consolidated financial statements and related notes in UPC's Current Report on
Form 8-K dated April 15, 1994, incorporated by reference. See "Incorporation
of Certain Documents by Reference."
<TABLE>
<CAPTION>
AS OF AND FOR THE TWELVE
MONTHS ENDED
DECEMBER 31,
1993(1)
--------------------------
<S> <C>
Book value per common share
UPC $ 18.96
UPC pro forma (EBI only) 18.94
UPC pro forma (all Recently Completed and Pending Acquisitions) 18.05
EBI 65.91
EBI equivalent pro forma (EBI only) 65.56
EBI equivalent pro forma (all Recently Completed and
Pending Acquisitions)(2) 62.48
Cash dividends per common share
UPC 0.72
UPC pro forma 0.72
EBI 2.00
EBI equivalent pro forma 2.49
Earnings before extraordinary items and accounting changes
UPC
Primary 2.69
Fully diluted 2.49
UPC pro forma (EBI only)
Primary 2.68
Fully diluted 2.49
UPC pro forma (all Recently Completed and Pending Acquisitions)(2)
Primary 2.22
Fully diluted 2.13
EBI
Primary 7.58
Fully diluted 7.58
EBI equivalent pro forma (EBI only)
Primary 9.28
Fully diluted 8.62
EBI equivalent pro forma (all Recently Completed and
Pending Acquisitions)(2)
Primary 7.68
Fully diluted 7.37
</TABLE>
____________________________
(1) The equivalent pro forma per share data for EBI is computed by
multiplying UPC's pro forma share information by 3.46154
(2) See also, "Recent Developments Affecting UPC -- Recently Completed
Acquisitions" and "-- Pending Acquisitions."
13
<PAGE> 23
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following tables contain unaudited, consolidated, pro forma,
financial information showing a statement of earnings for the twelve months
ended December 31, 1993, and a balance sheet at December 31, 1993, for (i) UPC;
(ii) UPC, Recently Completed Acquisitions and the Merger; and (iii) UPC,
Recently Completed Acquisitions, the Pending Acquisitions and the Merger. The
unaudited pro forma financial information reflects each transaction using
either the pooling of interests or purchase methods of accounting in accordance
with the accounting requirements applicable to each respective transaction.
The unaudited pro forma financial information should be read in conjunction
with the historical financial statements of UPC and EBI and in conjunction with
the information presented in UPC's 1993 Annual Report on Form 10-K and UPC's
Current Reports on Form 8-K dated February 8, 1994, April 14, 1994 and April
15, 1994. Pro forma results are not necessarily indicative of future operating
results. See "Incorporation of Certain Documents by Reference" and "Appendix A
- -- Earle Bankshares, Inc. and Subsidiary Consolidated Financial Statements."
14
<PAGE> 24
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, 1993
-----------------------------------------------------------------
UPC
Recently Completed
UPC, Acquisitions,
Recently Completed All Pending
Acquisitions Acquisitions
UPC and EBI and EBI
------- ---------------- -------------------
<S> <C> <C> <C>
Assets
Cash and due from banks $ 225,626 $ 245,681 $ 253,762
Interest-bearing deposits at financial
institutions 26,647 13,391 14,416
Federal funds sold and securities purchased under
agreements to resell 53,149 71,128 90,228
Trading account securities, at market 153,482 153,482 153,482
Loans held for resale 56,053 56,053 61,971
Investment securities
Held for sale 595,090 597,706 719,313
Held for investment 2,021,963 2,222,268 2,230,200
Loans, net of unearned income 2,935,215 3,236,214 3,517,213
Less:
Allowance for losses on loans (80,442) (87,884) (90,333)
----------- ----------- -----------
Net Loans 2,854,773 3,148,330 3,426,880
Premises and equipment 135,511 146,727 153,796
Accrued interest receivable 49,953 52,524 55,642
Goodwill and other intangibles 40,794 46,786 46,786
Other assets 105,145 114,250 118,779
------------ ---------- -----------
Total assets $ 6,318,186 $ 6,868,326 $ 7,325,255
=========== =========== ===========
Liabilities and shareholders' equity
Deposits
Noninterest-bearing $ 750,093 $ 805,362 $ 807,653
Other interest-bearing 4,501,273 4,948,120 5,314,994
----------- ----------- -----------
Total deposits 5,251,366 5,753,482 6,122,647
Short-term borrowings 244,995 245,663 245,663
Federal Home Loan Bank advances 157,954 158,554 190,461
Long-term debt 117,276 121,336 121,336
Accrued interest, expenses and taxes 41,893 43,004 43,004
Other liabilities 27,402 33,940 38,131
----------- ----------- -----------
Total liabilities 5,840,886 6,355,979 6,761,242
----------- ----------- -----------
Shareholders' equity
Preferred stock
Convertible 87,298 87,298 87,298
Nonconvertible 17,250 17,250 17,250
Common Stock 98,285 110,371 127,256
Additional paid-in capital 86,385 94,135 95,065
Retained earnings 188,082 203,293 237,144
----------- ----------- -----------
Total shareholders' equity 477,300 512,347 564,013
----------- ----------- -----------
Total liabilities and
shareholders' equity $ 6,318,186 $ 6,868,326 $ 7,325,255
=========== =========== ===========
</TABLE>
15
<PAGE> 25
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PROFORMA STATEMENT OF EARNINGS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Year-to-Date December 31, 1993
-----------------------------------------------------------------
UPC
Recently Completed
UPC, Acquisitions,
Recently Completed All Pending
Acquisitions, Acquisitions
UPC and EBI and EBI
---- ----------- ---------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $241,072 $272,920 $296,595
Interest on investment securities 140,473 152,536 160,588
Interest on deposits at financial institutions 1,634 1,284 1,337
Interest on federal funds sold and securities
purchased under agreements to resell 4,602 5,289 5,765
Interest on trading account securities 6,194 6,194 6,194
Interest on loans held for resale 3,239 3,239 3,239
-------- -------- --------
Total interest income 397,214 441,462 473,718
-------- -------- --------
Interest expense
Interest on deposits 146,800 166,850 180,519
Interest on short-term borrowings 6,287 6,571 6,571
Interest on Federal Home Loan Bank advances and
long-term debt 11,460 11,475 12,491
-------- -------- --------
Total interest expense 164,547 184,896 199,581
-------- -------- --------
Net interest income 232,667 256,566 274,137
Provision for losses on loans 9,689 14,549 14,862
-------- -------- --------
Net interest income after provision for losses on 222,978 242,017 259,275
loans -------- -------- --------
Noninterest income
Service charges on deposit accounts 28,721 31,362 32,297
Profits and commissions from trading activities 8,720 8,771 8,771
Investment securities gains 4,581 4,936 5,088
Other income 44,715 45,789 47,553
-------- -------- --------
Total noninterest income 86,737 90,858 93,709
-------- -------- --------
Noninterest expense
Salaries and employee benefits 98,920 109,173 113,905
Net occupancy expense 15,909 17,891 19,463
Equipment expense 17,735 16,504 16,504
Other expense 93,916 104,535 108,486
-------- -------- --------
Total noninterest expense 224,480 248,103 258,358
-------- -------- --------
Earnings before income taxes, extraordinary
item, and accounting changes 85,235 84,772 94,626
Applicable income taxes 23,967 25,346 29,014
-------- -------- --------
Earnings before extraordinary item and
accounting changes $ 61,268 $ 59,426 $ 65,612
======== ======== ========
Earnings per common share
Primary $ 2.69 $ 2.28 $ 2.22
Fully diluted 2.49 2.17 2.13
Average common shares outstanding (in thousands)
Primary 19,622 22,149 25,526
Fully diluted 23,852 26,646 30,023
</TABLE>
16
<PAGE> 26
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES
Each copy of this Prospectus mailed to holders of EBI Common Stock is
accompanied by a proxy appointment card furnished in connection with the EBI
Board's solicitation of proxies for use at the Special Meeting and at any
adjournments or postponements thereof. The Special Meeting is scheduled to be
held at 7:00 p.m. CDT, on Tuesday, June 21, 1994, at EBI's executive offices
located at 801 Commerce Street, Earle, Arkansas 72331. Only holders of record
of EBI Common Stock at the close of business on May 6, 1994, are entitled to
receive notice of, and to vote at the Special Meeting. At the Special Meeting,
the EBI shareholders will consider and vote upon (i) a proposal to approve the
Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit A
and (ii) such other matters as may properly be brought before the Special
Meeting or any adjournments or postponements thereof.
HOLDERS OF EBI COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO EBI IN THE
ENCLOSED, POSTAGE-PAID ENVELOPE. FAILURE TO RETURN YOUR PROPERLY EXECUTED
PROXY APPOINTMENT CARD OR TO VOTE AT THE SPECIAL MEETING WILL HAVE THE SAME
EFFECT AS A VOTE AGAINST THE REORGANIZATION AGREEMENT AND THE PLAN OF MERGER
(BUT WILL NOT BE SUFFICIENT TO PERFECT DISSENTERS' RIGHTS). EBI SHAREHOLDERS
SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY APPOINTMENT CARDS.
Any holder of EBI Common Stock who has delivered a proxy appointment may
revoke it at any time before it is voted by attending the Special Meeting and
voting in person at the Special Meeting or by giving notice of revocation in
writing or submitting a signed proxy appointment bearing a later date to Earle
Bankshares, Inc., 801 Commerce Street (P.O. Box 248), Earle, Arkansas 72331,
Attention: Corporate Secretary, provided such notice or proxy appointment is
actually received by EBI before the vote of shareholders. A proxy appointment
will not be revoked by death or supervening incapacity of the shareholder
executing the proxy appointment unless, before the shares are voted, notice of
such death or incapacity is filed with the Corporate Secretary or other person
responsible for tabulating the votes on behalf of EBI. The shares of EBI
Common Stock represented by properly executed proxy appointments received will
be voted "FOR" (or "AGAINST", if so indicated) approval of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A. If any other
matters are properly presented at the Special Meeting for consideration, the
persons named in the EBI proxy appointment card enclosed herewith will have
discretionary authority to vote on such matters in accordance with their best
judgment, provided, however, that such discretionary authority (i) will only be
exercised to the extent permissible under applicable federal or state
securities law and (ii) will not extend to any motion to adjourn the Special
Meeting made by EBI for the purpose of soliciting additional proxy
appointments. EBI is not aware of any matter to be presented at the Special
Meeting other than the proposal to approve the Reorganization Agreement and the
Plan of Merger annexed thereto as Exhibit A.
The cost of soliciting proxies from holders of EBI Common Stock will be
borne by EBI. Such solicitation will be made by mail but also may be made by
telephone or in person by the directors, officers and employees of EBI (who
will receive no additional compensation for doing so).
VOTES REQUIRED
The affirmative votes of the holders of two-thirds (2/3) of the outstanding
shares of EBI Common Stock entitled to vote at the Special Meeting are required
in order to approve the Reorganization Agreement and the Plan of Merger annexed
thereto as Exhibit A. Therefore, a failure to return a properly executed proxy
appointment or alternatively to vote in person at the Special Meeting will have
the same effect as a vote against the Reorganization
17
<PAGE> 27
Agreement and the Plan of Merger annexed thereto as Exhibit A (but will not be
sufficient to perfect the holder's dissenters' rights). As of the Record Date,
there were 100,000 shares of EBI Common Stock outstanding and entitled to vote
at the Special Meeting, with each share entitled to one vote.
As of the Record Date, the Management Group beneficially owned and held of
record a total of 63,934 shares or approximately 63.93% of the issued and
outstanding shares of EBI Common Stock. ALL OF THE MEMBERS OF THE MANAGEMENT
GROUP HAVE ADVISED EBI OF THEIR INTENTION TO VOTE THEIR SHARES IN FAVOR OF THE
REORGANIZATION AGREEMENT AND THE PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A.
SHAREHOLDERS' DISSENTERS' RIGHTS
Any shareholder of EBI entitled to vote on approval of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A has the right to
receive payment of the fair value of his shares of EBI Common Stock upon
compliance with Section 4-26-1007 of the Act, a copy of which is included as
Appendix C to this Prospectus. A shareholder may not dissent as to less than
all of the shares that he beneficially owns.
Any EBI shareholder intending to enforce his dissenters' rights may not
vote in favor of the Reorganization Agreement and the Plan of Merger (either
personally or by proxy) and must (i) deliver to the Corporate Secretary of EBI
prior to the time of the shareholder vote a written objection to the
Reorganization Agreement and the Plan of Merger ("Objection Notice") and (ii)
deliver to the Corporate Secretary of the surviving corporation within ten (10)
days after the date on which the vote was taken a written demand for payment of
the fair value of his shares as of the day prior to the date on which the vote
was taken approving the Merger (the "Demand Letter"). The Demand Letter must
state that the shareholder demands payment for his shares of EBI Common Stock
if the Merger is effected and must include the number of shares of EBI Common
Stock held by the dissenting EBI shareholder. A vote against approval of the
Reorganization Agreement and the Plan of Merger will not, in and of itself,
constitute an Objection Notice or Demand Letter satisfying the requirements of
Section 4-26-1007 of the Act. Failure to comply substantially with these
procedures will cause the EBI shareholder to lose his dissenters' rights to
receive cash payment for the shares. Consequently, any EBI shareholder who
desires to exercise his rights to payment for his shares is urged to consult
his legal adviser before attempting to exercise such rights.
If the Reorganization Agreement and the Plan of Merger should be approved
by EBI's shareholders at the Special Meeting and the Merger should be
consummated, each EBI shareholder who did not vote for the Merger and who has
properly filed an Objection Notice and Demand Letter will be notified by the
surviving corporation no later than ten (10) days after the Effective Date of
the Merger that the Merger was consummated. Such notification shall include an
offer to make payment for the fair value of the dissenting shareholder's shares
pursuant to the Act.
If within thirty (30) days after the Effective Date of the Merger the fair
value of such shares is agreed upon between the dissenting shareholder and the
surviving corporation, then payment of such shares' fair value shall be made by
the surviving corporation to the dissenting shareholder within ninety (90) days
after the Effective Date of the Merger, upon the surrender of the dissenting
shareholder's stock certificate(s) representing his shares of EBI Common Stock.
If within the 30-day period after the Effective Date of the Merger the
dissenting shareholder and the surviving corporation cannot agree upon the fair
value of such shares, then the dissenting shareholder, within sixty (60) days
after the expiration of the 30-day period, may file a petition in the circuit
court of Craighead County, Arkansas (the "Court"), asking for a finding and
determination of the fair value of the shares and shall be entitled to judgment
against the surviving corporation for the amount of the fair value as of the
day prior to the date on which the vote was taken approving the Merger,
together with interest thereon to the date of judgment. The judgment shall be
payable only upon and simultaneously with the surrender to the surviving
corporation of the certificate(s) representing the shares held by such
dissenting shareholder. Upon payment of the judgment, the dissenting
18
<PAGE> 28
shareholder shall cease to have any interest in the shares or in the surviving
corporation.
Unless the dissenting shareholder files his petition within the time period
set forth in the Act, the dissenting shareholder and all persons claiming such
rights under him will be bound by the terms of the Reorganization Agreement and
the Plan of Merger.
The foregoing summary of the applicable provisions of Section 4-26-1007 of
the Act is not intended to be a complete statement of such provisions, and is
qualified in its entirety by reference to such Section, which is annexed as
Appendix C to this Prospectus.
For a discussion of certain tax consequences in connection with exercising
Dissenters' Rights, see "The Merger -- Certain Federal Income Tax
Consequences."
RECOMMENDATION
For the reasons described below, the EBI Board has adopted the
Reorganization Agreement and the Plan of Merger and recommends that
shareholders of EBI vote "FOR" approval of the Reorganization Agreement and the
Plan of Merger.
THE MERGER
THE FOLLOWING INFORMATION CONCERNING THE MERGER, INSOFAR AS IT RELATES TO
MATTERS CONTAINED IN THE REORGANIZATION AGREEMENT OR THE PLAN OF MERGER ANNEXED
THERETO AS EXHIBIT A, IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
REORGANIZATION AGREEMENT, INCLUDING THE PLAN OF MERGER, WHICH IS ATTACHED TO
THE PROSPECTUS AS APPENDIX B. EBI SHAREHOLDERS ARE URGED TO READ THE
REORGANIZATION AGREEMENT AND THE PLAN OF MERGER CAREFULLY.
BACKGROUND OF, AND REASONS FOR, THE MERGER
Background. Earle Bankshares, Inc. has for several years operated First
Southern Bank, Earle, Arkansas ("First Southern") in Crittenden County as a
small, community bank in East Arkansas. First Southern has operated with
relatively few employees, focusing its activities primarily on serving
depositors and local businesses and making small business, agricultural and
consumer type loans. While First Southern's basic business has remained
largely the same, the regulatory environment in which the bank operates has
become increasingly complex. Credit analysis and documentation have become
more complex.
Discussions between Benjamin W. Rawlins, Jr., Chairman of UPC, and W.P.
Morrison, Chairman of EBI, regarding the possible acquisition of EBI by UPC
resulted in the execution of the annexed Reorganization Agreement dated as
November 18, 1993, which was approved by the EBI Board at a special meeting on
November 17, 1993, and by the UPC Board of Directors at its regular meeting
held on November 18, 1993.
EBI Reasons. In light of the foregoing, the EBI Board has voted to
recommend the approval of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A by the EBI shareholders for, and among others, the
following reasons:
19
<PAGE> 29
(i) The consideration to be paid by UPC. See "The Merger --
Terms of Merger";
(ii) The trends in the banking industry are toward
consolidation and increased regulation, making it more difficult for
an institution the size of EBI to be able to compete successfully in
the future;
(iii) Given the trends in the banking industry as discussed
above and the highly competitive environment in which EBI would be
expected to compete in the future, the proper time to effect a merger
of the organization with another institution is before increased
competition and regulation affect adversely EBI's earnings and,
consequently, its value;
(iv) First Southern will be able to benefit from UPC's
operations and regulatory expertise and management talent;
(v) Management of EBI believes that UPC's philosophy is to
provide its community banks with a substantial amount of operating
autonomy, generally leaving existing management in place to manage the
institution consistent with past management culture, so long as such
culture is not inconsistent with UPC's policies and produces results
consistent with results achieved while the institution was
independent; and
(vi) The annual dividend yield on the UPC Common Stock offered
in exchange for the EBI Common Stock exceeds the historical yield on
the EBI Common Stock and there is a broader and more liquid market for
the UPC Common Stock, which is listed and traded on the NYSE.
The EBI Board did not assign any specific or relative individual
weight to the foregoing factors in determining to recommend the Merger to the
EBI shareholders.
UPC Reasons. Management of UPC has recommended to the UPC Board of
Directors (the "UPC Board") and the UPC Board has approved the Merger and the
Reorganization Agreement along with the Plan of Merger annexed thereto as
Exhibit A because (i) EBI has experienced steady and continued growth, (ii) EBI
is located geographically in an area in which UPC has sought to increase its
market share, and (iii) UPC believes that by providing First Southern with
access to the UPC capital base and other banking resources, First Southern will
be well positioned to compete in its market in the face of enhanced competition
from larger, well capitalized institutions.
TERMS OF THE MERGER
At the Effective Time of the Merger, EBI will merge with and into NABS
with NABS surviving the Merger and continuing after the Effective Time of the
Merger to operate under the name North Arkansas Bancshares, Inc. The surviving
corporation will remain a wholly-owned subsidiary of UPC. In the Merger, each
share of EBI Common Stock outstanding immediately prior to the Effective Time
of the Merger, other than those shares with respect to which Dissenters' Rights
shall have been perfected as described above, will be converted exclusively
into the right to receive in exchange therefor (i) a number of whole shares of
UPC Common Stock based on the average closing price per share of UPC Common
Stock on the New York Stock Exchange for the 10 trading days immediately
following the receipt of all requisite governmental approvals of the Merger
("Current Market Price") and (ii) a cash payment in settlement of any remaining
fractional share of UPC Common Stock. If the Current Market Price of UPC
Common Stock is less than $24.00, EBI will have the right either (i) to
consummate the Merger at an exchange ratio (i.e., the number of shares of UPC
Common Stock to be received in exchange for each share of EBI Common Stock)
(the "Exchange Ratio") equal to 3.750, or (ii) not to consummate the Merger;
provided, however, that UPC would have the right to reinstate the transaction
by delivering shares of UPC Common Stock having a value of approximately $90.00
per EBI share. If the Current Market Price is greater than or equal to $24.00
but less than $30.00, the Exchange Ratio will be equal to $90.00 divided by the
Current Market Price.
20
<PAGE> 30
If the Current Market Price is greater than or equal to $30.00, the Exchange
Ratio will be 3.000. As of the date hereof, no governmental approvals have been
received, but if such approvals had been received on April 18, 1994, the
Current Market Price would have been $26.23 per share such that the value of
the UPC Common Stock entitled to be received for each outstanding share of EBI
Common Stock would have been approximately equal to $90.00.
No fractional shares of UPC Common Stock will be issued in the Merger,
and, after aggregation of the shares (and fractional shares, if any) of UPC
Common Stock to which the holder of record of EBI Common Stock immediately
prior to the Effective Time of the Merger (an "EBI Record Holder") is entitled,
cash will be paid by UPC in lieu of any remaining fractional share. The amount
of cash in exchange for fractional shares to be received by EBI Record Holders
in the Merger will be determined pursuant to Section 3.1(e) of the
Reorganization Agreement which is based on the Current Market Price of the UPC
Common Stock.
Holders of EBI Common Stock entitled to vote at the Special Meeting
will have the right to dissent from the Reorganization Agreement and the Plan
of Merger and receive a cash payment equal to the fair value of their shares,
all in conformity with Section 4-26-1007 of the Act. See "The Special Meeting
- -- Shareholders' Dissenters' Rights."
EFFECTIVE DATE AND EFFECTIVE TIME OF THE MERGER
Articles of Merger along with the executed Plan of Merger will be
filed as soon as practicable after all conditions precedent contained in the
Reorganization Agreement have been satisfied or lawfully waived, including
receipt of all regulatory approvals and expiration of all statutory waiting
periods, or on such later date as may be agreed to by UPC and EBI. The
Effective Time of the Merger will be at the time Articles of Merger along with
the Plan of Merger are filed in the Office of the Arkansas Secretary of State
pursuant to the Act or at such later date and time as the parties may agree and
specify in the Plan of Merger. The Effective Date of the Merger will be the
day on which the Effective Time of the Merger occurs. It is presently
anticipated that the Articles of Merger will be filed on or about July 31,
1994, but will specify, by agreement of the parties, an Effective Time of the
Merger of 12:01 a.m. CDT, on August 1, 1994. There can be no assurance that
such expectation will be achieved.
SURRENDER OF CERTIFICATES
As promptly as practicable after the Effective Time of the Merger,
Union Planters National Bank, acting in the capacity of exchange agent (the
"Exchange Agent"), will mail to each person who was a holder of record of EBI
Common Stock immediately prior to the Effective Time of the Merger a form
letter of transmittal, together with instructions and a return envelope
(collectively, the "Exchange Materials") to facilitate the exchange of such
holder's certificates formerly representing shares of EBI Common Stock for
certificates representing shares of UPC Common Stock.
HOLDERS OF EBI COMMON STOCK WHO DO NOT INTEND TO EXERCISE DISSENTERS'
RIGHTS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE THE EXCHANGE
MATERIALS FROM THE EXCHANGE AGENT.
Upon receipt of the Exchange Materials, EBI Record Holders should
complete the letter of transmittal in accordance with the instructions provided
and deliver the letter of transmittal, together with all stock certificates
formerly representing shares of EBI Common Stock to the Exchange Agent in the
return envelope provided. Provided the Exchange Agent shall have received the
certificates and related documentation completed in proper form, as soon as
practicable after the Effective Time of the Merger, UPC will issue, and the
Exchange Agent will mail, to the EBI Record Holder a certificate representing
the whole number of shares of UPC Common Stock to which such holder is entitled
pursuant to the Reorganization Agreement and a check in the amount of the cash
consideration, if any, with respect to any remaining fractional share to which
the holder is entitled. No consideration will be delivered to an EBI Record
Holder unless and until such holder shall have delivered to the Exchange Agent
all certificates formerly representing the shares of EBI Common Stock held by
him and in respect of which he
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<PAGE> 31
claims payment is due, or such documentation, if applicable, and security in
respect of lost or stolen certificates as is required by the Reorganization
Agreement.
No dividend or other distribution with respect to the UPC Common Stock
will be paid or delivered to the holder of any unsurrendered EBI certificate
until the holder surrenders all of such certificate(s) in accordance with the
Exchange Materials, at which time the EBI Record Holder will be entitled to
receive all previously withheld dividends and distributions, without interest.
After the Effective Time of the Merger, there will be no further
transfers on EBI's stock transfer books of shares of EBI Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger. If
certificates representing shares of EBI Common Stock should be presented for
transfer after the Effective Time of the Merger, they will be returned to the
presenter together with a form of letter of transmittal and exchange
instructions.
Neither UPC, the Exchange Agent, EBI nor any other person will be
liable to any former holder of EBI Common Stock for any amount properly
delivered to a public official pursuant to applicable unclaimed property,
escheat or similar laws.
If a certificate formerly representing EBI Common Stock has been lost,
stolen or destroyed, the Exchange Agent will deliver the consideration properly
payable in respect to such certificate in accordance with the Reorganization
Agreement upon receipt of appropriate evidence as to such loss, theft or
destruction; appropriate evidence as to ownership of such certificate by the
claimant; and a lost instrument bond in form satisfactory to UPC and the
Exchange Agent as required by the Exchange Materials.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of UPC and EBI to effect the Merger are
subject to the satisfaction of the following conditions prior to the Closing
Date: (i) approval of the Reorganization Agreement along with the Plan of
Merger annexed thereto as Exhibit A and the transactions contemplated thereby
by the affirmative votes of the holders of two-thirds (2/3) of the EBI Common
Stock outstanding on the Record Date; (ii) approval of the Reorganization
Agreement and the transactions contemplated thereby by the Federal Reserve and
the Arkansas Department and the expiration of any statutory waiting periods;
(iii) receipt of all other regulatory and contractual consents necessary to
consummate the transactions contemplated by the Reorganization Agreement; (iv)
the satisfaction of all other requirements prescribed by law as conditions
precedent to the consummation of the transactions contemplated by the
Reorganization Agreement; (v) none of UPC, NABS, EBI or First Southern shall be
subject to any order, decree or injunction of a court or agency which presents
a substantial risk of the restraint or prohibition of the consummation of the
Merger or the obtaining of material damages or other relief in connection
therewith; (vi) the Registration Statement of which this Prospectus forms a
part shall have become effective, no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission; and (vii)
receipt of a legal opinion of counsel to UPC that the Merger will constitute a
tax-free reorganization under one or more of the provisions of Section 368 of
the Internal Revenue Code and that the EBI Record Holders will not recognize
any gain or loss in the Merger upon the exchange of their EBI Common Stock for
shares of UPC Common Stock.
The obligations of UPC and NABS to effect the Merger are further
subject to the satisfaction, or waiver by UPC, of, among others, the following
conditions: (i) UPC shall have received a legal opinion, dated the date of
closing, from counsel to EBI as to the good standing of EBI and First Southern,
the enforceability and due authorization of the Reorganization Agreement and
the receipt of all required approvals (subject to limitations as permitted in
the Reorganization Agreement); (ii) each of the representations, warranties and
covenants of EBI and First Southern set forth in the Reorganization Agreement
shall, in all material respects, be true on, or complied with by, the Closing
Date as if made on such date (except to the extent they relate by their terms
to an earlier date) and UPC shall have received a certificate signed by certain
officers of EBI and First Southern to such effect; (iii) there
22
<PAGE> 32
shall have been no damage or destruction to, or taking of any property of EBI
or First Southern or any material adverse change in the business, financial
condition, results of operations or prospects of EBI or First Southern; (iv)
EBI and First Southern shall not have committed to effect any form of business
combination with, or asset sale to any other person or entity; adopted any
"poison pill", shareholders' rights provision or "golden parachute"; or taken
any other action the effect of which would be to materially diminish the value
of EBI or First Southern to UPC; and (v) at the time of Closing certain
financial covenants shall have been met including covenants that the total
assets of First Southern be equal to or greater than $38.5 million, the
tangible equity capital of each of First Southern and EBI, be equal to or
greater than $6.4 million, that neither EBI nor First Southern shall have
issued any additional equity or debt securities or rights to purchase such
securities, that there have been no extraordinary sales of assets, investment
portfolio restructuring or dividend declarations by either of EBI or First
Southern and that the Merger can be accounted for as a pooling of interests;
(vi) that each member of the EBI Board shall have entered into UPC's standard
form non- compete agreement with UPC or NABS; (vii) that UPC shall have
received opinions from the regularly retained independent accountants of UPC
and EBI that 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 that such
accountants are aware of no reason why the Merger may not be accounted for as a
pooling of interests; and (viii) receipt of letters from all affiliates of EBI
(as such term is defined in the Reorganization Agreement) committing not to
pledge, sell or assign the UPC Common Stock that they receive in the Merger
until such time as UPC has publicly released certain financial information for
at least a thirty day period following the Effective Date of the Merger.
The obligations of EBI to effect the Merger are further subject to the
satisfaction, or waiver by EBI, of, among others, the following conditions: (i)
EBI shall have received a legal opinion, dated the date of closing, from
counsel to UPC as to the good standing of UPC and NABS, the enforceability and
due authorization of the Reorganization Agreement, the validity of the UPC
Common Stock, the receipt of required approvals and the absence of conflict
with UPC's charter, bylaws and material contracts (subject to limitations as
permitted in the Reorganization Agreement); (ii) each of the representations,
warranties and covenants of UPC set forth in the Reorganization Agreement
shall, in all material respects, be true on, or complied with by, the Closing
Date as if made on such date (except to the extent they relate by their terms
to an earlier date) and EBI shall have received a certificate signed by certain
officers of UPC to that effect; (iii) EBI shall have received from UPC
certificates from certain UPC executive officers stating that the consummation
of the transaction has been duly authorized and that the persons executing and
delivering documents on behalf of UPC are duly appointed and that their
signatures are genuine; and (iv) EBI shall have received from the Exchange
Agent a certificate evidencing receipt of the certificates representing the UPC
Common Stock and cash constituting the Consideration payable in the Merger.
No assurance can be provided as to whether all of the conditions
precedent to the Merger will be satisfied or waived by the party lawfully
permitted to do so.
REGULATORY APPROVALS
The Merger is subject to prior approval by (i) the Arkansas Department
under Section 23-32-1804 of the Regional Reciprocal Banking Act of 1988, of the
Arkansas Code; and (ii) the Federal Reserve under Section 3 of the Bank Holding
Company Act of 1956, as amended (the "BHCA"), which requires that the Federal
Reserve take into consideration, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. Applications for such
approvals have been filed with the Federal Reserve and the Arkansas Department.
The BHCA prohibits the Federal Reserve from approving the Merger if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any part of
the United States, or if its effect in any section of the country may be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner be a restraint of trade, unless the Federal Reserve
finds that the anticompetitive effects of the Merger are clearly outweighed by
the public interest and the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. The Federal Reserve has
the authority to deny an application if it concludes that the combined
organization would have an inadequate capital position or if the acquiring
organization does not meet the requirements of the Community Reinvestment Act
of 1977.
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<PAGE> 33
Under the BHCA, the Merger may not be consummated until the 30th day
following the date of Federal Reserve approval, during which time the United
States Department of Justice is empowered to challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness
of the Federal Reserve's approval unless a court specifically orders otherwise.
There can be no assurance that the Department of Justice will not challenge the
Merger, or if such challenge is made, as to the result thereof.
The Merger may not lawfully proceed in the absence of the requisite
regulatory approvals. Applications for approval of the Merger are still
pending with the Federal Reserve and the Arkansas Department and there can be
no assurance as to when, if or subject to what conditions, such approvals will
be granted. See "The Merger--Conditions to Consummation of the Merger" and "--
Waiver and Amendment; Termination."
CONDUCT OF BUSINESS PENDING THE MERGER
The Reorganization Agreement contains certain restrictions upon the
conduct of EBI's and First Southern's business pending consummation of the
Merger. In particular, the Reorganization Agreement provides, in part, that,
except as otherwise provided in the Reorganization Agreement and/or without the
written consent of UPC, EBI and First Southern, respectively, may not, among
other things, (i) amend its charter or bylaws; (ii) permit any lien to exist in
respect to any share of stock held by EBI or its subsidiaries; (iii) repurchase
any of its capital stock, split or otherwise subdivide its capital stock,
recapitalize in any way or declare a stock dividend in respect to the EBI
Common Stock; (iv) issue or sell any EBI Common Stock or sell or otherwise
dispose of a substantial part of EBI's or First Southern's assets or earnings
power; (v) dispose of, discontinue or acquire any material assets or businesses
other than in the ordinary course of business; (vi) incur any additional debt
in excess of $50,000 except in the ordinary course of business; (vii) increase
compensation, pay bonuses or enter into severance arrangements except in
accordance with past practices; (viii) amend any existing employment contract
with any person having a salary in excess of $30,000 per year or enter into any
new employment contract providing for an annual salary exceeding $30,000 per
year unless EBI or its subsidiaries may terminate same at will without
liability; (ix) adopt any new benefit plan; (x) enter into any new service
contracts, purchase or sale agreements or lease agreements that are material to
it; (xi) make any capital expenditures except in the ordinary course of
business; (xii) extend credit (or commit to extend credit) to any officer,
director or holder of 2% or more of EBI Common Stock if such extension of
credit would exceed 2% of the capital of EBI or First Southern, or amend the
terms of any such credit; or (xiii) acquire direct or indirect control over any
person or entity except in the ordinary course of business or in connection
with internal reorganizations and acquisitions in EBI's or First Southern's
fiduciary capacity. Moreover, EBI and First Southern, respectively, shall,
among other things, operate in the usual, regular and ordinary course, preserve
its organization and assets and maintain its rights and franchises, use its
best efforts to retain its customer base and assist UPC in procuring all
applicable regulatory approvals.
PAYMENT OF DIVIDENDS
EBI is permitted under the Reorganization Agreement to declare and
pay, out of ordinary earnings, a quarterly cash dividend with respect to the
EBI Common Stock of up to $.50 per share of EBI Common Stock per calendar
quarter. Notwithstanding the foregoing, the Reorganization Agreement prohibits
EBI from paying a dividend if such payment would disqualify the Merger from
being accounted for by UPC under the pooling of interests method of accounting.
See "Description of UPC Common and Preferred Stock -- UPC Common Stock --
Dividends."
WAIVER AND AMENDMENT; TERMINATION
Prior to the Effective Date of the Merger, any condition of the
Reorganization Agreement may (to the extent allowed by law) be waived by the
party benefitted by the provision or may be amended or modified (including the
structure of the transaction) by an agreement in writing approved by the Boards
of Directors of UPC and EBI.
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<PAGE> 34
The Reorganization Agreement may be terminated at any time prior to
the Effective Date of the Merger, either before or after approval by the EBI
shareholders, as follows: (i) by the mutual consent of the parties; (ii) by UPC
or NABS if EBI or First Southern, respectively, should violate any affirmative
or negative covenant in respect to the operation of its business; (iii) by UPC,
NABS or EBI if closing shall not have occurred by September 30, 1994, unless
the failure is due to the failure of the party seeking to terminate; (iv) by
UPC, NABS or EBI if any governmental or regulatory approval is denied and not
successfully appealed within certain time limits; (v) by either party if the
other party's conditions have not been satisfied or waived as of the Closing
Date or if the other party has committed a material breach that is not cured
within 30 days after the breaching party receives notice of such breach; (vi)
by UPC or NABS if there has been a material adverse change in the business,
properties, liabilities, prospects or net worth of EBI or First Southern or if
EBI or First Southern should enter into a formal capital plan in cooperation
with applicable banking regulators; (vii) by UPC or NABS should EBI or First
Southern enter into any business combination or any letter of intent or
agreement in respect thereof with any other person; or (viii) by UPC in the
event that the holders of seven percent (7%) or more of the EBI Common Stock
shall perfect dissenters' rights.
In the event of the valid termination of the Reorganization Agreement
by either UPC or EBI, the Reorganization Agreement shall become void, and there
will be no liability on the part of either party or their officers or directors
except for liability for breach of the Reorganization Agreement or for any
misstatement or misrepresentation made prior to such termination.
MANAGEMENT AFTER THE MERGER
The Reorganization Agreement and the Plan of Merger provide that after the
Effective Time of the Merger, the surviving corporation will be managed by a
board of directors consisting of the present members of NABS Board of Directors
(the "NABS Board"), all of whom have served on the NABS Board for one or more
terms and are expected to continue to be qualified to serve as officers and/or
directors of the surviving corporation. All officers and directors serve one
(1) year terms but may be re-elected or reappointed, as the case may be. Set
forth below are those persons who are executive officers of NABS and members of
NABS's Board of Directors, their ages and principal occupations for the last
five years.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
G. L. Lieblong 49 Chairman of NABS; President
of NABS
Jackson W. Moore 45 Director of NABS; President and Director
of UPC
J. F. Springfield 64 Director of NABS; Secretary and
General Counsel of UPC
</TABLE>
Mr. Lieblong has been Chairman and President of NABS since 1990;
Chairman and Chief Executive Officer of Mercantile Bank, Jonesboro, Arkansas
since 1990; and President of Mercantile Bank since 1991. Prior to 1990, Mr.
Lieblong was President and Chief Executive Officer of First National Bank of
Paragould, Arkansas, Vice Chairman of Corning Bank, Corning, Arkansas and
President and Chief Executive Officer of their holding company, First Paragould
Bankshares, Inc.
Mr. Moore has been a director of NABS since 1990; a Director of UPC
since 1986; President of UPC since 1989; and a Partner of Wildman, Harrold,
Allen, Dixon & McDonnell, a law firm, prior to 1989.
Mr. Springfield has been a director of NABS since 1990, and has been
Secretary and General Counsel of UPC since 1985.
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<PAGE> 35
NABS EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Chairman of the
Board and Chief Executive Officers of NABS for the period indicated:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------- ---------------- -------
Restricted
NAME AND PRINCIPLE Other Annual Stock Options/ LTIP All Other
Position Year Salary(1) Bonus Compensation(2) Awards SARs Payouts Compensation(3)
- ------------------- ---- --------- ----- --------------- ------ ------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G.L. Lieblong 1993 $ 172,750 $ 21,320 $9,578 1,500 $ 36,100 -- $1,634
President and 1992 $ 163,770 $ 37,500 $9,527 -- $ 31,500 -- $1,711
Chairman of 1991 $ 154,500 $ 199 $7,013 -- -- -- $ 585
the Board
</TABLE>
_________________________________________
(1) NABS has no paid employees. Mr. Lieblong's salary is paid by Mercantile
Bank, Jonesboro, Arkansas, a wholly-owned subsidiary of NABS.
(2) Includes UPC's ESOP and 401(K) plan contributions.
(3) Mr. Lieblong receives other forms of compensation that may be deemed as
direct or indirect compensation, including special pay and miscellaneous
pay.
Except for G.L. Lieblong, none of NABS' subsidiaries' directors or
executive officers received in excess of $100,000 of aggregate direct
remuneration in 1993 from NABS or NABS' subsidiaries. NABS pays no direct or
indirect remuneration to its directors or executive officers. The aggregate
direct remuneration paid by NABS' wholly-owned subsidiary, Mercantile Bank,
Jonesboro, Arkansas, to all directors and executive officers as a group (4
persons) in 1993 was $217,701, which includes the amount paid by Mercantile
Bank, Jonesboro to Mr. Lieblong.
Messrs. Jackson W. Moore and J.F. Springfield receive no direct or indirect
compensation from NABS or NABS' subsidiaries for their services as directors of
NABS. Mr. Moore receives compensation from UPC for his services as executive
officer and director of UPC. Mr. Springfield receives compensation from UPC
for his services as an executive officer of UPC.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain of the directors and officers of EBI also serve on the First
Southern Board. Those individuals own approximately 63.93% of the shares of
EBI Common Stock issued and outstanding and will receive in the Merger the
consideration described above.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS ABBREVIATED IN
NATURE AND IS INCLUDED FOR GENERAL INFORMATION ONLY. EBI SHAREHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISERS AS TO THE SPECIFIC TAX CONSEQUENCES TO
THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL, STATE
AND LOCAL AND OTHER TAX LAWS.
General. It is intended that for federal income tax purposes the Merger
will be treated as a reorganization within the meaning of Section 368(a) of the
Code, and that, accordingly, (i) no gain or loss will be recognized by either
UPC or EBI as a result of the Merger, (ii) no gain or loss will be recognized
by the EBI Shareholders upon receipt of UPC Common Stock in the Merger in
exchange for their EBI Common Stock (except as discussed below with respect to
cash received in lieu of the issuance of fractional shares of UPC Common
Stock); (iii) the tax basis of UPC Common Stock to be received by the EBI
shareholders in connection with the Merger will be the same as
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<PAGE> 36
the EBI Record Holder's basis of the EBI Common Stock surrendered in exchange
therefor, increased by the amount allocable to a fractional share interest, if
any, for which cash is received; and (iv) the holding period of the UPC Common
Stock to be received by the EBI shareholders in connection with the Merger will
include the holding period of the EBI Common Stock surrendered in exchange
therefor, provided that the EBI Common Stock is held as a capital asset at the
Effective Time of the Merger.
Consequences of Receipt of Cash in Lieu of Fractional Shares. An EBI
shareholder who is entitled to receive cash in lieu of a fractional share of
UPC Common Stock in connection with the Merger will recognize as of the
Effective Date of the Merger gain (or loss) equal to the difference between
such cash amount and the shareholder's basis in the fractional share interest ,
subject to the conditions and limitations of Section 302 of the Code. Any gain
or loss recognized will be capital gain (or loss) if the EBI Common Stock is
held by such shareholder as a capital asset at the Effective Date of the
Merger.
Cash Received by Holders of EBI Common Stock Who Dissent. A shareholder
of EBI who perfects his dissenters' rights under the laws of Arkansas and who
receives a cash payment of the value of his shares of EBI Common Stock will be
treated as having received such payment in redemption of such stock. Such
redemption will be subject to the conditions and limitations of Section 302 of
the Code, including the attribution rules of Section 318. In general, if the
shares of EBI Common Stock are held by the holder as a capital asset at the
Effective Time of the Merger, such holder will recognize capital gain or loss
measured by the difference between the amount of cash received by such holder
and the basis of such shares. Each holder of EBI Common Stock who contemplates
exercising his dissenters' rights should consult his own tax advisor as to the
possibility that any payment to him will be treated as dividend income.
Legal Opinion. UPC and EBI have received from McDonnell Boyd, outside
legal counsel to UPC, an opinion to the above effect, a copy of which is
attached as Exhibit 8 to the Registration Statement of which this Prospectus is
a part. A copy of the opinion may be obtained by request to Gary A. Simanson,
UPC's Assistant Secretary, made as provided under "Incorporation of Certain
Documents by Reference." McDonnell Boyd has rendered legal services to UPC and
its subsidiaries for many years and in that capacity received legal fees
aggregating approximately $1,146,000 in 1993. Certain members of McDonnell
Boyd are UPC shareholders.
ACCOUNTING TREATMENT
The Merger is intended to be treated by UPC and EBI as a "pooling of
interests" for accounting purposes. Accordingly, under generally accepted
accounting principles as described in Accounting Principles Board Opinion No.
16 for business combinations, the assets and liabilities of EBI and UPC will be
carried on the books of UPC immediately subsequent to the Effective Time of the
Merger at the amounts recorded on the respective books of each corporation
immediately prior to the Effective Time of the Merger. Net income of UPC
subsequent to the Merger becoming effective will include the net income of EBI
and UPC for the entire fiscal period in which the Merger occurs, which is
expected by UPC and EBI to be fiscal year 1994. Subsequent to the Merger
becoming effective, the reported income of EBI and UPC will be combined and
restated as income of UPC for all periods, including those periods ended prior
to the Effective Time of the Merger. The unaudited pro forma financial
information contained in this Prospectus has been prepared using the pooling of
interests method of accounting where applicable.
EXPENSES
The Reorganization Agreement provides, in general, that UPC and EBI will
each pay their own expenses in connection with the Reorganization Agreement and
the transactions contemplated thereby, including fees and expenses of their own
accountants and counsel.
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<PAGE> 37
RESALES OF UPC COMMON STOCK
The shares of UPC Common Stock issued pursuant to the Reorganization
Agreement will be freely transferable under the Securities Act of 1933 except
for shares issued to any shareholder who may be deemed to be an "affiliate" of
EBI and therefore an "underwriter" as of the date of the Effective Time of the
Merger with respect to the UPC Common Stock issued in the Merger for purposes
of Rule 145 under the Securities Act. Affiliates may not sell their shares of
UPC Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement (other than on Form S-4) under the Securities
Act covering such shares or in compliance with Rule 145 promulgated under the
Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Persons who may be deemed to be affiliates
of EBI generally include individuals or entities that control, are controlled
by or are under common control with EBI and will include members of the
Management Group in their roles as either executive officers, directors or as
holders of ten percent (10%) of the outstanding Common Stock of EBI. UPC will
place restrictive legends on certificates representing UPC Common Stock issued
to all persons who are deemed "underwriters" under Rule 145. The shares of the
UPC Common Stock to be delivered pursuant to the Merger to any EBI shareholder
deemed an "affiliate" of EBI under the Securities Act are subject to the
additional restriction on resale imposed by provisions in the Reorganization
Agreement requiring all affiliates to retain all shares of UPC Common Stock
received by them in connection with the Merger until such time as UPC shall
have publicly released a statement of UPC's consolidated earnings reflecting
the combined financial results of UPC and EBI for a period of not less than 30
days subsequent to the Effective Date of the Merger. UPC does not expect to
release such a statement prior to November 14, 1994. Shares of UPC Common
Stock delivered to any EBI shareholders deemed affiliates will bear a legend to
that effect. See "Description of UPC Common and Preferred Stock -- UPC Common
Stock -- Dividends."
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
As a bank holding company, UPC is subject to the regulation and
supervision of the Federal Reserve. In addition, as a savings and loan holding
company, UPC is registered with the Office of Thrift Supervision (the "OTS")
and is subject to OTS regulations, supervision and reporting requirements.
UPC's bank subsidiaries that are national banking associations, including UPNB,
are subject to supervision and examination by the Office of the Comptroller of
the Currency (the "Comptroller") and the Federal Deposit Insurance Corporation
(the "FDIC"). State bank subsidiaries of UPC which are members of the Federal
Reserve System are subject to supervision and examination by the Federal
Reserve and the state banking authorities of the states in which they are
located. State bank subsidiaries which are not members of the Federal Reserve
System are subject to supervision and examination by the FDIC and the state
banking authorities of the states in which they are located. UPC's savings bank
subsidiaries are subject to supervision and examination by the OTS. UPC's
banking subsidiaries are subject to various requirements and restrictions,
including requirements to maintain reserves against deposits, restrictions on
the types and amounts of loans that may be granted and the interest that may be
charged thereon, and limitations on the types of investments that may be made
and the types of services that may be offered. Various consumer laws and
regulations also affect the operations of the banks. In addition to the impact
of regulation, the subsidiary banks are affected significantly by the actions
of the Federal Reserve as it attempts to control the money supply and credit
availability in order to influence the economy.
The BHCA generally requires the prior approval of the Federal Reserve
where a bank holding company proposes to acquire direct or indirect ownership
or control of more than 5% of the voting shares of any bank or otherwise to
acquire control of a bank or to merge or consolidate with any other bank
holding company. The BHCA generally prohibits the Federal Reserve from
approving an application by a bank holding company to acquire a bank located in
another state, unless such an acquisition is specifically authorized by statute
of the state in which the bank to be acquired is located. Tennessee has
adopted reciprocal interstate banking legislation permitting Tennessee-based
bank holding companies to acquire banks and bank holding companies in certain
other states and allowing bank
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holding companies located in certain states other than Tennessee, to acquire
banks and bank holding companies in Tennessee.
acquiring voting shares of any company which is not a bank, and from engaging
in any activities other than those of banking or of managing or controlling
banks or furnishing services to, or performing services for its subsidiaries.
An exception to these prohibitions permits a bank holding company to engage in,
or to acquire an interest in a company, such as a thrift institution, which
engages in activities that the Federal Reserve has determined are so closely
related to banking or managing or controlling banks as to be a proper incident
thereto.
CAPITAL ADEQUACY
The Federal Reserve has adopted risk-based capital guidelines for bank
holding companies. The minimum guideline for the ratio of total capital ("Total
capital") to risk-weighted assets (including certain off-balance-sheet
activities such as standby letters of credit) is 8%. At least half of the Total
capital must be composed of "Tier 1 capital" which consists of common
shareholders' equity, minority interests in the equity accounts of consolidated
subsidiaries, non-cumulative perpetual preferred stock and a limited amount of
cumulative perpetual preferred stock, less goodwill ("Tier 1 capital"). The
remainder, which is Tier 2 capital, may consist of subordinated debt (or
certain other qualifying debt issued prior to March 12, 1988), other preferred
stock and a limited amount of loan loss reserves.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 capital to average total assets, less goodwill (the "Leverage
ratio") of 3% for bank holding companies that meet certain specified criteria,
including those having the highest regulatory rating. All other bank holding
companies generally are required to maintain a Leverage ratio of at least 3%
plus an additional cushion of 100 to 200 basis points. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions are expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities. The Federal Reserve has not advised UPC of any specific minimum
Leverage ratio applicable to UPC.
Failure to meet capital requirements can subject an institution to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC and a prohibition on the taking of
brokered deposits. As described below, under the "Prompt Corrective Action"
regulations, substantial additional restrictions can be imposed upon
FDIC-insured institutions that fail to meet applicable capital requirements.
See "-- Prompt Corrective Action."
At December 31, 1993, UPC's Total risk based capital ratio was 18.59%,
Tier 1 capital ratio was 14.85% and Leverage ratio was 7.10%. In addition, each
of UPC's banking subsidiaries satisfied the minimum capital requirements
applicable to it and had the requisite capital levels to qualify as a
"well-capitalized" institution under the prompt corrective action provisions
discussed below.
PROMPT CORRECTIVE ACTION
FDICIA, enacted in December 1991, requires the federal banking regulators
to take prompt corrective action in respect of depository institutions that do
not meet their minimum capital requirements. FDICIA establishes five capital
tiers: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized" and "critically undercapitalized." Under
capital regulations, a bank is defined to be well capitalized if it maintains a
Leverage ratio of at least 5%, a Tier 1 capital ratio of at least 6% and a
Total capital ratio of at least 10% and is not otherwise in a "troubled
condition" as specified by its appropriate federal regulatory agency. A bank is
defined to be adequately capitalized if it meets all of its minimum capital
requirements as described above under "-- Capital
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Adequacy." In addition, a bank will be considered undercapitalized if it fails
to meet any minimum required measure, significantly undercapitalized if it is
significantly below such measure and critically undercapitalized if it fails to
maintain a level of tangible equity equal to not less than 2% of total assets.
A bank may be deemed to be in a capitalization category that is lower than is
indicated by its actual capital position if it receives an unsatisfactory
examination rating.
All institutions, regardless of their capital levels, are restricted from
making any capital distribution or paying any management fees that would cause
the institution to fail to satisfy the minimum levels to be considered
adequately capitalized. An undercapitalized institution is: (i) subject to
increased monitoring by the appropriate federal banking regulator; (ii)
required to submit an acceptable capital restoration plan within 45 days; (iii)
subject to asset growth limits; and (iv) required to obtain prior regulatory
approval for acquisitions, branching and new lines of business. The capital
restoration plan must include a guarantee by the institution's holding company
that the institution will comply with the plan until it has been adequately
capitalized on average for four consecutive quarters. Pursuant to the
guarantee, the institution's holding company would be liable up to the lesser
of 5% of the institution's total assets or the amount necessary to bring the
institution into capital compliance as of the date it failed to comply with its
capital restoration plan. If the controlling bank holding company should fail
to fulfill its obligations under the guarantee and files (or should have filed
against it) a petition under the federal Bankruptcy Code, the appropriate
federal banking regulator could have a claim as a general creditor of the bank
holding company, and, if the guarantee were deemed to be a commitment to
maintain capital under the federal Bankruptcy Code, the claim would be entitled
to a priority in such bankruptcy proceeding over third-party creditors of the
bank holding company.
The regulatory agencies have discretionary authority to reclassify well
capitalized institutions as adequately capitalized or to impose on adequately
capitalized institutions requirements or actions specified for undercapitalized
institutions if the agency determines after notice and an opportunity for
hearing that the institution is in an unsafe or unsound condition or is
engaging in an unsafe or unsound practice, which can consist of the receipt of
an unsatisfactory examination rating if the deficiencies cited are not
corrected. A significantly undercapitalized institution, as well as any
undercapitalized institution that did not submit an acceptable capital
restoration plan, may be subject to regulatory demands for recapitalization,
broader application of restrictions on transactions with affiliates,
limitations on interest rates paid on deposits, asset growth and other
activities, possible replacement of directors and officers and restrictions on
capital distributions by any bank holding company controlling the institution.
Any company controlling the institution could also be required to divest the
institution or the institution could be required to divest subsidiaries. The
senior executive officers of a significantly undercapitalized institution may
not receive bonuses or increases in compensation without prior approval and the
institution is prohibited from making payments of principal or interest on its
subordinated debt. If an institution becomes critically undercapitalized, the
institution will be subject to conservatorship or receivership within 90 days
unless periodic determinations are made that forbearance from such action would
better protect the deposit insurance fund. Unless appropriate findings and
certifications are made by the appropriate federal bank regulatory agencies, a
critically undercapitalized institution must be placed in receivership if it
remains critically undercapitalized on average during the calendar quarter
beginning 270 days after the date it became critically undercapitalized.
DIVIDEND RESTRICTIONS
UPC is a legal entity separate and distinct from UPNB, the Community
Banks and its nonbank subsidiaries. UPC's revenues (on a parent company only
basis) result, in significant part, from dividends paid to UPC by its
subsidiaries. The right of UPC, and consequently the right of creditors and
stockholders of UPC, to participate in any distribution of the assets or
earnings of any subsidiary through the payment of such dividends or otherwise
is necessarily subject to the prior claims of creditors of the subsidiary
(including depositors, in the case of banking subsidiaries), except to the
extent that claims of UPC in its capacity as a creditor may be recognized.
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There are statutory and regulatory requirements applicable to the
payment of dividends by UPNB and the Community Banks to UPC. Each national
banking association subsidiary of UPC, including UPNB, is required by federal
law to obtain the prior approval of the Comptroller for the payment of
dividends if the total of all dividends declared by the board of directors of
such bank in any year will exceed the total of (i) such bank's net profits (as
defined and interpreted by regulation) for that year plus (ii) the retained net
profits (as defined and interpreted by regulation) for the preceding two years,
less any required transfers to surplus. In addition, national banks may only
pay dividends to the extent that their retained net profits (including the
portion transferred to surplus) exceed statutory bad debts (as defined by
regulation). The state-chartered Community Banks are subject to similar
restrictions on the payment of dividends by the respective state laws under
which they are organized. Furthermore, as described further under "-- Prompt
Corrective Action," all depository institutions are prohibited from paying any
dividends, making other distributions or paying any management fees if, after
such payment, the depository institution would fail to satisfy its minimum
capital requirements. In accordance with the specified calculations, at January
1, 1994, UPNB and the Community Banks had approximately $74.3 million available
for distribution to UPC without obtaining regulatory approval excluding the
acquisitions effected since December 31, 1993. The actual amount of dividends
paid will be limited to a lesser amount by the management of UPC in order to
maintain compliance with UPC's internal capital guidelines and to maintain
strong capital positions in each of the subsidiary banks of UPC. Future
dividends will depend upon the level of earnings of the subsidiary banks of
UPC.
It is the policy of the Federal Reserve that bank holding companies
should pay dividends only out of current earnings. Federal banking regulators
also have the authority to prohibit banks and bank holding companies from
paying a dividend if they should deem such payment to be an unsafe or unsound
practice. In addition, it is the position of the Federal Reserve Board that as
a bank holding company, UPC is expected to act as a source of financial
strength to each of its subsidiary banks. See "-- Support of Subsidiary Banks."
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, UPC is expected to act as a source of
financial strength to UPNB and the Community Banks and, where required, to
commit resources to support each of such subsidiaries. This support may be
required at times when, absent such Federal Reserve policy, UPC may not be
inclined to provide it. Moreover, if one of its subsidiary banks should become
undercapitalized, under FDICIA, UPC would be required to guarantee the
subsidiary bank's compliance with its capital plan in order for such plan to be
accepted by the federal regulatory authority. See "-- Prompt Corrective
Action."
Under the "cross guarantee" provisions of the Federal Deposit Insurance
Act, any FDIC-insured subsidiary of UPC may be held liable for any loss
incurred by, or reasonably expected to be incurred by the FDIC in connection
with (i) the "default" of any other commonly controlled FDIC-insured subsidiary
or (ii) any assistance provided by the FDIC to any commonly controlled
FDIC-insured subsidiary "in danger of default." "Default" is defined generally
as the appointment of a conservator or receiver and "in danger of default" is
defined generally as the existence of certain conditions indicating that a
default is likely to occur in the absence of regulatory assistance.
Because it is a bank holding company, any capital loans made by UPC to
UPNB or any of the Community Banks are subordinate in right of payment to
deposits and to certain other indebtedness of such subsidiary bank. In the
event of a bank holding company's bankruptcy, any commitment by the bank
holding company to a federal bank regulatory agency to maintain the capital of
a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment over certain other creditors of the bank holding company.
TRANSACTIONS WITH AFFILIATES
Provisions of the Federal Reserve Act impose restrictions on the type,
quantity and quality of transactions between affiliates of an insured bank and
the insured bank (including its bank holding company and its nonbank
subsidiaries). The purpose of these restrictions is to prevent misuse of the
resources of the insured institution by its uninsured affiliates. An exception
to most of these restrictions is provided for transactions between two insured
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banks that are within the same holding company where the holding company owns
80% or more of each of these banks (the "sister bank" exception). The
restrictions also do not apply to transactions between an insured bank and its
wholly owned subsidiaries. These restrictions include limitations on the
purchase and sale of assets and extensions of credit by the insured bank to its
holding company or its nonbank subsidiaries. An insured bank and its
subsidiaries are limited in engaging in "covered transactions" with their
nonbank or nonsavings bank affiliates to the following amounts: (i) in the case
of any one such affiliate, the aggregate amount of covered transactions of the
insured bank and its subsidiaries may not exceed 10% of the capital stock and
surplus of the insured bank, and (ii) in the case of all affiliates, the
aggregate amount of covered transactions of the insured bank and its
subsidiaries may not exceed 20% of the capital stock and surplus of the bank.
"Covered transactions" are defined by statute to include a loan or extension of
credit, as well as a purchase of securities issued by an affiliate, a purchase
of assets (unless otherwise exempted by the Federal Reserve), the acceptance of
securities issued by the affiliate as collateral for a loan and the issuance of
a guarantee, acceptance or letter of credit issued on behalf of an affiliate.
Further, provisions of the Bank Holding Company Act of 1956, as amended,
prohibit a bank holding company and its subsidiaries from engaging in certain
tie-in arrangements in connection with any extension of credit, lease or sale
of property or furnishing of services.
FDIC INSURANCE ASSESSMENTS
The subsidiary banks of UPC are subject to FDIC deposit insurance
assessments. The FDIC has adopted a risk-based premium schedule which has
increased the assessment rates for most FDIC-insured depository institutions.
Under the new schedule, the annual premiums initially range from $.23 to $.31
for every $100 of deposits. Each financial institution is assigned to one of
three capital groups--well capitalized, adequately capitalized or
undercapitalized--and further assigned to one of three subgroups within a
capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and on the basis of other
information relevant to the institution's financial condition and the risk
posed to the applicable insurance fund. The actual assessment rate applicable
to a particular institution will, therefore, depend in part upon the risk
assessment classification so assigned to the institution by the FDIC.
RECENT BANKING LEGISLATION
In addition to the matters noted above, FDICIA made other significant
changes to the federal banking laws. FDICIA institutes certain changes to the
supervisory process, including provisions that mandate certain regulatory
agency actions against undercapitalized institutions within specified time
limits.
Standards for Safety and Soundness. FDICIA requires the federal bank
regulatory agencies to prescribe, by regulation, standards for all insured
depository institutions and depository-institution holding companies relating
to: (i) internal controls, information systems and audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) interest-rate risk exposure; (v)
asset growth; and (vi) compensation, fees and benefits. The compensation
standards must prohibit employment contracts, compensation or benefit
arrangements, stock option plans, fee arrangements or other compensatory
arrangements that would provide excessive compensation, fees or benefits or
could lead to material financial loss, but (subject to certain exceptions) may
not prescribe specific compensation levels or ranges for directors, officers or
employees. In addition, the federal banking regulatory agencies would be
required to prescribe by regulation standards specifying: (i) maximum
classified assets to capital ratios; (ii) minimum earnings sufficient to absorb
losses without impairing capital; and (iii) to the extent feasible, a minimum
ratio of market value to book value for publicly traded shares of depository
institutions and depository institution holding companies.
Brokered Deposits. The FDIC has adopted regulations governing the receipt
of brokered deposits. Under the regulations, a bank may not lawfully accept,
roll over or renew brokered deposits unless (i) it is well capitalized or (ii)
it is adequately capitalized and receives a waiver from the FDIC. A bank that
may not receive brokered deposits also may not offer "pass-through" insurance
on certain employee benefit accounts. Whether or not it has obtained such a
waiver, an adequately capitalized bank may not pay an interest rate on any
deposits in excess of 75 basis
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points over certain prevailing market rates specified by regulation. There are
no such restrictions on a bank that is well capitalized. Because UPNB and all
of the Community Banks had at December 31,1993, the requisite capital levels to
qualify as well capitalized institutions, UPC believes the brokered deposits
regulation will have no material affect on the funding or liquidity of UPNB or
any of the Community Banks.
Consumer Protection Provisions. FDICIA seeks to encourage enforcement of
existing consumer protection laws and enacted new consumer-oriented provisions
including a requirement of notice to regulators and customers of any proposed
branch closing and provisions intended to encourage the offering of "lifeline"
banking accounts and lending in distressed communities. FDICIA also requires
depository institutions to make additional disclosures to depositors with
respect to the rate of interest and the terms of their deposit accounts.
Miscellaneous. FDICIA also made extensive changes in the applicable rules
regarding audit, examinations and accounting. FDICIA generally requires annual,
on-site full-scope examinations by each bank's primary federal regulator.
FDICIA also imposes new responsibilities on management, the independent audit
committee and outside accountants to develop, approve or attest to reports
regarding the effectiveness of internal controls, legal compliance and
off-balance-sheet liabilities and assets.
FDICIA also required the Federal Reserve to prescribe standards which
limit the risks posed by an insured institution's "exposure" to any other
depository institution to limit the risks that the failure of a large
depository institution would pose to an insured depository institution. FDICIA
broadly defines "exposure" to include extensions of credit to the other
institution; purchases of, or investments in, securities issued by the other
institution; securities issued by the other institution and accepted as
collateral for an extension of credit to any person; and all similar
transactions which the Federal Reserve defines by regulation to be exposure.
The Federal Reserve has proposed procedures and "benchmark" standards to limit
an insured depository institution's credit and settlement exposure to each of
its correspondent banks. The final rules were effective on December 19, 1992,
but provide for a two-year transition period.
DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide
depositor preference rule in the event of a bank failure. Under this
arrangement, all deposits and certain other claims against a bank, including
the claim of the FDIC as subrogee of insured depositors, would receive payment
in full before any general creditor of the bank would be entitled to any
payment in the event of an insolvency or liquidation of the bank.
DESCRIPTION OF UPC COMMON AND PREFERRED STOCK
UPC's Charter of Incorporation (the "Charter") currently authorizes the
issuance of 50,000,000 shares of common stock, par value $5.00 per share, and
10,000,000 shares of preferred stock having no par value (the "UPC Preferred
Stock"). As of April 30, 1994, 21,767,202 shares of UPC Common Stock were
issued and outstanding, and approximately 680,000 shares were subject to
acquisition through the exercise of options granted pursuant to UPC's 1992 and
1983 Stock Option Plans and other employee, officer and director benefit plans;
approximately 1,300,000 shares were authorized for issuance pursuant to said
plans but not yet subject to option grants or otherwise issued; and
approximately 4,478,000 shares were authorized for issuance and reserved for
conversion of certain shares of UPC Preferred Stock. Additionally, as of April
30, 1994, 4,095,577 shares of UPC Preferred Stock were issued and outstanding,
consisting of 44,000 shares of UPC's $8.00 Nonredeemable, Cumulative,
Convertible Preferred Stock, Series B (the "Series B Preferred Stock"); 690,000
shares of UPC's 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred
Stock, Series C (the "Series C Preferred Stock"); 253,655 shares of UPC's 9.5%
Redeemable, Cumulative Convertible Preferred Stock, Series D (the "Series D
Preferred Stock"); and 3,107,922 shares of UPC's 8% Cumulative, Convertible
Preferred Stock, Series E (the "Series E Preferred Stock"). As of April 30,
1994, none of UPC's 250,000 authorized shares of Series A Preferred Stock were
issued and outstanding. THE CAPITAL STOCK OF UPC DOES NOT REPRESENT OR
CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT
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INSURED BY THE FDIC, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE
FUND OR ANY GOVERNMENTAL AGENCY.
UPC COMMON STOCK
General. Shares of UPC Common Stock may be issued at such time or times
and for such consideration (not less than the par value thereof) as the UPC
Board of Directors may deem advisable, subject to such limitations as may be
set forth in the laws of the State of Tennessee or UPC's charter or bylaws.
UPNB is the Registrar, Transfer Agent and Dividend Disbursing Agent for shares
of UPC Common Stock.
Dividends. Subject to the preferential dividend rights, if any,
applicable to shares of the UPC Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for purchase,
retirement or sinking funds for UPC Preferred Stock, the holders of UPC Common
Stock are entitled to receive, to the extent permitted by law, such dividends
as may be declared from time to time by the UPC Board of Directors.
UPC has the right to, and may from time to time enter into borrowing
arrangements or issue other debt instruments, the provisions of which may
contain restrictions on payment of dividends and other distributions on UPC
Common Stock and UPC Preferred Stock. As of the date of this Prospectus, no
such restrictions under any such borrowing arrangements or outstanding debt
instruments are in effect.
Liquidation Rights. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of UPC, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of the UPC Preferred Stock, holders of UPC Common Stock will be
entitled to receive all of the remaining assets of UPC of whatever kind
available for distribution to shareholders ratably in proportion to the number
of shares of UPC Common Stock held. The UPC Board of Directors may distribute
in kind to the holders of UPC Common Stock such remaining assets of UPC or may
sell, transfer or otherwise dispose of all or any part of such remaining assets
to any other person or entity and receive payment therefor in cash, stock or
obligations of such other person or entity, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of UPC Common Stock. Neither the merger or consolidation of UPC into or with
any other corporation, nor the merger of any other corporation into UPC, nor
any purchase or redemption of shares of stock of UPC of any class, shall be
deemed to be a dissolution, liquidation or winding-up of UPC for purposes of
this paragraph.
Because UPC is a holding company, its right and the rights of its
creditors and shareholders, including the holders of UPC Common Stock, to
participate in the distribution of assets of a subsidiary on its liquidation or
recapitalization may be subject to prior claims of such subsidiary's creditors
except to the extent that UPC itself may be a creditor having recognized claims
against such subsidiary.
PREFERRED STOCK OF UPC
Series A Preferred Stock. UPC's Charter provides for the issuance of up
to 250,000 shares (subject to adjustment by action of the UPC Board) of Series
A Preferred Stock under certain circumstances involving a potential change in
control of UPC. None of such shares are outstanding and management is aware of
no facts suggesting that issuance of such shares may be imminent. The Series A
Preferred Stock is described in more detail in UPC's Current Report on Form 8-K
dated January 19, 1989, incorporated by reference herein.
Series B Preferred Stock. In November 1989, UPC issued to two holders,
in a private offering incidental to an acquisition, 44,000 shares of its Series
B Preferred Stock all of which are outstanding as of the date hereof. Such
shares bear a dividend rate of $8.00 per share per annum; dividends are
cumulative. After November 30, 1994 (and in limited circumstances prior
thereto), each share of Series B Preferred Stock is convertible at the option
of the holder into 7.722 shares of UPC Common Stock, with the maximum number of
shares of UPC Common Stock into which such shares may be converted being
339,768. The Series B Preferred Stock is not subject to any sinking fund
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provisions and has no preemptive rights. Such shares provide for a liquidation
preference of $100.00 per share plus unpaid dividends accrued thereon and are
not subject to redemption by UPC. Holders of Series B Preferred Stock have no
voting rights except as required by law and certain other limited
circumstances.
Series C Preferred Stock. In August 1991, UPC issued in a public
offering 690,000 shares of its Series C Preferred Stock all of which are
outstanding as of the date hereof. Such shares have a stated value of $25.00
per share. Dividends are payable at the rates of approximately $.65 per
quarter, increasing to $.68 on November 1, 1994, to $.71 on November 1, 1995
and to $.74 on November 1, 1996; dividends are cumulative. The Series C
Preferred Stock is not convertible, is not subject to any sinking fund
provisions and has no preemptive rights. Such shares provide for a liquidation
preference of $25.00 per share plus unpaid dividends accrued thereon and, with
the prior approval of the Federal Reserve, are subject to redemption by UPC at
$25.00 per share at any time on or after October 31, 1994. Holders of Series C
Preferred Stock have no voting rights except as required by law and in certain
other limited circumstances.
Series D Preferred Stock. In connection with the July, 1992 acquisition
of Southeastern Bankshares, Inc., UPC issued in a private offering 253,655
shares of Series D Preferred Stock. Such shares have a stated value of $20.50
per share on which dividends accrue at a rate of 9.5% per annum; dividends are
cumulative. At any time prior to redemption, each share of the Series D
Preferred Stock is convertible at the option of the holder into one share of
UPC Common Stock. The Series D Preferred Stock is not subject to any sinking
fund provisions and has no preemptive rights. Such shares have a liquidation
preference of $20.50 per share plus unpaid dividends accrued thereon and, at
UPC's option, with the prior approval of the Federal Reserve, are subject to
redemption by UPC at any time and from time to time on or after July 1, 1995.
Holders of Series D Preferred Stock have no voting rights except as required by
law and in certain other limited circumstances.
Series E Preferred Stock. In February, 1992, UPC issued in a public
offering 2,200,000 shares of Series E Preferred Stock, all of which (except for
600 previously converted shares) are outstanding as of the date hereof. In the
first two quarters of 1993, UPC issued 908,522 shares of Series E Preferred
Stock in connection with UPC's acquisition of the remaining equity interest in
Bank of East Tennessee and UPC's acquisition of Erin Bank & Trust Company in
Erin, Tennessee, all of which are outstanding as of the date hereof. All
shares of Series E Preferred Stock have a stated value of $25.00 per share.
Dividends are payable at the rate of $.50 per share per quarter and are
cumulative. The Series E Preferred Stock is convertible at the rate of 1.25
shares of UPC Common Stock for each share of Series E Preferred Stock. The
Series E Preferred Stock is not subject to any sinking fund provisions and has
no preemptive rights. Such shares have a liquidation preference of $25 per
share plus unpaid dividends accrued thereon and, at UPC's option and with the
prior approval of the Federal Reserve, are subject to redemption by UPC at any
time or from time to time after March 31, 1997. Holders of Series E Preferred
Stock have no voting rights except as required by law and in certain other
limited circumstances.
CERTAIN PROVISIONS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT
Certain provisions of UPC's Charter and Bylaws, and certain provisions of
Tennessee law, may have an anti-takeover effect in that they could prevent,
discourage or delay a change in control of UPC. The following summary briefly
describes certain of those provisions. The summary is not intended to be
complete and is qualified in its entirety by reference to UPC's Charter and
Bylaws and to the Tennessee Code.
Charter and Bylaw Provisions. Pursuant to UPC's Charter, the directors
of UPC are elected for three-year terms of office, and approximately one-third
of the members of the UPC Board are up for election each year. The Charter
also restricts the removal of directors by the shareholders.
The Charter requires the affirmative votes of the holders of 66 2/3% of
the outstanding stock for approval of a merger, consolidation or a sale or
lease of all or substantially all of the assets of UPC if the other party to
the transaction is a beneficial owner of 10% or more of the outstanding shares
of UPC. The Charter also requires the
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affirmative votes of the holders of 66 2/3% of the outstanding stock to amend
the Bylaws of UPC and the provisions of the Charter applicable to UPC's capital
stock; to change the number, election and classification of directors; to give
approval of certain transactions as described above; and to amend certain
provisions of the Charter.
Share Purchase Rights Plan. In 1989, the UPC Board adopted a Share
Purchase Rights Plan and distributed a dividend of one Preferred Share Unit
Purchase Right ("Right") for each outstanding share of UPC Common Stock.
Moreover, one Right shall be, automatically and without further action by UPC,
distributed in respect to each share of UPC Common Stock issued thereafter.
The Rights are generally designed to deter coercive takeover tactics and to
encourage all persons interested in potentially acquiring control of UPC to
treat each shareholder on a fair and equal basis. Each Right trades in tandem
with the share of UPC Common Stock to which it relates until the occurrence of
certain events indicating a potential change in control of UPC. Upon the
occurrence of such an event, the Rights would separate from UPC Common Stock
and each holder of a Right (other than the potential acquirer) would be
entitled to purchase certain equity securities at prices below their market
value. UPC has authorized 250,000 shares of Series A Preferred Stock for
issuance under the Share Purchase Rights Plan, but no shares have been issued
as of the date of this Prospectus. Until a Right is exercised, the holder
thereof, as such, will have no rights as a shareholder of UPC, including the
right to vote or to receive dividends.
Provisions of the Tennessee Code. As a Tennessee corporation, UPC is or
could be subject to various legislative acts set forth in Chapter 35 of Title
48 of the Tennessee Code, which imposes certain restrictions on business
combinations, including, but not limited to, combinations with interested
shareholders similar to those described above.
The Tennessee Business Combination Act (the "Tennessee BCA") generally
prohibits a "business combination" (generally defined to include mergers, share
exchanges, sales and leases of assets, issuances of securities, and similar
transactions) by UPC or a subsidiary with an "Interested shareholder"
(generally defined as any person or entity which beneficially owns 10% or more
of the voting power of any class or series of UPC's stock then outstanding)
within five years after the person or entity becomes an interested shareholder
unless the business combination or the transaction pursuant to which the
interested shareholder became such was approved by the UPC Board of Directors
before the interested shareholder became such, and the business combination
satisfies any other applicable requirements imposed by law or by UPC's Charter
or Bylaws. The Tennessee BCA also severely limits the extent to which UPC or
any of its officers or directors could be held liable for resisting any
business combination.
The Tennessee Control Share Acquisition Act (the "Tennessee CSAA")
restricts the voting powers of shares acquired by a party once a specific level
of control is acquired, unless certain conditions are met. Specifically, the
Tennessee CSAA provides that "Control Shares" will not have the voting rights
to which they normally would be entitled unless approved by the other
shareholders at an annual or special meeting. "Control shares" are shares
that, in the absence of the Tennessee CSAA, would give the acquirer voting
power within any of the following ranges of all of the voting power of UPC: (i)
one-fifth or more but less than one-third; (ii) one-third or more but less than
a majority; or (iii) a majority or more.
In addition, the Tennessee Investor Protection Act places limitations on
certain takeover offers by persons owning 5% or more of any class of equity
securities of UPC.
The provisions described above might be deemed to make UPC less
attractive as a candidate for acquisition by another company than would
otherwise be the case in the absence of such provisions. For example, if
another company should seek to acquire a controlling interest of less than 66
2/3% of the outstanding shares of UPC Common Stock, the acquirer would not
thereby obtain the ability to replace a majority of the UPC Board until at
least the second annual meeting of shareholders following the acquisition, and
furthermore the acquirer would not obtain the ability immediately to effect a
merger, consolidation or other similar business combination unless the
described conditions were met. As a result, UPC's shareholders may be deprived
of opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices in a takeover context. The
36
<PAGE> 46
provisions described above also may make it more difficult for UPC's
shareholders to replace the UPC Board or management, even if the holders of a
majority of the UPC Common Stock should believe that such replacement is in the
interests of UPC. As a result, such provisions may tend to perpetuate the
incumbent UPC Board and management.
EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS
At the Effective Time of the Merger, the EBI Record Holders (except for
any EBI Record Holder properly exercising his dissenters' rights) automatically
will become holders of the UPC Common Stock, and their rights as holders of the
UPC Common Stock will be determined by the Tennessee Business Corporation Act
and by UPC's charter and Bylaws. The following is a summary of the material
differences in the rights of shareholders of UPC and EBI.
REMOVAL OF DIRECTORS
EBI's bylaws provide that its directors may be removed with cause by vote
of a majority vote of the entire EBI Board. EBI's Directors may be removed
with or without cause by the vote of a majority of the shareholders entitled to
vote at a special meeting.
UPC's bylaws provide that directors may be removed with or without cause
by vote of the holders of 66 2/3% or more of the outstanding shares entitled to
vote generally in the election of directors.
REQUIRED SHAREHOLDER VOTES
EBI's charter and bylaws contain no provisions for more than a majority
vote of all shares entitled to vote on any particular matter that may be
subjected to a shareholder vote, unless the question is one upon which, by
express provision of Arkansas law, a larger or different vote is required, in
which case the express statutory provision shall govern. The Act provides for
the affirmative vote of 66 2/3% of the shares entitled to vote to approve the
merger of an Arkansas corporation into an unaffiliated corporation. The UPC
charter provides that the vote of 66 2/3% or more of the shares entitled to
vote will be required to approve any merger or consolidation of UPC with or
into any other corporation or the sale, lease, exchange or other disposition of
substantially all of UPC's assets, if on the date a binding agreement providing
for such merger, sale or other disposition, the corporation, person or entity
into which UPC would be merged or to which its assets would be sold is the
beneficial owner of 10% or more of the outstanding capital stock of UPC.
ELECTION OF DIRECTORS
EBI's bylaws provide for only one class of directors, and shareholders
are entitled to elect all EBI directors annually. The number of directors may
be fixed from time to time by a majority of the entire board of directors
within the parameters set forth in the Bylaws.
UPC's bylaws provide for a classified board of directors consisting of
three classes with staggered terms of three years each. Therefore, UPC
shareholders are entitled to elect only one-third of UPC's directors annually.
The number of directors shall be not less than seven (7) nor more than
twenty-five (25). To increase the number of directors, 66 2/3% of the
directors then in office must concur.
37
<PAGE> 47
METHOD OF CASTING VOTES
Voting Rights. EBI's Bylaws provide that each common stockholder shall
be entitled to one vote for each share of stock held by him. At all elections
of directors, each stockholders shall be entitled to cast as many votes as
shall equal the number of shares of EBI Common Stock multiplied by the number
of directors to be elected, or to cumulate his votes.
Except as provided by law or the charter of UPC, each holder of UPC
Common Stock shall have one vote on all matters voted upon by shareholders in
respect of each share of UPC Common Stock held. Holders of UPC Common Stock do
not have cumulative voting rights.
Reservation of Shares. Such number of shares of UPC Common Stock as may
from time to time be required for such purpose shall be reserved for issuance
(i) upon conversion of any shares of UPC Preferred Stock or any other
obligation of UPC convertible into shares of UPC Common Stock which is at the
time outstanding, and (ii) upon exercise of any outstanding options or warrants
to purchase shares of UPC Common Stock.
EARLE BANKSHARES, INC.
Earle Bankshares, Inc. was organized as an Arkansas corporation in 1983,
and is headquartered in Earle, Arkansas. EBI is a one-bank holding company
registered with and regulated by the Federal Reserve. First Southern Bank of
Earle, Arkansas was chartered as a state bank under the laws of the State of
Arkansas in 1947 and commenced operations in 1947. First Southern's
main office is located at 801 Commerce Street, Earle, Arkansas 72331. First
Southern had total assets as of December 31, 1993, of $42.5 million and total
deposits of $34.7 million, and is engaged in the general banking business,
including taking deposits from the public and using such deposits, together
with other funds, to make loans and investments. First Southern is a state
bank and a member of the FDIC. The deposits of First Southern are insured by
the FDIC up to the maximum allowed by law.
All of the outstanding shares of common stock of First Southern are owned
by EBI.
As of May 1, 1994, First Southern had approximately 27 full-time
employees and 2 part-time employees operating out of three locations: the
Earle main office, the Crawfordsville branch, and the Marion branch. EBI has
no employees. Management believes that First Southern has a good relationship
with its employees. First Southern provides group health insurance coverage
for its employees.
PROPERTY
First Southern owns, free of any encumbrances, the property on which its
main office and branch offices are located. First Southern also holds from time
to time real estate acquired through foreclosure.
COMPETITION
First Southern competes with numerous other commercial banks and other
financial institutions in Crittenden and contiguous counties in Arkansas and
Tennessee. There are other commercial banks, savings and loan institutions,
credit unions, and other companies offering financial services in Crittenden
and surrounding counties.
38
<PAGE> 48
LEGAL PROCEEDINGS
As of the date of this proxy statement, EBI and First Southern are
parties to various legal proceedings which have arisen in the ordinary course
of business. Management of EBI is of the opinion that neither the financial
position nor the results of operations of EBI will be materially adversely
affected by the ultimate resolution of these legal proceedings.
MARKET PRICE OF EBI COMMON STOCK
The EBI Common Stock has no established trading market. However,
management of EBI is aware of ten transactions for consideration which have
occurred since January 1989 involving a total of 5,578 shares of EBI Common
Stock for prices ranging from $42.50 to $50.00 per share. Management of EBI
believes that these transactions were effected between unrelated parties.
EBI has historically declared and paid cash dividends in the amount of
$2.00 per share per year. A dividend in the amount of $.50 per share was
declared and paid on January 11 and April 12, 1994. For calendar years 1991,
1992, and 1993, EBI declared and paid regular cash dividends of $2.00 per
share.
39
<PAGE> 49
CERTAIN BENEFICIAL HOLDERS OF EBI COMMON STOCK
The following table sets forth certain information with respect to those
known to EBI to be beneficial owners of more than five percent (5%) of the EBI
Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF % OF
BENEFICIAL OWNER SHARES TOTAL
- ------------------- --------- -----
<S> <C> <C>
John T. Morrison(1) 12,660 12.66
1113 Main Street
Earle, AR 72331
Joe M. Morrison(1) 12,660 12.66
P.O. Box 240715
Memphis, TN 38124-0715
W. P. Morrison(1) 6,752 6.75
113 Main Street
Earle, AR 72331
David S. Wallace (1) 5,801 5.80
P.O. Box 182
Crawfordville, AR 72327
W. Price Morrison, Jr.(1) 12,660 12.66
2008 Quail Creek Cove
Memphis, TN 38119
Paul Hood 15,960 15.96
Route 1, Box 109
Earle, AR 72331
</TABLE>
_______________________________
(1) The holder is a director of EBI.
HOLDINGS OF EBI COMMON STOCK BY EBI MANAGEMENT
The following executive officers and directors of EBI and First Southern
held the following amounts and percentages of the outstanding EBI Common Stock
as of May 6, 1994:
<TABLE>
<CAPTION>
NUMBER OF % OF
NAME SHARES TOTAL(1)
---- ----------- -----
<S> <C> <C>
John E. Gregson 4,610 4.61
Chris M. Lehman 4,290 4.29
John T. Morrison 12,660 12.66
James H. Taylor, Jr. 4,501 4.50
Joe M. Morrison 12,660 12.66
W. P. Morrison 6,752 6.75
David S. Wallace 5,801 5.80
W. Price Morrison, Jr. 12,660 12.66
All Executive Officers and Directors as
a Group (8 persons) 63,934 63.93
</TABLE>
_______________________________
(1) Individual percentages may differ from total percentage due to rounding
to the nearest hundredth.
40
<PAGE> 50
EBI MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and tabular data presented below analyze major factors
and trends regarding the financial condition of Earle Bankshares, Inc. ("EBI")
as of December 31, 1993 and 1992 and the results of operations of EBI for each
of the years ended December 31, 1993, 1992, and 1991. This discussion should
be read in conjunction with the consolidated financial statements and the notes
thereto as of and for the three years ended December 31, 1993, presented in
Appendix A of this Prospectus and Proxy Statement.
OVERVIEW
For a summary of selected consolidated financial data as of and for
the years ended December 31, 1989 through 1993, see page 8 of this Prospectus
and Proxy Statement. Since December 31, 1989, total assets have grown from
$33.6 million to $42.5 million at December 31, 1993.
EBI's net income for the year ended December 31, 1993 was $752,000,
representing the highest level of earnings for the five year period ended
December 31, 1993, while net income of $426,000 for the year ended December 31,
1990 represents the lowest earnings for the same five year period.
Management expects growth to continue in both assets and earnings;
however, such growth is dependent upon the economies of the markets served by
EBI and other factors which are discussed below. EBI is headquartered in
Earle, Crittenden County, Arkansas.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
NET INCOME - Net income for 1993 was $752,000 an increase of $170,000 over 1992
net income of $582,000. 1992 net income increased $10,000 from net income of
$572,000 for 1991. Net income per share was $7.58 in 1993, compared to $5.88
in 1992 and $5.78 in 1991. A more detailed analysis of the components of net
income and the changes in such components is included under the appropriate
captions below.
The return on average assets for the year ended December 31, 1993 was
1.89% compared to 1.55% and 1.61% for 1992 and 1991, respectively. The return
on average equity for 1993 was 11.93% compared with 9.81% and 10.36% for the
years ended December 31, 1992 and 1991, respectively. EBI declared and paid
dividends on its common stock of $198,000 ($2.00 per share) for each of the
years ended December 31, 1993, 1992 and 1991.
NET INTEREST INCOME - Net interest income, the major component of EBI's income,
is the amount by which interest and fees generated by earning assets exceeds
the total interest cost of funds used to carry them. Table 1 - Average Balance
Sheet and Interest Yields/Rates and Table 2 - Volume and Yield/Rate Analysis
provide an analysis of net interest income for the years ended December 31,
1993, 1992 and 1991.
Net interest income was $2.9 million for the year ended December 31,
1993 compared to $2.1 million and $1.8 million for the years ended December 31,
1992 and 1991, respectively. The growth in net interest income has come from
increased levels of interest-earning assets rather than significant changes in
yields and rates. Additionally, EBI has realized discounts as certain loans
previously purchased from the Resolution Trust Corporation ("RTC") have prepaid
earlier than expected. These discounts have been included in interest income and
totalled $1,082,000, $118,000 and $54,000 for the years ended December 31, 1993,
1992 and 1991, respectively. Management continues to purchase such loans from
the RTC and recognize the discounts into income over the earlier of the life of
the loan or the prepayment date.
41
<PAGE> 51
PROVISION FOR LOAN LOSSES - The allowance for loan losses has been, in the
opinion of management, sufficient to maintain adequate support for the loan
portfolio. The amount of provisions for loan losses is based on past loan
experience, growth, and composition of the loan portfolio, as well as current
conditions. EBI recorded no provisions for loan losses for the years ended
December 31, 1993 and 1992 compared to $70,000 for the year ended December 31,
1991. EBI experienced net recoveries on loans charged-off for the three year
period ended December 31, 1993.
Table 8 - Summary of Loan Loss Experience presents EBI's loan loss
experience for the years ended December 31, 1993 and 1992 while Table 7 -
Nonperforming Assets presents the amount of nonperforming assets as of December
31, 1993 and 1992. The level of nonperforming assets has continued to decrease
over the last three years and management does not expect any significant
increases in the level of nonperforming assets. Future provisions for loan
losses are dependent upon various factors, including the economy, loan growth,
levels of nonperforming assets and loan loss experience. The amounts of
nonperforming assets represent risks in the loan portfolio; however, a major
portion of such loans is collateralized and should not be interpreted as
losses.
NONINTEREST INCOME - Total noninterest income for 1993 was $343,000, a $23,000
increase from the $320,000 reported for 1992. 1992 noninterest income
decreased $30,000 from the $350,000 reported for 1991. The changes from year
to year are not attributable to any significant individual items. Noninterest
income is primarily related to service charges on deposits and other fees for
services as well as investment securities gains.
Management continues to identify new sources of noninterest income;
however, no significant growth or the maintenance of current levels of
noninterest income can be assured.
NONINTEREST EXPENSE - Total noninterest expenses for 1993 were $2.0 million or
$500,000 (33%) more than the $1.5 million reported for 1992. Total noninterest
expenses for 1991 were $1.2 million, resulting in an increase in 1992 of
$300,000 (25%).
Salaries, wages and benefits totalled $970,000 for the year ended
December 31, 1993 compared to $982,000 and $677,000 for the years ended
December 31, 1992 and 1991, respectively.
Occupancy and equipment expense has remained level for the last three
years. Occupancy and equipment expense totalled $190,000 for the year ended
December 31, 1993 compared to $186,000 and $199,000 for the years ended
December 31, 1992 and 1991, respectively. Management does not expect any
significant changes in the amount of such expenses based on planned capital
expenditures.
During 1993, EBI terminated its defined benefit pension plan. (See
Note 8 to the December 31, 1993 consolidated financial statements in Appendix
A.) The termination resulted in a one-time pre-tax charge to earnings of
$439,000.
Other operating expenses increased from 1992 to 1993 by 38% or
$559,000. Other operating expenses include Federal Deposit Insurance
Corporation ("FDIC") insurance premiums on EBI's deposits, advertising,
professional fees, stationery and supplies, etc.
Management continues to monitor the level of noninterest expenses to
identify cost reductions where applicable; however, no significant reductions
are expected.
INCOME TAXES - Income tax expense totaled $472,000, $356,000 and $254,000 for
the years ended December 31, 1993, 1992 and 1991, respectively. These amounts
represent effective tax rates of 38.56%, 37.95% and 30.75% for the years ended
December 31, 1993, 1992 and 1991, respectively. Assuming no changes in the
statutory tax rate, management expects the effective tax rates to remain at the
1992 and 1993 levels in the future.
42
<PAGE> 52
FINANCIAL CONDITION
Total assets have increased at December 31, 1993 to $42.5 million,
compared to $39.3 million at December 31, 1992. The growth in assets has been
rimarily in investment securities funded by a decrease in loans and an increase
in deposits.
LOANS - Total loans, net of unearned income, at December 31, 1993 were $17.9
million, compared to $21.3 million at December 31, 1992. The decrease is
attributable to management's desire to increase the liquidity of the Bank and
to the unexpected prepayment of loans purchased from the RTC in the fourth
quarter of 1993. Such loans totalled $1.9 million at December 31, 1992
compared to $890,000 at December 31, 1993. Management does not expect
significant growth in the loan portfolio in the normal course of business;
however, management may seek to increase the level of loans purchased from the
RTC at discounts to their face value.
Table 5 - Gross Loans by Category presents the composition of the loan
portfolio at December 31, 1993 and 1992. Table 6 - Loan Maturities sets forth
the future maturity of loans as of December 31, 1993.
Table 7 - Nonperforming Assets sets forth information on the
nonperforming loans within the loan portfolio at December 31, 1993 and 1992.
Although the amounts shown represent risks in the loan portfolio, the major
portion of the loans is collateralized and should not be interpreted as losses.
Commercial and real estate loans are placed on nonaccrual status when they
become ninety days or more past due as to principal or interest unless in the
opinion of management, the loan is both well secured and in the process of
collection.
At December 31, 1993, there were no concentrations of loans (loans to
borrowers engaged in similar activities) exceeding 10% of the total loans
outstanding other than agricultural loans which totaled $3.7 million or 21% of
the loan portfolio at December 31, 1993. There were no foreign loans
outstanding at December 31, 1993 or 1992.
ALLOWANCE FOR LOSSES ON LOANS - In determining the amount of the provisions for
loan losses and allowance for loan losses, management considers past loan
charge-offs, the level of past due and nonaccrual loans, the size and mix of
the portfolio, adverse classification at recent regulatory examinations,
general economic conditions in the market area, and most importantly, a review
of individual loans to identify potential credit problems. Management believes
the level of the allowances for loan losses is adequate in relation to the
size, mix and quality of the loan portfolio at December 31, 1993.
Table 9 - Allocation of the Allowance for Loan Losses presents an
allocation of the allowance for loan losses by various loan categories. The
allocation is based on a number of qualitative factors, including management's
review of the reserve. The amounts presented are not necessarily indicative of
the actual amounts which will be charged off for any particular loan category.
INVESTMENT SECURITIES - Investment securities totaled $13.0 million at December
31, 1993, compared to $7.3 million at December 31, 1992. The level of
investment securities in the future will depend on loan demand and management's
ability to attract loans.
As of December 31, 1993, the approximate market value of investment
securities exceeded the book value by $72,000 or 5.53%. Table 3 - Investment
Securities sets forth the composition of investment securities portfolio as of
December 31, 1993 and 1992. Table 4 - Investment Securities Portfolio
Maturities and Yields provides an analysis of the maturities and yields of the
investment portfolio as of December 31, 1993.
There are no investment securities (other than securities of the U.S.
Government and its agencies) which have an aggregate book value as of December
31, 1993 exceeding ten percent (10%) of shareholders' equity as of that date.
43
<PAGE> 53
MONEY MARKET ASSETS - Federal funds sold and interest-bearing deposits at
financial institutions totaled $7.7 million at December 31, 1993, compared to
$6.7 million at December 31, 1992, a $1 million increase. The increase
resulted from the prepayment of the loans purchased from the RTC in the fourth
quarter of 1993, and management had not permanently reinvested these funds at
December 31, 1993.
FORECLOSED ASSETS - Foreclosed assets have remained stable. At December 31,
1993 foreclosed assets totalled $249,000 compared to $263,000 and $277,000 at
December 31, 1992 and 1991, respectively.
DEPOSITS - Table 10 - Average Deposits sets forth the average balances of EBI
deposit accounts for 1993 and 1992. Average rates paid on deposits are
reflected in Table 1 - Average Balance Sheet and Interest Yields/Rates.
Customer deposits totaled $34.7 million as of December 31, 1993, a $1.8
million increase over total deposits of $32.9 million as of December 31, 1992.
Included in time deposits are $3,804,592 of certificates of deposit of
$100,000 or greater, the maturities of which are set forth in Table 11 - Time
Deposit Maturities.
At December 31, 1993, EBI's loan to deposit ratio was 51.6%, compared to
64.9% at December 31, 1992. This decrease is representative of the significant
decrease in loans.
CAPITAL - Total shareholders' equity as of December 31, 1993 was $6.6 million,
compared to $6.0 million at December 31, 1992. The increase for each period is
attributable to net income for the applicable period offset by the payment of
dividends totaling $198,000 in each year.
EBI's equity to assets ratio was 15.50% at December 31, 1993, compared to
15.20% as of December 31, 1992. The ratio of equity to assets has remained
level as the growth in equity has been offset by the growth in assets.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT - EBI views liquidity and asset
liability management as the ability to assure that funds are available to
support bank requirements, that is the ability to allow depositors ready access
to their monies and credit customers available funds to meet their credit
needs. It is also the process by which EBI monitors and attempts to control
the mix and maturities of its assets and liabilities. Management maintains a
federal funds sold balance it believes necessary to meet EBI's daily cash
needs. Management does not foresee any particular matters which might
immediately threaten its ability to remain liquid.
SOURCES AND USES OF FUNDS - EBI has a variety of sources of funds available,
but its primary resource is the taking of deposits from customers, both
individual and business. EBI's deposit acquisition strategy is to rely on a
core deposit base of demand deposits as well as savings and time deposits under
$100,000. Next, EBI utilizes time deposits over $100,000 and public deposits
for additional sources of funds. At December 31, 1993, the percentage of time
deposits over $100,000 to total deposits was 10.96% compared to 11.13% at
December 31, 1992. The acquisition of deposits are from customers, individuals
and businesses, within EBI's market area. Management believes that the rates
offered for deposits are competitive with other financial institutions in EBI's
market area.
EBI's primary use of funds is the making of loans to customers. During
1993, the loan portfolio averaged 52.74% of total earning assets compared to
63.37% in 1992. Table 5 presents the composition of the loan portfolio at
December 31, 1993 and 1992. EBI's loan portfolio is comprised of loans to
individuals and businesses secured by various collateral and in certain
circumstances the loans are extended on an unsecured basis.
A secondary use of funds is the purchasing of debt and equity securities
for investment purposes. During 1993, the investment portfolio averaged 26.43%
of total earning assets compared to 21.27% in 1992. Table 3 presents the
composition of the investment securities portfolio at December 31, 1993 and
1992 with the average yields and maturities of the portfolio detailed in Table
4. The portfolio is comprised of U.S. Treasury obligations,
44
<PAGE> 54
obligations of U.S. Government agencies, obligations of state and local
governments and other securities. While EBI may continue to upgrade or
reposition the portfolio, management has not in the past nor does it intend to
in the future to trade securities for profit or to depend upon securities gains
as a regular source of income. Securities gains and losses have not had a
material impact on the results of operations for the years ended December 31,
1993, 1992 and 1991. At December 31, 1993, the market value of the investment
portfolio exceeded the carrying value by approximately $72,000.
As of January 1, 1994, the Bank adopted Statement of Financial Accounting
Standards No. 115, Accounting for Certain Investments in Debt and Equity
Securities, (SFAS 115), which did not have a material impact on the Bank's
financial position or results of operations. (See Note 1 to the December 31,
1993 consolidated financial statements included in Appendix A.)
For liquidity purposes, EBI has also invested other funds in
interest-bearing deposits at other financial institutions and federal funds
sold. The level of such invested funds varies based on the liquidity needs of
EBI and the timing of other activities of EBI, including lending and deposit
activities.
REGULATORY ASSESSMENTS - EBI is required to pay certain fees to the FDIC and
the Arkansas State Bank Department (the "Department"). FDIC insurance
assessments totaled $72,000, $70,000 and $59,000 for the years ended December
31, 1993, 1992 and 1991, respectively. The current assessment rate is 23 cents
per $100 of deposits. Depending on the level and soundness of the FDIC
insurance fund and the Bank's regulatory ratings, this assessment could
increase in the future. Fees paid to the Department totaled $18,000, $17,000
and $11,000 for the years ended December 31, 1993, 1992 and 1991, respectively.
EFFECTS OF INFLATION - A bank's asset and liability structure is primarily
monetary in nature, that is, fixed in terms of monetary amounts. Consequently,
the impact of inflation on a bank differs significantly from an industrial
company. Factors such as interest rates have a more significant impact on a
bank's performance than does general inflation. Interest rates do not
necessarily move in the same direction, or at the same magnitude, as the price
of other goods and services.
ACCOUNTING PRONOUNCEMENTS - See Note 1 to the December 31, 1993 consolidated
financial statements included in Appendix A-1 for a discussion of the following
accounting pronouncements applicable to EBI and their related impact:
# SFAS 106 - Employers' Accounting for Postretirement Benefits Other
Than Pensions
# SFAS 109 - Accounting for Income Taxes
# SFAS 112 - Employers' Accounting for Postemployment Benefits
# SFAS 114 - Accounting by Creditors for Impairment of a Loan
# SFAS 115 - Accounting for Certain Investments in Debt and Equity
Securities.
45
<PAGE> 55
EARLE BANKSHARES, INC.
TABLE 1
AVERAGE BALANCE SHEET AND INTEREST YIELDS/RATES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------
1993 1992
-------------------------------------- -----------------------------
DAILY DAILY
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ---- ------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets
Loans, net of unearned income(1) $ 19,191 $ 3,073 16.01% $ 21,400 $ 2,439 11.40%
Taxable investment securities 8,520 450 5.28 5,698 389 6.83
Nontaxable investment securities(2) 1,098 67 6.10 1,483 95 6.41
Federal funds sold 6,687 189 2.83 4,175 144 3.45
Deposits at other financial institutions 891 40 4.49 1,012 53 5.24
--------- ------- -------- --------
Total interest earning assets(2) 36,387 3,819 10.50 33,768 3,120 9.24
--------- ------- -------- --------
Noninterest earning assets
Cash and due from banks 2,174 2,087
Premises and equipment 999 1,041
Other assets 702 851
Less: allowance for loan losses (316) (302)
-------- --------
Total assets $ 39,946 $ 37,445
========= ========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1991
---------------------------------------
MONTHLY
AVERAGE YIELD/
BALANCE INTEREST RATE
------- -------- ----
<S> <C> <C> <C>
ASSETS
Interest earning assets
Loans, net of unearned income(1) $ 21,579 $ 2,453 11.37%
Taxable investment securities 4,336 369 8.51
Nontaxable investment securities(2) 1,842 126 6.84
Federal funds sold 3,708 219 5.91
Deposits at other financial institutions 752 65 8.64
----------- --------
Total interest earning assets(2) 32,217 3,232 10.03
----------- --------
Noninterest earning assets
Cash and due from banks 1,907
Premises and equipment 1,149
Other assets 598
Less: allowance for loan losses (244)
-----------
Total assets $ 35,627
===========
</TABLE>
46
<PAGE> 56
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1993 1992
---- ----
DAILY DAILY
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities
Money market accounts $ 5,015 $ 230 4.59% $ 4,114 $ 220 5.35%
Savings deposits 3,884 119 3.06 3,074 103 3.35
Certificates of deposits of $100,000
and over 3,801 124 3.26 4,014 159 3.96
Other time deposits 12,605 342 2.71 12,867 431 3.35
Other interest bearing deposits 2,667 99 3.71 2,538 124 4.89
--------- ------- -------- --------
Total interest-bearing liabilities 27,972 914 3.26 26,607 1,037 3.90
--------- ------- -------- --------
Noninterest-bearing liabilities
Domestic demand deposits 5,450 4,630
Other liabilities 219 273
Shareholders' equity 6,305 5,935
--------- --------
Total liabilities and stockholders'
equity $ 39,946 $ 37,445
========= ========
NET INTEREST INCOME $ 2,905 $ 2,083
======= ========
NET YIELD ON INTEREST EARNING ASSETS 7.98% 6.17%
===== =====
</TABLE>
<TABLE>
<CAPTION>
1991 1991
-------- ----
MONTHLY
AVERAGE YIELD/
BALANCE INTEREST RATE
------- -------- ----
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
Interest-bearing liabilities
Money market accounts $ 3,140 $ 241 7.68%
Savings deposits 2,524 121 4.79
Certificates of deposits of $100,000
and over 4,680 275 5.88
Other time deposits 13,388 687 5.13
Other interest bearing deposits 2,095 147 7.02
---------- ----------
Total interest-bearing liabilities 25,827 1,471 5.70
---------- ----------
Noninterest-bearing liabilities
Domestic demand deposits 4,000
Other liabilities 280
Shareholders' equity 5,520
-----
Total liabilities and stockholders'
equity $ 35,627
==========
NET INTEREST INCOME $ 1,761
==========
NET YIELD ON INTEREST EARNING ASSETS 5.47%
====
</TABLE>
_______________________________
(1) Nonaccruing loans are included in the daily average loan amount
outstanding and income on such loans is recognized as received. Loan
fees for all three years are included in the interest amounts for
loans, but in each case were immaterial in amount. Also included are
discounts on loans purchased which are accreted as yield adjustments
over the life of the loans which totaled $1,082,000, $118,000 and
$54,000, respectively, for the years ended December 31, 1993, 1992
and 1991.
(2) These amounts have not been presented on a tax-equivalent basis.
47
<PAGE> 57
<TABLE>
<CAPTION>
EARLE BANKSHARES, INC.
TABLE 2
VOLUME AND YIELD/RATE ANALYSIS
(DOLLARS IN THOUSANDS)
1993 COMPARED TO 1992 1992 COMPARED TO 1991
-------------------------------- --------------------------------
INCREASE INCREASE
(DECREASE) (DECREASE)
DUE TO(1) DUE TO(1)
--------- ---------
VOLUME RATE NET VOLUME RATE NET
------ ---- --- ------ ---- ---
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans, net of unearned income $ (272) $ 906 $ 634 $ (20) $ 6 $ (14)
Taxable investment securities 163 (102) 61 102 (82) 20
Nontaxable investment securities (23) (5) (28) (22) (9) (31)
Federal funds sold 75 (30) 45 25 (100) (75)
Deposits at other financial institutions (11) (2) (13) 18 (30) (12)
------- -------- -------- -------- -------- --------
Total income from
interest-earning
assets (68) 767 699 103 (215) (112)
Interest paid on:
Money market accounts 44 (35) 9 63 (84) (21)
Savings deposits 25 (9) 16 23 (41) (18)
Certificates of deposits of
$100,000 and over (9) (26) (35) (49) (67) (116)
Other time deposits (9) (80) (89) (28) (228) (256)
Other interest-bearing
liabilities 6 (31) (25) 27 (50) (23)
------- -------- -------- -------- -------- --------
Total expense on
interest-bearing
liabilities 57 (181) (124) 36 (470) (434)
-------- -------- -------- -------- -------- --------
Net interest income $ (11) $ 586 $ 575 $ 139 $ (685) $ (546)
======== ======== ======== ======== ======== ========
</TABLE>
___________________
(1) The change in interest due to both rate and volume has been allocated on a
consistent basis to rate.
48
<PAGE> 58
TABLE 3
INVESTMENT SECURITIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1993 1992
---- ----
<S> <C> <C>
U.S. Treasury securities $ 3,802 $ -
U.S. Government Agency securities 6,305 6,052
Obligations of states and political subdivisions 1,238 1,269
Mortgage-backed securities 1,546 -
Other securities 119 -
----------- ---------
Total investments $ 13,010 $ 7,321
=========== =========
</TABLE>
TABLE 4
INVESTMENT SECURITIES PORTFOLIO MATURITIES AND YIELDS
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
WEIGHTED
BOOK AVERAGE
VALUE YIELD(1)
----- -----
<S> <C> <C>
U. S. Treasury and Government Agency securities:
Within one year $ 1,300 3.67%
One to five years 6,357 4.31
Five to ten years 1,228 5.47
Over ten years 1,223 6.36
---------- -------
Total 10,108 4.14
Obligations of state and political subdivisions (1):
Within one year 320 5.45
One to five years 365 6.32
Five to ten years 80 7.00
Over ten years 473 6.02
---------- -------
Total 1,238 6.04
Mortgage-backed securities 1,545 6.59
Other securities with no stated maturity 119 -
---------- -------
Total investments $ 13,010 5.86%
========== =======
</TABLE>
(1) The average yield is not presented on a tax-equivalent basis.
49
<PAGE> 59
TABLE 5
GROSS LOANS BY CATEGORY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1993 1992
---- ----
<S> <C> <C>
Commercial and industrial $ 6,996 $ 8,582
Real estate:
Secured by single-family residential properties 2,348 2,325
Construction, land development and other
commercial 995 844
Secured by farmland 125 200
Agricultural 3,717 3,371
Installment loans to individuals 2,869 2,627
Other loans 994 3,549
---------- ----------
Total 18,044 21,498
Unearned income (135) (159)
---------- ----------
Loans, net of unearned income $ 17,909 $ 21,339
========== ==========
</TABLE>
TABLE 6
LOAN MATURITIES (1)
AS OF DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
Three months or less $ 5,916
After three months through one year 5,940
After one year through five years 3,772
After five years 2,281
-----------
Total loans (1) $ 17,909
===========
</TABLE>
(1) All loans are fixed rate as of December 31, 1993.
50
<PAGE> 60
TABLE 7
NONPERFORMING ASSETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1993 1992
---- ----
<S> <C> <C>
Nonaccrual loans $ 28 $ 1
Loans past due 90 days or more 180 204
Restructured loans - 25
Other real estate owned and foreclosed assets 249 263
------- ------
Total nonperforming assets $ 457 $ 493
======= ======
</TABLE>
TABLE 8
SUMMARY OF LOAN LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
YEARS ENDED
DECEMBER 31,
------------
1993 1992
---- ----
<S> <C> <C>
Balance, January 1 $ 310 $ 294
Provision for loan losses - -
Loans charged off:
Commercial, agricultural and real estate (2) -
Installment loans to individuals (2) -
---------- ----------
Total charge-offs (4) -
---------- ----------
Recoveries:
Commercial, agricultural and real estate 15 15
Installment - 1
---------- ----------
Total recoveries 15 16
---------- ----------
Net recoveries 11 16
---------- ----------
Balance, December 31 $ 321 $ 310
========== ==========
Loans, net of unearned income:
Year end $ 17,909 $ 21,239
Average during year 19,191 21,400
Allowance for loan losses to year
end loans, net of unearned income 1.79 % 1.45%
</TABLE>
51
<PAGE> 61
TABLE 9
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------
1993 1992
---- ----
AMOUNT % AMOUNT %
------ ----- ------ ----
<S> <C> <C> <C> <C>
Real estate $ 84 26 $ 99 32
Commercial and industrial 112 35 124 40
Agricultural 67 21 47 15
Installment loans to individuals 55 17 37 12
Other 3 1 3 1
-------- ----- -------- ----
$ 321 100 $ 310 100
======== ===== ======== ====
</TABLE>
TABLE 10
AVERAGE DEPOSITS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
------------
1993 1992
---- ----
<S> <C> <C>
Interest bearing:
Demand $ 7,681 $ 6,652
Savings 3,884 3,074
Time 16,407 16,881
Noninterest bearing:
Demand 5,450 4,630
---------- ----------
Total deposits $ 33,422 $ 31,237
========== ==========
</TABLE>
TABLE 11
TIME DEPOSIT MATURITIES
AS OF DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
3 months or less $ 7,513
Over 3 months through 12 months 6,504
Over 12 months through 5 years 42
-----------
Total $ 14,059
===========
</TABLE>
52
<PAGE> 62
VALIDITY OF UPC COMMON STOCK
The validity of the shares of UPC Common Stock offered hereby will be
passed upon by Gary A. Simanson, Assistant Secretary and Associate General
Counsel of UPC. Gary A. Simanson is an officer of UPC and receives
compensation from UPC.
EXPERTS
The consolidated financial statements of Union Planters Corporation
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
of UPC for the year ended December 31, 1993, have been so incorporated in
reliance on the report of Price Waterhouse, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Earle Bankshares, Inc. and
Subsidiary as of and for the year ended December 31, 1993, included in this
Prospectus, have been so included in reliance on the report of Price
Waterhouse, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of Bancfirst Corporation and its
subsidiary, Bankfirst, as of September 30, 1993 and 1992, and for the years
ended September 30, 1993, 1992 and 1991, incorporated in this Prospectus by
reference to the Current Report of UPC on Form 8-K, dated February 8, 1994,
have been audited by Deloitte & Touche, independent auditors, as stated in
their report which is incorporated herein by reference and in reliance upon the
report of such firm given their authority as experts in accounting and
auditing.
53
<PAGE> 63
UNION PLANTERS CORPORATION
INDEX TO APPENDICES
<TABLE>
<CAPTION>
APPENDIX
NUMBER
- --------
<S> <C> <C>
A-1 -- Earle Bankshares, Inc. and Subsidiary Audited Consolidated Financial
Statements as of December 31, 1993, and for the year ended December
31, 1993
A-2 -- Earle Bankshares, Inc. and Subsidiary Unaudited Consolidated
Financial Statements as of December 31, 1992, and for the years
ended December 31, 1992 and 1991
B -- Agreement and Plan of Reorganization, including the Plan of
Merger annexed as Exhibit A thereto
C -- Excerpt from Arkansas Business Corporation Act of 1965, as amended--
Dissenters' Rights
</TABLE>
<PAGE> 64
APPENDIX A-1
EARLE BANKSHARES, INC. AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1993 AND FOR THE YEAR ENDED
DECEMBER 31, 1993
<PAGE> 65
EARLE BANKSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
<PAGE> 66
REPORT OF INDEPENDENT ACCOUNTANTS
March 11, 1994
To the Board of Directors and Stockholders of
Earle Bankshares, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Earle Bankshares, Inc. and its subsidiary at December 31, 1993, and the
results of their operations and their cash flows for the year in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audit. We
conducted our audit of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse
<PAGE> 67
EARLE BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
ASSETS
- ------
Cash and due from banks $ 2,414
Federal funds sold 6,800
Interest-bearing deposits at other financial institutions 889
Investment securities (Market value: $13,082) 13,010
Loans 18,044
Less: Allowance for loan losses (321)
Unearned income (135)
-------
Net loans 17,588
Premises and equipment, net 977
Accrued interest 457
Other assets 383
-------
Total assets $42,518
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits
Noninterest-bearing $ 6,623
Certificates of deposit of $100,000 and over 3,805
Other interest-bearing 24,295
-------
Total deposits 34,723
Accrued interest 96
Income taxes 386
Accrued pension termination liability 400
Other liabilities 322
-------
Total liabilities 35,927
-------
Commitments and contingent liabilities (Notes 4, 8, 12 and 13) -
Stockholders' equity
Common stock, $10 par value; 100,000 shares authorized,
issued and outstanding 1,000
Additional paid-in capital 2,031
Retained earnings 3,560
-------
Total stockholders' equity 6,591
-------
Total liabilities and stockholders' equity $42,518
=======
The accompanying notes are an integral part of these financial statements.
<PAGE> 68
EARLE BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
- --------------------------------------------------------------------------------
INTEREST INCOME
Loans, including fees and discounts $ 3,073
Investment securities
Taxable 450
Non-taxable 67
Federal funds sold 189
Interest-bearing deposits at other financial institutions 40
-------
Total interest income 3,819
INTEREST EXPENSE
Deposits 914
-------
Net interest income 2,905
Provision for loan losses -
-------
Net interest income after provision for loan losses 2,905
-------
NONINTEREST INCOME
Service charges on deposit accounts 295
Investment securities gains 10
Other 38
-------
Total noninterest income 343
-------
NONINTEREST EXPENSE
Salaries, wages and benefits 970
Occupancy and equipment 190
Pension plan termination (Note 8) 439
Other 425
-------
Total noninterest expense 2,024
-------
Income before income taxes 1,224
Provision for income taxes 472
-------
Net income $ 752
=======
Net income per common share $ 7.58
=======
Weighted average common shares outstanding 99,195
=======
The accompanying notes are an integral part of these financial statements.
<PAGE> 69
EARLE BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 752
Adjustments to reconcile net income to net cash provided by operating activities
Investment securities gains (10)
Net accretion of investment securities 2
Depreciation 58
Deferred tax benefit (198)
(Increase) decrease in assets
Accrued interest 2
Other assets 42
Increase (decrease) in liabilities
Accrued interest payable (8)
Income taxes payable 269
Accrued pension termination liability 400
Other liabilities 208
--------
Net cash provided by operating activities 1,517
--------
INVESTING ACTIVITIES
Net increase in interest-bearing deposits at other financial institutions (289)
Purchases of investment securities (11,276)
Proceeds from maturities of investment securities 5,595
Net decrease in loans 3,441
Purchases of premises and equipment (35)
--------
Net cash used by investing activities (2,564)
--------
FINANCING ACTIVITIES
Net increase in deposits 1,856
Cash dividends paid (198)
--------
Net cash provided by financing activities 1,658
--------
CASH AND CASH EQUIVALENTS
Net increase 611
Beginning of year 8,603
--------
End of year $ 9,214
========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 922
========
Cash paid for income taxes $ 402
========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 70
EARLE BANKSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL
------------ PAID-IN RETAINED
SHARES PAR VALUE CAPITAL EARNINGS TOTAL
------ --------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 99,000 $ 990 $1,980 $3,006 $5,976
Net income 752 752
Common stock issued (Note 1) 1,000 10 51 61
Cash dividends - $2.00 per share (198) (198)
------- ------ ------ ------ ------
Balance at December 31, 1993 100,000 $1,000 $2,031 $3,560 $6,591
======= ====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 71
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Earle Bankshares, Inc. (the
Corporation) and its wholly-owned subsidiary, First Southern Bank (the Bank),
conform with generally accepted accounting principles and general practices of
the banking industry. The following is a description of the more significant
of those policies:
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of the Corporation and the Bank after elimination of significant
intercompany accounts and transactions.
STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks and federal funds sold.
MINORITY INTEREST. During 1993, the Corporation issued 1,000 shares of its $10
par value common stock to the minority shareholder of the Bank in exchange for
the remaining one percent ownership of the Bank. After the transaction, the
Corporation owns 100% of the outstanding common stock of the Bank.
INVESTMENT SECURITIES. Investment securities are stated at cost adjusted for
amortization of premium and accretion of discount, which are recognized as
adjustments to interest income. Gains and losses on investment securities are
recorded when realized on a specific identity basis or when, in the opinion of
management, an unrealized loss is other than temporary in nature. All
investment securities transactions are recorded using a method which
approximates trade-date accounting. At December 31, 1993 management has the
intent and ability to hold all investment securities to maturity.
In May 1993, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115) which is effective for
fiscal years beginning after December 15, 1993. This new standard addresses
the accounting for investments in equity securities that have readily
determinable fair values and for all investments in debt securities. The
investment securities covered by this standard are to be classified into three
categories: (i) debt securities for which the institution has a positive
intent and ability to hold to maturity are classified as "held to maturity"
securities 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 securities" 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 separate component of stockholders' equity.
1
<PAGE> 72
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Effective January 1, 1994, the Corporation adopted SFAS No. 115. This adoption
resulted in the classification of certain securities as "available for sale"
with the net unrealized gain or loss, net of applicable taxes, reflected as a
separate component of stockholders' equity. The remaining securities were
classified as "held to maturity" which will be carried at amortized cost
adjusted for amortization of premiums and accretion of discounts. The initial
adoption did not have any effect on the results of operations of the
Corporation.
LOANS. Loans are stated at the principal amount outstanding less discounts on
purchased loans. Interest income on loans is accrued using constant yield
methods, except for unearned income which is recorded as income using a method
which approximates the interest method. Discounts on loans purchased are
accreted as yield adjustments over the life of the loan. The discount on loans
prepaid is included in interest income during the period in which the loan is
repaid. Loan origination fees and direct loan origination costs are deferred
and recognized over the life of the related loans as adjustments to interest
income.
Loans are generally placed on nonaccrual status and interest is not recorded
currently if payment in full of principal or interest is not expected or when
the payment of principal or interest is more than 90 days past due, unless it
is both well-secured and in the process of collection. Income recognition on
installment loans is discontinued, and the loan is charged off if no payment is
received within 90 and 150 days, respectively. Loans are classified as
restructured when concessions, generally extended maturities or reduced
interest rates, have been granted because of the debtor's inability to meet the
original terms. Interest income on restructured loans is recognized on the
accrual basis at the restructured interest rate.
In May 1993, the FASB issued SFAS No. 114, "Accounting by Creditors for
Impairment of a Loan" which is applicable to all creditors and loans, addresses
the accounting for the impairment of loans, uncollateralized as well as
collateralized, except large groups of smaller-balance homogeneous loans (e.g.,
consumer and mortgage loans) that are collectively evaluated for impairment,
loans carried at fair value or at the lower of cost or fair value, leases and
debt securities as defined by SFAS No. 115. Such impaired loans should be
measured based on the present value of expected future cash flows discounted at
the loan's effective interest rate or, as a practical expedient, at the loan's
observable market price or fair value of the underlying collateral if the loan
is collateral dependent. The statement also applies to all loans that are
restructured in accordance with SFAS No. 15, "Accounting by Debtors and
Creditors for Troubled Debt Restructurings". This statement applies to
financial statements for fiscal years beginning after December 15, 1994 with
earlier application encouraged. Management has not fully evaluated the impact
of SFAS No. 114; therefore, the impact upon adoption of SFAS No. 114, if any,
on the Bank's financial position cannot be estimated at this time. Management
is currently reviewing its credit portfolio to determine which loans must be
measured in accordance with SFAS No. 114.
2
<PAGE> 73
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses represents
management's estimate of losses inherent in the existing loan portfolio. The
allowance for loan losses is increased by provisions for loan losses and
reduced by loans charged off, net of recoveries. Provisions for loan losses
are determined based on management's evaluation of past loan loss experience,
current economic conditions, the level of classified and nonperforming loans,
the composition and size of the portfolio, reviews and evaluations of specific
loans and the results of regulatory examinations. The allowance for loan
losses is maintained at a level considered adequate by management to provide
for losses in the existing loan portfolio.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost, less
accumulated depreciation. Depreciation provisions are computed principally on
straight-line and accelerated methods over the estimated useful lives of the
assets (buildings and improvements - 10 to 32 years; furniture and fixtures - 5
to 7 years).
OTHER REAL ESTATE. Other real estate represents real estate acquired through
foreclosure and is stated at the lower of the recorded amount of the loan or
the net realizable value (which approximates the fair value) of the underlying
real estate. Other real estate totaled $249,344 at December 31, 1993 and is
included in other assets.
INCOME TAXES. The Corporation and Bank file consolidated federal and state
income tax returns.
Income tax expense is based on income reported for financial accounting
purposes and includes deferred taxes resulting from the recognition of certain
transactions in different periods for tax reporting purposes. Effective
January 1, 1993, the Corporation adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes", which did not have a material impact on the
financial position or results of operations of the Corporation for the year
ended December 31, 1993.
EMPLOYEE BENEFITS. In December, 1990, SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions", was issued which requires accrual
for the liability for the postretirement benefits during the years the employee
performs services. This statement generally is effective for fiscal years
beginning after December 15, 1994 for employers with less than 500 employees.
Currently, the Corporation does not provide benefits for retired employees.
In November 1993, SFAS No. 112, "Employers' Accounting for Postemployment
Benefits" was issued and required adoption in fiscal years beginning after
December 15, 1993. This standard requires that certain costs of postemployment
benefits must be charged to expense during the years of service rather than
expensing such costs when paid. Currently, the Corporation does not offer any
such postemployment benefits.
3
<PAGE> 74
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
EARNINGS PER SHARE. Earnings per share amounts are based on the weighted
average common shares outstanding.
NOTE 2 - RESTRICTIONS ON CASH
The Bank is required by the Federal Reserve Bank to maintain average reserve
balances. The average required balance to be maintained for such purpose
during 1993 was approximately $76,000.
NOTE 3 - INVESTMENT SECURITIES
The carrying value and market value of investment securities as of December 31,
1993 are summarized as follows (in thousands):
UNREALIZED
CARRYING ---------- MARKET
VALUE GAINS LOSSES VALUE
----- ----- ------ -----
U.S. Treasury securities $3,802 $ 1 $ 9 $ 3,794
Securities of U.S. Government agencies 6,305 55 34 6,326
Obligations of states and political
subdivisions 1,238 54 9 1,283
Mortgage-backed and related securities 1,546 32 18 1,560
Other securities 119 - - 119
------ ---- --- -------
Total $13,010 $142 $70 $13,082
======= ==== === =======
Investment securities with a carrying value of approximately $3,200,000 at
December 31, 1993 were pledged to secure public and trust funds on deposit and
for other purposes as required or permitted by law.
4
<PAGE> 75
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following table presents the maturities of investment securities at
December 31, 1993 (in thousands):
CARRYING MARKET
VALUE VALUE
----- -----
Maturing within one year
U.S. Government agency securities $ 1,300 $ 1,300
Obligations of states and political subdivisions 320 322
------- -------
1,620 1,622
------- -------
Maturing after one year but within five years
U.S. Treasury securities 3,802 3,794
U.S. Government agency securities 2,554 2,546
Obligations of states and political subdivisions 365 380
------- -------
6,721 6,720
------- -------
Maturing after five years but within ten years
U.S. Government agency securities 1,228 1,232
Obligations of states and political subdivisions 80 87
------- -------
1,308 1,319
------- -------
Maturing after ten years
U.S. Government agency securities 1,223 1,248
Obligations of states and political subdivisions 473 494
------- -------
1,696 1,742
------- -------
Other securities
Mortgage-backed and related securities 1,546 1,560
Securities with no stated maturity 119 119
------- -------
$13,010 $13,082
======= =======
Mortgage-backed and related securities have contractual maturities which may
differ from actual maturities due to changes in interest rates and other
economic factors.
5
<PAGE> 76
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 4 - LOANS
Loans outstanding at December 31, 1993 are summarized as follows (in
thousands):
Commercial and industrial $ 6,996
Real estate
Secured by single-family residential properties 2,348
Construction, land development and other commercial 995
Secured by farmland 125
Agricultural 3,717
Installment loans to individuals 2,869
Other loans 994
-------
Total loans $18,044
=======
Nonperforming loans are summarized as follows at December 31, 1993 (in
thousands):
Nonaccrual loans $ 28
Loans 90 days or more past due 180
-------
Total nonperforming loans $ 208
=======
There were no material outstanding commitments related to the above
nonperforming loans at December 31, 1993. Interest which would have been
earned under the original terms on nonaccrual loans did not materially differ
from that actually recorded.
CONCENTRATION OF CREDIT RISK. The Bank's lending activities are concentrated
in Crittenden County, Arkansas, where the Corporation is headquartered, and the
surrounding area. The Bank's customers have similar characteristics including
economic factors and activities, primarily agricultural related. The loans are
collateralized by various security interests, including but not limited to
mortgages, equipment, automobiles and deposits. In some instances loans are
extended on an unsecured basis.
RELATED PARTY LENDING ACTIVITIES. The Bank has granted loans to executive
officers, directors and principal stockholders and their affiliates totaling
$1,429,000 at December 31, 1993. During the year ended December 31, 1993,
$1,533,000 of new loans were made to officers, directors, principal holders of
equity securities and their affiliates and $1,789,000 repaid. These loans were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with unrelated
persons. Management does not expect any losses from these outstanding loans.
6
<PAGE> 77
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS. The Bank is a party to financial instruments with
off-balance sheet credit risk in the normal course of business to meet the
financing needs of its customers. These instruments involve, to varying
degrees, elements of credit risk in excess of the amounts recognized in the
balance sheet. The contractual amounts of these instruments reflect the extent
of involvement the Bank has in particular classes of financial instruments.
Off-balance sheet contractual committed amounts at December 31, 1993 are as
follows (in thousands):
Commitments to extend credit $597
Standby, commercial and similar letters of credit 140
Commitments to extend credit are agreements to lend to customers as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's credit worthiness on a
case-by-case basis, and the amount of collateral required is determined based
on management's credit evaluation of the counterparty. Collateral held varies
but may include accounts receivable, inventory, property and equipment, income
producing properties and securities.
Letters of credit are conditional commitments issued by the Bank that are not
reflected in the Corporation's financial statements to guarantee the
performance of a customer to a third party. The credit risk involved in
issuing letters of credit is essentially the same as that involved in extending
loan facilities to customers. The Bank, in some cases, holds various types of
collateral to support those commitments for which collateral is deemed
necessary.
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
The following summarizes the changes in the allowance for loan losses for the
year ended December 31, 1993 (in thousands):
Balance, January 1 $ 310
Recoveries of loans previously charged off 15
Amounts charged off (4)
-----
Balance, December 31 $ 321
=====
7
<PAGE> 78
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 6 - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1993 is as follows (in
thousands):
Land $ 182
Buildings and improvements 950
Furniture and fixtures 870
-------
2,002
Less accumulated depreciation (1,025)
-------
Premises and equipment, net $ 977
=======
NOTE 7 - SUBSIDIARY DIVIDENDS
The amount of dividends which the Bank may pay is limited by applicable laws
and regulations. Banks incorporated under the laws of Arkansas may pay
dividends only to the extent of their unreserved and unrestricted surplus or
undivided profits. The Federal Deposit Insurance Corporation (FDIC), the
Bank's primary regulator, imposes no dollar limit on dividends paid by
state-chartered banks but requires maintenance of certain capital levels. The
Bank, at a minimum, must maintain total capital greater than or equal to eight
percent (8%) of adjusted total assets (as defined). Under the current capital
guidelines, the Bank could pay approximately $3 million in dividends; however,
the Bank is also restricted from paying dividends in excess of 50% of current
income before obtaining regulatory approval which would limit the Bank from
paying additional dividends exceeding $195,000 without regulatory approval.
The above amounts may be paid but, as a practical matter, other considerations,
including past dividend levels, may affect management's decision with respect
to the payment of dividends.
Additionally, the Merger Agreement described in Note 13 restricts the amount of
dividends the Company may pay prior to the closing of the transaction.
NOTE 8 - TERMINATION OF PENSION PLAN
Effective December 31, 1993, the Bank terminated its defined benefit pension
plan (Pension Plan). Upon termination all participants became fully vested in
benefits previously accrued under the Pension Plan. The Bank recorded $400,000
in expense to cover the shortfall between the projected settlement obligation
of $878,000 and the fair value of plan assets of $478,000 at December 31, 1993.
Approximately, $227,000 of the plan's assets are included in the Bank's
deposits (certificates of deposit).
8
<PAGE> 79
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9 - OTHER NONINTEREST EXPENSE
Other noninterest expenses for the year ended December 31, 1993 are summarized
as follows (in thousands):
Professional services (Note 13) $ 98
FDIC insurance premiums 72
Stationery, supplies and postage 70
Other 185
-----
Other noninterest expense $ 425
=====
NOTE 10 - INCOME TAXES
The components of income tax expense (benefit) for the year ended December 31,
1993 are as follows (in thousands):
Current
Federal $ 574
State 96
Deferred
Federal (165)
State (33)
-----
Provision for income taxes $ 472
=====
Deferred income taxes are provided in recognition of temporary differences in
reporting certain revenues and expenses for financial statement and income tax
purposes. The net deferred tax asset at December 31, 1993 is comprised of the
following which is included in other assets:
Gross deferred assets:
Allowance for loan losses $ 26
Pension termination 153
-----
Total 179
Gross deferred liabilities:
Cash basis of accounting for tax purposes (69)
-----
Deferred taxes $ 110
=====
9
<PAGE> 80
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A reconciliation of the statutory federal income tax rate to the effective tax
rate for the year ended December 31, 1993 is as follows (in thousands):
% OF
PRETAX
AMOUNT INCOME
------ ------
Computed "expected" tax $428 35.0
State income taxes, net of federal tax benefit 41 3.4
Tax-exempt income, net of disallowed interest expense (22) (1.8)
Benefit of federal graduated rates (12) (1.0)
Nondeductible merger expenses 14 1.1
Other, net 23 1.9
---- ----
Provision for income taxes $472 38.6
==== ====
The Bank has approximately $65,000 of capital loss carryforwards available for
which no benefit has been recognized due to the uncertain ability of the Bank
to generate offsetting capital gains.
NOTE 11 - EARLE BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(IN THOUSANDS)
CONDENSED BALANCE SHEET
DECEMBER 31, 1993
ASSETS
- ------
Due from Bank $ 2
Investment in Bank 6,632
------
Total assets $6,634
======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Other liabilities $ 43
Stockholders' equity 6,591
------
Total liabilities and stockholders' equity $6,634
======
10
<PAGE> 81
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 11 - EARLE BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(IN THOUSANDS) - CONTINUED
CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
Dividends from Bank $ 203
Undistributed income of Bank 595
Other expenses (46)
-----
Net income $ 752
=====
CONDENSED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1993
OPERATING ACTIVITIES
Net income $ 752
Equity in undistributed income of Bank (595)
Increase in other liabilities 43
-----
Net cash provided by operating activities 200
-----
FINANCING ACTIVITIES
Cash dividends paid (198)
-----
Net cash used by financing activities 198
-----
CASH AND CASH EQUIVALENTS
Net increase 2
Beginning of year -
-----
End of year $ 2
=====
NOTE 12 - LEGAL PROCEEDINGS
The Corporation and Bank are parties to various legal proceedings which have
arisen in the ordinary course of business. Management is of the opinion that
neither the Corporation's financial position nor its results of operations will
be materially adversely affected by the ultimate resolution of these legal
proceedings.
11
<PAGE> 82
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 13 - PENDING MERGER
In October 1993, the Board of Directors of the Corporation approved an
Agreement and Plan of Reorganization (Merger Agreement) with another bank
holding company whereby the two parties intend to effectuate a merger of the
Corporation with and into a subsidiary of the other bank holding company.
During February 1994, the Merger Agreement was amended for various items. The
merger, which is to be accounted for as a pooling of interests, is dependent
upon the approval of the stockholders of the Corporation and various regulatory
agencies. Additionally, the Corporation is restricted from certain activities
prior to the consummation of the transaction.
In connection with the above transaction, the Corporation has incurred
approximately $40,000 in legal and professional fees which are included in
professional services expense in other noninterest expense. Approximately
$20,000 of this amount is payable to an affiliate of a member of the Board of
Directors of the Corporation.
12
<PAGE> 83
APPENDIX A-2
EARLE BANKSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1992 AND FOR THE YEARS ENDED
DECEMBER 31, 1992 AND 1991
<PAGE> 84
EARLE BANKSHARES, INC.
AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992
<PAGE> 85
EARLE BANKSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1992
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
ASSETS
- ------
Cash and due from banks $ 2,503
Federal funds sold 6,100
Interest-bearing deposits at other financial institutions 600
Investment securities (Market value: $7,452) 7,321
Loans 21,498
Less: Allowance for loan losses (310)
Unearned income (159)
-------
Net loans 21,029
Premises and equipment, net 1,000
Accrued interest 459
Other assets 315
-------
Total assets $39,327
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits
Noninterest-bearing $ 5,895
Certificates of deposit of $100,000 and over 3,658
Other interest-bearing 23,314
-------
Total deposits 32,867
Accrued interest 104
Income taxes 205
Other liabilities 175
-------
Total liabilities 33,351
-------
Commitments and contingent liabilities (Notes 4 and 11) -
Stockholders' equity
Common stock, $10 par value; 100,000 shares authorized,
99,000 shares issued and outstanding 990
Additional paid-in capital 1,980
Retained earnings 3,006
-------
Total stockholders' equity 5,976
-------
Total liabilities and stockholders' equity $39,327
=======
The accompanying notes are an integral part of these financial statements.
<PAGE> 86
EARLE BANKSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
- --------------------------------------------------------------------------------
DECEMBER 31,
------------
1992 1991
---- ----
INTEREST INCOME
Loans, including fees and discounts $ 2,439 $ 2,453
Investment securities
Taxable 389 369
Non-taxable 95 126
Federal funds sold 144 219
Interest-bearing deposits at other financial institutions 53 65
------- -------
Total interest income 3,120 3,232
------- -------
INTEREST EXPENSE
Deposits 1,037 1,471
------- -------
Net interest income 2,083 1,761
Provision for loan losses - 70
------- -------
Net interest income after provision for loan losses 2,083 1,691
------- -------
NONINTEREST INCOME
Service charges on deposit accounts 284 287
Investment securities gains 3 8
Other 33 55
------- -------
Total noninterest income 320 350
------- -------
NONINTEREST EXPENSE
Salaries, wages and benefits 982 677
Occupancy and equipment 186 199
Other 297 339
------- -------
Total noninterest expense 1,465 1,215
------- -------
Income before income taxes 938 826
Provision for income taxes 356 254
------- -------
Net income $ 582 $ 572
======= =======
Net income per common share $ 5.88 $ 5.78
======= =======
Weighted average common shares outstanding 99,000 99,000
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE> 87
EARLE BANKSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
DECEMBER 31,
------------
1992 1991
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 582 $ 572
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 77 82
Provision for loan losses - 70
Investment securities gains (3) (8)
Net accretion (amortization) of investment securities 5 (1)
Deferred tax expense 18 18
(Increase) decrease in assets:
Accrued interest 39 17
Other assets (13) (302)
Increase (decrease) in liabilities:
Accrued interest (60) (106)
Income taxes 104 (30)
Other liabilities 120 4
------- -------
Net cash provided by operating activities 869 316
------- -------
INVESTING ACTIVITIES
Decrease in interest-bearing deposits at other financial institutions 578 270
Proceeds from sales of investment securities 1,950 -
Purchases of investment securities (6,429) (449)
Proceeds from maturities of investment securities 2,928 1,310
Net (increase) decrease in loans 1,014 (4,225)
Purchases of premises and equipment (5) (6)
------- -------
Net cash provided (used) by investing activities 36 (3,100)
------- -------
FINANCING ACTIVITIES
Net increase (decrease) in deposits (335) 3,721
Cash dividends paid (198) (198)
------- -------
Net cash provided (used) by financing activities (533) 3,523
------- -------
CASH AND CASH EQUIVALENTS
Net increase 372 739
Beginning of year 8,231 7,492
------- -------
End of year $ 8,603 $ 8,231
======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 1,097 $ 1,577
======= =======
Cash paid for income taxes $ 240 $ 265
======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 88
EARLE BANKSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL
------------ PAID-IN RETAINED
SHARES PAR VALUE CAPITAL EARNINGS TOTAL
------ --------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1991 99,000 $990 $1,980 $2,248 $5,218
Net income 572 572
Cash dividends - $2.00 per share (198) (198)
------ ---- ------ ------ ------
Balance at December 31, 1991 99,000 990 1,980 2,622 5,592
Net income 582 582
Cash dividends - $2.00 per share (198) (198)
------ ---- ------ ------ ------
Balance at December 31, 1992 99,000 $990 $1,980 $3,006 $5,976
====== ==== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 89
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Earle Bankshares, Inc. (the
Corporation) and its majority-owned subsidiary, First Southern Bank (the Bank),
conform with generally accepted accounting principles and general practices of
the banking industry. The following is a description of the more significant
of those policies:
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of the Corporation and the Bank after elimination of significant
intercompany accounts and transactions.
STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks and federal funds sold.
MINORITY INTEREST. The Corporation owns 99% of First Southern Bank. The
minority interest, which is included in other liabilities, totaled $61,000 at
December 31, 1992.
INVESTMENT SECURITIES. Investment securities are stated at cost adjusted for
amortization of premium and accretion of discount, which are recognized as
adjustments to interest income. Gains and losses on investment securities are
recorded when realized on a specific identity basis or when, in the opinion of
management, an unrealized loss is other than temporary in nature. All
investment securities transactions are recorded using a method which
approximates trade-date accounting.
LOANS. Loans are stated at the principal amount outstanding less discounts on
purchased loans. Interest income on loans is accrued using constant yield
methods, except for unearned income which is recorded as income using a method
which approximates the interest method. Discounts on loans purchased are
accreted as yield adjustments over the life of the loan. The discount on loans
prepaid is included in interest income during the period in which the loan is
prepaid. Loan origination fees and direct loan origination costs are deferred
and recognized over the life of the related loans as adjustments to interest
income.
Loans are generally placed on nonaccrual status and interest is not recorded
currently if payment in full of principal or interest is not expected or when
the payment of principal or interest is more than 90 days past due, unless it
is both well-secured and in the process of collection. Income recognition on
installment loans is discontinued, and the loan is charged off if no payment is
received within 90 and 150 days, respectively. Loans are classified as
restructured when concessions, generally extended maturities or reduced
interest rates, have been granted because of the debtor's inability to meet the
original terms. Interest income on restructured loans is recognized on the
accrual basis at the restructured interest rate.
1
<PAGE> 90
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses represents
management's estimate of losses inherent in the existing loan portfolio. The
allowance for loan losses is increased by provisions for loan losses and
reduced by loans charged off, net of recoveries. Provisions for loan losses
are determined based on management's evaluation of past loan loss experience,
current economic conditions, the level of classified and nonperforming loans,
the composition and size of the portfolio, reviews and evaluations of specific
loans and the results of regulatory examinations. The allowance for loan
losses is maintained at a level considered adequate by management to provide
for losses in the existing loan portfolio.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost, less
accumulated depreciation. Depreciation provisions are computed principally on
straight-line and accelerated methods and are charged to operating expense over
the estimated useful lives of the assets (buildings and improvements - 10 to 32
years; furniture and fixtures - 5 to 7 years).
OTHER REAL ESTATE. Other real estate represents real estate acquired through
foreclosure and is stated at the lower of the recorded amount of the loan or
the net realizable value (which approximates fair value) of the underlying
real estate. Other real estate totaled $263,000 at December 31, 1992 and is
included in other assets.
INCOME TAXES. The Corporation and Bank file consolidated federal and state
income tax returns.
Income tax expense is based on income reported for financial accounting
purposes, and includes deferred taxes resulting from the recognition of certain
transactions in different periods for tax reporting purposes in accordance with
Accounting Principles Board Opinion No. 11, "Accounting for Income Taxes."
EARNINGS PER SHARE. Earnings per share amounts are based on the weighted
average common shares outstanding.
NOTE 2 - RESTRICTIONS ON CASH
The Bank is required by the Federal Reserve Bank to maintain average reserve
balances. The average required balance to be maintained for such purpose
during 1992 was approximately $45,000.
2
<PAGE> 91
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 3 - INVESTMENT SECURITIES
The carrying value and market value of investment securities at December 31,
1992 are summarized as follows (in thousands):
UNREALIZED
CARRYING ---------- MARKET
VALUE GAINS LOSSES VALUE
----- ----- ------ -----
Securities of U.S. Government agencies $6,052 $103 $(20) $6,135
Obligations of states and political
subdivisions 1,269 49 (1) 1,317
------ ---- ---- ------
Total $7,321 $152 $(21) $7,452
====== ==== ==== ======
Investment securities with a carrying value of approximately $3,500,000 at
December 31, 1992 were pledged to secure public and trust funds on deposit and
for other purposes as required or permitted by law.
NOTE 4 - LOANS
Loans outstanding at December 31, 1992, are summarized as follows (in
thousands):
Commercial and industrial $ 8,582
Real estate
Secured by single-family residential properties 2,325
Construction, land development and other commercial 844
Secured by farmland 200
Agricultural 3,371
Installment loans to individuals 2,627
Other loans 3,549
-------
Total loans $21,498
=======
Nonperforming loans at December 31, 1992 are summarized as follows (in
thousands):
Nonaccrual loans $ 1
Restructured loans 25
Loans 90 days or more past due 204
----
Total $ 230
====
3
<PAGE> 92
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
There were no material outstanding commitments related to the above
nonperforming loans at December 31, 1992. Interest which would have been
earned under the original terms on nonaccrual loans did not materially differ
from that actually recorded for the years ended December 31, 1992 and 1991.
RELATED PARTY LENDING ACTIVITIES. The Bank has granted loans to executive
officers, directors, principal stockholders and their affiliates totaling
$1,685,000 at December 31, 1992. These loans were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with unrelated persons. Management does not
expect any losses from these outstanding loans.
FINANCIAL INSTRUMENTS. The Bank is a party to financial instruments with
off-balance sheet credit risk in the normal course of business to meet the
financing needs of its customers. These instruments involve, to varying
degrees, elements of credit risk in excess of the amounts recognized in the
balance sheet. The contractual amounts of these instruments reflect the extent
of involvement the Bank has in particular classes of financial instruments.
Off-balance sheet contractual committed amounts at December 31, 1992 are as
follows (in thousands):
Commitments to extend credit $1,008
Standby, commercial and similar letters of credit 130
Commitments to extend credit are agreements to lend to customers as long as
there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses.
Since many of the commitments are expected to expire without being drawn upon,
the total commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's credit worthiness on a
case-by-case basis, and the amount of collateral required is determined based
on management's credit evaluation of the counterparty. Collateral held varies
but may include accounts receivable, inventory, property, plant and equipment,
income-producing properties and securities.
Letters of credit are conditional commitments issued by the Bank that are not
reflected in the Corporation's financial statements to guarantee the
performance of a customer to a third party. The credit risk involved in
issuing letters of credit is essentially the same as that involved in extending
loan facilities to customers. The Bank, in some cases, holds various types of
collateral to support those commitments for which collateral is deemed
necessary.
4
<PAGE> 93
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
The following summarizes the changes in the allowance for loan losses for the
years ended December 31, 1992 and 1991 (in thousands):
1992 1991
---- ----
Balance, January 1 $294 $228
Provision for loan losses - 70
Recoveries of loans previously charged off 16 30
Amounts charged off - (34)
---- ----
Balance, December 31 $310 $294
==== ====
NOTE 6 - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1992 follows (in
thousands):
Land $ 182
Buildings and improvements 946
Furniture and fixtures 839
------
1,967
Less accumulated depreciation 967
------
Premises and equipment, net $1,000
======
NOTE 7 - OTHER NONINTEREST EXPENSE
Other noninterest expenses are summarized as follows (in thousands):
YEAR ENDED
DECEMBER 31,
------------
1992 1991
---- ----
FDIC insurance premiums $ 70 $ 59
Stationery, supplies and postage 37 47
Other 190 233
---- ----
Total $297 $339
==== ====
NOTE 8 - PENSION PLAN
The Bank has a noncontributory defined benefit pension plan covering
substantially all of its employees. Annual contributions to the plan were
$87,000 and $59,000 for the years ended December 31, 1992 and 1991,
respectively, which is included in salaries, wages and benefits.
5
<PAGE> 94
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 9 - INCOME TAXES
The components of income tax expense for the years ended December 31, 1992 and
1991 are as follows (in thousands):
1992 1991
---- ----
Current $338 $236
Deferred 18 18
---- ----
Total $356 $254
==== ====
Deferred income taxes are provided in recognition of timing differences in
reporting certain revenues and expenses for financial statement and income tax
purposes. The primary timing differences relate to the use of the cash basis
of accounting for tax purposes, the allowance for loan losses and pension plan
contributions.
The primary differences between the federal income tax rate of 34% and the
effective tax rates of 37.95% and 30.75% for the years ended December 31, 1992
and 1991, respectively, are state income taxes and tax-exempt income.
NOTE 10 - EARLE BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(IN THOUSANDS)
CONDENSED BALANCE SHEET
DECEMBER 31, 1992
ASSETS
- ------
Investment in Bank $6,037
======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Minority interest 61
Stockholders' equity 5,976
------
Total liabilities and stockholders' equity $6,037
======
6
<PAGE> 95
EARLE BANKSHARES, INC. AND SUBSIDIARY
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 10 - EARLE BANKSHARES, INC. (PARENT COMPANY ONLY) FINANCIAL INFORMATION
(IN THOUSANDS) - CONTINUED
CONDENSED STATEMENT OF INCOME
YEAR ENDED
DECEMBER 31,
------------
1992 1991
---- ----
Dividends from Bank $ 201 $ 200
Undistributed income of Bank 390 381
Other expense (9) (9)
----- -----
Net income $ 582 $ 572
===== =====
CONDENSED STATEMENT OF CASH FLOWS
YEAR ENDED
DECEMBER 31,
------------
1992 1991
---- ----
OPERATING ACTIVITIES
Net income $ 582 $ 572
Equity in undistributed income of Bank (390) (381)
Other 6 6
----- -----
Net cash provided by operating activities 198 197
----- -----
FINANCING ACTIVITIES
Cash dividends paid (198) (198)
----- -----
Net cash used by financing activities (198) (198)
----- -----
CASH
Net decrease - (1)
Beginning of year - 1
----- -----
End of year $ - $ -
===== =====
NOTE 11 - LEGAL PROCEEDINGS
The Corporation and Bank are party to various legal proceedings which have
arisen in the ordinary course of business. Management is of the opinion that
neither the Corporation's financial position nor its results of operations will
be materially adversely affected by the ultimate resolution of these legal
proceedings.
7
<PAGE> 96
APPENDIX B
AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF
NOVEMBER 18, 1993 BY AND BETWEEN
UNION PLANTERS CORPORATION, NORTH ARKANSAS BANCSHARES, INC.,
EARLE BANKSHARES, INC. AND FIRST SOUTHERN BANK,
INCLUDING THE PLAN OF MERGER ANNEXED
AS EXHIBIT A THERETO
<PAGE> 97
AGREEMENT AND PLAN OF REORGANIZATION
DATED as of November 18, 1993
Between
UNION PLANTERS CORPORATION and
NORTH ARKANSAS BANCSHARES
and
EARLE BANKSHARES, INC. and
FIRST SOUTHERN BANK
<PAGE> 98
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-----------
ARTICLE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
TERMS OF THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
----------
2.2 Articles of Incorporation, ByLaws, Directors, Officers and Name of the Surviving Corporation . . . . . . . . . . 8
--------------------------------------------------------------------------------------------
(a) Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
-------------------------
(b) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
------
(c) Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------------
(d) Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----
2.3 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
--------------------
2.4 Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
---------------------------
2.5 UPC's Right to Revise the Structure of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------------------------------------------------------
2.6 Holding Period of UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----------------------------------
2.7 EBI Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
------------------------------------
ARTICLE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1 Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------
(a) Satisfaction of Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------------------
(b) Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
----------------------------
(c) Shares of NABS Shall Remain Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
---------------------------------------
(d) Conversion and Cancellation of Shares of EBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------------------------
(e) Conversion and Exchange of EBI Shares; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------------------------------
(f) Mechanics of Payment of the Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
-----------------------------------------
(g) Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------
(h) Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
(i) Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------
(j) Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------------
(k) Dissenting Shareholders' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-------------------------------
(l) EBI Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
------------------------------------
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------------
ARTICLE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
</TABLE>
i
<PAGE> 99
<TABLE>
<S> <C> <C>
REPRESENTATIONS AND WARRANTIES OF UPC . . . . . . . . . . . . . . . . . . . . . 18
4.1 Organization and Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------------------------
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . . . . . . . 18
-----------------------------------------------------------------------------
4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------
4.4 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------------
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
--------------
4.6 UPC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------------------
4.7 Exchange Act and Listing Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------------------
4.8 The UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------
4.10 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
----------------------------
4.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------------------
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------
ARTICLE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
REPRESENTATIONS AND WARRANTIES OF EBI AND FSB . . . . . . . . . . . . . . . . . . . 24
5.1 Organization and Qualification of EBI and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
------------------------------------------------------
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . . . . . . . 24
-----------------------------------------------------------------------------
5.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------
5.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------------------
5.5 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-------------------
5.6 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-----------------
5.7 EBI Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
------------------------
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
--------------------------
5.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------
5.11 EBI Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
----------------
5.12 Condition of Fixed Assets and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------------------------
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
-----------
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------
5.15 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-------------------
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
---------
5.17 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
----------------------------
5.18 Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
---------------------
5.19 Capitalization of EBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
---------------------
5.20 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
--------------
5.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
----------
5.22 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
----------------------------------
5.23 Allowance for Possible Loan or ORE Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
-----------------------------------------
5.24 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------------
5.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------------
5.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
------------------
5.27 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
--------------------------
5.28 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
-------
5.29 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
---------------------------
ARTICLE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
</TABLE>
ii
<PAGE> 100
<TABLE>
<S> <C> <C>
COVENANTS OF UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
6.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
--------------------
6.2 Registration of UPC Common Stock under the Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
----------------------------------------------------------
6.3 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-----------------
6.4 Notifications to EBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
--------------------
6.5 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
-------
ARTICLE 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
COVENANTS OF EBI AND FSB . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Proxy Statement; EBI Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
-----------------------------------------
7.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
--------------------------------------------
7.3 Conduct of Business -- Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
-----------------------------------------
ARTICLE 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.1 Conditions to the Obligations of EBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
---------
(d) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
-------------
(e) Opinion of UPC's and NABS' Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
----------------------------------
8.2 Conditions to the Obligations of UPC and NABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
---------------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
---------
(d) Destruction of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
-----------------------
(e) Inspections Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
---------------------
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
--------------------------
(g) Opinion of EBI's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
------------------------
(h) Other Business Combinations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
--------------------------------
(i) Maintenance of Certain Covenants, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-------------------------------------
(j) Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
----------------------
(k) Pooling of Interests Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-----------------------------------------
(l) Receipt of Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
----------------------------
8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
----------------------------------------
(a) No Pending or Threatened Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
-------------------------------
(b) Governmental Approvals and Acquiescence Obtained . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
------------------------------------------------
(c) Effective Registration Statement and No Stop Orders . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------------------------------------------------
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
-----------
ARTICLE 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
-----------
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
---------------------
ARTICLE 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
iii
<PAGE> 101
<TABLE>
<S> <C> <C>
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . 61
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
-------
10.2 Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
-------------------------------------
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
-------------
10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
------------
10.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
------------
10.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
---------
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
----------------
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
------------
10.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
-------------------------------------
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
--------------
10.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-------------------
10.13 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
------------------
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
---------------
10.15 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
------------------------------------------
10.16 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
---------
10.17 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-------------------
</TABLE>
iv
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement") dated as of the _____ day of November, 1993, 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; NORTH ARKANSAS BANCSHARES, INC. ("NABS" or "Surviving Corporation" as
the context may require), a corporation chartered and existing under the laws
of the State of Arkansas which is a registered bank holding company whose
principal place of business is located at 300 South Church Street, Jonesboro,
Craighead County, Arkansas 72403 and a wholly-owned subsidiary of UPC; EARLE
BANKSHARES, INC. ("EBI"), a corporation chartered and existing under the laws
of the State of Arkansas which is a registered bank holding company and whose
principal offices are located at 801 Commerce Street (P. O. Box 248), Earle,
Crittenden County, Arkansas 72331; and FIRST SOUTHERN BANK ("FSB"), a state
bank chartered and existing under the laws of the State of Arkansas, having its
principal place of business at 801 Commerce Street (P. O. Box 248), Earle,
Crittenden County, Arkansas 72331 and a wholly-owned subsidiary of EBI.
FSB, for a valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by it, has joined in this Reorganization Agreement
for the sole purpose of making certain warranties and representations set forth
in Article 5 and binding itself to perform certain covenants set forth in
Article 7 as provided hereinafter. UPC, NABS, EBI and FSB are sometimes
referred to herein as the "Parties."
RECITALS
A. EBI is the beneficial owner and holder of record of 100,000
shares of the common stock of FSB which constitute all of the shares of common
stock of FSB issued and outstanding (the "FSB Common Stock"), and desires to
have itself and FSB 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").
B. The Boards of Directors of EBI and FSB deem it desirable and
in the best interests of EBI and FSB and the shareholders of EBI (the "EBI
Shareholders") that EBI be merged with and into NABS (which would survive the
merger) on the terms
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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.
C. The Boards of Directors of UPC and NABS deem it desirable and
in the best interests of UPC, NABS and the shareholders of UPC that EBI be
merged with and into NABS on the terms and subject to the conditions set forth
in this Reorganization Agreement and in the manner provided in this
Reorganization Agreement and Plan of Merger.
D. The respective Boards of Directors of UPC, NABS, EBI and FSB
have each adopted (or will each adopt) resolutions setting forth and adopting
this Reorganization Agreement and Plan of Merger, and have directed that this
Reorganization Agreement and Plan of Merger and all resolutions adopted by said
Boards of Directors and by the EBI 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"), the
Arkansas State Bank Department (the "ASBD") and such other regulatory agencies
or authorities as may be necessary in order to obtain all governmental
authorizations required to consummate the proposed Merger (as defined herein)
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
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, partnership,
corporation, association 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.
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"ASBD" shall mean the Arkansas State Bank Department.
"ARKANSAS CODE" means the Arkansas Code Annotated, as amended.
"ARKANSAS COMMISSIONER" shall mean the Commissioner of the
Arkansas State Bank Department.
"AUDITED FINANCIAL STATEMENTS OF EBI" 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.
"BUSINESS DAY" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a federal or state holiday generally recognized
by banks in Tennessee or Arkansas.
"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.
"CONSIDERATION" shall mean the value to be received by the EBI
Record Holders in exchange for their EBI 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.
"CURRENT MARKET PRICE PER SHARE" shall have the meaning set
forth in Section 3.1(e)(i) of this Reorganization Agreement.
"DEPOSITS" shall mean all deposits (including, but not limited
to, certificates of deposit, savings accounts, NOW accounts and checking
accounts) of FSB.
"EFFECTIVE DATE" shall mean that date on which the Effective
Time of the Merger shall have occurred.
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"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.
"EBI" means Earle Bankshares, Inc., an Arkansas-chartered
corporation registered as a bank holding company and headquartered at 801
Commerce Street (P. O. Box 248) Earle, Crittenden County, Arkansas 72331.
"EBI COMMON STOCK" has the meaning assigned to such term in
Section 3.1(d) of this Reorganization Agreement.
"EBI COMPANIES" shall mean EBI and all of its Subsidiaries,
including FSB and all FSB Subsidiaries.
"EBI 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 EBI or any EBI Subsidiary, including, but not limited to, FSB, to or
for the benefit of the officers, directors or employees of EBI or any EBI
Subsidiary.
"EBI RECORD HOLDERS" means the holders of record of all of the
issued and outstanding shares of EBI Common Stock immediately prior to the
Effective Time of the Merger.
"EBI SHAREHOLDERS" shall have the meaning assigned to such
term in Recital B of this Reorganization Agreement.
"EBI STOCK OPTIONS" shall have the meaning assigned to such
term in Section 3.1(l) of this Reorganization Agreement.
"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.
"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.
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"FSB" means First Southern Bank, a state bank chartered and
existing under the laws of the State of Arkansas and a wholly-owned Subsidiary
of EBI, having its principal place of business at 801 Commerce Street (P. O.
Box 248), Earle, Crittenden County, Arkansas 72331.
"FSB COMMON STOCK" shall have the meaning assigned to such
term in Recital A of this Reorganization Agreement.
"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.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in
Section 5.15(a) of this Reorganization Agreement.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended.
"MERGER" shall, as described in Section 2.1 of this
Reorganization Agreement, mean the merger of EBI with and into NABS, which
shall survive the Merger as the Surviving Corporation.
"NABS" shall mean North Arkansas Bancshares, Inc., an
Arkansas-chartered bank holding company having its principal place of business
in Jonesboro, Craighead County, Arkansas, and a wholly-owned Subsidiary of UPC.
"NABS COMMON STOCK" shall have the meaning assigned to such
term in Section 3.1(c) of this Reorganization Agreement.
"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.
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"PARTIES" shall mean EBI, FSB, UPC, and NABS collectively; EBI
and FSB on the one hand, or UPC and NABS 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 to be executed by authorized representatives of
EBI, UPC and NABS and filed with the Arkansas Secretary of State along with the
Articles of Merger in accordance with Section 4-26-1004 of the Arkansas Code
and providing for the Merger of EBI with and into NABS as contemplated by
Section 2.1 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 to be used by
EBI to solicit proxies with a view to securing the approval of the EBI
Shareholders of this Reorganization Agreement and the Plan of Merger.
"REALTY" means the real property of FSB or EBI owned or leased
by FSB or EBI or any Subsidiary of FSB or EBI.
"RECORDS" means all available records, original instruments
and other documentation, pertaining to EBI, EBI's assets (including plans and
specifications relating to the Realty), EBI's liabilities, the EBI Common
Stock, the Deposits and the Loans, and all other business and financial records
which are necessary or customary for use in the conduct of EBI's or FSB's
business by UPC and EBI on and after the Effective Time of the Merger as it was
conducted prior to the Closing Date.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Reserve, the ASBD, the FDIC, 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.
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"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.
"SEC" shall mean the Securities and Exchange Commission.
"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 Securities Laws, whether filed, or required to
be filed, with the SEC, the Comptroller, the FDIC 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 the similar state
securities laws and any similar rules and regulations promulgated by the
applicable federal bank Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the meeting of the EBI
Shareholders to be held pursuant to Section 7.1 of this Reorganization
Agreement, including any adjournment or adjournments thereof.
"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 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 NABS as the corporation
resulting from the consummation of the Merger as set forth in Section 2.1 of
this Reorganization Agreement.
"UPC" shall mean Union Planters Corporation, a
Tennessee-chartered bank holding company which is also registered
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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, 1991 and 1992 and each subsequent
December 31 prior 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 January 1, 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.
ARTICLE 2
TERMS OF THE MERGER
2.1 The Merger.
Subject to the satisfaction (or lawful 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, EBI shall be merged with and
into NABS (the "Merger"), which latter corporation (the "Surviving
Corporation") shall survive the Merger.
2.2 Articles of Incorporation, ByLaws, Directors,
Officers and Name of the Surviving Corporation.
(a) Articles of Incorporation. Immediately after
the Effective Time of the Merger, the Articles of Incorporation of NABS, as in
effect immediately prior to the Effective Time of the Merger, shall constitute
the Articles of Incorporation of NABS as the Surviving Corporation, unless and
until the same shall be amended thereafter as provided by law and the terms of
such Articles of Incorporation.
(b) Bylaws. At the Effective Time of the Merger,
the Bylaws of NABS, as in effect immediately prior to the Effective Time of the
Merger, shall continue to be the Bylaws of NABS as the Surviving Corporation,
unless and until amended or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
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repealed as provided by law, its Articles of Incorporation and such Bylaws.
(c) Directors and Officers. The directors and
officers of NABS 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 Articles 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 NABS as the Surviving
Corporation following the Merger shall remain unchanged and continue to be:
NORTH ARKANSAS BANCSHARES, INC.
2.3 Due Diligence Review. Each Party shall be entitled
to conduct a preliminary due diligence review of the books, 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 Party's earnings projections,
growth projections and sustained earnings prospects after consummation of the
Merger at reasonable growth rates; provided, however, 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 books, 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. Except as
expressly permitted by the disclosing Party, the receiving Party shall keep
confidential all non-public information received by the disclosing Party in
connection with the provisions of this Section 2.4.
2.5 UPC's Right to Revise the Structure of the
Transaction. UPC shall have the right with the consent of the Board of
Directors of EBI, which consent shall not be unreasonably withheld, to revise
the structure of the transaction to achieve tax benefits or for any other
reason which UPC may
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deem advisable; provided, however, that UPC shall not have the right, without
the approval of the Board of Directors of EBI, to make any revision to the
structure of the transaction (i) which changes the amount of the Consideration
which the EBI Record Holders are entitled to receive (determined in the manner
provided in Section 3.1(e) of this Reorganization Agreement), (ii) changes the
intended tax-free effects of the transaction to UPC or EBI, or (iii) which
would permit UPC to pay the Consideration other than by delivery of UPC Common
Stock registered with the SEC (in the manner described in Section 6.2 of this
Reorganization Agreement). UPC may exercise this right of revision by giving
written Notice to EBI and FSB 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 or in the form of an Amended and Restated
Agreement and Plan of Reorganization.
2.6 Holding Period of UPC Common Stock. EBI and FSB 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 EBI Record Holder who
would be deemed an Affiliate of EBI 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 EBI Common Stock
pursuant to the terms and conditions of this Reorganization Agreement, shall
not pledge on a non-recourse basis, 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 EBI
Record Holder upon consummation of the Merger, nor enter into any formal or
informal agreement to pledge on a non-recourse basis, 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 EBI 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 EBI
for a period of not less than thirty (30) days subsequent to the Effective Time
of the Merger. EBI further acknowledges and agrees that any UPC Common Stock
Certificates issued in connection with the Merger to EBI Record Holders who
would be deemed Affiliates of EBI or UPC at the time of Closing under the
Securities Laws shall be subject to and bear a restrictive legend substantially
in the form as follows:
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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, AND THAT SUCH SALE OR OTHER
DISPOSITION WILL NOT AFFECT THE "POOLING OF INTERESTS" ACCOUNTING
TREATMENT OF THE MERGER WHICH RESULTED IN THESE SHARES BEING ISSUED.
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 EARLE BANKSHARES,
INC. 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 DURING THE TIME PERIOD MENTIONED ABOVE 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.
2.7 EBI Stock Options and Treasury Stock. As of the date
of this Reorganization Agreement, there are no validly issued and outstanding
options to purchase shares of EBI Common Stock; and no other options, rights,
warrants, scrip or similar rights to purchase shares of EBI Common Stock
(collectively, the "EBI Stock Options") are (or have been) issued and
outstanding by EBI. Therefore, at the Effective Time of the Merger, there will
be no issued and outstanding EBI Stock Options. As of the date of this
Reorganization Agreement, EBI has not repurchased any shares of its capital
stock. Therefore, as of the date of this Reorganization Agreement, there are
no shares of EBI Common Stock held by EBI as Treasury Stock, nor will there be
any such shares at the Effective Time of the Merger.
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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
NABS and EBI, and each other condition to the obligations of the Parties hereto
has been satisfied or, if lawfully permitted, waived by the Party or Parties
entitled to the benefits thereof, other than those conditions which are to be
satisfied by delivery of documents by any Party to any other Party, 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 to the
Merger and each Party will provide the other Parties with such proof or
indication of satisfaction of the conditions 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 have been satisfied or
lawfully waived by the Party entitled to the benefits thereof, the Parties
shall, at the Closing, duly execute Articles of Merger for filing with the
Secretary of State of the State of Arkansas and immediately thereafter UPC
shall file or cause to be filed such Articles of Merger with the Secretary of
State of the State of Arkansas, and NABS and EBI 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 which is attached hereto as
Exhibit A and incorporated by reference as part of this Reorganization
Agreement. 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, the Merger shall become effective on
the date and at the time of filing of Articles of Merger with the Secretary of
State of the State of Arkansas or at such later date and/or time as may be
agreed upon by the Parties and set forth in the Articles of Merger so filed
(the "Effective Time of the Merger").
(c) Shares of NABS Shall Remain Outstanding.
Subsequent to the Effective Time of the Merger, each share of $1.00 par value
common stock of NABS (the "NABS Common Stock") then issued and outstanding
shall remain as the issued and outstanding common stock of NABS as the
Surviving Corporation.
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(d) Conversion and Cancellation of Shares of EBI.
As of the Effective Time of the Merger, each share of $10.00 par value common
stock of EBI (the "EBI 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 EBI Shares;
Exchange Ratio. As of the Effective Time of the Merger, the outstanding shares
of EBI Common Stock held by the EBI 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
EBI and shall automatically be converted exclusively into, and constitute only
the right of the EBI Record Holders to receive in exchange for their shares of
EBI 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). The shares of UPC Common
Stock and the cash settlement of any remaining fractional share of UPC Common
Stock deliverable by UPC to the EBI 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 EBI
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (based on there being no more than 100,000 shares of EBI 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:
(i) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $30.00 per share
of UPC Common Stock (the "Upper Collar"), the Exchange Ratio shall be
based on a fixed exchange ratio of 3.000 shares of UPC Common Stock
for each share of EBI Common Stock validly issued and outstanding
immediately prior to the Effective Time of the Merger;
(ii) 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 $30.00 per share of
UPC Common Stock (the "Primary Collar"), the Exchange Ratio shall be
based on (a) a fixed price of $90.00 per share of EBI Common Stock
divided by (b) the Current Market Price Per Share of UPC Common Stock;
and
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(iii) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $24.00 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be based on a
fixed exchange ratio of 3.750 shares of UPC Common Stock for each
share of EBI Common Stock; provided, however, EBI shall have the right
to either accept the fixed Exchange Ratio of 3.750, or terminate this
Reorganization Agreement and the transactions contemplated herein;
provided, further, in the event EBI should elect to terminate this
Reorganization Agreement in accordance with this Section 3.1(e)(iii),
UPC may, in its sole discretion, reinstate this Reorganization
Agreement and the transactions contemplated herein by increasing the
number of shares of UPC Common Stock to be delivered by UPC to the EBI
Record Holders based on (a) a fixed price of $90.00 per share of EBI
Common Stockdivided by (b) the Current Market Price Per Share of UPC
Common Stock.
The Exchange Ratio as determined in this Section 3.1(e) shall be based on an
aggregate of no more than 100,000 shares of EBI Common Stock validly issued and
outstanding immediately prior to the Effective Time of the Merger; 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 EBI 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 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) for each of the ten (10) NYSE general market trading
days immediately following the receipt by UPC of all requisite
Government Approvals on which the NYSE was open for business (the
"Pricing Period"). In the event the UPC Common Stock does 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
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(2) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should EBI Record Holders representing at least 7% of
the shares of EBI Common Stock issued and outstanding at the time of
Closing perfect such EBI Record Holder's dissenters' rights pursuant
to the Arkansas Code and maintain the perfected status of such
dissenters' rights through the Closing Date, UPC and NABS shall have
the right, exercisable in their sole discretion, to terminate this
Reorganization Agreement, or with the approval of the Board of
Directors of EBI reduce the number of shares of UPC Common Stock to be
delivered by UPC hereunder by an amount sufficient to off-set against
the Consideration any amounts paid, or to be paid, by UPC in
satisfaction of such dissenters' rights.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF UPC OR
EBI. Should either UPC or EBI 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 proportionately in such a manner as the Board of Directors of
UPC and the Board of Directors of EBI shall agree in good faith to be
fair and reasonable in order to give effect to such changes.
(f) Mechanics of Payment of the Consideration.
As soon as reasonably practicable 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 EBI Record Holders such
materials and information deemed necessary by the Exchange Agent to advise the
EBI Record Holders of the procedures required for proper surrender of their
certificates evidencing and representing shares of the EBI Common Stock in
order for the EBI 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 "Shareholder Materials"). All Shareholder Materials shall be
sent by United States mail to the EBI Record Holders at the addresses set forth
on a certified shareholder list to be delivered by EBI to UPC at the Closing
(the "Shareholder List"). As soon as reasonably practicable thereafter, the
EBI Record Holders of all of the outstanding shares of EBI Common Stock, shall
deliver, or cause to be delivered, to the Exchange Agent, pursuant to the
Shareholder Materials, the certificates formerly evidencing and representing
all of the shares of EBI Common Stock which were validly issued and outstanding
immediately prior to the Effective Time of the Merger, and the Exchange Agent
shall
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 15
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take prompt action to process such certificates formerly evidencing and
representing shares of EBI 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 EBI Common Stock, the Exchange Agent shall, on or prior to the 30th
day after the Effective Time of the Merger, mail to the former EBI Shareholders
in exchange for the certificate(s) surrendered by them, the Consideration to be
paid for each such EBI Shareholder's shares of EBI 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 EBI Common Stock of an EBI 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 EBI Record Holder's shares of EBI 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 EBI Record
Holder's EBI Common Stock shall have been surrendered as provided above, the
Consideration payable to the EBI Record Holder(s) of the cancelled shares as of
any time after the Effective Date shall not be paid to the EBI Record Holder(s)
of such certificate(s) until such certificates shall have been surrendered in
the manner required. Each EBI Shareholder will be responsible for all federal,
state and local taxes which may be incurred by him on account of his receipt of
the Consideration to be paid in the Merger. The EBI 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 EBI Record Holder is entitled, provided that each such EBI Record
Holder shall deliver to UPC and to the Exchange Agent: (i) a sworn statement
certifying 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 EBI Shareholder.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 16
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(g) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of EBI shall be closed and no transfer
of shares of EBI Common Stock shall be made thereafter.
(h) Effects of the Merger. As of the Effective
Time of the Merger, the separate existence of EBI shall cease, and EBI shall be
merged with and into NABS which, as the Surviving Corporation, shall thereupon
and thereafter possess all of the assets, rights, privileges, appointments,
powers, licenses, permits and franchises of the two merged corporations,
whether of a public or a private nature, and shall be subject to all of the
liabilities, restrictions, disabilities and duties of both EBI and NABS.
(i) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
EBI and NABS 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 NABS 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 EBI as well as those of
NABS, 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 EBI or NABS.
(k) Dissenting Shareholders' Rights. Any EBI
Record Holder of shares of EBI Common Stock who shall comply strictly with the
provisions of Section 4-26-1007 et seq. of the Arkansas Code, shall be entitled
to dissent from the Merger and to seek those appraisal remedies afforded by the
Arkansas Code. Such an EBI Shareholder is referred to herein as an "EBI
Dissenting Shareholder." However, UPC and NABS shall not be obligated to
consummate the Merger if EBI Record Holders holding or controlling more than
seven percent (7%) of the shares of the EBI Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall have perfected and
maintained in perfected status their dissenter's rights in accordance with the
Arkansas Code and the perfected status of said dissenter's rights shall have
continued to the time of Closing.
(l) EBI Stock Options and Treasury Stock. As of
the date of this Reorganization Agreement, there are no options,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
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rights, warrants, scrip or similar rights issued and outstanding by EBI to
purchase shares of EBI Common Stock (the "EBI Stock Options"). Therefore, at
the Effective Time of the Merger there will be no issued or outstanding EBI
Stock Options. As of the date of this Reorganization Agreement, there are no
shares of EBI Common Stock held by EBI as Treasury Stock.
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 Union Planters Corporation, Administrative Center,
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.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC
As of the date hereof and as of the Effective Time of the
Merger, UPC and NABS represent and warrant to EBI as follows:
4.1 Organization and Corporate Authority. UPC and NABS
are corporations duly organized, validly existing and in good standing under
the laws of the State of Tennessee and the State of Arkansas, respectively, and
(i) have, in all material respects, all 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 (iii) have in effect all federal,
state, local and foreign governmental authorizations, permits and licenses
necessary for them to own or lease their properties and assets and to carry on
their businesses as they are currently being conducted. The corporate Charters
and Bylaws of UPC and NABS, 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 NABS have all requisite corporate
power and authority to execute and deliver this Reorganization
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
<PAGE> 120
Agreement and the Plan of Merger and to consummate the transactions
contemplated hereby and thereby. This Reorganization Agreement, and all other
agreements contemplated to be executed in connection herewith by UPC and/or
NABS, have been (or upon execution will have been) duly executed and delivered
by UPC and/or NABS, have been (or upon execution will have been) effectively
authorized by all necessary action, corporate or otherwise, and, other than the
approval of UPC as sole shareholder of NABS and UPC's Board of Directors, no
other corporate proceedings on the part of UPC or NABS 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
NABS, 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, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof will not result in a 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 or NABS is a party or by which they
or their property or any of their assets are bound; the corporate Charters or
Bylaws of UPC or NABS; or any material judgment, decree, order or award of any
court, governmental body or arbitrator by which UPC or NABS is bound; or any
material permit, concession, grant, franchise, license, law, statute,
ordinance, rule or regulation applicable to UPC or NABS 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 or NABS, except that the Government Approvals shall
be required in order for UPC or NABS to consummate the Merger.
4.3 No Legal Bar. Neither UPC nor NABS is a party to,
subject to or bound by any agreement, judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body of competent
jurisdiction which would prevent the execution of this Reorganization Agreement
by UPC or NABS, its delivery to EBI and FSB or the consummation of the
transactions contemplated hereby, and no action or proceeding is pending
against UPC or NABS in which the validity of this Reorganization Agreement, any
of the transactions contemplated hereby or any action which has been taken by
any of the Parties
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
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in connection herewith or in connection with any of the transactions
contemplated hereby is at issue.
4.4 Government 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 NABS in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by UPC or
NABS, except for: (a) the prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") of the Merger under the Bank
Holding Company Act of 1956, as amended; and (b) the prior approval of the
Arkansas State Bank Department ("ASBD") under Section 23-32-1801 et seq of the
Arkansas Code and the regulations promulgated by the ASBD thereunder
(collectively, the "Government Approvals").
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 November 1, 1993, 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 January 19,
1989, between UPC and Union Planters National Bank as Rights Agent (the "UPC
Share Purchase Rights Agreement"). As of November 1, 1993, 19,598,092 shares
of UPC Common Stock were validly issued and outstanding.
Except as described in Schedule 4.5 hereto, UPC is the holder,
directly or indirectly, of all of the outstanding capital stock of its
Subsidiaries, except for director qualifying shares.
(b) The authorized capital stock of NABS consists of
1,000 shares of common stock having a par value of $1.00 per share (the "NABS
Common Stock") and no preferred stock. As of the date hereof, NABS had issued
all 1,000 shares of the authorized NABS Common Stock to UPC. Therefore, UPC is
the record holder and beneficial owner of all of the NABS Common Stock
outstanding.
4.6 UPC Financial Statements. UPC has delivered and, to
the extent reference is made to financial statements not yet available or
capable of development, will deliver to EBI true and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
<PAGE> 122
complete copies of: (i) UPC's audited Consolidated Financial Statements for the
calendar years ended December 31, 1991 and 1992 (as originally issued, but
without giving effect to subsequently effected business combinations accounted
for as poolings of interests); (ii) UPC's unaudited consolidated financial
statements for each of the calendar quarters ending in calendar year 1993 and
thereafter, ending prior to the Closing Date; and (iii) upon issuance thereof,
UPC's audited Consolidated Financial Statements for the calendar year ending
December 31, 1993. Such financial statements and the notes thereto present
fairly, or will present fairly when issued, in all material respects, the
consolidated financial position of UPC at the respective dates thereof and the
consolidated results of operations and consolidated cash flow of UPC for the
periods indicated, and in each case in conformity with GAAP consistently
applied and maintained.
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 material
forms and reports required by law 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 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 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 EBI Record Holders in exchange for all
of the EBI Common Stock 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 material respects such distinguishing characteristics as
those of the shares of UPC
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
<PAGE> 123
Common Stock outstanding immediately prior to the Effective Time of the Merger.
4.9 Litigation. Except as set forth in Schedule 4.9
hereto, there is no action, suit or proceeding pending against UPC or any UPC
Subsidiary, or to the best knowledge of UPC or any UPC Subsidiary 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 that (i)
would, if decided against UPC or the UPC Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities, condition (financial
or other) or prospects of UPC or any UPC Subsidiary and that are not reflected
in the UPC Financial Statements or (ii) has been brought by or on behalf of any
employee employed or formerly employed by UPC or any UPC Subsidiary that would
have a material adverse impact on UPC or any UPC Subsidiary.
4.10 Labor and Employment Matters. Except as reflected
in Schedule 4.10 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which UPC or any UPC 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 UPC or any UPC 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 UPC or any
UPC 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 UPC nor any UPC Subsidiary has
received notice from any governmental agency of any alleged violation of
applicable laws that remains unresolved respecting employment and employment
practices, terms and conditions of employment and wages and hours. UPC and
each UPC 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, and UPC and each UPC
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 UPC and each UPC Subsidiary and
are not liable for any arrears of wages, taxes, penalties or other sums for
failure
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
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to comply with any of the foregoing. Except as set forth in Schedule 4.10,
there is no: unfair labor practice complaint against UPC or any UPC Subsidiary
pending before the National Labor Relations Board or any state or local agency;
pending labor strike or other labor trouble affecting UPC or any UPC
Subsidiary; labor grievance pending against UPC or any UPC Subsidiary; pending
representation question respecting the employees of UPC or any UPC Subsidiary;
pending arbitration proceedings arising out of or under any collective
bargaining agreement to which UPC or any UPC Subsidiary is a party, or to the
best knowledge of UPC, any basis for which a claim may be made under any
collective bargaining agreement to which UPC or any UPC Subsidiary is a party.
4.11 Absence of Undisclosed Liabilities. Except as described
in Schedule 4.11 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, 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 (i) except as disclosed in
the UPC Financial Statements delivered to EBI 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. Except as
described in Schedule 4.11 hereto, since December 31, 1992, 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, 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.
4.12 Disclosure. The information concerning, and the
representations or warranties made by UPC and NABS as set forth in this
Reorganization Agreement, or in any document, statement, certificate or other
writing furnished or to be furnished by UPC and NABS to EBI 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 EBI by UPC and NABS pursuant hereto were or will be
complete and accurate copies of such documents.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF EBI AND FSB
Both as of the date hereof and as of the Effective Time of the Merger,
FSB and EBI represent and warrant to UPC and NABS as follows:
5.1 Organization and Qualification of EBI and
Subsidiaries. EBI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas and (a) has all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as it is currently being conducted; (b) 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 (c) is a registered bank
holding company with the Federal Reserve. Each EBI Subsidiary is duly
chartered, validly existing and in good standing under the laws of the state or
jurisdiction of its incorporation and (a) has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as it is currently being conducted and (b) 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. EBI 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 it is currently being conducted. FSB
is a state bank duly organized, validly existing and is in good standing under
the laws of the State of Arkansas and engages only in activities (and holds
properties only of the types) permitted by the Arkansas Code and the rules and
regulations promulgated by the ASBD thereunder or the FDIC for state banks.
FSB's deposit accounts are insured by the FDIC to the fullest extent permitted
under applicable law.
5.2 Authorization, Execution and Delivery;
Reorganization Agreement Not in Breach.
(a) EBI and FSB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
<PAGE> 126
consummation of the proposed transaction have been duly authorized by
majorities of the entire Boards of Directors of both EBI and FSB and, except
for the approval of the EBI Shareholders, no other corporate proceedings on the
part of EBI are 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
and all other agreements and instruments herein contemplated to be executed by
FSB and EBI have been (or upon execution will have been) duly executed and
delivered by FSB and EBI and constitute (or upon execution will constitute)
legal, valid and enforceable obligations of FSB and EBI, 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
transaction 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 mortgage, lease, covenant, agreement, indenture or other instrument to
which EBI or any EBI Subsidiary is a party or by which EBI or any EBI
Subsidiary is bound; the Articles of Incorporation or Bylaws of FSB or EBI; or
any judgment, decree, order, regulatory letter of understanding or award of any
court, governmental body, authority or arbitrator by which EBI or any EBI
Subsidiary is bound; or any permit, concession, grant, franchise, license, law,
statute, ordinance, rule or regulation applicable to EBI or any EBI 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 EBI or any EBI
Subsidiary.
5.3 No Legal Bar. Neither FSB nor EBI 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 FSB or EBI, the delivery
thereof to UPC and NABS, or the consummation of the transaction contemplated
hereby and thereby, and no action or proceeding is pending against FSB or EBI
in which the validity of this Reorganization Agreement, the transaction
contemplated hereby or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 25
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any action which has been taken by any of the Parties in connection herewith or
in connection with the transaction contemplated hereby is 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 FSB
or EBI 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 required from any
landlord, licensor or other non-governmental party which has granted rights to
FSB or EBI in order to avoid forfeiture or impairment of such rights.
5.5 Compliance With Law. EBI and all EBI Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses, and EBI and FSB 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 EBI's or FSB's properties or over any other part of EBI's or
FSB's assets, liabilities or operations. The benefits of all of such licenses,
franchises, permits and authorizations are in full force and effect and may
continue to be enjoyed by EBI and FSB subsequent to the Closing of the
transactions contemplated herein without any consent or approval. Neither EBI
nor any EBI 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 Articles of Incorporation and Bylaws of EBI
and FSB, respectively. The Articles of Incorporation and Bylaws of EBI and
FSB, as amended to date, are in full force and effect.
5.7 EBI Financial Statements. Accompanying Schedule 5.7
hereto are true copies of the audited consolidated statements of condition of
EBI as of December 31, 1992, and December 31, 1991, and the related
consolidated statements of income and changes in capital funds and cash flows
of EBI and FSB for the years ended December 31, 1992, and 1991 (the "Audited
Financial Statements of EBI") and the comparative interim (or annual) financial
statements for any subsequent quarter (or year) ending after December 31, 1992
and prior to the Closing Date. Such
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 26
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financial statements (i) were (or will be) prepared from the books and records
of EBI and FSB; (ii) were (or will be) prepared in accordance with generally
accepted accounting principles consistently applied; (iii) accurately present
(or will present) EBI's and FSB's consolidated financial condition and the
consolidated results of their operations, changes in stockholders' equity and
cash flows as at the relevant dates thereof and for the periods covered
thereby; (iv) do contain or reflect (or will contain and reflect) all necessary
adjustments and accruals for an accurate presentation of EBI's and FSB's
consolidated financial condition and the consolidated results of EBI's and
FSB's operations and cash flows for the periods covered by such financial
statements; (v) 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) 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.
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, 1992 (the "Balance Sheet Date") there has not
been:
(a) any transaction by EBI or FSB 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 EBI or FSB;
(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 EBI or FSB or their future
use and operation by EBI or FSB;
(d) any acquisition or disposition by EBI or FSB
of any property or asset of EBI or FSB, whether real or personal, having a fair
market value, singularly or in the aggregate, in an amount greater than Twenty
Thousand Dollars ($20,000), except in the ordinary course of business and in
conformity with past practice;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 27
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(e) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind on any of the respective properties or assets
of EBI or FSB, except to secure 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 EBI or FSB, to which EBI or FSB is a
party which would have an adverse effect upon the financial condition or
operations of EBI or FSB.
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director,
employee or agent of EBI or FSB, 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 EBI or FSB, any property subject to, any liability, except for
liabilities incurred or assumed or property taken subsequent to the Balance
Sheet Date in the ordinary course of business and in conformity with past
practice;
(i) any material alteration in the manner of
keeping the books, accounts or Records of EBI or FSB, or in the accounting
policies or practices therein reflected;
(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
EBI or FSB of any nature whatsoever, except in the ordinary course of business
and in conformity with past practice; or
(k) any loan (except credit card loans, passbook
loans or home loans) by EBI or FSB to any Officer, director or 2% shareholder
of EBI or FSB or any Affiliate of EBI or FSB; or to any member of the immediate
family of such Officer, director or 2% shareholder of EBI or FSB or any
Affiliate of EBI; or to any Person in which such Officer, director or 2%
shareholder 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%
shareholder has a ten percent (10%) or more beneficial interest; or as to which
such Officer, director or 2% shareholder serves as a trustee or in a similar
capacity. As used in this Section, "Officer" shall
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 28
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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. To the best of the knowledge, information
and belief of the management of EBI, none of the FSB Deposits is a "brokered"
Deposit or subject to any encumbrance, legal restraint or other legal process.
Except as set forth in Schedule 5.9, no portion of the Deposits represents a
Deposit by any Affiliate of EBI or FSB.
5.10 Properties. Except as described in Schedule 5.10
hereto or adequately reserved against in the Audited Financial Statements of
EBI, EBI and each EBI 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 EBI as being owned by EBI or
any EBI Subsidiary as of the dates thereof. All buildings, and all fixtures,
equipment, and other property and assets that are material to the business of
EBI and its Subsidiaries on a consolidated basis, held under leases or
subleases by EBI or any EBI 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). The policies of fire, theft,
liability, and other insurance maintained with respect to the properties,
assets or businesses of the EBI Companies provide adequate coverage against
loss, and the fidelity bonds in effect as to which any of the EBI Companies is
a named insured are believed to be sufficient.
5.11 EBI Subsidiaries. Schedule 5.11 hereto lists all of
the active and inactive EBI Subsidiaries (including any FSB Subsidiary) as of
the date of this Reorganization Agreement and describes generally the business
activities conducted, or permitted to be conducted, by each EBI Subsidiary. No
equity securities of any of the EBI Subsidiaries are or may become required to
be issued (other than to EBI or FSB) 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 EBI Subsidiary, and there are no contracts,
commitments, understandings, or arrangements by which
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 29
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any EBI Subsidiary is bound to issue (other than to EBI) 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 EBI Subsidiary held by EBI or by any EBI Subsidiary are fully paid and
nonassessable and are owned by EBI or such EBI 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 EBI's or FSB's fixed assets and
equipment having a net book value in excess of Five Thousand Dollars ($5,000)
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 EBI and each EBI 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 EBI or any EBI Subsidiary except as fully reserved for in
the Audited Financial Statements of EBI. All taxes, interest, additions, and
penalties due with respect to completed and settled examinations or concluded
litigation have been paid.
(b) Neither EBI nor any EBI 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) Adequate provision for any federal, state,
local, or foreign taxes due or to become due for EBI and all EBI Subsidiaries
for all periods through and including December 31, 1992, has been made and is
reflected on the December 31, 1992 financial statements included in the Audited
Financial Statements of EBI, and have been and will continue to be made with
respect to periods ending after December 31, 1992.
(d) Deferred taxes of EBI and each EBI Subsidiary
have been and will be provided for in accordance with GAAP.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 30
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(e) To the best knowledge of EBI and FSB, neither
the Internal Revenue Service nor any foreign, state, local or other taxing
authority is now asserting or threatening to assert against EBI or any EBI
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 EBI 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 EBI
or any EBI Subsidiary, either have been paid in full, or have been properly
accrued and reflected in the Audited Financial Statements of EBI referred to in
Section 5.7 of this Reorganization Agreement.
5.14 Litigation. Except as set forth in Schedule 5.14
hereto, there is no action, suit or proceeding pending against EBI or any EBI
Subsidiary, or to the best knowledge of EBI or FSB threatened against or
affecting EBI, any EBI Subsidiary or any of their assets, before any court or
arbitrator or any governmental body, agency or official that (i) would, if
decided against EBI or the EBI Subsidiary, have a material adverse impact on
the business, properties, assets, liabilities, condition (financial or other)
or prospects of EBI or FSB and that are not reflected in the Financial
Statements or (ii) has been brought by or on behalf of any employee employed or
formerly employed by EBI or any EBI Subsidiary.
5.15 Hazardous Materials. To the best of the knowledge,
information and belief of the management of EBI:
(a) EBI and all EBI Subsidiaries have obtained
all permits, licenses and other authorizations which are required to be
obtained by EBI or its Subsidiaries with respect to the Property (as defined
herein) under all Applicable Environmental Laws (as defined herein). All
Property controlled, directly or indirectly, by EBI or any EBI 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. For purposes hereof, the
following terms shall have the following meanings:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 31
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"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 2701 et seq.; (m)
the Arkansas Water and Air Pollution Control Act, Section 8-4-101 et seq. of
the Arkansas Code of 1987 Annotated; (n) the Arkansas Solid Waste Management
Act, Section 8-6-201 et seq. of the Arkansas Code of 1987 Annotated; (o) the
Hazardous Waste Management Act of 1979, Section 8-7-301 et seq. of the Arkansas
Code of 1987 Annotated; (p) the Arkansas Resource Reclamation Act of 1979,
Section 8- 7-301 et seq. of the Arkansas Code of 1987 Annotated; (q) the
Emergency Response Fund Act, Section 8-7-401 et seq. of the Arkansas Code of
1987 Annotated; (r) Remedial Act Trust Fund Act, Section 8-7-501 et seq. of the
Arkansas Code of 1987 Annotated; (s) the Arkansas statute dealing with
Regulated Substance Storage Tanks, 8-7-801 et seq. of the Arkansas Code of 1987
Annotated; (t) the Petroleum Storage Tank Trust Fund Act, Sections 8-7-901 et
seq. of the Arkansas Code of 1987 Annotated; (u) any amendments to the
foregoing Acts as adopted from time to time on or before the Closing; and (v)
any rule, regulation, order, injunction, judgment, declaration or decree
implementing or interpreting any of the foregoing Acts, 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 EBI or any EBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 32
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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 EBI or a EBI
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 EBI or any EBI Subsidiary to
have any permit, license or authorization required in connection with
the conduct of the business of EBI or any EBI 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 EBI or any Affiliate of EBI 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 EBI's or any EBI Subsidiary's occupancy
thereof, or during the occupancy thereof by any assignee or sublessee
of EBI or any EBI 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 33
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(c) Neither EBI nor any Affiliate of EBI 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, EBI or any Affiliate of EBI 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 EBI or any Affiliate
of EBI 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 EBI, 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.
(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
EBI or any Affiliate of EBI in relation to any Property, which have not been
made available to UPC.
(h) Neither EBI nor FSB is aware of any facts
which might suggest that EBI or any EBI Subsidiary has engaged in any
management practice with respect to any of its past or existing borrowers which
could reasonably be expected to subject EBI or any EBI 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) as modified by 40 C.F.R. Part 300.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 34
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5.16 Insurance. EBI and FSB have paid all material
amounts due and payable under any insurance policies and guaranties applicable
to EBI and FSB and EBI's or FSB's assets and operations; all such insurance
policies and guaranties are in full force and effect; and EBI and FSB and all
of EBI's and FSB's material Realty and other material properties are insured
against fire, casualty, theft, loss, 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.
5.17 Labor and Employment Matters. To the best of the
knowledge, information and belief of the management of EBI, except as reflected
in Schedule 5.17 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which EBI or any EBI 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 EBI or any EBI 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 EBI or any
EBI 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 EBI nor any EBI Subsidiary has
received notice from any governmental agency of any alleged violation of
applicable laws that remains unresolved respecting employment and employment
practices, terms and conditions of employment and wages and hours. EBI and
each EBI 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, and EBI and each EBI
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 EBI and each EBI 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 EBI or any EBI
Subsidiary pending before the National Labor Relations Board or any state or
local agency; pending labor strike or other labor trouble affecting EBI or any
EBI Subsidiary; labor grievance pending against EBI or any EBI
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 35
<PAGE> 137
Subsidiary; pending representation question respecting the employees of EBI or
any EBI Subsidiary; pending arbitration proceedings arising out of or under any
collective bargaining agreement to which EBI or any EBI Subsidiary is a party;
or to the best knowledge of EBI, any basis for which a claim may be made under
any collective bargaining agreement to which EBI or any EBI Subsidiary is a
party.
5.18 Records and Documents. The Records of FSB are and
will be sufficient to enable FSB to continue conducting its business as an
Arkansas state bank under similar standards as FSB has heretofore conducted
such business.
5.19 Capitalization of EBI. The authorized capital stock
of EBI consists of 100,000 shares of common stock having a par value of $10.00
per share (the "EBI Common Stock") and no shares of preferred stock or any
other class of equity security. As of the date of this Reorganization
Agreement, 100,000 shares of EBI Common Stock were issued and outstanding and
no shares of EBI Common Stock were held by EBI as treasury stock. All of the
outstanding EBI Common Stock is validly issued, fully-paid and nonassessable
and has not been issued in violation of any preemptive rights of any EBI
Shareholder. Except as described in Section 3.1(l) 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
EBI Common Stock or into any other equity or debt security of EBI, 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 EBI Common Stock or any other equity or debt
security of EBI. Accordingly, immediately prior to the Effective Time of the
Merger, there will be not more than (nor less than) 100,000 shares of EBI
Common Stock issued and outstanding. Except as set forth in Schedule 5.19
hereto, EBI owns and is the beneficial record holder of, and has good and
freely transferable title to, all of the 100,000 shares of FSB Common Stock
outstanding, recorded on the books and Records of FSB 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 effect the ability of EBI to freely vote such stock in
support of the transactions contemplated herein.
5.20 Sole Agreement. With the exception of this
Reorganization Agreement, neither EBI, nor FSB, nor any Subsidiary of either
has been, is or will become 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 36
<PAGE> 138
involvement of EBI or FSB or any Subsidiary of either (or any of their assets)
in any business combination of any kind; or any agreement obligating EBI or FSB
to issue or sell or authorize the sale or transfer of EBI Common Stock or the
capital stock of FSB. 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 EBI outstanding, except for shares
of EBI 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
exchangeable for, shares of the capital stock of EBI or FSB, or contracts,
commitments, understandings, or arrangements by which EBI or FSB 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 EBI or any EBI
Subsidiary is or may be bound to transfer or issue to any third party any
shares of the capital stock of any EBI 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 EBI to vote or to
dispose of any such shares.
5.21 Disclosure. The information concerning, and
representations and warranties made by, EBI and FSB set forth in this
Reorganization Agreement, or in the Schedules of Exceptions of EBI hereto, or
in any document, statement, certificate or other writing furnished or to be
furnished by EBI or FSB to UPC and NABS pursuant hereto, does 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 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 by
EBI or FSB 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, neither EBI nor any EBI Subsidiary has any obligation
or liability (contingent or otherwise) that is material to the financial
condition or operations of EBI or any EBI Subsidiary, or that, when combined
with all similar obligations or liabilities, would be material to the financial
condition or operations of EBI or any EBI Subsidiary (i) except as disclosed in
the EBI Financial Statements delivered to UPC prior to the date of this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 37
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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,
1992, neither EBI nor any EBI Subsidiary has incurred or paid any obligation or
liability which would be material to the financial condition or operations of
EBI or such EBI Subsidiary, 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 EBI or any EBI Subsidiary.
5.23 Allowance for Possible Loan or ORE Losses. The
allowance for possible loan losses shown on the consolidated Audited Financial
Statements of EBI is (with respect to periods ended on or before December 31,
1992) or will be (with respect to periods ending subsequent to December 31,
1992) 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. Except as disclosed in Schedule 5.23 hereto, as of the date thereof,
neither EBI nor FSB has any Loan which has been criticized or classified by its
bank examiners or by its independent auditors as "Other Assets Especially
Mentioned," "Substandard," "Doubtful" or "Loss" or as a "Potential Problem
Loan."
The allowance for possible losses on other real estate ("ORE") shown
on the consolidated Audited Financial Statements of EBI is (with respect to
periods ended on or before December 31, 1992) or will be (with respect to
periods ending subsequent to December 31, 1992) adequate in all respects to
provide for anticipated losses inherent in ORE owned or held by EBI or any EBI
Subsidiary and the net book value of ORE on the Balance Sheet of Audited
Financial Statements of EBI is the net realizable value of the ORE in
accordance with Statement of Position 92-3.
5.24 Compliance with Laws. To the best of the knowledge,
information and belief of the management of EBI, except as described in
Schedule 5.24 hereto, EBI and each EBI 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 EBI or any
EBI Subsidiary, or which would or could
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 38
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reasonably be expected to subject EBI or any EBI 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 EBI or any
EBI 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 EBI or any EBI Subsidiary, (ii) threatening to
revoke any license, franchise, permit, or governmental authorization which is
material to the financial condition or operations of EBI or any EBI Subsidiary,
or (iii) requiring EBI or any EBI Subsidiary to enter into a cease and desist
order, consent, agreement, or memorandum of understanding.
5.25 Employee Benefit Plans. (a) EBI has previously
provided to UPC true and complete copies of each "employee benefit plan," as
defined in ERISA, which, to the best of its knowledge, is subject to any
provision of ERISA and covers any employee, whether active or retired, of EBI
or any EBI Subsidiary, together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan. Such plans are hereinafter referred to collectively as the
"Employee Plans", and each such Employee Plan is listed in Schedule 5.25(a)
hereto. Each Employee Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code, is so qualified. Except as disclosed in
Schedule 5.25(a) hereto, all Employee Plans were in effect for substantially
all of calendar year 1992 and there has been no material amendment thereof
(other than amendments required to comply with applicable law) or material
increase in the cost thereof or benefits thereunder on or after January 1,
1993.
(b) EBI has furnished to UPC true and complete
copies and descriptions of each plan or arrangement maintained or otherwise
contributed to by EBI or any EBI Subsidiary which is not an Employee Plan and
which (exclusive of base salary and base wages) provides for any form of
current or deferred compensation, bonus, stock option, profit sharing, benefit,
retirement, incentive, group health or insurance, welfare plan (including, but
not limited to, "employee welfare benefit plans" as that term is defined in
ERISA), or similar plan or arrangement for the benefit of any employee or class
of employees, whether active or retired, of EBI or any EBI Subsidiary (such
plans and arrangements being collectively referred to herein as "Benefit
Arrangements" and all such Benefit Arrangements of EBI and EBI's
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 39
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Subsidiaries are listed on Schedule 5.25(b) hereto). Except as disclosed in
Schedule 5.25(b) hereto, there are no other Benefit Arrangements of the EBI
Companies and all Benefit Arrangements which are in effect were in effect for
substantially all of calendar year 1992. Except as disclosed in Schedule
5.25(b) hereto or as was required by applicable law, 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 January
1, 1993, and no material increase in the base salary and wage levels of EBI or
any EBI 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 1992.
Except as disclosed in Schedule 5.25(b) hereto, there has been no material
increase in the compensation of or benefits payable to any senior executive
employee of EBI or any EBI Subsidiary since January 1, 1993, nor any
employment, severance or similar contract entered into with any such employee,
nor any amendment to any such contract, since January 1, 1993. Except as
disclosed in Schedule 5.25(b) hereto, there is no contract, agreement or
Benefit Arrangement covering any employee of EBI or any EBI 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 280(G) of the Internal Revenue Code.
(c) With respect to all Employee Plans and Benefit
Arrangements, EBI and each EBI Subsidiary are in substantial compliance with
the requirements prescribed by any and all statutes, governmental or court
orders, or rules or regulations currently in effect, including but not limited
to ERISA and the Internal Revenue Code, applicable to such Employee Plans or
Benefit Arrangements. No condition exists that could constitute grounds for
the termination of any Employee Plan under Section 4042 of ERISA; no
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975
of the Internal Revenue Code, has occurred with respect to any Employee Plan,
or any other employee benefit plan maintained by EBI or any EBI Subsidiary
which is covered by Title I of ERISA, which could subject any person (other
than a person for whom neither EBI nor any EBI 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 which
could have an adverse effect on the business, assets, financial condition,
results of operations or prospects of any EBI Company; no Employee Plan subject
to Part III of Subtitle B of Title I of ERISA or Section 412 of the Internal
Revenue Code, or both, has incurred any "accumulated funding deficiency," as
defined in Section 412 of the Code, whether or not waived; neither EBI nor any
EBI Subsidiary has failed to make any contribution or pay any
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 40
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amount due and owing as required by the terms of any Employee Plan or Benefit
Arrangement; no Benefit Arrangement has incurred, nor does any Benefit
Arrangement have, any unfunded plan liabilities, whether or not waived; neither
EBI nor any EBI Subsidiary has incurred or expects to incur, directly or
indirectly, any liability under Title IV of ERISA arising in connection with
the termination of, or a complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA which could constitute a liability
of UPC or any of its Affiliates (including EBI or any EBI Subsidiary) at or
after the Effective Time of the Merger. Except as disclosed in Schedule
5.25(c) hereto, to the best knowledge, information and belief of EBI, no
condition exists that could subject any person (other than a person for whom
neither EBI nor any EBI Subsidiary is directly or indirectly responsible) to
liabilities, damages, losses, taxes or sanctions that arise under Sections
106(b), 162(i) and 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 Sections 162(k) and 4980B of the Internal Revenue Code with
respect to any current or former employee, including their beneficiaries, of
EBI or any EBI Subsidiary.
(d) Except as described in Schedule 5.25(d) hereto,
each Employee 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 can be terminated by
FSB (or by NABS as the Surviving Corporation) within a period of 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. Any amounts representing or attributable to overfunding for a EBI
defined benefit plan may be returned to EBI or any EBI Subsidiary in accordance
with the respective plan's arrangements as described in the respective plan's
organic documents.
5.26 Material Contracts. Except as reflected in the EBI
Financial Statements, or as described in Schedule 5.26 hereto, neither EBI nor
any EBI 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 affected 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
EBI as of the date of this Reorganization Agreement that has not already been
filed as an exhibit to EBI's Form 10-K filed for the fiscal year ended
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 41
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December 31, 1992, or in any other SEC Document filed prior to the date of this
Reorganization Agreement.
5.27 Material Contract Defaults. To the best of the
knowledge, information and belief of the management of EBI, neither EBI nor any
EBI 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 EBI or any
EBI Subsidiary, 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 January 1, 1988, EBI and FSB have filed
all reports and statements, together with any amendments required to be made
with respect thereto, that it was required to file with (i) the ASBD; (ii) the
FDIC; (iii) the Federal Reserve, including, but not limited to, Annual Reports
on Form F.R. Y-6, Quarterly Reports on Form F.R. Y-9SP and Reports on Forms
F.R. 2900 and FFIEC 034 and proxy statements; and (iv) 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 material respects and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. EBI has previously provided to UPC true
and correct copies of all such reports filed by EBI or FSB after January 1,
1988.
5.29 Statements True and Correct. None of the information
prepared by, or on behalf of, EBI or any EBI Subsidiary regarding EBI, FSB or
any other EBI Subsidiary included or to be included in the Proxy Statement to
be mailed to EBI's shareholders in connection with the Shareholders 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 are filed, and, with respect to the Proxy
Statement, when first mailed to the shareholders of EBI, be false or misleading
with
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 42
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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 Shareholders
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
Shareholders Meeting. All documents which EBI or any EBI 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 Regulatory Approvals. Within a reasonable time 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 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 6.1 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 sole discretion, deem
such condition to be unreasonable or 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.
6.2 Registration of UPC Common Stock under the Securities
Laws. UPC shall cooperate with EBI in the preparation of the EBI Proxy
Statement to be used at the Shareholders Meeting (and which shall serve also as
UPC's prospectus with respect to
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 43
<PAGE> 145
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 EBI 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 New York Stock Exchange the UPC Common
Stock. Such registration, qualification and listing shall be effected prior to
the Closing.
6.3 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 EBI or
the EBI Subsidiaries and all employees of EBI and the EBI Subsidiaries
immediately prior to the Effective Time of the Merger who shall continue as
employees of NABS as the Surviving Corporation, FSB 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 EBI or with any EBI
Subsidiary prior to the Effective Time of the Merger by such former EBI Company
employees 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 January next following the Effective Time of the Merger
the participation of the employees of EBI and EBI's Subsidiaries in the
employee benefit plans maintained by UPC or UPC's Subsidiaries; provided,
however, during any such postponement period, The EBI Employee Plans and all
related employee benefit plans shall continue in full force and effect, except
as expressly modified or amended by the terms of this Reorganization Agreement,
or until such time as the plan is replaced by a benefit plan maintained by UPC.
6.4 Notifications to EBI. UPC shall notify EBI immediately
upon receipt by UPC of all Government Approvals and of the initiation of the
Pricing Period.
6.5 Filings. UPC shall, upon filing with the SEC or NYSE any
form or report required to be filed by UPC with the SEC or NYSE, immediately
send by U.S. First Class Mail a copy of such form or report to the management
of EBI and FSB.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 44
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ARTICLE 7
COVENANTS OF EBI AND FSB
7.1 Proxy Statement; EBI Shareholder Approval. EBI shall
call the Shareholders Meeting to be held as soon as reasonably practicable
after the date of this Reorganization Agreement and shall use its best efforts
to ensure that such meeting is held not later than June 1, 1994, 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 Shareholders Meeting, (i) EBI shall, with UPC's assistance, prepare a
Proxy Statement to be filed with the SEC as part of UPC's registration
statement and with any other appropriate Regulatory Authority; shall mail or
cause to be mailed such Proxy Statement to its shareholders 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 EBI 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 EBI shall recommend (subject
to compliance with their legal and fiduciary duties as advised by counsel) to
EBI Shareholders the approval of this Reorganization Agreement and the Plan of
Merger; and (iv) EBI shall use its best efforts, subject to compliance with its
legal and fiduciary duty as advised by counsel, to obtain such EBI
Shareholders' approvals.
7.2 Conduct of Business -- Affirmative Covenants. Unless the
prior written consent of UPC shall have been obtained and, except as otherwise
contemplated herein:
(a) EBI and FSB shall, and shall cause each EBI
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 45
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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 EBI or such
EBI 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 FSB's
present customer base and to facilitate the retention of such
customers by FSB and its branches after the Effective Time of the
Merger; and
(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 EBI, FSB 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
FSB's customer relationships;
(b) EBI and FSB 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 that such
Government Approvals can not be obtained, and EBI and FSB shall provide to UPC
or to the appropriate governmental authorities all information reasonably
required to be submitted in connection with obtaining such approvals;
(c) EBI and FSB, 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 EBI, FSB 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
Closing, EBI and FSB shall inform UPC in writing of any and all
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 46
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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 EBI
and FSB; 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, EBI and FSB 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 necessary or appropriate effectively to consummate the
transaction contemplated by this Reorganization Agreement;
(f) Between the date of this Reorganization
Agreement and the Closing Date, EBI and FSB 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 EBI and FSB. EBI and FSB shall
provide reasonable assistance to UPC in its investigation of matters relating
to EBI and FSB; and
(g) Subject to the terms and conditions of this
Reorganization Agreement, EBI and FSB 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 transaction 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. EBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 47
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Reorganization Agreement, EBI and FSB covenant and agree that they will neither
do, nor agree or commit to do, nor permit any EBI Subsidiary to do or commit or
agree to do, except for existing commitments or agreements which have
previously been disclosed to UPC, 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:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Plan of Merger, amend its Articles 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
(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 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 EBI Common Stock; 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 EBI Common Stock, or any other capital stock of EBI or of
any EBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 48
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any such shares of such stock are sold or otherwise transferred to EBI or any
EBI Subsidiary, or (ii) sell, agree to sell, or otherwise dispose of any
substantial part of the assets or earning power of EBI or of any EBI
Subsidiary; or (iii) sell, agree to sell, or otherwise dispose of any asset of
EBI or any EBI 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
(f) Incur, or permit any EBI 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 EBI or any EBI
Subsidiary to EBI or another EBI Subsidiary] in excess of an aggregate of
$50,000 (for EBI and its Subsidiaries on a consolidated basis) except in the
ordinary course of the business of EBI or such EBI 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, and sales of certificates of deposit); or
(g) 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 EBI or of any EBI 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) 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 EBI or
FSB (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) Adopt any new employee benefit plan or
terminate or make any material change in or to any existing
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 49
<PAGE> 151
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
contracts or lease agreements that are material to EBI or any EBI 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) Grant or commit to grant any new extension of
credit to any officer, director or holder of 2% or more of the outstanding EBI
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 EBI or amend
the terms of any such credit outstanding on the date hereof.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of EBI. Unless waived
in writing by EBI, the obligation of EBI 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 NABS to be performed at or prior to the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The
representations and warranties of UPC and NABS contained in Article 4 of this
Reorganization Agreement shall be true and complete, in all material respects,
on and as of the Effective Time of the Merger with the same effect as though
made on and as of the Effective Time of the Merger;
(c) Documents. In addition to the other
deliveries of UPC or NABS described elsewhere in this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 50
<PAGE> 152
Reorganization Agreement, EBI shall have received the following documents and
instruments:
(i) a certificate signed by the
Secretary or an assistant secretary of UPC and NABS dated as of the
Closing Date certifying that:
(A) UPC's and NABS' respective
Boards of Directors 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 NABS is an
officer of UPC or NABS, as the case may be, holding the office
or offices specified therein 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 NABS attached to such certificate remain in full force and
effect; and
(D) UPC and NABS are in good
standing under their respective corporate charters; and
(ii) a certificate signed respectively by
duly authorized officers of UPC or NABS stating that the conditions
set forth in Section 8.1(a) and Section 8.1(b) of this Reorganization
Agreement have been fulfilled;
(d) Consideration. EBI 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
certificates evidencing and representing that number of shares of UPC Common
Stock and cash funds sufficient to meet the obligations of UPC to the EBI
Record Holders to deliver the Consideration under this Reorganization Agreement
and the Plan of Merger; and
(e) Opinion of UPC's and NABS' Counsel. EBI
shall have been furnished with an opinion of counsel to UPC and NABS, dated as
of the Closing Date, addressed to and in form and substance satisfactory to
EBI, to the effect that:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 51
<PAGE> 153
(i) UPC is a Tennessee corporation duly
organized, validly existing, and in good standing under the laws of
the State of Tennessee; and NABS is an Arkansas corporation duly
organized, validly existing, and in good standing under the laws of
the State of Arkansas;
(ii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by UPC and
NABS and (assuming this Reorganization Agreement is a binding
obligation of EBI and FSB) constitutes a valid and binding obligation
of UPC and NABS 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 NABS of this Reorganization Agreement nor any of the
documents to be executed and delivered by UPC or NABS in connection
herewith violates or conflicts with UPC's or NABS' 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 NABS;
(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 NABS of this Reorganization
Agreement or any of the documents to be executed and delivered by UPC
or NABS in connection herewith; and
(v) the shares of UPC Common Stock to be
issued in the names of the EBI Record Holders and delivered in
exchange for their EBI 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 NABS or appropriate government
officials; (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 State of Tennessee; and (iii) incorporate, be guided by,
and be interpreted in accordance with, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 52
<PAGE> 154
8.2 Conditions to the Obligations of UPC and NABS.
Unless waived in writing by UPC and NABS, the obligation of UPC and NABS 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 EBI and/or FSB to be performed at or before the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The
representations and warranties of EBI and/or FSB contained in Article 5 of this
Reorganization Agreement shall be true and correct, in all material respects,
on and as of the Closing Date with the same effect as though made on and as of
the Closing Date;
(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 EBI and FSB dated as of the
Closing Date certifying that:
(A) EBI's and FSB'S respective
Boards of Directors 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 EBI or FSB is an officer
of EBI or FSB, as the case may be, holding the office or
offices specified therein and that the signature of each
person set forth on such certificate is his or her genuine
signature;
(C) the charter documents of EBI
and FSB attached to such certificate remain in full force and
effect; and
(D) EBI and FSB are in good
standing under their respective corporate charters; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 53
<PAGE> 155
(ii) a certificate signed by the
respective Chief Executive Officers or an Executive Vice President of
each of EBI and FSB stating that the 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
EBI or FSB 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 EBI or FSB; 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 or NABS may
elect either (i) to close the contemplated transaction 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, EBI and FSB 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 EBI
and FSB. EBI and FSB shall have caused all EBI or FSB personnel to provide
reasonable assistance to UPC in its investigation of matters relating to EBI
and FSB;
(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 EBI or FSB 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 EBI or FSB, UPC
may elect either (i) to close the contemplated transaction in accordance with
the terms of this Reorganization Agreement or (ii) to terminate this
Reorganization Agreement without penalty;
(g) Opinion of EBI's Counsel. UPC shall have
been furnished with an opinion of counsel to EBI and FSB, dated the Closing
Date, addressed to and in form and substance satisfactory to UPC, to the effect
that:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 54
<PAGE> 156
(i) EBI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Arkansas;
(ii) FSB is a state bank duly organized,
validly existing, and in good standing under the laws of the State of
Arkansas;
(iii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by EBI and
FSB and (assuming that this Reorganization Agreement is a binding
obligation of UPC and NABS and the Plan of Merger is a binding
obligation of UPC and NABS) constitutes a valid and binding obligation
of EBI and FSB 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 and
delivery by EBI or FSB of this Reorganization Agreement or any of the
documents to be executed and delivered by EBI and FSB in connection
herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of EBI or FSB or appropriate government
officials; (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 State of Arkansas; and (iii) incorporate, be guided by, and
be interpreted in accordance with, the Legal Opinion Accord of the ABA Section
of Business Law (1991); and
(h) Other Business Combinations, Etc. Neither
EBI nor FSB shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which EBI or FSB would merge;
consolidate with; effect a business combination with; sell any substantial part
of EBI's or FSB'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 which would have the effect of materially
decreasing the value of EBI or FSB or the benefits of acquiring the EBI Common
Stock; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 55
<PAGE> 157
(i) Maintenance of Certain Covenants, Etc. At
the time of Closing (i) the total assets of FSB shall be not less than
$38,500,000; (ii) the tangible equity capital of FSB was not less than
$6,400,000 as of September 30, 1993, and shall in no event be less than
$6,400,000 at the time of Closing; (iii) the tangible equity capital of EBI was
not less than $6,400,000 as of September 30, 1993, and shall in no event be
less than $6,400,000 at the time of Closing; (iv) neither EBI nor FSB 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 exactly 100,000 shares
of EBI Common Stock validly issued and outstanding at the Effective Time of the
Merger); (iv) from December 31, 1992, there shall have been no extraordinary
sale of assets, nor any investment portfolio restructuring or dividend
declaration by either EBI or FSB; and (v) the Merger can be accounted for on
the financial statements of UPC as a "pooling of interests". The criteria and
calculations set forth above shall be determined in accordance with GAAP
assuming that EBI and FSB 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 or out of the ordinary borrowings or
by the realization of extraordinary 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
Board of Directors of EBI shall have entered into a non-compete agreement with
UPC and/or NABS substantially in the form of UPC's standard form of non-compete
agreement, providing for a term of not less than two (2) years and covering
Crittenden County, Arkansas, the county in which EBI and FSB currently operate
and do business in and have a present intention to do business in;
(k) 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 Reorganization
and 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 EBI'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 EBI's books and records, the accountants
are aware of no reason why a business combination, such as the one contemplated
in this Reorganization Agreement, to
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 56
<PAGE> 158
which EBI is a party should not be accounted for as a "pooling of interests"
under generally accepted accounting principles; and
(l) 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 EBI Record Holder who would be deemed
an Affiliate of EBI 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 EBI Common Stock pursuant to the terms
and conditions of this Reorganization Agreement, committing to UPC that such
EBI 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 EBI
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 EBI 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 EBI for a period of not
less than thirty (30) days subsequent to the Effective Time of the Merger.
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) Effective Registration Statement and No Stop
Orders. An S-4 Registration Statement encompassing the Proxy
Statement-Prospectus shall have been filed with the SEC, such
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 57
<PAGE> 159
registration statement shall have become effective and no stop order shall have
been issued or in effect by the SEC with respect to such registration statement
or the shares of UPC Common Stock to be issued pursuant thereto; and
(d) Tax Opinion. UPC and EBI shall have received
a written opinion from counsel to UPC 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 and that the EBI Record Holders will not recognize any
gain or loss to the extent that such EBI Record Holders exchange shares of EBI
Common Stock for shares of UPC Common Stock as contemplated by this
Reorganization Agreement and the Plan of Merger assuming that the shares of EBI
Common Stock so exchanged by such EBI Record Holders are held by them as
capital assets at the time of such exchange.
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;
(b) By UPC or NABS, should EBI or any EBI
Subsidiary fail to conduct its business pursuant to EBI's and FSB's Covenants
made in Article 7; or by EBI, should UPC or any UPC Subsidiary fail to conduct
its business pursuant to UPC's and NABS' Covenants made in Article 6;
(c) By UPC, NABS or EBI in the event the Closing
shall not have occurred by September 30, 1994 (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 EBI and FSB shall, upon UPC's written request, extend the
Closing Date for a reasonable time in order for UPC to obtain all Government
Approvals and for the expiration of any stipulated waiting periods;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 58
<PAGE> 160
(d) By either UPC, NABS or EBI, 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 transaction contemplated); provided, however,
that either UPC or EBI 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 NABS if 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 EBI 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;
(f) By UPC or NABS 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 EBI or FSB 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 EBI Common Stock which are the subject
of the instant transaction; or by EBI in the event that there shall have been,
in EBI'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;
(g) By UPC, NABS or EBI 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 NABS should EBI or any EBI
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 to sell a material portion of
its assets or to be acquired in any other manner by any other Person or to
acquire a material amount of assets or a material equity position in any other
Person, whether financial or otherwise; or by EBI should
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 59
<PAGE> 161
UPC 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 to sell a material portion of its
assets or to be acquired in any other manner by any other Person;
(i) By UPC or NABS should EBI or FSB or any EBI
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 EBI or FSB to raise additional capital or to sell
a substantial portion of its assets; or by EBI should UPC or any material 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 or any material UPC Subsidiary to raise
additional capital or to sell a substantial portion of its assets; or
(j) 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.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h), (i) or (j) 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 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 60
<PAGE> 162
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:
<TABLE>
<S> <C>
If to EBI or FSB:
Earle Bankshares, Inc.
801 Commerce Street (P.O. Box 248)
Earle, Arkansas 72331
Fax: (501) 735-8860
Attn: W. P. Morrison, Chairman
With a copy to: W. Price Morrison, Esq.
Martin, Tate, Morrow & Marston, P.C.
23 North Front Street
Memphis, Tennessee 38103
Fax: (901) 527-3746
If to UPC or NABS: Union Planters Corporation
P.O. Box 387 (mailing address)
Memphis, Tennessee 38147
or 7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38088
Fax: (901) 383-2832
Attn: Jackson W. Moore, President
Gary A. Simanson, Associate General Counsel
</TABLE>
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.
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; provided, however, such assignment
shall not change the form or nature of Consideration to be received by the EBI
Record Holders. This Reorganization Agreement shall
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 61
<PAGE> 163
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. 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. EBI, FSB, UPC and NABS each agrees
to use its best efforts to complete the transactions contemplated by this
Reorganization Agreement; provided, however, that the use of best efforts by
UPC shall not obligate UPC to obtain or to provide EBI additional capital in an
amount, to divest any Subsidiary or branch, or to meet any other condition
which may be imposed by any Regulatory Authority as a condition to approval
which UPC shall deem, in good faith, to be unreasonable in the circumstances.
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.
10.7 Entire Agreement. This Reorganization Agreement,
together with the Plan of Merger which is Exhibit A hereto, 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 62
<PAGE> 164
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, to the extent permitted by law, 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
(d) 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 63
<PAGE> 165
10.11 Payment of Expenses. Except as set forth herein, UPC
and EBI 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, NABS, FSB and EBI
represent and warrant to each other that 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 transaction 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 EBI or FSB, UPC
and NABS will be without an adequate remedy at law by reason of the unique
nature of EBI and FSB. In recognition thereof, in addition to (and not in lieu
of) any remedies at law which may be available to UPC and NABS, UPC and NABS
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 EBI or FSB, and no attempt on the part of UPC or
NABS to obtain such equitable relief shall be deemed to constitute an election
of remedies by UPC or NABS which would preclude UPC or NABS from obtaining any
remedies at law to which it would otherwise be entitled. EBI and FSB covenant
that they shall not contend in any such proceeding that UPC or NABS is not
entitled to a decree of specific performance by reason of having an adequate
remedy at law.
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 only upon
expiration of the applicable
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 64
<PAGE> 166
statutes of limitation. Nothing in this Section 10.15 shall limit EBI's,
FSB's, UPC's or NABS' rights or remedies for misrepresentations, breaches of
this Reorganization Agreement or any other improper action or inaction by the
other Party hereto prior to its termination.
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.
10.17 Remedies Cumulative. All remedies provided in this
Reorganization Agreement, by law or otherwise, shall be cumulative and not
alternative.
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.
EARLE BANKSHARES, INC.
By: /s/ W. P. Morrison
----------------------
W. P. Morrison
Its: Chairman of the Board
ATTEST:
/s/ Chris M. Lehman
- ------------------------------
Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 65
<PAGE> 167
<TABLE>
<S> <C>
FIRST SOUTHERN BANK
By: /s/ W. P. Morrison
-----------------------------
W. P. Morrison
Its: Chairman of the Board
ATTEST:
/s/ Chris M. Lehman
- ------------------------------
Secretary
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
-----------------------------
Jackson W. Moore
Its: President
ATTEST:
/s/
- ------------------------------
Secretary
NORTH ARKANSAS BANCSHARES, INC.
By: /s/ G. L. Lieblong
-----------------------------
G. L. Lieblong
Its: President
ATTEST:
/s/ John C. Freeman
- ------------------------------
Secretary
</TABLE>
REORGAGT.101
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 66
<PAGE> 168
EXHIBIT A
PLAN OF MERGER
SETTING FORTH THE PLAN OF MERGER
OF
EARLE BANKSHARES, INC.
(AN ARKANSAS CORPORATION)
WITH AND INTO
NORTH ARKANSAS BANCSHARES, INC.
(AN ARKANSAS CORPORATION)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the ______ day of November, 1993, by and between EARLE BANKSHARES, INC.
("EBI"), a corporation organized and existing under the laws of the State of
Arkansas having its principal office at 801 Commerce Street, Earle, Crittenden
County, Arkansas 72331 and which is a registered bank holding company under the
Bank Holding Company Act; 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 NORTH ARKANSAS BANCSHARES, INC. ("NABS"), a
corporation organized and existing under the laws of the State of Arkansas
having its principal office at 300 South Church Street, Jonesboro, Craighead
County, Arkansas 72403. All of the authorized, issued and outstanding shares
of capital stock of NABS are owned and held of record by UPC.
PREAMBLE
WHEREAS, UPC, NABS and EBI have entered into an Agreement and Plan of
Reorganization dated as of the ______ day of November, 1993 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as a part thereof providing for the merger of EBI with and into NABS
(which would be the Surviving Corporation) and the acquisition of all of the
EBI Common Stock outstanding immediately prior to the Effective Time of the
Merger by UPC for the Consideration set forth in the Reorganization Agreement;
and
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 67
<PAGE> 169
WHEREAS, As provided in the Reorganization Agreement, UPC has caused
NABS to join in this Plan of Merger by executing and delivering same; and
WHEREAS, The Boards of Directors of UPC, NABS and EBI are each of the
opinion that the interests of their respective corporations and their
corporations' respective shareholders would best be served if EBI were to be
merged with and into NABS, 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 continue to be a wholly-owned subsidiary of UPC.
NOW, THEREFORE, in consideration of the covenants and agreements of
the Parties contained herein, EBI, UPC, and NABS hereby make, adopt and approve
this Plan of Merger in order to set forth the terms and conditions for the
merger of EBI with and into NABS (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 NORTH ARKANSAS BANCSHARES, INC.. The authorized capital stock
of NABS consists of 1,000 shares of common stock having a par value of $1.00
per share (the "NABS Common Stock") and no shares of preferred stock. As of
the date of this Plan of Merger, 1,000 shares of NABS Common Stock are issued
and outstanding, and no shares of NABS Common Stock are held by it as treasury
stock. All such issued and outstanding shares of NABS Common Stock are owned
beneficially and of record by UPC.
2.2 UNION PLANTERS CORPORATION. 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 November 1, 1993, 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
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 68
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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 January 19, 1989, between UPC and Union Planters National Bank as Rights
Agent (the "UPC Share Purchase Rights Agreement"). As of November 1, 1993,
19,598,092 shares of UPC Common Stock were validly issued and outstanding.
2.3 EARLE BANKSHARES, INC. The authorized capital stock of EBI
consists of 100,000 shares of common stock having a par value of $10.00 per
share (the "EBI Common Stock") and no shares of preferred stock. As of the
date hereof, 100,000 shares of EBI Common Stock were issued and outstanding,
and no shares of EBI Common Stock were held by it as EBI Treasury Stock.
ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent
corporation to the Merger is:
NORTH ARKANSAS BANCSHARES, INC.
and
EARLE BANKSHARES, INC.
3.2 Surviving Corporation. The Surviving Corporation shall be:
NORTH ARKANSAS BANCSHARES, INC.
which as of the Effective Time of the Merger shall continue to be named:
NORTH ARKANSAS BANCSHARES, INC.
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 lawful
waiver (by the Party or Parties entitled to the benefit thereof) of all
conditions precedent to consummation of the Merger, the Merger will become
effective on the date and at the time (the "Effective Time of the Merger") of
the filing of Articles of Merger with the Secretary of State of the State of
Arkansas, or at such later time and/or date as may be agreed upon by the
parties and set forth in the Articles of Merger. At the Effective Time of the
Merger, EBI shall be merged with and into NABS which will survive the Merger,
and the separate existence of EBI shall cease thereupon, and without further
action, NABS shall thereafter possess all of the assets,
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 69
<PAGE> 171
rights, privileges, appointments, powers, licenses, permits and franchises of
both NABS and EBI, whether of a public or private nature, and shall be subject
to all of the liabilities, restrictions, disabilities, and duties of both NABS
and EBI.
3.4 Articles of Incorporation. At the Effective Time of the
Merger, the Articles of Incorporation of NABS, as in effect immediately prior
to the Effective Time of the Merger, shall constitute the Articles of
Incorporation of NABS as the Surviving Corporation, unless and until the same
shall be amended as provided by law and the terms of such Articles of
Incorporation.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of
NABS, as in effect immediately prior to the Effective Time, shall continue to
be its Bylaws as the Surviving Corporation, unless and until amended or
repealed as provided by law, its Articles of Incorporation and such Bylaws.
3.6 Directors and Officers. The directors and officers of NABS 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 Articles 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 be removed as provided
therein.
3.7 Name. The name of NABS as the Surviving Corporation following
the Merger, shall remain:
NORTH ARKANSAS BANCSHARES, INC.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 Shares of NABS Shall Remain Outstanding. Subsequent to the
Effective Time of the Merger, each share of $1.00 par value common stock of
NABS then issued and outstanding shall remain as the issued and outstanding
common stock of NABS as the Surviving Corporation.
4.2 Conversion and Cancellation of Shares of EBI. As of the
Effective Time of the Merger, each share of $10.00 par value common stock of
EBI 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 4.4 hereof.
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 70
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4.3 Exchange of EBI Shares; Exchange Ratio. As of the Effective
Time of the Merger, the outstanding shares of EBI Common Stock held by the EBI
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 EBI and shall automatically be
converted exclusively into, and constitute only the right of the EBI Record
Holders to receive in exchange for their shares of EBI Common Stock, whole
shares of UPC Common Stock and any cash payment made by UPC 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 to the EBI Record Holders pursuant to the terms of this Plan
of Merger and the 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 EBI
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (based on there being no more than 100,000 shares of EBI 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:
(i) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $30.00 per share
of UPC Common Stock (the "Upper Collar"), the Exchange Ratio shall be
based on a fixed exchange ratio of 3.000 shares of UPC Common Stock
for each share of EBI Common Stock validly issued and outstanding
immediately prior to the Effective Time of the Merger;
(ii) 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 $30.00 per share of
UPC Common Stock (the "Primary Collar"), the Exchange Ratio shall be
based on (a) a fixed price of $90.00 per share of EBI Common Stock
divided by (b) the Current Market Price Per Share of UPC Common Stock;
and
(iii) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $24.00 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be based on a
fixed exchange ratio of 3.750 shares of UPC Common Stock for each
share of EBI Common Stock;provided, however, EBI shall have the right
to either accept the fixed Exchange Ratio of 3.750, or terminate this
Plan of
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 71
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Merger and the Reorganization Agreement and the transactions
contemplated herein;provided, further, in the event EBI should elect
to terminate this Reorganization Agreement in accordance with this
Section 4.3(iii), UPC may, in its sole discretion, reinstate this Plan
of Merger and the Reorganization Agreement and the transactions
contemplated herein by increasing the number of shares of UPC Common
Stock to be delivered by UPC to the EBI Record Holders based on (a) a
fixed price of $90.00 per share of EBI Common Stock divided by (b) the
Current Market Price Per Share of UPC Common Stock.
The Exchange Ratio as determined in this Section 4.3 shall be based on an
aggregate of no more than 100,000 shares of EBI Common Stock validly issued and
outstanding immediately prior to the Effective Time of the Merger; 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 EBI 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 4.4 hereof, which shall be calculated based
upon the Current Market Price Per Share of one (1) full share of UPC Common
Stock.
(i) 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) for each of the ten (10) NYSE general market trading
days immediately following the receipt by UPC of all requisite
Government Approvals on which the NYSE was open for business (the
"Pricing Period"). UPC shall notify EBI immediately upon receipt by
UPC of all Government Approvals and of the initiation of the Pricing
Period. In the event the UPC Common Stock does 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.
(ii) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should EBI Record Holders representing at least 7% of
the shares of EBI Common Stock issued and outstanding at the time of
Closing perfect such EBI Record Holder's dissenters' rights pursuant
to the Arkansas Code
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 72
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and maintain the perfected status of such dissenters' rights through
the Closing Date, UPC and NABS shall have the right, exercisable in
their sole discretion, to terminate this Reorganization Agreement, or
with the approval of the Board of Directors of EBI reduce the number
of shares of UPC Common Stock to be delivered by UPC hereunder by an
amount sufficient to off-set against the Consideration any amounts
paid, or to be paid, by UPC in satisfaction of such dissenters'
rights.
(iii) EFFECT OF STOCK SPLITS, REVERSE
STOCK SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF
UPC OR EBI. Should either UPC or EBI 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 proportionately in such a manner as the Board
of Directors of UPC and the Board of Directors of EBI shall agree in
good faith to be fair and reasonable in order to give effect to such
changes.
4.4 Mechanics of Payment of the Consideration. As soon as
reasonably practicable 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 EBI Record Holders such
materials and information as may be deemed necessary by the Exchange Agent to
advise the EBI Record Holders of the procedures required for proper surrender
of their certificates evidencing and representing shares of the EBI Common
Stock in order for the EBI 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 "Shareholder Materials"). All Shareholder Materials
shall be sent by United States mail to the EBI Record Holders at the addresses
set forth on a certified shareholder list to be delivered by EBI to UPC at the
Closing (the "Shareholder List"). As soon as reasonably practicable
thereafter, the EBI Record Holders of all of the outstanding shares of EBI
Common Stock, shall deliver, or cause to be delivered, to the Exchange Agent,
pursuant to the Shareholder Materials, the certificates evidencing and
representing all of the shares of EBI 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 EBI 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
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
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the certificate(s) formerly representing and evidencing ownership of the shares
of EBI Common Stock, the Exchange Agent shall, on or prior to the 30th day
after the Effective Time of the Merger, mail to the former EBI Shareholders in
exchange for the certificate(s) surrendered by them, the Consideration to be
paid for each such EBI Shareholder's shares of EBI 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 EBI Common Stock of an EBI 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 EBI Record Holder's shares of EBI 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 EBI Record
Holder's EBI Common Stock shall have been surrendered as provided above, the
Consideration payable to the EBI Record Holder(s) of the cancelled shares as of
any time after the Effective Date shall not be paid to the EBI Record Holder(s)
of such certificate(s) until such certificates shall have been surrendered in
the manner required. Each EBI Shareholder will be responsible for all federal,
state and local taxes which may be incurred by him on account of his receipt of
the Consideration to be paid in the Merger. The EBI 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 EBI Record Holder is entitled, provided that each such EBI Record
Holder shall deliver to UPC and to the Exchange Agent: (i) a sworn statement
certifying 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 EBI Shareholder.
4.5 Stock Transfer Books. At the Effective Time of the Merger,
the stock transfer books of EBI shall be closed and no transfer of shares of
EBI Common Stock shall be made thereafter.
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 74
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4.6 Effects of the Merger. As of the Effective Time of the
Merger, the separate existence of EBI shall cease, and EBI shall be merged with
and into NABS which, as the Surviving Corporation, shall thereupon and
thereafter possess all of the assets, rights, privileges, appointments, powers,
licenses, permits and franchises of the two merged corporations, whether of a
public or a private nature, and shall be subject to all of the liabilities,
restrictions, disabilities and duties of both EBI and NABS.
4.7 Transfer of Assets. At the Effective Time of the Merger, all
rights, assets, licenses, permits, franchises and interests of EBI and NABS 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
NABS 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 EBI 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 EBI or the Surviving Corporation.
4.9 Dissenting Shareholders' Rights. Any EBI Record Holder of
shares of EBI Common Stock who shall comply strictly with the provisions of
Section 4-26-1007 et seq. of the Arkansas Code Annotated (the "Arkansas Code"),
shall be entitled to dissent from the Merger and to seek those appraisal
remedies afforded by the Arkansas Code. Such an EBI Shareholder is referred to
herein as an "EBI Dissenting Shareholder." However, UPC and NABS shall not be
obligated to consummate the Merger if EBI Record Holders holding or controlling
more than seven percent (7%) of the shares of the EBI Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall have
perfected their dissenter's rights in accordance with the Arkansas Code and the
perfected status of said dissenter's rights shall have continued to the time of
Closing.
4.10 Approvals of Shareholders of EBI and NABS. In order to become
effective, the Merger must be approved by the respective shareholders of EBI
and of NABS 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 Arkansas.
4.11 EBI Treasury Stock. At the Effective Time of the Merger, any
shares of EBI Common Stock held by EBI as Treasury
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
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Stock shall be cancelled automatically without further action on the part of
anyone and shall be of no further effect.
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 NABS as set forth in Section
10.9(d) of the Reorganization Agreement; provided, however, that the provisions
of Section 4.4 of this Plan of Merger relating to the manner or basis upon
which shares of EBI 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 EBI Record Holders
determined as provided in Section 4.3 of the Reorganization Agreement nor shall
this Plan of Merger be amended to permit UPC to utilize assets other than its
UPC Common Stock or cash to make payment of the Consideration as provided in
Section 3.1(e) of the Reorganization Agreement at any time after the
Shareholders' Meeting without the requisite approval of the EBI Record Holders
of the shares of EBI Common Stock outstanding, 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 NABS, 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 Tennessee Secretary of State, to
waive any default in the performance of any term of this Plan of Merger by EBI,
to waive or extend the time for the compliance or fulfillment by EBI 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 NABS 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, EBI, 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 Arkansas Secretary of State, to waive any default in the
performance of any term of this Plan of Merger by UPC or NABS, to waive or
extend the time for the compliance or fulfillment by UPC or NABS of any and all
of their obligations under this Plan of Merger, and to waive any or all of the
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conditions precedent to the obligations of EBI 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:
<TABLE>
<S> <C>
UPC and NABS: Union Planters Corporation
P.O. Box 387 (mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Telecopy Number: (901) 578-2832
Attn: Mr. Jackson W. Moore, President
Gary A. Simanson
Associate General Counsel
EBI: Earle Bankshares, Inc.
801 Commerce Street (P.O. Box 248)
Earle, Arkansas 72331
Telecopy Number: (501) 735-8860
Attn: Mr. W. P. Morrison, Chairman
With a copy to: W. Price Morrison, Esq.
Martin, Tate, Morrow & Marston, P.C.
23 North Front Street
Memphis, Tennessee 38103
Fax: (901) 527-3746
</TABLE>
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 Arkansas with respect to
those provisions of this Plan of Merger expressly required by Arkansas law to
be included in this Plan of Merger disregarding, however, the Arkansas
conflicts
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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 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.
<TABLE>
<S> <C>
ATTEST: UNION PLANTERS CORPORATION
/s/ James F. Springfield By: /s/ Jackson W. Moore
- -------------------------- ---------------------------
James F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: NORTH ARKANSAS BANCSHARES, INC.
/s/ John C. Freeman By: /s/ G. L. Lieblong
- -------------------------- ---------------------------
G. L. Lieblong
Its: Secretary Its: President
ATTEST: EARLE BANKSHARES, INC.
/s/ Chris M. Lehman By: /s/ W. P. Morrison
- ----------------------------- ---------------------------
W. P. Morrison
Its: Secretary Its: Chairman of the Board
</TABLE>
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APPENDIX C
ARKANSAS BUSINESS CORPORATION ACT OF 1965 -- DISSENTERS' RIGHTS
<PAGE> 181
4-26-1007 RIGHTS OF DISSENTING SHAREHOLDERS.--(a) If a
shareholder of a corporation which is a party to a merger or consolidation
files with the corporation, prior to or at the meeting of shareholders at which
the plan of merger or consolidation is submitted to a vote, a written objection
to the plan of merger or consolidation and does not vote in favor thereof, and
the shareholder within ten (10) days after the date on which the vote was taken
makes written demand on the surviving or new domestic or foreign corporation
for payment of the fair value of his shares as of the day prior to the date on
which the vote was taken approving the merger or consolidation, then, if the
merger or consolidation is effected, the surviving or new corporation shall pay
to the shareholder, upon surrender of his certificate or certificates
representing the shares, the fair value thereof.
(b) The demand shall state the number and class of the shares
owned by the dissenting shareholder.
(c) Any shareholder failing to make demand within the ten-day
period shall be bound by the terms of the merger or consolidation.
(d) Within ten (10) days after the merger or consolidation is
effected, the surviving or new corporation, as the case may be, shall give
notice to each dissenting shareholder who has made demand as herein provided
for the payment of the fair value of his shares.
(e)(1) If within thirty (30) days after the date on which the merger
or consolidation was effected the value of such shares is agreed upon between
the dissenting shareholder and the surviving or new corporation, payment shall
be made within ninety (90) days after the date on which such merger or
consolidation was effected, upon the surrender of his certificate or
certificates representing those shares.
(2) Upon payment of the agreed value, the dissenting shareholder
shall cease to have any interest in those shares or in the corporation.
(f)(1) If within the period of thirty (30) days the shareholder and
the surviving or new corporation do not so agree, then the dissenting
shareholder, within sixty (60) days after the expiration of the thirty-day
period, may file a petition in the circuit court of the county in which the
registered office of the surviving corporation is located, if the surviving
corporation is a domestic corporation or in the Pulaski County Circuit Court if
the surviving corporation is a foreign corporation, asking for a finding and
determination of the fair value of the shares and shall be entitled to judgment
against the surviving or new corporation for the amount of the fair value as of
the day prior to the date on which the vote was taken approving such merger or
consolidation, together with interest thereon to the date of the judgment.
(2) The judgment shall be payable only upon and simultaneously
with the surrender to the surviving or new corporation of the certificate or
certificates representing the shares.
(3) Upon payment of the judgment, the dissenting shareholder shall
cease to have any interest in the shares or in the surviving or new corporation.
(4) Unless the dissenting shareholder files the petition within
the time herein limited, the shareholder and all persons claiming under him
shall be bound by the terms of the merger or consolidation.
(g) Shares acquired by the surviving or new corporation pursuant
to the payment of the agreed value thereof or to payment of the judgment
entered, as in this section provided, may be held and disposed of by the
corporation as in the case of other treasury shares.
(h) The provisions of this section shall not apply to a merger if,
on the date of the filing of the articles of merger, the surviving corporation
is the owner of all the outstanding shares of the other domestic or foreign
corporations that are parties to the merger.
