<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 18, 1994
REGISTRATION NO. 33-51883
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNION PLANTERS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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TENNESSEE 6712 62-0859007
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
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7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 383-6000
(Address, including zip code, and telephone number of
registrant's principal executive offices)
GARY A. SIMANSON, ESQ.,
ASSISTANT SECRETARY AND ASSOCIATE GENERAL COUNSEL
UNION PLANTERS CORPORATION
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 383-6590
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
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MARION S. BOYD, ESQ. CHARLES W. BONE, ESQ. STEVEN J. EISEN, ESQ.
McDonnell Boyd Wyatt, Tarrant & Combs Baker, Worthington, Crossley,
The Crescent Center 1500 Nashville City Center Stansberry & Woolf
6075 Poplar Avenue, Suite 623 Nashville, Tennessee 37219 1700 Nashville City Center
Memphis, Tennessee 38119 Post Office Box 2866
Nashville, Tennessee 37219
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
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CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF OFFERING AGGREGATE
SECURITIES TO BE AMOUNT TO BE PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) PRICE(2) REGISTRATION FEE
- ----------------- ---------- ----------- -------- ----------------
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Common Stock (par value
$5.00 per share) including
rights to purchase shares
of Series A Preferred Stock 1,050,000 $22.00 $23,100,000 $7,965.60
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(1) Estimated based on an assumed conversion price range.
(2) Determined pursuant to Rule 457(f).
<PAGE> 2
UNION PLANTERS CORPORATION
CROSS REFERENCE OF ITEMS IN FORM S-4 TO PROSPECTUS
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<CAPTION>
ITEMS IN PART I OF FORM S-4 OR LOCATION PROSPECTUS CAPTION
- --------------------------------------- ------------------
A. INFORMATION ABOUT THE TRANSACTION
<S> <C>
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus Facing Page. Cross Reference Sheet and Outside Front
Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front Cover and TABLE OF CONTENTS
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information SUMMARY
4. Terms of the Transaction SUMMARY, and THE MERGER and THE EFFECT OF MERGER ON
RIGHTS OF SHAREHOLDERS
5. Pro Forma Financial Information SUMMARY
6. Material Contracts with the
Company Being Acquired *
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be Underwriters THE MERGER
8. Interests of Named Experts and
Counsel EXPERTS and VALIDITY OF UPC COMMON STOCK
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities *
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants SUMMARY, THE MERGER, CERTAIN REGULATORY CONSIDERATIONS,
DESCRIPTION OF UPC COMMON AND PREFERRED STOCK and
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
11. Incorporation of Certain
Information by Reference INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
12. Information with Respect to S-2
or S-3 Registrants *
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<PAGE> 3
<TABLE>
<CAPTION>
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ITEMS IN PART I OF FORM S-4 OR LOCATION PROSPECTUS CAPTION
- --------------------------------------- ------------------
13. Incorporation of Certain
Information by Reference *
14. Information with Respect to
Registrants Other Than S-3 or
S-2 Registrants *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to
S-3 Companies *
16. Information with Respect to S-2
or S-3 Companies *
17. Information with Respect to
Companies Other Than S-3 or
S-2 Companies SUMMARY, THE MERGER, FIRST NATIONAL BANCORP OF
SHELBYVILLE, INC., FNB MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS and FIRST
NATIONAL BANCORP OF SHELBYVILLE, INC. FINANCIAL
STATEMENTS (APPENDIX A)
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE, THE
SPECIAL MEETING, THE MERGER and EFFECT OF MERGER ON
RIGHTS OF SHAREHOLDERS
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange Offer *
* Omitted because the answer is negative or the item is inapplicable.
</TABLE>
<PAGE> 4
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
111 WEST SIDE SQUARE (P.O. BOX 500)
SHELBYVILLE, TENNESSEE 37160
January 19, 1994
TO THE SHAREHOLDERS OF FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
You are cordially invited to attend a Special Meeting of Shareholders
of First National Bancorp of Shelbyville, Inc. ("FNB") to be held at the
Community Room of the Elm Street Branch of First National Bank of Shelbyville,
101 Elm Street, Shelbyville, Tennessee 37160, at 10:00 a.m. CST, on Friday,
February 18, 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 September 21, 1993 (the "Reorganization Agreement"), along with the Plan of
Merger annexed thereto as Exhibit A, pursuant to which FNB Acquisition Company,
Inc., a newly-organized, wholly-owned subsidiary of Union Planters Corporation
would be merged with and into FNB which would survive the Merger. The Boards
of Directors of FNB and Union Planters Corporation have approved the
Reorganization Agreement and the Plan of Merger and the merger contemplated
thereby.
In the merger, shareholders of FNB will receive shares of common stock,
$5.00 par value per share (the "UPC Common Stock"), of Union Planters
Corporation for each share of FNB's common stock, $10.00 par value per share.
The number of shares received will depend upon the market price of the UPC
Common Stock and will be determined in accordance with the conversion formula
described in Section 3.1(e) of the Reorganization Agreement. At the time the
Reorganization Agreement was negotiated, the value of the UPC Common Stock to
be received by the shareholders of FNB was approximately $205.63 per share of
FNB common stock (subject to adjustment as set forth in the Reorganization
Agreement) based on an exchange ratio of seven (7) shares of UPC Common Stock
for each share of FNB common stock and a then current market price per share of
$29.375 for the UPC Common Stock. 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 FNB's shareholders is required
to consummate the merger.
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.
<PAGE> 5
The Board of Directors of FNB has considered a number of proposals to
sell FNB and has determined that the proposal outlined in the Reorganization
Agreement is the best plan for the continuation of First National Bank of
Shelbyville as a locally managed bank, while at the same time maximizing the
financial interests of the shareholders of FNB. Accordingly the Board of
Directors of FNB recommends that you vote FOR the proposal being considered.
Sincerely,
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
[SIG]
D. B. Nelson, Jr.
Chairman of the Board
<PAGE> 6
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
111 WEST SIDE SQUARE (P.O. BOX 500)
SHELBYVILLE, TENNESSEE 37160
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 18, 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of First
National Bancorp of Shelbyville, Inc. ("FNB") has been called by the Board of
Directors of FNB and will be held at the Community Room of the Elm Street
Branch of First National Bank of Shelbyville, 101 Elm Street, Shelbyville,
Tennessee 37160, on Friday, February 18, 1994, at 10:00 a.m. CST for the
following purposes:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Reorganization dated as of September 21, 1993
(the "Reorganization Agreement"), by and between Union Planters
Corporation ("UPC"), a Tennessee-chartered bank holding company; FNB
Acquisition Company, Inc. ("Interim"), a newly-organized, wholly-owned
subsidiary of UPC; First National Bancorp of Shelbyville, Inc.
("FNB"), a Tennessee-chartered bank holding company; and First
National Bank of Shelbyville ("FIRST NATIONAL"), a national banking
association and a wholly-owned subsidiary of FNB, along with the Plan
of Merger annexed thereto as Exhibit A. The Reorganization Agreement
and the Plan of Merger provide for the merger (the "Merger") of
Interim with and into FNB, whereupon the holders of FNB's common
stock, $10.00 par value per share, of record immediately prior to the
effective time of the Merger would receive shares of the common stock,
$5.00 par value per share, of UPC, for each share of FNB common stock
owned, pursuant to a conversion formula described in Section 3.1(e) of
the Reorganization Agreement. 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 FNB have the right to dissent from the Merger pursuant
to, and in accordance with, Section 48-23-101 et seq of the Tennessee Code
Annotated. Copies of said section of the Tennessee Code Annotated accompany
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. PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. If you
attend in person, the proxy appointment can be disregarded, if you wish, and
you may vote your own shares.
<PAGE> 7
Only holders of FNB common stock of record at the close of business on
January 19, 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]
D. B. Nelson, Jr.
Chairman of the Board
Shelbyville, Tennessee
Dated: January 19, 1994
THE BOARD OF DIRECTORS OF FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. BY
MAJORITY VOTE RECOMMENDS THAT THE HOLDERS OF FIRST NATIONAL BANCORP OF
SHELBYVILLE, INC. COMMON STOCK VOTE TO APPROVE THE REORGANIZATION AGREEMENT AND
THE PLAN OF MERGER.
<PAGE> 8
PROSPECTUS
UNION PLANTERS CORPORATION
COMMON STOCK
PROXY STATEMENT
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
SPECIAL MEETING TO BE HELD FEBRUARY 18, 1994
This Prospectus and Proxy Statement (the "Prospectus") relates to up
to 1,050,000 shares of Common Stock (par value $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 First National Bancorp of Shelbyville, Inc. ("FNB"), a
Tennessee-chartered bank holding company, in a merger (the "Merger") of FNB
Acquisition Company, Inc., a newly-organized, wholly-owned subsidiary of UPC
("Interim"), with and into FNB, pursuant to an Agreement and Plan of
Reorganization dated as of September 21, 1993, by and between UPC, Interim,
FNB, and First National Bank of Shelbyville ("FIRST NATIONAL"), a wholly-owned
national banking association subsidiary of FNB (the "Reorganization
Agreement"), and in accordance with the Plan of Merger annexed thereto as
Exhibit A (the "Plan of Merger"). The number of shares of UPC Common Stock to
be issued by UPC in connection with the Merger in respect to each outstanding
share of FNB common stock, $10.00 par value per share (the "FNB Common Stock"),
is 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 January 11, 1994, was $25.25 per
share.
This Prospectus also constitutes a proxy statement and is furnished to
holders of record of FNB Common Stock in connection with the solicitation of
proxies by the FNB Board of Directors (the "FNB Board") for use at a Special
Meeting of FNB shareholders to be held at 10:00 a.m. CST, on Friday, February
18, 1994, at the Community Room of the Elm Street Branch of First National Bank
of Shelbyville, 101 Elm Street (P.O. Box 500), Shelbyville, Bedford County,
Tennessee, 37160 and at any adjournments or postponements thereof (the "Special
Meeting"). At the Special Meeting, holders of FNB Common Stock of record as of
January 19, 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) all shares of FNB Common Stock (except for those
shares held by any FNB shareholders with respect to which dissenters' rights
shall have been perfected in accordance with Tennessee law) would be converted
exclusively into the right to receive shares of UPC Common Stock (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) Interim would be merged with and into FNB, with FNB surviving the Merger
and continuing to operate under the name of First National Bancorp of
Shelbyville, Inc., whereupon FNB would become a wholly-owned subsidiary of UPC.
All information contained in this Prospectus and Proxy Statement
pertaining to UPC and its subsidiaries has been supplied by UPC, and all
information
<PAGE> 9
pertaining to FNB or FIRST NATIONAL has been supplied by FNB. This
Prospectus and Proxy Statement and the accompanying proxy appointment cards are
first being mailed to shareholders of FNB on or about January 19, 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 JANUARY 19, 1994
<PAGE> 10
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. 33-51883) 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, 1992;
2. UPC's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30, and September 30, 1993;
3. UPC's Current Reports on Form 8-K dated January 19, 1989
and January 4, January 14, February 17, February 18, April 20, June
17, July 20, September 27, September 30, October 14 and October 21,
1993, and January 10 and January 11, 1994; and
4. The description of the 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.
ii
<PAGE> 11
UPC's Annual Report on Form 10-K for the year ended December 31, 1992
incorporates by reference specific portions of UPC's Annual Report to
Shareholders for that year ("Annual Report to Shareholders"), but does not
incorporate other portions of the Annual Report to Shareholders. The portion
of the Annual Report to Shareholders captioned "Letter to Shareholders" and
other portions of the Annual Report to Shareholders not specifically
incorporated into the 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.
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.
iii
<PAGE> 12
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 FNB SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
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TABLE OF CONTENTS
PAGE
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Available Information (ii)
Incorporation of Certain Documents by Reference (ii)
Summary 1
Parties to the Merger 1
Special Meeting of FNB Shareholders 3
Votes Required; Record Date 3
Terms of the Merger 3
Effective Date 3
Reasons for the Merger; Recommendations of Boards of Directors 4
Conditions; Regulatory Approvals 4
Management After the Merger 4
Shareholders' Dissenters' Rights 5
Certain Federal Income Tax Consequences 5
Accounting Treatment 5
Market Prices of Common Stock 6
Selected Consolidated Financial Data 7
Recent Developments Affecting UPC 11
Equivalent and Pro Forma Per Share Data 14
Pro Forma Condensed Financial Information 16
The Special Meeting 20
Time and Place of Special Meeting; Solicitation of Proxies 20
Votes Required 21
Shareholders' Dissenters' Rights 21
Recommendation 24
The Merger 24
Background of and Reasons for the Merger 24
Terms of the Merger 25
Effective Date and Effective Time of the Merger 26
Surrender of Certificates 26
Conditions to Consummation of the Merger 27
Regulatory Approvals 29
Conduct of Business Pending the Merger 29
Payment of Dividends 30
Waiver and Amendment; Termination 30
Management after the Merger 31
</TABLE>
iv
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<TABLE>
<CAPTION>
PAGE
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First National Executive Compensation 34
FNB Options and Stock Appreciation Rights 35
FNB Aggregated Option Exercises in 1992 and Year-End Values 36
Interests of Certain Persons in the Merger 37
Certain Federal Income Tax Consequences 37
Accounting Treatment 38
Expenses 38
Resales of UPC Common Stock 38
Certain Regulatory Considerations 39
General 39
Capital Adequacy 40
Prompt Corrective Action 40
Dividend Restrictions 42
Support of Subsidiary Banks 43
Transactions with Affiliates 43
FDIC Insurance Assessments 44
Recent Banking Legislation 44
Depositor Preference 45
Description of UPC Common and Preferred Stock 46
UPC Common Stock 46
Preferred Stock of UPC 47
Certain Provisions That May Have an Anti-Takeover Effect 48
Effect of Merger on Rights of Shareholders 50
Removal of Directors 50
Required Shareholder Votes 51
Election of Directors 51
First National Bancorp of Shelbyville, Inc. 52
Property 52
Competition 52
Deposits 52
Legal Proceedings 53
Market Price of FNB Common Stock 53
Regulatory Agreement 53
Certain Beneficial Holders of FNB Common Stock 54
Holdings of FNB Common Stock by FNB Management 55
FNB Management's Discussion and Analysis of Financial Condition
and Results of Operations 56
Validity of UPC Common Stock 72
Experts 72
Index to Appendices
Appendix A--First National Bancorp of Shelbyville, Inc. Financial Statements
Appendix B--Agreement and Plan of Reorganization, along with the
Plan of Merger annexed thereto as Exhibit A
Appendix C--Tennessee Business Corporation Act--Dissenters' Rights
</TABLE>
v
<PAGE> 14
SUMMARY
The following summary is not intended to be a complete description of
all material facts regarding UPC, FNB 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
UPC. Union Planters Corporation ("UPC") is a multi-state bank and
savings and loan holding company headquartered in Memphis, Tennessee. At
September 30, 1993, UPC had total consolidated assets of approximately $6.1
billion, deposits of approximately $5.2 billion and shareholders' equity of
approximately $459 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 September 30, 1993, UPC's ratio of nonperforming loans to total
loans was .84% and nonperforming assets to loans and foreclosed property was
1.03%. Its allowance for losses on loans to total loans at such date was 2.94%
and its allowance for losses on loans to nonperforming loans was 352%. Also
at such date, UPC's Tier 1 risk-based capital, Total risk-based capital and
Leverage ratios were 14.51%, 16.86% and 6.91%, respectively.
UPC conducts its business activities through its lead bank
subsidiary, Union Planters National Bank ("UPNB"), and through 32 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 91 branches
throughout Tennessee with a presence in each of Memphis, Nashville, Knoxville
and Chattanooga, the major metropolitan markets in Tennessee. At September 30,
1993, UPNB had total consolidated assets of approximately $3.4 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 145 branches and had at September
30, 1993, total combined assets of approximately $2.9 billion ($1.9 billion in
Tennessee, $473 million in Mississippi, $467 million in Arkansas, and $23
million in Alabama). All of the Community Banks have been acquired by UPC since
1986 and are generally located 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 35 Community Banks, 22 have the largest deposit
share and six have the second largest deposit share in their respective markets
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 intends to
continue expansion of
<PAGE> 15
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
establishes 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.
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 significant local
market share in communities primarily 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, and 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 UPC common stock. For information
with respect to acquisitions that have been consummated during 1993 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. See "Incorporation of Certain Documents by
Reference."
FNB. First National Bancorp of Shelbyville, Inc. ("FNB") is a bank
holding company chartered under the laws of the State of Tennessee whose main
office is located at 111 West Side Square (P.O. Box 500), Shelbyville,
Tennessee 37160 (telephone (615) 684-7511). FNB's principal subsidiary is
First National Bank of Shelbyville ("FIRST NATIONAL"), a national banking
association chartered under the laws of the United States of America. At
September 30, 1993, FIRST NATIONAL was rendering banking services, consisting
primarily of traditional deposit and lending services, from six banking offices
located in Bedford and Grundy Counties, Tennessee. As of September 30, 1993,
FNB's total assets were approximately $169.2 million and its deposits were
approximately $153.9 million.
Interim. FNB Acquisition Company, Inc. ("Interim") was organized by
UPC solely to effectuate the Merger. At the Effective Time of the Merger (as
defined below), Interim will, pursuant to the terms of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A, merge with and
into FNB, with FNB surviving the Merger as a wholly-owned subsidiary of UPC and
continuing to operate under the name First National Bancorp of Shelbyville,
Inc.
2
<PAGE> 16
SPECIAL MEETING OF FNB SHAREHOLDERS
A Special Meeting (the "Special Meeting") of the FNB shareholders will
be held on Friday, February 18, 1994, at 10:00 a.m. CST, at the Community Room
of the Elm Street Branch of First National Bank of Shelbyville, 101 Elm Street,
Shelbyville, Tennessee 37160, 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 FNB Common Stock of record at the close of business on
January 19, 1994 (the "Record Date") will be entitled to receive notice of and
vote at the Special Meeting. The affirmative votes of the holders of a
majority of the shares of FNB 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 January 19, 1994, there were 130,000 shares of FNB
Common Stock entitled to vote.
The directors and executive officers of FNB (the "Management Group")
held, as of the Record Date, 27,403 shares, or 21.08% of the outstanding shares
of FNB Common Stock. FNB 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 Exhibits A. See "The Special Meeting."
TERMS OF THE MERGER
Upon consummation of the Merger, each share of FNB 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 Tennessee law) will be converted exclusively into the right
to receive the number of shares of UPC Common Stock determined pursuant to a
conversion formula set forth in Section 3.1(e) of the Reorganization Agreement.
The number of shares of UPC Common Stock to be delivered in the Merger
will be determined based on the Current Market Price Per Share of the UPC
Common Stock immediately prior to the Closing Date, which Current Market Price
Per Share may move up or down between the date of this Prospectus, the Closing
Date and the Effective Time of the Merger. The "Current Market Price Per
Share" is defined in the Reorganization Agreement as the average price per
share of the "last" trades of the UPC Common Stock as reported in The Wall
Street Journal for each of the ten (10) trading days next preceding the Closing
Date.
EFFECTIVE DATE
The Merger will become effective at the time the Articles of Merger
along with the executed Plan of Merger are filed with the Tennessee Secretary
of State in accordance with the Tennessee Business Corporation Act, 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
3
<PAGE> 17
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 March 1, 1994. 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 day prior to the
effectiveness of the Merger (the "Closing Date"). Holders of record of FNB
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; RECOMMENDATIONS OF BOARDS OF DIRECTORS
The Board of Directors of FNB (the "FNB Board") believes the Merger is
fair to, and in the best interests of, FNB and its shareholders and recommends
that FNB's shareholders vote FOR approval of the Reorganization Agreement and
the Plan of Merger annexed thereto as Exhibit A. The FNB Board believes that
the Merger will provide significant value to all FNB shareholders and also
enable them to participate in opportunities for investment growth that the FNB
Board believes the Merger makes possible. The Merger will give FNB access to a
substantially greater base of capital, affording FNB an opportunity to expand
services beyond those presently provided. Moreover, affiliation with UPC will
allow FNB to compete more strongly in the Middle Tennessee marketplace and will
provide FNB with certain economies of scale in its banking operations. 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 FNB shareholders, receipt of the necessary
regulatory approvals and satisfaction of customary 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 Tennessee Department of Financial Institutions (the
"Tennessee Department"). Applications for such approvals have been submitted
to each of the respective regulatory agencies and approval has been received
from both the Tennessee Department and the Federal Reserve for the parties to
consummate the Merger. See "The Merger--Conditions to Consummation of the
Merger," "--Regulatory Approvals" and "-- Conduct of Business Pending the
Merger" and "Certain Regulatory Considerations."
MANAGEMENT AFTER THE MERGER
At the Effective Time of the Merger, the persons who are serving as
directors and officers of FNB immediately prior thereto shall continue to be
the directors and officers of FNB as the surviving corporation and will hold
office as provided in the charter and bylaws of FNB unless and until their
successors have been duly elected or appointed and qualified. See "The
Merger--Management After the Merger."
4
<PAGE> 18
SHAREHOLDERS' DISSENTERS' RIGHTS
Under the Act, holders of FNB 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 Sections 48-23-201
through 209 of the Act will have the right to dissent from the Merger and to be
paid cash for the value of their shares. (A vote in favor of the Merger will
disqualify an FNB shareholder from exercising dissenters' rights). Tennessee
law defines "fair value" to mean the value, determined by appraisal pursuant to
the Act, of the shares immediately prior to the effectuation of the Merger,
excluding any appreciation or depreciation in anticipation of the Merger. In
order for a holder of FNB Common Stock to perfect dissenters' rights, such
holder must not vote his or her shares of FNB Common Stock FOR approval of the
Reorganization Agreement and the Plan of Merger and must deliver to FNB, before
the vote on the Merger is taken a written notice of the dissenter's intent to
demand payment for his shares. Neither a 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 constitute such written notice. Certain additional procedures must be
followed in order for an FNB 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 Chapter 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, FNB shareholders will realize and recognize gain
or loss (if any) only to the extent of any cash received as consideration for
their FNB Common Stock. FNB shareholders may also 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") as described in
Accounting Principles Board Opinion No. 16.
5
<PAGE> 19
MARKET PRICES OF COMMON STOCK
UPC Common Stock. The UPC Common Stock is listed and traded on the
NYSE (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 NYSE and
the cash dividends declared per share for the periods indicated:
<TABLE>
<CAPTION>
CASH
DIVIDENDS
PRICE RANGE DECLARED
------------------------
HIGH LOW PER SHARE
------ ------ ----------
<S> <C> <C> <C>
1994
First Quarter,
through January 11, 1994 $25.50 $24.88 $ --
----
Total $.00
====
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 NYSE as of
January 11, 1994, which was the last practicable date prior to the mailing of
this Prospectus, was $25.25 per share.
FNB Common Stock. The FNB Common Stock is not listed for trading on a
national securities exchange or otherwise publicly traded in any established
securities market.
6
<PAGE> 20
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for UPC and FNB, on an historical basis,
selected unaudited consolidated financial data. The information for FNB has
been derived from financial statements, including the financial statements of
FNB 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 FNB, have been
included.
7
<PAGE> 21
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, (1) FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
----------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net interest income $ 174,002 $ 139,093 $ 191,137 $ 153,555 $ 134,324 $ 123,155 $ 117,017
Provision for losses on loans 8,944 11,744 18,557 24,835 19,166 49,229 15,486
Profits and commissions from
trading activities 6,728 8,424 10,168 14,707 24,268 36,700 41,250
Investment securities gains (losses) 3,874 12,065 13,246 3,344 (341) (1,294) (3,586)
Other noninterest income 53,141 41,768 59,859 51,559 46,069 42,121 41,456
Noninterest expense 167,437 149,400 199,218 164,771 160,805 177,833 148,850
Earnings (loss) before income taxes and
accounting changes 61,364 40,206 56,635 33,559 24,349 (26,380) 31,801
Applicable income taxes (benefit) 17,009 10,278 15,196 6,051 1,639 (4,111) 9,139
Earnings (loss) before accounting changes 44,355 29,928 41,439 27,508 22,710 (22,269) 22,662
Accounting changes, net 4,661 - - - - - -
Net earnings (loss) 49,016 29,298 41,439 27,508 22,710 (22,269) 22,662
Per Common Share Data
Earnings (loss) before accounting changes
Primary $ 1.99 $ 1.53 $ 2.10 $ 1.59 $ 1.20 $ (1.19) $ 1.20
Fully diluted 1.85 1.47 2.02 1.58 1.20 (1.19) 1.20
Net earnings (loss)
Primary 2.24 1.53 2.10 1.59 1.20 (1.19) 1.20
Fully diluted 2.05 1.47 2.02 1.58 1.20 (1.19) 1.20
Cash dividends .54 .45 .60 .48 .48 .48 .35
Book value 18.53 15.94 16.34 14.99 13.61 12.46 14.14
Balance Sheet Data (at period end)
Total assets $6,139,577 $4,964,477 $ 5,262,184 $3,786,839 $4,004,710 $4,002,614 $3,743,855
Loans, net of unearned income 2,762,660 2,255,954 2,231,839 1,912,914 2,129,083 1,995,383 1,994,637
Allowance for losses on loans 81,298 63,350 64,290 47,934 50,921 46,871 41,063
Investment securities 2,530,365 2,015,225 2,198,103 1,147,803 1,155,266 1,019,759 947,523
Deposits 5,181,421 4,272,343 4,450,176 3,211,261 3,341,840 3,129,567 2,871,888
Long-term debt (2) 226,824 39,042 77,156 42,085 48,765 73,521 39,834
Total shareholders' equity 459,424 347,522 356,211 269,446 237,035 240,591 264,971
Average shares outstanding (in thousands)
Primary 19,118 16,723 16,765 16,632 18,641 18,894 18,882
Fully diluted 23,264 19,382 19,609 16,986 18,981 18,928 18,894
Profitability Ratios
Return on average assets
Earnings before accounting changes .97% .87% .87% .72% .56% NM% .63%
Net earnings 1.07 .87 .87 .72 .56 NM .63
Return on average common equity
Earnings before accounting changes 15.35 13.38 13.65 11.18 9.34 NM 8.59
Net earnings 17.23 13.38 13.65 11.18 9.34 NM 8.59
Net interest income (tax-equivalent) to
average earning assets 4.37 4.61 4.61 4.63 4.00 3.81 4.11
Asset Quality Data
Allowance/period end loans 2.94% 2.81% 2.88% 2.51% 2.39% 2.35% 2.06%
Nonperforming loans(3) $ 23,094 $ 35,632 $ 38,049 $ 26,197 $ 20,804 $ 17,512 $ 21,296
Nonperforming assets(4) 28,423 47,278 44,546 36,507 34,655 25,275 29,038
Nonperforming loans/total loans .84% 1.58% 1.71% 1.37% .98% .88% 1.07%
Allowance/nonperforming loans 352.03 177.79 168.97 182.98 244.77 267.65 192.82
Nonperforming assets/loans and
foreclosed property 1.03 2.08 2.00 1.90 1.62 1.26 1.45
Loans 90 days or more past due/loans .18 .13 .15 .21 .44 .27 .47
Provision/average loans .44 .73 .86 1.23 .93 2.50 .83
Net charge-offs/average loans .32 .70 .83 1.38 1.10 2.25 .73
Net charge-offs $ 6,479 $ 11,130 $ 17,879 $ 27,822 $ 22,704 $ 44,274 $ 13,494
</TABLE>
8
<PAGE> 22
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,(1) FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
----------------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Liquidity and Capital Ratios (at period end)
Loans/deposits 53.32% 52.80% 50.15% 59.57% 63.71% 63.76% 69.45%
Equity/assets 7.48 7.00 6.77 7.12 6.01 6.01 7.08
Tier 1 capital to risk-weighted assets(5) 14.51 13.88 13.81 12.19 9.57 NA NA
Total capital to risk-weighted assets(5) 16.86 16.44 16.33 14.93 12.17 NA NA
Leverage ratio (5) 6.91 6.87 6.85 6.94 5.71 5.76 6.66
</TABLE>
(1) Interim period ratios are presented on an annualized basis where
appropriate.
(2) Includes subsidiary banks' long-term debt (primarily Federal Home Loan
Bank advances of $152.5 million and $2.9 million at September 30, 1993
and 1992, respectively. Also, see "Recent Developments Affecting UPC---
Long-Term Debt."
(3) Nonperforming loans include loans on nonaccrual status and restructured
loans.
(4) Nonperforming assets include nonperforming loans and foreclosed properties.
(5) 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%.
NA - Not available NM - Not meaningful
9
<PAGE> 23
FNB SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,(1) FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
--------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 4,923 $ 4,755 $ 6,441 $ 6,203 $ 6,083 $ 6,723 $ 6,053
Provision for loan losses - 382 382 4,952 3,224 960 1,324
Noninterest income 877 1,126 1,370 881 1,241 929 1,050
Noninterest expense 3,909 3,616 5,136 5,997 5,431 4,998 4,521
Income (loss) before taxes,
extraordinary item
and accounting change 1,891 1,883 2,293 (3,865) (1,330) 1,694 1,258
Income tax expense (benefit) 710 1 745 (48) (125) 100 200
Extraordinary item-tax
loss carryforward - 525 699 - - - -
Accounting change 1,282 - - - - - -
Net income (loss) 2,463 1,882 2,247 (3,817) (1,205) 1,594 1,058
PER COMMON SHARE DATA
Net income $ 18.95 $ 17.37 $ 19.75 $ (38.17) $(12.05) $ 15.94 $ 10.58
Cash dividends .75 - - - 4.00 4.00 4.00
Book value 105.03 100.83 86.83 70.01 106.58 122.63 110.69
Average shares 130,000 108,333 113,750 100,000 100,000 100,000 100,000
BALANCE SHEET DATA (at period end)
Investment securities $ 89,467 $ 70,609 $ 78,206 $ 62,255 $53,417 $48,765 $ 41,472
Loans, net of unearned
income 67,036 73,314 71,018 80,016 96,881 96,471 89,830
Total assets 169,196 159,204 162,664 157,948 167,430 166,265 147,985
Deposits 153,921 147,190 150,206 149,525 153,294 149,978 133,901
Shareholders' equity 13,653 10,924 11,288 7,001 10,658 12,263 11,069
PROFITABILITY RATIOS
Return on average assets 1.99% 1.58% 1.41% NM NM 1.03% .75%
Return on average equity 25.87 29.85 24.82 NM NM 13.69 9.69
ASSET QUALITY DATA
Allowance for loan losses $ 2,889 $ 4,045 $ 3,969 $ 4,415 $ 2,804 $ 1,280 $ 1,348
Net charge-offs 1,081 752 828 3,341 1,700 1,027 1,163
Nonperforming loans (2) 1,668 1,962 2,719 3,546 4,705 4,236 1,869
Allowance for loan losses to
loans, net of unearned
income 4.31% 5.53% 5.59% 5.52% 2.89% 1.33% 1.50%
Foreclosed assets (3) $ 67 $ 320 $ 151 $ 1,330 $ 942 $ 466 $ 357
Nonperforming assets to loans,
net of unearned income, and
foreclosed assets (4) 2.59% 3.10% 4.03% 5.99% 5.77% 4.85% 2.47%
LIQUIDITY AND CAPITAL RATIOS
Loans, net of unearned
income to deposits 43.55% 49.81% 47.28% 53.51% 63.20% 64.32% 67.09%
Shareholders' equity
to total assets 8.07 6.86 6.94 4.43 6.37 7.38 7.48
___________
</TABLE>
(1) Interim period ratios are presented on an annualized basis where
appropriate.
(2) Nonperforming loans includes loans on nonaccrual status, restructured
loans, and loans 90 days or more past due.
(3) Includes other real estate owned and other foreclosed assets.
(4) Nonperforming assets includes nonperforming loans plus foreclosed
assets.
NM - Not Meaningful
10
<PAGE> 24
RECENT DEVELOPMENTS AFFECTING UPC.
Long-Term Debt. A shelf registration statement for $150 million of
UPC's subordinated debt securities became effective with the Commission on
October 21, 1993. On November 2, 1993, UPC issued $75 million of 6.25%
Subordinated Notes due 2003 at 99.305% under this shelf registration
statement. The Subordinated Notes qualify for Tier 2 capital under
risk-based capital guidelines.
The net proceeds from the offering were, approximately $73.7 million.
Approximately $39.0 million of the net proceeds have been used by UPC to
in-substance defease the current 10-1/8% Subordinated Capital Debentures due
April, 1999 (10-1/8% Debentures). Purchased direct obligations of the U.S.
Government will provide cash flows matching the principal and interest debt
service required for the 10-1/8% Debentures to the date the debentures can be
called (April 1, 1996). The securities were placed in an irrevocable trust
which will allow UPC under generally accepted accounting principles, to
remove the obligation from its balance sheet. The transaction resulted in an
extraordinary loss of approximately $3.2 million after taxes. The remaining
net proceeds will be used for general corporate purposes.
UPC has also entered into an interest rate swap agreement with a
notional amount of $50 million to convert a portion of its fixed-rate debt
outstanding to a floating LIBOR rate for two and one-half years.
Recently Completed Acquisition. During the first nine months of 1993,
UPC acquired eleven Community Banks in Tennessee and Arkansas, contributing
approximately $1.2 billion in assets, $604 million in loans and $1.0 billion in
deposits to UPC's consolidated balance sheet. For additional information with
respect to these transactions, see UPC's Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30, and September 30, 1993, and UPC's Current
Reports on Form 8-K dated September 27 and September 30, 1993, October 14,
1993, and January 10 and January 11, 1994 incorporated herein by reference. See
"Incorporation of Certain Documents by Reference."
11
<PAGE> 25
Since September 30, 1993, UPC has completed the acquisition of the
following institutions (collectively, the "Recently Completed Acquisitions"):
<TABLE>
<CAPTION>
CONSIDERATION
-------------
INSTITUTION ASSET SIZE VALUE TYPE
- ----------- ---------- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
First Financial Services, Inc.
and its subsidiary,
First State Bank,
Brownsville, Tennessee $ 85 $12 UPC Common Stock
Mid-South Bancorp, Inc.
and its subsidiaries,
Simpson County Bank,
Franklin, Kentucky;
Adairville Banking Company,
Adairville, Kentucky;
First Citizens Bank,
Franklin, Tennessee;
The Peoples Bank of Elk Valley,
Fayetteville, Tennessee; and
General Trust Company,
Nashville, Tennessee 184 23 UPC Common Stock
---- ---
Totals $269 $35
==== ===
</TABLE>
12
<PAGE> 26
Pending Acquisitions. Consistent with UPC's acquisition strategy, UPC has
entered into definitive agreements to acquire the following financial
institutions in addition to FNB (collectively, the "Pending Acquisitions")
which management considers probable and which are expected to be consummated
by June 30, 1994:
<TABLE>
<CAPTION>
CONSIDERATION
-------------
INSTITUTION ASSET SIZE VALUE TYPE
----------- ---------- ----- -----
(IN MILLIONS)
<S> <C> <C> <C>
Liberty Bancshares, Inc.
and its subsidiary,
Liberty Federal Savings Bank,
Paris, Tennessee $174 $31.7 UPC Common Stock
Anderson County Bank
in Clinton, Tennessee 19 2.0 Cash
Clin-Ark Bankshares, Inc.
and its subsidiary,
First National Bank
of Clinton, Clinton
Arkansas 48 6.0 UPC Common Stock
Earle Bancshares, Inc.
and its subsidiary,
First Southern Bank,
Earle, Arkansas 40 8.7 UPC Common Stock
Tennessee Bancorp, Inc.
and its subsidiary,
Tennessee National Bank,
Columbia, Tennessee 92 14.0 Cash
---- -----
Totals $373 $62.4
==== =====
</TABLE>
If the Merger, the Pending Acquisitions and the Recently Completed
Acquisitions had been consummated at September 30, 1993, UPC's consolidated
total assets would have increased by approximately $769 million to
approximately $6.9 billion, and UPC's consolidated total deposits would have
increased by approximately $685 million to approximately $5.9 billion, based
upon September 30, 1993, pro forma financial information. See "Pro Forma
Condensed Financial Information" and the related pro forma financial
information in UPC's Current Reports on Form 8-K dated September 27, September
30 and October 14, 1993, and January 10 and January 11, 1994, and historical
financial information included in UPC's 1992 Annual Report on Form 10-K and
UPC's Quarterly Report on Form 10-Q dated September 30, 1993, incorporated by
reference. See "Incorporation of Certain Documents by Reference."
13
<PAGE> 27
EQUIVALENT AND PRO FORMA PER SHARE DATA
The following table presents selected comparative unaudited per share
data for (i) UPC Common Stock and FNB Common Stock on an historical basis; (ii)
UPC Common Stock on a pro forma basis for the FNB Acquisition only and for the
FNB Acquisition, all Recently Completed Acquisitions and the Pending
Acquisitions; and (iii) FNB Common Stock on an equivalent pro forma basis for
the FNB Acquisition only and for the FNB Acquisition, all Recently Completed
Acquisitions and the Pending Acquisitions, for the periods indicated. The data
is 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, 1992. 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 FNB set forth below in Appendix
A and the unaudited pro forma consolidated financial statements and related
notes in UPC's Current Reports on Form 8-K dated January 11, 1994, and the
historical financial statements of certain recently completed and pending
acquisitions dated September 27 and October 14, 1993 and January 10 and January
11, 1994, incorporated by reference. See "Incorporation of Certain Documents
by Reference."
14
<PAGE> 28
<TABLE>
<CAPTION>
NINE TWELVE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1993(1) 1992(1)
------- -------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
UPC $ 18.53 $ 16.34
UPC pro forma (FNB only) 18.37 16.14
UPC pro forma (FNB and all recently completed and pending acquisitions) 17.97 15.75
FNB 105.03 86.83
FNB equivalent pro forma (FNB only) 128.59 112.98
FNB equivalent pro forma (FNB and all recently completed and
pending acquisitions)(2) 125.79 110.25
CASH DIVIDENDS PER COMMON SHARE
UPC .54 .60
UPC pro forma .54 .60
FNB .75 -
FNB equivalent pro forma 3.78 -
EARNINGS BEFORE EXTRAORDINARY ITEMS AND ACCOUNTING CHANGES
UPC
Primary 1.99 2.10
Fully diluted 1.85 2.02
UPC pro forma (FNB only)
Primary 1.96 2.08
Fully diluted 1.83 2.01
UPC pro forma (FNB and all recently completed and pending acquisitions)(2)
Primary 1.71 1.44
Fully diluted 1.63 1.44(3)
FNB
Primary 9.08 13.61
Fully diluted 9.08 13.61
FNB equivalent pro forma (FNB only)
Primary 13.72 14.56
Fully diluted 12.81 14.07
FNB equivalent pro forma (FNB and all recently completed and
pending acquisitions)(2)
Primary 11.97 10.08
Fully diluted 11.41 10.08 (3)
</TABLE>
(1) The equivalent pro forma per share data for FNB is computed by multiplying
UPC's pro forma share information by 7.
(2) See also, "Recent Developments - Recently Completed Acquisitions" and
"Pending Acquisitions."
(3) The assumed conversion of UPC Preferred Stock is antidilutive; therefore,
it is not presented.
15
<PAGE> 29
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following tables contain unaudited, consolidated, pro forma,
condensed financial information showing a statement of earnings for the nine
months ended September 30, 1993, and for the twelve months ended December 31,
1992, and a balance sheet at September 30, 1993, for (i) UPC; (ii) UPC,
Recently Completed Acquisitions and FNB; and (iii) UPC, Recently Completed
Acquisitions, the Pending Acquisitions and FNB. Additionally, the pro forma
statements of earnings include certain acquisitions completed prior to December
31, 1992. The unaudited pro forma financial information reflects the Pending
Acquisitions and the acquisition of FNB using both the pooling of interests and
purchase methods of accounting in accordance with the accounting requirements
of each specific transaction. The unaudited pro forma financial information
should be read in conjunction with the historical financial statements of UPC
and FNB and in conjunction with the information presented in UPC's 1992 Annual
Report on Form 10-K, UPC's Quarterly Reports on Form 10-Q dated March 31, June
and September 30, 1993, and UPC's Current Report on Form 8-K dated September 27
and October 14, 1993 and January 10 and January 11, 1994. Pro forma results
are not necessarily indicative of future operating results. See "Incorporation
of Certain Documents by Reference" and "Appendix A."
16
<PAGE> 30
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED THE PENDING
ACQUISITIONS ACQUISITIONS
UPC AND FNB AND FNB
---------- ---------------- ----------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 251,679 $ 265,312 $ 260,988
Interest-bearing deposits at
financial institutions 35,456 38,220 40,356
Federal funds sold and securities
purchased under agreements to resell 136,487 146,268 163,293
Trading account securities, at market 126,308 126,308 126,308
Loans held for resale 48,818 48,818 52,479
Investment securities
Held for sale 458,187 458,187 431,998
Held for investment 2,072,178 2,237,982 2,316,855
Loans 2,762,660 2,994,257 3,237,951
Allowance for losses on loans (81,298) (88,183) (90,996)
---------- ---------- ----------
Net loans 2,681,362 2,906,074 3,146,955
Premises and equipment 130,541 138,979 145,630
Goodwill and other intangibles 42,628 43,001 48,557
Mortgage servicing rights 4,149 4,149 4,149
Other real estate 5,010 5,826 6,787
Other assets 146,774 158,714 164,220
---------- ---------- ----------
Total assets $6,139,577 $6,577,838 $6,908,575
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 749,073 $ 804,805 $ 816,519
Interest-bearing 4,432,348 4,764,792 5,050,242
---------- ---------- ----------
Total deposits 5,181,421 5,569,583 5,866,761
Short-term borrowings
Federal funds purchased and
securities sold under agreements
to repurchase 184,780 184,805 184,805
Other 6,441 7,142 7,142
Federal Home Loan Bank advances 149,257 153,506 154,106
Long-term debt
Subordinated notes and debentures 74,292 74,292 74,292
Other 3,275 8,149 8,149
Other liabilities 80,687 85,624 89,151
---------- ---------- ----------
Total liabilities 5,680,153 6,083,101 6,384,406
---------- ---------- ----------
Shareholders' equity
Preferred stock 104,548 104,548 104,548
Common stock 95,751 106,731 116,469
Additional paid-in capital 83,368 83,868 83,784
Retained earnings 175,757 199,590 219,368
---------- ---------- ----------
Total shareholders' equity 459,424 494,737 524,169
---------- ---------- ----------
Total liabilities and
shareholders' equity $6,139,577 $6,577,838 $6,908,575
========== ========== ==========
</TABLE>
17
<PAGE> 31
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED THE PENDING
ACQUISITIONS, ACQUISITIONS
UPC AND FNB AND FNB
---------- ---------------- ----------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $178,967 $197,986 $214,094
Interest on investment securities
Taxable 88,773 96,783 99,780
Tax-exempt 17,396 18,235 18,298
Interest on deposits at financial institutions 1,223 1,298 1,392
Interest on federal funds sold and securities
purchased under agreements to resell 2,866 3,247 3,479
Interest on trading account securities 4,837 4,837 4,837
Interest on loans held for resale 2,588 2,588 2,588
-------- -------- --------
Total interest income 296,650 324,974 344,467
-------- -------- --------
Interest expense
Interest on deposits 110,090 122,539 131,920
Interest on short-term borrowings 4,699 4,718 4,737
Interest on long-term debt 7,859 8,198 8,208
-------- -------- --------
Total interest expense 122,648 135,455 144,865
-------- -------- --------
Net interest income 174,002 189,519 199,602
Provision for losses on loans 8,944 12,517 13,268
-------- -------- --------
Net interest income after provision
for losses on loans 165,058 177,002 186,334
-------- -------- --------
Noninterest income
Service charges on deposit accounts 20,965 22,933 23,856
Profits and commissions from trading
activities 6,728 6,728 6,728
Investment securities gains 3,874 4,132 4,452
Other income 32,176 32,723 33,830
-------- -------- --------
Total noninterest income 63,743 66,516 68,866
-------- -------- --------
Noninterest expense
Salaries and employee benefits 73,303 79,215 82,718
Net occupancy expense 11,714 12,996 13,764
Equipment expense 11,721 12,014 12,282
Other expense 70,699 76,155 79,636
-------- -------- --------
Total noninterest expense 167,437 180,380 188,400
-------- -------- --------
Earnings before income taxes and
accounting changes 61,364 63,138 66,800
Applicable income taxes 17,009 18,500 19,789
-------- -------- --------
Earnings before accounting changes $ 44,355 $ 44,638 $ 47,011
======== ======== ========
Earnings per common share before accounting changes
Primary $1.99 $1.76 $1.71
Fully diluted 1.85 1.67 1.63
Average common shares outstanding
(in thousands)
Primary 19,118 21,539 23,542
Fully diluted 23,264 25,966 27,970
</TABLE>
18
<PAGE> 32
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1992
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED THE PENDING
ACQUISITIONS ACQUISITIONS
UPC AND FNB AND FNB
---------- ---------------- ----------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $199,881 $297,291 $321,006
Interest on investment securities
Taxable 106,139 144,635 149,674
Tax-exempt 16,148 18,171 18,266
Deposits at financial institutions 3,999 4,351 3,952
Interest on federal funds sold and securities
purchased under agreements to resell 4,280 6,531 7,107
Interest on trading account securities 6,648 6,648 6,648
Interest on loans held for resale 3,457 3,457 3,457
-------- -------- --------
Total interest income 340,552 481,084 510,110
-------- -------- --------
Interest expense
Interest on deposits 137,605 206,694 221,902
Interest on short-term borrowings 6,942 6,959 6,961
Interest on long-term debt 4,868 6,944 6,981
-------- -------- --------
Total interest expense 149,415 220,597 235,844
-------- -------- --------
Net interest income 191,137 260,487 274,266
Provision for losses on loans 18,557 40,067 40,595
-------- -------- --------
Net interest income after provision
for losses on loans 172,580 220,420 233,671
-------- -------- --------
Noninterest income
Service charges on deposit accounts 20,843 26,623 27,687
Profits and commissions from trading
activities 10,168 10,168 10,168
Investment securities gains 13,246 15,500 15,584
Other income 39,016 50,558 51,870
-------- -------- --------
Total noninterest income 83,273 102,849 105,309
-------- -------- ---------
Noninterest expense
Salaries and employee benefits 74,772 106,059 110,438
Net occupancy expense 13,136 18,825 19,881
Equipment expense 12,225 15,987 16,180
Other expense 99,085 127,330 131,679
-------- -------- --------
Total noninterest expense 199,218 268,201 278,178
-------- -------- --------
Earnings before income taxes and
extraordinary items 56,635 55,068 60,802
Applicable income taxes 15,196 17,344 19,317
-------- -------- --------
Earnings before extraordinary items $ 41,439 $ 37,724 $ 41,485
======== ======== ========
Earnings per common share before extraordinary items
Primary $ 2.10 $ 1.39 $ 1.44
Fully diluted 2.02 1.39* 1.44*
Average common shares outstanding
(in thousands)
Primary 16,765 21,140 23,143
Fully diluted 19,609 25,247 27,250
</TABLE>
* The assumed conversion of UPC Preferred Stock is antidilutive, therefore it
is not presented.
19
<PAGE> 33
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES
Each copy of this Prospectus mailed to holders of FNB Common Stock is
accompanied by a proxy appointment card furnished in connection with the FNB
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 10:00 a.m. CST, on Friday, February 18, 1994, at the Community Room of
the Elm Street Branch of First National Bank of Shelbyville, 101 Elm Street,
Shelbyville, Tennessee 37160. Only holders of record of FNB Common Stock at
the close of business on January 19, 1994, are entitled to receive notice of
and to vote at the Special Meeting. At the Special Meeting, the FNB
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 FNB COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO FNB 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). FNB SHAREHOLDERS
SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY APPOINTMENT CARDS.
Any holder of FNB 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
First National Bancorp of Shelbyville, Inc., 111 West Side Square (P.O. Box
500), Shelbyville, Tennessee 37160, Attention: Corporate Secretary, provided
such notice or proxy appointment is actually received by FNB 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 FNB. The shares of FNB 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 FNB 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 FNB for the purpose of soliciting
additional proxy appointments. FNB is unaware 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.
20
<PAGE> 34
The cost of soliciting proxies from holders of FNB Common Stock will
be borne by FNB. Such solicitation will be made by mail but also may be made
by telephone or in person by the directors, officers and employees of FNB (who
will receive no additional compensation for doing so).
VOTES REQUIRED
The affirmative votes of the holders of a majority of the outstanding
shares of FNB 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 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 130,000 shares
of FNB 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 27,403 shares or approximately 21.08% of the issued
and outstanding shares of FNB Common Stock. ALL THE MEMBERS OF THE MANAGEMENT
GROUP HAVE ADVISED FNB 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 FNB entitled to vote on 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 FNB Common Stock upon
compliance with Sections 48-23-202 and 48-23-204 of the Act, a copy of which is
Appendix C to this Prospectus. A shareholder may not dissent as to less than
all of the shares that he beneficially owns. A nominee or fiduciary may not
dissent on behalf of a beneficial owner as to less than all of the shares of
such beneficial owner held of record by such nominee or fiduciary. A
beneficial owner asserting dissenters' rights to shares held on his behalf must
notify FNB in writing of the name and address of the record holder of the
shares, if known to him.
Any FNB shareholder intending to enforce his dissenters' rights may
not vote in favor of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A (either personally or by proxy) and must deliver
to the Corporate Secretary before the time of the vote a written notice of
intent to demand payment for his shares (the "Objection Notice"). The
Objection Notice must state that the shareholder intends to demand payment for
his shares of FNB Common Stock if the Merger is effected. A vote against
approval of the Reorganization Agreement and the Plan of Merger annexed thereto
as Exhibit A will not, in and of itself, constitute an Objection Notice
satisfying the requirements of Section 48-23-202 of the Act.
If the Reorganization Agreement, including the Plan of Merger annexed
thereto as Exhibit A, is approved by FNB's shareholders at the Special Meeting,
each FNB shareholder who has filed an Objection Notice will be notified by FNB
of such approval no later than ten (10) days after the FNB Special Meeting (the
21
<PAGE> 35
"Dissenter's Notice"). The Dissenter's Notice will (i) state where the payment
demand must be sent and where and when certificates for certificated shares of
FNB Common Stock (the "Certificates") must be deposited, (ii) inform holders of
uncertificated shares (if any) to what extent transfer of the shares will be
restricted after the payment demand is received, (iii) supply a form for
demanding payment that includes the date of the first announcement to news
media or to shareholders of the principal terms of the proposed corporate
action and requires that the person asserting the dissenters' rights certify
whether or not he acquired beneficial ownership of the shares before that date,
(iv) set a date by which FNB must receive the payment demand, which date may
not be fewer than one nor more than two months after the date the Dissenter's
Notice was delivered, and (v) be accompanied by a copy of Sections 48-23-101
through 48-23-302 of the Act. Within the time prescribed in the Dissenter's
Notice, an FNB shareholder electing to dissent must make a demand for payment
(the "Payment Demand"), certify whether he (or the beneficial shareholder on
whose behalf he is asserting dissenters' rights) acquired beneficial ownership
of the shares of FNB Common Stock before September 21, 1993 (the date of the
first public announcement of the terms of the Reorganization Agreement), and
deposit the Certificates in accordance with the terms of the Dissenter's
Notice. Upon delivering the Payment Demand and depositing the Certificates in
accordance with the Dissenter's Notice, the FNB shareholder will retain all
other rights of a FNB shareholder until these rights are cancelled or modified
by consummation of the Merger. FAILURE TO COMPLY SUBSTANTIALLY WITH THESE
PROCEDURES WILL CAUSE THE FNB SHAREHOLDER TO LOSE HIS DISSENTERS' RIGHTS TO
PAYMENT FOR THE SHARES. CONSEQUENTLY, ANY FNB 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.
As soon as the Merger is consummated, or upon later receipt of a
timely Payment Demand, FNB shall, pursuant to Section 48-23-206 of the Act, pay
to each dissenting shareholder who has complied with the requirements of
Section 48-23-204 of the Act the amount that FNB estimates to be the fair value
of the shares of FNB Common Stock, plus accrued interest. Such payment must be
accompanied by (i) certain of FNB's financial statements, (ii) a statement of
FNB's estimate of the fair value of the shares, (iii) an explanation of how the
interest was calculated, (iv) a statement of the dissenter's right to demand
payment under Section 48-23-209 of the Act, and (v) a copy of Section 48-23-101
through 48-23-302 of the act if not previously furnished. As authorized by
Section 48-23-208 of the Act, FNB intends to delay any payments with respect to
any shares (the "after-acquired shares") held by a dissenting shareholder which
were not held by such shareholder on September 21, 1993, the date of the first
public announcement of the terms of the Reorganization Agreement. To the
extent FNB elects to withhold payment, after effecting the Merger, FNB as the
surviving corporation in the Merger must estimate the fair value of the shares,
plus accrued interest, and pay such amount to each dissenter who agrees to
accept it in full satisfaction of this demand. FNB shall send with such
payment a statement of its estimate of the fair value of the shares, an
explanation of how the interest was calculated and a statement of the
dissenter's right to demand additional payment under Section 48-23-209 of the
Act.
If (i) a dissenter believes that the amount paid in respect to his
shares or offered under Section 48-23-208 is less than the fair value of his
shares or that the interest due is incorrectly calculated, (ii) FNB fails to
make payment
22
<PAGE> 36
under Section 48-23-206 within two months after the date set for demanding
payment, or (iii) FNB, having failed to effect the Merger, does not return the
deposited certificates or release the transfer restrictions imposed on
uncertificated shares within two months after the date set for demanding
payment, the dissenter may notify FNB (or its successor in the Merger) in
writing (which notice is invalid if not delivered to FNB within one month after
FNB made or offered payment for such shareholder's shares) of his own estimate
of the fair value of the shares and the amount of interest due and may demand
payment of the difference between his estimate of the fair value and the amount
of any payment in respect to such shares already received by the shareholder,
or, in the alternative, if no payment has yet been made by FNB, reject FNB's
offer under Section 48-23-208 and demand payment of the fair value of his
shares and interest due.
If FNB (or the surviving corporation) cannot agree with such dissenter
on a fair value within two months after FNB receives the Payment Demand, FNB
will institute judicial proceedings in either the chancery or circuit court of
Bedford County, Tennessee (the "Court"), naming all dissenters (whether or not
Tennessee residents) whose demands remain unsettled as parties to the
proceeding and serving such parties with a copy of the petition. The Court
will then undertake to establish the fair value of the shares immediately
before the consummation of the Merger, excluding any appreciation or
depreciation in anticipation of the Merger, and will determine the interest
owing on the disputed amount. The fair value of a dissenter's shares of FNB
Common Stock may be more than, less than or the same as the consideration
provided in the Reorganization Agreement. The Court may, in it discretion,
appoint one or more persons as appraisers to receive evidence and render a
decision on the question of fair value. Each dissenter made a party to the
proceeding is entitled to judgment for the amount (if any) by which the court
finds the fair value of his shares, plus accrued interest, exceeds the amount
paid by FNB or the fair value, plus accrued interest, of his after-acquired
shares for which FNB elected to withhold payment under Section 48-23-208 of the
Act.
The Court shall assess costs and expenses of such proceeding
(including reasonable compensation for and expenses of the appraiser but
excluding fees and expenses of counsel and experts) against FNB (or its
successor in the Merger), except that the court may assess such costs and
expenses as it deems appropriate against any or all of the dissenting
shareholders if it finds that their demand for additional payment was
arbitrary, vexatious or not in good faith. The Court may award fees and
expenses of counsel and experts in amounts the Court finds equitable: (i)
against FNB, if the Court finds that FNB did not comply substantially with the
relevant requirements of the Act or (ii) against FNB or any dissenting
shareholder, if the Court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith.
The foregoing summary of the applicable provisions of Sections
48-23-101 through 48-23-302 of the Act is not intended to be a complete
statement of such provisions, and is qualified in its entirety by reference to
such sections, which are included as Appendix C hereof.
23
<PAGE> 37
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 FNB Board has adopted the
Reorganization Agreement and the Plan of Merger, believes the Merger is in the
best interest of FNB and its shareholders and recommends that shareholders of
FNB 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 Agreemen 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
hereto as Appendix B. FNB shareholders are urged to read the Reorganization
Agreement and the Plan of Merger carefully.
BACKGROUND OF AND REASONS FOR THE MERGER
Background. First National Bancorp of Shelbyville, Inc. has for
several years operated First National Bank of Shelbyville ("First National") in
Bedford County as a small, community bank in Middle Tennessee. FIRST NATIONAL
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 NATIONAL's basic business
has remained largely the same except for its expansion into Grundy County, the
regulatory environment in which the bank operates has become increasingly
complex. Credit analysis and documentation have become more complex.
UPC learned in early 1992 that management of FNB might be inclined to
consider a proposal to permit FNB to be acquired by a larger institution.
Shortly thereafter, UPC made a preliminary offer to acquire FNB subject to a
number of conditions. The Board of Directors of FNB did not accept the offer,
and the parties discontinued all discussions related to the acquisition
proposal. In mid-1993, the Board of Directors of FNB decided to explore again
the possibility of selling FNB and appointed a special committee to contact
potential purchasers, including UPC. At that time, Benjamin W. Rawlins, Jr.,
Chairman of the Board and Chief Executive Officer of UPC commenced discussions
with the special committee. Such discussions resulted in the execution of the
Reorganization Agreement dated as of September 21, 1993, which was approved by
the FNB Board at a special meeting on September 21, 1993, and by the UPC Board
of Directors at their regular meeting held on October 21, 1993.
FNB Reasons. In light of the foregoing, the FNB Board has voted to
recommend the approval of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A by the FNB shareholders for the following reasons:
24
<PAGE> 38
(i) The trend in the banking industry is toward
consolidation, making it less likely that an institution the size of
FNB will be able to compete successfully in the future;
(ii) Given the trend in the banking industry as discussed
above and the highly competitive environment in which FNB would be
expected to compete in the future, the proper time to effect a merger
of the organization with a larger institution is at the beginning of
the trend and before increased competition has had time to adversely
affect FNB's earnings and, consequently, its value;
(iii) FNB will be able to significantly benefit from UPC's
larger capital base, operations and regulatory expertise and
management talent;
(iv) 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
(v) The value of the UPC Common Stock offered in exchange for
the FNB Common Stock exceeds the recent trading prices for the FNB
Common Stock, the annual dividend yield on the UPC Common Stock
exceeds the historical yield on the FNB 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 FNB Board did not assign any specific or relative weight to the
foregoing factors in determining to recommend the Merger to the FNB
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) FNB has experienced strong and continued growth, (ii)
FNB is located geographically in a county in which UPC has sought to increase
its market share, and (iii) UPC believes that by providing FNB with access to
the UPC capital base and other banking resources, FNB 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, Interim (which was formed for the
specific purpose of effecting the Merger) will merge with and into FNB with FNB
surviving the Merger and continuing after the Effective Time of the Merger to
operate under the name First National Bancorp of Shelbyville, Inc. The
surviving corporation will become a wholly-owned subsidiary of UPC. In the
Merger, each share of FNB 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
25
<PAGE> 39
the right to receive shares of UPC Common Stock as provided in the
Reorganization Agreement and the Plan of Merger. Those shareholders of FNB who
hold of record shares of FNB Common Stock immediately prior to the Effective
Time of the Merger are referenced to herein as the "FNB Record Holders."
The number of shares of UPC Common Stock to be received by FNB Record
Holders (other than dissenting shareholders, who will receive cash only) in the
Merger will be determined pursuant to a conversion formula described in Section
3.1(e) of the Reorganization Agreement which is based on the Current Market
Price Per Share of the UPC Common Stock. The Current Market Price Per Share
equals the average price per share of the "last" trades of the UPC Common Stock
on the NYSE for each of the ten (10) trading days next preceding the Closing
Date. No fractional shares of UPC Common Stock will be issued in respect to
FNB Common Stock, and, after aggregation of the shares (and fractional shares)
of UPC Common Stock to which an FNB Record Holder is entitled, cash will be
paid by UPC in lieu of any remaining fractional share.
Holders of FNB Common Stock 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
48-23-101 et seq 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 FNB. The
Effective Time of the Merger will be at the time the Articles of Merger along
with the Plan of Merger are filed in the Office of the Tennessee Secretary of
State pursuant to the Act or at such later 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 February 28, 1994, but
will specify, by agreement of the parties, an Effective Time of the Merger of
12:01 a.m. CST, on March 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 FNB
Common Stock immediately prior to the Effective Time of the Merger a form
letter of transmittal, together with instructions and a return mailing envelope
(collectively, the "Exchange Materials") to facilitate the exchange of such
holder's certificates formerly representing shares of FNB Common Stock for
certificates representing shares of UPC Common Stock.
HOLDERS OF FNB 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.
26
<PAGE> 40
Upon receipt of the Exchange Materials, FNB 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 FNB 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 FNB 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 with respect to any remaining fractional share to which the
holder is entitled. No consideration will be delivered to an FNB Record Holder
unless and until such holder shall have delivered to the Exchange Agent all
certificates formerly representing the shares of FNB Common Stock held by him
and in respect of which he claims payment is due, or such documentation, if
applicable, and security in respect of lost or stolen certificates as 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 FNB certificate
until the holder surrenders such certificate(s) in accordance with the Exchange
Materials, at which time the 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 FNB's stock transfer books of shares of FNB Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger. If
certificates representing shares of FNB 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, FNB nor any other person will be
liable to any former holder of FNB 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 FNB 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 FNB 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 a majority of the FNB Common Stock
27
<PAGE> 41
outstanding on the Record Date; (ii) approval of the Reorganization
Agreement and the transactions contemplated thereby by the Federal Reserve and
the Tennessee 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, Interim, FNB or FIRST NATIONAL will
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) UPC shall have received executed affiliate
agreements from those shareholders of FNB deemed to be "affiliates" by the
Commission, a tax opinion letter from legal counsel to UPC confirming the
Merger qualifies as a tax-free reorganization under the Internal Revenue Code
and a letter from independent accountants of UPC confirming that the Merger may
be accounted for as a pooling of interests in accordance with generally
accepted accounting principles; and (vii) 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.
The obligations of UPC and Interim 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 FNB as to the good standing of FNB, 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 FNB
and FIRST NATIONAL 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
FNB and FIRST NATIONAL to such effect; (iii) there shall have been no damage or
destruction to, or taking of any property of FNB or FIRST NATIONAL or any
material adverse change in the business, financial condition, results of
operations or prospects of FNB or FIRST NATIONAL; and (iv) FNB and FIRST
NATIONAL 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 FNB or FIRST
NATIONAL to UPC.
The obligations of FNB to effect the Merger are further subject to the
satisfaction, or waiver by FNB, of, among others, the following conditions: (i)
FNB shall have received a legal opinion, dated the date of closing, from
counsel to UPC as to the good standing of UPC and Interim, 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 FNB shall have received a certificate signed by certain
officers of UPC to that effect; (iii) FNB shall have received from UPC
certificates from 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) FNB shall
28
<PAGE> 42
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 Tennessee
Department under the Tennessee Reciprocal Banking Act; 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 Tennessee 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.
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 may 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. As of the date of this Prospectus, both the Federal
Reserve and the Tennessee Department have given their approvals of the Merger.
The Federal Reserve authorized the consummation of the Merger on December 20,
1993. 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 FNB's and FIRST NATIONAL'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
29
<PAGE> 43
consent of UPC, FNB and FIRST NATIONAL, 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 FNB; (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 FNB Common Stock; (iv) issue or
sell any FNB Common Stock or sell or otherwise dispose of a substantial part of
FNB's or FIRST NATIONAL'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 FNB 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 FNB Common Stock if
such extension of credit would exceed 2% of the capital of FNB or FIRST
NATIONAL, 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
FNB's or FIRST NATIONAL's fiduciary capacity. Moreover, FNB and FIRST
NATIONAL, 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
FNB is permitted under the Reorganization Agreement to declare and pay
a normal and customary quarterly cash dividend with respect to the FNB Common
Stock of up to $.75 per share of FNB Common Stock per calendar quarter. The
aggregate amount of dividends that may be so paid shall be limited to an amount
not to exceed $97,500 per calendar quarter until the Closing of the Merger.
Notwithstanding the foregoing, the Reorganization Agreement prohibits FNB 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
UPC Common Stock 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 FNB; provided, however, that no such amendment may be
effected after shareholder approval of the Reorganization Agreement and the
Plan of Merger annexed thereto as Exhibit A without approval of the FNB
shareholders if the effect of such amendment would be to change the amount or
the type of consideration to be paid in the Merger to the FNB Record Holders.
30
<PAGE> 44
The Reorganization Agreement may be terminated at any time prior to
the Effective Date of the Merger, either before or after approval by the FNB
shareholders, as follows: (i) by the mutual consent of the parties; (ii) by UPC
or Interim if FNB or FIRST NATIONAL, respectively, should violate any
affirmative or negative covenant in respect to the operation of its business;
(iii) by UPC, Interim or FNB if closing shall not have occurred by June 30,
1994, unless the failure is due to the failure of the party seeking to
terminate; (iv) by either party 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 if there has been a material adverse change in the
business, properties, liabilities or prospects of FNB or FIRST NATIONAL or if
FNB or FIRST NATIONAL should enter into a formal capital plan in cooperation
with applicable banking regulators; or (vii) by UPC should FNB or FIRST
NATIONAL enter into any business combination or any letter of intent or
agreement in respect thereof with any other person.
In the event of the valid termination of the Reorganization Agreement
by either UPC or FNB, 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 provides that after the Effective Time of
the Merger, the surviving corporation will be managed by a board of directors
consisting of the members, all of whom have served on either the FNB Board or
the FIRST NATIONAL Board for one or more terms and are expected to be qualified
to serve as officers and/or directors of the surviving corporation. All
officers and directors serve one 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 FNB and FIRST NATIONAL, members of FNB's and FIRST
NATIONAL's Boards of Directors, their ages and principal occupations for the
last five years.
Executive Officers and Directors of FNB and FIRST NATIONAL:
NAME AGE POSITION
D. B. Nelson, Jr. 49 Chairman of the Board of FNB
and Director of FIRST NATIONAL
John T. Bobo 45 Director of FNB and Chairman of
the Board of FIRST NATIONAL
James H. Caperton, Jr. 45 Senior Vice President and
Director of FIRST NATIONAL
and Director of FNB
Thomas H. Hickerson 69 Director of FNB and Advisory
Director of FIRST NATIONAL
31
<PAGE> 45
<TABLE>
<S> <C> <C>
Eugene B. Higgins 75 Director of FNB and Advisory
Director of FIRST NATIONAL
Delores V. Hornaday 58 Director and Secretary of FNB
and Advisory Director of
FIRST NATIONAL
David L. Howard 49 Director of FNB and
FIRST NATIONAL
Edward C. Huffman, Jr. 47 Director of FNB and
FIRST NATIONAL
L. Gordon Johnson 71 Director of FNB and
FIRST NATIONAL
H. Malcolm Judd 66 Director of FNB and
FIRST NATIONAL
C. Bailey Little, Jr. 56 Director and Interim President of FNB and Advisory Director and
Interim President of FIRST NATIONAL
Sam P. McClatchy 41 Senior Vice President of
FIRST NATIONAL
Jennifer J. Feldhaus 38 Controller of FNB and Cashier/
Controller of FIRST NATIONAL
Lee M. McFarland 39 Senior Vice President of
First National
</TABLE>
Mr. Bobo has been a director of FIRST NATIONAL since 1981, and FNB
since its inception in 1982. He has been a practicing attorney in Shelbyville
for over 19 years and is a partner in the law firm of Bobo, Hunt, and Bobo. He
was elected Chairman of the Board of FIRST NATIONAL in February, 1993.
Mr. Caperton has been a director of FIRST NATIONAL and FNB since 1986.
He has been an employee of FIRST NATIONAL since 1972 and currently serves as
Senior Vice President-Trust and Investments.
Ms. Feldhaus joined FIRST NATIONAL in 1979 as Internal Auditor. She
was promoted to Controller in 1983 and to Cashier/Controller in 1985. Ms.
Feldhaus ia an honor graduate of the University of Tennessee in Knoxville and
is a Certified Public Accountant.
Mr. Hickerson became associated with FIRST NATIONAL in June, 1947 and
served in various capacities until his retirement from active service in
November, 1989. He served as President/CEO of FIRST NATIONAL from January,
1978 until December 30, 1988. He has served as a director of FIRST NATIONAL
from 1957 to 1991 and of FNB from 1982 to the present.
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<PAGE> 46
Mr. Higgins has served as a director of FIRST NATIONAL from 1957 to
1991, and of FNB since 1982. He was employed by FIRST NATIONAL in 1950 and
served in various capacities, including Vice Chairman until retiring in August,
1983.
Ms. Hornaday served as a director of FIRST NATIONAL from 1988 to 1991,
and FNB from 1988 to the present. She was employed by FIRST NATIONAL from
June, 1954 through December 31, 1991, at which time she retired. In February,
1992 she was re-elected as Secretary of FNB. She recently returned to work at
FIRST NATIONAL on a part-time basis.
Mr. Howard served as a director of FIRST NATIONAL and FNB between 1990
and January, 1992, and again from September, 1992 until the present. He is the
president and owner of Dabora, Inc. and has been involved in the publishing and
horse equipment business in Bedford County for over 23 years.
Mr. Huffman, Jr. has been a director of FIRST NATIONAL since 1979 and
FNB since its formation in 1982. He served in various capacities with FIRST
NATIONAL until his resignation in June, 1991. At that time he was
President/CEO of FIRST NATIONAL and FNB. He is now a private investor.
Mr. Johnson has served as a director of FIRST NATIONAL since 1976 and
FNB since 1982. He is a retired general merchant and is now a part-time cattle
farmer.
Mr. Judd has been a resident of Bedford County since 1954. Now
retired, he was an employee of Bedford Hosiery Mills for 35 years, President
from 1967 to 1986, and Vice President of Fidelity Hosiery Mills from 1987 to
1989. He has been a director of FIRST NATIONAL and FNB since 1985.
Mr. Little served as a Director of FIRST NATIONAL from 1974 until
1991, and as a Director of FNB since its formation in 1982. He served as
Senior Vice President-Operations of FIRST NATIONAL from 1986 until December,
1993, at which time he was elected Interim President of FIRST NATIONAL and FNB.
Mr. McClatchy has 14 years of banking experience, eight months at
FIRST NATIONAL. He has been Senior Vice President since June, 1993.
Mr. McFarland, Senior Vice President, has been with FIRST NATIONAL
since July, 1985. He has 13 years experience in various aspects of commercial
banking. He serves as the manager of the Tracy City/Monteagle offices of FIRST
NATIONAL.
Mr. Nelson is a general partner of Coldwell Banker-Segroves/Nelson
Real Estate and has been a director of FIRST NATIONAL and FNB since summer of
1989. He is a full-time fee real estate appraiser and has been in the real
estate field for approximately 18 years in sales, appraising, developing of
subdivisions, condominiums, apartment buildings and residential construction.
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<PAGE> 47
FIRST NATIONAL EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the
President and Chief Executive Officer of FIRST NATIONAL for the periods
indicated. Other than the President and Chief Executive Officer, FIRST
NATIONAL has no executive officers whose total remuneration exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION (1) AWARDS PAYOUTS
----------------------- ------ -------
NAME AND RESTRICTED
PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR(1) SALARY(2) BONUS COMPENSATION AWARDS SARS(3) PAYOUTS COMPENSATION(4)
- -------- ---- --------- ----- --------------- ------ ----------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William Hart, 1992 $ 101,200 $ - - - 1,300 - 12,750
President and 1991 5,600 - - - - - (3)
CEO of FNB,
President &
CEO of FIRST
NATIONAL
</TABLE>
(1) Mr. Hart was not employed by FIRST NATIONAL prior to December 9, 1991.
Mr. Hart's employment terminated as of November 16, 1993.
(2) Information under "Salary" includes fees for services as a director of
FIRST NATIONAL.
(3) On December 9, 1992, Mr. Hart was granted an option to purchase that
number of shares of FNB Common Stock equal to 1% of FNB's common stock
outstanding, determined as of the day of the grant at an exercise price
equal to the stock's book value as of December 31, 1991, which was $70.01
per share.
(4) Amounts reported as "All Other Compensation" include $10,798 as
reimbursement for moving expenses and use of a new automobile owned by
FIRST NATIONAL, and $1,952 as payment of country club membership dues.
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<PAGE> 48
FNB OPTIONS AND STOCK APPRECIATION RIGHTS
The following two tables summarize option grants to the executive officer
named in the FIRST NATIONAL Executive Compensation Table during 1992 and the
value of the options held by such officer as of December 31, 1992. No
options were exercised during 1992, and FNB has not issued any stock
appreciation rights.
<TABLE>
<CAPTION>
Option Grants in 1992
Potential
Realized Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Percent of
Total
Options
Granted to Exercise
Options Employees or Base
Granted in Expiration Expiration
Name 1992 ($/Sh) Date (1) 5%(3) 10%(4) 0%
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
William D. Hart, $1,300 100% $70.01 12/09/02 $92,857 $201,769 $21,867
President & CEO
</TABLE>
(1) Mr. Hart's options expire on the earlier of December 9, 2002, or ninety
days from the termination of his employment. Mr Hart's employment terminated
as of November 16, 1993.
(2) The dollar amounts under these columns are the result of calculations at 0%,
5% and 10% assumed rates as proscribed by the commission and
are not intended to forecast possible future appreciation, if any,
of FNB's Common Stock.
(3) Assumes FNB's Common Stock would have a book value of $141.44
per share for these values to be realizable, an increase in
stock value which will benefit all FNB stockholders commensurately.
(4) Assumes FNB's Common Stock would have a book value of $225.22
per share for these values to be realizable, an increase in stock value
which will benefit all FNB stockholders commensurately.
35
<PAGE> 49
FNB AGGREGATED OPTION EXERCISES IN 1992 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Value ($) of
Number of Unexercised
Unexercised In-the-Money
Shares Acquired Value Options/at Options/at
Name on Exercise(1) Realized($) December 31, 1992 December 31, 1992(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William D. Hart, --- --- Exercisable Exercisable
President & CEO 1,300 21,867
Unexercisable Unexercisable
-0- -0-
</TABLE>
(1) No FNB stock options were exercised in 1992.
(2) The book value per share of FNB Common Stock was $86.83 per share as of
December 31, 1992.
36
<PAGE> 50
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The directors and officers of FNB own approximately 21.08% of the shares
of FNB Common Stock issued and outstanding and will receive the Merger
consideration described above. All directors of FNB are likely to retain their
positions as directors of FNB.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is abbreviated in
nature and is included for general information only. FNB 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 FNB as a result of the Merger, (ii) gain or loss will be recognized by
the FNB shareholders only to the extent of any cash consideration received in
respect to their FNB Common Stock in connection with the Merger (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 FNB shareholders in connection with the Merger will be
the same as the basis in the FNB Common Stock surrendered in exchange therefor,
increased by the amount of any gain recognized and reduced by the amount of
cash received with respect thereto and the amount allocable to a fractional
share interest for which cash is received; and (iv) the holding period of the
UPC Common Stock to be received by the FNB shareholders in connection with the
Merger will include the holding period of the FNB Common Stock surrendered in
exchange therefor, provided that the FNB 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 FNB
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.
Any gain or loss recognized will be capital gain (or loss) if the FNB Common
Stock is held by such shareholder as a capital asset at the Effective Date of
the Merger.
Cash Received by Holders of FNB Common Stock Who Dissent. A shareholder
of FNB who perfects his dissenters' rights under the laws of Tennessee and who
receives a cash payment of the value of his shares of FNB 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 FNB 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 FNB Common Stock who contemplates
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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.
ACCOUNTING TREATMENT
The Merger is intended to be treated by UPC and FNB 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 FNB 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 FNB
and UPC for the entire fiscal period in which the Merger occurs, which is
expected by UPC and FNB to be fiscal year 1994. Subsequent to the Merger
becoming effective, the reported income of FNB and UPC will be combined and
restated as income of UPC. 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 FNB 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.
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
FNB and therefore an "underwriter" in respect to UPC Common Stock for purposes
of Rule 145 under the Securities Act as of the date of the Effective Time of
the Merger. 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 FNB generally
include individuals or entities that control, are controlled by or are under
common control with FNB and will include members of the Management Group in
their roles as either executive officers, directors or ten percent (10%) or
greater shareholders of FNB. 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 FNB shareholder deemed an "affiliate"
of FNB 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 FNB for a period of not less than 30 days
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subsequent to the Effective Date of the Merger. Shares of UPC Common Stock
delivered to any FNB 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 holding companies located in certain states
other than Tennessee, to acquire banks and bank holding companies in Tennessee.
A bank holding company is generally prohibited under the BHCA from
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
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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 September 30, 1993, UPC's Total risk based capital ratio was 16.86%,
Tier 1 capital ratio was 14.51% and Leverage ratio was 6.91%. 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
The Federal Deposit Insurance Corporation Improvement Act of 1991
("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
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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 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 fails to
fulfill its obligations under the guarantee and files (or has 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
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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
shareholders 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.
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 September 30,
1993, UPNB and the Community Banks had approximately $87 million available for
distribution to UPC without obtaining regulatory approval. 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.
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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
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
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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 to become effective no later
than December 1, 1993, 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
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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 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 September
30, 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
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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 December 31, 1993, 19,656,924 shares of UPC Common Stock were
issued and outstanding, and approximately 588,000 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 1,404,000 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
December 31, 1993; 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 the UPC's 8%
Cumulative, Convertible Preferred Stock, Series E (the "Series E Preferred
Stock"). As of December 31, 1993, 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 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 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 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.
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.
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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 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 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
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
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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 Bancshares, 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 Board, 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
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<PAGE> 62
the members of the UPC Board are up for election each year. The Charter also
restricts the removal of directors by 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 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 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.
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<PAGE> 63
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 sought 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 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 FNB Record Holders (except for
any FNB shareholder properly exercising dissenters' rights) automatically will
become holders of the UPC Common Stock of UPC, 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 FNB.
REMOVAL OF DIRECTORS
FNB's bylaws provide that its directors may be removed with cause by vote
of a majority vote of the entire FNB Board. FNB's Directors may be removed
with or without cause by the vote of a majority of the shareholders entitled to
vote at a regular or 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.
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<PAGE> 64
REQUIRED SHAREHOLDER VOTES
FNB/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. 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
FNB's bylaws provide for only one class of directors, and shareholders are
entitled to elect all FNB 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 benot 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.
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FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
First National Bancorp of Shelbyville, Inc. was organized as a Tennessee
corporation in 1982, and is headquartered in Shelbyville, Tennessee. FNB is a
one-bank holding company registered with and regulated by the Federal Reserve.
First National Bank of Shelbyville was chartered as a national banking
association in 1931 and commenced operations that same year. FIRST NATIONAL'S
main office is located at 111 West Side Square, P. O. Box 500, Shelbyville,
Tennessee 37160. There are two other full service branches in Shelbyville, one
full service branch in Monteagle, Tennessee, and one full service branch in
Tracy City, Tennessee. Both the Tracy City and Monteagle branches are located
in Grundy County, Tennessee and were acquired from the FDIC in 1985. The
Grundy County branches are approximately 60 miles southeast of Shelbyville,
Tennessee. FIRST NATIONAL had total assets as of September 30, 1993, of $169
million and total deposits of $154 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
NATIONAL is a national bank and a member of the Federal Reserve System. The
deposits of FIRST NATIONAL are insured by the FDIC up to the maximum allowed by
law.
All of the outstanding shares of common stock of FIRST NATIONAL are owned
by FNB. FNB has one other direct subsidiary, First Leasing Corporation of
Shelbyville, Inc., which is an inactive leasing company.
As of January 1, 1994, FIRST NATIONAL had approximately 85 full-time
employees and 6 part-time employees. FNB and the leasing company have no
employees. Management believes that FIRST NATIONAL has a good relationship
with its employees. FIRST NATIONAL has a defined benefit pension plan and a
flexible benefits and 401(k) plan for its employees as well as group health,
disability and life insurance coverage.
PROPERTY
FIRST NATIONAL owns its main office and all branch offices. FIRST
NATIONAL also owns various parcels of foreclosed property.
COMPETITION
FIRST NATIONAL competes with numerous other commercial banks and other
financial institutions in Bedford and Grundy Counties in Tennessee. There are
other commercial banks, savings and loan institutions, credit unions, and other
companies offering financial services in Bedford, Grundy and surrounding
counties.
DEPOSITS
Management of FIRST NATIONAL does not believe there are any depositors
whose withdrawals would have a significant effect on the deposits of FIRST
NATIONAL.
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LEGAL PROCEEDINGS
As of the date of this proxy statement, neither FNB nor FIRST NATIONAL is
involved as defendant in any legal matters that management of FNB deems would
have a material impact on the financial position or results of operations of
FNB.
MARKET PRICE OF FNB COMMON STOCK
The FNB Common Stock has no established trading market, and relatively
few transfers have occurred since FNB was organized in 1982. In 1992 FNB
issued 30,000 shares of FNB Common Stock at $68.00 per share in a common stock
offering to new and existing shareholders. There has been only intermittent
trading in the FNB Common Stock, all of which has occurred in the price range
between $68.00 and $175.00 per share. As of January 19, 1994, there were 410
shareholders of record of the FNB Common Stock and a total of 130,000 shares of
FNB Common Stock issued and outstanding.
FIRST NATIONAL has historically declared and paid dividends semi-annually
with all dividends payable to FNB to be used for funding of FNB'S dividend
payments to its shareholders. FNB has historically declared and paid cash
dividends semi-annually totalling $4.00 per share annually. For calendar years
1991 and 1992 no dividends were declared due to the provisions in the formal
agreement with the Office of the Comptroller of the Currency ("OCC") that FIRST
NATIONAL entered into on March 26, 1991. See "Regulatory Agreement." FIRST
NATIONAL declared a $97,500 dividend with the permission of the OCC on
September 21, 1993, which was paid to FNB, which then declared and paid a
dividend to the shareholders of FNB on October 1, 1993. FIRST NATIONAL
declared a $97,500 dividend with the permission of the OCC on November 30,
1993, which was paid to FNB and then to the shareholders of FNB on December 31,
1993.
REGULATORY AGREEMENT
FIRST NATIONAL entered into a formal agreement with the OCC on March 26,
1991, to take certain actions to improve the financial condition of FIRST
NATIONAL. The agreement is a "written statement" for purposes of 12 U.S.C.
Section 1818(b)(1) and therefore is enforceable against FIRST NATIONAL and
affiliates of FIRST NATIONAL including its directors, officers, employees,
controlling stockholders and others who participate in the conduct of the
affairs of FIRST NATIONAL. Violation of the agreement by FIRST NATIONAL may
give rise to enforcement proceedings including the imposition of
cease-and-desist orders and civil money penalties against FIRST NATIONAL or its
institution-affiliated parties or removal and prohibition orders against
institution- affiliated parties.
FNB and FIRST NATIONAL believe that they are in full compliance with the
above-described agreement.
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CERTAIN BENEFICIAL HOLDERS OF FNB COMMON STOCK
The following table sets forth certain information with respect to those
known to FNB to be beneficial owners of more than five percent (5%) of the FNB
Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF % OF
BENEFICIAL OWNER SHARES TOTAL
- ------------------- --------- -----
<S> <C> <C>
David L. Howard(1) 10,763 8.28%
Shelbyville, TN
Edward C. Huffman 12,701 9.77%
and Normanda S. Huffman(2)
Shelbyville, TN
</TABLE>
(1) Mr. Howard is also a director of FNB.
(2) Ms. Huffman is the wife of Edward C. Huffman, retired Chairman of the
Board of FNB and a Director Emeritus of FNB and FIRST NATIONAL.
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<PAGE> 68
HOLDINGS OF FNB COMMON STOCK BY FNB MANAGEMENT
The following executive officers and directors of FNB and FIRST NATIONAL
held the following amounts and percentages of the outstanding FNB Common Stock
as of January 19, 1994:
<TABLE>
<CAPTION>
NUMBER OF % OF
NAME SHARES TOTAL(1)
---- --------- --------
<S> <C> <C>
D. B. Nelson, Jr. 1,100 .85%
John T. Bobo 2,703 2.08%
James H. Caperton, Jr. 520 .40%
Thomas W. Hickerson 1,300 1.00%
Eugene B. Higgins 728 .56%
Delores V. Hornaday 187 .14%
David L. Howard 10,763 8.28%
Edward C. Huffman, Jr. 3,359 2.58%
L. Gordon Johnson 5,121 3.94%
H. Malcolm Judd 1,000 .77%
C. Bailey Little, Jr. 518 .40%
Jennifer J. Feldhaus 103 .08%
Lee M. McFarland 1 .00%
Sam P. McClatchy None .00%
All Executive Officers and Directors as
a Group (14 persons) 27,403 21.08%
</TABLE>
(1) Individual percentages may differ from total percentage due to rounding
to the nearest hundredth.
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<PAGE> 69
FNB 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 FNB as of December 31, 1992 and
1991 and the results of operations of FNB for each of the fiscal years ended
December 31, 1992, 1991, and 1990 and the nine month periods ended September
30, 1993 and 1992. 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, 1992 and the unaudited interim financial statements as
of and for the nine-month periods ended September 30, 1993 and 1992, presented
in Appendix A of the Prospectus and Proxy Statement.
OVERVIEW
For a summary of selected consolidated financial data as of and for
the years ended December 31, 1988 through 1992 and for the nine-month periods
ended September 30, 1993 and 1992, see page 10 of this Prospectus and Proxy
Statement. Since December 31, 1988, total assets of FNB have grown at an
average annual rate of approximately 1.98% to $162.7 million at December 31,
1992. This growth rate has continued in 1993, with assets increasing to $169.2
million at September 30, 1993, which represents an annualized growth rate of
5.41%.
FNB's net income for the year ended December 31, 1992 of $2,247,000 is
the highest level of income for the five-year period ended December 31, 1992,
and the net loss of $3,817,000 for the year ended December 31, 1991, represents
the lowest earnings for the same five year period. Net income for the
nine-month period ended September 30, 1993 was $2,463,000, representing an
increase of $581,000 from net income of $1,882,000 for the same period in 1992.
Net income for the nine-month period ended September 30, 1993, includes a
$1,282,000 cumulative effect of an accounting change for income taxes.
Management of FNB expects growth to continue in both assets and
earnings; however, such growth is dependent on the economies of the markets
served by FNB and other factors which are discussed below. FNB is
headquartered in Shelbyville, Bedford County, Tennessee.
SOURCES AND USES OF FUNDS
FNB has a variety of sources of funds available, but its primary
resource is the taking of deposits from customers, both individual and
business. FNB'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,
FNB utilizes time deposits over $100,000 and public deposits for additional
sources of funds. At December 31, 1992, the percentage of time deposits over
$100,000 to total deposits was 11.03% compared to 12.88% at December 31, 1991.
The acquisition of deposits is from customers, individuals and businesses
within FNB'S market area. Management of FNB believes that the rates offered
for deposits are competitive with other financial institutions in FNB'S market
area. FNB'S primary use of funds is the making of loans to customers.
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<PAGE> 70
During 1992, the loan portfolio averaged 49.27% of total earning
assets of FNB compared to 57.60% in 1991. Table 4 presents the composition of
the loan portfolio at December 31, 1992 and 1991. FNB'S loan portfolio is
comprised of loans to individuals and businesses secured by various types of
collateral and in certain circumstances the loans are extended on an unsecured
basis.
A secondary use of funds is the purchasing of debt securities. During
1992, the investment portfolio averaged 43.65% of total earning assets of FNB
compared to 38.47% in 1991. As of December 31, 1992 and 1991 there were no
securities classified in the portfolio as held for sale. The average yields
and maturities of the portfolio are detailed in Table 3. The portfolio is
comprised of U.S. Treasury obligations, obligations of U.S. Government
agencies, obligations of state and local governments and other securities.
While FNB may continue to upgrade or reposition the portfolio, FNB's 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 for 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, 1992, 1991, and 1990. At September
30, 1993, the market value of the investment portfolio exceeded the carrying
value by approximately $3,471,000.
For liquidity purposes, FNB 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
FNB and the timing of other activities of FNB, including lending and deposit
activities.
FINANCIAL CONDITION
Total assets have increased at September 30, 1993 to $169.2 million,
compared to $162.7 million at December 31, 1992. Total assets were $157.9
million at December 31, 1991.
Total loans, net of unearned income, at September 30, 1993 were $67.1
million, compared to $71.0 million and $80.0 million at December 31, 1992 and
1991, respectively.
Investment securities totaled $89.8 million at September 30, 1993
compared to $78.6 million and $62.7 million at December 31, 1992 and 1991,
respectively. The level of investment securities in the future will depend on
loan demand and the ability of management to attract quality loans.
Federal funds sold and interest-bearing deposits at financial
institutions totaled $3.7 million at September 30, 1993, compared to $6.0
million at December 31, 1992, a $2.3 million decrease. Such invested funds
totaled $8.3 million at December 31, 1991. This decrease, which was primarily
in Federal funds sold, shows the increased investment in securities as of
September 30, 1993.
Customer deposits totaled $153.9 million as of September 30, 1993, a
$3.7 million increase over total deposits of $150.2 million as of December 31,
1992. Total deposits increased $700,000 from total deposits of $149.5 million
at December 31, 1991.
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At September 30, 1993, FNB'S loan to deposit ratio was 43.64%,
compared to 47.28% and 53.51% at December 31, 1992 and 1991, respectively.
Total shareholders' equity as of September 30, 1993, was $13.7 million
compared to $11.3 million and $7.0 million at December 31, 1992 and 1991,
respectively. The increase for each period is attributable to net income for
the applicable period plus the sale of capital stock on July 15, 1992, the net
proceeds of which was $2,040,000.
FNB'S equity to assets ratio was 8.07% at September 30, 1993, compared
to 6.94% and 4.43% as of December 31, 1992 and 1991, respectively.
RESULTS OF OPERATIONS-NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
NET INCOME- Net income for the nine-month period ended September 30,
1993 was $2,463,000 or $18.95 per common share, an increase from the $1,882,000
or $17.37 per common share reported for the same period in 1992. A detailed
analysis of the components of net income is included below. Net income for the
nine-month period ended September 30, 1993 included $1,282,000 ($9.86 per
common share) as a result of a cumulative effect of an accounting change for
income taxes.
The annualized return on average assets for the nine-month period
ended September 30, 1992 was 1.99% versus the 1.58% for the same period in 1992
and 1.41% for the year ended December 31, 1992. The annualized return on
average shareholders' equity for the nine-month period ended September 30, 1993
was 25.87%, compared to 29.85% for the same period in 1992 and 24.82% for the
year ended December 31, 1992.
NET INTEREST INCOME- Net interest income is the major component of
FNB'S income. Net interest income before the provision for loan losses was
$4,923,000 and $4,755,000 for the nine-month periods ended September 30, 1993
and 1992, respectively. Total interest income decreased from $9.7 million for
the nine-months period ended September 30, 1992 to $8.9 million for the same
period in 1993. Total interest expense decreased from $5.0 million for the
nine-month period ended September 30, 1992 to $4.0 million for the same period
in 1993. The decreases in total interest income and interest expenses are a
result of the declining interest rate environment experienced in 1991 and 1992,
continuing in 1993. The declining interest rate environment has reduced the
yield on interest-earning assets as well as decreasing the rate paid on
interest-bearing liabilities.
PROVISION FOR LOAN LOSSES- The provision for loan losses for the
nine-month periods ended September 30, 1993 and 1992 were $0 and $382,000,
respectively. The allowance for loan losses, which totaled $2.9 million at
September 30, 1993, has been, in management's opinion, sufficient to absorb any
losses inherent in the loan portfolio and levels of nonperforming loans.
Future provisions for loan losses, if any, will be based on past loan
experience, growth and composition of the loan portfolio, as well as the then
current economic conditions. The $2.9 million allowance for loan losses at
September 30, 1993 represents 4.30% of the gross outstanding loans as of that
date.
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<PAGE> 72
A summary of the activity in the allowance for loan losses for the
nine-month periods ended September 30, 1993 and 1992 is set forth below ($000's
omitted):
<TABLE>
<CAPTION>
SEPTEMBER 30
------------
1993 1992
---- ----
<S> <C> <C>
Balance-January 1 $ 3,970 $ 4,415
Provision charged to expense 0 382
Net loans charged-off (1,081) (752)
------- ------
Balance at period end $ 2,889 $ 4,045
</TABLE>
Loans past due 90 days or more and still accruing interest were
$60,000 and $370,000 at September 30, 1993 and December 31, 1992, respectively.
At September 30, 1993 and December 31, 1992, FNB has $1,608,000 and $2,349,000,
respectively, in loans on nonaccrual status. Loans are placed on nonaccrual
status when they become past-due as to principal or interest and in the opinion
of management the loans are not in the process of collection or well-secured.
Management has reviewed in detail all loans outstanding as of
September 30, 1993, and believes there are no loans outstanding which are not
past due or on nonaccrual status as of September 30, 1993, that would cause
management to have serious doubts as to the ability of such borrowers to comply
with the present loan repayment terms.
As of September 30, 1993, there were no foreign loans outstanding and
no concentrations of loans (loans to borrowers engaged in similar activities)
exceeding 10% of total loans outstanding.
FNB'S rollover policy consists of an item by item review of maturing
loans. Each maturing loan is evaluated to determine if such loan will be
renewed (or rolled over) and if so, at what amount, rate and maturity.
NONINTEREST INCOME- Noninterest income for the nine-month period ended
September 30, 1993 was $877,000, a decrease of $249,000 from the $1,126,000 for
the same period in 1992. The primary sources of noninterest income are from
service charges on deposits and other miscellaneous income from the operations
of FNB. No significant increases or decreases from 1992 to 1993 in the
individual items comprising noninterest income occurred. Securities gains were
$256,000 for the nine-month period ended September 30, 1993, compared to
$374,000 gain for the same period in 1992.
NONINTEREST EXPENSES- Noninterest expenses for the nine-month period
ended September 30, 1993 were $3,908,000, a $292,000 increase from the
$3,616,000 reported for the same period in 1992. The primary components of
noninterest expenses are salaries and wages, occupancy and equipment expenses,
FDIC insurance premiums and other miscellaneous operating expenses of FNB. The
increase was primarily due to the restoration of director and committee fees
after being discontinued in 1992, the restoration of funding of the pension
plan after temporary halt in 1992, and an increase in FDIC premiums.
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<PAGE> 73
INCOME TAXES- The provision for income taxes for the nine-month period
ended September 30, 1993 totaled $710,000, compared to $526,000 for the same
period in 1992. The increase is due to the adoption and booking of the
deferred tax asset and loss carryforwards according to FAS No. 109 in early
1993.
Effective January 1, 1993, FNB adopted SFAS No. 109, "Accounting for
Income Taxes" which had a material impact on FNB's financial position and
results of operations. The cumulative effect of the accounting change was
$1,282,000, which is included in the net income for the nine-month period ended
September 30, 1993.
RESULTS OF OPERATIONS-FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
NET INCOME- Net income for 1992 was $2,247,000, a significant increase
over the net loss of $3,817,000 for 1991. 1990 also had a net loss of
$1,205,000. Both of the loss years were due to extraordinarily high provisions
for loan losses.
A more detailed analysis of the components of net income and the
changes in such components is included under the appropriate captions below.
NET INTEREST INCOME- Net interest income, the major component of FNB'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-Interest
Rates and Interest Differential, and Table 2- Volume and Yield/Rate Variances,
in the following information, provide an analysis of net interest income for
the years ended December 31, 1992, 1991 and 1990.
Net interest income was $6.4 million for the year ended December 31,
1992, compared with $6.2 million and $6.1 million for the years ended December
31, 1991 and 1990, respectively. The growth in net interest income has come
from increased levels of interest-earning assets and the changes in yield and
rates that have changed the overall levels of total interest income.
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 level of provisions for loan losses is based on past loan
experience, growth, composition of the loan portfolio, as well as current
conditions. FNB recorded provisions for loan losses totaling $382,000,
$4,952,000 and $3,224,000 for the years ended December 31, 1992, 1991 and 1990,
respectively. The significant increases in 1990 and 1991 were the result of
increases in the level of nonperforming loans and deterioration of certain
specific credits.
Table 7 in the accompanying information presents a "Summary of Loan
Loss Experience" for the years ended December 31, 1992,and 1991. The amounts
of nonperforming assets represents 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 1992 was $1,370,000,
a $489,000 increase from the $881,000 reported for 1991. 1991 noninterest
income decreased $360,000 from the $1,242,000 reported for 1990. The increase
in non-
60
<PAGE> 74
interest income in 1992 from 1991 is due primarily to gains on securities in
1992 of $374,000 versus a loss of $117,000 in 1991.
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 1992 were $5.1
million or $900,000 less than the $6.0 million reported for 1991. Total
noninterest expenses for 1990 were $5.4 million, which is an increase from 1991
of $600,000 or 11.11%. The decrease in 1992 compared to 1991 was attributable
to a temporary halt in directors and committee fees, director's deferred
compensation, funding of the employee's retirement plan and other operating
expenses in 1992. The increase in noninterest expenses in 1991 over 1990 were
primarily concentrated in large legal and other real estate expenses incurred in
connection with the deterioration of certain specific credits. Also, there was
a permanent loss on a bond carried in the investment portfolio and a
significant increase in FDIC premiums.
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 (benefit) totaled $745,000, ($48,000)
and ($125,000) for the years ended December 31, 1992, 1991, and 1990,
respectively. The 1992 expense of $745,000 was offset by a tax benefit due to
loss carryforward of $699,000 making the net income tax effect an expense of
$46,000. The 1992 expense of $745,000 before the tax benefit represents a
32.49% effective tax rate. Since 1991 and 1990 were loss years, effective tax
rate computations are meaningless.
REGULATORY ASSESSMENTS- FNB is required to pay certain fees to the
FDIC and the Office of the Comptroller of the Currency (OCC). FDIC insurance
and OCC assessments totaled $386,000, $362,000 and $212,000 for the years ended
December 31, 1992, 1991 and 1990, respectively. The current assessment rate is
26 cents per $100 of deposits. Depending on the level and soundness of the
FDIC insurance fund, this assessment could increase in the future.
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- In December 1990, the FASB issued
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). As a non-public
employer with fewer than 500 employees, FNB is not required to adopt, and has
not adopted, SFAS 106 as of September 30, 1993. However, the impact of such
adoption in the future is
61
<PAGE> 75
not expected to have a material impact on FNB'S financial position or results
of operations.
Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes", ("SFAS 109") was issued in February 1991 and adopted by FNB
effective January 1, 1993. Implementation resulted in the recording of a
cumulative effect adjustment of $1,282,000 during the nine-month period ended
September 30, 1993.
Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Debt and Equity Securities ("SFAS 115") was issued in 1993. FNB
expects to adopt SFAS 115 as of January 1, 1994; however the impact of such
adoption is not expected to be significant.
62
<PAGE> 76
TABLE 1
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
INTEREST RATE AND INTEREST DIFFERENTIAL
For the Years Ended December 31,
($000'S OMITTED)
<TABLE>
<CAPTION>
1992 1991 1990
Average ---- Yield/ Average ---- Yield/ Average ---- Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ---- ------- -------- ----
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earning Assets
Loans, net of unearned income (1) $75,647 $7,651 10.11% $89,883 $10,107 11.24% $95,469 $11,161 11.69%
Taxable Investment Securities (2) 64,021 4,578 7.15% 54,925 4,396 8.00% 47,982 4,137 8.62%
Nontaxable Investment Securities 800 49 6.13% 2,428 136 5.60% 7,341 519 7.07%
Federal Funds Sold 10,881 377 3.46% 6,132 337 5.50% 3,039 245 8.06%
Deposits at other Financial Institutions 2,194 171 7.79% 2,692 228 8.47% 2,992 268 8.96%
-------- -------- ------ -------- ------- ------ -------- -------- ------
Total Interest Earning Assets (2) $153,543 $12,826 8.35% $156,060 $15,204 9.74% $156,823 $16,330 10.41%
-------- -------- ------ -------- ------- ------ -------- -------- ------
Noninterest Earning Assets
Cash and Due from Banks $4,310 $4,358 $4,207
Premises and Equipment 2,441 2,600 2,352
Other Assets 3,220 4,447 4,770
Less Allowance for Loan Losses (4,053) (2,862) (1,815)
-------- -------- --------
TOTAL ASSETS $159,461 $164,603 $166,337
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest Bearing Liabilities
Now Accounts $22,668 $734 3.24% $18,177 $823 4.53% $16,017 $804 5.02%
Money Market Accounts 12,716 443 3.48% 14,223 748 5.26% 13,569 871 6.42%
Savings Deposits 13,822 482 3.49% 11,073 590 5.33% 9,987 571 5.72%
Certificates of deposit $100,000 and over 17,401 912 5.24% 20,660 1,463 7.08% 21,885 1,765 8.06%
Other Time Deposits 69,031 3,814 5.52% 75,205 5,377 7.15% 78,493 6,236 7.94%
-------- -------- ------ -------- ------- ------ -------- -------- ------
Total Interest Bearing Liabilities $135,638 $6,385 4.71% $139,338 $9,001 6.46% $139,951 $10,247 7.32%
-------- -------- ------ -------- ------- ------ -------- -------- ------
Noninterest Bearing Liabilities
Demand Deposits $13,621 $13,312 $13,895
Other Liabilities 1,340 3,084 1,532
Shareholders' Equity 8,862 8,869 10,959
-------- -------- --------
Total Liabilities and $159,461 $164,603 $166,337
======== ======== ========
Shareholders' Equity
NET INTEREST INCOME $6,441 $6,203 $6,083
======= ======= ======
NET YIELD ON INTEREST EARNING ASSETS 4.19% 3.97% 3.88%
===== ===== =====
</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.
(2) These amounts have not been presented on a tax-equivalent basis.
63
<PAGE> 77
TABLE 2
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
VOLUME AND YIELD/RATE VARIANCES
($000'S OMITTED)
<TABLE>
<CAPTION>
1992 Compared to 1991 1991 Compared to 1990
--------------------- ---------------------
Increase (Decrease) Increase (Decrease)
Due to (1) Due to (1)
---------- ----------
Volume Rate Net Volume Rate Net
------ ---- --- ------ ---- ---
<S> <C> <C> <C> <C> <C>
Interest Earned on:
Loans, net of unearned income (1) ($1,600) ($856) ($2,456) ($653) ($401) ($1,054)
Taxable Investment Securities (2) 725 (543) 182 596 (337) 259
Nontaxable Investment Securities (91) 4 (87) (347) (36) (383)
Federal Funds Sold 261 (221) 40 249 (157) 92
Deposits at other Financial Institutions (42) (15) (57) (27) (13) (40)
-------- ------- ------- ------- ------- -------
Total income from Interest Earning Assets (747) (1,631) (2,378) (182) (944) (1,126)
Interest Paid on:
Now Accounts 203 (292) (89) 108 (89) 19
Money Market Accounts (80) (225) (305) 42 (165) (123)
Savings Deposits 147 (255) (108) 62 (43) 19
Certificates of (231) (320) (551) (99) (203) (302)
deposit $100,000 and over
Other Time Deposit (441) (1,122) (1,563) (261) (598) (859)
-------- ------- ------- ------- ------- -------
Total Expense on Interest Bearing Liabilities (402) (2,214) (2,616) (148) (1,098) (1,246)
-------- ------- ------- ------- ------- -------
NET INTEREST INCOME ($345) $583 $238 ($34) $154 $120
======== ======= ======= ======= ======= =======
</TABLE>
(1) The change in interest due to both rate and volume has been
allocated on a consistent basis to rate.
64
<PAGE> 78
TABLE 3
PORTFOLIO MATURITIES AND YIELDS
(Dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1992
-----------------
AVERAGE
BOOK VALUE YIELD
-------
<S> <C> <C>
U. S. Treasury and Government Agency
Securities:
Within One Year $ 3,947 6.88%
One to Five Years 41,324 6.23
Over Ten Years 8,313 6.85
-------------
Total 53,584
Obligations of State and
Political Subdivisions(1):
Within One Year 173 5.58
One to Five Years 345 8.38
Five to Ten Years 630 8.69
Over Ten Years 564 7.84
-------------
Total 1,712
Mortgage Backed Securities 22,910 7.72
Marketable Equity Securities with no
maturity 358
-------------
Total Investments $ 78,564
=============
</TABLE>
(1) The average yield is not presented on a tax-equivalent basis.
There are no investment securities (other than securities of the U. S.
Government and its agencies and Mortgage Backed Securities) which have an
aggregate book value as of December 31, 1992 exceeding ten percent (10%) of
shareholders' equity as of that date.
65
<PAGE> 79
Table 4 presents a summary of loans by category as of December 31, 1992 and
1991.
TABLE 4
GROSS LOANS BY CATEGORY
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31,
1992 1991
---- ----
<S> <C> <C>
Real Estate:
Secured by single-family $29,241 $29,472
Construction, land development
and other commercial 15,698 14,713
Secured by Farmland 3,506 4,705
Secured by Multi-Family 41 51
Commercial and Industrial 10,884 15,639
Agricultural 972 1,462
Individual Installment 10,123 12,484
Lease Financing 0 455
Other Loans 669 1,397
------- -------
Total 71,134 80,378
Unearned Income 116 362
------- -------
Loans, net of unearned income $71,018 $80,016
======= =======
</TABLE>
Loans made by FNB to directors, executive officers and those
individuals or organizations that are related to them totaled $532,000 and
$640,000 as of December 31, 1992 and 1991, respectively. All of these loans
were made in the normal course of business on substantially the same terms as
extended to other customers of comparable size and financial status and the
loans did not include more than a normal risk of collectibility or present any
other unfavorable terms.
66
<PAGE> 80
Table 5 sets forth the loan maturity and interest rate sensitivity of loans as
of December 31, 1992.
TABLE 5
LOAN MATURITY
As of December 31, 1992
(Dollars in Thousands)
<TABLE>
<S> <C>
Fixed Rate Loans
Three months or less $ 6,868
After three months through one year 7,126
After one year through five years 7,700
After five years 1,349
-------
Total fixed rate loans 23,043
-------
Floating rate loans:
Repricing quarterly or more frequently 17,870
Repricing annually or more frequently, but
less than quarterly 13,547
Repricing every five years or more frequently,
but less than annually 14,209
-------
Total Floating Rate Loans 45,626
-------
Total Loans (1) $68,669
=======
</TABLE>
(1) Net of nonaccrual loans ($2,349,000) and Unearned Income ($116,000).
67
<PAGE> 81
Table 6 sets forth information on the nonperforming loans in FNB's loan
portfolio as of December 31, 1992 and 1991. Although the amounts shown
represent risks in the loan portfolio, the major portions are collateralized
and should not be interpreted as losses.
TABLE 6
NONPERFORMING ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1992 1991
---- ----
<S> <C> <C>
Nonaccrual loans $2,349 $3,377
Loans Past Due 90 Days 370 169
Other Real Estate Owned and Foreclosed assets 151 1,330
-------- --------
Total Nonperforming Assets $2,870 $4,876
======== ========
</TABLE>
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 loans are both well secured and in the process
of collection.
At December 31, 1992, there were no concentrations of loans (loans to
borrowers engaged in similar activities) exceeding 10% of the total loans
outstanding. There were no foreign loans outstanding at December 31, 1992 or
1991.
68
<PAGE> 82
TABLE 7
SUMMARY OF LOAN LOSS EXPERIENCE
For the Years Ended December 31,
(Dollars in thousands)
<TABLE>
<CAPTION>
1992 1991
---- ----
<S> <C> <C>
Balance, January 1, $ 4,415 $ 2,804
Provision for Loan Loss 382 4,952
Loans Charged-Off:
Commercial, agricultural and
real estate 1,441 2,895
Installment 221 783
-------- --------
Total loans charged-off 1,663 3,678
Recoveries:
Commercial, agricultural and
real estate 663 151
Installment 172 186
-------- --------
Total recoveries 835 337
-------- --------
Net Charge-offs 827 3,341
-------- --------
Balance, December 31, $ 3,969 $ 4,415
======== ========
Loans, net of unearned income:
Year end $ 71,018 $ 80,016
Average during Year 75,647 89,883
Allowance for loan losses to year
end loans, net of unearned income 5.59% 5.52%
</TABLE>
In determining the amount of the provision for loan losses and
allowance for loan losses, management considers past loan charge-offs, the
level of past due an nonaccrual loans, the size and mix of the portfolio,
adverse classifications at recent regulatory examinations, general economic
conditions in the market area, and most importantly, a review of individual
loans to identify potential credit problems. The level of allowances for loan
losses is believed adequate in relation to the size, mix and quality of the
loan portfolio.
69
<PAGE> 83
Table 8 presents an allocation of the allowance for loan losses by
different 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 to
any particular loan category.
TABLE 8
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1992 1991
---- ----
Amount % Amount %
------ -- ------ --
<S> <C> <C> <C> <C>
Real Estate $ 970 25 $ 979 22
Commercial and Industrial 2,706 69 3,023 69
Agricultural 78 2 117 3
Lease Financing 0 0 18 0
Other 215 4 278 6
-------- --- -------- ---
TOTAL $ 3,969 100 $ 4,415 100
======== === ======== ===
</TABLE>
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
FNB 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
FNB monitors and attempts to control the mix and maturities of its assets and
liabilities in order to maximize net interest income. Management maintains a
federal funds sold balance it believes necessary to meet FNB's daily cash
needs. Management does not foresee any particular matters which might
immediately threaten its ability to remain liquid.
DEPOSITS
Table 9 sets forth the average balance on FNB deposit accounts for the
periods indicated. Average rates paid on deposits by FNB are reflected in
Table 1.
70
<PAGE> 84
TABLE 9
Average Deposits
----------------
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1992 1991
---- ----
<S> <C> <C>
Interest Bearing:
Demand $ 35,384 $ 32,400
Savings 13,822 11,073
Time 86,432 95,865
Noninterest Bearing:
Demand 13,621 13,312
-------- --------
Total Deposits $149,259 $152,650
======== ========
</TABLE>
Included in time deposits are $15,801,000 of certificates of deposit
of $100,000 or greater, the maturities of which are set forth in Table 10
below.
TABLE 10
Time Deposit Maturity
As of December 31, 1992
(Dollars in thousands)
Maturing
<TABLE>
<S> <C>
3 months or less $5,349
Over 3 months through 12 months 8,550
Over 12 months through 5 years 1,902
Over 5 years 0
--------
Total $15,801
=========
</TABLE>
71
<PAGE> 85
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 UPNB 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, 1992, 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 combined financial statements of Security Trust Federal Savings and
Loan Association and SaveTrust Federal Savings Bank for the year ended December
31, 1992, incorporated in this Prospectus by reference to UPC's Annual Report
on Form 10-K dated December 31, 1992, have been so incorporated in reliance
upon the report of Horne CPA Group, independent accountants, given on authority
of said firm as experts in auditing and accounting.
The consolidated financial statements of Mid-South Bancorp, Inc. as of and
for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Baird, Kurtz & Dobson,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Bank of East Tennessee as of and
for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Coopers & Lybrand,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Central State Bancorp, Inc. as of
and for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Williams and Jerrolds,
P.C., independent accountants, incorporated, given on the authority of said
firm as experts in auditing and accounting.
The consolidated balance sheets of First Federal Savings Bank and
subsidiary, of Maryville, Tennessee, as of December 31, 1992 and 1991, and the
related consolidated statements of operations, retained earnings, and cash
flows for each of the years in the three-year period ended December 31, 1992,
incorporated in this Prospectus by reference to the Current Report on Form 8-K
of UPC dated September 27, 1993, have been incorporated in reliance upon the
report of KPMG Peat Marwick, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in auditing and accounting.
72
<PAGE> 86
The consolidated financial statements of Garrett Bancshares, Inc. as of
and for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Heathcott & Mullaly,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of First National Bancorp of
Shelbyville, Inc. as of and for the year ended December 31, 1992, incorporated
in this Prospectus by reference to the Current Report on Form 8-K of UPC dated
October 14, 1993, have been so incorporated in reliance on the report of
Winnett Associates, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The consolidated financial statements of Tennessee Bancorp, Inc. as of
December 31, 1992 and 1991 and for the years ended December 31, 1992 and 1991,
the six months ended December 31, 1990 and the year ended June 30, 1990
incorporated in this Prospectus by reference to the Current Report on Form 8-K
of UPC dated October 14, 1993, have been audited by Deloitte & Touche,
independent auditors, as stated in their report, which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated balance sheets of Liberty Bancshares, Inc. and
subsidiary, of Paris, Tennessee, as of December 31, 1992 and 1991, and the
related consolidated statements of operations, retained earnings, and cash
flows for each of the years in the three-year period ended December 31, 1992,
incorporated in this Prospectus by reference to the Current Report on Form 8-K
of UPC dated January 10, 1994, have been incorporated in reliance upon the
report of KPMG Peat Marwick, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of Clin-Ark Bankshares, Inc. as of
December 31, 1992 and for the year ended, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated January 10, 1994, have
been audited by Frost & Company, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so
incorporated in reliance on the report of such firm given on the authority of
said firm as experts in auditing and accounting.
73
<PAGE> 87
UNION PLANTERS CORPORATION
INDEX TO APPENDICES
APPENDIX
NUMBER
A-1 -- First National Bancorp of Shelbyville, Inc. Audited Consolidated
Financial Statements as of December 31, 1992 and 1991, and for the
three years ended December 31, 1992
A-2 -- First National Bancorp of Shelbyville, Inc. Unaudited Consolidated
Financial Statements as of September 30, 1993, and for the
three-month and nine-month periods ended September 30, 1993 and 1992
B -- Agreement and Plan of Reorganization, along with the Plan of
Merger annexed thereto as Exhibit A
C -- Excerpt from Tennessee Business Corporation Act, as
amended--Dissenters' Rights
<PAGE> 88
APPENDIX A-1
First National Bancorp of Shelbyville, Inc.
Audited Consolidated Financial Statements
as of December 31, 1992 and December 31, 1991 and for the three years
ended
<PAGE> 89
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditor's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statement of Changes in Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
<PAGE> 90
INDEPENDENT AUDITOR'S REPORT
Board of Directors
First National Bancorp of Shelbyville, Inc.
Shelbyville, Tennessee
We have audited the accompanying consolidated balance sheet of
First National Bancorp of Shelbyville, Inc. and Subsidiaries as of December 31,
1992 and 1991 and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the three years in the period ended December
31, 1992. These consolidated financial statements are the responsibility of
the Bancorp's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects the financial position of
First National Bancorp of Shelbyville, Inc. and Subsidiaries as of December 31,
1992 and 1991, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1992 in conformity
with generally accepted accounting principles.
As discussed in Note N to the financial statements, First
National Bank of Shelbyville, Tennessee is operating under a Letter Agreement
with the Office of the Comptroller of the Currency.
Winnett Associates
January 22, 1993
(except for Note Q, as to which the date is September 21, 1993)
1
<PAGE> 91
CONSOLIDATED BALANCE SHEET
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992 and 1991
(Dollars in Thousands)
<TABLE>
<CAPTION>
December 31,
ASSETS 1992 1991
- ------ ---------- -----------
<S> <C> <C>
Cash on hand and due from banks $ 5,566 $ 5,088
Interest-bearing deposits with banks 1,581 2,868
Federal funds sold 4,370 5,400
Investment securities (market value of
$79,355 in 1992 and $63,713 in 1991) 78,206 62,255
Other investments 358 462
Loans 71,134 80,378
Less: Allowance for loan losses 3,969 4,415
Unearned income 116 362
--------- ---------
67,049 75,601
Premises and equipment, net 2,367 2,501
Accrued interest receivable 1,481 1,700
Other real estate 141 367
Deferred income taxes 363 378
Other assets 1,182 1,328
--------- ---------
Total Assets $ 162,664 $ 157,948
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 92
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION> 1992 1991
----------- -----------
<S> <C> <C>
DEPOSITS
- --------
Non-interest bearing $ 14,899 $ 12,617
Certificates of deposit of
$100,000 and over 15,801 18,731
Other interest bearing 119,506 118,177
----------- ---------
150,206 149,525
Deferred compensation payable 489 467
Accrued interest payable 420 704
Provision for state taxes 38 23
Other liabilities 223 228
</TABLE>
Commitments and Contingent Liabilities - Note G
STOCKHOLDERS EQUITY
<TABLE>
<S> <C> <C>
Common stock, par value $10 per share,
700,000 shares authorized, 130,000
shares issued and outstanding 1,300 1,000
Additional paid-in capital 4,240 2,500
Retained earnings 5,748 3,501
----------- --------
11,288 7,001
----------- --------
$ 162,664 $ 157,948
=========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 93
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the years ended December 31, 1990, 1991,and 1992
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained Total
Stock Capital Earnings
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Balance January 1, 1990 $ 1,000 $ 2,500 $ 8,763 $ 12,263
Net Loss (1,205) (1,205)
Cash dividends - $4.00 per share (400) (400)
-------- ----------- ---------- ---------
Balance at December 31, 1990 1,000 2,500 7,158 10,658
Prior period adjustment 160 160
Correction of an accrual error
-------- ----------- ---------- ---------
1,000 2,500 7,318 10,818
Net loss (3,817) (3,817)
--------- ----------- ---------- ---------
Balance at December 31, 1991 1,000 2,500 3,501 7,001
Stock issued 300 1,740 2,040
Net income 2,247 2,247
--------- ----------- ---------- ---------
Balance at December 31, 1992 $ 1,300 $ 4,240 $ 5,748 $ 11,288
========= =========== ========== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 94
CONSOLIDATED STATEMENT OF INCOME
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Years ended December 31,
1992 1991 1990
------- -------- -------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $ 7,651 $ 10,107 11,161
Interest and dividends on
investment securities:
Taxable 4,578 4,396 4,137
Tax-exempt 49 136 519
Federal funds sold 377 337 245
Interest-bearing deposits at
financial institutions 171 228 268
-------- ------ ------
TOTAL INTEREST INCOME 12,826 15,204 16,330
Interest expense
Deposits 6,378 8,989 10,242
Other loans 7 12 5
-------- ----- ------
TOTAL INTEREST EXPENSE 6,385 9,001 10,247
-------- ----- ------
NET INTEREST INCOME 6,441 6,203 6,083
Provision for loan losses 382 4,952 3,224
--------- ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 6,059 1,251 2,859
Other income
Service charge on deposit
accounts 730 732 853
Securities gains (losses) 364 (117) 128
Trust department fees-Note A(2) 91 44 44
Insurance fees 51 60 110
Other service charges, collection
charges and fees 16 16 14
Other operating income 118 146 93
---------- ---- -----
TOTAL OTHER INCOME 1,370 881 1,242
Operating expenses
Salaries and other employee
benefits 2,786 2,853 2,793
Occupancy expense 379 411 364
Other real estate expense 42 120 10
Equipment expense 232 289 282
Data processing and computer
service 320 321 369
</TABLE>
5
<PAGE> 95
CONSOLIDATED STATEMENT OF INCOME (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Years ended December 31,
1992 1991 1990
------ ------ -------
<S> <C> <C> <C>
Operating expenses (cont'd)
Legal and professional 176 391 136
FDIC - Comptroller Assessment 386 362 212
Other 815 1,250 1,265
------ ------ ------
TOTAL OPERATING EXPENSES 5,136 5,997 5,431
Earnings, <loss> before income
tax and extraordinary item 2,293 (3,865) (1,330)
Income taxes <credit> 745 (48) (125)
------- ------ ------
INCOME BEFORE EXTRAORDINARY
ITEM $ 1,548 ($ 3,817) ($ 1,205)
Extraordinary item
Tax benefit due to loss
carryforward 699
-------- ------- -------
NET INCOME <LOSS> $ 2,247 ($ 3,817) ($ 1,205)
========= ======= =======
Earnings <loss> per share
Note I $ 20 ($ 38) ($ 12)
========= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 96
CONSOLIDATED STATEMENT OF CASH FLOWS
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1992 1991 1990
--------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating
activities:
Net income $ 2,247 ($ 3,817) ($ 1,205)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Provision for loan losses 382 4,952 3,224
Provision for depreciation
and amortization 178 196 207
Tax effect of prior period
adjustment (35)
Loss on retirement of
fixed assets 3 1
Change in assets and liabilities:
Decrease (increase) in
interest receivable 219 1,507 33
Decrease (increase) in
other assets 388 139 (584)
Increase (decrease) in
accrued interest payable (284) (254) (91)
Increase (decrease) in
other liabilities 89 238 (59)
-------- -------- -------
975 6,744 2,730
-------- -------- --------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,222 2,927 1,525
--------- ------- --------
Cash flows from investing activities:
Capital expenditures (48) (19) (750)
Purchases of investment
securities - Note C (14,560) (8,009) (3,864)
Net decrease (increase)
in loans 8,170 13,525 (2,111)
--------- -------- --------
NET CASH PROVIDED BY
INVESTING ACTIVITIES (6,438) 5,497 (6,725)
Cash flows from financing activities:
Proceeds from issuance
of common stock 2,040
Dividends paid (275) (400)
</TABLE>
7
<PAGE> 97
CONSOLIDATED STATEMENT OF CASH FLOWS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
1992 1991 1990
-------- -------- ---------
<S> <C> <C> <C>
Cash flows from financing activities:
Increase in deposits 681 (3,770) 3,316
Increase (decrease) in
repurchase agreement (1,750) (400)
Increase (decrease) in other
loans payable (57) (14) 4
-------- -------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,664 (5,809) 2,520
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS (552) 2,615 (2,680)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 10,488 7,873 10,553
-------- -------- ---------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 9,936 $ 10,488 $ 7,873
========= ======== =========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 6,669 $ 9,255 $ 10,338
State and federal income
taxes 55 58 306
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE> 98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) Principles of Consolidation
The consolidated financial statements include the accounts of
First National Bancorp of Shelbyville, Inc. (the Bancorp), and
its subsidiaries, First National Bank and First Leasing
Corporation, after eliminating all significant intercompany
transactions and balances.
(2) Basis of Accounting
The records of the Bancorp are maintained on the accrual
method. The accompanying financial statements have been
prepared in conformity with generally accepted accounting
principles and conform with practices within the banking
industry including the reporting of trust fees as income on
the cash basis.
(3) Investment Securities
Investment securities are those securities which the Bancorp
has the ability and intent to hold to maturity. These
securities are stated at cost adjusted for amortization of
premiums and accretion of discounts, which are recognized as
adjustments to interest income. Gains and losses on
disposition are based on the net proceeds and the adjusted
carrying amount of the securities sold, using the specific
identification method. Generally, such securities are sold
only to meet liquidity needs or in accordance with the
specific investment strategy of the bank. Declines in market
value below cost, which are judged to be other than temporary,
are reflected in the determination of current period earnings.
(4) Allowance for Loan Losses
The allowance for loan losses is established through a
provision for loan losses charged to expense. Loans are
charged against the allowance for loan losses when management
believes the collectibility of the principal is unlikely. The
allowance is an amount believed adequate to absorb possible
losses on exiting loans that may become uncollectible, based
on evaluation of the collectibility of loans and prior loan
loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions and trends that
may affect the borrower's ability to pay. Specific reserves
are established for some classified credits, with other
9
<PAGE> 99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(4) Allowance for Loan Losses (Cont,d)
reserves being based upon varying percentages of the remaining
credits.
Changes in the loan loss allowance are detailed as follows (in
thousands):
<TABLE>
<CAPTION>
1992 1991 1990
------- -------- --------
<S> <C> <C> <C>
Balance at January 1, $4,415 $2,804 $1,280
Add:
Recoveries credited to
allowance 835 337 329
Bad debt provision 382 4,952 3,224
------ ------ ------
$5,632 $8,093 $4,833
Deduct loans charged-off 1,663 3,678 2,029
------ ------ ------
$3,969 $4,415 $2,804
====== ====== ======
</TABLE>
For federal income tax purposes, the allowance for loan losses
is maintained at the maximum allowable by the Internal Revenue
Code which amounted to $1,102,402 and $1,185,923 at December
31, 1992 and 1991, respectively.
(5) Premises and Equipment
Bank premises and equipment are stated at cost, less
accumulated depreciation computed utilizing a declining-
balance method over estimated useful lives of the assets.
Expenditures for maintenance and repairs are charged to
operations when incurred.
Major classifications of these assets are summarized as
follows:
<TABLE>
<CAPTION>
December 31,
1992 1991
------------- ------------
<S> <C> <C>
Land $ 417,749 $ 417,749
Buildings and Improvements 2,822,936 2,822,936
Equipment and vehicles 1,236,177 1,216,915
----------- ----------
Accumulated depreciation (2,109,356) (1,956,741)
----------- ----------
$ 4,476,862 $ 4,457,600
=========== ===========
</TABLE>
10
<PAGE> 100
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
(6) Interest Earned and Unearned
Unearned interest on installment loans is recognized as income
over the terms of the loans by the rule of 78s method.
Interest on other loans is calculated by using simple interest
methods on daily balances of the principal amount outstanding.
Interest accruals are discontinued when, in the opinion of
management it is not reasonable to expect that such interest
will be collected.
(7) Trust Assets
Assets held by the banking subsidiaries in fiduciary or agency
capacities are not included as assets in the accompanying
balance sheet since such items are not assets of the Bancorp.
(8) Statement of Cash Flows
For purposes of reporting cash flows, cash and cash
equivalents include cash on hand, amounts due from banks, and
federal funds sold. Generally, federal funds are purchased
and sold for one-day periods.
(9) Other Real Estate
Other real estate, acquired through partial or total
satisfaction of loans, is carried at the lower of cost or net
realizable value (which approximates the fair value) of the
underlying real estate. At the date of acquisition of such
real estate, losses on such loans are charged to the allowance
for possible loan losses. Fair value is defined as the amount
that a creditor could reasonably expect to receive in a
current sale between a willing buyer and a willing seller.
NOTE B - RESTRICTIONS ON CASH AND DUE FROM BANKS
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
$879,000.
11
<PAGE> 101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE C - INVESTMENT SECURITIES
The carrying amounts of investment securities as shown in the
balance sheet of First National Bank and their approximate
market values are summarized as:
<TABLE>
<CAPTION>
Carrying Unrealized Unrealized Market
Amount Gains Losses Value
-------- ---------- ---------- ------
<S> <C> <C> <C> <C>
December 31, 1992
U. S.Government and
agency securities $76,494,817 $ 1,317,152 $ 257,715 $77,554,254
State and municipal
securities 1,711,292 120,458 30,885 1,800,865
=========== =========== ========= ===========
</TABLE>
Gross-realized gains and gross-realized losses on sales of
securities were:
Gross-realized gains:
U.S. government and agency securities $381,553
Gross-realized losses:
U.S. government and agency securities $ 7,392
Other securities $ 10,000
The maturities of investment securities at December 31, 1992
were as follows:
Carrying Market
Amount Value
---------- -----------
[S] [C] [C]
Due in one year or less $ 7,180,156 $ 7,242,573
Due in one to five years 56,690,163 57,504,775
Due from five to ten years 11,756,223 12,015,155
Due after ten years 2,579,567 2,592,616
U.S. Government, state and municipal securities carried at
$15,216,340 were pledged at December 31, 1992, to secure
public and trust deposits and for other purposes as required
by law.
Proceeds from maturities and sales of investment securities
amounted to $13,246,307 and $18,618,765 respectively for 1992.
For 1991 proceeds from maturities and sales on investment
securities amounted to $9,970,704 and $48,156,600
respectively; for 1990 proceeds from maturities and sales of
investment securities amounted to $10,674,423 and $51,712,786
respectively.
12
<PAGE> 102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE D - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which
it is practical to estimate that value:
Cash and short-term investments - the carrying amount is a
reasonable estimate of fair value.
Investment securities - fair values are based on quoted market
prices, if available.
Loan receivables - fair values are estimated by discounting
the future cash flows using the current rates which the bank
offers borrowers and deducting the applicable reserve for
credit losses.
Deposit liabilities - fair value of demand deposits, savings
accounts, and certain money market deposits is the amount
payable on demand at the reporting date. The fair value of
certificates of deposit and individual retirement accounts is
estimated using the bank's current incremental borrowing rate.
Estimates of fair values at December 31, 1992 for certificates
of deposit and individual retirement accounts are $74,248,000
and $14,225,000 respectively.
NOTE E - LOANS
Loans are stated at the amount of unpaid principal reduced by
unearned discount and the allowance for loan losses.
Loans on which the accrual of interest has been discontinued
amounted to $2,349,228 at December 31, 1992. If interest on
these loans had been accrued, such income would have
approximated $159,000. Accrual of interest is discontinued on
a loan when management believes, after considering economic
and business conditions and collection efforts, that
borrowers' financial condition is such that collection of
interest is doubtful.
First National Bank grants agribusiness, commercial and
residential loans to its customers, substantially all of whom
reside in Bedford and Grundy Counties, Tennessee. Thus a
substantial portion of its debtors' ability to honor their
loan contracts may be affected by the current economic
conditions of this area.
The estimate of the fair value of loan receivables at December
31, 1992 is $70,888,000.
13
<PAGE> 103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE E - LOANS (Cont'd)
Loans outstanding at December 31, 1992 are summarized as
follows (in thousands):
<TABLE>
<CAPTION>
December 31,
<S> <C> <C>
Real estate: 1992 1991
-------- --------
Secured by single-family
residential properties $ 29,241 $ 29,472
Construction, land development
and other commercial 15,698 14,713
Secured by farmland 3,506 4,707
Secured by multi-family
residential properties 41 51
Commercial and industrial 10,884 15,639
Agricultural 972 1,925
Installment loans to individuals 10,123 12,474
Tax-exempt obligations of
states and political subdivisions 442 1,072
Other loans 227 325
--------- ---------
Total loans $ 71,134 $ 80,378
========= =========
</TABLE>
NOTE F - LOANS TO RELATED PARTIES
Loans to related parties include loans made to directors and
executive officers of the BanCorp, their affiliates, families,
and companies in which they hold ten percent or more
ownership.
The aggregate dollar amount of these loans was $531,909 at
December 31, 1992. New extensions and repayments amounted to
$2,500 and $110,937 respectively.
These loans transactions were made on substantially the same
terms as those prevailing at the time for comparable loans to
other persons. They did not involve more than the normal risk
of collectibility.
NOTE G - COMMITMENTS AND CONTINGENT LIABILITIES
The Bank leases its computer system and various other pieces
of equipment. Minimum future lease payments are as follows:
1993 $188,247
1994 188,247
14
<PAGE> 104
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992,1991, and 1990
NOTE G - COMMITMENTS AND CONTINGENT LIABILITIES (Cont'd)
1995 175,692
1996 103,521
In the normal course of business there are various commitments
and contingent liabilities (such as guarantees, commitments to
extend credit, lines of credit and liability for assets held
in trust) which are properly not recorded in the financial
statements. In the opinion of management, these do not
represent unusual risks.
The Bancorp is also subject to claims and lawsuits which arise
in the ordinary course of business. Based on information
presently available, it is the opinion of management and legal
counsel that the disposition or ultimate determination of such
claims and lawsuits will not have a material adverse effect on
the consolidated financial position of the BanCorp.
NOTE H - LIMITATION ON DIVIDENDS
First National Bank must receive the approval of the
Comptroller of Currency before declaring a dividend, if the
amount of all dividends, including the proposed dividend,
declared by the Bank in any calendar year exceeds the total of
the Bank's net profit for that year to date, combined with its
retained net profits for the preceding two years.
NOTE I - EARNINGS OR LOSS PER SHARE
Earnings or loss per share is computed based on the weighted
average number of shares outstanding during the year - 11,750
for 1992 and 100,000 for 1991.
NOTE J - DEFINED BENEFIT PENSION PLAN
The Bank has a noncontributory defined benefit pension plan
covering substantially all its employees. The benefits are
based on years of service and the employees' compensation
during the years of employment. The Bank's funding policy in
the past has been to make monthly contributions based upon
actuarial recommendations. Monthly contributions were
suspended during 1991 as a cost-cutting measure but were
resumed during 1992. Beginning with the 1991 calendar year,
the Bank elected to apply the provisions of Financial
Accounting Standards Board Statement 87, which sets forth the
basis for determination of net pension cost for any plan year.
15
<PAGE> 105
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE J - DEFINED BENEFIT PENSION (Cont'd)
The components of net periodic pension cost for the year ended
December 31, are as follows:
1992 1991
---------- ---------
Service cost $ 75,105 $ 107,069
Interest cost 186,503 154,561
Actual return on assets (201,878) (202,782)
Other 1,979 (2,208)
---------- ---------
$ 61,709 $ 56,640
========== =========
The funded status of the plan reconciled to the amounts
reported in the Bank's statement of financial position is as
follows:
<TABLE>
<S> <C>
Plan assets at fair value $ 2,454,773
Actuarial present value of benefit obligations:
(a) Accumulated benefit obligation -
vested $ 2,092,852
-vested 18,496
(b) Projected benefit obligation 2,111,348
------------
Plan assets in excess of projected
benefit obligation 343,425
Unrecognized net obligation
1-1-92 $ (214,767)
Recognized amount 11,931 (202,836)
------------
Unrecognized net (gain) or loss (145,879)
-----------
Accrued pension cost $ 5,290
===========
</TABLE>
The discount rate and rate of compensation increase used to
measure the projected benefit obligation are 8.25% and 6.5%,
respectively. The expected long-term rate of return on plan
assets is 9.0%.
Included in plan assets is First National Bancorp Stock,
valued by the plan administrator at $134,602.
16
<PAGE> 106
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE K - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to
meet the financing needs of its customers and to reduce its
own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit,
covered call options written, standby letters of credit and
financial guarantees, and interest rate caps and floors
written. Those instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the
amount recognized in these financial statements. The contract
or notional amounts of those instruments reflect the extent of
involvement the Bank has in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument
for commitments to extend credit and standby letters of credit
and financial guarantees written is represented by the
contractual notional amount of those instruments. The Bank
uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet
instruments. For interest rate caps, floors, and covered call
options written, the contract or notional amounts do not
represent exposure to credit loss.
Unless noted otherwise, the Bank does not require collateral
or other security to support financial instruments with
off-balance-sheet credit risk.
Financial instruments whose contract amounts represent credit
risk (in thousands):
<TABLE>
<CAPTION>
Contract Amount
1992 1991
-------- --------
<S> <C> <C>
Commitments to extend credit $ 7,159 $ 8,130
Standby letters of credit and
financial guarantees written 1,080 852
Financial instruments whose notional
or contract amounts exceed the amount
of credit risk:
Interest rate caps and floors written $ 26,786 $ 26,065
</TABLE>
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any conditions
17
<PAGE> 107
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE K - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK (Cont'd)
established in the contract. Other than credit card lines of
credit, commitments have fixed expiration dates or other
termination clauses, and payment of a fee may be required.
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 creditworthiness on a case-by-case
basis. The amount of collateral obtained if deemed necessary
by the Bank upon extension of credit is based on management's
credit evaluation of the counter-party. Collateral held
varies, but may include accounts receivable, inventory,
property, plant, equipment, income-producing commercial
properties, and residential properties.
Standby letters of credit and financial guarantees written are
conditional commitments issued by the Bank to guarantee the
performance of a customer to a third party. Generally, the
commitments extend for a period of one year with a subsequent
thirty-day period during which the customer may request
renewal of the agreement for an additional term. The credit
risk involved in issuing letters of credit is essentially the
same as that involved in extending loan facilities to
customers. The Bank holds cash for which collateral is deemed
necessary. At December 31, 1992, and 1991 the dollar amount
of commitments collateralized was 31 percent and 34 percent
respectively.
The Bank enters into a variety of interest rate contracts -
including interest rate caps and floors written and covered
call options written - in its trading activities and in
managing its interest rate exposure. Interest rate caps and
floors written by the Bank enable customers to transfer,
modify, or reduce their interest rate risk. Covered call
options are contracts that allow the holder of the option to
purchase or sell a financial instrument at a specified price
and within a specified period of time from the seller or
"writer" of the option. As a writer of options, the Bank
receives a premium at the outset and then bears the risk of an
unfavorable change in the price of the financial instrument
underlying the option.
NOTE L - NET OPERATING LOSS CARRYOVER
As a result of the Bank's loss for the year ending December
31, 1991, the Bank has a tax benefit for the year ending
December 31, 1992, in the amount of $698,898. Approximately
$900,000 and $500,000 are available to offset future federal
18
<PAGE> 108
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE L - NET OPERATING CARRYOVER (Cont'd)
and state income taxes, respectively. If unused, the net
operating loss carryforward will expire with the due date of
the calendar year 2006 tax return.
NOTE M - STOCK OPTION
During 1991, in conjunction with entering into a management
contract, the Bancorp granted its Chief Executive
Officer an option to purchase, at book value, one percent of
the outstanding stock per year for five years, with all
unexercised options expiring at the end of ten years.
NOTE N - LETTER AGREEMENT
On March 26, 1991, the First National Bank of Shelbyville,
Tennessee (the Bank) and the Office of the Comptroller of the
Currency (OCC) entered into an agreement wherein the Bank
agreed to take certain actions and comply with certain
requirements. The provisions of the Agreement continue in
full force and effect unless or until such provisions are
amended by mutual consent of the parties to the Agreement or
excepted, waived, or terminated by the OCC.
To meet capital requirements prescribed by the Letter
Agreement, during July, 1992, the Bancorp issued an additional
30,000 common shares, resulting in net proceeds of $2,040,000.
NOTE O - INCOME TAXES
To the extent permitted by generally accepted accounting
principles deferred income taxes are reported for those
temporary differences between items of income or expense and
those reported for income tax purposes. These differences
relate principally to the provision for loan losses and
deferred compensation payable. The difference attributable to
provision for loan losses was approximately $2,867,000, and
the difference attributable to deferred compensation was
$511,000 at December 31, 1992.
Total income taxes (credits) in the statements of income are
as follows (in thousands):
<TABLE>
<S> <C> <C> <C>
Currently payable 1992 1991 1990
------ ------- ------
Federal $ 621 $ -0- ($ 98)
State 114 44 37
</TABLE>
19
<PAGE> 109
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
NOTE O - INCOME TAXES (CONT'D)
Deferred: 1992 1991 1990
------ ------ ------
Federal 6 (48) (27)
State 4
------ ------ ------
$ 745 ($ 4) ($ 88)
A reconciliation of the income tax rate to the effective tax
rate for December 31, 1992, is as follows:
Computed "expected" tax $ 779,773 34.0%
State income taxes (40,144) 1.7
Tax-exempt income, net
of disallowed interest
expense (34,011) 1.5
Other (78,383) (3.4)
--------- ----
$ 627,235 27.4%
Effective January 1, 1993, the corporation adopted the
provisions of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" (SFAS 109) which resulted
in recording a previously unrecognized tax benefit of
approximately $1,280,000. The cumulative effect of this
accounting change was recorded in the first quarter of 1993.
NOTE P - FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. (PARENT COMPANY
ONLY)
Financial Information
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
December 31
Assets 1992 1991
------ ----------- ------------
<S> <C> <C>
Cash and due from banks(1) $ 9,963 $ 4,683
Investment in Plateau
Management Co. 168,833 133,655
Investment in First National
Bank (1) 11,084,716 6,823,035
Investment in First Leasing
Corporation (1) 24,918 39,941
------------ -----------
Total Assets $ 11,288,430 $ 7,001,314
============ ===========
</TABLE>
20
<PAGE> 110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
December 31, 1992, 1991, and 1990
<TABLE>
<S> <C> <C>
Federal and state taxes
payable (1) $ 74 - 0-
Stockholders' Equity (2) 11,288,356 7,001,314
------------ -----------
Total Liabilities
and Stockholders'
Equity $ 11,288,430 $ 7,001,314
============ ===========
</TABLE>
(1) Eliminated in consolidated
(2) $11,119,523 and $6,867,659 eliminate1992
ands1991arespectively.
CONDENSED STATEMENT OF INCOME
For the Years Ended December 31, 1992, 1991, and 1990
<TABLE>
<CAPTION>
1992 1991 1990
----------- ----------- -----------
<S> <C> <C> <C>
Dividend Income $ 18,578 $ 15,752 $ 15,752
Undistributed income
(loss )of First
National Bank (1) 2,261,682 (3,640,878) (1,004,667)
Undistributed income
(loss) of First
Leasing Corporation
(1) (15,024) (190,718) (213,777)
------------ ----------- -----------
Total Income $ 2,265,236 ($3,815,844) ($1,202,692)
Operating Expenses 18,133 1,388 1,470
------------ ----------- -----------
Earnings (loss)
before taxes 2,247,103 (3,817,232) (1,204,162)
Income taxes 61 -0- 488
------------ ----------- -----------
Net Income $ 2,247,042 ($3,817,232) $ 1,204,650
============ =========== ===========
</TABLE>
CONDENSED STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1992, 1991, and 1990
<TABLE>
<CAPTION>
1992 1991 1990
---------- ---------- ----------
<S> <C> <C> <C>
Operating Activities
Net income (loss) $2,247,042 ($3,817,232) ($1,204,650)
Equity in undistributed
(income) loss of Bank (2,261,682) 3,640,878 1,004,667
Equity in undistributed
loss of First Leasing
Corporation 15,024 190,718 213,777
</TABLE>
21
<PAGE> 111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
CONDENSED STATEMENT OF CASH FLOWS (CONT'D)
For the Year Ended December 31, 1992, 1991, and 1990
<TABLE>
<CAPTION>
1992 1991 1990
---- ---- ----
<S> <C> <C> <C>
Increase (decrease)
in payable 74 (1,988) (2,157)
----------- --------- --------
458 12,376 11,637
Investing Activities
Purchase of investments
securities (35,178) (15,753) -0-
Sale of capital assets -0- -0- 196,499
Financing Activities
Proceeds from issuance
of common stock 2,040,000 -0- -0-
Distributed to First
National Bank (net of
receipt from First
Leasing) (2,000,000) (230,000) -0-
----------- --------- --------
Net cash provided
by financing
activities 40,000 (230,000) -0-
Net increase (decrease) in cash 5,280 (233,377) 208,136
Beginning of year 4,683 238,060 29,924
----------- --------- --------
End of year $ 9,963 $ 4,683 $238,060
=========== ========= ========
</TABLE>
NOTE Q - PENDING MERGER
As of September 21, 1993, the Board of Directors of the
Bancorp approved an "Agreement of Reorganization" with another
bank holding company whereby the two parties intend to
effectuate a merger of the Bancorp with and into the other
bank holding company. 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.
22
<PAGE> 112
APPENDIX A-2
First National Bancorp of Shelbyville, Inc.
Unaudited Interim Consolidated Financial Statements
as of September 30, 1993, and for the three and nine-month
periods ended September 30, 1993 and 1992
<PAGE> 113
CONSOLIDATED BALANCE SHEET (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
September 30, 1993
================================================================================
ASSETS
- ------
Cash and due from banks $ 4,600,340
Interest-bearing deposits with banks 1,279,483
Federal funds sold 2,450,000
Securities 89,467,103
Other investments 357,683
Loans 67,089,102
Less: Allowance for loan losses (2,888,971)
Unearned income (53,436)
-------------
Net loans 64,146,695
Premises and equipment, net 2,313,612
Accrued interest receivable 1,879,155
Other real estate 66,852
Deferred income taxes 1,166,515
Other assets 1,468,787
------------
$169,196,225
============
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
1
<PAGE> 114
================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
- --------
Non-interest bearing $ 15,128,405
Certificates of deposit of $100,000 and
over 17,412,727
Other interest bearing 121,379,612
------------
153,920,744
Deferred compensation payable 584,804
Accrued interest payable 411,644
Provision for state and federal taxes 230,960
Other liabilities 394,634
Commitments and Contingent Liabilities
STOCKHOLDERS' EQUITY
- --------------------
Common Stock, par value $10 per share,
700,000 shares authorized, 130,000
shares issued and outstanding 1,300,000
Additional paid-in capital 4,240,000
Retained earnings 8,113,439
-------------
13,653,439
------------
$169,196,225
============
2
<PAGE> 115
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the nine months ended September 30, 1993
================================================================================
Additional
Common Paid-in Retained
Stock Capital Earnings
----------- ----------- -----------
Balance January 1, 1993 $1,300,000 $4,240,000 $5,748,356
Net income for the period 2,462,583
Dividend, $.75 per share 97,500
---------- ---------- ----------
Balance September 30, 1993 $1,300,000 $4,240,000 $8,113,439
========== ========== ==========
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
3
<PAGE> 116
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the nine months ended September 30, 1993 and 1992
================================================================================
1993 1992
---- ----
Interest income:
Interest and fees on loans $ 4,746,838 $ 5,915,362
Interest and dividends on investment
securities:
Taxable 3,967,210 3,322,348
Tax-exempt 28,744 35,815
Federal funds sold 90,955 317,773
Interest-bearing deposits at
financial institutions 85,419 135,040
------------ ------------
TOTAL INTEREST INCOME 8,919,166 9,726,338
Interest expense:
Deposits 3,996,280 4,971,181
------------ ------------
NET INTEREST INCOME 4,922,886 4,755,157
Provision for loan losses -0- 381,989
------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 4,922,886 4,373,168
Other income:
Service charges on deposit accounts 478,406 552,321
Securities gains 256,328 374,161
Trust Department fees 27,774 46,132
Insurance fees 28,139 41,008
Other service charges, collection
charges and fees 9,550 9,909
Other operating income 76,391 102,416
------------ ------------
TOTAL OTHER INCOME 876,588 1,125,947
Operating expenses:
Salaries and other employee benefits 2,037,990 1,965,534
Occupancy expense 297,920 269,307
Other real estate expense 28,383 20,000
Equipment expense 171,218 170,502
Data processing and computer service 223,094 232,774
Legal and professional 143,916 121,927
FDIC - Comptroller Assessment 325,316 288,642
Other 680,669 547,621
------------ ------------
TOTAL OPERATING EXPENSES 3,908,506 3,616,307
------------ ------------
Earnings before income taxes 1,890,968 1,882,808
4
<PAGE> 117
CONSOLIDATED STATEMENTS OF INCOME (CONT'D) (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the nine months ended September 30, 1993 and 1992
================================================================================
Federal and state income taxes 710,149 525,615
------------ ------------
Earnings before extraordinary item and
cumulative change in accounting principle 1,180,819 1,357,193
Extraordinary item:
Tax benefit due to loss carryforward -0- 525,000
Cumulative effect of change in accounting
principle 1,281,764 -0-
------------ ------------
NET INCOME $ 2,462,583 1,882,193
============ ============
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
5
<PAGE> 118
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the three months ended September 30, 1993 and 1992
================================================================================
1993 1992
---- ----
Interest income:
Interest and fees on loans $ 1,537,906 $ 1,853,316
Interest and dividends on investment
securities:
Taxable 1,314,233 1,163,937
Tax-exempt 8,478 13,596
Federal funds sold 30,382 82,278
Interest-bearing deposits at
financial institutions 25,891 39,454
------------ ------------
TOTAL INTEREST INCOME 2,916,890 3,152,581
Interest expense:
Deposits 1,326,692 1,528,800
------------ ------------
NET INTEREST INCOME 1,590,198 1,623,781
Provision for loan losses -0- 90,000
------------ ------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,590,198 1,533,781
Other income:
Service charges on deposit accounts 151,455 186,506
Securities gains 90,407 808
Trust Department fees 7,101 18,132
Insurance fees (3,900) 12,768
Other service charges, collection
charges and fees 1,550 2,073
Other operating income 11,385 24,145
------------ ------------
TOTAL OTHER INCOME 257,998 244,432
Operating expenses:
Salaries and other employee benefits 698,288 689,769
Occupancy expense 89,356 94,733
Other real estate expense 4,530 8,250
Equipment expense 60,845 60,329
Data processing and computer service 74,584 76,171
Legal and professional 28,574 24,528
FDIC - Comptroller Assessment 108,708 97,158
Other 241,372 210,758
------------ ------------
TOTAL OPERATING EXPENSES 1,306,257 1,261,696
------------ ------------
Earnings before income taxes 541,939 516,517
Federal and state income taxes 180,414 175,357
------------ ------------
Earnings before extraordinary item 361,525 341,160
6
<PAGE> 119
CONSOLIDATED STATEMENTS OF INCOME (CONT'D) (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the three months ended September 30, 1993 and 1992
================================================================================
Extraordinary item:
Tax benefit due to loss carryforward -0- 175,000
------------ ------------
NET INCOME $ 361,525 $ 516,160
============ ============
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
7
<PAGE> 120
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
For the nine months ended September 30, 1993 and 1992
<TABLE>
<CAPTION>
===================================================================================================================
1993 1992
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,462,583 $ 1,882,193
Adjustments to reconcile net income
to net cash provided by
operating activities:
Provision for loan losses -0- 381,989
Provision for depreciation and amortization 128,705 131,727
Change in assets and liabilities:
Decrease(Increase) in interest receivable (398,384) 52,652
Decrease(Increase) in other assets (1,016,267) 367,322
Increase(Decrease) in accrued interest payable (8,334) (209,057)
Increase(Decrease) in other liabilities 359,444 (121,146)
----------- ---------
TOTAL ADJUSTMENTS (934,836) 603,487
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,527,747 2,485,680
Cash flows from investing activities:
Capital expenditures (74,811) (37,072)
Purchases of investment securities, net (10,959,217) (7,154,399)
Net decrease in loans 2,901,896 5,949,427
----------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (8,132,132) (1,242,044)
Cash flows from financing activities:
Proceeds from issuance of common stock -0- 2,040,000
Increase(Decrease) in deposits 3,715,121 (2,334,136)
Increase in other loans payable 3,307 (1,927)
----------- -----------
NET CASH USED BY FINANCING ACTIVITIES 3,718,428 (296,063)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,885,957) 947,573
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 9,936,297 10,488,105
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,050,340 $11,435,678
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 4,004,614 $ 5,180,238
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
8
<PAGE> 121
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. AND SUBSIDIARIES
September 30, 1993
================================================================================
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. The foregoing financial statements
are unaudited; however, in the opinion of management, all adjustments,
including normal recurring adjustments, necessary for a fair presentation of
the consolidated financial statements have been included. The accounting
policies followed by First National Bancorp of Shelbyville, Inc. and its
subsidiaries for interim financial reporting are consistent with the accounting
policies followed for annual financial reporting, except as noted below. The
notes included herein should be read in conjunction with the notes to the
consolidated financial statements for the year ended December 31, 1992.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted in accordance with the rules of the Securities and Exchange
Commission.
Effective January 1, 1993, the Bancorp adopted Statement on Financial
Accounting Standards Number 109, "Accounting for Income Taxes" (FASB 109) which
superseded Accounting Principles Board Opinion No. 11, "Accounting for Income
Taxes" (APB 11) which is currently used by the Bancorp. Adoption of FASB 109
resulted in the Bancorp recording previously unrecognized tax benefits totaling
approximately $1,280,000 as of January 1, 1993. As of January 1, 1993, the
gross deferred tax asset was $1,446,000 comprised primarily of the allowance
for loan losses and the gross deferred tax liability was $155,000.
NOTE 2 - PROPOSED MERGER
The Bancorp executed a merger agreement in September 1993 with Union Planters
Corporation. Consummation of the merger is dependent upon the approval of the
shareholders and various regulatory agencies.
9
<PAGE> 122
APPENDIX B
Agreement and Plan of Reorganization dated
September 21, 1993 By and Between
Union Planters Corporation, FNB Acquisition Company, Inc.,
First National Bancorp of Shelbyville, Inc. and First National Bank of
Shelbyville, along with the Plan of Merger annexed thereto
as Exhibit A
<PAGE> 123
AGREEMENT AND PLAN OF REORGANIZATION
DATED as of September 21, 1993
Between
UNION PLANTERS CORPORATION and
FNB ACQUISITION COMPANY, INC.
and
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
Joined in by:
FIRST NATIONAL BANK OF SHELBYVILLE
<PAGE> 124
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 1
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
ARTICLE 2
TERMS OF THE REORGANIZATION
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------
2.2 Charter, ByLaws, Directors, Officers and Name of the Surviving Corporation . . . . . . . . . . . . . 9
--------------------------------------------------------------------------
(a) Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------
(b) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------
(c) Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------------
(d) Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----
2.3 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------------
2.4 Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------------------
2.5 UPC's Right to Revise the Structure of the Transaction . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------------------------------------
2.6 Holding Period of UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------------------
2.7 FNB Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------------------------
ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------
(a) Satisfaction of Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------------------
(b) Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------
(c) Conversion of Shares of INTERIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------
(d) Conversion and Cancellation of Shares of FNB . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------------------------
(e) Conversion and Exchange of FNB Shares; Exchange Ratio . . . . . . . . . . . . . . . . . . . 14
-----------------------------------------------------
(f) Mechanics of Payment of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------------------------
(g) Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------
(h) Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
---------------------
(i) Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
(j) Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------------
(k) Dissenters' Rights of FNB Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------------------------
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------
</TABLE>
i
<PAGE> 125
<TABLE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM
<S> <C> <C>
4.1 Organization and Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------------------
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . 19
-----------------------------------------------------------------------------
4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------
4.4 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------
4.6 UPC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
------------------------
4.7 Exchange Act and Listing Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------------------
4.8 The UPC Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------
4.10 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------------
4.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------------------
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FNB COMPANIES
5.1 Organization and Qualification of FNB and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------------------------------------
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . 26
-----------------------------------------------------------------------------
5.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------
5.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------------
5.5 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------
5.6 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------
5.7 FNB Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------------------
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
--------------------------
5.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
----------
5.11 FNB Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------------
5.12 Condition of Fixed Assets and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
---------------------------------------
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
-----------
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------
5.15 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
---------
5.17 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------------------
5.18 Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------
5.19 Capitalization of FNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------
5.20 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------
5.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
----------
5.22 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------------------------
5.23 Allowance for Possible Loan or ORE Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
-----------------------------------------
5.24 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--------------------
5.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
----------------------
5.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
------------------
5.27 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
--------------------------
5.28 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-------
5.29 Exchange Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
--------------------
5.30 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
---------------------------
</TABLE>
ii
<PAGE> 126
<TABLE>
ARTICLE 6
COVENANTS OF UPC
<S> <C> <C>
6.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
--------------------
6.2 Registration of UPC Common Stock under the Securities Laws . . . . . . . . . . . . . . . . . . . 50
----------------------------------------------------------
6.3 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-----------------
ARTICLE 7
COVENANTS OF FNB COMPANIES
7.1 Proxy Statement; FNB Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
-----------------------------------------
7.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--------------------------------------------
7.3 Conduct of Business -- Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
-----------------------------------------
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of FNB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------
(d) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
-------------
(e) Opinion of UPC's and INTERIM's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 58
--------------------------------------
8.2 Conditions to the Obligations of UPC and INTERIM . . . . . . . . . . . . . . . . . . . . . . . . 59
------------------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
---------
(d) Destruction of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-----------------------
(e) Inspections Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
---------------------
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
--------------------------
(g) Opinion of FNB's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
------------------------
(h) Other Business Combinations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
--------------------------------
(i) Maintenance of Certain Covenants, Etc . . . . . . . . . . . . . . . . . . . . . . . . . 62
-------------------------------------
(j) Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
----------------------
(k) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
-----------
(l) Pooling of Interests Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . 63
-----------------------------------------
(m) Receipt of Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
----------------------------
8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
----------------------------------------
(a) No Pending or Threatened Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-------------------------------
(b) Governmental Approvals and Acquiescence Obtained . . . . . . . . . . . . . . . . . . . 64
------------------------------------------------
ARTICLE 9
TERMINATION
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-----------
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
---------------------
</TABLE>
iii
<PAGE> 127
<TABLE>
ARTICLE 10
GENERAL PROVISIONS
<S> <C> <C>
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-------
10.2 Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------------------------------
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------
10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
------------
10.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
------------
10.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
---------
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
----------------
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
------------
10.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
-------------------------------------
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
--------------
10.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
-------------------
10.12 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
-------------------
10.13 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
------------------
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
---------------
10.15 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 71
------------------------------------------
10.16 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
---------
10.17 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-------------------
</TABLE>
iv
<PAGE> 128
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement") dated as of the 21st day of September, 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; FNB ACQUISITION COMPANY, INC. ("INTERIM"), a corporation chartered and
existing under the laws of the State of Tennessee, whose principal place of
business is located at 7130 Goodlett Farms Parkway, Memphis, Shelby County,
Tennessee 38018, and which is a wholly-owned subsidiary of UPC; and FIRST
NATIONAL BANCORP OF SHELBYVILLE, INC. ("FNB" or "Surviving Corporation" as the
context may require), a corporation chartered and existing under the laws of
the State of Tennessee which is a registered bank holding company and whose
principal offices are located at 111 West Side Square (Post Office Box 500),
Shelbyville, Bedford County, Tennessee 37160.
FIRST NATIONAL BANK OF SHELBYVILLE ("FIRST NATIONAL"), a national banking
association chartered and existing under the laws of the United States of
America, having its main office at 111 West Side Square (Post Office Box 500),
Shelbyville, Bedford County, Tennessee 37160, and which is a wholly-owned
subsidiary of FNB, for a valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by it, joins in this Reorganization Agreement for
the sole purpose of making certain representations and warranties set forth in
Article 5 and elsewhere in this Reorganization Agreement and binding itself to
perform certain covenants set forth in Articles 6 and 7 and elsewhere in this
Reorganization Agreement as provided hereinafter.
UPC, INTERIM, FNB and FIRST NATIONAL are sometimes referred to herein
as the "Parties."
RECITALS
A. FNB is the beneficial owner and holder of record of 100,000
shares of the common stock, $10.00 par value per share, of FIRST NATIONAL which
constitute all of the shares of common stock of FIRST NATIONAL issued and
outstanding (the "FIRST NATIONAL Common Stock") and desires to have itself and
FIRST NATIONAL acquired by UPC on the terms and subject to the conditions set
forth in this Reorganization Agreement and the accompanying Plan of Merger
(attached hereto as Exhibit A) (the "Plan of Merger").
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 1
<PAGE> 129
B. UPC is the beneficial owner and holder of record of 1,000
shares of the common stock, $1.00 par value per share, of INTERIM which
constitute all of the shares of common stock of INTERIM issued and outstanding
(the "INTERIM Common Stock"), and desires to acquire FNB and FIRST NATIONAL on
the terms and subject to the conditions set forth in this Reorganization
Agreement and the accompanying Plan of Merger.
C. The Board of Directors of FNB deems it desirable and in the
best interests of FNB and FIRST NATIONAL and the shareholders of FNB (the "FNB
Shareholders") that INTERIM be merged with and into FNB (which would survive
the merger as the Surviving Corporation, as defined herein) on the terms and
subject to the conditions set forth in this Reorganization Agreement and in the
manner provided in this Reorganization Agreement and the Plan of Merger (the
"Merger").
D. The Boards of Directors of UPC and INTERIM deem it desirable
and in the best interests of UPC and INTERIM and the shareholders of UPC that
INTERIM be merged with and into FNB on the terms and subject to the conditions
set forth in this Reorganization Agreement and in the manner provided in this
Reorganization Agreement and the Plan of Merger.
F. The respective Boards of Directors of UPC, INTERIM, FNB and
FIRST NATIONAL have each adopted (or will each adopt) resolutions setting forth
and adopting this Reorganization Agreement and the Plan of Merger, and have
directed that this Reorganization Agreement and the Plan of Merger and all
resolutions adopted by said Boards of Directors and by the FNB 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 Tennessee Department of Financial
Institutions (the "TDFI") and such other regulatory agencies or authorities as
may be necessary in order to obtain all governmental authorizations required to
consummate the proposed Merger and the transactions contemplated in this
Reorganization Agreement in accordance with this Reorganization Agreement, the
Plan of Merger and applicable law.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 2
<PAGE> 130
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.
"AUDITED FINANCIAL STATEMENTS OF FNB" 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.
"FNB" means First National Bancorp of Shelbyville, Inc., a
corporation chartered and existing under the laws of the State of Tennessee
which is a registered bank holding company and whose principal offices are
located at 111 West Side Square (Post Office Box 500), Shelbyville, Bedford
County, Tennessee 37160.
"FNB COMMON STOCK" has the meaning assigned to such term in
Section 3.1(d) of this Reorganization Agreement.
"FNB COMPANIES" shall mean FNB and all of its Subsidiaries,
including FIRST NATIONAL and all of its Subsidiaries.
"FNB 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 FNB or any FNB Subsidiary, to or for the benefit of the officers,
directors or employees of FNB or any FNB Subsidiary.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 3
<PAGE> 131
"FNB RECORD HOLDERS" means the holders of record of all of the
issued and outstanding shares of FNB Common Stock immediately prior to the
Effective Time of the Merger.
"FNB SHAREHOLDERS" shall have the meaning assigned to such
term in Recital D of this Reorganization Agreement.
"FNB STOCK OPTIONS" shall have the meaning assigned to such
term in Section 2.7 of this Reorganization Agreement.
"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.
"CERCLA" shall have the meaning set forth in Section 5.15(a)
of this Reorganization Agreement.
"CLOSING" shall have the meaning assigned to such term in
Section 3.1(a) of this Reorganization Agreement.
"CLOSING DATE" shall have the meaning assigned to such term in
Section 3.2 of this Reorganization Agreement.
"COMPTROLLER" shall mean the Office of the Comptroller of the
Currency, or any successor thereto.
"CONSIDERATION" shall mean the value to be received by the FNB
Record Holders in exchange for their FNB 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.
"DEPOSITS" shall mean all deposits (including, but not limited
to, certificates of deposit, savings accounts, NOW accounts and checking
accounts) of FIRST NATIONAL.
"EFFECTIVE DATE OF THE MERGER" shall mean that date on which
the Effective Time of the Merger shall have occurred.
"EFFECTIVE TIME OF THE MERGER" shall have the meaning assigned
in Section 3.3 of the Plan of Merger and Section 3.1(b) of this Reorganization
Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 4
<PAGE> 132
"EXCHANGE AGENT" shall mean Union Planters National Bank,
Memphis, Tennessee, acting through its Corporate Trust Department.
"EXCHANGE RATIO" shall have the meaning assigned to such term
in Section 3.1(e) of this Reorganization Agreement.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FEDERAL RESERVE" shall mean the Board of Governors of the
Federal Reserve System and shall include the Federal Reserve Bank of St. Louis
acting under delegated authority.
"FIRST NATIONAL" means First National Bank of Shelbyville, a
national banking association, chartered and existing under the laws of the
United States of America, having its main office at 111 West Side Square (Post
Office Box 500), Shelbyville, Bedford County, Tennessee 37160, and which is a
wholly-owned subsidiary of FNB.
"FIRST NATIONAL COMMON STOCK" shall have the meaning assigned
to such term in Recital A of this Reorganization Agreement.
"FIXED ASSETS" shall mean the furniture, fixtures and
equipment of the referenced Party.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL APPROVALS" shall have the meaning assigned to
such term in Section 4.4 of this Reorganization Agreement.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended and recodified.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in
Section 5.15(a) of this Reorganization Agreement.
"INTERIM" shall mean FNB Acquisition Company, Inc., a
corporation chartered and existing under the laws of the State of Tennessee,
whose principal place of business is located at 7130 Goodlett Farms Parkway,
Memphis, Shelby County, Tennessee 38018, and which is a wholly-owned subsidiary
of UPC formed solely to effect the Merger.
"INTERIM COMMON STOCK" shall have the meaning assigned to such
term in Section 3.1(c) of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 5
<PAGE> 133
"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 INTERIM with and into FNB, which
shall survive the Merger as the Surviving Corporation.
"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.
"OTS" shall mean the Office of Thrift Supervision, or any
successor thereto.
"PARTIES" shall mean FNB, FIRST NATIONAL, UPC and INTERIM
collectively; FNB and FIRST NATIONAL on the one hand, or UPC and INTERIM on the
other hand, may sometimes be referred to as a "PARTY."
"PENSION PLAN" shall mean any employee pension benefit plan as
such term is defined in Section 3(2) of ERISA which is maintained by the
referenced Party.
"PERSON" shall mean any natural person, fiduciary,
corporation, partnership, joint venture, association, business trust or any
other entity of any kind.
"PLAN OF MERGER" shall mean the Plan of Merger substantially
in the form of Exhibit A hereto to be executed by authorized representatives of
FNB, UPC and INTERIM and filed with the Tennessee Secretary of State along with
the Articles of Merger in accordance with Section 48-21-105 of the Tennessee
Code and providing for the Merger of INTERIM with and into FNB 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
FNB to solicit proxies with a view to securing the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 6
<PAGE> 134
approval of the FNB Shareholders of this Reorganization Agreement and the Plan
of Merger.
"REALTY" means the real property of FNB or any FNB Subsidiary
owned or leased by FNB or any FNB Subsidiary.
"RECORDS" means all available records, minutes of meetings of
the Board of Directors, committees and shareholders of FNB or any FNB
Subsidiary; original instruments and other documentation, pertaining to FNB or
any FNB Subsidiary, FNB's or any FNB Subsidiary's assets (including plans and
specifications relating to the Realty), FNB's or any FNB Subsidiary's
liabilities, the FNB Common Stock, the FIRST NATIONAL 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 FNB's or any FNB Subsidiary's
business by UPC or FNB 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 TDFI, the SEC, or any other state or federal governmental or
quasi-governmental entity which has, or may hereafter have, jurisdiction over
any of the transactions described in this Reorganization Agreement.
"RELEASE" shall have the meaning assigned to such term in
Section 5.15(b)(i) of this Reorganization Agreement.
"REORGANIZATION" shall mean the Merger (as described in
Section 2.1(a) of this Reorganization Agreement) and the transactions
contemplated in this Reorganization Agreement and the Plan of Merger annexed
hereto as Exhibit A.
"REORGANIZATION AGREEMENT" means this Agreement and Plan of
Reorganization together with the Plan of Merger (Exhibit A) and all Exhibits
and Schedules annexed to, and incorporated by specific reference as a part of,
this Reorganization Agreement.
"SEC" shall mean the Securities and Exchange Commission, or
any successor thereto.
"SEC DOCUMENTS" shall mean all reports, proxy statements and
registration statements filed, or required to be filed, by a Party or any of
its Subsidiaries pursuant to the Securities Laws, whether filed, or required to
be filed, with the SEC, the OTS, the Comptroller, the FDIC, the Federal Reserve
or with any other Regulatory Authority pursuant to the Securities Laws.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 7
<PAGE> 135
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC promulgated thereunder, as well as any similar state
securities laws and any similar rules and regulations promulgated by the
applicable federal bank Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the meeting of the FNB
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 voting equity securities either directly or
through an unbroken chain of entities as to each of which 5% or more of the
outstanding equity securities is owned directly or indirectly by its parent;
provided, however, that there shall not be included any such entity acquired
through foreclosure or in satisfaction of a debt previously contracted in good
faith, any such entity that owns or operates an automatic teller machine
interchange network, any such entity that is a joint venture of the parent or
of a Subsidiary of the parent, or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity or through a small
business investment corporation.
"SURVIVING CORPORATION" shall mean FNB as the corporation
resulting from the consummation of the Merger as set forth in Section 2.1(a) of
this Reorganization Agreement.
"TENNESSEE CODE" shall mean the Tennessee Code Annotated, as
amended.
"TDFI" shall mean the Tennessee Department of Financial
Institutions.
"TENNESSEE COMMISSIONER" shall mean the Commissioner of the
TDFI.
"UPC" means Union Planters Corporation, a Tennessee-chartered
bank holding company which is also registered as a savings and loan holding
company having its principal place of business in Memphis, Shelby County,
Tennessee.
"UPC COMMON STOCK" shall have the meaning set forth in Section
4.5 of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
<PAGE> 136
"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 REORGANIZATION
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, INTERIM
shall be merged with and into FNB (the "Merger"), which latter corporation (the
"Surviving Corporation") shall survive the Merger.
2.2 Charter, ByLaws, Directors, Officers and Name of the
Surviving Corporation.
(a) Charter. At the Effective Time of the
Merger, the Charter of FNB, as in effect immediately prior to the Effective
Time of the Merger, shall continue to be the Charter of FNB as the Surviving
Corporation, unless and until the same shall be amended thereafter as provided
by law and the terms of such Charter.
(b) Bylaws. At the Effective Time of the Merger,
the Bylaws of FNB, as in effect immediately prior to the Effective Time of the
Merger, shall continue to be the Bylaws of FNB as the Surviving Corporation,
unless and until amended or repealed as provided by law, its Charter and such
Bylaws.
(c) Directors and Officers. The directors and
officers of FNB 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 Charter and Bylaws of the Surviving
Corporation, unless and until their successors shall have been elected or
appointed and shall
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 9
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have qualified or until they shall have been removed in the manner provided
therein.
(d) Name. The name of FNB as the Surviving
Corporation following the Merger shall remain unchanged and continue to be:
FIRST NATIONAL BANCORP OF SHELBYVILLE, 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, that any review conducted
by a Party pursuant to the provisions of this Section 2.3 shall be completed
within thirty (30) days from the date of this Reorganization Agreement.
2.4 Availability of Information. Promptly after the
execution by the Parties of this Reorganization Agreement, each Party shall
provide to the other Party, its Officers, employees, agents, and
representatives access, on reasonable notice and during customary business
hours, to all of the 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 unilateral right to revise the structure of
the corporate Reorganization contemplated by this Reorganization Agreement in
order to achieve tax benefits or for any other reason which UPC may deem
advisable; provided, however, that UPC shall not have the right, without the
approval of the Board of Directors of FNB, to make any revision to the
structure of the Reorganization which (i) changes the amount of the
Consideration which the FNB 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 Merger to UPC, INTERIM, FNB
or any FNB Subsidiary; or (iii) would permit UPC to pay the Consideration other
than by delivery of shares of UPC Common Stock registered
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 10
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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 FNB 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. FNB and each FNB
Subsidiary 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 FNB Record
Holder who would be deemed an Affiliate of FNB 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 FNB Common Stock
pursuant to the terms and conditions of this Reorganization Agreement, 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 FNB 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 FNB 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 FNB for a period of not less than thirty (30)
days subsequent to the Effective Time of the Merger. FNB further acknowledges
and agrees that any UPC Common Stock certificates issued in connection with the
Merger to FNB Record Holders who would be deemed Affiliates of FNB 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:
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 11
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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 FIRST NATIONAL BANCORP OF
SHELBYVILLE, 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 FNB Stock Options and Treasury Stock. Except as
described in Schedule 2.7 hereto, as of the date of this Reorganization
Agreement, there are no validly issued and outstanding options to purchase
shares of FNB Common Stock, and no other options, rights, warrants, scrip or
similar rights to purchase shares of FNB Common Stock (collectively, the "FNB
Stock Options") are (or have been) issued and outstanding by FNB. Therefore,
at the Effective Time of the Merger, there will be no issued and outstanding
FNB Stock Options other than as described in Schedule 2.7 hereto. Except as
described in Schedule 2.7 hereto, within two (2) years prior to the date of
this Reorganization Agreement, FNB has not repurchased FNB Stock Options, and
FNB has not repurchased any shares of its capital stock. Therefore, as of the
date of this Reorganization Agreement, there are no shares of FNB Common Stock
held by FNB as Treasury Stock, nor will there be any such shares at the
Effective Time of the Merger.
ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After
the transactions contemplated herein have been approved by the shareholders of
FNB and INTERIM, and each other condition to the obligations of the Parties
hereto, other than those conditions which are to be satisfied by delivery of
documents by any Party to any other Party, has been satisfied or, if lawfully
permitted, waived by the Party or Parties entitled to the benefits thereof,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 12
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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 effecting the Merger and each Party will provide the other Parties with such
proof or indication of satisfaction of the conditions to the obligations of
such other Parties to consummate the Merger as such other Parties may
reasonably require. If all conditions to the obligations of each of the
Parties shall have been satisfied or lawfully waived by the Party entitled to
the benefits thereof, the Parties shall, at the Closing, duly execute a
Articles of Merger for filing with the Secretary of State of the State of
Tennessee and promptly thereafter FNB and INTERIM 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 a Articles of Merger with the Secretary
of State of the State of Tennessee 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) Conversion of Shares of INTERIM. At the
Effective Time of the Merger, each share of $1.00 par value common stock of
INTERIM (the "INTERIM Common Stock") issued and outstanding immediately prior
to the Effective Time of The Merger shall, by virtue of the Merger becoming
effective and without any further action on the part of anyone, be converted
into and become one share of the issued and outstanding common stock of the
Surviving Corporation.
(d) Conversion and Cancellation of Shares of FNB.
At the Effective Time of the Merger, each share of $10.00 par value per share
common stock of FNB (the "FNB 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 13
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(e) Conversion and Exchange of FNB Shares;
Exchange Ratio. At the Effective Time of the Merger, the outstanding shares of
FNB Common Stock held by the FNB 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
FNB and shall automatically be converted exclusively into, and constitute only
the right of the FNB Record Holders to receive in exchange for their shares of
FNB 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 FNB 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 FNB
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (based on there being no more than 130,000 shares of FNB Common
Stock issued and outstanding at 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 or equal to
$25.375 per share of UPC Common Stock but less than or equal to
$33.375 per share of UPC Common Stock (the "Primary Collar"), the
Exchange Ratio shall be based on a fixed Exchange Ratio of seven (7)
shares of UPC Common Stock for each share of FNB 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 $33.375 per share
of UPC Common Stock (the "Ceiling"), the Exchange Ratio shall be based
on (a) a fixed price of $233.625 per share of FNB Common Stock divided
by (b) the Current Market Price Per Share of UPC Common Stock;
provided, however, in the event that UPC shall have entered into a
letter of intent, agreement or understanding with a third party for a
change in control of UPC, the Exchange Ratio shall remain fixed at
seven (7) shares of UPC Common Stock for each share of FNB Common
Stock validly issued and outstanding at the Effective Time of the
Merger; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
<PAGE> 142
(iii) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $25.375 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be fixed at
seven (7) shares of UPC Common Stock for each share or FNB Common
Stock validly issued and outstanding immediately prior to the
Effective Time of the Merger; provided, however, FNB shall have the
right to either accept the fixed Exchange Ratio of seven (7) shares of
UPC Common Stock for each share of FNB Common Stock or terminate this
Reorganization Agreement and the transactions contemplated
herein;provided, further, in the event FNB 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 FNB Record Holders based on (a) a fixed price of $177.625
per share of FNB 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 130,000 shares of FNB 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 FNB 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.
(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 next preceding the Closing Date 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 15
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(ii) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should FNB Record Holders representing at least 5% of
the shares of FNB Common Stock issued and outstanding at the time of
Closing perfect such FNB Record Holder's Dissenters' Rights pursuant
to the Tennessee Code and maintain the perfected status of such
Dissenters' Rights through the Closing Date, UPC and INTERIM shall
have the right, exercisable in their sole discretion, to either
terminate this Reorganization Agreement or, subject to the prior
approval of the FNB Board of Directors, reduce the per share
Consideration 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 FNB.
Should FNB effect any stock splits, reverse stock splits, stock
dividends or similar changes in its respective capital accounts
subsequent to the date of this Reorganization Agreement but prior to
the Effective Time of the Merger, the Exchange Ratio shall be adjusted
in such a manner as the Board of Directors of UPC shall deem in good
faith to be fair and reasonable in order to give effect to such
changes.
(f) Mechanics of Payment of 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 FNB Record Holders such
materials and information deemed necessary by the Exchange Agent to advise the
FNB Record Holders of the procedures required for proper surrender of their
certificates evidencing and representing shares of the FNB Common Stock in
order for the FNB 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 FNB Record Holders at the addresses set forth
on a certified shareholder list to be delivered by FNB to UPC at the Closing
(the "Shareholder List"). As soon as reasonably practicable thereafter, the
FNB Record Holders of all of the outstanding shares of FNB 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 FNB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 16
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evidencing and representing shares of FNB 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 FNB Common Stock, the Exchange Agent
shall, on or prior to the 30th day after the Effective Time of the Merger, mail
to the former FNB Record Holders in exchange for the certificate(s) surrendered
by them, the Consideration to be paid for each such FNB Record Holder's shares
of FNB 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 FNB
Common Stock of a FNB 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 FNB Record Holder's shares
of FNB 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 FNB Record Holder's FNB Common Stock shall have been properly surrendered
as provided above, the Consideration payable to the FNB Record Holder(s) of the
cancelled shares as of any time after the Effective Date shall not be paid to
the FNB Record Holder(s) of such certificate(s) until such certificates shall
have been surrendered in the manner required. Each FNB Record Holder 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
FNB 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 FNB Record Holder is entitled, provided
that each such FNB 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 FNB
Record Holder.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
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(g) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of FNB shall be closed and no transfer
of shares of FNB Common Stock shall be made thereafter.
(h) Effects of the Merger. At the Effective Time
of the Merger, the separate existence of INTERIM shall cease, and INTERIM shall
be merged with and into FNB 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 FNB and
INTERIM.
(i) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
FNB and INTERIM in and to every type of property, whether real, personal, or
mixed, whether tangible or intangible, and to choses in action shall be deemed
to be vested in FNB 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 FNB as well as those of
INTERIM, whether the same shall be matured or unmatured; whether accrued,
absolute, contingent or otherwise; and whether or not reflected or reserved
against in the balance sheets, other financial statements, books of account or
records of FNB or INTERIM.
(k) Dissenters' Rights of FNB Shareholders. Any
FNB Record Holder of shares of FNB Common Stock who shall comply strictly with
the provisions of Sections 48-23-201 et seq. of the Tennessee Code, shall be
entitled to dissent from the Merger and to seek those appraisal remedies
afforded by the Tennessee Code. Such an FNB Shareholder is referred to herein
as an "FNB Dissenting Shareholder." However, UPC and INTERIM shall not be
obligated to consummate the Merger if FNB Record Holders holding or controlling
more than five percent (5%) of the shares of the FNB Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall have
perfected and maintained in perfected status their Dissenters' Rights in
accordance with the Tennessee Code and the perfected status of said Dissenters'
Rights shall have continued to the time of Closing.
(l) Reservation, Registration and Listing of
shares of UPC Common Stock. UPC shall reserve for issuance,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
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register under the Securities Laws and apply for listing for trading on the
NYSE a sufficient number of shares of UPC Common Stock for the purpose of
issuing shares of UPC Common Stock to the FNB Record Holders in accordance with
the terms and conditions of this Section 3.1.
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 Administrative Center, Union Planters
Corporation Executive Offices (Fourth Floor), 7130 Goodlett Farms Parkway,
Memphis, Shelby County, Tennessee 38018. The Closing may be held at such other
time or place as may be mutually agreed upon by the Parties.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM
As of the date hereof and as of the Effective Time of the
Merger, UPC and INTERIM represent and warrant to FNB as follows:
4.1 Organization and Corporate Authority. UPC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee. INTERIM is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee.
UPC and INTERIM (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
Charter and Bylaws of UPC and the Charter and Bylaws of INTERIM, as amended to
date, are in full force and effect as of the date of this Reorganization
Agreement.
4.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
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(a) UPC and INTERIM have all requisite corporate
power and authority to execute and deliver this Reorganization Agreement and
the Plan of Merger and to consummate the transactions contemplated hereby and
thereby. This Reorganization Agreement, and all other agreements contemplated
to be executed in connection herewith by UPC and INTERIM, have been (or upon
execution will have been) duly executed and delivered by UPC and INTERIM, have
been (or upon execution will have been) effectively authorized by all necessary
action, corporate or otherwise, and, other than the approval of UPC as sole
shareholder of INTERIM and UPC's Board of Directors, no other corporate
proceedings on the part of UPC or INTERIM are (or will be) necessary to
authorize such execution and delivery, and constitute (or upon execution will
constitute) legal, valid and enforceable obligations of UPC and INTERIM,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, and to the application of equitable principles and
judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement, 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 INTERIM is a party or by which
they or their property or any of their assets are bound; the corporate Charter
and Bylaws of UPC or the Charter and Bylaws of INTERIM; or any material
judgment, decree, order or award of any court, governmental body or arbitrator
by which UPC or INTERIM is bound; or any material permit, concession, grant,
franchise, license, law, statute, ordinance, rule or regulation applicable to
UPC or INTERIM 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
INTERIM, except that the Government Approvals shall be required in order for
UPC and INTERIM to consummate the Merger.
4.3 No Legal Bar. Neither UPC nor INTERIM is a party to,
subject to or bound by any agreement, judgment, 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 INTERIM, its delivery to FNB and the FNB Companies or the
consummation of the transactions contemplated hereby, and no action or
proceeding
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
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is pending against UPC or INTERIM 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 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 INTERIM in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by UPC or
INTERIM, except for: (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
Tennessee Department of Financial Institutions ("TDFI") under Sections
45-12-101 et seq of the Tennessee Code and the regulations promulgated by the
TDFI 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 June 30, 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 June 30, 1993, 18,254,509 shares of
UPC Common Stock were validly issued and outstanding.
As of the date hereof, UPC is the holder, directly or indirectly, of
all of the outstanding capital stock of its Subsidiaries, except for director
qualifying shares.
(b) The authorized capital stock of INTERIM consists
of 1,000 shares of common stock having a par value of $1.00 per share (the
"INTERIM Common Stock") and no preferred stock. As of the date hereof, INTERIM
had issued all 1,000 shares of the authorized INTERIM Common Stock to UPC.
Therefore, UPC is the record holder and beneficial owner of all of the INTERIM
Common Stock outstanding.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
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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 FNB true and 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 FNB Record Holders in exchange for all
of the FNB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
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Consideration shall have in all material respects such distinguishing
characteristics as those of the shares of UPC Common Stock outstanding
immediately prior to the Effective Time of the Merger.
4.9 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.
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
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any arrears of wages, taxes, penalties or other sums for failure 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 FNB prior to the date of this
Reorganization Agreement, or (ii) except obligations or liabilities incurred in
the ordinary course of its business consistent with past practices, or (iii)
except as contemplated under this Reorganization Agreement. Since December 31,
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 INTERIM as set forth in this
Reorganization Agreement, or in any document, statement, certificate or other
writing furnished or to be furnished by UPC and INTERIM to FNB 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 FNB by UPC and INTERIM pursuant hereto were or will be
complete and accurate copies of such documents.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FNB COMPANIES
Both as of the date hereof and as of the Effective Time of the Merger,
FNB and FIRST NATIONAL represent and warrant to UPC and INTERIM as follows:
5.1 Organization and Qualification of FNB and
Subsidiaries.
(a) FNB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and (i)
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;
(ii) is in good standing and is duly qualified to do business in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its business makes such qualification necessary; and (iii) is a
registered bank holding company with the Federal Reserve.
(b) Each FNB Subsidiary is duly chartered, validly
existing and in good standing under the laws of the state or jurisdiction of
its incorporation and (i) has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as it is
currently being conducted and (ii) is in good standing and is duly qualified to
do business in each jurisdiction where the character of its properties owned
or held under lease or the nature of its business makes such qualification
necessary. FNB 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.
(c) FIRST NATIONAL is a national banking
association, duly organized, validly existing and in good standing under the
laws of the United States of America and engages only in activities (and holds
properties only of the types) permitted by the United States Code Annotated and
the rules and regulations promulgated by the Comptroller thereunder or the FDIC
for insured depository institutions. FIRST NATIONAL's deposit accounts are
insured by the Bank Insurance Fund (the "BIF") as administered by the FDIC to
the fullest extent permitted under applicable law.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 25
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5.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) FNB and FIRST NATIONAL have all requisite
power and authority to execute and deliver this Reorganization Agreement and
the Plan of Merger and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Reorganization Agreement and the
Plan of Merger and the consummation of the proposed transaction have been (or
within thirty (30) days from the date of this Reorganization Agreement will
have been) duly authorized by majorities of the entire Boards of Directors of
FNB and FIRST NATIONAL and, except for the approval of the FNB Shareholders, no
other corporate proceedings on the part of FNB 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 FNB or FIRST NATIONAL have been (or upon
execution will have been) duly executed and delivered by FNB and FIRST NATIONAL
and constitute (or upon execution will constitute) legal, valid and enforceable
obligations of FNB and FIRST NATIONAL, 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) Except as described in Schedule 5.2(b)
hereto, 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 FNB or any FNB Subsidiary is
a party or by which FNB or any FNB Subsidiary is bound; the Charter and Bylaws
of FNB or the Charter and Bylaws of any FNB Subsidiary; or any judgment,
decree, order, regulatory letter of understanding or award of any court,
governmental body, authority or arbitrator by which FNB or any FNB Subsidiary
is bound; or any permit, concession, grant, franchise, license, law, statute,
ordinance, rule or regulation applicable to FNB or any FNB 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 FNB or any FNB
Subsidiary.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 26
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5.3 No Legal Bar. Neither FNB nor any FNB Subsidiary 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 by FNB or FIRST NATIONAL, or the
Plan of Merger by FNB, or the delivery thereof to UPC and INTERIM, or the
consummation of the transaction contemplated hereby and thereby, and no action
or proceeding is pending against FNB or any FNB Subsidiary in which the
validity of this Reorganization Agreement, the transaction contemplated hereby
or 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 FNB
or any FNB Subsidiary 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 FNB or any FNB Subsidiary in order to avoid forfeiture or impairment of such
rights. Neither FNB nor any FNB Subsidiary are aware of any facts,
circumstances or reasons why such Government Approvals should not be forth
coming or which would prevent or hinder such approvals from being obtained.
5.5 Compliance With Law. FNB and all FNB Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses, and FNB and each FNB Subsidiary,
respectively, 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 FNB's or any FNB Subsidiary's
properties or over any other part of FNB's or any FNB Subsidiary'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 FNB and each FNB Subsidiary subsequent to the Closing of the
transactions contemplated herein without any consent or approval. Neither FNB
nor any FNB 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 27
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5.6 Charter Documents. Included in Schedule 5.6 hereto
are true and correct copies of the Charter and Bylaws of FNB and the Articles
of Association or Charter and Bylaws of each FNB Subsidiary, respectively. The
Charter and Bylaws of FNB and the Articles of Association or Charter and Bylaws
of each FNB Subsidiary, as amended to date, are in full force and effect.
5.7 FNB Financial Statements. Accompanying Schedule 5.7
hereto are true copies of the audited consolidated balance sheets of FNB as of
December 31, 1992, the audited consolidated balance sheets of FNB as of
December 31, 1991, and selected financial data for FNB as of December 31, 1990,
1989 and 1988, and the related consolidated statements of income and changes in
stockholders' equity and cash flows of FNB and each FNB Subsidiary for the
years ended December 31, 1992, 1991 and 1990 (the "Audited Financial Statements
of FNB") 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 financial statements (i) were (or will be) prepared from
the books and records of FNB and each FNB Subsidiary; (ii) were (or will be)
prepared in accordance with generally accepted accounting principles
consistently applied; (iii) accurately present (or will present) FNB's and each
FNB Subsidiary's consolidated financial condition and the consolidated results
of their operations, changes in stockholders' equity and cash flows 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 FNB's and each FNB Subsidiary's consolidated
financial condition and the consolidated results of FNB's and each FNB
Subsidiary'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 FNB or any FNB Subsidiary
not in the ordinary course of business and in conformity with past practice;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 28
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(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 FNB or any FNB Subsidiary;
(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 FNB or any FNB Subsidiary or
their future use and operation by FNB or any FNB Subsidiary;
(d) any acquisition or disposition by FNB or any
FNB Subsidiary of any property or asset of FNB or any FNB Subsidiary, whether
real or personal, having a fair market value, singularly or in the aggregate
for each FNB Company, in an amount greater than Twenty Thousand Dollars
($20,000), except in the ordinary course of business and in conformity with
past practice;
(e) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind on any of the respective properties or assets
of FNB or any FNB Subsidiary, 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 FNB or any FNB Subsidiary, to which FNB
or any FNB Subsidiary is a party which would have an adverse effect upon the
financial condition or operations of FNB or any FNB Subsidiary.
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director,
employee or agent of FNB or any FNB Subsidiary, 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 FNB or any FNB Subsidiary, 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 FNB or any FNB Subsidiary, or in the
accounting policies or practices therein reflected;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 29
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(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
FNB or any FNB Subsidiary 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 FNB or any FNB Subsidiary to any Officer, director or
2% shareholder of FNB or any FNB Subsidiary or any Affiliate of FNB or any FNB
Subsidiary; or to any member of the immediate family of such Officer, director
or 2% shareholder of FNB or any FNB Subsidiary or any Affiliate of FNB; 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 5.8, "Officer" shall refer to a person who holds the title
of chairman, president, executive vice president, senior vice president,
controller, secretary, cashier or treasurer or who performs the normal duties
of such officer whether or not he or she is compensated for such service or has
an official title.
5.9 Deposits. None of the Deposits of any FNB Subsidiary
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 FNB or any FNB Subsidiary.
5.10 Properties. Except as described in Schedule 5.10 hereto
or adequately reserved against in the Audited Financial Statements of FNB, FNB
and each FNB 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 FNB as being owned by FNB or
any FNB Subsidiary as of the dates thereof. All buildings, and all fixtures,
equipment, and other property and assets that are material to the business of
FNB and its Subsidiaries on a consolidated basis, held under leases or
subleases by FNB or any FNB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 30
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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 FNB Companies provide adequate coverage against
loss, and the fidelity bonds in effect as to which any of the FNB Companies is
a named insured are believed to be sufficient.
5.11 FNB Subsidiaries. Schedule 5.11 hereto lists all of the
active and inactive FNB Subsidiaries (including any Subsidiary of a FNB
Subsidiary) as of the date of this Reorganization Agreement and describes
generally the business activities conducted, or permitted to be conducted, by
each FNB Subsidiary. Except as described in Schedule 5.11 hereto, no equity
securities of any of the FNB Subsidiaries are or may become required to be
issued (other than to FNB or any FNB Subsidiary) 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 FNB Subsidiary, and there
are no contracts, commitments, understandings, or arrangements by which any FNB
Subsidiary is bound to issue (other than to FNB) any additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. Except as described in Schedule 5.11
hereto, all of the shares of capital stock of each FNB Subsidiary held by FNB
or by any FNB Subsidiary are fully paid and nonassessable and are owned by FNB
or such FNB 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 FNB's or any FNB Subsidiary's
fixed assets and equipment having a net book value in excess of Twenty Thousand
Dollars ($20,000) included in the Fixed Assets is in good operating condition
and repair, normal wear and tear excepted.
5.13 Tax Matters. Except as described in Schedule 5.13
hereto:
(a) all federal, state, local, and foreign tax
returns required to be filed by or on behalf of FNB and each FNB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 31
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litigation or matter in controversy with respect to any taxes that might result
in a determination materially adverse to FNB or any FNB Subsidiary except as
fully reserved for in the Audited Financial Statements of FNB. All taxes,
interest, additions, and penalties due with respect to completed and settled
examinations or concluded litigation have been paid.
(b) Neither FNB nor any FNB 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 FNB and all FNB 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 FNB, and have been and will continue to be made with
respect to periods ending after December 31, 1992.
(d) Deferred taxes of FNB and each FNB Subsidiary
have been and will be provided for in accordance with GAAP.
(e) To the best knowledge of FNB and any FNB
Subsidiary, neither the Internal Revenue Service nor any foreign, state, local
or other taxing authority is now asserting or threatening to assert against FNB
or any FNB 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 FNB
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 FNB or any FNB Subsidiary, either have been paid in full, or
have been properly accrued and reflected in the Audited Financial Statements of
FNB 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 FNB or any FNB
Subsidiary, or to the best knowledge of FNB or any FNB Subsidiary threatened
against or affecting FNB, any FNB Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that (i)
would, if decided against FNB or the FNB Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities, condition (financial
or other) or prospects of FNB or any FNB Subsidiary and that are not reflected
in the Audited Financial
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 32
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Statements of FNB or (ii) has been brought by or on behalf of any employee
employed or formerly employed by FNB or any FNB Subsidiary.
5.15 Hazardous Materials.
(a) FNB and all FNB Subsidiaries have obtained
all material permits, licenses and other authorizations which are required to
be obtained by FNB 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 FNB or any FNB Subsidiary is in
material compliance with the terms and conditions of all of such permits,
licenses and authorizations, and is also in material 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 hereto. For purposes hereof,
the following terms shall have the following meanings:
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all federal, state,
local and municipal environmental laws, rules or regulations to the extent
applicable to the Property, including, but not limited to, (a) the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. ("CERCLA"); (b) the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq. "RCRA"; (c) the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; (d) the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; (e) the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1471 et seq.; (f) the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; (g) the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 et seq.; (h) the National Environmental Policy Act, 42
U.S.C. Section 4321 et seq.; (i) the Rivers and Harbours Act of 1899, 33 U.S.C.
Section 401 et seq.; (j) the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; (k) the Safe Drinking Water Act, 42 U.S.C. Section 300(f)
et seq.; (l) the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; (m)
the Hazardous Waste Management Act of 1977, Sections 68-46-101 et seq. of the
Tennessee Code; (n) the Hazardous Waste Management Act of 1983, Sections
68-46-201 et seq. of the Tennessee Code; (o) the Hazardous Waste Reduction Act
of 1990, Sections 68-46-301 et seq. of the Tennessee Code; (p) the Petroleum
Underground Storage Tank Act, Sections 68-58-101 et seq. of the Tennessee Code;
(q) any amendments to the foregoing Acts as adopted from time to time on or
before the Closing; and (r) any rule, regulation, order, injunction, judgment,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 33
<PAGE> 161
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 FNB or any FNB Subsidiary or its use or operation, including,
without limitation, (a) any substance, material, element, compound, mixture,
solution, waste, chemical or pollutant listed, defined, characterized or
regulated as hazardous, toxic or dangerous under any Applicable Environmental
Laws, (b) petroleum, petroleum derivatives or by-products, and other
hydrocarbons, (c) polychlorinated biphenyls (PCBs), asbestos and urea
formaldehyde, and (d) radioactive substances, materials or waste.
"PROPERTY" shall be deemed to include, but shall not be
limited to, all real property owned, controlled, leased or held by FNB or a FNB
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 FNB or any FNB Subsidiary to
have any permit, license or authorization required in connection with
the conduct of the business of FNB or any FNB 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 FNB or any Affiliate of FNB at the Property;
(ii) None of the Property has received
or held any Hazardous Substances in such amount and in such manner as
to constitute a violation of the Applicable Environmental Laws, and no
Hazardous Substances have been Released or disposed of on, in or under
any of the Property during or prior to FNB's or any FNB Subsidiary's
occupancy
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 34
<PAGE> 162
thereof, or during or prior to the occupancy thereof by any assignee
or sublessee of FNB or any FNB Subsidiary, except in compliance with
all Applicable Environmental Laws;
(iii) There are no Hazardous Substances
being stored at any Property or located in, on or upon, any Property
(including the subsurface thereof) or installed or affixed to
structures or equipment on the Property; and there are no underground
storage tanks for Hazardous Substances, active or abandoned, at any
Property; and
(iv) No Hazardous Substances have been
Released in a reportable quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or order, at, on
or under any Property.
(c) Neither FNB nor any Affiliate of FNB 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, FNB or any Affiliate of FNB 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 FNB or any Affiliate
of FNB 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 FNB, threatened, or are in process
which could subject any of such properties to such liens and none of the
Property would be required to place any notice or restriction relating to the
presence of Hazardous Substances at any Property in any deed to such Property.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 35
<PAGE> 163
(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
FNB or any Affiliate of FNB in relation to any Property, which have not been
made available to UPC.
(h) Neither FNB nor any FNB Subsidiary is aware
of any facts which might suggest that FNB or any FNB Subsidiary has engaged in
any management practice with respect to any of its past or existing borrowers
which could reasonably be expected to subject FNB or any FNB 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.
5.16 Insurance. FNB and each FNB Subsidiary have paid
all material amounts due and payable under any insurance policies and
guaranties applicable to FNB and any FNB Subsidiary and FNB's or any FNB
Subsidiary's assets and operations; all such insurance policies and guaranties
are in full force and effect; and FNB and each FNB Subsidiary and all of FNB's
and each FNB Subsidiary'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. Except as reflected
in Schedule 5.17 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which FNB or any FNB 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 FNB or any FNB 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 FNB or any
FNB 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 FNB nor any FNB 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. FNB and
each FNB Subsidiary have complied in all material respects with all applicable
laws, rules and regulations relating to the employment of labor, including
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 36
<PAGE> 164
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 FNB and each FNB
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 FNB and each FNB 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 FNB or any FNB
Subsidiary pending before the National Labor Relations Board or any state or
local agency; pending labor strike or other labor trouble affecting FNB or any
FNB Subsidiary; labor grievance pending against FNB or any FNB Subsidiary;
pending representation question respecting the employees of FNB or any FNB
Subsidiary; pending arbitration proceedings arising out of or under any
collective bargaining agreement to which FNB or any FNB Subsidiary is a party,
or to the best knowledge of FNB, any basis for which a claim may be made under
any collective bargaining agreement to which FNB or any FNB Subsidiary is a
party.
5.18 Records and Documents. The Records of each FNB
Subsidiary are and will be sufficient to enable such FNB Subsidiary to continue
conducting its business under similar standards as such FNB Subsidiary has
heretofore conducted such business.
5.19 Capitalization of FNB. The authorized capital stock
of FNB consists of 700,000 shares of common stock having a par value of $10.00
per share (the "FNB Common Stock"), no shares of preferred stock (the "FNB
Preferred Stock") and no other class of equity security. As of the date of
this Reorganization Agreement, 130,000 shares of FNB Common Stock were issued
and outstanding, no shares of FNB Common Stock were held by FNB as treasury
stock and no shares of FNB Preferred Stock were issued and outstanding. All of
the outstanding FNB Common Stock is validly issued, fully-paid and
nonassessable and has not been issued in violation of any preemptive rights of
any FNB Shareholder. Except as described in Section 2.7 of this Reorganization
Agreement or as described on Schedule 5.19 hereto, as of the date hereof, there
are no outstanding securities or other obligations which are convertible into
FNB Common Stock or into any other equity or debt security of FNB, 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 FNB Common Stock or any other equity or debt
security of FNB. Accordingly, immediately prior to the Effective Time of the
Merger, there will
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 37
<PAGE> 165
be not more than (nor less than) 130,000 shares of FNB Common Stock issued and
outstanding. Except as set forth in Schedule 5.19 hereto, FNB owns and is the
beneficial record holder of, and has good and freely transferable title to, all
of the shares of FNB Subsidiary Common Stock outstanding, and recorded on the
books and Records of each FNB Subsidiary 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 FNB to freely vote such stock in support of the
transactions contemplated herein.
5.20 Sole Agreement. Except as described in Schedule 5.20
hereto, with the exception of this Reorganization Agreement, neither FNB, nor
any FNB Subsidiary, 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 involvement of FNB or any FNB Subsidiary
or any Subsidiary of any FNB Subsidiary (or any of their assets) in any
business combination of any kind; or any agreement obligating FNB or any FNB
Subsidiary to issue or sell or authorize the sale or transfer of FNB Common
Stock or the capital stock of any FNB Subsidiary. 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 FNB
outstanding, except for shares of FNB 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 FNB or any
FNB Subsidiary, or contracts, commitments, understandings, or arrangements by
which FNB or any FNB Subsidiary 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 FNB or any FNB Subsidiary is or may be
bound to transfer or issue to any third party any shares of the capital stock
of any FNB 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 FNB to vote or to dispose of any such shares.
5.21 Disclosure. The information concerning, and
representations and warranties made by, FNB and any FNB Subsidiary set forth in
this Reorganization Agreement, or in the Schedules of Exceptions of FNB hereto,
or in any document,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 38
<PAGE> 166
statement, certificate or other writing furnished or to be furnished by FNB or
any FNB Subsidiary to UPC and INTERIM 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 or
INTERIM by FNB or any FNB Subsidiary 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 FNB nor any FNB Subsidiary has any obligation
or liability (contingent or otherwise) that is material to the financial
condition or operations of FNB or any FNB Subsidiary, or that, when combined
with all similar obligations or liabilities, would be material to the financial
condition or operations of FNB or any FNB Subsidiary (i) except as disclosed in
the Audited Financial Statements of FNB delivered to UPC prior to the date of
this Reorganization Agreement or (ii) except obligations or liabilities
incurred in the ordinary course of its business consistent with past practices
or (iii) except as contemplated under this Reorganization Agreement. Since
December 31, 1992, neither FNB nor any FNB Subsidiary has incurred or paid any
obligation or liability which would be material to the financial condition or
operations of FNB or such FNB 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 FNB or any
FNB Subsidiary.
5.23 Allowance for Possible Loan or ORE Losses. The
allowance for possible loan losses shown on the Audited Financial Statements of
FNB 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 FNB nor any FNB
Subsidiary has any Loan which has been criticized or classified by bank
examiners representing any Regulatory Authority 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 Audited Financial Statements of FNB is (with
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 39
<PAGE> 167
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 FNB
or any FNB Subsidiary and the net book value of ORE on the Balance Sheet of the
Audited Financial Statements of FNB is the net realizable value of the ORE in
accordance with Statement of Position 92-3.
5.24 Compliance with Laws. FNB and each FNB 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 FNB or any
FNB Subsidiary, or which would or could reasonably be expected to subject FNB
or any FNB 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 FNB or any
FNB 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 FNB or any FNB Subsidiary, (ii) threatening to
revoke any license, franchise, permit, or governmental authorization which is
material to the financial condition or operations of FNB or any FNB Subsidiary,
or (iii) requiring FNB or any FNB Subsidiary to enter into a cease and desist
order, consent, agreement, or memorandum of understanding.
5.25 Employee Benefit Plans.
(a) FNB has previously provided to UPC true and
complete copies of each "employee pension benefit plan," as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA") which, to
the best of its knowledge, is subject to any provision of ERISA and covers any
employee, whether active or retired, of FNB or any FNB Subsidiary or any other
entity which is a member of a controlled group or is under common control with
FNB or its Subsidiaries in the manner defined and further described in Section
414(b), (c), or (m) of the Internal Revenue Code of 1986 (the "Code"). Such
plans are hereinafter referred to collectively as the "Employee Pension Benefit
Plans", and each such Employee Pension Benefit Plan is
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 40
<PAGE> 168
listed in Schedule 5.25(a) hereto. FNB has also provided to UPC true and
complete copies of all trust agreements, collective bargaining agreements, and
insurance contracts related to such Employee Pension Benefit Plans.
To the best knowledge of FNB and its Subsidiaries,
each Employee Pension Benefit Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. Copies of
the latest determination letters concerning the qualified status of each
Employee Pension Benefit Plan which is intended to be qualified under Section
401(a) of the Code have been provided to UPC. Requests for determination
letters relating to amendments required to cause such Employee Pension Benefit
Plans to be in compliance with the Tax Equity and Fiscal Responsibility Act of
1982, the Deficit Reduction Act of 1984 and the Retirement Equity Act of 1984
were timely filed and have been received by FNB and its Subsidiaries. Requests
for determination letters relating to any subsequent amendments to such plans
which are currently pending have been provided to UPC. All such requests were
timely and properly filed and appropriate notice of any such filing was timely
and properly provided to affected plan participants and beneficiaries.
Each of the Employee Pension Benefit Plans has been
operated in substantial conformity with the written provisions of the
applicable plan documents which have been delivered to UPC and in compliance
with the requirements prescribed by all statutes, orders, rules, and
regulations including, but not limited to, ERISA and the Code, which are
applicable to such Employee Pension Benefit Plans. To the extent that the
operation of an Employee Pension Benefit Plan has deviated from the written
provisions of the plan, such operational deviations have been disclosed in
Schedule 5.25(a) hereto. All such deviations have been made in conformity with
applicable laws, including ERISA and the Code.
With respect to Employee Pension Benefit Plans which
are subject to the annual report requirement of ERISA Section 103 or to the
annual return requirement of Code Section 6047, all required annual reports and
annual returns, or such other documents as may have been required as
alternative means of compliance with the annual report requirement, have been
timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date have been delivered to UPC. With respect to Employee Pension
Benefit Plans which complied with the annual return requirement by satisfaction
of an alternate compliance method, any documents required to be filed
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 41
<PAGE> 169
with the Department of Labor in satisfaction of such requirements have been
provided to UPC.
With respect to all Employee Pension Benefit Plans
which are subject to the summary plan description requirement of ERISA Section
102, all such summary plan descriptions as were required to be filed with the
Department of Labor and distributed to participants and beneficiaries have been
timely filed and distributed. Copies of all such summary plan descriptions
have been delivered to UPC. No Employee Pension Benefit Plan constitutes a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
No Employee Pension Benefit Plan subject to Part III
of Subtitle B of ERISA or Section 412 of the Code, or both, has incurred an
"accumulated funding deficiency" within the meaning of Code Section 412,
whether or not waived. All required contributions to all Employee Pension
Benefit Plans have been timely made. Any penalties or taxes which have been
incurred by FNB or its subsidiaries or by any Employee Pension Benefit Plan
with respect to the timing or amount of payment of any contribution to an
Employee Pension Benefit Plan have been timely paid. The limitations of Code
Section 415 have not been exceeded with respect to any Employee Pension Benefit
Plan or combination of such plans to which such limitations apply.
No "reportable event" (as described in Section
4043(b) of ERISA) has occurred with respect to any Employee Pension Benefit
Plan. No Employee Pension Benefit Plan or any trust created thereunder, nor
any "disqualified person" with respect to the plan (as defined in Section 4975
of the Code), has engaged in a "prohibited transaction", as such term is
defined in Section 4975 of the Code, which could subject such Employee Pension
Benefit Plan, any such trust or any such disqualified person (other than a
person for whom neither FNB nor any FNB 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 Code.
No condition exists with regard to any Employee
Pension Benefit Plan which constitutes grounds for the termination of such plan
pursuant to Section 4042 of ERISA.
The fair market value of the assets of any Employee
Pension Benefit Plan which is subject to Title IV of ERISA (excluding for these
purposes any accrued but unpaid contributions) exceeded the present value of
all benefits accrued under any such plan, determined on a termination basis
using the assumptions established by the Pension Benefit Guaranty Corporation
as in effect on such date. Neither FNB nor its
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 42
<PAGE> 170
Subsidiaries have incurred any liability under Title IV of ERISA arising in
connection with the termination of, or complete or partial withdrawal from, any
plan covered or previously covered by Title IV of ERISA. The termination of
any Code Section 401(a) qualified Employee Pension Benefit Plan previously
terminated by FNB or any FNB Subsidiary did not adversely affect the
qualification of such Employee Pension Benefit Plan. The distribution of the
assets of any such Employee Pension Benefit Plan was made or is currently being
made in conformity with the requirements of that Employee Pension Benefit Plan
and of applicable legal requirements and has not resulted in, will not result
in, and is reasonably not anticipated to result in the assessment of any tax,
penalty, or excise tax against such pension plan, its related trusts, the
fiduciary and administrators of the Employee Pension Benefit Plan, FNB or its
Subsidiaries, or any disqualified person (as defined in Code Section 4975) with
respect to the Employee Pension Benefit Plan.
No tax has been, will be, or is reasonably
anticipated to be imposed under Code Section 4978, 4978A, 4978B, or 4979A due
to the operation of an Employee Pension Benefit Plan sponsored by FNB or its
Subsidiaries which is an employee stock ownership plan ("ESOP").
Except as disclosed in Schedule 5.25(a) hereto, all
Employee Pension Benefit Plans were in effect for substantially all of calendar
year 1992. There has been no material amendment of any such plans (other than
amendments required to comply with applicable law) or material increase in the
cost of maintaining such plans or providing benefits thereunder on or after the
last day of the plan year which ended in calendar year 1992 for each such
Employee Pension Benefit Plan.
FNB has provided to UPC copies of the annual
actuarial valuation or allocation report for each Employee Pension Benefit Plan
for the three (3) plan years for such plan immediately preceding the current
date. With regard to Employee Pension Benefit Plans which are not intended to
be qualified under Section 401(a) of the Code, copies of financial statements
or reports containing information regarding the expense of maintaining any such
Employee Pension Benefit Plan for the three (3) plan years preceding the
current date have been delivered to UPC.
FNB has provided to UPC copies of all filings
regarding the Employee Pension Benefit Plans which have been made with the
Securities and Exchange Commission for the three (3) plan years preceding the
current date.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 43
<PAGE> 171
(b) FNB has furnished to UPC true and complete copies of
each "Employee Welfare Benefit Plan" as defined in Section 3(1) of ERISA,
which, to the best of its knowledge, is subject to any provision of ERISA and
covers any employee, whether active or retired, of FNB or any FNB Subsidiary or
members of a controlled group or entities under common control with FNB or its
Subsidiaries in the manner defined and further described in Section 414(b),
(c), or (m) of the Code. Such plans are hereinafter referred to collectively
as the "Employee Welfare Benefit Plans", and each such Employee Welfare Benefit
Plan is listed in Schedule 5.25(b) hereto.
FNB has also provided to UPC true and complete copies
of documents establishing all funding instruments for such Employee Welfare
Benefit Plans, including but not limited to, trust agreements, cafeteria plans
(pursuant to Code Section 125), and voluntary employee beneficiary associations
(pursuant to Code Section 501(c)(9)). Each of the Employee Welfare Benefit
Plans has been operated in substantial conformity with the written provisions
of the plan documents which have been delivered to UPC and in compliance with
the requirements prescribed by all statutes, orders, rules, and regulations
including, but not limited to, ERISA and the Code, which are applicable to such
Employee Welfare Benefit Plans. Any deviation in the operation of such plans
from the requirements of the plan documents or of applicable laws have been
listed in Schedule 5.25(b) hereto. FNB has provided any notification required
by law to any participant covered under any Employee Welfare Benefit Plan which
has failed to comply with the requirements of any Code section which results in
the imposition of a tax on benefits provided to such participants under such
plan.
With respect to all Employee Welfare Benefit Plans
which are subject to the annual report requirement of ERISA Section 103 or to
the annual return requirement of Code Section 6039D, all annual reports and
annual returns as were required to be filed pursuant to such sections have been
timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date for all plans subject to such requirements have been delivered
to UPC. With respect to all Employee Welfare Benefit Plans which are subject
to the summary plan description requirement of ERISA Section 102, all such
summary plan descriptions as were required to be filed with the Department of
Labor and distributed to participants and beneficiaries have been timely filed
and distributed. Copies of all such summary plan descriptions have been
delivered to UPC.
Except as disclosed in Schedule 5.25(b) hereto, all
Employee Welfare Benefit Plans which are in effect were in
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 44
<PAGE> 172
effect for substantially all of calendar year 1992. Except as disclosed in
Schedule 5.25(b) hereto, there has been with respect to such Employee Welfare
Benefit Plans no material amendment thereof or material increase in the cost
thereof or benefits payable thereunder on or after January 1, 1993.
No Employee Welfare Benefit Plan or any trust created
thereunder, nor any "party in interest" with respect to the plan (as defined in
Section 3(14) of ERISA), has engaged in a "prohibited transaction", as such
term is defined in Section 406 of ERISA, which could subject such Employee
Welfare Benefit Plan, any such trust, or any party in interest (other than a
person for whom neither FNB nor any FNB Subsidiary is directly or indirectly
responsible) to the imposition of a penalty for such prohibited transaction
under Section 502(i) of ERISA. The Department of Labor has not assessed any
such penalty or served notice to FNB or any of its Subsidiaries that such a
penalty may be imposed upon any Employee Welfare Benefit Plan.
Neither FNB nor any FNB Subsidiary has failed to make
any contribution to, or pay any amount due and owing by FNB or an FNB
Subsidiary under the terms of, an Employee Welfare Benefit Plan. Except as
disclosed in Section 5.25(b) hereto, no claims have been incurred with respect
to any Employee Welfare Benefit Plan which may, to the best knowledge,
information and belief of FNB, constitute a liability for FNB or any FNB
Subsidiary after the application of any insurance, trust or other funds which
are applicable to the payment of such claims.
Except as disclosed in Schedule 5.25(b) hereto, to
the best knowledge, information and belief of FNB, no condition exists that
could subject any Employee Welfare Benefit Plan or any person (other than a
person for whom neither FNB or any FNB Subsidiary is directly or indirectly
responsible) to liabilities, damages, losses, taxes, or sanctions that arise
under Section 4980B of the Code or Sections 601 through 608 of ERISA for
failure to comply with the continuation health care coverage requirements of
ERISA Sections 601 through 608 and Code Section 4980B with respect to any
current or former employee of FNB or any FNB Subsidiary, or the beneficiaries
of such employee.
(c) FNB has furnished to UPC true and complete copies
and/or descriptions of each plan or arrangement maintained or otherwise
contributed to by FNB or any FNB Subsidiary which is not an Employee Pension
Benefit Plan and is not an Employee Welfare Benefit Plan and which (exclusive
of base salary and base wages) provides for any form of current or deferred
compensation, bonus, stock option, profit sharing, retirement, group health or
insurance, welfare benefits, fringe benefits, or similar plan or arrangement
for the benefit of any employee or class of
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 45
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employees, whether active or retired, or independent contractors of FNB or any
FNB subsidiary. Such plans and arrangements shall collectively be referred to
herein as "Benefit Arrangements" and all such Benefit Arrangements of FNB and
FNB's Subsidiaries are listed on Schedule 5.25(c) hereto. Except as disclosed
in Schedule 5.25(c) hereto, there are no other benefit arrangements of the FNB
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(c) hereto, there has been with respect to Benefit Arrangements no material
amendment thereof or material increase in the cost thereof or benefits payable
thereunder on or after January 1, 1993. There has been no material increase in
the base salary and wage levels of FNB or any FNB 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(c) hereto, there has been no material increase in the compensation of, or
benefits payable to, any senior executive employee of FNB or any FNB subsidiary
on or after January 1, 1993, nor has any employment, severance, or similar
contract been entered into with any such employee, nor has any amendment to any
such contract been made on or after January 1, 1993.
With respect to all Benefit Arrangements which are
subject to the annual return requirement of Code Section 6039D, all annual
returns as were required to be filed have been timely filed. Copies of all
such annual returns for the three (3) plan years immediately preceding the
current date have been delivered to UPC.
(d) Listed on Schedule 5.25(d) hereto are all Employee
Pension Benefit Plans, Employee Welfare Benefit Plans, and Benefit Arrangements
which provide compensation or benefits which become effective upon a change in
control of FNB or any FNB Subsidiary, including, but not limited to, additional
compensation or benefits, or acceleration in the amount or timing of payment of
compensation or benefits which had become effective prior to the date of such
acceleration. Except as disclosed in Schedule 5.25(d) hereto, there is no
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement covering any employee of FNB or any FNB Subsidiary which
individually or collectively could give rise to the payment of any amount which
would constitute an "excess parachute payment", as such term is defined in
Section 280G of the Code and Regulations proposed pursuant to that section.
(e) Except as described in Schedule 5.25(e) hereto, each
Employee Pension Benefit Plan, Employee Welfare Benefit
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 46
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Plan, or Benefit Arrangement and each personal services contract, fringe
benefit, consulting contract or similar arrangement with or for the benefit of
any officer, director, employee, or other person may be terminated by FNB (or
by FNB as the Surviving Corporation) within a period of no more than thirty
(30) days following the effective time of the merger, without payment of any
amount as a penalty, bonus, premium, severance pay, or other compensation for
such termination. No limitation on the right to terminate any such plan has
been communicated by FNB or its Subsidiaries to employees, former employees, or
retirees who are or may be participants in or beneficiaries of such plans or
arrangements. Each Employee Pension Benefit Plan which is qualified under
Section 401(a) of the Code as a qualified defined benefit pension plan permits
the reversion of excess assets to the employer maintaining the plan or its
successors or assigns upon a plan termination and such provision has been
included in the Employee Pension Benefit Plan for the period required under
ERISA Section 4044(d).
(f) Except as disclosed in Schedule 5.25(f) hereto,
neither FNB nor any FNB Subsidiary has received notice from any governmental
agency of any alleged violation of applicable laws or of any prospective audit
or other investigation for the purpose of reviewing compliance with applicable
laws with respect to any Employee Pension Benefit Plan, Employee Welfare
Benefit Plan or Benefit Arrangement.
Except as disclosed in Schedule 5.25(f) hereto, no
suits, actions, or claims have been filed in any court of law or with any
governmental agency regarding the operation of any Employee Pension Benefit
Plan, Employee Welfare Benefit Plan, or Benefit Arrangement and no such
additional suits, actions, or claims are, to the best information, knowledge
and belief of FNB, anticipated to be filed.
5.26 Material Contracts. Except as reflected in the Audited
Financial Statements of FNB, or as described in Schedule 5.26 hereto, neither
FNB nor any FNB 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
FNB as of the date of this Reorganization Agreement that has not already been
filed as an exhibit to FNB's Form 10-K filed for the fiscal year ended December
31, 1992, or in any other SEC Document filed prior to the date of this
Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 47
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5.27 Material Contract Defaults. Neither FNB nor any FNB
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 FNB or any
FNB 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, FNB and each FNB
Subsidiary 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 TDFI; (ii) the Federal Reserve, (iii) the Comptroller, (iv) the SEC,
including, but not limited to, Annual Reports on Form 10-K, Quarterly Reports
on Form 10-Q and Reports on Forms 2900 and FFIEC 034 and proxy statements; and
(v) 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. FNB has
previously provided to UPC true and correct copies of all such reports filed by
FNB or any FNB Subsidiary after January 1, 1988.
5.29 Exchange Act Filings. The outstanding shares of FNB
Common Stock are registered with the SEC pursuant to the 1934 Act and FNB has
filed with the SEC all material forms and reports required by law to be filed
by FNB 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.
5.30 Statements True and Correct. None of the information
prepared by, or on behalf of, FNB or any FNB Subsidiary regarding FNB, any FNB
Subsidiary or any Subsidiary of a FNB Subsidiary included or to be included in
the Proxy
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 48
<PAGE> 176
Statement to be mailed to FNB'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 FNB,
be false or misleading with respect to any material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, in the case of
the Proxy Statement or any amendment thereof or supplement thereto, at the time
of the 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 FNB or any FNB
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 49
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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 FNB in the preparation of the FNB Proxy
Statement to be used at the Shareholders Meeting (and which shall serve also as
UPC's prospectus with respect to UPC's issuance of shares of the UPC Common
Stock) and shall cause a registration statement on the appropriate form of the
SEC to be prepared and filed so as to cause any shares of UPC Common Stock
which may be delivered to the FNB Record Holders in payment of the
Consideration to be registered under the 1933 Act and to be duly qualified
under appropriate state securities laws. UPC shall also list for trading on
the NYSE the 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 FNB or
the FNB Subsidiaries and all employees of FNB and the FNB Subsidiaries
immediately prior to the Effective Time of the Merger who shall continue as
employees of FNB as the Surviving Corporation or as employees of any other UPC
Subsidiary will be afforded the opportunity to participate in any employee
benefit plans maintained by UPC or UPC's Subsidiaries, including but not
limited to any "employee benefit plan," as that term is defined in ERISA, on an
equal basis with employees of UPC or any UPC Subsidiaries with comparable
positions, compensation, and tenure. Service with FNB or with any FNB
Subsidiary prior to the Effective Time of the Merger by such former FNB 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 FNB and FNB's Subsidiaries in the
employee benefit plans maintained by UPC or UPC's Subsidiaries; provided,
however, during any such postponement period, The FNB 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 plans are replaced by benefit plans maintained by
UPC.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 50
<PAGE> 178
ARTICLE 7
COVENANTS OF FNB COMPANIES
7.1 Proxy Statement; FNB Shareholder Approval. FNB 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 December 1, 1993, 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) FNB 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 the FNB 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 FNB 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 FNB shall recommend (subject
to compliance with their legal and fiduciary duties as advised by counsel) to
FNB Shareholders the approval of this Reorganization Agreement and the Plan of
Merger; and (iv) FNB shall use its best efforts, subject to compliance with its
legal and fiduciary duty as advised by counsel, to obtain such FNB
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) FNB and each FNB Subsidiary shall, and shall
cause each FNB 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 51
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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 FNB or such
FNB 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 any FNB
Subsidiary's present customer base and to facilitate the retention of
such customers by any FNB Subsidiary 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 FNB, any FNB Subsidiary 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 any FNB Subsidiary's customer relationships;
(b) FNB and each FNB Subsidiary 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 FNB and each FNB
Subsidiary shall provide to UPC or to the appropriate governmental authorities
all information reasonably required to be submitted in connection with
obtaining such approvals;
(c) FNB and each FNB Subsidiary, 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 FNB, any FNB Subsidiary 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 52
<PAGE> 180
(d) At all times to and including, and as of, the
Closing, FNB and each FNB Subsidiary shall inform UPC in writing of any and all
facts necessary to amend or supplement the representations and warranties made
herein and the Schedules attached hereto as necessary so that the information
contained herein and therein will accurately reflect the current status of FNB
and any FNB Subsidiary; 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, FNB and each FNB
Subsidiary 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 transactions contemplated by this
Reorganization Agreement;
(f) Between the date of this Reorganization
Agreement and the Closing Date, FNB and each FNB Subsidiary 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 FNB and any FNB
Subsidiary. FNB and each FNB Subsidiary shall provide reasonable assistance to
UPC in its investigation of matters relating to FNB and any FNB Subsidiary; and
(g) Subject to the terms and conditions of this
Reorganization Agreement, FNB and each FNB Subsidiary agree to use all
reasonable efforts and to take, or to cause to be taken, all actions, and to
do, or to cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective, with
reasonable promptness after the date of this Reorganization Agreement, the
transactions contemplated by this Reorganization Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining or other order adversely affecting the ability of the Parties to
consummate the transaction contemplated by this Reorganization Agreement. FNB
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 53
<PAGE> 181
consummation of each of the transactions contemplated by this Reorganization
Agreement.
7.3 Conduct of Business -- Negative Covenants. From the date
of this Reorganization Agreement until the earlier of the Effective Time of the
Merger or the termination of this Reorganization Agreement, FNB and each FNB
Subsidiary covenant and agree that they will neither do, nor agree or commit to
do, nor permit any FNB Subsidiary to do or commit or agree to do, any of the
following without the prior written consent of the chief executive officer,
president, or chief financial officer of UPC, which consent will not be
unreasonably withheld:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Plan of Merger, amend its Charter 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 FNB Common Stock; or (v) pay or declare a regular
quarterly cash dividend in excess of Seventy-Five Cents ($0.75) per share of
FNB Common Stock or make or declare any other type of distribution on the FNB
Common Stock except as expressly permitted by this Reorganization Agreement or
the Plan of Merger; or
(d) Except as expressly permitted by this
Reorganization Agreement, acquire direct or indirect control over any
corporation, association, firm, organization or other entity, other than in
connection with (i) mergers, acquisitions, or other transactions approved in
writing by UPC, (ii) internal reorganizations or consolidations involving
existing Subsidiaries, (iii) foreclosures in the ordinary course of business
and not knowingly exposing it to liability by reason of Hazardous Substances,
(iv) acquisitions of control in its fiduciary capacity, or (v) the creation of
new subsidiaries organized to conduct or continue activities otherwise
permitted by this Reorganization Agreement; or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 54
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(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 FNB Common Stock, or any other capital stock of FNB or of
any FNB Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are directly sold or otherwise directly transferred to FNB or any FNB
Subsidiary, or (ii) sell, agree to sell, or otherwise dispose of any
substantial part of the assets or earning power of FNB or of any FNB
Subsidiary; or (iii) sell, agree to sell, or otherwise dispose of any asset of
FNB or any FNB 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 FNB 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 FNB or any FNB
Subsidiary to any FNB Subsidiary in excess of an aggregate of $50,000 (for FNB
and its Subsidiaries on a consolidated basis) except in the ordinary course of
the business of FNB or such FNB 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 FNB or of any FNB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 55
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annual salary thereunder in excess of $30,000 that FNB or any FNB Subsidiary
(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 employee benefit plan other
than any change that is required by law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax-qualified status of any such plan;
or
(j) Enter into any new service contracts, purchase
or sale agreements or lease agreements that are material to FNB or any FNB
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 FNB
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 FNB 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 FNB. Unless waived
in writing by FNB, the obligation of FNB to consummate the transaction
contemplated by this Reorganization Agreement is subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and
undertakings of UPC and INTERIM to be performed at or prior to the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 56
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(b) Representations and Warranties. The
representations and warranties of UPC and INTERIM contained in Article 4 of
this Reorganization Agreement shall be true and complete, in all material
respects, on and as of the Effective 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 INTERIM described elsewhere in this Reorganization
Agreement, FNB shall have received the following documents and instruments:
(i) a certificate signed by the
Secretary or an assistant secretary of UPC and INTERIM dated as of the
Closing Date certifying that:
(A) UPC's and INTERIM's respective
Boards of Directors have duly adopted resolutions (copies of
which shall be attached to such certificate) approving the
substantive terms of this Reorganization Agreement (including
the Plan of Merger) and authorizing the consummation of the
transactions contemplated by this Reorganization Agreement and
certifying that such resolutions have not been amended or
modified and remain in full force and effect;
(B) each person executing this
Reorganization Agreement on behalf of UPC or INTERIM is an
officer of UPC or INTERIM, as the case may be, holding the
office or offices specified therein, with full power and
authority to execute this Reorganization Agreement and any and
all other documents in connection with the Merger, and that
the signature of each person set forth on such certificate is
his or her genuine signature;
(C) the charter documents of UPC
and INTERIM attached to such certificate remain in full force
and effect; and
(D) UPC and INTERIM are in good
standing under their respective corporate charters; and
(ii) a certificate signed respectively by
duly authorized officers of UPC and INTERIM stating that the
conditions set forth in Section 8.1(a) and Section 8.1(b) of this
Reorganization Agreement have been fulfilled;
(d) Consideration. FNB shall have received a
certificate executed by an authorized officer of the Exchange
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 57
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Agent to the effect that the Exchange Agent has received and holds in its
possession proper authorization to issue certificates evidencing shares of UPC
Common Stock and cash or other good funds sufficient to meet the obligations of
UPC to the FNB Record Holders to deliver the Consideration under this
Reorganization Agreement and the Plan of Merger; and
(e) Opinion of UPC's and INTERIM's Counsel. FNB
shall have been furnished with an opinion of counsel to UPC and INTERIM, dated
as of the Closing Date, addressed to and in form and substance satisfactory to
FNB, to the effect that:
(i) UPC is a Tennessee corporation duly
organized, validly existing, and in good standing under the laws of
the State of Tennessee; and INTERIM is a Tennessee corporation duly
organized, validly existing, and in good standing under the laws of
the State of Tennessee;
(ii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by UPC, and
INTERIM and (assuming this Reorganization Agreement is a binding
obligation of FNB and FIRST NATIONAL) constitutes a valid and binding
obligation of UPC and INTERIM enforceable in accordance with its
terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of
equitable principles and judicial discretion;
(iii) neither the execution and delivery by
UPC or INTERIM of this Reorganization Agreement nor any of the
documents to be executed and delivered by UPC or INTERIM in connection
herewith violates or conflicts with UPC's, or INTERIM's corporate
charters or bylaws or, to the best of the knowledge, information and
belief (without making special inquiry) of such counsel, any material
contracts, agreements or other commitments of UPC or INTERIM; and
(iv) to the knowledge of such counsel
after due inquiry, no consent or approval by any Governmental
Authority which has not already been obtained is required for
execution and delivery by UPC and INTERIM of this Reorganization
Agreement or any of the documents to be executed and delivered by UPC
or INTERIM in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of UPC or INTERIM or appropriate government
officials; (ii) in the case of matters of law governed by the laws of the
states in which they are not
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 58
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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).
8.2 Conditions to the Obligations of UPC and INTERIM.
Unless waived in writing by UPC and INTERIM, the obligation of UPC and INTERIM
to consummate the transactions contemplated by this Reorganization Agreement is
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) Performance. Each of the material acts and
undertakings of FNB and any FNB Subsidiary 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 FNB and any FNB Subsidiary 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 FNB and FIRST NATIONAL dated as
of the Closing Date certifying that:
(A) FNB's and each such FNB
Subsidiary'S respective Boards of Directors and shareholders
have duly adopted resolutions (copies of which shall be
attached to such certificate) approving the substantive terms
of this Reorganization Agreement (including the Plan of
Merger) and authorizing the consummation of the transactions
contemplated by this Reorganization Agreement and certifying
that such resolutions have not been amended or modified and
remain in full force and effect;
(B) each person executing this
Reorganization Agreement on behalf of FNB or a FNB Subsidiary,
is an officer of FNB or such FNB Subsidiary, as the case may
be, holding the office or offices specified therein, with full
power and authority to execute this Reorganization Agreement
and any and all other documents in connection with the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 59
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Merger, and that the signature of each person set forth on
such certificate is his or her genuine signature;
(C) the charter documents of FNB
and each FNB Subsidiary attached to such certificate remain in
full force and effect; and
(D) FNB and all FNB Subsidiaries
are in good standing under their respective corporate
charters; and
(ii) a certificate signed by the
respective President, Chief Executive Officer or an Executive Vice
President of each of FNB and each FNB Subsidiary 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
FNB or any FNB Subsidiary 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 FNB or any FNB Subsidiary; provided, however, that the
availability of insurance coverage shall be taken into account in determining
whether there has been such a material adverse impact or material reduction in
market value. In the event of such damage, destruction, order, limitation or
restriction, UPC and INTERIM may elect either (i) to close the contemplated
transactions in accordance with the terms of this Reorganization Agreement or
(ii) to terminate this Reorganization Agreement without penalty;
(e) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, FNB and each FNB Subsidiary
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 FNB and each FNB Subsidiary. FNB and each FNB Subsidiary shall
have caused all FNB or any such FNB Subsidiary personnel to provide reasonable
assistance to UPC in its investigation of matters relating to FNB and any FNB
Subsidiary;
(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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 60
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condition (financial or otherwise) of FNB or any FNB Subsidiary 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 FNB or any FNB
Subsidiary, UPC may elect either (i) to close the contemplated transactions in
accordance with the terms of this Reorganization Agreement or (ii) to terminate
this Reorganization Agreement without penalty;
(g) Opinion of FNB's Counsel. UPC shall have
been furnished with an opinion of legal counsel to FNB and the FNB
Subsidiaries, dated the Closing Date, addressed to and in form and substance
satisfactory to UPC, to the effect that:
(i) FNB is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Tennessee;
(ii) each FNB Subsidiary is duly
organized, validly existing, and in good standing under the laws of
its jurisdiction of incorporation;
(iii) this Reorganization Agreement has been
duly and validly authorized, executed and delivered by FNB and FIRST
NATIONAL and (assuming that this Reorganization Agreement is a binding
obligation of UPC and INTERIM and the Plan of Merger is a binding
obligation of UPC and INTERIM) constitutes a valid and binding
obligation of FNB and FIRST NATIONAL, 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 FNB or any FNB Subsidiary of this Reorganization Agreement
or any of the documents to be executed and delivered by FNB and any
FNB Subsidiary in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of FNB or any FNB Subsidiary 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,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 61
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the Legal Opinion Accord of the ABA Section of Business Law (1991);
(h) Other Business Combinations, Etc. Neither FNB
nor any FNB Subsidiary shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which FNB or any FNB Subsidiary
would merge; consolidate with; effect a business combination with; sell any
substantial part of FNB's or any FNB Subsidiary'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 FNB or any FNB Subsidiary or the benefits of acquiring the FNB Common Stock;
(i) Maintenance of Certain Covenants, Etc. At
the time of Closing (i) the total assets of FNB shall be not less than
$160,000,000; (ii) the equity capital of FNB shall have been not less than
$13,000,000 as of June 30, 1993, and shall have increased since that time
through normal earnings growth; (iii) the tangible equity capital of FNB shall
be not less than its stated level as of June 30, 1993, and shall have increased
since that time through normal earnings growth; (iv) neither FNB nor any FNB
Subsidiary shall have issued or repurchased from the date hereof any additional
equity or debt securities, or any rights to purchase or repurchase such
securities, except as set forth in this Agreement (therefore, there shall be
not more than 130,000 shares of FNB Common Stock validly issued and outstanding
at the Effective Time of the Merger); (v) from December 31, 1992, there shall
have been no extraordinary sale of assets, nor any investment portfolio
restructuring by either FNB or any FNB Subsidiary; (vi) neither FNB nor any FNB
Subsidiary shall have issued or granted since December 31, 1992, through the
Closing Date any FNB Stock Options; (vii) from the date hereof, except as
permitted in Section 7.3(c)(v) of this Reorganization Agreement, FNB shall not
have declared or paid any cash dividends prior to Closing; and (viii) the
Merger can be accounted for as a "pooling of interests" on the financial
statements of UPC. The criteria and calculations set forth above shall be
determined in accordance with GAAP assuming that FNB and each FNB Subsidiary
shall have been operated consistently in the normal course of their business;
provided, however, that the effects of any balance sheet expansion through
abnormal, unusual, nonrecurring or out of the ordinary borrowings or by the
realization of extraordinary or nonrecurring gains or other income from the
disposition of assets or liabilities or through similar transactions shall be
eliminated from the calculations;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 62
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(j) Non-Compete Agreements. Each member of the Board of
Directors of FNB shall have entered into a non-compete agreement with UPC and
FNB substantially in the form of UPC's standard form of non-compete agreement,
a copy which is annexed hereto as Exhibit 8.2(j), providing for a term of two
(2) years from Closing and covering Bedford and Grundy Counties in Tennessee;
and such Board Member shall not be involved in any way with the formation or
organization of a new financial institution in such counties;
(k) Tax Opinion. UPC shall have received a written
opinion from counsel to the effect that the transactions contemplated by this
Reorganization Agreement and the Plan of Merger will constitute one or more
tax-free reorganizations under Section 368 of the Internal Revenue Code and
that the FNB Record Holders will not recognize any gain or loss to the extent
that such FNB Record Holders exchange shares of FNB Common Stock for shares of
UPC Common Stock as contemplated by this Reorganization Agreement and the Plan
of Merger assuming that the shares of FNB Common Stock so exchanged by such FNB
Record Holders are held by them as capital assets at the time of such exchange;
(l) Pooling of Interests Accounting Treatment. UPC shall
have received (i) from Price Waterhouse, or other independent accountants
acceptable to UPC, a letter dated within five (5) days prior to the Closing
Date, in form and substance acceptable to UPC, stating the accountants' opinion
that, based upon the information furnished to them, the 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 FNB'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 FNB'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 which FNB is a party should not be accounted for as a "pooling of
interests" under generally accepted accounting principles; and
(m) Receipt of Affiliate Letters. Pursuant to the
provisions of Section 6.2 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 FNB Record Holder who would be deemed
an Affiliate of FNB 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 FNB Common Stock pursuant to the terms
and conditions of this Reorganization Agreement, committing to UPC that such
FNB Record Holder shall
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 63
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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 FNB 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 FNB 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 FNB 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; and
(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.
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 INTERIM, should FNB or any FNB
Subsidiary fail to conduct its business pursuant to FNB's and such FNB
Subsidiary's Covenants made in Article 7;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 64
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(c) By UPC, INTERIM or FNB in the event the Closing
shall not have occurred by June 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 FNB and any FNB Subsidiary that is a party to this
Reorganization Agreement shall, upon UPC's written request, extend the Closing
Date until such time as all Government Approvals have been obtained and any
stipulated waiting periods have expired; provided, however, the Closing Date
shall not be extended under the provisions of this Section 9.1(c) beyond
September 30, 1994.
(d) By either UPC, INTERIM or FNB, upon written
notice to the other Party, upon denial of any Governmental Approval necessary
for the consummation of the Merger (or should such approval be conditioned upon
a substantial deviation from the transactions contemplated); provided, however,
that either UPC or FNB may, upon written notice to the other, extend the term
of this Reorganization Agreement for only one sixty (60) day period to
prosecute diligently and overturn such denial, provided that such denial has
been appealed within ten (10) business days of the receipt thereof;
(e) By UPC or INTERIM in the event the conditions
set forth in Sections 8.2 or 8.3 are not satisfied in all material respects as
of the Closing Date, or by FNB 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 INTERIM in the event that there
shall have been, in UPC's good faith opinion, a material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), prospects, operations, liquidity,
income, condition (financial or otherwise) or net worth of FNB or any FNB
Subsidiary 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 FNB
Common Stock which are the subject of the instant transaction;
(g) By UPC, INTERIM or FNB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 65
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remedied within thirty (30) days after receipt by the breaching Party of
written notice from the other Party specifying the nature of such breach and
requesting that it be remedied;
(h) By UPC or INTERIM should FNB or any FNB
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;
(i) By UPC or INTERIM should FNB or any FNB
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 FNB or any FNB Subsidiary to raise additional
capital or to sell a substantial portion of its assets;
(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;
(k) By FNB in the event that there shall have
been, in FNB'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; or
(l) By FNB in the event that UPC shall have
entered into any letter of intent, agreement or understanding for a change in
control of UPC by a third-party with a banking presence in Bedford County,
Tennessee.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or (l) 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 66
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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.
ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. Any notice, request, demand and other
communication which either Party hereto may desire or may be required hereunder
to give shall be in writing and shall be deemed to be duly given if delivered
personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
If to UPC or INTERIM:
Union Planters Corporation
Post Office Box 387 (mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Fax: (901) 383-2877
Attn: Mr. Jackson W. Moore, President
Gary A. Simanson,
Associate General Counsel
If to FNB: First National Bancorp of Shelbyville, Inc.
111 West Side Square
Post Office Box 500
Shelbyville, Tennessee 37160
Fax: (615) 684-8256
Attn: Mr. William D. Hart
President and Chief Executive Officer
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 67
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With a copy to: Baker, Worthington, Crossley,
Stansberry & Woolf
1700 Nashville City Center
Post Office Box 2866
Nashville, Tennessee 37219
Fax: (615) 726-0464
Attn: Steven J. Eisen, Esq.
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. This Reorganization Agreement shall
inure to the benefit of, and be binding only upon the Parties hereto and their
respective successors and permitted assigns and no other Persons.
10.3 Governing Law. This Reorganization Agreement shall
be governed by, and construed and enforced in accordance with, the internal
laws, and not the laws pertaining to choice or conflicts of laws, of the State
of Tennessee, unless and to the extent that federal law controls. 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 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. FNB, each FNB Subsidiary, UPC and
INTERIM 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 or INTERIM to obtain or to
provide FNB or any FNB Subsidiary 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 or INTERIM
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 68
<PAGE> 196
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 parts of this
Reorganization Agreement. Except as provided herein, by specific language and
not by mere implication, this Reorganization Agreement is not intended to
confer upon any other person not a Party to this Reorganization Agreement any
rights or remedies hereunder.
10.8 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any
way the validity or enforceability of the remaining portions or provisions
hereof in such jurisdiction or rendering that or any other portions or
provisions of this Reorganization Agreement invalid, illegal or unenforceable
in any other jurisdiction.
10.9 Modifications, Amendments and Waivers. At any time
prior to the Closing or termination of this Reorganization Agreement, the
Parties may, solely by written agreement executed by their duly authorized
officers:
(a) extend the time for the performance of any of
the obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations
and warranties made by the other Party contained in this Reorganization
Agreement or in the Annexes, Schedules or Exhibits hereto or any other document
delivered pursuant to this Reorganization Agreement;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 69
<PAGE> 197
(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.
10.11 Payment of Expenses. Except as set forth herein, UPC
and FNB shall each pay its own fees and expenses (including, without
limitation, legal fees and expenses) incurred by it in connection with the
transactions contemplated hereunder.
10.12 Finders and Brokers. UPC, INTERIM, FNB and each FNB
Subsidiary 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 transactions contemplated
herein. This section shall survive the termination of this Reorganization
Agreement.
10.13 Equitable Remedies. The Parties hereto agree that, in
the event of a breach of this Reorganization Agreement by FNB or any FNB
Subsidiary, UPC and INTERIM will be without an adequate remedy at law by reason
of the unique nature of FNB and each FNB Subsidiary. In recognition thereof,
in addition to (and not in lieu of) any remedies at law which may be available
to UPC and INTERIM, UPC, and INTERIM shall be entitled to obtain equitable
relief, including the remedies of specific performance and injunction, in the
event of a breach of this Reorganization Agreement by FNB or any FNB
Subsidiary, and no attempt on the part of UPC or INTERIM to obtain such
equitable relief shall be deemed to constitute an election of remedies by UPC
or INTERIM which would preclude UPC or INTERIM from obtaining any remedies at
law to which it would otherwise be entitled. FNB and each FNB Subsidiary
covenant that they shall not contend in any such proceeding that UPC or INTERIM
is not entitled to a decree of specific performance by reason of having an
adequate remedy at law.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 70
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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 two (2) years after 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 statutes of limitation. Nothing
in this Section 10.15 shall limit FNB's, any FNB Subsidiary's, UPC's or
INTERIM's rights or remedies for misrepresentations, breaches of this
Reorganization Agreement or any other improper action or inaction by the other
Party hereto prior to the its termination.
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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 71
<PAGE> 199
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.
FIRST NATIONAL BANCORP OF
SHELBYVILLE, INC.
By: /s/ William D. Hart
-------------------------------
William D. Hart
Its: President and Chief
Executive Officer
ATTEST:
/s/ Delores V. (Judy) Hornaday
- ----------------------------------
Delores V. Hornaday, Secretary
FIRST NATIONAL BANK OF SHELBYVILLE
By: /s/ William D. Hart
-------------------------------
William D. Hart
Its: President and Chief
Executive Officer
ATTEST:
/s/ Delores V. (Judy) Hornaday
- ----------------------------------
Delores V. Hornaday, Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 72
<PAGE> 200
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
-------------------------------
Jackson W. Moore
Its: President
ATTEST:
/s/ J. F. Springfield
- --------------------------------
J. F. Springfield, Secretary
FNB ACQUISITION COMPANY, INC.
By: /s/ Jackson W. Moore
-------------------------------
Jackson W. Moore
Its: President
ATTEST:
/s/ J. F. Springfield
- --------------------------------
J. F. Springfield, Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 73
<PAGE> 201
PLAN OF MERGER EXHIBIT A
SETTING FORTH THE PLAN OF MERGER
OF
FNB ACQUISITION COMPANY, INC.
(A TENNESSEE CORPORATION)
WITH AND INTO
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
(A TENNESSEE CORPORATION)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the 21st day of September, 1993, by and between FIRST NATIONAL BANCORP OF
SHELBYVILLE, INC. ("FNB"), a corporation chartered and existing under the laws
of the State of Tennessee which is a registered bank holding company and whose
principal offices are located at 111 West Side Square (Post Office Box 500),
Shelbyville, Bedford County, Tennessee 37160; 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 FNB ACQUISITION COMPANY, INC.
("INTERIM"), a corporation chartered and existing under the laws of the State
of Tennessee, whose principal place of business is located at 7130 Goodlett
Farms Parkway, Memphis, Shelby County, Tennessee 38018, and which is a
wholly-owned subsidiary of UPC. All of the authorized, issued and outstanding
shares of capital stock of INTERIM are owned and held of record by UPC.
PREAMBLE
WHEREAS, UPC, INTERIM and FNB have entered into an Agreement and Plan
of Reorganization dated as of the 21st day of September, 1993 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as an integral part thereof providing for the merger of INTERIM with
and into FNB (which would be the Surviving Corporation) and the acquisition of
all of the FNB Common Stock outstanding immediately prior to the Effective Time
of the Merger by UPC for the Consideration set forth in the Reorganization
Agreement and this Plan of Merger; and
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WHEREAS, As provided in the Reorganization Agreement, UPC has caused
INTERIM to join in this Plan of Merger by executing and delivering same; and
WHEREAS, The Boards of Directors of UPC, INTERIM and FNB are each of
the opinion that the interests of their respective corporations and their
corporations' respective shareholders would best be served if INTERIM were to
be merged with and into FNB, which would survive the Merger, on the terms and
conditions provided in the Reorganization Agreement and in this Plan of Merger,
and as a result of such Merger becoming effective, the Surviving Corporation
would become a wholly-owned subsidiary of UPC.
NOW, THEREFORE, in consideration of the covenants and agreements of
the Parties contained herein, FNB, UPC and INTERIM hereby make, adopt and
approve this Plan of Merger in order to set forth the terms and conditions for
the merger of INTERIM with and into FNB (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 FNB ACQUISITION COMPANY, INC.. The authorized capital stock
of INTERIM consists of 1,000 shares of common stock having a par value of $1.00
per share (the "INTERIM Common Stock") and no shares of preferred stock. As of
the date of this Plan of Merger, 1,000 shares of INTERIM Common Stock are
issued and outstanding, and no shares of INTERIM Common Stock are held by it as
treasury stock. All such issued and outstanding shares of INTERIM Common Stock
are owned beneficially and of record by UPC.
2.2 FIRST NATIONAL BANCORP OF SHELBYVILLE, INC. The authorized
capital stock of FNB consists of 700,000 shares of common stock having a par
value of $10.00 per share (the "FNB Common Stock"), and no shares of preferred
stock (the "FNB Preferred Stock). As of the date hereof, 130,000 shares of FNB
Common Stock were issued and outstanding, no shares of FNB Common Stock were
held by FNB as FNB Treasury Stock and no shares of FNB Preferred Stock were
issued and outstanding.
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ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent
corporation to the Merger is:
FNB ACQUISITION COMPANY, INC.
and
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
3.2 Surviving Corporation. The Surviving Corporation shall be:
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
which as of the Effective Time of the Merger shall continue to be named:
FIRST NATIONAL BANCORP OF SHELBYVILLE, 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 a Articles of Merger with the Secretary of State of the State of
Tennessee, 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, INTERIM shall be merged with and into FNB which will survive the
Merger, and the separate existence of INTERIM shall cease thereupon, and
without further action, FNB shall thereafter possess all of the assets, rights,
privileges, appointments, powers, licenses, permits and franchises of both FNB
and INTERIM, whether of a public or private nature, and shall be subject to all
of the liabilities, restrictions, disabilities, and duties of both FNB and
INTERIM.
3.4 Charter. At the Effective Time of the Merger, the Charter of
FNB, as in effect immediately prior to the Effective Time of the Merger, shall
constitute the Charter of FNB as the Surviving Corporation, unless and until
the same shall be amended as provided by law and the terms of such Charter.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of
FNB, as in effect immediately prior to the Effective Time of the Merger, shall
continue to be its Bylaws as the Surviving Corporation, unless and until
amended or repealed as provided by law, its Charter and such Bylaws.
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3.6 Directors and Officers. The directors and officers of FNB 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 Charter 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 FNB as the Surviving Corporation following
the Merger, shall remain:
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 Conversion of the INTERIM Common Stock. At the Effective Time
of the Merger, each share of $1.00 par value common stock of INTERIM (the
"INTERIM Common Stock") issued and outstanding immediately prior to the
Effective Time of The Merger shall, by virtue of the Merger becoming effective
and without any further action on the part of anyone, be converted into and
become one share of the issued and outstanding common stock of the Surviving
Corporation.
4.2 Conversion and Cancellation of Shares of FNB. At the
Effective Time of the Merger, each share of $10.00 par value common stock of
FNB issued and outstanding immediately prior to the Effective Time of the
Merger shall, by virtue of the Merger becoming effective and without any
further action on the part of anyone, be converted, exchanged and cancelled as
provided in Section 4.3 hereof.
4.3 Exchange of FNB Shares; Exchange Ratio. At the Effective Time
of the Merger, the outstanding shares of FNB Common Stock held by the FNB
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 FNB and shall automatically be
converted exclusively into, and constitute only the right of the FNB Record
Holders to receive in exchange for their shares of FNB 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 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 FNB Record Holders pursuant to the
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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 FNB
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (based on there being no more than 130,000 shares of FNB Common
Stock issued and outstanding at 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 or equal to
$25.375 per share of UPC Common Stock but less than or equal to
$33.375 per share of UPC Common Stock (the "Primary Collar"), the
Exchange Ratio shall be based on a fixed Exchange Ratio of seven (7)
shares of UPC Common Stock for each share of FNB 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 $33.375 per share
of UPC Common Stock (the "Ceiling"), the Exchange Ratio shall be based
on (a) a fixed price of $233.625 per share of FNB Common Stock divided
by (b) the Current Market Price Per Share of UPC Common Stock;
provided, however, in the event that UPC shall have entered into a
letter of intent, agreement or understanding with a third party for a
change in control of UPC, the Exchange Ratio shall remain fixed at
seven (7) shares of UPC Common Stock for each share of FNB Common
Stock validly issued and outstanding at the Effective Time of the
Merger; and
(iii) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $25.375 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be fixed at
seven (7) shares of UPC Common Stock for each share or FNB Common
Stock validly issued and outstanding immediately prior to the
Effective Time of the Merger; provided, however, FNB shall have the
right to either accept the fixed Exchange Ratio of seven (7) shares of
UPC Common Stock for each share of FNB Common Stock or terminate this
Reorganization Agreement and the transactions contemplated
herein; provided, further, in the event FNB 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
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number of shares of UPC Common Stock to be delivered by UPC to the FNB
Record Holders based on (a) a fixed price of $177.625 per share of FNB
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 130,000 shares of FNB 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 FNB 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 Purchase
Price 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 next preceding the Closing Date 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.
(ii) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should FNB Record Holders representing at least 5% of
the shares of FNB Common Stock issued and outstanding at the time of
Closing perfect such FNB Record Holder's Dissenters' Rights pursuant
to the Tennessee Code and maintain the perfected status of such
Dissenters' Rights through the Closing Date, UPC and INTERIM shall
have the right, exercisable in their sole discretion, to either
terminate this Reorganization Agreement or reduce the per share
Consideration 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.
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(iii) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF FNB.
Should FNB effect any stock splits, reverse stock splits, stock
dividends or similar changes in its respective capital accounts
subsequent to the date of this Reorganization Agreement but prior to
the Effective Time of the Merger, the Exchange Ratio shall be adjusted
in such a manner as the Board of Directors of UPC shall deem in good
faith to be fair and reasonable in order to give effect to such
changes.
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 FNB Record Holders such
materials and information as may be deemed necessary by the Exchange Agent to
advise the FNB Record Holders of the procedures required for proper surrender
of their certificates evidencing and representing shares of the FNB Common
Stock in order for the FNB 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 FNB Record Holders at the addresses
set forth on a certified shareholder list to be delivered by FNB to UPC at the
Closing (the "Shareholder List"). As soon as reasonably practicable
thereafter, the FNB Record Holders of all of the outstanding shares of FNB
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 FNB 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 FNB 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 FNB Common Stock, the Exchange Agent
shall, on or prior to the 30th day after the Effective Time of the Merger, mail
to the former FNB Shareholders in exchange for the certificate(s) surrendered
by them, the Consideration to be paid for each such FNB Shareholder's shares of
FNB 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
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which formerly evidenced and represented the shares of FNB Common Stock of a
FNB Record Holder, subject to the provisions of this Section 4.4, shall be
deemed for all corporate purposes to represent and evidence only the right to
receive the Consideration into which such FNB Record Holder's shares of FNB
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 FNB
Record Holder's FNB Common Stock shall have been surrendered as provided above,
the Consideration payable to the FNB Record Holder(s) of the cancelled shares
as of any time after the Effective Date shall not be paid to the FNB Record
Holder(s) of such certificate(s) until such certificates shall have been
surrendered in the manner required. Each FNB 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 FNB 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 FNB Record Holder is entitled, provided that
each such FNB 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 FNB
Shareholder.
4.5 Stock Transfer Books. At the Effective Time of the Merger,
the stock transfer books of FNB shall be closed and no transfer of shares of
FNB Common Stock shall be made thereafter.
4.6 Effects of the Merger. At the Effective Time of the Merger,
the separate existence of INTERIM shall cease, and INTERIM shall be merged with
and into FNB 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 FNB and INTERIM.
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4.7 Transfer of Assets. At the Effective Time of the Merger, all
rights, assets, licenses, permits, franchises and interests of FNB and INTERIM
in and to every type of property, whether real, personal, or mixed, whether
tangible or intangible, and to choses in action shall be deemed to be vested in
FNB as the Surviving Corporation by virtue of the Merger and without any deed
or other instrument or act of transfer whatsoever.
4.8 Assumption of Liabilities. At the Effective Time of the
Merger, the Surviving Corporation shall become and be liable for all debts,
liabilities, obligations and contracts of INTERIM as well as those of the
Surviving Corporation, whether the same shall be matured or unmatured; whether
accrued, absolute, contingent or otherwise; and whether or not reflected or
reserved against in the balance sheets, other financial statements, books of
account or records of INTERIM or the Surviving Corporation.
4.9 Dissenters' Rights of FNB Shareholders. Any FNB Record Holder
of shares of FNB Common Stock who shall comply strictly with the provisions of
Sections 48-23-201 et seq. of the Tennessee Code, shall be entitled to dissent
from the Merger and to seek those appraisal remedies afforded by the Tennessee
Code. Such an FNB Shareholder is referred to herein as an "FNB Dissenting
Shareholder." However, UPC and INTERIM shall not be obligated to consummate
the Merger if FNB Record Holders holding or controlling more than five percent
(5%) of the shares of the FNB Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger shall have perfected and maintained
in perfected status their Dissenters' Rights in accordance with the Tennessee
Code and the perfected status of said Dissenters' Rights shall have continued
to the time of Closing.
4.10 Approvals of Shareholders of FNB and INTERIM. In order to
become effective, the Merger must be approved by the respective shareholders of
FNB and of INTERIM at meetings to be called for that purpose by their
respective Boards of Directors, or by their unanimous action by written consent
complying fully with the laws of Tennessee.
4.11 FNB Stock Options. Except as described in Section 2.7 of the
Reorganization Agreement, there are no validly issued and outstanding FNB Stock
Options. Therefore, at the Effective Time of the Merger, there will be no FNB
Stock Options issued and outstanding except as described in Section 2.7 of the
Reorganization Agreement. It is expected that at the Effective Time of the
Merger any validly issued and outstanding FNB Stock Options will either be
exercised by the holders thereof, repurchased by FNB or converted into options
to acquire shares of UPC Common Stock at the election of the holders thereof.
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ARTICLE 5
AMENDMENTS AND WAIVERS
5.1 AMENDMENTS. To the extent permitted by law, this Plan of
Merger may be amended unilaterally by UPC and INTERIM as set forth in Section
10.9(d) of the Reorganization Agreement; provided, however, that the provisions
of Section 4.3 of this Plan of Merger relating to the manner or basis upon
which shares of FNB 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 FNB Record Holders
determined as provided in Section 4.3 of this Plan of Merger nor shall this
Plan of Merger be amended to permit UPC to utilize assets other than cash or
good funds to make payment of the Consideration as provided in Section 3.1(e)
of the Reorganization Agreement at any time after the Shareholders' Meeting
without the requisite approval (except as provided for in the Reorganization
Agreement) of the FNB Record Holders of the shares of FNB 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 INTERIM, acting through their respective
Boards of Directors or chief executive officers or presidents or other
authorized officers, shall have the right to amend this Plan of Merger to
postpone the Effective Time of the Merger to a date and time subsequent to the
time of filing of the Plan of Merger with the Tennessee Secretary of State, to
waive any default in the performance of any term of this Plan of Merger by FNB,
to waive or extend the time for the compliance or fulfillment by FNB of any and
all of its obligations under this Plan of Merger, and to waive any or all of
the conditions precedent to the obligations of UPC and INTERIM under this Plan
of Merger, except any condition that, if not satisfied, would result in the
violation of any law or applicable governmental regulation. Prior to the
Effective Time of the Merger, FNB, 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 Tennessee Secretary of State, to waive any default in the
performance of any term of this Plan of Merger by UPC or INTERIM, to waive or
extend the time for the compliance or fulfillment by UPC or INTERIM of any and
all of their obligations under this Plan of Merger, and to waive any or all of
the conditions precedent to the obligations of FNB under this Plan of Merger
except any condition that, if not satisfied, would
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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:
If to UPC or INTERIM:
Union Planters Corporation
Post Office Box 387 (mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Fax: (901) 383-2877
Attn: Mr. Jackson W. Moore, President
Gary A. Simanson,
Associate General Counsel
If to FNB: First National Bancorp of Shelbyville, Inc.
111 West Side Square
Post Office Box 500
Shelbyville, Tennessee 37160
Fax: (615) 684-8256
Attn: Mr. William D. Hart
President and Chief Executive Officer
With a copy to: Baker, Worthington, Crossley,
Stansberry & Woolf
1700 Nashville City Center
Post Office Box 2866
Nashville, Tennessee 37219
Fax: (615) 726-0464
Attn: Steven J. Eisen, Esq.
or at such other address as shall be furnished in writing by any of the Parties
to the others by notice given as provided in this section 6.1.
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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 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.
ATTEST: UNION PLANTERS CORPORATION
/s/ J. F. Springfield By: /s/ Jackson W. Moore
- --------------------- ----------------------
J. F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: FNB ACQUISITION COMPANY, INC.
/s/ J.F. Springfield By: /s/ Jackson W. Moore
- -------------------- ----------------------
J. F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: FIRST NATIONAL BANCORP OF
SHELBYVILLE, INC.
/s/ Delores V. (Judy) Hornaday By: /s/ William D. Hart
- ------------------------------ ---------------------
Delores V. Hornaday William D. Hart
Its: Secretary Its: President and
Chief Executive
Officer
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 85
<PAGE> 213
APPENDIX C
Tennessee Business Corporation Act -- Dissenters' Rights
<PAGE> 214
CHAPTER 23
BUSINESS CORPORATIONS--DISSENTERS' RIGHTS
<TABLE>
<CAPTION>
SECTION. SECTION.
<S> <C>
PART 1--RIGHT TO DISSENT AND OBTAIN 48-23-203. Dissenters' notice.
PAYMENT FOR SHARES 48-23-204. Duty to demand payment.
48-23-101. Definitions. 48-23-205. Share restrictions.
48-23-102. Right to dissent. 48-23-206. Payment.
48-23-103. Dissent by nominees and 48-23-207. Failure to take action.
beneficial owners. 48-23-208. After-acquired shares.
48-23-209. Procedure if shareholder
dissatisfied with payment
or offer.
PART 2--PROCEDURE FOR EXERCISE OF
DISSENTERS' RIGHTS PART 3--JUDICIAL APPRAISAL OF SHARES
48-23-201. Notice of dissenters' 48-23-301. Court action.
rights. 48-23-302. Court costs and counsel fees.
48-23-202. Notice of intent to demand
payment.
</TABLE>
PART 1--RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
48-23-101. DEFINITIONS--(1) "Beneficial shareholder" means the person who is
a beneficial owner of shares held by a nominee as the record shareholder;
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under Section 48-23-102 and who exercises that right when and in the
manner required by Section Section 48-23-201--48-23-209;
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the corporate action
that give rise to the shareholder's right to dissent until the date of payment,
at the average auction rate paid on United States treasury bills with a
maturity of six (6) months (or the closest maturity thereto) as of the auction
date for such treasury bills closest to such effective date;
(6) "Record shareholder" means the person in whose name shares are registered
in the records of a corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee certificate on file with a corporation; and
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
[Acts 1986, ch. 887, Section 13.01]
48-23-102. RIGHT TO DISSENT.--(a) A shareholder is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
Appendix C - Page 1
<PAGE> 215
(A) If shareholder approval is required for the merger by Section
48-21-103 or the charter and the charter and the shareholder is entitled to
vote on the merger; or
(B) If the corporation is a subsidiary that is merged with its parent
under Section 48-21-104;
(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the shareholder is
entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one (1) year after the date of sale;
(4) An amendment of the charter that materially and adversely affects rights
in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share, if the fractional share is to be acquired for cash under
Section 48-106-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent
the charter, bylaws, or a resolution of the board of directors provides that
voting or nonvoting shareholders are entitled to dissent and obtain payment for
their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares under
this chapter may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the shareholder or
the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder may
dissent as to any shares of a security which, as of the date of the
effectuation of the transaction which would otherwise give rise to dissenters'
rights, is listed on an exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended, or is a "national market system security," as
defined in rules promulgated pursuant to the Securities Exchange Act of 1934,
as amended [Acts 1986, ch. 887, Section 13.02.]
48-23-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
Appendix C - Page 2
<PAGE> 216
are determined as if the shares as to which he dissents and his other shares
were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares of
any one (1) or more classes held on his behalf only if:
(1) He submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(2) He does so with respect to all shares of the same class of which he is
the beneficial shareholder or over which he has power to direct the vote.
[Acts 1986, ch. 887, Section 13.03.]
PART 2--PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
48-23-201. NOTICE OF DISSENTERS' RIGHTS.--(a) If proposed corporate action
creating dissenters' rights under Section 48-23-102 is submitted to a vote at
a shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under this chapter and be
accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under Section 48-23-102
is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in Section 48-23-203.
(c) A corporation's failure to give notice pursuant to this section will not
invalidate the corporate action. [Acts 1986, ch. 887, Section 13.20.]
48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT.--(a) If proposed corporate
action creating dissenters' rights under Section 48-23-102 is submitted to a
vote at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights:
(1) Must deliver to the corporation, before the vote is taken, written notice
of his intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed action. No such
written notice of intent to demand payment is required of any shareholder to
whom the corporation failed to provide the notice required by Section
48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for his shares under this chapter. [Acts 1986, ch. 887,
Section 13.21.]
48-23-203. DISSENTERS' NOTICE.--(a) If proposed corporate action creating
dissenters' rights under Section 48-23-102 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of Section 48-23-202.
(b) The dissenters' notice must be sent no later than ten (10) days after the
corporate action was authorized by the shareholders or effectuated, whichever
is the first to occur, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the principal terms of the
proposed corporate action and requires that the person asserting dissenters'
Appendix C - Page 3
<PAGE> 217
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than one (1) nor more than two (2) months after the
date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to Section
48-23-201 [Acts 1986, ch. 887 Section 13.22.]
48-23-204. DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a dissenters'
notice described in Section 48-23-203 must demand payment, certify whether he
acquired beneficial ownership of the shares before the date required to be set
forth in the dissenters' notice pursuant to Section 48-23-203 (b)(3), and
deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the effectuation of the proposed corporate
action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless
the corporation with which it was filed, or the surviving corporation, consents
thereto. [Acts 1986, ch. 887 Section 13.23.]
48-23-205. SHARE RESTRICTIONS.--(a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is effectuated or the restrictions
released under Section 48-23-207.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the effectuation of the proposed corporate action.
[Acts 1986, ch. 887 , Section 13.24.]
48-23-206. PAYMENT.--(a) Except as provided in Section 48-23-208, as soon
as the proposed corporate action is effectuated, or upon receipt of a payment
demand, whichever is later, the corporation shall pay each dissenter who
complied with Section 48-23-204 the amount the corporation estimates to be the
fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending not
more than sixteen (16) months before the date of payment, an income statement
for that year, a statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under Section
48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent a copy
of this chapter to the shareholder pursuant to Section 48-23-201 or Section
48-23-203. [Acts 1986, ch. 887, Section 13.25.]
Appendix C - Page 4
<PAGE> 218
48-23-207. FAILURE TO TAKE ACTION.--(a) If the corporation does not
effectuate the proposed action that gave rise to the dissenters' rights within
two (2) months after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under Section 48-23-203 and repeat the payment demand
procedure. [Acts 1986, ch. 887, Section 13.26.]
48-23-208. AFTER-ACQUIRED SHARES.--(a) A corporation may elect to withhold
payment required by Section 48-23-206 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders
of the principal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under subsection
(a), after effectuating the proposed corporate action, it shall estimate the
fair value of the shares, plus accrued interest, and shall pay this amount to
each dissenter who agrees to accept it in full satisfaction of his demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand payment under Section 48-23-209.
[Acts 1986, ch. 887, Section 13.27.]
48-23-209. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.--(a)
A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due, and demand payment of his
estimate (less any payment under Section 48-23-206), or reject the
corporation's offer under Section 48-23-208 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under Section 48-23-206 or
offered under Section 48-23-208 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Section 48-23-206 within two
(2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within two (2) months after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a)
within one (1) month after the corporation made or offered payment for his
shares. [Acts 1986, ch. 887, Section 13.28.]
PART 3--JUDICIAL APPRAISAL OF SHARES
48-23-201. COURT ACTION.--(a) If a demand for payment under Section
48-23-209 remains unsettled, the corporation shall commence a proceeding within
two (2) months after receiving the payment demand and petition the court to
determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the two-month period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.
Appendix C - Page 5
<PAGE> 219
(b) The corporation shall commence the proceeding in a court of record having
equity jurisdiction in the county where the corporation's principal office (or,
if none in this state, its registered office) is located. If the corporation
is a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one (1) or more
persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of his
shares, plus accrued interest, exceeds the amount paid by the corporation; or
(2) For the fair value, plus accrued interest, of his after-acquired shares
for which the corporation elected to withhold payment under Section 48-23-208.
[Acts 1986, ch. 887, Section 13.30.]
48-23-302. COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under Section 48-23-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under Section 48-23-209.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the courts find equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of Section Section 48-23-201--48-23-209; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court
may award to these counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited. [Acts 1986, ch. 887, 13.31.]
Appendix C - Page 6
<PAGE> 220
PROXY
FIRST NATIONAL BANCORP OF SHELBYVILLE, INC.
No. of Shares _____
111 WEST SIDE SQUARE (P.O. BOX 500)
SHELBYVILLE, TENNESSEE 37160
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints D. B. Nelson, Jr. and John T. Bobo or
either of them acting alone as proxies, each with the power to appoint such
person's substitute, and hereby authorizes them to vote, as designated below,
all shares of common stock of First National Bancorp of Shelbyville, Inc. held
of record by the undersigned on January 19, 1994, at the Special Meeting of
Shareholders to be held on February 18, 1994 or at any adjournments or
postponements thereof.
1. APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN UNION
PLANTERS CORPORATION, FNB ACQUISITION COMPANY, INC., FIRST NATIONAL
BANCORP OF SHELBYVILLE, INC., AND FIRST NATIONAL BANK OF SHELBYVILLE
DATED AS OF SEPTEMBER 21, 1993, ALONG WITH THE PLAN OF MERGER ANNEXED
THERETO AS EXHIBIT A.
FOR APPROVAL OF REORGANIZATION AGREEMENT AND THE _____
PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A
AGAINST APPROVAL OF REORGANIZATION AGREEMENT AND _____
THE PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
(Continued on other side)
<PAGE> 221
(Continued from other side)
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made, this
proxy will be voted FOR approval of the Reorganization Agreement and the Plan
of Merger.
Dated: __________________________ , 1994
Signature _____________________________
Signature _____________________________
(if held jointly)
Please sign exactly as name appears to
left. When shares are held by
joint tenants, both must sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign full corporate
name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE> 222
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20 . INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Charter of the Registrant provides as follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the Corporation
may indemnify or purchase and maintain insurance to indemnify any of its
directors, officers, employees or agents and any persons who may serve at
the request of the Corporation as directors, officers, employees, trustees
or agents of any other corporation, firm, association, national banking
association, state-chartered bank, trust company, business trust,
organization or any other type of entity whether or not the Corporation
shall have any ownership interest in such entity. Such indemnification(s)
may be provided for in the Bylaws, or by resolution of the Board of
Directors or by appropriate contract with the person involved.
Article V, INDEMNIFICATION, of the Registrant's Bylaws provides as follows:
The Corporation does hereby indemnify its directors and officers to
the fullest extent permitted by the laws of the State of Tennessee and by
ARTICLE TWELFTH of its Charter. The Corporation may indemnify any other
person to the extent permitted by the Charter and by applicable law.
Indemnification of corporate directors and officers is governed by
Sections 48-18-501 through 48-18-509 of the Tennessee Business Corporation Act
(the "Act"). Under the Act, a person may be indemnified by a corporation
against judgments, fines, amounts paid in settlement and reasonable expenses
(including attorneys' fees) actually and necessarily incurred by him in
connection with any threatened or pending suit or proceeding or any appeal
thereof (other than an action by or in the right of the corporation), whether
civil or criminal, by reason of the fact that he is or was a director or
officer of the corporation or is or was serving at the request of the
corporation as a director or officer, employee or agent of another corporation
of any type or kind, domestic or foreign, if such director or officer acted in
good faith for a purpose which he reasonably believed to be in the best
interest of the corporation and, in criminal actions or proceedings only, in
addition, had no reasonable cause to believe that his conduct was unlawful. A
Tennessee corporation may indemnify a director or officer thereof in a suit by
or in the right of the corporation against amounts paid in settlement and
reasonable expenses, including attorneys' fees, actually and necessarily
incurred as a result of such suit unless such director or officer did not act
in good faith or with the degree of diligence, care and skill which ordinarily
prudent men exercise under similar circumstances and in like positions.
II-1
<PAGE> 223
A person who has been wholly successful, on the merits or otherwise, in
the defense of any of the foregoing types of suits or proceedings is entitled
to indemnification for the foregoing amounts. A person who has not been wholly
successful in any such suit or proceeding may be indemnified only upon the
order of a court or a finding that the director or officer met the required
statutory standard of conduct by (i) a majority vote of a disinterested quorum
of the board of Directors, (ii) the Board of Directors based upon the written
opinion of independent legal counsel to such effect, or (iii) a vote of the
shareholders.
ITEM 21. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
2 -- Agreement and Plan of Reorganization, dated September
21, 1993, by and between Union Planters Corporation,
FNB Acquisition Company, Inc., First National Bancorp
of Shelbyville, Inc. and First National Bank of
Shelbyville, along with the Plan of Merger annexed
thereto as Exhibit A (included as Appendix B to the
Prospectus)
5 -- Opinion of Gary A. Simanson, Associate General
Counsel to Union Planters Corporation, regarding
legality of Common Stock, $5.00 par value per share,
of Union Planters Corporation
23(a) -- Consent of Gary A. Simanson, Esq. (included in Exhibit 5)
23(b) -- Consent of Price Waterhouse
23(c) -- Consent of Horne CPA Group
23(d) -- Consent of Williams and Jerrolds, P.C.
23(e) -- Consent of Heathcott and Mullaly
23(f) -- Consent of KPMG Peat Marwick
23(g) -- Consent of Baird, Kurtz & Dobson
23(h) -- Consent of Coopers & Lybrand
23(i) -- Consent of Deloitte & Touche
23(j) -- Consent of Winnett Associates
23(k) -- Consent of KPMG Peat Marwick
23(l) -- Consent of Frost & Company
24 -- Power of Attorney (included in signature pages)
II-2
<PAGE> 224
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(2) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as a part of a registration in reliance upon Rule 430A
and contained in the form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(3) That for purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(4) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel, the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction,
the question whether such indemnification by its is public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
(5) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11, or 13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail
or other equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
II-3
<PAGE> 225
(6) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-4
<PAGE> 226
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to the Registrant has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Memphis, State of Tennessee, on the 12th day of
January 1994.
DATE: January 12, 1994
UNION PLANTERS CORPORATION
By: /s/ Benjamin W. Rawlins, Jr.
Benjamin W. Rawlins, Jr.
Chairman of the Board
We, the undersigned directors and officers of Union Planters
Corporation do hereby constitute and appoint James F. Springfield and M. Kirk
Walters, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for us and in our name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, and we do hereby ratify and confirm all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
/s/ Benjamin W. Rawlins, Jr.
Benjamin W. Rawlins, Jr. Chairman of the Board, Chief
Executive Officer, Director
(Principal Executive Officer) January 12, 1994
/s/ John W. Parker
John W. Parker Executive Vice President and
Chief Financial Officer
(Principal Financial Officer) January 12, 1994
/s/ M. Kirk Walters
M. Kirk Walters Senior Vice President,
Treasurer and
Chief Accounting Officer January 12, 1994
/s/ Albert M. Austin
Albert M. Austin Director January 12, 1994
Marvin E. Bruce Director January _, 1994
George W. Bryan Director January _, 1994
/s/ Robert B. Colbert, Jr.
Robert B. Colbert, Jr. Director January 12, 1994
</TABLE>
II-5
<PAGE> 227
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Hanford F. Farrell, Jr. Director January _, 1994
/s/ C. J. Lowrance, III
C. J. Lowrance, III Director January 12, 1994
R. Brad Martin Director January _, 1994
/s/ Jackson W. Moore
Jackson W. Moore President and Director January 12, 1994
/s/ Stanley D. Overton
Stanley D. Overton Director January 12, 1994
/s/ C. Penn Owen, Jr.
C. Penn Owen, Jr. Director January 12, 1994
/s/ V. Lane Rawlins
V. Lane Rawlins Director January 12, 1994
/s/ J. Armistead Smith
J. Armistead Smith Vice Chairman and Director January 12, 1994
/s/ Leslie M. Stratton, III
Leslie M. Stratton, III Director January 12, 1994
Mike P. Sturdivant Director January _, 1994
/s/ Richard A. Trippeer, Jr.
Richard A. Trippeer, Jr. Director January 12, 1994
</TABLE>
II-6
<PAGE> 1
( LOGO )
Union Planters Corporation
January 12, 1994
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38088
Re: 1,050,000 shares of the Common Stock, $5.00 par value per share, of
Union Planters Corporation ("UPC")
Gentlemen:
The undersigned has participated in the preparation of a registration statement
on Form S-4 (the "Registration Statement") for filing with the Securities and
Exchange Commission in respect to not more than 1,050,000 shares of UPC's
Common Stock, (the "Shares") which may be issued by UPC pursuant to an
Agreement and Plan of Reorganization dated as of September 21, 1993, by and
between UPC, FNB Acquisition Company, Inc., First National Bancorp of
Shelbyville, Inc. and First National Bank of Shelbyville (the "Agreement").
For purposes of rendering the opinion expressed herein, the undersigned has
examined UPC's corporate charter and all amendments thereto; UPC's by-laws and
amendments thereto; the Agreement and such of UPC's corporate records as the
undersigned has deemed necessary and material to rendering the undersigned's
opinion. The undersigned has relied upon certificates of public officials and
representations of UPC officials, and has assumed that all documents examined
by the undersigned as originals are authentic, that all documents submitted to
the undersigned as photocopies are exact duplicates of original documents, and
that all signatures on all documents are genuine.
Further, the undersigned is familiar with and has supervised all corporate
action taken in connection with the authorization of the sale of the subject
securities.
Based upon and subject to the foregoing and subsequent assumptions,
qualifications and exceptions, it is the undersigned's opinion that:
1. UPC is a duly organized and validly existing corporation in good
standing under the laws of the State of Tennessee and has all requisite power
and authority to issue, sell and deliver the subject securities, and to carry
on its business and own its property;
<PAGE> 2
Union Planters Corporation
January 12, 1994
Page 2
2. The Shares have been duly authorized and when issued by UPC in
accordance with the Agreement, the Shares will be fully paid and nonassessable.
The opinion expressed above is limited by the following assumptions,
qualifications and exceptions.
(a) The undersigned is licensed to practice law only in the State of
Tennessee and the State of New York, and expresses no opinion with respect to
the effect of any laws other than those of the State of Tennessee and the
United States of America.
(b) The opinion stated herein is based upon statutes, regulations, rules,
court decisions and other authorities existing and effective as of the date of
this opinion, and the undersigned undertakes no responsibility to update or
supplement said opinion in the event of or in response to any subsequent
changes in the law or said authorities, or upon the occurrence after the date
hereof of events or circumstances that, if occurring prior to the date hereof,
might have resulted in a different opinion.
(c) This opinion has been rendered solely for the benefit of Union
Planters Corporation and no other person or entity shall be entitled to rely
hereon without the express written consent of the undersigned.
(d) This opinion is limited to the legal matters expressly set forth
herein, and no opinion is to be implied or inferred beyond the legal matters
expressly so addressed.
The undersigned hereby consents to the undersigned being named as a party
rendering a legal opinion under the caption "Validity of UPC Common Stock" in
the Prospectus constituting part of the Registration Statement and to the
filing of this opinion with the Securities and Exchange Commission as well as
all state regulatory bodies and jurisdictions where qualification is sought for
the sale of the subject securities.
The undersigned is an officer of and receives compensation from UPC and is
therefore not independent from UPC.
Very truly yours,
UNION PLANTERS CORPORATION
By: /s/ Gary A. Simanson
Gary A. Simanson
Associate General Counsel
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Union Planters
Corporation of our report dated January 14, 1993, which appears on page 30 of
Union Planters Corporation's 1992 Annual Report to Shareholders, which is
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1992. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PRICE WATERHOUSE
Memphis, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Union Planters Corporation:
We hereby consent to the incorporation by reference in the January 12, 1994
Registration Statement on Form S-4 of Union Planters Corporation (UPC) of our
report, dated February 11, 1993, relating to the combined financial statements
of Security Trust Federal Savings and Loan Association and SaveTrust Federal
Savings Bank, which is included in UPC's Form 10K for the year ended December
31, 1992.
We also consent to the reference to Horne CPA Group under the heading "Experts"
in such Registration Statement.
/s/ Horne CPA Group
Laurel, Mississippi
January 12, 1994
<PAGE> 1
Exhibit 23(d)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-4 of Union Planters
Corporation of our report dated February 26, 1993 (except for Note 15, as to
which the date is May 28, 1993) relating to the consolidated financial
statements of Central State Bancorp Inc., which appears in the
Current Report on Form 8-K of Union Planters Corporation dated September 27,
1993. We also consent to the reference to our firm under the caption
"Experts" in the Prospectus, which is a part of this Registration Statement.
/S/ WILLIAMS AND JERROLDS, P.C.
Savannah, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-4 of Union Planters Corporation of our report dated
February 16, 1993 on the consolidated financial statements of Garrett
Bancshares, Inc. appearing in Union Planters Corporation's current report on
Form 8K dated September 27, 1993. We also consent to the reference to us under
the heading "Experts" in such Registration Statement.
/s/ Heathcott & Mullaly
Brentwood, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(f)
ACCOUNTANTS' CONSENT
We consent to incorporation by reference in the registration statement on Form
S-4 of Union Planters Corporation of our report dated March 19, 1993, relating
to the consolidated balance sheets of First Federal Savings Bank and subsidiary
as of December 31, 1992 and 1991, and the related consolidated statements of
operations, retained earnings, and cash flows for each of the years in the
three-year period ended December 31, 1992, which report appears in the Current
Report on Form 8-K dated September 27, 1993, of Union Planters Corporation, and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick
Nashville, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(g)
CONSENT OF BAIRD, KURTZ & DOBSON
INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Form
S-4 Registration Statement of Union Planters Corporation to be filed with the
Securities and Exchange Commission on or about January 12, 1994, of our report
dated February 18, 1993 with respect to the consolidated financial statements
of Mid-South Bancorp, Inc. appearing as Exhibit 28(g) in the Form 8-K Current
Report of Union Planters Corporation dated September 27, 1993. We also consent
to the reference to us under the heading "Experts" in such registration
statement.
/s/ BAIRD, KURTZ & DOBSON
Bowling Green, Kentucky
January 12, 1994
<PAGE> 1
Exhibit 23(h)
Coopers
& Lybrand
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement of Union Planters
Corporation on Form S-4 of our report dated January 29, 1993, on our audits of
the financial statements of Bank of East Tennessee. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand
Knoxville, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(i)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Union Planters Corporation on Form S-4 of our report dated February 12, 1993,
appearing in the Annual Report on Form 10-K of Tennessee Bancorp, Inc. for the
year ended December 31, 1992 and to the reference to us under the heading
"Experts" in the Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE
Nashville, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(j)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-4 of Union Planters
Corporation of our report dated January 22, 1993 (except Note Q, as to which
the date is September 21, 1993) relating to the consolidated financial
statements of First National Bancorp of Shelbyville, Inc., which appears in the
Current Report on Form 8-K of Union Planters Corporation dated October 14,
1993. We also consent to the reference to our firm under the caption "Experts"
in the Prospectus, which is a part of this Registration Statement.
/s/ WINNETT ASSOCIATES
Shelbyville, Tennessee
Janaury 12, 1994
<PAGE> 1
Exhibit 23(k)
ACCOUNTANTS' CONSENT
The Board of Directors
Liberty Bancshares, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-4 of Union Planters Corporation of our report dated January 25, 1993,
relating to the consolidated balance sheets of Liberty Bancshares, Inc. and
subsidiary as of December 31, 1992 and 1991, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1992, which report appears in
the Current Report on Form 8-K dated January 10, 1994, of Union Planters
Corporation, and to the reference to our firm under the heading "Experts" in
the prospectus.
/s/ KPMG Peat Marwick
Nashville, Tennessee
January 12, 1994
<PAGE> 1
Exhibit 23(l)
Consent of Independent Public Accountants
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-4 of Union Planters Corporation, and in the
Prospectus required in connection therewith, of our report dated February 19,
1993, relating to the consolidated financial statements of Clin-Ark Bankshares,
Inc. as of December 31, 1992, and for the year then ended, which report appears
on page 1 of Exhibit 99(d) in the Current Report on Form 8-K dated January 10,
1994, of Union Planters Corporation.
/s/ Frost & Company
Certified Public Accountants
Little Rock, Arkansas
January 12, 1994
