<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 26, 1994
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNION PLANTERS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
TENNESSEE 6712 62-0859007
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
</TABLE>
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:
<TABLE>
<S> <C>
MARION S. BOYD, ESQ. STEVEN J. EISEN, ESQ.
McDonnell Boyd Baker, Worthington, Crossley,
The Crescent Center & Stansberry
6075 Poplar Avenue, Suite 650 1700 Nashville City Center
Memphis, Tennessee 38119 Post Office Box 2866
Nashville, Tennessee 37219
</TABLE>
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: / /
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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
---------- ---------- ----------- -------- ----------------
<S> <C> <C> <C> <C>
Common Stock (par value
$5.00 per share) including
rights to purchase shares
of Series A Preferred Stock 202,000 $22.00 $4,444,000 $1,532.42
</TABLE>
(1) Estimated based on an assumed conversion price range.
(2) Determined pursuant to Rule 457(f).
<PAGE> 3
UNION PLANTERS CORPORATION
CROSS REFERENCE OF ITEMS IN FORM S-4 TO PROSPECTUS
<TABLE>
<CAPTION>
ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
- --------------------------- ------------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
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 *
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
- --------------------------- ------------------------------
<S> <C>
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, COMMERCIAL BANCORP, INC. (CBI), MANAGEMENT'S
DISCUSSION AND ANALYSIS OF CONDITION AND RESULTS OF OPERATIONS and CBI
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 *
</TABLE>
* Omitted because the answer is negative or the item is inapplicable.
<PAGE> 5
COMMERCIAL BANCORP, INC.
224 SEVENTH STREET (P.O. BOX 297)
OBION, TENNESSEE 38240
August 31, 1994
TO THE SHAREHOLDERS OF COMMERCIAL BANCORP, INC.
You are cordially invited to attend a Special Meeting of Shareholders
of Commercial Bancorp, Inc. ("CBI") to be held in the main lobby of the main
office of The Commercial Bank, 224 Seventh Street, Obion, Tennessee 38240, at
10:00 a.m. CDT, on Thursday, October 6, 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 June 14, 1994 (the "Reorganization Agreement"), along with the Plan of
Merger annexed thereto as Exhibit A, pursuant to which CBI Acquisition Company,
Inc., a newly-organized, wholly-owned subsidiary of Union Planters Corporation
would be merged with and into CBI which would survive the Merger. The Boards
of Directors of CBI and Union Planters Corporation have approved the
Reorganization Agreement and the Plan of Merger and the merger contemplated
thereby.
In the merger, shareholders of CBI will receive shares of common
stock, $5.00 par value per share (the "UPC Common Stock"), of Union Planters
Corporation for each share of CBI's common stock, $10.00 par value per share
outstanding immediately prior to the effective time of the merger. 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 CBI was approximately $260.44 per share of CBI common stock
(subject to adjustment as set forth in the Reorganization Agreement) based on
an exchange ratio of 9.26 shares of UPC Common Stock for each share of CBI
common stock and a current market price per share of $28.125 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 CBI'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> 6
The Board of Directors of CBI has considered more than one proposal to
sell CBI and has determined that the proposal outlined in the Reorganization
Agreement is the best plan for the continuation of The Commercial Bank as a
locally managed bank, while at the same time maximizing the financial interests
of the shareholders of CBI. Accordingly the Board of Directors of CBI
recommends that you vote FOR the proposal being considered.
Sincerely,
Commercial Bancorp, Inc.
/s/ Joel C. Pipkin
-------------------------
Joel C. Pipkin
President
<PAGE> 7
COMMERCIAL BANCORP, INC.
224 SEVENTH STREET (P.O. BOX 297)
OBION, TENNESSEE 38240
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 6, 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of
Commercial Bancorp, Inc. ("CBI") has been called by the Board of Directors of
CBI and will be held in the main lobby of the main office of The Commercial
Bank, 224 Seventh Street, Obion, Tennessee 38240, on Thursday, October 6, 1994,
at 10:00 a.m. CDT for the following purposes:
1. To consider and vote upon a proposal to approve an
Agreement and Plan of Reorganization dated as of June 14, 1994 (the
"Reorganization Agreement"), by and between Union Planters Corporation
("UPC"), a Tennessee-chartered bank holding company; CBI Acquisition
Company, Inc. ("Interim"), a newly-organized, wholly-owned subsidiary
of UPC; Commercial Bancorp, Inc. ("CBI"), a Tennessee-chartered bank
holding company; and The Commercial Bank ("CBO"), a state banking
corporation and a wholly-owned subsidiary of CBI, 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 CBI, whereupon the holders of CBI'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 CBI 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 CBI 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> 8
Only holders of CBI common stock of record at the close of business on
August 29, 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
/s/ Joel C. Pipkin
-----------------------------------
Joel C. Pipkin
President
Obion, Tennessee
Dated: August 31, 1994
THE BOARD OF DIRECTORS OF COMMERCIAL BANCORP, INC. BY UNANIMOUS VOTE RECOMMENDS
THAT THE HOLDERS OF COMMERCIAL BANCORP, INC. COMMON STOCK VOTE TO APPROVE THE
REORGANIZATION AGREEMENT AND THE PLAN OF MERGER.
<PAGE> 9
PROSPECTUS
UNION PLANTERS CORPORATION
COMMON STOCK
PROXY STATEMENT
COMMERCIAL BANCORP, INC.
SPECIAL MEETING TO BE HELD OCTOBER 6, 1994
This Prospectus and Proxy Statement (the "Prospectus") relates to up
to 202,000 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 Commercial Bancorp, Inc. ("CBI"), a Tennessee-chartered bank
holding company, in a merger (the "Merger") of CBI Acquisition Company, Inc., a
newly-organized, wholly-owned subsidiary of UPC ("Interim"), with and into CBI,
pursuant to an Agreement and Plan of Reorganization dated as of June 14, 1994,
by and between UPC, Interim, CBI, and The Commercial Bank ("CBO"), a
wholly-owned Tennessee banking corporation of CBI (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 CBI common stock, $10.00 par value per share (the "CBI 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 August 22, 1994, was $25.25 per
share. If the Current Market Price Per Share of UPC Common Stock were $25.25
on the Closing Date, the value of the UPC Common Stock to be received by the
shareholders of CBI would be approximately $233.81 per share of CBI common
stock (subject to adjustment as set forth in the Reorganization Agreement)
based on an exchange ratio of 9.26 shares of UPC Common Stock for each share of
CBI common stock.
This Prospectus also constitutes a proxy statement and is furnished to
holders of record of CBI Common Stock in connection with the solicitation of
proxies by the CBI Board of Directors (the "CBI Board") for use at a Special
Meeting of CBI shareholders to be held at 10:00 a.m. CDT, on Thursday, October
6, 1994, in the main lobby of the main office of CBO, 224 Seventh Street (P.O.
Box 297), Obion, Obion County, Tennessee, 38240 and at any adjournments or
postponements thereof (the "Special Meeting"). At the Special Meeting, holders
of CBI Common Stock of record as of August 29, 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 CBI
Common Stock (except for those shares held by any CBI 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 CBI,
with CBI surviving the Merger and continuing to operate under the name of
Commercial Bancorp, Inc., whereupon CBI would become a wholly-owned subsidiary
of UPC.
<PAGE> 10
All information contained in this Prospectus and Proxy Statement
pertaining to UPC and its subsidiaries has been supplied by UPC, and all
information pertaining to CBI or CBO has been supplied by CBI. This Prospectus
and Proxy Statement and the accompanying proxy appointment cards are first
being mailed to shareholders of CBI on or about August 31, 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 AUGUST 31, 1994
<PAGE> 11
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-________) on Form S-4 (together
with any amendments thereto, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act") with respect to the shares of
UPC Common Stock to be issued pursuant to the Reorganization Agreement. This
Prospectus does not contain all of the information set forth in the
Registration Statement and the Exhibits thereto. Certain items were omitted in
accordance with the rules and regulations of the Commission. For further
information regarding UPC and the UPC Common Stock offered by this Prospectus,
reference is made to the complete Registration Statement, including all
amendments thereto and the schedules and exhibits filed as a part thereof.
Statements contained herein concerning provisions of documents are necessarily
summaries of the documents and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by UPC with the Commission
(Commission File Number 0-6919) pursuant to the Exchange Act are hereby
incorporated by reference in this Prospectus:
1. UPC's Annual Report on Form 10-K for the year ended
December 31, 1993;
2. UPC's Quarterly Reports on Form 10-Q dated March 31,
1994 and June 30, 1994;
3. UPC's Current Report on Form 8-K dated January 19,
1989, filed on February 1, 1989, in connection with
UPC's designation and authorization of its Series A
Preferred Stock;
4. UPC's Current Reports on Form 8-K dated February 8,
1994, April 14, 1994, May 18, 1994, July 1, 1994,
July 26, 1994, August 18, 1994 and August 19, 1994;
5. 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.
UPC's Annual Report on Form 10-K for the year ended December 31, 1993
incorporates by reference specific portions of UPC's Annual Report to
Shareholders for that year ("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
ii
<PAGE> 12
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> 13
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 CBI SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
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PAGE
----
Available Information (ii)
Incorporation of Certain Documents by Reference (ii)
Summary 1
Parties to the Merger 1
Special Meeting of CBI Shareholders 3
Votes Required; Record Date 3
Terms of the Merger 3
Effective Date 4
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 6
Market Prices of Common Stock 6
Selected Consolidated Financial Data 7
Recent Developments Affecting UPC 12
Equivalent and Pro Forma Per Share Data 16
Pro Forma Condensed Financial Information 18
The Special Meeting 24
Time and Place of Special Meeting; Solicitation of Proxies 24
Votes Required 25
Shareholders' Dissenters' Rights 25
Recommendation 27
The Merger 27
Background of and Reasons for the Merger 27
Terms of the Merger 29
Effective Date and Effective Time of the Merger 29
Surrender of Certificates 29
Conditions to Consummation of the Merger 30
Regulatory Approvals 32
Conduct of Business Pending the Merger 32
Payment of Dividends 33
Waiver and Amendment; Termination 33
Management after the Merger 34
</TABLE>
iv
<PAGE> 14
<TABLE>
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PAGE
----
CBI Executive Compensation 36
Interests of Certain Persons in the Merger 37
Certain Federal Income Tax Consequences 37
Accounting Treatment 37
Expenses 38
Resales of UPC Common Stock 38
Certain Regulatory Considerations 38
General 38
Capital Adequacy 39
Prompt Corrective Action 40
Dividend Restrictions 41
Support of Subsidiary Banks 42
Transactions with Affiliates 42
FDIC Insurance Assessment 43
Recent Banking Legislation 43
Depositor Preference 44
Description of UPC Common and Preferred Stock 45
UPC Common Stock 45
Preferred Stock of UPC 46
Certain Provisions That May Have an Anti-Takeover Effect 47
Effect of Merger on Rights of Shareholders 49
Removal of Directors 49
Required Shareholder Votes 49
Election of Directors 49
Commercial Bancorp, Inc. 50
Property 50
Competition 50
Deposits 50
Legal Proceedings 50
Market Price of CBI Common Stock 51
Certain Beneficial Holders of CBI Common Stock 51
Holdings of CBI Common Stock by CBI Management 52
Commercial Bancorp, Inc. Management's Discussion and Analysis
of Financial Condition
and Results of Operation 53
Validity of UPC Common Stock 65
Experts 65
Index to Appendices
Appendix A--Commercial Bancorp, 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> 15
SUMMARY
The following summary is not intended to be a complete description of
all material facts regarding UPC, CBI 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 holding
company and savings and loan holding company headquartered in Memphis,
Tennessee. At June 30, 1994, UPC had total consolidated assets of approximately
$7.0 billion, loans of approximately $3.3 billion, deposits of approximately
$5.6 billion and shareholders' equity of approximately $517 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 June 30, 1994, UPC's ratio of
nonperforming loans to total loans was .55% and nonperforming assets to loans
and foreclosed property was .65%. UPC's allowance for losses on loans to total
loans at such date was 2.57% and UPC's allowance for losses on loans to
nonperforming loans was 470.21%. Also at such date, UPC's Tier 1 risk-based
capital, total risk-based capital and leverage ratios were 14.56%, 18.02% and
7.18%, respectively.
UPC conducts its business activities through its principal bank
subsidiary, Union Planters National Bank ("UPNB"), four Tennessee regional bank
subsidiaries (the "Tennessee Regional Banks"), and through 39 community banks
and four savings and loan subsidiaries (collectively, the "Community Banks")
located in Tennessee, Arkansas, Mississippi, Alabama and Kentucky. UPNB was
founded in 1869 and operates 35 branches throughout West Tennessee. The
Regional Banks resulted from a corporate division of UPNB effective on July 1,
1994 as part of UPC's effort to emphasize community management. Those
subsidiaries operate 30, 13, five and 12 branches in Middle Tennessee, East
Tennessee, Chattanooga, and Jackson, Tennessee, respectively. At June 30,
1994, UPNB had total consolidated assets of approximately $3.7 billion (total
assets of approximately $2.4 billion after the corporate division effective
July 1, 1994). For information with respect to the split off of the Regional
Banks and recent changes to UPNB, see "--Recent Developments Affecting UPC."
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.
In addition to UPNB and the Regional Banks, UPC, through the Community
Banks, operates 155 branches and had at June 30, 1994, total combined assets of
approximately $3.4 billion ($2.2 billion in Tennessee, $503 million in
Mississippi, $504 million in Arkansas, $109 million in Kentucky, and $27
million in Alabama). All of the Community Banks have been acquired by UPC
since 1986, generally are 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 39 Community Banks, 21 have the largest deposit
share and nine have the second largest deposit share in their respective
markets based on June 30, 1993 information, providing UPC with a strong
competitive position in those markets.
UPC believes that the Community Banks provide additional
diversification of the funding and revenue sources for UPC, and UPC intends to
continue expansion of the Community Banks/Regional Banks. UPC believes that
its strategy of permitting the Community Banks to retain their names and boards
of directors as
<PAGE> 16
well as substantial autonomy in their day-to-day operations enables UPC to be
an attractive acquirer of community banking organizations and permits such
institutions to continue to grow within their markets without disruption.
UPC controls risk through centralized loan review and audit functions as well
as close monitoring of the financial performance of each Community Bank. UPC
also implements its asset and liability management strategy on a consolidated
basis and effects all trades for the investment portfolios of the Community
Banks. UPC seeks economies in the Community Banks 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 in the major markets of Tennessee and
through the acquisition of community banks that have a significant local market
share, primarily in communities located in Tennessee and contiguous states.
Future acquisitions may entail the payment by UPC of consideration in excess of
the book value of the underlying assets being acquired, may result in the
issuance of additional shares of UPC capital stock or the incurrence of
additional indebtedness by UPC, and could have a dilutive effect on the per
share earnings or book value of the UPC Common Stock. For information with
respect to acquisitions that have been consummated recently or that are
currently pending, see "-- Recent Developments Affecting UPC."
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 Proxy Statement/Prospectus. See "Incorporation of Certain
Documents by Reference."
CBI. Commercial Bancorp, Inc. ("CBI") is a bank holding company
chartered under the laws of the State of Tennessee whose main office is located
at 224 Seventh Street (P.O. Box 297), Obion, Tennessee 38240 (telephone (901)
536-6236). CBI's principal subsidiary is The Commercial Bank ("CBO"), a state
banking corporation. At June 30, 1994, CBO was rendering banking services,
consisting primarily of traditional deposit and lending services, from two
banking offices located in Obion County, Tennessee. As of June 30, 1994, CBI's
total assets were approximately $29 million, its loans were approximately $10
million and its deposits were approximately $25 million.
2
<PAGE> 17
Interim. CBI 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 CBI, with CBI surviving the Merger as a wholly-owned subsidiary of UPC and
continuing to operate under the name Commercial Bancorp, Inc.
SPECIAL MEETING OF CBI SHAREHOLDERS
A Special Meeting (the "Special Meeting") of the CBI shareholders will
be held on Thursday, October 6, 1994, at 10:00 a.m. CDT, in the lobby of the
main office of The Commercial Bank, 224 Seventh Street (P.O. Box 297), Obion,
Tennessee 38240, 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 CBI Common Stock of record at the close of business on
August 29, 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 CBI 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 August 29, 1994, there were 20,000 shares of CBI
Common Stock entitled to vote.
The directors and executive officers of CBI (the "Management Group")
held, as of the Record Date, 3,418 shares, or 17.1% of the outstanding shares
of CBI Common Stock. CBI 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 CBI Common Stock which
was outstanding immediately prior to the Effective Time of the Merger (except
for shares with respect to which dissenters' rights had 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.
3
<PAGE> 18
THE EFFECTIVE DATE
The Merger will become effective at the time 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 satisfaction or waiver of all conditions to closing specified 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 November 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 CBI 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 CBI (the "CBI Board") believes the Merger is
fair to, and in the best interests of, CBI and its shareholders and recommends
that CBI's shareholders vote FOR approval of the Reorganization Agreement and
the Plan of Merger annexed thereto as Exhibit A. The CBI Board believes that
the Merger will provide significant value to all CBI shareholders and also
enable them to participate in opportunities for investment growth that the CBI
Board believes the Merger makes possible. The Merger will give CBI access to a
substantially greater base of capital, affording CBI an opportunity to expand
services beyond those presently provided. Moreover, affiliation with UPC will
allow CBI to compete more strongly in the West Tennessee marketplace and will
provide CBI 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 CBI shareholders, receipt of the necessary
regulatory approvals and satisfaction of customary contractual closing
conditions.
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Reorganization Agreement include the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and the Tennessee Department of Financial Institutions (the
"Tennessee Department"). Applications for such approvals have been submitted
to each of the respective regulatory agencies. As of the date of this
Prospectus, approvals have not been received from either the Tennessee
Department or 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 Interim immediately prior thereto shall become the
directors and officers of CBI as the surviving corporation and will hold office
as provided in the Charter and Bylaws of CBI unless and until their successors
shall have been duly elected or appointed and qualified. The persons serving
as officers and directors of CBO immediately prior to the Effective Time of the
Merger shall continue to serve as the officers and directors of CBO as a wholly
owned subsidiary of UPC unless and until their service shall expire or
terminate
4
<PAGE> 19
and their successors have been duly elected or appointed and qualified. See
"The Merger--Management After the Merger."
SHAREHOLDERS' DISSENTERS' RIGHTS
Under the Act, holders of CBI 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 a CBI shareholder from exercising his or her dissenters' rights).
Tennessee law defines "fair value" to mean the value, determined by appraisal
pursuant to the Act, of the shares as of the moment immediately prior to the
effectuation of the Merger, excluding any appreciation or depreciation in
anticipation of the Merger. In order for a holder of CBI Common Stock to
perfect dissenters' rights, such holder must not vote his or her shares of CBI
Common Stock FOR approval of the Reorganization Agreement and the Plan of
Merger and must deliver to CBI, before the vote on the Merger is taken a
written notice of the dissenter's intent to demand payment for his or her
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, in and of itself,
constitute such written notice. Certain additional procedures must be followed
in order for a CBI 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, CBI shareholders will realize and recognize gain
or loss (if any) only to the extent of any cash received as consideration for
their CBI Common Stock. CBI shareholders may recognize gain or loss by reason
of receiving cash in lieu of a fractional share or by receiving cash incidental
to the exercise of Dissenters' Rights. See "The Merger--Certain Federal Income
Tax Consequences."
5
<PAGE> 20
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.
MARKET PRICES OF COMMON STOCK
UPC Common Stoc. 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
PRICE RANGE DIVIDENDS
----------- DECLARED
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1994
First Quarter $26.25 $23.13 $.21
Second Quarter 28.75 24.75 .21
Third Quarter through August 22,
1994 25.38 23.50 .23
----
Total $.65
====
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
August 22, 1994, which was the last practicable date prior to the mailing of
this Proxy Statement/Prospectus, was $25.25 per share.
CBI Common Stock. The CBI Common Stock is not listed for trading on a
national securities exchange or otherwise publicly traded in any established
securities market.
6
<PAGE> 21
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for CBI and UPC on an historical basis,
selected unaudited consolidated financial data. The information for CBI has
been derived from financial statements, including the financial statements of
CBI 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, consisting only
of normal recurring adjustments, necessary to arrive at a fair statement of
results of operations of UPC and CBI, have been included.
7
<PAGE> 22
COMMERCIAL BANCORP, INC., SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,(1) YEARS ENDED DECEMBER 31,
----------- ------------------------------
1994 1993 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 551,181 $ 591,775 $ 1,158,411 $ 1,149,783
Provision for loan losses - - - 22,000
Noninterest income 50,593 38,872 89,045 106,645
Noninterest expense 350,020 346,793 700,824 694,187
Income before taxes 251,754 283,854 546,632 540,241
Income tax expense 88,913 97,105 186,214 188,715
Net income 162,841 186,749 360,418 351,526
PER COMMON SHARE DATA
Net income $ 8.14 $ 9.34 $ 18.02 $ 17.58
Cash dividends $ 2.25 $ 1.75 $ 4.00 $ 3.35
Book value $ 191.39 $ 178.53 $ 189.23 $ 170.94
Average shares 20,000 20,000 20,000 20,000
BALANCE SHEET DATA (at period end)
Investment securities 16,040,507 15,072,251 15,037,877 14,555,573
Loans, net of unearned
income 10,449,950 10,073,477 10,565,475 10,606,401
Total assets 28,731,015 27,951,719 28,702,513 28,242,061
Deposits 24,729,794 24,909,127 24,678,595 24,589,585
Shareholders' equity 3,827,759 3,570,622 3,784,607 3,418,874
PROFITABILITY RATIOS
Return on average assets 1.15% 1.34% 1.27% 1.25%
Return on average equity 8.80% 10.93% 10.01% 10.73%
ASSET QUALITY DATA
Allowance for loan losses 212,881 216,558 212,977 217,646
Net charge-offs 96 1,088 4,669 15,559
Nonperforming loans (2) 20,231 11,760 1,153 12,664
Allowance for loan losses to
loans, net of unearned income 2.04% 2.15% 2.02% 2.05%
Foreclosed assets - - - -
Nonperforming assets to loans,
net of unearned income, and
foreclosed assets (3) .19% .12% .01% .12%
LIQUIDITY AND CAPITAL RATIOS
Loans, net of unearned income
to deposits 42.26% 40.44% 42.81% 43.13%
Shareholders' equity to total
assets 13.32% 12.77% 13.19% 12.11%
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1991 1990 1989
---- ---- ----
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 1,073,582 $ 944,133 $ 894,974
Provision for loan losses - 37,000 18,500
Noninterest income 77,939 98,842 85,726
Noninterest expense 679,852 612,656 553,881
Income before taxes 471,669 393,319 408,319
Income tax expense 139,552 118,912 110,351
Net income 332,117 274,407 297,968
PER COMMON SHARE DATA
Net income $ 16.61 $ 13.72 $ 14.89
Cash dividends $ 3.00 $ 3.60 $ 2.60
Book value $ 156.72 $ 143.11 $ 131.21
Average shares 20,000 20,000 20,000
BALANCE SHEET DATA (at period end)
Investment securities 13,951,655 13,353,598 12,795,342
Loans, net of unearned
income 10,489,068 10,151,970 9,487,919
Total assets 28,021,454 26,894,590 26,234,714
Deposits 24,437,870 23,493,585 22,859,382
Shareholders' equity 3,134,348 2,862,231 2,624,124
PROFITABILITY RATIOS
Return on average assets 1.21% 1.03% 1.14%
Return on average equity 11.08% 10.00% 11.35%
ASSET QUALITY DATA
Allowance for loan losses 211,205 223,118 226,221
Net charge-offs 11,913 3,103 12,279
Nonperforming loans (2) 62,359 17,934 4,118
Allowance for loan losses to
loans, net of unearned income 2.01% 2.20% 2.38%
Foreclosed assets - 20,075 21,415
Nonperforming assets to loans,
net of unearned income, and
foreclosed assets (3) .59% .37% .27%
LIQUIDITY AND CAPITAL RATIOS
Loans, net of unearned income
to deposits 42.92% 43.21% 41.51%
Shareholders' equity to total
assets 11.19% 10.64% 10.00%
(1) Annualized, where applicable
(2) Nonperforming loans include restructured loans and loans 90 days or more past due.
(3) Nonperforming assets include nonperforming loans plus foreclosed assets.
</TABLE>
8
<PAGE> 23
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, (1) FOR THE YEARS ENDED DECEMBER 31,
----------------------- ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---------- ----------- ----------- ---------- ---------- --------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net interest income $ 122,225 $ 116,784 $ 232,667 $ 189,453 $ 152,015 $ 133,018 $ 121,995
Provision for losses on loans - 7,490 9,689 18,557 24,835 19,166 49,229
Profits and commissions from
trading activities 2,841 3,803 8,720 10,168 14,707 24,268 36,700
Investment securities gains (losses) 101 3,425 4,581 13,246 3,344 (341) (1,294)
Other noninterest income 36,373 36,218 73,436 61,453 53,099 47,375 43,281
Noninterest expense 110,661 111,226 224,480 199,218 164,771 160,805 177,833
Earnings (loss) before income taxes,
extraordinary item and accounting
changes 50,879 41,514 85,235 56,635 33,559 24,349 (26,380)
Applicable income taxes (benefit) 14,994 13,465 23,967 15,196 6,051 1,639 (4,111)
Earnings (loss) before extraordinary
item and accounting changes 35,885 28,049 61,268 41,439 27,508 22,710 (22,269)
Extraordinary item - defeasance
of debt, net of taxes - - (3,026) - - - -
Accounting changes, net of taxes - 5,001 5,001 - - - -
Net earnings (loss) 35,885 33,050 63,063 41,439 27,508 22,710 (22,269)
Per Common Share Data
Primary
Earnings (loss) before
extraordinary item and
accounting changes $ 1.44 $ 1.23 $ 2.69 $ 2.10 $ 1.58 $ 1.20 $ (1.19)
Extraordinary item - defeasance
of debt, net of taxes - - (0.16) - - - -
Accounting changes, net of taxes - 0.26 0.25 - - - -
Net earnings (loss) 1.44 1.49 2.78 2.10 1.59 1.20 (1.19)
Fully diluted
Earnings (loss) before
extraordinary item and
accounting changes $ 1.33 $ 1.16 $ 2.49 $ 2.02 $ 1.58 $ 1.20 $ (1.19)
Extraordinary item - defeasance
of debt, net of taxes - - (0.13) - - - -
Accounting changes, net of
taxes - 0.21 0.21 - - - -
Net earnings (loss) 1.33 1.37 2.57 2.02 1.59 1.20 (1.19)
Cash dividends .42 .36 .72 .60 .48 .48 .48
Book value 18.90 18.01 18.96 16.34 14.99 13.61 12.46
Book value assuming conversion
of convertible preferred stock 19.00 18.29 19.06 16.84 14.95 13.60 12.46
</TABLE>
9
<PAGE> 24
UPC SELECTED CONSOLIDATED FINANCIAL DATA - (continued)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, (1) FOR THE YEARS ENDED DECEMBER 31,
----------------------- ---------------------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
---------- ----------- ----------- ---------- ---------- --------- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data (at period end)
Total assets $6,966,854 $6,316,019 $6,318,186 $5,262,184 $3,786,839 $4,004,710 $4,002,614
Loans, net of unearned income 3,330,825 2,792,878 2,935,215 2,231,839 1,912,914 2,129,083 1,995,383
Allowance for losses on loans 85,640 81,017 80,442 64,290 47,934 50,921 46,871
Investment securities 2,886,128 2,661,874 2,617,053 2,198,103 1,147,803 1,155,266 1,019,759
Deposits 5,578,850 5,370,077 5,251,366 4,450,176 3,211,261 3,341,840 3,129,567
Long-term debt
Parent Company 114,764 74,292 114,729 74,292 38,163 44,662 34,500
Subsidiary Banks 169,425 122,767 160,501 2,864 3,922 4,103 39,021
Total shareholders' equity 516,909 456,661 477,300 356,211 269,446 237,035 240,591
Average assets 6,844,193 6,193,798 6,249,339 4,742,832 3,839,744 4,053,820 3,988,348
Average shareholders' equity(2) 516,422 426,917 446,994 329,492 247,859 243,783 265,233
Average shares outstanding
(in thousands)
Primary 21,905 19,458 19,622 16,765 16,632 18,641 18,761
Fully diluted 26,387 23,426 23,852 19,609 16,986 18,981 18,761
Profitability and Capitol Ratios
Before extraordinary item
and accounting changes
Return on average assets 1.06% .91% .98% .87 % .72% .56% NM%
Return on average common equity(2) 15.40 14.53 15.18 13.65 11.18 9.34 NM
Net earnings
Return on average assets 1.06% 1.08% 1.01% .87 % .72% .56% NM%
Return on average common equity(2) 15.40 17.56 15.70 13.65 11.18 9.34 NM
Net interest income (tax-equivalent)
to average earning assets(2) 4.15 4.37 4.30 4.57 4.59 3.97 3.77
Loans/deposits 59.70 52.01 55.89 50.15 59.57 63.71 63.76
Equity/assets (period end) 7.42 7.23 7.55 6.77 7.12 5.92 6.01
Average shareholders' equity/
average total assets(2) 7.55 6.89 7.15 6.95 6.46 6.01 6.65
Tier 1 capital to risk -
weighted assets(3) 14.56 13.48 14.85 13.81 12.19 9.57 NA
Total capital to risk -
weighted assets(3) 18.02 15.77 18.59 16.33 14.93 12.17 NA
Leverage ratio(3) 7.18 6.68 7.10 6.85 6.94 5.71 5.76
Asset Quality Ratios
Allowance/period end loans 2.57% 2.90% 2.74% 2.88% 2.51% 2.39% 2.35%
Nonperforming loans/total loans(4) .55 .93 .76 1.70 1.37 .98 .88
Allowance/nonperforming loans(4) 470.21 311.57 362.83 168.97 182.98 244.77 267.65
Nonperforming assets/loans and
foreclosed properties(5) .65 1.21 .92 1.99 1.90 1.62 1.26
Provision/average loans NM .55 .35 .86 1.23 .93 2.50
Net charge-offs/average loans .09 .54 .37 .83 1.38 1.10 2.25
- -------------
(1) Interim period ratios have been annualized where applicable.
(2) Average balances and calculations exclude the impact of the net unrealized gain (loss) on available for sale investment
securities.
(3) 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%.
(4) Nonperforming loans include loans on nonaccrual status and restructured loans.
(5) Nonperforming assets include nonperforming loans and foreclosed properties.
NA - Not Available NM - Not Meaningful
</TABLE>
10
<PAGE> 25
UNION PLANTERS CORPORATION
PRO FORMA SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1994
------------------------
EARNINGS
JUNE 30, 1994 (LOSS)
------------------------------------------------------ BEFORE
UPC SHARES EXTRAORDINARY
OUTSTANDING TOTAL ITEMS AND
OR TO BE TOTAL TOTAL SHAREHOLDERS' TOTAL ACCOUNTING
ISSUED ASSETS DEPOSITS EQUITY REVENUES(1) CHANGES
------ ------ -------- ------ ----------- -------
<S> <C> <C> <C> <C> <C> <C>
UPC 21,814,022 $ 6,966,854 $5,578,850 $516,909 $161,540 $35,885
Consummated
acquisitions 1,543,465 222,226 182,729 27,314 4,282 (190)
---------- ----------- ---------- -------- -------- -------
Pro forma total 23,357,487 7,189,080 5,761,579 544,223 165,822 35,695
CBI 185,200 28,731 24,730 3,828 602 163
---------- ----------- ---------- -------- -------- -------
Pro forma total 23,542,687 7,217,811 5,786,309 548,051 166,424 35,858
GSSC 13,485,720 2,466,209 2,210,705 183,046 68,842 13,151
BNF(2) 2,054,323 278,344 227,425 31,441 5,824 1,617
Other pending
acquisitions 523,080 129,704 114,539 7,364 2,932 408
---------- ----------- ---------- -------- -------- -------
Pro forma
consolidated 39,605,810 $10,092,068 $8,338,978 $769,902 $244,022 $51,034
========== =========== ========== ======== ======== =======
<CAPTION>
TWELVE MONTHS ENDED DECEMBER 31,
--------------------------------------------------------------------------------
1993 1992 1991
------------------------- ------------------------- -------------------------
EARNINGS EARNINGS EARNINGS
(LOSS) (LOSS) (LOSS)
BEFORE BEFORE BEFORE
EXTRAORDINARY EXTRAORDINARY EXTRAORDINARY
ITEMS AND ITEMS AND ITEMS AND
TOTAL ACCOUNTING TOTAL ACCOUNTING TOTAL ACCOUNTING
REVENUES(1) CHANGES REVENUES(1) CHANGES REVENUES(1) CHANGES
----------- ------- ----------- ------- ----------- -------
<S> <C> <C> <C> <C> <C> <C>
UPC $319,404 $61,268 $274,410 $41,439 $223,165 $27,508
Consumated
acquisitions 37,139 1,834 - - -
-------- ------- -------- -------- -------
Pro forma total 356,543 63,102 274,410 41,439 223,165 27,508
CBI 1,229 361 - - -
-------- ------- -------- ------ -------- -------
Pro forma total 357,772 63,463 274,410 41,439 223,165 27,508
GSSC 131,876 24,612 107,091 18,227 94,557 12,762
BNF(2) 12,355 4,096 12,256 3,584 9,389 2,626
Other pending
acquisitions 5,830 1,142 - - - -
-------- ------- -------- ------- -------- -------
Pro forma
consolidated $507,833 $93,313 $393,757 $63,250 $327,111 $42,896
======== ======= ======== ======= ======== =======
</TABLE>
__________________
1. Total revenues include net interest income plus non-interest
income.
2. Financial information for BNF has been converted to a calendar
year basis.
11
<PAGE> 26
RECENT DEVELOPMENTS AFFECTING UPC
Reorganization of UPNB. UPC's Tennessee Regional Banks, which were
split off from UPNB as of July 1, 1994, consist of Union Planters Bank of East
Tennessee, National Association ("Nashville"), Union Planters Bank of
Chattanooga, National Association ("Chattanooga") and Union Planters Bank of
Jackson, National Association ("Jackson"). UPC injected equity of $101.7
million in the Regional Banks with a majority of the funds ($98 million)
provided by a dividend from UPNB. Each of the Regional Banks acquired from
UPNB, at book value, substantially all of the assets and assumed the
liabilities of the UPNB branches located in its region. While the separation
of the branches previously held by UPNB had no material impact on the
consolidated financial condition of UPC, it is expected to promote the
identification of individual branch operations within their local communities.
UPNB continues to operate branches located in Memphis and West Tennessee.
Earnings Considerations Related to Pending Acquisitions and
Reorganizations. In connection with pending acquisitions, particularly the
GSSC acquisition, and possible internal and acquisitions-related
reorganizations, UPC management anticipates that possible significant expenses
(e.g., elimination of duplicate facilities, staff reductions, elimination of
duplicate functions, write-off of impaired assets, etc.) may be incurred in the
third and fourth quarters of 1994 upon completion of ongoing financial, due
diligence, and strategic reviews and assessments of the post-merger operating
environment of UPC. It is preliminarily estimated that at least $2 million
will be incurred in the third quarter. Any additional charges which may be
incurred in either the third or fourth quarter as a result of the completion of
the studies cannot be estimated at this time. Additionally, management of UPC
expects to achieve significant future cost savings from the combined operations
of UPC and Grenada Sunburst System Corporation ("GSSC") once that acquisition
is consummated. See "--Pending Acquisitions" and "--Grenada Sunburst
Acquisition" below. Preliminary studies indicate that there are significant
savings opportunities and management expects that they will be realized once
the recommendations are implemented; however, the amount of the savings which
will actually be realized cannot be estimated at this time.
Third Quarter 1994 Earnings Consideration. UPC is evaluating its
available for sale (AFS) investment portfolio in light of the rising interest
rate environment in the first half of 1994. Selective restructurings of the AFS
investment portfolio to increase book yields are expected in the last half of
1994. It is currently estimated that the losses recognized would be in a range
of $2.5 million to $5 million after taxes. These losses have already been
recognized on UPC's balance sheet by a reduction in shareholders' equity under
SFAS No. 115, adopted January 1, 1994. The higher book yields in the investment
portfolio after the restructurings are expected to increase UPC's future
earnings, and any losses are expected to be earned back over a shorter time
period than the original maturity of the securities being sold. The
restructurings are expected to enhance the liquidity and flexibility of UPC's
balance sheet.
12
<PAGE> 27
Recently Completed Acquisitions. Since June 30, 1994, UPC has
completed the acquisitions of the following institutions (collectively, the
"Recently Completed Acquisitions"):
<TABLE>
<CAPTION>
METHOD OF
INSTITUTION ASSET SIZE CONSIDERATION ACCOUNTING
- ----------- ---------- ------------- ----------
(In millions)
<S> <C> <C> <C>
Liberty Bancshares, Inc.
and its subsidiary, Liberty
Federal Savings Bank, 1,223,353 shares Pooling of
Paris, Henry County, Tennessee 181 of UPC Common Stock Interests
Earle Bankshares, Inc.
and its subsidiary,
First Southern Bank, 320,112 shares Pooling of
Earle, Crittenden County, of UPC Common Stock Interests
Arkansas 43
---
Total $224
====
</TABLE>
13
<PAGE> 28
Pending Acquisitions. Consistent with UPC's acquisition strategy, UPC
has entered into definitive agreements to acquire the following financial
institutions in addition to CBI (collectively, the "Pending Acquisitions")
which management considers probable of consummation and which are expected to
be closed by the end of the third quarter of 1994:
<TABLE>
<CAPTION>
CONSIDERATION
-------------
APPROXIMATE
INSTITUTION ASSET SIZE VALUE TYPE
- ----------- ---------- ----- ----
(In millions)
<S> <C> <C> <C>
BNF BANCORP, Inc. and its
subsidiary BANKFIRST, a federal
savings bank, in Decatur, UPC Common Stock
Alabama(1) $278 $ 51 (Approximately
2,054,000 shares)
Mid South Bancshares, Inc.
and its subsidiaries, Security
Bank, Paragould, Greene County
and Farmers & Merchants Bank, UPC Common Stock
Reyno, Randolph County, Arkansas 130 13 (Approximately
523,000 shares)
Grenada Sunburst System Corporation
and its subsidiaries Sunburst Bank, UPC Common Stock
Mississippi, Grenada, Grenada (Approximately
Counting, Mississippi and Sunburst 13,486,000
Bank, Baton Rouge, Louisiana (2) 2,463 361 shares)
------ ----
Totals $2,871 $425
- ------------------------ ====== ====
</TABLE>
(1) It is anticipated that the closing of this acquisition will occur on or
about August 31, 1994 and become effective as of September 1, 1994.
(2) See "--Grenada Sunburst Acquisition" below for additional information
regarding the merger of GSSC Acquisition Company, Inc., a wholly-
owned subsidiary of UPC, with and into this entity.
(3) The number of shares of common stock to be issued in connection with the
Pending Acquisitions is subject to change depending on the market price of
UPC's common stock during the stipulated pricing periods. The shares
above are based on an assumed current market price of $25.25.
If the Reorganization, the Pending Acquisitions and the Recently
Completed Acquisitions had been consummated at June 30, 1994, UPC's
consolidated total assets would have increased by approximately $3.1 billion to
approximately $10.1 billion, UPC's consolidated total loans would have
increased by $2.1 billion to approximately $5.4 billion. UPC's consolidated
total deposits would have increased by approximately $2.7 billion to
approximately $8.3 billion, based upon June 30, 1994, pro forma financial
information. See "--Pro Forma Consolidated Financial Information" and the
related pro forma financial information in UPC's Current Reports on Form 8-K
dated August 18, 1994 and the historical financial information included in
UPC's 1993 Annual Report on Form 10-K and its Quarterly Report on Form 10-Q,
for the periods ended June 30, 1994 incorporated by reference. See
"Incorporation of Certain Documents by Reference."
14
<PAGE> 29
Grenada Sunburst Acquisition. On July 1, 1994, UPC entered into a
definitive agreement to acquire Grenada Sunburst System Corporation ("GSSC") in
a tax-free reorganization (the "Grenada Sunburst Acquisition") in a transaction
to be accounted for as a pooling of interests. The Grenada Sunburst
Acquisition will result in the issuance of approximately 13.5 million shares of
UPC Common Stock having a value of approximately $361 million based on UPC's
June 30, 1994 closing stock price of $26.75.
GSSC is a multi-bank holding company headquartered in Grenada,
Mississippi. It is the third largest financial institution headquartered in
Mississippi. As of June 30, 1994, GSSC had total assets of approximately $2.5
billion, total loans of $1.7 billion, total deposits of $2.2 billion, and
shareholders' equity of $183 million. GSSC was organized under the laws of the
State of Delaware on May 20, 1986. GSSC has two major subsidiaries: Sunburst
Bank, Mississippi, and Sunburst Bank, Louisiana. Sunburst Bank, Mississippi,
organized in 1890, and Sunburst Bank, Louisiana, acquired in May 1988
(collectively the "Banks"), had approximately $2.0 billion and $500 million,
respectively, in total assets as of June 30, 1994.
GSSC is engaged in the general commercial banking business, conducting
operations in 124 locations in 59 communities in Mississippi and Louisiana.
The Banks accept demand deposits and various types of interest-bearing
transactions and time deposit accounts and utilize funds from such activities
to make loans and other investments. In addition, through GSSC's subsidiary,
Sunburst Financial Group, Inc., GSSC offers full-service brokerage to its
customers. The Banks offer a wide range of fiduciary services through their
trust divisions, and mortgage services through Sunburst GSSC Mortgage
Corporation as well as other financial services to their customers. GSSC has
expanded its operations through de novo branch banking and acquisition of banks
in Mississippi and Louisiana. Each branch office of GSSC does business under
the name "Sunburst Bank".
At June 30, 1994, GSSC had approximately 1,700 full-time-equivalent
employees. Sunburst Bank, Mississippi is incorporated under the laws of the
State of Mississippi, and as such is subject to regulation by the Department of
Banking and Consumer Finance for the State of Mississippi. Sunburst Bank,
Louisiana is incorporated under the laws of the State of Louisiana and as such
is subject to regulation by the Office of Financial Institutions for the State
of Louisiana. GSSC is registered as a bank holding company with the Federal
Reserve and is governed by its applicable laws and regulations as a bank
holding company. The Banks' deposits are insured by the FDIC, and, therefore,
both banks are subject to regulation by the Federal Deposit Insurance
Corporation and to examination by that corporation.
The acquisition of GSSC is contingent upon the receipt of all
necessary regulatory approvals and the requisite shareholder approvals of GSSC
and UPC and is also subject to satisfaction of customary contractual closing
conditions. The acquisition is expected to be consummated by year-end 1994.
For additional information regarding GSSC, see UPC's Current Report on Form 8-K
dated July 1, 1994, July 26, 1994, August 18, 1994 and August 19, 1994.
15
<PAGE> 30
Equivalent and Pro Forma Per Share Data
The following table presents selected comparative unaudited per share
data for (i) UPC Common Stock and CBI Common Stock on an historical basis; (ii)
UPC Common Stock on a pro forma basis for the CBI Acquisition only and for the
CBI Acquisition, all Recently Completed Acquisitions and the Pending
Acquisitions; and (iii) CBI Common Stock on an equivalent pro forma basis for
the CBI Acquisition only and for the CBI Acquisition, all Recently Completed
Acquisitions and the Pending Acquisitions, for the periods indicated. These
data are not necessarily indicative of the results of the future operations of
either entity or the actual results that would have occurred had the Merger
been consummated January 1, 1993. The information is derived from, and should
be read in conjunction with the consolidated historical financial statements of
UPC (including related notes thereto) which are incorporated by reference, the
consolidated historical financial statements of CBI set forth below in Appendix
A and the unaudited pro forma consolidated financial statements and related
notes in UPC's Current Report on Form 8-K, dated August 18, 1994, incorporated
by reference. See "Incorporation of Certain Documents by Reference."
16
<PAGE> 31
<TABLE>
<CAPTION>
SIX MONTHS AS OF AND FOR THE TWELVE
ENDED MONTHS ENDED DECEMBER 31,
JUNE 30, -----------------------------------------
1994(1) 1993(1) 1992(1) 1991(1)
------- ------- ------- -------
<S> <C> <C> <C> <C>
BOOK VALUE PER COMMON SHARE
UPC $ 18.90 $ 18.96 $ 16.34 $ 14.99
UPC pro forma (CBI only) 18.92 18.98 16.34 14.99
UPC pro forma (all completed
and pending acquisitions) 16.80 16.31 13.85 12.61
CBI 191.39 189.23 170.94 156.72
CBI equivalent pro forma
(CBI only) 175.20 175.75 151.31 138.81
CBI equivalent pro forma
(all completed and pending
acquisitions)(2) 155.57 151.03 128.25 116.77
CASH DIVIDENDS PER COMMON SHARE
UPC .42 .72 .60 .48
UPC pro forma .42 .72 .60 .48
CBI 2.25 4.00 3.35 3.00
CBI equivalent pro forma 3.89 6.67 5.56 4.44
EARNINGS BEFORE EXTRAORDINARY
ITEMS AND ACCOUNTING CHANGES
UPC
Primary 1.44 2.69 2.10 1.59
Fully diluted 1.33 2.49 2.02 1.58
UPC pro forma (CBI only)
Primary 1.43 2.68 2.06 1.56
Fully diluted 1.32 2.49 2.00 1.55
UPC pro forma (all completed
and pending acquisitions)(2)
Primary 1.17 2.13 1.77 1.30
Fully diluted 1.13 2.07 1.75 1.30
CBI
Primary 8.14 18.02 17.58 16.61
Fully diluted 8.14 18.02 17.58 16.61
CBI equivalent pro forma
(CBI only)
Primary 13.24 24.82 19.08 14.44
Fully diluted 12.22 23.06 18.52 14.35
CBI equivalent pro forma
(all completed and pending
acquisitions)(2)
Primary 10.83 19.72 16.39 12.04
Fully diluted 10.46 19.17 16.21 12.04
</TABLE>
(1) The equivalent pro forma per share data for CBI are computed by
multiplying UPC's pro forma share information by 9.26.
(2) See also, "Recent Developments - Recently Completed Acquisitions" and
"Pending Acquisitions."
17
<PAGE> 32
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following tables contain unaudited, consolidated, pro forma, condensed
financial information showing a statement of earnings for the six months ended
June 30, 1994, and for the years ended December 31, 1993, 1992 and 1991, and a
balance sheet at June 30, 1994, for (i) UPC; (ii) UPC, Recently Completed
Acquisitions and CBI; and (iii) UPC, Recently Completed Acquisitions, the
Pending Acquisitions and CBI. The unaudited pro forma financial information
reflects each transaction using either the pooling of interest or purchase
method of accounting in accordance with the accounting requirements applicable
to each respective transaction. The unaudited pro forma financial information
should be read in conjunction with the historical financial statements of UPC
and CBI and in conjunction with the information presented in UPC's Quarterly
Reports on From 10-Q dated March 31, 1994 and June 30, 1994, UPC's 1993 Annual
Report on Form 10-K, and UPC's Current Reports on Form 8-K dated February 8,
1994, April 14, 1994, May 18, 1994, July 1, 1994, July 26, 1994, August 18,
1994 and August 19, 1994. Pro forma results are not necessarily indicative of
future operating results. See "Incorporation of Certain Documents by
Reference" and "Appendix A."
18
<PAGE> 33
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, 1994
--------------------------------------------------------------
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED ALL PENDING
ACQUISITIONS ACQUISITIONS
UPC AND CBI AND CBI
---------- ------------------ ------------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 283,892 $ 291,667 $ 420,690
Interest-bearing deposits at
financial institutions 10,489 12,755 17,994
Federal funds sold and securities
purchased under agreements to resell 24,993 40,468 41,223
Trading account securities, at market 148,204 148,204 148,204
Loans held for resale 6,933 6,933 39,026
Investment securities
Available for sale 2,331,859 2,365,115 2,584,600
Held to maturity 554,269 589,991 1,087,717
Loans, net of unearned income 3,330,825 3,482,040 5,389,383
Less:
Allowance for losses on loans (85,640) (87,402) (122,445)
---------- ---------- -----------
Net loans 3,245,185 3,394,638 5,266,938
Premises and equipment 150,185 153,646 212,960
Accrued interest receivable 58,415 60,431 81,770
Goodwill and other intangibles 45,193 45,271 46,467
Other assets 107,237 108,692 144,479
---------- ---------- -----------
Total assets $6,966,854 $7,217,811 $10,092,068
========== ========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 819,741 $ 828,088 $ 1,242,535
Interest-bearing 4,759,109 4,958,221 7,096,443
---------- ---------- -----------
Total deposits 5,578,850 5,786,309 8,338,978
Short-term borrowings 506,516 506,832 534,914
Federal Home Loan Bank advances 167,140 176,399 193,399
Long-term debt 117,049 117,049 143,685
Accrued interest, expenses and taxes 46,694 47,293 63,092
Other liabilities 33,696 35,878 48,098
---------- ---------- -----------
Total liabilities 6,449,945 6,669,760 9,322,166
---------- ---------- -----------
Shareholders' equity
Preferred stock
Convertible 87,298 87,298 87,298
Nonconvertible 17,250 17,250 17,250
Common stock 109,070 117,714 198,030
Additional paid-in capital 88,851 91,501 92,570
Net unrealized loss - available
for sale securities (13,633) (13,211) (13,581)
Retained earnings 228,073 247,499 388,335
---------- ---------- -----------
Total shareholders' equity 516,909 548,051 769,902
---------- ---------- -----------
Total liabilities and
shareholders' equity $6,966,854 $7,217,811 $10,092,068
========== ========== ===========
</TABLE>
19
<PAGE> 34
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA
STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1994
---------------------------------------------------------------
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED THE PENDING
ACQUISITIONS, ACQUISITIONS
UPC AND CBI AND CBI
------------ ------------------ ------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $132,678 $138,216 $213,844
Interest on investment securities 71,292 73,446 92,797
Interest on deposits at financial
institutions 218 219 368
Interest on federal funds sold and
securities purchased under agreements
to resell 1,299 1,159 1,433
Interest on trading account securities 3,978 4,062 4,062
Interest on loans held for resale 829 829 2,589
-------- -------- --------
Total interest income 210,294 217,931 315,093
-------- -------- --------
Interest expense
Interest on deposits 74,595 77,901 112,022
Interest on short-term borrowings 5,815 5,815 6,457
Interest on Federal Home Loan Bank
advances and long-term debt 7,659 7,780 9,016
-------- -------- --------
Total interest expense 88,069 91,496 127,495
-------- -------- --------
Net interest income 122,225 126,435 187,598
Provision for losses on loans - 174 1,974
-------- -------- --------
Net interest income after provision
for losses on loans 122,225 126,261 185,624
-------- -------- --------
Noninterest income
Service charges on deposit accounts 15,364 15,605 24,783
Profits and commissions from trading
activities 2,841 2,841 2,841
Investment securities gains 101 103 266
Other income 21,009 21,440 28,534
-------- -------- --------
Total noninterest income 39,315 39,989 56,424
-------- -------- --------
Noninterest expense
Salaries and employee benefits 49,664 51,538 80,036
Net occupancy expense 8,595 8,875 12,885
Equipment expense 8,648 8,783 13,014
Other expense 43,754 45,584 62,447
-------- -------- --------
Total noninterest expense 110,661 114,780 168,382
-------- -------- --------
Earnings before income taxes, extra-
ordinary items and accounting changes 50,879 51,470 73,666
Applicable income taxes 14,994 15,612 22,632
-------- -------- --------
Earnings before extraordinary items
and accounting changes $ 35,885 $ 35,858 $ 51,034
======== ======== ========
Earnings per common share
Primary $ 1.44 $ 1.33 $ 1.17
Fully diluted 1.33 1.24 1.13
Average common shares outstanding
(in thousands)
Primary 21,905 23,634 39,697
Fully diluted 26,387 28,116 44,179
</TABLE>
20
<PAGE> 35
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA
STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1993
-------------------------------------------------------------
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED THE PENDING
ACQUISITIONS ACQUISITIONS
UPC AND CBI AND CBI(1)
---------- ------------------ ------------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $241,072 $284,783 $426,593
Interest on investment securities 140,473 155,813 197,984
Interest on deposits at financial
institutions 1,634 1,842 2,288
Interest on federal funds sold and
securities purchased under agreements
to resell 4,602 5,212 5,730
Interest on trading account securities 6,194 6,194 6,194
Interest on loans held for resale 3,239 3,239 7,335
-------- -------- --------
Total interest income 397,214 457,083 646,124
-------- -------- --------
Interest expense
Interest on deposits 146,800 173,363 242,640
Interest on short-term borrowings 6,287 6,571 7,520
Interest on Federal Home Loan Bank
advances and long-term debt 11,460 11,593 13,771
-------- -------- --------
Total interest expense 164,547 191,527 263,931
-------- -------- --------
Net interest income 232,667 265,556 382,193
Provision for losses on loans 9,689 14,351 21,262
-------- -------- --------
Net interest income after provision
for losses on loans 222,978 251,205 360,931
-------- -------- --------
Noninterest income
Service charges on deposit accounts 28,721 31,797 50,401
Profits and commissions from trading
activities 8,720 8,771 8,771
Investment securities gains 4,581 4,946 4,892
Other income 44,715 46,702 61,576
-------- -------- --------
Total noninterest income 86,737 92,216 125,640
-------- -------- --------
Noninterest expense
Salaries and employee benefits 98,920 111,559 164,915
Net occupancy expense 15,909 18,518 27,557
Equipment expense 15,735 16,365 23,672
Other expense 93,916 106,883 136,523
-------- -------- --------
Total noninterest expense 224,480 253,325 352,667
-------- -------- --------
Earnings before income taxes,
extraordinary items and accounting
changes 85,235 90,096 133,904
Applicable income taxes 23,967 26,633 40,591
-------- -------- --------
Earnings before extraordinary items
and accounting changes $ 61,268 $ 63,463 $ 93,313
======== ======== ========
Earnings per common share
Primary $ 2.69 $ 2.32 $ 2.13
Fully diluted 2.49 2.19 2.07
Average common shares outstanding
(in thousands)
Primary 19,622 23,567 39,630
Fully diluted 23,852 28,165 44,228
</TABLE>
(1) Financial information with respect to BNF, a significant Pending
Acquisition, has been converted to a calendar year basis.
21
<PAGE> 36
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA
STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
------------------------------------------------------------
UPC AND UPC,GSSC
UPC AND BNF(1) AND BNF(1)
-------------- -------------- ------------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $198,197 $212,225 $315,976
Interest on investment securities 122,287 129,508 165,005
Interest on deposits at financial
institutions 3,999 3,999 4,915
Interest on federal funds sold and
securities purchased under agreements
to resell 4,280 4,280 5,250
Interest on trading account securities 6,648 6,648 6,648
Interest on loans held for resale 3,457 3,457 7,146
-------- -------- --------
Total interest income 338,868 360,117 504,940
-------- -------- --------
Interest expense
Interest on deposits 137,605 147,132 209,035
Interest on short-term borrowings 6,942 6,942 8,040
Interest on Federal Home Loan Bank
advances and long-term debt 4,868 5,489 5,555
-------- -------- --------
Total interest expense 149,415 159,563 222,630
-------- -------- --------
Net interest income 189,453 200,554 282,310
Provision for losses on loans 18,557 19,194 27,182
-------- -------- --------
Net interest income after provision
for losses on loans 170,896 181,360 255,128
-------- -------- --------
Noninterest income
Service charges on deposit accounts 20,843 21,335 35,590
Profits and commissions from trading
activities 10,168 10,168 10,168
Investment securities gains 13,246 13,363 14,019
Other income 40,700 41,246 51,670
-------- -------- --------
Total noninterest income 84,957 86,112 111,447
-------- -------- --------
Noninterest expense
Salaries and employee benefits 74,772 77,245 116,764
Net occupancy expense 13,136 14,097 19,989
Equipment expense 12,225 12,225 18,186
Other expense 99,085 101,271 124,525
-------- -------- --------
Total noninterest expense 199,218 204,838 279,464
-------- -------- --------
Earnings before income taxes and
extraordinary items 56,635 62,634 87,111
Applicable income taxes 15,196 17,611 23,861
-------- -------- --------
Earnings before extraordinary items $ 41,439 $ 45,023 $ 63,250
======== ======== ========
Earnings per common share
Primary $ 2.10 $ 2.06 $ 1.77
Fully diluted 2.02 2.00 1.75
Average common shares outstanding
(in thousands)
Primary 16,765 18,819 32,305
Fully diluted 19,609 21,663 35,149
</TABLE>
(1) Financial information with respect to BNF has been converted to a
calendar year basis.
22
<PAGE> 37
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA
STATEMENT OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT
PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1991
------------------------------------------------------------
UPC AND UPC,GSSC
UPC AND BNF(1) AND BNF(1)
------------- ------------ -----------
<S> <C> <C> <C>
Interest income
Interest and fees on loans $213,222 $227,667 $341,936
Interest on investment securities 92,607 99,693 141,925
Interest on deposits at financial
institutions 7,525 7,525 9,898
Interest on federal funds sold and
securities purchased under agreements
to resell 6,606 6,606 8,791
Interest on trading account securities 5,419 5,419 5,419
Interest on loans held for resale 4,671 4,671 6,150
-------- -------- --------
Total interest income 330,050 351,581 514,119
-------- -------- --------
Interest expense
Interest on deposits 160,252 173,295 259,518
Interest on short-term borrowings 12,809 12,809 14,383
Interest on Federal Home Loan Bank
advances and long-term debt 4,974 5,004 5,196
-------- -------- --------
Total interest expense 178,035 191,108 279,097
-------- -------- --------
Net interest income 152,015 160,473 235,022
Provision for losses on loans 24,835 25,281 34,203
-------- -------- --------
Net interest income after provision
for losses on loans 127,180 135,192 200,819
-------- -------- --------
Noninterest income
Service charges on deposit accounts 19,394 19,868 33,626
Profits and commissions from trading
activities 14,707 14,707 14,707
Investment securities gains 3,344 3,391 2,624
Other income 33,705 34,115 41,132
-------- -------- --------
Total noninterest income 71,150 72,081 92,089
-------- -------- --------
Noninterest expense
Salaries and employee benefits 69,756 71,953 108,490
Net occupancy expense 10,556 11,543 17,414
Equipment expense 10,627 10,627 16,077
Other expense 73,832 75,478 96,494
-------- -------- --------
Total noninterest expense 164,771 169,601 238,475
-------- -------- --------
Earnings before income taxes and
extraordinary items 33,559 37,672 54,433
Applicable income taxes 6,051 7,538 11,537
-------- -------- --------
Earnings before extraordinary items $ 27,508 $ 30,134 $ 42,896
======== ======== ========
Earnings per common share
Primary $ 1.59 $ 1.56 $ 1.30
Fully diluted 1.58 1.54 1.30
Average common shares outstanding
(in thousands)
Primary 16,632 18,686 32,172
Fully diluted 16,986 19,040 32,526
</TABLE>
(1) Financial information with respect to BNF has been converted to a
calendar year basis.
23
<PAGE> 38
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES
Each copy of this Prospectus mailed to holders of CBI Common Stock is
accompanied by a proxy appointment card furnished in connection with the CBI
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. CDT, on Thursday, October 6, 1994, in the main lobby of the
main office of The Commercial Bank, 224 Seventh Street, Obion, Tennessee
38240. Only holders of record of CBI Common Stock at the close of business on
August 29, 1994, are entitled to receive notice of and to vote at the Special
Meeting. At the Special Meeting, the CBI 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 CBI COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO CBI 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). CBI SHAREHOLDERS
SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY APPOINTMENT CARDS.
Any holder of CBI 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
Commercial Bancorp, Inc., 224 Seventh Street (P.O. Box 297), Obion, Tennessee
38240, Attention: Corporate Secretary, provided such notice or proxy
appointment is actually received by CBI 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 CBI. The
shares of CBI 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 CBI 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 CBI for the purpose of soliciting
additional proxy appointments. CBI 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.
The cost of soliciting proxies from holders of CBI Common Stock will
be borne by CBI. Such solicitation will be made by mail but also may be made
by telephone or in person by the directors, officers and employees of CBI (who
will receive no additional compensation for doing so).
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VOTES REQUIRED
The affirmative votes of the holders of a majority of the outstanding
shares of CBI 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 20,000 shares
of CBI 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 3,418 shares or approximately 17.1% of the issued and
outstanding shares of CBI Common Stock. ALL THE MEMBERS OF THE MANAGEMENT
GROUP HAVE ADVISED CBI 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 CBI 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 or her shares of CBI 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 or she 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 or her
behalf must notify CBI in writing of the name and address of the record holder
of the shares, if known to him or her.
Any CBI shareholder intending to enforce his or her 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 or her shares (the "Objection Notice"). The
Objection Notice must state that the shareholder intends to demand payment for
his or her shares of CBI 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 CBI's shareholders at the Special Meeting,
each CBI shareholder who has filed an Objection Notice will be notified by CBI
of such approval no later than ten (10) days after the CBI Special Meeting (the
"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
CBI 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 or she acquired beneficial ownership of the shares before
that date, (iv) set a date by which CBI 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, a CBI shareholder electing to dissent must make a demand
for payment (the "Payment
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Demand"), certify whether he or she (or the beneficial shareholder on whose
behalf he or she is asserting dissenters' rights) acquired beneficial ownership
of the shares of CBI Common Stock before June 15, 1994 (the date of the first
public announcement of the terms of the Reorganization Agreement), and deposit
his or her 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 CBI shareholder will retain all
other rights of a CBI shareholder until these rights are cancelled or modified
by consummation of the Merger. FAILURE TO COMPLY SUBSTANTIALLY WITH THESE
PROCEDURES WILL CAUSE THE CBI SHAREHOLDER TO LOSE HIS OR HER DISSENTERS' RIGHTS
TO PAYMENT FOR THE SHARES IN CASH. CONSEQUENTLY, ANY CBI SHAREHOLDER WHO
DESIRES TO EXERCISE HIS OR HER RIGHTS TO PAYMENT FOR HIS OR HER SHARES IS URGED
TO CONSULT HIS OR HER LEGAL ADVISER BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
As soon as the Merger is consummated, or upon later receipt of a
timely Payment Demand, CBI 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 CBI estimates to be the fair value
of the shares of CBI Common Stock, plus accrued interest. Such payment must be
accompanied by (i) certain of CBI's financial statements, (ii) a statement of
CBI'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, CBI 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 June 15, 1994, the date of the first
public announcement of the terms of the Reorganization Agreement. To the
extent CBI should elect to withhold payment, after effecting the Merger, CBI 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. CBI 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 or
her shares or offered under Section 48-23-208 is less than the fair value of
his or her shares or that the interest due is incorrectly calculated, (ii) CBI
fails to make payment under Section 48-23-206 within two months after the date
set for demanding payment, or (iii) CBI, 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 CBI (or its successor in the
Merger) in writing (which notice is invalid if not delivered to CBI within one
month after CBI made or offered payment for such shareholder's shares) of his
or her own estimate of the fair value of the shares and the amount of interest
due and may demand payment of the difference between his or her 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 CBI, reject CBI's offer under Section 48-23-208 and demand payment of
the fair value of his or her shares and interest due.
If CBI (or the surviving corporation) cannot agree with such dissenter
on a fair value within two months after CBI receives the Payment Demand, CBI
will institute judicial proceedings in either the Chancery or Circuit Court of
Obion 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 as of the point
in time immediately prior to the consummation of the Merger, excluding any
appreciation or depreciation in anticipation of the Merger, and will determine
the interest owing
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on the disputed amount. The fair value of a dissenter's shares of CBI Common
Stock may be more than, less than or the same as the consideration provided for
in the Reorganization Agreement. The Court may, in its 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 or her shares, plus accrued interest, exceeds the amount paid by
CBI or the fair value, plus accrued interest, of his or her after-acquired
shares for which CBI elected to withhold payment under Section 48-23-208 of the
Act.
The Court shall assess the 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 CBI (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 should find 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 CBI, if the Court finds that CBI did not comply substantially with the
relevant requirements of the Act or (ii) against CBI 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 hereto.
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 CBI Board has adopted the
Reorganization Agreement and the Plan of Merger, believes the Merger is in the
best interest of CBI and its shareholders and recommends that shareholders of
CBI 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. CBI shareholders are urged to read the Reorganization
Agreement and the Plan of Merger carefully.
BACKGROUND OF AND REASONS FOR THE MERGER
Background. Commercial Bancorp, Inc. has for several years operated
The Commercial Bank ("CBO") in Obion County as a small, community bank in West
Tennessee. CBO 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 CBO's basic
business has remained largely the same, the regulatory environment in which the
bank operates has become increasingly complex. Credit analysis and
documentation have become more complex.
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In early-1994, the CBI Board was approached by a potential acquiror to
determine whether CBI might be interested in a sale. The CBI Board decided to
explore the possibility of selling CBI 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 June 14, 1994, which
was approved by the CBI Board at a special meeting held June 14, 1994, and by
the UPC Board of Directors at their regular meeting held on July 28, 1994.
CBI Reasons. In light of the foregoing, the CBI Board has voted to
recommend the approval of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A by the CBI shareholders for the following reasons:
(i) The trend in the banking industry is toward
consolidation, making it less likely that an institution the size of
CBI 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 CBI 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 CBI's earnings and, consequently, its value;
(iii) CBI 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 CBI Common Stock exceeds the recent trading prices for the CBI
Common Stock, the annual dividend yield on the UPC Common Stock
exceeds the historical yield on the CBI 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 CBI Board did not assign any specific or relative weight to the
foregoing factors in determining to recommend the Merger to the CBI
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) CBI has experienced strong and continued growth, (ii)
CBI is located geographically in a county in which UPC has sought to increase
its market share, and (iii) UPC believes that by providing CBI with access to
the UPC capital base and other banking resources, CBI will be well positioned
to compete in its market in the face of enhanced competition from larger, well
capitalized institutions.
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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 CBI with CBI
surviving the Merger and continuing after the Effective Time of the Merger to
operate under the name Commercial Bancorp, Inc. At the Effective Time of the
Merger, the surviving corporation will become a wholly-owned subsidiary of UPC.
In the Merger, each share of CBI Common Stock outstanding immediately prior to
the Effective Time of the Merger, other than those shares with respect to which
Dissenters' Rights shall have been perfected as described above, will be
converted exclusively into the right to receive shares of UPC Common Stock as
provided in the Reorganization Agreement and the Plan of Merger.
The number of shares of UPC Common Stock to be received by CBI Record
Holders (other than dissenting shareholders, who will receive cash only) in the
Merger would 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 CBI Common Stock, and, after aggregation of the shares (and any
fractional shares) of UPC Common Stock to which a CBI Record Holder is
entitled, cash will be paid by UPC in lieu of any remaining fractional share.
Holders of CBI 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 CBI. 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 October 31, 1994, but
will specify, by agreement of the parties, an Effective Time of the Merger of
12:01 a.m. CST, on November 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 CBI
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 CBI Common Stock for
certificates representing shares of UPC Common Stock.
HOLDERS OF CBI 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.
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Upon receipt of the Exchange Materials, CBI 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 CBI 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 CBI 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 any remaining fractional share to which the holder
is entitled. No consideration will be delivered to a CBI Record Holder unless
and until such holder shall have delivered to the Exchange Agent in accordance
with the Exchange Materials all certificates formerly representing the shares
of CBI Common Stock held by him or her and in respect of which he or she 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 CBI 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 CBI's stock transfer books of shares of CBI Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger. If
certificates representing shares of CBI 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, CBI nor any other person will be
liable to any former holder of CBI 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 CBI 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 CBI 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 CBI Common Stock
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, CBI or CBO 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
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material damages or other relief in connection therewith; (vi) UPC shall have
received executed affiliate agreements from those shareholders of CBI deemed to
be "affiliates" by the Commission, a tax opinion letter from legal counsel to
UPC confirming that the Merger will qualify as a tax-free reorganization under
the Internal Revenue Code, non-compete agreements from each member of the CBI
Board 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; Joel C. Pipkin and Billy Fielder
shall have received three-year employment agreements from CBO; 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 CBI as to the good standing of CBI, 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 CBI
and CBO 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 CBI and CBO
to such effect; (iii) there shall have been no damage or destruction to, or
taking of any property of CBI or CBO or any material adverse change in the
business, financial condition, results of operations or prospects of CBI or
CBO; and (iv) CBI and CBO 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 CBI or CBO to UPC.
The obligations of CBI to effect the Merger are further subject to the
satisfaction, or waiver by CBI, of, among others, the following conditions: (i)
CBI 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 CBI shall have received a certificate signed by certain
officers of UPC to that effect; (iii) CBI 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) CBI shall have received from the Exchange
Agent a certificate evidencing receipt of the certificates representing the UPC
Common Stock and cash constituting the Consideration payable in the Merger.
No assurance can be provided as to whether all of the conditions
precedent to the Merger will be satisfied or waived by the party lawfully
permitted to do so.
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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, neither the Federal
Reserve nor the Tennessee Department has given its approval of the Merger. 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 CBI's and CBO's business pending consummation of the Merger. In
particular, the Reorganization Agreement provides, in part, that, except as
otherwise provided in the Reorganization Agreement and/or without the written
consent of UPC, CBI and CBO, 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 CBI; (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 CBI Common Stock in excess of a semi-annual
cash dividend of $2.25 per share of CBI; (iv) issue or sell any CBI Common
Stock or sell or otherwise dispose of a substantial part of CBI's or CBO'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 CBI 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
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<PAGE> 47
more of CBI Common Stock if such extension of credit would exceed $300,000, 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 CBI's or CBO's
fiduciary capacity. Moreover, CBI and CBO, 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
CBI is permitted under the Reorganization Agreement to declare and pay
a normal and customary semi-annual cash dividend with respect to the CBI Common
Stock of up to $2.25 per share of CBI Common Stock. Notwithstanding the
foregoing, the Reorganization Agreement prohibits CBI 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 CBI; 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 CBI
shareholders if the effect of such amendment would be to change the amount or
the type of consideration to be delivered in the Merger to the CBI Record
Holders.
The Reorganization Agreement may be terminated at any time prior to
the Effective Date of the Merger, either before or after approval by the CBI
shareholders, as follows: (i) by the mutual consent of the parties; (ii) by UPC
or Interim if CBI or CBO, respectively, should violate any affirmative or
negative covenant in respect to the operation of its business; (iii) by UPC,
Interim or CBI if closing shall not have occurred by January 1, 1995, 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 CBI or CBO or if CBI or CBO should enter into a
formal capital plan in cooperation with applicable banking regulators; or (vii)
by UPC should CBI or CBO 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 CBI, 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.
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<PAGE> 48
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 of the Board of Directors of Interim immediately
prior to the effective time of the merger and that the persons serving as
officers and directors of CBO, all of whom have served on either the CBI Board
or the CBO Board for one or more terms and are expected to be qualified to
serve as officers and/or directors of CBO. 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 CBI, CBO and
Interim, members of CBI's, CBO's and Interim's Boards of Directors, their ages
and principal occupations for the last five years.
Executive Officers and Directors of CBI and CBO:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Joel C. Pipkin 51 President and Director of CBI
and CBO
Billy Fielder 49 Secretary and Director of CBI
and CBO, Vice President of CBO
Judy Knight 44 Treasurer of CBI, Cashier of CBO
Herman Denning 49 Director of CBI and CBO
Melvin Ferguson 60 Director of CBI and CBO
Frank Glover 52 Director of CBI and CBO
Polk Glover 56 Director of CBI and CBO
James A. Huey 69 Director of CBI and CBO
Perry Marshall 72 Director of CBI and CBO
J. Kirk Wells 83 Director of CBI and CBO
</TABLE>
Mr. Pipkin graduated from Medina High School in 1960. Attended West
Tennessee Business College, Jackson, Tennessee and graduated from School of
Banking of the South in 1971. Started work for Medina Banking Co., Medina,
Tennessee in August 1960 and remained there until hired by CBO in 1970.
Started as Vice President and Cashier and served as Secretary of Board of
Directors from 1970 to 1978. Elected Executive Vice President & Cashier in
1978 and President in 1979. Served on Board of Directors of CBO since 1971 and
on Board of Directors and President of CBI since 1987. He is also a member of
CBO's Finance Committee.
Mr. Fielder graduated from Obion County Central High School in 1962
and is a graduate of Tennessee School of Banking. Worked for C.I.T. Financial
Services in managerial position from 1966 to 1977, when he was employed by CBO
as Assistant Vice President in Loan Department. Elected Vice President and
Secretary of Board of Directors in 1978 and Director in 1983, and is presently
on Finance Committee. He has served as Director and Secretary of CBI since
1987.
Ms. Knight graduated from Obion County Central High School. Started
work as bookkeeper for CBO in 1968, promoted to Assistant Cashier in 1978, head
of bookkeeping department in 1979, and Cashier in 1984, her present position
with
34
<PAGE> 49
CBO. She was elected Treasurer of CBI in 1987, a position she still holds.
She is a 1992 graduate of Georgia Bankers Association, School of Bank
Operations.
Mr. Denning graduated from Obion County General High School in 1963.
A farmer, he presently farms 1300 acres. Is a past director of Farm Bureau and
Obion Farmers Co-Op, has served on Obion County ASCS and Obion County Soil
Conservation Committee. Elected to Board of Directors of CBO in 1979 and to
Board of Directors of CBI in 1987. Presently serves on CBO's Finance
Committee.
Mr. Ferguson graduated from Cloverdale High School in 1951. A farmer,
he has served as a Director of Farm Bureau and Obion Farmers Co-Op. Presently
President of Lane Gin Co., Inc., Obion, Tennessee. Elected to Board of
Directors of CBO in 1977 and Board of Directors of CBI in 1987.
Mr. Polk Glover graduated from Obion High School in 1956, Union
University, Jackson, TN in 1961 with a B.S. in Business. Farms 2,700 acres in
partnership with 2 brothers. Served on various boards and committees and is
presently a Trustee on the Executive Board of Union University, Jackson,
Tennessee. Elected to Board of Directors of CBO in 1971 and Board of Directors
of CBI in 1987.
Mr. Frank Glover graduated from Obion High School in 1960, received a
B.S. in Industrial Engineering from University of Tennessee and a M.B.A. from
University of Illinois. Farms 2,700 acres in partnership with 2 brothers.
Serves on Obion County Commission and serves as Chairman of Budget Committee.
Served as a director of Obion County Farm Bureau and Obion Farmers Co-Op, and
on Board of Trustees for Dyersburg State Community College, Dyersburg,
Tennessee. Elected to Board of Directors of CBO Bank in 1983 and Board of
Directors of CBI in 1987. Presently serves on Bank's Finance Committee.
Mr. Huey graduated from Troy High School and attended University of
Tennessee at Martin. Has served as Councilman for Town of Obion. Presently
President of Huey Brothers Lumber Co., Inc., Obion, Tennessee and has been in
lumber business all his life. Elected to Board of Directors of CBO in 1979 and
to Board of Directors of CBI in 1987.
Mr. Marshall graduated from Elbridge-Cloverdale High School in 1940.
World War II B-24 pilot. POW from November 1943 to 1945. Worked for
Forcum-Lannon Lumber Co., Inc., Obion, Tennessee 1946 until 1984, serving as
manager from 1950 until his 1984 retirement. He also served as Director of
Forcum-Lannom, Inc. from the late 60's until 1984. Elected to CBO Board of
Directors in 1971 and to CBI in 1987.
Mr. Wells, a retired farmer, worked several years for Obion Grain
Company, Obion, Tennessee, from which he retired in the mid-70's. Elected to
Board of Directors of CBO in 1971 and Board of Directors of CBI in 1987.
Executive Officers and Directors of Interim:
Name Age Position
- ---- --- --------
Jackson W. Moore 45 President and Director of Interim
Mr. Moore is President of UPC and has been since April 1, 1989.
Previous to that he was a partner with the law firm of Wildman, Harrold, Allen,
Dixon & McDonnell in Memphis, Tennessee.
35
<PAGE> 50
CBI Executive Compensation
No compensation is paid by CBI to any officers or directors. The
following table sets forth the compensation received by the President and Chief
Executive Officer of CBO for the periods indicated. CBO has no executive
officers whose total remuneration exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
NAME AND RESTRICTED
PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION AWARDS SARS PAYOUTS COMPENSATION(2)
- -------- ---- --------- ----- ------------ ------ -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel C. Pipkin 1993 $52,945 - - - - - 2,166.31
President and 1992 51,945 - - - - - 898.76
CEO of CBI, 1991 49,820 - - - - - 969.08
President &
CEO of CBO
</TABLE>
(1) Information under "Salary" includes fees for service as a director of CBO
and a member of the Finance Committee.
(2) Reflects automobile and insurance benefits received by Mr. Pipkin.
36
<PAGE> 51
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The directors and officers of CBI own approximately 17.1% of the shares
of CBI Common Stock issued and outstanding and will receive the Merger
consideration described above. All directors of CBI that are also directors of
CBO and all Directors of CBO are likely to retain their positions as directors
of CBO.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is abbreviated in
nature and is included for general information only. CBI 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 CBI as a result of the Merger, (ii) gain or loss will be
recognized by the CBI shareholders only to the extent of any cash consideration
received in respect to their CBI 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 CBI shareholders in connection with the
Merger will be the same as the basis in the CBI 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 CBI shareholders in
connection with the Merger will include the holding period of the CBI Common
Stock surrendered in exchange therefor, provided that the CBI 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. A CBI
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 CBI Common
Stock is held by such shareholder as a capital asset at the Effective Date of
the Merger.
Cash Received by Holders of CBI Common Stock Who Dissent. A shareholder
of CBI who perfects his dissenters' rights under the laws of Tennessee and who
receives a cash payment of the value of his shares of CBI 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 CBI 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 CBI Common Stock who contemplates
exercising his dissenters' rights should consult his own tax advisor as to the
possibility that any payment to him will be treated as dividend income.
ACCOUNTING TREATMENT
The Merger is intended to be treated by UPC and CBI 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 CBI 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
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<PAGE> 52
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 CBI
and UPC for the entire fiscal period in which the Merger occurs, which is
expected by UPC and CBI to be fiscal year 1994. Subsequent to the Merger
becoming effective, the reported income of CBI 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 CBI
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
CBI 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 CBI generally
include individuals or entities that control, are controlled by or are under
common control with CBI and will include members of the Management Group in
their roles as either executive officers, directors or ten percent (10%) or
greater shareholders of CBI. 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 CBI shareholder deemed an "affiliate"
of CBI 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 CBI for a period of not less than 30 days subsequent to the
Effective Date of the Merger. Shares of UPC Common Stock delivered to any CBI
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
federally-chartered savings bank
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<PAGE> 53
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 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.
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<PAGE> 54
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 June 30, 1994, UPC's Total risk based capital ratio was 18.02%, Tier
1 capital ratio was 14.56% and Leverage ratio was 7.18%. 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 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
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<PAGE> 55
undercapitalized institution, as well as any undercapitalized institution that
did not submit an acceptable capital restoration plan, may be subject to
regulatory demands for recapitalization, broader application of restrictions on
transactions with affiliates, limitations on interest rates paid on deposits,
asset growth and other activities, possible replacement of directors and
officers and restrictions on capital distributions by any bank holding company
controlling the institution. Any company controlling the institution could also
be required to divest the institution or the institution could be required to
divest subsidiaries. The senior executive officers of a significantly
undercapitalized institution may not receive bonuses or increases in
compensation without prior approval and the institution is prohibited from
making payments of principal or interest on its subordinated debt. If an
institution becomes critically undercapitalized, the institution will be
subject to conservatorship or receivership within 90 days unless periodic
determinations are made that forbearance from such action would better protect
the deposit insurance fund. Unless appropriate findings and certifications are
made by the appropriate federal bank regulatory agencies, a critically
undercapitalized institution must be placed in receivership if it remains
critically undercapitalized on average during the calendar quarter beginning
270 days after the date it became critically undercapitalized.
Dividend Restrictions. UPC is a legal entity separate and distinct from UPNB,
the Regional Banks, 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 July 1,
1994, the banking subsidiaries had approximately $12.8 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. UPNB received approval from the Comptroller to declare and pay a
dividend of approximately $98 million on July 1, 1994 in connection with the
reorganization of UPNB. See "Summary -- Recent Developments Affecting UPC."
It is the policy of the Federal Reserve that bank holding companies
should pay dividends only out of current earnings. Federal banking regulators
also have
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<PAGE> 56
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 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.
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FDIC Insurance Assessments. The subsidiary banks of UPC are subject to FDIC
deposit insurance assessments. The FDIC has adopted a risk-based premium
schedule which has increased the assessment rates for most FDIC-insured
depository institutions. Under the new schedule, the annual premiums initially
range from $.23 to $.31 for every $100 of deposits. Each financial institution
is assigned to one of three capital groups--well capitalized, adequately
capitalized or undercapitalized--and further assigned to one of three subgroups
within a capital group, on the basis of supervisory evaluations by the
institution's primary federal and, if applicable, state supervisors and on the
basis of other information relevant to the institution's financial condition
and the risk posed to the applicable insurance fund. The actual assessment
rate applicable to a particular institution will, therefore, depend in part
upon the risk assessment classification so assigned to the institution by the
FDIC.
RECENT BANKING LEGISLATION
In addition to the matters noted above, FDICIA made other significant
changes to the federal banking laws. FDICIA institutes certain changes to the
supervisory process, including provisions that mandate certain regulatory
agency actions against undercapitalized institutions within specified time
limits.
Standards for Safety and Soundness. FDICIA requires the federal bank
regulatory agencies to prescribe, by regulation, standards for all insured
depository institutions and depository-institution holding companies relating
to: (i) internal controls, information systems and audit systems; (ii) loan
documentation; (iii) credit underwriting; (iv) interest-rate risk exposure; (v)
asset growth; and (vi) compensation, fees and benefits. The compensation
standards must prohibit employment contracts, compensation or benefit
arrangements, stock option plans, fee arrangements or other compensatory
arrangements that would provide excessive compensation, fees or benefits or
could lead to material financial loss, but (subject to certain exceptions) may
not prescribe specific compensation levels or ranges for directors, officers or
employees. In addition, the federal banking regulatory agencies would be
required to prescribe by regulation standards specifying: (i) maximum
classified assets to capital ratios; (ii) minimum earnings sufficient to absorb
losses without impairing capital; and (iii) to the extent feasible, a minimum
ratio of market value to book value for publicly traded shares of depository
institutions and depository institution holding companies.
Brokered Deposits. The FDIC has adopted regulations governing the
receipt of brokered deposits. Under the regulations, a bank may not lawfully
accept, roll over or renew brokered deposits unless (i) it is well capitalized
or (ii) it is adequately capitalized and receives a waiver from the FDIC. A
bank that may not receive brokered deposits also may not offer "pass-through"
insurance on certain employee benefit accounts. Whether or not it has obtained
such a waiver, an adequately capitalized bank may not pay an interest rate on
any deposits in excess of 75 basis 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 June 30, 1994,
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.
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Miscellaneous. FDICIA also made extensive changes in the applicable
rules regarding audit, examinations and accounting. FDICIA generally requires
annual on-site full-scope examinations by each bank's primary federal
regulator. FDICIA also imposes new responsibilities on management, the
independent audit committee and outside accountants to develop, approve or
attest to reports regarding the effectiveness of internal controls, legal
compliance and off-balance-sheet liabilities and assets.
FDICIA also required the Federal Reserve to prescribe standards which
limit the risks posed by an insured institution's "exposure" to any other
depository institution to limit the risks that the failure of a large
depository institution would pose to an insured depository institution. FDICIA
broadly defines "exposure" to include extensions of credit to the other
institution; purchases of, or investments in, securities issued by the other
institution; securities issued by the other institution and accepted as
collateral for an extension of credit to any person; and all similar
transactions which the Federal Reserve defines by regulation to be exposure.
The Federal Reserve has proposed procedures and "benchmark" standards to limit
an insured depository institution's credit and settlement exposure to each of
its correspondent banks. The final rules were effective on December 19, 1992,
but provide for a two-year transition period.
DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide
depositor preference rule in the event of a bank failure. Under this
arrangement, all deposits and certain other claims against a bank, including
the claim of the FDIC as subrogee of insured depositors, would receive payment
in full before any general creditor of the bank would be entitled to any
payment in the event of an insolvency or liquidation of the bank.
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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 July 31, 1994, 23,045,058 shares of UPC Common Stock were
issued and outstanding, and approximately 666,000 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 1,175,000 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 July
31, 1994; 4,095,577 shares of UPC Preferred Stock were issued and outstanding,
consisting of 44,000 shares of UPC's $8.00 Nonredeemable, Cumulative,
Convertible Preferred Stock, Series B (the "Series B Preferred Stock"); 690,000
shares of UPC's 10 3/8% Increasing Rate, Redeemable, Cumulative Preferred
Stock, Series C (the "Series C Preferred Stock"); 253,655 shares of UPC's 9.5%
Redeemable, Cumulative Convertible Preferred Stock, Series D (the "Series D
Preferred Stock"); and 3,107,922 shares of the UPC's 8% Cumulative, Convertible
Preferred Stock, Series E (the "Series E Preferred Stock"). As of July 31,
1994, none of UPC's 250,000 authorized shares of Series A Preferred Stock were
issued and outstanding. THE CAPITAL STOCK OF UPC DOES NOT REPRESENT OR
CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT 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.
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
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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 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. Subject to receiving the prior approval of the
Federal Reserve, it is UPC's present intention to redeem all of its outstanding
shares of Series C Preferred Stock on October 31, 1994.
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
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<PAGE> 61
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 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.
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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.
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.
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EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS
At the Effective Time of the Merger, shareholders of CBI (except for
any CBI 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 CBI.
REMOVAL OF DIRECTORS
CBI's Bylaws provide that its directors may be removed with cause by
vote of a majority vote of the entire CBI Board. CBI'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.
REQUIRED SHAREHOLDER VOTES
CBI'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
CBI's Bylaws provide for only one class of directors, and shareholders
are entitled to elect CBI directors annually with terms not to exceed three
years. The number of directors may be fixed from time to time by a majority of
the entire board of directors within the parameters set forth in the Bylaws.
UPC's Bylaws provide for a classified board of directors consisting of
three classes with staggered terms of three years each. Therefore, UPC
shareholders are entitled to elect only one-third of UPC's directors annually.
The number of directors shall be not less than 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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COMMERCIAL BANCORP, INC.
Commercial Bancorp, Inc. ("CBI") was organized as a Tennessee
corporation in 1986, and is headquartered in Obion, Tennessee. CBI is a
one-bank holding company registered with and regulated by the Federal Reserve.
The Commercial Bank ("CBO") was chartered as a state banking association in
1903 and commenced operations that same year. CBO'S main office is located at
224 Seventh Street, P. O. Box 297, Obion, Tennessee 38240. There is one other
full service branch in Elbridge, Tennessee. CBO had total assets as of June
30, 1994, of $29 million and total deposits of $25 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.
The deposits of CBO are insured by the FDIC up to the maximum allowed by law.
All of the outstanding shares of common stock of CBO are owned by CBI.
CBI has no subsidiaries other than CBO.
As of June 30, 1994, CBO had approximately 15 full-time employees and
no part-time employees. CBI has no employees. Management believes that CBO
has a good relationship with its employees. CBO has a defined benefit pension
plan for its employees as well as group health, disability and life insurance
coverage.
PROPERTY
CBO owns its main office and its branch office. CBO owns one parcel
of foreclosed property as of June 30, 1994. This property has been written off
of the books of CBI and is not reflected in the CBI Financial Statements.
COMPETITION
CBO competes with numerous other commercial banks and other financial
institutions in Obion and Dyer Counties in Tennessee. There are other
commercial banks, savings and loan institutions, credit unions, and other
companies offering financial services in Obion, Dyer and surrounding counties.
DEPOSITS
Management of CBO does not believe there are any depositors whose
withdrawals would have a significant effect on the deposits of CBO.
LEGAL PROCEEDINGS
As of the date of this Prospectus, neither CBI nor CBO is involved as
defendant in any legal matters that management of CBI deems would have a
material impact on the financial position or results of operations of CBI.
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MARKET PRICE OF CBI COMMON STOCK
The CBI Common Stock has no established trading market, and relatively
few transfers have occurred since CBI was organized in 1986. There has been
only intermittent trading in the CBI Common Stock, all of which has occurred in
the price range between $50 and $66 per share. As of August 29, 1994, there
were 91 shareholders of record of the CBI Common Stock and a total of 20,000
shares of CBI Common Stock issued and outstanding.
CBO has historically declared and paid dividends semi-annually with
all dividends payable to CBI to be used for funding of CBI'S dividend payments
to its shareholders. CBI has historically declared and paid cash dividends
semi-annually with the most recent dividend paid on June 24, 1994, being $2.25
per share.
CERTAIN BENEFICIAL HOLDERS OF CBI COMMON STOCK
The following table sets forth certain information with respect to
those known to CBI to be beneficial owners of more than five percent (5%) of
the CBI Common Stock.
NAME AND ADDRESS OF NUMBER OF % OF
BENEFICIAL OWNER SHARES TOTAL
- ------------------- --------- -----
Joel C. Pipkin(1) 1,026 5.13%
Obion, TN
Elizabeth B. Glover(2) 3,100 15.50%
Obion, TN
Edward H. Lannom, Jr.(3) 2,120 10.60%
Dyersburg, TN
Gladys W. Pardue 1,720 8.60%
Obion, TN
(1) Mr. Pipkin is also a director of CBI.
(2) Dale Francis Glover, Jr. and William Polk Glover, who are both directors
of CBO, have a power of attorney on Mrs. Glover's stock.
(3) Mr. Lannom also is a co-executor of the Edna Brown Forcum Estate which
owns an additional 800 shares.
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HOLDINGS OF CBI COMMON STOCK BY CBI MANAGEMENT
The following executive officers and directors of CBI and CBO held the
following amounts and percentages of the outstanding CBI Common Stock as of
August 29, 1994:
<TABLE>
<CAPTION>
NUMBER OF % OF
NAME SHARES TOTAL(1)
---- --------- -----
<S> <C> <C>
Herman Denning 150 0.75
Melvin Ferguson 500 2.50
Billy Fielder 181 0.91
Dale Francis Glover, Jr. 700 3.50
William Polk Glover 355 1.78
James A. Huey 400 2.00
Perry Marshall 50 0.25
Joel C. Pipkin 1,026 5.13
J. Kirk Wells 50 0.25
Executive Officers Not Direct
- -----------------------------
Judy Knight 5 0.03
Talmadge Brown 1 0.01
------ ------
3,418 17.11
====== ======
</TABLE>
(1) Individual percentages may differ from total percentage due to rounding
to the nearest hundredth.
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COMMERCIAL BANCORP, INC., 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 Commercial Bancorp, Inc., ("CBI")
as of December 31, 1993 and 1992, and the results of operations of CBI for each
of the fiscal years ended December 31, 1993, 1992, and 1991, and the six-month
periods ended June 30, 1994 and 1993. This discussion should be read in
conjunction with the audited consolidated financial statements and the notes
thereto as of and for the year ended December 31, 1993, the unaudited
consolidated financial statements and the notes thereto as of and for the two
years ended December 31, 1992, and the unaudited interim financial statements
as of June 30, 1994 and 1993, presented in Appendix A of this Prospectus and
Proxy Statement.
OVERVIEW
For a summary of selected consolidated financial data as of and for the years
ended December 31, 1989 through 1993 and for the six- month periods ended June
30, 1994 and 1993, see page 8 of this Prospectus/Proxy Statement. Since
December 31, 1989, total assets of CBI have grown at an average annual rate of
approximately 2.63% to $28.702 million at December 31, 1993. Assets have
increased to $28.731 million at June 30, 1994, which represents an annualized
growth rate of .2%.
CBI's net income for the year ended December 31, 1993, of $360,000 represents
the highest level for the five year period ended December 31, 1993, and
compares to net income of $274,000 for the year ended December 31, 1990, which
represents the lowest earnings for the same five year period. Net income for
the six-month period ended June 30, 1994, was $163,000 representing a decrease
of $23,000 from net income of $186,000 for the same period in 1993.
There has been steady growth in both assets and earnings since 1989, with a
slight decline in earnings for the period ended June 30, 1994. However, such
growth is dependent on the economies of the markets served by CBI and other
factors which are discussed below. CBI is located in Obion, Obion County,
Tennessee.
SOURCES AND USES OF FUNDS
CBI has a variety of sources of funds available, but its primary resource is
the taking of deposits from customers, both individual and business. CBI'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, CBI
utilizes time deposits over $100,000 and public deposits for additional sources
of funds. At December 31, 1993, the percentage of time deposits over $100,000
to total deposits was 10.27% compared to 10.67% at December 31, 1992. The
acquisition of deposits are from customers, individuals and businesses within
CBI's market area. Management believes that the rates offered for deposits are
competitive with the rates of other financial institutions in CBI's market
area.
CBI's primary use of funds is the purchasing of debt and equity securities.
During 1993, the investment portfolio averaged 55.92% of total earning assets
of CBI compared to 55.46% in 1992. Table 3 presents the composition of
investment securities at December 31, 1993 and 1992, with the average yields
and maturities of the portfolio detailed in Table 4. The portfolio is
comprised of U.S. Treasury obligations, obligations of U.S. Government
agencies, obligations of state and local governments and mortgage backed
securities. CBI's management has not in the past nor does it intend 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, 1993, 1992
and 1991. At June 30, 1994, the market value of the investment portfolio
exceeded the carrying value by approximately $278,000. Effective December 31,
1993, CBI adopted SFAS No. 115, Accounting for Certain Investments in Debt and
Equity Securities. Consequently, securities available-for-sale were recorded
at their fair market value, with an offsetting credit to equity of $85,316, net
of deferred income taxes of $56,878.
53
<PAGE> 68
A secondary use of funds is the making of loans to customers. During 1993, the
loan portfolio averaged 38.50% of total earning assets of CBI compared to
39.58% in 1992. Table 5 presents the composition of the loan portfolio at
December 31, 1993 and 1992. CBI's loan portfolio is comprised of loans to
individuals and businesses secured by various types of collateral, and in
certain circumstances, loans are extended on an unsecured basis.
For liquidity purposes, CBI has also invested other funds in federal funds
sold. The level of such invested funds varies based on the liquidity needs of
CBI and the timing of other activities of CBI, including lending and deposit
activities.
FINANCIAL CONDITION
Total assets have increased at June 30, 1994, to $28.731 million, compared to
$28.702 million at December 31, 1993. Total assets were $28.242 million at
December 31, 1992.
Investment securities totaled $16.041 million at June 30, 1994, compared to
$15.037 million and $14.556 million at December 31, 1993 and 1992,
respectively. The level of investment securities in the future will depend on
loan demand and the ability of management to attract quality loans.
Total loans, net of unearned income, at June 30, 1994, were $10.450 million,
compared to $10.566 million and $10.606 million at December 31, 1993 and 1992,
respectively, which evidences a stable loan portfolio.
Federal funds sold totaled $375,000 at June 30, 1994, compared to $1.5 million
at December 31, 1993, a $1.125 million decrease. This decrease was offset by
an increase in investment securities. Such invested funds totaled $1.3 million
at December 31, 1992.
Customer deposits totaled $24.730 million as of June 30, 1994, a $51,000
increase over total deposits of $24.679 million as of December 31, 1993. Total
deposits increased $90,000 from total deposits of $24.589 million at December
31, 1992 to December 31, 1993.
At June 30, 1994, CBI's loan to deposit ratio was 42.26%, compared to 42.81%
and 43.13% at December 31, 1993 and 1992, respectively. Total equity as of
June 30, 1994, was $3.828 million, compared to $3.785 million and $3.419
million at December 31, 1993 and 1992, respectively. The increase for each
period is attributable to net income for the applicable period less dividends
paid by CBI of $80,000, $67,000 and $60,000 for the years ended December 31,
1993, 1992 and 1991, respectively.
CBI's equity to assets ratio was 13.32% at June 30, 1994, compared to 13.19%
and 12.11% as of December 31, 1993 and 1992, respectively. The ratio of equity
to assets has increased due to earnings in excess of dividends paid.
RESULTS OF OPERATIONS - SIX-MONTH PERIODS ENDED JUNE 30, 1994 AND 1993
Net Income - Net income for the six-month period ended June 30, 1994, was
$162,841 or $8.14 per common share, a decrease from the $186,749 or $9.34 per
common share reported for the same period in 1993. A detailed analysis of the
components of net income is included below.
The annualized return on average assets for the six-month period ended June 30,
1994, was 1.15% versus 1.34% for the same period in 1993 and 1.27% for the year
ended December 31, 1993. The annualized return on average equity for the
six-month period ended June 30, 1994, was 8.80%, compared to 10.93% for the
same period in 1993 and 10.01% for the year ended December 31, 1993. The
decrease in 1994 was due in part to an accounting change of recording
securities available-for-sale at market value, with the resulting unrealized
gain/loss, net of deferred income taxes, being recorded in equity.
Net Interest Income - Net interest income is the major component of CBI's
income. Net interest income before the provision for loan losses was $551,181
and $591,775 for the six-month periods ended June 30, 1994 and 1993,
respectively. Total interest income decreased from $990,328 for the six-month
period ended June 30, 1993 to $959,903 for the same period in 1994. Total
54
<PAGE> 69
interest expense increased from $398,553 for the six-month period ended June
30, 1993 to $408,722 for the same period in 1994. The decrease in total
interest income is a result of the declining interest rate environment
experienced in 1992 and 1993, continuing in 1994. 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 - There was no provision for loan losses for the
six-month periods ended June 30, 1994 and 1993. The allowance for loan losses,
which totaled $212,881 at June 30, 1994, has been, in management's opinion,
sufficient to support the loan portfolio and levels of non-performing 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 allowance for loan losses at June 30, 1994,
represents 2.04% of outstanding loans, net of unearned income.
55
<PAGE> 70
A summary of the activity in the allowance for loan losses (rounded to
thousands) for the six-month periods ended June 30, 1994 and 1993 is set forth
below.
1994 1993
-------- --------
Balance - January 1 $213,000 $218,000
Provision charged to expense -- --
Net loans charged off -- 1,000
-------- --------
Balance - June 30 $213,000 $217,000
======== ========
Loans past due 90 days or more and still accruing interest were $20,000 and
$1,000 at June 30, 1994 and December 31, 1993, respectively. At the same
dates, CBI had no loans on non-accrual status. Management has reviewed in
detail all other loans outstanding as of June 30, 1994, and believes there are
none 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 June 30, 1994, there were no foreign loans outstanding and no
concentrations of loans (other than agricultural loans, as disclosed in the
notes to the financial statements) exceeding 10% of total loans outstanding.
CBI'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.
CBI has not yet adopted SFAS No. 114, Accounting by Creditors for Impairment of
a Loan. The effect of this pronouncement has not yet been determined.
Non-interest Income - Non-interest income for the six-month period ended June
30, 1994, was $50,593, an increase of $11,721 from the $38,872 for the same
period in 1993. The primary sources of non-interest income are from service
charges on deposits and other miscellaneous income from the operations of CBI.
Service charges were $46,000 for the six-month period ended June 30, 1994,
compared to $38,000 for the same period in 1993, which represents the largest
fluctuation in non-interest income between the periods.
Non-interest Expenses - Non-interest expenses for the six-month period ended
June 30, 1994, were $350,020, a $3,227 increase over the $346,793 reported for
the same period in 1993. The primary components of non-interest expenses are
salaries and benefits, occupancy, FDIC insurance premiums and other operating
expenses of CBI. No significant increase or decrease from 1993 to 1994 in the
individual items comprising non-interest expenses occurred.
Income Taxes - The provision for income taxes for the six-month period ended
June 30, 1994, totaled $88,913, compared to $97,105 for the same period in
1993. The decrease is due to lower pre-tax earnings as a result of the items
discussed above. The effective tax rate for the six-month period ended June
30, 1994, was 35.32%, compared to 34.21% for the same period in 1993 and 34.07%
for the year ended December 31, 1993.
Effective January 1, 1993, CBI adopted SFAS 109, "Accounting for Income Taxes,"
which did not have a material impact on CBI's financial position or results of
operations.
RESULTS OF OPERATIONS - FOR THE YEARS ENDED DECEMBER 31, 1993, 1992, AND 1991
Net Income - Net income for 1993 was $360,000, a slight increase over 1992 net
income of $352,000. Net income for 1992 increased $20,000 from net income of
$332,000 for 1991. Net income per share was $18.02 in 1993, compared to $17.58
in 1992 and $16.61 in 1991.
56
<PAGE> 71
A more detailed analysis of the components of net income and the changes in
such components is included under the appropriate captions below.
The return on average assets for the year ended December 31, 1993, was 1.27%
compared to 1.25% and 1.21% for 1992 and 1991, respectively. The return on
average equity for 1993 was 10.01% compared with 10.73% and 11.08% for the
years ended December 31, 1992 and 1991, respectively. CBI declared and paid
dividends on its common stock of $80,000, $67,000, and $60,000 for the years
ended December 31, 1993, 1992, and 1991, respectively.
Net Interest Income - Net interest income, the major component of CBI'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 attached information, provide an analysis of net interest income for the
years ended December 31, 1993, 1992 and 1991.
Net interest income was $1.158 million for the year ended December 31, 1993,
compared to $1.150 million and $1.073 for the years ended December 31, 1992 and
1991, respectively. The growth in net interest income has come from increased
levels of interest-earning assets over the growth in interest-bearing
liabilities, rather than significant changes in yields and rates. The changes
in yields and rates have changed the levels of total interest income and
interest expense; however, such changes have not significantly altered the
overall level of net interest income.
57
<PAGE> 72
COMMERCIAL BANCORP, INC.
TABLE 1 -INTEREST RATE AND INTEREST DIFFERENTIAL
(Dollars in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992
---- ----
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets
Loans, net of unearned income(1) $10,126 $ 949 9.37% $10,848 $ 1,102 10.16%
Taxable investment securities 12,214 830 6.80% 11,647 904 7.76%
Nontaxable investment securities(2) 2,640 133 5.04% 2,425 132 5.44%
Federal funds sold and securities
purchased with agreements to resell 1,596 45 2.82% 1,616 55 3.40%
Total interest earning assets(2) $26,576 $ 1,957 7.36% $26,536 $ 2,193 8.26%
------- -------
Noninterest earning assets
Cash and due from banks 782 693
Premises and equipment 161 188
Other assets 773 716
Less allowance for loan losses (216) (220)
------- -------
Total assets $28,076 $27,913
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Money market accounts $ 5,583 $ 155 2.78% $ 5,072 $ 174 3.43%
Savings deposits 2,179 78 3.58% 1,768 74 4.19%
Certificates of deposit over
$100,000 2,538 105 4.14% 2,492 143 5.74%
Other time deposits 11,971 461 3.85% 13,153 652 4.96%
------- ------- ------- -------
Total interest-bearing
liabilities $22,271 $ 799 3.59% $22,485 $ 1,043 4.64%
------- -------
Noninterest-bearing liabilities
Domestic demand deposits 2,071 1,937
Other liabilities 177 247
Shareholders' equity 3,557 3,244
------- -------
Total liabilities and
shareholders' equity $28,076 $27,913
======= =======
NET INTEREST INCOME $ 1,158 $ 1,150
======= =======
NET YIELD ON INTEREST EARNING ASSETS 4.36% 4.33%
=====
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------
1991
----
Average Yield/
Balance Interest Rate
------- -------- ----
<S> <C> <C> <C>
ASSETS
Interest earning assets
Loans, net of unearned income(1) $10,649 $ 1,263 11.86%
Taxable investment securities 11,797 1,029 8.72%
Nontaxable investment securities(2) 2,211 134 6.06%
Federal funds sold and securities
purchased with agreements to resell 1,379 74 5.37
Total interest earning assets(2) $26,036 $ 2,500 9.60%
-------
Noninterest earning assets
Cash and due from banks 577
Premises and equipment 199
Other assets 719
Less allowance for loan losses (223)
-------
Total assets $27,308
=======
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities
Money market accounts $ 4,301 $ 211 4.91%
Savings deposits 1,297 70 5.40%
Certificates of deposit over
$100,000 2,608 194 7.44%
Other time deposits 14,068 952 6.77%
------- -------
Total interest-bearing
liabilities 22,274 1,427 6.41%
-------
Noninterest-bearing liabilities
Domestic demand deposits 1,763
Other liabilities 321
Shareholders' equity 2,950
-------
Total liabilities and
shareholders' equity $27,308
=======
NET INTEREST INCOME $ 1,073
=======
NET YIELD ON INTEREST EARNING ASSETS 4.12%
=====
</TABLE>
(1) 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.
58
<PAGE> 73
COMMERCIAL BANCORP, INC.
TABLE 2 - VOLUME AND YIELD/RATE VARIANCES
(Dollars in thousands)
<TABLE>
<CAPTION>
1993 Compared to 1992 1992 Compared to 1991
-------------------------------------- ----------------------------------
Increase (Decrease) Due to (*) Increase (Decrease) Due to (*)
-------------------------------------- ----------------------------------
Volume Rate Net Volume Rate Net
------ -------- ------- ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans, net of unearned income $(73) $ (80) $(153) $ 24 $(185) $(161)
Taxable investment securities 44 (118) (74) (13) (112) (125)
Nontaxable investment securities 12 (11) 1 13 (15) (2)
Federal funds sold and securities purchased
with agreements to resell (1) (9) (10) 13 (32) (19)
---- ----- ----- ---- ----- -----
Total income from interest-earning assets $(18) $(218) $(236) $ 37 $(344) $(307)
---- ----- ----- ---- ----- -----
Interest paid on:
Money market accounts $ 17 $ (36) $ (19) $ 38 $ (75) $ (37)
Savings deposits 17 (13) 4 25 (21) 4
Certificate of deposits of $100,000 and over 3 (41) (38) (9) (42) (51)
Other time deposits (58) (133) (191) (62) (238) (300)
---- ----- ----- ---- ----- -----
Total expense on interest-bearing liabilities $(21) $(223) $(244) $ (8) $(376) $(384)
---- ----- ----- ---- ----- -----
Net interest income $ 3 $ 5 $ 8 $ 45 $ 32 $ 77
==== ===== ===== ==== ===== =====
</TABLE>
(*) The change in interest due to both rate and volume has been allocated on
a consistent basis to rate.
59
<PAGE> 74
TABLE 3
INVESTMENT SECURITIES AT CARRYING VALUE
(DOLLARS IN THOUSANDS)
December 31,
------------------------
1993 1992
------- --------
U.S. Treasury securities $ 1,132 $ 393
U.S. Government and Federal Agencies 6,735 5,588
State and local governments 2,930 2,705
Mortgage-backed securities 4,240 5,870
------- -------
Total investments $15,037 $14,556
======= =======
TABLE 4
PORTFOLIO MATURITIES AND YIELDS (DOLLARS IN THOUSANDS)
DECEMBER 31, 1993
Carrying Average
Value Yield(1)
-------- --------
U.S. Treasury Securities
One to five years $ 1,132 5.11%
-------
U.S. Government and Federal Agencies
Within one year $ 756 7.40%
One to five years 4,474 6.00%
Five to ten years 1,360 6.64%
Over ten years 145 6.65%
-------
Total $ 6,735
-------
State and local governments
Within one year 455 6.54%
One to five years 966 6.02%
Five to ten years 1,509 4.87%
-------
Total $ 2,930
-------
Mortgage-backed securities 4,240 5.91%
-------
Total investments $15,037
=======
(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 which have an aggregate book value as of December 31, 1993,
exceeding ten percent of equity as of that date.
60
<PAGE> 75
TABLE 5
GROSS LOANS BY CATEGORY (DOLLARS IN THOUSANDS)
December 31,
-----------------------
1993 1992
-------- --------
Real estate:
Secured by single-family $ 3,562 $ 3,520
Construction, land development and other
commercial 1,818 1,394
Secured by farmland 1,157 1,267
Commercial and industrial 328 673
Agricultural 1,282 1,421
Installment loans on individuals 2,535 2,451
Other loans 34 24
------- -------
Total $10,716 $10,750
Unearned income 150 144
------- -------
Loans, net of unearned income $10,566 $10,606
======= =======
Loans made by CBI to directors, officers, and those individuals or
organizations that are related to them totaled $431,430 and $395,260 as of
December 31, 1993 and 1992, 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.
61
<PAGE> 76
Table 6 sets forth loan maturity and interest rate sensitivity of loans as of
December 31, 1993.
TABLE 6
LOAN MATURITY (DOLLARS IN THOUSANDS)
DECEMBER 31, 1993
<TABLE>
<S> <C>
Fixed rate loans:
Three months or less $ 873
After three months through one year 2,273
After one year through five years 1,882
After five years 17
-------
Total fixed rate loans $ 5,045
Floating rate loans
With repricing quarterly or more frequently 1,212
With repricing annually or more frequently
but less frequently than quarterly 2,059
With repricing every five years or more
frequently, but less frequently than annually 2,250
-------
Total loans, net of unearned income $10,566
=======
</TABLE>
TABLE 7
NONPERFORMING ASSETS (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
---------------------------------------
1993 1992
-------- --------
<S> <C> <C>
Loans past due 90 days $1 $13
Nonaccrual loans, excluding loans past due 90 days - -
Restructured loans - -
Other real estate owned - -
------ ------
$1 $13
====== ======
</TABLE>
62
<PAGE> 77
TABLE 8
SUMMARY OF LOAN LOSS EXPERIENCE (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the year ended December 31,
-----------------------------------
1993 1992
---- ----
<S> <C> <C>
Balance, January 1 $218 $211
Provision for loan losses - 22
Loans charged off:
Commercial 1 23
Installment 5 4
---- ----
Total loans charged off (6) (27)
Recoveries:
Commercial - 7
Installment 1 5
---- ----
Total recoveries 1 12
---- ----
Net charge-offs (5) (15)
---- ----
Balance, December 31 $213 $218
==== ====
Loans, net of unearned income
Year-end 10,566 10,606
Average during year 10,126 10,848
Allowance for loan losses to year-end loans, net
of unearned income 2.02% 2.06%
</TABLE>
TABLE 9
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the year ended December 31,
-----------------------------------------------------------
1993 1992
---------------------- ---------------------
Amount % Amount %
------- --- ------ ---
<S> <C> <C> <C> <C>
Real estate $ 11 5 $ 11 5
Commercial and industrial 94 44 96 44
Agricultural 47 22 48 22
Other 61 29 63 29
---- --- ---- ---
Total $213 100 $218 100
==== === ==== ===
</TABLE>
63
<PAGE> 78
TABLE 10
AVERAGE DEPOSITS (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the year ended December 31,
----------------------------------
1993 1992
------- -------
<S> <C> <C>
Interest bearing:
Demand $ 5,583 $ 5,072
Savings 2,179 1,768
Time 14,509 15,645
Non-interest bearing:
Demand 2,071 1,937
------- -------
Total deposits $24,342 $24,422
======= =======
</TABLE>
Included in time deposits are $2,535,000 of certificates of deposit of $100,000
or greater, the maturities of which are set forth in the table on the following
page.
TABLE 11
TIME DEPOSIT MATURITY
$100,000 OR GREATER (DOLLARS IN THOUSANDS)
AS OF DECEMBER 31, 1993
<TABLE>
<S> <C>
Three months or less $ 933
Over three months through twelve months 1,602
------
Total $2,535
======
</TABLE>
64
<PAGE> 79
VALIDITY OF UPC COMMON STOCK
The validity of the shares of UPC Common Stock offered hereby will be passed
upon by Gary A. Simanson, Assistant Secretary and Associate General Counsel of
UPC. Gary A. Simanson is an officer of UPC and receives compensation from UPC.
EXPERTS
The consolidated financial statements of Union Planters Corporation
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
of UPC for the year ended December 31, 1993, have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated balance sheets of Grenada Sunburst Systems Corporation and
subsidiaries, as of December 31, 1993 and 1992, and the related consolidated
statements of income, stockholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1993 have been incorporated in this
Proxy Statement/Prospectus by reference to the Current Report of Union Planters
Corporation on Form 8-K dated July 26, 1994, have been incorporated in reliance
upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of Commercial Bancorp, Inc. and
Subsidiary as of and for the year ended December 31, 1993, included in this
Prospectus, have been so included in reliance on the report of Dunn, Creswell,
Sparks, Smith, Horne & Downing, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The consolidated financial statements of BNF BANCORP, INC., formerly
BANCFIRST Corporation, ("BNF") as of September 30, 1993 and 1992 and for each
of the three years in the period ended September 30, 1993 incorporated in this
Proxy Statement/Prospectus by reference to the Current Report of Union Planters
Corporation on Form 8-K dated February 8, 1994 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting
and auditing.
65
<PAGE> 80
UNION PLANTERS CORPORATION
INDEX TO APPENDICES
<TABLE>
<CAPTION>
APPENDIX
NUMBER
- --------
<S> <C> <C>
A-1 -- Commercial Bancorp, Inc. and Subsidiary Audited Consolidated Financial Statements as of December 31, 1993 and for
the year ended December 31, 1993
A-2 -- Commercial Bancorp, Inc. and Subsidiary Unaudited Consolidated Financial Statements as of December 31, 1992 and for
the two years ended December 31, 1992
A-3 -- Commercial Bancorp, Inc. and Subsidiary Unaudited Consolidated Financial Statements as of June 30, 1994, and for the
six-month periods ended June 30, 1994 and 1993
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
</TABLE>
<PAGE> 81
APPENDIX A-1
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1993 AND FOR THE YEAR ENDED
DECEMBER 31, 1993
<PAGE> 82
COMMERCIAL BANCORP, INC.
AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1993
AND FOR THE YEAR ENDED
DECEMBER 31, 1993
<PAGE> 83
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<S> <C>
INDEPENDENT AUDITORS' REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
CONSOLIDATED BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
CONSOLIDATED STATEMENT OF INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CONSOLIDATED STATEMENT OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
<PAGE> 84
Independent Auditors' Report
The Stockholders and Board of Directors
Commercial Bancorp, Inc. and Subsidiary
Obion, Tennessee 38240
We have audited the accompanying consolidated balance sheet of Commercial
Bancorp, Inc., and subsidiary as of December 31, 1993, and the related
consolidated statements of income, changes in equity and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in
all material respects, the financial position of Commercial Bancorp, Inc., and
subsidiary at December 31, 1993, and the results of its operations and its cash
flows for the year then ended, in conformity with generally accepted accounting
principles.
As described in Notes 1 and 6 to the financial statements, The Commercial Bank
changed its method of accounting for securities and income taxes in 1993 as
required by the provisions of Statements of Financial Accounting Standards No.
115 and 109.
Dunn, Creswell, Sparks, Smith, Horne & Downing
Certified Public Accountants
January 6, 1994
<PAGE> 85
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
December 31, 1993
<TABLE>
<S> <C> <C>
ASSETS
Cash and due from banks $ 840,326
Other receivables 2,043
Investment securities:
Held-to-maturity, at amortized cost (market value $11,862,436) 11,285,962
Available-for-sale, at market value 3,751,915
Federal funds sold 1,500,000
Loans, net of allowance for loan losses of $212,977
and unearned income of $150,473 10,352,498
Property and equipment, net of accumulated depreciation of $484,772 151,655
Accrued interest 680,965
Goodwill 79,422
Other assets 57,727
------------------
Total Assets $ 28,702,513
==================
LIABILITIES AND EQUITY
Liabilities
Noninterest-bearing deposits $ 2,191,371
Interest-bearing deposits 19,952,585
Certificates of deposit over $100,000 2,534,639
------------------
Total deposits $ 24,678,595
Accrued interest 121,310
Deferred taxes 56,878
Other liabilities 61,123
------------------
Total Liabilities $ 24,917,906
Commitments & Contingencies (See Note 7) --
Equity
Capital stock-100,000 shares authorized, $10 par, $ 200,000
20,000 shares issued and outstanding
Additional paid-in capital 1,914,029
Retained earnings-unappropriated 1,585,262
Unrealized gain on securities
available-for-sale, net of deferred income taxes 85,316
------------------
Total Equity 3,784,607
------------------
</TABLE>
See accompanying notes
-2-
<PAGE> 86
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
<TABLE>
<S> <C> <C>
Total Liabilities and Equity $ 28,702,513
==============
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
For the year ended December 31, 1993
Interest income
Loans, including fees $ 949,314
Federal funds sold 45,489
Investment securities - taxable 829,644
Investment securities - non-taxable 132,778
--------------
Total interest income $ 1,957,225
Interest expense
Interest on deposits 798,814
--------------
Net interest income $ 1,158,411
Provision for loan losses -
--------------
Net interest income after provision for loan losses $ 1,158,411
Noninterest income (expense)
Service charges $ 83,377
Rent income 4,683
Other income 985
Amortization of goodwill (2,365)
Loss on sale of bonds (1,500)
Salaries and benefits (358,326)
FDIC Insurance (54,980)
Taxes and licenses (43,562)
Occupancy expenses (42,121)
Director fees (24,500)
Other expenses (173,470)
-----------------
Total noninterest income (expense) (611,779)
--------------
Net income before taxes $ 546,632
Corporate income taxes 186,214
--------------
Net income $ 360,418
==============
Weighted average shares
outstanding 20,000
Earnings per share $ 18.02
==============
</TABLE>
See accompanying notes
-3-
<PAGE> 87
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended December 31, 1993
<TABLE>
<CAPTION>
Unrealized
Gain on
Additional Securities
Capital Paid-in Retained Available-
Stock Capital Earnings for-Sale
--------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
Balance - January 1, 1993 $200,0000 $1,914,0299 $1,304,844 $
Net income for the year - - 360,418 -
Cash dividends paid - $4 per share - - (80,000) -
Unrealized gain on securities
available-for-sale, net of deferred
income taxes of $56,878
- - - 85,316
--------- ----------- ---------- --------------
Balance - December 31, 1993 $200,0000 $1,914,0299 $1,585,262 $ 85,316
========= =========== ========== ==============
</TABLE>
See accompanying notes
-4-
<PAGE> 88
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended December 31, 1993
<TABLE>
<S> <C> <C>
Cash flows from operating activities
Net income $ 360,418
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation $ 16,967
Amortization of goodwill 2,365
Loss on sale of bonds 1,500
Bond premium amortization, net of discount accretion 16,523
Decrease in other receivables 24,719
Increase in accrued interest receivable (75,133)
Increase in other assets (837)
Decrease in accrued interest payable (10,881)
Decrease in other liabilities (33,773)
------------------
Total adjustments (58,550)
----------------------
Net cash provided by operating activities $ 301,868
Cash flows from investing activities
Proceeds from calls and maturities of investment securities $ 5,275,997
Purchase of investment securities (5,832,630)
Proceeds from sale of bonds 198,500
Net increase in federal funds sold (200,000)
Purchase of property & equipment (369)
Net decrease in loans 29,740
------------------
Net cash used by investing activities (528,762)
Cash flows from financing activities
Cash dividends paid $ (80,000)
Net increase in deposits 89,011
------------------
Net cash provided by financing activities 9,011
----------------------
Net decrease in cash and cash equivalents $ (217,883)
Cash and cash equivalents - January 1, 1993 1,058,209
----------------------
Cash and cash equivalents - December 31, 1993 $ 840,326
======================
Supplemental disclosures of cash flow information
Cash paid for interest $ 809,695
======================
Cash paid for income taxes $ 197,137
======================
Non-cash investing activity:
Unrealized gain on securities available-for-sale -
$142,194; less deferred income taxes of $56,878 $ 85,316
======================
</TABLE>
See accompanying notes
-5-
<PAGE> 89
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Commercial Bancorp, Inc., and its
subsidiary conform to generally accepted accounting principles and to banking
industry practices and are summarized as follows:
A. Organization - Commercial Bancorp, Inc., is a one-bank holding company
chartered under the laws of the State of Tennessee. The Corporation owns
all of the outstanding capital stock of The Commercial Bank of Obion.
B. Principles of Consolidation - The consolidated financial statements
include the accounts of the Corporation and its subsidiary. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
C. Basis of Accounting - The books, records and financial statements of the
Corporation are maintained on the accrual basis of accounting.
D. Cash Equivalents - The Corporation considers all temporary cash
investments with an original maturity of three months or less when
purchased to be cash equivalents.
E. Investment Securities - The Corporation adopted SFAS 115 effective
December 31, 1993. The effect on the financial statements was a credit to
equity in the amount of $85,316, net of deferred income taxes of $56,878.
Debt securities that management has the ability and intent to hold to
maturity are classified as held-to-maturity and carried at cost, adjusted
for amortization of premium and accretion of discounts using methods
approximating the interest method. Other marketable securities are
classified as available-for-sale and are carried at fair value.
Unrealized gains and losses on securities available-for-sale are
recognized as direct increases or decreases in stockholders' equity. Cost
of securities sold is recognized using the specific identification method.
F. Property and Equipment - Property and equipment are stated at cost less
accumulated depreciation. The provision for depreciation is computed
using accelerated methods and is charged to operating expense over the
estimated useful lives of the assets. Expenditures for maintenance and
repairs are charged against income as incurred. Cost of major additions
and improvements are capitalized and depreciated over their estimated
useful lives. The estimated lives of the classes of assets are:
<TABLE>
<CAPTION>
Class Life
<S> <C>
Banking house 10 - 40 years
Furniture and fixtures 5 - 12 years
</TABLE>
-6-
<PAGE> 90
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
G. Interest Income on Loans - Interest income on real estate and commercial
loans is accrued and credited to operations based on principal amount
outstanding. Interest on installment loans is computed and recorded as
income using the rule of 78's method, which does not represent a
significant deviation from the interest method.
H. Allowance for Loan Losses - The provision for loan losses, which is
charged to operations, is based on management's assessment of the quality
of the loan portfolio, current economic conditions, and other relevant
factors. In management's judgement, the provision for loan losses will
maintain the allowance for loan losses at an adequate level to absorb
potential loan losses which may exist in the portfolio. Therefore, there
was no provision for loan losses charged to operations during the current
year.
The Corporation, as of December 31, 1993, had not adopted SFAS 114. The
effect on the financial statements as of and for the year ended December
31, 1993 has not been determined.
I. Income Taxes - Commercial Bancorp, Inc. uses the accrual method of
accounting for federal income tax reporting, and deferred taxes are
computed for any significant differences between financial statement and
taxable income arising from timing differences.
J. Goodwill - The excess of cost over book value of assets acquired, arising
from the acquisition of the Elbridge branch of The Commercial Bank of
Obion, is being amortized on a straight-line basis over twenty-five years.
K. 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 1993 was
approximately $83,000.
-7-
<PAGE> 91
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE 2 - INVESTMENT SECURITIES
Securities held-to-maturity consist of the following:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Type of Investment Amortized Cost Gains Losses Fair Value
----------------------- ----------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
U.S. Treasury
securities $ 371,926 $ 23,375 -- $ 395,301
U.S. government and
federal agencies 5,997,207 520,017 -- 6,517,224
State and local
governments 2,384,591 25,930 -- 2,410,521
Mortgage-backed
securities 2,532,238 7,152 -- 2,539,390
----------- ----------- ------------- -------------
Total held-to-
maturity $11,285,962 $ 576,474 -- $ 11,862,436
=========== =========== ============= =============
</TABLE>
Securities available-for-sale consist of the following:
<TABLE>
<Caption
Gross Gross
Type of Amortized Unrealized Unrealized Fair
Investment Cost Gains Losses Value
- --------------- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
U.S. Treasury
securities $ 751,394 $ 9,559 -- $ 760,953
U.S. government
and federal
agencies 706,252 31,828 -- 738,080
State and local
governments 516,114 29,304 -- 545,418
Mortgage-backed
securities 1,635,961 71,503 -- 1,707,464
---------- ---------- ------------- ------------
Total available-
for sale $3,609,721 $ 142,194 -- $ 3,751,915
========== ========== ============= ============
</TABLE>
The book value and estimated market value of debt securities at December 31,
1993, by contractual maturity, are on the following page.
-8-
<PAGE> 92
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
<TABLE>
<CAPTION>
Contractual Maturity Book Value Market Value
- ----------------------------------------------------- --------------------- -------------------
<S> <C> <C>
One year or less
U.S. Treasury securities
-- --
U.S. government and federal agencies - held to
maturity 499,922 628,993
U.S. government and federal agencies - available
for sale 251,526 256,563
State and local governments - held to maturity 454,811 459,437
---------- ----------
$1,206,259 $1,344,993
---------- ----------
After one year through five years
U.S. Treasury securities - available for sale 751,394 760,953
U.S. Treasury securities - held to maturity 371,926 395,301
U.S. government and federal agencies - held to
maturity 3,993,016 4,355,291
U.S. government and federal agencies - available
for sale 454,726 481,517
State and local governments - held to maturity 420,874 426,122
State and local governments - available for sale 516,114 545,418
---------- ----------
$6,508,050 $6,964,602
---------- ----------
After five years through ten years
U.S. Treasury securities -- --
U.S. government and federal agencies - held to
maturity 1,359,512 1,385,475
State and local governments - held to maturity 1,508,906 1,524,962
---------- ----------
$2,868,418 $2,910,437
---------- ----------
After ten years
U.S. Treasury securities -- --
U.S. government and federal agencies - held to
maturity 144,757 147,465
</TABLE>
-9-
<PAGE> 93
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
<TABLE>
<S> <C> <C>
State and local governments -- --
----------- -----------
144,757 147,465
----------- -----------
Other securities
Mortgage-backed securities - held to maturity 2,532,238 2,539,390
Mortgage backed securities - available for sale 1,635,961 1,707,464
----------- -----------
4,168,199 4,246,854
----------- -----------
Total $14,895,683 $15,614,351
=========== ===========
</TABLE>
At December 31, 1993, investment securities with a book value of $950,000 were
pledged as collateral to secure public deposits and for other purposes as
allowed by law.
NOTE 3 - LOANS
Loans were classified as follows at December 31, 1993:
<TABLE>
<S> <C>
Real estate:
Secured by single-family residential properties $ 3,561,960
Construction, land development and other commercial 1,817,634
Secured by farmland 1,157,737
Commercial and industrial 327,907
Agricultural 1,281,623
Consumer 2,534,595
Other loans 34,492
-----------
Total $10,715,948
===========
</TABLE>
An analysis of the allowance for loan losses is as follows:
<TABLE>
<S> <C>
Balance - January 1, 1993 $217,646
Provision for losses --
Loans charged off, net (4,669)
--------
Balance - December 31, 1993 $212,977
========
</TABLE>
-10-
<PAGE> 94
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE 4 - INTEREST RECEIVABLE
Accrued interest receivable at December 31, 1993, consisted of the following:
<TABLE>
<S> <C>
Loans $ 90,762
Investments 590,203
--------
Total $680,965
========
</TABLE>
NOTE 5 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment accounts at December 31,
1993:
<TABLE>
<S> <C>
Banking House $ 294,589
Furniture and Fixtures 341,838
Accumulated Depreciation (484,772)
---------
Net Property and Equipment $ 151,655
=========
</TABLE>
NOTE 6 - INCOME TAXES
The Corporation adopted FASB 109 effective January 1, 1993. Prior to the
effective date of the adoption, income tax expense was determined based on APB
11. The Corporation files a consolidated federal income tax return with its
subsidiary. Each member of the controlled group provides for income taxes on a
separate-return basis and remits to its affiliates amounts determined to be
currently payable. Income tax expense as computed on current year net income
and reported on the consolidated statement of income for the year ended
December 31, 1993, consisted of $156,793 federal tax and $29,421 state excise
tax, for a total of $186,214.
Deferred taxes of $56,878 have been provided on the unrealized holding gain
recorded for the difference between the amortized cost of investment securities
and the fair value, as required by SFAS No. 115. There were no revenue and
expense items that would result in temporary differences during the current
year.
A reconciliation of the federal income tax rate to the effective tax rate is as
follows (in thousands):
<TABLE>
<CAPTION>
1993
----
Amount %
------ --
<S> <C> <C>
Computed "expected" tax federal $186 34.0
State income taxes - net of federal tax benefit 19 4.0
Tax-exempt income, net of disallowed interest expense (20) (4.0)
Other, net 1 -
---- ----
Applicable income tax $186 34.0
==== ====
</TABLE>
-11-
<PAGE> 95
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE 7 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Commercial Bank of Obion is a party to financial instruments with off-
balance sheet risk in the normal course of business to meet the financing needs
of their customers. These financial instruments include commitments to extend
credit and standby letters of credit. These instruments involve, to varying
degrees, elements of credit risk which are not recognized in the consolidated
balance sheet. The Bank's exposure to credit loss in the event of
non-performance by the other party to the financial instrument for commitments
to extend credit and standby letters of credit is represented by the
contractual amount of those instruments. The same policies are utilized in
making commitments and conditional obligations as are used for creating
on-balance sheet instruments. Ordinarily, collateral or other security is not
required to support financial instruments with off-balance sheet risk.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Loan
commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many commitments are expected to
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. Each customer's credit-
worthiness is evaluated on a case-by-case basis, and collateral required, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counter party. At December 31, 1993, the Bank had
outstanding loan commitments of $623,557.
-12-
<PAGE> 96
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
Standby letters of credit and financial guarantees are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
Those guarantees are issued primarily to support public and private borrowing
arrangements, and the credit risk involved is essentially the same as that
involves in extending loans to customers. The Bank requires collateral to
secure these commitments when it is deemed necessary. At December 31, 1993,
outstanding standby letters of credit totaled $21,000.
NOTE 8 - SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
The Commercial Bank of Obion grants agribusiness, commercial, residential and
personal loans to customers throughout the area. A large majority of the
Banks' loans, however, are concentrated in the immediate vicinity of Northwest
Tennessee. Although the Bank has diversified loan portfolios, a substantial
portion of their debtors' ability to honor their obligations is dependent upon
the agribusiness sector of that geographic area. The Bank also maintains cash
balances, together with federal funds sold, at several correspondent banks.
Accounts at each institution are insured by federal depository insurance only
up to $100,000.
NOTE 9 - RELATED PARTY TRANSACTIONS
The subsidiary has granted loans to its officers and directors. These loans
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated persons and do not involve more than the normal risk of
collectibility. The aggregate dollar amount of these loans was $431,430 at
December 31, 1993. During the year ended December 31, 1993, $998,443 of new
loans were made to officers and directors and $962,273 was repaid. Total
deposits by officers and directors were $1,091,648 as of December 31, 1993.
NOTE 10 - EMPLOYEE PENSION PLAN
The Commercial Bank of Obion has a non-contributory defined benefit pension
plan covering substantially all employees. Employees are 100% vested after
five years of employment. Vesting is 0% for any period less than five years.
Employees are eligible for the plan one year after hiring, if they complete one
thousand hours of work. The Bank's policy is to fund accrued pension cost in
accordance with minimum ERISA requirements. The actuary assumes an 8.00%
interest rate for the January 1, 1993, valuation.
A summary of accumulated plan benefits and plan net assets for the pension plan
as of the latest actuarial valuation, January 1, 1993, is presented below.
-13-
<PAGE> 97
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
<TABLE>
<S> <C>
Actuarial present value of accumulated plan
benefits:
Vested $160,221
Non-vested 10,407
--------
Total accumulated benefits $170,628
========
Fair value of plan assets $390,624
========
</TABLE>
During the year ended December 31, 1993 , no contributions were made to the
plan, since the plan is currently overfunded. Actuarial assumptions used were
investment return of 8% per annum, compounded annually, and salary scale of 6%
projection.
-14-
<PAGE> 98
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
Pension plan assets as of December 31, 1993, were categorized as follows:
<TABLE>
<S> <C>
Cash -%
U.S. government portfolio 4%
Collective trust fund 29.3%
Accrued income .4%
Mutual fund stocks 44.0%
Mutual fund bonds 25.9%
</TABLE>
NOTE 11 - COMMERCIAL BANCORP, INC., (PARENT COMPANY ONLY) FINANCIAL INFORMATION
- - AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
CONDENSED BALANCE SHEET
<S> <C>
Assets
------
Cash $ 2,306
Investment in bank 3,761,705
Other assets 20,596
----------
Total Assets $3,784,607
==========
Equity $3,784,607
==========
CONDENSED STATEMENT OF INCOME
-----------------------------
Dividends from bank $ 80,000
Undistributed income of bank 280,994
Miscellaneous expenses (576)
----------
Net income $ 360,418
==========
CONDENSED STATEMENT OF CASH FLOWS
---------------------------------
Operating Activities
Net income $ 360,418
Equity in undistributed income of bank (280,994)
Purchase of investments (1,050)
----------
Net cash provided by operating activities $ 78,374
Financing Activities
Cash dividends paid (80,000)
----------
Net decrease in cash (1,626)
Cash - beginning 3,932
----------
Cash - ending $ 2,306
==========
</TABLE>
-15-
<PAGE> 99
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1993
NOTE 12 - EVENT SUBSEQUENT TO THE DATE OF THE REPORT OF INDEPENDENT AUDITOR
(UNAUDITED)
In 1994, the Board of Directors of Commercial Bancorp, Inc. approved an
agreement of reorganization with Union Planters Corporation whereby the two
parties intend to effectuate a merger of CBI 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 CBI and
various regulatory agencies.
-16-
<PAGE> 100
APPENDIX A-2
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1992 AND FOR THE YEARS
ENDED DECEMBER 31, 1992 AND 1991
<PAGE> 101
COMMERCIAL BANCORP, INC.
AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992, AND FOR THE
TWO YEARS ENDED DECEMBER 31, 1992
<PAGE> 102
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
UNAUDITED CONSOLIDATED BALANCE SHEET . . . . . . . . . . . . . . . . . 1
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME . . . . . . . . . . . . . . 2
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY . . . . . . . . 3
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . 4
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . 5
<PAGE> 103
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
December 31, 1992
<TABLE>
<S> <C> <C>
ASSETS
Cash and due from banks $ 1,058,209
Other receivables 26,761
Investment securities (market value $15,067,387) 14,555,573
Federal funds sold 1,300,000
Loans, net of allowance for loan losses of $217,646
and unearned income of $143,957 10,388,755
Property and equipment, net of accumulated depreciation of $467,805 168,253
Accrued interest 605,833
Goodwill 81,787
Other assets 56,890
------------
Total Assets $ 28,242,061
============
LIABILITIES AND EQUITY
Liabilities
Noninterest-bearing deposits $ 2,139,210
Interest-bearing deposits 19,827,476
Certificates of deposit over $100,000 2,622,899
------------
Total deposits $ 24,589,585
Accrued interest 138,707
Other liabilities 94,895
------------
Total Liabilities $ 24,823,187
Commitments and Contingencies (See Note 7) -
Equity
Capital stock - 100,000 shares authorized, $10 par,
20,000 shares issued and outstanding $ 200,000
Additional paid-in capital 1,914,029
Retained earnings - unappropriated 1,304,845
-----------
Total Equity 3,418,874
------------
Total Liabilities and Equity $ 28,242,061
============
</TABLE>
See accompanying notes
-1-
<PAGE> 104
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1992 and 1991
<TABLE>
<CAPTION>
1992 1991
----------- -----------
<S> <C> <C>
Interest income
Loans, including fees $ 1,101,624 $ 1,262,520
Federal funds sold 55,306 74,318
Investment securities - taxable 903,930 1,029,065
Investment securities - non-taxable 132,490 134,284
----------- -----------
Total interest income $ 2,193,350 $ 2,500,187
Interest expense
Deposits 1,043,567 1,426,605
----------- -----------
Net interest income $ 1,149,783 $ 1,073,582
Provision for loan losses 22,000 -
----------- -----------
Net interest income after provision for loan losses $ 1,127,783 $ 1,073,582
----------- -----------
Noninterest income (expense)
Service charges $ 72,029 $ 67,896
Rent income 5,147 4,383
Other income 3,243 4,660
Securities gains from bonds called 26,226 1,000
Amortization of goodwill (2,365) (2,365)
Amortization of organization costs (2,359) (2,546)
Salaries and benefits (345,654) (328,073)
Insurance (72,223) (68,888)
Taxes and licenses (33,484) (33,077)
Occupancy expenses (56,025) (61,878)
Director fees (24,300) (23,700)
Other expenses (157,777) (159,325)
----------- -----------
Total noninterest income (expense) $ (587,542) $ (601,913)
----------- -----------
Net income before taxes $ 540,241 $ 471,669
Corporate income taxes 188,715 139,552
----------- -----------
Net income $ 351,526 $ 332,117
=========== ===========
Weighted average shares outstanding 20,000 20,000
=========== ===========
Earnings per share $ 17.58 $ 16.61
=========== ===========
</TABLE>
See accompanying notes
-2-
<PAGE> 105
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the years ended December 31, 1992 and 1991
<TABLE>
<CAPTION>
Additional
Capital Paid-in Retained
Stock Capital Earnings
----------- ----------- -----------
<S> <C> <C> <C>
Balance - January 1, 1991 $ 200,000 $ 1,914,029 $ 748,202
Net income for the year - - 332,117
Cash dividends paid - $3 per share - - (60,000)
----------- ----------- -----------
Balance - December 31, 1991 $ 200,000 $ 1,914,029 $ 1,020,319
Net income for the year - - 351,526
Cash dividends paid - $3.35 per share - - (67,000)
------------ ----------- -----------
Balance - December 31, 1992 $ 200,000 $ 1,914,029 $ 1,304,845
============ =========== ===========
</TABLE>
See accompanying notes
-3-
<PAGE> 106
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1992 and 1991
<TABLE>
<CAPTION>
1992 1991
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income $ 351,526 $ 332,117
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 32,873 38,862
Provision for loan losses 22,000 -
Amortization of goodwill/organization costs 4,724 4,911
Securities gains from bonds called (26,226) (1,000)
Loss on sale of fixed assets - 4,401
Bond premium amortization, net of discount accretion 17,200 11,347
Deferred taxes (397) (397)
(Increase) decrease in other receivables (26,523) 231
(Increase) decrease in accrued interest receivable (45,489) 20,333
Decrease in other assets 6,175 7,177
Decrease in accrued interest payable (103,238) (87,932)
Increase (decrease) in other liabilities 41,801 (11,846)
----------- -----------
Net cash provided by operating activities $ 274,426 $ 318,204
----------- -----------
Cash flows from investing activities
Proceeds from calls and maturities of investment securities $ 4,742,032 $ 4,071,441
Purchase of investment securities (5,336,923) (4,581,761)
Net (increase) decrease in federal funds sold 825,000 (450,000)
Proceeds from sale of property & equipment - 8,000
Purchase of property & equipment (12,604) (32,063)
Net increase in loans (116,187) (316,061)
----------- -----------
Net cash provided (used) by investing activities $ 101,318 $(1,300,444)
----------- -----------
Cash flows from financing activities
Cash dividends paid $ (67,000) $ (60,000)
Net increase in deposits 151,715 944,285
----------- -----------
Net cash provided by financing activities $ 84,715 $ 884,285
----------- -----------
Net increase (decrease) in cash and cash equivalents $ 460,459 $ (97,955)
Cash and cash equivalents - beginning 597,750 695,705
----------- -----------
Cash and cash equivalents - ending $ 1,058,209 $ 597,750
=========== ===========
Supplemental disclosures of cash flow information
Cash paid for interest $ 1,146,805 $ 1,514,537
=========== ===========
Cash paid for income taxes $ 151,680 $ 155,730
=========== ===========
</TABLE>
See accompanying notes
-4-
<PAGE> 107
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Commercial Bancorp, Inc., and its
subsidiary conform to generally accepted accounting principles and to banking
industry practices and are summarized as follows:
A. Organization - Commercial Bancorp, Inc., is a one-bank holding company
chartered under the laws of the State of Tennessee. The Corporation owns
all of the outstanding capital stock of The Commercial Bank of Obion.
B. Principles of Consolidation - The consolidated financial statements
include the accounts of the Corporation and its subsidiary. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
C. Basis of Accounting - The books, records and financial statements of the
Corporation are maintained on the accrual basis of accounting.
D. Cash Equivalents - The Corporation considers all temporary cash
investments with an original maturity of three months or less when
purchased to be cash equivalents.
E. Investment Securities - Securities are purchased for investment purposes
with the intention of holding them to maturity. These securities are
carried at cost, adjusted for amortization of premium and accretion of
discounts using methods approximating the interest method. Gains and
losses on the sale of investment securities are computed on the basis of
specific identification of the adjusted cost of each security.
F. Property and Equipment - Property and equipment are stated at cost less
accumulated depreciation. The provision for depreciation is computed
using accelerated methods and is charged to operating expense over the
estimated useful lives of the assets. Expenditures for maintenance and
repairs are charged against income as incurred. Cost of major additions
and improvements are capitalized and depreciated over their estimated
useful lives. The estimated lives of the classes of assets are:
Class Life
---------------------------------------------
Banking house 10 - 40
---------------------------------------------
Furniture and fixtures 5 - 12 years
---------------------------------------------
-5-
<PAGE> 108
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
G. Interest Income on Loans - Interest income on real estate and commercial
loans is accrued and credited to operations based on principal amount
outstanding. Interest on installment loans is computed and recorded as
income using the rule of 78's method, which does not represent a
significant deviation from the interest method.
H. Allowance for Loan Losses - The provision for loan losses, which is
charged to operations, is based on management's assessment of the quality
of the loan portfolio, current economic conditions, and other relevant
factors. In management's judgement, the provision for loan losses will
maintain the allowance for loan losses at an adequate level to absorb
potential loan losses which may exist in the portfolio. Therefore, there
was no provision for loan losses charged to operations during the current
year.
I. Income Taxes - Commercial Bancorp, Inc. uses the accrual method of
accounting for federal income tax reporting, and deferred taxes are
computed for any significant differences between financial statement and
taxable income arising from timing differences.
J. Goodwill - The excess of cost over book value of assets acquired, arising
from the acquisition of the Elbridge branch of The Commercial Bank of
Obion, is being amortized on a straight-line basis over twenty-five years.
K. Restricted Cash - The Bank is required by the Federal Reserve Bank to
maintain average reserve balances. The average required balance to be
maintained for such purpose during 1992 was approximately $70,000.
-6-
<PAGE> 109
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 2 - INVESTMENT SECURITIES
Investment securities at December 31, 1992, consisted of the following:
<TABLE>
<CAPTION>
Gross Gross
Type of Amortized Unrealized Unrealized
Investment Cost Gains Losses Fair Value
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
U.S. treasury
securities $ 392,791 $ 3,463 $ - $ 396,254
U. S. government and
federal agencies 5,587,834 384,409 3,908 5,968,335
State and local
governments 2,705,040 44,016 7,460 2,741,596
Mortgage-backed
securities 5,869,908 100,747 9,453 5,961,202
------------ ------------ ------------ ------------
Total $ 14,555,573 $ 532,635 $ 20,821 $ 15,067,387
============ ============ ============ ============
</TABLE>
At December 31, 1992, investment securities with a book value of $1,100,257
were pledged as collateral to secure public deposits and for other purposes as
allowed by law.
-7-
<PAGE> 110
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 3 - LOANS
Loans were classified as follows at December 31, 1992:
<TABLE>
<S> <C>
Real estate:
Secured by single-family residential properties $ 3,519,905
Construction, land development and other commercial 1,393,607
Secured by farmland 1,266,703
Commercial and industrial 673,342
Agricultural 1,421,454
Consumer 2,451,254
Other loans 24,093
------------
Total $ 10,750,358
============
</TABLE>
An analysis of the allowance for loan losses is as follows:
<TABLE>
<CAPTION>
1992 1991
--------- ---------
<S> <C> <C>
Balance - January 1 $ 211,205 $ 223,118
Provision for losses 22,000 --
Recoveries 12,080 6,384
Loans charged off (27,639) (18,297)
--------- ---------
Balance - December 31 $ 217,646 $ 211,205
========= =========
</TABLE>
NOTE 4 - INTEREST RECEIVABLE
Accrued interest receivable at December 31, 1992, consisted of the following:
<TABLE>
<S> <C>
Loans $ 127,899
Investments 477,934
---------
Total $ 605,833
=========
</TABLE>
-8-
<PAGE> 111
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 5 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment accounts at December 31,
1992:
<TABLE>
<S> <C>
Banking House $ 294,589
Furniture and Fixtures 341,469
Accumulated Depreciation (467,805)
---------
Net Property and Equipment $ 168,253
=========
</TABLE>
-9-
<PAGE> 112
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 6 - INCOME TAXES
The Corporation files a consolidated federal income tax return with its
subsidiary. Each member of the controlled group provides for income taxes on a
separate-return basis and remits to its affiliates amounts determined to be
currently payable. Income tax expense as computed on net income and reported
on the statement of income for the year ended December 31, 1992, according to
APB 11 consisted of $153,645 federal tax and $35,070 state excise tax, for a
total of $188,715 and for the year ended December 31, 1991, consisted of
$121,523 federal tax and $18,029 state excise tax, for a total of $139,552.
NOTE 7 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Commercial Bank of Obion is a party to financial instruments with off-
balance sheet risk in the normal course of business to meet the financing needs
of their customers. These financial instruments include commitments to extend
credit and standby letters of credit. These instruments involve, to varying
degrees, elements of credit risk which are not recognized in the unaudited
consolidated balance sheet.
The Bank's exposure to credit loss in the event of non-performance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those
instruments. The same policies are utilized in making commitments and
conditional obligations as are used for creating on-balance sheet instruments.
Ordinarily, collateral or other security is not required to support financial
instruments with off-balance sheet risk.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Loan
commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many commitments are expected to
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. Each customer's credit-
worthiness is evaluated on a case-by-case basis, and collateral required, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counter party. At December 31, 1992, the Bank had
outstanding loan commitments of $2,145,624.
Standby letters of credit and financial guarantees are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
Those guarantees are issued primarily to support public and private borrowing
arrangements, and the credit
-10-
<PAGE> 113
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
risk involved is essentially the same as that involved in extending loans to
customers. The Bank requires collateral to secure these commitments when it is
deemed necessary. At December 31, 1992, outstanding standby letters of credit
totaled $21,000.
NOTE 8 - SIGNIFICANT CONCENTRATIONS OF CREDIT RISK
The Commercial Bank of Obion grants agribusiness, commercial, residential and
personal loans to customers throughout the area. A large majority of the
Banks' loans, however, are concentrated in the immediate vicinity of Northwest
Tennessee. Although the Bank has diversified loan portfolios, a substantial
portion of their debtors' ability to honor their obligations is dependent upon
the agribusiness sector of that geographic area.
The Bank also maintains cash balances as well as federal funds sold at several
correspondent banks. Accounts at each institution are insured by federal
depository insurance only up to $100,000.
-11-
<PAGE> 114
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 9 - RELATED PARTY TRANSACTIONS
The subsidiary has granted loans to its officers, directors and their
affiliates. These loans were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated persons and do not involve more than the normal
risk of collectibility. The aggregate dollar amount of these loans was
$395,260 at December 31, 1992.
Total deposits by officers and directors were $698,497 as of December 31, 1992.
NOTE 10 - EMPLOYEE PENSION PLAN
The Commercial Bank of Obion has a non-contributory defined benefit pension
plan covering substantially all employees. Employees are 100% vested after
five years of employment. Vesting is 0% for any period less than five years.
Employees are eligible for the plan one year after hiring if they complete one
thousand hours of work. The Bank's policy is to fund accrued pension cost in
accordance with minimum ERISA requirements. The actuary assumes an 8.00%
interest rate for the January 1, 1992, valuation.
A summary of accumulated plan benefits and plan net assets for the pension plan
as of the latest actuarial valuation, January 1, 1992, is presented below.
<TABLE>
<S> <C>
Actuarial present value of accumulated
plan benefits:
Vested $ 122,769
Non-vested 12,141
---------
Total accumulated benefits $ 134,910
---------
Market value of plan assets $ 362,545
=========
</TABLE>
During the years ended December 31, 1992 and 1991, no contributions were made
to the plan, since the plan is currently overfunded. Actuarial assumptions
were investment return of 8% per annum, compounded annually, and salary scale
of 6% projection.
Pension plan assets as of December 31, 1992 were categorized as follows:
<TABLE>
<S> <C>
Cash 0%
US Governments 3%
Collective Trust Funds 99.7%
</TABLE>
-12-
<PAGE> 115
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1992
NOTE 11 - COMMERCIAL BANCORP, INC., (PARENT COMPANY ONLY) FINANCIAL INFORMATION
AS OF DECEMBER 31, 1992 AND FOR THE YEARS ENDED DECEMBER 31, 1992 AND 1991
CONDENSED BALANCE SHEET
December 31, 1992
<TABLE>
<S> <C>
Assets
Cash $ 3,932
Investment in bank 3,395,396
Other assets 19,546
------------------
Total Assets $ 3,418,874
==================
Equity $ 3,418,874
- ------ ==================
</TABLE>
CONDENSED STATEMENT OF INCOME
<TABLE>
<S> <C> <C>
1992 1991
Dividends from bank $ 67,000 $ 60,000
Undistributed income of bank 288,535 276,106
Miscellaneous expenses (4,009) (3,989)
------------------ ------------------
Net income $ 351,526 $ 332,117
================== ==================
</TABLE>
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<S> <C> <C>
1992 1991
Operating activities
Net income $ 351,526 $ 332,117
Amortization of goodwill 2,359 2,546
Equity in undistributed income of bank (288,535) (276,106)
----------------- -----------------
Net cash provided by operating activities $ 65,350 $ 58,557
Financing activities
Cash dividends paid (67,000) (60,000)
----------------- -----------------
Net decrease in cash (1,650) (1,443)
Cash - beginning of year 5,582 7,025
----------------- -----------------
Cash - end of year $ 3,932 $ 5,582
================= =================
</TABLE>
13
<PAGE> 116
APPENDIX A-3
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1994 AND FOR THE SIX-MONTH
PERIODS ENDED JUNE 30, 1994 AND 1993
<PAGE> 117
COMMERCIAL BANCORP, INC.
AND SUBSIDIARY
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1994, AND FOR THE
SIX-MONTH PERIODS ENDED
JUNE 30, 1994 AND 1993
<PAGE> 118
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
<TABLE>
<S> <C>
UNAUDITED CONSOLIDATED BALANCE SHEET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . 2
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . 3
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS . . . . . . . . . . . . . . . . . . . . . . . . 4
NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 5
</TABLE>
<PAGE> 119
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
June 30, 1994
<TABLE>
<S> <C>
ASSETS
Cash and due from banks $ 884,674
Other receivables 30,703
Investments in securities:
Held-to-maturity, at amortized cost (market value $12,597,000) 12,319,414
Available-for-sale, at market value 3,721,093
Federal funds sold 375,000
Loans, net of allowance for loan losses of $212,881
and unearned income of $180,322 10,237,069
Property and equipment, net of accumulated depreciation of $493,676 142,858
Accrued interest 885,158
Goodwill 78,240
Other assets 56,806
-----------------
Total Assets $ 28,731,015
=================
LIABILITIES AND EQUITY
Liabilities
Noninterest-bearing deposits $ 2,465,976
Interest-bearing deposits 19,708,566
Certificates of deposit, over $100,000 2,555,252
-----------------
Total deposits $ 24,729,794
Accrued interest 122,128
Deferred taxes 7,084
Other liabilities 44,250
-----------------
Total Liabilities $ 24,903,256
-----------------
Equity
Capital stock-100,000 shares authorized, $10 par,
20,000 shares issued and outstanding $ 200,000
Additional paid-in capital 1,914,029
Retained earnings-unappropriated 1,703,103
Unrealized gain on securities available-for-sale,
net of deferred income taxes 10,627
-----------------
Total Equity $ 3,827,759
-----------------
Total Liabilities and Equity $ 28,731,015
=================
</TABLE>
See accompanying note -1-
<PAGE> 120
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
For the six months ended June 30, 1994 and 1993
<TABLE>
<S> <C> <C>
1994 1993
------------------ -------------------
Interest income
Loans, including fees $ 452,906 $ 471,451
Federal funds sold 23,299 24,003
Investment securities - taxable 417,474 430,484
Investment securities - non-taxable 66,224 64,390
------------------ -------------------
Total interest income $ 959,903 $ 990,328
Interest expense
Deposits 408,722 398,553
------------------ -------------------
Net interest income $ 551,181 $ 591,775
------------------ -------------------
Provision for loan losses - -
Net interest income after provision for loan losses $ 551,181 $ 591,775
Noninterest income (expense)
Service charges $ 45,565 $ 37,869
Rent income 518 626
Other income 4,510 377
Amortization of goodwill (1,183) (1,183)
Salaries and benefits (181,622) (182,748)
Insurance (35,935) (35,699)
Taxes and licenses (16,817) (17,001)
Occupancy expenses (26,214) (27,945)
Director fees (5,200) (5,000)
Other expenses (83,049) (77,217)
------------------ -------------------
Total noninterest income (expense) $ (299,427) $ (307,921)
------------------ -------------------
Net income before taxes $ 251,754 $ 283,854
Corporate income taxes 88,913 97,105
------------------ -------------------
Net income $ 162,841 $ 186,749
================== ===================
Weighted average shares outstanding 20,000 20,000
================== ===================
Earnings per share $ 8.14 $ 9.34
================== ===================
</TABLE>
See accompanying note -2-
<PAGE> 121
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended June 30, 1994
<TABLE>
<CAPTION>
Unrealized
Gain on
Additional Available-
Capital Paid-in Retained for-sale
Stock Capital Earnings Securities
----------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Balance - January 1, 1994 $200,000 $1,914,029 $1,585,262 $ 85,316
Net income for the year - - 162,841 -
Cash dividends paid - $2.25 per share - - (45,000) -
Change in unrealized gain on
securities available-for-sale
net of deferred income taxes
- - - (74,689)
------- --------- --------- -------
Balance - June 30, 1994 $200,000 $1,914,029 $1,703,103 $ 10,627
======= ========= ========= =======
</TABLE>
See accompanying note -3-
<PAGE> 122
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1994 and 1993
<TABLE>
<S> <C> <C>
1994 1993
------------------ --------------------
Cash flows from operating activities
Net income $ 162,841 $ 186,749
------------------ --------------------
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation $ 8,904 $ 16,428
Amortization of goodwill 1,182 1,182
Bond premium amortization, net of discount accretion 8,138 9,610
(Increase) decrease in other receivables (28,660) 3,511
Increase in accrued interest receivable (204,193) (102,261)
(Increase) decrease in other assets 921 (1,962)
Increase (decrease) in accrued interest payable 818 (19,738)
Decrease in other liabilities (16,873) (41,894)
------------------ --------------------
Total adjustments $ (229,763) $ (135,124)
------------------ --------------------
Net cash provided (used) by operating activities $ (66,922) $ 51,625
------------------ --------------------
Cash flows from investing activities
Proceeds from calls and maturities of investment securities $ 981,073 $ 2,849,162
Purchase of investment securities (2,116,324) (3,375,450)
Net decrease in federal funds sold 1,125,000 200,000
Purchase of property & equipment (107) (261)
Net decrease in loans 115,429 376,876
------------------ --------------------
Net cash provided by investing activities $ 105,071 $ 50,327
------------------ --------------------
Cash flows from financing activities
Cash dividends paid $ (45,000) $ (35,000)
Net increase (decrease) in deposits 51,199 (380,459)
------------------ --------------------
Net cash provided (used) by financing activities $ 6,199 $ (415,459)
------------------ --------------------
Net increase (decrease) in cash and cash equivalents $ 44,348 $ (313,507)
Cash and cash equivalents - beginning 840,326 1,058,209
------------------ --------------------
Cash and cash equivalents - ending $ 884,674 $ 744,702
================== ===================
Supplemental disclosures of cash flow information
Cash paid for interest $ 407,904 $ 418,291
================== ===================
Cash paid for income taxes $ 104,878 $ 132,249
================== ===================
Non-cash investing activity:
Unrealized loss on securities available-for-sale $ 74,689 $ -
================== ===================
</TABLE>
See accompanying note -4-
<PAGE> 123
COMMERCIAL BANCORP, INC. AND SUBSIDIARY
NOTE TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1994
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 Commercial Bancorp, Inc. and its subsidiary for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. The information included herein should be read in
conjunction with the notes to the consolidated financial statements for the
year ended December 31, 1993.
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.
See accompanying note -5-
<PAGE> 124
APPENDIX B
AGREEMENT AND PLAN OF REORGANIZATION,
ALONG WITH THE PLAN OF MERGER
ANNEXED THERETO
AS EXHIBIT A
<PAGE> 125
AGREEMENT AND PLAN OF REORGANIZATION
DATED as of June 14, 1994
Between
UNION PLANTERS CORPORATION and
CBI ACQUISITION COMPANY, INC.
and
COMMERCIAL BANCORP, INC.
Joined in by:
THE COMMERCIAL BANK
<PAGE> 126
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2
TERMS OF THE REORGANIZATION . . . . . . . . . . . . . . . . . . . . . . . . 9
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.7 CBI Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 3
DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . 12
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 CBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Conversion and Exchange of CBI Shares; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 13
(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 CBI Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM . . . . . . . . . . . . . . . . . . 19
4.1 Organization and Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . . . . . . . 20
4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
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 CBI COMPANIES . . . . . . . . . . . . . . . . . . . 25
5.1 Organization and Qualification of CBI 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 CBI Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.11 CBI Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.12 Condition of Fixed Assets and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
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 CBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.20 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.27 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.28 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.29 Exchange Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.30 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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ARTICLE 6
COVENANTS OF UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
6.2 Registration of UPC Common Stock under the Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.3 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.4 Charter, Name Change or Corporate Reorganization of CBO . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 7
COVENANTS OF CBI COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . 51
7.1 Proxy Statement; CBI Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.3 Conduct of Business -- Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 8
CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 57
8.1 Conditions to the Obligations of CBI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(d) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(g) Opinion of CBI'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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(n) Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(a) No Pending or Threatened Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
(b) Governmental Approvals and Acquiescence Obtained . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE 9
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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ARTICLE 10
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
10.2 Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.12 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.13 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.15 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.16 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.17 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement") dated as of the 14th day of June, 1994, by and between UNION
PLANTERS CORPORATION ("UPC"), a corporation chartered and existing under the
laws of the State of Tennessee which is registered both as a bank holding
company and a savings and loan holding company and whose principal offices are
located at 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee
38018; CBI 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 COMMERCIAL
BANCORP, INC. ("CBI" 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 224 7th Street (Post Office Box 297), Obion, Obion County, Tennessee
38240.
THE COMMERCIAL BANK ("CBO"), a state banking corporation chartered and existing
under the laws of the State of Tennessee, having its main office at 224 7th
Street (Post Office Box 297), Obion, Obion County, Tennessee 38240, and which
is a wholly-owned subsidiary of CBI, 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, CBI and CBO are sometimes referred to herein as the
"Parties."
RECITALS
A. CBI is the beneficial owner and holder of record of 20,000
shares of the common stock, $10.00 par value per share, of CBO which constitute
all of the shares of common stock of CBO issued and outstanding (the "CBO
Common Stock") and desires to have itself and CBO 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> 131
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 CBI and CBO 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 CBI deems it desirable and in the
best interests of CBI and CBO and the shareholders of CBI (the "CBI
Shareholders") that INTERIM be merged with and into CBI (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 and
INTERIM that INTERIM be merged with and into CBI 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, CBI and
CBO 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 CBI 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> 132
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 CBI" shall have the meaning
assigned to such term in Section 5.7 of this Reorganization Agreement.
"BALANCE SHEET DATE" shall have the meaning assigned to such
term in Section 5.8 of this Reorganization Agreement.
"BHCA" shall mean the Bank Holding Company Act of 1956, as
amended.
"BUSINESS DAY" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a federal or state holiday generally recognized
by banks in Tennessee.
"CBI" means Commercial Bancorp, 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 224 7th Street
(Post Office Box 297), Obion, Obion County, Tennessee 38240.
"CBI COMMON STOCK" has the meaning assigned to such term in
Section 3.1(d) of this Reorganization Agreement.
"CBI COMPANIES" shall mean CBI and all of its Subsidiaries,
including CBO and all of its Subsidiaries.
"CBI 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 CBI or any CBI Subsidiary, to or for the benefit of the officers,
directors or employees of CBI or any CBI Subsidiary.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 3
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"CBI RECORD HOLDERS" means the holders of record of all of the
issued and outstanding shares of CBI Common Stock immediately prior to the
Effective Time of the Merger.
"CBI SHAREHOLDERS" shall have the meaning assigned to such
term in Recital D of this Reorganization Agreement.
"CBI STOCK OPTIONS" shall have the meaning assigned to such
term in Section 2.7 of this Reorganization Agreement.
"CBO" means The Commercial Bank, a state banking corporation,
chartered and existing under the laws of the State of Tennessee, having its
main office at 224 7th Street (Post Office Box 297), Obion, Obion County,
Tennessee 38240, and which is a wholly-owned subsidiary of CBI.
"CBO COMMON STOCK" shall have the meaning assigned to such
term in Recital A of this Reorganization Agreement.
"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 CBI
Record Holders in exchange for their CBI 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 CBO.
"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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 4
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"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXCHANGE AGENT" shall mean Union Planters National Bank,
Memphis, Tennessee, acting through its Corporate Trust Department.
"EXCHANGE RATIO" shall have the meaning assigned to such term
in Section 3.1(e) of this Reorganization Agreement.
"FDIC" means the Federal Deposit Insurance Corporation, or any
successor thereto.
"FEDERAL RESERVE" shall mean the Board of Governors of the
Federal Reserve System and shall include the Federal Reserve Bank of St. Louis
acting under delegated authority.
"FIXED ASSETS" shall mean the furniture, fixtures and
equipment of the referenced Party.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GOVERNMENTAL APPROVALS" shall have the meaning assigned to
such term in Section 4.4 of this Reorganization Agreement.
"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 CBI 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.
"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 CBI, which
shall survive the Merger as the Surviving Corporation.
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"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 CBI, CBO, UPC and INTERIM collectively;
CBI and CBO 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
CBI, 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 CBI 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
CBI to solicit proxies with a view to securing the approval of the CBI
Shareholders of this Reorganization Agreement and the Plan of Merger.
"REALTY" means the real property of CBI or any CBI Subsidiary
owned or leased by CBI or any CBI Subsidiary.
"RECORDS" means all available records, minutes of meetings of
the Board of Directors, committees and shareholders of CBI or any CBI
Subsidiary; original instruments and other
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 6
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documentation, pertaining to CBI or any CBI Subsidiary, CBI's or any CBI
Subsidiary's assets (including plans and specifications relating to the
Realty), CBI's or any CBI Subsidiary's liabilities, the CBI Common Stock, the
CBO 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
CBI's or any CBI Subsidiary's business by UPC or CBI 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 TDFI, the
Federal Reserve or with any other Regulatory Authority pursuant to the
Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC promulgated thereunder, as well as any similar state
securities laws and any similar rules and regulations promulgated by the
applicable federal bank Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the meeting of the CBI
Shareholders to be held pursuant to Section 7.1 of this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 7
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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 CBI 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.
"UPC FINANCIAL STATEMENTS" shall mean (i) the audited
consolidated balance sheets and related consolidated statements of earnings, of
changes in shareholders' equity, and of cash flows (including related notes) of
UPC and its Subsidiaries as of December 31, 1992 and 1993 and each subsequent
December 31 prior 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, 1994, as filed by UPC in SEC Documents.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
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"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 CBI (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 CBI, as in effect immediately prior to the Effective
Time of the Merger, shall continue to be the Charter of CBI 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 CBI, as in effect immediately prior to the Effective Time of the
Merger, shall continue to be the Bylaws of CBI 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 INTERIM in office immediately prior to the Effective Time of the
Merger shall 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 until they shall have been removed in the manner
provided therein.
(d) Name. The name of CBI as the Surviving
Corporation following the Merger shall remain unchanged and continue to be:
COMMERCIAL BANCORP, 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 9
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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 CBI, to make any revision to the
structure of the Reorganization which (i) changes the amount of the
Consideration which the CBI 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, CBI
or any CBI Subsidiary; or (iii) would permit UPC to pay the Consideration other
than by delivery of shares of UPC Common Stock registered with the SEC (in the
manner described in Section 6.2 of this Reorganization Agreement). UPC may
exercise this right of revision by giving written Notice to CBI 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. CBI and each CBI
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 10
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interests under the rules and regulations promulgated by the SEC, Accounting
Principles Board Opinion No. 16 and GAAP, any CBI Record Holder who would be
deemed an Affiliate of CBI 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 CBI 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 CBI 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 CBI 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 CBI for a period of not less than thirty (30) days subsequent to the
Effective Time of the Merger. CBI further acknowledges and agrees that any UPC
Common Stock certificates issued in connection with the Merger to CBI Record
Holders who would be deemed Affiliates of CBI 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 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 COMMERCIAL BANCORP,
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 11
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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 CBI 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 CBI Common Stock, and no other options, rights, warrants, scrip or
similar rights to purchase shares of CBI Common Stock (collectively, the "CBI
Stock Options") are (or have been) issued and outstanding by CBI. Therefore,
at the Effective Time of the Merger, there will be no issued and outstanding
CBI 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, CBI has not repurchased CBI Stock Options, and
CBI has not repurchased any shares of its capital stock. Therefore, as of the
date of this Reorganization Agreement, there are no shares of CBI Common Stock
held by CBI 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
CBI 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, 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 12
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a Articles of Merger for filing with the Secretary of State of the State of
Tennessee and promptly thereafter CBI 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 CBI.
At the Effective Time of the Merger, each share of $10.00 par value per share
common stock of CBI (the "CBI Common Stock") validly issued and outstanding
immediately prior to the Effective Time of the Merger shall, by virtue of the
Merger becoming effective and without any further action on the part of anyone,
be converted, exchanged and cancelled as provided in Section 3.1(e) hereof.
(e) Conversion and Exchange of CBI Shares;
Exchange Ratio. At the Effective Time of the Merger, the outstanding shares of
CBI Common Stock held by the CBI 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
CBI and shall, except for those shares held by any CBI Record Holder having
properly perfected such holder's dissenters' rights and maintained the
perfected status of such dissenters' rights through the Effective Time of the
Merger, automatically be converted exclusively into, and constitute only the
right of the CBI Record Holders to receive in exchange for their shares of CBI
Common Stock, whole shares of UPC Common Stock and a cash payment
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 13
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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 CBI 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 CBI
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (based on there being no more than 20,000 shares of CBI 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
$24.00 per share of UPC Common Stock but less than or equal to $30.00
per share of UPC Common Stock (the "Primary Collar"), the Exchange
Ratio shall be fixed at 9.26 shares of UPC Common Stock for each share
of CBI Common Stock issued and outstanding at the Effective Time of
the Merger;
(ii) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $30.00 per share
of UPC Common Stock but less than or equal to $32.00 per share of UPC
Common Stock (the "Upper Secondary Collar"), the Exchange Ratio shall
be based on (a) a fixed price of $277.80 per share of CBI Common Stock
divided by (b) the Current Market Price Per Share of UPC Common Stock
for each share of CBI Common Stock validly issued and outstanding at
the Effective Time of the Merger;
(iii) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $32.00 per share
of UPC Common Stock (the "Ceiling"), the Exchange Ratio shall be fixed
at 8.68 shares of UPC Common Stock for each share or CBI Common
Stock;provided, however, UPC would have the right to either deliver
the fixed Exchange Ratio of 8.68 or to terminate the transaction
contemplated in this Reorganization Agreement;provided, however,
should UPC elect to terminate the transaction under this provision,
CBI would have the unilateral right to reinstate the transaction by
accepting in exchange for each share of CBI Common Stock issued and
outstanding that number of shares of UPC Common Stock at the Current
Market Price Per Share sufficient to equal $277.80 per share of CBI
Common Stock;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
<PAGE> 144
(iv) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than or equal to
$22.00 per share of UPC Common Stock but less than $24.00 per share of
UPC Common Stock (the "Lower Secondary Collar"), the Exchange Ratio
shall be based on (a) a fixed price of $222.24 per share of CBI Common
Stock divided by (b) the Current Market Price Per Share of UPC Common
Stock for each share of CBI Common Stock validly issued and
outstanding at the Effective Time of the Merger; and
(v) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $22.00 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be fixed at
10.10 shares of UPC Common Stock for each share of CBI Common
Stock;provided, however, CBI shall have the right to either accept the
fixed Exchange Ratio of 10.10 or to terminate the transaction
contemplated in this Reorganization Agreement; provided, however,
should CBI elect to terminate the transaction under this provision,
UPC would have the unilateral right to reinstate the transaction by
delivering in exchange for each share of CBI Common Stock issued and
outstanding that number of shares of UPC Common Stock at the Current
Market Price Per Share sufficient to equal $222.24 per share of CBI
Common Stock.
The Exchange Ratio as determined in this Section 3.1(e) shall be based on an
aggregate of no more than 20,000 shares of CBI 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 CBI Record
Holder is entitled based upon the Exchange Ratio, there shall be a fractional
share of UPC Common Stock remaining, such fractional share shall be settled by
a cash payment therefor pursuant to the Mechanics of Payment of the
Consideration set forth in Section 3.1(f) hereof, which shall be calculated
based upon the Current Market Price Per Share of one (1) full share of UPC
Common Stock.
(1) DEFINITION OF "CURRENT MARKET PRICE
PER SHARE." The "Current Market Price Per Share" shall be the average
closing price per share of the "last" real time trades (i.e., closing
price) of the UPC Common Stock on the NYSE (as published in The Wall
Street Journal) for each of the ten (10) NYSE general market trading
days 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 15
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per share of UPC Common Stock and the average shall be based upon the
"last" real time trades and number of days on which the UPC Common
Stock actually traded during the Pricing Period.
(2) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should CBI Record Holders representing at least 10%
of the shares of CBI Common Stock issued and outstanding at the time
of Closing perfect such CBI 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 CBI 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 excess of $250.00 per share of CBI Common Stock in
satisfaction of such Dissenters' Rights.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF CBI.
Should CBI 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.
Within five days after the Effective Time of the Merger and the receipt of a
certified list of all of the CBI Record Holders, the Corporate Trust Department
of Union Planters National Bank, Memphis, Tennessee (the "Exchange Agent")
shall deliver to each of the CBI Record Holders such materials and information
deemed necessary by the Exchange Agent to advise the CBI Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the CBI Common Stock in order for the CBI 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 CBI Record Holders at the addresses set forth on a certified shareholder
list to be delivered by CBI to UPC at the Closing (the "Shareholder List"). As
soon as reasonably practicable thereafter, the CBI Record
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Holders of all of the outstanding shares of CBI 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 CBI 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 CBI 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 CBI Common Stock, the Exchange Agent shall, on or prior to the 5th
day after the receipt of such certificates, mail to the former CBI Record
Holders in exchange for the certificate(s) surrendered by them, the
Consideration to be paid for each such CBI Record Holder's shares of CBI 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 CBI Common
Stock of a CBI 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 CBI Record Holder's shares of CBI
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 CBI
Record Holder's CBI Common Stock shall have been properly surrendered as
provided above, the Consideration payable to the CBI Record Holder(s) of the
cancelled shares as of any time after the Effective Date shall not be paid to
the CBI Record Holder(s) of such certificate(s) until such certificates shall
have been surrendered in the manner required. Each CBI 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
CBI 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 CBI Record Holder is entitled, provided
that each such CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
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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 CBI Record Holder.
(g) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of CBI shall be closed and no transfer
of shares of CBI 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 CBI 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 CBI and
INTERIM.
(i) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
CBI 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 CBI 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 CBI 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 CBI or INTERIM.
(k) Dissenters' Rights of CBI Shareholders. Any
CBI Record Holder of shares of CBI 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 CBI Shareholder is referred to herein
as an "CBI Dissenting Shareholder." However, UPC and INTERIM shall not be
obligated to consummate the Merger if CBI Record Holders holding or controlling
more than ten percent (10%) of the shares of the CBI Common Stock issued and
outstanding immediately prior to the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
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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, 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 CBI 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 CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
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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.
(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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
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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 CBI and the CBI Companies or the
consummation of the transactions contemplated hereby, and no action or
proceeding 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 1, 1994, UPC had
issued and outstanding: 44,000 shares of $8.00 Nonredeemable Cumulative
Convertible Preferred Stock, Series B; 690,000 shares of 10-3/8% Increasing
Rate, Redeemable, Cumulative Preferred Stock, Series C; 253,655 shares of 9.5%
Redeemable, Cumulative Preferred Stock, Series D; and 3,107,922 shares of 8%
Cumulative, Convertible Preferred Stock, Series E. In addition, 250,000 shares
of UPC Preferred Stock have been reserved for issuance as Series A Preferred
Stock pursuant to the UPC Share Purchase Rights Agreement dated January 19,
1989, between UPC and Union Planters National Bank as Rights Agent (the "UPC
Share Purchase Rights Agreement"). As of June 1, 1994, 21,804,805 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
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(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.
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 CBI true and complete copies of: (i)
UPC's audited Consolidated Financial Statements for the calendar years ended
December 31, 1992 and 1993 (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 1994 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,
1994. 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
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4.8 The UPC Common Stock. All shares of UPC Common Stock
to be issued by UPC and delivered to the CBI Record Holders in exchange for all
of the CBI Common Stock will be duly authorized, validly issued, fully paid and
non-assessable, and none of such shares of UPC Common Stock will have been
issued in violation of any preemptive rights of any UPC shareholders. The
shares of UPC Common Stock to be delivered in payment of the Consideration
shall have in all material respects such distinguishing characteristics as
those of the shares of UPC 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,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
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wages, hours, collective bargaining and the payment and withholding of taxes
and other sums as required by the appropriate governmental authorities, and UPC
and each UPC Subsidiary have withheld and paid to the appropriate governmental
authorities or are holding for payment not yet due to such authorities, all
amounts required to be withheld from the employees of UPC and each UPC
Subsidiary and are not liable for any arrears of wages, taxes, penalties or
other sums for failure 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 CBI 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 CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
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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 CBI by UPC and INTERIM pursuant hereto were or
will be complete and accurate copies of such documents.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CBI COMPANIES
Both as of the date hereof and as of the Effective Time of the Merger,
CBI and CBO represent and warrant to UPC and INTERIM as follows:
5.1 Organization and Qualification of CBI and
Subsidiaries.
(a) CBI 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 CBI 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. CBI 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) CBO is a state banking corporation, duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and engages only in activities (and holds properties only of the
types) permitted by the Tennessee Code and the rules and regulations
promulgated by the TDFI
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 25
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thereunder or the FDIC for insured depository institutions. CBO'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.
5.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) CBI and CBO 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 CBI and CBO and,
except for the approval of the CBI Shareholders, no other corporate proceedings
on the part of CBI 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 CBI or CBO have been (or upon execution will have been) duly
executed and delivered by CBI and CBO and constitute (or upon execution will
constitute) legal, valid and enforceable obligations of CBI and CBO, 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 CBI or any CBI Subsidiary is
a party or by which CBI or any CBI Subsidiary is bound; the Charter and Bylaws
of CBI or the Charter and Bylaws of any CBI Subsidiary; or any judgment,
decree, order, regulatory letter of understanding or award of any court,
governmental body, authority or arbitrator by which CBI or any CBI Subsidiary
is bound; or any permit, concession, grant, franchise, license, law, statute,
ordinance, rule or regulation applicable to CBI or any CBI Subsidiary or the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 26
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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 CBI or any CBI
Subsidiary.
5.3 No Legal Bar. Neither CBI nor any CBI 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 CBI or CBO, or the Plan of Merger
by CBI, 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 CBI or any CBI 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 CBI
or any CBI 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 CBI or any CBI Subsidiary in order to avoid forfeiture or impairment of such
rights. Neither CBI nor any CBI 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. CBI and all CBI Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses, and CBI and each CBI 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 CBI's or any CBI Subsidiary's
properties or over any other part of CBI's or any CBI 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 CBI and each CBI Subsidiary subsequent to the Closing of the
transactions contemplated herein without
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 27
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any consent or approval. Neither CBI nor any CBI Subsidiary has received
notice of any proceeding for the suspension or revocation of any such license,
franchise, permit, or authorization and no such proceeding is pending or has
been threatened by any governmental authority.
5.6 Charter Documents. Included in Schedule 5.6 hereto
are true and correct copies of the Charter and Bylaws of CBI and the Articles
of Association or Charter and Bylaws of each CBI Subsidiary, respectively. The
Charter and Bylaws of CBI and the Articles of Association or Charter and Bylaws
of each CBI Subsidiary, as amended to date, are in full force and effect.
5.7 CBI Financial Statements. Accompanying Schedule 5.7
hereto are true copies of the comparative parent only balance sheets of CBI as
of December 31, 1993, the comparative parent only balance sheets of CBI as of
December 31, 1992, and selected financial data for CBI as of December 31, 1991,
1990 and 1989, and the related comparative statements of income and changes in
stockholders' equity and cash flows of CBI for the years ended December 31,
1993, 1992 and 1991, audited financial statements of CBO for the year ended
December 31, 1993, and Call Reports for the years ended December 31, 1992,
1991, 1990 and 1989 (the "Audited Financial Statements of CBI") and the
comparative interim (or annual) financial statements for any subsequent quarter
(or year) ending after December 31, 1993 and prior to the Closing Date. Such
financial statements (i) were (or will be) prepared from the books and records
of CBI and each CBI Subsidiary; (ii) were (or will be) prepared in accordance
with generally accepted accounting principles consistently applied; (iii)
accurately present (or will present) CBI's and each CBI Subsidiary's financial
condition and the 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 CBI's and each CBI
Subsidiary's financial condition and the results of CBI's and each CBI
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.
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5.8 Absence of Certain Changes. Except as disclosed in
Schedule 5.8 or as provided for or contemplated in this Reorganization
Agreement, since December 31, 1993 (the "Balance Sheet Date") there has not
been:
(a) any transaction by CBI or any CBI Subsidiary
not in the ordinary course of business and in conformity with past practice;
(b) any material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), prospects, operations, liquidity, income,
condition (financial or otherwise) or net worth of CBI or any CBI 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 CBI or any CBI Subsidiary or
their future use and operation by CBI or any CBI Subsidiary;
(d) any acquisition or disposition by CBI or any
CBI Subsidiary of any property or asset of CBI or any CBI Subsidiary, whether
real or personal, having a fair market value, singularly or in the aggregate
for each CBI 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 CBI or any CBI 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 CBI or any CBI Subsidiary, to which CBI
or any CBI Subsidiary is a party which would have an adverse effect upon the
financial condition or operations of CBI or any CBI Subsidiary.
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director,
employee or agent of CBI or any CBI 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 29
<PAGE> 159
(h) any incurring of, assumption of, or taking
of, by CBI or any CBI 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 CBI or any CBI Subsidiary, or in the
accounting policies or practices therein reflected;
(j) any release or discharge of any obligation or
liability of any person or entity related to or arising out of any loan made by
CBI or any CBI 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 CBI or any CBI Subsidiary to any Officer, director or
2% shareholder of CBI or any CBI Subsidiary or any Affiliate of CBI or any CBI
Subsidiary; or to any member of the immediate family of such Officer, director
or 2% shareholder of CBI or any CBI Subsidiary or any Affiliate of CBI; 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 CBI 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 CBI or any CBI Subsidiary.
5.10 Properties. Except as described in Schedule 5.10 hereto
or adequately reserved against in the Audited Financial Statements of CBI, CBI
and each CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 30
<PAGE> 160
or intangible, reflected in the Audited Financial Statements of CBI as being
owned by CBI or any CBI Subsidiary as of the dates thereof. All buildings, and
all fixtures, equipment, and other property and assets that are material to the
business of CBI and its Subsidiaries on a consolidated basis, held under leases
or subleases by CBI or any CBI Subsidiary, are held under valid instruments
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or other laws affecting the enforcement of creditors' rights
generally, and except that the availability of the equitable remedy of specific
performance or injunctive relief is subject to the discretion of the court
before which any proceedings may be pending). The policies of fire, theft,
liability, and other insurance maintained with respect to the properties,
assets or businesses of the CBI Companies provide adequate coverage against
loss, and the fidelity bonds in effect as to which any of the CBI Companies is
a named insured are believed to be sufficient.
5.11 CBI Subsidiaries. Schedule 5.11 hereto lists all of the
active and inactive CBI Subsidiaries (including any Subsidiary of a CBI
Subsidiary) as of the date of this Reorganization Agreement and describes
generally the business activities conducted, or permitted to be conducted, by
each CBI Subsidiary. Except as described in Schedule 5.11 hereto, no equity
securities of any of the CBI Subsidiaries are or may become required to be
issued (other than to CBI or any CBI 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 CBI Subsidiary, and there
are no contracts, commitments, understandings, or arrangements by which any CBI
Subsidiary is bound to issue (other than to CBI) 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 CBI Subsidiary held by CBI
or by any CBI Subsidiary are fully paid and nonassessable and are owned by CBI
or such CBI 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 CBI's or any CBI 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 31
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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 CBI and each CBI Subsidiary have been
timely filed or requests for extensions have been timely filed, granted, and
have not expired for periods ended on or before the date of this Reorganization
Agreement, and all returns filed are, and the information contained therein is,
complete and accurate. All tax obligations reflected in such returns have been
paid. As of the date of this Reorganization Agreement, there is no audit
examination, deficiency, or refund litigation or matter in controversy with
respect to any taxes that might result in a determination materially adverse
to CBI or any CBI Subsidiary except as fully reserved for in the Audited
Financial Statements of CBI. All taxes, interest, additions, and penalties
due with respect to completed and settled examinations or concluded litigation
have been paid.
(b) Neither CBI nor any CBI 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 CBI and all CBI Subsidiaries for all
periods through and including December 31, 1993, has been made and is reflected
on the December 31, 1993 financial statements included in the Audited Financial
Statements of CBI, and have been and will continue to be made with respect to
periods ending after December 31, 1993.
(d) Deferred taxes of CBI and each CBI Subsidiary have
been and will be provided for in accordance with GAAP.
(e) To the best knowledge of CBI and any CBI
Subsidiary, neither the Internal Revenue Service nor any foreign, state, local
or other taxing authority is now asserting or threatening to assert against CBI
or any CBI 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 CBI
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 CBI or any CBI Subsidiary, either have been paid in full, or
have been properly accrued and reflected in the Audited
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 32
<PAGE> 162
Financial Statements of CBI 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 CBI or any CBI
Subsidiary, or to the best knowledge of CBI or any CBI Subsidiary threatened
against or affecting CBI, any CBI Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that (i)
would, if decided against CBI or the CBI Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities, condition (financial
or other) or prospects of CBI or any CBI Subsidiary and that are not reflected
in the Audited Financial Statements of CBI or (ii) has been brought by or on
behalf of any employee employed or formerly employed by CBI or any CBI
Subsidiary.
5.15 Hazardous Materials.
(a) CBI and all CBI Subsidiaries have obtained all
material permits, licenses and other authorizations which are required to
be obtained by CBI 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 CBI or any CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 33
<PAGE> 163
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, 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 CBI or any CBI 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 CBI or a CBI
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 CBI or any CBI Subsidiary to have any permit,
license or authorization required in connection with the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 34
<PAGE> 164
conduct of the business of CBI or any CBI 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 CBI or
any Affiliate of CBI 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 CBI's or any CBI Subsidiary's
occupancy thereof, or during or prior to the occupancy thereof by any
assignee or sublessee of CBI or any CBI 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 CBI nor any Affiliate of CBI 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, CBI or any Affiliate of CBI 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 CBI or any Affiliate of
CBI relating to the Property and no Property is
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 35
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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 CBI, threatened, or are in process
which could subject any of such properties to such liens and none of the
Property would be required to place any notice or restriction relating to the
presence of Hazardous Substances at any Property in any deed to such Property.
(g) Except as described in Schedule 5.15(g) hereto,
there have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by or which are in the possession of CBI
or any Affiliate of CBI in relation to any Property, which have not been made
available to UPC.
(h) Neither CBI nor any CBI Subsidiary is aware of any
facts which might suggest that CBI or any CBI Subsidiary has engaged in any
management practice with respect to any of its past or existing borrowers which
could reasonably be expected to subject CBI or any CBI 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. CBI and each CBI Subsidiary have paid
all material amounts due and payable under any insurance policies and
guaranties applicable to CBI and any CBI Subsidiary and CBI's or any CBI
Subsidiary's assets and operations; all such insurance policies and guaranties
are in full force and effect; and CBI and each CBI Subsidiary and all of CBI's
and each CBI 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 CBI or any CBI 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 CBI or any CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 36
<PAGE> 166
benefits) are afforded any of the employees of CBI or any CBI 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 CBI nor any CBI 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. CBI and each CBI 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 CBI and each CBI 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 CBI and each CBI 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 CBI or any CBI Subsidiary pending before the
National Labor Relations Board or any state or local agency; pending labor
strike or other labor trouble affecting CBI or any CBI Subsidiary; labor
grievance pending against CBI or any CBI Subsidiary; pending representation
question respecting the employees of CBI or any CBI Subsidiary; pending
arbitration proceedings arising out of or under any collective bargaining
agreement to which CBI or any CBI Subsidiary is a party, or to the best
knowledge of CBI, any basis for which a claim may be made under any collective
bargaining agreement to which CBI or any CBI Subsidiary is a party.
5.18 Records and Documents. The Records of each CBI
Subsidiary are and will be sufficient to enable such CBI Subsidiary to continue
conducting its business under similar standards as such CBI Subsidiary has
heretofore conducted such business.
5.19 Capitalization of CBI. The authorized capital stock
of CBI consists of 100,000 shares of common stock having a par value of $10.00
per share (the "CBI Common Stock"), no shares of preferred stock (the "CBI
Preferred Stock") and no other class of equity security. As of the date of
this Reorganization Agreement, 20,000 shares of CBI Common Stock were issued
and outstanding, no shares of CBI Common Stock were held by CBI as treasury
stock and no shares of CBI Preferred Stock were issued
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 37
<PAGE> 167
and outstanding. All of the outstanding CBI Common Stock is validly issued,
fully-paid and nonassessable and has not been issued in violation of any
preemptive rights of any CBI 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 CBI Common Stock or into any other equity or debt security
of CBI, 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 CBI Common Stock or any other
equity or debt security of CBI. Accordingly, immediately prior to the
Effective Time of the Merger, there will be not more than (nor less than)
20,000 shares of CBI Common Stock issued and outstanding. Except as set forth
in Schedule 5.19 hereto, CBI owns and is the beneficial record holder of, and
has good and freely transferable title to, all of the shares of CBI Subsidiary
Common Stock outstanding, and recorded on the books and Records of each CBI
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 CBI 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 CBI, nor
any CBI 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 CBI or any CBI Subsidiary
or any Subsidiary of any CBI Subsidiary (or any of their assets) in any
business combination of any kind; or any agreement obligating CBI or any CBI
Subsidiary to issue or sell or authorize the sale or transfer of CBI Common
Stock or the capital stock of any CBI 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 CBI
outstanding, except for shares of CBI 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 CBI or any
CBI Subsidiary, or contracts, commitments, understandings, or arrangements by
which CBI or any CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 38
<PAGE> 168
are no (nor will there be at the Effective Time of the Merger any) contracts,
commitments, understandings, or arrangements by which CBI or any CBI Subsidiary
is or may be bound to transfer or issue to any third party any shares of the
capital stock of any CBI 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 CBI to vote or to dispose of any such
shares.
5.21 Disclosure. The information concerning, and
representations and warranties made by, CBI and any CBI Subsidiary set forth in
this Reorganization Agreement, or in the Schedules of Exceptions of CBI hereto,
or in any document, statement, certificate or other writing furnished or to be
furnished by CBI or any CBI 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 CBI or any CBI 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 CBI nor any CBI Subsidiary has any obligation
or liability (contingent or otherwise) that is material to the financial
condition or operations of CBI or any CBI Subsidiary, or that, when combined
with all similar obligations or liabilities, would be material to the financial
condition or operations of CBI or any CBI Subsidiary (i) except as disclosed in
the Audited Financial Statements of CBI 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 CBI nor any CBI Subsidiary has incurred or paid any
obligation or liability which would be material to the financial condition or
operations of CBI or such CBI 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 CBI or any
CBI Subsidiary.
5.23 Allowance for Possible Loan or ORE Losses. The
allowance for possible loan losses shown on the Audited Financial Statements of
CBI is (with respect to periods ended on or before December 31, 1993) or will
be (with respect to periods ending
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 39
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subsequent to December 31, 1993) adequate in all respects to provide for
anticipated losses inherent in Loans outstanding or for commitments to extend
credit or similar off-balance-sheet items (including accrued interest
receivable) as of the dates thereof. Except as disclosed in Schedule 5.23
hereto, as of the date thereof, neither CBI nor any CBI 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 CBI is (with respect to periods ended on
or before December 31, 1993) or will be (with respect to periods ending
subsequent to December 31, 1993) adequate in all respects to provide for
anticipated losses inherent in ORE owned or held by CBI or any CBI Subsidiary
and the net book value of ORE on the Balance Sheet of the Audited Financial
Statements of CBI is the net realizable value of the ORE in accordance with
Statement of Position 92-3.
5.24 Compliance with Laws. CBI and each CBI 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 CBI or any
CBI Subsidiary, or which would or could reasonably be expected to subject CBI
or any CBI 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 CBI or any
CBI 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 CBI or any CBI Subsidiary, (ii) threatening to
revoke any license, franchise, permit, or governmental authorization which is
material to the financial condition or operations of CBI or any CBI Subsidiary,
or (iii) requiring CBI or any CBI Subsidiary to enter into a cease and desist
order, consent, agreement, or memorandum of understanding.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 40
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5.25 Employee Benefit Plans.
(a) CBI 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 CBI or any CBI Subsidiary or any other
entity which is a member of a controlled group or is under common control with
CBI 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 listed in Schedule
5.25(a) hereto. CBI 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 CBI 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 CBI 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)
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 41
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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 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 CBI 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 CBI nor
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 42
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any CBI 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 CBI nor its Subsidiaries have incurred any
liability under Title IV of ERISA arising in connection with the termination
of, or complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA. The termination of any Code Section 401(a)
qualified Employee Pension Benefit Plan previously terminated by CBI or any CBI
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, CBI 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 CBI 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 1993. There has been no material amendment of any such plans (other than
amendments required to comply with applicable law) or material increase in the
cost of maintaining such plans or providing benefits thereunder on or after the
last day of the plan year which ended in calendar year 1993 for each such
Employee Pension Benefit Plan.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 43
<PAGE> 173
CBI 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.
CBI 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.
(b) CBI 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 CBI or any CBI Subsidiary or
members of a controlled group or entities under common control with CBI 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.
CBI 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. CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 44
<PAGE> 174
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 effect for
substantially all of calendar year 1993. Except as disclosed in Schedule
5.25(b) hereto, there has been with respect to such Employee Welfare Benefit
Plans no material amendment thereof or material increase in the cost thereof or
benefits payable thereunder on or after January 1, 1994.
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 CBI nor any CBI 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 CBI or any of its Subsidiaries that such a
penalty may be imposed upon any Employee Welfare Benefit Plan.
Neither CBI nor any CBI Subsidiary has failed to make
any contribution to, or pay any amount due and owing by CBI or an CBI
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 CBI, constitute a liability for CBI or any CBI
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 CBI, no condition exists that
could subject any Employee Welfare Benefit Plan or any person (other than a
person for whom neither CBI or any CBI Subsidiary is directly or indirectly
responsible) to liabilities,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 45
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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
CBI or any CBI Subsidiary, or the beneficiaries of such employee.
(c) CBI has furnished to UPC true and complete copies
and/or descriptions of each plan or arrangement maintained or otherwise
contributed to by CBI or any CBI Subsidiary which is not an Employee Pension
Benefit Plan and is not an Employee Welfare Benefit Plan and which (exclusive
of base salary and base wages) provides for any form of current or deferred
compensation, bonus, stock option, profit sharing, retirement, group health or
insurance, welfare benefits, fringe benefits, or similar plan or arrangement
for the benefit of any employee or class of employees, whether active or
retired, or independent contractors of CBI or any CBI subsidiary. Such plans
and arrangements shall collectively be referred to herein as "Benefit
Arrangements" and all such Benefit Arrangements of CBI and CBI'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 CBI companies and all
Benefit Arrangements which are in effect were in effect for substantially all
of calendar year 1993. Except as disclosed in Schedule 5.25(c) hereto, there
has been with respect to Benefit Arrangements no material amendment thereof or
material increase in the cost thereof or benefits payable thereunder on or
after January 1, 1994. There has been no material increase in the base salary
and wage levels of CBI or any CBI Subsidiary and, except in the ordinary course
of business, no change in the terms or conditions of employment (including
severance benefits) compared, in each case, to those prevailing for
substantially all of calendar year 1993. Except as disclosed in Schedule
5.25(c) hereto, there has been no material increase in the compensation of, or
benefits payable to, any senior executive employee of CBI or any CBI subsidiary
on or after January 1, 1994, 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, 1994.
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 46
<PAGE> 176
Benefit Arrangements which provide compensation or benefits which become
effective upon a change in control of CBI or any CBI 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 CBI or
any CBI 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 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 CBI (or by CBI 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 CBI 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 CBI nor any CBI 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 CBI, anticipated to be filed.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 47
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5.26 Material Contracts. Except as reflected in the Audited
Financial Statements of CBI, or as described in Schedule 5.26 hereto, neither
CBI nor any CBI 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
CBI as of the date of this Reorganization Agreement that has not already been
filed as an exhibit to CBI's Form 10-K filed for the fiscal year ended December
31, 1993, or in any other SEC Document filed prior to the date of this
Reorganization Agreement.
5.27 Material Contract Defaults. Neither CBI nor any CBI
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 CBI or any
CBI 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, 1989, CBI and each CBI
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 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 (iv) any other applicable
federal or state securities or banking authorities (except, in the case of
federal or state securities authorities, filings that are not material). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all of the requirements of their respective forms and all of the
statutes, rules, and regulations enforced or promulgated by the Regulatory
Authority with which they were filed. All such reports were true and complete
in all material respects and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. CBI has previously provided to UPC true
and correct copies of all such reports filed by CBI or any CBI Subsidiary after
January 1, 1989.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 48
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5.29 Exchange Act Filings. The outstanding shares of CBI
Common Stock are not registered with the SEC and are exempt from such
registration pursuant to the 1934 Act.
5.30 Statements True and Correct. None of the information
prepared by, or on behalf of, CBI or any CBI Subsidiary regarding CBI, any CBI
Subsidiary or any Subsidiary of a CBI Subsidiary included or to be included in
the Proxy Statement to be mailed to CBI'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 CBI,
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 CBI or any CBI
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 49
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Section 6.1 shall be construed to obligate UPC to take any action to meet any
condition required to obtain prior regulatory approval if UPC shall, in UPC's
sole discretion, deem such condition to be unreasonable or to constitute a
significant impediment upon UPC's ability to carry on its business or
acquisition programs or to require UPC to increase UPC's capital ratios to
amounts in excess of the Federal Reserve's minimum capital ratio guidelines
which may be in effect from time to time.
6.2 Registration of UPC Common Stock under the Securities
Laws. UPC shall cooperate with CBI in the preparation of the CBI 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 CBI 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 CBI or
the CBI Subsidiaries and all employees of CBI and the CBI Subsidiaries
immediately prior to the Effective Time of the Merger who shall continue as
employees of CBI 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 CBI or with any CBI
Subsidiary prior to the Effective Time of the Merger by such former CBI 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 CBI and CBI's Subsidiaries in the
employee benefit plans maintained by UPC or UPC's Subsidiaries; provided,
however, during any such postponement period, The CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 50
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Reorganization Agreement, or until such time as the plans are replaced by
benefit plans maintained by UPC.
6.4 Charter, Name Change or Corporate Reorganization of CBO.
For a period of three years after the Effective Time of the Merger, neither UPC
nor CBI shall take any action to merge or consolidate CBO with UPC or an
Affiliate of UPC, nor shall UPC or CBI take any action to change the corporate
name of CBO. The covenants contained in this Section 4 may be waived by an
affirmative vote of the Board of Directors of CBO at any time.
ARTICLE 7
COVENANTS OF CBI COMPANIES
7.1 Proxy Statement; CBI Shareholder Approval. CBI 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 September 30, 1994, for the
purpose of (i) approving this Reorganization Agreement and the Plan of Merger,
and (ii) such other related matters as it deems appropriate. In connection
with the Shareholders Meeting, (i) CBI 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 CBI 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 CBI 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 CBI shall recommend (subject
to compliance with their legal and fiduciary duties as advised by counsel) to
CBI Shareholders the approval of this Reorganization Agreement and the Plan of
Merger; and (iv) CBI shall use its best efforts, subject to compliance with its
legal and fiduciary duty as advised by counsel, to obtain such CBI
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) CBI and each CBI Subsidiary shall, and shall cause
each CBI Subsidiary to:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 51
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(i) Operate its business only in the usual,
regular, and ordinary course;
(ii) Preserve intact its business organizations and
assets and to maintain its rights and franchises;
(iii) Take no action, unless otherwise required by
law, rules or regulation, that would (A) adversely affect the ability
of any of them or UPC to obtain any necessary approvals of Regulatory
Authorities required to consummate the transactions contemplated by
this Reorganization Agreement, or (B) adversely affect the ability of
such Party to perform its covenants and agreements under this
Reorganization Agreement;
(iv) Except as they may terminate in accordance
with their terms, keep in full force and effect, and not default in
any of their obligations under, all material contracts;
(v) Keep in full force and effect insurance
coverage with responsible insurance carriers which is reasonably
adequate in coverage and amount for companies the size of CBI or such
CBI 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 CBI
Subsidiary's present customer base and to facilitate the retention of
such customers by any CBI 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 CBI, any CBI 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 CBI Subsidiary's customer relationships;
(b) CBI and each CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 52
<PAGE> 182
Approvals can not be obtained, and CBI and each CBI 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) CBI and each CBI 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 CBI, any CBI 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;
(d) At all times to and including, and as of, the
Closing, CBI and each CBI 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 CBI
and any CBI 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, CBI and each CBI
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, CBI and each CBI 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 CBI and any CBI Subsidiary.
CBI and each CBI Subsidiary shall provide reasonable assistance to UPC in its
investigation of matters relating to CBI and any CBI Subsidiary; and
(g) Subject to the terms and conditions of this
Reorganization Agreement, CBI and each CBI Subsidiary agree to use all
reasonable efforts and to take, or to cause to be taken,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 53
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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. CBI shall use, and shall cause each of its Subsidiaries to use, its
best efforts to obtain consents of all third parties and Regulatory Authorities
necessary or desirable for the consummation of each of the transactions
contemplated by this Reorganization Agreement.
7.3 Conduct of Business -- Negative Covenants. From the date
of this Reorganization Agreement until the earlier of the Effective Time of the
Merger or the termination of this Reorganization Agreement, CBI and each CBI
Subsidiary covenant and agree that they will neither do, nor agree or commit to
do, nor permit any CBI 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 CBI Common Stock; or (v) pay or declare a regular
semi-annual cash dividend in excess of Two Dollars and No/Cents ($2.25) per
share of CBI Common Stock or make or declare any other type of distribution on
the CBI Common Stock except as expressly permitted by this Reorganization
Agreement or the Plan of Merger; or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 54
<PAGE> 184
(d) Except as expressly permitted by this Reorganization
Agreement, acquire direct or indirect control over any corporation,
association, firm, organization or other entity, other than in connection with
(i) mergers, acquisitions, or other transactions approved in writing by UPC,
(ii) internal reorganizations or consolidations involving existing
Subsidiaries, (iii) foreclosures in the ordinary course of business and not
knowingly exposing it to liability by reason of Hazardous Substances, (iv)
acquisitions of control in its fiduciary capacity, or (v) the creation of new
subsidiaries organized to conduct or continue activities otherwise permitted
by this Reorganization Agreement; or
(e) Except as expressly permitted by this Reorganization
Agreement or the Plan of Merger, to (i) issue, sell, agree to sell, or
otherwise dispose of or otherwise permit to become outstanding any additional
shares of CBI Common Stock, or any other capital stock of CBI or of any CBI
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 CBI or any CBI
Subsidiary, or (ii) sell, agree to sell, or otherwise dispose of any
substantial part of the assets or earning power of CBI or of any CBI
Subsidiary; or (iii) sell, agree to sell, or otherwise dispose of any asset of
CBI or any CBI 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 CBI 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 CBI or any CBI
Subsidiary to any CBI Subsidiary in excess of an aggregate of $50,000 (for CBI
and its Subsidiaries on a consolidated basis) except in the ordinary course of
the business of CBI or such CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 55
<PAGE> 185
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
CBI or of any CBI Subsidiary; or effect any change in retirement benefits for
any class of its employees or officers, unless such change is required by
applicable law; or
(h) Amend any existing employment contract between it
and any person having a salary thereunder in excess of $30,000 per year
(unless such amendment is required by law) to increase the compensation or
benefits payable thereunder; or to enter into any new employment contract with
any person having an annual salary thereunder in excess of $30,000 that CBI or
any CBI 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 CBI or any CBI
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 CBI
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 $300,000, or amend the terms of any such credit
outstanding on the date hereof.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 56
<PAGE> 186
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of CBI. Unless waived
in writing by CBI, the obligation of CBI 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;
(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, CBI 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 57
<PAGE> 187
(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. CBI shall have received a
certificate executed by an authorized officer of the Exchange Agent to the
effect that the Exchange Agent has received and holds in its possession proper
authorization to issue certificates evidencing shares of UPC Common Stock and
cash or other good funds sufficient to meet the obligations of UPC to the CBI
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. CBI
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
CBI, 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 CBI and CBO) 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 58
<PAGE> 188
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 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 CBI and any CBI 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 CBI and any CBI 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 CBI and CBO dated as of the Closing Date
certifying that:
(A) CBI's and each such CBI
Subsidiary'S respective Boards of Directors and shareholders
have duly adopted resolutions (copies of
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 59
<PAGE> 189
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 CBI or a CBI Subsidiary,
is an officer of CBI or such CBI 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 Merger,
and that the signature of each person set forth on such
certificate is his or her genuine signature;
(C) the charter documents of CBI
and each CBI Subsidiary attached to such certificate remain in
full force and effect; and
(D) CBI and all CBI 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 CBI and each CBI 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
CBI or any CBI 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 CBI or any CBI 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 60
<PAGE> 190
(e) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, CBI and each CBI 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 CBI and each CBI Subsidiary. CBI and each CBI Subsidiary shall
have caused all CBI or any such CBI Subsidiary personnel to provide reasonable
assistance to UPC in its investigation of matters relating to CBI and any CBI
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 condition (financial or otherwise) of CBI or any CBI
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 CBI or any CBI 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 CBI's Counsel. UPC shall have
been furnished with an opinion of legal counsel to CBI and the CBI
Subsidiaries, dated the Closing Date, addressed to and in form and substance
satisfactory to UPC, to the effect that:
(i) CBI is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Tennessee;
(ii) each CBI 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 CBI and CBO 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 CBI and
CBO, 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 61
<PAGE> 191
(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 CBI or any CBI Subsidiary of this Reorganization Agreement
or any of the documents to be executed and delivered by CBI and any
CBI Subsidiary in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of CBI or any CBI 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, the Legal Opinion Accord of the ABA
Section of Business Law (1991);
(h) Other Business Combinations, Etc. Neither CBI
nor any CBI Subsidiary shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which CBI or any CBI Subsidiary
would merge; consolidate with; effect a business combination with; sell any
substantial part of CBI's or any CBI 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 CBI or any CBI Subsidiary or the benefits of acquiring the CBI Common Stock;
(i) Maintenance of Certain Covenants, Etc. At
the time of Closing (i) the total assets of CBI shall be not less than
$28,500,000; (ii) the equity capital of CBI shall have been not less than
$3,800,000 as of March 31, 1994, and shall have increased since that time
through normal earnings growth; (iii) the tangible equity capital of CBI shall
be not less than its stated level as of March 31, 1994, and shall have
increased since that time through normal earnings growth; (iv) neither CBI nor
any CBI 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 20,000 shares of CBI Common Stock validly issued and
outstanding at the Effective Time of the Merger); (v) from December 31, 1993,
there shall have been no extraordinary sale of assets, nor any investment
portfolio restructuring by either CBI or any CBI Subsidiary; (vi) neither CBI
nor any CBI Subsidiary shall have issued or granted since December 31, 1993,
through the Closing
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 62
<PAGE> 192
Date any CBI Stock Options; (vii) from the date hereof, except as permitted in
Section 7.3(c)(v) of this Reorganization Agreement, CBI shall not have declared
or paid any cash dividends prior to Closing; and (viii) the Merger can be
accounted for as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and 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 CBI and each CBI
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;
(j) Non-Compete Agreements. Each member of the Board of
Directors of CBI shall have entered into a non-compete agreement with UPC and
CBI 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 three
(3) years from Closing and covering Obion County 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 CBI Record Holders will not recognize any gain or loss to the extent
that such CBI Record Holders exchange shares of CBI Common Stock for shares of
UPC Common Stock as contemplated by this Reorganization Agreement and the Plan
of Merger assuming that the shares of CBI Common Stock so exchanged by such CBI
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 CBI's regularly retained
independent accountants or other independent accountants acceptable to UPC, a
letter dated within five (5) days prior to the Closing Date
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 63
<PAGE> 193
stating that, upon a review of CBI'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 CBI 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 CBI Record Holder who would be deemed
an Affiliate of CBI 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 CBI Common Stock pursuant to the terms
and conditions of this Reorganization Agreement, committing to UPC that such
CBI Record Holder shall not pledge, assign, sell, transfer, devise, otherwise
alienate or take any action which would eliminate or diminish the risk of
owning or holding the shares of UPC Common Stock to be received by such CBI
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 CBI 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 CBI for a period of not
less than thirty (30) days subsequent to the Effective Time of the Merger.
(n) Employment Agreements. Joel C. Pipkin as President
and Chief Executive Officer and Billy Fielder as Vice President shall each have
entered into an employment agreement with UPC and/or CBI substantially in the
form of UPC's standard form of employment agreement, a copy of which is annexed
hereto as Exhibit 8.2(n), providing for a term of three years from the Closing.
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 64
<PAGE> 194
(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 CBI or any CBI
Subsidiary fail to conduct its business pursuant to CBI's and such CBI
Subsidiary's Covenants made in Article 7;
(c) By UPC, INTERIM or CBI in the event the Closing
shall not have occurred by January 1, 1995 (the "Target Date"), unless the
failure of the Closing to occur shall be due to the failure of the Party
seeking to terminate this Agreement to perform its obligations hereunder in a
timely manner. If UPC shall have filed any and all applications to obtain the
requisite Government Approvals within thirty (30) 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 CBI and any CBI 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 April
1, 1995.
(d) By either UPC, INTERIM or CBI, 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 CBI 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 65
<PAGE> 195
(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 CBI 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 CBI or any CBI
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 CBI
Common Stock which are the subject of the instant transaction;
(g) By UPC, INTERIM or CBI in the event that
there shall have been a material breach of any obligation of the other Party
hereunder and such breach shall not have been remedied within thirty (30) days
after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied;
(h) By UPC or INTERIM should CBI or any CBI
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 CBI or any CBI
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 CBI or any CBI 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 66
<PAGE> 196
expectations as to the sustained growth and earnings prospects of the reviewed
Party;
(k) By CBI in the event that there shall have been,
in CBI'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 CBI 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 Obion 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.
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:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 67
<PAGE> 197
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 CBI: Commercial Bancorp, Inc.
224 7th Street
Post Office Box 297
Obion, Tennessee 38240
Fax: (901) 536-0121
Attn: Mr. Joel C. Pipkin
President and Chief Executive Officer
With a copy to: Baker, Worthington, Crossley
& Stansberry
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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 68
<PAGE> 198
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. CBI, each CBI 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 CBI or any CBI 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 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 69
<PAGE> 199
provisions hereof in such jurisdiction or rendering that or any other portions
or provisions of this Reorganization Agreement invalid, illegal or
unenforceable in any other jurisdiction.
10.9 Modifications, Amendments and Waivers. At any time
prior to the Closing or termination of this Reorganization Agreement, the
Parties may, solely by written agreement executed by their duly authorized
officers:
(a) extend the time for the performance of any of
the obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations
and warranties made by the other Party contained in this Reorganization
Agreement or in the Annexes, Schedules or Exhibits hereto or any other document
delivered pursuant to this Reorganization Agreement;
(c) waive compliance with any of the covenants or
agreements of the other Party contained in this Reorganization Agreement; and
(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 CBI 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, CBI and each CBI
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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 70
<PAGE> 200
10.13 Equitable Remedies. The Parties hereto agree that, in
the event of a breach of this Reorganization Agreement by CBI or any CBI
Subsidiary, UPC and INTERIM will be without an adequate remedy at law by reason
of the unique nature of CBI and each CBI 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 CBI or any CBI
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. CBI and each CBI 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.
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 CBI's, any CBI 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 71
<PAGE> 201
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 72
<PAGE> 202
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.
COMMERCIAL BANCORP, INC.
By: /s/ Joel C. Pipkin
-------------------------------
Joel C. Pipkin
Its: President and Chief
Executive Officer
ATTEST:
/s/ Billy Fielder
- -------------------------------
Billy Fielder, Secretary
THE COMMERCIAL BANK
By: /s/ Joel C. Pipkin
-------------------------------
Joel C. Pipkin
Its: President and Chief
Executive Officer
ATTEST:
/s/ Billy Fielder
- -------------------------------
Billy Fielder, Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 73
<PAGE> 203
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
-------------------------------
Jackson W. Moore
Its: President
ATTEST:
/s/ J. F. Springfield
- -------------------------------
J. F. Springfield, Secretary
CBI 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 74
<PAGE> 204
PLAN OF MERGER EXHIBIT A
SETTING FORTH THE PLAN OF MERGER
OF
CBI ACQUISITION COMPANY, INC.
(A TENNESSEE CORPORATION)
WITH AND INTO
COMMERCIAL BANCORP, INC.
(A TENNESSEE CORPORATION)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the 14th day of June, 1994, by and between COMMERCIAL BANCORP, INC. ("CBI"), 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 224 7th Street (Post Office Box 297), Obion, Obion County, Tennessee
38240; 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
CBI 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 CBI have entered into an Agreement and Plan
of Reorganization dated as of the 14th day of June, 1994 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as an integral part thereof providing for the merger of INTERIM with
and into CBI (which would be the Surviving Corporation) and the acquisition of
all of the CBI 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
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 75
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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 CBI 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 CBI, 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, CBI, 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 CBI (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 CBI 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 COMMERCIAL BANCORP, INC. The authorized capital stock of CBI
consists of 100,000 shares of common stock having a par value of $10.00 per
share (the "CBI Common Stock"), and no shares of preferred stock (the "CBI
Preferred Stock). As of the date hereof, 20,000 shares of CBI Common Stock
were issued and outstanding, no shares of CBI Common Stock were held by CBI as
CBI Treasury Stock and no shares of CBI Preferred Stock were issued and
outstanding.
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 76
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ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent
corporation to the Merger is:
CBI ACQUISITION COMPANY, INC.
and
COMMERCIAL BANCORP, INC.
3.2 Surviving Corporation. The Surviving Corporation shall be:
COMMERCIAL BANCORP, INC.
which as of the Effective Time of the Merger shall continue to be named:
COMMERCIAL BANCORP, 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 CBI which will survive the
Merger, and the separate existence of INTERIM shall cease thereupon, and
without further action, CBI shall thereafter possess all of the assets, rights,
privileges, appointments, powers, licenses, permits and franchises of both CBI
and INTERIM, whether of a public or private nature, and shall be subject to all
of the liabilities, restrictions, disabilities, and duties of both CBI and
INTERIM.
3.4 Charter. At the Effective Time of the Merger, the Charter of
CBI, as in effect immediately prior to the Effective Time of the Merger, shall
constitute the Charter of CBI 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
CBI, 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.
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 77
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3.6 Directors and Officers. The directors and officers of INTERIM
in office immediately prior to the Effective Time of the Merger shall 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 CBI as the Surviving Corporation following
the Merger, shall remain:
COMMERCIAL BANCORP, 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 CBI. At the
Effective Time of the Merger, each share of $10.00 par value common stock of
CBI 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 CBI Shares; Exchange Ratio. At the Effective Time
of the Merger, the outstanding shares of CBI Common Stock held by the CBI
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 CBI and shall, except for those
shares held by any CBI Record Holder having properly perfected such holder's
dissenters' rights and maintained the perfected status of such dissenters'
rights through the Effective Time of the Merger, automatically be converted
exclusively into, and constitute only the right of the CBI Record Holders to
receive in exchange for their shares of CBI 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
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 78
<PAGE> 208
UPC Common Stock and the cash settlement of any remaining fractional share of
UPC Common Stock deliverable by UPC to the CBI 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 CBI
Common Stock issued and outstanding immediately prior to the Effective Time of
the Merger (based on there being no more than 20,000 shares of CBI 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
$24.00 per share of UPC Common Stock but less than or equal to $30.00
per share of UPC Common Stock (the "Primary Collar"), the Exchange
Ratio shall be fixed at 9.26 shares of UPC Common Stock for each share
of CBI Common Stock issued and outstanding at the Effective Time of
the Merger;
(ii) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $30.00 per share
of UPC Common Stock but less than or equal to $32.00 per share of UPC
Common Stock (the "Upper Secondary Collar"), the Exchange Ratio shall
be based on (a) a fixed price of $277.80 per share of CBI Common Stock
divided by (b) the Current Market Price Per Share of UPC Common Stock
for each share of CBI Common Stock validly issued and outstanding at
the Effective Time of the Merger;
(iii) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than $32.00 per share
of UPC Common Stock (the "Ceiling"), the Exchange Ratio shall be fixed
at 8.68 shares of UPC Common Stock for each share or CBI Common
Stock;provided, however, UPC would have the right to either deliver
the fixed Exchange Ratio of 8.68 or to terminate the transaction
contemplated in the Reorganization Agreement; provided, however,
should UPC elect to terminate the transaction under this provision,
CBI would have the unilateral right to reinstate the transaction by
accepting in exchange for each share of CBI Common Stock issued and
outstanding that number of shares of UPC Common Stock at the Current
Market Price Per Share sufficient to equal $277.80 per share of CBI
Common Stock;
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 79
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(iv) In the event the Current Market Price
Per Share of UPC Common Stock should be greater than or equal to
$22.00 per share of UPC Common Stock but less than $24.00 per share of
UPC Common Stock (the "Lower Secondary Collar"), the Exchange Ratio
shall be based on (a) a fixed price of $222.24 per share of CBI Common
Stock divided by (b) the Current Market Price Per Share of UPC Common
Stock for each share of CBI Common Stock validly issued and
outstanding at the Effective Time of the Merger; and
(v) In the event the Current Market Price
Per Share of UPC Common Stock should be less than $22.00 per share of
UPC Common Stock (the "Floor"), the Exchange Ratio shall be fixed at
10.10 shares of UPC Common Stock for each share of CBI Common
Stock;provided, however, CBI shall have the right to either accept the
fixed Exchange Ratio of 10.10 or to terminate the transaction
contemplated in the Reorganization Agreement;provided, however, should
CBI elect to terminate the transaction under this provision, UPC would
have the unilateral right to reinstate the transaction by delivering
in exchange for each share of CBI Common Stock issued and outstanding
that number of shares of UPC Common Stock at the Current Market Price
Per Share sufficient to equal $222.24 per share of CBI Common Stock.
The Exchange Ratio as determined in this Section 4.3 shall be based on an
aggregate of no more than 20,000 shares of CBI 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 CBI 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.
(1) DEFINITION OF "CURRENT MARKET PRICE
PER SHARE." The "Current Market Price Per Share" shall be the average
closing price per share of the "last" real time trades (i.e., closing
price) of the UPC Common Stock on the NYSE (as published in The Wall
Street Journal) for each of the ten (10) NYSE general market trading
days 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
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 80
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per share of UPC Common Stock and the average shall be based upon the
"last" real time trades and number of days on which the UPC Common
Stock actually traded during the Pricing Period.
(2) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should CBI Record Holders representing at least 10%
of the shares of CBI Common Stock issued and outstanding at the time
of Closing perfect such CBI 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.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF CBI.
Should CBI 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. Within five days
after the Effective Time of the Merger and the receipt of a certified list of
all of the CBI Record Holders, the Corporate Trust Department of Union Planters
National Bank, Memphis, Tennessee (the "Exchange Agent") shall deliver to each
of the CBI Record Holders such materials and information as may be deemed
necessary by the Exchange Agent to advise the CBI Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the CBI Common Stock in order for the CBI 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 CBI Record Holders at the addresses set forth on a certified shareholder
list to be delivered by CBI to UPC at the Closing (the "Shareholder List"). As
soon as reasonably practicable thereafter, the CBI Record Holders of all of the
outstanding shares of CBI Common Stock, shall deliver, or cause to be
delivered, to the Exchange Agent,
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pursuant to the Shareholder Materials, the certificates evidencing and
representing all of the shares of CBI 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 CBI 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 CBI Common Stock, the Exchange Agent
shall, on or prior to the 5th day after the receipt of such certificates, mail
to the former CBI Shareholders in exchange for the certificate(s) surrendered
by them, the Consideration to be paid for each such CBI Shareholder's shares of
CBI 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 CBI
Common Stock of a CBI 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 CBI Record Holder's
shares of CBI 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 CBI Record Holder's CBI Common Stock shall have been
surrendered as provided above, the Consideration payable to the CBI Record
Holder(s) of the cancelled shares as of any time after the Effective Date shall
not be paid to the CBI Record Holder(s) of such certificate(s) until such
certificates shall have been surrendered in the manner required. Each CBI
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 CBI 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 CBI Record Holder is
entitled, provided that each such CBI 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
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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 CBI Shareholder.
4.5 Stock Transfer Books. At the Effective Time of the Merger,
the stock transfer books of CBI shall be closed and no transfer of shares of
CBI 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 CBI 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 CBI and INTERIM.
4.7 Transfer of Assets. At the Effective Time of the Merger, all
rights, assets, licenses, permits, franchises and interests of CBI 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
CBI 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 CBI Shareholders. Any CBI Record Holder
of shares of CBI 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 CBI Shareholder is referred to herein as an "CBI Dissenting
Shareholder." However, UPC and INTERIM shall not be obligated to consummate
the Merger if CBI Record Holders holding or controlling more than ten percent
(10%) of the shares of the CBI 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.
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4.10 Approvals of Shareholders of CBI and INTERIM. In order to
become effective, the Merger must be approved by the respective shareholders of
CBI 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 CBI Stock Options. Except as described in Section 2.7 of the
Reorganization Agreement, there are no validly issued and outstanding CBI Stock
Options. Therefore, at the Effective Time of the Merger, there will be no CBI
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 CBI Stock Options will either be
exercised by the holders thereof, repurchased by CBI or converted into options
to acquire shares of UPC Common Stock at the election of the holders thereof.
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 CBI 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 CBI 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 CBI Record Holders of the shares of CBI 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
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Merger by CBI, to waive or extend the time for the compliance or fulfillment by
CBI 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, CBI, 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 CBI under this Plan of Merger
except any condition that, if not satisfied, would result in the violation of
any law or applicable governmental regulation.
ARTICLE 6
MISCELLANEOUS
6.1 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, or by registered or certified mail, postage
pre-paid to the persons at the addresses set forth below (or at such other
addresses or facsimile numbers as may hereafter be designated as provided
below), and shall be deemed to have been delivered as of the date received by
the Party to which, or to whom it is addressed:
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
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If to CBI: Commercial Bancorp, Inc.
224 7th Street
Post Office Box 297
Obion, Tennessee 38240
Fax: (901) 536-0121
Attn: Mr. Joel C. Pipkin
President and Chief Executive Officer
With a copy to: Baker, Worthington, Crossley
& Stansberry
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.
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
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ATTEST: CBI ACQUISITION COMPANY, INC.
/s/ J. F. Springfield By: /s/ Jackson W. Moore
- ------------------------------- ------------------------------
J. F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: COMMERCIAL BANCORP, INC.
/s/ Billy Fielder By: /s/ Joel C. Pipkin
- ------------------------------- ------------------------------
Billy Fielder Joel C. Pipkin
Its: Secretary Its: President and
Chief Executive Officer
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APPENDIX C
TENNESSEE BUSINESS CORPORATION ACT -- DISSENTERS' RIGHTS
<PAGE> 218
CHAPTER 23
BUSINESS CORPORATIONS--DISSENTERS' RIGHTS
<TABLE>
<S> <C>
SECTION. SECTION.
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 sec. 48-23-102 and who exercises that right when and in the
manner required by secs. 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, sec. 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:
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(A) If shareholder approval is required for the merger by sec.
48-21-103 or 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 sec. 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 effects 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
sec. 48-16-104; 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, sec. 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
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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, sec. 13.03)
PART 2--PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
48-23-201. NOTICE OF DISSENTER'S RIGHTS.--(a) If proposed corporate action
creating dissenters' rights under sec. 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 sec. 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 sec. 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, sec. 13.20.)
48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT.--(a) If proposed corporate
action creating dissenters' rights under sec. 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 sec. 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,
sec. 13.21.)
48-23-203. DISSENTERS' NOTICE.--(a) If proposed corporate action creating
dissenters' rights under sec. 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 sec. 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
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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 Sec.
48-23-201 (Acts 1986, ch. 887 sec. 13.22.)
48-23-204. DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a dissenters'
notice described in sec. 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 sec. 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, sec. 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 sec. 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, sec. 13.24.)
48-23-206. PAYMENT.--(a) Except as provided in sec. 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 sec. 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 sec.
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 sec. 48-23-201 or sec.
48-23-203. (Acts 1986, ch. 887, sec. 13.25.)
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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 sec. 48-23-203 and repeat the payment demand
procedure. (Acts 1986, ch. 887, sec. 13.26.)
48-23-208. AFTER-ACQUIRED SHARES.--(a) A corporation may elect to withhold
payment required by sec. 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 sec. 48-23-209.
(Acts 1986, ch. 887, sec. 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 sec. 48-23-206), or reject the
corporation's offer under sec. 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 sec. 48-23-206 or
offered under sec. 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 sec. 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, sec. 13.28.)
PART 3--JUDICIAL APPRAISAL OF SHARES
48-23-301. COURT ACTION.--(a) If a demand for payment under sec. 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.
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(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 sec. 48-23-208.
(Acts 1986, ch. 887, sec. 13.03.)
48-23-302. COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under sec. 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 sec. 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 secs. 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 service 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> 224
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,
II-1
<PAGE> 225
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.
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.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C> <C>
2 -- Agreement and Plan of Reorganization, dated June 14, 1994, by and between Union Planters Corporation, CBI
Acquisition Company, Inc., Commercial Bancorp, Inc. and The Commercial Bank of Obion, 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 LLP
23(c) -- Consent of KPMG Peat Marwick LLP
23(d) -- Consent of Deloitte & Touche LLP
23(e) -- Consent of Dunn, Creswell, Sparks, Smith, Horne & Downing
24 -- Power of Attorney (included in signature pages)
</TABLE>
II-2
<PAGE> 226
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.
II-3
<PAGE> 227
(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.
(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> 228
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 26th day of August, 1994.
DATE: August 26, 1994
UNION PLANTERS CORPORATION
By: /s/
-------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board
We, the undersigned directors and officers of Union Planters Corporation
do hereby constitute and appoint J. 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>
/s/ Chairman of the Board, August 26, 1994
- ----------------------------- Chief Executive Officer,
Benjamin W. Rawlins, Jr. Director (Principal
Executive Officer)
/s/ Executive Vice President August 26, 1994
- ----------------------------- and Chief Financial
John W. Parker Officer (Principal
Financial Officer)
/s/ Senior Vice President, August 26, 1994
- ----------------------------- Treasurer and Chief
M. Kirk Walters Accounting Officer
/s/ Director August 26, 1994
- -----------------------------
Albert M. Austin
/s/ Director August 26, 1994
- -----------------------------
Marvin E. Bruce
/s/ Director August 26, 1994
- -----------------------------
George W. Bryan
</TABLE>
II-5
<PAGE> 229
<TABLE>
<S> <C> <C>
/s/ Director August 26, 1994
- -----------------------------
Robert B. Colbert, Jr.
/s/ Director August 26, 1994
- -----------------------------
C. J. Lowrance, III
/s/ President and Director August 26, 1994
- -----------------------------
Jackson W. Moore
/s/ Director August 26, 1994
- -----------------------------
Stanley D. Overton
/s/ Director August 26, 1994
- -----------------------------
V. Lane Rawlins
/s/ Director August 26, 1994
- -----------------------------
Mike P. Sturdivant
/s/ Director August 26, 1994
- -----------------------------
Richard A. Trippeer, Jr.
</TABLE>
II-6
<PAGE> 230
PROXY
COMMERCIAL BANCORP, INC.
No. of Shares _____
224 SEVENTH STREET (P.O. BOX 297)
OBION, TENNESSEE 38240
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Joel C. Pipkin and Judy Knight 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 Commercial Bancorp, Inc. held of record by the undersigned
on August 29, 1994, at the Special Meeting of Shareholders to be held on
October 6, 1994 or at any adjournments or postponements thereof.
1. APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN UNION
PLANTERS CORPORATION, CBI ACQUISITION COMPANY, INC., COMMERCIAL
BANCORP, INC. AND THE COMMERCIAL BANK DATED AS OF JUNE 14, 1994, 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> 231
(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> 1
EXHIBIT 5
LOGO
UNION PLANTERS CORPORATION
August 24, 1994
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38088
Re: 202,000 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-8 (the "Registration Statement") for filing with the Securities and
Exchange Commission in respect to not more than 202,000 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 June 14, 1994, by and between UPC, CBI
Acquisition Company, Inc., Commercial Bancorp, Inc. and The Commercial Bank
(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 Plan 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; and
<PAGE> 2
Union Planters Corporation
August 24, 1994
Page 2
2. The Shares have been duly authorized and when issued by UPC in
accordance with the Plan, 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 qualifications 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 20, 1994, except as to Note 2 which is
as of March 1, 1994, which appears on page 34 of Union Planters Corporation's
1993 Annual Report to Shareholders, which is incorporated by reference in its
Annual Report on Form 10-K for the year ended December 31, 1993. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Memphis, Tennessee
August 26, 1994
<PAGE> 1
Exhibit 23(c)
(LOGO) KPMG PEAT MARWICK LLP
Morgan Keegan Tower, Suite 900
Fifty North Front Street
Memphis, TN 38103
ACCOUNTANT'S CONSENT
The Board of Directors
Grenada Sunburst System Corporation:
We consent to incorporation by reference in the registration statement
(No._________) on Form S-4 of Union Planters Corporation of our report dated
January 28, 1994, to the consolidated balance sheets of Grenada Sunburst System
Corporation and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1993, which
report appears in the Current Report on Form 8-K dated July 26, 1994, of Union
Planters Corporation and to the reference to our firm under the heading of
"Experts" in the Prospectus.
KPMG Peat Marwick LLP
Memphis, Tennessee
August 25, 1994
<PAGE> 1
EXHIBIT 23(d)
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 October 28, 1993,
incorporated by reference in the Annual Report on Form 10-K of BNF BANCORP,
INC., formerly BANCFIRST Corporation, for the year ended September 30, 1993 and
in the report on Form 8-K of Union Planters Corporation dated February 8, 1994
and to the reference to us under the heading "Experts" in the Prospectus, which
is part of this Registration Statement.
Deloitte & Touche L.L.P.
Birmingham, Alabama
August 26, 1994
<PAGE> 1
Exhibit 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Union Planters Corporation of our report
dated January 6, 1994 related to the financial statements of Commercial
Bancorp, Inc. and Subsidiary, which appear in such Prospectus. We also consent
to the reference to us under the heading "Experts" in such Prospectus.
/s/
Dunn, Creswell, Sparks, Smith, Horne & Downing
Certified Public Accountants
Union City, Tennessee
August 26, 1994
