<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1994
REGISTRATION NO. 33-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
UNION PLANTERS CORPORATION
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
TENNESSEE 6712 62-0859007
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</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)
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COPIES TO:
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MARION S. BOYD, ESQ. M. EDWARD MORGAN, ESQ.
MCDONNELL BOYD 608 EAST MAIN STREET
THE CRESCENT CENTER CLINTON, ARKANSAS 72031
6075 POPLAR AVENUE, SUITE 623 (501) 745-4044
MEMPHIS, TENNESSEE 38119
(901) 685-2550
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
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CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT MAXIMUM AGGREGATE AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(2) FEE
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Common Stock (par value $5.00
per share) including rights
to purchase shares of
Series A Preferred Stock... 227,768 $26.00 $5,921,968 $2,042.06
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</TABLE>
(1) Estimated based on an assumed conversion price range.
(2) Determined pursuant to Rule 457(f).
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<PAGE> 2
UNION PLANTERS CORPORATION
CROSS REFERENCE OF ITEMS IN FORM S-4 TO PROSPECTUS
<TABLE>
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ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
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<C> <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, THE MERGER and 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 *
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 *
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
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<C> <S> <C>
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, CLIN-ARK BANKSHARES, INC., CAB
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS and CLIN-ARK
BANKSHARES, INC. FINANCIAL STATEMENTS (APPENDIX A)
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies,
Consents or Authorizations are
to be Solicited INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE, THE
SPECIAL MEETING, THE MERGER and EFFECT OF MERGER ON
RIGHTS OF SHAREHOLDERS
19. Information if Proxies,
Consents or Authorizations are
not to be Solicited or in an
Exchange Offer *
</TABLE>
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* Omitted because the answer is negative or the item is inapplicable.
<PAGE> 4
CLIN-ARK BANKSHARES, INC.
HIGHWAY 65 SOUTH (P.O. BOX 789)
CLINTON, ARKANSAS 72031
January 27, 1994
TO THE SHAREHOLDERS OF CLIN-ARK BANKSHARES, INC.
You are cordially invited to attend a Special Meeting of Shareholders of
Clin-Ark Bankshares, Inc. ("CAB") to be held at the executive offices of CAB on
Highway 65 South, Clinton, Arkansas 72031, at 7:00 p.m. CST, on Thursday, March
3, 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
April 30, 1993 (the "Reorganization Agreement"), along with the Plan of Merger
annexed thereto as Exhibit A, pursuant to which CAB would be merged with and
into North Arkansas Bancshares, Inc. ("NABS"), a registered bank holding company
and wholly-owned subsidiary of Union Planters Corporation ("UPC"), which would
survive the merger. The Boards of Directors of CAB and UPC have approved the
Reorganization Agreement and the Plan of Merger and the merger contemplated
thereby.
In the merger, shareholders of CAB will receive four (4) shares of UPC's
common stock, having a par value of $5.00 per share (the "UPC Common Stock") in
exchange for each share of CAB's common stock, having a par value of $1.00 per
share. At the time the Reorganization Agreement was negotiated, the value of the
UPC Common Stock to be received by the shareholders of CAB was approximately
$105 per share of CAB's common stock. The enclosed Notice of Special Meeting of
Shareholders and the Prospectus and Proxy Statement explain the merger, the
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 CAB'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.
The Board of Directors of CAB has considered a number of proposals to sell
CAB and has determined that the proposal outlined in the Reorganization
Agreement is the best plan for the continuation of First National Bank, Clinton,
Arkansas as a locally managed bank, while at the same time maximizing the
financial interests of the shareholders of CAB. Accordingly, the Board of
Directors of CAB recommends that you vote FOR the proposal being considered.
Sincerely,
CLIN-ARK BANKSHARES, INC.
/s/ Stephen J. Smith
Stephen J. Smith
President
<PAGE> 5
CLIN-ARK BANKSHARES, INC.
HIGHWAY 65 SOUTH (P.O. BOX 789)
CLINTON, ARKANSAS 72031
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 3, 1994
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Clin-Ark
Bankshares, Inc. ("CAB") has been called by the Board of Directors of CAB and
will be held at the executive offices of CAB, Highway 65 South, Clinton,
Arkansas 72031, on Thursday, March 3, 1994, at 7:00 p.m., CST for the following
purposes:
1. To consider and vote upon a proposal to approve an Agreement and
Plan of Reorganization dated as of April 30, 1993 (the "Reorganization
Agreement"), by and between Union Planters Corporation ("UPC"), a
Tennessee-chartered bank holding company; North Arkansas Bancshares, Inc.
("NABS"), a registered bank holding company and wholly-owned subsidiary of
UPC; Clin-Ark Bankshares, Inc. ("CAB"), an Arkansas-chartered bank holding
company; and First National Bank, Clinton, Arkansas ("First National"), a
national banking association and a wholly-owned subsidiary of CAB, together
with the Plan of Merger annexed to the Reorganization Agreement as Exhibit
A. The Reorganization Agreement and the Plan of Merger provide for the
merger (the "Merger") of CAB with and into NABS, whereupon the holders of
CAB's common stock, $1.00 par value per share, of record immediately prior
to the effective time of the Merger would receive four (4) shares of the
common stock, $5.00 par value per share, of UPC, for each share of CAB
common stock owned. 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 CAB have the right to dissent from the Merger pursuant to,
and in accordance with, Section 4-26-1007 of the Arkansas Code Annotated. A copy
of said section of the Arkansas Code Annotated accompanies this notice as
Appendix C to the Prospectus and Proxy Statement.
Whether or not you plan to attend the Special Meeting, please sign the
enclosed proxy appointment card and return it at once in the stamped return
envelope in order to ensure that your shares will be represented at the Special
Meeting. PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. If you
attend in person, your proxy appointment can be disregarded if you wish and you
may vote your own shares.
Only holders of CAB common stock of record at the close of business on
January 19, 1994 will be entitled to receive notice of, and to vote at the
Special Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors
/s/ Stephen J. Smith
Stephen J. Smith
President
Clinton, Arkansas
Dated: January 27, 1994
THE BOARD OF DIRECTORS OF CLIN-ARK BANKSHARES, INC., BY MAJORITY VOTE
RECOMMENDS THAT THE HOLDERS OF CLIN-ARK BANKSHARES, INC. COMMON STOCK VOTE TO
APPROVE THE REORGANIZATION AGREEMENT AND THE PLAN OF MERGER.
<PAGE> 6
PROSPECTUS
UNION PLANTERS CORPORATION
COMMON STOCK
PROXY STATEMENT
CLIN-ARK BANKSHARES, INC.
SPECIAL MEETING TO BE HELD MARCH 3, 1994
This Prospectus and Proxy Statement (the "Prospectus") relates to up to
227,768 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 Clin-Ark Bankshares, Inc. ("CAB"), an Arkansas-chartered bank
holding company, in a merger (the "Merger") of CAB with and into North Arkansas
Bancshares, Inc. ("NABS"), a registered bank holding company and wholly-owned
subsidiary of UPC, pursuant to an Agreement and Plan of Reorganization dated as
of April 30, 1993, by and between UPC, NABS, CAB, and First National Bank,
Clinton, Arkansas ("First National"), a wholly-owned national banking
association subsidiary of CAB (the "Reorganization Agreement"), and in
accordance with the Plan of Merger annexed thereto as Exhibit A (the "Plan of
Merger"). Upon the Merger becoming effective, four (4) shares of UPC Common
Stock are to be issued by UPC in exchange for each share of CAB common stock,
$1.00 par value per share (the "CAB Common Stock") outstanding immediately prior
to the effective time of the Merger. No fractional shares of UPC Common Stock
will be issued. Fractional shares will be exchanged for cash based on a
conversion formula more particularly described in Section 3.1(e) of the
Reorganization Agreement, a copy of which is attached as Appendix B to this
Prospectus.
Shares of the outstanding UPC Common Stock are now, and the UPC Common
Stock to be issued in connection with the Merger will be, listed for trading on
the New York Stock Exchange ("NYSE") under the symbol "UPC." The last reported
sale price of UPC Common Stock on the NYSE on January 18, 1994, was $26.00 per
share.
This Prospectus also constitutes a proxy statement and is furnished to
holders of record of CAB Common Stock in connection with the solicitation of
proxies by the CAB Board of Directors (the "CAB Board") for use at a Special
Meeting of CAB shareholders to be held at 7:00 p.m. CST, on Thursday, March 3,
1994, at CAB's executive offices on Highway 65 South, Clinton, Van Buren County,
Arkansas 72031 and at any adjournments or postponements thereof (the "Special
Meeting"). At the Special Meeting, holders of CAB Common Stock of record as of
January 19, 1994, will consider and vote upon a proposal to approve the
Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit A,
upon consummation of which (i) each share of CAB Common Stock (except for those
shares held by any CAB shareholders with respect to which dissenters' rights
shall have been perfected in accordance with Arkansas law) would be converted
exclusively into the right to receive four (4) 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) CAB would be merged with and into NABS, with NABS surviving the Merger
and continuing to operate under the name of North Arkansas Bancshares, Inc.
All information contained in this Prospectus and Proxy Statement pertaining
to UPC and its subsidiaries has been supplied by UPC, and all information
pertaining to CAB or First National has been supplied by CAB. This Prospectus
and Proxy Statement and the accompanying proxy appointment cards are first being
mailed to shareholders of CAB on or about January 27, 1994.
THE SHARES OF UPC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
SAVINGS ASSOCIATION INSURANCE FUND, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus -- Proxy Statement is January 27, 1994
<PAGE> 7
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,
1992;
2. UPC's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30, and September 30, 1993;
3. UPC's Current Reports on Form 8-K dated January 4, January 14,
February 17, February 18, April 20, June 17, July 20, September 27,
September 30, October 14 and October 21, 1993, and January 10, January 11,
and January 20, 1994; and
4. The description of the UPC Common Stock contained in UPC's
Registration Statement under Section 12(b) of the Exchange Act, and any
amendment or report filed for the purpose of updating such description.
UPC's Annual Report on Form 10-K for the year ended December 31, 1992
incorporates by reference specific portions of UPC's Annual Report to
Shareholders for that year ("Annual Report to Shareholders"), but does not
incorporate other portions of the Annual Report to Shareholders. The portion of
the Annual Report to Shareholders captioned "Letter to Shareholders" and other
portions of the Annual Report to Shareholders not specifically incorporated into
the Annual Report on Form 10-K are NOT incorporated herein and are not a part of
the Registration Statement.
All documents filed by UPC with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus
and prior to the termination of the offering of the shares of UPC Common Stock
offered hereby shall likewise be incorporated herein by reference and shall
become a part hereof from and after the time such documents are filed. Any
statement contained herein or in a document incorporated herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any other subsequently-filed document which
also is incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
2
<PAGE> 8
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.
3
<PAGE> 9
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 CAB 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
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Available Information................................................................. 2
Incorporation of Certain Documents by Reference....................................... 2
Summary............................................................................... 6
Parties to the Merger............................................................... 6
Special Meeting of CAB Shareholders................................................. 7
Votes Required; Record Date......................................................... 7
Terms of the Merger................................................................. 7
Effective Date...................................................................... 8
Reasons for the Merger; Recommendations of Boards of Directors...................... 8
Conditions; Regulatory Approvals.................................................... 8
Management After the Merger......................................................... 8
Shareholders' Dissenters' Rights.................................................... 9
Certain Federal Income Tax Consequences............................................. 9
Accounting Treatment................................................................ 9
Market Prices of Common Stock....................................................... 10
Selected Consolidated Financial Data................................................ 11
Recent Developments Affecting UPC................................................... 13
Equivalent and Pro Forma Per Share Data............................................. 17
Pro Forma Condensed Financial Information........................................... 18
The Special Meeting................................................................... 22
Time and Place of Special Meeting; Solicitation of Proxies.......................... 22
Votes Required...................................................................... 22
Shareholders' Dissenters' Rights.................................................... 23
Recommendation...................................................................... 24
The Merger............................................................................ 24
Background of, and Reasons for, the Merger.......................................... 24
Terms of the Merger................................................................. 25
Effective Date and Effective Time of the Merger..................................... 25
Surrender of Certificates........................................................... 26
Conditions to Consummation of the Merger............................................ 26
Regulatory Approvals................................................................ 28
Conduct of Business Pending the Merger.............................................. 28
Payment of Dividends................................................................ 29
Waiver and Amendment; Termination................................................... 29
Management after the Merger......................................................... 29
NABS Executive Compensation......................................................... 30
</TABLE>
4
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Interests of Certain Persons in the Merger.......................................... 31
Certain Federal Income Tax Consequences............................................. 31
Accounting Treatment................................................................ 31
Expenses............................................................................ 32
Resales of UPC Common Stock......................................................... 32
Certain Regulatory Considerations..................................................... 32
General............................................................................. 32
Capital Adequacy.................................................................... 33
Prompt Corrective Action............................................................ 34
Dividend Restrictions............................................................... 35
Support of Subsidiary Banks......................................................... 35
Transactions with Affiliates........................................................ 36
FDIC Insurance Assessments.......................................................... 36
Recent Banking Legislation.......................................................... 36
Depositor Preference................................................................ 37
Description of UPC Common and Preferred Stock......................................... 37
UPC Common Stock.................................................................... 38
Preferred Stock of UPC.............................................................. 38
Certain Provisions That May Have an Anti-Takeover Effect............................ 39
Effect of Merger on Rights of Shareholders............................................ 41
Removal of Directors................................................................ 41
Required Shareholder Votes.......................................................... 41
Election of Directors............................................................... 41
Method of Casting Votes............................................................. 41
Clin-Ark Bankshares, Inc.............................................................. 43
Property............................................................................ 43
Competition......................................................................... 43
Deposits............................................................................ 43
Legal Proceedings................................................................... 43
Market Price of CAB Common Stock.................................................... 43
Certain Beneficial Holders of CAB Common Stock...................................... 44
Holdings of CAB Common Stock by CAB Management...................................... 44
CAB Management's Discussion and Analysis of Financial Condition and Results of
Operations.......................................................................... 45
Financial Condition................................................................... 45
Results of Operations -- Nine-Month Periods Ended September 30, 1993 and 1992......... 45
Results of Operations -- For the Years Ended December 31, 1992, 1991 and 1990......... 46
Validity of UPC Common Stock.......................................................... 54
Experts............................................................................... 54
Index to Appendices
Appendix A -- Clin-Ark Bankshares, Inc. Financial Statements
Appendix B -- Agreement and Plan of Reorganization, along with the Plan of Merger
annexed thereto as Exhibit A
Appendix C -- 1965 Arkansas Business Corporation Act -- Dissenters' Rights
</TABLE>
5
<PAGE> 11
SUMMARY
The following summary is not intended to be a complete description of all
material facts regarding UPC, CAB and the matters to be considered at the
Special Meeting, and is qualified in all respects by the information appearing
elsewhere or incorporated by reference in this Prospectus, the Appendices hereto
and the documents referred to herein.
PARTIES TO THE MERGER
UPC. Union Planters Corporation ("UPC") is a multi-state bank and savings
and loan holding company headquartered in Memphis, Tennessee. At September 30,
1993, UPC had total consolidated assets of approximately $6.1 billion, deposits
of approximately $5.2 billion and shareholders' equity of approximately $459
million. As of that date, UPC was the third largest independent bank holding
company headquartered in Tennessee as measured by consolidated deposits.
Management's emphasis in recent years has been to improve asset quality and
maintain capital well in excess of regulatory minimums. At September 30, 1993,
UPC's ratio of nonperforming loans to total loans was .84% and its ratio of
nonperforming assets to loans and foreclosed property was 1.03%. The ratios of
its allowance for losses on loans to total loans at such date was 2.94% and of
its allowance for losses on loans to nonperforming loans was 352%. Also at such
date, UPC's Tier 1 risk-based capital, Total risk-based capital and Leverage
ratios were 14.51%, 16.86% and 6.91%, respectively.
UPC conducts its business activities through its lead bank subsidiary,
Union Planters National Bank ("UPNB"), and through 32 community banks and three
savings and loan subsidiaries (collectively the "Community Banks") located in
Tennessee, Arkansas, Mississippi, Alabama and Kentucky (the "Community Bank
Group"). UPNB was founded in 1869 and operates 91 branches throughout Tennessee
with a presence in each of Memphis, Nashville, Knoxville and Chattanooga, the
major metropolitan markets in Tennessee. At September 30, 1993, UPNB had total
consolidated assets of approximately $3.4 billion. UPNB provides a diversified
range of financial services in the communities in which it operates, including
consumer, commercial and corporate lending, retail banking and mortgage banking.
To enhance fee income, UPNB also is engaged in mortgage servicing, investment
management and trust services, the issuance and servicing of credit and debit
cards and the origination, packaging and securitization of the
government-guaranteed portions of Small Business Administration (SBA) loans.
The Community Bank Group operates 145 branches and at September 30, 1993,
had total combined assets of approximately $2.9 billion ($1.9 billion in
Tennessee, $473 million in Mississippi, $467 million in Arkansas, and $23
million in Alabama). All of the Community Banks have been acquired by UPC since
1986 and are generally located in nonmetropolitan towns and communities and
provide banking services and loan products to such communities, with an emphasis
on one-to-four family residential mortgages and consumer and small commercial
lending. Of the 35 Community Banks, 22 have the largest deposit share and six
have the second largest deposit share in their respective markets providing UPC
with a strong competitive position in those markets.
UPC believes that the Community Banks provide additional diversification of
the funding and revenue sources for UPC and intends to continue expansion of the
Community Bank Group. UPC believes that its strategy of permitting the Community
Banks to retain their names and boards of directors as well as substantial
autonomy in their day-to-day operations enables UPC to be an attractive acquirer
of community banking organizations and permits such institutions to continue to
grow within their markets without disruption. UPC controls risk through
centralized loan review and audit functions as well as close monitoring of the
financial performance of each Community Bank. UPC also establishes its asset and
liability management strategy on a consolidated basis and effects all trades for
the investment portfolios of the Community Banks. UPC seeks economies in the
Community Bank Group through consolidation of administrative and operational
processes and is currently in the process of converting all of the Community
Banks to a common data processing system. This system conversion should be
completed by year-end 1994 and should permit UPC to realize significant cost
savings upon full implementation.
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions by UPNB in the major markets
6
<PAGE> 12
of Tennessee and through the acquisition of Community Banks that have
significant local market share in communities primarily located in Tennessee and
contiguous states. Future acquisitions may entail the payment by UPC of
consideration in excess of the book value of the underlying assets being
acquired, and may result in the issuance of additional shares of UPC capital
stock or the incurrence of additional indebtedness by UPC, and could have a
dilutive effect on the per share earnings or book value of UPC common stock. For
information with respect to acquisitions that have been consummated during 1993
or that are currently pending, see "Recent Developments."
UPC's corporate office is located at 7130 Goodlett Farms Parkway, Memphis,
Tennessee 38018, and its telephone number is (901) 383-6000.
Additional information about UPC is included in documents incorporated by
reference in this Prospectus. See "Incorporation of Certain Documents by
Reference."
CAB. Clin-Ark Bankshares, Inc. ("CAB") is a bank holding company chartered
under the laws of the State of Arkansas whose main office is located at Highway
65 South, Clinton, Arkansas 72031 (telephone (501) 745-8200). CAB's principal
subsidiary is First National Bank, Clinton, Arkansas ("First National"), a
national banking association chartered under the laws of the United States of
America. At September 30, 1993, First National was rendering banking services,
consisting primarily of traditional deposit and lending services, from four
banking offices located in Van Buren County, Arkansas. As of September 30, 1993,
CAB's consolidated total assets and deposits were approximately $49.8 million
and $45.5 million, respectively.
NABS. North Arkansas Bankshares, Inc. ("NABS") is a bank holding company
chartered under the laws of the State of Arkansas and a wholly-owned subsidiary
of UPC with principal offices located at 300 South Church Street, Jonesboro,
Arkansas 72403 (telephone 501-933-2295). NABS currently has seven banking
subsidiaries, all located in the State of Arkansas, serving twelve (12) counties
within that State. At the Effective Time of the Merger (as defined below), CAB
will, pursuant to the terms of the Reorganization Agreement and the Plan of
Merger annexed thereto as Exhibit A, merge with and into NABS, with NABS
surviving the Merger and continuing as a wholly-owned subsidiary of UPC to
operate under the name North Arkansas Bancshares, Inc.
SPECIAL MEETING OF CAB SHAREHOLDERS
A Special Meeting (the "Special Meeting") of the CAB shareholders will be
held on Thursday, March 3, 1994, at 7:00 p.m. CST, at CAB's executive offices on
Highway 65 South, Clinton, Arkansas 72031, 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 CAB Common Stock of record at the close of business on
January 19, 1994 (the "Record Date") will be entitled to receive notice of, and
vote at the Special Meeting. The affirmative votes of the holders of two-thirds
( 2/3) of the total shares of CAB Common Stock outstanding on the Record Date
are required to approve the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A. As of January 19, 1994, there were 54,442 shares
of CAB Common Stock entitled to vote.
The directors and executive officers of CAB (the "Management Group") held,
as of the Record Date, 29,837 shares, or 54.8% of the outstanding shares of CAB
Common Stock. CAB has been advised by all of the members of the Management Group
that these individuals intend to vote their shares in favor of approval of the
Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit A.
See "The Special Meeting."
TERMS OF THE MERGER
Upon consummation of the Merger, each share of CAB Common Stock which is
outstanding immediately prior to the Effective Time of the Merger (except for
shares with respect to which dissenters'
7
<PAGE> 13
rights shall have been perfected in accordance with Arkansas law) will be
converted exclusively into the right to receive four (4) shares of UPC Common
Stock and, to the extent of any fractional shares to which a CAB Record Holder
as defined below is entitled, cash in an amount determined pursuant to a
conversion formula set forth in Section 3.1(e) of the Reorganization Agreement.
EFFECTIVE DATE
The Merger will become effective at the time Articles of Merger along with
the executed Plan of Merger are filed with the Arkansas Secretary of State in
accordance with the 1965 Arkansas 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 in the Reorganization Agreement, it is
intended by the parties to the Reorganization Agreement that Articles of Merger
along with the Plan of Merger will be filed so as to become effective on or
about April 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 CAB Common Stock immediately
prior to the Effective Time of the Merger (the "CAB Record Holders") 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 CAB (the "CAB Board") believes the Merger is fair
to, and in the best interests of, CAB and its shareholders and recommends that
CAB's shareholders vote FOR approval of the Reorganization Agreement and the
Plan of Merger annexed thereto as Exhibit A. The CAB Board believes that the
Merger will provide significant value to all CAB shareholders and also enable
them to participate in opportunities for investment growth that the CAB Board
believes the Merger makes possible. The Merger will give CAB access to a
substantially greater base of capital, affording CAB an opportunity to expand
services beyond those presently provided. Moreover, affiliation with UPC will
allow CAB to compete more strongly in the North Arkansas marketplace and will
provide CAB 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 CAB shareholders, receipt of the necessary
regulatory approvals and satisfaction of customary closing conditions.
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Reorganization Agreement include the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and the Arkansas State Bank Department (the "Arkansas Department").
Applications for such approvals have been submitted to each of the respective
regulatory agencies and approval has been received from the Federal Reserve for
the parties to consummate the Merger. The application with the Arkansas
Department is still pending and there can be no assurance as to when, if or
subject to what conditions, such approval will be granted. See "The
Merger -- Conditions to Consummation of the Merger," "-- Regulatory Approvals"
and "-- Conduct of Business Pending the Merger" and "Certain Regulatory
Considerations."
MANAGEMENT AFTER THE MERGER
After the Effective Time of the Merger, the persons who are serving as
directors and officers of NABS immediately prior thereto shall continue to be
the directors and officers of NABS as the surviving corporation and will hold
office as provided in the charter and bylaws of NABS unless and until their
successors have been duly elected or appointed and qualified. See "The
Merger -- Management After the Merger."
8
<PAGE> 14
SHAREHOLDERS' DISSENTERS' RIGHTS
Under the Act, holders of CAB 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 4-26-1007 of
the Act will have the right to dissent from the Merger and to be paid cash for
the fair value of their shares as of the day prior to the date on which a vote
is taken approving the Merger. (A vote in favor of the Merger will disqualify a
CAB shareholder from exercising dissenters' rights). In order for a holder of
CAB Common Stock to perfect dissenters' rights, such holder must (i) not vote
his or her shares of CAB Common Stock FOR approval of the Reorganization
Agreement and the Plan of Merger; (ii) deliver to CAB, prior to or at the
Special Meeting at which the Reorganization Agreement and the Plan of Merger are
submitted for shareholder vote, a written objection to the Reorganization
Agreement and the Plan of Merger; and (iii) within ten (10) days after the date
on which the vote is taken, make written demand to the surviving corporation for
the payment of the fair value of his or her shares. Neither a delivery of a
proxy appointment directing a vote against the Reorganization Agreement and the
Plan of Merger nor a failure to vote for the Reorganization Agreement and the
Plan of Merger will constitute such written notice. Certain additional
procedures must be followed in order for a CAB shareholder to exercise
dissenters' rights. Shareholders wishing to dissent from the Reorganization
Agreement and the Plan of Merger are urged to read carefully "The Special
Meeting -- Shareholders' Dissenters' Rights" and Appendix C (containing a copy
of the Section of the Act pertaining to Dissenters' Rights) attached to this
Prospectus and should consult with their own legal advisors.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is intended for federal income tax purposes that the Merger will be
treated as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, (the "Code") and accordingly, for federal
income tax purposes, CAB shareholders will realize and recognize gain or loss
(if any) only to the extent of any cash received as consideration for their CAB
Common Stock. CAB shareholders may also recognize gain or loss by reason of
receiving cash in lieu of a fractional share or by the exercise of Dissenters'
Rights. See "The Merger -- Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "pooling of interests"
under generally accepted accounting principles ("GAAP") as described in
Accounting Principles Board Opinion No. 16.
9
<PAGE> 15
MARKET PRICES OF COMMON STOCK
UPC Common Stock. The UPC Common Stock is listed and traded on the NYSE
(symbol: UPC). The following table sets forth for the periods indicated the high
and low closing sale prices of the UPC Common Stock on the NYSE and the cash
dividends declared per share for the periods indicated:
<TABLE>
<CAPTION>
CASH
PRICE RANGE DIVIDENDS
----------------- DECLARED
HIGH LOW PER SHARE
------ ------ ---------
<S> <C> <C> <C>
1994
First Quarter,
through January 18, 1994................................... $26.00 $24.88 --
---------
Total................................................. .00
---------
---------
1993
First Quarter................................................. $29.13 $22.50 $ .18
Second Quarter................................................ 29.25 22.63 .18
Third Quarter................................................. 30.00 25.00 .18
Fourth Quarter................................................ 28.75 23.63 .18
---------
Total................................................. $ .72
---------
---------
1992
First Quarter................................................. $15.50 $13.75 $ .15
Second Quarter................................................ 20.13 14.63 .15
Third Quarter................................................. 20.75 17.50 .15
Fourth Quarter................................................ 24.75 17.75 .15
---------
Total................................................. $ .60
---------
---------
</TABLE>
The last reported sale price of UPC Common Stock on the NYSE as of January
18, 1994, which was the last practicable date prior to the mailing of this
Prospectus, was $26.00 per share.
On January 20, 1994, UPC declared a quarterly cash dividend on the UPC
Common Stock of $0.21 per share payable on February 18, 1994, to UPC
shareholders of record on February 4, 1994.
CAB Common Stock. The CAB Common Stock is not listed for trading on a
national securities exchange or otherwise publicly traded in any established
securities market.
10
<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for UPC and CAB, on an historical basis,
selected unaudited consolidated financial data. The information for CAB has been
derived from financial statements, including the financial statements of CAB
appearing in Appendix A to this Prospectus. The information for UPC has been
derived from the financial statements of UPC, including the financial statements
of UPC incorporated by reference in this Prospectus, and should be read in
conjunction therewith and with the notes thereto. See "Incorporation of Certain
Documents by Reference." Historical results are not necessarily indicative of
results to be expected for any future period. In the opinion of the managements
of the respective companies, all adjustments necessary to arrive at a fair
statement of results of operations of UPC and CAB, have been included.
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,(1) FOR THE YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data
Net interest income................ $ 174,002 $ 139,093 $ 191,137 $ 153,555 $ 134,324 $ 123,155 $ 117,017
Provision for losses on loans...... 8,944 11,744 18,557 24,835 19,166 49,229 15,486
Profits and commissions from
trading activities............... 6,728 8,424 10,168 14,707 24,268 36,700 41,250
Investment securities gains
(losses)......................... 3,874 12,065 13,246 3,344 (341) (1,294) (3,586)
Other noninterest income........... 53,141 41,768 59,859 51,559 46,069 42,121 41,456
Noninterest expense................ 167,437 149,400 199,218 164,771 160,805 177,833 148,850
Earnings (loss) before income taxes
and accounting changes........... 61,364 40,206 56,635 33,559 24,349 (26,380) 31,801
Applicable income taxes
(benefit)........................ 17,009 10,278 15,196 6,051 1,639 (4,111) 9,139
Earnings (loss) before accounting
changes.......................... 44,355 29,928 41,439 27,508 22,710 (22,269) 22,662
Accounting changes, net............ 4,661 -- -- -- -- -- --
Net earnings (loss)................ 49,016 29,298 41,439 27,508 22,710 (22,269) 22,662
Per Common Share Data
Earnings (loss) before accounting
changes
Primary.......................... $ 1.99 $ 1.53 $ 2.10 $ 1.59 $ 1.20 $ (1.19) $ 1.20
Fully diluted.................... 1.85 1.47 2.02 1.58 1.20 (1.19) 1.20
Net earnings (loss)
Primary.......................... 2.24 1.53 2.10 1.59 1.20 (1.19) 1.20
Fully diluted.................... 2.05 1.47 2.02 1.58 1.20 (1.19) 1.20
Cash dividends..................... .54 .45 .60 .48 .48 .48 .35
Book value......................... 18.53 15.94 16.34 14.99 13.61 12.46 14.14
Balance Sheet Data (at period end)
Total assets....................... $6,139,577 $4,964,477 $5,262,184 $3,786,839 $4,004,710 $4,002,614 $3,743,855
Loans, net of unearned income...... 2,762,660 2,255,954 2,231,839 1,912,914 2,129,083 1,995,383 1,994,637
Allowance for losses on loans...... 81,298 63,350 64,290 47,934 50,921 46,871 41,063
Investment securities.............. 2,530,365 2,015,225 2,198,103 1,147,803 1,155,266 1,019,759 947,523
Deposits........................... 5,181,421 4,272,343 4,450,176 3,211,261 3,341,840 3,129,567 2,871,888
Long-term debt(2).................. 226,824 39,042 77,156 42,085 48,765 73,521 39,834
Total shareholders' equity......... 459,424 347,522 356,211 269,446 237,035 240,591 264,971
Average shares outstanding (in
thousands)
Primary.......................... 19,118 16,723 16,765 16,632 18,641 18,894 18,882
Fully diluted.................... 23,264 19,382 19,609 16,986 18,981 18,928 18,894
Profitability Ratios
Return on average assets
Earnings before accounting
changes........................ .97% .87% .87% .72% .56% NM% .63%
Net earnings..................... 1.07 .87 .87 .72 .56 NM .63
Return on average common equity
Earnings before accounting
changes........................ 15.35 13.38 13.65 11.18 9.34 NM 8.59
Net earnings..................... 17.23 13.38 13.65 11.18 9.34 NM 8.59
Net interest income
(tax-equivalent) to average
earning assets................... 4.37 4.61 4.61 4.63 4.00 3.81 4.11
</TABLE>
11
<PAGE> 17
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,(1) FOR THE YEARS ENDED DECEMBER 31,
----------------------- --------------------------------------------------------------
1993 1992 1992 1991 1990 1989 1988
---------- ---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Asset Quality Data
Allowance/period end loans......... 2.94% 2.81% 2.88% 2.51% 2.39% 2.35% 2.06%
Nonperforming loans(3)............. $ 23,094 $ 35,632 $ 38,049 $ 26,197 $ 20,804 $ 17,512 $ 21,296
Nonperforming assets(4)............ 28,423 47,278 44,546 36,507 34,655 25,275 29,038
Nonperforming loans/total loans.... .84% 1.58% 1.71% 1.37% .98% .88% 1.07%
Allowance/nonperforming loans...... 352.03 177.79 168.97 182.98 244.77 267.65 192.82
Nonperforming assets/loans and
foreclosed property.............. 1.03 2.08 2.00 1.90 1.62 1.26 1.45
Loans 90 days or more past
due/loans........................ .18 .13 .15 .21 .44 .27 .47
Provision/average loans............ .44 .73 .86 1.23 .93 2.50 .83
Net charge-offs/average loans...... .32 .70 .83 1.38 1.10 2.25 .73
Net charge-offs.................... $ 6,479 $ 11,130 $ 17,879 $ 27,822 $ 22,704 $ 44,274 $ 13,494
Liquidity and Capital Ratios (at
period end)
Loans/deposits..................... 53.32% 52.80% 50.15% 59.57% 63.71% 63.76% 69.45%
Equity/assets...................... 7.48 7.00 6.77 7.12 5.92 6.01 7.08
Tier 1 capital to risk-weighted
assets(5)........................ 14.51 13.88 13.81 12.19 9.57 NA NA
Total capital to risk-weighted
assets(5)........................ 16.86 16.44 16.33 14.93 12.17 NA NA
Leverage ratio(5).................. 6.91 6.87 6.85 6.94 5.71 5.76 6.66
</TABLE>
- ---------------
(1) Interim period ratios are presented on an annualized basis where
appropriate.
(2) Includes subsidiary banks' long-term debt (primarily Federal Home Loan Bank
advances of $152.5 million and $2.9 million) at September 30, 1993 and
1992, respectively. Also, see "Recent Developments Affecting
UPC -- Long-Term Debt."
(3) Nonperforming loans include loans on nonaccrual status and restructured
loans.
(4) Nonperforming assets include nonperforming loans and foreclosed properties.
(5) The risk-based capital ratios are based upon capital guidelines prescribed
by federal bank regulatory authorities. Under those guidelines, the
required minimum Tier 1 and total capital to risk-weighted assets ratios
are 4% and 8%, respectively. The required minimum leverage ratio of Tier 1
capital to total adjusted assets is 3% to 5%.
NA -- Not available NM -- Not meaningful
12
<PAGE> 18
CAB SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE PERIOD
ENDED SEPTEMBER 30, FOR THE YEAR ENDED DECEMBER 31,
------------------- -----------------------------------------------
1993 1992 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Data
Net earnings(1)
Net earnings per
share(2)............... $ 9.85 $ 9.12 $ 12.96 $ 9.69 $ 6.90 $ 4.60 $ 3.69
Dividends declared.......... 1.44 0.00 0.00 0.00 0.00 0.00 0.00
Book value at period
end(1)................... 72.38 60.17 63.90 51.65 42.49 35.88 31.73
Average common shares
outstanding.............. 55,581 54,393 54,461 53,846 53,162 52,730 52,478
Earnings
Interest income............. $ 2,534 $ 2,736 $ 3,626 $ 3,619 $ 2,925 $ 2,202 $ 1,612
Interest expense............ 1,045 1,294 1,663 2,056 1,734 1,292 906
Net interest income......... 1,489 1,442 1,963 1,563 1,191 910 706
Provision for possible loan
losses................... (50) (78) (77) (47) (60) (92) (32)
Other operating income...... 282 345 446 281 241 174 108
Other operating expenses.... 967 844 1,146 1,020 827 635 484
Income taxes................ 295 369 480 255 178 114 104
Cumulative effect of
accounting
change................... 87 0 0 0 0 0 0
Net income.................. 546 496 706 522 367 243 194
Ending Balance Sheet
Total assets................ $49,833 $47,270 $48,427 $43,409 $33,163 $25,948 $19,640
Investment securities....... 13,963 13,797 13,044 10,608 7,240 5,852 3,806
Loans net of unearned
income................... 32,624 29,867 30,645 25,391 19,813 16,389 12,013
Deposits.................... 45,482 42,854 44,568 40,281 30,597 23,763 17,796
Long-term debt.............. 0 0 0 0 0 0 0
Shareholders' equity........ 4,023 3,273 3,480 2,781 2,259 1,892 1,665
Reserve for possible loan
losses................... 359 310 304 242 198 163 78
Selected Ratios
Return on average assets.... 1.48%(3) 1.46%(3) 1.54% 1.36% 1.24% 1.07% 1.12%
Return on average equity.... 19.41(3) 21.85(3) 22.55 20.71 17.68 13.66 12.37
Equity to assets
(average)................ 8.19 7.22 7.58 7.26 7.64 8.30 9.59
</TABLE>
- ---------------
(1) Based on average common shares outstanding adjusted for common stock
equivalents including options to purchase 2,500 shares of CAB Common Stock.
(2) Includes cumulative effect of accounting change equal to $1.57 per share.
(3) Annualized
RECENT DEVELOPMENTS AFFECTING UPC.
Long-Term Debt. A shelf registration statement for $150 million of UPC's
subordinated debt securities became effective with the Commission on October 21,
1993. On November 2, 1993, UPC issued $75 million of 6.25% Subordinated Notes
due 2003 at 99.305% under this shelf registration statement. The Subordinated
Notes qualify for Tier 2 capital under risk-based capital guidelines.
The net proceeds from the offering were $73.7 million. Approximately $39.0
million of the net proceeds have been used by UPC to in-substance defease UPC's
10 1/8% Subordinated Capital Debentures due April, 1999 (10 1/8% Debentures).
Purchased direct obligations of the U.S. Government will provide cash flows
matching the principal and interest debt service required for the 10 1/8%
Debentures to the date the debentures can be called (April 1, 1996). The
securities were placed in an irrevocable trust which will allow UPC, under
generally accepted accounting principles, to remove the obligation from its
balance sheet. The in-substance
13
<PAGE> 19
defeasance transaction resulted in an extraordinary loss of approximately $3.2
million after taxes. The remaining net proceeds will be used for general
corporate purposes.
UPC has also entered into an interest rate swap agreement with a notional
amount of $50 million to convert a portion of its fixed-rate debt outstanding to
a floating LIBOR rate for two and one-half years.
1993 Preliminary Year-End Operating Results. The following table presents
certain information for the three and twelve month periods ended December 31,
1993 and 1992. Reference is made to UPC's press release dated January 20, 1994,
which is included in UPC's Current Report on Form 8-K dated January 20, 1994.
For additional information, see "Incorporation of Certain Documents by
Reference."
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31,(1) DECEMBER 31,(1)
------------------------- -------------------------
1993 1992 1993 1992
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Income Statement Data
Net interest income..................... $ 57,944 $ 52,044 $ 234,605 $ 191,137
Provision for losses on loans........... 710 6,813 9,689 18,557
Investment securities gains............. 642 1,181 4,581 13,246
Other noninterest income................ 20,072 19,835 80,218 70,027
Noninterest expense..................... 55,105 49,818 224,480 199,218
Earnings before extraordinary item and
accounting changes................... 16,218 11,511 61,268 41,439
Extraordinary item-defeasance of debt,
net of taxes......................... (3,206) -- (3,206) --
Accounting changes, net of taxes........ -- -- 5,001 --
Net earnings............................ 13,012 11,511 63,063 41,439
Per Common Share Data
Earnings before extraordinary item and
accounting changes
-- primary................ .71 .58 2.69 2.10
-- fully diluted.......... .65 .55 2.49 2.02
Net earnings -- primary................. .55 .58 2.78 2.10
-- fully diluted.......... .52 .55 2.57 2.02
Cash dividends.......................... .18 .15 .72 .60
Book value.............................. 18.96 16.34
Book value -- assuming conversion of
convertible preferred stock............. 19.06 16.84
Profitability Ratios
Return on average assets
Earnings before extraordinary item
and accounting changes............. 1.02% .90% .98% .87%
Net earnings......................... .82 .90 1.01 .87
Return on average common equity
Earnings before accounting changes... 15.11 14.42 15.18 13.65
Net earnings......................... 11.65 14.42 15.70 13.65
Net interest income (tax-equivalent)/
average earning assets............. 4.23 4.61 4.34 4.61
Asset Quality Data
Allowance for losses on loans........... $ 80,442 $ 64,290
Nonperforming loans..................... 22,171 38,049
Nonperforming assets.................... 26,963 44,546
Loans 90 days or more past due.......... 4,771 3,368
Nonperforming loans/loans............... .76% 1.70%
</TABLE>
14
<PAGE> 20
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31,(1) DECEMBER 31,(1)
------------------------- -------------------------
1993 1992 1993 1992
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Nonperforming assets/loans and
foreclosed properties................ .92% 1.99%
Allowance/nonperforming loans........... 362.83 168.97
Balance Sheet Data (at Period End)
Total assets............................ $6,318,186 $5,262,184
Loans, net of unearned income........... 2,935,215 2,231,839
Investment securities
Book value........................... 2,617,053 2,198,103
Market value......................... 2,661,260 2,239,534
Total deposits.......................... 5,251,366 4,450,176
Long-term debt(2)....................... 275,230 77,156
Total shareholders' equity.............. 477,300 356,211
Capital Ratios
Equity/assets........................... 7.55% 6.77%
Leverage................................ 7.10 6.85
</TABLE>
- ---------------
(1) Interim period ratios are annualized. Information for the twelve months
ended December 31, 1993, includes the results of operations and financial
condition of Garrett Bancshares, Inc., Hogue Holding Company, Inc., Central
State Bancorp, Inc. and First Financial Services, Inc. for the entire
period.
(2) Includes subsidiary banks' long-term debt (primarily Federal Home Loan Bank
advances) of $160.5 million and $2.9 million at December 31, 1993 and 1992,
respectively. Also, see "Recent Developments Affecting UPC -- Long-Term
Debt."
Recently Completed Acquisitions. During the first nine months of 1993, UPC
acquired eleven Community Banks in Tennessee and Arkansas, contributing
approximately $1.2 billion in assets, $604 million in loans and $1.0 billion in
deposits to UPC's consolidated balance sheet. For additional information with
respect to these transactions, see UPC's Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30, and September 30, 1993, and UPC's Current
Reports on Form 8-K dated September 27 and September 30, 1993, October 14, 1993,
and January 10 and January 11, 1994, incorporated herein by reference. See
"Incorporation of Certain Documents by Reference."
Since September 30, 1993, UPC has completed the acquisition of the
following institutions (collectively, the "Recently Completed Acquisitions"):
<TABLE>
<CAPTION>
CONSIDERATION
INSTITUTION ASSET SIZE VALUE TYPE
-------------------------------------------- ---------- ----- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
First Financial Services, Inc. and its
subsidiary, First State Bank, Brownsville,
Tennessee................................. $ 85 $12 UPC Common Stock
Mid-South Bancorp, Inc. and its
subsidiaries, Simpson County Bank,
Franklin, Kentucky; Adairville Banking
Company, Adairville, Kentucky; First
Citizens Bank, Franklin, Tennessee; The
Peoples Bank of Elk Valley, Fayetteville,
Tennessee; and General Trust Company,
Nashville, Tennessee...................... 184 23 UPC Common Stock
---------- -----
Totals............................ $269 $35
---------- -----
---------- -----
</TABLE>
Pending Acquisitions. Consistent with UPC's acquisition strategy, UPC has
entered into definitive agreements to acquire the following financial
institutions in addition to CAB (collectively, the "Pending
15
<PAGE> 21
Acquisitions") which management considers probable and which are expected to be
consummated by June 30, 1994:
<TABLE>
<CAPTION>
CONSIDERATION
INSTITUTION ASSET SIZE VALUE TYPE
--------------------------------------------- ---------- ----- -----------------
(IN MILLIONS)
<S> <C> <C> <C>
Liberty Bancshares, Inc. and its subsidiary,
Liberty Federal Savings Bank, Paris,
Tennessee.................................. $174 $31.7 UPC Common Stock
Anderson County Bank, Clinton, Tennessee..... 19 2.0 Cash
First National Bancorp of Shelbyville, Inc.
and its subsidiary, First National Bank of
Shelbyville, Shelbyville, Tennessee........ 169 27.0 UPC Common Stock
Earle Bancshares, Inc. and its subsidiary,
First Southern Bank, Earle, Arkansas....... 40 8.7 UPC Common Stock
Tennessee Bancorp, Inc. and its subsidiary,
Tennessee National Bank, Columbia,
Tennessee.................................. 92 14.0 Cash
---------- -----
Totals............................. $494 $83.4
---------- -----
---------- -----
</TABLE>
If the Merger, the Pending Acquisitions and the Recently Completed
Acquisitions had been consummated at September 30, 1993, UPC's consolidated
total assets would have increased by approximately $769 million to approximately
$6.9 billion, and UPC's consolidated total deposits would have increased by
approximately $685 million to approximately $5.9 billion, based upon September
30, 1993, pro forma financial information. See "Pro Forma Condensed Financial
Information" and the related pro forma financial information in UPC's Current
Reports on Form 8-K dated September 27, September 30 and October 14, 1993, and
January 10 and 11, 1994, and historical financial information included in UPC's
1992 Annual Report on Form 10-K and UPC's Quarterly Report on Form 10-Q dated
September 30, 1993, incorporated by reference. See "Incorporation of Certain
Documents by Reference."
16
<PAGE> 22
EQUIVALENT AND PRO FORMA PER SHARE DATA
The following table presents selected comparative unaudited per share data
for (i) UPC Common Stock and CAB Common Stock on an historical basis; (ii) UPC
Common Stock on a pro forma basis for the CAB Acquisition only and for the CAB
Acquisition, all Recently Completed Acquisitions and the Pending Acquisitions;
and (iii) CAB Common Stock on an equivalent pro forma basis for the CAB
Acquisition only and for the CAB Acquisition, all Recently Completed
Acquisitions and the Pending Acquisitions, for the periods indicated. The data
is not necessarily indicative of the results of the future operations of either
entity or the actual results that would have occurred had the Merger been
consummated January 1, 1992. The information is derived from and should be read
in conjunction with the consolidated historical financial statements of UPC
(including related notes thereto) which are incorporated by reference, the
consolidated historical financial statements of CAB annexed hereto as Appendix A
and the unaudited pro forma consolidated financial statements and related notes
in UPC's Current Report on Form 8-K dated January 11, 1994, and the historical
financial statements of certain recently completed and pending acquisitions,
dated September 27 and October 14, 1993 and January 10, 1994, incorporated by
reference. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
NINE TWELVE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1993(1) 1992(1)
------------- -------------
<S> <C> <C>
Book value per common share
UPC.............................................................. $ 18.53 $ 16.34
UPC pro forma (CAB only)......................................... 18.52 16.33
UPC pro forma (CAB and all Recently Completed and Pending
Acquisitions)................................................. 17.97 15.75
CAB.............................................................. 73.90 67.65
CAB equivalent pro forma (CAB only).............................. 74.08 65.32
CAB equivalent pro forma (CAB and all Recently Completed and
Pending Acquisitions)(2)...................................... 71.88 63.00
Cash dividends per common share
UPC.............................................................. .54 .60
UPC pro forma.................................................... .54 .60
CAB.............................................................. 1.44 --
CAB equivalent pro forma......................................... 2.16 --
Earnings before extraordinary items and accounting changes
UPC
Primary....................................................... 1.99 2.10
Fully diluted................................................. 1.85 2.02
UPC pro forma (CAB only)
Primary....................................................... 1.99 2.12
Fully diluted................................................. 1.85 2.03
UPC pro forma (CAB and all Recently Completed and Pending
Acquisitions)(2)
Primary....................................................... 1.71 1.44
Fully diluted................................................. 1.63 1.44(3)
CAB
Primary....................................................... 8.28 12.96
Fully diluted................................................. 8.28 12.96
CAB equivalent pro forma (CAB only)
Primary....................................................... 7.96 8.48
Fully diluted................................................. 7.40 8.12
</TABLE>
17
<PAGE> 23
<TABLE>
<CAPTION>
NINE TWELVE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1993(1) 1992(1)
------------- -------------
<S> <C> <C>
CAB equivalent pro forma (CAB and all Recently Completed and
Pending Acquisitions)(2)
Primary....................................................... 6.84 5.76
Fully diluted................................................. 6.52 5.76(3)
</TABLE>
- ---------------
(1) The equivalent pro forma per share data for CAB is computed by multiplying
UPC's pro forma share information by 4.00.
(2) See also, "Recent Developments -- Recently Completed Acquisitions" and
"Pending Acquisitions."
(3) The assumed conversion of UPC Preferred Stock is antidilutive; therefore, it
is not presented.
PRO FORMA CONDENSED FINANCIAL INFORMATION
The following tables contain unaudited, consolidated, pro forma, condensed
financial information showing a statement of earnings for the nine months ended
September 30, 1993, and for the twelve months ended December 31, 1992, and a
balance sheet at September 30, 1993, for (i) UPC; (ii) UPC, the Recently
Completed Acquisitions and CAB; and (iii) UPC, the Recently Completed
Acquisitions, the Pending Acquisitions and CAB. Additionally, the pro forma
statements of earnings include certain acquisitions completed prior to December
31, 1992. The unaudited pro forma financial information reflects the Pending
Acquisitions and the acquisition of CAB using both the pooling of interests and
purchase methods of accounting in accordance with the accounting requirements of
each specific transaction. The unaudited pro forma financial information should
be read in conjunction with the historical financial statements of UPC and CAB
and in conjunction with the information presented in UPC's 1992 Annual Report on
Form 10-K, UPC's Quarterly Reports on Form 10-Q dated March 31, June 30 and
September 30, 1993, and UPC's Current Reports on Form 8-K dated September 27 and
October 14, 1993 and January 10, 11 and 20, 1994. Pro forma results are not
necessarily indicative of future operating results. See "Incorporation of
Certain Documents by Reference" and "Appendix A."
18
<PAGE> 24
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED PENDING
ACQUISITIONS ACQUISITIONS
UPC AND CAB AND CAB
---------- ------------------ ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks...................... $ 251,679 $ 262,399 $ 260,988
Interest-bearing deposits at financial
institutions............................... 35,456 36,941 40,356
Federal funds sold and securities purchased
under agreements to resell................. 136,487 144,243 163,293
Trading account securities, at market........ 126,308 126,308 126,308
Loans held for resale........................ 48,818 48,818 52,479
Investment securities
Held for sale.............................. 458,187 458,187 431,998
Held for investment........................ 2,072,178 2,162,120 2,316,855
Loans........................................ 2,762,660 2,959,845 3,237,951
Allowance for losses on loans.............. (81,298) (85,653) (90,996)
---------- ------------------ ------------------
Net loans.......................... 2,681,362 2,874,192 3,146,955
Premises and equipment....................... 130,541 137,559 145,630
Goodwill and other intangibles............... 42,628 43,001 48,557
Mortgage servicing rights.................... 4,149 4,149 4,149
Other real estate............................ 5,010 5,759 6,787
Other assets................................. 146,774 154,799 164,220
---------- ------------------ ------------------
Total assets....................... $6,139,577 $6,458,475 $6,908,575
---------- ------------------ ------------------
---------- ------------------ ------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing........................ $ 749,073 $ 794,134 $ 816,519
Interest-bearing........................... 4,432,348 4,667,010 5,050,242
---------- ------------------ ------------------
Total deposits..................... 5,181,421 5,461,144 5,866,761
Short-term borrowings
Federal funds purchased and securities sold
under agreements to repurchase.......... 184,780 184,805 184,805
Other...................................... 6,441 7,142 7,142
Federal Home Loan Bank advances.............. 149,257 153,506 154,106
Long-term debt
Subordinated notes and debentures.......... 74,292 74,292 74,292
Other...................................... 3,275 8,149 8,149
Other liabilities............................ 80,687 84,330 89,151
---------- ------------------ ------------------
Total liabilities.................. 5,680,153 5,973,368 6,384,406
---------- ------------------ ------------------
Shareholders' equity
Preferred stock............................ 104,548 104,548 104,548
Common stock............................... 95,751 103,320 116,469
Additional paid-in capital................. 83,368 83,100 83,784
Retained earnings.......................... 175,757 194,139 219,368
---------- ------------------ ------------------
Total shareholders' equity......... 459,424 485,107 524,169
---------- ------------------ ------------------
Total liabilities and shareholders'
equity........................... $6,139,577 $6,458,475 $6,908,575
---------- ------------------ ------------------
---------- ------------------ ------------------
</TABLE>
19
<PAGE> 25
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED PENDING
ACQUISITIONS ACQUISITIONS
UPC AND CAB AND CAB
-------- ------------------ ------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest income
Interest and fees on loans....................... $178,967 $195,233 $214,094
Interest on investment securities
Taxable....................................... 88,773 93,287 99,780
Tax-exempt.................................... 17,396 18,223 18,298
Interest on deposits at financial institutions... 1,223 1,215 1,392
Interest on federal funds sold and securities
purchased under agreements to resell.......... 2,866 3,206 3,479
Interest on trading account securities........... 4,837 4,837 4,837
Interest on loans held for resale................ 2,588 2,588 2,588
-------- ------------------ ------------------
Total interest income.................... 296,650 318,589 344,467
-------- ------------------ ------------------
Interest expense
Interest on deposits............................. 110,090 119,588 131,920
Interest on short-term borrowings................ 4,699 4,708 4,737
Interest on long-term debt....................... 7,859 8,208 8,208
-------- ------------------ ------------------
Total interest expense................... 122,648 132,504 144,865
-------- ------------------ ------------------
Net interest income...................... 174,002 186,085 199,602
Provision for losses on loans...................... 8,944 12,567 13,268
-------- ------------------ ------------------
Net interest income after provision for
losses on loans........................ 165,058 173,518 186,334
-------- ------------------ ------------------
Noninterest income
Service charges on deposit accounts.............. 20,965 22,662 23,856
Profits and commissions from trading
activities.................................... 6,728 6,728 6,728
Investment securities gains...................... 3,874 3,880 4,452
Other income..................................... 32,176 32,651 33,830
-------- ------------------ ------------------
Total noninterest income................. 63,743 65,921 68,866
-------- ------------------ ------------------
Noninterest expense
Salaries and employee benefits................... 73,303 77,592 82,718
Net occupancy expense............................ 11,714 12,800 13,764
Equipment expense................................ 11,721 11,940 12,282
Other expense.................................... 70,699 75,106 79,636
-------- ------------------ ------------------
Total noninterest expense................ 167,437 177,438 188,400
-------- ------------------ ------------------
Earnings before income taxes and
accounting changes..................... 61,364 62,001 66,800
Applicable income taxes............................ 17,009 17,998 19,789
-------- ------------------ ------------------
Earnings before accounting changes....... $ 44,355 $ 44,003 $ 47,011
-------- ------------------ ------------------
-------- ------------------ ------------------
Earnings per common share before accounting changes
Primary.......................................... $ 1.99 $ 1.79 $ 1.71
Fully diluted.................................... 1.85 1.69 1.63
Average common shares outstanding (in thousands)
Primary.......................................... 19,118 20,856 23,542
Fully diluted.................................... 23,264 25,284 27,970
</TABLE>
20
<PAGE> 26
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
UPC,
RECENTLY COMPLETED
UPC, ACQUISITIONS,
RECENTLY COMPLETED PENDING
ACQUISITIONS ACQUISITIONS
UPC AND CAB AND CAB
-------- ------------------ ------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest income
Interest and fees on loans....................... $199,881 $292,341 $321,006
Interest on investment securities
Taxable....................................... 106,139 140,669 149,674
Tax-exempt.................................... 16,148 18,123 18,266
Deposits at financial institutions............... 3,999 4,460 3,952
Interest on federal funds sold and securities
purchased under agreements to resell.......... 4,280 6,186 7,107
Interest on trading account securities........... 6,648 6,648 6,648
Interest on loans held for resale................ 3,457 3,457 3,457
-------- ------------------ ------------------
Total interest income.................... 340,552 471,884 510,110
-------- ------------------ ------------------
-------- ------------------ ------------------
Interest expense
Interest on deposits............................. 137,605 201,977 221,902
Interest on short-term borrowings................ 6,942 6,958 6,961
Interest on long-term debt....................... 4,868 6,940 6,981
-------- ------------------ ------------------
Total interest expense................... 149,415 215,875 235,844
-------- ------------------ ------------------
Net interest income...................... 191,137 256,009 274,266
Provision for losses on loans...................... 18,557 39,762 40,595
-------- ------------------ ------------------
Net interest income after provision for
losses on loans........................ 172,580 216,247 233,671
-------- ------------------ ------------------
Noninterest income
Service charges on deposit accounts.............. 20,843 26,069 27,687
Profits and commissions from trading
activities.................................... 10,168 10,168 10,168
Investment securities gains...................... 13,246 15,212 15,584
Other income.................................. 39,016 50,476 51,870
-------- ------------------ ------------------
Total noninterest income................. 83,273 101,925 105,309
-------- ------------------ ------------------
Noninterest expense
Salaries and employee benefits................... 74,772 103,879 110,438
Net occupancy expense............................ 13,136 18,573 19,881
Equipment expense................................ 12,225 15,756 16,180
Other expense.................................... 99,085 126,003 131,679
-------- ------------------ ------------------
Total noninterest expense................ 199,218 264,211 278,178
-------- ------------------ ------------------
Earnings before income taxes and
extraordinary items.................... 56,635 53,961 60,802
Applicable income taxes............................ 15,196 17,079 19,317
-------- ------------------ ------------------
Earnings before extraordinary items...... $ 41,439 $ 36,882 $ 41,485
-------- ------------------ ------------------
-------- ------------------ ------------------
Earnings per common share before extraordinary
items
Primary.......................................... $ 2.10 $ 1.40 $ 1.44
Fully diluted.................................... 2.02 1.40* 1.44*
Average common shares outstanding (in thousands)
Primary.......................................... 16,765 20,458 23,143
Fully diluted.................................... 19,609 24,565 27,250
</TABLE>
- ---------------
* The assumed conversion of UPC Preferred Stock is antidilutive, therefore it is
not presented.
21
<PAGE> 27
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES
Each copy of this Prospectus mailed to holders of CAB Common Stock is
accompanied by a proxy appointment card furnished in connection with the CAB
Board's solicitation of proxies for use at the Special Meeting and at any
adjournments or postponements thereof. The Special Meeting is scheduled to be
held at 7:00 p.m. CST, on Thursday, March 3, 1994, at CAB's executive offices
located on Highway 65 South, Clinton, Arkansas 72031. Only holders of record of
CAB Common Stock at the close of business on January 19, 1994, are entitled to
receive notice of and to vote at the Special Meeting. At the Special Meeting,
the CAB 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 CAB COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO CAB 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). CAB SHAREHOLDERS SHOULD NOT
FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY APPOINTMENT CARDS.
Any holder of CAB 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
Clin-Ark Bankshares, Inc., Highway 65 South (P.O. Box 789), Clinton, Arkansas
72031, Attention: Corporate Secretary, provided such notice or proxy appointment
is actually received by CAB 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 CAB. The shares of CAB 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 CAB 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 CAB
for the purpose of soliciting additional proxy appointments. CAB is not aware of
any matter to be presented at the Special Meeting other than the proposal to
approve the Reorganization Agreement and the Plan of Merger annexed thereto as
Exhibit A.
The cost of soliciting proxies from holders of CAB Common Stock will be
borne by CAB. Such solicitation will be made by mail but also may be made by
telephone or in person by the directors, officers and employees of CAB (who will
receive no additional compensation for doing so).
VOTES REQUIRED
The affirmative votes of the holders of two-thirds ( 2/3) of the
outstanding shares of CAB 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
54,442 shares of CAB Common Stock outstanding and entitled to vote at the
Special Meeting, with each share entitled to one vote.
22
<PAGE> 28
As of the Record Date, the Management Group beneficially owned and held of
record a total of 29,837 shares or approximately 54.8% of the issued and
outstanding shares of CAB Common Stock. ALL OF THE MEMBERS OF THE MANAGEMENT
GROUP HAVE ADVISED CAB 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 CAB entitled to vote on approval of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A has the right to
receive payment of the fair value of his shares of CAB Common Stock upon
compliance with Section 4-26-1007 of the Act, a copy of which is included as
Appendix C to this Prospectus. A shareholder may not dissent as to less than all
of the shares that he beneficially owns.
Any CAB shareholder intending to enforce his dissenters' rights may not
vote in favor of the Reorganization Agreement and the Plan of Merger (either
personally or by proxy) and must (i) deliver to the Corporate Secretary of CAB
prior to the time of the shareholder vote a written objection to the
Reorganization Agreement and the Plan of Merger ("Objection Notice") and (ii)
deliver to the Corporate Secretary of the surviving corporation within ten (10)
days after the date on which the vote was taken a written demand for payment of
the fair value of his shares as of the day prior to the date on which the vote
was taken approving the Merger (the "Demand Letter"). The Demand Letter must
state that the shareholder demands payment for his shares of CAB Common Stock if
the Merger is effected and include the number of shares of CAB Common Stock
owned by the dissenting CAB shareholder. A vote against approval of the
Reorganization Agreement and the Plan of Merger will not, in and of itself,
constitute an Objection Notice or Demand Letter satisfying the requirements of
Section 4-26-1007 of the Act. Failure to comply substantially with these
procedures will cause the CAB shareholder to lose his dissenters' rights to
receive cash payment for his shares. Consequently, any CAB shareholder who
desires to exercise his rights to payment for his shares is urged to consult his
legal adviser before attempting to exercise such rights.
If the Reorganization Agreement and the Plan of Merger should be approved
by CAB's shareholders at the Special Meeting and the Merger is consummated, each
CAB shareholder who did not vote for the Merger and who has properly filed an
Objection Notice and Demand Letter will be notified by the surviving corporation
no later than ten (10) days after the Effective Date of the Merger that the
Merger was consummated, and which letter shall offer to make payment for the
fair value of the dissenting shareholder's shares pursuant to the Act.
If within thirty (30) days after the Effective Date of the Merger the fair
value of such shares is agreed upon between the dissenting shareholder and the
surviving corporation, then payment of such shares' fair value shall be made by
the surviving corporation to the dissenting shareholder within ninety (90) days
after the Effective Date of the Merger, upon the surrender of the dissenting
shareholder's stock certificate(s) representing his shares of CAB Common Stock.
If within the 30-day period after the Effective Date of the Merger the
dissenting shareholder and the surviving corporation cannot agree upon the fair
value of such shares, then the dissenting shareholder, within sixty (60) days
after the expiration of the 30-day period, may file a petition in the Circuit
Court of Craighead County, Arkansas (the "Court"), asking for a finding and
determination of the fair value of the shares and shall be entitled to judgment
against the surviving corporation for the amount of the fair value as of the day
prior to the date on which the vote was taken approving the Merger, together
with interest thereon to the date of judgment. The judgment shall be payable
only upon and simultaneously with the surrender to the surviving corporation of
the certificate(s) representing the shares held by such dissenting shareholder.
Upon payment of the judgment, the dissenting shareholder shall cease to have any
interest in the shares or in the surviving corporation.
Unless the dissenting shareholder files his petition within the time period
set forth in the Act, the dissenting shareholder and all persons claiming such
rights under him will be bound by the terms of the Reorganization Agreement and
the Plan of Merger.
23
<PAGE> 29
The foregoing summary of the applicable provisions of Section 4-26-1007 of
the Act is not intended to be a complete statement of such provisions, and is
qualified in its entirety by reference to such Section, which is annexed as
Appendix C to this Prospectus.
For a discussion of certain tax consequences in connection with exercising
Dissenters' Rights, see "The Merger -- Certain Federal Income Tax Consequences."
RECOMMENDATION
For the reasons described below, the CAB Board has adopted the
Reorganization Agreement and the Plan of Merger, believes the Merger is in the
best interest of CAB and its shareholders and recommends that shareholders of
CAB vote FOR approval of the Reorganization Agreement and the Plan of Merger.
THE MERGER
The following information concerning the Merger, insofar as it relates to
matters contained in the Reorganization Agreement or the Plan of Merger annexed
thereto as Exhibit A, is qualified in its entirety by reference to the
Reorganization Agreement, including the Plan of Merger, which is attached to
this Prospectus as Appendix B. CAB shareholders are urged to read the
Reorganization Agreement and the Plan of Merger carefully.
BACKGROUND OF, AND REASONS FOR, THE MERGER
Background. Clin-Ark Bankshares, Inc. has for several years operated First
National Bank, Clinton, Arkansas ("First National") in Van Buren County as a
small, community bank in North Arkansas. First National has operated with
relatively few employees, focusing its activities primarily on serving
depositors and local businesses and making small business, agricultural and
consumer type loans. While First National's basic business has remained largely
the same, the regulatory environment in which the bank operates has become
increasingly complex. Credit analysis and documentation have become more
complex.
UPC learned in early 1992 that management of CAB might be inclined to
consider a proposal to permit CAB to be acquired by a larger institution.
Shortly thereafter, UPC made a preliminary offer to acquire CAB subject to a
number of conditions. At that time, Jackson W. Moore, President of UPC,
commenced discussions with Stephen J. Smith and other members of the CAB Board.
Such discussions resulted in the execution of the Reorganization Agreement dated
as of April 30, 1993, which was approved by the CAB Board at a special meeting
on March 23, 1993, and by the UPC Board of Directors at their regular meeting
held on May 20, 1993.
CAB Reasons. In light of the foregoing, the CAB Board has voted to
recommend the approval of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A by the CAB 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 First National 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 First National 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 affect adversely First
National earnings and, consequently, its value;
(iii) First National will be able to benefit significantly from UPC's
larger capital base, operations, 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
24
<PAGE> 30
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 market value of the UPC Common Stock offered in exchange for
the CAB Common Stock exceeds the recent trading prices for the CAB Common
Stock, the annual dividend yield on the UPC Common Stock exceeds the
historical yield on the CAB 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 CAB Board did not assign any specific or relative individual weight to
the foregoing factors in determining to recommend the Merger to the CAB
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) CAB has experienced strong and continued growth, (ii)
First National is located geographically in a region in which UPC has sought to
increase its market share, and (iii) UPC believes that by providing First
National with access to the UPC capital base and other banking resources, First
National will be well positioned to compete in its market in the face of
enhanced competition from larger, well capitalized institutions.
TERMS OF THE MERGER
At the Effective Time of the Merger, CAB will merge with and into NABS with
NABS surviving the Merger and continuing after the Effective Time of the Merger
to operate under the name North Arkansas Bancshares, Inc. The surviving
corporation will remain a wholly-owned subsidiary of UPC. In the Merger, each
share of CAB 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 four (4) shares of UPC Common Stock as provided in the
Reorganization Agreement and the Plan of Merger.
No fractional shares of UPC Common Stock will be issued in the Merger, and,
after aggregation of the shares (and fractional shares, if any) of UPC Common
Stock to which the holder of record of CAB Common Stock immediately prior to the
Effective Time of the Merger (a "CAB Record Holder") is entitled, cash will be
paid by UPC in lieu of any remaining fractional share. No fractional shares
would be involved should the exchange ratio remain at four for one. The amount
of cash in exchange for fractional shares to be received by CAB Record Holders
in the Merger will be determined pursuant to Section 3.1(e) of the
Reorganization Agreement which is based on the Current Market Price Per Share of
the UPC Common Stock. The Current Market Price Per Share equals the average
price per share of the "last" real time trades of the UPC Common Stock on the
NYSE for each of the ten (10) general market trading days next preceding the
Closing Date on which the NYSE was open for business.
Holders of CAB Common Stock entitled to vote at the Special Meeting will
have the right to dissent from the Reorganization Agreement and the Plan of
Merger and receive a cash payment equal to the fair value of their shares, all
in conformity with Section 4-26-1007 of the Act. See "The Special Meeting --
Shareholders' Dissenters' Rights."
EFFECTIVE DATE AND EFFECTIVE TIME OF THE MERGER
Articles of Merger along with the executed Plan of Merger will be filed as
soon as practicable after all conditions precedent contained in the
Reorganization Agreement have been satisfied or lawfully waived, including
receipt of all regulatory approvals and expiration of all statutory waiting
periods, or on such later date as may be agreed to by UPC and CAB. 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 Arkansas Secretary of State
pursuant to the Act or at such later date and time as the parties may agree and
specify in the Plan of Merger. The Effective Date of the Merger will be the day
on which the Effective Time of the Merger occurs. It is presently anticipated
that the Articles of Merger will be filed on or about March 31, 1994, but will
specify, by agreement
25
<PAGE> 31
of the parties, an Effective Time of the Merger of 12:01 a.m. CST, on April 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 CAB 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 CAB Common Stock for
certificates representing shares of UPC Common Stock.
HOLDERS OF CAB COMMON STOCK WHO DO NOT INTEND TO EXERCISE DISSENTERS'
RIGHTS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE THE EXCHANGE
MATERIALS FROM THE EXCHANGE AGENT.
Upon receipt of the Exchange Materials, CAB 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 CAB 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 CAB Record Holder a certificate representing
the whole number of shares of UPC Common Stock to which such holder is entitled
pursuant to the Reorganization Agreement and a check in the amount of the cash
consideration, if any, with respect to any remaining fractional share to which
the holder is entitled. No consideration will be delivered to a CAB Record
Holder unless and until such holder shall have delivered to the Exchange Agent
all certificates formerly representing the shares of CAB Common Stock held by
him and in respect of which he claims payment is due, or such documentation, if
applicable, and security in respect of lost or stolen certificates as is
required by the Reorganization Agreement.
No dividend or other distribution with respect to the UPC Common Stock will
be paid or delivered to the holder of any unsurrendered CAB certificate until
the holder surrenders all of such certificate(s) in accordance with the Exchange
Materials, at which time the CAB Record Holder will be entitled to receive all
previously withheld dividends and distributions, without interest.
After the Effective Time of the Merger, there will be no further transfers
on CAB's stock transfer books of shares of CAB Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger. If
certificates representing shares of CAB 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, NABS nor any other person will be liable
to any former holder of CAB 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 CAB 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 CAB to effect the Merger are subject
to the satisfaction of the following conditions prior to the Closing Date: (i)
approval of the Reorganization Agreement along with the Plan of Merger annexed
thereto as Exhibit A and the transactions contemplated thereby by the
affirmative votes of the holders of two-thirds ( 2/3) of the CAB Common Stock
outstanding on the Record Date; (ii) approval of the Reorganization Agreement
and the transactions contemplated thereby by the Federal
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<PAGE> 32
Reserve and the Arkansas Department and the expiration of any statutory waiting
periods; (iii) receipt of all other regulatory and contractual consents
necessary to consummate the transactions contemplated by the Reorganization
Agreement; (iv) the satisfaction of all other requirements prescribed by law as
conditions precedent to the consummation of the transactions contemplated by the
Reorganization Agreement; (v) none of UPC, NABS, CAB or First National shall be
subject to any order, decree or injunction of a court or agency which presents a
substantial risk of the restraint or prohibition of the consummation of the
Merger or the obtaining of material damages or other relief in connection
therewith; (vi) the Registration Statement of which this Prospectus forms a part
shall have become effective, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission; and (vii)
receipt of opinions from the regularly retained independent accountants of UPC
and CAB that the Merger should be accounted for by UPC as a pooling of interests
for financial statement purposes and that such accounting treatment is in
accordance with generally accepted accounting principles and that such
accountants are aware of no reason why the Merger may not be accounted for as a
pooling of interests.
The obligations of UPC and NABS to effect the Merger are further subject to
the satisfaction, or waiver by UPC, of, among others, the following conditions:
(i) UPC shall have received a legal opinion, dated the date of closing, from
counsel to CAB as to the good standing of CAB, 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 CAB and First
National set forth in the Reorganization Agreement shall, in all material
respects, be true on, or complied with by, the Closing Date as if made on such
date (except to the extent they relate by their terms to an earlier date) and
UPC shall have received a certificate signed by certain officers of CAB and
First National to such effect; (iii) there shall have been no damage or
destruction to, or taking of any property of CAB or First National or any
material adverse change in the business, financial condition, results of
operations or prospects of CAB or First National; (iv) CAB and First National
shall not have committed to effect any form of business combination with, or
asset sale to any other person or entity; adopted any "poison pill",
shareholders' rights provision or "golden parachute;" or taken any other action
the effect of which would be to materially diminish the value of CAB or First
National to UPC; and (v) at the time of Closing certain financial covenants
shall have been met including covenants that the total assets of First National
be equal to or greater than $47 million, the tangible equity capital of First
National and CAB, be equal to or greater than $3.7 million and $3.8 million,
respectively, that neither CAB nor First National shall have issued any
additional equity or debt securities or rights to purchase such securities, that
there have been no extraordinary sales of assets, investment portfolio
restructuring or dividend declarations by either of CAB or First National and
that the Merger can be accounted for as a pooling of interests; (vi) that each
member of the CAB Board shall have entered into UPC's standard form non-compete
agreement with UPC or First National; and (vii) Mr. G. Robert Garner shall have
entered into a written agreement with UPC and CAB providing for the conversion
of his options to purchase 2,500 shares of CAB Common Stock into the exclusive
right to purchase shares of UPC Common Stock as provided in the Reorganization
Agreement.
The obligations of CAB to effect the Merger are further subject to the
satisfaction, or waiver by CAB, of, among others, the following conditions: (i)
CAB shall have received a legal opinion, dated the date of closing, from counsel
to UPC as to the good standing of UPC and NABS, the enforceability and due
authorization of the Reorganization Agreement, the validity of the UPC Common
Stock, the receipt of required approvals and the absence of conflict with UPC's
charter, bylaws and material contracts (subject to limitations as permitted in
the Reorganization Agreement); (ii) each of the representations, warranties and
covenants of UPC set forth in the Reorganization Agreement shall, in all
material respects, be true on, or complied with by, the Closing Date as if made
on such date (except to the extent they relate by their terms to an earlier
date) and CAB shall have received a certificate signed by certain officers of
UPC to that effect; (iii) CAB shall have received from UPC certificates from
certain UPC executive officers stating that the consummation of the transaction
has been duly authorized and that the persons executing and delivering documents
on behalf of UPC are duly appointed and that their signatures are genuine; and
(iv) CAB 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.
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<PAGE> 33
No assurance can be provided as to whether all of the conditions precedent
to the Merger will be satisfied or waived by the party lawfully permitted to do
so.
REGULATORY APPROVALS
The Merger is subject to prior approval by (i) the Arkansas Department
under Section 23-32-1804 of the Regional Reciprocal Banking Act of 1988, of the
Arkansas Code; and (ii) the Federal Reserve under Section 3 of the Bank Holding
Company Act of 1956, as amended (the "BHCA"), which requires that the Federal
Reserve take into consideration, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. Applications for such
approvals have been filed with the Federal Reserve and the Arkansas Department.
The BHCA prohibits the Federal Reserve from approving the Merger if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any part of
the United States, or if its effect in any section of the country may be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner be a restraint of trade, unless the Federal Reserve
finds that the anticompetitive effects of the Merger are clearly outweighed by
the public interest and the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. The Federal Reserve has
the authority to deny an application if it concludes that the combined
organization would have an inadequate capital position or if the acquiring
organization does not meet the requirements of the Community Reinvestment Act of
1977.
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. The Federal Reserve authorized the consummation of the
Merger on December 15, 1993. Application for approval of the Merger is still
pending with the Arkansas Department and there can be no assurance as to when,
if or subject to what conditions, such approval will be granted. See "The
Merger -- Conditions to Consummation of the Merger" and "-- Waiver and
Amendment; Termination."
CONDUCT OF BUSINESS PENDING THE MERGER
The Reorganization Agreement contains certain restrictions upon the conduct
of CAB's and First National's business pending consummation of the Merger. In
particular, the Reorganization Agreement provides, in part, that, except as
otherwise provided in the Reorganization Agreement and/or without the written
consent of UPC, neither CAB nor First National may, among other things, (i)
amend its charter or bylaws; (ii) permit any lien to exist in respect to any
share of stock held by CAB or its subsidiaries; (iii) repurchase any of its
capital stock, split or otherwise subdivide its capital stock, recapitalize in
any way or declare a stock dividend in respect to the CAB Common Stock; (iv)
issue or sell any CAB Common Stock or sell or otherwise dispose of a substantial
part of CAB's or First National's assets or earnings power; (v) dispose of,
discontinue or acquire any material assets or businesses other than in the
ordinary course of business; (vi) incur any additional debt in excess of $50,000
except in the ordinary course of business; (vii) increase compensation, pay
bonuses or enter into severance arrangements except in accordance with past
practices; (viii) amend any existing employment contract with any person having
a salary in excess of $30,000 per year or enter into any new employment contract
providing for an annual salary exceeding $30,000 per year unless CAB or its
subsidiaries may terminate same at will without liability; (ix) adopt any new
benefit plan; (x) enter into any new service contracts, purchase or sale
agreements or lease agreements that are material to it; (xi) make any capital
expenditures except in the ordinary course of business; (xii) extend credit (or
commit to extend credit) to any officer, director or holder of 2% or more of CAB
Common Stock if such extension of credit would exceed 2% of the capital of CAB
or First National, or amend the terms of any such credit; or (xiii) acquire
direct or indirect control over any person or entity except in the ordinary
course of business or in connection with internal reorganizations and
acquisitions in CAB's or First National's fiduciary capacity.
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<PAGE> 34
Moreover, CAB and First National, respectively, shall, among other things,
operate in the usual, regular and ordinary course, preserve its organization and
assets and maintain its rights and franchises, use its best efforts to retain
its customer base and assist UPC in procuring all applicable regulatory
approvals.
PAYMENT OF DIVIDENDS
Subject to certain conditions, CAB is permitted under the Reorganization
Agreement to declare and pay, out of ordinary earnings, a quarterly cash
dividend with respect to the CAB Common Stock of up to $.72 per share of CAB
Common Stock per calendar quarter for any quarterly period ending subsequent to
the date of the Reorganization Agreement (April 30, 1993) and prior to January
1, 1994. The aggregate amount of dividends that may be so paid shall be limited
to an amount not to exceed UPC's quarterly dividend payout ratio.
Notwithstanding the foregoing, the Reorganization Agreement prohibits CAB 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 CAB; 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 CAB shareholders
if the effect of such amendment would be to change the amount or the type of
consideration to be paid in the Merger to the CAB 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 CAB
shareholders, as follows: (i) by the mutual consent of the parties; (ii) by UPC
or NABS if CAB or First National, respectively, should violate any affirmative
or negative covenant in respect to the operation of its business; (iii) by UPC,
NABS or CAB if the Closing Date shall not have occurred by March 31, 1994,
unless the failure is due to the failure of the party seeking to terminate; (iv)
by UPC, NABS or CAB if any governmental or regulatory approval is denied and not
successfully appealed within certain time limits; (v) by either party if the
other party's conditions have not been satisfied or waived as of the Closing
Date or if the other party has committed a material breach that is not cured
within 30 days after the breaching party receives notice of such breach; (vi) by
UPC or NABS if there has been a material adverse change in the business,
properties, liabilities, prospects or net worth of CAB or First National or if
CAB or First National should enter into a formal capital plan in cooperation
with applicable banking regulators; (vii) by UPC or NABS should CAB or First
National enter into any business combination or any letter of intent or
agreement in respect thereof with any other person; or (viii) by UPC in the
event that the holders of five percent (5%) or more of the CAB Common Stock
shall perfect dissenters' rights.
In the event of the valid termination of the Reorganization Agreement by
either UPC or CAB, the Reorganization Agreement shall become void, and there
will be no liability on the part of either party or their officers or directors
except for liability for breach of the Reorganization Agreement or for any
misstatement or misrepresentation made prior to such termination.
MANAGEMENT AFTER THE MERGER
The Reorganization Agreement and the Plan of Merger provide that after the
Effective Time of the Merger, the surviving corporation will be managed by a
board of directors consisting of the present members of NABS Board of Directors
(the "NABS Board"), all of whom have served on the NABS Board for one or more
terms and are expected to be qualified to serve as officers and/or directors of
the surviving corporation. All officers and directors serve one (1) year terms
but may be re-elected or reappointed, as the case may be.
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<PAGE> 35
Set forth below are those persons who are executive officers of NABS and members
of NABS's Board of Directors, their ages and principal occupations for the last
five years.
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------- --- ---------------------------------------
<S> <C> <C>
G. L. Lieblong......................... 49 Chairman of NABS; President of NABS;
J. Armistead Smith..................... 58 Director of NABS; Vice Chairman of UPC
Jackson W. Moore....................... 45 Director of NABS; President of UPC
J. F. Springfield...................... 64 Director of NABS; Secretary and General
Counsel of UPC
</TABLE>
Mr. Lieblong has been Chairman and President of NABS since 1990; Chairman
and Chief Executive Officer of Mercantile Bank, Jonesboro, Arkansas since 1990;
and President of Mercantile Bank since 1991. Prior to 1990, Mr. Lieblong was
President and Chief Executive Officer of First National Bank of Paragould,
Arkansas and First Paragould Bankshares, Inc.
Mr. Smith has been a director of NABS since 1990; Vice Chairman of UPC
since 1989; Executive Vice President of UPC from 1987 to 1989; President of UPNB
from 1988 to 1992; and Vice Chairman of UPNB from 1985 to 1988.
Mr. Moore has been a director of NABS since 1990; a Director of UPC since
1986; President of UPC since 1989; and a Partner of Wildman, Harrold, Allen,
Dixon & McDonnell, a law firm, prior to 1989.
Mr. Springfield has been a director of NABS since 1990, and has been
Secretary and General Counsel of UPC since 1985.
NABS EXECUTIVE COMPENSATION
The following table sets forth the compensation received by the Chairman of
the Board and Chief Executive Officer of NABS for the period indicated:
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------------
AWARDS
ANNUAL COMPENSATION --------------------- PAYOUTS
-------------------------------------- RESTRICTED -------
NAME AND PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION(2) AWARDS SARS(3) PAYOUTS COMPENSATION(4)
- ------------------------- ---- --------- ------- --------------- ---------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
G.L. Lieblong............ 1992 $163,770 $37,500 $ 9,527 -- $31,500 -- $ 1,711
President and Chairman 1991 $154,500 $ 199 $ 7,013 -- -- -- $ 585
of the Board 1990 $ 79,615 (5) $50,000 $ 109 -- -- -- $ 317
</TABLE>
- ---------------
(1) NABS has no paid employees. Mr. Lieblong's salary is paid by Mercantile
Bank, Jonesboro, Arkansas, a wholly-owned subsidiary of NABS.
(2) Includes UPC's ESOP and 401(K) plan contributions.
(3) In 1990, G.L. Lieblong received options to purchase 10,000 shares of UPC
Common Stock in connection with UPC's acquisition of NABS.
(4) Mr. Lieblong receives other forms of compensation that may be deemed as
direct or indirect compensation, including special pay and miscellaneous
pay, amounting to $1,711 in 1992.
(5) From date of hire of June 1, 1990.
Except for G.L. Lieblong, none of NABS' subsidiaries' directors or
executive officers received in excess of $100,000 of aggregate direct
remuneration in 1992 from NABS or NABS' subsidiaries. NABS pays no direct or
indirect remuneration to its directors or executive officers. The aggregate
direct remuneration paid by NABS' wholly-owned subsidiary, Mercantile Bank,
Jonesboro, Arkansas, to all directors and executive officers as a group (4
persons) in 1992 was $244,008, which reflects the amount paid by Mercantile
Bank, Jonesboro to Mr. Lieblong.
Messrs. J. Armistead Smith, Jackson W. Moore and J. F. Springfield receive
no direct or indirect compensation from NABS or NABS' subsidiaries for their
services as directors of NABS. Messrs. Smith and
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<PAGE> 36
Moore receive compensation from UPC for their services as executive officers and
directors of UPC. Mr. Springfield receives compensation from UPC for his
services as an executive officer of UPC.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain of the directors and officers of CAB also serve on the First
National Board of Directors (the "First National Board") and will retain their
positions on the First National Board after consummation of the Merger. Those
individuals own approximately 54.8% of the shares of CAB Common Stock issued and
outstanding and will receive in the Merger the consideration described above.
All directors of First National are likely to retain their positions as
directors of First National. Certain of the directors and officers of CAB
currently own in the aggregate 1,550 shares of UPC Common Stock.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is abbreviated in nature
and is included for general information only. CAB 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 CAB as a result of the Merger, (ii) gain or loss will be recognized by
the CAB shareholders only to the extent of any cash consideration received in
exchange for their CAB 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 CAB shareholders in connection with the Merger will be the
same as the CAB Record Holder's basis of the CAB 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, if any, for which cash is received; and (iv) the
holding period of the UPC Common Stock to be received by the CAB shareholders in
connection with the Merger will include the holding period of the CAB Common
Stock surrendered in exchange therefor, provided that the CAB 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 CAB
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 CAB Common Stock is held
by such shareholder as a capital asset at the Effective Date of the Merger.
Cash Received by Holders of CAB Common Stock Who Dissent. A shareholder of
CAB who perfects his dissenters' rights under the laws of Arkansas and who
receives a cash payment of the value of his shares of CAB 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 CAB 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 CAB 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 CAB 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 CAB and UPC will be
carried on the books of UPC immediately subsequent to the Effective Time of the
Merger at the amounts recorded on the respective books of each corporation
immediately prior to the Effective Time of the Merger. Net income
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<PAGE> 37
of UPC subsequent to the Merger becoming effective will include the net income
of CAB and UPC for the entire fiscal period in which the Merger occurs, which is
expected by UPC and CAB to be fiscal year 1994. Subsequent to the Merger
becoming effective, the reported income of CAB and UPC will be combined and
restated as income of UPC for all periods in 1994, including those periods ended
prior to the Effective Time of the Merger. The unaudited pro forma financial
information contained in this Prospectus has been prepared using the pooling of
interests method of accounting where applicable.
EXPENSES
The Reorganization Agreement provides, in general, that UPC and CAB 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
CAB and therefore an "underwriter" as of the date of the Effective Time of the
Merger with respect to the UPC Common Stock issued in the Merger for purposes of
Rule 145 under the Securities Act. Affiliates may not sell their shares of UPC
Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement (other than on Form S-4) under the Securities
Act covering such shares or in compliance with Rule 145 promulgated under the
Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Persons who may be deemed to be affiliates
of CAB generally include individuals or entities that control, are controlled by
or are under common control with CAB and will include members of the Management
Group in their roles as either executive officers, directors or ten percent
(10%) or greater shareholders of CAB. 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 CAB shareholder deemed an "affiliate" of
CAB 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 CAB
for a period of not less than 30 days subsequent to the Effective Date of the
Merger. UPC does not expect to release such a statement prior to July 21, 1994.
Shares of UPC Common Stock delivered to any CAB 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
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System are subject to supervision and examination by the Federal Reserve and the
state banking authorities of the states in which they are located. State bank
subsidiaries which are not members of the Federal Reserve System are subject to
supervision and examination by the FDIC and the state banking authorities of the
states in which they are located. UPC's savings bank subsidiaries are subject to
supervision and examination by the OTS. UPC's banking subsidiaries are subject
to various requirements and restrictions, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and the rate of 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. Both Tennessee and Arkansas
have adopted reciprocal interstate banking legislation permitting
Tennessee-based bank holding companies to acquire banks and bank holding
companies in certain other states, including Arkansas, and allowing bank holding
companies located in certain states other than Tennessee and Arkansas, to
acquire banks and bank holding companies in Tennessee and Arkansas.
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 requirement of the guidelines 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 classified as "Tier 2 capital," may consist
of subordinated debt (or certain other qualifying debt issued prior to March 12,
1988), other preferred stock and a limited amount of loan loss reserves.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 capital to average total assets, less goodwill (the "Leverage
ratio") of 3% for bank holding companies that meet certain specified criteria,
including those having the highest regulatory rating. All other bank holding
companies generally are required to maintain a Leverage ratio of at least 3%
plus an additional cushion of 100 to 200 basis points. The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions are expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets. Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 capital leverage ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities. The Federal Reserve has not advised UPC of any specific minimum
Leverage ratio applicable to UPC.
Failure to meet capital requirements can subject an institution to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC and a prohibition
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on the taking of brokered deposits. As described below, under the "Prompt
Corrective Action" regulations, substantial additional restrictions can be
imposed upon FDIC-insured institutions that fail to meet applicable capital
requirements. See "-- Prompt Corrective Action."
At September 30, 1993, UPC's Total risk based capital ratio was 16.86%,
Tier 1 capital ratio was 14.51% and Leverage ratio was 6.91%. In addition, each
of UPC's banking subsidiaries satisfied the minimum capital requirements
applicable to it and had the requisite capital levels to qualify as a
"well-capitalized" institution under the prompt corrective action provisions
discussed below.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") enacted in December 1991 requires the federal banking regulators to
take prompt corrective action in respect of depository institutions that do not
meet their minimum capital requirements. FDICIA establishes five capital tiers:
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized" and "critically undercapitalized." Under capital regulations,
a bank is defined to be well capitalized if it maintains a Leverage ratio of at
least 5%, a Tier 1 capital ratio of at least 6% and a Total capital ratio of at
least 10% and is not otherwise in a "troubled condition" as specified by its
appropriate federal regulatory agency. A bank is defined to be adequately
capitalized if it meets all of its minimum capital requirements as described
above under "Capital Adequacy." In addition, a bank will be considered
undercapitalized if it fails to meet any minimum required measure, significantly
undercapitalized if it is significantly below such measure and critically
undercapitalized if it fails to maintain a level of tangible equity equal to not
less than 2% of total assets. A bank may be deemed to be in a capitalization
category that is lower than is indicated by its actual capital position if it
receives an unsatisfactory examination rating.
All institutions, regardless of their capital levels, are restricted from
making any capital distribution or paying any management fees that would cause
the institution to fail to satisfy the minimum levels to be considered
adequately capitalized. An undercapitalized institution is: (i) subject to
increased monitoring by the appropriate federal banking regulator; (ii) required
to submit an acceptable capital restoration plan within 45 days; (iii) subject
to asset growth limits; and (iv) required to obtain prior regulatory approval
for acquisitions, branching and new lines of business. The capital restoration
plan must include a guarantee by the institution's holding company that the
institution will comply with the plan until it has been adequately capitalized
on average for four consecutive quarters. Pursuant to the guarantee, the
institution's holding company would be liable up to the lesser of 5% of the
institution's total assets or the amount necessary to bring the institution into
capital compliance as of the date it failed to comply with its capital
restoration plan. If the controlling bank holding company fails to fulfill its
obligations under the guarantee and files (or has filed against it) a petition
under the federal Bankruptcy Code, the appropriate federal banking regulator
could have a claim as a general creditor of the bank holding company, and, if
the guarantee were deemed to be a commitment to maintain capital under the
federal Bankruptcy Code, the claim would be entitled to a priority in such
bankruptcy proceeding over third-party creditors of the bank holding company.
The regulatory agencies have discretionary authority to reclassify well
capitalized institutions as adequately capitalized or to impose on adequately
capitalized institutions requirements or actions specified for undercapitalized
institutions if the agency determines after notice and an opportunity for
hearing that the institution is in an unsafe or unsound condition or is engaging
in an unsafe or unsound practice, which can consist of the receipt of an
unsatisfactory examination rating if the deficiencies cited are not corrected. A
significantly undercapitalized institution, as well as any undercapitalized
institution that did not submit an acceptable capital restoration plan, may be
subject to regulatory demands for recapitalization, broader application of
restrictions on transactions with affiliates, limitations on interest rates paid
on deposits, asset growth and other activities, possible replacement of
directors and officers and restrictions on capital distributions by any bank
holding company controlling the institution. Any company controlling the
institution could also be required to divest the institution or the institution
could be required 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
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subject to conservatorship or receivership within 90 days unless periodic
determinations are made that forbearance from such action would better protect
the deposit insurance fund. Unless appropriate findings and certifications are
made by the appropriate federal bank regulatory agencies, a critically
undercapitalized institution must be placed in receivership if it remains
critically undercapitalized on average during the calendar quarter beginning 270
days after the date it became critically undercapitalized.
DIVIDEND RESTRICTIONS
UPC is a legal entity separate and distinct from UPNB, the Community Banks
and its nonbank subsidiaries. UPC's revenues (on a parent company only basis)
result, in significant part, from dividends paid to UPC by its subsidiaries. The
right of UPC, and consequently the right of creditors and shareholders of UPC,
to participate in any distribution of the assets or earnings of any subsidiary
through the payment of such dividends or otherwise is necessarily subject to the
prior claims of creditors of the subsidiary (including depositors, in the case
of banking subsidiaries), except to the extent that claims of UPC in its
capacity as a creditor may be recognized.
There are statutory and regulatory requirements applicable to the payment
of dividends by UPNB and the Community Banks to UPC. Each national banking
association subsidiary of UPC, including UPNB, is required by federal law to
obtain the prior approval of the Comptroller for the payment of dividends if the
total of all dividends declared by the board of directors of such bank in any
year will exceed the total of (i) such bank's net profits (as defined and
interpreted by regulation) for that year plus (ii) the retained net profits (as
defined and interpreted by regulation) for the preceding two years, less any
required transfers to surplus. In addition, national banks may only pay
dividends to the extent that their retained net profits (including the portion
transferred to surplus) exceed statutory bad debts (as defined by regulation).
The state-chartered Community Banks are subject to similar restrictions on the
payment of dividends by the respective state laws under which they are
organized. Furthermore, as described further under "-- Prompt Corrective
Action," all depository institutions are prohibited from paying any dividends,
making other distributions or paying any management fees if, after such payment,
the depository institution would fail to satisfy its minimum capital
requirements. In accordance with the specified calculations, at September 30,
1993, UPNB and the Community Banks had approximately $87 million available for
distribution to UPC without obtaining regulatory approval. The actual amount of
dividends paid will be limited to a lesser amount by the management of UPC in
order to maintain compliance with UPC's internal capital guidelines and to
maintain strong capital positions in each of the subsidiary banks of UPC. Future
dividends will depend upon the level of earnings of the subsidiary banks of UPC.
It is the policy of the Federal Reserve that bank holding companies should
pay dividends only out of current earnings. Federal banking regulators also have
the authority to prohibit banks and bank holding companies from paying a
dividend if they should deem such payment to be an unsafe or unsound practice.
In addition, it is the position of the Federal Reserve Board that as a bank
holding company UPC is expected to act as a source of financial strength to each
of its subsidiary banks. See "-- Support of Subsidiary Banks."
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, UPC is expected to act as a source of
financial strength to UPNB and the Community Banks and, where required, to
commit resources to support each of such subsidiaries. This support may be
required at times when, absent such Federal Reserve policy, UPC may not be
inclined to provide it. Moreover, if one of its subsidiary banks should become
undercapitalized, under FDICIA, UPC would be required to guarantee the
subsidiary bank's compliance with its capital plan in order for such plan to be
accepted by the federal regulatory authority. See "-- Prompt Corrective Action."
Under the "cross guarantee" provisions of the Federal Deposit Insurance
Act, any FDIC-insured subsidiary of UPC may be held liable for any loss incurred
by, or reasonably expected to be incurred by the FDIC in connection with (i) the
"default" of any other commonly controlled FDIC-insured subsidiary or (ii) any
assistance provided by the FDIC to any commonly controlled FDIC-insured
subsidiary "in danger of default." "Default" is defined generally as the
appointment of a conservator or receiver and "in danger of
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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.
FDIC INSURANCE ASSESSMENTS
The subsidiary banks of UPC are subject to FDIC deposit insurance
assessments. The FDIC has adopted a risk-based premium schedule which has
increased the assessment rates for most FDIC-insured depository institutions.
Under the new schedule, the annual premiums initially range from $.23 to $.31
for every $100 of deposits. Each financial institution is assigned to one of
three capital groups -- well capitalized, adequately capitalized or
undercapitalized -- and further assigned to one of three subgroups within a
capital group, on the basis of supervisory evaluations by the institution's
primary federal and, if applicable, state supervisors and on the basis of other
information relevant to the institution's financial condition and the risk posed
to the applicable insurance fund. The actual assessment rate applicable to a
particular institution will, therefore, depend in part upon the risk assessment
classification so assigned to the institution by the FDIC.
RECENT BANKING LEGISLATION
In addition to the matters noted above, FDICIA made other significant
changes to the federal banking laws. FDICIA institutes certain changes to the
supervisory process, including provisions that mandate certain regulatory agency
actions against undercapitalized institutions within specified time limits.
Standards for Safety and Soundness. FDICIA requires the federal bank
regulatory agencies to prescribe, by regulation to become effective no later
than December 1, 1993, standards for all insured depository institutions and
depository-institution holding companies relating to: (i) INTERNAL controls,
information systems and audit systems; (ii) loan documentation; (iii) credit
underwriting; (iv) interest-rate
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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 September 30, 1993, the
requisite capital levels to qualify as well capitalized institutions, UPC
believes the brokered deposits regulation will have no material affect on the
funding or liquidity of UPNB or any of the Community Banks.
Consumer Protection Provisions. FDICIA seeks to encourage enforcement of
existing consumer protection laws and enacted new consumer-oriented provisions
including a requirement of notice to regulators and customers of any proposed
branch closing and provisions intended to encourage the offering of "lifeline"
banking accounts and lending in distressed communities. FDICIA also requires
depository institutions to make additional disclosures to depositors with
respect to the rate of interest and the terms of their deposit accounts.
Miscellaneous. FDICIA also made extensive changes in the applicable rules
regarding audit, examinations and accounting. FDICIA generally requires annual
on-site full-scope examinations by each bank's primary federal regulator. FDICIA
also imposes new responsibilities on management, the independent audit committee
and outside accountants to develop, approve or attest to reports regarding the
effectiveness of internal controls, legal compliance and off-balance-sheet
liabilities and assets.
FDICIA also required the Federal Reserve to prescribe standards which limit
the risks posed by an insured institution's "exposure" to any other depository
institution to limit the risks that the failure of a large depository
institution would pose to an insured depository institution. FDICIA broadly
defines "exposure" to include extensions of credit to the other institution;
purchases of, or investments in, securities issued by the other institution;
securities issued by the other institution and accepted as collateral for an
extension of credit to any person; and all similar transactions which the
Federal Reserve defines by regulation to be exposure. The Federal Reserve has
proposed procedures and "benchmark" standards to limit an insured depository
institution's credit and settlement exposure to each of its correspondent banks.
The final rules were effective on December 19, 1992, but provide for a two-year
transition period.
DEPOSITOR PREFERENCE
Legislation recently enacted by Congress establishes a nationwide depositor
preference rule in the event of a bank failure. Under this arrangement, all
deposits and certain other claims against a bank, including the claim of the
FDIC as subrogee of insured depositors, would receive payment in full before any
general creditor of the bank would be entitled to any payment in the event of an
insolvency or liquidation of the bank.
DESCRIPTION OF UPC COMMON AND PREFERRED STOCK
UPC's Charter of Incorporation (the "Charter") currently authorizes the
issuance of 50,000,000 shares of common stock, par value $5.00 per share, and
10,000,000 shares of preferred stock having no par value (the
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"UPC Preferred Stock"). As of December 31, 1993, 19,656,924 shares of UPC Common
Stock were issued and outstanding, and approximately 588,000 shares were subject
to acquisition through the exercise of options granted pursuant to UPC's 1992
and 1983 Stock Option Plans and other employee, officer and director benefit
plans; approximately 1,404,000 shares were authorized for issuance pursuant to
said plans but not yet subject to option grants or otherwise issued; and
approximately 4,478,000 shares were authorized for issuance and reserved for
conversion of certain shares of UPC Preferred Stock. Additionally, as of
December 31, 1993; 4,095,577 shares of UPC Preferred Stock were issued and
outstanding, consisting of 44,000 shares of UPC's $8.00 Nonredeemable,
Cumulative, Convertible Preferred Stock, Series B (the "Series B Preferred
Stock"); 690,000 shares of UPC's 10 3/8% Increasing Rate, Redeemable, Cumulative
Preferred Stock, Series C (the "Series C Preferred Stock"); 253,655 shares of
UPC's 9.5% Redeemable, Cumulative Convertible Preferred Stock, Series D (the
"Series D Preferred Stock"); and 3,107,922 shares of the UPC's 8% Cumulative,
Convertible Preferred Stock, Series E (the "Series E Preferred Stock"). As of
December 31, 1993, none of UPC's 250,000 authorized shares of Series A Preferred
Stock were issued and outstanding. The capital stock of UPC does not represent
or constitute a deposit account and is not insured by the FDIC, the Bank
Insurance Fund, the Savings Association Insurance Fund or any governmental
agency.
UPC COMMON STOCK
General. Shares of UPC Common Stock may be issued at such time or times
and for such consideration (not less than the par value thereof) as the UPC
Board may deem advisable, subject to such limitations as may be set forth in the
laws of the State of Tennessee or UPC's charter or bylaws. UPNB is the
Registrar, Transfer Agent and Dividend Disbursing Agent for shares of UPC Common
Stock.
Dividends. Subject to the preferential dividend rights, if any, applicable
to shares of UPC preferred stock and subject to applicable requirements, if any,
with respect to the setting aside of sums for purchase, retirement or sinking
funds for UPC Preferred Stock, the holders of UPC Common Stock are entitled to
receive, to the extent permitted by law, such dividends as may be declared from
time to time by the UPC Board.
UPC has the right to, and may from time to time enter into borrowing
arrangements or issue other debt instruments, the provisions of which may
contain restrictions on payment of dividends and other distributions on UPC
Common Stock and UPC Preferred Stock. As of the date of this Prospectus, no such
restrictions under any such borrowing arrangements or outstanding debt
instruments are in effect.
Liquidation Rights. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of UPC, after
distribution in full of the preferential amounts, if any, to be distributed to
the holders of UPC Preferred Stock, holders of UPC Common Stock will be entitled
to receive all of the remaining assets of UPC of whatever kind available for
distribution to shareholders ratably in proportion to the number of shares of
UPC Common Stock held. The UPC Board may distribute in kind to the holders of
UPC Common Stock such remaining assets of UPC or may sell, transfer or otherwise
dispose of all or any part of such remaining assets to any other person or
entity and receive payment therefor in cash, stock or obligations of such other
person or entity, and may sell all or any part of the consideration so received
and distribute any balance thereof in kind to holders of UPC Common Stock.
Neither the merger or consolidation of UPC into or with any other corporation,
nor the merger of any other corporation into UPC, nor any purchase or redemption
of shares of stock of UPC of any class, shall be deemed to be a dissolution,
liquidation or winding-up of UPC for purposes of this paragraph.
Because UPC is a holding company, its right and the rights of its creditors
and shareholders, including the holders of UPC Common Stock, to participate in
the distribution of assets of a subsidiary on its liquidation or
recapitalization may be subject to prior claims of such subsidiary's creditors
except to the extent that UPC itself may be a creditor having recognized claims
against such subsidiary.
PREFERRED STOCK OF UPC
Series A Preferred Stock. UPC's Charter provides for the issuance of up to
250,000 shares (subject to adjustment by action of the UPC Board) of Series A
Preferred Stock under certain circumstances involving a
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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.
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.
Series D Preferred Stock. In connection with the July, 1992 acquisition of
Southeastern Bancshares, Inc., UPC issued in a private offering 253,655 shares
of Series D Preferred Stock. Such shares have a stated value of $20.50 per share
on which dividends accrue at a rate of 9.5% per annum; dividends are cumulative.
At any time prior to redemption, each share of the Series D Preferred Stock is
convertible at the option of the holder into one share of UPC Common Stock. The
Series D Preferred Stock is not subject to any sinking fund provisions and has
no preemptive rights. Such shares have a liquidation preference of $20.50 per
share plus unpaid dividends accrued thereon and, at UPC's option, with the prior
approval of the Federal Reserve, are subject to redemption by UPC at any time
and from time to time on or after July 1, 1995. Holders of Series D Preferred
Stock have no voting rights except as required by law and in certain other
limited circumstances.
Series E Preferred Stock. In February, 1992, UPC issued in a public
offering 2,200,000 shares of Series E Preferred Stock, all of which (except for
600 previously converted shares) are outstanding as of the date hereof. In the
first two quarters of 1993, UPC issued 908,522 shares of Series E Preferred
Stock in connection with UPC's acquisition of the remaining equity interest in
Bank of East Tennessee and UPC's acquisition of Erin Bank & Trust Company in
Erin, Tennessee, all of which are outstanding as of the date hereof. All shares
of Series E Preferred Stock have a stated value of $25.00 per share. Dividends
are payable at the rate of $.50 per share per quarter and are cumulative. The
Series E Preferred Stock is convertible at the rate of 1.25 shares of UPC Common
Stock for each share of Series E Preferred Stock. The Series E Preferred Stock
is not subject to any sinking fund provisions and has no preemptive rights. Such
shares have a liquidation preference of $25 per share plus unpaid dividends
accrued thereon and, at UPC's option and with the prior approval of the Federal
Reserve Board, are subject to redemption by UPC at any time or from time to time
after March 31, 1997. Holders of Series E Preferred Stock have no voting rights
except as required by law and in certain other limited circumstances.
CERTAIN PROVISIONS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT
Certain provisions of UPC's charter and bylaws, and certain provisions of
Tennessee law, may have an anti-takeover effect in that they could prevent,
discourage or delay a change in control of UPC. The following summary briefly
describes certain of those provisions. The summary is not intended to be
complete and is qualified in its entirety by reference to UPC's Charter and
Bylaws and to the Tennessee Code.
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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. 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
40
<PAGE> 46
shares of UPC Common Stock, the acquirer would not thereby obtain the ability to
replace a majority of the UPC Board until at least the second annual meeting of
shareholders following the acquisition, and furthermore the acquirer would not
obtain the ability immediately to effect a merger, consolidation or other
similar business combination unless the described conditions were met. As a
result, UPC's shareholders may be deprived of opportunities to sell some or all
of their shares at prices that represent a premium over prevailing market prices
in a takeover context. The provisions described above also may make it more
difficult for UPC's shareholders to replace the UPC Board or management, even if
the holders of a majority of the UPC Common Stock should believe that such
replacement is in the interests of UPC. As a result, such provisions may tend to
perpetuate the incumbent UPC Board and management.
EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS
At the Effective Time of the Merger, the CAB Record Holders (except for any
CAB Record Holder properly exercising his dissenters' rights) automatically will
become holders of the UPC Common Stock, and their rights as holders of the UPC
Common Stock will be determined by the Tennessee Business Corporation Act and by
UPC's charter and Bylaws. The following is a summary of the material differences
in the rights of shareholders of UPC and CAB.
REMOVAL OF DIRECTORS
CAB's bylaws provide that its directors may be removed with cause by vote
of a majority vote of the entire CAB Board. CAB's Directors may be removed with
or without cause by the vote of a majority of the shareholders entitled to vote
at a special meeting.
UPC's bylaws provide that directors may be removed with or without cause by
vote of the holders of 66 2/3% or more of the outstanding shares entitled to
vote generally in the election of directors.
REQUIRED SHAREHOLDER VOTES
CAB's charter and bylaws contain no provisions for more than a majority
vote of all shares entitled to vote on any particular matter that may be
subjected to a shareholder vote, unless the question is one upon which, by
express provision of Arkansas law, a larger or different vote is required, in
which case the express statutory provision shall govern. The Act provides for
the affirmative vote of 66 2/3% of the shares entitled to vote to approve the
merger of an Arkansas corporation into an unaffiliated corporation. The UPC
charter provides that the vote of 66 2/3% or more of the shares entitled to vote
will be required to approve any merger or consolidation of UPC with or into any
other corporation or the sale, lease, exchange or other disposition of
substantially all of UPC's assets, if on the date a binding agreement providing
for such merger, sale or other disposition, the corporation, person or entity
into which UPC would be merged or to which its assets would be sold is the
beneficial owner of 10% or more of the outstanding capital stock of UPC.
ELECTION OF DIRECTORS
CAB's bylaws provide for only one class of directors, and shareholders are
entitled to elect all CAB directors annually. The number of directors may be
fixed from time to time by a majority of the entire board of directors within
the parameters set forth in the Bylaws.
UPC's bylaws provide for a classified board of directors consisting of
three classes with staggered terms of three years each. Therefore, UPC
shareholders are entitled to elect only one-third of UPC's directors annually.
The number of directors shall be not less than seven (7) nor more than
twenty-five (25). To increase the number of directors, 66 2/3% of the directors
then in office must concur.
METHOD OF CASTING VOTES
Voting Rights. Except as provided by law or the charter of UPC, each
holder of UPC Common Stock shall have one vote on all matters voted upon by
shareholders in respect of each share of UPC Common Stock held. Holders of UPC
Common Stock do not have cumulative voting rights.
41
<PAGE> 47
CAB's Bylaws provide that each common stockholder shall be entitled to one
vote for each share of stock held by him. At all elections of directors, each
stockholders shall be entitled to cast as many votes as shall equal the number
of shares of CAB Common Stock multiplied by the number of directors to be
elected, or to cumulate his votes.
Reservation of Shares. Such number of shares of UPC Common Stock as may
from time to time be required for such purpose shall be reserved for issuance
(i) upon conversion of any shares of UPC Preferred Stock or any other obligation
of UPC convertible into shares of UPC Common Stock which is at the time
outstanding, and (ii) upon exercise of any outstanding options or warrants to
purchase shares of UPC Common Stock.
42
<PAGE> 48
CLIN-ARK BANKSHARES, INC.
Clin-Ark Bankshares, Inc. was organized as an Arkansas corporation in 1986,
and is headquartered in Clinton, Arkansas. CAB is a one-bank holding company
registered with and regulated by the Federal Reserve. First National Bank,
Clinton, Arkansas was chartered as a national banking association in 1984. First
National's main office is located at Highway 65 South (P.O. Box 789), Clinton,
Arkansas 72031. First National had total assets as of September 30, 1993, of
$49.8 million and total deposits of $45.5 million, and is engaged in the general
banking business, including taking deposits from the public and using such
deposits, together with other funds to make loans and investments. First
National is a national bank and a member of the Federal Reserve System. The
deposits of First National are insured by the FDIC up to the maximum allowed by
law.
All of the outstanding shares of common stock of First National are owned
by CAB. First National has one wholly-owned subsidiary, First North Central
Insurance, Inc. ("First North Central"), which until November 1, 1993 was a full
service, independent insurance agency providing home, life and auto insurance,
policies. On November 1, 1993 all of the assets of First North Central were sold
to Clinton Insurance Agency.
As of January 1, 1994, First National had approximately 33 full-time
employees and 2 part-time employees operating out of four locations: the Clinton
main office, the Bee Branch, the Fairfield Bay and Mountain View branches. CAB
and First North Central have no employees. Management believes that First
National has a good relationship with its employees. First National has a profit
sharing plan and a flexible benefits plan for its employees as well as group
health and life insurance coverage.
PROPERTY
First National owns the property on which its main office and branch
offices are located. First National also owns a parcel of land in Quitman,
Arkansas to be used for a future branch location.
COMPETITION
First National competes with numerous other commercial banks and other
financial institutions in Van Buren and contiguous counties in Arkansas. Its
main competitor is Clinton State Bank in Clinton. There are other commercial
banks, savings and loan institutions, credit unions, and other companies
offering financial services in Van Buren and surrounding counties.
DEPOSITS
Management of First National does not believe there are any depositors
whose withdrawals would have a significant effect on the deposits of First
National.
LEGAL PROCEEDINGS
As of the date of this proxy statement, neither CAB nor First National is
involved as defendant in any legal matters that management of CAB deems would
have a material impact on the financial position or results of operations of
CAB.
MARKET PRICE OF CAB COMMON STOCK
The CAB Common Stock has no established trading market, and relatively few
transfers have occurred since CAB was organized in 1986.
First National has historically declared and paid no dividends. First
National declared and paid a cash dividend of $39,000 to CAB in October of 1993,
and January of 1994. CAB declared and paid cash dividends in the amount of $.72
per share in April, July and October of 1993, and on January 10, 1994. For
calendar years 1991 and 1992, CAB declared and paid no dividends.
43
<PAGE> 49
CERTAIN BENEFICIAL HOLDERS OF CAB COMMON STOCK
The following table sets forth certain information with respect to those
known to CAB to be beneficial owners of more than five percent (5%) of the CAB
Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF % OF
BENEFICIAL OWNER SHARES TOTAL
- ---------------------------------------------------------------------------- --------- -----
<S> <C> <C>
Oather Fred Bowling Family Trust(1)......................................... 4,000 7.35%
Route 6, Box 206
Clinton, AR 72031
G. Robert Garner(2)......................................................... 7,050 12.95
P.O. Box 524
Clinton, AR 72031
John F. Hazelton............................................................ 4,000 7.35
109 Howard Court
Fairfield Bay, AR 72088
Tommy Lewis................................................................. 3,850 7.07
P.O. Box 252
Conway, AR 72032
Bobby Joe Nixon(3).......................................................... 4,200 7.71
Route 1, Box 335
Shirley, AR 72153
Jimmy G. Smith.............................................................. 4,000 7.35
Route 1, Box 123
Clinton, AR 72031
John B. Stacks(3)........................................................... 6,212 11.41
Route 1, Box 44
Damascus, AR 72039
William B. Williams(3)...................................................... 4,200 7.71
110 Howard Court
Fairfield Bay, AR 72088
</TABLE>
- ---------------
(1) The principal beneficiary of the trust is Oather F. Bowling, a director of
CAB.
(2) The number of shares reflects 6,950 shares currently held in trusts for the
benefit of Mr. Garner, Chairman of the Board of CAB and his wife, Elinor.
(3) The holder is a director of CAB.
HOLDINGS OF CAB COMMON STOCK BY CAB MANAGEMENT
The following executive officers and directors of CAB held the following
amounts and percentages of the outstanding CAB Common Stock as of January 19,
1994:
<TABLE>
<CAPTION>
NUMBER OF % OF
NAME SHARES TOTAL(1)
------------------------------------------------------------- --------- --------
<S> <C> <C>
Stephen J. Smith............................................. 175 .32%
G. Robert Garner............................................. 7,050 12.95%
Oather F. Bowling............................................ 4,000 7.35%
John F. Hazelton............................................. 4,000 7.35%
Bobby Joe Nixon.............................................. 4,200 7.71%
John B. Stacks............................................... 6,212 11.41%
William B. Williams.......................................... 4,200 7.71%
--------- --------
--------- --------
All Executive Officers and Directors as a Group (7
persons)................................................... 29,837 54.8%
</TABLE>
- ---------------
(1) Individual percentages may differ from total percentage due to rounding to
the nearest hundredth.
44
<PAGE> 50
CAB 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 and results of operations of CAB for
each of the fiscal years ended December 31, 1992, 1991 and 1990 and the
nine-month periods ended September 30, 1993 and 1992. This discussion should be
read in conjunction with the consolidated financial statements and the notes
thereto as of and for the three years ended December 31, 1992 and the unaudited
interim financial statements as of September 30, 1993 and 1992, incorporated by
reference in this Prospectus and Proxy Statement.
FINANCIAL CONDITION
At September 30, 1993, total assets were $49.8 million, compared to $48.4
million at December 31, 1992 and $43.4 million at December 31, 1991. The overall
increase in total assets is primarily due to an increase in loans which has
resulted from an increase in loan demand. Total loans, net of unearned interest,
at September 30, 1993 were $32.6 million, compared to $30.3 million and $25.1
million at December 31, 1992 and 1991, respectively. Also contributing to the
change in total assets were increases in total investment securities and Federal
funds sold which totaled $14.4 million at September 30, 1993, as compared to
$14.1 million and $11.4 million at December 31, 1992 and 1991, respectively. At
December 31, 1991, interest-bearing time deposits were $4.3 million. At December
31, 1992, interest-bearing time deposits maintained by CAB with other financial
institutions decreased from 1991 by $3.4 million to $891,000. At September 30,
1993, interest-bearing time deposits decreased from 1992 by $891,000 to zero. At
September 30, 1993, investment securities had a total market value of
approximately $178,000 greater than their carrying value.
Total deposits were $45.5 million as of September 30, 1993, a $914,000
increase over total deposits as of December 31, 1992 of $44.6 million. Total
deposits as of December 31, 1992 reflected a 10.6% increase over total deposits
of $40.3 million as of December 31, 1991. CAB's loan to deposit ratio at
September 30, 1993 was 70.94%, compared to 68.07% and 62.43 at December 31, 1992
and 1991, respectively.
Total shareholders' equity as of September 30, 1993 was $4.02 million, as
compared to $3.5 million and $2.8 million as of December 31, 1992 and 1991,
respectively. This represents an equity to average assets ratio of 8.19%, 7.58%
and 7.26% as of September 30, 1993 and December 31, 1992 and 1991, respectively.
RESULTS OF OPERATIONS -- NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
Net Income -- Net income for the nine-month period ended September 30, 1993
was $546,000 or $9.85 per share, an increase from $496,000 or $9.12 per share
reported for the same period in 1992. A detailed analysis of the components of
net income is included below. Net income for the nine-month period ended
September 30, 1993 included $87,000 ($1.57 per share) which represented the
cumulative effect of a change in accounting for income taxes.
The annualized return on average assets for the nine-month period ended
September 30, 1993 was 1.48% versus 1.46% for the same period in 1992 and 1.54%
for the year ended December 31, 1992. The annualized return on average
shareholders' equity for the nine-month period ended September 30, 1993 was
19.41% compared to 21.85% for the same period in 1992 and 22.55% for the year
ended December 31, 1992.
Net Interest Income -- Net interest income before the provision for loan
losses was $1.49 million and $1.44 million for the nine-month periods ended
September 30, 1993 and 1992, respectively. Total interest income decreased from
$2.74 million for the nine-month period ended September 30, 1992 to $2.53
million for the same period in 1993. Total interest expense decreased from $1.30
million for the nine-month period ended September 30, 1993 to $1.05 million for
the same period in 1992. The decrease in total interest income and interest
expense are a result of the declining interest rate environment experienced in
1991 and 1992, continuing in 1993. The declining interest rate environment has
reduced the yield on interest-bearing assets as well as decreasing the rate paid
on interest-bearing liabilities. The impact of the decline in yield on interest-
bearing assets has been partially offset by the overall increase in
interest-bearing assets.
45
<PAGE> 51
Provision for Loan Losses -- The provision for loan losses for the
nine-month periods ended September 30, 1993 and 1992 were $50,000 and $78,000,
respectively. The $359,000 allowance for loan losses at September 30, 1993
represents 1.10% of outstanding loans, net of unearned income. The allowance for
loan losses, is sufficient, in management's opinion, to support the loan
portfolio and levels of nonperforming loans.
A summary of the activity in the allowance for loan losses for the
nine-month periods ended September 30, 1993 and 1992 is set forth below ($000's
omitted):
<TABLE>
<CAPTION>
SEPTEMBER 30,
-------------
1993 1992
---- ----
<S> <C> <C>
Balance -- January 1.................................................. $304 $242
Provision charged to expense.......................................... 50 78
Net loans charged-off................................................. 5 (10)
---- ----
Balance at period end................................................. $359 $310
---- ----
---- ----
</TABLE>
No loans were on nonaccrual status at September 30, 1993, compared to
$25,000 at December 31, 1992. Loans are placed on nonaccrual status when they
become past-due as to principal and interest and in the opinion of management
the loans are not in the process of collection or well-secured.
Management has reviewed in detail all loans outstanding as of September 30,
1993, and believes there are no loans outstanding which are not past due or on
nonaccrual status as of September 30, 1993, that would cause management to have
serious doubts as to the ability of such borrowers to comply with the present
loan repayment terms.
Other Operating Income -- Other operating income for the nine-month period
ended September 30, 1993 was $282,000, a decrease of $63,000 from the $345,000
reported for the same period of 1992. During the period ended September 30,
1992, CAB restructured its securities portfolio which resulted in the
recognition of gains on disposals of securities of $65,000. During the period
ended September 30, 1993, gains on disposals of securities were $4,000 which
represents the largest fluctuation in other operating income between the
periods.
Other Operating Expenses -- Other operating expenses for the nine-month
period ended September 30, 1993 were $967,000, a $123,000 increase from the
$844,000 reported for the same period in 1992. The primary components of other
operating expenses are salaries and benefits and other miscellaneous operating
expenses. The overall increase in other operating expenses was primarily due to
an $81,000 increase in salaries and benefits resulting from an increase in
personnel in anticipation of the retirement of a senior loan officer and the
opening of a new branch. In addition, other miscellaneous operating expenses
increased $45,000 primarily as a result of costs incurred in connection with the
pending merger with UPC.
Income Taxes -- The provision for income taxes for the nine-month period
ended September 30, 1993 totaled $295,000, compared to $369,000 for the same
period in 1992.
Effective January 1, 1993, CAB adopted SFAS 109, "Accounting for Income
Taxes" which did not have a material impact on CAB's financial position or
results of operations. The cumulative effect of the accounting change of $87,000
is included in net income for the nine-month period ended September 30, 1993.
RESULTS OF OPERATIONS -- FOR THE YEARS ENDED DECEMBER 31, 1992, 1991 AND 1990
Net Income -- Net income for 1992 was $706,000, an increase of 35% over
1991 net income of $522,000. The 1991 net income reflected an increase of 42%
over 1990 net income of $367,000. Earnings per share were $12.96 in 1992,
compared to $9.69 in 1991 and $6.90 in 1990. The 1992 increase in net income
over 1991 was primarily due to a $400,000 increase in net interest income. This
additional income was partially offset by additional income tax expense on this
income.
The increase in net income of $155,000 in 1991 from 1990 was primarily
attributable to an increase in net interest income of $372,000 which was
partially offset by an increase in other operating expenses of $193,000.
46
<PAGE> 52
A more detailed analysis of the components of net interest income and other
operating expenses is addressed under the appropriate captions below.
Return on average assets for the year ended December 31, 1992 was 1.54%
versus 1.36% and 1.24% for 1991 and 1990, respectively. Return on average equity
for 1992 was 22.55% compared with 20.71% and 17.68% for the years ended December
31, 1991 and 1990, respectively. Dividends were not paid in the years ended
December 31, 1992, 1991, or 1990. The average equity to average asset ratio was
7.58% at December 31, 1992, compared to 7.26% and 7.64% at December 31, 1991 and
1990, respectively.
Net Interest Income -- Net interest income is the amount by which interest
and fees generated by earning assets exceed 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, set forth herein, provide analysis
of net interest income.
Provision for Loan Losses -- The provision for loan losses for 1992 of
$77,000 represents a 64% increase over the 1991 provision for loan losses of
$47,000. This increase was attributable to the additional provision recorded to
cover higher net charge-offs and the overall increase in loan growth. The 1991
provision of $47,000 was a decrease of 22% from the 1990 provision of $60,000.
This was primarily due to a decline in net charge-offs between the years.
Other Operating Income -- Total other operating income for 1992 was
$446,000 which represents a 58.7% increase over total other operating income for
1991 of $281,000. Total other operating income for 1991 was up $40,000 from the
1990 reported balance of $241,000. In 1992, the CAB restructured its investment
portfolio which resulted in the recognition of significant gains on the sales of
securities. The gains on the sales of these securities primarily accounted for
the total securities gains of $76,000 which was recognized in 1992. During 1991,
a municipal security was sold at a significant loss which accounted for the
total loss on securities of $49,000 in 1991.
Other Operating Expenses -- Total other operating expenses for 1992 were
$1.15 million or $126,000 (12.4%) more than the $1.02 million reported for 1991.
Total other operating expenses for 1990 were $827,000 resulting in an increase
of $193,000 or 23.3% in 1991. The fluctuations in other operating expenses
relate to the asset growth experienced over the past several years. In 1992,
asset growth declined significantly from the annual growth rates experienced
prior to 1992. Total salaries and pension and other benefits costs for 1992 were
$606,000 as compared to $520,000 for 1991, an increase of $86,000 or 16.5%.
Total salaries and pension and other benefits costs for 1991 increased $88,000
or 20.4% over 1990 costs of $432,000.
47
<PAGE> 53
TABLE 1 -- CLIN-ARK BANKSHARES, INC.
INTEREST RATES AND INTEREST DIFFERENTIAL
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1992 1991 1990
------------------------- ------------------------- -------------------------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------ ------- -------- ------ ------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest earning assets
Loans, net of unearned interest(1).......... $28,018 $ 2,702 9.64% $22,602 $ 2,517 11.14% $18,101 $ 2,144 11.84%
Taxable investment securities............... 11,274 751 6.66% 8,199 647 7.89% 5,817 539 9.27%
Nontaxable investment securities............ 552 32 5.80% 725 46 6.34% 729 42 5.76%
Federal funds sold & deposits at financial
institutions.............................. 3,491 141 4.04% 4,605 409 8.88% 3,087 200 6.48%
------- -------- ------ ------- -------- ------ ------- -------- ------
Total interest earning assets......... 43,335 3,626 8.37% 36,131 3,619 10.02% 27,734 2,925 10.55%
------- -------- ------ ------- -------- ------ ------- -------- ------
Noninterest earning assets:
Cash and due from banks..................... 1,619 1,119 782
Premises and equipment...................... 696 701 690
Other assets................................ 540 554 530
Less allowance for loan losses.............. (273) (220) (180)
------- ------- -------
Total assets.......................... $45,917 $38,285 $29,556
------- ------- -------
------- ------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Money market accounts....................... $ 6,438 $ 220 3.42% $ 4,737 $ 218 4.60% $ 2,974 $ 167 5.62%
Savings deposits............................ 1,885 62 3.29% 1,365 57 4.18% 929 44 4.74%
NOW accounts................................ 5,891 194 3.29% 4,545 190 4.18% 3,383 162 4.79%
Certificates of deposits of $100,000 and
over...................................... 4,217 213 5.05% 3,659 287 7.84% 3,657 234 6.40%
Other time deposits......................... 20,627 974 4.72% 18,611 1,304 7.01% 14,197 1,127 7.94%
------- -------- ------ ------- -------- ------ ------- -------- ------
Total interest-bearing liabilities.... 39,058 1,663 4.26% 32,917 2,056 6.25% 25,140 1,734 6.90%
------- -------- ------ ------- -------- ------ ------- -------- ------
Noninterest-bearing liabilities:
Domestic demand deposits.................... 3,367 2,521 2,040
Other liabilities........................... 362 327 300
Shareholders' equity.......................... 3,130 2,520 2,076
------- ------- -------
Total liabilities and shareholders'
equity.............................. $45,917 $38,285 $29,556
------- ------- -------
------- ------- -------
NET INTEREST INCOME........................... $ 1,963 $ 1,563 $ 1,191
-------- -------- --------
-------- -------- --------
NET YIELD ON INTEREST EARNING ASSETS.......... 4.53% 4.33% 4.29%
------ ------ ------
------ ------ ------
</TABLE>
- ---------------
(1) Nonaccruing loans are included in the average loan amount outstanding and
income on such loans is recognized as received. Loan fees for all three
years are included in the interest amounts for loans, but in each case were
immaterial in amount.
48
<PAGE> 54
TABLE 2 -- CLIN-ARK BANKSHARES, INC.
VOLUME AND YIELD/RATE VARIANCE
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992 COMPARED TO 1991 1991 COMPARED TO 1990
----------------------- ----------------------
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO (1) DUE TO (1)
----------------------- ----------------------
VOLUME RATE NET VOLUME RATE NET
------ ----- ----- ------ ----- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans.................................................. $560 $(375) $ 185 $517 $(144) $373
Taxable investment securities.......................... 219 (115) 104 201 (93) 108
Nontaxable investment securities....................... (7) (7) (14) 1 3 4
Federal funds sold and deposits at financial
institutions......................................... (72) (196) (268) 117 92 209
------ ----- ----- ------ ----- ----
Total income from interest-earning assets....... 700 (693) 7 836 (142) 694
------ ----- ----- ------ ----- ----
Interest paid on:
Money market accounts.................................. 68 (67) 1 90 (39) 51
Savings deposits....................................... 20 (15) 5 19 (6) 13
NOW accounts........................................... 50 (46) 4 52 (24) 28
Certificates of deposit................................ 153 (556) (403) 326 (96) 230
------ ----- ----- ------ ----- ----
Total exp. on interest-bearing liabilities...... 291 (684) (393) 487 (165) 322
------ ----- ----- ------ ----- ----
Net interest income...................................... $409 $ (9) $ 400 $349 $ 23 $372
------ ----- ----- ------ ----- ----
------ ----- ----- ------ ----- ----
</TABLE>
- ---------------
(1) The change in interest due to both rate and volume has been allocated on a
consistent basis to rate.
Investments -- As of December 31, 1992, the approximate market value of
investment securities exceeded the book value by $95,000 or .7%. As of December
31, 1991, the book value exceeded the approximate market value by $226,000 or
2.1%. Table 3 sets forth the classification of investment securities based on
book value as of December 31, 1992 and 1991. Table 4 provides an analysis of the
investment securities portfolio maturities and yields as of December 31, 1992.
TABLE 3 -- CLIN-ARK BANKSHARES, INC.
INVESTMENTS AT BOOK VALUE
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992 1991
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
U.S. Treasury securities................................................. $ 3,677 $ 3,261
Federal Agency securities................................................ 3,016 3,274
Obligations of state and political subdivisions.......................... 446 722
Other securities......................................................... 5,937 3,383
Reserve for bond losses.................................................. (32) (32)
------- -------
Total Investments.............................................. $13,044 $10,608
------- -------
------- -------
</TABLE>
49
<PAGE> 55
TABLE 4 -- CLIN-ARK BANKSHARES, INC.
INVESTMENT SECURITIES PORTFOLIO MATURITIES AND YIELDS
AS OF DECEMBER 31, 1992
<TABLE>
<CAPTION>
BOOK AVERAGE
VALUE YIELD
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
U.S. Treasury Securities and Federal Agency Securities(1)
Within one year....................................................... $ 500 3.8675 %
One to five years..................................................... 6,193 5.9405
-------
Total......................................................... 6,693 5.7856
-------
Obligations of State and Political Subdivisions
Within one year....................................................... 100 2.0643
One to five years(2).................................................. 301 5.6328
Five to ten years..................................................... 45 6.2570
-------
Total......................................................... 446 4.8957
-------
Other Securities
Within one year....................................................... 5,404 5.4966
Over ten years........................................................ 533 6.8976
-------
Total......................................................... 5,937 5.4717
Reserve for bond losses....................................... (32)
-------
Total Investments............................................. $13,044
-------
-------
</TABLE>
- ---------------
(1) The average yield is not presented on a tax-equivalent basis.
(2) The average yield reflects bonds currently in default and/or on nonaccrual
status.
There are no investment securities (other than securities of the U.S.
Government and Federal agencies) which have an aggregate book value as of
December 31, 1992 exceeding (10%) of shareholders' equity as of that date.
Deposits -- Table 5 sets forth the monthly average balances on CAB deposit
accounts for the periods indicated. Average rates paid on deposits by CAB are
reflected in Table 1.
TABLE 5 -- CLIN-ARK BANKSHARES, INC.
AVERAGE DEPOSITS
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992 1991 1990
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest bearing:
Demand.......................................................... $ 5,891 $ 4,545 $ 3,383
Savings......................................................... 8,323 6,102 3,903
Time............................................................ 24,844 22,270 17,854
Noninterest bearing:
Domestic Demand Deposits........................................ 3,367 2,521 2,040
------- ------- -------
Total deposits.................................................. $42,425 $35,438 $27,180
------- ------- -------
------- ------- -------
</TABLE>
50
<PAGE> 56
Included in time deposits at December 31, 1992 are certificates of deposit
of $100,000 or greater totaling $4.5 million, the maturities of which are set
forth in Table 6 below.
TABLE 6 -- CLIN-ARK BANKSHARES, INC.
TIME DEPOSITS
DECEMBER 31, 1992
<TABLE>
<CAPTION>
MATURING 1992 1991
- --------------------------------------------------------------------------- ------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Three months or less....................................................... $2,462 $1,859
3 months to 6 months....................................................... 1,744 806
6 months through 12........................................................ 300 1,081
Over 12 months............................................................. 0 182
------ ------
Totals........................................................... $4,506 $3,928
------ ------
------ ------
</TABLE>
Loan Portfolio -- As shown in Table 7, loans net of unearned interest as of
December 31, 1992 increased $5.3 million (20.7%) from net loans reported at
December 31, 1991.
TABLE 7 -- CLIN-ARK BANKSHARES, INC.
LOANS BY CATEGORY
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992 1991
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Commercial, financial and agricultural................................... $ 4,534 $ 4,336
Real estate -- construction.............................................. 1 4
Real estate -- mortgage.................................................. 21,844 16,409
Installment.............................................................. 4,266 4,642
------- -------
Total.......................................................... 30,645 25,391
Unearned interest........................................................ 0 0
------- -------
Total net loans................................................ $30,645 $25,391
------- -------
------- -------
</TABLE>
Loans made by CAB to directors, executive officers, and individuals or
organizations that are related to them totaled $1.2 million and $1.0 million as
of December 31, 1992 and 1991, respectively. All of these loans were made in the
normal course of business under substantially the same terms 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.
Table 8 sets forth the loan maturity and interest rate sensitivity of loans
as of December 31, 1992.
TABLE 8 -- CLIN-ARK BANKSHARES, INC.
LOAN MATURITY
DECEMBER 31, 1992
<TABLE>
<CAPTION>
ONE TO AFTER
FIVE FIVE
ONE YEAR YEARS YEARS TOTAL
-------- ------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Fixed rate loans............................................ $15,847 $13,918 $ 40 $29,805
Variable rate loans......................................... 54 264 522 840
Unearned interest........................................... 0 0 0 0
-------- ------- ------ -------
Total net loans................................... $15,901 $14,182 $562 $30,645
-------- ------- ------ -------
-------- ------- ------ -------
</TABLE>
51
<PAGE> 57
Table 9 sets forth information on the nonperforming loans in CAB's
portfolio as of December 31, 1992 and 1991. Although the amounts shown represent
risks in the loan portfolio, the major portion of the loans are collateralized
and should not be interpreted as losses.
TABLE 9 -- CLIN-ARK BANKSHARES, INC.
NONPERFORMING ASSETS
AS OF DECEMBER 31,
<TABLE>
<CAPTION>
1992 1991
------ ------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Nonaccrual loans........................................................ $ 25 $136
Loans past due 90 days.................................................. 75 1
Debt Securities & other assets (excluding ORE owned & other repossessed
assets)............................................................... 33 65
Restructured loans...................................................... 0 0
Other real estate owned................................................. 4 10
---- ----
Total nonperforming assets.................................... $137 $212
---- ----
---- ----
</TABLE>
Commercial and real estate loans are placed on nonaccrual status when they
become ninety days or more past due as to principal or interest unless in the
opinion of management, the loan is both well secured and in the process of
collection.
At December 31, 1992, there were no concentrations of loans (loans to
borrowers engaged in similar activities) exceeding 10% of the total loans
outstanding.
TABLE 10 -- CLIN-ARK BANKSHARES, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1992 1991
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Allowance for loan losses, January 1................................... $ 242 $ 198
Provision for loan losses.............................................. 77 47
Loans charged off:
Commercial........................................................... 10 0
Real estate -- mortgage.............................................. 0 0
Installment.......................................................... 7 6
------- -------
Total loans charged off...................................... 17 6
------- -------
Recoveries:
Commercial........................................................... 1 1
Real estate -- mortgage.............................................. 0 0
Installment.......................................................... 1 2
------- -------
Total recoveries............................................. 2 3
------- -------
Net charge-offs........................................................ 15 3
------- -------
Allowance for loan losses, December 31,................................ $ 304 $ 242
------- -------
------- -------
Loans, net of unearned interest:
Year end............................................................. $30,645 $25,391
Average during year.................................................. 28,018 22,602
Net charge-offs to average loans, net of unearned interest............. .05% .01%
Provision for loan losses to net charge-offs........................... 513.33 1566.67
Allowance for loan losses to Y/E loans, net of unearned interest....... 0.99 0.95
</TABLE>
52
<PAGE> 58
In determining the amount of the provision for loan losses and reserve for
loan losses, management considers past loan charge offs, the level of past due
and nonaccrual loans, the size and mix of the portfolio, adverse classification
at recent regulatory examinations, general economic conditions in the market
area, and most importantly, a review of individual loans to identify potential
credit problems. The level of allowances for loan losses is believed adequate in
relation to the size, mix and quality of the loan portfolio.
Table 11 presents an allocation of the reserve for possible loan losses by
different loan categories. The allocation is based on a number of qualitative
factors, including management's review of the reserve. The amounts presented are
not necessarily indicative of the actual amounts which will be charged to any
particular loan category.
TABLE 11 -- CLIN-ARK BANKSHARES, INC.
ALLOCATION OF THE RESERVE FOR LOAN LOSSES
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992 1991
--------------- ---------------
AMOUNT % AMOUNT %
------ ------ ------ ------
<S> <C> <C> <C> <C>
Commercial.................................................. $ 40 13.26% $ 37 15.37%
Installment loans........................................... 57 18.65 49 20.33
Real estate................................................. 207 68.08 156 64.30
------ ------ ------ ------
$304 100.00% $242 100.00%
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
Income Taxes -- Income tax expense totaled $480,000 and $255,000 in 1992
and 1991 respectively, compared to tax expense of $178,000 in 1990. The increase
in tax expense was primarily attributable to an increase in taxable income.
Liquidity and Asset/Liability Management -- CAB views liquidity and asset
liability management as the ability to assure that funds are available to
support bank requirements, that is the ability to allow depositors ready access
to their monies and credit customers available funds to meet their credit needs.
It is also the process by which CAB monitors and attempts to control the mix and
maturities of its assets and liabilities in order to maximize net interest
income. Management maintains a federal funds sold balance it believes necessary
to meet CAB's daily cash needs. Management does not foresee any particular
matters which might immediately threaten its ability to remain liquid.
Interest rate sensitivity is measured by analyzing the maturity and timing
of interest rate changes on assets and liabilities. Management's objective is to
maintain the difference between interest-sensitive assets and liabilities at a
level that will minimize the effects on the net interest margin of significant
interest rate shifts. Table 12 sets forth the interest rate sensitivity of
interest-earning assets and interest-bearing liabilities as of December 31,
1992.
53
<PAGE> 59
TABLE 12 -- CLIN-ARK BANKSHARES, INC.
INTEREST SENSITIVITY
AS OF DECEMBER 31, 1992
<TABLE>
<CAPTION>
TOTAL OVER ONE
WITHIN YEAR OR
0-3 MONTHS 4-12 MONTHS ONE YEAR NONSENSITIVE TOTAL
---------- ----------- -------- ------------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Earning assets:
Loans (net of nonaccrual and unearned
interest).............................. $ 5,567 $10,309 $15,876 $ 14,744 $30,620
Certificates of Deposit Purchased......... 693 198 891 -- 891
Investment securities..................... 4,393 1,578 5,971 7,073 13,044
---------- ----------- -------- ------------ -------
Total interest-earning assets..... $ 10,653 $12,085 $22,738 $ 21,817 $44,555
---------- ----------- -------- ------------ -------
---------- ----------- -------- ------------ -------
Percent of total earning assets............. 23.91% 27.12% 51.03 % 48.97% 100.00%
---------- ----------- -------- ------------ -------
---------- ----------- -------- ------------ -------
Sources of funding:
Non-Interest-Bearing Deposits............. $ -- $ -- $ -- $ 3,905 $ 3,905
Interest-Bearing deposits................. 9,973 11,473 21,446 19,217 40,663
---------- ----------- -------- ------------ -------
Total Sources of funding.......... $ 9,973 $11,473 $21,446 $ 23,122 $44,568
---------- ----------- -------- ------------ -------
---------- ----------- -------- ------------ -------
Percent of total funding sources............ 22.38% 25.74% 48.12 % 51.88% 100.00%
---------- ----------- -------- ------------ -------
---------- ----------- -------- ------------ -------
Difference.................................. $ 680 $ 612 $ 1,292 $(1,305) $ (13)
---------- ----------- -------- ------------ -------
---------- ----------- -------- ------------ -------
Cumulative gap.............................. $ 680 $ 1,292 $ 1,292 $ (13) $ (13)
---------- ----------- -------- ------------ -------
---------- ----------- -------- ------------ -------
</TABLE>
VALIDITY OF UPC COMMON STOCK
The validity of the shares of UPC Common Stock offered hereby will be
passed upon by Gary A. Simanson, Assistant Secretary and Associate General
Counsel of UPC. Gary A. Simanson is an officer of UPC and UPNB and receives
compensation from UPC.
EXPERTS
The consolidated financial statements of Union Planters Corporation
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
of UPC for the year ended December 31, 1992, have been so incorporated in
reliance on the report of Price Waterhouse, independent accountants, given on
the authority of said firm as experts in auditing and accounting.
The combined financial statements of Security Trust Federal Savings and
Loan Association and SaveTrust Federal Savings Bank for the year ended December
31, 1992, incorporated in this Prospectus by reference to UPC's Annual Report on
Form 10-K dated December 31, 1992, have been so incorporated in reliance upon
the report of Horne CPA Group, independent accountants, given on authority of
said firm as experts in auditing and accounting.
The consolidated financial statements of Mid-South Bancorp, Inc. as of and
for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Baird, Kurtz & Dobson,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of Bank of East Tennessee as of and
for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC
54
<PAGE> 60
dated September 27, 1993, have been so incorporated in reliance on the report of
Coopers & Lybrand, independent accountants, given on the authority of said firm
as experts in auditing and accounting.
The consolidated financial statements of Central State Bancorp, Inc. as of
and for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Williams and Jerrolds,
P.C., independent accountants, incorporated, given on the authority of said firm
as experts in auditing and accounting.
The consolidated balance sheets of First Federal Savings Bank and
subsidiary, of Maryville, Tennessee, as of December 31, 1992 and 1991, and the
related consolidated statements of operations, retained earnings, and cash flows
for each of the years in the three-year period ended December 31, 1992,
incorporated in this Prospectus by reference to the Current Report on Form 8-K
of UPC dated September 27, 1993, have been incorporated in reliance upon the
report of KPMG Peat Marwick, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in auditing and accounting.
The consolidated financial statements of Garrett Bancshares, Inc. as of and
for the year ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated September 27, 1993,
have been so incorporated in reliance on the report of Heathcott & Mullaly,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of First National Bancorp of
Shelbyville, Inc. as of and for the year ended December 31, 1992, incorporated
in this Prospectus by reference to the Current Report on Form 8-K of UPC dated
October 14, 1993, have been so incorporated in reliance on the report of Winnett
Associates, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of Tennessee Bancorp, Inc. as of
December 31, 1992 and 1991 and for the years ended December 31, 1992 and 1991,
the six months ended December 31, 1990 and the year ended June 30, 1990
incorporated in this Prospectus by reference to the Current Report on Form 8-K
of UPC dated October 14, 1993, have been audited by Deloitte & Touche,
independent auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The consolidated balance sheets of Liberty Bancshares, Inc. and subsidiary,
as of December 31, 1992 and 1991, and the related consolidated statements of
earnings, stockholders' equity, and cash flows for each of the years in the
three-year period ended December 31, 1992, incorporated in this Prospectus by
reference to the Current Report on Form 8-K of UPC dated January 10, 1994, have
been incorporated in reliance upon the report of KPMG Peat Marwick, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Clin-Ark Bankshares, Inc. for the
year ended December 31, 1992, incorporated in this Prospectus, have been audited
by Frost & Company, independent auditors, as stated in their report, which is
incorporated herein, and have been so incorporated in reliance on the report of
such firm, given on the authority of said firm as experts in auditing and
accounting.
55
<PAGE> 61
UNION PLANTERS CORPORATION
INDEX TO APPENDICES
<TABLE>
<CAPTION>
APPENDIX
NUMBER
- --------
<S> <C> <C>
A-1 -- Clin-Ark Bankshares, Inc. Audited Consolidated Financial Statements as of
December 31, 1992, and for the year ended December 31, 1992
A-2 -- Clin-Ark Bankshares, Inc. Unaudited Consolidated Financial Statements as of
December 31, 1991 and 1990, and for the years ended December 31, 1991 and 1990
A-3 -- Clin-Ark Bankshares, Inc. Unaudited Consolidated Financial Statements as of
September 30, 1993, and for the three and nine-month periods ended September
30, 1993 and 1992
B -- Agreement and Plan of Reorganization, along with the Plan of Merger annexed
thereto as Exhibit A
C -- Excerpt from Arkansas Business Corporation Act of 1965, as
amended -- Dissenters' Rights
</TABLE>
<PAGE> 62
FINANCIAL INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
APPENDIX A-1.......................................................................... F-2
Independent Auditor's Report........................................................ F-3
Consolidated Balance Sheet as of December 31, 1992.................................. F-4
Consolidated Statement of Income for the Year Ended December 31, 1992............... F-5
Consolidated Statement of Changes in Stockholders' Equity for the Year Ended
December 31, 1992................................................................ F-6
Consolidated Statement of Cash Flow for the Year Ended December 31, 1992............ F-7
Notes to Consolidated Financial Statements.......................................... F-8
APPENDIX A-2.......................................................................... F-15
Consolidated Balance Sheet as of December 31, 1991 (Unaudited)...................... F-16
Consolidated Statement of Income for the Years Ended December 31, 1991 and 1990
(Unaudited)...................................................................... F-17
Consolidated Statement of Changes in Stockholders' Equity for the Years Ended
December 31, 1991 and 1990 (Unaudited)........................................... F-18
Consolidated Statement of Cash Flows for the Years Ended December 31, 1991 and 1990
(Unaudited)...................................................................... F-19
Notes to Consolidated Financial Statements.......................................... F-20
APPENDIX A-3.......................................................................... F-25
Consolidated Balance Sheet as of September 30, 1993 (Unaudited)..................... F-26
Statement of Income for the Quarterly Periods Ended September 30, 1993
and 1992 (Unaudited)............................................................. F-27
Statement of Income for the Nine Month Periods Ended September 30, 1993
and 1992 (Unaudited)............................................................. F-28
Consolidated Statement of Changes in Stockholders' Equity for the Nine Month Period
Ended September 30, 1993 (Unaudited)............................................. F-29
Consolidated Statement of Cash Flows for the Nine Month Periods Ended September 30,
1993 and 1992 (Unaudited)........................................................ F-30
Notes to Unaudited Consolidated Financial Statements................................ F-31
</TABLE>
F-1
<PAGE> 63
APPENDIX A-1
CLIN-ARK BANKSHARES, INC.
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1992 AND FOR THE YEAR
ENDED DECEMBER 31, 1992
F-2
<PAGE> 64
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Clin-Ark Bankshares, Inc.
Clinton, Arkansas
We have audited the accompanying consolidated balance sheet of Clin-Ark
Bankshares, Inc. as of December 31, 1992, and the related consolidated
statements of income, stockholders' equity and cash flows for the year then
ended. These consolidated financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on the
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Clin-Ark Bankshares, Inc. as of December 31, 1992, and the consolidated results
of its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
FROST & COMPANY
Certified Public Accountants
Little Rock, Arkansas
February 19, 1993
F-3
<PAGE> 65
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992
---------------
(DOLLAR AMOUNTS
IN THOUSANDS)
<S> <C>
ASSETS
Cash and due from banks....................................................... $ 1,856
---------------
Interest-bearing time deposits................................................ 891
---------------
Investment securities
United States Treasury securities........................................... 3,677
Securities of United States government agencies and corporations............ 3,016
Obligations of state and political subdivisions............................. 414
Other securities............................................................ 5,937
---------------
Total investment securities......................................... 13,044
---------------
Federal funds sold............................................................ 1,035
---------------
Loans
Loans, net of unearned income............................................... 30,645
Reserve for loan losses..................................................... (304)
---------------
Net loans..................................................................... 30,341
---------------
Premises and equipment, net of accumulated depreciation....................... 715
---------------
Other assets.................................................................. 545
---------------
Total assets........................................................ $48,427
---------------
---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits................................................ $ 3,905
Interest-bearing deposits................................................... 40,663
---------------
Total deposits...................................................... 44,568
---------------
Accrued expenses and other liabilities........................................ 379
---------------
Total liabilities................................................... 44,947
---------------
Commitments and contingencies (Notes 8, 9, 11 and 13)
Stockholders' equity
Common stock, par value, $1 per share; authorized, 52,000 shares; issued and
outstanding, 51,442 shares............................................... 52
Additional paid-in capital.................................................. 1,260
Retained earnings........................................................... 2,194
---------------
3,506
Treasury stock, 558 shares at cost.......................................... (26)
---------------
Total stockholders' equity.......................................... 3,480
---------------
Total liabilities and stockholders' equity.......................... $48,427
---------------
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 66
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992
-------------------
(DOLLAR AMOUNTS
IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
<S> <C>
Interest income
Interest and fees on loans............................................... $ 2,701
Interest on Federal funds sold........................................... 32
Interest on time deposits................................................ 109
Interest and dividends on investment securities
United States Treasury securities................................... 246
Securities of United States government agencies and corporations.... 219
Obligations of state and political subdivisions..................... 33
Other securities.................................................... 286
-------
Total interest income............................................ 3,626
-------
Interest expense
Interest on deposits..................................................... 1,661
Interest on Federal funds purchased and securities sold under repurchase
agreements............................................................ 2
-------
Total interest expense........................................... 1,663
-------
Net interest income........................................................ 1,963
Provision for loan losses................................................ (77)
-------
Net interest income after provision for loan losses........................ 1,886
-------
Other operating income.....................................................
Service charges on deposit accounts...................................... 176
Other service charges, commissions and fees.............................. 92
Securities gains......................................................... 76
Other income............................................................. 102
-------
Total other operating income..................................... 446
-------
Other operating expenses
Salaries................................................................. 491
Pension and other employee benefits...................................... 115
Net expense of premises and fixed assets................................. 127
Other.................................................................... 413
-------
Total other operating expenses................................... 1,146
-------
Income before income taxes................................................. 1,186
Income taxes............................................................... 480
-------
Net income................................................................. $ 706
-------
-------
Primary earnings per share................................................. $ 12.96
-------
-------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 67
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
------ ---------- -------- -------- ------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance -- January 1, 1992......................... $ 52 $1,260 $1,488 $ (19) $2,781
Purchase of treasury stock....................... -- -- -- (7) (7)
Net income....................................... -- -- 706 -- 706
------ ---------- -------- -------- ------
Balance -- December 31, 1992....................... $ 52 $1,260 $2,194 $ (26) $3,480
------ ---------- -------- -------- ------
------ ---------- -------- -------- ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 68
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992
-----------------------------
<S> <C>
(DOLLAR AMOUNTS
IN THOUSANDS)
Cash flows from operating activities
Net income............................................................... $ 706
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Provision for loan losses and losses on other real estate............. 82
Depreciation and amortization......................................... 89
Accretion of bond discounts........................................... 152
Gain on sale of investment securities................................. (76)
Change in deferred income tax benefit................................. 18
Loss on sale of equipment............................................. (1)
Increase in other assets.............................................. (54)
Increase in accrued expenses and other liabilities.................... 32
-----------
Net cash provided (used) by operating activities........................... 948
-----------
Cash flows from investing activities
Proceeds from sale of investment securities.............................. 4,853
Proceeds from maturities of investment securities........................ 3,996
Purchase of investment securities........................................ (11,362)
Net increase in loans.................................................... (5,269)
Net decrease in time deposits............................................ 3,360
Proceeds from sales of premises and equipment............................ 11
Purchases of premises and equipment...................................... (113)
Increase in Federal funds sold........................................... (230)
-----------
Net cash provided (used) by investing activities........................... (4,754)
-----------
Cash flows from financing activities
Increase in deposits..................................................... 4,287
Purchase of treasury stock............................................... (7)
-----------
Net cash provided (used) by financing activities........................... 4,280
-----------
Net increase in cash and cash equivalents.................................. 474
Cash and cash equivalents -- beginning of year............................. 1,382
-----------
Cash and cash equivalents -- end of year................................... $ 1,856
-----------
-----------
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest.............................................................. $ 1,732
Income taxes.......................................................... $ 390
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE> 69
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Clin-Ark Bankshares, Inc. ("the
Corporation") conform with generally accepted accounting principles and
practices within the banking industry. The policies that materially affect
financial position and the results of operations are summarized as follows:
a. Basis of presentation -- The consolidated financial statements include
the accounts of the Corporation, its wholly owned subsidiary First National Bank
of Clinton and its majority owned subsidiary, First North Central Insurance,
Inc. All material intercompany accounts and transactions have been eliminated in
consolidation.
b. Investment securities -- Investment securities are stated at cost,
adjusted for amortization of premiums and accretion of discounts computed on the
interest method. Although the quoted market values fluctuate, investment
securities are held for investment purposes and gains and losses are recognized
in the accounts upon realization or at such time that management determines that
a permanent decline in value exists. The adjusted cost of the specific security
is used to compute the gain or loss on sales of investment securities.
c. Loans -- Interest on loans is credited to income based upon the
principal amount outstanding.
d. Reserve for loan losses -- For financial reporting purposes, the reserve
for loan losses is established through a provision for loan losses charged to
expense. Loans are charged against the reserve for loan losses when management
believes that the collectibility of the principal is unlikely. The reserve is an
amount that management believes will be adequate to absorb possible losses on
existing loans that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. The evaluations take
into consideration such factors as changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans, and
current economic conditions that may affect the borrowers' ability to pay.
Accrual of interest is discontinued on a loan when management believes, after
considering economic and business conditions and collection efforts, that the
borrowers' financial condition is such that collection of interest is doubtful.
For income tax purposes, loans are charged to expense when management believes
that the collectibility of the principal is unlikely.
e. Premises and equipment -- Premises and equipment are stated at cost,
less accumulated depreciation.
For financial reporting purposes, depreciation is charged to operating
expenses over the estimated useful lives of the assets and is computed on the
straight-line method. For income tax purposes, depreciation is computed under
the methods prescribed under the applicable tax laws.
f. Income taxes -- The Corporation utilizes the liability method of
accounting for deferred income taxes. The liability method provides for a
deferred tax liability (benefit) on the balance sheet for the temporary
differences between financial statement and tax return income at the tax rates
which are in effect at the date of the financial statements.
g. Real estate acquired through foreclosure -- Real estate acquired through
foreclosure is reported at the lower of cost or estimated realizable value.
During 1992, the Corporation acquired $125,000 of other real estate as a result
of foreclosing on past due loans. At December 31, 1992, approximately $4,000 of
other real estate is included in other assets.
h. Cash and cash equivalents -- For purposes of reporting cash flows, cash
and cash equivalents include cash on hand and amounts due from banks.
i. Earnings per common share -- Primary earnings per share are computed
based on the weighted average number of shares that would be outstanding plus
the shares that would be outstanding assuming exercise of dilutive stock options
which are considered to be common stock equivalents. The number of shares
F-8
<PAGE> 70
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992
that would be issued from the exercise of stock options has been reduced by the
number of shares that could have been purchased from the proceeds at the average
estimated number of shares used in the computations were $54,461 in 1992. Fully
diluted earnings per share amounts are not presented because they are not
materially dilutive.
2. INVESTMENT SECURITIES
At December 31, 1992, the amortized cost and estimated market values of
investment securities were as follows (in thousands):
<TABLE>
<CAPTION>
1992
-----------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Treasury securities.............. $ 3,677 $ 40 $ -- $ 3,717
Securities of United States government agencies
and corporations............................. 3,016 34 2 3,048
Obligations of state and political
subdivisions................................. 414 10 12 412
Other securities............................... 5,937 36 10 5,963
--------- ---------- --- ---------
$13,044 $120 $ 24 $13,140
--------- ---------- --- ---------
--------- ---------- --- ---------
</TABLE>
The amortized cost and estimated market value of investment securities at
December 31, 1992 by contractual maturity are shown below. Expected maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
1992
---------------------
ESTIMATED
AMORTIZED MARKET
COST VALUE
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Due in one year or less................................................... $ 5,971 $ 5,977
Due after one year through five years..................................... 6,495 6,577
Due after five years through ten years.................................... 45 46
Due after ten years....................................................... 533 540
--------- ---------
$13,044 $13,140
--------- ---------
--------- ---------
</TABLE>
Proceeds from sales and maturities of investments in investment securities
during the year ending December 31, 1992 were approximately $8,849,000. Gross
gains of approximately $76,000 were realized on the sales.
As required by law, investments carried at approximately $5,750,000 at
December 31, 1992 were pledged to secure public deposits and for other purposes.
F-9
<PAGE> 71
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992
3. LOANS
The following is a summary of the loan portfolio by principal regulatory
categories at December 31, 1992 (in thousands):
<TABLE>
<CAPTION>
1992
-------
<S> <C>
Commercial, financial and agricultural.......................... $ 4,534
Real estate -- construction..................................... 1
Real estate -- mortgage......................................... 21,844
Other........................................................... 4,266
-------
Loans, net of unearned income................................... $30,645
-------
-------
</TABLE>
Loan maturities as of December 31, 1992 are as follows (in thousands):
<TABLE>
<CAPTION>
1992
-------
<S> <C>
Within one year................................................. $15,901
One to five years............................................... 14,182
After five years................................................ 562
-------
Total................................................. $30,645
-------
-------
</TABLE>
4. RESERVE FOR LOAN LOSSES
A summary of transactions within the reserve for loan losses for the year
ending December 31, 1992 is as follows (in thousands):
<TABLE>
<CAPTION>
1992
----
<S> <C>
Balance -- beginning of year...................................... $242
Provision charged to operating expense.......................... 77
Recoveries on loans previously charged-off...................... 2
----
321
Loans charged-off............................................... 17
----
Balance -- end of year............................................ $304
----
----
</TABLE>
5. PREMISES AND EQUIPMENT
A summary of asset classifications and depreciable lives at December 31,
1992 is as follows (in thousands): Useful Lives
<TABLE>
<CAPTION>
1992 (YEARS)
------ --------
<S> <C> <C>
Land....................................................................... $ 134
Buildings and improvements................................................. 510 15 to 60
Furniture and equipment.................................................... 397 3 to 15
Automobiles................................................................ 13 3 to 5
------
1,054
Accumulated depreciation................................................... (339)
------
$ 715
------
------
</TABLE>
Depreciation, included in operating expenses, amounted to approximately
66,000 in 1992.
F-10
<PAGE> 72
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992
6. TIME DEPOSITS
The remaining maturities of time deposits at December 31, 1992 are as
follows (in thousands):
<TABLE>
<S> <C>
Three months or less............................................................... $ 9,973
Three through six months........................................................... 7,181
Six through twelve months.......................................................... 4,292
Over twelve months................................................................. 3,945
-------
Total.................................................................... $25,391
-------
-------
</TABLE>
7. INCOME TAXES
Income tax expense for the consolidated statement of income consists of (in
thousands):
<TABLE>
<CAPTION>
1992
----
<S> <C>
Current provision..................................................................... $462
Deferred provision.................................................................... 18
----
$480
----
----
</TABLE>
The reasons for the difference between the actual tax expense and tax
computed at the statutory Federal income tax rate are as follows (in thousands):
<TABLE>
<CAPTION>
1992
----------------
AMOUNT PERCENT
------ -------
<S> <C> <C>
Tax on pre-tax income................................................ $403 34.0%
State income tax, net of Federal benefit............................. 33 2.8
Interest and other items exempt from income tax...................... (28) (2.4)
Other................................................................ 72 6.1
------ -------
$480 40.5%
------ -------
------ -------
</TABLE>
The sources of timing differences that result in the deferred income tax
benefits and the tax effects of each were as follows (in thousands):
<TABLE>
<CAPTION>
1992
----
<S> <C>
Provision for loan losses............................................. $(24)
Depreciation.......................................................... 1
Writedown of other real estate owned.................................. (2)
Increase in unrecognized deferred tax benefit......................... 43
----
Deferred income tax provision......................................... $ 18
----
----
</TABLE>
In February 1992, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 109 -- Accounting for Income
Taxes. This statement provides for, among other things, the recognition of a
deferred tax liability or asset for the estimated tax effect attributable to
temporary differences and carryforwards. The valuation of deferred tax assets is
reduced, if necessary, by the amount of any tax benefits that are not expected
to be realized. This statement is effective for fiscal years beginning after
December 15, 1992 although earlier application is allowed. As of December 31,
1992, the Corporation has not implemented this statement. Although the estimated
benefit has not been quantified, management believes that the adoption of this
statement will have a favorable impact on the Corporation's financial position.
F-11
<PAGE> 73
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992
8. NONCOMPENSATING STOCK OPTION AGREEMENTS
On January 13, 1988, the Corporation granted a director and officer of the
Corporation an option to purchase 3,000 shares of the Corporation's common stock
at a purchase price of $25.00 per share. The term of the option was for a period
of five years from the date of the grant. On March 26, 1990, an additional
option was granted to the director to purchase up to an additional 2,500 shares
of common stock at a purchase price of $45.00 per share. The term of this option
was also for a period of five years from the date of the grant.
As of December 31, 1992, neither of the above noted option agreements had
been exercised.
In January, 1993, the director exercised the option to purchase 3,000
shares of the Corporations common stock at a purchase price of $25.00 per share.
9. COMMITMENTS AND CONTINGENCIES
The Corporation is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuation in interest rates. These
financial instruments include commitments to extend credit, standby letters of
credit and interest rate caps and floors written.
The Corporation's exposure to credit loss in the event of nonperformance by
the other party to the financial instruments for commitments to extend credit is
represented by the contractual notional amount of those instruments. The
Corporation has the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. For interest rate caps
and floors, the contract or notional amounts do not represent exposure to credit
loss.
Financial instruments, whose contract amount represents credit risk,
consist of commitments to extend credit of approximately $1,650,000 at December
31, 1992.
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.
Commitments generally have fixed expiration dates or other termination clauses
and may require repayment of a fee. Since these commitments may expire without
being drawn upon, the total commitment amount does not necessarily represent
future cash requirements. The Corporation evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Corporation upon extension of credit, is based on management's
credit evaluation of the counterpart. Collateral held varies but may include
accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.
The Corporation grants agribusiness, commercial, mortgage and consumer
loans to customers within its lending region. The Corporation maintains a loan
portfolio with a high concentration of real estate mortgage loans.
10. RELATED PARTY TRANSACTIONS
Directors, officers and employees were customers of, and had other
transactions with, the Corporation's subsidiaries in the ordinary course of
business. Loan transactions with directors, officers and employees were made on
substantially the same terms as those prevailing, at the time made, for
comparable loans to other persons and did not involve more than normal risk of
collectibility or present other unfavorable features. Loans to these related
parties amounted to approximately $1,231,000 at December 31, 1992.
F-12
<PAGE> 74
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992
11. EMPLOYEE BENEFIT PLAN
The Corporation offers a profit sharing plan for all eligible employees.
Employer contributions are based upon amounts determined at the sole discretion
of the board of directors. Employees are not required or permitted to make
contributions under the plan. Expenses relating to Corporation contributions to
the plan were approximately $33,500 during the year ended December 31, 1992.
12. PARENT COMPANY FINANCIAL STATEMENTS
The following are the condensed parent company only balance sheet as of
December 31, 1992 and the parent only condensed statement of income and cash
flows for the year then ended.
CLIN-ARK BANKSHARES, INC.
PARENT COMPANY ONLY CONDENSED BALANCE SHEET
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992
---------------
(DOLLAR AMOUNTS
IN THOUSANDS)
<S> <C>
ASSETS
Cash and cash equivalents..................................................... $ 1
Land.......................................................................... 68
Investments in subsidiary..................................................... 3,411
-------
$ 3,480
-------
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
Income tax payable to subsidiary.............................................. $ 1
Stockholders' equity.......................................................... 3,479
-------
$ 3,480
-------
-------
</TABLE>
CLIN-ARK BANKSHARES, INC.
PARENT COMPANY ONLY CONDENSED STATEMENT OF INCOME
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992
---------------
(DOLLAR AMOUNTS
IN THOUSANDS)
<S> <C>
Other operating income........................................................ $ 2
Total operating expenses...................................................... 7
------
Operating loss before equity in undistributed earnings of subsidiary.......... (5)
Equity in undistributed earnings of subsidiary................................ 711
------
Net income.................................................................... $ 706
------
------
</TABLE>
At December 31, 1992, stockholders' equity of First National Bank of
Clinton of approximately $1,557,000 was available for the payment of dividends
to the Corporation without obtaining prior regulatory approval and while
maintaining regulatory capital ratio requirements.
F-13
<PAGE> 75
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1992
CLIN-ARK BANKSHARES, INC.
PARENT COMPANY ONLY CONDENSED STATEMENTS OF CASH FLOWS
DECEMBER 31, 1992
<TABLE>
<CAPTION>
1992
---------------
(DOLLAR AMOUNTS
IN THOUSANDS)
<S> <C>
Cash flows from operating activities
Operating loss.............................................................. $ (5)
Adjustments to reconcile net income to net cash provided (used)
by operating activities:
Equity in undistributed earnings of subsidiary........................... 711
-------
Net cash provided (used) by operating activities.............................. 706
-------
Cash flows from investing activities
Purchase of fixed assets.................................................... (68)
Increase in investment in subsidiary........................................ (632)
-------
Net cash provided (used) by investing activities.............................. (700)
-------
Cash flows from financing activities Purchase of treasury stock............... (7)
-------
Net cash provided (used) by financing activities.............................. (7)
-------
Net decrease in cash and cash equivalents..................................... (1)
Cash and cash equivalents -- beginning of year................................ 2
-------
Cash and cash equivalents -- end of year...................................... $ 1
-------
-------
SUPPLEMENTAL DISCLOSURES
Cash paid during the year for:
Interest................................................................. $ 7
Income taxes............................................................. $ 390
</TABLE>
13. MERGER
On December 16, 1992, the Corporation entered into a letter of intent with
Union Planters Corporation ("UPC"), whereby UPC intends to acquire the
Corporation's outstanding stock in exchange for shares of UPC. Consummation of
this transaction is subject to regulatory and stockholder approval.
F-14
<PAGE> 76
APPENDIX A-2
CLIN-ARK BANKSHARES, INC.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1991, 1990 AND FOR THE YEARS
ENDED DECEMBER 31, 1991 AND 1990
F-15
<PAGE> 77
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1991
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1991
-------
<S> <C>
ASSETS
Cash and due from banks............................................................ $ 1,382
-------
Interest-bearing time deposits..................................................... 4,251
-------
Investment securities
United States Treasury securities................................................ 3,261
Securities of United States government agencies and corporations................. 3,274
Obligations of state and political subdivisions.................................. 690
Other securities................................................................. 3,383
-------
Total investment securities.............................................. 10,608
-------
Federal funds sold................................................................. 805
-------
Loans
Loans, net of unearned income.................................................... 25,391
Reserve for loan losses.......................................................... (242)
-------
Net loans.......................................................................... 25,149
-------
Premises and equipment, net of accumulated depreciation............................ 678
-------
Other assets....................................................................... 536
-------
Total assets............................................................. $43,409
-------
-------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing deposits..................................................... $ 2,828
Interest-bearing deposits........................................................ 37,453
-------
Total deposits........................................................... 40,281
-------
Accrued expenses and other liabilities............................................. 347
-------
Total liabilities........................................................ 40,628
-------
Commitments and contingencies (Note 7, 8 and 10)
Stockholders' equity
Common stock, par value, $1 per share; authorized, 52,000 shares; issued and
outstanding, 51,542 shares.................................................... 52
Additional paid-in capital....................................................... 1,260
Retained earnings................................................................ 1,488
-------
2,800
Treasury stock, 458 shares at cost............................................... (19)
-------
Total stockholders' equity............................................... 2,781
-------
Total liabilities and stockholders' equity............................... $43,409
-------
-------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-16
<PAGE> 78
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1991 AND 1990
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1991 1990
------ ------
<S> <C> <C>
Interest income
Interest and fees on loans............................................... $2,516 $2,142
Interest on Federal funds sold........................................... 55 77
Interest on time deposits................................................ 354 124
Interest and dividends on investment securities
United States Treasury securities..................................... 297 278
Securities of United States government agencies and corporations...... 240 224
Obligations of state and political subdivisions....................... 49 52
Other securities...................................................... 108 28
------ ------
Total interest income...................................................... 3,619 2,925
------ ------
Interest expense
Interest on deposits..................................................... 2,056 1,734
------ ------
Total interest expense..................................................... 2,056 1,734
------ ------
Net interest income........................................................ 1,563 1,191
Provision for loan losses................................................ (47) (60)
------ ------
Net interest income after provision for loan losses........................ 1,516 1,131
------ ------
Other operating income
Service charges on deposit accounts...................................... 161 103
Other service charges, commissions and fees.............................. 77 48
Securities losses........................................................ (49) --
Other income............................................................. 92 90
------ ------
Total other operating income............................................... 281 241
------ ------
Other operating expenses
Salaries................................................................. 430 363
Pension and other employee benefits...................................... 90 69
Net expense of premises and fixed assets................................. 128 111
Other.................................................................... 372 284
------ ------
Total other operating expenses............................................. 1,020 827
------ ------
Income before income taxes................................................. 777 545
Income taxes............................................................... 255 178
------ ------
Net income................................................................. $ 522 $ 367
------ ------
------ ------
Primary earnings per share................................................. $ 9.69 $ 6.90
------ ------
------ ------
</TABLE>
The accompanying notes are integral part of these financial statements.
F-17
<PAGE> 79
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1991 AND 1990
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
------ ---------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance -- January 1, 1990.................. $ 52 $1,260 $ 599 $(19) $1,892
Net income................................ -- -- 367 -- 367
------ ---------- -------- -------- ------
Balance -- December 31, 1990................ 52 1,260 966 (19) 2,259
Net income................................ -- -- 522 -- 522
------ ---------- -------- -------- ------
Balance -- December 31, 1991................ $ 52 $1,260 $1,488 $(19) $2,781
------ ---------- -------- -------- ------
------ ---------- -------- -------- ------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE> 80
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1991 AND 1990
(UNAUDITED)
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1991 1990
------- -------
<S> <C> <C>
Cash flows from operating activities
Net income............................................................. $ 522 $ 367
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Provision for loan losses and losses on other real estate........... 51 64
Depreciation and amortization....................................... 93 85
Accretion of bond discount.......................................... 17 --
Deferred income tax benefit......................................... (18) --
Loss on sale of investment securities............................... 49 --
(Gain) loss on sale of equipment.................................... 1 (1)
(Increase) decrease in other assets................................. 30 (115)
Increase in accrued expenses and other liabilities.................. 39 14
------- -------
Net cash provided (used) by operating activities......................... 784 414
------- -------
Cash flows from investing activities
Proceeds from sale of investment securities............................ 47 --
Proceeds from maturities of investment securities...................... 3,194 2,222
Purchase of investment securities...................................... (6,675) (3,610)
Net increase in loans.................................................. (5,582) (3,448)
Net increase in time deposits.......................................... (597) (3,059)
Proceeds from sales of premises and equipment.......................... -- 10
Purchases of premises and equipment.................................... (25) (139)
(Increase) decrease in Federal funds sold.............................. (305) 925
------- -------
Net cash provided (used) by investing activities......................... (9,943) (7,099)
------- -------
Cash flows from financing activities
Increase in deposits................................................... 9,685 6,834
------- -------
Net cash provided (used) by financing activities......................... 9,685 6,834
------- -------
Net increase in cash and cash equivalents................................ 526 149
Cash and cash equivalents -- beginning of year........................... 856 707
------- -------
Cash and cash equivalents -- end of year................................. $ 1,382 $ 856
------- -------
------- -------
Supplemental disclosures
Cash paid during the year for:
Interest............................................................ $ 2,048 $ 1,685
Income taxes........................................................ $ 228 $ 177
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE> 81
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1991 AND 1990
(UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Clin-Ark Bankshares, Inc. ("the
Corporation") conform with generally accepted accounting principles and
practices within the banking industry. The policies that materially affect
financial position and the results of operations are summarized as follows:
a. Basis of presentation -- The consolidated financial statements
include the accounts of the Corporation, its wholly owned subsidiary, First
National Bank of Clinton and its majority owned subsidiary, First North
Central Insurance, Inc. All material intercompany accounts and transactions
have been eliminated in consolidation.
b. Investment securities -- Investment securities are stated at cost,
adjusted for amortization of premiums and accretion of discounts computed
on the interest method. Although the quoted market values fluctuate,
investment securities are held for investment purposes and gains and losses
are recognized in the accounts upon realization or at such time that
management determines that a permanent decline in value exists. The
adjusted cost of the specific security is used to compute the gain or loss
on sales of investment securities.
c. Loans -- Interest on loans is credited to income based upon the
principal amount outstanding.
d. Reserve for loan losses -- For financial reporting purposes, the
reserve for loan losses is established through a provision for loan losses
charged to expense. Loans are charged against the reserve for loan losses
when management believes that the collectibility of the principal is
unlikely. The reserve is an amount that management believes will be
adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of loans and
prior loan loss experience. The evaluations take into consideration such
factors as changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans, and current economic
conditions that may affect the borrower's ability to pay. Accrual of
interest is discontinued on a loan when management believes, after
considering economic and business conditions and collection efforts, that
the borrowers' financial condition is such that collection of interest is
doubtful. For income tax purposes, loans are charged to expense when
management believes that the collectibility of the principal is unlikely.
e. Premises and equipment -- Premises and equipment are stated at
cost, less accumulated depreciation.
For financial reporting purposes, depreciation is charged to operating
expenses over the estimated useful lives of the assets and is computed on
the straight-line method. For income tax purposes, depreciation is computed
under the methods prescribed under the applicable tax laws.
f. Income taxes -- The Corporation utilizes the liability method of
accounting for deferred income taxes. The liability method provides for a
deferred tax liability (benefit) on the balance sheet for the temporary
differences between financial statement and tax return income at the tax
rates which are in effect at the date of the financial statements.
g. Real estate acquired through foreclosure -- Real estate acquired
through foreclosure is reported at the lower of cost or estimated
realizable value. During 1990, the Corporation acquired approximately
$23,000 of other real estate as a result of foreclosing on past due loans.
At December 31, 1991, approximately $10,000 of other real estate is
included in other assets.
h. Cash and cash equivalents -- For purposes of reporting cash flows,
cash and cash equivalents include cash on hand and amounts due from banks.
F-20
<PAGE> 82
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
i. Earnings per common share -- Primary earnings per share are
computed based on the weighted average number of shares actually
outstanding plus the shares that would be outstanding assuming exercise of
dilutive stock options which are considered to be common stock equivalents.
The number of shares that would be issued from the exercise of stock
options has been reduced by the number of shares that could have been
purchased from the proceeds at the average estimated market price of the
Corporation's stock. The number of shares used in the computations were
53,846 and 53,162 in 1991 and 1990, respectively. Fully diluted earnings
per share amounts are not presented for 1991 and 1990 because they are not
materially dilutive.
2. INVESTMENT SECURITIES
At December 31, 1991, the amortized cost and estimated market values of
investment securities were as follows (in thousands):
<TABLE>
<CAPTION>
1991
-----------------------------------------------
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
United States Treasury securities.............. $ 3,261 $ 93 $ -- $ 3,354
Securities of United States government agencies
and corporations............................. 3,274 62 -- 3,336
Obligations of state and political
subdivisions................................. $ 690 $ 27 $ -- $ 717
Other securities............................... 3,383 59 (15) 3,427
--------- ---------- ---------- ---------
$10,608 $241 $(15) $10,834
--------- ---------- ---------- ---------
--------- ---------- ---------- ---------
</TABLE>
Proceeds from sales and maturities of investments in investment securities
during the year ending December 31, 1991 were approximately $3,241,000. Gross
gains of approximately $1,000 and gross losses of approximately $50,000 were
realized on the sales. Proceeds from sales and maturities of investments in
investment securities during the year ending December 31, 1990 were
approximately $2,222,000.
As required by law, investments carried at approximately $4,449,000 at
December 31, 1991 were pledged to secure public deposits and for other purposes.
3. LOANS
Following is a summary of the loan portfolio by principal regulatory
categories at December 31, 1991 (in thousands):
<TABLE>
<CAPTION>
1991
-------
<S> <C>
Commercial, financial and agricultural..................................... $ 4,336
Real estate -- construction................................................ 4
Real estate -- mortgage.................................................... 16,409
Other...................................................................... 4,642
-------
Loans, net of unearned income.............................................. $25,391
-------
-------
</TABLE>
F-21
<PAGE> 83
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. RESERVE FOR LOAN LOSSES
A summary of transactions within the reserve for loan losses for the years
ending December 31, 1991 and 1990 is as follows (in thousands):
<TABLE>
<CAPTION>
1991 1990
---- ----
<S> <C> <C>
Balance -- beginning of year.......................................... $198 $163
Provision charged to operating expense.............................. 47 60
Recoveries on loans previously charged-off.......................... 3 3
---- ----
248 226
Loans charged-off................................................... 6 28
---- ----
Balance -- end of year................................................ $242 $198
---- ----
---- ----
</TABLE>
5. PREMISES AND EQUIPMENT
A summary of asset classifications and depreciable lives at December 31,
1991 is as follows (in thousands):
<TABLE>
<CAPTION>
USEFUL LIVES
1991 (YEARS)
----- ------------
<S> <C> <C>
Land.............................................................. $ 61
Buildings and improvements........................................ 501 15 to 60
Furniture and equipment........................................... 379 3 to 15
Automobiles....................................................... 18 3 to 5
-----
959
Accumulated depreciation.......................................... (281)
-----
$ 678
-----
-----
</TABLE>
Depreciation, included in operating expenses, amounted to approximately
$70,400 and $61,100 in 1991 and 1990, respectively.
6. INCOME TAXES
Income tax expense for the consolidated statement of income consists of (in
thousands):
<TABLE>
<CAPTION>
1991 1990
---- ----
<S> <C> <C>
Current provision..................................................... $273 $178
Deferred provision (benefit).......................................... (18) --
---- ----
$255 $178
---- ----
---- ----
</TABLE>
The reasons for the difference between the actual tax expense and tax
computed at the statutory Federal income tax rate are as follows (in thousands):
<TABLE>
<CAPTION>
1991 1990
---------------- ----------------
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C>
Tax on pre-tax income....................................... $264 34.0% $185 34.0%
State income taxes, net of Federal benefit.................. 14 1.8 1 0.1
Interest and other items exempt from income tax............. (38) (4.9) (35) (6.4)
Other....................................................... 15 1.9 27 5.0
------ ------- ------ -------
$255 32.8% $178 32.7%
------ ------- ------ -------
------ ------- ------ -------
</TABLE>
F-22
<PAGE> 84
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The sources of timing differences that result in deferred income tax
provisions (benefits) and the tax effects of each were as follows (in
thousands):
<TABLE>
<CAPTION>
1991 1990
---- ----
<S> <C> <C>
Provision for loan losses............................................. $(17) $(13)
Depreciation.......................................................... 7 11
Reserve for securities losses......................................... (11) (2)
Write-down of other real estate....................................... (2) (2)
Change in unrecognized deferred tax benefit........................... 5 6
---- ----
Deferred income tax provision (benefit)............................... $(18) $ --
---- ----
---- ----
</TABLE>
7. NONCOMPENSATORY STOCK OPTION AGREEMENTS
On January 13, 1988, the Corporation granted a director and officer of the
Corporation an option to purchase 3,000 shares of the Corporation's common stock
at a purchase price of $25.00 per share. The term of the option was for a period
of five years from the date of the grant. On March 26, 1990, an additional
option was granted to the director to purchase up to an additional 2,500 shares
of common stock at a purchase price of $45.00 per share. The term of this option
was also for a period of five years from the date of the grant.
As of December 31, 1991, neither of the above noted option agreements had
been exercised.
8. COMMITMENTS AND CONTINGENCIES
The Corporation is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of its
customers and to reduce its own exposure to fluctuation in interest rates. These
financial instruments include commitments to extend credit, standby letters of
credit, and interest rate caps and floors written.
The Corporation's exposure to credit loss in the event of nonperformance by
the other party to the financial instruments for commitments to extend credit is
represented by the contractual notional amount of those instruments. The
Corporation has the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. For interest rate caps
and floors, the contract or notional amounts do not represent exposure to credit
loss.
Financial instruments, whose contract amount represents credit risk,
consist of commitments to extend credit, of approximately $2,136,000 at December
31, 1991.
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.
Commitments generally have fixed expiration dates or other termination clauses
and may require repayment of a fee. Since these commitments may expire without
being drawn upon, the total commitment amount does not necessarily represent
future cash requirements. The Corporation evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Corporation upon extension of credit, is based on management's
credit evaluation of the counterpart. Collateral held varies but may include
accounts receivable, inventory, property, plant and equipment, and
income-producing commercial properties.
The Corporation grants agribusiness, commercial, mortgage and consumer
loans to customers within its lending region. The Corporation maintains a loan
portfolio with a high concentration of real estate mortgage loans.
F-23
<PAGE> 85
CLIN-ARK BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. RELATED PARTY TRANSACTIONS
Directors, officers and employees were customers of, and had other
transactions with, the Corporation's subsidiaries in the ordinary course of
business. Loan transactions with directors, officers and employees were made on
substantially the same terms as those prevailing, at the time made, for
comparable loans to other persons and did not involve more than normal risk of
collectibility or present other unfavorable features. Loans to these related
parties amounted to approximately $1,005,000 at December 31, 1991.
10. EMPLOYEE BENEFIT PLAN
The Corporation offers a profit sharing plan for all eligible employees.
Employer contributions are based upon amounts determined at the sole discretion
of the board of directors. Employees are not required or permitted to make
contributions under the plan. Expenses relating to Corporation contributions to
the plan were approximately $23,600 and $16,500 during the years ending December
31, 1991 and 1990, respectively.
F-24
<PAGE> 86
APPENDIX A-3
CLIN-ARK BANKSHARES, INC.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1993, AND FOR THE THREE AND NINE-MONTH
PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
F-25
<PAGE> 87
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
(DOLLAR AMOUNTS IN THOUSANDS
(UNAUDITED)
<S> <C>
ASSETS
Cash and due from banks................................................... $ 1,687
Interest -- bearing time deposits......................................... --
Investment securities
United States Treasury Securities....................................... 4,628
Securities of United States government agencies and corporations........ 2,503
Obligations of state and political subdivisions......................... 442
Other securities........................................................ 6,390
----------
Total investment securities..................................... 13,963
----------
Federal funds sold........................................................ 425
----------
Loans
Loans, net of unearned income........................................... 32,624
Reserve for loan losses................................................. (359)
----------
Net loans................................................................. 32,265
----------
Premises and equipment, net of accumulated depreciation................... 894
----------
Other assets.............................................................. 599
----------
Total assets.................................................... $ 49,833
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest -- bearing deposits......................................... $ 4,471
Interest -- bearing deposits............................................ 41,011
----------
Total deposits.................................................. 45,482
----------
Accrued expenses and other liabilities.................................... 328
----------
Total liabilities............................................... 45,810
----------
Stockholders' equity
Common stock, par value, $1 per share; authorized 55,000 shares; issued
and outstanding, 54,442.............................................. 55
Additional paid-in capital.............................................. 1,332
Retained earnings....................................................... 2,662
----------
4,049
Treasury stock, 558 shares at cost...................................... (26)
----------
Total stockholders' equity...................................... 4,023
----------
Total liabilities and stockholders' equity...................... $ 49,833
----------
----------
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-26
<PAGE> 88
CLIN-ARK BANKSHARES, INC.
STATEMENT OF INCOME
FOR THE QUARTERLY PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
----- -----
(DOLLAR
AMOUNTS IN
THOUSANDS,
EXCEPT PER
SHARE AMOUNTS)
<S> <C> <C>
(UNAUDITED)
Interest income
Interest and fees on loans.................................................. $ 676 $ 674
Interest on Federal funds sold.............................................. 20 1
Interest on time deposits................................................... -- 18
Interest and dividends on investment securities
United States Treasury securities........................................ 56 61
Securities of United States government agencies and corporations......... 34 47
Obligations of state and political subdivisions.......................... 5 8
Other securities......................................................... 59 86
----- -----
Total interest income............................................... 850 895
----- -----
Interest expense
Interest on deposits........................................................ 355 401
Interest on Federal fund purchased and securities sold under repurchase
agreements............................................................... -- 1
----- -----
Total interest expense.............................................. 355 402
----- -----
Net interest income........................................................... 495 493
Provision for loan losses................................................... (11) (20)
----- -----
Net interest income after provision for loan losses........................... 484 473
----- -----
Other operating income
Service charges on deposit accounts......................................... 51 46
Other service charges, commissions and fees................................. 26 23
Securities gains............................................................ -- 16
Other income................................................................ 16 19
----- -----
Total other operating income........................................ 93 104
----- -----
Other operating expenses
Salaries.................................................................... 143 125
Pension and other employee benefits......................................... 35 28
Net expenses of premises and fixed assets................................... 34 33
Other....................................................................... 111 109
----- -----
Total other operating expenses...................................... 323 296
----- -----
Income before income taxes.................................................... 254 282
Income taxes.................................................................. 92 107
----- -----
Net income.................................................................... $ 162 $ 175
----- -----
----- -----
Earnings per share............................................................ $2.91 $3.21
----- -----
----- -----
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-27
<PAGE> 89
CLIN-ARK BANKSHARES, INC.
STATEMENT OF INCOME
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
------ ------
(DOLLAR AMOUNTS
IN THOUSANDS,
EXCEPT PER
SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Interest income
Interest and fees on loans................................................. $1,994 $1,992
Interest on Federal funds sold............................................. 50 27
Interest on time deposits.................................................. 2 99
Interest and dividends on investment securities
United States Treasury securities....................................... 156 191
Securities of United States government agencies and corporations........ 105 177
Obligations of state and political subdivisions......................... 17 25
Other securities........................................................ 210 225
------ ------
Total interest income.............................................. 2,534 2,736
------ ------
Interest expense
Interest on deposits....................................................... 1,045 1,292
Interest on Federal fund purchased and securities sold under repurchase
agreements.............................................................. -- 2
------ ------
Total interest expense............................................. 1,045 1,294
------ ------
Net interest income.......................................................... 1,489 1,442
Provision for loan losses.................................................. (50) (78)
------ ------
Net interest income after provision for loan losses.......................... 1,439 1,364
------ ------
Other operating income
Service charges on deposit accounts........................................ 144 127
Other service charges, commissions and fees................................ 73 70
Securities gains........................................................... 4 65
Other income............................................................... 61 83
------ ------
Total other operating income....................................... 282 345
------ ------
Other operating expenses
Salaries................................................................... 415 356
Pension and other employee benefits........................................ 102 80
Net expenses of premises and fixed assets.................................. 97 100
Other...................................................................... 353 308
------ ------
Total other operating expenses..................................... 967 844
------ ------
Income before income taxes and cumulative effect of accounting change........ 754 865
Income taxes................................................................. 295 369
------ ------
Income before cumulative effect of accounting change......................... 459 496
Cumulative effect of accounting change (note 1).............................. 87 --
------ ------
Net income................................................................... $ 546 $ 496
------ ------
------ ------
Earnings per share:
Income before cumulative effect of accounting change....................... $ 8.28 $ 9.12
------ ------
------ ------
Net income................................................................. $ 9.85 $ 9.12
------ ------
------ ------
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-28
<PAGE> 90
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTH PERIOD ENDED
SEPTEMBER 30, 1993
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED TREASURY
STOCK CAPITAL EARNINGS STOCK TOTAL
------ ---------- -------- -------- ------
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance -- January 1, 1992......................... $ 52 $1,260 $2,194 $(26) $3,480
Issuance of common stock......................... 3 72 -- -- 75
Dividends paid................................... -- -- (78) -- (78)
Net income....................................... -- -- 546 -- 546
------ ---------- -------- -------- ------
Balance -- September 30, 1993...................... $ 55 $1,332 $2,662 $(26) $4,023
------ ---------- -------- -------- ------
------ ---------- -------- -------- ------
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-29
<PAGE> 91
CLIN-ARK BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1993 AND 1992
<TABLE>
<CAPTION>
1993 1992
------- -------
(DOLLAR AMOUNTS IN
THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash lows from operating activities
Net income......................................................... $ 546 $ 496
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Provision for loan losses and losses on other real estate....... 50 78
Depreciation and amortization................................... 62 83
Accretion of bond discounts..................................... 73 114
Gain on sale of investment securities........................... (4) (65)
Change in deferred tax benefit.................................. (87) 18
Loss on sale of equipment....................................... -- (1)
Increase in other assets........................................ 16 (85)
Increase in accrued expenses and liabilities.................... (50) 792
------- -------
Net cash provided (used) by operating activities........... 606 1,430
------- -------
Cash flows from investing activities Proceeds from sale of investment
securities......................................................... 256 4,076
Proceeds from maturities of investment securities.................. 2,813 3,896
Purchase of investment securities.................................. (4,056) (11,210)
Net increase in loans.............................................. (1,975) (4,794)
Net decrease in time deposits...................................... 891 3,261
Proceeds from sales of premises and equipment...................... -- 11
Purchases of premises and equipment................................ (225) (113)
Decrease (increase) in Federal funds sold.......................... 610 805
------- -------
Net cash provided (used) by investing activities........... (1,686) (4,068)
------- -------
Cash flows from financing activities
Increase in deposits............................................... 914 2,573
Proceeds from issuance of common stock............................. 75 --
Payment of dividends............................................... (78) --
------- -------
Net cash provided (used) by financing activities........... 911 2,573
------- -------
Net increase in cash and cash equivalents............................ (169) (65)
Cash and cash equivalents -- beginning of period..................... 1,856 1,382
------- -------
Cash and cash equivalents -- end of period........................... $ 1,687 $ 1,317
------- -------
------- -------
SUPPLEMENTAL DISCLOSURES
- ---------------------------------------------------------------------
Cash paid during the year for:
Interest........................................................... $ 1,027 $ 1,388
Income taxes....................................................... $ 382 $ 283
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
F-30
<PAGE> 92
CLIN-ARK BANKSHARES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1993 AND 1992
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles. In the opinion of
management, the accompanying unaudited financial statements reflect all
adjustments (which include only normal recurring adjustments) necessary to
summarize fairly the financial position of Clin-Ark Bankshares, Inc. ("the
Corporation") as of September 30, 1993 and the results of its operations and
changes in its cash flows for the nine months ended September 30, 1993 and
September 30, 1992. The accounting policies followed by the Corporation for
interim financial reporting are consistent with the accounting policies followed
for annual financial reporting, except as noted below. These financial
statements should be read in conjunction with the corporation's 1992 annual
financial statements and related notes included therein.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted in accordance with the rules of the Securities and Exchange
Commission.
Effective March 31, 1993, the Corporation adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes ("FASB 109") which
supercedes Statement of Financial Accounting Standards No. 96, "Accounting for
Income Taxes" (FASB 96) which is currently used by the Corporation. Adoption of
FASB 109 resulted in the Corporation recording previously unrecognized tax
benefits totaling approximately $87,000. The previously unrecognized tax benefit
of $87,000 was attributable to cumulative differences which existed between
reported book and tax income. The realization of this benefit is dependent on
the Corporation having future taxable income. The disclosures required by FASB
109 are substantially similar to those previously disclosed under FASB 96.
2. DIVIDENDS
During the nine month period ended September 30, 1993, dividends of $.72
per share per quarter were declared and paid for the second and third quarters
of 1993.
3. PENDING MERGER
In April, 1993, the Board of Directors of the Corporation approved an
agreement to merge with another bank holding company whereby the two parties
intend to effectuate the merger of the Corporation with and into the other bank
holding company. The merger, which is to be accounted for as a pooling of
interests, is dependent upon the approval of the stockholders of the Corporation
and various regulatory agencies.
F-31
<PAGE> 93
APPENDIX B
AGREEMENT AND PLAN OF REORGANIZATION
DATED APRIL 30, 1993
BY AND BETWEEN
UNION PLANTERS CORPORATION,
NORTH ARKANSAS BANCSHARES, INC.
CLIN-ARK BANKSHARES, INC.
AND
FIRST NATIONAL BANK OF CLINTON
ALONG WITH THE PLAN OF MERGER
ANNEXED THERETO AS EXHIBIT A
<PAGE> 94
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
AGREEMENT AND PLAN OF REORGANIZATION............................. 1
AGREEMENT.......................................... 2
ARTICLE 1
DEFINITIONS........................................ 2
1.1 Definitions................................................................... 2
ARTICLE 2
TERMS OF THE MERGER............................... 5
2.1 The Merger.................................................................... 5
2.2 Articles of Incorporation, Bylaws, Directors, Officers and Name of the
Surviving Corporation......................................................... 5
(a) Articles of Incorporation............................................... 5
(b) Bylaws.................................................................. 5
(c) Directors and Officers.................................................. 5
(d) Name.................................................................... 6
ARTICLE 3
DESCRIPTION OF TRANSACTION.............................. 6
3.1 Terms of the Merger........................................................... 6
(a) Satisfaction of Conditions to Closing................................... 6
(b) Effective Time of the Merger............................................ 6
(c) Shares of NABS Shall Remain Outstanding................................. 6
(d) Conversion and Cancellation of Shares of CAB............................ 6
(e) Conversion and Exchange of CAB Shares; Exchange Ratio................... 6
(f) Mechanics of Payment of Purchase Price.................................. 7
(g) Stock Transfer Books.................................................... 8
(h) Effects of the Merger................................................... 8
(i) Transfer of Assets...................................................... 8
(j) Assumption of Liabilities............................................... 8
(k) Dissenting Shareholders' Rights......................................... 8
(l) CAB Stock Options....................................................... 9
3.2 Time and Place of Closing..................................................... 9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC............................ 9
4.1 Organization and Corporate Authority.......................................... 9
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach........................................................................ 10
4.3 No Legal Bar.................................................................. 10
4.4 Government Approvals.......................................................... 10
4.5 Capitalization................................................................ 10
4.6 UPC Financial Statements...................................................... 11
4.7 Exchange Act Filings.......................................................... 11
4.8 The UPC Common Stock.......................................................... 11
4.9 Intentionally Omitted......................................................... 11
4.10 Disclosure.................................................................... 11
</TABLE>
i
<PAGE> 95
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CAB AND FIRST NATIONAL........................ 12
5.1 Organization and Qualification of CAB and Subsidiaries........................ 12
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach........................................................................ 12
5.3 No Legal Bar.................................................................. 13
5.4 Government and Other Approvals................................................ 13
5.5 Compliance With Law........................................................... 13
5.6 Charter Documents............................................................. 13
5.7 CAB Financial Statements...................................................... 13
5.8 Absence of Certain Changes.................................................... 14
5.9 Deposits...................................................................... 15
5.10 Properties.................................................................... 15
5.11 CAB Subsidiaries.............................................................. 15
5.12 Condition of Fixed Assets and Equipment....................................... 15
5.13 Tax Matters................................................................... 15
5.14 Litigation.................................................................... 16
5.15 Hazardous Materials........................................................... 16
5.16 Insurance..................................................................... 18
5.17 Labor and Employment Matters.................................................. 18
5.18 Records and Documents......................................................... 18
5.19 Capitalization of CAB......................................................... 19
5.20 Sole Agreement................................................................ 19
5.21 Disclosure.................................................................... 19
5.22 Absence of Undisclosed Liabilities............................................ 19
5.23 Allowance for Possible Loan or ORE Losses..................................... 20
5.24 Compliance with Laws.......................................................... 20
5.25 Employee Benefit Plans........................................................ 20
5.26 Material Contracts............................................................ 22
5.27 Material Contract Defaults.................................................... 22
5.28 Reports....................................................................... 22
5.29 Statements True and Correct................................................... 22
ARTICLE 6
COVENANTS OF UPC................................ 23
6.1 Regulatory Approvals.......................................................... 23
6.2 Registration of UPC Common Stock under the Securities Laws.................... 23
6.3 Employee Benefits............................................................. 23
ARTICLE 7
COVENANTS OF CAB AND FIRST NATIONAL............................. 23
7.1 Proxy Statement; CAB Shareholder Approval..................................... 23
7.2 Conduct of Business -- Affirmative Covenants.................................. 24
7.3 Conduct of Business -- Negative Covenants..................................... 25
</TABLE>
ii
<PAGE> 96
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C> <C>
ARTICLE 8
CONDITIONS TO CLOSING.............................. 27
8.1 Conditions to the Obligations of CAB.......................................... 27
(a) Performance............................................................. 27
(b) Representations and Warranties.......................................... 27
(c) Documents............................................................... 27
(d) Consideration........................................................... 27
(e) Opinion of UPC's and NABS' Counsel...................................... 28
8.2 Conditions to the Obligations of UPC and NABS................................. 28
(a) Performance............................................................. 28
(b) Representations and Warranties.......................................... 28
(c) Documents............................................................... 28
(d) Destruction of Property................................................. 29
(e) Inspections Permitted................................................... 29
(f) No Material Adverse Change.............................................. 29
(g) Opinion of CAB's Counsel................................................ 29
(h) Other Business Combinations, Etc........................................ 30
(i) Maintenance of Certain Covenants, Etc................................... 30
(j) Non-Compete Agreements.................................................. 30
(k) Stock Option Agreement.................................................. 30
8.3 Conditions to Obligations of All Parties...................................... 30
(a) No Pending or Threatened Claims......................................... 30
(b) Governmental Approvals and Acquiescences Obtained....................... 30
(c) Pooling of Interests Accounting Treatment............................... 30
ARTICLE 9
TERMINATION...................................... 31
9.1 Termination................................................................... 31
9.2 Effect of Termination......................................................... 32
ARTICLE 10
GENERAL PROVISIONS................................ 32
10.1 Notices....................................................................... 32
10.2 Assignability and Parties in Interest......................................... 33
10.3 Governing Law................................................................. 33
10.4 Counterparts.................................................................. 33
10.5 Best Efforts.................................................................. 33
10.6 Publicity..................................................................... 33
10.7 Entire Agreement.............................................................. 33
10.8 Severability.................................................................. 33
10.9 Modifications, Amendments and Waivers......................................... 34
10.10 Interpretation................................................................ 34
10.11 Payment of Expenses........................................................... 34
10.12 Finders and Brokers........................................................... 34
10.13 Equitable Remedies............................................................ 34
10.14 Attorneys' Fees............................................................... 34
10.15 Survival of Representations and Warranties.................................... 34
10.16 No Waiver..................................................................... 35
10.17 Remedies Cumulative........................................................... 35
</TABLE>
iii
<PAGE> 97
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization Agreement")
dated as of the 30th day of April, 1993, by and between UNION PLANTERS
CORPORATION ("UPC"), a corporation chartered and existing under the laws of the
State of Tennessee which is registered both as a bank holding company and a
savings and loan holding company and whose principal offices are located at 7130
Goodlett Farms Parkway, Cordova, Shelby County, Tennessee 38018; NORTH ARKANSAS
BANCSHARES, INC. ("NABS" or "Surviving Corporation" as the context may require),
whose principal place of business is located at 300 South Church Street,
Jonesboro, Craighead County, Arkansas 72403, an Arkansas-chartered corporation
which is a registered bank holding company and a wholly-owned subsidiary of UPC;
CLIN-ARK BANKSHARES, INC. ("CAB"), a corporation chartered and existing under
the laws of the State of Arkansas which is a registered bank holding company and
whose principal offices are located at Highway 65 South (P. O. Box 810),
Clinton, Van Buren County, Arkansas 72031; and FIRST NATIONAL BANK OF CLINTON,
ARKANSAS ("FIRST NATIONAL"), a national banking association chartered and
existing under the laws of the United States of America, having its principal
place of business at Highway 65 South (P. O. Box 810), Clinton, Van Buren
County, Arkansas 72031 and a wholly-owned subsidiary of CAB.
FIRST NATIONAL, for a valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by it, has joined in this Reorganization
Agreement for the sole purpose of making certain warranties and representations
set forth in Article 5 and binding itself to perform certain covenants set forth
in Article 7 as provided hereinafter. UPC, NABS, CAB and FIRST NATIONAL are
sometimes referred to herein as the "Parties."
RECITALS
A. CAB is the beneficial owner and holder of record of 52,000 shares of the
common stock of FIRST NATIONAL which constitute all of the shares of common
stock of FIRST NATIONAL issued and outstanding (the "FIRST NATIONAL Common
Stock"), and desires to have itself and FIRST NATIONAL acquired by UPC on the
terms and subject to the conditions set forth in this Reorganization Agreement
and the accompanying Plan of Merger (attached hereto as Exhibit A) (the "Plan of
Merger").
B. The Boards of Directors of CAB and FIRST NATIONAL deem it desirable and
in the best interests of CAB and FIRST NATIONAL and the shareholders of CAB (the
"CAB Shareholders") that CAB be merged with and into NABS (which would survive
the merger) 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.
C. The Boards of Directors of UPC and NABS deem it desirable and in the
best interests of UPC, NABS and the shareholders of UPC that CAB be merged with
and into NABS on the terms and subject to the conditions set forth in this
Reorganization Agreement and in the manner provided in this Reorganization
Agreement and Plan of Merger.
D. The respective Boards of Directors of UPC, NABS, CAB and FIRST NATIONAL
have each adopted (or will each adopt) resolutions setting forth and adopting
this Reorganization Agreement and Plan of Merger, and have directed that this
Reorganization Agreement and Plan of Merger and all resolutions adopted by said
Boards of Directors and by the CAB Shareholders related to this Reorganization
Agreement, be submitted with appropriate applications to, and filed with the
Board of Governors of the Federal Reserve System (the "Federal Reserve"), the
Arkansas State Bank Department (the "ASBD") and such other regulatory agencies
or authorities as may be necessary in order to obtain all governmental
authorizations required to consummate the proposed Merger (as defined herein) in
accordance with this Reorganization Agreement, the Plan of Merger and applicable
law.
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NOW THEREFORE, in consideration of the foregoing premises and the mutual
representations, warranties, covenants and agreements herein contained and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Reorganization Agreement, the following
terms have the definitions indicated:
"AFFILIATE" of a party means any person, partnership, corporation,
association or other legal entity directly or indirectly controlling, controlled
by or under common Control, as that term is defined herein, with that party.
"APPLICABLE ENVIRONMENTAL LAWS" shall have the meaning assigned to such
term in Section 5.15(a) of this Reorganization Agreement.
"ASBD" shall mean the Arkansas State Bank Department.
"ARKANSAS CODE" means the Arkansas Code Annotated, as amended.
"ARKANSAS COMMISSIONER" shall mean the Commissioner of the Arkansas State
Bank Department.
"AUDITED FINANCIAL STATEMENTS OF CAB" 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.
"CAB" means Clin-Ark Bankshares, Inc., an Arkansas-chartered corporation
registered as a bank holding company and headquartered at Highway 65 South (P.
O. Box 810), Clinton, Van Buren County, Arkansas 72031.
"CAB COMMON STOCK" has the meaning assigned to such term in Section 3.1(d)
of this Reorganization Agreement.
"CAB COMPANIES" shall mean CAB and all of its Subsidiaries, including FIRST
NATIONAL and all FIRST NATIONAL Subsidiaries.
"CAB 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 CAB or any
CAB Subsidiaries, including, but not limited to, FIRST NATIONAL, to or for the
benefit of the officers, directors or employees of CAB or any CAB Subsidiary.
"CAB RECORD HOLDERS" means the holders of record of all of the issued and
outstanding shares of CAB Common Stock immediately prior to the Effective Time
of the Merger.
"CAB SHAREHOLDERS" shall have the meaning assigned to such term in Recital
B of this Reorganization Agreement.
"CAB STOCK OPTIONS" shall have the meaning assigned to such term in Section
3.1(l) of this Reorganization Agreement.
"CERCLA" shall have the meaning set forth in Section 5.15(a) of this
Reorganization Agreement.
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"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.
"CONSIDERATION" shall mean the value to be received by the CAB Record
Holders in exchange for their CAB Common Stock, such value to be determined as
provided in Article 3, Section 3.1(e), of this Reorganization Agreement.
"CONTROL" shall have the meaning assigned to such term in Section 2(a)(2)
of the Bank Holding Company Act of 1956, as amended.
"CURRENT MARKET PRICE PER SHARE" shall have the meaning set forth in
Section 3.1(e)(i) of this Reorganization Agreement.
"DEPOSITS" shall mean all deposits (including, but not limited to,
certificates of deposit, savings accounts, NOW accounts and checking accounts)
of FIRST NATIONAL.
"EFFECTIVE DATE" shall mean that date on which the Effective Time of the
Merger shall have occurred.
"EFFECTIVE TIME OF THE MERGER" shall have the meaning assigned in Section
3.3 of the Plan of Merger and Section 3.1(b) of this Reorganization Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE AGENT" shall mean Union Planters National Bank, Memphis,
Tennessee, acting through its Corporate Trust Department.
"EXCHANGE RATIO" shall have the meaning assigned to such term in Section
3.1(e) of this Reorganization Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" shall mean the Board of Governors of the Federal Reserve
System and shall include the Federal Reserve Bank of St. Louis acting under
delegated authority.
"FIRST NATIONAL" means First National Bank of Clinton, Arkansas, a national
banking association chartered and existing under the laws of the United States
of America and a wholly-owned Subsidiary of CAB, having its principal place of
business at Highway 65 South (P.O. Box 810), Clinton, Van Buren County, Arkansas
72031.
"FIRST NATIONAL COMMON STOCK" shall have the meaning assigned to such term
in Recital A of this Reorganization Agreement.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"GOVERNMENTAL APPROVALS" shall have the meaning assigned to such term in
Section 4.4 of this Reorganization Agreement.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in Section 5.15(a)
of this Reorganization Agreement.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"MERGER" shall, as described in Section 2.1 of this Reorganization
Agreement, mean the merger of CAB with and into NABS, which shall survive the
Merger as the Surviving Corporation.
"NABS" shall mean NORTH ARKANSAS BANCSHARES, INC., an Arkansas-chartered
bank holding company having its principal place of business in Jonesboro,
Craighead County, Arkansas, and a wholly-owned Subsidiary of UPC.
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"NABS COMMON STOCK" shall have the meaning assigned to such term in Section
3.1(c) of this Reorganization Agreement.
"NYSE" shall mean the New York Stock Exchange, or its successor, upon which
shares of the UPC Common Stock are listed for trading.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"OFFICER" shall have the meaning set forth in Section 5.8(k) of this
Reorganization Agreement.
"PARTIES" shall mean CAB, FIRST NATIONAL, UPC, and NABS collectively; FIRST
NATIONAL and CAB on the one hand, or UPC and NABS on the other hand, may
sometimes be referred to as a "PARTY."
"PENSION PLAN" shall mean any employee pension benefit plan as such term is
defined in Section 3(2) of ERISA which is maintained by the referenced Party.
"PERSON" shall mean any natural person, fiduciary, corporation,
partnership, joint venture, association, business trust or any other entity of
any kind.
"PLAN OF MERGER" shall mean the Plan of Merger substantially in the form of
Exhibit A hereto to be executed by authorized representatives of CAB, UPC and
NABS and filed with the Arkansas Secretary of State along with the Articles of
Merger in accordance with Section 4-26-1004 of the Arkansas Code and providing
for the Merger of CAB with and into NABS as contemplated by Section 2.1 of this
Reorganization Agreement.
"PROPERTY" shall have the meaning assigned to such term in Section 5.15(a)
of this Reorganization Agreement.
"PROXY STATEMENT" shall mean the proxy statement to be used by CAB to
solicit proxies with a view to securing the approval of the CAB Shareholders of
this Reorganization Agreement and the Plan of Merger.
"REALTY" means the real property of FIRST NATIONAL or CAB owned or leased
by FIRST NATIONAL or CAB or any Subsidiary of FIRST NATIONAL or CAB.
"RECORDS" means all available records, original instruments and other
documentation, pertaining to CAB, CAB's assets (including plans and
specifications relating to the Realty), CAB's liabilities, the CAB 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 CAB's or FIRST NATIONAL's
business by UPC and CAB on and after the Effective Time of the Merger as it was
conducted prior to the Closing Date.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Reserve, the
ASBD, the 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 AGREEMENT" means this Agreement and Plan of Reorganization
together with the Plan of Merger (Exhibit A), and all Exhibits and Schedules
annexed to, and incorporated by specific reference as a part of, this
Reorganization Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all reports, proxy statements and registration
statements filed, or required to be filed, by a Party or one of its Subsidiaries
pursuant to the Securities Laws, whether filed, or required to be filed, with
the SEC, the Comptroller 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,
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and the rules and regulations of the SEC promulgated thereunder, as well as the
similar state securities laws and any similar rules and regulations promulgated
by the applicable federal bank Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the meeting of the CAB Shareholders to be
held pursuant to Section 7.1 of this Reorganization Agreement, including any
adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all of those corporations, banks, associations or
other entities of which the entity in question owns or controls 5% or more of
the outstanding equity securities either directly or through an unbroken chain
of entities as to each of which 5% or more of the outstanding equity securities
is owned directly or indirectly by its parent; provided, however, that there
shall not be included any such entity acquired through foreclosure or in
satisfaction of a debt previously contracted in good faith, any such entity that
owns or operates an automatic teller machine interchange network, any such
entity that is a joint venture of the parent or of a Subsidiary of the parent,
or any such entity the equity securities of which are owned or controlled in a
fiduciary capacity or through a small business investment corporation.
"SURVIVING CORPORATION" shall mean NABS as the corporation resulting from
the consummation of the Merger as set forth in Section 2.1 of this
Reorganization Agreement.
"UPC" shall mean Union Planters Corporation, a Tennessee-chartered bank
holding company which is also registered as a savings and loan holding company
having its principal place of business in Cordova, Shelby County, Tennessee.
"UPC COMMON STOCK" shall have the meaning set forth in Section 4.5 of this
Reorganization Agreement.
"UPC FINANCIAL STATEMENTS" shall mean (i) the audited consolidated balance
sheets and related consolidated statements of earnings, of changes in
shareholders' equity, and of cash flows (including related notes) of UPC and its
Subsidiaries as of December 31, 1991 and 1992 and each subsequent December 31
prior to the Effective Time of the Merger, and (ii) the related unaudited
consolidated balance sheets and related consolidated statements of earnings, of
changes in shareholders' equity, and of cash flows (including related notes) of
UPC and its Subsidiaries for each of the quarters ended or ending after January
1, 1993, as filed by UPC in SEC Documents.
"UPC PREFERRED STOCK" shall have the meaning assigned to such term in
Section 4.5 of this Reorganization Agreement.
ARTICLE 2
TERMS OF THE MERGER
2.1 The Merger.
Subject to the satisfaction (or lawful waiver) of all of the conditions to
the obligations of each of the Parties to this Reorganization Agreement, at the
Effective Time of the Merger, CAB shall be merged with and into NABS (the
"Merger"), which latter corporation (the "Surviving Corporation") shall survive
the Merger.
2.2 Articles of Incorporation, ByLaws, Directors, Officers and Name of the
Surviving Corporation.
(a) Articles of Incorporation. Immediately after the Effective Time of the
Merger, the Articles of Incorporation of NABS, as in effect immediately prior to
the Effective Time of the Merger, shall constitute the Articles of Incorporation
of NABS as the Surviving Corporation, unless and until the same shall be amended
thereafter as provided by law and the terms of such Articles of Incorporation.
(b) Bylaws. At the Effective Time of the Merger, the Bylaws of NABS, as in
effect immediately prior to the Effective Time of the Merger, shall continue to
be the Bylaws of NABS as the Surviving Corporation, unless and until amended or
repealed as provided by law, its Articles of Incorporation and such Bylaws.
(c) Directors and Officers. The directors and officers of NABS in office
immediately prior to the Effective Time of the Merger shall continue to be the
directors and officers of the Surviving Corporation, to hold office as provided
in the Articles of Incorporation and Bylaws of the Surviving Corporation, unless
and until their successors shall have been elected or appointed and shall have
qualified or until they shall have been removed in the manner provided therein.
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(d) Name. The name of NABS as the Surviving Corporation following the
Merger shall remain unchanged and continue to be:
NORTH ARKANSAS BANCSHARES, INC.
ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After the transactions
contemplated herein have been approved by the shareholders of NABS and CAB, and
each other condition to the obligations of the Parties hereto has been satisfied
or, if lawfully permitted, waived by the Party or Parties entitled to the
benefits thereof, other than those conditions which are to be satisfied by
delivery of documents by any Party to any other Party, a closing (the "Closing")
will be held on the date (the "Closing Date") and at the time of day and place
referred to in Section 3.2 of this Reorganization Agreement. At the Closing the
Parties shall use their respective best efforts to deliver the certificates,
letters and opinions which constitute conditions to the Merger and each Party
will provide the other Parties with such proof or indication of satisfaction of
the conditions of such other Parties to consummate the Merger as such other
Parties may reasonably require. If all conditions to the obligations of each of
the Parties have been satisfied or lawfully waived by the Party entitled to the
benefits thereof, the Parties shall, at the Closing, duly execute Articles of
Merger for filing with the Secretary of State of the State of Arkansas and
promptly thereafter, NABS and CAB 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 Agreement to consummate the transactions
contemplated herein.
(b) Effective Time of the Merger. Upon the satisfaction of all conditions
to Closing, the Merger shall become effective on the date and at the time of
filing of Articles of Merger with the Secretary of State of the State of
Arkansas or at such later date and/or time as may be agreed upon by the Parties
and set forth in the Articles of Merger so filed (the "Effective Time of the
Merger").
(c) Shares of NABS Shall Remain Outstanding. Subsequent to the Effective
Time of the Merger, each share of $1.00 par value common stock of NABS (the
"NABS Common Stock") then issued and outstanding shall remain as the issued and
outstanding common stock of NABS as the Surviving Corporation.
(d) Conversion and Cancellation of Shares of CAB. As of the Effective Time
of the Merger, each share of $1.00 par value common stock of CAB (the "CAB
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 CAB Shares; Exchange Ratio. As of the
Effective Time of the Merger, the outstanding shares of CAB Common Stock held by
the CAB 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 CAB and shall automatically be
converted exclusively into, and constitute only the right of the CAB Record
Holders to receive in exchange for their shares of CAB Common Stock, whole
shares of UPC Common Stock and a cash payment in settlement of any remaining
fractional share of UPC Common Stock in accordance with the terms and conditions
of this Section 3.1(e). The shares of UPC Common Stock and the cash settlement
of any remaining fractional share of UPC Common Stock deliverable by UPC to the
CAB 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
CAB Common Stock issued and outstanding immediately prior to the Effective Time
of the Merger shall be four (4) shares of
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UPC Common Stock for each share of CAB Common Stock (based on an aggregate of no
more than 56,942 shares of CAB Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger and, for purposes of this paragraph,
counting all CAB Stock Options issued and outstanding immediately prior to the
Effective Time of the Merger as shares of CAB Common Stock) so converted and
exchanged (the "Exchange Ratio") (thus, in accordance with the Exchange Ratio,
at the Effective Time of the Merger, UPC would issue in the aggregate no more
than 227,768 shares of UPC Common Stock as Consideration in 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 CAB
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 3.1(f) hereof, which shall be calculated
based upon the Current Market Price Per Share of one (1) full share of UPC
Common Stock.
(i) DEFINITION OF "CURRENT MARKET PRICE PER SHARE." The "Current
Market Price Per Share" shall be the average 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 price per share of UPC Common Stock
and the average shall be based upon the "last" real time trades and number
of days on which the UPC Common Stock actually traded during the Pricing
Period.
(ii) EFFECTS OF DISSENTER'S RIGHTS ON THE EXCHANGE RATIO. Should any
CAB Record Holder perfect such CAB Record Holder's dissenter's rights
pursuant to the Arkansas Code and maintain the perfected status of such
dissenter's rights through the Closing Date, UPC and NABS shall have the
right, exercisable in their sole discretion, to either terminate this
Agreement or reduce the number of shares of UPC Common Stock to be
delivered by UPC hereunder by an amount sufficient to off-set against the
Consideration any amounts paid, or to be paid, by UPC in satisfaction of
such dissenter's rights.
(iii) EFFECT OF STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS
AND SIMILAR CHANGES IN THE CAPITAL OF UPC OR CAB. Should either UPC or CAB
effect any stock splits, reverse stock splits, stock dividends or similar
changes in their respective capital accounts subsequent to the date of this
Reorganization Agreement but prior to the Effective Time of the Merger, the
Exchange Ratio shall be adjusted in such a manner as the Board of Directors
of UPC shall deem in good faith to be fair and reasonable in order to give
effect to such changes.
(f) Mechanics of Payment of Purchase Price. As soon as reasonably
practicable after the Effective Time of the Merger, the Corporate Trust
Department of Union Planters National Bank, Memphis, Tennessee (the "Exchange
Agent") shall deliver to each of the CAB Record Holders such materials and
information deemed necessary by the Exchange Agent to advise the CAB Record
Holders of the procedures required for proper surrender of their certificates
evidencing and representing shares of the CAB Common Stock in order for the CAB
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 CAB Record Holders at the addresses set forth on a certified shareholder
list to be delivered by CAB to UPC at the Closing (the "Shareholder List"). As
soon as reasonably practicable thereafter, the CAB Record Holders of all of the
outstanding shares of CAB 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 CAB 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 CAB 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 CAB Common Stock, the
Exchange Agent shall, on or prior to the 30th day after
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the Effective Time of the Merger, mail to the former CAB Shareholders in
exchange for the certificate(s) surrendered by them, the Consideration to be
paid for each such CAB Shareholder's shares of CAB 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 CAB Common Stock of an CAB 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 CAB Record Holder's shares of CAB 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 CAB Record Holder's CAB Common Stock
shall have been surrendered as provided above, the Consideration payable to the
CAB Record Holder(s) of the cancelled shares as of any time after the Effective
Date shall not be paid to the CAB Record Holder(s) of such certificate(s) until
such certificates shall have been surrendered in the manner required. Each CAB
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 CAB 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 CAB Record Holder is entitled,
provided that each such CAB Record Holder shall deliver to UPC and to the
Exchange Agent: (i) a sworn statement certifying such loss or destruction and
specifying the circumstances thereof and (ii) a lost instrument bond in form
satisfactory to UPC and the Exchange Agent which has been duly executed by a
corporate surety satisfactory to UPC and the Exchange Agent, indemnifying the
Surviving Corporation, UPC, the Exchange Agent (and their respective successors)
to their satisfaction against any loss or expense which any of them may incur as
a result of such lost or destroyed certificates being thereafter presented. Any
costs or expenses which may arise from such replacement procedure, including the
premium on the lost instrument bond, shall be for the account of the CAB
Shareholder.
(g) Stock Transfer Books. At the Effective Time of the Merger, the stock
transfer books of CAB shall be closed and no transfer of shares of CAB Common
Stock shall be made thereafter.
(h) Effects of the Merger. As of the Effective Time of the Merger, the
separate existence of CAB shall cease, and CAB shall be merged with and into
NABS which, as the Surviving Corporation, shall thereupon and thereafter possess
all of the assets, rights, privileges, appointments, powers, licenses, permits
and franchises of the two merged corporations, whether of a public or a private
nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of both CAB and NABS.
(i) Transfer of Assets. At the Effective Time of the Merger, all rights,
assets, licenses, permits, franchises and interests of CAB and NABS in and to
every type of property, whether real, personal, or mixed, whether tangible or
intangible, and to choses in action shall be deemed to be vested in NABS as the
Surviving Corporation by virtue of the Merger becoming effective and without any
deed or other instrument or act of transfer whatsoever.
(j) Assumption of Liabilities. At the Effective Time of the Merger, the
Surviving Corporation shall become and be liable for all debts, liabilities,
obligations and contracts of CAB as well as those of NABS, whether the same
shall be matured or unmatured; whether accrued, absolute, contingent or
otherwise; and whether or not reflected or reserved against in the balance
sheets, other financial statements, books of account or records of CAB or NABS.
(k) Dissenting Shareholders' Rights. Any CAB Record Holder of shares of
CAB Common Stock who shall comply strictly with the provisions of Section
4-26-1007 et seq. of the Arkansas Code, shall be entitled to dissent from the
Merger and to seek those appraisal remedies afforded by the Arkansas Code. Such
an CAB Shareholder is referred to herein as an "CAB Dissenting Shareholder."
However, UPC and NABS shall not be obligated to consummate the Merger if CAB
Record Holders holding or controlling more than five percent (5%) of the shares
of the CAB Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger shall have perfected and maintained in perfected
status their dissenter's rights in
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accordance with the Arkansas Code and the perfected status of said dissenter's
rights shall have continued to the time of Closing.
(l) CAB Stock Options. As of the date of this Reorganization Agreement,
Mr. G. Robert Garner, Chairman of the Board of CAB, holds beneficially and of
record stock options (the "CAB Stock Options") to purchase 2,500 shares of CAB
Common Stock at a purchase price of $45.00 per share of CAB Common Stock (the
"Exercise Price"), there being no other options, rights, warrants, scrip or
similar rights issued and outstanding. At the Effective Time of the Merger, any
outstanding and unexercised CAB Stock Options held beneficially and of record by
Mr. G. Robert Garner to purchase shares of CAB Common Stock at the Exercise
Price shall cease to represent the right to purchase shares of CAB Common Stock
and shall automatically and without any further action on the part of anyone be
converted into the right of the holder of the CAB Stock Options to purchase from
UPC the equivalent number of shares of UPC Common Stock that the holder of the
CAB Stock Options would have been entitled to receive if, immediately prior to
the Effective Time of the Merger, the holder of the CAB Stock Options had
exercised his rights under the CAB Stock Options to purchase shares of CAB
Common Stock and subsequently, after the Effective time of the Merger, as a CAB
Record Holder, exchanged the shares of CAB Common Stock purchased under the CAB
Stock Options for shares of UPC Common Stock in accordance with the terms of
exchange and the Exchange Ratio set forth in Section 3.1(e) of this
Reorganization Agreement. UPC shall reserve on its books and records that number
of shares of UPC Common Stock necessary to satisfy the exercise of the converted
CAB Stock Options. The number of shares of UPC Common Stock deliverable by UPC
to the CAB Record Holders pursuant to the terms of Section 3.1(e) of this
Reorganization Agreement shall be reduced by the number of shares of UPC Common
Stock reserved on the books and records of UPC for satisfaction of the converted
CAB Stock Options.
The per share purchase price for each share of UPC Common Stock purchased
pursuant to the converted CAB Stock Option shall be the Exercise Price divided
by the Exchange Ratio as such terms are defined in this Reorganization
Agreement.
3.2 Time and Place of Closing. The Closing shall take place at 10:00 a.m.
on the Business Day next preceding the date on which the Effective Time of the
Merger is expected to occur, or at such other time as the Parties, acting
through their chief executive officers, presidents or chief financial officers,
may mutually agree (the "Closing Date"). The place of Closing shall be at Union
Planters Corporation, Administrative Center, Executive Offices (Fourth Floor),
7130 Goodlett Farms Parkway, Cordova, Shelby County, Tennessee 38018. The
Closing may be held at such other time and place as may be mutually agreed upon
by the Parties.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC
As of the date hereof and as of the Effective Time of the Merger, UPC and
NABS represent and warrant to CAB as follows:
4.1 Organization and Corporate Authority. UPC and NABS are corporations
duly organized, validly existing and in good standing under the laws of the
State of Tennessee and the State of Arkansas, respectively, and (i) have, in all
material respects, all requisite corporate power and authority to own, operate
and lease their material properties and carry on their businesses as they are
currently being conducted; (ii) are in good standing and are duly qualified to
do business in each jurisdiction where the character of their properties owned
or held under lease or the nature of their business makes such qualification
necessary; and (iii) have in effect all federal, state, local and foreign
governmental authorizations, permits and licenses necessary for them to own or
lease their properties and assets and to carry on their businesses as they are
currently being conducted. The corporate Charters and Bylaws of UPC and NABS, as
amended to date, are in full force and effect as of the date of this
Reorganization Agreement.
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4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach.
(a) UPC and NABS have all requisite corporate power and authority to
execute and deliver this Reorganization Agreement and the Plan of Merger and to
consummate the transactions contemplated hereby and thereby. This Reorganization
Agreement, and all other agreements contemplated to be executed in connection
herewith by UPC and/or NABS, have been (or upon execution will have been) duly
executed and delivered by UPC and/or NABS, have been (or upon execution will
have been) effectively authorized by all necessary action, corporate or
otherwise, and, other than the approval of UPC as sole shareholder of NABS and
UPC's Board of Directors, no other corporate proceedings on the part of UPC or
NABS are (or will be) necessary to authorize such execution and delivery, and
constitute (or upon execution will constitute) legal, valid and enforceable
obligations of UPC and NABS, subject, as to enforceability, to applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally, and to the application of equitable
principles and judicial discretion.
(b) The execution and delivery of this Reorganization Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of the
terms hereof will not result in a breach of any of the terms or provisions of,
or constitute a default under (or an event which, with the passage of time or
the giving of notice or both, would constitute a default under), or conflict
with, or permit the acceleration of any obligation under, any material mortgage,
lease, covenant, agreement, indenture or other instrument to which UPC or NABS
is a party or by which they or their property or any of their assets are bound;
the corporate Charters or Bylaws of UPC or NABS; or any material judgment,
decree, order or award of any court, governmental body or arbitrator by which
UPC or NABS is bound; or any material permit, concession, grant, franchise,
license, law, statute, ordinance, rule or regulation applicable to UPC or NABS
or their properties; or result in the creation of any lien, claim, security
interest, encumbrance, charge, restriction or right of any third party of any
kind whatsoever upon the property or assets of UPC or NABS, except that the
approval of Citibank, N.A. under an existing loan agreement and the Government
Approvals shall be required in order for UPC or NABS to consummate the
Acquisition.
4.3 No Legal Bar. Neither UPC nor NABS is a party to, subject to or bound
by any agreement, judgment, order, writ, prohibition, injunction or decree of
any court or other governmental body of competent jurisdiction which would
prevent the execution of this Reorganization Agreement by UPC or NABS, its
delivery to CAB and FIRST NATIONAL or the consummation of the transactions
contemplated hereby, and no action or proceeding is pending against UPC or NABS
in which the validity of this Reorganization Agreement, any of the transactions
contemplated hereby or any action which has been taken by any of the Parties in
connection herewith or in connection with any of the transactions contemplated
hereby is at issue.
4.4 Government Approvals. No consent, approval, order or authorization of,
or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by UPC or NABS in
connection with the execution and delivery of this Reorganization Agreement or
the consummation of the transactions contemplated hereby by UPC or NABS, except
for: (a) the prior approval of the Board of Governors of the Federal Reserve
System (the "Federal Reserve") of the Merger under the Bank Holding Company Act
of 1956, as amended; and (b) the prior approval of the Arkansas State Bank
Department ("ASBD") under Section 23-32-1801 et seq of the Arkansas Code and the
regulations promulgated by the ASBD thereunder (collectively, the "Government
Approvals").
4.5 Capitalization. (a) The authorized capital stock of UPC consists of
10,000,000 shares of preferred stock having no par value (the "UPC Preferred
Stock"), and 50,000,000 shares of common stock having a par value of $5.00 per
share (the "UPC Common Stock"). As of December 31, 1992, 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 2,200,000 shares of 8%
Cumulative, Convertible Preferred Stock, Series E. On January 4, 1993, UPC
issued an additional 331,741 shares of its Series E Preferred Stock in
connection with its acquisition of a 44% equity interest in the Bank of East
Tennessee. 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
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UPC and Union Planters National Bank as Rights Agent (the "UPC Share Purchase
Rights Agreement"). As of December 31, 1992, 16,788,758 UPC Common Stock were
validly issued and outstanding.
Except as previously described in this Section and except as described in
Schedule 4.5 to this Reorganization Agreement, as of the date hereof, UPC is the
holder, directly or indirectly, of all of the outstanding capital stock of its
Subsidiaries except for directors' qualifying shares and except for
approximately 38% of the outstanding shares of common stock of the Bank of East
Tennessee which UPC has contracted to acquire in a separate and independent
transaction.
(b) The authorized capital stock of NABS consists of 1,000 shares of common
stock having a par value of $1.00 per share (the "NABS Common Stock") and no
preferred stock. As of the date hereof, NABS had issued all 1,000 shares of the
authorized NABS Common Stock to UPC. Therefore, UPC is the record holder and
beneficial owner of all of the NABS Common Stock outstanding.
4.6 UPC Financial Statements. UPC has delivered and, to the extent
reference is made to financial statements not yet available or capable of
development, will deliver to CAB true and complete copies of: (i) UPC's audited
Consolidated Financial Statements for the calendar years ended December 31, 1991
and 1992 (as originally issued, but without giving effect to subsequently
effected business combinations accounted for as poolings of interests); (ii)
UPC's unaudited consolidated financial statements for each of the calendar
quarters ending in calendar year 1993 and thereafter, ending prior to the
Closing Date; and (iii) upon issuance thereof, UPC's audited Consolidated
Financial Statements for the calendar year ending December 31, 1993. Such
financial statements and the notes thereto present fairly, or will present
fairly when issued, in all material respects, the consolidated financial
position of UPC at the respective dates thereof and the consolidated results of
operations and consolidated cash flow of UPC for the periods indicated, and in
each case in conformity with GAAP consistently applied and maintained.
4.7 Exchange Act Filings. 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.
4.8 The UPC Common Stock. All shares of UPC Common Stock to be issued by
UPC and delivered to the CAB Record Holders in exchange for all of the CAB
Common Stock held by the CAB Record Holders 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 Intentionally Omitted.
4.10 Disclosure. The information concerning, and the representations or
warranties made by UPC and/or NABS as set forth in this Reorganization
Agreement, or in any document, statement, certificate or other writing furnished
or to be furnished by UPC and/or NABS to CAB and FIRST NATIONAL pursuant hereto,
do not and will not contain any untrue statement of a material fact or omit and
will not omit to state a material fact required to be stated herein or therein
which is necessary to make the statements and facts contained herein or therein,
in light of the circumstances under which they were or are made, not false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available to CAB and FIRST NATIONAL by UPC and/or NABS pursuant hereto were or
will be complete and accurate copies of such documents.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF CAB AND FIRST NATIONAL
Both as of the date hereof and as of the Effective Time of the Merger,
FIRST NATIONAL and CAB represent and warrant to UPC and NABS as follows:
5.1 Organization and Qualification of CAB and Subsidiaries. CAB is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Arkansas and (a) has all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as it is
currently being conducted; (b) is in good standing and is duly qualified to do
business in each jurisdiction where the character of its properties owned or
held under lease or the nature of its business makes such qualification
necessary; and (c) is a registered bank holding company with the Federal
Reserve. Each CAB Subsidiary is duly chartered, validly existing and in good
standing under the laws of the state or jurisdiction of its incorporation and
(a) has all requisite corporate power and authority to own, operate and lease
its properties and to carry on its business as it is currently being conducted
and (b) is in good standing and is duly qualified to do business in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its business makes such qualification necessary. CAB 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. FIRST NATIONAL is a national banking
association duly organized, validly existing and is in good standing under the
laws of the United States of America and engages only in activities (and holds
properties only of the types) permitted by the United States Code and the rules
and regulations promulgated by the Comptroller hereunder for national banks.
FIRST NATIONAL's deposit accounts are insured by the FDIC to the fullest extent
permitted under applicable law.
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach.
(a) CAB and FIRST NATIONAL have all requisite power and authority to
execute and deliver this Reorganization Agreement and the Plan of Merger and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Reorganization Agreement and the Plan of Merger and the
consummation of the proposed transaction have been duly authorized by majorities
of the entire Boards of Directors of both CAB and FIRST NATIONAL and, except for
the approval of the CAB Shareholders, no other corporate proceedings on the part
of CAB 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 FIRST
NATIONAL and CAB have been (or upon execution will have been) duly executed and
delivered by FIRST NATIONAL and CAB and constitute (or upon execution will
constitute) legal, valid and enforceable obligations of FIRST NATIONAL and CAB,
subject, as to enforceability, to applicable bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to the application
of equitable principles and judicial discretion.
(b) The execution and delivery of this Reorganization Agreement and the
Plan of Merger, the consummation of the transaction contemplated hereby and
thereby, and the fulfillment of the terms hereof and thereof will not result in
a violation or breach of any of the terms or provisions of, or constitute a
default under (or an event which, with the passage of time or the giving of
notice, or both, would constitute a default under), or conflict with, or permit
the acceleration of, any obligation under any mortgage, lease, covenant,
agreement, indenture or other instrument to which CAB or any CAB Subsidiary is a
party or by which CAB or any CAB Subsidiary is bound; the Charter or Bylaws of
FIRST NATIONAL or CAB; or any judgment, decree, order, regulatory letter of
understanding or award of any court, governmental body, authority or arbitrator
by which CAB or any CAB Subsidiary is bound; or any permit, concession, grant,
franchise, license, law, statute, ordinance, rule or regulation applicable to
CAB or any CAB Subsidiary or the properties of any of them; or result in the
creation of any lien, claim, security interest, encumbrance, charge, restriction
or right of any third party of any kind whatsoever upon the properties or assets
of CAB or any CAB Subsidiary.
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5.3 No Legal Bar. Neither FIRST NATIONAL nor CAB 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 which would prevent the execution of this Reorganization
Agreement or the Plan of Merger by FIRST NATIONAL or CAB, the delivery thereof
to UPC and NABS, or the consummation of the transaction contemplated hereby and
thereby, and no action or proceeding is pending against FIRST NATIONAL or CAB 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 FIRST NATIONAL or
CAB 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
FIRST NATIONAL or CAB in order to avoid forfeiture or impairment of such rights.
5.5 Compliance With Law. CAB and all CAB Subsidiaries hold all licenses,
franchises, permits and authorizations necessary for the lawful conduct of their
respective businesses, and CAB and FIRST NATIONAL 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 CAB's or FIRST NATIONAL's properties or over any other part of CAB's or
FIRST NATIONAL'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 CAB and FIRST NATIONAL subsequent to the
Closing of the transactions contemplated herein without any consent or approval.
Neither CAB nor any CAB Subsidiary has received notice of any proceeding for the
suspension or revocation of any such license, franchise, permit, or
authorization and no such proceeding is pending or has been threatened by any
governmental authority.
5.6 Charter Documents. Included in Schedule 5.6 hereto are true and
correct copies of the Articles and Bylaws of CAB and FIRST NATIONAL,
respectively. The Articles and Bylaws of CAB and FIRST NATIONAL, as amended to
date, are in full force and effect.
5.7 CAB Financial Statements. Accompanying Schedule 5.7 hereto are true
copies of the audited consolidated balance sheets of CAB as of December 31,
1992, the unaudited consolidated balance sheets of CAB as of December 31, 1991,
and selected financial data for CAB as of December 31, 1990, 1989 and 1988, and
the related consolidated statements of income and changes in stockholders'
equity and cash flows of CAB and FIRST NATIONAL for the years ended December 31,
1992, 1991 and 1990 (the "Audited Financial Statements of CAB") and the
comparative interim (or annual) financial statements for any subsequent quarter
(or year) ending after December 31, 1992 and prior to the Closing Date. Such
financial statements (i) were (or will be) prepared from the books and records
of CAB and FIRST NATIONAL; (ii) were (or will be) prepared in accordance with
generally accepted accounting principles consistently applied; (iii) accurately
present (or will present) CAB's and FIRST NATIONAL's consolidated financial
condition and the consolidated results of its operations, changes in
stockholders' equity and cash flows as at the relevant dates thereof and for the
periods covered thereby; (iv) do contain or reflect (or will contain and
reflect) all necessary adjustments and accruals for an accurate presentation of
CAB's and FIRST NATIONAL's consolidated financial condition and the consolidated
results of CAB's and FIRST NATIONAL'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, 1992 (the "Balance Sheet Date") there has not been:
(a) any transaction by CAB or FIRST NATIONAL 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 CAB or FIRST NATIONAL;
(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 CAB or FIRST NATIONAL or their
future use and operation by CAB or FIRST NATIONAL;
(d) any acquisition or disposition by CAB or FIRST NATIONAL of any
property or asset of CAB or FIRST NATIONAL, whether real or personal,
having a fair market value, singularly or in the aggregate, in an amount
greater than Twenty Thousand Dollars ($20,000), except in the ordinary
course of business and in conformity with past practice;
(e) any mortgage, pledge or subjection to lien, charge or encumbrance
of any kind on any of the respective properties or assets of CAB or FIRST
NATIONAL, 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 CAB or FIRST NATIONAL, to which CAB or FIRST
NATIONAL is a party which would have an adverse effect upon the financial
condition or operations of CAB or FIRST NATIONAL.
(g) any increase in, or commitment to increase, the compensation
payable or to become payable to any officer, director, employee or agent of
CAB or FIRST NATIONAL, or any bonus payment or similar arrangement made to
or with any of such officers, directors, employees or agents, other than
routine increases made in the ordinary course of business not exceeding the
greater of ten percent (10%) per annum or $6,000 for any of them
individually;
(h) any incurring of, assumption of, or taking of, by CAB or FIRST
NATIONAL, 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 CAB or FIRST NATIONAL, 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 CAB or FIRST
NATIONAL 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 CAB or FIRST NATIONAL to any Officer, director or 2% shareholder of CAB
or FIRST NATIONAL or any Affiliate of CAB or FIRST NATIONAL; or to any
member of the immediate family of such Officer, director or 2% shareholder
of CAB or FIRST NATIONAL or any Affiliate of CAB; or to any Person in which
such Officer, director or 2% shareholder directly or indirectly owns
beneficially or of record ten percent (10%) or more of any class of equity
securities in the case of a corporation, or of any equity interest, in the
case of a partnership or other non-corporate entity; or to any trust or
estate in which such Officer, director or 2% shareholder has a ten percent
(10%) or more beneficial interest; or as to which such Officer, director or
2% shareholder serves as a trustee or in a similar capacity. As used in
this Section, "Officer" shall 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.
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5.9 Deposits. None of the FIRST NATIONAL Deposits is a "brokered" Deposit
or subject to any encumbrance, legal restraint or other legal process. Except as
set forth in Schedule 5.9, no portion of the Deposits represents a Deposit by
any Affiliate of CAB or FIRST NATIONAL.
5.10 Properties. Except as described in Schedule 5.10 hereto or adequately
reserved against in the CAB Financial Statements, CAB and each CAB Subsidiary
has good and marketable title free and clear of all material liens,
encumbrances, charges, defaults, or equities of whatever character to all of the
material properties and assets, tangible or intangible, reflected in the CAB
Financial Statements as being owned by CAB or any CAB Subsidiary as of the dates
thereof. All buildings, and all fixtures, equipment, and other property and
assets that are material to the business of CAB and its Subsidiaries on a
consolidated basis, held under leases or subleases by CAB or any CAB 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 CAB Companies provide adequate
coverage against loss, and the fidelity bonds in effect as to which any of the
CAB Companies is a named insured are believed to be sufficient.
5.11 CAB Subsidiaries. Schedule 5.11 hereto lists all of the active and
inactive CAB Subsidiaries (including any FIRST NATIONAL Subsidiary) as of the
date of this Reorganization Agreement and describes generally the business
activities conducted, or permitted to be conducted, by each CAB Subsidiary. No
equity securities of any of the CAB Subsidiaries are or may become required to
be issued (other than to CAB or FIRST NATIONAL) 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 CAB Subsidiary, and there are no
contracts, commitments, understandings, or arrangements by which any CAB
Subsidiary is bound to issue (other than to CAB) any additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. All of the shares of capital stock of
each CAB Subsidiary held by CAB or by any CAB Subsidiary are fully paid and
nonassessable and are owned by CAB or such CAB 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 CAB's or FIRST NATIONAL's fixed assets and
equipment having a net book value in excess of Five Thousand Dollars ($5,000)
included in the Fixed Assets is in good operating condition and repair, normal
wear and tear excepted.
5.13 Tax Matters. Except as described in Schedule 5.13 hereto:
(a) all federal, state, local, and foreign tax returns required to be
filed by or on behalf of CAB and each CAB 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 CAB or any CAB Subsidiary except as fully reserved
for in the CAB Financial Statements. All taxes, interest, additions, and
penalties due with respect to completed and settled examinations or
concluded litigation have been paid.
(b) Neither CAB nor any CAB 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 CAB and all CAB Subsidiaries for all periods
through and including December 31, 1992, has been made and is reflected on
the December 31, 1992 financial statements included in the CAB Financial
Statements, and have been and will continue to be made with respect to
periods ending after December 31, 1992.
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(d) Deferred taxes of CAB and each CAB Subsidiary have been and will
be provided for in accordance with GAAP.
(e) To the best knowledge of CAB and FIRST NATIONAL, neither the
Internal Revenue Service nor any foreign, state, local or other taxing
authority is now asserting or threatening to assert against CAB or any CAB
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 CAB 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 CAB or any CAB Subsidiary, either have been paid in
full, or have been properly accrued and reflected in CAB's Financial
Statements 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 CAB or any CAB Subsidiary, or to the
best knowledge of CAB or FIRST NATIONAL threatened against or affecting CAB, any
CAB Subsidiary or any of their assets, before any court or arbitrator or any
governmental body, agency or official that (i) would, if decided against CAB or
the CAB Subsidiary, have a material adverse impact on the business, properties,
assets, liabilities, condition (financial or other) or prospects of CAB or FIRST
NATIONAL and that are not reflected in the Financial Statements or (ii) has been
brought by or on behalf of any employee employed or formerly employed by CAB or
any CAB Subsidiary.
5.15 Hazardous Materials.
(a) CAB and all CAB Subsidiaries have obtained all permits, licenses and
other authorizations which are required to be obtained by CAB 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 CAB or any CAB Subsidiary is in compliance with the
terms and conditions of all of such permits, licenses and authorizations, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any Applicable Environmental Laws or in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, except as described in detail in Schedule
5.15 hereto. For purposes hereof, the following terms shall have the following
meanings:
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all federal, state, local and
municipal environmental laws, rules or regulations to the extent applicable to
the Property, including, but not limited to, (a) the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et seq.
("CERCLA"); (b) the Resource Conservation and Recovery Act, 42 U.S.C. Section
6901 et seq. "RCRA"; (c) the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; (d) the Clean Air Act, 42 U.S.C. Section 7401 et seq.; (e)
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1471 et seq.; (f)
the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; (g) the
Emergency Planning and Community Right-to-Know Act, 42 U.S.C. Section 11001 et
seq.; (h) the National Environmental Policy Act, 42 U.S.C. Section 4321 et seq.;
(i) the Rivers and Harbours Act of 1899, 33 U.S.C. Section 401 et seq.; (j) the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.; (k) the Safe
Drinking Water Act, 42 U.S.C. Section 300(f) et seq.; (l) the Oil Pollution Act
of 1990, 33 U.S.C. Section 2701 et seq.; (m) the Arkansas Water and Air
Pollution Control Act, Section 8-4-101 et seq. of the Arkansas Code of 1987
Annotated; (n) the Arkansas Solid Waste Management Act, Section 8-6-201 et seq.
of the Arkansas Code of 1987 Annotated; (o) the Hazardous Waste Management Act
of 1979, Section 8-7-301 et seq. of the Arkansas Code of 1987 Annotated; (p) the
Arkansas Resource Reclamation Act of 1979, Section 8-7-301 et seq. of the
Arkansas Code of 1987 Annotated; (q) the Emergency Response Fund Act, Section
8-7-401 et seq. of the Arkansas Code of 1987 Annotated; (r) Remedial Act Trust
Fund Act, Section 8-7-501 et seq. of the Arkansas Code of 1987 Annotated; (s)
the Arkansas statute dealing with Regulated Substance Storage Tanks, 8-7-801 et
seq. of the Arkansas Code of 1987 Annotated; (t) the Petroleum Storage Tank
Trust Fund Act, Sections 8-7-901 et seq. of the Arkansas Code of 1987 Annotated;
(u) any amendments to the foregoing Acts
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as adopted from time to time on or before the Closing; and (v) any rule,
regulation, order, injunction, judgment, declaration or decree implementing or
interpreting any of the foregoing Acts, as amended.
"HAZARDOUS SUBSTANCES" shall mean any substance, material, waste, or
pollutant that is now (or prior to the Closing) listed, defined, characterized
or regulated as hazardous, toxic or dangerous under or pursuant to any statute,
law, ordinance, rule or regulation of any federal, state, regional, county or
local governmental authority having jurisdiction over the Property of CAB or any
CAB 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 CAB or a CAB 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 CAB or
any CAB Subsidiary to have any permit, license or authorization required in
connection with the conduct of the business of CAB or any CAB 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 CAB
or any Affiliate of CAB 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 CAB's or
any CAB Subsidiary's occupancy thereof, or during the occupancy thereof by
any assignee or sublessee of CAB or any CAB 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 CAB nor any Affiliate of CAB 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, CAB or
any Affiliate of CAB 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 CAB or any Affiliate of CAB relating to the
Property and no Property is listed or proposed for listing on the National
Priority List promulgated pursuant to CERCLA, on CERCLIS or on any similar state
list of sites requiring investigation or clean-up.
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(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 CAB, 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 CAB or any Affiliate of CAB in
relation to any Property, which have not been made available to UPC.
(h) Neither CAB nor FIRST NATIONAL is aware of any facts which might
suggest that CAB or any CAB Subsidiary has engaged in any management practice
with respect to any of its past or existing borrowers which could reasonably be
expected to subject CAB or any CAB 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. CAB and FIRST NATIONAL have paid all material amounts due
and payable under any insurance policies and guaranties applicable to CAB and
FIRST NATIONAL and CAB's or FIRST NATIONAL's assets and operations; all such
insurance policies and guaranties are in full force and effect; and CAB and
FIRST NATIONAL and all of CAB's and FIRST NATIONAL'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 CAB or any CAB 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 CAB or any CAB 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 CAB or any CAB 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 CAB nor any CAB 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. CAB and each CAB 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 CAB and each CAB 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 CAB
and each CAB 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 CAB or any CAB Subsidiary pending before the National Labor Relations
Board or any state or local agency; pending labor strike or other labor trouble
affecting CAB or any CAB Subsidiary; labor grievance pending against CAB or any
CAB Subsidiary; pending representation question respecting the employees of CAB
or any CAB Subsidiary; pending arbitration proceedings arising out of or under
any collective bargaining agreement to which CAB or any CAB Subsidiary is a
party; or to the best knowledge of CAB, any basis for which a claim may be made
under any collective bargaining agreement to which CAB or any CAB Subsidiary is
a party.
5.18 Records and Documents. The Records of FIRST NATIONAL are and will be
sufficient to enable FIRST NATIONAL to continue conducting its business as a
national banking association under similar standards as FIRST NATIONAL has
heretofore conducted such business.
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5.19 Capitalization of CAB. The authorized capital stock of CAB consists
of 100,000 shares of common stock having a par value of $1.00 per share (the
"CAB Common Stock") and no shares of preferred stock or any other class of
equity security. As of the date of this Reorganization Agreement, 54,442 shares
of CAB Common Stock were issued and outstanding and no CAB Common Stock was held
by CAB as treasury stock. All of the outstanding CAB Common Stock is validly
issued, fully-paid and nonassessable and has not been issued in violation of any
preemptive rights of any CAB Shareholder. Except as described in Section 3.1(l)
of this Reorganization Agreement or as described on Schedule 5.19 hereto, as of
the date hereof, there are no outstanding securities or other obligations which
are convertible into CAB Common Stock or into any other equity or debt security
of CAB, 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 CAB Common Stock or any other equity
or debt security of CAB. Accordingly, immediately prior to the Effective Time of
the Merger, there will be not more than 56,942 shares of CAB Common Stock issued
and outstanding (for purposes of this paragraph, counting all CAB Stock Options
issued and outstanding immediately prior to the Effective Time of the Merger as
shares of CAB Common Stock) so converted and exchanged. Except as set forth in
Schedule 5.19 hereto, CAB beneficially owns and is the record holder of, and has
good and freely transferable title to, all of the 52,000 shares of FIRST
NATIONAL Common Stock outstanding, recorded on the books and Records of FIRST
NATIONAL 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 CAB to
freely vote such stock in support of the transactions contemplated herein.
5.20 Sole Agreement. With the exception of this Reorganization Agreement,
neither CAB, nor FIRST NATIONAL, 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 CAB or
FIRST NATIONAL or any Subsidiary of either (or any of their assets) in any
business combination of any kind; or any agreement obligating CAB or FIRST
NATIONAL to issue or sell or authorize the sale or transfer of CAB Common Stock
or the capital stock of FIRST NATIONAL. 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 CAB outstanding, except
for shares of CAB 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 CAB or FIRST NATIONAL, or
contracts, commitments, understandings, or arrangements by which CAB or FIRST
NATIONAL is or may be bound to issue additional shares of their capital stock or
options, warrants, or rights to purchase or acquire any additional shares of
their capital stock. There are no (nor will there be at the Effective Time of
the Merger any) contracts, commitments, understandings, or arrangements by which
CAB or any CAB Subsidiary is or may be bound to transfer or issue to any third
party any shares of the capital stock of any CAB 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 CAB to vote
or to dispose of any such shares.
5.21 Disclosure. The information concerning, and representations and
warranties made by, CAB and FIRST NATIONAL set forth in this Reorganization
Agreement, or in the Schedules of Exceptions of CAB hereto, or in any document,
statement, certificate or other writing furnished or to be furnished by CAB or
FIRST NATIONAL to UPC and NABS pursuant hereto, does not and will not contain
any untrue statement of a material fact or omit and will not omit to state a
material fact required to be stated herein or therein necessary to make the
statements and facts contained herein or therein, in light of the circumstances
in which they were or are made, not false or misleading. Copies of all documents
heretofore or hereafter delivered or made available to UPC by CAB or FIRST
NATIONAL 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 CAB nor any CAB Subsidiary has any obligation or liability
(contingent or otherwise) that is material to the financial condition or
operations of CAB or any CAB Subsidiary, or that, when combined with all similar
obligations or
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liabilities, would be material to the financial condition or operations of CAB
or any CAB Subsidiary (i) except as disclosed in the CAB Financial Statements
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 CAB nor any CAB
Subsidiary has incurred or paid any obligation or liability which would be
material to the financial condition or operations of CAB or such CAB 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 CAB or any CAB Subsidiary.
5.23 Allowance for Possible Loan or ORE Losses. The allowance for possible
loan losses shown on the consolidated CAB Financial Statements is (with respect
to periods ended on or before December 31, 1992) or will be (with respect to
periods ending subsequent to December 31, 1992) adequate in all respects to
provide for anticipated losses inherent in Loans outstanding or for commitments
to extend credit or similar off-balance-sheet items (including accrued interest
receivable) as of the dates thereof. Except as disclosed in Schedule 5.23
hereto, as of the date thereof, neither CAB nor FIRST NATIONAL has any Loan
which has been criticized or classified by its bank examiners or by its
independent auditors as "Other Assets Especially Mentioned," "Substandard,"
"Doubtful" or "Loss" or as a "Potential Problem Loan."
The allowance for possible losses on other real estate ("ORE") shown on the
consolidated CAB Financial Statements is (with respect to periods ended on or
before December 31, 1992) or will be (with respect to periods ending subsequent
to December 31, 1992) adequate in all respects to provide for anticipated losses
inherent in ORE owned or held by CAB or any CAB Subsidiary and the net book
value of ORE on the Balance Sheet of CAB Financial Statements is the net
realizable value of the ORE in accordance with Statement of Position 92-3.
5.24 Compliance with Laws. CAB and each CAB 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 CAB or any CAB
Subsidiary, or which would or could reasonably be expected to subject CAB
or any CAB 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 CAB or any CAB
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 CAB or any CAB Subsidiary, (ii) threatening
to revoke any license, franchise, permit, or governmental authorization
which is material to the financial condition or operations of CAB or any
CAB Subsidiary, or (iii) requiring CAB or any CAB Subsidiary to enter into
a cease and desist order, consent, agreement, or memorandum of
understanding.
5.25 Employee Benefit Plans. (a) CAB has previously provided to UPC true
and complete copies of each "employee benefit plan," as defined in ERISA, which,
to the best of its knowledge, is subject to any provision of ERISA and covers
any employee, whether active or retired, of CAB or any CAB Subsidiary, together
with the most recent annual report (Form 5500 including, if applicable, Schedule
B thereto) prepared in connection with any such plan. Such plans are hereinafter
referred to collectively as the "Employee Plans", and each such Employee Plan is
listed in Schedule 5.25(a) hereto. Each Employee Plan which is intended to be
qualified under Section 401(a) of the Internal Revenue Code, is so qualified.
Except as disclosed in Schedule 5.25(a) hereto, all Employee Plans were in
effect for substantially all of calendar year 1992 and there has been no
material amendment thereof (other than amendments required to comply with
applicable law) or material increase in the cost thereof or benefits thereunder
on or after January 1, 1993.
(b) CAB has furnished to UPC true and complete copies and descriptions of
each plan or arrangement maintained or otherwise contributed to by CAB or any
CAB Subsidiary which is not an Employee Plan and
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which (exclusive of base salary and base wages) provides for any form of current
or deferred compensation, bonus, stock option, profit sharing, benefit,
retirement, incentive, group health or insurance, welfare plan (including, but
not limited to, "employee welfare benefit plans" as that term is defined in
ERISA), or similar plan or arrangement for the benefit of any employee or class
of employees, whether active or retired, of CAB or any CAB Subsidiary (such
plans and arrangements being collectively referred to herein as "Benefit
Arrangements" and all such Benefit Arrangements of CAB and CAB's Subsidiaries
are listed on Schedule 5.25(b) hereto). Except as disclosed in Schedule 5.25(b)
hereto, there are no other Benefit Arrangements of the CAB Companies and all
Benefit Arrangements which are in effect were in effect for substantially all of
calendar year 1992. Except as disclosed in Schedule 5.25(b) hereto or as was
required by applicable law, there has been with respect to Benefit Arrangements
no material amendment thereof or material increase in the cost thereof or
benefits payable thereunder on or after January 1, 1993, and no material
increase in the base salary and wage levels of CAB or any CAB Subsidiary and
except in the ordinary course of business, no change in the terms or conditions
of employment (including severance benefits) compared, in each case, to those
prevailing for substantially all of calendar year 1992. Except as disclosed in
Schedule 5.25(b) hereto, there has been no material increase in the compensation
of or benefits payable to any senior executive employee of CAB or any CAB
Subsidiary since January 1, 1993, nor any employment, severance or similar
contract entered into with any such employee, nor any amendment to any such
contract, since January 1, 1993. Except as disclosed in Schedule 5.25(b) hereto,
there is no contract, agreement or Benefit Arrangement covering any employee of
CAB or any CAB Subsidiary which individually or collectively could give rise to
the payment of any amount which would constitute an "excess parachute payment,"
as such term is defined in Section 280(G) of the Internal Revenue Code.
(c) With respect to all Employee Plans and Benefit Arrangements, CAB and
each CAB Subsidiary are in substantial compliance with the requirements
prescribed by any and all statutes, governmental or court orders, or rules or
regulations currently in effect, including but not limited to ERISA and the
Internal Revenue Code, applicable to such Employee Plans or Benefit
Arrangements. No condition exists that could constitute grounds for the
termination of any Employee Plan under Section 4042 of ERISA; no "prohibited
transaction," as defined in Section 406 of ERISA and Section 4975 of the
Internal Revenue Code, has occurred with respect to any Employee Plan, or any
other employee benefit plan maintained by CAB or any CAB Subsidiary which is
covered by Title I of ERISA, which could subject any person (other than a person
for whom neither CAB nor any CAB Subsidiary is directly or indirectly
responsible) to liability under Title I of ERISA or to the imposition of any tax
under Section 4975 of the Internal Revenue Code which could have an adverse
effect on the business, assets, financial condition, results of operations or
prospects of any CAB Company; no Employee Plan subject to Part III of Subtitle B
of Title I of ERISA or Section 412 of the Internal Revenue Code, or both, has
incurred any "accumulated funding deficiency," as defined in Section 412 of the
Code, whether or not waived; neither CAB nor any CAB Subsidiary has failed to
make any contribution or pay any amount due and owing as required by the terms
of any Employee Plan or Benefit Arrangement; no Benefit Arrangement has
incurred, nor does any Benefit Arrangement have, any unfunded plan liabilities,
whether or not waived; neither CAB nor any CAB Subsidiary has incurred or
expects to incur, directly or indirectly, any liability under Title IV of ERISA
arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA
which could constitute a liability of UPC or any of its Affiliates (including
CAB or any CAB Subsidiary) at or after the Effective Time of the Merger. Except
as disclosed in Schedule 5.25(c) hereto, to the best knowledge, information and
belief of CAB, no condition exists that could subject any person (other than a
person for whom neither CAB nor any CAB Subsidiary is directly or indirectly
responsible) to liabilities, damages, losses, taxes or sanctions that arise
under Sections 106(b), 162(i) and 4980B of the Internal Revenue Code or Sections
601 through 608 of ERISA for failure to comply with the continuation health care
coverage requirements of Sections 162(k) and 4980B of the Internal Revenue Code
with respect to any current or former employee, including their beneficiaries,
of CAB or any CAB Subsidiary.
(d) Except as described in Schedule 5.25(d) hereto, each Employee Plan or
Benefit Arrangement and each personal services contract, fringe benefit,
consulting contract or similar arrangement with or for the benefit of any
officer, director, employee or other person can be terminated by FIRST NATIONAL
(or by NABS as the Surviving Corporation) within a period of 30 days following
the Effective Time of the Merger,
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without payment of any amount as a penalty, bonus, premium, severance pay or
other compensation for such termination. Any amounts representing or
attributable to overfunding for a CAB defined benefit plan may be returned to
CAB or any CAB Subsidiary in accordance with the respective plan's arrangements
as described in the respective plan's organic documents.
5.26 Material Contracts. Except as reflected in the CAB Financial
Statements, or as described in Schedule 5.26 hereto, neither CAB nor any CAB
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 CAB as of the date of this
Reorganization Agreement that has not already been filed as an exhibit to CAB's
Form 10-K filed for the fiscal year ended December 31, 1992, or in any other SEC
Document filed prior to the date of this Reorganization Agreement.
5.27 Material Contract Defaults. Neither CAB nor any CAB 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 CAB or any CAB Subsidiary, and there has
not occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
5.28 Reports. Since January 1, 1988, CAB and FIRST NATIONAL 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 Comptroller of the
Currency; (ii) the FDIC; (iii) the Federal Reserve, including, but not limited
to, Annual Reports on Form F.R. Y-6, Quarterly Reports on Form F.R. Y-9SP and
Reports on Forms F.R. 2900 and FFIEC 034 and proxy statements; and (iv) any
other applicable federal or state securities or banking authorities (except, in
the case of federal or state securities authorities, filings that are not
material). As of their respective dates, each of such reports and documents,
including the financial statements, exhibits, and schedules thereto, complied in
all material respects with all of the requirements of their respective forms and
all of the statutes, rules, and regulations enforced or promulgated by the
Regulatory Authority with which they were filed. All such reports were true and
complete in all material respects and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. CAB has previously provided to UPC true
and correct copies of all such reports filed by CAB or FIRST NATIONAL after
January 1, 1988.
5.29 Statements True and Correct. None of the information prepared by, or
on behalf of, CAB or any CAB Subsidiary regarding CAB, FIRST NATIONAL or any
other CAB Subsidiary included or to be included in the Proxy Statement to be
mailed to CAB'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 CAB, 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
CAB or any CAB 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.
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ARTICLE 6
COVENANTS OF UPC
6.1 Regulatory Approvals. Within a reasonable time after execution of this
Reorganization Agreement, UPC shall file any and all applications with the
appropriate government Regulatory Authorities in order to obtain the Government
Approvals and shall take such other actions as may be reasonably required to
consummate the transactions contemplated in this Reorganization Agreement and
the Plan of Merger with reasonable promptness. UPC shall pay all fees and
expenses arising in connection with such applications for regulatory approval.
UPC agrees to provide the appropriate Regulatory Authorities with the
information required by such authorities in connection with UPC's applications
for regulatory approval and UPC agrees to use its best efforts to obtain such
regulatory approvals, and any other approvals and consents as may be required
for the Closing, as promptly as practicable; provided, however, that nothing in
this Section 6.1 shall be construed to obligate UPC to take any action to meet
any condition required to obtain prior regulatory approval if UPC shall, in
UPC's sole discretion, deem such condition to be unreasonable or to constitute a
significant impediment upon UPC's ability to carry on its business or
acquisition programs or to require UPC to increase UPC's capital ratios to
amounts in excess of the Federal Reserve's minimum capital ratio guidelines
which may be in effect from time to time.
6.2 Registration of UPC Common Stock under the Securities Laws. UPC shall
cooperate with CAB in the preparation of the CAB 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 CAB Record Holders in payment of the Consideration to be registered under
the 1933 Act and to be duly qualified under appropriate state securities laws.
UPC shall also list for trading on the New York Stock Exchange the UPC Common
Stock. Such registration, qualification and listing shall be effected prior to
the Closing.
6.3 Employee Benefits. Following the consummation of the transactions
contemplated herein, UPC shall not be obligated to make further contributions to
any of the Employee Plans or Benefit Arrangements of CAB or the CAB Subsidiaries
and all employees of CAB and the CAB Subsidiaries immediately prior to the
Effective Time of the Merger who shall continue as employees of NABS 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 CAB or with any CAB Subsidiary prior to the Effective Time of the
Merger by such former CAB 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 CAB and CAB's
Subsidiaries in the employee benefit plans maintained by UPC or UPC's
Subsidiaries; provided, however, during any such postponement period, The CAB
Employee Plans and all related employee benefit plans shall continue in full
force and effect, except as expressly modified or amended by the terms of this
Reorganization Agreement, or until such time as the plan is replaced by a
benefit plan maintained by UPC.
ARTICLE 7
COVENANTS OF CAB AND FIRST NATIONAL
7.1 Proxy Statement; CAB Shareholder Approval. CAB 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, 1993, for the purpose of (i)
approving this Reorganization Agreement and the Plan of Merger, and (ii) such
other related matters as it deems appropriate. In connection with the
Shareholders Meeting, (i) CAB 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
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appropriate Regulatory Authority; shall mail or cause to be mailed such Proxy
Statement to its shareholders and shall provide UPC the opportunity to review
and comment on the Proxy Statement at least five (5) business days prior to the
filing of the Proxy Statement with the Regulatory Authorities for prior review
and at least five (5) business days prior to the mailing of the Proxy Statement
to the CAB 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 CAB shall recommend (subject to compliance with their legal and
fiduciary duties as advised by counsel) to CAB Shareholders the approval of this
Reorganization Agreement and the Plan of Merger; and (iv) CAB shall use its best
efforts, subject to compliance with its legal and fiduciary duty as advised by
counsel, to obtain such CAB 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) CAB and FIRST NATIONAL shall, and shall cause each CAB Subsidiary
to:
(i) Operate its business only in the usual, regular, and ordinary
course;
(ii) Preserve intact its business organizations and assets and to
maintain its rights and franchises;
(iii) Take no action, unless otherwise required by law, rules or
regulation, that would (A) adversely affect the ability of any of them
or UPC to obtain any necessary approvals of Regulatory Authorities
required to consummate the transactions contemplated by this
Reorganization Agreement, or (B) adversely affect the ability of such
Party to perform its covenants and agreements under this Reorganization
Agreement;
(iv) Except as they may terminate in accordance with their terms,
keep in full force and effect, and not default in any of their
obligations under, all material contracts;
(v) Keep in full force and effect insurance coverage with
responsible insurance carriers which is reasonably adequate in coverage
and amount for companies the size of CAB or such CAB 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 FIRST NATIONAL's present
customer base and to facilitate the retention of such customers by FIRST
NATIONAL 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 CAB, FIRST NATIONAL 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 FIRST NATIONAL's customer
relationships;
(b) CAB and FIRST NATIONAL agree to use their best efforts to assist
UPC in obtaining the Government Approvals necessary to complete the
transactions contemplated hereby, and CAB and FIRST NATIONAL shall provide
to UPC or to the appropriate governmental authorities all information
reasonably required to be submitted in connection with obtaining such
approvals;
(c) CAB and FIRST NATIONAL, 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 CAB, FIRST NATIONAL 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, CAB and
FIRST NATIONAL shall inform UPC in writing of any and all facts necessary
to amend or supplement the representations and
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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 CAB and FIRST NATIONAL; 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, CAB and FIRST NATIONAL shall give
such further assistance to UPC and shall execute, acknowledge and deliver
all such documents and instruments as UPC may reasonably request and take
such further action as may be necessary or appropriate effectively to
consummate the transaction contemplated by this Reorganization Agreement;
(f) Between the date of this Reorganization Agreement and the Closing
Date, CAB and FIRST NATIONAL 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 CAB and FIRST NATIONAL. CAB and
FIRST NATIONAL shall provide reasonable assistance to UPC in its
investigation of matters relating to CAB and FIRST NATIONAL; and
(g) Subject to the terms and conditions of this Reorganization
Agreement, CAB and FIRST NATIONAL agree to use all reasonable efforts and
to take, or to cause to be taken, all actions, and to do, or to cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective, with reasonable promptness
after the date of this Reorganization Agreement, the transaction
contemplated by this Reorganization Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining or other order adversely affecting the ability of the Parties
to consummate the transaction contemplated by this Reorganization
Agreement. CAB 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, CAB and FIRST NATIONAL
covenant and agree that they will neither do, nor agree or commit to do, nor
permit any CAB 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 Articles of Incorporation or 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 CAB Common Stock; or
(d) Except as expressly permitted by this Reorganization Agreement,
acquire direct or indirect control over any corporation, association, firm,
organization or other entity, other than in connection with (i) mergers,
acquisitions, or other transactions approved in writing by UPC, (ii)
internal reorganizations or consolidations involving existing Subsidiaries,
(iii) foreclosures in the ordinary course of business and
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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 CAB
Common Stock, or any other capital stock of CAB or of any CAB 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
sold or otherwise transferred to CAB or any CAB Subsidiary, or (ii) sell,
agree to sell, or otherwise dispose of any substantial part of the assets
or earning power of CAB or of any CAB Subsidiary; or (iii) sell, agree to
sell, or otherwise dispose of any asset of CAB or any CAB 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 CAB 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 CAB or any CAB
Subsidiary to CAB or another CAB Subsidiary] in excess of an aggregate of
$50,000 (for CAB and its Subsidiaries on a consolidated basis) except in
the ordinary course of the business of CAB or such CAB Subsidiary
consistent with past practices (and such ordinary course of business shall
include, but shall not be limited to, creation of deposit liabilities,
entry into repurchase agreements or reverse repurchase agreements,
purchases or sales of federal funds, Federal Reserve advances, and sales of
certificates of deposit); or
(g) Grant any increase in compensation or benefits to any of its
employees or officers, except in accordance with past practices or as
required by law; pay any bonus except in accordance with past practices;
enter into any severance agreements with any of its officers or employees;
grant any material increase in fees or other increases in compensation or
other benefits to any director of CAB or of any CAB 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 CAB or
FIRST NATIONAL (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 lease agreements that are material to CAB or
any CAB 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 CAB Common
Stock, or to any corporation, partnership, trust or other entity controlled
by any such person, if such extension of credit, together with all other
credits then outstanding to the same borrower and all affiliated persons of
such borrower, would exceed two percent (2%) of the capital of CAB or amend
the terms of any such credit outstanding on the date hereof; or
(n) Except as expressly provided for in this Agreement, pay or declare
a cash dividend on the CAB Common Stock. CAB shall have the right (unless
otherwise prohibited by law or a Regulatory
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Authority) to pay or declare a quarterly cash dividend on the CAB Common
Stock in an amount not to exceed 72 Cents per quarter for any quarterly
period ending subsequent to the date of this Agreement and prior to January
1, 1994; provided, however, any dividends paid by CAB pursuant to the terms
of this Section 7.3(n) shall derive from ordinary earnings and shall not
exceed the quarterly dividend payout ratio of UPC (i.e. UPC quarterly
dividend payout to UPC quarterly earnings) for the same period or be in
violation of the requirements of pooling of interests accounting principles
established under the rules and regulations promulgated by the SEC, APBO 16
or GAAP.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of CAB. Unless waived in writing by CAB,
the obligation of CAB to consummate the transaction contemplated by this
Reorganization Agreement is subject to the satisfaction at or prior to the
Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings of UPC
and NABS to be performed at or before the Closing Date pursuant to this
Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The representations and
warranties of UPC and NABS contained in Article 4 of this Reorganization
Agreement shall be true and complete, in all material respects, on and as
of the Effective Time of the Merger with the same effect as though made on
and as of the Effective Time of the Merger;
(c) Documents. In addition to the other deliveries of UPC or NABS
described elsewhere in this Reorganization Agreement, CAB shall have
received the following documents and instruments:
(i) a certificate signed by the Secretary or an assistant secretary
of UPC and NABS dated as of the Closing Date certifying that:
(A) UPC's and NABS' respective Boards of Directors have duly
adopted resolutions (copies of which shall be attached to such
certificate) approving the substantive terms of this Reorganization
Agreement (including the Plan of Merger) and authorizing the
consummation of the transactions contemplated by this Reorganization
Agreement and certifying that such resolutions have not been amended
or modified and remain in full force and effect;
(B) each person executing this Reorganization Agreement on
behalf of UPC or NABS is an officer of UPC or NABS, as the case may
be, holding the office or offices specified therein and that the
signature of each person set forth on such certificate is his or her
genuine signature;
(C) the charter documents of UPC and NABS attached to such
certificate remain in full force and effect; and
(D) UPC and NABS are in good standing under their respective
corporate charters; and
(ii) a certificate signed respectively by duly authorized officers
of UPC or NABS stating that the conditions set forth in Section 8.1(a)
and Section 8.1(b) of this Reorganization Agreement have been fulfilled;
(d) Consideration. CAB shall have received a certificate executed by
an authorized officer of the Exchange Agent to the effect that the Exchange
Agent has received and holds in its possession certificates evidencing and
representing that number of shares of UPC Common Stock and cash funds
sufficient to meet the obligations of UPC to the CAB Record Holders to
deliver the Consideration under this Reorganization Agreement and the Plan
of Merger; and
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(e) Opinion of UPC's and NABS' Counsel. CAB shall have been furnished
with an opinion of legal counsel to UPC and NABS, dated as of the Closing
Date, addressed to and in form and substance satisfactory to CAB, 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 NABS is an Arkansas corporation duly organized, validly existing,
and in good standing under the laws of the State of Arkansas;
(ii) this Reorganization Agreement has been duly and validly
authorized, executed and delivered by UPC and NABS and (assuming this
Reorganization Agreement is a binding obligation of CAB and FIRST
NATIONAL) constitutes a valid and binding obligation of UPC and NABS
enforceable in accordance with its terms, subject as to enforceability
to applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and to the application of equitable principles and judicial discretion;
(iii) neither the execution and delivery by UPC or NABS of this
Reorganization Agreement nor any of the documents to be executed and
delivered by UPC or NABS in connection herewith violates or conflicts
with UPC's or NABS' corporate charters or bylaws or, to the best of the
knowledge, information and belief (without making special inquiry) of
such legal counsel, any material contracts, agreements or other
commitments of UPC or NABS, including that certain Loan Agreement with
Citibank, N.A.;
(iv) to the knowledge of such counsel after due inquiry, no consent
or approval by any Governmental Authority which has not already been
obtained is required for execution and delivery by UPC and NABS of this
Reorganization Agreement or any of the documents to be executed and
delivered by UPC or NABS in connection herewith; and
(v) the shares of UPC Common Stock to be issued in the names of the
CAB Record Holders and delivered in exchange for their CAB Common Stock
will be duly authorized, validly issued, fully paid and non-assessable.
Such opinion may (i) expressly rely as to matters of fact upon
certificates furnished by appropriate officers of UPC or NABS or
appropriate government officials; (ii) in the case of matters of law
governed by the laws of the states in which they are not licensed,
reasonably rely upon the opinions of legal counsel duly licensed in such
states and may be limited, in any event, to Federal Law and the State of
Tennessee; and (iii) incorporate, be guided by, and be interpreted in
accordance with, the Legal Opinion Accord of the ABA Section of Business
Law (1991).
8.2 Conditions to the Obligations of UPC and NABS. Unless waived in
writing by UPC and NABS, the obligation of UPC and NABS to consummate the
transactions contemplated by this Reorganization Agreement is subject to the
satisfaction at or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and undertakings of CAB
and/or FIRST NATIONAL 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 CAB and/or FIRST NATIONAL 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 respective Chief Executive Officers
or an Executive Vice President of each of CAB and FIRST NATIONAL stating
that the conditions set forth in Section 8.2(a) and Section 8.2(b) of
this Reorganization Agreement have been satisfied; and
(ii) the consent to the transactions contemplated hereunder by
Citibank, N.A.;
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(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 CAB or
FIRST NATIONAL 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 CAB or FIRST NATIONAL; provided, however, that the
availability of insurance coverage shall be taken into account in
determining whether there has been such a material adverse impact or
material reduction in market value. In the event of such damage,
destruction, order, limitation or restriction, UPC or NABS may elect either
(i) to close the contemplated transaction in accordance with the terms of
this Reorganization Agreement or (ii) to terminate this Reorganization
Agreement without penalty;
(e) Inspections Permitted. Between the date of this Reorganization
Agreement and the Closing Date, CAB and FIRST NATIONAL 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
CAB and FIRST NATIONAL. CAB and FIRST NATIONAL shall have caused all CAB or
FIRST NATIONAL personnel to provide reasonable assistance to UPC in its
investigation of matters relating to CAB and FIRST NATIONAL;
(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 CAB or FIRST
NATIONAL 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 CAB or FIRST NATIONAL, UPC may elect either (i) to close
the contemplated transaction in accordance with the terms of this
Reorganization Agreement or (ii) to terminate this Reorganization Agreement
without penalty;
(g) Opinion of CAB's Counsel. UPC shall have been furnished with an
opinion of M. Edward Morgan, Esq., counsel to CAB and FIRST NATIONAL, dated
the Closing Date, addressed to and in form and substance satisfactory to
UPC, to the effect that:
(i) CAB is a corporation duly organized, validly existing and in
good standing under the laws of the State of Arkansas;
(ii) FIRST NATIONAL is a national banking association duly
organized, validly existing, and in good standing under the laws of the
United States of America;
(iii) this Reorganization Agreement has been duly and validly
authorized, executed and delivered by CAB and FIRST NATIONAL and
(assuming that this Reorganization Agreement is a binding obligation of
UPC and NABS and the Plan of Merger is a binding obligation of UPC and
NABS) constitutes a valid and binding obligation of CAB and FIRST
NATIONAL enforceable in accordance with its terms, subject as to
enforceability to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally and to the application of equitable principles and
judicial discretion; and
(iv) to the knowledge of such counsel after due inquiry, no consent
or approval, which has not already been obtained, by any governmental
authority is required for execution and delivery by CAB or FIRST
NATIONAL of this Reorganization Agreement or any of the documents to be
executed and delivered by CAB and FIRST NATIONAL in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon
certificates furnished by appropriate officers of CAB or FIRST NATIONAL
or appropriate government officials; (ii) in the case of matters of law
governed by the laws of the states in which they are not licensed,
reasonably rely upon the opinions of legal counsel duly licensed in such
states and may be limited, in any event, to Federal Law and the State of
Arkansas; and (iii) incorporate, be guided by, and be interpreted in
accordance with, the Legal Opinion Accord of the ABA Section of Business
Law (1991); and
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(h) Other Business Combinations, Etc. Neither CAB nor FIRST NATIONAL
shall have entered into any agreement, letter of intent, understanding or
other arrangement pursuant to which CAB or FIRST NATIONAL would merge;
consolidate with; effect a business combination with; sell any substantial
part of CAB's or FIRST NATIONAL'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 CAB or
FIRST NATIONAL or the benefits of acquiring the CAB Common Stock; and
(i) Maintenance of Certain Covenants, Etc. At the time of Closing (i)
the total assets of FIRST NATIONAL shall be not less than $47,000,000; (ii)
the tangible equity capital of FIRST NATIONAL shall be not less than
$3,700,000; (iii) the tangible equity capital of CAB shall be not less than
$3,800,000; (iv) neither CAB nor FIRST NATIONAL shall have issued from the
date hereof any additional equity or debt securities, or any rights to
purchase such securities, except as set forth in this Agreement; (iv) from
the date hereof, there shall have been no extraordinary sale of assets, nor
any investment portfolio restructuring or dividend declaration (except as
expressly provided for in this Agreement) by either CAB or FIRST NATIONAL;
and (v) the Merger can be accounted for on the financial statements of UPC
as a "pooling of interests". The criteria and calculations set forth above
shall be determined in accordance with GAAP assuming that CAB and FIRST
NATIONAL shall have been operated consistently in the normal course of
their business; provided, however, that the effects of any balance sheet
expansion through abnormal, unusual or out of the ordinary borrowings or by
the realization of extraordinary gains or other income from the disposition
of assets or liabilities or through similar transactions shall be
eliminated from the calculations; and
(j) Non-Compete Agreements. Each member of the Board of Directors of
CAB shall have entered into a non-compete agreement with UPC and/or FIRST
NATIONAL substantially in the form of UPC's standard form of non-compete
agreement, providing for a term of not less than two (2) years and covering
the general geographic region(s) in which CAB and FIRST NATIONAL currently
operate and do business in or have a present intention to do business in;
and
(k) Stock Option Agreement. Mr. Robert G. Garner shall have entered
into a written agreement with CAB and UPC providing for the conversion of
any CAB Stock Options unexercised prior to the Effective Time of the Merger
into the exclusive right to purchase shares of UPC Common Stock in
accordance with the terms and conditions of Section 3.1(l) of this
Reorganization Agreement.
8.3 Conditions to Obligations of All Parties. The obligation of each party
to effect the transactions contemplated hereby shall be subject to the
fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. That no claim, action, suit,
investigation or other proceeding shall be pending or threatened before any
court or governmental agency which presents a substantial risk of the
restraint or prohibition of the transactions contemplated by this
Reorganization Agreement or the obtaining of material damages or other
relief in connection therewith; and
(b) Governmental Approvals and Acquiescences Obtained. The Parties
hereto shall have received all applicable Governmental Approvals for the
consummation of the transactions contemplated herein and all waiting
periods incidental to such approvals or notices given shall have expired.
(c) 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 CAB's regularly
retained independent accountants or other independent accountants
acceptable to UPC, a letter dated within five (5) days prior to the Closing
Date stating that, upon a review of CAB's books and
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records, the accountants are aware of no reason why a business combination,
such as the one contemplated in this Reorganization Agreement, to which CAB
is a party may not be accounted for as a "pooling of interests" under
generally accepted accounting principles.
ARTICLE 9
TERMINATION
9.1 Termination. This Reorganization Agreement and the Plan of Merger may
be terminated at any time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By UPC or NABS, should CAB or any CAB Subsidiary fail to conduct
its business pursuant to CAB's and FIRST NATIONAL's Covenants made in
Article 7;
(c) By UPC, NABS or CAB in the event the Closing shall not have
occurred by March 31, 1994 (the "Target Date"), unless the failure of the
Closing to occur shall be due to the failure of the Party seeking to
terminate this Agreement to perform its obligations hereunder in a timely
manner. If UPC shall have filed any and all applications to obtain the
requisite Government Approvals within sixty (60) days of the date hereof,
and if the Closing shall not have occurred solely because of a delay caused
by a government regulatory agency or authority in its review of the
application before it, then CAB and FIRST NATIONAL 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. Notwithstanding anything in this Reorganization Agreement to the
contrary, during any extension period as provided for in this Section
9.1(c) CAB shall have the right (unless otherwise prohibited by law or a
Regulatory Authority) to pay or declare a quarterly cash dividend on the
CAB Common Stock equivalent to the amount of any cash dividends the CAB
Shareholders would have received on the UPC Common Stock had the Closing
occurred on the Closing Date for any period subsequent to the Target Date
until such time as the Closing shall have occurred or this Reorganization
shall have been terminated; provided, however, any dividends paid by CAB
pursuant to the terms of this Section 9.1(c) shall derive from ordinary
earnings and shall not exceed the quarterly dividend payout ratio of UPC
(i.e. UPC quarterly dividend payout to UPC quarterly earnings) for the same
period or be in violation of the requirements of pooling of interests
accounting principles established under the rules and regulations
promulgated by the SEC, APBO 16 or GAAP.
(d) By either UPC, NABS or CAB, upon written notice to the other
Party, upon denial of any Governmental Approval necessary for the
consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transaction contemplated); provided,
however, that either UPC or CAB may, upon written notice to the other,
extend the term of this Reorganization Agreement for only one sixty (60)
day period to prosecute diligently and overturn such denial, provided that
such denial has been appealed within ten (10) business days of the receipt
thereof;
(e) By UPC or NABS if the conditions set forth in Sections 8.2 or 8.3
are not satisfied in all material respects as of the Closing Date, or by
CAB if the conditions set forth in Section 8.1 or 8.3 are not satisfied in
all material respects as of the Closing Date, and such failure has not been
waived prior to the Closing;
(f) By UPC or NABS in the event that there shall have been, in UPC's
good faith opinion, a material adverse change in the business, property,
assets (including loan portfolios), liabilities (whether absolute, accrued,
contingent or otherwise), prospects, operations, liquidity, income,
condition (financial or otherwise) or net worth of CAB or FIRST NATIONAL
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 CAB Common Stock
which are the subject of the instant Acquisition;
(g) By UPC, NABS or CAB 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
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(30) days after receipt by the breaching Party of written notice from the
other Party specifying the nature of such breach and requesting that it be
remedied;
(h) By UPC or NABS should CAB or any CAB Subsidiary enter into any
letter of intent or agreement with a view to being acquired by or effecting
a business combination with any other Person; or any agreement to merge, to
consolidate, to combine or to sell a material portion of its assets or to
be acquired in any other manner by any other Person or to acquire a
material amount of assets or a material equity position in any other
Person, whether financial or otherwise; or
(i) By UPC or NABS should CAB or FIRST NATIONAL or any CAB 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 CAB or FIRST NATIONAL to raise additional
capital or to sell a substantial portion of its assets.
If a Party should elect to terminate this Reorganization Agreement
pursuant to subsections (b), (c), (d), (e), (f), (g), (h) or (i) 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 CAB or FIRST NATIONAL:
Clin-Ark Bankshares, Inc.
Highway 65 South (P.O. Box 789)
Clinton, Arkansas 72031
Fax: (501) 745-5868
Attn: Stephen J. Smith, President
With a copy to:
M. Edward Morgan, Esq.
608 East Main Street
Clinton, Arkansas 72031
Fax: (501) 745-5358
If to UPC or NABS:
Union Planters Corporation
P.O. Box 387 (mailing address)
Memphis, Tennessee 38147
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or
7130 Goodlett Farms Parkway (deliveries)
Cordova, Tennessee 38018
Attn: Jackson W. Moore, President
Gary A. Simanson, Associate General Counsel
Fax: (901) 383-2877
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 Shelby County, Tennessee.
10.4 Counterparts. This Reorganization Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which shall constitute but one and the same instrument.
10.5 Best Efforts. FIRST NATIONAL, CAB and UPC each agrees to use its best
efforts to complete the transactions contemplated by this Reorganization
Agreement; provided, however, that the use of best efforts by UPC shall not
obligate UPC to obtain or to provide CAB additional capital in an amount, to
divest any Subsidiary or branch, or to meet any other condition which may be
imposed by any Regulatory Authority as a condition to approval which UPC shall
deem, in good faith, to be unreasonable in the circumstances.
10.6 Publicity. The Parties agree that press releases and other public
announcements to be made by any of them with respect to the transactions
contemplated hereby shall be subject to mutual agreement. Notwithstanding the
foregoing, each of the Parties hereto may respond to inquiries relating to this
Reorganization Agreement and the transactions contemplated hereby by the press,
employees or customers without any notice or further consent of the other
Parties.
10.7 Entire Agreement. This Reorganization Agreement, together with the
Plan of Merger which is Exhibit A hereto, the Schedules, Exhibits and
certificates required to be delivered hereunder and any amendments or addenda
hereafter executed and delivered in accordance with Section 10.9 hereof
constitute the entire agreement of the Parties hereto pertaining to the
transaction contemplated hereby and supersede all prior written and oral (and
all contemporaneous oral) agreements and understandings of the Parties hereto
concerning the subject matter hereof. The Schedules, Annexes, Exhibits and
certificates attached hereto or furnished pursuant to this Reorganization
Agreement are hereby incorporated as integral parts of this Reorganization
Agreement. Except as provided herein, by specific language and not by mere
implication, this Reorganization Agreement is not intended to confer upon any
other person not a Party to this Reorganization Agreement any rights or remedies
hereunder.
10.8 Severability. If any portion or provision of this Reorganization
Agreement should be determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any jurisdiction, such portion or provision
shall be ineffective as to that jurisdiction to the extent of such invalidity,
illegality or unenforceability, without affecting in any way the validity or
enforceability of the remaining portions or provisions hereof in such
jurisdiction or rendering that or any other portions or provisions of this
Reorganization Agreement invalid, illegal or unenforceable in any other
jurisdiction.
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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 CAB shall
each pay its own fees and expenses (including, without limitation, legal fees
and expenses) incurred by it in connection with the transactions contemplated
hereunder.
10.12 Finders and Brokers. UPC, NABS, FIRST NATIONAL and CAB represent and
warrant to each other that they have employed no broker or finder in connection
with the transactions described in this Reorganization Agreement under an
arrangement pursuant to which a fee is, or may be due to such broker or finder
as a result of the execution of this Reorganization Agreement or the closing of
the transaction contemplated herein. This section shall survive the termination
of this Reorganization Agreement.
10.13 Equitable Remedies. The Parties hereto agree that, in the event of a
breach of this Reorganization Agreement by CAB or FIRST NATIONAL, UPC and NABS
will be without an adequate remedy at law by reason of the unique nature of CAB
and FIRST NATIONAL. In recognition thereof, in addition to (and not in lieu of)
any remedies at law which may be available to UPC and NABS, UPC and NABS shall
be entitled to obtain equitable relief, including the remedies of specific
performance and injunction, in the event of a breach of this Reorganization
Agreement by CAB or FIRST NATIONAL, and no attempt on the part of UPC or NABS to
obtain such equitable relief shall be deemed to constitute an election of
remedies by UPC or NABS which would preclude UPC or NABS from obtaining any
remedies at law to which it would otherwise be entitled. CAB and FIRST NATIONAL
covenant that they shall not contend in any such proceeding that UPC or NABS is
not entitled to a decree of specific performance by reason of having an adequate
remedy at law.
10.14 Attorneys' Fees. If any Party hereto shall bring an action at law or
in equity to enforce its rights under this Reorganization Agreement (including
an action based upon a misrepresentation or the breach of any warranty,
covenant, agreement or obligation contained herein), the prevailing Party in
such action shall be entitled to recover from the other Party its reasonable
costs and expenses necessarily incurred in connection with such action
(including fees, disbursements and expenses of attorneys and costs of
investigation).
10.15 Survival of Representations and Warranties. All representations and
warranties made by the Parties hereto or in any instrument or document furnished
in connection herewith, shall survive the Closing and any investigation at any
time made by or on behalf of the Parties hereto and shall expire at the
Effective Time of the Merger except as to any matter which is based upon willful
fraud with respect to which the representations and warranties set forth in this
Reorganization Agreement shall expire only upon expiration of the applicable
statutes of limitation. Nothing in this Section 10.15 shall limit CAB's, FIRST
NATIONAL's, UPC's or NABS' rights or remedies for misrepresentations, breaches
of this Reorganization Agreement or any other improper action or inaction by the
other Party hereto prior to its termination.
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10.16 No Waiver. No failure, delay or omission of or by any Party in
exercising any right, power or remedy upon any breach or default of any other
Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Reorganization Agreement must be in writing and must be
executed by the Parties to this Reorganization Agreement and shall be effective
only to the extent specifically set forth in such writing.
10.17 Remedies Cumulative. All remedies provided in this Reorganization
Agreement, by law or otherwise, shall be cumulative and not alternative.
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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.
CLIN-ARK BANKSHARES, INC.
By: /s/ STEPHEN J. SMITH
Stephen J. Smith
Its: President
ATTEST:
/s/ LORIE MEAZL
Lorie Meazl
Secretary
FIRST NATIONAL BANK OF CLINTON,
ARKANSAS
By: /s/ STEPHEN J. SMITH
Stephen J. Smith
Its: President
ATTEST:
/s/ LORIE MEAZL
Lorie Meazl
Secretary
UNION PLANTERS CORPORATION
By: /s/ JACKSON W. MOORE
Jackson W. Moore
Its: President
ATTEST:
/s/ JAMES F. SPRINGFIELD
James F. Springfield
Secretary
NORTH ARKANSAS BANCSHARES, INC.
By: /s/ G. L. LIEBLONG
G. L. Lieblong
Its: President
ATTEST:
/s/ JOHN C. FREEMAN
John C. Freeman
Secretary
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EXHIBIT A
PLAN OF MERGER
SETTING FORTH THE PLAN OF MERGER
OF
CLIN-ARK BANKSHARES, INC.
(AN ARKANSAS CORPORATION)
WITH AND INTO
NORTH ARKANSAS BANCSHARES, INC.
(AN ARKANSAS CORPORATION)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of the
30th day of April, 1993, by and between CLIN-ARK BANKSHARES, INC. ("CAB"), a
corporation organized and existing under the laws of the State of Arkansas
having its principal office at Highway 65 South, Clinton, Van Buren County,
Arkansas 72031 and which is a registered bank holding company under the Bank
Holding Company Act; UNION PLANTERS CORPORATION ("UPC"), a corporation organized
and existing under the laws of the State of Tennessee having its principal
office at 7130 Goodlett Farms Parkway, Cordova, Shelby County, Tennessee 38018
and which is registered as a bank holding company under the Bank Holding Company
Act; and NORTH ARKANSAS BANCSHARES, INC. ("NABS"), a corporation organized and
existing under the laws of the State of Arkansas having its principal office at
300 South Church Street, Jonesboro, Craighead County, Arkansas 72403. All of the
authorized, issued and outstanding shares of capital stock of NABS are owned and
held of record by UPC.
PREAMBLE
WHEREAS, UPC, NABS and CAB have entered into an Agreement and Plan of
Reorganization dated as of the 30th day of April , 1993 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as a part thereof providing for the merger of CAB with and into NABS
(which would be the Surviving Corporation) and the acquisition of all of the CAB
Common Stock outstanding immediately prior to the Effective Time of the Merger
by UPC for the Consideration set forth in the Reorganization Agreement; and
WHEREAS, As provided in the Reorganization Agreement, UPC has caused NABS
to join in this Plan of Merger by executing and delivering same; and
WHEREAS, The Boards of Directors of UPC, NABS and CAB are each of the
opinion that the interests of their respective corporations and their
corporations' respective shareholders would best be served if CAB were to be
merged with and into NABS, which would survive the Merger, on the terms and
conditions provided in the Reorganization Agreement and in this Plan of Merger,
and as a result of such Merger becoming effective, the Surviving Corporation
would become a wholly-owned subsidiary of UPC.
NOW, THEREFORE, in consideration of the covenants and agreements of the
Parties contained herein, CAB, UPC, and NABS hereby make, adopt and approve this
Plan of Merger in order to set forth the terms and conditions for the merger of
CAB with and into NABS (the "Merger").
ARTICLE 1
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.
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ARTICLE 2
CAPITALIZATION
2.1 North Arkansas Bancshares, Inc. The authorized capital stock of NABS
consists of 1,000 shares of common stock having a par value of $1.00 per share
(the "NABS Common Stock") and no shares of preferred stock. As of the date of
this Plan of Merger, 1,000 shares of NABS Common Stock are issued and
outstanding, and no shares of NABS Common Stock are held by it as treasury
stock. All such issued and outstanding shares of NABS Common Stock are owned
beneficially and of record by UPC.
2.2 Union Planters Corporation. The authorized capital stock of UPC
consists of 10,000,000 shares of preferred stock having no par value (the "UPC
Preferred Stock"), and 50,000,000 shares of common stock having a par value of
$5.00 per share (the "UPC Common Stock"). As of December 31, 1992, 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, Convertible Preferred Stock, Series D; and 2,200,000
shares of 8% Cumulative, Convertible Preferred Stock, Series E. On January 4,
1993, UPC issued an additional 331,741 shares of its Series E Preferred Stock in
connection with its acquisition of a 44% equity interest in the Bank of East
Tennessee. In addition, 250,000 shares of UPC Series A 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
December 31, 1992, 16,788,758 shares of UPC Common Stock were validly issued and
outstanding; approximately 2,500,000 shares of UPC Common Stock were reserved
for issuance pursuant to outstanding stock option plans and certain other
employee benefit plans; and approximately 200,000 shares of UPC Common Stock
have been reserved for issuance in connection with UPC's Dividend Reinvestment
Plan.
2.3 CLIN-ARK Bankshares, Inc. The authorized capital stock of CAB consists
of 100,000 shares of common stock having a par value of $1.00 per share (the
"CAB Common Stock") and no shares of preferred stock. As of the date hereof,
54,442 shares of shares of CAB Common Stock were issued and outstanding, and no
shares of CAB Common Stock were held by it as CAB treasury stock.
ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent corporation to
the Merger is:
NORTH ARKANSAS BANCSHARES, INC.
and
CLIN-ARK BANKSHARES, INC.
3.2 Surviving Corporation. The Surviving Corporation shall be:
NORTH ARKANSAS BANCSHARES, INC.
which as of the Effective Time of the Merger shall continue to be named:
NORTH ARKANSAS BANCSHARES, INC.
3.3 Terms and Conditions of Merger. The Merger shall be consummated only
pursuant to, and in accordance with this Plan of Merger and the Reorganization
Agreement. Conditioned upon the satisfaction or lawful waiver (by the Party or
Parties entitled to the benefit thereof) of all conditions precedent to
consummation of the Merger, the Merger will become effective on the date and at
the time (the "Effective Time of the Merger") of the filing of Articles of
Merger with the Secretary of State of the State of Arkansas, or at such later
time and/or date as may be agreed upon by the parties and set forth in the
Articles of Merger. At the Effective Time of the Merger, CAB shall be merged
with and into NABS which will survive the Merger, and the separate existence of
CAB shall cease thereupon, and without further action, NABS shall
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thereafter possess all of the assets, rights, privileges, appointments, powers,
licenses, permits and franchises of both NABS and CAB, whether of a public or
private nature, and shall be subject to all of the liabilities, restrictions,
disabilities, and duties of both NABS and CAB.
3.4 Articles of Incorporation. At the Effective Time of the Merger, the
Articles of Incorporation of NABS, as in effect immediately prior to the
Effective Time of the Merger, shall constitute the Articles of Incorporation of
NABS as the Surviving Corporation, unless and until the same shall be amended as
provided by law and the terms of such Articles of Incorporation.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of NABS, as in
effect immediately prior to the Effective Time, shall continue to be its Bylaws
as the Surviving Corporation, unless and until amended or repealed as provided
by law, its Articles of Incorporation and such Bylaws.
3.6 Directors and Officers. The directors and officers of NABS in office
immediately prior to the Effective Time of the Merger shall continue to be the
directors and officers of the Surviving Corporation, to hold office as provided
in the Articles of Incorporation and Bylaws of the Surviving Corporation, unless
and until their successors shall have been elected or appointed and shall have
qualified or they shall be removed as provided therein.
3.7 Name. The name of NABS as the Surviving Corporation following the
Merger, shall remain:
NORTH ARKANSAS BANCSHARES, INC.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 Shares of NABS Shall Remain Outstanding. Subsequent to the Effective
Time of the Merger, each share of $1.00 par value common stock of NABS then
issued and outstanding shall remain as the issued and outstanding common stock
of NABS as the Surviving Corporation.
4.2 Conversion and Cancellation of Shares of CAB. As of the Effective Time
of the Merger, each share of $1.00 par value common stock of CAB issued and
outstanding immediately prior to the Effective Time of the Merger shall, by
virtue of the Merger becoming effective and without any further action on the
part of anyone, be converted, exchanged and cancelled as provided in Section 4.4
hereof.
4.3 Exchange of CAB Shares; Exchange Ratio. As of the Effective Time of
the Merger, the outstanding shares of CAB Common Stock held by the CAB 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 CAB and shall automatically be converted
exclusively into, and constitute only the right of the CAB Record Holders to
receive in exchange for their shares of CAB Common Stock, whole shares of UPC
Common Stock and any cash payment made by UPC in settlement of any remaining
fractional share of UPC Common Stock in accordance with the terms and conditions
of this Section 4.3. The shares of UPC Common Stock and the cash settlement of
any remaining fractional share of UPC Common Stock deliverable by UPC to the CAB
Record Holders pursuant to the terms of this Plan of Merger and the
Reorganization Agreement are sometimes collectively referred to herein as the
"Consideration."
The number of shares of UPC Common Stock to be exchanged for each share of
CAB Common Stock issued and outstanding immediately prior to the Effective Time
of the Merger shall be four (4) shares of UPC Common Stock for each share of CAB
Common Stock (based on an aggregate of no more than 56,942 shares of CAB Common
Stock issued and outstanding immediately prior to the Effective Time of the
Merger and, for purposes of this paragraph, counting all CAB Stock Options
issued and outstanding immediately prior to the Effective Time of the Merger as
shares of CAB Common Stock) so converted and exchanged (the "Exchange Ratio")
(thus, in accordance with the Exchange Ratio, at the Effective Time of the
Merger, UPC would issue in the aggregate no more than 227,768 shares of UPC
Common Stock as Consideration in 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 CAB Record Holder is entitled
based upon the Exchange Ratio, there shall be a fractional share of UPC Common
Stock remaining, such fractional share
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shall be settled by a cash payment therefor pursuant to the Mechanics of Payment
of the Purchase Price set forth in Section 3.1(f) hereof, which shall be
calculated based upon the Current Market Price Per Share of one (1) full share
of UPC Common Stock.
(i) DEFINITION OF "CURRENT MARKET PRICE PER SHARE." The "Current
Market Price Per Share" shall be the average 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 price per share of UPC Common Stock
and the average shall be based upon the "last" real time trades and number
of days on which the UPC Common Stock actually traded during the Pricing
Period.
(ii) EFFECTS OF DISSENTER'S RIGHTS ON THE EXCHANGE RATIO. Should any
CAB Record Holder perfect such CAB Record Holder's dissenter's rights
pursuant to the Arkansas Code and maintain the perfected status of such
dissenter's rights through the Closing Date, UPC and NABS shall have the
right, exercisable in their sole discretion, to either terminate this
Agreement or reduce the number of shares of UPC Common Stock to be
delivered by UPC hereunder by an amount sufficient to off-set against the
Consideration any amounts paid, or to be paid, by UPC in satisfaction of
such dissenter's rights.
(iii) EFFECT OF STOCK SPLITS, REVERSE STOCK SPLITS, STOCK DIVIDENDS
AND SIMILAR CHANGES IN THE CAPITAL OF UPC OR CAB. Should either UPC or CAB
effect any stock splits, reverse stock splits, stock dividends or similar
changes in their respective capital accounts subsequent to the date of this
Plan of Merger and the Reorganization Agreement but prior to the Effective
Time of the Merger, the Exchange Ratio shall be adjusted in such a manner
as the Board of Directors of UPC shall deem in good faith to be fair and
reasonable in order to give effect to such changes.
4.4 Mechanics of Payment of Purchase Price. As soon as reasonably
practicable after the Effective Time of the Merger, the Corporate Trust
Department of Union Planters National Bank, Memphis, Tennessee (the "Exchange
Agent") shall deliver to each of the CAB Record Holders such materials and
information as may be deemed necessary by the Exchange Agent to advise the CAB
Record Holders of the procedures required for proper surrender of their
certificates evidencing and representing shares of the CAB Common Stock in order
for the CAB 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 CAB Record Holders at the addresses set forth on a certified
shareholder list to be delivered by CAB to UPC at the Closing (the "Shareholder
List"). As soon as reasonably practicable thereafter, the CAB Record Holders of
all of the outstanding shares of CAB Common Stock, shall deliver, or cause to be
delivered, to the Exchange Agent, pursuant to the Shareholder Materials, the
certificates evidencing and representing all of the shares of CAB 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 CAB 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 CAB Common Stock, the
Exchange Agent shall, on or prior to the 30th day after the Effective Time of
the Merger, mail to the former CAB Shareholders in exchange for the
certificate(s) surrendered by them, the Consideration to be paid for each such
CAB Shareholder's shares of CAB 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 CAB Common Stock of an CAB 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 CAB Record Holder's shares of CAB Common Stock were converted and
aggregated at the Effective Time of
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the Merger. Unless and until the outstanding certificate or certificates, which
immediately prior to the Effective Time of the Merger evidenced and represented
the CAB Record Holder's CAB Common Stock shall have been surrendered as provided
above, the Consideration payable to the CAB Record Holder(s) of the cancelled
shares as of any time after the Effective Date shall not be paid to the CAB
Record Holder(s) of such certificate(s) until such certificates shall have been
surrendered in the manner required. Each CAB 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 CAB 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 CAB Record Holder is entitled, provided that
each such CAB Record Holder shall deliver to UPC and to the Exchange Agent: (i)
a sworn statement certifying such loss or destruction and specifying the
circumstances thereof and (ii) a lost instrument bond in form satisfactory to
UPC and the Exchange Agent which has been duly executed by a corporate surety
satisfactory to UPC and the Exchange Agent, indemnifying the Surviving
Corporation, UPC, the Exchange Agent (and their respective successors) to their
satisfaction against any loss or expense which any of them may incur as a result
of such lost or destroyed certificates being thereafter presented. Any costs or
expenses which may arise from such replacement procedure, including the premium
on the lost instrument bond, shall be for the account of the CAB Shareholder.
4.5 Stock Transfer Books. At the Effective Time of the Merger, the stock
transfer books of CAB shall be closed and no transfer of shares of CAB Common
Stock shall be made thereafter.
4.6 Effects of the Merger. As of the Effective Time of the Merger, the
separate existence of CAB shall cease, and CAB shall be merged with and into
NABS which, as the Surviving Corporation, shall thereupon and thereafter possess
all of the assets, rights, privileges, appointments, powers, licenses, permits
and franchises of the two merged corporations, whether of a public or a private
nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of both CAB and NABS.
4.7 Transfer of Assets. At the Effective Time of the Merger, all rights,
assets, licenses, permits, franchises and interests of CAB and NABS in and to
every type of property, whether real, personal, or mixed, whether tangible or
intangible, and to choses in action shall be deemed to be vested in NABS as the
Surviving Corporation by virtue of the Merger and without any deed or other
instrument or act of transfer whatsoever.
4.8 Assumption of Liabilities. At the Effective Time of the Merger, the
Surviving Corporation shall become and be liable for all debts, liabilities,
obligations and contracts of CAB 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 CAB
or the Surviving Corporation.
4.9 Dissenting Shareholders' Rights. Any CAB Record Holder of shares of
CAB Common Stock who shall comply strictly with the provisions of Section
4-26-1007 et seq. of the Arkansas Code Annotated (the "Arkansas Code"), shall be
entitled to dissent from the Merger and to seek those appraisal remedies
afforded by the Arkansas Code. Such an CAB Shareholder is referred to herein as
an "CAB Dissenting Shareholder." However, UPC and NABS shall not be obligated to
consummate the Merger if CAB Record Holders holding or controlling more than
five percent (5%) of the shares of the CAB Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger shall have perfected their
dissenter's rights in accordance with the Arkansas Code and the perfected status
of said dissenter's rights shall have continued to the time of Closing.
4.10 Approvals of Shareholders of CAB and NABS. In order to become
effective, the Merger must be approved by the respective shareholders of CAB and
of NABS at meetings to be called for that purpose by their respective Boards of
Directors, or by their unanimous action by written consent complying fully with
the laws of Arkansas.
4.11 CAB Stock Options. At the Effective Time of the Merger, any
outstanding and unexercised stock options (the "CAB Stock Options") to purchase
shares of CAB Common Stock at a purchase price of $45.00 per share of CAB Common
Stock (the "Exercise Price") shall cease to represent the right to purchase
shares
A-5
<PAGE> 138
of CAB Common Stock and shall automatically and without any further action on
the part of anyone be converted into the right of the holder of the CAB Stock
Options to purchase from UPC the equivalent number of shares of UPC Common Stock
that the holder of the CAB Stock Options would have been entitled to receive if,
immediately prior to the Effective Time of The Merger, the holder of the CAB
Stock Options had exercised his rights under the CAB Stock Options to purchase
shares of CAB Common Stock and subsequently, after the Effective time of the
Merger, as a CAB Record Holder, exchanged the shares of CAB Common Stock
purchased under the CAB Stock Options for shares of UPC Common Stock in
accordance with the terms of exchange and the Exchange Ratio set forth in
Section 4.3 of this Plan of Merger and Section 3.1(e) of the Reorganization
Agreement. UPC shall reserve on its books and records that number of shares of
UPC Common Stock necessary to satisfy the exercise of the converted CAB Stock
Options. The number of shares of UPC Common Stock deliverable by UPC to the CAB
Record Holders pursuant to the terms of Section 4.3 of this Plan of Merger and
Section 3.1(e) of the Reorganization Agreement shall be reduced by the number of
shares of UPC Common Stock reserved on the books and records of UPC for
satisfaction of the converted CAB Stock Options.
The per share purchase price for each share of UPC Common Stock purchased
pursuant to the converted CAB Stock Option shall be the Exercise Price divided
by the Exchange Ratio as such terms are defined in the Reorganization Agreement.
ARTICLE 5
AMENDMENTS AND WAIVERS
5.1 AMENDMENTS. To the extent permitted by law, this Plan of Merger may be
amended unilaterally by UPC and NABS as set forth in Section 10.9(d) of the
Reorganization Agreement; provided, however, that the provisions of Section 4.4
of this Plan of Merger relating to the manner or basis upon which shares of CAB
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 CAB Record Holders determined as
provided in Section 4.3 of the Reorganization Agreement nor shall this Plan of
Merger be amended to permit UPC to utilize assets other than its UPC Common
Stock or cash to make payment of the Consideration as provided in Section 4.3 of
the Reorganization Agreement at any time after the Shareholders' Meeting without
the requisite approval of the CAB Record Holders of the shares of CAB Common
Stock outstanding, and that no amendment to this Plan of Merger shall modify the
requirements of regulatory approval as set forth in Section 8.3(b) of the
Reorganization Agreement.
5.2 AUTHORITY FOR AMENDMENTS AND WAIVERS. Prior to the Effective Time of
the Merger, UPC and NABS, acting through their respective Boards of Directors or
chief executive officers or presidents or other authorized officers, shall have
the right to amend this Plan of Merger to postpone the Effective Time of the
Merger to a date and time subsequent to the time of filing of the Plan of Merger
with the Arkansas Secretary of State, to waive any default in the performance of
any term of this Plan of Merger by CAB, to waive or extend the time for the
compliance or fulfillment by CAB of any and all of its obligations under this
Plan of Merger, and to waive any or all of the conditions precedent to the
obligations of UPC and NABS under this Plan of Merger, except any condition
that, if not satisfied, would result in the violation of any law or applicable
governmental regulation. Prior to the Effective Time of the Merger, CAB, acting
through its Board of Directors or chief executive officer or president or other
authorized officer, shall have the right to amend this Plan of Merger to
postpone the Effective Time of the Merger to a date and time subsequent to the
time of filing of the Plan of Merger with the Arkansas Secretary of State, to
waive any default in the performance of any term of this Plan of Merger by UPC
or NABS, to waive or extend the time for the compliance or fulfillment by UPC or
NABS of any and all of their obligations under this Plan of Merger, and to waive
any or all of the conditions precedent to the obligations of CAB under this Plan
of Merger except any condition that, if not satisfied, would result in the
violation of any law or applicable governmental regulation.
A-6
<PAGE> 139
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:
UPC and NABS:
Union Planters Corporation
P.O. Box 387 (mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (deliveries)
Cordova, Tennessee 38018
Telecopy Number: (901) 383-2877
Attention: Mr. Jackson W. Moore, President
Gary A. Simanson,
Associate General Counsel
CAB:
Clin-Ark Bankshares, Inc.
Highway 65 South (P.O. Box 789)
Clinton, Arkansas 72031
Telecopy Number: (501) 745-5868
Attention: Mr. Stephen J. Smith, President
With a copy to:
M. Edward Morgan, Esq.
608 East Main Street
Clinton, Arkansas 72031
Telecopy Number: (501) 745-5358
or at such other address as shall be furnished in writing by any of the Parties
to the others by notice given as provided in this section 6.1.
6.2 GOVERNING LAW. Except to the extent federal law shall be controlling,
this Plan of Merger shall be governed by and construed and enforced in
accordance with the laws of the State of Arkansas with respect to those
provisions of this Plan of Merger expressly required by Arkansas law to be
included in this Plan of Merger disregarding, however, the Arkansas conflicts of
laws rules. In all other instances, this Plan of Merger shall be governed by and
construed and enforced in accordance with the laws of the State of Tennessee
disregarding, however, the Tennessee conflicts of laws rules.
6.3 CAPTIONS. The Captions heading the Sections in this Plan of Merger are
for convenience only and shall not affect the construction or interpretation of
this Plan of Merger.
6.4 COUNTERPARTS. This Plan of Merger may be executed in two or more
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute one and the same instrument.
A-7
<PAGE> 140
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger to
be duly executed and delivered by its duly authorized officers as of the date
first above written.
<TABLE>
<S> <C>
ATTEST: UNION PLANTERS CORPORATION
/s/ JAMES F. SPRINGFIELD By: /s/ JACKSON W. MOORE
- ---------------------------------------------- ------------------------------------------
James F. Springfield Jackson W. Moore
Its: Secretary Its: President
ATTEST: NORTH ARKANSAS BANCSHARES, INC.
/s/ JOHN C. FREEMAN By: /s/ G. L. LIEBLONG
- ---------------------------------------------- ------------------------------------------
John C. Freeman G. L. Lieblong
Its: Secretary Its: President
ATTEST: CLIN-ARK BANKSHARES, INC.
/s/ LORI MEAZL By: /s/ STEPHEN J. SMITH
- ---------------------------------------------- ------------------------------------------
Lori Meazl Stephen J. Smith
Its: Secretary Its: President
</TABLE>
A-8
<PAGE> 141
APPENDIX C
ARKANSAS BUSINESS CORPORATION ACT
OF 1965 -- DISSENTERS' RIGHTS
<PAGE> 142
EXCERPT FROM ARKANSAS BUSINESS CORPORATION ACT OF 1965
4-26-1007 RIGHTS OF DISSENTING SHAREHOLDERS. -- (a) If a shareholder of a
corporation which is a party to a merger or consolidation files with the
corporation, prior to or at the meeting of shareholders at which the plan of
merger or consolidation is submitted to a vote, a written objection to the plan
of merger or consolidation and does not vote in favor thereof, and the
shareholder within ten (10) days after the date on which the vote was taken
makes written demand on the surviving or new domestic or foreign corporation for
payment of the fair value of his shares as of the day prior to the date on which
the vote was taken approving the merger or consolidation, then, if the merger or
consolidation is effected, the surviving or new corporation shall pay to the
shareholder, upon surrender of his certificate or certificates representing the
shares, the fair value thereof.
(b) The demand shall state the number and class of the shares owned by the
dissenting shareholder.
(c) Any shareholder failing to make demand within the ten-day period shall
be bound by the terms of the merger or consolidation.
(d) Within ten (10) days after the merger or consolidation is effected, the
surviving or new corporation, as the case may be, shall give notice to each
dissenting shareholder who has made demand as herein provided for the payment of
the fair value of his shares.
(e)(1) If within thirty (30) days after the date on which the merger or
consolidation was effected the value of such shares is agreed upon between the
dissenting shareholder and the surviving or new corporation, payment shall be
made within ninety (90) days after the date on which such merger or
consolidation was effected, upon the surrender of his certificate or
certificates representing those shares.
(2) Upon payment of the agreed value, the dissenting shareholder shall
cease to have any interest in those shares or in the corporation.
(f)(1) If within the period of thirty (30) days the shareholder and the
surviving or new corporation do not so agree, then the dissenting shareholder,
within sixty (60) days after the expiration of the thirty-day period, may file a
petition in the circuit court of the county in which the registered office of
the surviving corporation is located, if the surviving corporation is a domestic
corporation or in the Pulaski County Circuit Court if the surviving corporation
is a foreign corporation, asking for a finding and determination of the fair
value of the shares and shall be entitled to judgment against the surviving or
new corporation for the amount of the fair value as of the day prior to the date
on which the vote was taken approving such merger or consolidation, together
with interest thereon to the date of the judgment.
(2) The judgment shall be payable only upon and simultaneously with the
surrender to the surviving or new corporation of the certificate or certificates
representing the shares.
(3) Upon payment of the judgment, the dissenting shareholder shall cease to
have any interest in the shares or in the surviving or new corporation.
(4) Unless the dissenting shareholder files the petition within the time
herein limited, the shareholder and all persons claiming under him shall be
bound by the terms of the merger or consolidation.
(g) Shares acquired by the surviving or new corporation pursuant to the
payment of the agreed value thereof or to payment of the judgment entered, as in
this section provided, may be held and disposed of by the corporation as in the
case of other treasury shares.
(h) The provisions of this section shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other domestic or foreign
corporations that are parties to the merger.
C-1
<PAGE> 143
PROXY CLIN-ARK BANKSHARES, INC.
HIGHWAY 65 SOUTH (P.O. BOX 789) No. of Shares _______
CLINTON, ARKANSAS 72031
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stephen J. Smith and G. Robert Garner 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 Clin-Ark Bankshares, Inc. held of record by the
undersigned on January 19, 1994, at the Special Meeting of Shareholders to be
held on March 3, 1994 or at any adjournments or postponements thereof.
1. APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN UNION
PLANTERS CORPORATION, NORTH ARKANSAS BANCSHARES, INC., CLIN-ARK BANKSHARES,
INC. AND FIRST NATIONAL BANK, CLINTON, ARKANSAS DATED AS OF APRIL 30, 1993,
TOGETHER WITH THE PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A.
<TABLE>
<S> <C>
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 / /
</TABLE>
2. In their discretion, the proxies are authorized to vote on such other
business as may properly come before the meeting.
(Continued on other side)
(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> 144
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Charter of the Registrant provides as follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the Corporation
may indemnify or purchase and maintain insurance to indemnify any of its
directors, officers, employees or agents and any persons who may serve
at the request of the Corporation as directors, officers, employees,
trustees or agents of any other corporation, firm, association, national
banking association, state-chartered bank, trust company, business
trust, organization or any other type of entity whether or not the
Corporation shall have any ownership interest in such entity. Such
indemnification(s) may be provided for in the Bylaws, or by resolution
of the Board of Directors or by appropriate contract with the person
involved.
Article V, INDEMNIFICATION, of the Registrant's Bylaws provides as
follows:
The Corporation does hereby indemnify its directors and officers to
the fullest extent permitted by the laws of the State of Tennessee and
by ARTICLE TWELFTH of its Charter. The Corporation may indemnify any
other person to the extent permitted by the Charter and by applicable
law.
Indemnification of corporate directors and officers is governed by
Sections 48-18-501 through 48-18-509 of the Tennessee Business Corporation
Act (the "Act"). Under the Act, a person may be indemnified by a
corporation against judgments, fines, amounts paid in settlement and
reasonable expenses (including attorneys' fees) actually and necessarily
incurred by him in connection with any threatened or pending suit or
proceeding or any appeal thereof (other than an action by or in the right
of the corporation), whether civil or criminal, by reason of the fact that
he is or was a director or officer of the corporation or is or was serving
at the request of the corporation as a director or officer, employee or
agent of another corporation of any type or kind, domestic or foreign, if
such director or officer acted in good faith for a purpose which he
reasonably believed to be in the best interest of the corporation and, in
criminal actions or proceedings only, in addition, had no reasonable cause
to believe that his conduct was unlawful. A Tennessee corporation may
indemnify a director or officer thereof in a suit by or in the right of the
corporation against amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred as a result of
such suit unless such director or officer did not act in good faith or with
the degree of diligence, care and skill which ordinarily prudent men
exercise under similar circumstances and in like positions.
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.
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<PAGE> 145
ITEM 21. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -------------------------------------------------------------------------------
<S> <C> <C>
2 -- Agreement and Plan of Reorganization, dated April 30, 1993, by and between
Union Planters Corporation, North Arkansas Bancshares, Inc., Clin-Ark
Bankshares, Inc. and First National Bank, Clinton, Arkansas, along with the
Plan of Merger annexed thereto as Exhibit A (included as Appendix B to the
Prospectus)
5 -- Opinion of Gary A. Simanson, Associate General Counsel to Union Planters
Corporation, regarding legality of Common Stock, $5.00 par value per share, of
Union Planters Corporation
23 (a) -- Consent of Gary A. Simanson, Esq. (included in Exhibit 5)
23 (b) -- Consent of Price Waterhouse
23 (c) -- Consent of Horne CPA Group
23 (d) -- Consent of Williams and Jerrolds, P.C.
23 (e) -- Consent of Heathcott and Mullaly
23 (f) -- Consent of KPMG Peat Marwick
23 (g) -- Consent of Baird, Kurtz & Dobson
23 (h) -- Consent of Coopers & Lybrand
23 (i) -- Consent of Deloitte & Touche
23 (j) -- Consent of Winnett Associates
23 (k) -- Consent of KPMG Peat Marwick
23 (l) -- Consent of Frost & Company
24 -- Power of Attorney (included in signature pages)
</TABLE>
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
II-2
<PAGE> 146
appropriate jurisdiction, the question whether such indemnification by its
is public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this
Form S-4, within one business day of receipt of such request, and to send
the incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent to
the effective date of the registration statement through the date of
responding to the request.
(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-3
<PAGE> 147
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 20TH DAY OF JANUARY 1994.
UNION PLANTERS CORPORATION
By: /s/ BENJAMIN W. RAWLINS, JR.
Benjamin W. Rawlins, Jr.
Chairman of the Board and
Chief Executive Officer
DATE: January 20, 1994
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.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- --------------------------------------------- ------------------------------ -----------------
<C> <S> <C>
/s/ BENJAMIN W. RAWLINS, JR. Chairman of the Board, Chief January 20, 1994
Benjamin W. Rawlins, Jr. Executive Officer, Director
(Principal Executive Officer)
/s/ JOHN W. PARKER Executive Vice President and January 20, 1994
John W. Parker Chief Financial Officer
(Principal Financial Officer)
/s/ M. KIRK WALTERS Senior Vice President, January 20, 1994
M. Kirk Walters Treasurer and Chief Accounting
Officer
/s/ ALBERT M. AUSTIN Director January 20, 1994
Albert M. Austin
Director
Marvin E. Bruce
Director
George W. Bryan
/s/ ROBERT B. COLBERT, JR. Director January 20, 1994
Robert B. Colbert, Jr.
/s/ HANFORD F. FARRELL, JR. Director January 20, 1994
Hanford F. Farrell, Jr.
/s/ PARNELL S. LEWIS, JR. Director January 20, 1994
Parnell S. Lewis, Jr.
</TABLE>
II-4
<PAGE> 148
<TABLE>
<CAPTION>
NAME CAPACITY DATE
- --------------------------------------------- ------------------------------ -----------------
<C> <S> <C>
/s/ C. J. LOWRANCE, III Director January 20, 1994
C. J. Lowrance, III
/s/ R. BRAD MARTIN Director January 20, 1994
R. Brad Martin
/s/ JACKSON W. MOORE President and Director January 20, 1994
Jackson W. Moore
/s/ STANLEY D. OVERTON Director January 20, 1994
Stanley D. Overton
/s/ C. PENN OWEN, JR. Director January 20, 1994
C. Penn Owen, Jr.
/s/ V. LANE RAWLINS Director January 20, 1994
V. Lane Rawlins
/s/ DONALD F. SCHUPPE Director January 20, 1994
Donald F. Schuppe
/s/ J. ARMISTEAD SMITH Vice Chairman and Director January 20, 1994
J. Armistead Smith
/s/ LESLIE M. STRATTON, III Director January 20, 1994
Leslie M. Stratton, III
/s/ MIKE P. STURDIVANT Director January 20, 1994
Mike P. Sturdivant
/s/ RICHARD A. TRIPPEER, JR. Director January 20, 1994
Richard A. Trippeer, Jr.
</TABLE>
II-5
<PAGE> 149
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBERED PAGE
- ------- ------------------------------------------------------------------- -------------
<S> <C> <C> <C>
2 -- Agreement and Plan of Reorganization, dated April 30, 1993, by and
between Union Planters Corporation, North Arkansas Bancshares,
Inc., Clin-Ark Bankshares, Inc. and First National Bank, Clinton,
Arkansas, along with the Plan of Merger annexed thereto as Exhibit
A (included as Appendix B to the Prospectus)
5 -- Opinion of Gary A. Simanson, Associate General Counsel to Union
Planters Corporation, regarding legality of Common Stock, $5.00 par
value per share, of Union Planters Corporation
23 (a) -- Consent of Gary A. Simanson, Esq. (included in Exhibit 5)
23 (b) -- Consent of Price Waterhouse
23 (c) -- Consent of Horne CPA Group
23 (d) -- Consent of Williams and Jerrolds, P.C.
23 (e) -- Consent of Heathcott and Mullaly
23 (f) -- Consent of KPMG Peat Marwick
23 (g) -- Consent of Baird, Kurtz & Dobson
23 (h) -- Consent of Coopers & Lybrand
23 (i) -- Consent of Deloitte & Touche
23 (j) -- Consent of Winnett Associates
23 (k) -- Consent of KPMG Peat Marwick
23 (l) -- Consent of Frost & Company
24 -- Power of Attorney (included in signature pages)
</TABLE>
<PAGE> 1
Exhibit 5
( LOGO )
Union Planters Corporation
January 20, 1994
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 227,768 shares of the Common Stock, $5.00 par value per share, of
Union Planters Corporation ("UPC")
Gentlemen:
The undersigned has participated in the preparation of a registration statement
on Form S-4 (the "Registration Statement") for filing with the Securities and
Exchange Commission in respect to not more than 227,768 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 April 30, 1993, by and
between UPC, North Arkansas Bancshares, Inc., Clin-Ark Bankshares, Inc. and
First National Bank, Clinton, Arkansas (the "Agreement").
For purposes of rendering the opinion expressed herein, the undersigned has
examined UPC's corporate charter and all amendments thereto; UPC's by-laws and
amendments thereto; the Agreement and such of UPC's corporate records as the
undersigned has deemed necessary and material to rendering the undersigned's
opinion. The undersigned has relied upon certificates of public officials and
representations of UPC officials, and has assumed that all documents examined
by the undersigned as originals are authentic, that all documents submitted to
the undersigned as photocopies are exact duplicates of original documents, and
that all signatures on all documents are genuine.
Further, the undersigned is familiar with and has supervised all corporate
action taken in connection with the authorization of the sale of the subject
securities.
Based upon and subject to the foregoing and subsequent assumptions,
qualifications and exceptions, it is the undersigned's opinion that:
1. UPC is a duly organized and validly existing corporation in good
standing under the laws of the State of Tennessee and has all requisite power
and authority to issue, sell and deliver the subject securities, and to carry
on its business and own its property;
<PAGE> 2
Union Planters Corporation
January 20, 1994
Page 2
2. The Shares have been duly authorized and when issued by UPC in
accordance with the Agreement, the Shares will be fully paid and nonassessable.
The opinion expressed above is limited by the following assumptions,
qualifications and exceptions.
(a) The undersigned is licensed to practice law only in the State of
Tennessee and the State of New York, and expresses no opinion with respect to
the effect of any laws other than those of the State of Tennessee and the
United States of America.
(b) The opinion stated herein is based upon statutes, regulations, rules,
court decisions and other authorities existing and effective as of the date of
this opinion, and the undersigned undertakes no responsibility to update or
supplement said opinion in the event of or in response to any subsequent
changes in the law or said authorities, or upon the occurrence after the date
hereof of events or circumstances that, if occurring prior to the date hereof,
might have resulted in a different opinion.
(c) This opinion has been rendered solely for the benefit of Union
Planters Corporation and no other person or entity shall be entitled to rely
hereon without the express written consent of the undersigned.
(d) This opinion is limited to the legal matters expressly set forth
herein, and no opinion is to be implied or inferred beyond the legal matters
expressly so addressed.
The undersigned hereby consents to the undersigned being named as a party
rendering a legal opinion under the caption "Validity of UPC Common Stock" in
the Prospectus constituting part of the Registration Statement and to the
filing of this opinion with the Securities and Exchange Commission as well as
all state regulatory bodies and jurisdictions where qualification is sought for
the sale of the subject securities.
The undersigned is an officer of and receives compensation from UPC and is
therefore not independent from UPC.
Very truly yours,
UNION PLANTERS CORPORATION
By: /s/ Gary A. Simanson
Gary A. Simanson
Associate General Counsel
<PAGE> 1
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Union Planters
Corporation of our report dated January 14, 1993, which appears on page 30 of
Union Planters Corporation's 1992 Annual Report to Shareholders, which is
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1992. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/ PRICE WATERHOUSE
Memphis, Tennessee
January 20, 1994
<PAGE> 1
Exhibit 23(c)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Union Planters Corporation:
We hereby consent to the incorporation by reference in the January 20, 1994
Registration Statement on Form S-4 of Union Planters Corporation (UPC) of our
report, dated February 11, 1993, relating to the combined financial statements
of Security Trust Federal Savings and Loan Association and SaveTrust Federal
Savings Bank, which is included in UPC's Form 10K for the year ended December
31, 1992.
We also consent to the reference to Horne CPA Group under the heading "Experts"
in such Registration Statement.
/s/ Horne CPA Group
Laurel, Mississippi
January 20, 1994
<PAGE> 1
Exhibit 23(d)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-4 of Union Planters
Corporation of our report dated February 26, 1993 (except for Note 15, as to
which the date is May 28, 1993) relating to the consolidated financial
statements of Central State Bancorp, Inc., which appears in the
Current Report on Form 8-K of Union Planters Corporation dated September 27,
1993. We also consent to the reference to our firm under the caption
"Experts" in the Prospectus, which is a part of this Registration Statement.
/S/ WILLIAMS AND JERROLDS, P.C.
Savannah, Tennessee
January 20, 1994
<PAGE> 1
Exhibit 23(e)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-4 of Union Planters Corporation of our report dated
February 16, 1993 on the consolidated financial statements of Garrett
Bancshares, Inc. appearing in Union Planters Corporation's current report on
Form 8K dated September 27, 1993. We also consent to the reference to us under
the heading "Experts" in such Registration Statement.
/s/ Heathcott & Mullaly
Brentwood, Tennessee
January 20, 1994
<PAGE> 1
Exhibit 23(f)
ACCOUNTANTS' CONSENT
We consent to incorporation by reference in the registration statement on Form
S-4 of Union Planters Corporation of our report dated March 19, 1993, relating
to the consolidated balance sheets of First Federal Savings Bank and subsidiary
as of December 31, 1992 and 1991, and the related consolidated statements of
operations, retained earnings, and cash flows for each of the years in the
three-year period ended December 31, 1992, which report appears in the Current
Report on Form 8-K dated September 27, 1993, of Union Planters Corporation, and
to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick
Nashville, Tennessee
January 19, 1994
<PAGE> 1
Exhibit 23(g)
CONSENT OF BAIRD, KURTZ & DOBSON
INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Form
S-4 Registration Statement of Union Planters Corporation to be filed with the
Securities and Exchange Commission on or about January 20, 1994, of our report
dated February 18, 1993 with respect to the consolidated financial statements
of Mid-South Bancorp, Inc. appearing as Exhibit 28(g) in the Form 8-K Current
Report of Union Planters Corporation dated September 27, 1993. We also consent
to the reference to us under the heading "Experts" in such registration
statement.
/s/ BAIRD, KURTZ & DOBSON
Bowling Green, Kentucky
January 20, 1994
<PAGE> 1
Exhibit 23(h)
Coopers
& Lybrand
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement of Union Planters
Corporation on Form S-4 of our report dated January 29, 1993, on our audits of
the financial statements of Bank of East Tennessee. We also consent to the
reference to our firm under the caption "Experts".
/s/ Coopers & Lybrand
Knoxville, Tennessee
January 19, 1994
<PAGE> 1
Exhibit 23(i)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Union Planters Corporation on Form S-4 of our report dated February 12,
1993, relating to the consolidated financial statements of Tennessee Bancorp,
Inc., appearing in the Current Report of Union Planters Corporation dated
October 14, 1993 and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE
Nashville, Tennessee
January 20, 1994
<PAGE> 1
Exhibit 23(j)
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-4 of Union Planters
Corporation of our report dated January 22, 1993 (except Note Q, as to which
the date is September 21, 1993) relating to the consolidated financial
statements of First National Bancorp of Shelbyville, Inc., which appears in the
Current Report on Form 8-K of Union Planters Corporation dated October 14,
1993. We also consent to the reference to our firm under the caption "Experts"
in the Prospectus, which is a part of this Registration Statement.
/s/ WINNETT ASSOCIATES
Shelbyville, Tennessee
January 20, 1994
<PAGE> 1
Exhibit 23(k)
ACCOUNTANTS' CONSENT
The Board of Directors
Liberty Bancshares, Inc.:
We consent to incorporation by reference in the registration statement on Form
S-4 of Union Planters Corporation of our report dated January 25, 1993,
relating to the consolidated balance sheets of Liberty Bancshares, Inc. and
subsidiary as of December 31, 1992 and 1991, and the related consolidated
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1992, which report appears in
the Current Report on Form 8-K dated January 10, 1994, of Union Planters
Corporation, and to the reference to our firm under the heading "Experts" in
the prospectus.
/s/ KPMG Peat Marwick
Nashville, Tennessee
January 19, 1994
<PAGE> 1
Exhibit 23(l)
Consent of Independent Public Accountants
We hereby consent to the incorporation in this Registration Statement
on Form S-4 of Union Planters Corporation, and in the Prospectus required in
connection therewith, of our report dated February 19, 1993, relating to the
consolidated financial statements of Clin-Ark Bankshares, Inc. as of December
31, 1992, and for the year then ended, which report appears on page 1 of
Appendix A-1 of this Registration Statement dated January 20, 1994. We also
consent to the reference to our firm under the caption "Experts."
/s/ Frost & Company
Certified Public Accountants
Little Rock, Arkansas
January 20, 1994
