<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 14, 1995
REGISTRATION NO. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNION PLANTERS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
TENNESSEE 6712 62-0859007
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
</TABLE>
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 383-6000
(Address, including zip code, and telephone number of
registrant's principal executive offices)
GARY A. SIMANSON, ESQ.,
ASSISTANT SECRETARY AND ASSOCIATE GENERAL COUNSEL
UNION PLANTERS CORPORATION
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 383-6590
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<S> <C>
MARION S. BOYD, ESQ. STEVEN J. EISEN, ESQ.
McDonnell Dyer Baker, Donelson, Bearman & Caldwell
The Crescent Center 1700 Nashville City Center
6075 Poplar Avenue, Suite 650 Post Office Box 190613
Memphis, Tennessee 38119 Nashville, Tennessee 37219
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF OFFERING AGGREGATE
SECURITIES TO BE AMOUNT TO BE PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT(1) PRICE(2) REGISTRATION FEE
---------- ---------- ----------- -------- ----------------
<S> <C> <C> <C> <C>
8% Cumulative, Convertible Preferred
Stock, Series E, having no par value but
having a stated value of $25.00 per share.(3) 407,196 $33.00 $13,437,468 $4,633.61
Common Stock having a par value of $5.00 508,995
per share into which the said 8% Cumulative,
Convertible Preferred Stock, Series E, will be
Convertible
- --------------------------
</TABLE>
(1) Estimated based on an assumed conversion price range.
(2) Determined pursuant to Rule 457(f).
(3) Each share is convertible into 1.25 shares of Union Planters
Corporation Common Stock having a par value of $5.00 per share,
including rights to purchase shares of Series A Preferred Stock under
UPC's Share Purchase Rights Plan in certain circumstances.
DELAYING AMENDMENT
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
<PAGE> 2
UNION PLANTERS CORPORATION
CROSS REFERENCE OF ITEMS IN FORM S-4 TO PROSPECTUS
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<CAPTION>
ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
- --------------------------- ------------------------------
<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement
and Outside Front Cover Page of
Prospectus Facing Page. Cross Reference Sheet and Outside Front
Cover Page
2. Inside Front and Outside Back Cover
Pages of Prospectus Inside Front Cover and TABLE OF CONTENTS
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information SUMMARY
4. Terms of the Transaction SUMMARY, 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 THE UPC SERIES E PREFERRED 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
THE UPC COMMON AND PREFERRED STOCK and INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
11. Incorporation of Certain
Information by Reference INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
12. Information with Respect to S-2
or S-3 Registrants *
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
- --------------------------- ------------------------------
<S> <C>
13. Incorporation of Certain
Information by Reference *
14. Information with Respect to
Registrants Other Than S-3 or
S-2 Registrants *
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to
S-3 Companies *
16. Information with Respect to S-2
or S-3 Companies *
17. Information with Respect to
Companies Other Than S-3 or
S-2 Companies SUMMARY, THE MERGER, FIRST STATE BANCORPORATION. INC., MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
and FIRST STATE BANCORPORATION, INC. CONSOLIDATED FINANCIAL STATEMENTS
(APPENDIX A)
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE, THE
SPECIAL MEETING, THE MERGER and EFFECT OF MERGER ON
RIGHTS OF SHAREHOLDERS
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange Offer *
* Omitted because the answer is negative or the item is inapplicable.
</TABLE>
<PAGE> 4
FIRST STATE BANCORPORATION, INC.
213 CHURCH AVENUE NORTH
DYERSBURG, TENNESSEE 38025
April 24, 1995
TO THE SHAREHOLDERS OF FIRST STATE BANCORPORATION, INC.
You are cordially invited to attend a Special Meeting of Shareholders
of First State Bancorporation, Inc. ("FSB") to be held in the board room of the
Dyersburg Office of First Exchange Bank, 213 Church Avenue North, Dyersburg,
Tennessee 38025, at 3:00 p.m. CDT, on Wednesday, May 24, 1995.
At the Special Meeting, you will have the opportunity to consider and
to vote on a proposal to approve an Agreement and Plan of Reorganization dated
as of February 24, 1995 (the "Reorganization Agreement") along with the Plan of
Merger annexed thereto as Exhibit A (both as subsequently amended) pursuant to
which FSB would be merged with and into FSB Acquisition Company, Inc., a
newly-organized, wholly-owned subsidiary of Union Planters Corporation, which
would survive the Merger. The Boards of Directors of FSB and Union Planters
Corporation have approved the Reorganization Agreement and the Plan of Merger
and the merger contemplated thereby.
In the merger shareholders of FSB would receive shares of Union
Planters Corporation 8% Cumulative, Convertible Preferred Stock, Series E,
having no par value (the "Series E Preferred Stock") for their shares of FSB's
common stock, $1.00 par value per share, outstanding immediately prior to the
effective time of the merger. Based upon the "current market price per share"
(as defined in the Reorganization Agreement) of the Series E Preferred Stock
being neither less than $27.00 nor more than $33.00 per share, the FSB
shareholders would receive 1.185433 shares of Series E Preferred Stock in
exchange for each share of FSB Common Stock held by them at that time. The
last trade of the Series E Preferred Stock on April 20, 1995, was $______ per
share. Should the current market price be less than $27.00 or more than $33.00
per share, Section 3.1(e) of the Reorganization Agreement prescribes the method
for determining whether the transaction will be consummated and for what
consideration. At the time the Reorganization Agreement was negotiated, the
value of the Series E Preferred Stock to be received by the shareholders of FSB
was approximately $35.56 per share of FSB common stock based on an exchange
ratio of 1.185433 shares of Series E Preferred Stock for each share of FSB
common stock and a current market price of $30.00 per share for the Series E
Preferred Stock. The enclosed Notice of Special Meeting of Shareholders and
the Prospectus and Proxy Statement explain the merger and 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 FSB'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 FSB has considered more than one proposal to
sell FSB and has determined that the proposal outlined in the Reorganization
Agreement is the best plan for the employees and the community, while at the
same time maximizing the financial interests of the shareholders of FSB.
Accordingly the Board of Directors of FSB recommends that you vote FOR the
proposal being considered.
Sincerely,
FIRST STATE BANCORPORATION, INC.
[SIG]
Percy E. Smith
Chairman, President and Chief Executive Officer
<PAGE> 5
FIRST STATE BANCORPORATION, INC.
213 CHURCH AVENUE NORTH
DYERSBURG, TENNESSEE 38025
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD WEDNESDAY, MAY 24, 1995
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of First State
Bancorporation, Inc. ("FSB") has been called by the Board of Directors of FSB
and will be held in the board room of the Dyersburg Office of First Exchange
Bank, 213 Church Avenue North, Dyersburg, Tennessee 38025, on Wednesday, May
24, 1995, at 3:00 p.m. CDT for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan
of Reorganization dated as of February 24, 1995 (the "Reorganization
Agreement") by and between Union Planters Corporation ("UPC"), a
Tennessee-chartered bank holding company; FSB Acquisition Company,
Inc. ("Interim"), a newly-organized, wholly-owned subsidiary of UPC;
First State Bancorporation, Inc. ("FSB"), a Tennessee-chartered bank
holding company; and First Exchange Bank ("FEB"), a
Tennessee-chartered banking corporation which is a wholly-owned
subsidiary of FSB, along with the Plan of Merger annexed thereto as
Exhibit A, both as subsequently amended by Letter Agreement dated
April 4, 1995. The Reorganization Agreement and the Plan of Merger,
as amended, provide for the merger (the "Merger") of FSB with and into
Interim whereupon the holders of FSB's common stock, $1.00 par value
per share, of record immediately prior to the effective time of the
Merger would receive 1.185433 shares of the Union Planters Corporation
8% Cumulative, Convertible Preferred Stock, Series E, having no par
value for each share of FSB common stock then held based upon the
"current market price per share" (as defined in the Reorganization
Agreement) of the Series E Preferred Stock being neither less than
$27.00 nor more than $33.00 per share. 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 FSB have the right to dissent from the Merger pursuant to, and
in accordance with, Section 48-23-101 et seq of the Tennessee Code Annotated.
Copies of said section of the Tennessee Code Annotated accompany this notice as
Appendix C to the Prospectus and Proxy Statement.
Whether or not you plan to attend the Special Meeting, please sign the enclosed
proxy appointment card and return it at once in the stamped return envelope in
order to ensure that your shares will be represented at the Special Meeting.
PLEASE DO NOT SEND IN ANY STOCK CERTIFICATES AT THIS TIME. If you should
attend the Special Meeting in person, the proxy appointment can be disregarded,
if you wish, and you may vote your own shares.
<PAGE> 6
Only holders of FSB Common Stock of record at the close of business on April
21, 1995, will be entitled to receive notice of, and to vote at the Special
Meeting and any adjournments or postponements thereof.
By Order of the Board of Directors
[SIG]
Percy E. Smith
Chairman, President and Chief Executive Officer
Dyersburg, Tennessee
Dated: April 24, 1995
THE BOARD OF DIRECTORS OF FIRST STATE BANCORPORATION, INC. BY UNANIMOUS VOTE
RECOMMENDS THAT THE HOLDERS OF FIRST STATE BANCORPORATION, INC. COMMON STOCK
VOTE TO APPROVE THE REORGANIZATION AGREEMENT AND THE PLAN OF MERGER.
<PAGE> 7
PROSPECTUS
407,196 SHARES OF
UNION PLANTERS CORPORATION
8% CUMULATIVE, CONVERTIBLE PREFERRED STOCK, SERIES E
PROXY STATEMENT
FIRST STATE BANCORPORATION, INC.
SPECIAL MEETING TO BE HELD WEDNESDAY, MAY 24, 1995
This Prospectus and Proxy Statement (the "Prospectus") relates to up to 407,196
shares of the 8% Cumulative, Convertible Preferred Stock, Series E, having no
par value but having a stated value of $25.00 per share (the "Series E
Preferred Stock") of Union Planters Corporation ("UPC"), a Tennessee-chartered
bank holding company and savings and loan holding company, to be issued to
shareholders of First State Bancorporation, Inc. ("FSB"), a Tennessee-chartered
bank holding company, in a merger (the "Merger") of FSB with and into FSB
Acquisition Company, Inc. ("Interim"), a newly-organized, wholly-owned
subsidiary of UPC, pursuant to an Agreement and Plan of Reorganization dated
as of February 24, 1995, by and between UPC, Interim, FSB, and First Exchange
Bank ("FEB"), a wholly-owned, Tennessee-chartered banking subsidiary of FSB
(the "Reorganization Agreement"), and in accordance with the Plan of Merger
annexed thereto as Exhibit A (the "Plan of Merger"), both as amended by Letter
Agreement dated April 4, 1995 (the "Letter Agreement"). The number of shares
of Series E Preferred Stock to be issued by UPC in connection with the Merger
in respect to each outstanding share of FSB common stock having a par value of
$1.00 per share (the "FSB Common Stock") is based on a conversion formula more
particularly described in Section 3.1(e) of the Reorganization Agreement, a
copy of which (including the Plan of Merger and Letter Agreement) is attached
as Appendix B to this Prospectus.
Shares of the outstanding Series E Preferred Stock are now, and the
Series E Preferred Stock to be issued in connection with the Merger will be,
listed for trading through the facilities of the National Association of
Securities Dealers National Market System ("NASDAQ/NMS") under the symbol
"UPCPO." The UPC Common Stock into which the Series E Preferred Stock is
convertible is listed for trading on the New York Stock Exchange ("NYSE") under
the symbol "UPC." The last reported sale price of Series E Preferred Stock on
the NASDAQ/NMS on April 20, 1995, was $_____ per share. If the market price of
the Series E Preferred Stock were $_____ per share, the value of the Series E
Preferred Stock to be received by the shareholders of FSB would be
approximately $_____ per share of FSB Common Stock based on an exchange ratio
of 1.185433 shares of Series E Preferred Stock for each share of FSB Common
Stock.
This Prospectus also constitutes a proxy statement and is furnished to holders
of record of FSB Common Stock in connection with the solicitation of proxies by
the FSB Board of Directors (the "FSB Board") for use at a Special Meeting of
FSB shareholders to be held at 3:00 p.m. CDT, on Wednesday, May 24, 1995, in
the board room of the Dyersburg Office of First Exchange Bank, 213 Church
Avenue North, Dyersburg, Dyer County, Tennessee 38025 and at any adjournments
or postponements thereof (the "Special Meeting"). At the Special Meeting,
holders of FSB Common Stock of record as of April 21, 1995, will consider and
vote upon a proposal to approve the Reorganization Agreement and the Plan of
Merger annexed thereto as Exhibit A, both as amended by the Letter Agreement,
upon consummation of which (i) all outstanding shares of FSB Common Stock
(except for those shares held by any FSB shareholders with respect to which
dissenters' rights shall have been perfected in accordance with Tennessee law)
would be converted exclusively into the right to receive shares of Series E
Preferred Stock (and cash in lieu of any remaining fractional share) based on a
conversion formula more particularly set forth in Section 3.1(e) of the
Reorganization Agreement and (ii) FSB would be merged with and into Interim
with Interim surviving the Merger. Thus, at the Effective Time of the Merger,
FEB would become a wholly-owned subsidiary of UPC.
All information contained in this Prospectus pertaining to UPC and its
subsidiaries has been supplied by UPC and all information pertaining to FSB or
FEB has been supplied by FSB. This Prospectus and the accompanying proxy
appointment cards are first being mailed to shareholders of FSB on or about
April 24, 1995.
<PAGE> 8
NEITHER THE SHARES OF UPC SERIES E PREFERRED STOCK NOR THE SHARES OF UPC COMMON
STOCK INTO WHICH THE SERIES E PREFERRED STOCK IS CONVERTIBLE OFFERED HEREBY ARE
SAVINGS ACCOUNTS OR DEPOSITS AND NEITHER IS 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 IS APRIL 24, 1995
<PAGE> 9
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
Series E Preferred 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 as
permitted by the rules and regulations of the Commission. For further
information regarding UPC and the Series E Preferred 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
(except as indicated, under Commission File Number 1- 10160) 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, 1994;
2. UPC's Current Report on Form 8-K dated January 19, 1989, filed
on February 1, 1989 (Commission File Number 0-6919), in
connection with UPC's designation and authorization of its
Series A Preferred Stock;
3. UPC's Current Report on Form 8-K dated December 31, 1994, as
filed on January 13, 1995 and amended on January 31, 1995;
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;
5. The description of the Union Planters Corporation 8%
Cumulative, Convertible Preferred Stock, Series E, contained
in UPC's Registration Statement under Section 12(g) of the
Exchange Act and any amendment or report filed for the purpose
of updating such description; and
6. Restated Charter of Incorporation, as amended December 17,
1992, of Union Planters Corporation annexed as Exhibit 3(a) to
its Annual Report on Form 10-K dated December 31, 1992.
UPC's Annual Report on Form 10-K for the year ended December 31, 1994,
incorporates by reference specific portions of UPC's Annual Report to
Shareholders for that year (UPC's "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 Series
E
ii
<PAGE> 10
Preferred Stock offered hereby shall likewise be incorporated herein by
reference and shall become a part hereof from and after the time such documents
are filed. Any statement contained herein or in a document incorporated herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently-filed
document which also is incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
ON THE WRITTEN OR ORAL REQUEST OF EACH PERSON TO WHOM THIS PROSPECTUS
IS DELIVERED, UPC WILL PROVIDE, WITHOUT CHARGE, A COPY OF ANY OR ALL OF THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH
DOCUMENTS). WRITTEN OR TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED
TO GARY A. SIMANSON, ASSISTANT SECRETARY AND ASSOCIATE GENERAL COUNSEL, UNION
PLANTERS CORPORATION, P.O. BOX 387, MEMPHIS, TENNESSEE 38147, (901) 383-6590.
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 FSB SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
TABLE OF CONTENTS
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PAGE
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<S> <C>
Available Information (ii)
Incorporation of Certain Documents by Reference (ii)
Summary 1
Parties to the Merger 1
Special Meeting of FSB Shareholders 2
Votes Required; Record Date 2
Terms of the Merger 3
The Effective Date 3
Reasons for the Merger; Recommendations of Boards of Directors 3
Conditions; Regulatory Approvals 4
Management After the Merger 4
Shareholders' Dissenters' Rights 4
Certain Federal Income Tax Consequences 5
Accounting Treatment 5
Market Prices of UPC Series E Preferred Stock and UPC Common Stock 5
Selected Consolidated Financial Data 7
Recent Developments Affecting UPC 12
The Special Meeting 12
Time and Place of Special Meeting; Solicitation of Proxies 12
Votes Required 13
Shareholders' Dissenters' Rights 13
Recommendation 15
The Merger 15
Background of and Reasons for the Merger 16
Terms of the Merger 17
Effective Date and Effective Time of the Merger 17
Surrender of Certificates 17
Conditions to Consummation of the Merger 18
Regulatory Approvals 19
Conduct of Business Pending the Merger 20
</TABLE>
iii
<PAGE> 11
<TABLE>
<CAPTION>
Page
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<S> <C>
Payment of Dividends 20
Waiver and Amendment; Termination 21
Management after the Merger 21
FSB Executive Compensation 24
Interests of Certain Persons in the Merger 25
Certain Federal Income Tax Consequences 25
Accounting Treatment 26
Expenses 26
Resales of Series E Preferred Stock 26
Certain Regulatory Considerations 27
Description of The UPC Common and Preferred Stock 27
The UPC Common Stock 28
The UPC Series E Preferred Stock 29
Other Preferred Stock of UPC 32
Certain Provisions That May Have an Anti-Takeover Effect 33
Effect of Merger on Rights of Shareholders 34
Removal of Directors 34
Required Shareholder Votes 34
Election of Directors 34
First State Bancorporation, Inc. 35
Property 35
Competition 35
Deposits 36
Legal Proceedings 36
Market Price of FSB Common Stock 36
Certain Beneficial Holders of FSB Common Stock 36
Holdings of FSB Common Stock by FSB Management 37
First State Bancorporation, Inc. Management's Discussion and Analysis
of Financial Condition and Results of Operations 37
Validity of the UPC Series E Preferred Stock 50
Experts 50
Index to Appendices
Appendix A--First State Bancorporation, Inc. Consolidated Financial Statements
Appendix B--Agreement and Plan of Reorganization and Letter Amendment thereto, along with the
Plan of Merger annexed thereto as Exhibit A
Appendix C--Tennessee Business Corporation Act--Dissenters' Rights
</TABLE>
iv
<PAGE> 12
SUMMARY
The following summary is not intended to be a complete description of
all material facts regarding UPC, FSB and the matters to be considered at the
Special Meeting and is qualified in all respects by the information appearing
elsewhere or incorporated by reference in this Prospectus, the Appendices
hereto and the documents referred to herein.
PARTIES TO THE MERGER
UPC. Union Planters Corporation ("UPC") is a multi-state bank
holding company and savings and loan holding company headquartered in Memphis,
Tennessee. At December 31, 1994, UPC had total consolidated assets of
approximately $10.0 billion, loans of approximately $5.9 billion, deposits of
approximately $8.4 billion and shareholders' equity of approximately $731
million. As of that date, UPC was the second-largest independent bank holding
company headquartered in Tennessee as measured by consolidated assets. In
recent years UPC's Management has emphasized asset quality and maintenance of
capital well in excess of regulatory minima. At December 31, 1994, UPC's ratio
of nonperforming loans to total loans was .32% and its ratio of nonperforming
assets to loans and foreclosed property was .42%. The ratio of UPC's allowance
for losses on loans to total loans at such date was 2.05% and the ratio of
UPC's allowance for losses on loans to nonperforming loans was 641%. Also at
such date, UPC's Tier 1 risk-based capital, total risk-based capital and
leverage ratios were 12.22%, 14.75% and 7.18%, respectively.
UPC conducts its business activities through its two principal bank
subsidiaries, the $2.2-billion Union Planters National Bank ("UPNB"), founded
in 1869 and headquartered in Memphis, Tennessee, and the $2.0-billion Sunburst
Bank, Mississippi ("SBM"), headquartered in Grenada, Mississippi; 32 other bank
subsidiaries; and four savings and loan subsidiaries located in Tennessee,
Mississippi, Arkansas, Louisiana, Alabama and Kentucky (collectively, the
"Banking Subsidiaries"). Through its Banking Subsidiaries, UPC provides a
diversified range of financial services in the communities in which they
operate, including consumer, commercial and corporate lending, retail banking
and mortgage banking. UPC 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.
Through its Banking Subsidiaries, UPC operates approximately 380
banking offices. At December 31, 1994, UPC's assets were allocable by state to
its banking offices approximately as follows: $6.1 billion in Tennessee, $2.5
billion in Mississippi, $680 million in Arkansas, $502 million in Louisiana,
$273 million in Alabama and $110 million in Kentucky.
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of UPC's business. The Corporation completed
four acquisitions in 1992, 12 in 1993 and 13 in 1994, adding approximately $1.6
billion in total assets in 1992, $1.3 billion in 1993 and $3.8 billion in 1994.
For a discussion of UPC's acquisition program and its managements philosophy,
see "Acqusitions" on page 10 of UPC's Annual Report to Shareholders included as
Exhibit 13 to UPC's Annual Report on Form 10-K dated December 31, 1994 which is
incorporated by reference herein. For information with respect to acquisitions
consummated during the past three years, see Note 2 to UPC's audited
Consolidated Financial Statements for the years ended December 31, 1994 and
1993 which are included in UPC's Annual Report to Shareholders which is Exhibit
13 to UPC's Annual Report on Form 10-K dated December 31, 1994 which is
incorporated by reference herein. 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. Future
acquisitions may entail the payment by UPC of consideration in excess of the
book value of the underlying net assets acquired, may result in the issuance of
additional shares of UPC capital stock or the incurrence of additional
indebtedness by UPC, and could have a dilutive effect on the earnings or book
value per share of UPC. For acquisitions which are currently pending, see "--
Recent Developments Affecting UPC."
<PAGE> 13
UPC controls risk through centralized loan review and audit functions
as well as close monitoring of the financial performance of each Banking
Subsidiary. UPC also implements its asset and liability management strategy on
a consolidated basis and effects all trades for the investment portfolios of
the Banking Subsidiaries. UPC seeks to achieve economies in the Banking
Subsidiaries through consolidation of administrative and operational processes
and has substantially completed converting all of the Banking Subsidiaries to a
common data processing system. This system conversion should be completed by
the end of 1995 and should permit UPC to realize significant cost savings upon
full implementation. Additional information about UPC is included in documents
incorporated by reference in this Prospectus. See "Incorporation of Certain
Documents by Reference."
Additional information about UPC is included in documents incorporated
by reference in this Prospectus. See "Incorporation of Certain Documents by
Reference."
UPC's corporate office is located at 7130 Goodlett Farms Parkway,
Memphis, Tennessee 38018, and its telephone number is (901) 383-6000.
FSB. First State Bancorporation, Inc. ("FSB") is a bank holding
company chartered under the laws of the State of Tennessee whose main office is
located at 213 Church Avenue North, Dyersburg, Tennessee 38025 [telephone (901)
285-0662]. FSB's principal subsidiary is First Exchange Bank ("FEB"), a
Tennessee-chartered banking corporation. At December 31, 1994, FEB was
rendering banking services, consisting primarily of traditional deposit and
lending services, from four banking offices located in Lake County, Tennessee;
one banking office in Dyer County, Tennessee; and three banking offices in
Weakley County, Tennessee. As of December 31, 1994, FSB's total assets were
approximately $110 million, its loans were approximately $70 million and its
deposits were approximately $100 million.
INTERIM. FSB Acquisition Company, Inc. ("Interim") was organized by
UPC solely to be a party to the Merger. At the Effective Time of the Merger
(as defined below), FSB will, pursuant to the terms of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A (both as amended
by the Letter Agreement), merge with and into Interim with Interim surviving
the Merger and continuing as a wholly-owned subsidiary of UPC. The Agreement
and Plan of Reorganization and annexed Plan of Merger initially contemplated
that FSB would survive the Merger, however, by the Letter Agreement, the
parties have agreed that FSB would be merged with and into Interim, such that
Interim would survive the Merger.
SPECIAL MEETING OF FSB SHAREHOLDERS
A Special Meeting (the "Special Meeting") of the FSB shareholders will
be held on Wednesday, May 24, 1995, at 3:00 p.m. CDT, in the board room of the
Dyersburg Office of First Exchange Bank, 213 Church Avenue North, Dyersburg,
Tennessee 38025, 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 FSB Common Stock of record at the close of business on
April 21, 1995 (the "Record Date") will be entitled to receive notice of, and
vote at the Special Meeting. The affirmative votes of the holders of a
majority of the shares of FSB 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 April 21, 1995, there were 343,499.7 shares of FSB
Common Stock outstanding and entitled to vote.
The directors and executive officers of FSB (the "Management Group")
held, as of the Record Date, 203,563.5 shares, or 59.3% of the outstanding
shares of FSB Common Stock. FSB 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
2
<PAGE> 14
the Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit
A. See "The Special Meeting." Should they so vote their shares, the
requirement of FSB shareholder approval would be satisfied.
TERMS OF THE MERGER
Upon consummation of the Merger, each share of FSB Common Stock which
was outstanding immediately prior to the Effective Time of the Merger (except
for shares with respect to which dissenters' rights had been perfected in
accordance with Tennessee law) will be converted exclusively into the right to
receive 1.185433 shares of UPC Series E Preferred Stock based upon the "Current
Market Price Per Share" of the Series E Preferred Stock being neither less than
$27.00 nor more than $33.00 per share. The "Current Market Price Per Share" is
defined in the Reorganization Agreement as the average price per share of the
"last" trades of the Series E Preferred Stock as reported in The Wall Street
Journal for each of the ten (10) trading days next preceding the Closing Date.
Should the Current Market Price Per Share of the Series E Preferred Stock be
less than $27.00 or more than $33.00, Section 3.1(e) of the Reorganization
Agreement sets forth the method for determining whether the Merger will be
consummated and, if so, the method for determining the number of shares of
Series E Preferred Stock to which an FSB shareholder would be entitled. The
last trade of the UPC Series E Preferred Stock on the NASDAQ/NMS on April 20,
1995, was $_______ per share. The market price of the shares and therefore the
Current Market Price Per Share may move up or down between the date of this
Prospectus, the Closing Date and the Effective Time of the Merger.
THE EFFECTIVE DATE
The Merger will become effective at the time Articles of Merger along
with the executed Plan of Merger are filed with the Tennessee Secretary of
State in accordance with the Tennessee Business Corporation Act, as amended
(the "Act") or on such later date and at such later time as the Articles of
Merger may specify (the "Effective Time of the Merger"). Assuming the timely
receipt of all regulatory approvals, the expiration of all statutory waiting
periods and the satisfaction or waiver of all conditions to closing specified
in the Reorganization Agreement, it is the present intention of the parties to
the Reorganization Agreement that the Articles of Merger along with the Plan of
Merger will be filed so as to become effective on or about July 1, 1995. 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 presently intend to close the transactions
contemplated therein on the last business day next preceding the Effective Date
of the Merger (the "Closing Date"). Holders of record of FSB Common Stock
immediately prior to the Effective Time of the Merger will be entitled to
receive the consideration for the Merger pursuant to the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A.
REASONS FOR THE MERGER; RECOMMENDATIONS OF BOARDS OF DIRECTORS
The FSB Board believes that the Merger is fair to, and in the best
interests of, FSB and its shareholders and recommends that FSB's shareholders
vote "FOR" approval of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A, both as amended by the Letter Agreement. The FSB
Board believes that the Merger will provide significant value to all FSB
shareholders and will also enable them to participate in opportunities for
investment growth that the FSB Board believes the Merger makes possible. The
Merger will give FEB access to a substantially greater base of capital,
affording FEB an opportunity to expand services beyond those presently
provided. Moreover, affiliation with UPC and its affiliate banks will allow
FEB to compete more strongly in its marketplace and will make available to FEB
certain economies of scale in its banking operations. See headings "THE
MERGER--Background of and Reasons for the Merger."
3
<PAGE> 15
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is subject to various conditions, including
receipt of the approval of the FSB shareholders, receipt of the necessary
regulatory approvals and satisfaction of customary contractual closing
conditions.
The regulatory approvals and consents necessary to consummate the
transactions contemplated by the Reorganization Agreement include the prior
approval of the Board of Governors of the Federal Reserve System (the "Federal
Reserve") and prior approval of the Tennessee Department of Financial
Institutions (the "Tennessee Department"). Applications for such approvals
have been submitted to each of the respective regulatory agencies. As of the
date of this Prospectus, approvals have not been received from either the
Tennessee Department or the Federal Reserve for the parties to consummate the
Merger. See headings: "THE MERGER--Conditions to Consummation of the Merger,"
"--Regulatory Approvals," "--Conduct of Business Pending the Merger" and
"CERTAIN REGULATORY CONSIDERATIONS."
MANAGEMENT AFTER THE MERGER
At the Effective Time of the Merger, the persons who are serving as
directors and officers of Interim immediately prior thereto shall continue to
serve as the directors and officers of Interim as the entity surviving the
Merger and shall continue to hold office as provided in the Charter and Bylaws
of Interim as the surviving entity unless and until their successors shall have
been duly elected or appointed and qualified. The persons serving as officers
and directors of FEB immediately prior to the Effective Time of the Merger
shall continue to serve as the officers and directors of FEB as a wholly owned
subsidiary of UPC unless and until their service shall expire or terminate and
their successors have been duly elected or appointed and qualified as provided
in FEB's Bylaws. See "THE MERGER--Management After the Merger."
SHAREHOLDERS' DISSENTERS' RIGHTS
Under Chapter 23 of Title 48 of the Tennessee Business Corporation Act
(the "Act"), holders of FSB Common Stock outstanding and entitled to vote at
the Special Meeting who do not vote "FOR" approval of the Reorganization
Agreement and the Plan of Merger annexed thereto as Exhibit A and who comply
with certain notice and other requirements set forth in Sections 48-23-201
through 209 of the Act will have the right to dissent from the Merger and to be
paid in cash the "fair value" of their shares of FSB Common Stock. (A vote in
favor of the Merger will disqualify an FSB shareholder from exercising his or
her dissenters' rights). Tennessee law defines "fair value" to mean the value,
determined by appraisal pursuant to the Act, of the shares as of the moment
immediately prior to the effectuation of the Merger, excluding any appreciation
or depreciation in anticipation of the Merger. In order for a holder of FSB
Common Stock to perfect dissenters' rights, such holder must not vote his or
her shares of FSB Common Stock "FOR" approval of the Reorganization Agreement
and the Plan of Merger and must also deliver to FSB, before the vote on the
Merger is taken, a written notice of the dissenter's intent to demand payment
for his or her shares. Neither delivery of a proxy appointment directing a
vote against the Reorganization Agreement and the Plan of Merger nor a failure
to vote "FOR" the Reorganization Agreement and the Plan of Merger will, in and
of itself, constitute such written notice. Certain additional procedures must
be followed in order for an FSB shareholder to exercise dissenters' rights.
Shareholders wishing to dissent from the Reorganization Agreement and the Plan
of Merger are urged to read carefully "The Special Meeting --Shareholders'
Dissenters' Rights" and Appendix C (containing a copy of the Chapter of the Act
pertaining to Dissenters' Rights) attached to this Prospectus and should
consult with their own legal advisors.
4
<PAGE> 16
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 of the Internal
Revenue Code of 1986, as amended (the "Code") and that accordingly, for federal
income tax purposes, FSB shareholders will realize and recognize gain or loss
(if any) only to the extent of any cash received as consideration for their FSB
Common Stock. FSB shareholders may recognize taxable gain or loss by reason of
receiving cash in lieu of a fractional share or by receiving cash incidental to
the exercise of Dissenters' Rights. See "THE MERGER--Certain Federal Income
Tax Consequences."
ACCOUNTING TREATMENT
The Merger is expected to be accounted for as a "purchase" under
generally accepted accounting principles ("GAAP") as described in Accounting
Principles Board Opinion No. 16. See "THE MERGER--Accounting Treatment" below.
MARKET PRICES OF UPC SERIES E PREFERRED STOCK AND UPC COMMON STOCK
UPC Series E Preferred Stock . The Series E Preferred Stock is listed
on the NASDAQ/NMS under the symbol "UPCPO." The following table sets forth for
the indicated periods the high and low closing prices for the Series E
Preferred Stock, as traded through the facilities of the NASDAQ/NMS and the
cash dividends declared per share.
<TABLE>
<CAPTION>
CASH
PRICE RANGE DIVIDENDS
----------------- DECLARED
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1995
First Quarter $32.38 $27.75 $ .50
Second Quarter through
April 20, 1995 -
------ ------ -----
Total $ .50
=====
1994
First Quarter $37.13 $33.50 $ .50
Second Quarter 38.50 34.25 .50
Third Quarter 34.75 32.25 .50
Fourth Quarter 33.00 26.25 .50
-----
Total $2.00
=====
1993
First Quarter $40.00 $32.75 $ .50
Second Quarter 40.50 33.25 .50
Third Quarter 41.00 35.63 .50
Fourth Quarter 40.25 34.00 .50
-----
Total $2.00
=====
</TABLE>
5
<PAGE> 17
<TABLE>
<CAPTION>
1992
<S> <C> <C> <C>
First Quarter, $26.00 $25.00 $ -
Second Quarter , accrued subsequent to date of issuance 29.13 25.00 .38
Third Quarter 30.13 28.00 .50
Fourth Quarter 34.00 28.25 .50
-----
Total $1.38
=====
</TABLE>
The last reported sale price of Series E Preferred Stock on the
NASDAQ/NMS on April 20, 1995, which was the last practicable date prior to the
mailing of this Prospectus, was $______ per share.
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>
1995
First Quarter $24.50 $20.88 $ .23
Second Quarter through
April 20, 1995 -
-----
Total $ .23
=====
1994
First Quarter $26.25 $23.13 $ .21
Second Quarter 28.75 24.75 .21
Third Quarter 26.00 23.50 .23
Fourth Quarter 24.50 19.63 .23
-----
Total $ .88
=====
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
April 20, 1995, which was the last practicable date prior to the mailing of
this Prospectus, was $_______ per share.
FSB Common Stock . The FSB Common Stock is not listed for trading on a
national securities exchange or otherwise publicly traded in any established
securities market.
6
<PAGE> 18
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for UPC and FSB on an historical basis,
selected unaudited consolidated financial data for the five years ended
December 31, 1994. The information for UPC has been derived from the
consolidated financial statements of UPC, including the consolidated financial
statements of UPC incorporated in this Prospectus by reference to UPC's 1994
Annual Report on Form 10-K, dated December 31, 1994, and should be read in
conjunction therewith and with the notes thereto. See "Incorporation of
Certain Documents by Reference." The information for FSB has been derived from
consolidated financial statements, including the consolidated financial
statements of FSB appearing in Appendix A to this Prospectus. 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 FSB, have been included.
7
<PAGE> 19
UPC Selected Consolidated Financial Data
<TABLE>
<CAPTION>
Years Ended December 31, (1)
-----------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 388,278 $ 343,710 $ 281,148 $ 233,790 $ 206,529
Provision for losses on loans 3,636 16,558 27,182 34,203 26,304
Investment securities gains (losses) (20,298) 4,495 14,019 2,624 83
Other noninterest income 113,860 115,430 98,590 90,697 92,076
Noninterest expense 398,835 319,681 279,464 238,475 231,733
----------- ---------- ---------- ---------- ----------
Earnings before income taxes,
extraordinary item, and accounting changes 79,369 127,396 87,111 54,433 40,651
Applicable income taxes 20,761 37,420 23,861 11,537 5,408
----------- ---------- ---------- ---------- ----------
Earnings before extraordinary item and
accounting changes 58,608 89,976 63,250 42,896 35,243
Extraordinary item-defeasance of debt, net of taxes - (3,206) - - -
Accounting changes, net of taxes - 5,782 - - -
----------- ---------- ---------- ---------- ----------
Net earnings $ 58,608 $ 92,552 $ 63,250 $ 42,896 $ 35,243
=========== ========== ========== ========== ==========
PER COMMON SHARE DATA (2)
Primary
Earnings before extraordinary item and
accounting changes $ 1.25 $ 2.31 $ 1.79 $ 1.32 $ 1.03
Extraordinary item-defeasance of debt, net of taxes - (.09) - - -
Accounting changes, net of taxes - .16 - - -
Net earnings 1.25 2.38 1.79 1.32 1.03
Fully diluted
Earnings before extraordinary item and
accounting changes 1.25 2.23 1.77 1.32 1.03
Extraordinary item-defeasance of debt, net of taxes - (.08) - - -
Accounting changes, net of taxes - .15 - - -
Net earnings 1.25 2.30 1.77 1.32 1.03
Cash dividends .88 .72 .60 .48 .48
Book value 16.01 16.29 14.02 12.77 11.77
BALANCE SHEET DATA (AT PERIOD END)
Total Assets $10,015,069 $9,029,893 $7,493,004 $5,928,496 $6,095,531
Loans, net of unearned income 5,949,128 4,653,368 3,585,769 3,132,924 3,376,435
Allowance for losses on loans 122,089 114,353 89,827 67,989 67,505
Investment securities 2,962,144 3,295,644 2,793,950 1,777,754 1,773,508
Deposits 8,417,842 7,671,621 6,441,991 5,145,181 5,182,379
Short-term borrowings 415,171 275,537 321,976 222,510 362,364
Long-term debt (3)
Parent company 114,790 114,729 74,292 38,163 44,662
Subsidiary banks 226,161 195,442 21,756 10,083 4,469
Total shareholders' equity 730,707 682,002 529,496 425,970 383,349
Average assets 10,025,383 8,857,216 6,934,718 5,928,927 6,096,808
Average shareholders' equity 778,232 639,874 494,529 398,651 386,800
Average shares outstanding (in thousands)
Primary 40,055 35,311 31,910 31,752 33,738
Fully diluted 40,397 39,541 34,754 32,105 34,078
</TABLE>
8
<PAGE> 20
UPC Selected Consolidated Financial Data (continued)
<TABLE>
Years Ended December 31, (1)
-----------------------------------------------------------------------
1994 1993 1992 1991 1990
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets .58% 1.04% .91% .72% .58%
Return on average common equity 7.40 15.55 13.48 10.80 9.12
Net interest income (taxable-equivalent) to
average earning assets (4) 4.39 4.44 4.62 4.54 4.02
Loans/deposits 70.67 60.66 55.66 60.89 65.15
Common and preferred dividend payout ratio 64.68 31.81 35.72 35.66 43.08
Equity/assets (period end) 7.30 7.55 7.07 7.19 6.29
Average shareholders' equity/average total assets 7.76 7.22 7.13 6.72 6.34
Leverage ratio (5) 7.18 7.23 7.11 7.10 6.18
Tier 1 capital to risk-weighted assets (5) 12.22 13.58 13.35 11.91 9.98
Total capital to risk-weighted assets (5) 14.75 16.40 15.44 14.13 12.09
ASSET QUALITY RATIOS
Allowance/period end loans 2.05 2.46 2.51 2.17 2.00
Nonperforming loans/total loans .32 .59 1.32 1.09 1.07
Allowance/nonperforming loans 641 414 190 200 187
Nonperforming assets/loans and foreclosed properties .42 .78 1.69 1.74 1.81
Provision/average loans .07 .37 .77 1.04 .78
Net charge-offs/average loans .09 .30 .60 1.02 .85
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDENDS (6)
Excluding interest on deposits 2.25x 4.23x 4.20x 3.18x 2.01x
Including interest on deposits 1.23 1.46 1.34 1.18 1.11
</TABLE>
- -----------------
(1) Reference is made to "Basis of Presentation" in Note 1 to the consolidated
financial statements.
(2) Share and per share amounts have been retroactively restated for material
acquisitions accounted for as poolings of interests.
(3) Long-term debt includes subordinated notes and debentures, obligations
under capital leases, mortgage indebtedness, and notes payable with
maturities greater than one year. Subsidiary banks' long-term debt is
primarily FHLB advances.
(4) Calculation does not include the impact of the unrealized gain or loss on
available for sale investment securities.
(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% (5% for bank holding companies
effecting acquisitions).
(6) For the purpose of computing these ratios, earnings represent earnings
before income taxes, extraordinary item and accounting changes, preferred
dividend factor and fixed charges. Fixed charges represent the preferred
dividend factor, interest expense (exclusive of interest on deposits in one
case and inclusive of interest in the other), capitalized interest expense,
amortization of debt issuance costs and one-third (the portion deemed
representative of the interest factor) of all operating rents.
9
<PAGE> 21
FSB SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 4,287,282 $ 4,182,120 $ 3,961,434 $ 3,264,666 $ 2,833,136
Provision for loan losses 104,000 165,000 155,000 60,000 41,000
Noninterest income 1,067,345 967,174 749,283 704,794 445,114
Noninterest expense 3,929,440 3,624,172 3,285,149 3,396,305 2,805,243
Income before taxes and cumulative
effect adjustment 1,321,187 1,360,122 1,270,568 513,155 432,007
Corporate income taxes 436,388 473,934 392,159 139,000 39,498
Income before effect of a change in
accounting principle 884,799 886,188 878,409 374,155 392,509
Cumulative effect of a change in
accounting principle - (53,988) - - -
Net income 884,799 832,200 878,409 374,155 392,509
PER COMMON SHARE DATA
Income before effect of a change in
accounting principle $ 2.58 $ 2.58 $ 2.56 $ 1.05 $ 1.08
Cumulative effect of a change in
accounting principle - $(0.16) - - -
Net income $ 2.58 $ 2.42 $ 2.56 $ 1.05 $ 1.08
Cash dividends $ 1.25 $ 1.50 $ 1.25 $ 0.97 $ 1.00
Book value $ 21.93 $ 20.72 $ 19.80 $ 17.91 $ 17.96
Average shares 343,500 343,500 343,500 354,758 362,800
BALANCE SHEET DATA (period end)
Investment securities 30,531,286 18,385,046 16,957,278 19,930,865 27,353,342
Loans, net of unearned income 69,743,547 70,694,860 61,159,860 54,634,496 37,871,938
Allowance for loan losses 918,367 900,499 727,821 674,048 744,393
Total assets 109,766,449 101,841,431 92,031,653 85,758,311 77,074,349
Deposits 99,486,169 93,115,572 83,666,034 78,089,715 69,153,690
Long-term debt 1,922,544 746,800 504,875 82,500 432,000
Total capital 7,532,829 7,118,489 6,801,538 6,352,504 6,514,848
PROFITABILITY RATIOS
Return on average assets 0.83% 0.82% 1.02% 0.46% 0.53%
Return on average capital 12.11% 12.19% 13.08% 5.34% 5.49%
Net yield on interest earning assets 4.34% 4.43% 5.02% 4.33% 4.11%
Dividend payout 48.53% 61.91% 48.88% 91.81% 92.43%
ASSET QUALITY DATA
Net charge-offs (recoveries) 72,132 (7,678) 101,227 130,345 (57,000)
Nonperforming loans (1) 91,210 112,870 119,388 150,289 595,000
Foreclosed assets 96,087 - - - -
Allowance for loan losses to loans,
net of unearned income 1.32% 1.27% 1.19% 1.23% 1.97%
Nonperforming loans to loans, net
of unearned income 0.13% 0.16% 0.20% 0.28% 1.57%
Allowance for loan losses to
nonperforming loans 1006.87% 797.82% 609.63% 448.50% 125.11%
Nonperforming assets to loans, net of
unearned income, and foreclosed assets (2) 0.27% 0.16% 0.20% 0.28% 1.57%
Provision for loan losses to average
loans, net of unearned income 0.15% 0.23% 0.26% 0.13% 0.11%
Net charge-offs (recoveries) to average
loans, net of unearned income 0.10% (0.01)% 0.17% 0.28% (0.16)%
</TABLE>
10
<PAGE> 22
FSB SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
1994 1993 1992 1991 1990
------------------------------------------------------------------------
LIQUIDITY AND CAPITAL RATIOS
<S> <C> <C> <C> <C> <C>
Loans, net of unearned income to deposits 70.10% 75.92% 73.10% 69.96% 54.76%
Total capital to total assets (period end) 6.86% 6.99% 7.39% 7.41% 8.45%
Average capital to average assets 6.84% 6.71% 7.80% 8.53% 9.65%
Tier 1 capital to risk-weighted assets (3) 11.26% 10.45% 11.08% 11.42% 15.83%
Total capital to risk-weighted assets (3) 12.51% 11.70% 12.27% 12.64% 17.08%
Leverage ratio (3) 6.97% 7.05% 7.64% 7.36% 8.79%
</TABLE>
(1) Nonperforming loans include loans on nonaccrual status and restructured
loans.
(2) Nonperforming assets include nonperforming loans plus foreclosed assets.
(3) The risk-based capital ratios are based upon capital guidelines
prescribed by federal 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%.
11
<PAGE> 23
RECENT DEVELOPMENTS AFFECTING UPC
Pending Acquisitions. Consistent with UPC's acquisition strategy, UPC
has entered into definitive agreements to acquire the following financial
institutions in addition to FSB (collectively, the "Pending Acquisitions")
which management considers probable of consummation and which are expected to
be closed in the third quarter of 1995:
<TABLE>
<CAPTION>
CONSIDERATION
APPROXIMATE ---------------------------
INSTITUTION ASSET SIZE VALUE TYPE
- ----------- ----------- ----- ----
(In millions)
<S> <C> <C> <C>
Planters Bank & Trust Co.
Forrest City, Arkansas $59 $8.0 UPC Common Stock
First Bancshares of Eastern Arkansas, Inc
and its subsidiary,
First National Bank of West Memphis
West Memphis, Arkansas 57 9.4 Cash
First Bancshares of Northeast Arkansas, Inc.
and its subsidiary
First National Bank of Osceola
Osceola, Arkansas 65 9.3 Cash
---- -----
Totals $181 $26.7
==== =====
</TABLE>
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES
Each copy of this Prospectus mailed to holders of FSB Common Stock is
accompanied by a proxy appointment card furnished in connection with the FSB
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 3:00 p.m. CDT, on Wednesday, May 24, 1995, in the board room of the
Dyersburg Office of First Exchange Bank, 213 Church Avenue North, Dyersburg,
Tennessee 38025. Only holders of record of FSB Common Stock at the close of
business on April 21, 1995, are entitled to receive notice of, and to vote at
the Special Meeting. At the Special Meeting the FSB shareholders will consider
and vote upon (i) a proposal to approve the Reorganization Agreement and the
Plan of Merger annexed thereto as Exhibit A (both as amended by the Letter
Agreement) and (ii) such other matters as may properly be brought before the
Special Meeting or any adjournments or postponements thereof.
HOLDERS OF FSB COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO FSB 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). FSB SHAREHOLDERS
SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY APPOINTMENT CARDS.
12
<PAGE> 24
Any holder of FSB Common Stock who has delivered a proxy appointment may
revoke it at any time before it is voted by attending the Special Meeting and
voting in person at the Special Meeting or by giving notice of revocation in
writing or submitting a signed proxy appointment bearing a later date to First
State Bancorporation, Inc., 213 Church Avenue North, Dyersburg, Tennessee
38025, Attention: Corporate Secretary, provided such notice or proxy
appointment is actually received by FSB before the vote of shareholders has
been taken. A proxy appointment will not be revoked by the 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 FSB. The shares of FSB 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
FSB 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 FSB for
the purpose of soliciting additional proxy appointments. FSB is unaware of any
matter to be presented at the Special Meeting other than the proposal to
approve the Reorganization Agreement and the Plan of Merger annexed thereto as
Exhibit A.
The cost of soliciting proxies from the holders of FSB Common Stock will
be borne by FSB. Such solicitation will be made by mail but also may be made
by telephone or in person by the directors, officers and employees of FSB (who
will receive no additional compensation for doing so).
VOTES REQUIRED
The affirmative votes of the holders of a majority of the outstanding
shares of FSB 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 343,499.7
shares of FSB Common Stock outstanding and entitled to vote at the Special
Meeting, with each share entitled to one vote.
As of the Record Date, the Management Group beneficially owned and held of
record a total of 203,563.5 shares or approximately 59.3% of the issued and
outstanding shares of FSB Common Stock. ALL THE MEMBERS OF THE MANAGEMENT
GROUP HAVE ADVISED FSB 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 FSB entitled to vote on the Reorganization Agreement
and the Plan of Merger annexed thereto as Exhibit A has the right to receive
payment in cash of the "fair value" of his or her shares of FSB Common Stock
upon compliance with Sections 48-23-201, et seq., of the Act, a copy of which
is Appendix C to this Prospectus. A shareholder may not dissent as to less
than all of the shares that he or she beneficially owns. A nominee or
fiduciary may not dissent on behalf of a beneficial owner as to less than all
of the shares of such beneficial owner held of record by such nominee or
fiduciary. A beneficial owner asserting dissenters' rights to shares held by
another on his or her behalf must notify FSB in writing of the name and address
of the record holder of the shares, if known to him or her.
Any FSB shareholder intending to enforce his or her dissenters' rights may
not vote in favor of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A (either personally or by proxy) and must deliver
to the Corporate Secretary before the time of the vote a written notice of
intent to demand
13
<PAGE> 25
payment for his or her shares (the "Objection Notice"). The Objection Notice
must state that the shareholder intends to demand payment for his or her shares
of FSB Common Stock if the Merger is effected. A vote against approval of the
Reorganization Agreement and the Plan of Merger annexed thereto as Exhibit A
will not, in and of itself, constitute an Objection Notice satisfying the
requirements of Section 48-23-202 of the Act.
If the Reorganization Agreement, including the Plan of Merger annexed
thereto as Exhibit A, is approved by FSB's shareholders at the Special Meeting,
each FSB shareholder who has filed an Objection Notice will be notified by FSB
of such approval no later than ten (10) days after the FSB Special Meeting (the
"Dissenter's Notice"). The Dissenter's Notice will (i) state where the payment
demand must be sent and where and when certificates for certificated shares of
FSB Common Stock (the "Certificates") must be deposited, (ii) inform holders of
uncertificated shares (if any) to what extent transfer of the shares will be
restricted after the payment demand is received, (iii) supply a form for
demanding payment that includes the date of the first announcement to news
media or to shareholders of the principal terms of the proposed corporate
action and requires that the person asserting the dissenters' rights certify
whether or not he or she acquired beneficial ownership of the shares before
that date, (iv) set a date by which FSB must receive the payment demand, which
date may not be fewer than one nor more than two months after the date the
Dissenter's Notice was delivered, and (v) be accompanied by a copy of Sections
48-23-101 through 48-23-302 of the Act. Within the time prescribed in the
Dissenter's Notice, an FSB shareholder electing to dissent must make a demand
for payment (the "Payment Demand"), certify whether he or she (or the
beneficial shareholder on whose behalf he or she is asserting dissenters'
rights) acquired beneficial ownership of the shares of FSB Common Stock before
February 24, 1995 (the date of the first public announcement of the terms of
the Reorganization Agreement), and deposit his or her Certificates in
accordance with the terms of the Dissenter's Notice. Upon delivering the
Payment Demand and depositing the Certificates in accordance with the
Dissenter's Notice, the FSB shareholder will retain all other rights of an FSB
shareholder until these rights are cancelled or modified by consummation of the
Merger. FAILURE TO COMPLY SUBSTANTIALLY WITH THESE PROCEDURES WILL CAUSE THE
FSB SHAREHOLDER TO LOSE HIS OR HER DISSENTERS' RIGHTS TO PAYMENT FOR THE SHARES
IN CASH. CONSEQUENTLY, ANY FSB SHAREHOLDER WHO DESIRES TO EXERCISE HIS OR HER
RIGHTS TO PAYMENT FOR HIS OR HER SHARES IS URGED TO CONSULT HIS OR HER LEGAL
ADVISER BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
As soon as the Merger is consummated, or upon later receipt of a timely
Payment Demand, FSB shall, pursuant to Section 48-23-206 of the Act, pay to
each dissenting shareholder who has complied with the requirements of Section
48-23-204 of the Act the amount that FSB estimates to be the fair value of the
shares of FSB Common Stock, plus accrued interest. Such payment must be
accompanied by (i) certain of FSB's financial statements, (ii) a statement of
FSB's estimate of the fair value of the shares, (iii) an explanation of how the
interest was calculated, (iv) a statement of the dissenter's right to demand
payment under Section 48-23-209 of the Act, and (v) a copy of Section 48-23-101
through 48-23-302 of the act if not previously furnished. As authorized by
Section 48-23-208 of the Act, FSB intends to delay any payments with respect to
any shares (the "after-acquired shares") held by a dissenting shareholder which
were not held by such shareholder before February 24, 1995, the date of the
first public announcement of the terms of the Reorganization Agreement. To the
extent that FSB (or Interim as FSB's successor by merger) should elect to
withhold payment, after effecting the Merger, Interim, as the surviving
corporation in the Merger, must estimate the fair value of the shares, plus
accrued interest, and pay such amount to each dissenter who agrees to accept it
in full satisfaction of this demand. FSB shall send with such payment a
statement of its estimate of the fair value of the shares, an explanation of
how the interest was calculated and a statement of the dissenter's right to
demand additional payment under Section 48-23-209 of the Act.
If (i) a dissenter should believe that the amount paid in respect to his
or her shares or offered under Section 48-23-208 is less than the fair value of
his or her shares or that the interest due is incorrectly calculated, (ii) FSB
fails to make payment under Section 48-23-206 within two months after the date
set for demanding payment, or (iii) FSB, having failed to effect the Merger,
does not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within two months after the date set for
demanding payment, the dissenter may notify FSB (or its successor in the
Merger) in writing (which notice is invalid if not
14
<PAGE> 26
delivered to FSB within one month after FSB made or offered payment for such
shareholder's shares) of his or her own estimate of the fair value of the
shares and the amount of interest due and may demand payment of the difference
between his or her estimate of the fair value and the amount of any payment in
respect to such shares already received by the shareholder, or, in the
alternative, if no payment has yet been made by FSB, reject FSB's offer under
Section 48-23-208 and demand payment of the fair value of his or her shares and
interest due.
If FSB (or the surviving corporation) cannot agree with such dissenter on
a fair value within two months after FSB receives the Payment Demand, FSB will
institute judicial proceedings in either the Chancery or Circuit Court having
jurisdiction over Lake County, Tennessee (the "Court"), naming all dissenters
(whether or not Tennessee residents) whose demands remain unsettled as parties
to the proceeding and serving such parties with a copy of the petition. The
Court will then undertake to establish the fair value of the shares as of the
point in time immediately prior to the consummation of the Merger, excluding
any appreciation or depreciation in anticipation of the Merger, and will
determine the interest owing on the disputed amount. The fair value of a
dissenter's shares of FSB Common Stock may be more than, less than or the same
as the consideration provided for in the Reorganization Agreement. The Court
may, in its discretion, appoint one or more persons as appraisers to receive
evidence and render a decision on the question of fair value. Each dissenter
made a party to the proceeding is entitled to judgment for the amount (if any)
by which the court finds the fair value of his or her shares, plus accrued
interest, exceeds the amount paid by FSB or the fair value, plus accrued
interest, of his or her after-acquired shares for which FSB elected to withhold
payment under Section 48-23-208 of the Act.
The Court shall assess the costs and expenses of such proceeding
(including reasonable compensation for, and expenses of the appraiser but
excluding fees and expenses of counsel and experts) against FSB (or its
successor in the Merger), except that the Court may assess such costs and
expenses as it deems appropriate against any or all of the dissenting
shareholders if it should find that their demand for additional payment was
arbitrary, vexatious or not in good faith. The Court may award fees and
expenses of counsel and experts in amounts the Court finds equitable: (i)
against FSB, if the Court finds that FSB did not comply substantially with the
relevant requirements of the Act or (ii) against FSB or its successor by merger
or against any dissenting shareholder, if the Court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith.
The foregoing summary of the applicable provisions of Sections 48-23-101
through 48-23-302 of the Act is not intended to be a complete statement of such
provisions, and is qualified in its entirety by reference to such sections,
which are included as Appendix C hereto.
For a discussion of certain tax consequences in connection with exercising
Dissenters' Rights, see "THE MERGER--Certain Federal Income Tax Consequences."
RECOMMENDATION
For the reasons described below, the FSB Board has adopted the
Reorganization Agreement and the Plan of Merger, believes the Merger is in the
best interest of FSB and its shareholders and recommends that shareholders of
FSB 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 and the Letter Agreement
amending both, which are attached hereto as collective Appendix B. FSB
shareholders are urged to read the Reorganization Agreement, the Plan of Merger
and the Letter Agreement carefully.
15
<PAGE> 27
BACKGROUND OF AND REASONS FOR THE MERGER
Background. FSB has for several years operated FEB in Lake, Dyer and
Weakley Counties as a community bank in Northwest Tennessee. FEB has focused
its activities primarily on serving depositors and local businesses and making
small business, agricultural and consumer type loans. While FEB'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.
During 1994, the FSB Board conducted various long-range planning
discussions to determine the future of the corporation in the light of
regulatory and marketing changes in the banking industry. Various alternatives
were considered, including the sale of the corporation. In order to
investigate the market value of the corporation, the FSB Board decided to ask
certain potential purchasers what they might offer to purchase the corporation.
A package of information on FSB and FEB was prepared and delivered to these
potential purchasers.
On November 23, 1994, such a package was sent to Jackson W. Moore,
President of UPC. Percy E. Smith, Chairman, President and Chief Executive
Officer of FSB, traveled to Memphis, thereafter, and met with Mr. Moore to
discuss the possible acquisition. Mr. Moore contacted legal counsel for FSB
to discuss possible acquisition alternatives, such as preferred stock. In the
meantime, similar discussions were held with at least seven other potential
purchasers. In light of the value of some of the offers received, the FSB
Board decided to proceed with the sale of FSB. After numerous FSB Board
meetings to review the offers received, on January 31, 1995, the FSB Board
accepted the UPC offer subject to no noncompete covenant being required of
James E. McFarlin, President and a director of FEB and a director of FSB, which
was accepted by Mr. Moore by telephone with FSB's legal counsel. The attorneys
for FSB and UPC were directed to prepare an acquisition agreement to be
presented to the FSB Board for execution. The Reorganization Agreement was
adopted February 23, 1995, by the FSB Board and on February 24, 1995, by the
UPC Board.
FSB Reasons. In light of the foregoing, the FSB Board has voted to
recommend the approval of the Reorganization Agreement and the Plan of Merger
annexed thereto as Exhibit A by the FSB 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
FEB 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 FEB would be
expected to compete in the future, the proper time to effect a merger
of the organization with a larger institution is at the beginning of
the trend and before increased competition has had time to adversely
affect FSB's earnings and, consequently, its value;
(iii) FEB will be able to significantly benefit from UPC's
larger capital base, operations and regulatory expertise and
management talent; and
(iv) The value of the Series E Preferred Stock offered in
exchange for the FSB Common Stock exceeds the most recent trading
prices for the FSB Common Stock, the annual dividend yield on the
Series E Preferred Stock exceeds the historical yield on the FSB
Common Stock, and there is a broader and more liquid market for the
Series E Preferred Stock, which is listed on the NASDAQ/NMS.
The FSB Board did not assign any specific or relative weight to the
foregoing factors in determining to recommend the Merger to the FSB
shareholders.
16
<PAGE> 28
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) FSB has experienced strong and continued growth, (ii)
FSB is located geographically in a county in which UPC has sought to increase
its market share, and (iii) UPC believes that by providing FEB with access to
UPC's capital base and other banking resources, FEB will be well positioned to
compete in its market in the face of enhanced competition from larger, better
capitalized institutions.
TERMS OF THE MERGER
At the Effective Time of the Merger, FSB will merge with and into
Interim (which was formed for the specific purpose of effecting the Merger)
with Interim surviving the Merger. Immediately after the Effective Time of the
Merger, Interim, as the surviving corporation of the Merger, would remain a
wholly-owned subsidiary of UPC and would hold all assets of FSB, including all
of the capital stock of First Exchange Bank. Initially, the Reorganization
Agreement contemplated a merger in which FSB would be the corporate survivor;
however the Reorganization Agreement has been amended such that FSB would be
merged with and into Interim and Interim would survive the Merger. In the
Merger, each share of FSB Common Stock outstanding immediately prior to the
Effective Time of the Merger, other than those shares with respect to which
Dissenters' Rights shall have been perfected as described above, will be
converted exclusively into the right to receive shares of Series E Preferred
Stock as provided in the Reorganization Agreement and the Plan of Merger.
The number of shares of Series E Preferred Stock to be received by FSB
Record Holders (other than dissenting shareholders, who would be entitled to
receive "fair value" in cash only) in the Merger would be determined pursuant
to a conversion formula set forth in Section 3.1(e) of the Reorganization
Agreement which is based on the Current Market Price Per Share of the Series E
Preferred Stock. The Current Market Price Per Share equals the average price
per share of the "last" trades of the Series E Preferred Stock through the
facilities of the NASDAQ/NMS for each of the ten (10) trading days next
preceding the Closing Date. No fractional shares of Series E Preferred Stock
will be issued in respect to FSB Common Stock, and, after aggregation of all of
the shares (and any fractional shares) of Series E Preferred Stock to which an
FSB Record Holder is entitled, cash will be paid by UPC in lieu of any
remaining fractional share.
Holders of FSB Common Stock will have the right to dissent from the
Reorganization Agreement and the Plan of Merger and receive a cash payment
equal to the "fair value" of their shares, all in conformity with Section
48-23-101 et seq of the Act. See "THE SPECIAL MEETING--Shareholders'
Dissenters' Rights."
EFFECTIVE DATE AND EFFECTIVE TIME OF THE MERGER
Articles of Merger along with the executed Plan of Merger will be
filed as soon as practicable after all conditions precedent contained in the
Reorganization Agreement have been satisfied or lawfully waived, including
receipt of all regulatory approvals and expiration of all statutory waiting
periods, or on such later date as may be agreed to by UPC and FSB. The
Effective Time of the Merger will be at the time the Articles of Merger along
with the Plan of Merger are filed in the Office of the Tennessee Secretary of
State pursuant to the Act or at such later time as the parties may agree and
specify in the Articles of Merger. The Effective Date of the Merger will be
the day on which the Effective Time of the Merger occurs. It is presently
expected that the Articles of Merger will be filed on June 30, 1995, but will
specify, by agreement of the parties, an Effective Time of the Merger of 12:01
a.m. CDT, on July 1, 1995. 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
17
<PAGE> 29
record of FSB Common Stock immediately prior to the Effective Time of the
Merger a form letter of transmittal, together with instructions and a return
envelope (collectively, the "Exchange Materials") to facilitate the exchange of
such holder's certificates formerly evidencing and representing shares of FSB
Common Stock for certificates representing shares of Series E Preferred Stock.
HOLDERS OF FSB 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, FSB 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 FSB Common Stock to the Exchange Agent in the
return envelope supplied. 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 FSB Record Holder a certificate representing
the whole number of shares of Series E Preferred Stock to which such holder is
entitled pursuant to the Reorganization Agreement and a check in the amount of
the cash consideration with respect any remaining fractional share to which the
holder is entitled. No consideration will be delivered to an FSB Record Holder
unless and until such holder shall have delivered to the Exchange Agent in
accordance with the Exchange Materials all certificates formerly representing
the shares of FSB Common Stock held by him or her and in respect of which he or
she claims payment is due, or such documentation, if applicable, and security
in respect of lost or stolen certificates as required by the Reorganization
Agreement.
No dividend or other distribution with respect to the Series E
Preferred Stock will be paid or delivered to the holder of any unsurrendered
FSB certificate until the holder surrenders such certificate(s) in accordance
with the Exchange Materials, at which time the holder will be entitled to
receive all previously withheld dividends and distributions, without interest.
After the Effective Time of the Merger, there will be no further
transfers on FSB's stock transfer books of shares of FSB Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger. If
certificates representing shares of FSB 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, FSB nor any other person will be
liable to any former holder of FSB 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 FSB 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 FSB to effect the Merger are
subject to the satisfaction of the following conditions prior to the Closing
Date: (i) approval of the Reorganization Agreement along with the Plan of
Merger annexed thereto as Exhibit A and the transactions contemplated thereby
by the affirmative votes of the holders of a majority of the FSB Common Stock
outstanding on the Record Date; (ii) approval of the Reorganization Agreement
and the transactions contemplated thereby by the Federal Reserve and the
Tennessee Department and the expiration of any statutory waiting periods; (iii)
receipt of all other regulatory and
18
<PAGE> 30
contractual consents necessary to consummate the transactions contemplated by
the Reorganization Agreement; (iv) the satisfaction of all other requirements
prescribed by law as conditions precedent to the consummation of the
transactions contemplated by the Reorganization Agreement; (v) none of UPC,
Interim, FSB or FEB will be subject to any order, decree or injunction of a
court or agency which presents a substantial risk of the restraint or
prohibition of the consummation of the Merger or the obtaining of material
damages or other relief in connection therewith; (vi) UPC shall have received
executed "affiliate agreements" from those shareholders of FSB who would be
deemed to be "affiliates" by the Commission, a tax opinion letter from legal
counsel to UPC confirming that the Merger will qualify as a tax-free
reorganization under the Internal Revenue Code, and a three-year non-compete
agreement from each member of the FSB Board (other than James E. McFarlin,
President of FEB and a member of the Boards of Directors of FSB and FEB) with
all members receiving nominal consideration for such agreement except Percy E.
Smith, who will receive twelve (12) quarterly payments of $37,500.00 each; and
(vii) the Registration Statement of which this Prospectus forms a part shall
have become effective, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission.
The obligations of UPC and Interim to effect the Merger are further
subject to the satisfaction or waiver by UPC of, among others, the following
conditions: (i) UPC shall have received a legal opinion, dated the date of
Closing, from counsel to FSB as to the good standing of FSB, 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 FSB
and FEB 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 FSB and FEB
to such effect; (iii) there shall have been no damage or destruction to, or
taking of, any property of FSB or FEB or any material adverse change in the
business, financial condition, results of operations or prospects of FSB or
FEB; and (iv) FSB and FEB 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 FSB or FEB to UPC.
The obligations of FSB to effect the Merger are further subject to the
satisfaction, or waiver by FSB, of, among others, the following conditions: (i)
FSB shall have received a legal opinion, dated the date of Closing, from
counsel to UPC as to the good standing of UPC and Interim, the enforceability
and due authorization of the Reorganization Agreement, the validity of the
Series E Preferred 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 FSB shall have
received a certificate signed by certain officers of UPC to that effect; (iii)
FSB shall have received from UPC certificates from UPC executive officers
stating that the consummation of the transaction has been duly authorized and
that the persons executing and delivering documents on behalf of UPC are duly
appointed and that their signatures are genuine; and (iv) FSB shall have
received from the Exchange Agent a certificate evidencing receipt of the
certificates representing the Series E Preferred Stock and cash constituting
the Consideration payable in the Merger.
No assurance can be provided as to whether all of the conditions
precedent to the Merger will be satisfied or waived by the party lawfully
permitted to do so.
REGULATORY APPROVALS
The Merger is subject to prior approval by (i) the Tennessee
Department under the Tennessee Reciprocal Banking Act and (ii) the Federal
Reserve under Section 3 of the Bank Holding Company Act of 1956, as amended
(the "BHCA"), which requires that the Federal Reserve take into consideration,
among other
19
<PAGE> 31
factors, the financial and managerial resources and future prospects of the
institutions and the convenience and needs of the communities to be served.
Applications for such approvals have been filed with the Federal Reserve and
the Tennessee Department. The BHCA prohibits the Federal Reserve from
approving the Merger if it would result in a monopoly or be in furtherance of
any combination or conspiracy to monopolize or to attempt to monopolize the
business of banking in any part of the United States, or if its effect in any
section of the country may be substantially to lessen competition or to tend to
create a monopoly, or if it would in any other manner be a restraint of trade,
unless the Federal Reserve finds that the anticompetitive effects of the Merger
are clearly outweighed by the public interest and the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. The Federal Reserve has the authority to deny an application if it
concludes that the combined organization would have an inadequate capital
position or if the acquiring organization does not meet the requirements of the
Community Reinvestment Act of 1977.
Under the BHCA, the Merger may be consummated no sooner than 15 days
following the date of Federal Reserve approval, during which time the United
States Department of Justice is authorized to challenge the Merger on antitrust
grounds. The commencement of an antitrust action would stay the effectiveness
of the Federal Reserve's approval unless a court specifically orders otherwise.
There can be no assurance that the Department of Justice will not challenge the
Merger, or if such challenge is made, as to the result thereof.
The Merger may not lawfully proceed in the absence of the requisite
regulatory approvals. As of the date of this Prospectus, neither the Federal
Reserve nor the Tennessee Department has given its approval of the Merger. See
"THE MERGER-- Conditions to Consummation of the Merger" and "--Waiver and
Amendment; Termination."
CONDUCT OF BUSINESS PENDING THE MERGER
The Reorganization Agreement contains certain restrictions upon the
conduct of FSB's and FEB'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, FSB and FEB, respectively, may not, among other things, (i)
amend its charter or bylaws; (ii) permit any lien to exist in respect to any
share of stock held by FSB; (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 FSB Common Stock; (iv) issue or sell any FSB
Common Stock or sell or otherwise dispose of a substantial part of FSB's or
FEB'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 FSB 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 FSB Common Stock if
such extension of credit would exceed $300,000, or amend the terms of any such
credit; or (xiii) acquire direct or indirect control over any person or entity
except in the ordinary course of business or in connection with internal
reorganizations and acquisitions in FSB's or FEB's fiduciary capacity.
Moreover, FSB and FEB, 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
Under the Reorganization Agreement, FSB is prohibited from declaring
or paying any dividends prior to Closing; provided, however, that if for any
reason, including an unexpected delay in the Merger becoming
20
<PAGE> 32
effective, the FSB shareholders should not receive in the third quarter of
1995 the full cash dividend of $.50 per share on the UPC Series E Preferred
Stock into which their FSB Common Stock would be converted in the Merger, FSB
shall have the right to declare before Closing a dividend on the FSB Common
Stock in an amount equal to the shortfall. See "DESCRIPTION OF THE UPC COMMON
AND PREFERRED STOCK--The UPC Series E Preferred 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 FSB; 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 FSB
shareholders if the effect of such amendment would be to change the amount or
the type of consideration to be delivered in the Merger to the FSB 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 FSB
shareholders, as follows: (i) by the mutual consent of the parties; (ii) by UPC
or Interim if FSB or FEB, respectively, should violate any affirmative or
negative covenant in respect to the operation of its business; (iii) by UPC,
Interim or FSB if Closing shall not have occurred by December 31, 1995, (and
earlier under certain circumstances) unless the failure is due to the failure
of the party seeking to terminate; (iv) by either party if any governmental or
regulatory approval is denied and not successfully appealed within certain time
limits; (v) by either party if the other party's conditions have not been
satisfied or waived as of the Closing Date or if the other party has committed
a material breach that is not cured within 30 days after the breaching party
receives notice of such breach; (vi) by UPC if there has been a material
adverse change in the business, properties, liabilities or prospects of FSB or
FEB or if FSB or FEB should enter into a formal capital plan in cooperation
with applicable banking regulators; or (vii) by UPC should FSB or FEB enter
into any business combination or any letter of intent or agreement in respect
thereof with any other person.
In the event of the valid termination of the Reorganization Agreement
by either UPC or FSB, the Reorganization Agreement shall become void, and there
will be no liability on the part of either party or their officers or directors
except for liability for breach of the Reorganization Agreement or for any
misstatement or misrepresentation made prior to such termination.
MANAGEMENT AFTER THE MERGER
The Reorganization Agreement provides that after the Effective Time of
the Merger, the surviving corporation will be managed by a board of directors
consisting of the members of the Board of Directors of Interim immediately
prior to the effective time of the merger and that the persons serving as
officers and directors of FEB, all of whom have served on either the FSB Board
or the FEB Board for one or more terms and are expected to be qualified to
serve as officers and/or directors of FEB. All officers and directors serve
one-year terms but may be re-elected or reappointed, as the case may be. Set
forth below are those persons who are executive officers of FSB, FEB and
Interim, members of FSB's, FEB's and Interim's Boards of Directors, their ages
and principal occupations for the last five years.
21
<PAGE> 33
Executive Officers and Directors of FSB and FEB:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Percy E. Smith 63 Chairman, President, Chief Executive Officer and Director
of FSB; Chairman and Director of FEB
James E. McFarlin 49 President and Director of FEB
Director of FSB
T.H. Farmer, III 66 Vice Chairman and Director of both FSB and FEB
Mack Forrester 61 Secretary/Treasurer and Director of FSB; Secretary and Director of FEB
Daron McNatt 61 Executive Vice President and Director
of FEB
Dessel T. Wright 68 Director of FSB
Bruce D. Wyatt, Sr. 63 Director of FSB
</TABLE>
_____________________________
Mr. McFarlin was President and Chief Executive Officer of Sovran
Bank-Union City from 1985 to 1990.
Mr. Farmer is a retired wholesale food distributor in Martin,
Tennessee.
Mr. Forrester has been a partner in Forrester & White Insurance Agency
in Ridgely, Tennessee.
Mr. McNatt was a loan officer for the Production Credit Association
before joining FEB in 1989.
Mr. Wright is the owner and former operator of Dessell T. Wright Co, a
Tom's Snack Food Distributor in Martin, Tennessee.
Mr. Wyatt is a farmer in Ridgely, Tennessee
Executive Officers and Directors of Interim:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Jackson W. Moore 46 President and Director of Interim
M. Kirk Walters 54 Vice President, Treasurer and Director of Interim
E. James House, Jr. 58 Secretary and Director of Interim
</TABLE>
____________________
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<PAGE> 34
Mr. Moore is President of UPC and has been since April 1, 1989.
Previous to that he was a partner with the law firm of Wildman,
Harrold, Allen, Dixon & McDonnell in Memphis, Tennessee.
Mr Walters is Senior Vice President and Chief Accounting Officer of
UPC and has been Treasurer of UPC since 1985.
Mr. House is also corporate Secretary of UPC and, until December 31,
1994, served as Manager of the Trust Group of UPNB.
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<PAGE> 35
FSB EXECUTIVE COMPENSATION
During the last few years, compensation has been paid to certain executive
officers from both FSB and FEB. The following information reflects the
aggregate amounts of such compensation. The following table sets forth the
compensation received by the President and Chief Executive Officer of FSB and
FEB for the periods indicated. Neither FSB nor FEB has any other executive
officers whose total annual remuneration exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ------ -------
NAME AND RESTRICTED
PRINCIPAL OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION AWARDS SARS PAYOUTS COMPENSATION(2)
- --------- ---- --------- ----- ------------ ------ -------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Percy E. Smith, Chairman 1994 $307,535 0 0 - - - $1,095
President and 1993 264,132 0 0 - - - 0
CEO of FSB; 1992 255,404 0 0 - - - 0
Chairman
of FEB
James E.McFarlin 1994 $148,160 0 0 - - - 1,095
President of FEB 1993 123,872 0 0 - - - 1,095
1992 108,872 4,957 0 - - - 583
</TABLE>
____________________
(1) Information under "Salary" includes fees for service as a director of
FSB and FEB and as a member of various committees.
(2) Reflects automobile and insurance benefits.
24
<PAGE> 36
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
Estimated Future Payouts under Non-Stock
Priced-Based Plans
Performance ----------------------------------------
Number of or Other
Shares, Units Period Until
or Other Maturation or Threshold Target Maximum
Name Rights (#) Payout ($ or #) ($ or #) ($ or #)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James E. 3,816 12/31/2002 N/A (2) In no event may the number
McFarlin, Units of Units exceed 10% of the
President of outstanding shares of common
FEB stock of FSB
</TABLE>
_______________________
(1) After a change in control of FSB, which will occur as a result of the
acquisition of FSB by UPC, the employees covered by the Phantom Stock
Appreciation Plan dated June 13, 1993 (the "Plan") described above
will receive an amount equal to $1.00 less than three times their
average earnings for the last five years. In the case of Mr.
McFarlin, this amount is equal to $332,588.
(2) On the Payment Date (12/31/2002), employees will receive a payment in
cash equal to the Fair Market Value of the Units previously awarded,
plus all Excess Dividend Gains, less the Fair Market Value of the
Units at the date the Units were awarded. Therefore, at the time of
the award of Units, the difference is zero so that the Plan has no
current value. As the Fair Market Value of the shares of common stock
of FSB rise, the value of the Plan to covered employees rises as well.
Capitalized terms used herein are defined in the Plan, and this
description is only a summary of the Plan and does not include other
conditions and adjustments that might apply.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The directors and officers of FSB own approximately 59.3% of the
shares of FSB Common Stock issued and outstanding and will receive the Merger
consideration described above. Immediately subsequent to the Effective Time of
the Merger, all directors of FSB who are also directors of FEB and all
Directors of FEB are likely to retain their positions as directors of FEB.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The federal income tax discussion set forth below is abbreviated in
nature and is included for general information only. FSB 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 of
the Internal Revenue Code, and that, accordingly, (i) no gain or loss will be
recognized by either UPC, Interim or FSB as a result of the Merger, (ii) gain or
loss will be recognized by the FSB shareholders only to the extent of any cash
consideration received in respect to their FSB 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 Series E Preferred Stock); (iii) the tax
basis of Series E Preferred Stock to be received by the FSB shareholders in
connection with the Merger will be the same as the basis in the FSB Common Stock
surrendered in exchange therefor, increased by the amount of any gain recognized
and reduced by the amount of cash received with respect thereto and the amount
allocable to a fractional share interest for
25
<PAGE> 37
which cash is received; and (iv) the holding period of the Series E Preferred
Stock to be received by the FSB shareholders in connection with the Merger will
include the holding period of the FSB Common Stock surrendered in exchange
therefor, provided that the FSB Common Stock is held as a capital asset at the
Effective Time of the Merger.
Consequences of Receipt of Cash in Lieu of Fractional Shares. An FSB
shareholder who is entitled to receive cash in lieu of a fractional share of
Series E Preferred 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 FSB Common Stock
is held by such shareholder as a capital asset at the Effective Date of the
Merger.
Cash Received by Holders of FSB Common Stock Who Perfect their
Dissents. A shareholder of FSB who perfects his dissenters' rights under the
laws of Tennessee and who receives a cash payment for the "fair value" of his
shares of FSB 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 FSB 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 FSB
Common Stock who contemplates exercising his dissenters' rights should consult
his own tax advisor as to the possibility that any payment to him would be
treated as dividend income.
ACCOUNTING TREATMENT
The Merger will be accounted for by UPC and FSB under the "purchase"
method of accounting. Accordingly, under generally accepted accounting
principles, the assets and liabilities of FSB will be adjusted to their fair
values as of the date of acquisition and the resulting goodwill allocated in
accordance with APB Opinion No. 16. Net income of UPC subsequent to the
Effective Time of the Merger will include the net income of both FSB and UPC.
EXPENSES
The Reorganization Agreement provides, in general, that UPC and FSB
will each pay their own expenses in connection with the Reorganization
Agreement and the transactions contemplated thereby, including fees and
expenses of their own independent accountants and counsel.
RESALES OF SERIES E PREFERRED STOCK
The shares of Series E Preferred 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 FSB and therefore an "underwriter" with respect to the Series E
Preferred Stock offered hereunder for purposes of Rule 145 under the Securities
Act as of the date of the Effective Time of the Merger. Affiliates may not
sell their shares of Series E Preferred 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 FSB generally include individuals or entities that
control, are controlled by or are under common control with FSB and will
include members of the Management Group in their roles as either executive
officers, directors or the holders of ten percent (10%) or more of the
outstanding shares of FSB. UPC will place restrictive legends on certificates
representing Series E Preferred Stock issued to all persons who are deemed
"underwriters" under Rule 145. See "DESCRIPTION OF THE UPC COMMON AND
PREFERRED STOCK--The UPC Series E Preferred Stock."
26
<PAGE> 38
CERTAIN REGULATORY CONSIDERATIONS
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 are subject to
supervision and examination by the Office of the Comptroller of the Currency
(the "Comptroller") and the Federal Deposit Insurance Corporation (the "FDIC").
State bank subsidiaries of UPC which are members of the Federal Reserve System
are subject to supervision and examination by the Federal Reserve and the state
banking authorities of the states in which they are located. State bank
subsidiaries which are not members of the Federal Reserve System are subject to
supervision and examination by the FDIC and the state banking authorities of
the states in which they are located. UPC's federally-chartered savings bank
subsidiaries are subject to supervision and examination by the OTS. UPC's
banking subsidiaries are subject to various requirements and restrictions,
including requirements to maintain reserves against deposits, restrictions on
the types and amounts of loans that may be granted and the interest that may be
charged thereon, and limitations on the types of investments that may be made
and the types of services that may be offered. Various consumer laws and
regulations also affect the operations of the banks. In addition to the impact
of regulation, the Banking Subsidiaries 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. A more detailed
discussion of this subject may be found in Part I, Item 1 of UPC's Annual
Report on Form 10-K dated December 31, 1994, under the caption GOVERNMENTAL
SUPERVISION AND REGULATION OF FINANCIAL INSTITUTIONS (pages 3 through 6) which
is hereby incorporated by reference in this Prospectus.
As a bank holding company, FSB is subject to the regulation and
supervision of the Federal Reserve. As a Tennessee- chartered, nonmember,
insured bank, FEB is subject to the regulation and supervision of both the
Tennessee Department of Financial Institutions and the FDIC. Thus FSB and FEB
are subject to regulation similar in scope to that of UPC and of UPC's
subsidiaries which are Tennessee-chartered, non-member, FDIC-insured banks.
Some of the subjects of regulation are: business expansion through
acquisitions or otherwise, capital adequacy, the requirement of prompt
corrective action under certain circumstances, restriction upon payments of
dividends and making other distributions, support of subsidiary banks,
limitations upon transactions with affiliates, FDIC Deposit Insurance
assessments, standards for safety and soundness, limitations upon acceptance of
brokered deposits, consumer protection, accounting, financial reporting and
similar matters.
DESCRIPTION OF THE 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
(the "UPC Common Stock") and 10,000,000 shares of preferred stock having no par
value (the "UPC Preferred Stock"). UPC's shareholders will vote upon a
proposal at UPC's Annual Meeting to be held April 27, 1995, to amend UPC's
Charter to increase its authorized common stock from 50,000,000 shares to
100,000,000 shares. As of March 31, 1995, 40,369,088 shares of UPC Common
Stock were issued and outstanding, and approximately 811,000 shares were
subject to issuance 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 1,050,000 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 March 31, 1995, 3,405,577 shares of UPC Preferred Stock of
all series 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"); 253,655 shares of UPC's 9.5% Redeemable,
Cumulative, Convertible Preferred Stock,
27
<PAGE> 39
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 April 14, 1995, 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.
THE 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 the UPC Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for purchase,
retirement or sinking funds, if any, for all outstanding UPC Preferred Stock,
the holders of the 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 the UPC
Common Stock and UPC Preferred Stock. In June 1993, UPC entered into an
unsecured $25-million credit agreement which expires May 31, 1996. No
borrowings are outstanding thereunder. The line of credit is for working
capital purposes and as a commercial paper backup and includes certain negative
covenants relating to payment of dividends, making acquisitions, sale of
assets, and incurring indebtedness. UPC's dividends are limited by the loan
agreement to 60% of its consolidated net earnings for the preceding fiscal
year. Because of significant restructuring and other charges taken by UPC
in the fourth quarter of 1994 which reduced its net earnings, should UPC
desire to draw against this line of credit it would be necessary for UPC to
obtain the lenders' permission to pay dividends on the UPC Common Stock, but
not the UPC Preferred Stock, in the latter part of 1995. Although UPC has not
drawn on this line of credit, UPC has requested such permission and it is
expected to be forthcoming.
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 Preferred Stock and
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.
28
<PAGE> 40
THE UPC SERIES E PREFERRED STOCK
General. Pursuant to its Charter, as amended, UPC is authorized to
issue 3,340,000 shares of Series E Preferred Stock. The UPC Board has approved
the Reorganization Agreement and the issuance by UPC of shares of Series E
Preferred Stock to satisfy the terms of the Reorganization Agreement and is
expected to adopt a resolution on April 27, 1995, amending the charter of UPC to
increase to 4,500,000 the number of shares of UPC Preferred Stock which may be
issued as Series E Preferred Stock. 3,107,922 shares of the Series E Preferred
Stock were issued and outstanding on the date hereof. Shares of Series E
Preferred Stock have no par value but have a $25.00 per share "Stated Value" for
purposes of determining the amounts of dividends and preferential payments in
the event of liquidation of UPC. When issued and delivered to the FSB Record
Holders, the shares of Series E Preferred Stock offered hereby will be fully
paid and non-assessable. The Series E Preferred Stock ranks, with respect to
dividends, preferences, qualifications, limitations, restrictions and the
distribution of assets upon liquidation, on a parity with UPC's outstanding (i)
Series B Preferred Stock, (ii) Series D Preferred Stock, and (iii) Series A
Preferred Stock, if and when shares of the same should be issued. Shares of
Series E Preferred Stock have no preemptive rights, no voting rights (except as
may be provided by statute) and are not subject to any sinking fund or other
obligation of UPC to purchase or redeem the Series E Preferred Stock. Union
Planters National Bank is the Registrar, Transfer Agent and Dividend Disbursing
Agent for UPC's Series E Preferred Stock. The following description of the
terms applicable to the Series E Preferred Stock is subject in its entirety to
the provisions of Article SIXTH of UPC's Restated Charter which specifies in
detail the rights of the holders of UPC's Capital Stock, including the Series E
Preferred Stock. UPC's Restated Charter, as presently in effect, is Exhibit
3(a) to the Annual Report on Form 10-K of Union Planters Corporation dated
December 31, 1992. Said Exhibit 3(a) is incorporated by reference as a part of
this Prospectus.
Dividends. Holders of shares of the Series E Preferred Stock are
entitled to receive, but only when, as and if declared by the Board of Directors
of UPC out of funds legally available therefor, an annual cash dividend at a
rate of 8% of the $25.00 Stated Value per share, i.e., $2.00 of dividends per
annum payable in four quarterly installments of $.50 per share in the manner
described below.
Dividends on each share of Series E Preferred Stock accrue and are
cumulative from (but not including) the date of its original issuance on the
basis of a quarterly dividend period consisting of three calendar months ending
on the last days of January, April, July and October. Dividends are payable
quarterly on the 15th days of February, May, August and November (each, a
"Quarterly Dividend Payment Date"), unless such 15th day is not a day on which
banks in Memphis, Tennessee are required to be open for business, in which case
such Quarterly Dividend Payment Date will be the next business day. Assuming
the Effective Date will be July 1, 1995, the first Quarterly Dividend Payment
Date for the Series E Preferred Stock offered hereby will be August 15, 1995.
The amount of dividends payable for the initial dividend period or for any
period shorter than a full dividend period, shall be calculated on the basis of
the actual number of days elapsed in a 360-day year of twelve 30-day months.
Dividends are payable to holders of record as they appear on the stock transfer
records of UPC on such record dates, not more than 30 days nor less than 10
days preceding the Quarterly Dividend Payment Date, as may be fixed by the
Board of Directors.
For any dividend period, no dividends may be paid or declared and set
apart for payment on any Series E Preferred Stock, or any other series of UPC
Preferred Stock at the time outstanding, unless dividends properly accumulated
in respect to the Series E Preferred Stock and all other series of UPC
Preferred Stock ranking senior to or on a parity therewith for all prior
dividend periods shall have been paid or declared and set apart for payment.
In the event that full cumulative dividends on the Series E Preferred
Stock shall not have been paid when due, or set apart for payment, then, until
such aggregate deficiency shall have been declared and paid, or set apart for
payment, UPC may not (A) declare or pay any dividends or make other
distributions on the UPC Common Stock other than (i) dividends payable in
shares of UPC Common Stock or other stock of UPC ranking junior to the Series E
Preferred Stock as to the payment of dividends and distributions upon
liquidation,
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<PAGE> 41
dissolution and winding up of UPC (such other capital stock is hereinafter
referred to as "Junior Stock") or (ii) options, warrants or rights to subscribe
for or purchase shares of UPC Common Stock or Junior Stock or (B) purchase,
redeem or otherwise acquire (i) any share of UPC Common Stock or Junior Stock
(other than with funds previously deposited in trust for the redemption of
shares of Junior Stock pursuant to any sinking fund) or (ii) any other shares
of capital stock of UPC ranking on a parity with the Series E Preferred Stock,
except by conversion into or exchange for UPC Common Stock or Junior Stock.
A holder of shares of Series E Preferred Stock surrendered for
conversion during the period between any dividend payment record date and the
corresponding dividend payment date will receive the dividend payable by UPC on
such shares of Series E Preferred Stock on such date, even though the payment
date for such dividend may be subsequent to the date of conversion.
UPC has the right to, and may, from time to time or at any time
hereafter, enter into borrowing arrangements or issue other debt instruments,
the provisions of which may contain restrictions on payment of dividends and
other distributions on the Common Stock and the Preferred Stock of UPC.
Liquidation Rights. In the event of a liquidation, dissolution and
winding up of UPC, whether voluntary or involuntary, the registered holders of
shares of Series E Preferred Stock then outstanding shall be entitled to
receive out of the assets of UPC, before any distributions to the holders of
the UPC Common Stock or any other Junior Stock, an amount equal to the
"Liquidation Preference" with respect to such shares of Series E Preferred
Stock. The Liquidation Preference for the Series E Preferred Stock is $25.00
per share, plus an amount equal to all dividends thereon (whether or not
declared) accrued and unpaid through the date of final distribution. After
receipt of the Liquidation Preference, the holders of shares of Series E
Preferred Stock will not be entitled to any further participation in any
distributions of the assets of UPC. If, upon any such liquidation, dissolution
and winding up of UPC, the assets of UPC are insufficient to make full payment
to the holders of shares of the Series E Preferred Stock and to the holders of
any UPC Preferred Stock ranking as to liquidation, dissolution and winding up,
on a parity with the Series E Preferred Stock, then such assets will be
distributed pro rata among the holders of shares of Series E Preferred Stock
and of any other UPC Preferred Stock in proportion to the amounts of their
respective Liquidation Preferences. Neither the consolidation nor the merger
of UPC with or into any other corporation or corporations, nor a reorganization
of UPC alone, nor the sale or transfer by UPC of substantially all of its
assets will be deemed to be a dissolution or liquidation of UPC.
The holders of Series E Preferred Stock will not be entitled to
receive the Liquidation Preference in respect to such shares until the
liquidation preferences on any shares of UPC's capital stock ranking senior to
the Series E Preferred Stock as to the right to receive distributions upon
liquidation, dissolution and winding up shall have been paid, or a sum set
aside therefor sufficient to provide payment in full. No such senior capital
stock of UPC is currently authorized or outstanding and the holders of Series E
Preferred Stock will have certain voting rights with respect to the creation of
any such series or class of senior capital stock of UPC. See "--Voting Rights"
below.
Because UPC is a holding company, its rights and the rights of its
creditors and shareholders, including the holders of the Series E Preferred
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.
Optional Redemption. At the option of UPC, and upon the giving of at
least 30 but not more than 60 days' notice, the Series E Preferred Stock may be
redeemed, in whole or in part, at any time or from time to time on or after
March 31, 1997, for a redemption price per share of $25.00 plus accrued and
unpaid dividends to the redemption date. Any such redemption may be effected
only with the prior approval of the Federal Reserve. If fewer than all the
outstanding shares of Series E Preferred Stock are to be redeemed, UPC may
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<PAGE> 42
select those to be redeemed by lot or pro rata (or by a substantially
equivalent method), as determined by UPC's Board of Directors to be equitable.
Conversion. From and after original issuance but prior to redemption,
the Series E Preferred Stock is convertible into shares of UPC's $5.00 par
value Common Stock at a ratio of 1.25 common shares for each share of Series E
Preferred Stock. The conversion ratio will be adjusted upon the occurrence of
any (i) dividend in respect to the UPC Common Stock that is paid in shares of
UPC Common Stock; (ii) expansion or contraction of the number of outstanding
shares of UPC Common Stock by means of any stock split, reverse stock split or
other similar transaction; (iii) combination or subdivision of shares of Series
E Preferred Stock into a smaller or larger number of shares by means of any
stock split, reverse stock split or other similar transaction having the effect
of altering the number of shares of Series E Preferred Stock then outstanding;
or (iv) issuance of rights or warrants entitling holders of UPC Common Stock to
subscribe for or purchase UPC Common Stock at less than the then current market
price. No events requiring adjustment have occurred. No fractional shares
will be issued upon conversion of the Series E Preferred Stock and converting
holders will receive cash in lieu of fractional shares upon conversion.
If UPC should merge into or consolidate with another corporation or
reclassify the UPC Common Stock (other than by stock split, reverse split or
other similar transaction described above), then each share of Series E
Preferred Stock shall be convertible into the stock, securities or other
property that would have been received in such transaction had such share been
converted into UPC's Common Stock immediately prior to the consummation of such
transaction.
Treasury regulations issued under Section 305 of the Internal Revenue
Code of 1986, as amended, treat as taxable events certain constructive
distributions of stock with respect to stock and convertible securities. An
adjustment in the conversion price of the Series E Preferred Stock to reflect
taxable distributions on Common Stock (but not stock splits or non-taxable
stock dividends) may be treated as a constructive distribution of stock that is
taxable as a dividend to the extent of the current and accumulated earnings and
profits of UPC. Prospective purchasers are advised to consult their own tax
advisors as to the Federal, state and local tax consequences of acquiring,
holding, converting and disposing of shares of Series E Preferred Stock and
Common Stock issuable upon conversion thereof.
Voting Rights. Except as indicated below or in a Prospectus
Supplement, or except as expressly required by applicable law, the holders of
Series E Preferred Stock are not entitled to vote. So long as any shares of
Series E Preferred Stock remain outstanding, the consents of the holders of at
least two-thirds (2/3rds) of the shares of Series E Preferred Stock outstanding
at the time (voting separately as a class together with all other series of UPC
Preferred Stock ranking on a parity with the Series E Preferred Stock either as
to dividends or the distribution of assets upon liquidation, dissolution and
winding up and upon which like voting rights have been conferred and are
exercisable) given in person or by proxy, either in writing or at any special
or annual meeting called for the purpose, shall be necessary to permit, effect
or validate (i) the authorization, creation or issuance of a new class of
capital stock or series of Preferred Stock having rights, preferences or
privileges senior to the Series E Preferred Stock, or any increase in the
number of authorized shares of any class of capital stock or series of
Preferred Stock of UPC having rights, preferences or privileges senior to the
Series E Preferred Stock or (ii) the amendment, alteration or repeal, whether
by merger, consolidation or otherwise, of any of the provisions of UPC's
Charter which would materially and adversely affect any right, preference,
privilege or voting power of the Series E Preferred Stock or of the holders
thereof; provided, however, that any increase in the amount of authorized
Common Stock or Preferred Stock or the creation and issuance of any other class
of capital stock or series of Preferred Stock, in each case ranking on a parity
with or junior to the Series E Preferred Stock with respect to the payment of
dividends and the distribution of assets upon liquidation, dissolution and
winding up, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers.
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<PAGE> 43
The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding shares of Series E Preferred Stock shall
have been redeemed or called for redemption and sufficient funds shall have
been deposited in trust to effect such redemption.
Preemptive Rights. Holders of shares of Series E Preferred Stock are
not entitled to preemptive rights with respect to any shares or other
securities of UPC which may be issued.
Ranking. Series E Preferred Stock ranks on a parity with UPC's Series
B Preferred Stock, Series D Preferred Stock, and, when and if ever issued, UPC's
Series A Preferred Stock. UPC has redeemed all of its outstanding Series C
Preferred Stock.
OTHER PREFERRED STOCK OF UPC
Series A Preferred Stock. UPC's Charter provides for the issuance of
up to 250,000 shares (subject to adjustment by action of the UPC Board) of
Series A Preferred Stock under certain circumstances involving a potential
change in control of UPC. None of such shares are outstanding and management is
aware of no facts suggesting that issuance of such shares may be imminent. The
Series A Preferred Stock is described in more detail in UPC's Current Report on
Form 8-K dated January 19, 1989, and filed February 1, 1989 (Commission File No.
0-6919) which is incorporated by reference herein.
Series B Preferred Stock. In November 1989, UPC issued to two holders,
in a private offering incidental to an acquisition, 44,000 shares of its Series
B Preferred Stock all of which are outstanding as of the date hereof. Such
shares bear a dividend rate of $8.00 per share per annum; dividends are
cumulative. 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 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. Management intends
to call for redemption on July 1, 1995, all of UPC's Series D Preferred Stock.
This action is contingent upon receipt of the prior approval of the Federal
Reserve. It is expected that upon its call, the holders thereof would convert
their Series D Preferred Stock into shares of UPC Common Stock unless the market
price of the UPC Common Stock should fall below $20.50 per share.
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.
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<PAGE> 44
CERTAIN PROVISIONS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT
Certain provisions of UPC's Charter and Bylaws, and certain provisions
of Tennessee law, may have an anti-takeover effect in that they could prevent,
discourage or delay a change in control of UPC. The following summary briefly
describes certain of those provisions. The summary is not intended to be
complete and is qualified in its entirety by reference to UPC's Charter and
Bylaws and to the Tennessee Code.
Charter and Bylaw Provisions. Pursuant to UPC's Charter, the
directors of UPC are elected for three-year terms of office, and approximately
one-third of the members of the UPC Board are up for election each year. The
Charter also restricts the removal of directors by shareholders.
The Charter requires the affirmative votes of the holders of 66 2/3%
of the outstanding stock for approval of a merger, consolidation or a sale or
lease of all or substantially all of the assets of UPC if the other party to
the transaction is a beneficial owner of 10% or more of the outstanding shares
of UPC. The Charter also requires the affirmative votes of the holders of 66
2/3% of the outstanding stock to amend the Bylaws of UPC and the provisions of
the Charter applicable to UPC's capital stock; to change the number, election
and classification of directors; to give approval of certain transactions as
described above; and to amend certain provisions of the Charter.
Share Purchase Rights Plan. In 1989, the UPC Board adopted a Share
Purchase Rights Plan and distributed a dividend of one Preferred Share Unit
Purchase Right ("Right") for each outstanding share of UPC Common Stock.
Moreover, one Right was required to 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, thus they
would have no right to vote or to receive dividends on these shares..
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
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<PAGE> 45
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.
The provisions described above might be deemed to make UPC less
attractive as a candidate for acquisition by another company than would
otherwise be the case in the absence of such provisions. For example, if
another company sought to acquire a controlling interest of less than 66 2/3%
of the outstanding shares of UPC Common Stock, the acquirer would not thereby
obtain the ability to replace a majority of the UPC Board until at least the
second annual meeting of shareholders following the acquisition, and
furthermore the acquirer would not obtain the ability immediately to effect a
merger, consolidation or other similar business combination unless the
described conditions were met. As a result, UPC's shareholders may be deprived
of opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices in a takeover context. The provisions
described above also may make it more difficult for UPC's shareholders to
replace the UPC Board or management, even if the holders of a majority of the
UPC Common Stock should believe that such replacement is in the interests of
UPC. As a result, such provisions may tend to perpetuate the incumbent UPC
Board and management.
EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS
At the Effective Time of the Merger, shareholders of FSB (except for
any FSB shareholder properly exercising dissenters' rights) automatically will
become holders of the Series E Preferred Stock of UPC, and their rights as
holders of the Series E Preferred 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
FSB.
REMOVAL OF DIRECTORS
FSB's Bylaws provide that its directors may be removed with cause by
vote of a majority vote of the entire FSB Board. FSB's Directors may be
removed with or without cause by the vote of a majority of the shareholders
entitled to vote at a regular or special meeting.
UPC's Bylaws provide that directors may be removed with or without
cause by vote of the holders of 66 2/3% or more of the outstanding shares
entitled to vote generally in the election of directors.
REQUIRED SHAREHOLDER VOTES
FSB's Charter and Bylaws contain no provisions for more than a
majority vote of all shares entitled to vote on any particular matter that may
be subjected to a shareholder vote. The UPC Charter provides that the vote of
66 2/3% or more of the shares entitled to vote will be required to approve any
merger or consolidation of UPC with or into any other corporation or the sale,
lease, exchange or other disposition of substantially all of UPC's assets, if
on the date a binding agreement providing for such merger, sale or other
disposition, the corporation, person or entity into which UPC would be merged
or to which its assets would be sold should be the beneficial owner of 10% or
more of the outstanding capital stock of UPC.
ELECTION OF DIRECTORS
FSB's Bylaws provide for only one class of directors, and shareholders
are entitled to elect FSB 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.
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<PAGE> 46
UPC's Bylaws provide for a classified board of directors consisting of
three classes of directors having staggered terms of three years each.
Therefore, UPC shareholders are entitled to elect only one-third of UPC's
directors annually. The number of directors shall be not less than 7 nor more
than twenty-five (25). To increase the number of directors, 66 2/3% of the
directors then in office must concur.
FIRST STATE BANCORPORATION, INC.
First State Bancorporation, Inc. ("FSB") was organized as a Tennessee
corporation in 1980, and is headquartered in Dyersburg, Dyer County, Tennessee.
FSB is a one-bank holding company registered with and regulated by the Federal
Reserve. First Exchange Bank ("FEB") was chartered as a state banking
association in 1923 and commenced operations that same year under the name The
First State Bank and Trust Company. In 1984, FSB acquired The Martin Bank in
Martin, Tennessee, and transferred the assets and liabilities of The Martin
Bank to FEB in 1992. FEB'S main headquarters is located at 213 Church Avenue
North, Dyersburg, Tennessee 38025, which is a branch which opened in 1988.
FEB's official principal office is in Tiptonville. FEB has a total of eight
banking offices located in Martin, Ridgely, Tiptonville, and Dyersburg,
Tennessee. FEB had total assets as of December 31, 1994, of $110 million and
total deposits of $100 million, and is engaged in the general banking business,
including taking deposits from the public and using such deposits, together
with other funds to make loans and investments. The deposits of FEB are
insured by the FDIC up to the maximum allowed by law.
All of the outstanding shares of common stock of FEB are owned by FSB.
FSB has no active subsidiaries other than FEB.
As of December 31, 1994, FEB had approximately 51 full-time employees
and 10 part-time employees. Percy E. Smith, its Chairman, President and Chief
Executive Officer, is the sole employee of FSB. Management believes that FEB
has a good relationship with its employees. FEB has a 401(k) profit sharing
plan for its employees as well as group health, disability and life insurance
coverage.
PROPERTY
FEB owns all of its banking offices. FEB owned three parcels of
foreclosed property as of December 31, 1994. One of these properties has been
written off of the books of FSB and is not reflected in the FSB Financial
Statements. The other two parcels are recorded at the lower of cost or the
assets' fair market values.
COMPETITION
FEB competes with numerous other commercial banks and other financial
institutions in Lake, Weakley and Dyer Counties in Tennessee. There are other
commercial banks, savings and loan institutions, credit unions, and other
companies offering financial services in these surrounding counties.
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<PAGE> 47
DEPOSITS
Management of FEB does not believe there are any depositors whose
withdrawals would have a significant adverse effect on the deposits of FEB.
LEGAL PROCEEDINGS
As of the date of this Prospectus, neither FSB nor FEB is involved as
defendant in any legal matters that management of FSB deems would have a
material impact on the financial position or results of operations of FSB.
MARKET PRICE OF FSB COMMON STOCK
The FSB Common Stock has no established trading market, and relatively
few transfers have occurred since FSB was organized in 1980. There has been
only intermittent trading in the FSB Common Stock, all of which has occurred in
the price range between $7.00 and $19.00 per share. As of April 21,1995, there
were 206 shareholders of record of the FSB Common Stock and a total of
343,499.7 shares of FSB Common Stock issued and outstanding.
FEB has historically declared and paid dividends quarterly with all
dividends payable to FSB to be used for funding of FSB'S obligations and
dividend payments to FSB's shareholders. FSB has historically declared and
paid cash dividends annually with the most recent dividend paid on December 30,
1994, being $1.25 per share.
CERTAIN BENEFICIAL HOLDERS OF FSB COMMON STOCK
The following table sets forth certain information with respect to
those known to FSB to be beneficial owners of more than five percent (5%) of
the FSB Common Stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF NUMBER OF % OF
BENEFICIAL OWNER SHARES TOTAL
- ------------------- ------ -----
<S> <C> <C>
Percy E. Smith, Chairman, President and 171,920.1 50.05%
Chief Executive Officer (1)
Dyersburg, TN
</TABLE>
_________________________
(1) Mr. Smith is also a director of both FSB and FEB. His wife is the
holder of 434 shares which are included in the above amount and
percentage
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<PAGE> 48
HOLDINGS OF FSB COMMON STOCK BY FSB MANAGEMENT
The following executive officers and directors of FSB held the
following amounts and percentages of the outstanding FSB Common Stock as of
April 21, 1995:
<TABLE>
<CAPTION>
NUMBER OF % OF
NAME SHARES TOTAL(1)
---- ---------- -----
<S> <C> <C>
T.H. Farmer, III 10,007.0 2.9%
Mack M. Forrester 8,300.0 (2) 2.4
James E. McFarlin 500.0 .1
Percy E. Smith 171,920.1 (2) 50.0
Bruce D. Wyatt, Sr. 2,450.0 (3) .7
Dessel T. Wright 10,386.4 3.0
--------- ----
Totals 203,563.5 59.3%
========= ====
</TABLE>
_________________________
(1) Individual percentages may differ from total percentage due to rounding
to the nearest hundredth
(2) Includes 1,400 shares and 434 shares held of record respectively by the
wives of Messrs. Forrester and Smith
(3) All 2,450 shares are registered in the name of Wyatt Farms, Inc., a
corporation controlled by Mr. Wyatt.
FIRST STATE BANCORPORATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The discussion and tabular data presented below analyze major factors and
trends regarding the financial condition of First State Bancorporation, Inc.
and Subsidiaries (FSB) as of December 31, 1994 and 1993, and the results of
operations of FSB for each of the fiscal years ended December 31, 1994, 1993,
and 1992. This discussion should be read in conjunction with the audited
consolidated financial statements and the notes thereto as of and for the years
ended December 31, 1994, 1993 and 1992, presented in Appendix A of this
Prospectus and Proxy Statement.
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<PAGE> 49
OVERVIEW
For a summary of selected consolidated financial data of FSB as of and for the
years ended December 31, 1990 through 1994, see pages 9 and 10 of this
Prospectus. Since December 31, 1990, total assets of FSB have grown at an
average annual rate of approximately 10.60% to $109.766 million at December 31,
1994.
FSB's net income for the year ended December 31, 1994, of $884,799 represents
the highest level for the five year period ended December 31, 1994, and
compares to net income of $392,509 for the year ended December 31, 1990, which
represents the lowest earnings for the same five year period.
There has been steady growth in both assets and earnings since 1990, with a
slight decline in earnings for the period ended December 31, 1993, due to the
effect of adopting SFAS 109. The increase in earnings from 1991 to 1992 of
$504,254 was due to improved net margins in 1992. The improved net margins
were the result of decreasing interest rates in 1991 and 1992. FSB, as do
other institutions, normally enjoys improved margins during periods of
fluctuating interest rates, both increasing and decreasing. However, such
growth is dependent on the economies of the markets served by FSB and other
factors which are discussed below. FSB is located in Tiptonville, Lake County,
Tennessee and has branches in Martin, Weakley County, Tennessee and Dyersburg,
Dyer County, Tennessee.
SOURCES AND USES OF FUNDS
FSB has a variety of sources of funds available, but its primary resource is
the taking of deposits from customers, both individual and business. FSB's
deposit acquisition strategy is to rely on a core deposit base of demand
deposits as well as savings and time deposits under $100,000. Next, FSB
utilizes time deposits over $100,000 and public deposits for additional sources
of funds. At December 31, 1994, the percentage of time deposits over $100,000
to total deposits was 9.65% compared to 7.01% at December 31, 1993. The
acquisition of deposits are from customers, individuals and businesses within
FSB's market area. Management believes that the rates offered for deposits are
competitive with other financial institutions in FSB's market area.
FSB's primary use of funds is the making of loans to customers. During 1994,
the loan portfolio averaged 71.62% of total earning assets of FSB compared to
74.86% in 1993. Table 5 presents the composition of the loan portfolio at
December 31, 1994 and 1993. FSB's loan portfolio is comprised of loans to
individuals and businesses secured by various types of collateral, and in
certain circumstances, loans are extended on an unsecured basis.
A secondary use of funds is the purchasing of investment securities. During
1994, the investment portfolio averaged 24.83% of total earning assets of FSB
compared to 19.48% in 1993. Table 3 presents the composition of investment
securities at December 31, 1994 and 1993, with the average yields and
maturities of the portfolio detailed in Table 4. The portfolio is comprised
principally of U.S. Treasury obligations, obligations of U.S. Government
agencies, obligations of state and local governments and mortgage backed
securities. While FSB may continue to upgrade or reposition the portfolio,
FSB's management has not in the past nor does it intend in the future to trade
securities for profit or to depend upon securities gains for a regular source
of income. Securities gains and losses have not had a material impact on the
results of operations for the years ended December 31, 1994 and 1993.
Effective January 1, 1994, FSB adopted SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Consequently, upon adoption of SFAS
115, securities of
38
<PAGE> 50
$11,226,430 were transferred to the available-for-sale category at their fair
value, with an offsetting credit to capital of $75,683, net of deferred income
taxes of $30,273. At December 31, 1994, the net unrealized loss on these
securities was $41,084.
For liquidity purposes, FSB invests available funds in federal funds sold. The
level of such invested funds varies based on the liquidity needs of FSB and the
timing of other activities of FSB, including lending and deposit activities.
FINANCIAL CONDITION - DECEMBER 31, 1994 AND 1993
Total assets have increased at December 31,1994, to $109.766 million, compared
to $101.841 million at December 31, 1993.
Investment securities totaled $30.531 million at December 31, 1994, compared to
$18.385 million at December 31, 1993. This increase was funded by net income
of $884,799, net increase in deposits of $6.363 million, proceeds from borrowed
money of $1.214 million, proceeds from calls and maturities of securities of
$3.741million and the decrease in federal funds sold of $4.075 million. The
level of investment securities in the future will depend on loan demand and the
ability of management to attract quality loans.
Total loans, net of unearned income, at December 31,1994, were $69.744 million,
compared to $70.695 million at December 31, 1993, which evidences a stable
loan portfolio.
Federal funds sold totaled $1.3 million at December 31, 1994, compared to $5.4
million at December 31, 1993, a $4.1 million decrease. Management feels that
this decline and the deployment into higher yielding investment securities
does not significantly affect its liquidity.
Customer deposits totaled $99.486 million as of December 31, 1994, a $6.37
million increase over total deposits of $93.116 million as of December 31,
1993. This increase was caused by $1 million in noninterest-bearing deposits,
$2.38 million in interest-bearing deposits under $100,000 and $2.99 million in
certificates of deposit over $100,000. The increase in certificates of deposit
over $100,000 is attributable to the institution having approximately $3
million in governmental funds. These certificates of deposit will mature
within the next year and the withdrawals will be funded by maturities of
investment securities and a decrease in federal funds sold.
At December 31, 1994, FSB's loan to deposit ratio was 70.10%, compared to
75.92% at December 31, 1993. This ratio decreased due to total deposits
increasing by $6.37 million (as explained in the above paragraph) while total
loans, net of unearned interest, decreased by $951,000.
Total capital as of December 31, 1994 was $7.533 million, compared to $7.118
million at December 31, 1993. The increase for each period is attributable to
net income for the applicable period less dividends paid by FSB of $429,375 and
$515,249 for the years ended December 31, 1994 and 1993, respectively.
FSB's capital to assets ratio was 6.86% at December 31, 1994, compared to 6.99%
as of December 31, 1993. The ratio of capital to assets has decreased due to
assets growing at a faster rate than earnings.
39
<PAGE> 51
RESULTS OF OPERATIONS - FOR THE YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
Net Income - Net income for 1994 was $884,799, a slight increase over 1993 net
income of $832,200. Net income for 1993 decreased $46,209 from net income of
$878,409 for 1992. This decrease was due to the adoption of SFAS 109 in 1993.
Net income per share was $2.58 in 1994, compared to $2.42 in 1993 and $2.56 in
1992.
A more detailed analysis of the components of net income and the changes in
such components is included under the appropriate captions below.
The return on average assets for the year ended December 31, 1994, was .83%
compared to .82% and 1.02% for 1993 and 1992, respectively. The return on
average capital for 1994 was 12.11% compared with 12.19% and 13.08% for the
years ended December 31, 1993 and 1992, respectively. FSB declared and paid
dividends on its common stock of $429,375, $515,249, and $429,375 for the years
ended December 31, 1994, 1993, and 1992, respectively.
Net Interest Income - Net interest income, the major component of FSB's income,
is the amount by which interest and fees generated by earning assets exceeds
the total interest cost of funds incurred to carry them. Table 1 - Interest
Rates and Interest Differential, and Table 2 - Volume and Yield/Rate Variances
provides an analysis of net interest income for the years ended December 31,
1994, 1993 and 1992.
Net interest income was $4.287 million for the year ended December 31, 1994,
compared to $4.182 million and $3.961 for the years ended December 31, 1993 and
1992, respectively. The growth in net interest income has come from increased
levels of interest- earning assets over the growth in interest-bearing
liabilities. The changes in yields and rates have changed the levels of total
interest income and interest expense; however, such changes have not
significantly altered the overall level of net interest income, except for the
difference in net interest income for the years ended December 31, 1991 and
1992.
Provision for Loan Losses - The provision for loan losses for the three years
ended December 31, 1994, 1993 and 1992 were $104,000, $165,000 and $155,000,
respectively. The allowance for loan losses, which totaled $918,367 at
December 31, 1994, has been, in management's opinion, sufficient to support the
loan portfolio and levels of nonperforming loans. Future provisions for loan
losses will be based on past loan experience, growth and composition of the
loan portfolio, as well as the then current economic conditions. The $918,367
allowance for loan losses at December 31, 1994 represents 1.32% of outstanding
loans, net of unearned income. A summary of the activity in the allowance for
loan losses for the years ended December 31, 1994 and 1993 is set forth in
Table 8.
Noninterest Income - Noninterest income for the three years ended December 31,
1994, 1993 and 1992, was $1.067 million, $.967 million and $.749 million,
respectively. The primary sources of noninterest income are from service
charges on deposits and other miscellaneous income from the operations of FSB.
Securities gains (losses) were $(5,553) and $194,047 for the years ended
December 31, 1994 and 1993. There were no securities sold during 1992. Other
fluctuations responsible for the increase in income for 1994 as compared to
1993 were recoveries of defaulted investment securities, increases in credit
life insurance and a gain on the sale of a bank subsidiary. The securities
gains in 1993 of $194,047 was attributable to certain strategic restructurings
of
40
<PAGE> 52
securities to provide funds necessary for moderate growth to maintain liquidity
in the anticipated adoption of SFAS No. 115 on January 1, 1994.
Noninterest Expenses - Noninterest expenses for the years ended December 31,
1994, 1993 and 1992, were $3.929 million, $3.624 million and $3.285 million,
respectively. The primary components of noninterest expenses are salaries and
wages, occupancy expenses, furniture and equipment expenses, FDIC insurance
premiums and other miscellaneous expenses of FSB. One of the largest
fluctuations in the above expenses, other than salaries, was the difference in
furniture and equipment expenses. This expense increased $156,554 from 1993 to
1994 due to the bank leasing statement-imaging equipment in 1994, and increases
in depreciation expense as a result of significant additions in 1993 to fixed
assets.
Income Taxes - The provision for income taxes for the three years ended
December 31, 1994, 1993 and 1992, was $436,388, $473,934 and $392,159,
respectively. The increase in 1993 was due to higher pretax earnings as a
result of the items discussed above. The effective tax rate for the three
years was 33.03% for December 31, 1994, compared to 34.84% for 1993 and 30.86%
for 1992.
Effective January 1, 1993, FSB adopted SFAS 109, Accounting for Income Taxes
which did not have a material impact on FSB's financial position or results of
operations. The cumulative effect of the accounting change was $53,988 which
is included in net income for the year ended December 31, 1993.
41
<PAGE> 53
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
TABLE 1 - INTEREST RATES AND INTEREST DIFFERENTIAL (Dollars in thousands)
<TABLE>
<CAPTION>
For the Years Ended December 31,
-------------------------------------------------------------------------------------
1994 1993 1992
------------------------- ---------------------------- --------------------------
Average Yield/ Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate Balance Interest Rate
------- -------- ------ ------- -------- ------ ------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest earning assets
Loans, net of unearned income(1),(4) $ 70,833 $6,151 8.68% $ 70,686 $5,797 8.20% $59,372 $5,451 9.18%
Taxable investment securities(3) 21,235 1,066 5.02% 15,960 797 4.99% 14,213 1,166 8.20%
Nontaxable investment securities(2),(3) 3,318 161 4.85% 2,431 99 4.07% 1,853 120 6.48%
Federal funds sold and securities
purchased with agreements to resell 3,512 121 3.45% 5,350 85 1.59% 3,458 113 3.27%
------- ------ ----- ------- ------ ---- ------- ------ ----
Total interest earning assets(2) $ 98,898 $7,499 7.58% $ 94,427 $6,778 7.18% $78,896 $6,850 8.68%
------ ------ ------
Noninterest earning assets
Cash and due from banks 4,916 4,372 4,164
Premises and equipment 2,598 2,653 2,387
Other assets 1,330 1,158 1,390
Less allowance for loan losses (934) (900) (688)
------- ------- -------
Total assets $106,808 $101,710 $86,149
======= ======= =======
LIABILITIES AND SHAREHOLDERS' CAPITAL
Interest-bearing liabilities
Money market accounts $ 10,055 $ 403 4.01% $ 7,135 $ 153 2.14% $ 4,206 $ 141 3.35%
Savings deposits 7,830 233 2.98% 7,304 209 2.86% 5,825 203 3.48%
Certificates of deposit over $100,000 8,004 331 4.14% 6,528 231 3.54% 4,755 226 4.75%
Other time deposits 40,054 1,704 4.25% 40,812 1,467 3.59% 37,874 1,785 4.71%
Other Interest bearing deposits 17,840 421 2.36% 18,676 509 2.73% 15,727 529 3.36%
Borrowed money 1,610 119 7.39% 556 27 4.86% 100 5 5.00%
------- ------ ----- ------- ------ ---- ------- ------ ----
Total interest-bearing liabilities $ 85,393 $3,211 3.76% $ 81,011 $2,596 3.20% $68,487 $2,889 4.22%
------ ------ ------
Noninterest-bearing liabilities
Demand deposits 13,246 12,958 9,800
Other liabilities 863 912 1,146
Shareholders' capital 7,306 6,829 6,716
------- ------- -------
Total liabilities and shareholders'
capital $106,808 $101,710 $86,149
======= ======= =======
NET INTEREST INCOME $4,288 $4,182 $3,961
====== ====== ======
NET YIELD ON INTEREST EARNING ASSETS 4.34% 4.43% 5.02%
===== ==== ====
</TABLE>
(1) Loan fees for all three years are included in the interest amounts for
loans, but in each case were immaterial in amount.
(2) These amounts have not been presented on a tax-equivalent basis.
(3) Yields are calculated on historical cost and exclude the impact of the
unrealized gain (loss) on available-for-sale securities.
(4) Includes loans on non-accrual status.
42
<PAGE> 54
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
TABLE 2 - VOLUME AND YIELD/RATE VARIANCES
(Dollars in thousands)
<TABLE>
<CAPTION>
1994 Compared to 1993 1993 Compared to 1992
------------------------------------- ----------------------------------
Increase (Decrease) Due to (*) Increase (Decrease) Due to (*)
------------------------------------- ----------------------------------
Volume Rate Net Volume Rate Net
------ ---- --- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Interest earned on:
Loans, net of unearned income $ 12 $342 $354 $1,039 $ (693) $ 346
Taxable investment securities 263 6 269 143 (512) (369)
Nontaxable investment securities 36 26 62 37 (58) (21)
Federal funds sold and securities purchased
with agreements to resell (29) 65 36 62 (90) (28)
----- ---- ---- ------ ------- -----
Total income from interest-earning assets $ 282 $439 $721 $1,281 $(1,353) $ (72)
----- ---- ---- ------ ------- -----
Interest paid on:
Money market accounts $ 63 $187 $250 $ 98 $ (86) $ 12
Savings deposits 15 9 24 52 (46) 6
Certificate of deposits of $100,000 and over 52 48 100 84 (79) 5
Other time deposits (27) 264 237 138 (456) (318)
Other interest bearing deposits (23) (65) (88) 98 (118) (20)
Borrowed money 51 41 92 23 (1) 22
----- ---- ---- ------ ------- -----
Total expense on interest-bearing liabilities $ 131 $484 $615 $ 493 $ (786) $(293)
----- ---- ---- ------ ------- -----
Net interest income $ 151 $(45) $106 $ 788 $ (567) $ 221
===== ==== ==== ====== ======= =====
</TABLE>
___________________
(*) The change in interest due to both rate and volume has been allocated to
change due to volume and change due to rate in proportion to the relationship
of the absolute dollar amounts of the change in each.
43
<PAGE> 55
TABLE 3
INVESTMENT SECURITIES AT BOOK VALUE
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
----------------------------------
1994 1993
------------ ----------
<S> <C> <C>
U.S. Treasury securities $13,739 $11,453
U.S. Government and Federal Agencies 9,870 998
State and local governments 3,605 2,481
Mortgage-backed securities 2,536 2,625
Equity securities 850 828
------- -------
Total investments $30,600 $18,385
======= =======
TABLE 4
PORTFOLIO MATURITIES AND YIELDS
December 31, 1994
(Dollars in thousands)
Book Value Average Yield(1)
---------- ---------------
U.S. Treasury Securities
Within one year $10,108 4.24%
One to five years 3,498 4.79%
Five to ten years 133 8.79%
-------
Total $13,739
-------
U.S. Government and Federal Agencies
Within one year $ 750 4.50%
One to five years 7,620 7.45%
Five to ten years 1,000 6.13%
Over ten years 500 5.79%
-------
Total $ 9,870
-------
State and local governments
Within one year $ 329 3.69%
One to five years 3,109 5.73%
Five to ten years 167 6.00%
-------
Total $ 3,605
-------
Mortgage-backed securities
One to five years $ 1,576 7.18%
Over ten years 960 5.79%
-------
Total $ 2,536
-------
Equity securities
Over ten years 850 5.30%
-------
Total investments $30,600
=======
</TABLE>
(1) The average yield is not presented on a tax-equivalent basis.
There are no investment securities other than securities of the U.S. Government
and its agencies which have an aggregate book value as of December 31, 1994,
exceeding ten percent of capital as of that date.
44
<PAGE> 56
TABLE 5
GROSS LOANS BY CATEGORY
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
----------------------------------
1994 1993
----------- ----------
<S> <C> <C>
Real estate:
Secured by single-family residential properties $29,105 $27,750
Secured by multi-family residential properties 723 340
Secured by non-farm residential properties 10,505 12,693
Construction, land development and other
commercial 248 478
Secured by farmland 3,522 3,502
Commercial and industrial 9,720 9,699
Agricultural 3,219 3,330
Consumer 12,369 12,316
Other loans 794 1,111
------- -------
Total $70,205 $71,219
Unearned income 461 524
------- -------
Loans, net of unearned income $69,744 $70,695
======= =======
- --------------
</TABLE>
At December 31, 1994, there were no concentrations of loans (loans to borrowers
engaged in similar activities) exceeding 10% of the total loans outstanding.
45
<PAGE> 57
Table 6 sets forth loan maturity and interest rate sensitivity of loans as of
December 31, 1994.
TABLE 6
LOAN MATURITY
DECEMBER 31, 1994
(Dollars in thousands)
<TABLE>
<S> <C>
Fixed rate loans:
Three months or less $ 3,173
After three months through one year 5,070
After one year through five years 11,697
After five years 4,280
-------
Total fixed rate loans $24,220
Floating rate loans
With repricing quarterly or more frequently 20,224
With repricing annually or more frequently
but less frequently than quarterly 10,692
With repricing every five years or more
frequently, but less frequently than annually 15,069
-------
Total loans $70,205
Unearned income 461
-------
Loans, net of unearned income $69,744
=======
</TABLE>
Table 7 sets forth information on the nonperforming loans in FSB's loan
portfolio as of December 31, 1994 and 1993. Although the amounts represent
risks in the loan portfolio, the major portion of the loans are collateralized
and should not be interpreted as losses.
TABLE 7
NONPERFORMING ASSETS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
--------------------------------
1994 1993
----------- ----------
<S> <C> <C>
Loans past due 90 days $ 24 $ 75
Nonaccrual loans, excluding loans past due 90 days 91 113
Restructured loans - -
Other real estate owned 96 -
---- ----
$211 $188
==== ====
</TABLE>
Management places loans on non-accrual status when it is expected that the
interest will not be collected.
All potential problem loans have been disclosed in Table 7. Potential problem
loans are those loans about which management has obtained information of
possible credit problems of the borrower, resulting in serious doubts as to the
ability of the borrower to comply with the present loan repayment terms.
46
<PAGE> 58
TABLE 8
SUMMARY OF LOAN LOSS EXPERIENCE
(Dollars in thousands)
<TABLE>
<CAPTION>
For the year ended December 31,
-----------------------------------
1994 1993
----------- ----------
<S> <C> <C>
Balance, January 1 $ 900 $ 728
Provision for loan losses 104 165
Sale of subsidiary (14) -
Loans charged off:
Commercial and industrial 16 1
Consumer 81 47
------- -------
Total loans charged off (97) (48)
Recoveries:
Real Estate - 20
Commercial and industrial 13 7
Consumer 12 28
------- -------
Total recoveries 25 55
------- -------
Net (charge-offs) recoveries (72) 7
------- -------
Balance, December 31 $ 918 $ 900
======= =======
Loans, net of unearned income
Year-end $69,744 $70,695
Average during year 70,833 70,686
Allowance for loan losses to year-end loans, net of unearned
income 1.32% 1.27%
Net charge-offs (recoveries) to average loans, net of unearned
income 0.10% (0.01)%
</TABLE>
___________________
In determining the amount of the provision for loan losses and allowance for
loan losses, management considers past loan charge- offs, the level of past due
and nonaccrual loans, the size and mix of the portfolio, adverse classification
at recent regulatory examinations, general economic conditions and potential
credit problems. The level of the allowance for loan losses is believed
adequate in relation to the size, mix and quality of the loan portfolio.
47
<PAGE> 59
Table 9 presents an allocation of the allowance for loan losses by different
loan categories. The allocation is based on a number of qualitative factors,
including management's review of the reserve. The amounts presented are not
necessarily indicative of the actual amounts which will be charged to any
particular loan category.
TABLE 9
ALLOCATION OF ALLOWANCE FOR LOAN LOSSES
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------------
1994 1993
---------------------- -----------------------
Amount % Amount %
----- --- ------ ---
<S> <C> <C> <C> <C>
Real estate $ 92 10 $ 90 10
Commercial and industrial 367 40 360 40
Agricultural 92 10 90 10
Other 367 40 360 40
---- --- ---- ---
Total $918 100 $900 100
==== === ==== ===
</TABLE>
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
FSB 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 FSB 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 FSB's daily cash needs. With the
available-for-sale securities portfolio, management can, at their discretion,
manage the liquidity and interest rate risk of the bank. Management does not
foresee any particular matters which might immediately threaten its ability to
remain liquid.
As the parent company, FSB's sources of liquidity are management fees from the
subsidiaries, dividends from subsidiaries, and working capital. At December
31, 1994, the parent company had cash of $36,770 and had working capital of
$86,773. As of December 31, 1994, the subsidiary could have paid dividends to
the parent company without prior regulatory approval of approximately $2
million.
DEPOSITS
Table 10 sets forth the average balances on FSB's deposit accounts for the
periods indicated. Average rates paid on deposits by FSB are reflected in
Table 1.
TABLE 10
AVERAGE DEPOSITS
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
---------------------------------
Interest bearing: 1994 1993
------- --------
<S> <C> <C>
Demand $27,895 $25,811
Savings 7,830 7,304
Time 48,058 47,340
Non-interest bearing:
Demand 13,246 12,958
------- -------
Total deposits $97,029 $93,413
======= =======
</TABLE>
_________________
Included in time deposits are $8,004,000 of certificates of deposit of $100,000
or greater.
48
<PAGE> 60
Table 11 sets forth the maturities of certificate of deposits over $100,000 as
of December 31, 1994.
TABLE 11
TIME DEPOSIT MATURITY
$100,000 OR GREATER
AS OF DECEMBER 31, 1994
(Dollars in thousands)
<TABLE>
<S> <C>
Three months or less $4,509
Over three months through twelve months 4,249
Over one year through five years 840
------
Total $9,598
======
</TABLE>
CAPITAL
The key to continued growth and profitability of FSB is to maintain adequate
levels of capital. The capital adequacy of a bank holding company is
determined based upon the level of capital as well as asset quality, liquidity,
earnings history, and economic conditions. Management's goal is to maintain
its bank in the "well-capitalized" category for regulatory capital. At year
end, FSB and its subsidiary were in this category.
The regulatory capital guidelines divided capital into two tiers, Tier 1
capital and Tier 2 capital. Tier 1 capital of FSB consists of shareholders'
equity including the unrealized loss on available-for-sale securities. Tier 2
capital includes the allowance for loan losses with certain limitations. In
determining the risk-based capital requirements, assets are assigned risk
weights of zero to 100 percent, depending upon the regulatory assigned levels
of credit risk associated with such assets. Off balance sheet items are
included in the calculation of risk-adjusted assets through conversion factors
established by regulatory agencies.
At December 31, 1994, FSB's Tier 1 and Total capital to risk-weighted assets
ratios were 11.26% and 12.51%, respectively, compared to 10.45% and 11.70%,
respectively at year end 1993. The regulatory agencies require
"well-capitalized" institutions to have Tier 1 and Total capital ratios of 6%
and 10%, respectively.
In addition to the risk-based capital requirements, the regulatory agencies
have established leverage capital requirements. This ratio is computed by
dividing Tier 1 capital by unadjusted (not risk-weighted) quarterly average
total assets. FSB's leverage ratio at December 31, 1994 was 6.97% compared to
7.05% at year end 1993, and compared to the regulatory guideline of 5% for
"well- capitalized" institutions.
The FDIC monitors risk-based capital requirements and requires weaker
institutions to pay higher deposit insurance premiums, while allowing
well-capitalized institutions to pay less. The deposit insurance assessments
currently range from 23 cents per $100 of deposits for "well-capitalized"
institutions to 31 cents for the weakest institutions. These premiums are
currently under review and it is expected that the premium for Bank Insurance
Fund institutions would decrease from 23 cents to 4 cents per $100 of
deposits. For 1994, FSB paid 23 cents per $100 of deposits and had $99.486
million of insured deposits as of December 31, 1994.
IMPACT OF ACCOUNTING STANDARDS TO BE ADOPTED
Financial Instruments - SFAS 107 requires disclosure regarding the market value
of financial instruments. SFAS 107 is effective for financial statements
issued for fiscal years ending after December 15, 1992 (calendar 1992
statements); however, for any entity with less than $150 million in assets
reported in the most recent balance sheet, the effective date is for financial
statements issued for fiscal years ending after December 15, 1995 (calendar
1995 statements). FSB expects to adopt SFAS 107 prospectively in 1995. It is
anticipated that the adoption of SFAS 107 will not have a material effect on
FSB's financial condition, results of operations, or liquidity.
Postemployment Benefits - SFAS 112 "Employers' Accounting for Postemployment
Benefits" established standards of accounting and reporting for the estimated
cost of benefits provided by an employer to its former or inactive employees
after employment but before retirement. SFAS 112 requires the accrual of a
liability for postemployment benefits that meet certain conditions contained in
SFAS 43. SFAS 112 was effective for fiscal years beginning after December 15,
1993. However, except as discussed in the notes to the financial statements,
FSB does not provide material postemployment benefits to its former or
inactive employees.
49
<PAGE> 61
Postretirement Benefits - SFAS 106 "Employers' Accounting for Postretirement
Benefits Other Than Pensions" requires that companies recognize the cost of
providing postretirement benefits as employees render service, since such
benefits are provided in exchange for employee service. The general provisions
of SFAS 106 were effective for fiscal years beginning after December 15, 1992.
However, for foreign plans and for defined benefit plans of nonpublic companies
with no more than 500 participants in the aggregate, adoption is not required
until fiscal years beginning after December 15, 1994. Except as discussed in
Note 16 to the financial statements, FSB does not provide material
postretirement benefits other than pensions to its employees.
Impairment of Loans - SFAS No. 114, "Accounting by Creditors for Impairment of
a Loan" (effective for fiscal years beginning after December 15, 1994), as
amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures," prescribes a valuation methodology for
impaired loans as defined by the standard. Generally a loan is considered
impaired if management believes that it is probable that all amounts due will
not be collected according to the contractual terms stipulated in the loan
agreement. An impaired loan must be valued using the present value of expected
future cash flows discounted at the loan's effective interest rate, the loan's
observable market price or fair value of the loan's underlying collateral. FSB
expects to adopt SFAS No. 114 prospectively in 1995. It is anticipated that
the adoption of SFAS No. 114 will not have a material effect on FSB's financial
condition, results of operations or liquidity.
VALIDITY OF THE UPC SERIES E PREFERRED STOCK
The validity of the shares of Union Planters Corporation Series E
Preferred Stock offered hereby will be passed upon by Gary A. Simanson,
Esquire, Assistant Secretary and Associate General Counsel of UPC. Gary A.
Simanson is an officer of UPC and receives compensation from UPC.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Union Planters Corporation for
the year ended December 31, 1994, have been so incorporated in reliance on the
report of Price Waterhouse LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
The consolidated financial statements of First State Bancorporation,
Inc. and Subsidiaries as of December 31, 1994 and 1993 and for each of the
three years in the period ended December 31, 1994 included in this Prospectus
have been so included in reliance on the report of Dunn, Creswell, Sparks,
Smith, Horne & Downing, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
50
<PAGE> 62
UNION PLANTERS CORPORATION
INDEX TO APPENDICES
APPENDIX
NUMBER
- --------
A - First State Bancorporation, Inc. and Subsidiaries Audited Consolidated
Financial Statements as of December 31, 1994 and 1993 and for Each of
the Three Years in the period ended December 31, 1994
B - Agreement and Plan of Reorganization dated as of February 24, 1995
together with a Letter Amendment thereto dated April 4, 1995 and the
Plan of Merger annexed thereto as Exhibit A. (Collective Exhibit)
C - Excerpt from Tennessee Business Corporation Act, as amended --
Concerning Dissenters' Rights
<PAGE> 63
APPENDIX A
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
Audited Consolidated Financial Statements
As of December 31, 1994 and 1993
and for
Each of the Three Years in the Period Ended
December 31, 1994
<PAGE> 64
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
TABLE OF CONTENTS TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED BALANCE SHEETS 2
CONSOLIDATED STATEMENTS OF INCOME 3
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL 4
CONSOLIDATED STATEMENTS OF CASH FLOWS 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6
<PAGE> 65
<TABLE>
<S> <C> <C>
DUNN CRESWELL SPARKS
SMITH HORNE & DOWNING
Fulton, Kentucky
Knoxville, Tennessee
624 Reelfoot Avenue Certified Public Accountants McKenzie, Tennessee
Post Office Box 896 Nashville, Tennessee
Union City, TN 38261 American Institute of Certified Public Accountants Paris, Tennessee
901-885-3661 phone Tennessee Society of Certified Public Accountants Trenton, Tennessee
901-885-6909 fax Private Companies Practice Section - AICPA Union City, Tennessee
</TABLE>
Independent Auditors' Report
The Stockholders and Board of Directors
First State Bancorporation, Inc. and Subsidiaries
Tiptonville, Tennessee 38079
We have audited the accompanying consolidated balance sheets of First State
Bancorporation, Inc. and its subsidiaries as of December 31, 1994 and 1993, and
the related consolidated statements of income, changes in capital and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First State
Bancorporation, Inc. and its subsidiaries at December 31, 1994 and 1993, and
the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the financial statements, the Corporation changed its
method of accounting for income taxes in 1993 and investment securities in 1994
as required by the provisions of FASB SFAS 109 and SFAS 115, respectively.
/s/
- ----------------------------------------------
Dunn, Creswell, Sparks, Smith, Horne & Downing
Certified Public Accountants
February 7, 1995, except for Note 18, as to which the date is February 24, 1995
<PAGE> 66
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
<TABLE>
<CAPTION>
ASSETS 1994 1993
--------------- ---------------
<S> <C> <C>
Cash and due from banks $ 5,137,950 $ 4,572,808
Federal funds sold 1,275,000 5,350,000
Investment securities:
Held-to-maturity, at book value (market value $16,236,276 at 16,645,381 18,385,046
December 31, 1994 and $18,688,273 at December 31, 1993)
Available-for-sale, at market value (book value $13,954,378) 13,885,905 --
Loans, net of unearned interest of $461,233 and $523,650 and
allowance for loan losses of $918,367 and $900,499 at December
31, 1994 and 1993, respectively 68,825,180 69,794,361
Bank premises and equipment, net of accumulated depreciation of
$1,947,264 at December 31, 1994 and $1,671,968 at December 31, 1993 2,440,331 2,658,678
Accrued interest receivable 1,194,403 893,572
Deferred income taxes 102,885 --
Other assets 259,414 186,966
------------ ------------
Total Assets $109,766,449 $101,841,431
============ ============
LIABILITIES AND CAPITAL
Liabilities
Noninterest-bearing deposits $ 13,880,046 $ 12,958,001
Interest-bearing deposits 56,882,229 54,952,772
NOW deposits 19,126,323 18,676,590
Certificates of deposit over $100,000 9,597,571 6,528,209
------------ ------------
Total deposits $ 99,486,169 $ 93,115,572
Accrued interest payable 520,006 422,079
Accrued taxes payable 44,112 147,751
Excess of book value of asset acquired over cost, net 233,269 252,231
Notes payable 1,922,544 746,800
Deferred income taxes -- 1,852
Other liabilities 27,520 36,657
------------ ------------
Total Liabilities $102,233,620 $ 94,722,942
------------ ------------
Commitments & Contingencies (Notes 8, 13, 16, 18) $ -- $ --
------------ ------------
Capital
Capital stock - 1,000,000 shares authorized; $1 par; 384,472
shares issued; 343,500 shares outstanding $ 384,472 $ 384,472
Surplus 1,861,307 1,861,307
Undivided profits 5,901,111 5,445,687
Treasury stock, at cost (572,977) (572,977)
Unrealized gain (loss) on securities available-for-sale,
net of deferred income taxes of $27,390 (41,084) --
------------ ------------
Total Equity $ 7,532,829 $ 7,118,489
------------ ------------
Total Liabilities and Equity $109,766,449 $101,841,431
============ ============
</TABLE>
See accompanying notes to financial statements -2-
<PAGE> 67
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Interest income
Loans, including fees $6,151,117 $5,796,558 $5,450,500
Federal funds sold 120,600 85,230 113,490
Investment securities - taxable 1,066,002 797,317 1,166,415
Investment securities - non-taxable 160,786 99,000 119,642
---------- ---------- ----------
Total interest income $7,498,505 $6,778,105 $6,850,047
---------- ---------- ----------
Interest expense
Interest on deposits $3,091,982 $2,568,672 $2,883,402
Interest on borrowed funds 119,241 27,313 5,211
---------- ---------- ----------
Total interest expense $3,211,223 $2,595,985 $2,888,613
---------- ---------- ----------
Net interest income $4,287,282 $4,182,120 $3,961,434
Provision for loan losses 104,000 165,000 155,000
---------- ---------- ----------
Net interest income after provision for loan losses $4,183,282 $4,017,120 $3,806,434
---------- ---------- ----------
Noninterest income
Service fees $ 817,176 $ 642,615 $ 585,744
Rent income 3,900 3,600 3,600
Gain (Loss) on securities (5,553) 194,047 --
Gain on sale of subsidiary 72,485 -- --
Other 179,337 126,912 159,939
---------- ---------- ----------
Total Noninterest income $1,067,345 $ 967,174 $ 749,283
---------- ---------- ----------
Noninterest Expense
Salaries $1,630,458 $1,588,292 $1,490,622
Employee benefits 327,961 309,310 285,429
Occupancy expenses 223,860 217,737 215,134
Furniture and equipment 540,469 383,915 337,928
Advertising and public relations 130,971 147,594 114,312
Stationery and supplies 181,660 169,718 131,847
Outside service fees 114,020 118,123 113,612
Loan and collection expense 10,086 78,096 7,341
Postage and freight 63,943 57,396 59,370
FDIC insurance 212,299 184,515 176,671
Insurance - other 113,133 110,065 115,908
Personal development 107,017 67,302 61,164
Other expenses 273,563 192,109 175,811
---------- ---------- ----------
Total noninterest expense $3,929,440 $3,624,172 $3,285,149
---------- ---------- ----------
Income before taxes and cumulative effect adjustment $1,321,187 $1,360,122 $1,270,568
Corporate income taxes 436,388 473,934 392,159
---------- ---------- ----------
Income before effect of a change in accounting
principle $ 884,799 $ 886,188 $ 878,409
Cumulative effect of a change in accounting principle -- (53,988) --
---------- ---------- ----------
Net income $ 884,799 $ 832,200 $ 878,409
========== ========== ==========
Weighted average shares outstanding 343,500 343,500 343,500
========== ========== ==========
Earnings per share
Income before effect of a change in accounting
principle $ 2.58 $ 2.58 $ 2.56
Cumulative effect of a change in accounting
principle -- (0.16) --
---------- ---------- ----------
Net income $ 2.58 $ 2.42 $ 2.56
========== ========== ==========
</TABLE>
See accompanying notes to financial statements -3-
<PAGE> 68
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL
For the years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Unrealized
Gain
(Loss) on
Securities
Available
Capital Undivided Treasury -for-
Stock Surplus Profits Stock Sale, net
-------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Balance - January 1, 1992 $384,472 $1,861,307 $4,679,702 $(572,977) $ --
Net income for 1992 -- -- 878,409 -- --
Cash dividends paid -
$1.25 per share -- -- (429,375) -- --
-------- ---------- ---------- --------- --------
Balance - December 31, 1992 $384,472 $1,861,307 $5,128,736 $(572,977) $ --
Net income for 1993 -- -- 832,200 -- --
Cash dividends paid -
$1.50 per share -- -- (515,249) -- --
-------- ---------- ---------- --------- --------
Balance - December 31, 1993 $384,472 $1,861,307 $5,445,687 $(572,977) $ --
Cumulative effect of adoption of -- -- -- --
SFAS 115 on January 1, 1994 45,410
Net income for 1994 -- -- 884,799 -- --
Cash dividends paid -
$1.25 per share -- -- (429,375) -- --
Change in unrealized gain (loss)
on securities available-for-sale,
net -- -- -- -- (86,494)
-------- ---------- ---------- --------- --------
Balance - December 31, 1994 $384,472 $1,861,307 $5,901,111 $(572,977) $(41,084)
======== ========== ========== ========= ========
</TABLE>
See accompanying notes to financial statements -4-
<PAGE> 69
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 884,799 $ 832,200 $ 878,409
------------ ------------ -----------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation - fixed assets $ 311,829 $ 229,305 $ 195,343
Amortization of negative goodwill (18,962) (18,962) (18,962)
Deferred income taxes (77,347) (21,943) (25,615)
Cumulative effect of change in accounting principle - 53,988 -
Provision for loan losses 104,000 165,000 155,000
Demand deposit charge-offs 7,687 16,378 4,576
Gain on sale of subsidiary (72,485) - -
Net effect of amortization of premiums on investment securities 152,540 113,303 34,714
(Gain) loss on securities 5,553 (194,047) -
(Gain) loss on sale of assets (6,223) 409 -
(Increase) decrease in accrued interest receivable (300,831) (102,504) 159,787
Decrease in other assets 23,638 51,125 71,978
Increase (decrease) in accrued interest payable 97,927 53,830 (220,611)
Increase (decrease) in accrued taxes payable (103,938) (59,759) 193,829
Increase (decrease) in other liabilities (9,137) 2,969 (103,027)
------------ ------------ -----------
Total adjustments $ 114,551 $ 289,092 $ 447,012
------------ ------------ -----------
Net cash provided by operating activities $ 999,350 $ 1,121,292 $ 1,325,421
------------ ------------ -----------
Cash flows from investing activities
Proceeds from calls and maturities
of investment securities - HTM $ 2,677,808 $ 5,183,103 $ 9,246,681
Proceeds from sale of investment securities - HTM - 4,188,634 -
Proceeds from calls and maturities
of investment securities - AFS 1,063,735 - -
Purchase of investment securities - HTM (12,322,734) (10,718,762) (6,307,808)
Purchase of investment securities - AFS (3,791,615) - -
Purchase of fixed assets (155,701) (512,267) (173,838)
Proceeds from sale of fixed assets 61,125 25,185 300
Proceeds from sale of subsidiary 630,017 - -
Net (increase) decrease in loans 218,878 (9,532,684) (6,626,590)
------------ ------------ -----------
Net cash used by investing activities $(11,618,487) $(11,366,791) $(3,861,255)
------------ ------------ -----------
Cash flows from financing activities
Cash dividends paid $ (429,375) $ (515,249) $ (429,375)
Repayment of long-term debt (38,100) (4,875) (77,625)
Proceeds from borrowed money 1,213,844 246,800 500,000
Net increase in deposits 6,362,910 9,433,160 5,571,744
------------ ------------ -----------
Net cash provided by financing activities $ 7,109,279 $ 9,159,836 $ 5,564,744
------------ ------------ -----------
Net increase (decrease) in cash and cash equivalents $ (3,509,858) $ (1,085,663) $ 3,028,910
Cash and cash equivalents at beginning of year 9,922,808 11,008,471 7,979,561
------------ ------------ -----------
Cash and cash equivalents at end of year $ 6,412,950 $ 9,922,808 $11,008,471
============ ============ ===========
Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes $ 620,225 $ 532,619 $ 163,835
============ ============ ===========
Cash paid for interest $ 3,113,296 $ 2,542,155 $ 3,109,224
============ ============ ===========
Non-cash investing activities:
Net unrealized loss on securities available for sale $ 68,473 $ - $ -
============ ============ ===========
Loans transferred to other real estate included in other assets $ 96,087 $ - $ -
============ ============ ===========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE> 70
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of First State Bancorporation, Inc. (the
Corporation) and its subsidiaries conform to generally accepted accounting
principles and to banking industry practices and are summarized as follows:
A. Organization - First State Bancorporation, Inc. is a one-bank holding
company chartered under the laws of the State of Tennessee. The
Corporation owns all of the outstanding capital stock of First
Exchange Bank. The Bank operates branches in the counties of Lake,
Dyer, and Weakley.
In July 1993, the Cardinal Credit Corporation was formed to operate a
finance company in Union City, Tennessee. First Exchange Bank owned
all of the authorized stock of the finance company, which was
subsequently sold during the year ended December 31, 1994.
B. Principles of Consolidation - The consolidated financial statements
include the accounts of the Corporation and its subsidiaries. All
significant intercompany accounts and transactions have been
eliminated in consolidation.
C. Basis of Accounting - The books, records and financial statements of
the Corporation are maintained on the accrual basis of accounting.
D. Cash Equivalents - The Corporation considers cash, due from banks and
federal funds sold to be cash equivalents.
E. Investment Securities - The Corporation adopted SFAS 115 effective
January 1, 1994. Upon adoption, $11,226,430 of investment securities
were transferred to the securities available-for-sale category. The
effect on the financial statements was a credit to equity in the
amount of $45,410, net of deferred income taxes of $30,273. Debt
securities that management has the ability and intent to hold to
maturity are classified as held-to-maturity and carried at cost,
adjusted for amortization of premium and accretion of discounts using
methods approximating the interest method. Other marketable
securities are classified as available-for-sale and are carried at
fair value. Unrealized gains and losses on securities
available-for-sale are recognized as direct increases or decreases in
stockholders' equity. Cost of securities sold is recognized using the
specific identification method. Securities gains and losses are
recognized on settlement date basis which does not vary materially
from trade date basis.
-6-
<PAGE> 71
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
F. Impairment of Loans - In May 1993, the FASB issued SFAS No, 114,
"Accounting by Creditors for Impairment of a Loan" (which takes effect
for fiscal years beginning after December 15, 1994) as amended by SFAS
No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures" issued in October 1994. SFAS No. 114
prescribes a valuation methodology for impaired loans as defined by
the standard. Generally, a loan is considered impaired if management
believes that it is probable that all amounts due will not be
collected according to the contractual terms stipulated in the loan
agreement. An impaired loan must be valued using the present value of
expected future cash flows discounted at the loan's effective interest
rate, the loan's observable market price, or fair value of the loan's
underlying collateral. The Corporation expects to adopt SFAS No. 114
prospectively in 1995. It is anticipated that the adoption of SFAS
No. 114 will not have a material effect on the Corporation's financial
condition, results of operations, or liquidity.
G. Interest Income on Loans - Interest income on real estate and
commercial loans is accrued and credited to operations based on
principal amount outstanding. Interest on installment loans is
computed and recorded in income using the rule of 78's method, which
does not represent a significant deviation from the interest method.
Loans are placed on non-accrual status and interest accruals are
discontinued when, in the opinion of management, it is not reasonable
to expect that such interest will be collected.
H. Allowance for Loan Losses - The provision for loan losses, which is
charged to operations, is based on management's assessment of the
quality of the loan portfolio, current economic conditions, and other
relevant factors. In management's judgement, the provision will
maintain the allowance for loan losses at an adequate level to absorb
potential losses which may exist in the portfolio.
I. Premises and Equipment - Premises and equipment are stated at cost
less accumulated depreciation. The provision for depreciation is
computed using the straight-line method for financial reporting and
accelerated methods for income tax purposes, with depreciation expense
of $311,829, $229,305 and $195,343 for 1994, 1993 and 1992,
respectively. Expenditures for maintenance and repairs are charged
against income as incurred. Cost of major additions and improvements
are capitalized and depreciated over their estimated useful lives.
The estimated lives for each class of assets are as follows:
-7-
<PAGE> 72
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Class Life
<S> <C>
Bank premises 5 - 40 years
Furniture, equipment and autos 5 - 20 years
Leasehold improvements 10 - 12 years
</TABLE>
J. Foreclosed Real Estate - At the time of foreclosure, real estate is
recorded at the lower of the Bank's cost or the asset's fair value,
less estimated costs to sell, which becomes the property's new basis.
Any write-downs based on the asset's fair value at date of acquisition
are charged to the allowance for loan losses. Costs incurred in
maintaining foreclosed real estate and subsequent write-downs to
reflect declines in the fair value of the property are recorded in
income on foreclosed real estate.
K. Negative Goodwill - The excess of book value of assets acquired over
cost, arising from the acquisition of the Martin Bank, which later
merged with First State Bank & Trust Company (now First Exchange
Bank), is being amortized on a straight-line basis over twenty-five
years.
L. Financial Instruments - SFAS 107 requires disclosure regarding the
market value of financial instruments. SFAS 107 is effective for
financial statements issued for fiscal years ending after December 15,
1992 (calendar 1992 statements); however, for any entity with less
than $150 million in assets reported in the most recent balance sheet,
the effective date is for financial statements issued for fiscal years
ending after December 15, 1995 (calendar 1995 statements). The
Corporation expects to adopt SFAS 107 prospectively in 1995. It is
anticipated that the adoption of SFAS 107 will not have a material
effect on the Corporation's financial condition, results of
operations, or liquidity.
M. Income Taxes - During 1993, the Corporation adopted FASB Statement
109, "Accounting for Income Taxes". Income taxes are provided for the
tax effects of the transactions reported in the financial statements
and consist of taxes currently due plus deferred taxes related
primarily to differences between the basis of available-for-sale
securities, allowance for loan losses, accumulated depreciation,
accretions of discounts and amortization of premiums on securities for
financial and income tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled. In 1992, the
Corporation accounted for income taxes according to APB 11. Deferred
taxes were computed for any significant differences between financial
statement and taxable income arising from timing differences. On
January 1, 1993, an adjustment was made for the cumulative effect of
change in accounting principle. The
-8-
<PAGE> 73
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
1992 financial statements have not been restated.
N. Significant Concentrations of Credit Risk - First Exchange Bank grants
agribusiness, commercial, residential and personal loans to customers
throughout the state. A large majority of the Bank's loans, however,
are concentrated in the immediate vicinity of Northwest Tennessee.
Although the Bank has diversified loan portfolios, a substantial
portion of their debtors' ability to honor their obligations is
dependent upon the agribusiness sector of that geographic area.
The Bank also maintains cash balances at several correspondent banks.
Accounts at each institution are insured by federal depository
insurance up to $100,000. Amounts in excess of this amount are
uninsured; however, management evaluates the financial strength of
those banks where deposits exceed $100,000.
O. Postemployment Benefits - SFAS 112 "Employers' Accounting for
Postemployment Benefits" established standards of accounting and
reporting for the estimated cost of benefits provided by an employer
to its former or inactive employees after employment but before
retirement. SFAS 112 requires the accrual of a liability for
postemployment benefits that meet certain conditions contained in SFAS
43. SFAS 112 is effective for fiscal years beginning after December
31, 1993. See Notes 16 and 18 for a description of these benefits.
P. Postretirement Benefits - SFAS 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" requires that companies
recognize the cost of providing postretirement benefits as employees
render service, since such benefits are provided in exchange for
employee service. The general provisions of SFAS 106 are effective
for fiscal years beginning after December 15, 1992. However, for
foreign plans and for defined benefit plans of nonpublic companies
with no more than 500 participants in the aggregate, adoption is not
required until fiscal years beginning after December 15, 1994. See
Note 16 for a description of these benefits.
Q. Reclassifications - Certain reclassifications have been made to the
1993 and 1992 financial statements to conform to the presentation
adopted in 1994. These reclassifications had no effect on net income
as previously reported.
NOTE 2 - RESTRICTIONS ON CASH AND DUE FROM BANKS
The Corporation's banking subsidiary is required to maintain
noninterest-bearing average reserve balances with the Federal Reserve Bank.
Average balances required to be maintained for such purposes during 1994 and
1993 were $981,000 and $1,214,000, respectively.
-9-
<PAGE> 74
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE 3 - INVESTMENT SECURITIES
Securities held-to-maturity at December 31, 1994, consisted of the following :
<TABLE>
<CAPTION> Gross Gross
Unrealized Unrealized
Type of Investment Book Value Gains Losses Fair Value
------------------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $ 3,131,539 $ 442 $ (96,706) $ 3,035,275
U.S. government and federal
agencies 7,870,396 - (196,274) 7,674,122
State and local governments 3,604,571 21,762 (111,865) 3,514,468
Mortgage-backed securities 2,038,875 - (26,464) 2,012,411
----------- ------- --------- -----------
Total $16,645,381 $22,204 $(431,309) $16,236,276
=========== ======= ========= ===========
</TABLE>
Securities held-to-maturity at December 31, 1993, were as follows:
<TABLE>
<CAPTION> Gross Gross
Unrealized Unrealized
Type of Investment Book Value Gains Losses Fair Value
------------------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $11,453,172 $ 53,629 $ - $11,506,801
U.S. government and federal
agencies 997,935 160 (634) 997,461
State and local governments 2,480,862 205,864 (53,460) 2,633,266
Mortgage-backed securities 2,624,577 97,668 - 2,722,245
Equity securities 828,500 - - 828,500
----------- -------- -------- -----------
Total $18,385,046 $357,321 $(54,094) $18,688,273
=========== ======== ======== ===========
</TABLE>
-10-
<PAGE> 75
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
Securities available-for-sale at December 31, 1994, consisted of the following:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Type of Investment Book Value Gains Losses Fair Value
------------------------ ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. Treasury securities $10,607,855 $3,947 $(68,694) $10,543,108
U.S. government and federal
agencies 2,000,000 - - 2,000,000
State and local governments - - - -
Mortgage-backed securities 496,823 (3,726) 493,097
Equity securities 849,700 - - 849,700
----------- ------ -------- -----------
Total $13,954,378 $3,947 $(72,420) $13,885,905
=========== ====== ======== ===========
</TABLE>
Included in the securities portfolio (held-to-maturity) are bonds issued
under the name of Memphis, Tennessee Health, Education and Housing with a par
value of $200,000 and a book value of $113,655 at December 31, 1994. These
securities mature September 15, 1996. Payment of these obligations at maturity
is dependent on the ability of Executive Life Insurance Company to satisfy its
obligations, and due to financial losses suffered by Executive Life Insurance
Company, this ability has come into serious question. At December 31, 1994,
management feels that the value of these investments has experienced an other
than temporary decline in value and has recognized a provision for such decline
in the amount of $63,156.
The book value and estimated market value of debt and equity securities at
December 31, 1994, by contractual maturity, are shown below - held-for-maturity
(HTM); available-for-sale (AFS):
<TABLE>
<CAPTION>
Contractual Maturity Book Value Fair Value
-------------------------------------------- ----------- -----------
<S> <C> <C>
One year or less
U.S. Treasury securities - AFS $10,107,855 $10,058,668
U.S. government and federal agencies - HTM 750,000 745,812
State and local governments - HTM 328,871 336,289
----------- -----------
$11,186,726 $11,140,769
=========== ===========
</TABLE>
-11-
<PAGE> 76
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<S> <C> <C>
After one year through five years
U.S. Treasury securities - HTM $ 2,998,651 $ 2,901,945
U.S. Treasury securities - AFS 500,000 484,440
U.S. government and federal agencies - HTM 5,620,396 5,502,860
U.S. government and federal agencies - AFS 2,000,000 2,000,000
State and local governments - HTM 3,108,475 3,008,945
Mortgage-backed securities - HTM 1,575,851 1,552,859
----------- -----------
$15,803,373 $15,451,049
----------- -----------
After five years through ten years
U.S. Treasury securities - HTM $ 132,888 $ 133,330
U.S. government and federal agencies - HTM 1,000,000 939,200
State and local governments - HTM 167,225 169,234
----------- -----------
$ 1,300,113 $ 1,241,764
----------- -----------
After ten years
U.S. government and federal agencies - HTM $ 500,000 $ 486,250
Mortgage-backed securities - HTM 463,024 459,552
Mortgage-backed securities - AFS 496,823 493,097
Equity securities - AFS 849,700 849,700
----------- -----------
$ 2,309,547 $ 2,288,599
----------- -----------
Totals $30,599,759 $30,122,181
=========== ===========
</TABLE>
Mortgage-backed securities are shown above for 1994 by contractual maturities.
Expected maturities will differ from contractual maturities because borrowers
may have the right to call or prepay obligations without call or prepayment
penalties.
At December 31, 1994 and 1993, investment securities with a book value of
$19,907,810 ($10,103,472 classified as held-to-maturity; $9,804,338 classified
as available-for-sale) and $12,023,827, respectively, were pledged as
collateral to secure public deposits and for other purposes as allowed by law.
The following table shows the realized gains and losses on securities sold or
called:
-12-
<PAGE> 77
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
------- -------- -----
<S> <C> <C> <C>
Realized gains $ 1,582 $198,833 $ -
Realized losses (7,135) (4,786) -
------- -------- -----
Net gain (loss) $(5,553) $194,047 $ -
======= ======== =====
</TABLE>
Income tax expense (benefit) applicable to securities transactions was ($2,055)
for 1994 and $71,798 for 1993.
NOTE 4 - LOANS
Loans were classified as follows at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Real Estate:
Secured by single-family residential properties $29,105,440 $27,750,165
Construction and land development 248,412 477,408
Secured by farmland 3,521,470 3,502,135
Secured by multi-family residential properties 722,867 339,776
Secured by non-farm residential properties 10,504,548 12,692,794
Commercial and industrial 9,720,467 9,699,036
Agriculture 3,219,122 3,330,206
Consumer 12,368,743 12,316,081
Other loans 793,711 1,110,909
----------- -----------
Total loans $70,204,780 $71,218,510
Unearned interest (461,233) (523,650)
Allowance for loan losses (918,367) (900,499)
----------- -----------
Net loans $68,825,180 $69,794,361
=========== ===========
</TABLE>
An analysis of the allowance for loan losses for the years ended December 31,
1994, 1993 and 1992 is as follows:
-13-
<PAGE> 78
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Beginning balance $900,499 $727,821 $674,048
Charge-offs (96,990) (48,269) (128,088)
Recoveries 24,858 55,947 26,861
Provision for loan losses 104,000 165,000 155,000
Sale of Subsidiary (14,000) - -
-------- -------- --------
Ending balance $918,367 $900,499 $727,821
======== ======== ========
</TABLE>
The following is a loan portfolio by rates at December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Variable Rate $45,893,109 $48,932,640
Fixed Rate 24,220,461 22,173,000
Non-Accrual 91,210 112,870
Unearned Discounts (461,233) (523,650)
----------- -----------
Total $69,743,547 $70,694,860
=========== ===========
</TABLE>
NOTE 5 - PREMISES AND EQUIPMENT
The following is a summary of premises and equipment at December 31, 1994 and
1993:
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Land $ 407,650 $ 407,650
Building and improvements 1,807,471 1,793,434
Leasehold improvements - 1,063
Furniture and equipment 2,172,474 2,128,499
---------- ----------
Total $4,387,595 $4,330,646
Accumulated depreciation (1,947,264) (1,671,968)
---------- ----------
Net premises and equipment $2,440,331 $2,658,678
========== ==========
</TABLE>
NOTE 6 - OTHER ASSETS
Other assets on the balance sheet consisted of the following at December 31,
1994 and 1993:
-14-
<PAGE> 79
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Prepaid expenses $105,224 $75,227
Cash value of life insurance 46,214 96,934
Repossessions 18,560 -
Bank owned real estate 77,527 -
Other assets 11,889 14,805
-------- --------
Total $259,414 $186,966
======== ========
</TABLE>
NOTE 7 - NOTES PAYABLE
First Exchange Bank has borrowed money from the Federal Home Loan Bank (FHLB)
of Cincinnati to finance loans made for one-to-four family residential
mortgages. A blanket agreement for advances and security agreement was
executed on August 23, 1992, for an indefinite period. Advances are secured by
all shares of FHLB stock owned by the Bank and 150% of the Bank's mortgage
portfolio. At year-end, the Bank had adequate collateral to cover these
advances. Following is a schedule of each advance outstanding at December 31,
1994 and 1993:
<TABLE>
<CAPTION>
Note Maturity Date Interest 1994 1993
Date Rate Payment terms Balance Balance
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
10/20/92 10/20/95 5.30% interest only $500,000 $500,000
11/01/93 12/01/03 5.40% $605/month 51,658 56,000
12/06/93 01/01/14 6.40% $651/month 85,948 88,000
12/06/93 01/01/09 6.10% $526/month 59,615 62,000
12/06/93 01/01/04 5.65% $446/month 37,942 40,800
01/14/94 02/01/03 6.05% $1,375/month 156,712 -
01/14/94 02/01/14 6.40% $1,710/month 226,240 -
02/11/94 03/01/14 6.65% $1,113/month 144,782 -
02/11/94 03/01/09 6.35% $595/month 66,883 -
04/01/94 05/01/04 6.95% $371/month 30,680 -
04/01/94 05/01/04 7.70% $327/month 39,497 -
05/02/94 06/01/14 8.10% $1,726/month 202,774 -
</TABLE>
-15-
<PAGE> 80
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<S> <C> <C> <C> <C> <C>
05/02/94 06/01/09 7.80% $1,371/month 142,639 -
05/02/94 06/01/04 7.40% $313/month 25,560 -
06/06/94 07/01/04 7.35% $1,110/month 91,396 -
06/06/94 07/01/09 7.70% $574/month 60,218 -
-------------------------
Totals $1,922,544 $746,800
=========================
</TABLE>
Estimated principal payments for the next five years on the FHLB advances are
as follows:
1995 $563,258
1996 61,922
1997 66,235
1998 70,853
1999 75,798
NOTE 8 - LEASE COMMITMENTS
The Corporation entered into a lease agreement during 1994 for the use of an
imaging system. The lease requires a monthly payment of $9,641 and extends for
sixty months. Lease expense for 1994 on this lease was $72,748. Other lease
expense incurred during the year amounted to $68,660. Total lease expense for
1993 and 1992 was $71,226 and $64,063, respectively. Minimum rentals on the
imaging system lease for the next five years are estimated as follows:
1995 $115,692
1996 115,692
1997 115,692
1998 115,692
1999 42,944
NOTE 9 - INCOME TAXES
The Corporation files a consolidated federal income tax return with its
subsidiary. Each member of the controlled group provides for income taxes on a
separate-return basis and remits to its affiliates amounts determined to be
currently payable.
The consolidated provision for income taxes consisted of the following at
December 31:
-16-
<PAGE> 81
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Current income tax expense $513,735 $495,877 $417,774
Deferred income tax expense (77,347) (21,943) (25,615)
-------- -------- --------
Total $436,388 $473,934 $392,159
======== ======== ========
</TABLE>
The income tax provision is reconciled to that computed by applying statutory
rates to income before income taxes, as shown below at December 31:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ----------
<S> <C> <C> <C>
Net income before income taxes $1,321,187 $1,360,122 $1,270,568
Expected federal income tax rate 34% 34% 34%
---------- ---------- ----------
Expected federal income tax $ 449,204 $ 462,441 $ 431,993
Effect of nondeductible
expenses 23,773 24,773 22,227
Effect of tax exempt income (82,113) (62,721) (107,453)
State income taxes 45,524 49,441 45,392
---------- ---------- ----------
Total income tax expense $ 436,388 $ 473,934 $ 392,159
========== ========== ==========
</TABLE>
Deferred tax assets have been provided for deductible temporary differences
related to unrealized losses on available- for-sale securities, unamortized
premiums on securities and allowance for loan losses. Deferred tax liabilities
have been provided for taxable temporary differences related to accumulated
depreciation and unaccreted discounts on securities. The net deferred tax
assets in the consolidated financial statements include the following
components at December 31:
<TABLE>
<CAPTION>
1994 1993
--------- --------
<S> <C> <C>
Deferred Tax Assets:
Provision for loan losses $ 119,574 $ 85,410
Amortization of premiums on securities 65,440 5,774
Unrealized loss on securities AFS 27,390 -
Deferred Tax Liabilities:
Depreciation (101,983) (92,904)
Accretion of discounts on securities (7,536) (132)
--------- --------
Net assets (liabilities) $ 102,885 $ (1,852)
========= ========
</TABLE>
-17-
<PAGE> 82
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE 10 - EMPLOYEE BENEFIT PLAN
As of the balance sheet dates, First Exchange Bank maintained an employee
profit sharing plan under the name of First State Bank and Trust Company which
covers generally all employees of the Bank who have completed at least one year
of service and who have reached the age of 21. Under this Plan, there is no
fixed dollar amount of retirement benefits. The actual retirement benefit will
depend on the amount of the employees' account balance at the time of
retirement. The employees' account balance will reflect the annual
allocations, the period of time the employees participate in the Plan and the
success of the Plan in investing and reinvesting the assets of the trust fund.
For each plan year, the Employer may contribute for each participant a matching
contribution equal to up to 100% of the participant's "eligible contributions,"
which equals the amount of the participant's elective deferrals for the plan
year which does not exceed 6% of compensation. The Advisory Committee
allocates the matching contributions to the participants' Regular Matching
Contributions Account. As of January 1, 1992, the name was changed to First
Exchange Bank 401(K) Profit Sharing Plan.
During the years ended December 31, 1994, 1993 and 1992, contributions were
made to the plan in the amount of $47,489, $47,001 and $44,372, respectively.
NOTE 11 - LIFE INSURANCE
First Exchange Bank holds life insurance policies on the directors of the
former First State Bank & Trust Company. The bank is the beneficiary of these
policies. First State Bancorporation holds life insurance policies on Percy E.
Smith, President of the holding company. First State Bancorporation is the
beneficiary of these policies. The cash surrender values at December 31, 1994
and 1993, were $46,214 and $96,934, respectively.
NOTE 12 - RELATED PARTY TRANSACTIONS
The Bank has granted loans to its officers and directors. These loans are made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unrelated persons
and do not involve more than the normal risk of collectibility. The aggregate
dollar amount of these loans was approximately $1,655,020 and $1,941,219 at
December 31, 1994 and 1993, respectively. During 1994, new loans to officers
and directors amounted to $429,805 while payments from officers and directors
on loans was $716,004.
Total deposits by officers and directors were approximately $1,542,372 and
$980,000 at
-18-
<PAGE> 83
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
December 31, 1994 and 1993, respectively.
NOTE 13 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
First Exchange Bank is a party to financial instruments with off-balance sheet
risk in the normal course of business to meet the financing needs of their
customers. These financial instruments include commitments to extend credit
and standby letters of credit. These instruments involve, to varying degrees,
elements of credit risk which are not recognized in the consolidated balance
sheets.
The Bank's exposure to credit loss in the event of non-performance by the other
party to the financial instrument for commitments to extend credit and standby
letters of credit is represented by the contractual amount of those
instruments. The same policies are utilized in making commitments and
conditional obligations as are used for creating on-balance sheet instruments.
Ordinarily, collateral or other security is not required to support financial
instruments with off-balance sheet risk.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Loan
commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many commitments are expected to
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. Each customer's
credit-worthiness is evaluated on a case-by-case basis, and collateral
required, if deemed necessary by the Bank upon extension of credit, is based on
management's credit evaluation of the counter party. At December 31, 1994 and
1993, the Bank had outstanding loan commitments of $3,751,264 and $4,542,877,
respectively. Loan commitments outstanding at December 31, 1994, are scheduled
to expire in 1 - 5 years.
Standby letters of credit and financial guarantees are conditional commitments
issued by the Bank to guarantee the performance of a customer to a third party.
Those guarantees are issued primarily to support public and private borrowing
arrangements, and the credit risk involved is essentially the same as that
involved in extending loans to customers. The Bank requires collateral to
secure these commitments when it is deemed necessary. At December 31, 1994 and
1993, outstanding standby letters of credit totaled $103,700 and $132,200,
respectively. The letters of credit at December 31, 1994, will all expire
during 1995.
-19-
<PAGE> 84
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE 14 - FIRST STATE BANCORPORATION, INC. (PARENT COMPANY ONLY) FINANCIAL
INFORMATION
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
Assets 1994 1993
------ --------------------------------
<S> <C> <C>
Cash $ 36,770 $ 292,763
Investment in Bank 7,679,325 7,146,887
Due from Bank 78,198 -
Other assets 19,163 77,445
---------- ----------
Total assets $7,813,456 $7,517,095
Liabilities ========== ==========
-----------
Accrued taxes $ 47,358 $ 146,375
Negative goodwill, net 233,269 252,231
---------- ----------
Total liabilities $ 280,627 $ 398,606
Equity 7,532,829 7,118,489
------ ---------- ----------
Total liabilities and equity $7,813,456 $7,517,095
========== ==========
</TABLE>
CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year ended December 31,
1994 1993 1992
-----------------------------------------------------
<S> <C> <C> <C>
Undistributed income - Bank $ 573,522 $ 303,039 $ 148,275
Dividend income - Bank 370,000 655,765 681,000
Management fee income 16,000 24,000 312,000
Other income 57,257 35,064 21,137
Operating expenses (150,816) (302,538) (311,036)
Income tax benefit 18,836 116,870 27,033
-----------------------------------------------------
Net income $ 884,799 $ 832,200 $ 878,409
=====================================================
</TABLE>
-20-
<PAGE> 85
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
Operating Activities 1994 1993 1992
-----------------------------------------------------
<S> <C> <C> <C>
Net income $ 884,799 $ 832,200 $ 878,409
Equity in undistributed
income of Bank (573,522) (303,039) (148,275)
Depreciation 1,136 1,136 11,360
Amortization (18,962) (18,962) (18,962)
(Increase) decrease in due
from Bank (78,198) 222,191 (222,191)
Decrease in other assets 57,146 5,289 7,983
Increase (decrease) in
accrued taxes (99,017) (92,816) 158,630
Decrease in other liabilities - (19,600) -
-----------------------------------------------------
Net cash provided by
operating activities $ 173,382 $ 626,399 $ 666,954
-----------------------------------------------------
Investing Activities
Purchase of fixed assets $ - $ - $ (5,677)
Increase in CSV of life
insurance - - (155)
-----------------------------------------------------
Net cash used by investing
activities $ - $ - $ (5,832)
-----------------------------------------------------
Financing Activities
Cash dividends paid $(429,375) $(515,249) $(429,375)
Payments on notes - - (77,625)
-----------------------------------------------------
Net cash used by
financing activities $(429,375) $(515,249) $(507,000)
-----------------------------------------------------
Net change in cash $(255,993) $ 111,150 $ 154,122
Cash - beginning 292,763 181,613 27,491
-----------------------------------------------------
Cash - ending $ 36,770 $ 292,763 $ 181,613
=====================================================
</TABLE>
-21-
<PAGE> 86
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
NOTE 15 - SALE OF SUBSIDIARY
As of August 1994, Cardinal Credit, Inc., a wholly-owned subsidiary of First
Exchange Bank, was sold to People's Protective. The purchase price of $630,017
was allocated between fixed assets, notes receivable and unearned interest and
was paid to First Exchange Bank. The liability of $550,216 payable to First
Exchange Bank was assumed by People's Protective.
NOTE 16 - DEFERRED COMPENSATION PLANS
In 1993, First State Bancorporation adopted a Phantom Stock Appreciation Plan
for one of its' officers. The plan states that deferred compensation units
equal to 10% of the outstanding shares of common stock of the Company be
allocated to the officer over a period of 10 years on January 1 of each year.
The value of the deferred compensation units shall be determined by the fair
market value of the common stock less the accumulated basis of the units
awarded. The value as of December 31, 1994, was immaterial and therefore, not
accrued in the financial statements. The deferred compensation units had no
value as of December 31, 1993. This plan offers a provision for a fixed
(parachute) payment to the officer in the event of a reduction of the CEO's
stock ownership of First State Bancorporation below 50%. In this case, the
officer shall forfeit all payments due him under the Phantom Stock Appreciation
Plan.
First Exchange Bank has agreed to pay the former Directors of the First State
Bank & Trust Company of Tiptonville currently over 65 years of age $83.33 per
month for 10 years or until their death, whichever occurs first, upon their
retirement from the Board of Directors of First Exchange Bank. The liability
resulting from this as of December 31, 1994, 1993 and 1992, was immaterial and
therefore, not accrued in these financial statements.
NOTE 17 - RESTRICTIONS ON DIVIDENDS
The amount of dividends which the Corporation and the Corporation's subsidiary
may pay is limited by applicable laws and regulations. The payment of
dividends by state-chartered bank subsidiaries is regulated by applicable laws
in Tennessee and the regulations of the Federal Deposit Insurance Corporation
(FDIC).
At December 31, 1994, the Bank could have paid dividends to the Corporation
aggregating $2,122,554 without prior regulatory approval. Future dividends
will be dependent on the level of earnings of the subsidiary financial
institution.
NOTE 18 - PENDING MERGER
In February 1995, the Board of Directors of First State Bancorporation, Inc.
approved an Agreement and Plan of Reorganization (Merger Agreement) with
another bank holding company
-22-
<PAGE> 87
FIRST STATE BANCORPORATION, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994, 1993 and 1992
whereby the two parties intend to effectuate a merger of the Corporation with
and into a subsidiary of the other bank holding company. The merger, which is
to be accounted for as a purchase, is dependent upon the approval of the
stockholders of the Corporation and various regulatory agencies. Additionally,
the Corporation is restricted from certain activities prior to the consummation
of the transaction.
In connection with the above transaction, First State Bancorporation, Inc. has
not incurred any legal and professional fees as of December 31, 1994. However,
in reference to Note 16, the pending merger could result in a parachute payment
to one of the officers when the merger is consummated. This amount is
approximately $332,000 and has not been accrued in the financial statements.
-23-
<PAGE> 88
APPENDIX B
Agreement and Plan of Reorganization dated as of February 24, 1995; Letter
Agreement dated April 4, 1995, amending said Agreement and Plan of
Reorganization; together with the Plan of Merger annexed to the Agreement and
Plan of Reorganization as Exhibit A thereto. (Collective exhibit)
<PAGE> 89
AGREEMENT AND PLAN OF REORGANIZATION
DATED as of February 24, 1995
Between
UNION PLANTERS CORPORATION and
FSB ACQUISITION COMPANY, INC.
and
FIRST STATE BANCORPORATION, INC.
Joined in by:
FIRST EXCHANGE BANK
<PAGE> 90
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 1
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
-----------
ARTICLE 2
TERMS OF THE REORGANIZATION
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------
2.2 Charter, Bylaws, Directors, Officers and Name of the Surviving Corporation . . . . . . . . . . . . . . . 9
--------------------------------------------------------------------------
(a) Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
-------
(b) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
------
(c) Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
----------------------
(d) Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
----
2.3 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
--------------------
2.4 Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
---------------------------
2.5 UPC's Right to Revise the Structure of the Transaction . . . . . . . . . . . . . . . . . . . . . . . . . 10
------------------------------------------------------
2.6 Holding Period of UPC Series E Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
----------------------------------------------
2.7 FSB Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
------------------------------------
ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------
(a) Satisfaction of Conditions to Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-------------------------------------
(b) Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
----------------------------
(c) Conversion of Shares of INTERIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
-------------------------------
(d) Conversion and Cancellation of Shares of FSB . . . . . . . . . . . . . . . . . . . . . . . . . 13
--------------------------------------------
(e) Conversion and Exchange of FSB Shares; Exchange Ratio . . . . . . . . . . . . . . . . . . . . . 13
-----------------------------------------------------
(f) Mechanics of Payment of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
-------------------------------------
(g) Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
--------------------
(h) Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
---------------------
(i) Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
------------------
(j) Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
-------------------------
(k) Dissenters' Rights of FSB Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
--------------------------------------
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
-------------------------
</TABLE>
i
<PAGE> 91
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM
<TABLE>
<S> <C> <C>
4.1 Organization and Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
------------------------------------
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . . . 19
-----------------------------------------------------------------------------
4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
------------
4.4 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------------
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
--------------
4.6 UPC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
------------------------
4.7 Exchange Act and Listing Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
--------------------------------
4.8 The UPC Common Stock and UPC Series E Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 22
-----------------------------------------------------
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------
4.10 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
----------------------------
4.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
----------------------------------
4.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
----------
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FSB COMPANIES
5.1 Organization and Qualification of FSB and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 25
------------------------------------------------------
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in Breach . . . . . . . . . . . . . 26
-----------------------------------------------------------------------------
5.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------
5.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
------------------------------
5.5 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
-------------------
5.6 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
-----------------
5.7 FSB Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
------------------------
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
--------------------------
5.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
--------
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------
5.11 FSB Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
----------------
5.12 Condition of Fixed Assets and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
---------------------------------------
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
-----------
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
----------
5.15 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
-------------------
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
---------
5.17 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
----------------------------
5.18 Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
---------------------
5.19 Capitalization of FSB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
---------------------
5.20 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
--------------
5.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------
5.22 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
----------------------------------
5.23 Allowance for Possible Loan or ORE Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
-----------------------------------------
5.24 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
--------------------
5.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
----------------------
5.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
------------------
5.27 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
--------------------------
5.28 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
-------
5.29 Exchange Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
--------------------
</TABLE>
ii
<PAGE> 92
<TABLE>
<S> <C> <C>
5.30 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
---------------------------
ARTICLE 6
COVENANTS OF UPC
6.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
--------------------
6.2 Registration of UPC Series E Preferred Stock and UPC Common Stock under the Securities Laws . . . . . . 50
-------------------------------------------------------------------------------------------
6.3 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
-----------------
ARTICLE 7
COVENANTS OF FSB COMPANIES
7.1 Proxy Statement; FSB Shareholder Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
-----------------------------------------
7.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--------------------------------------------
7.3 Conduct of Business -- Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
-----------------------------------------
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of FSB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
---------
(d) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
-------------
(e) Opinion of UPC's and INTERIM's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
--------------------------------------
8.2 Conditions to the Obligations of UPC and INTERIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
------------------------------------------------
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
-----------
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
------------------------------
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
---------
(d) Destruction of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
-----------------------
(e) Inspections Permitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
---------------------
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
--------------------------
(g) Opinion of FSB's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
------------------------
(h) Other Business Combinations, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
--------------------------------
(i) Maintenance of Certain Covenants, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
-------------------------------------
(j) Non-Compete Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
----------------------
(k) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
-----------
(l) Receipt of Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
----------------------------
8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
----------------------------------------
(a) No Pending or Threatened Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
-------------------------------
(b) Governmental Approvals and Acquiescence Obtained . . . . . . . . . . . . . . . . . . . . . . . 64
------------------------------------------------
ARTICLE 9
TERMINATION
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
-----------
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
---------------------
</TABLE>
iii
<PAGE> 93
ARTICLE 10
GENERAL PROVISIONS
<TABLE>
<S> <C> <C>
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
-------
10.2 Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------------------------------
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
-------------
10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
------------
10.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
------------
10.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
---------
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
----------------
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
------------
10.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
-------------------------------------
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
--------------
10.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
-------------------
10.12 Finders and Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
-------------------
10.13 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
------------------
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
---------------
10.15 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
------------------------------------------
10.16 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
---------
10.17 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
-------------------
</TABLE>
iv
<PAGE> 94
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement") dated as of the 24th day of February, 1995, by and between UNION
PLANTERS CORPORATION ("UPC"), a corporation chartered and existing under the
laws of the State of Tennessee which is registered both as a bank holding
company and a savings and loan holding company and whose principal offices are
located at 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee
38018; FSB ACQUISITION COMPANY, INC. ("INTERIM"), a corporation chartered and
existing under the laws of the State of Tennessee, whose principal place of
business is located at 7130 Goodlett Farms Parkway, Memphis, Shelby County,
Tennessee 38018, and which is a wholly-owned subsidiary of UPC; and FIRST STATE
BANCORPORATION, INC. ("FSB" or "Surviving Corporation" as the context may
require), a corporation chartered and existing under the laws of the State of
Tennessee which is a registered bank holding company and whose principal
offices are located at 221 Church Street, Tiptonville, Lake County, Tennessee
38079.
FIRST EXCHANGE BANK ("FEB"), a state banking corporation chartered and existing
under the laws of the State of Tennessee, having its main office at 221 Church
Street, Tiptonville, Lake County, Tennessee 38079, and which is a wholly-owned
subsidiary of FSB, for a valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by it, joins in this Reorganization Agreement for
the sole purpose of making certain representations and warranties set forth in
Article 5 and elsewhere in this Reorganization Agreement and binding itself to
perform certain covenants set forth in Articles 6 and 7 and elsewhere in this
Reorganization Agreement as provided hereinafter.
UPC, INTERIM, FSB and FEB are sometimes referred to herein as the
"Parties."
RECITALS
A. FSB is the beneficial owner and holder of record of 45
shares of the common stock, $5,000.00 par value per share, of FEB which
constitute all of the shares of common stock of FEB issued and outstanding (the
"FEB Common Stock") and desires to have itself and FEB acquired by UPC on the
terms and subject to the conditions set forth in this Reorganization Agreement
and the accompanying Plan of Merger (attached hereto as Exhibit A) (the "Plan
of Merger").
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 1
<PAGE> 95
B. UPC is the beneficial owner and holder of record of 1,000
shares of the common stock, $1.00 par value per share, of INTERIM which
constitute all of the shares of common stock of INTERIM issued and outstanding
(the "INTERIM Common Stock"), and desires to acquire FSB and FEB on the terms
and subject to the conditions set forth in this Reorganization Agreement and
the accompanying Plan of Merger.
C. The Board of Directors of FSB deems it desirable and in the
best interests of FSB and FEB and the shareholders of FSB (the "FSB
Shareholders") that INTERIM be merged with and into FSB (which would survive
the merger as the Surviving Corporation, as defined herein) on the terms and
subject to the conditions set forth in this Reorganization Agreement and in the
manner provided in this Reorganization Agreement and the Plan of Merger (the
"Merger").
D. The Boards of Directors of UPC and INTERIM deem it
desirable and in the best interests of UPC and INTERIM and the shareholders of
UPC and INTERIM that INTERIM be merged with and into FSB on the terms and
subject to the conditions set forth in this Reorganization Agreement and in the
manner provided in this Reorganization Agreement and the Plan of Merger.
F. The respective Boards of Directors of UPC, INTERIM, FSB and
FEB have each adopted (or will each adopt) resolutions setting forth and
adopting this Reorganization Agreement and the Plan of Merger, and have
directed that this Reorganization Agreement and the Plan of Merger and all
resolutions adopted by said Boards of Directors and by the FSB Shareholders
related to this Reorganization Agreement, be submitted with appropriate
applications to, and filed with the Board of Governors of the Federal Reserve
System (the "Federal Reserve"), the Tennessee Department of Financial
Institutions (the "TDFI") and such other regulatory agencies or authorities as
may be necessary in order to obtain all governmental authorizations required to
consummate the proposed Merger and the transactions contemplated in this
Reorganization Agreement in accordance with this Reorganization Agreement, the
Plan of Merger and applicable law.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 2
<PAGE> 96
AGREEMENT
ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Reorganization
Agreement, the following terms have the definitions indicated:
"AFFILIATE" of a party means any person, partnership,
corporation, association or other legal entity directly or indirectly
controlling, controlled by or under common Control, as that term is defined
herein, with that party.
"APPLICABLE ENVIRONMENTAL LAWS" shall have the meaning
assigned to such term in Section 5.15(a) of this Reorganization Agreement.
"AUDITED FINANCIAL STATEMENTS OF FSB" 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.
"CERCLA" shall have the meaning set forth in Section
5.15(a) of this Reorganization Agreement.
"CLOSING" shall have the meaning assigned to such term in
Section 3.1(a) of this Reorganization Agreement.
"CLOSING DATE" shall have the meaning assigned to such term
in Section 3.2 of this Reorganization Agreement.
"COMPTROLLER" shall mean the Office of the Comptroller of
the Currency, or any successor thereto.
"CONSIDERATION" shall mean the value to be received by the
FSB Record Holders in exchange for their FSB Common Stock, such value to be
determined as provided in Article 3, Section 3.1(e), of this Reorganization
Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 3
<PAGE> 97
"CONTROL" shall have the meaning assigned to such term in
Section 2(a)(2) of the Bank Holding Company Act of 1956, as amended.
"DEPOSITS" shall mean all deposits (including, but not
limited to, certificates of deposit, savings accounts, NOW accounts and
checking accounts) of FEB.
"EFFECTIVE DATE OF THE MERGER" shall mean that date on
which the Effective Time of the Merger shall have occurred.
"EFFECTIVE TIME OF THE MERGER" shall have the meaning
assigned in Section 3.3 of the Plan of Merger and Section 3.1(b) of this
Reorganization Agreement.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"EXCHANGE AGENT" shall mean Union Planters National Bank,
Memphis, Tennessee, acting through its Corporate Trust Department.
"EXCHANGE RATIO" shall have the meaning assigned to such
term in Section 3.1(e) of this Reorganization Agreement.
"FDIC" means the Federal Deposit Insurance Corporation, or
any successor thereto.
"FEB" means First Exchange Bank, a state banking
corporation, chartered and existing under the laws of the State of Tennessee,
having its main office at 221 Church Street, Tiptonville, Lake County,
Tennessee 38079, and which is a wholly-owned subsidiary of FSB.
"FEB COMMON STOCK" shall have the meaning assigned to such
term in Recital A of this Reorganization Agreement.
"FEDERAL RESERVE" shall mean the Board of Governors of the
Federal Reserve System and shall include the Federal Reserve Bank of St. Louis
acting under delegated authority.
"FIXED ASSETS" shall mean the furniture, fixtures and
equipment of the referenced Party.
"FSB" means First State Bancorporation, Inc., a corporation
chartered and existing under the laws of the State of Tennessee which is a
registered bank holding company and whose principal offices are located at 221
Church Street, Tiptonville, Lake County, Tennessee 38079.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 4
<PAGE> 98
"FSB COMMON STOCK" has the meaning assigned to such term in
Section 3.1(d) of this Reorganization Agreement.
"FSB COMPANIES" shall mean FSB and all of its Subsidiaries,
including FEB and all of its Subsidiaries.
"FSB 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 FSB or any FSB Subsidiary, to or for the benefit of the officers,
directors or employees of FSB or any FSB Subsidiary.
"FSB RECORD HOLDERS" means the holders of record of all of
the issued and outstanding shares of FSB Common Stock immediately prior to the
Effective Time of the Merger.
"FSB SHAREHOLDERS" shall have the meaning assigned to such
term in Recital D of this Reorganization Agreement.
"FSB STOCK OPTIONS" shall have the meaning assigned to such
term in Section 2.7 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.
"HOLA" shall mean the Home Owners' Loan Act of 1933, as
amended and recodified.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in
Section 5.15(a) of this Reorganization Agreement.
"INTERIM" shall mean FSB Acquisition Company, Inc., a
corporation chartered and existing under the laws of the State of Tennessee,
whose principal place of business is located at 7130 Goodlett Farms Parkway,
Memphis, Shelby County, Tennessee 38018, and which is a wholly-owned subsidiary
of UPC formed solely to effect the Merger.
"INTERIM COMMON STOCK" shall have the meaning assigned to
such term in Section 3.1(c) of this Reorganization Agreement.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue
Code of 1986, as amended.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 5
<PAGE> 99
"MERGER" shall, as described in Section 2.1 of this
Reorganization Agreement, mean the merger of INTERIM with and into FSB, which
shall survive the Merger as the Surviving Corporation.
"NYSE" shall mean the New York Stock Exchange, or its
successor, upon which shares of the UPC Common Stock are listed for trading.
"1933 ACT" shall mean the Securities Act of 1933, as
amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"OFFICER" shall have the meaning set forth in Section
5.8(k) of this Reorganization Agreement.
"OTS" shall mean the Office of Thrift Supervision, or any
successor thereto.
"PARTIES" shall mean FSB, FEB, UPC and INTERIM
collectively; FSB and FEB on the one hand, or UPC and INTERIM on the other
hand, may sometimes be referred to as a "PARTY."
"PENSION PLAN" shall mean any employee pension benefit plan
as such term is defined in Section 3(2) of ERISA which is maintained by the
referenced Party.
"PERSON" shall mean any natural person, fiduciary,
corporation, partnership, joint venture, association, business trust or any
other entity of any kind.
"PLAN OF MERGER" shall mean the Plan of Merger
substantially in the form of Exhibit A hereto to be executed by authorized
representatives of FSB, UPC and INTERIM and filed with the Tennessee Secretary
of State along with the Articles of Merger in accordance with Section 48-21-105
of the Tennessee Code and providing for the Merger of INTERIM with and into FSB
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 FSB to solicit proxies with a view to securing the approval of the FSB
Shareholders of this Reorganization Agreement and the Plan of Merger.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 6
<PAGE> 100
"REALTY" means the real property of FSB or any FSB
Subsidiary owned or leased by FSB or any FSB Subsidiary.
"RECORDS" means all available records, minutes of meetings
of the Board of Directors, committees and shareholders of FSB or any FSB
Subsidiary; original instruments and other documentation, pertaining to FSB or
any FSB Subsidiary, FSB's or any FSB Subsidiary's assets (including plans and
specifications relating to the Realty), FSB's or any FSB Subsidiary's
liabilities, the FSB Common Stock, the FEB 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 FSB's or any FSB Subsidiary's business by
UPC or FSB on and after the Effective Time of the Merger as it was conducted
prior to the Closing Date.
"REGULATORY AUTHORITIES" shall mean, collectively, the
Federal Reserve, the TDFI, the SEC, or any other state or federal governmental
or quasi-governmental entity which has, or may hereafter have, jurisdiction
over any of the transactions described in this Reorganization Agreement.
"RELEASE" shall have the meaning assigned to such term in
Section 5.15(b)(i) of this Reorganization Agreement.
"REORGANIZATION" shall mean the Merger (as described in
Section 2.1(a) of this Reorganization Agreement) and the transactions
contemplated in this Reorganization Agreement and the Plan of Merger annexed
hereto as Exhibit A.
"REORGANIZATION AGREEMENT" means this Agreement and Plan of
Reorganization together with the Plan of Merger (Exhibit A) and all Exhibits
and Schedules annexed to, and incorporated by specific reference as a part of,
this Reorganization Agreement.
"SEC" shall mean the Securities and Exchange Commission, or
any successor thereto.
"SEC DOCUMENTS" shall mean all reports, proxy statements
and registration statements filed, or required to be filed, by a Party or any
of its Subsidiaries pursuant to the Securities Laws, whether filed, or required
to be filed, with the SEC, the OTS, the Comptroller, the FDIC, the TDFI, the
Federal Reserve or with any other Regulatory Authority pursuant to the
Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act,
the Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 7
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promulgated thereunder, as well as any similar state securities laws and any
similar rules and regulations promulgated by the applicable federal bank
Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the meeting of the FSB
Shareholders to be held pursuant to Section 7.1 of this Reorganization
Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all of those corporations, banks,
associations or other entities of which the entity in question owns or controls
5% or more of the outstanding voting equity securities either directly or
through an unbroken chain of entities as to each of which 5% or more of the
outstanding equity securities is owned directly or indirectly by its parent;
provided, however, that there shall not be included any such entity acquired
through foreclosure or in satisfaction of a debt previously contracted in good
faith, any such entity that owns or operates an automatic teller machine
interchange network, any such entity that is a joint venture of the parent or
of a Subsidiary of the parent, or any such entity the equity securities of
which are owned or controlled in a fiduciary capacity or through a small
business investment corporation.
"SURVIVING CORPORATION" shall mean FSB as the corporation
resulting from the consummation of the Merger as set forth in Section 2.1(a) of
this Reorganization Agreement.
"TENNESSEE CODE" shall mean the Tennessee Code Annotated,
as amended.
"TDFI" shall mean the Tennessee Department of Financial
Institutions.
"TENNESSEE COMMISSIONER" shall mean the Commissioner of the
TDFI.
"UPC" means Union Planters Corporation, a
Tennessee-chartered bank holding company which is also registered as a savings
and loan holding company having its principal place of business in Memphis,
Shelby County, Tennessee.
"UPC COMMON STOCK" shall have the meaning set forth in
Section 4.5 of this Reorganization Agreement.
"UPC FINANCIAL STATEMENTS" shall mean (i) the audited
consolidated balance sheets and related consolidated statements of earnings, of
changes in shareholders' equity, and of cash flows (including related notes) of
UPC and its Subsidiaries as of December 31, 1992 and 1993 and each subsequent
December 31 prior
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
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to the Effective Time of the Merger, and (ii) the related unaudited
consolidated balance sheets and related consolidated statements of earnings, of
changes in shareholders' equity, and of cash flows (including related notes) of
UPC and its Subsidiaries for each of the quarters ended or ending after January
1, 1994, as filed by UPC in SEC Documents.
"UPC PREFERRED STOCK" shall have the meaning assigned to
such term in Section 4.5 of this Reorganization Agreement.
"UPC SERIES E PREFERRED STOCK" shall mean the Series E
Preferred Stock of UPC.
ARTICLE 2
TERMS OF THE REORGANIZATION
2.1 The Merger. Subject to the satisfaction (or lawful
waiver) of all of the conditions to the obligations of each of the Parties to
this Reorganization Agreement, at the Effective Time of the Merger, INTERIM
shall be merged with and into FSB (the "Merger"), which latter corporation (the
"Surviving Corporation") shall survive the Merger.
2.2 Charter, Bylaws, Directors, Officers and Name of the
Surviving Corporation.
(a) Charter. At the Effective Time of the
Merger, the Charter of FSB, as in effect immediately prior to the Effective
Time of the Merger, shall continue to be the Charter of FSB as the Surviving
Corporation, unless and until the same shall be amended thereafter as provided
by law and the terms of such Charter.
(b) Bylaws. At the Effective Time of the Merger,
the Bylaws of FSB, as in effect immediately prior to the Effective Time of the
Merger, shall continue to be the Bylaws of FSB as the Surviving Corporation,
unless and until amended or repealed as provided by law, its Charter and such
Bylaws.
(c) Directors and Officers. The directors and
officers of INTERIM in office immediately prior to the Effective Time of the
Merger shall be the directors and officers of the Surviving Corporation, to
hold office as provided in the Charter and Bylaws of the Surviving Corporation,
unless and until their successors shall have been elected or appointed and
shall have qualified or until they shall have been removed in the manner
provided therein.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 9
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(d) Name. The name of FSB as the Surviving
Corporation following the Merger shall remain unchanged and continue to be:
FIRST STATE BANCORPORATION, INC.
2.3 Due Diligence Review. Each Party shall be entitled
to conduct a preliminary due diligence review of the books, records and
operations of the other Party, including, but not limited to, a review of the
Party's loan portfolios, ORE and classified assets, investment portfolios and
properties, to verify the reasonableness of the Party's earnings projections,
growth projections and sustained earnings prospects after consummation of the
Merger at reasonable growth rates; provided, however, that any review conducted
by a Party pursuant to the provisions of this Section 2.3 shall be completed
within thirty (30) days from the date of this Reorganization Agreement.
2.4 Availability of Information. Promptly after the
execution by the Parties of this Reorganization Agreement, each Party shall
provide to the other Party, its Officers, employees, agents, and
representatives access, on reasonable notice and during customary business
hours, to all of the books, records, properties and facilities of the Party and
shall use its best efforts to cause its Officers, employees, agents and
representatives to cooperate with any of the reviewing Party's reasonable
requests for information which would be customary in order to conduct the
review provided for in Section 2.3 of this Reorganization Agreement. Except as
expressly permitted by the disclosing Party, the receiving Party shall keep
confidential all non-public information received by the disclosing Party in
connection with the provisions of this Section 2.4.
2.5 UPC's Right to Revise the Structure of the
Transaction. UPC shall have the unilateral right to revise the structure of
the corporate Reorganization contemplated by this Reorganization Agreement in
order to achieve tax benefits or for any other reason which UPC may deem
advisable; provided, however, that UPC shall not have the right, without the
approval of the Board of Directors of FSB, to make any revision to the
structure of the Reorganization which (i) changes the amount of the
Consideration which the FSB Record Holders are entitled to receive (determined
in the manner provided in Section 3.1(e) of this Reorganization Agreement);
(ii) changes the intended tax-free effects of the Merger to UPC, INTERIM, FSB
or any FSB Subsidiary; or (iii) would permit UPC to pay the Consideration other
than by delivery of shares of UPC Series E Preferred Stock registered with the
SEC (in the manner described in Section 6.2 of this Reorganization Agreement).
UPC may exercise this right of revision by giving written Notice to FSB in the
manner
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 10
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provided in Section 10.1 of this Reorganization Agreement which Notice shall be
in the form of an amendment to this Reorganization Agreement or in the form of
an Amended and Restated Agreement and Plan of Reorganization.
2.6 Holding Period of UPC Series E Preferred Stock. FSB
and each FSB Subsidiary hereby acknowledge and agree that, in order to qualify
the Merger under the Internal Revenue Code as a tax-free reorganization, any
FSB Record Holder who would be deemed an Affiliate of FSB at the time of
Closing under the Securities Laws and who accepts shares of UPC Series E
Preferred Stock as Consideration for the cancellation, exchange and conversion
of his shares of FSB Common Stock pursuant to the terms and conditions of this
Reorganization Agreement, shall not pledge, assign, sell, transfer, devise,
otherwise alienate or take any action which would eliminate or diminish the
risk of owning or holding the shares of UPC Series E Preferred Stock to be
received by such FSB Record Holder upon consummation of the Merger, nor enter
into any formal or informal agreement to pledge, assign, sell or transfer,
devise, or otherwise alienate his right, title and interests in any of the
shares of UPC Series E Preferred Stock to be delivered by UPC to such FSB
Record Holder pursuant to the terms and conditions of this Reorganization
Agreement except in accordance with the Securities Laws and consistent with the
transaction being recorded as a tax-free reorganization. FSB further
acknowledges and agrees that any UPC Series E Preferred Stock certificates
issued in connection with the Merger to FSB Record Holders who would be deemed
Affiliates of FSB or UPC at the time of Closing under the Securities Laws shall
be subject to and bear a restrictive legend substantially in the form as
follows:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE HELD SUBJECT
TO ALL APPLICABLE PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND THE RULES AND REGULATIONS PROMULGATED BY
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") THEREUNDER. NO SALES,
TRANSFERS OR OTHER DISPOSITION OF THESE SHARES MAY BE MADE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT (OTHER THAN A REGISTRATION STATEMENT ON SEC FORM S-4) OR UPON THE
PRIOR DELIVERY TO UNION PLANTERS CORPORATION ("UPC") OF AN OPINION
FROM LEGAL COUNSEL, SATISFACTORY TO UPC, IN FORM AND SUBSTANCE
SATISFACTORY TO UPC AND ITS LEGAL COUNSEL, STATING THAT SUCH SALE OR
OTHER DISPOSITION IS BEING MADE PURSUANT TO AND IN ACCORDANCE WITH THE
REQUIREMENTS OF SEC RULES 144 AND 145 OR IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT, AND THAT SUCH SALE OR OTHER
DISPOSITION WILL NOT AFFECT THE TAX-FREE TREATMENT OF THE MERGER
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 11
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2.7 FSB Stock Options and Treasury Stock. Except as
described in Schedule 2.7 hereto, as of the date of this Reorganization
Agreement, there are no validly issued and outstanding options to purchase
shares of FSB Common Stock, and no other options, rights, warrants, scrip or
similar rights to purchase shares of FSB Common Stock (collectively, the "FSB
Stock Options") are (or have been) issued and outstanding by FSB. Therefore,
at the Effective Time of the Merger, there will be no issued and outstanding
FSB Stock Options other than as described in Schedule 2.7 hereto. Except as
described in Schedule 2.7 hereto, within two (2) years prior to the date of
this Reorganization Agreement, FSB has not repurchased FSB Stock Options, and
FSB has not repurchased any shares of its capital stock. Therefore, as of the
date of this Reorganization Agreement, there are no shares of FSB Common Stock
held by FSB as Treasury Stock, nor will there be any such shares at the
Effective Time of the Merger.
ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After
the transactions contemplated herein have been approved by the shareholders of
FSB and INTERIM, and each other condition to the obligations of the Parties
hereto, other than those conditions which are to be satisfied by delivery of
documents by any Party to any other Party, has been satisfied or, if lawfully
permitted, waived by the Party or Parties entitled to the benefits thereof, a
closing (the "Closing") will be held on the date (the "Closing Date") and at
the time of day and place referred to in Section 3.2 of this Reorganization
Agreement. At the Closing the Parties shall use their respective best efforts
to deliver the certificates, letters and opinions which constitute conditions
to effecting the Merger and each Party will provide the other Parties with such
proof or indication of satisfaction of the conditions to the obligations of
such other Parties to consummate the Merger as such other Parties may
reasonably require. If all conditions to the obligations of each of the
Parties shall have been satisfied or lawfully waived by the Party entitled to
the benefits thereof, the Parties shall, at the Closing, duly execute a
Articles of Merger for filing with the Secretary of State of the State of
Tennessee and promptly thereafter FSB and INTERIM shall take all steps
necessary or desirable to consummate the Merger in accordance with all
applicable laws, rules and regulations and the Plan of Merger which is attached
hereto as
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 12
<PAGE> 106
Exhibit A and incorporated by reference as part of this Reorganization
Agreement. The Parties shall thereupon take such other and further actions as
UPC shall direct or as may be required by law or this Reorganization Agreement
to consummate the transactions contemplated herein.
(b) Effective Time of the Merger. Upon the
satisfaction of all conditions to Closing, the Merger shall become effective on
the date and at the time of filing of a Articles of Merger with the Secretary
of State of the State of Tennessee or at such later date and/or time as may be
agreed upon by the Parties and set forth in the Articles of Merger so filed
(the "Effective Time of the Merger").
(c) Conversion of Shares of INTERIM. At the
Effective Time of the Merger, each share of $1.00 par value common stock of
INTERIM (the "INTERIM Common Stock") issued and outstanding immediately prior
to the Effective Time of The Merger shall, by virtue of the Merger becoming
effective and without any further action on the part of anyone, be converted
into and become one share of the issued and outstanding common stock of the
Surviving Corporation.
(d) Conversion and Cancellation of Shares of FSB.
At the Effective Time of the Merger, each share of $1.00 par value per share
common stock of FSB (the "FSB 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 FSB Shares;
Exchange Ratio. At the Effective Time of the Merger, the outstanding shares of
FSB Common Stock held by the FSB 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
FSB and shall, except for those shares held by any FSB Record Holder having
properly perfected such holder's dissenters' rights and maintained the
perfected status of such dissenters' rights through the Effective Time of the
Merger, automatically be converted exclusively into, and constitute only the
right of the FSB Record Holders to receive in exchange for their shares of FSB
Common Stock, whole shares of UPC Series E Preferred Stock and a cash payment
in settlement of any remaining fractional share of UPC Series E Preferred Stock
in accordance with the terms and conditions of this Section 3.1(e). The shares
of UPC Series E Preferred Stock and the cash settlement of any remaining
fractional share of UPC Series E Preferred Stock deliverable by
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 13
<PAGE> 107
UPC to the FSB 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 Series E Preferred Stock to be exchanged for each
share of FSB Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger (based on there being no more than 343,499.7
shares of FSB Common Stock issued and outstanding at the Effective Time of the
Merger) shall be based on an exchange ratio (the "Exchange Ratio") as
determined and set forth in this Section 3.1(e). The Exchange Ratio shall be
determined as follows:
(i) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be greater than or
equal to $27.00 per share of UPC Series E Preferred Stock but less
than or equal to $33.00 per share of UPC Series E Preferred Stock (the
"Collar"), the Exchange Ratio shall be fixed at 1.185433 shares of UPC
Series E Preferred Stock for each share of FSB Common Stock issued and
outstanding at the Effective Time of the Merger;
(ii) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be greater than
$33.00 per share of UPC Series E Preferred Stock (the "Ceiling"), the
Exchange Ratio shall be fixed at 1.185433 shares of UPC Series E
Preferred Stock for each share or FSB Common Stock; provided, however,
UPC would have the right to either deliver the fixed Exchange Ratio of
1.185433 or to terminate the transaction contemplated in this
Reorganization Agreement; provided, however, should UPC elect to
terminate the transaction under this provision, FSB would have the
unilateral right to reinstate the transaction by accepting in exchange
for each share of FSB Common Stock issued and outstanding that number
of shares of UPC Series E Preferred Stock at the Current Market Price
Per Share sufficient to equal $39.12 per share of FSB Common Stock;
and
(iii) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be less than $27.00
per share of UPC Series E Preferred Stock (the "Floor"), the Exchange
Ratio shall be fixed at 1.1854333 shares of UPC Series E Preferred
Stock for each share of FSB Common Stock; provided, however, FSB shall
have the right to either accept the fixed Exchange Ratio of 1.1854333
or to terminate the transaction contemplated in this Reorganization
Agreement; provided, however, should FSB elect to terminate the
transaction under this provision, UPC would have the unilateral right
to reinstate the transaction
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
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by delivering in exchange for each share of FSB Common Stock issued
and outstanding that number of shares of UPC Series E Preferred Stock
at the Current Market Price Per Share sufficient to equal $32.01 per
share of FSB Common Stock.
The Exchange Ratio as determined in this Section 3.1(e) shall be based on an
aggregate of no more than 343,499.7 shares of FSB Common Stock validly issued
and outstanding immediately prior to the Effective Time of the Merger;
provided, however, that no fractional shares of UPC Series E Preferred Stock
shall be issued and if, after aggregating all of the shares of UPC Series E
Preferred Stock to which a FSB Record Holder is entitled based upon the
Exchange Ratio, there shall be a fractional share of UPC Series E Preferred
Stock remaining, such fractional share shall be settled by a cash payment
therefor pursuant to the Mechanics of Payment of the Consideration set forth in
Section 3.1(f) hereof, which shall be calculated based upon the Current Market
Price Per Share of one (1) full share of UPC Series E Preferred Stock.
(1) DEFINITION OF "CURRENT MARKET PRICE
PER SHARE." The "Current Market Price Per Share" shall be the average
closing price per share of the "last" real time trades (i.e., closing
price) of the UPC Series E Preferred Stock quoted on the NASDAQ/NMS
(as published in The Wall Street Journal) for each of the ten (10)
NASDAQ/NMS general market trading days next preceding the Closing Date
on which the NASDAQ/NMS was open for business (the "Pricing Period").
In the event the UPC Series E Preferred Stock does not trade on one or
more of the trading days during the Pricing Period (a "No Trade
Date"), any such No Trade Date shall be disregarded in computing the
average closing price per share of UPC Series E Preferred Stock and
the average shall be based upon the "last" real time trades and number
of days on which the UPC Series E Preferred Stock actually traded
during the Pricing Period.
(2) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should FSB Record Holders representing at least 10%
of the shares of FSB Common Stock issued and outstanding at the time
of Closing perfect such FSB Record Holder's Dissenters' Rights
pursuant to the Tennessee Code and maintain the perfected status of
such Dissenters' Rights through the Closing Date, UPC and INTERIM
shall have the right, exercisable in their sole discretion, to either
terminate this Reorganization Agreement or, subject to the prior
approval of the FSB Board of Directors, reduce the per share
Consideration to be delivered by UPC hereunder by an amount sufficient
to off-set against the Consideration any amounts paid, or to be paid,
by UPC in excess of $35.56 per
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 15
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share of FSB Common Stock in satisfaction of such Dissenters' Rights.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF FSB.
Should FSB effect any stock splits, reverse stock splits, stock
dividends or similar changes in its respective capital accounts
subsequent to the date of this Reorganization Agreement but prior to
the Effective Time of the Merger, the Exchange Ratio shall be adjusted
in such a manner as the Board of Directors of UPC shall deem in good
faith to be fair and reasonable in order to give effect to such
changes.
(f) Mechanics of Payment of Consideration.
Within five days after the Effective Time of the Merger and the receipt of a
certified list of all of the FSB Record Holders, the Corporate Trust Department
of Union Planters National Bank, Memphis, Tennessee (the "Exchange Agent")
shall deliver to each of the FSB Record Holders such materials and information
deemed necessary by the Exchange Agent to advise the FSB Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the FSB Common Stock in order for the FSB 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 FSB Record Holders at the addresses set forth on a certified shareholder
list to be delivered by FSB to UPC at the Closing (the "Shareholder List"). As
soon as reasonably practicable thereafter, the FSB Record Holders of all of the
outstanding shares of FSB 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 FSB
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 FSB
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
FSB Common Stock, the Exchange Agent shall, on or prior to the 5th day after
the receipt of such certificates, mail to the former FSB Record Holders in
exchange for the certificate(s) surrendered by them, the Consideration to be
paid for each such FSB Record Holder's shares of FSB Common Stock evidenced by
the certificate or certificates which were cancelled
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 16
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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 FSB Common
Stock of a FSB 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 FSB Record Holder's shares of FSB
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 FSB
Record Holder's FSB Common Stock shall have been properly surrendered as
provided above, the Consideration payable to the FSB Record Holder(s) of the
cancelled shares as of any time after the Effective Date shall not be paid to
the FSB Record Holder(s) of such certificate(s) until such certificates shall
have been surrendered in the manner required. Each FSB Record Holder will be
responsible for all federal, state and local taxes which may be incurred by him
on account of his receipt of the Consideration to be paid in the Merger. The
FSB 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 FSB Record Holder is entitled, provided
that each such FSB 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 FSB
Record Holder.
(g) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of FSB shall be closed and no transfer
of shares of FSB Common Stock shall be made thereafter.
(h) Effects of the Merger. At the Effective Time
of the Merger, the separate existence of INTERIM shall cease, and INTERIM shall
be merged with and into FSB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
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a public or a private nature, and shall be subject to all of the liabilities,
restrictions, disabilities and duties of both FSB and INTERIM.
(i) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
FSB and INTERIM in and to every type of property, whether real, personal, or
mixed, whether tangible or intangible, and to choses in action shall be deemed
to be vested in FSB 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 FSB as well as those of
INTERIM, whether the same shall be matured or unmatured; whether accrued,
absolute, contingent or otherwise; and whether or not reflected or reserved
against in the balance sheets, other financial statements, books of account or
records of FSB or INTERIM.
(k) Dissenters' Rights of FSB Shareholders. Any
FSB Record Holder of shares of FSB Common Stock who shall comply strictly with
the provisions of Sections 48-23-201 et seq. of the Tennessee Code, shall be
entitled to dissent from the Merger and to seek those appraisal remedies
afforded by the Tennessee Code. Such an FSB Shareholder is referred to herein
as an "FSB Dissenting Shareholder." However, UPC and INTERIM shall not be
obligated to consummate the Merger if FSB Record Holders holding or controlling
more than ten percent (10%) of the shares of the FSB Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall have
perfected and maintained in perfected status their Dissenters' Rights in
accordance with the Tennessee Code and the perfected status of said Dissenters'
Rights shall have continued to the time of Closing.
(l) Reservation, Registration and Listing of
shares of UPC Series E Preferred Stock. UPC shall reserve for issuance,
register under the Securities Laws and apply for listing for trading on the
NYSE a sufficient number of shares of UPC Common Stock for the purpose of
reserving such shares for issuance to any holder of shares of the UPC Series E
Preferred Stock that should seek to convert such shares to shares of UPC Common
Stock. UPC shall reserve for issuance, register under the Securities Laws and
apply for listing for trading on the NASDAQ/NMS a sufficient number of shares
of UPC Series E Preferred Stock for the purpose of issuing such shares to the
FSB Record Holders in accordance with the terms and conditions of this Section
3.1.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
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3.2 Time and Place of Closing. The Closing shall take
place at 10:00 a.m. on the Business Day next preceding the date on which the
Effective Time of the Merger is expected to occur, or at such other time as the
Parties, acting through their chief executive officers, presidents or chief
financial officers, may mutually agree (the "Closing Date"). The place of
Closing shall be at Union Planters Administrative Center, Union Planters
Corporation Executive Offices (Fourth Floor), 7130 Goodlett Farms Parkway,
Memphis, Shelby County, Tennessee 38018. The Closing may be held at such other
time or place as may be mutually agreed upon by the Parties.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC AND INTERIM
As of the date hereof and as of the Effective Time of the
Merger, UPC and INTERIM represent and warrant to FSB as follows:
4.1 Organization and Corporate Authority. UPC is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Tennessee. INTERIM is a corporation duly organized,
validly existing and in good standing under the laws of the State of Tennessee.
UPC and INTERIM (i) have, in all material respects, all requisite corporate
power and authority to own, operate and lease their material properties and
carry on their businesses as they are currently being conducted; (ii) are in
good standing and are duly qualified to do business in each jurisdiction where
the character of their properties owned or held under lease or the nature of
their business makes such qualification necessary; and (iii) have in effect all
federal, state, local and foreign governmental authorizations, permits and
licenses necessary for them to own or lease their properties and assets and to
carry on their businesses as they are currently being conducted. The corporate
Charter and Bylaws of UPC and the Charter and Bylaws of INTERIM, as amended to
date, are in full force and effect as of the date of this Reorganization
Agreement.
4.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) UPC and INTERIM have all requisite corporate
power and authority to execute and deliver this Reorganization Agreement and
the Plan of Merger and to consummate the transactions contemplated hereby and
thereby. This Reorganization Agreement, and all other agreements contemplated
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
<PAGE> 113
to be executed in connection herewith by UPC and INTERIM, have been (or upon
execution will have been) duly executed and delivered by UPC and INTERIM, have
been (or upon execution will have been) effectively authorized by all necessary
action, corporate or otherwise, and, other than the approval of UPC as sole
shareholder of INTERIM and UPC's Board of Directors, no other corporate
proceedings on the part of UPC or INTERIM are (or will be) necessary to
authorize such execution and delivery, and constitute (or upon execution will
constitute) legal, valid and enforceable obligations of UPC and INTERIM,
subject, as to enforceability, to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally, and to the application of equitable principles and
judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under (or an event
which, with the passage of time or the giving of notice or both, would
constitute a default under), or conflict with, or permit the acceleration of
any obligation under, any material mortgage, lease, covenant, agreement,
indenture or other instrument to which UPC or INTERIM is a party or by which
they or their property or any of their assets are bound; the corporate Charter
and Bylaws of UPC or the Charter and Bylaws of INTERIM; or any material
judgment, decree, order or award of any court, governmental body or arbitrator
by which UPC or INTERIM is bound; or any material permit, concession, grant,
franchise, license, law, statute, ordinance, rule or regulation applicable to
UPC or INTERIM or their properties; or result in the creation of any lien,
claim, security interest, encumbrance, charge, restriction or right of any
third party of any kind whatsoever upon the property or assets of UPC or
INTERIM, except that the Government Approvals shall be required in order for
UPC and INTERIM to consummate the Merger.
4.3 No Legal Bar. Neither UPC nor INTERIM is a party to,
subject to or bound by any agreement, judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body of competent
jurisdiction which would prevent the execution of this Reorganization Agreement
by UPC or INTERIM, its delivery to FSB and the FSB Companies or the
consummation of the transactions contemplated hereby, and no action or
proceeding is pending against UPC or INTERIM in which the validity of this
Reorganization Agreement, any of the transactions contemplated hereby or any
action which has been taken by any of the Parties in connection herewith or in
connection with any of the transactions contemplated hereby is at issue.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
<PAGE> 114
4.4 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by UPC
or INTERIM in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by UPC or
INTERIM, except for: (a) the prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") of the Merger under the Bank
Holding Company Act of 1956, as amended; and (b) the prior approval of the
Tennessee Department of Financial Institutions ("TDFI") under Sections
45-12-101 et seq of the Tennessee Code and the regulations promulgated by the
TDFI thereunder (collectively, the "Government Approvals").
4.5 Capitalization. (a) The authorized capital stock of
UPC consists of 10,000,000 shares of preferred stock having no par value (the
"UPC Preferred Stock"), and 50,000,000 shares of common stock having a par
value of $5.00 per share (the "UPC Common Stock"). As of December 31, 1995,
UPC had issued and outstanding: 44,000 shares of $8.00 Nonredeemable Cumulative
Convertible Preferred Stock, Series B; 253,655 shares of 9.5% Redeemable,
Cumulative Preferred Stock, Series D; and 3,107,922 shares of 8% Cumulative,
Convertible Preferred Stock, Series E. In addition, 250,000 shares of UPC
Preferred Stock have been reserved for issuance as Series A Preferred Stock
pursuant to the UPC Share Purchase Rights Agreement dated January 19, 1989,
between UPC and Union Planters National Bank as Rights Agent (the "UPC Share
Purchase Rights Agreement"). As of December 31, 1995, 40,179,474 shares of UPC
Common Stock were validly issued and outstanding.
As of the date hereof, UPC is the holder, directly or indirectly, of
all of the outstanding capital stock of its Subsidiaries, except for director
qualifying shares.
(b) The authorized capital stock of INTERIM consists
of 1,000 shares of common stock having a par value of $1.00 per share (the
"INTERIM Common Stock") and no preferred stock. As of the date hereof, INTERIM
had issued all 1,000 shares of the authorized INTERIM Common Stock to UPC.
Therefore, UPC is the record holder and beneficial owner of all of the INTERIM
Common Stock outstanding.
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 FSB true and complete copies of: (i)
UPC's audited Consolidated Financial Statements for the calendar years ended
December 31, 1992 and 1993 (as originally issued, but without giving effect to
subsequently effected business combinations accounted for as
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
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poolings of interests); (ii) UPC's unaudited consolidated financial statements
for each of the calendar quarters ending in calendar year 1994 and thereafter,
ending prior to the Closing Date; and (iii) upon issuance thereof, UPC's
audited Consolidated Financial Statements for the calendar year ending December
31, 1994. Such financial statements and the notes thereto present fairly, or
will present fairly when issued, in all material respects, the consolidated
financial position of UPC at the respective dates thereof and the consolidated
results of operations and consolidated cash flow of UPC for the periods
indicated, and in each case in conformity with GAAP consistently applied and
maintained.
4.7 Exchange Act and Listing Filings.
(a) The outstanding shares of UPC Common Stock are registered with
the SEC pursuant to the 1934 Act and UPC has filed with the SEC all material
forms and reports required by law to be filed by UPC with the SEC, which forms
and reports, taken as a whole, are true and correct in all material respects,
and do not misstate a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(b) The outstanding shares of UPC Common Stock are listed for trading
on the NYSE (under the symbol "UPC") pursuant to the listing rules of the NYSE
and UPC has filed with the NYSE all material forms and reports required by the
NYSE to be filed by UPC with the NYSE, which forms and reports, taken as a
whole, are true and correct in all material respects, and do not misstate a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(c) The outstanding shares of UPC Series E Preferred Stock are quoted
on the NASDAQ/NMS (under the symbol "UnPlantr PE") pursuant to the rules of the
NASD and UPC has filed with the NASD all material forms and reports required by
the NASD to be filed by UPC with the NASD, 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 and UPC Series E Preferred
Stock. All shares of UPC Series E Preferred Stock to be issued by UPC and
delivered to the FSB Record Holders in exchange for
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
<PAGE> 116
all of the FSB Common Stock will be duly authorized, validly issued, fully paid
and non-assessable, and none of such shares of UPC Series E Preferred Stock
will have been issued in violation of any preemptive rights of any UPC
shareholders. The shares of UPC Series E Preferred 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 Series E Preferred
Stock outstanding immediately prior to the Effective Time of the Merger.
All shares of UPC Common Stock to be reserved for issuance by UPC for the
conversion of any shares of UPC Series E Preferred Stock issued to the FSB
Record Holders in exchange for all of the FSB Common Stock will be duly
authorized, validly issued, fully paid and non-assessable, and none of such
shares of UPC Common Stock will have been issued in violation of any preemptive
rights of any UPC shareholders. The shares of UPC Common Stock reserved for
issuance shall have in all material respects such distinguishing
characteristics as those of the shares of UPC Common Stock outstanding
immediately prior to the Effective Time of the Merger.
4.9 Litigation. Except as set forth in Schedule 4.9
hereto, there is no action, suit or proceeding pending against UPC or any UPC
Subsidiary, or to the best knowledge of UPC or any UPC Subsidiary threatened
against or affecting UPC, any UPC Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that (i)
would, if decided against UPC or the UPC Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities, condition (financial
or other) or prospects of UPC or any UPC Subsidiary and that are not reflected
in the UPC Financial Statements or (ii) has been brought by or on behalf of any
employee employed or formerly employed by UPC or any UPC Subsidiary.
4.10 Labor and Employment Matters. Except as reflected
in Schedule 4.10 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which UPC or any UPC Subsidiary is a party or by which
any of them is bound; (ii) employment, profit sharing, deferred compensation,
bonus, stock option, purchase, retainer, consulting, retirement, welfare or
incentive plan or contract to which UPC or any UPC Subsidiary is a party or by
which it is bound; or (iii) plan or agreement under which "fringe benefits"
(including, but not limited to, vacation plans or programs, sick leave plans or
programs and related benefits) are afforded any of the employees of UPC or any
UPC Subsidiary. No party to any such agreement, plan or contract is in default
with respect to any material term or condition thereof, nor has any event
occurred which, through the passage of
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
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time or the giving of notice, or both, would constitute a default thereunder or
would cause the acceleration of any obligation of any party thereto. Neither
UPC nor any UPC Subsidiary has received notice from any governmental agency of
any alleged violation of applicable laws that remains unresolved respecting
employment and employment practices, terms and conditions of employment and
wages and hours. UPC and each UPC Subsidiary have complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor, including those related to its employment practices,
employee disabilities, wages, hours, collective bargaining and the payment and
withholding of taxes and other sums as required by the appropriate governmental
authorities, and UPC and each UPC Subsidiary have withheld and paid to the
appropriate governmental authorities or are holding for payment not yet due to
such authorities, all amounts required to be withheld from the employees of UPC
and each UPC Subsidiary and are not liable for any arrears of wages, taxes,
penalties or other sums for failure to comply with any of the foregoing.
Except as set forth in Schedule 4.10, there is no: unfair labor practice
complaint against UPC or any UPC Subsidiary pending before the National Labor
Relations Board or any state or local agency; pending labor strike or other
labor trouble affecting UPC or any UPC Subsidiary; labor grievance pending
against UPC or any UPC Subsidiary; pending representation question respecting
the employees of UPC or any UPC Subsidiary; pending arbitration proceedings
arising out of or under any collective bargaining agreement to which UPC or any
UPC Subsidiary is a party, or to the best knowledge of UPC, any basis for which
a claim may be made under any collective bargaining agreement to which UPC or
any UPC Subsidiary is a party.
4.11 Absence of Undisclosed Liabilities. Except as
described in Schedule 4.11 hereto, neither UPC nor any UPC Subsidiary has any
obligation or liability (contingent or otherwise) that is material to the
financial condition or operations of UPC or any UPC Subsidiary, or that, when
combined with all similar obligations or liabilities, would be material to the
financial condition or operations of UPC or any UPC Subsidiary (i) except as
disclosed in the UPC Financial Statements delivered to FSB prior to the date of
this Reorganization Agreement, or (ii) except obligations or liabilities
incurred in the ordinary course of its business consistent with past practices,
or (iii) except as contemplated under this Reorganization Agreement. Since
December 31, 1993, neither UPC nor any UPC Subsidiary has incurred or paid any
obligation or liability which would be material to the financial condition or
operations of UPC or such UPC Subsidiary, except for obligations paid in
connection with transactions made by it in the ordinary course of its business
consistent with past
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
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practices, laws and regulations applicable to UPC or any UPC Subsidiary.
4.12 Disclosure. The information concerning, and the
representations or warranties made by UPC and INTERIM as set forth in this
Reorganization Agreement, or in any document, statement, certificate or other
writing furnished or to be furnished by UPC and INTERIM to FSB 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 FSB by UPC and INTERIM pursuant hereto were or will be
complete and accurate copies of such documents.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FSB COMPANIES
Both as of the date hereof and as of the Effective Time of the Merger,
FSB and FEB represent and warrant to UPC and INTERIM as follows:
5.1 Organization and Qualification of FSB and
Subsidiaries.
(a) FSB is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee and (i)
has all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is currently being conducted;
(ii) is in good standing and is duly qualified to do business in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its business makes such qualification necessary; and (iii) is a
registered bank holding company with the Federal Reserve.
(b) Each FSB Subsidiary is duly chartered, validly
existing and in good standing under the laws of the state or jurisdiction of
its incorporation and (i) has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as it is
currently being conducted and (ii) is in good standing and is duly qualified to
do business in each jurisdiction where the character of its properties owned
or held under lease or the nature of its business makes such qualification
necessary. FSB and each of its
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 25
<PAGE> 119
Subsidiaries have in effect all federal, state, local and foreign governmental
authorizations, permits and licenses necessary for them to own or lease their
respective properties and assets and to carry on their business as it is
currently being conducted.
(c) FEB is a state banking corporation, duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and engages only in activities (and holds properties only of the
types) permitted by the Tennessee Code and the rules and regulations
promulgated by the TDFI thereunder or the FDIC for insured depository
institutions. FEB's deposit accounts are insured by the Bank Insurance Fund
(the "BIF") as administered by the FDIC to the fullest extent permitted under
applicable law.
5.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) FSB and FEB have all requisite power and
authority to execute and deliver this Reorganization Agreement and the Plan of
Merger and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Reorganization Agreement and the Plan of Merger
and the consummation of the proposed transaction have been (or within thirty
(30) days from the date of this Reorganization Agreement will have been) duly
authorized by majorities of the entire Boards of Directors of FSB and FEB and,
except for the approval of the FSB Shareholders, no other corporate proceedings
on the part of FSB are necessary to authorize the execution and delivery of
this Reorganization Agreement and the Plan of Merger and the consummation of
the transactions contemplated hereby and thereby. This Reorganization
Agreement and all other agreements and instruments herein contemplated to be
executed by FSB or FEB have been (or upon execution will have been) duly
executed and delivered by FSB and FEB and constitute (or upon execution will
constitute) legal, valid and enforceable obligations of FSB and FEB, subject,
as to enforceability, to applicable bankruptcy, insolvency, receivership,
conservatorship, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and to the application of equitable
principles and judicial discretion.
(b) Except as described in Schedule 5.2(b)
hereto, the execution and delivery of this Reorganization Agreement and the
Plan of Merger, the consummation of the transaction contemplated hereby and
thereby, and the fulfillment of the terms hereof and thereof will not result in
a violation or breach of any of the terms or provisions of, or constitute a
default under (or an event which, with the passage of time or the giving of
notice, or both, would constitute a default under), or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 26
<PAGE> 120
conflict with, or permit the acceleration of, any obligation under any
mortgage, lease, covenant, agreement, indenture or other instrument to which
FSB or any FSB Subsidiary is a party or by which FSB or any FSB Subsidiary is
bound; the Charter and Bylaws of FSB or the Charter and Bylaws of any FSB
Subsidiary; or any judgment, decree, order, regulatory letter of understanding
or award of any court, governmental body, authority or arbitrator by which FSB
or any FSB Subsidiary is bound; or any permit, concession, grant, franchise,
license, law, statute, ordinance, rule or regulation applicable to FSB or any
FSB 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 FSB
or any FSB Subsidiary.
5.3 No Legal Bar. Neither FSB nor any FSB Subsidiary is
a party to, or subject to, or bound by, any agreement or judgment, order,
letter of understanding, writ, prohibition, injunction or decree of any court
or other governmental authority or body, or any law which would prevent the
execution of this Reorganization Agreement by FSB or FEB, or the Plan of Merger
by FSB, or the delivery thereof to UPC and INTERIM, or the consummation of the
transaction contemplated hereby and thereby, and no action or proceeding is
pending against FSB or any FSB Subsidiary in which the validity of this
Reorganization Agreement, the transaction contemplated hereby or any action
which has been taken by any of the Parties in connection herewith or in
connection with the transaction contemplated hereby is at issue.
5.4 Government and Other Approvals. Except for the
Government Approvals described in Section 4.4, no consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by FSB
or any FSB Subsidiary in connection with the execution and delivery of this
Reorganization Agreement or the consummation of the transactions contemplated
by this Reorganization Agreement nor is any consent or approval required from
any landlord, licensor or other non-governmental party which has granted rights
to FSB or any FSB Subsidiary in order to avoid forfeiture or impairment of such
rights. Neither FSB nor any FSB Subsidiary are aware of any facts,
circumstances or reasons why such Government Approvals should not be forth
coming or which would prevent or hinder such approvals from being obtained.
5.5 Compliance With Law. FSB and all FSB Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses, and FSB and each FSB Subsidiary,
respectively, as the owners of
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 27
<PAGE> 121
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 FSB's or any FSB Subsidiary's properties or over any other
part of FSB's or any FSB Subsidiary's assets, liabilities or operations. The
benefits of all of such licenses, franchises, permits and authorizations are in
full force and effect and may continue to be enjoyed by FSB and each FSB
Subsidiary subsequent to the Closing of the transactions contemplated herein
without any consent or approval. Neither FSB nor any FSB Subsidiary has
received notice of any proceeding for the suspension or revocation of any such
license, franchise, permit, or authorization and no such proceeding is pending
or has been threatened by any governmental authority.
5.6 Charter Documents. Included in Schedule 5.6 hereto
are true and correct copies of the Charter and Bylaws of FSB and the Articles
of Association or Charter and Bylaws of each FSB Subsidiary, respectively. The
Charter and Bylaws of FSB and the Articles of Association or Charter and Bylaws
of each FSB Subsidiary, as amended to date, are in full force and effect.
5.7 FSB Financial Statements. Accompanying Schedule 5.7
hereto are true copies of the comparative parent only balance sheets of FSB as
of December 31, 1994, the comparative parent only balance sheets of FSB as of
December 31, 1993, and selected financial data for FSB as of December 31, 1992,
1991 and 1990, and the related comparative statements of income and changes in
stockholders' equity and cash flows of FSB for the years ended December 31,
1994, 1993 and 1992, audited financial statements of FEB for the year ended
December 31, 1994, and Call Reports for the years ended December 31, 1994,
1993, 1992 and 1991 (the "Audited Financial Statements of FSB") and the
comparative interim (or annual) financial statements for any subsequent quarter
(or year) ending after December 31, 1994 and prior to the Closing Date. Such
financial statements (i) were (or will be) prepared from the books and records
of FSB and each FSB Subsidiary; (ii) were (or will be) prepared in accordance
with generally accepted accounting principles consistently applied; (iii)
accurately present (or will present) FSB's and each FSB Subsidiary's financial
condition and the results of their operations, changes in stockholders' equity
and cash flows at the relevant dates thereof and for the periods covered
thereby; (iv) do contain or reflect (or will contain and reflect) all necessary
adjustments and accruals for an accurate presentation of FSB's and each FSB
Subsidiary's financial condition and the results of FSB's and each FSB
Subsidiary's operations and cash flows for the periods covered by such
Financial Statements; (v) do contain and reflect (or will contain and reflect)
adequate provisions for
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 28
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loan losses, for ORE reserves and for all reasonably anticipatable liabilities
for all taxes, federal, state, local or foreign, with respect to the periods
then ended; and (vi) do contain and reflect (or will contain and reflect)
adequate provisions for all reasonably anticipated liabilities for Post
Retirement Benefits Other Than Pensions ("OPEB") pursuant to FASB 106 and 112.
5.8 Absence of Certain Changes. Except as disclosed in
Schedule 5.8 or as provided for or contemplated in this Reorganization
Agreement, since December 31, 1994 (the "Balance Sheet Date") there has not
been:
(a) any transaction by FSB or any FSB Subsidiary
not in the ordinary course of business and in conformity with past practice;
(b) any material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), prospects, operations, liquidity, income,
condition (financial or otherwise) or net worth of FSB or any FSB Subsidiary;
(c) any damage, destruction or loss, whether or
not covered by insurance, which has had or may have a material adverse effect
on any of the properties, business or prospects of FSB or any FSB Subsidiary or
their future use and operation by FSB or any FSB Subsidiary;
(d) any acquisition or disposition by FSB or any
FSB Subsidiary of any property or asset of FSB or any FSB Subsidiary, whether
real or personal, having a fair market value, singularly or in the aggregate
for each FSB Company, in an amount greater than Twenty Thousand Dollars
($20,000), except in the ordinary course of business and in conformity with
past practice;
(e) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind on any of the respective properties or assets
of FSB or any FSB Subsidiary, except to secure extensions of credit in the
ordinary course of business and in conformity with past practice;
(f) any amendment, modification or termination of
any contract or agreement, relating to FSB or any FSB Subsidiary, to which FSB
or any FSB Subsidiary is a party which would have an adverse effect upon the
financial condition or operations of FSB or any FSB Subsidiary.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 29
<PAGE> 123
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director,
employee or agent of FSB or any FSB Subsidiary, or any bonus payment or similar
arrangement made to or with any of such officers, directors, employees or
agents, other than routine increases made in the ordinary course of business
not exceeding the greater of ten percent (10%) per annum or $6,000 for any of
them individually;
(h) any incurring of, assumption of, or taking
of, by FSB or any FSB Subsidiary, any property subject to, any liability,
except for liabilities incurred or assumed or property taken subsequent to the
Balance Sheet Date in the ordinary course of business and in conformity with
past practice;
(i) any material alteration in the manner of
keeping the books, accounts or Records of FSB or any FSB Subsidiary, or in the
accounting policies or practices therein reflected;
(j) any release or discharge of any obligation or
liability of any person or entity related to or arising out of any loan made by
FSB or any FSB Subsidiary of any nature whatsoever, except in the ordinary
course of business and in conformity with past practice; or
(k) any loan (except credit card loans, passbook
loans or home loans) by FSB or any FSB Subsidiary to any Officer, director or
2% shareholder of FSB or any FSB Subsidiary or any Affiliate of FSB or any FSB
Subsidiary; or to any member of the immediate family of such Officer, director
or 2% shareholder of FSB or any FSB Subsidiary or any Affiliate of FSB; or to
any Person in which such Officer, director or 2% shareholder directly or
indirectly owns beneficially or of record ten percent (10%) or more of any
class of equity securities in the case of a corporation, or of any equity
interest, in the case of a partnership or other non-corporate entity; or to any
trust or estate in which such Officer, director or 2% shareholder has a ten
percent (10%) or more beneficial interest; or as to which such Officer,
director or 2% shareholder serves as a trustee or in a similar capacity. As
used in this Section 5.8, "Officer" shall refer to a person who holds the title
of chairman, president, executive vice president, senior vice president,
controller, secretary, cashier or treasurer or who performs the normal duties
of such officer whether or not he or she is compensated for such service or has
an official title.
5.9 Deposits. None of the Deposits of any FSB Subsidiary
is a "brokered" Deposit or subject to any encumbrance, legal restraint or other
legal process. Except as set forth in
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 30
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Schedule 5.9, no portion of the Deposits represents a Deposit by any Affiliate
of FSB or any FSB Subsidiary.
5.10 Properties. Except as described in Schedule 5.10
hereto or adequately reserved against in the Audited Financial Statements of
FSB, FSB and each FSB Subsidiary has good and marketable title free and clear
of all material liens, encumbrances, charges, defaults, or equities of whatever
character to all of the material properties and assets, tangible or intangible,
reflected in the Audited Financial Statements of FSB as being owned by FSB or
any FSB Subsidiary as of the dates thereof. All buildings, and all fixtures,
equipment, and other property and assets that are material to the business of
FSB and its Subsidiaries on a consolidated basis, held under leases or
subleases by FSB or any FSB 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 FSB Companies provide adequate coverage against
loss, and the fidelity bonds in effect as to which any of the FSB Companies is
a named insured are believed to be sufficient.
5.11 FSB Subsidiaries. Schedule 5.11 hereto lists all of
the active and inactive FSB Subsidiaries (including any Subsidiary of a FSB
Subsidiary) as of the date of this Reorganization Agreement and describes
generally the business activities conducted, or permitted to be conducted, by
each FSB Subsidiary. Except as described in Schedule 5.11 hereto, no equity
securities of any of the FSB Subsidiaries are or may become required to be
issued (other than to FSB or any FSB Subsidiary) by reason of any options,
warrants, scrip, rights to subscribe to, calls, or commitments of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for, shares of the capital stock of any FSB Subsidiary, and there
are no contracts, commitments, understandings, or arrangements by which any FSB
Subsidiary is bound to issue (other than to FSB) any additional shares of its
capital stock or options, warrants, or rights to purchase or acquire any
additional shares of its capital stock. Except as described in Schedule 5.11
hereto, all of the shares of capital stock of each FSB Subsidiary held by FSB
or by any FSB Subsidiary are fully paid and nonassessable and are owned by FSB
or such FSB Subsidiary free and clear of any claim, lien, or encumbrance of any
nature whatsoever, whether perfected or not.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 31
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5.12 Condition of Fixed Assets and Equipment. Except as
disclosed in Schedule 5.12 hereto, each item of FSB's or any FSB Subsidiary's
fixed assets and equipment having a net book value in excess of Twenty Thousand
Dollars ($20,000) included in the Fixed Assets is in good operating condition
and repair, normal wear and tear excepted.
5.13 Tax Matters. Except as described in Schedule 5.13
hereto:
(a) all federal, state, local, and foreign tax
returns required to be filed by or on behalf of FSB and each FSB 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 FSB or any FSB Subsidiary except as fully reserved for in
the Audited Financial Statements of FSB. All taxes, interest, additions, and
penalties due with respect to completed and settled examinations or concluded
litigation have been paid.
(b) Neither FSB nor any FSB 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 FSB and all FSB Subsidiaries
for all periods through and including December 31, 1994, has been made and is
reflected on the December 31, 1994 financial statements included in the Audited
Financial Statements of FSB, and have been and will continue to be made with
respect to periods ending after December 31, 1994.
(d) Deferred taxes of FSB and each FSB Subsidiary
have been and will be provided for in accordance with GAAP.
(e) To the best knowledge of FSB and any FSB
Subsidiary, neither the Internal Revenue Service nor any foreign, state, local
or other taxing authority is now asserting or threatening to assert against FSB
or any FSB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 32
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assessments, imposed upon FSB 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 FSB or any FSB Subsidiary,
either have been paid in full, or have been properly accrued and reflected in
the Audited Financial Statements of FSB 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 FSB or any FSB
Subsidiary, or to the best knowledge of FSB or any FSB Subsidiary threatened
against or affecting FSB, any FSB Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that (i)
would, if decided against FSB or the FSB Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities, condition (financial
or other) or prospects of FSB or any FSB Subsidiary and that are not reflected
in the Audited Financial Statements of FSB or (ii) has been brought by or on
behalf of any employee employed or formerly employed by FSB or any FSB
Subsidiary.
5.15 Hazardous Materials.
(a) FSB and all FSB Subsidiaries have obtained
all material permits, licenses and other authorizations which are required to
be obtained by FSB 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 FSB or any FSB Subsidiary is in
material compliance with the terms and conditions of all of such permits,
licenses and authorizations, and is also in material compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in any Applicable Environmental
Laws or in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder,
except as described in detail in Schedule 5.15 hereto. For purposes hereof,
the following terms shall have the following meanings:
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all federal,
state, local and municipal environmental laws, rules or regulations to the
extent applicable to the Property, including, but not limited to, (a) the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. ("CERCLA"); (b) the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq. "RCRA"; (c) the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; (d) the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 33
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Clean Air Act, 42 U.S.C. Section 7401 et seq.; (e) the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1471 et seq.; (f) the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; (g) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.; (h) the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; (i) the Rivers and
Harbours Act of 1899, 33 U.S.C. Section 401 et seq.; (j) the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq.; (k) the Safe Drinking
Water Act, 42 U.S.C. Section 300(f) et seq.; (l) the Oil Pollution Act of 1990,
33 U.S.C. Section 2701 et seq.; (m) the Hazardous Waste Management Act of 1977,
Sections 68-46-101 et seq. of the Tennessee Code; (n) the Hazardous Waste
Management Act of 1983, Sections 68-46-201 et seq. of the Tennessee Code; (o)
the Hazardous Waste Reduction Act of 1990, Sections 68-46-301 et seq. of the
Tennessee Code; (p) the Petroleum Underground Storage Tank Act, Sections
68-58-101 et seq. of the Tennessee Code; (q) any amendments to the foregoing
Acts as adopted from time to time on or before the Closing; and (r) any rule,
regulation, order, injunction, judgment, 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 FSB or any FSB 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 FSB or a FSB
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:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 34
<PAGE> 128
(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 FSB or any FSB Subsidiary to
have any permit, license or authorization required in connection with
the conduct of the business of FSB or any FSB 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 FSB or any Affiliate of FSB at the Property;
(ii) None of the Property has received
or held any Hazardous Substances in such amount and in such manner as
to constitute a violation of the Applicable Environmental Laws, and no
Hazardous Substances have been Released or disposed of on, in or under
any of the Property during or prior to FSB's or any FSB Subsidiary's
occupancy thereof, or during or prior to the occupancy thereof by any
assignee or sublessee of FSB or any FSB 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 FSB nor any Affiliate of FSB 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 35
<PAGE> 129
(d) Except as set forth in Schedule 5.15(d), no
Hazardous Substances have been generated, recycled, treated, stored, disposed
of or Released by, FSB or any Affiliate of FSB 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 FSB or any Affiliate
of FSB relating to the Property and no Property is listed or proposed for
listing on the National Priority List promulgated pursuant to CERCLA, on
CERCLIS or on any similar state list of sites requiring investigation or
clean-up.
(f) There are no liens arising under or pursuant
to any Applicable Environmental Laws on any Property, and no government actions
have been taken or, to the best knowledge of FSB, 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
FSB or any Affiliate of FSB in relation to any Property, which have not been
made available to UPC.
(h) Neither FSB nor any FSB Subsidiary is aware
of any facts which might suggest that FSB or any FSB Subsidiary has engaged in
any management practice with respect to any of its past or existing borrowers
which could reasonably be expected to subject FSB or any FSB 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. FSB and each FSB Subsidiary have paid
all material amounts due and payable under any insurance policies and
guaranties applicable to FSB and any FSB Subsidiary and FSB's or any FSB
Subsidiary's assets and operations; all such insurance policies and guaranties
are in full force and effect; and FSB and each FSB Subsidiary and all of FSB's
and each FSB Subsidiary's material Realty and other material properties are
insured against fire, casualty, theft, loss, and such other events against
which it is customary to insure, all such insurance policies being in amounts
that are adequate and consistent with past practice and experience.
5.17 Labor and Employment Matters. Except as reflected
in Schedule 5.17 hereto, there is no (i) collective
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 36
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bargaining agreement or other labor agreement to which FSB or any FSB
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 FSB or
any FSB 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 FSB or any FSB 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 FSB nor any FSB 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. FSB and each FSB 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 FSB and each FSB 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 FSB and each FSB 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 FSB or any FSB Subsidiary pending before the
National Labor Relations Board or any state or local agency; pending labor
strike or other labor trouble affecting FSB or any FSB Subsidiary; labor
grievance pending against FSB or any FSB Subsidiary; pending representation
question respecting the employees of FSB or any FSB Subsidiary; pending
arbitration proceedings arising out of or under any collective bargaining
agreement to which FSB or any FSB Subsidiary is a party, or to the best
knowledge of FSB, any basis for which a claim may be made under any collective
bargaining agreement to which FSB or any FSB Subsidiary is a party.
5.18 Records and Documents. The Records of each FSB
Subsidiary are and will be sufficient to enable such FSB Subsidiary to continue
conducting its business under similar standards as such FSB Subsidiary has
heretofore conducted such business.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 37
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5.19 Capitalization of FSB. The authorized capital stock
of FSB consists of 1,000,000 shares of common stock having a par value of $1.00
per share (the "FSB Common Stock"), no shares of preferred stock (the "FSB
Preferred Stock") and no other class of equity security. As of the date of
this Reorganization Agreement, 343,499.7 shares of FSB Common Stock were issued
and outstanding, no shares of FSB Common Stock were held by FSB as treasury
stock and no shares of FSB Preferred Stock were issued and outstanding. All of
the outstanding FSB Common Stock is validly issued, fully-paid and
nonassessable and has not been issued in violation of any preemptive rights of
any FSB Shareholder. Except as described in Section 2.7 of this Reorganization
Agreement or as described on Schedule 5.19 hereto, as of the date hereof, there
are no outstanding securities or other obligations which are convertible into
FSB Common Stock or into any other equity or debt security of FSB, 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 FSB Common Stock or any other equity or debt
security of FSB. Accordingly, immediately prior to the Effective Time of the
Merger, there will be not more than (nor less than) 343,499.7 shares of FSB
Common Stock issued and outstanding. Except as set forth in Schedule 5.19
hereto, FSB owns and is the beneficial record holder of, and has good and
freely transferable title to, all of the shares of FSB Subsidiary Common Stock
outstanding, and recorded on the books and Records of each FSB Subsidiary as
being held in its name, free and clear of all liens, charges or encumbrances,
and such stock is not subject to any voting trusts, agreements or similar
arrangements or other claims which could effect the ability of FSB to freely
vote such stock in support of the transactions contemplated herein.
5.20 Sole Agreement. Except as described in Schedule 5.20
hereto, with the exception of this Reorganization Agreement, neither FSB, nor
any FSB Subsidiary, nor any Subsidiary of either has been, is or will become a
party to: any letter of intent or agreement to merge, to consolidate, to sell
or purchase assets (other than in the normal course of its business) or to any
other agreement which contemplates the involvement of FSB or any FSB Subsidiary
or any Subsidiary of any FSB Subsidiary (or any of their assets) in any
business combination of any kind; or any agreement obligating FSB or any FSB
Subsidiary to issue or sell or authorize the sale or transfer of FSB Common
Stock or the capital stock of any FSB Subsidiary. Except as described in
Schedule 5.20 hereto, there are no (nor will there be at the Effective Time of
the Merger any) shares of capital stock or other equity securities of FSB
outstanding, except for shares of FSB Common Stock presently issued and
outstanding, and there are no (nor will there be at the Effective Time of the
Merger any)
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 38
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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 FSB or any
FSB Subsidiary, or contracts, commitments, understandings, or arrangements by
which FSB or any FSB Subsidiary is or may be bound to issue additional shares
of their capital stock or options, warrants, or rights to purchase or acquire
any additional shares of their capital stock. There are no (nor will there be
at the Effective Time of the Merger any) contracts, commitments,
understandings, or arrangements by which FSB or any FSB Subsidiary is or may be
bound to transfer or issue to any third party any shares of the capital stock
of any FSB 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 FSB to vote or to dispose of any such shares.
5.21 Disclosure. The information concerning, and
representations and warranties made by, FSB and any FSB Subsidiary set forth in
this Reorganization Agreement, or in the Schedules of Exceptions of FSB hereto,
or in any document, statement, certificate or other writing furnished or to be
furnished by FSB or any FSB Subsidiary to UPC and INTERIM pursuant hereto, does
not and will not contain any untrue statement of a material fact or omit and
will not omit to state a material fact required to be stated herein or therein
necessary to make the statements and facts contained herein or therein, in
light of the circumstances in which they were or are made, not false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available to UPC or INTERIM by FSB or any FSB Subsidiary pursuant hereto were
or will be complete and accurate copies of such documents.
5.22 Absence of Undisclosed Liabilities. Except as
described in Schedule 5.22 hereto, neither FSB nor any FSB Subsidiary has any
obligation or liability (contingent or otherwise) that is material to the
financial condition or operations of FSB or any FSB Subsidiary, or that, when
combined with all similar obligations or liabilities, would be material to the
financial condition or operations of FSB or any FSB Subsidiary (i) except as
disclosed in the Audited Financial Statements of FSB 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, 1994, neither FSB nor any FSB Subsidiary has
incurred or paid any obligation or liability which would be material to the
financial condition or operations of FSB or such FSB Subsidiary, except for
obligations paid in connection with transactions made by it in
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 39
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the ordinary course of its business consistent with past practices, laws and
regulations applicable to FSB or any FSB Subsidiary.
5.23 Allowance for Possible Loan or ORE Losses. The
allowance for possible loan losses shown on the Audited Financial Statements of
FSB is (with respect to periods ended on or before December 31, 1994) or will
be (with respect to periods ending subsequent to December 31, 1994) 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 FSB nor any FSB
Subsidiary has any Loan which has been criticized or classified by bank
examiners representing any Regulatory Authority or by its independent auditors
as "Other Assets Especially Mentioned," "Substandard," "Doubtful" or "Loss" or
as a "Potential Problem Loan."
The allowance for possible losses on other real estate ("ORE") shown
on the Audited Financial Statements of FSB is (with respect to periods ended on
or before December 31, 1994) or will be (with respect to periods ending
subsequent to December 31, 1994) adequate in all respects to provide for
anticipated losses inherent in ORE owned or held by FSB or any FSB Subsidiary
and the net book value of ORE on the Balance Sheet of the Audited Financial
Statements of FSB is the net realizable value of the ORE in accordance with
Statement of Position 92-3.
5.24 Compliance with Laws. FSB and each FSB 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 FSB or any
FSB Subsidiary, or which would or could reasonably be expected to subject FSB
or any FSB 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 FSB or any
FSB 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 FSB or any FSB
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 40
<PAGE> 134
Subsidiary, (ii) threatening to revoke any license, franchise, permit, or
governmental authorization which is material to the financial condition or
operations of FSB or any FSB Subsidiary, or (iii) requiring FSB or any FSB
Subsidiary to enter into a cease and desist order, consent, agreement, or
memorandum of understanding.
5.25 Employee Benefit Plans.
(a) FSB has previously provided to UPC true and
complete copies of each "employee pension benefit plan," as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974 ("ERISA") which, to
the best of its knowledge, is subject to any provision of ERISA and covers any
employee, whether active or retired, of FSB or any FSB Subsidiary or any other
entity which is a member of a controlled group or is under common control with
FSB or its Subsidiaries in the manner defined and further described in Section
414(b), (c), or (m) of the Internal Revenue Code of 1986 (the "Code"). Such
plans are hereinafter referred to collectively as the "Employee Pension Benefit
Plans", and each such Employee Pension Benefit Plan is listed in Schedule
5.25(a) hereto. FSB has also provided to UPC true and complete copies of all
trust agreements, collective bargaining agreements, and insurance contracts
related to such Employee Pension Benefit Plans.
To the best knowledge of FSB and its Subsidiaries,
each Employee Pension Benefit Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and each trust forming a part
thereof is exempt from tax pursuant to Section 501(a) of the Code. Copies of
the latest determination letters concerning the qualified status of each
Employee Pension Benefit Plan which is intended to be qualified under Section
401(a) of the Code have been provided to UPC. Requests for determination
letters relating to amendments required to cause such Employee Pension Benefit
Plans to be in compliance with the Tax Equity and Fiscal Responsibility Act of
1982, the Deficit Reduction Act of 1984 and the Retirement Equity Act of 1984
were timely filed and have been received by FSB and its Subsidiaries. Requests
for determination letters relating to any subsequent amendments to such plans
which are currently pending have been provided to UPC. All such requests were
timely and properly filed and appropriate notice of any such filing was timely
and properly provided to affected plan participants and beneficiaries.
Each of the Employee Pension Benefit Plans has been
operated in substantial conformity with the written provisions of the
applicable plan documents which have been
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 41
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delivered to UPC and in compliance with the requirements prescribed by all
statutes, orders, rules, and regulations including, but not limited to, ERISA
and the Code, which are applicable to such Employee Pension Benefit Plans. To
the extent that the operation of an Employee Pension Benefit Plan has deviated
from the written provisions of the plan, such operational deviations have been
disclosed in Schedule 5.25(a) hereto. All such deviations have been made in
conformity with applicable laws, including ERISA and the Code.
With respect to Employee Pension Benefit Plans which
are subject to the annual report requirement of ERISA Section 103 or to the
annual return requirement of Code Section 6047, all required annual reports and
annual returns, or such other documents as may have been required as
alternative means of compliance with the annual report requirement, have been
timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date have been delivered to UPC. With respect to Employee Pension
Benefit Plans which complied with the annual return requirement by satisfaction
of an alternate compliance method, any documents required to be filed with the
Department of Labor in satisfaction of such requirements have been provided to
UPC.
With respect to all Employee Pension Benefit Plans
which are subject to the summary plan description requirement of ERISA Section
102, all such summary plan descriptions as were required to be filed with the
Department of Labor and distributed to participants and beneficiaries have been
timely filed and distributed. Copies of all such summary plan descriptions
have been delivered to UPC. No Employee Pension Benefit Plan constitutes a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA.
No Employee Pension Benefit Plan subject to Part III
of Subtitle B of ERISA or Section 412 of the Code, or both, has incurred an
"accumulated funding deficiency" within the meaning of Code Section 412,
whether or not waived. All required contributions to all Employee Pension
Benefit Plans have been timely made. Any penalties or taxes which have been
incurred by FSB or its subsidiaries or by any Employee Pension Benefit Plan
with respect to the timing or amount of payment of any contribution to an
Employee Pension Benefit Plan have been timely paid. The limitations of Code
Section 415 have not been exceeded with respect to any Employee Pension Benefit
Plan or combination of such plans to which such limitations apply.
No "reportable event" (as described in Section
4043(b) of ERISA) has occurred with respect to any
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 42
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Employee Pension Benefit Plan. No Employee Pension Benefit Plan or any trust
created thereunder, nor any "disqualified person" with respect to the plan (as
defined in Section 4975 of the Code), has engaged in a "prohibited
transaction", as such term is defined in Section 4975 of the Code, which could
subject such Employee Pension Benefit Plan, any such trust or any such
disqualified person (other than a person for whom neither FSB nor any FSB
Subsidiary is directly or indirectly responsible) to liability under Title I of
ERISA or to the imposition of any tax under Section 4975 of the Code.
No condition exists with regard to any Employee
Pension Benefit Plan which constitutes grounds for the termination of such plan
pursuant to Section 4042 of ERISA.
The fair market value of the assets of any Employee
Pension Benefit Plan which is subject to Title IV of ERISA (excluding for these
purposes any accrued but unpaid contributions) exceeded the present value of
all benefits accrued under any such plan, determined on a termination basis
using the assumptions established by the Pension Benefit Guaranty Corporation
as in effect on such date. Neither FSB nor its Subsidiaries have incurred any
liability under Title IV of ERISA arising in connection with the termination
of, or complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA. The termination of any Code Section 401(a)
qualified Employee Pension Benefit Plan previously terminated by FSB or any FSB
Subsidiary did not adversely affect the qualification of such Employee Pension
Benefit Plan. The distribution of the assets of any such Employee Pension
Benefit Plan was made or is currently being made in conformity with the
requirements of that Employee Pension Benefit Plan and of applicable legal
requirements and has not resulted in, will not result in, and is reasonably not
anticipated to result in the assessment of any tax, penalty, or excise tax
against such pension plan, its related trusts, the fiduciary and administrators
of the Employee Pension Benefit Plan, FSB or its Subsidiaries, or any
disqualified person (as defined in Code Section 4975) with respect to the
Employee Pension Benefit Plan.
No tax has been, will be, or is reasonably
anticipated to be imposed under Code Section 4978, 4978A, 4978B, or 4979A due
to the operation of an Employee Pension Benefit Plan sponsored by FSB or its
Subsidiaries which is an employee stock ownership plan ("ESOP").
Except as disclosed in Schedule 5.25(a) hereto, all
Employee Pension Benefit Plans were in effect for substantially all of calendar
year 1994. There has been no material amendment of any such plans (other than
amendments
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 43
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required to comply with applicable law) or material increase in the cost of
maintaining such plans or providing benefits thereunder on or after the last
day of the plan year which ended in calendar year 1994 for each such Employee
Pension Benefit Plan.
FSB has provided to UPC copies of the annual
actuarial valuation or allocation report for each Employee Pension Benefit Plan
for the three (3) plan years for such plan immediately preceding the current
date. With regard to Employee Pension Benefit Plans which are not intended to
be qualified under Section 401(a) of the Code, copies of financial statements
or reports containing information regarding the expense of maintaining any such
Employee Pension Benefit Plan for the three (3) plan years preceding the
current date have been delivered to UPC.
FSB has provided to UPC copies of all filings
regarding the Employee Pension Benefit Plans which have been made with the
Securities and Exchange Commission for the three (3) plan years preceding the
current date.
(b) FSB has furnished to UPC true and complete copies of
each "Employee Welfare Benefit Plan" as defined in Section 3(1) of ERISA,
which, to the best of its knowledge, is subject to any provision of ERISA and
covers any employee, whether active or retired, of FSB or any FSB Subsidiary or
members of a controlled group or entities under common control with FSB or its
Subsidiaries in the manner defined and further described in Section 414(b),
(c), or (m) of the Code. Such plans are hereinafter referred to collectively
as the "Employee Welfare Benefit Plans", and each such Employee Welfare Benefit
Plan is listed in Schedule 5.25(b) hereto.
FSB has also provided to UPC true and complete copies
of documents establishing all funding instruments for such Employee Welfare
Benefit Plans, including but not limited to, trust agreements, cafeteria plans
(pursuant to Code Section 125), and voluntary employee beneficiary associations
(pursuant to Code Section 501(c)(9)). Each of the Employee Welfare Benefit
Plans has been operated in substantial conformity with the written provisions
of the plan documents which have been delivered to UPC and in compliance with
the requirements prescribed by all statutes, orders, rules, and regulations
including, but not limited to, ERISA and the Code, which are applicable to such
Employee Welfare Benefit Plans. Any deviation in the operation of such plans
from the requirements of the plan documents or of applicable laws have been
listed in Schedule 5.25(b) hereto. FSB has provided any notification required
by law to any participant covered under any Employee Welfare Benefit Plan which
has failed
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 44
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to comply with the requirements of any Code section which results in the
imposition of a tax on benefits provided to such participants under such plan.
With respect to all Employee Welfare Benefit Plans
which are subject to the annual report requirement of ERISA Section 103 or to
the annual return requirement of Code Section 6039D, all annual reports and
annual returns as were required to be filed pursuant to such sections have been
timely filed. Copies of all such annual returns/reports, including all
attachments and Schedules, for the three (3) plan years immediately preceding
the current date for all plans subject to such requirements have been delivered
to UPC. With respect to all Employee Welfare Benefit Plans which are subject
to the summary plan description requirement of ERISA Section 102, all such
summary plan descriptions as were required to be filed with the Department of
Labor and distributed to participants and beneficiaries have been timely filed
and distributed. Copies of all such summary plan descriptions have been
delivered to UPC.
Except as disclosed in Schedule 5.25(b) hereto, all
Employee Welfare Benefit Plans which are in effect were in effect for
substantially all of calendar year 1994. Except as disclosed in Schedule
5.25(b) hereto, there has been with respect to such Employee Welfare Benefit
Plans no material amendment thereof or material increase in the cost thereof or
benefits payable thereunder on or after January 1, 1995.
No Employee Welfare Benefit Plan or any trust created
thereunder, nor any "party in interest" with respect to the plan (as defined in
Section 3(14) of ERISA), has engaged in a "prohibited transaction", as such
term is defined in Section 406 of ERISA, which could subject such Employee
Welfare Benefit Plan, any such trust, or any party in interest (other than a
person for whom neither FSB nor any FSB Subsidiary is directly or indirectly
responsible) to the imposition of a penalty for such prohibited transaction
under Section 502(i) of ERISA. The Department of Labor has not assessed any
such penalty or served notice to FSB or any of its Subsidiaries that such a
penalty may be imposed upon any Employee Welfare Benefit Plan.
Neither FSB nor any FSB Subsidiary has failed to make
any contribution to, or pay any amount due and owing by FSB or an FSB
Subsidiary under the terms of, an Employee Welfare Benefit Plan. Except as
disclosed in Section 5.25(b) hereto, no claims have been incurred with respect
to any Employee Welfare Benefit Plan which may, to the best knowledge,
information and belief of FSB, constitute a liability for FSB or any FSB
Subsidiary after the application of any insurance, trust or other funds which
are applicable to the payment of such claims.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 45
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Except as disclosed in Schedule 5.25(b) hereto, to
the best knowledge, information and belief of FSB, no condition exists that
could subject any Employee Welfare Benefit Plan or any person (other than a
person for whom neither FSB or any FSB Subsidiary is directly or indirectly
responsible) to liabilities, damages, losses, taxes, or sanctions that arise
under Section 4980B of the Code or Sections 601 through 608 of ERISA for
failure to comply with the continuation health care coverage requirements of
ERISA Sections 601 through 608 and Code Section 4980B with respect to any
current or former employee of FSB or any FSB Subsidiary, or the beneficiaries
of such employee.
(c) FSB has furnished to UPC true and complete copies
and/or descriptions of each plan or arrangement maintained or otherwise
contributed to by FSB or any FSB Subsidiary which is not an Employee Pension
Benefit Plan and is not an Employee Welfare Benefit Plan and which (exclusive
of base salary and base wages) provides for any form of current or deferred
compensation, bonus, stock option, profit sharing, retirement, group health or
insurance, welfare benefits, fringe benefits, or similar plan or arrangement
for the benefit of any employee or class of employees, whether active or
retired, or independent contractors of FSB or any FSB subsidiary. Such plans
and arrangements shall collectively be referred to herein as "Benefit
Arrangements" and all such Benefit Arrangements of FSB and FSB's Subsidiaries
are listed on Schedule 5.25(c) hereto. Except as disclosed in Schedule 5.25(c)
hereto, there are no other benefit arrangements of the FSB companies and all
Benefit Arrangements which are in effect were in effect for substantially all
of calendar year 1994. Except as disclosed in Schedule 5.25(c) hereto, there
has been with respect to Benefit Arrangements no material amendment thereof or
material increase in the cost thereof or benefits payable thereunder on or
after January 1, 1995. There has been no material increase in the base salary
and wage levels of FSB or any FSB 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 1994. Except as disclosed in Schedule
5.25(c) hereto, there has been no material increase in the compensation of, or
benefits payable to, any senior executive employee of FSB or any FSB subsidiary
on or after January 1, 1995, nor has any employment, severance, or similar
contract been entered into with any such employee, nor has any amendment to any
such contract been made on or after January 1, 1995.
With respect to all Benefit Arrangements which are
subject to the annual return requirement of Code Section 6039D, all annual
returns as were required to be filed have been timely filed. Copies of all
such annual returns for the three (3) plan
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 46
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years immediately preceding the current date have been delivered to UPC.
(d) Listed on Schedule 5.25(d) hereto are all Employee
Pension Benefit Plans, Employee Welfare Benefit Plans, and Benefit Arrangements
which provide compensation or benefits which become effective upon a change in
control of FSB or any FSB Subsidiary, including, but not limited to, additional
compensation or benefits, or acceleration in the amount or timing of payment of
compensation or benefits which had become effective prior to the date of such
acceleration. Except as disclosed in Schedule 5.25(d) hereto, there is no
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement covering any employee of FSB or any FSB Subsidiary which
individually or collectively could give rise to the payment of any amount which
would constitute an "excess parachute payment", as such term is defined in
Section 280G of the Code and Regulations proposed pursuant to that section.
(e) Except as described in Schedule 5.25(e) hereto, each
Employee Pension Benefit Plan, Employee Welfare Benefit Plan, or Benefit
Arrangement and each personal services contract, fringe benefit, consulting
contract or similar arrangement with or for the benefit of any officer,
director, employee, or other person may be terminated by FSB (or by FSB as the
Surviving Corporation) within a period of no more than thirty (30) days
following the effective time of the merger, without payment of any amount as a
penalty, bonus, premium, severance pay, or other compensation for such
termination. No limitation on the right to terminate any such plan has been
communicated by FSB or its Subsidiaries to employees, former employees, or
retirees who are or may be participants in or beneficiaries of such plans or
arrangements. Each Employee Pension Benefit Plan which is qualified under
Section 401(a) of the Code as a qualified defined benefit pension plan permits
the reversion of excess assets to the employer maintaining the plan or its
successors or assigns upon a plan termination and such provision has been
included in the Employee Pension Benefit Plan for the period required under
ERISA Section 4044(d).
(f) Except as disclosed in Schedule 5.25(f) hereto,
neither FSB nor any FSB Subsidiary has received notice from any governmental
agency of any alleged violation of applicable laws or of any prospective audit
or other investigation for the purpose of reviewing compliance with applicable
laws with respect to any Employee Pension Benefit Plan, Employee Welfare
Benefit Plan or Benefit Arrangement.
Except as disclosed in Schedule 5.25(f) hereto, no
suits, actions, or claims have been filed in any court of law or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 47
<PAGE> 141
with any governmental agency regarding the operation of any Employee Pension
Benefit Plan, Employee Welfare Benefit Plan, or Benefit Arrangement and no such
additional suits, actions, or claims are, to the best information, knowledge
and belief of FSB, anticipated to be filed.
5.26 Material Contracts. Except as reflected in the
Audited Financial Statements of FSB, or as described in Schedule 5.26 hereto,
neither FSB nor any FSB 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 FSB as of the date of this Reorganization Agreement that has not
already been filed as an exhibit to FSB's Form 10-K filed for the fiscal year
ended December 31, 1994, or in any other SEC Document filed prior to the date
of this Reorganization Agreement.
5.27 Material Contract Defaults. Neither FSB nor any FSB
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 FSB or any
FSB 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, 1990, FSB and each FSB
Subsidiary have filed all reports and statements, together with any amendments
required to be made with respect thereto, that it was required to file with (i)
the TDFI; (ii) the Federal Reserve, (iii) the SEC, including, but not limited
to, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Reports on
Forms 2900 and FFIEC 034 and proxy statements; and (iv) any other applicable
federal or state securities or banking authorities (except, in the case of
federal or state securities authorities, filings that are not material). As of
their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all of the requirements of their respective forms and all of the
statutes, rules, and regulations enforced or promulgated by the Regulatory
Authority with which they were filed. All such reports were true and complete
in all material respects and did not contain any untrue statement of a
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 48
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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. FSB has previously provided to UPC true
and correct copies of all such reports filed by FSB or any FSB Subsidiary after
January 1, 1990.
5.29 Exchange Act Filings. The outstanding shares of FSB
Common Stock are not registered with the SEC and are exempt from such
registration pursuant to the 1934 Act.
5.30 Statements True and Correct. None of the information
prepared by, or on behalf of, FSB or any FSB Subsidiary regarding FSB, any FSB
Subsidiary or any Subsidiary of a FSB Subsidiary included or to be included in
the Proxy Statement to be mailed to FSB'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 FSB,
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 FSB or any FSB
Subsidiary is responsible for filing with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby will comply
as to form in all material respects with the provisions of applicable law,
including applicable provisions of the Securities Laws and the rules and
regulations issued thereunder.
ARTICLE 6
COVENANTS OF UPC
6.1 Regulatory Approvals. Within a reasonable time after
execution of this Reorganization Agreement, UPC shall file any and all
applications with the appropriate government Regulatory Authorities in order to
obtain the Government Approvals and shall take such other actions as may be
reasonably required to consummate the transactions contemplated in this
Reorganization Agreement and the Plan of Merger with reasonable promptness.
UPC shall pay all fees and expenses arising in
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 49
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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 Series E Preferred Stock and UPC
Common Stock under the Securities Laws. UPC shall cooperate with FSB in the
preparation of the FSB 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 Series E Preferred Stock and the reservation for issuance
of shares of 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 Series E Preferred Stock which may be delivered to the FSB 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 NASDAQ/NMS the UPC Series E Stock. UPC shall also list
for trading on the NYSE the UPC Common Stock. Such registration, qualification
and listing shall be effected prior to the Closing.
6.3 Employee Benefits. Following the consummation of the
transactions contemplated herein, UPC shall not be obligated to make further
contributions to any of the Employee Plans or Benefit Arrangements of FSB or
the FSB Subsidiaries and all employees of FSB and the FSB Subsidiaries
immediately prior to the Effective Time of the Merger who shall continue as
employees of FSB 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 FSB or with any FSB
Subsidiary prior to the Effective Time of the Merger by such former FSB Company
employees will be deemed service with UPC for purposes of determining
eligibility for participation and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 50
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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 FSB and FSB's Subsidiaries in the employee benefit plans
maintained by UPC or UPC's Subsidiaries; provided, however, during any such
postponement period, The FSB Employee Plans and all related employee benefit
plans shall continue in full force and effect, except as expressly modified or
amended by the terms of this Reorganization Agreement, or until such time as
the plans are replaced by benefit plans maintained by UPC.
ARTICLE 7
COVENANTS OF FSB COMPANIES
7.1 Proxy Statement; FSB Shareholder Approval. FSB shall
call the Shareholders Meeting to be held as soon as reasonably practicable
after the date of this Reorganization Agreement and shall use its best efforts
to ensure that such meeting is held not later than June 30, 1995, 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) FSB shall, with UPC's assistance, prepare a
Proxy Statement to be filed with the SEC as part of UPC's registration
statement and with any other appropriate Regulatory Authority; shall mail or
cause to be mailed such Proxy Statement to the FSB 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 FSB 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 FSB shall recommend (subject
to compliance with their legal and fiduciary duties as advised by counsel) to
FSB Shareholders the approval of this Reorganization Agreement and the Plan of
Merger; and (iv) FSB shall use its best efforts, subject to compliance with its
legal and fiduciary duty as advised by counsel, to obtain such FSB
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) FSB and each FSB Subsidiary shall, and shall
cause each FSB Subsidiary to:
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(i) Operate its business only in the usual,
regular, and ordinary course;
(ii) Preserve intact its business
organizations and assets and to maintain its rights and franchises;
(iii) Take no action, unless otherwise
required by law, rules or regulation, that would (A) adversely affect
the ability of any of them or UPC to obtain any necessary approvals of
Regulatory Authorities required to consummate the transactions
contemplated by this Reorganization Agreement, or (B) adversely affect
the ability of such Party to perform its covenants and agreements
under this Reorganization Agreement;
(iv) Except as they may terminate in
accordance with their terms, keep in full force and effect, and not
default in any of their obligations under, all material contracts;
(v) Keep in full force and effect insurance
coverage with responsible insurance carriers which is reasonably
adequate in coverage and amount for companies the size of FSB or such
FSB Subsidiary and for the businesses and properties owned by each and
in which each is engaged, to the extent that such insurance is
reasonably available;
(vi) Use its best efforts to retain any FSB
Subsidiary's present customer base and to facilitate the retention of
such customers by any FSB Subsidiary and its branches after the
Effective Time of the Merger; and
(vii) Maintain, renew, keep in full force
and effect, and preserve its business organization and material rights
and franchises, permits and licenses, and to use its best efforts to
maintain positive relations with its present employees so that such
employees will continue to perform effectively and will be available
to FSB, any FSB Subsidiary or UPC and UPC's Subsidiaries at and after
the Effective Time of the Merger, and to use its best efforts to
maintain its existing, or substantially equivalent, credit
arrangements with banks and other financial institutions and to assure
the continuance of any FSB Subsidiary's customer relationships;
(b) FSB and each FSB Subsidiary agree to use their
best efforts to assist UPC in obtaining the Government Approvals necessary to
complete the transactions contemplated
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 52
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hereby and do not know of any reason that such Government Approvals can not be
obtained, and FSB and each FSB Subsidiary shall provide to UPC or to the
appropriate governmental authorities all information reasonably required to be
submitted in connection with obtaining such approvals;
(c) FSB and each FSB Subsidiary, at their own cost
and expense, shall use their best efforts to secure all necessary consents and
all consents and releases, if any, required of FSB, any FSB Subsidiary or third
parties and shall comply with all applicable laws, regulations and rulings in
connection with this Reorganization Agreement and the consummation of the
transactions contemplated hereby;
(d) At all times to and including, and as of, the
Closing, FSB and each FSB Subsidiary shall inform UPC in writing of any and all
facts necessary to amend or supplement the representations and warranties made
herein and the Schedules attached hereto as necessary so that the information
contained herein and therein will accurately reflect the current status of FSB
and any FSB Subsidiary; provided, however, that any such updates to Schedules
shall be required prior to the Closing only with respect to matters which
represent material changes to the Schedules and the information contained
therein; and provided further, that before such amendment, supplement or update
may be deemed to be a part of this Reorganization Agreement, UPC shall have
agreed in writing to each amendment, supplement or update to the Schedules made
subsequent to the date of this Reorganization Agreement as an amendment to this
Reorganization Agreement;
(e) On and after the Closing Date, FSB and each FSB
Subsidiary shall give such further assistance to UPC and shall execute,
acknowledge and deliver all such documents and instruments as UPC may
reasonably request and take such further action as may be necessary or
appropriate effectively to consummate the transactions contemplated by this
Reorganization Agreement;
(f) Between the date of this Reorganization
Agreement and the Closing Date, FSB and each FSB Subsidiary shall afford UPC
and its authorized agents and representatives reasonable access during normal
business hours to the properties, operations, books, records, contracts,
documents, loan files and other information of, or relating to FSB and any FSB
Subsidiary. FSB and each FSB Subsidiary shall provide reasonable assistance to
UPC in its investigation of matters relating to FSB and any FSB Subsidiary; and
(g) Subject to the terms and conditions of this
Reorganization Agreement, FSB and each FSB Subsidiary agree to
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 53
<PAGE> 147
use all reasonable efforts and to take, or to cause to be taken, all actions,
and to do, or to cause to be done, all things necessary, proper, or advisable
under applicable laws and regulations to consummate and make effective, with
reasonable promptness after the date of this Reorganization Agreement, the
transactions contemplated by this Reorganization Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining or other order adversely affecting the ability of the Parties to
consummate the transaction contemplated by this Reorganization Agreement. FSB
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, FSB and each
FSB Subsidiary covenant and agree that they will neither do, nor agree or
commit to do, nor permit any FSB Subsidiary to do or commit or agree to do, any
of the following without the prior written consent of the chief executive
officer, president, or chief financial officer of UPC, which consent will not
be unreasonably withheld:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Plan of Merger, amend its Charter or Bylaws; or
(b) Impose, or suffer the imposition, on any share
of capital stock held by it or by any of its Subsidiaries of any lien, charge,
or encumbrance, or permit any such lien, charge, or encumbrance to exist; or
(c) (i) Repurchase, redeem, or otherwise acquire or
exchange, directly or indirectly, any shares of its capital stock or other
equity securities or any securities or instruments convertible into any shares
of its capital stock, or any rights or options to acquire any shares of its
capital stock or other equity securities except as expressly permitted by this
Reorganization Agreement or the Plan of Merger; or (ii) split or otherwise
subdivide its capital stock; or (iii) recapitalize in any way; or (iv) declare
a stock dividend on the FSB Common Stock; or (v) pay or declare any cash
dividends or make or declare any other type of distribution on the FSB Common
Stock except as expressly permitted in Section 8.2(i) of this Reorganization
Agreement or the Plan of Merger; or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 54
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(d) Except as expressly permitted by this
Reorganization Agreement, acquire direct or indirect control over any
corporation, association, firm, organization or other entity, other than in
connection with (i) mergers, acquisitions, or other transactions approved in
writing by UPC, (ii) internal reorganizations or consolidations involving
existing Subsidiaries, (iii) foreclosures in the ordinary course of business
and not knowingly exposing it to liability by reason of Hazardous Substances,
(iv) acquisitions of control in its fiduciary capacity, or (v) the creation of
new subsidiaries organized to conduct or continue activities otherwise
permitted by this Reorganization Agreement; or
(e) Except as expressly permitted by this
Reorganization Agreement or the Plan of Merger, to (i) issue, sell, agree to
sell, or otherwise dispose of or otherwise permit to become outstanding any
additional shares of FSB Common Stock, or any other capital stock of FSB or of
any FSB Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are directly sold or otherwise directly transferred to FSB or any FSB
Subsidiary, or (ii) sell, agree to sell, or otherwise dispose of any
substantial part of the assets or earning power of FSB or of any FSB
Subsidiary; or (iii) sell, agree to sell, or otherwise dispose of any asset of
FSB or any FSB 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 FSB 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 FSB or any FSB
Subsidiary to any FSB Subsidiary in excess of an aggregate of $50,000 (for FSB
and its Subsidiaries on a consolidated basis) except in the ordinary course of
the business of FSB or such FSB Subsidiary consistent with past practices (and
such ordinary course of business shall include, but shall not be limited to,
creation of deposit liabilities, entry into repurchase agreements or reverse
repurchase agreements, purchases or sales of federal funds, Federal Reserve
advances, and sales of certificates of deposit); or
(g) Grant any increase in compensation or benefits
to any of its employees or officers, except in accordance with past practices
or as required by law; pay any
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 55
<PAGE> 149
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
FSB or of any FSB 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 FSB or
any FSB Subsidiary (or their respective successors) do not have the
unconditional right to terminate without liability (other than liability for
services already rendered), at any time on or after the Effective Time of the
Merger; or
(i) Adopt any new employee benefit plan or terminate
or make any material change in or to any existing employee benefit plan other
than any change that is required by law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax-qualified status of any such plan;
or
(j) Enter into any new service contracts, purchase
or sale agreements or lease agreements that are material to FSB or any FSB
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 FSB
Common Stock, or to any corporation, partnership, trust or other entity
controlled by any such person, if such extension of credit, together with all
other credits then outstanding to the same borrower and all affiliated persons
of such borrower, would exceed $300,000, or amend the terms of any such credit
outstanding on the date hereof.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 56
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ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of FSB. Unless waived
in writing by FSB, the obligation of FSB to consummate the transaction
contemplated by this Reorganization Agreement is subject to the satisfaction at
or prior to the Closing Date of the following conditions:
(a) Performance. Each of the material acts and
undertakings of UPC and INTERIM to be performed at or prior to the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The
representations and warranties of UPC and INTERIM contained in Article 4 of
this Reorganization Agreement shall be true and complete, in all material
respects, on and as of the Effective Time of the Merger with the same effect as
though made on and as of the Effective Time of the Merger;
(c) Documents. In addition to the other
deliveries of UPC or INTERIM described elsewhere in this Reorganization
Agreement, FSB shall have received the following documents and instruments:
(i) a certificate signed by the Secretary
or an assistant secretary of UPC and INTERIM dated as of the Closing
Date certifying that:
(A) UPC's and INTERIM's respective
Boards of Directors have duly adopted resolutions (copies
of which shall be attached to such certificate) approving
the substantive terms of this Reorganization Agreement
(including the Plan of Merger) and authorizing the
consummation of the transactions contemplated by this
Reorganization Agreement and certifying that such
resolutions have not been amended or modified and remain in
full force and effect;
(B) each person executing this
Reorganization Agreement on behalf of UPC or INTERIM is an
officer of UPC or INTERIM, as the case may be, holding the
office or offices specified therein, with full power and
authority to execute this Reorganization Agreement and any
and all other documents in connection with the Merger, and
that the signature of each person set forth on such
certificate is his or her genuine signature;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 57
<PAGE> 151
(C) the charter documents of UPC
and INTERIM attached to such certificate remain in full
force and effect; and
(D) UPC and INTERIM are in good
standing under their respective corporate charters; and
(ii) a certificate signed respectively by
duly authorized officers of UPC and INTERIM stating that the
conditions set forth in Section 8.1(a) and Section 8.1(b) of this
Reorganization Agreement have been fulfilled;
(d) Consideration. FSB shall have received a
certificate executed by an authorized officer of the Exchange Agent to the
effect that the Exchange Agent has received and holds in its possession proper
authorization to issue certificates evidencing shares of UPC Series E Preferred
Stock and cash or other good funds sufficient to meet the obligations of UPC to
the FSB Record Holders to deliver the Consideration under this Reorganization
Agreement and the Plan of Merger; and
(e) Opinion of UPC's and INTERIM's Counsel. FSB
shall have been furnished with an opinion of counsel to UPC and INTERIM, dated
as of the Closing Date, addressed to and in form and substance satisfactory to
FSB, to the effect that:
(i) UPC is a Tennessee corporation duly
organized, validly existing, and in good standing under the laws of
the State of Tennessee; and INTERIM is a Tennessee corporation duly
organized, validly existing, and in good standing under the laws of
the State of Tennessee;
(ii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by UPC, and
INTERIM and (assuming this Reorganization Agreement is a binding
obligation of FSB and FEB) constitutes a valid and binding obligation
of UPC and INTERIM enforceable in accordance with its terms, subject
as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and to the application of equitable
principles and judicial discretion;
(iii) neither the execution and delivery
by UPC or INTERIM of this Reorganization Agreement nor any of the
documents to be executed and delivered by UPC or INTERIM in connection
herewith violates or conflicts with UPC's, or INTERIM's corporate
charters or bylaws or, to the best of the knowledge, information and
belief (without making
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 58
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special inquiry) of such counsel, any material contracts, agreements
or other commitments of UPC or INTERIM; and
(iv) to the knowledge of such counsel
after due inquiry, no consent or approval by any Governmental
Authority which has not already been obtained is required for
execution and delivery by UPC and INTERIM of this Reorganization
Agreement or any of the documents to be executed and delivered by UPC
or INTERIM in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of UPC or INTERIM or appropriate government
officials; (ii) in the case of matters of law governed by the laws of the
states in which they are not licensed, reasonably rely upon the opinions of
legal counsel duly licensed in such states and may be limited, in any event, to
Federal Law and the State of Tennessee; and (iii) incorporate, be guided by,
and be interpreted in accordance with, the Legal Opinion Accord of the ABA
Section of Business Law (1991).
8.2 Conditions to the Obligations of UPC and INTERIM.
Unless waived in writing by UPC and INTERIM, the obligation of UPC and INTERIM
to consummate the transactions contemplated by this Reorganization Agreement is
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) Performance. Each of the material acts and
undertakings of FSB and any FSB Subsidiary to be performed at or before the
Closing Date pursuant to this Reorganization Agreement shall have been duly
performed;
(b) Representations and Warranties. The
representations and warranties of FSB and any FSB Subsidiary contained in
Article 5 of this Reorganization Agreement shall be true and correct, in all
material respects, on and as of the Closing Date with the same effect as though
made on and as of the Closing Date;
(c) Documents. In addition to the documents
described elsewhere in this Reorganization Agreement, UPC shall have received
the following documents and instruments:
(i) a certificate signed by the
Secretary or an assistant secretary of FSB and FEB dated as of the
Closing Date certifying that:
(A) FSB's and each such FSB
Subsidiary'S respective Boards of Directors and
shareholders have duly adopted resolutions (copies of
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 59
<PAGE> 153
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 FSB or a FSB
Subsidiary, is an officer of FSB or such FSB Subsidiary, as
the case may be, holding the office or offices specified
therein, with full power and authority to execute this
Reorganization Agreement and any and all other documents in
connection with the Merger, and that the signature of each
person set forth on such certificate is his or her genuine
signature;
(C) the charter documents of FSB
and each FSB Subsidiary attached to such certificate remain
in full force and effect; and
(D) FSB and all FSB Subsidiaries
are in good standing under their respective corporate
charters; and
(ii) a certificate signed by the
respective President, Chief Executive Officer or an Executive Vice
President of each of FSB and each FSB Subsidiary stating that the
conditions set forth in Section 8.2(a), Section 8.2(b) and 8.2(f) this
Reorganization Agreement have been satisfied;
(d) Destruction of Property. Between the date of
this Reorganization Agreement and the Closing Date, there shall have been no
damage to or destruction of real property, improvements or personal property of
FSB or any FSB Subsidiary which materially reduces the market value of such
property, and no zoning or other order, limitation or restriction imposed
against the same that might have a material adverse impact upon the operations,
business or prospects of FSB or any FSB Subsidiary; provided, however, that the
availability of insurance coverage shall be taken into account in determining
whether there has been such a material adverse impact or material reduction in
market value. In the event of such damage, destruction, order, limitation or
restriction, UPC and INTERIM may elect either (i) to close the contemplated
transactions in accordance with the terms of this Reorganization Agreement or
(ii) to terminate this Reorganization Agreement without penalty;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 60
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(e) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, FSB and each FSB Subsidiary
shall have afforded UPC and its authorized agents and representatives
reasonable access during normal business hours to the properties, operations,
books, records, contracts, documents, loan files and other information of or
relating to FSB and each FSB Subsidiary. FSB and each FSB Subsidiary shall
have caused all FSB or any such FSB Subsidiary personnel to provide reasonable
assistance to UPC in its investigation of matters relating to FSB and any FSB
Subsidiary;
(f) No Material Adverse Change. No material
adverse change in the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), prospects, operations,
liquidity, income, or condition (financial or otherwise) of FSB or any FSB
Subsidiary taken as a whole shall have occurred since the date of this
Reorganization Agreement. In the event of such a material adverse change with
respect to FSB or any FSB Subsidiary, UPC may elect either (i) to close the
contemplated transactions in accordance with the terms of this Reorganization
Agreement or (ii) to terminate this Reorganization Agreement without penalty;
(g) Opinion of FSB's Counsel. UPC shall have
been furnished with an opinion of legal counsel to FSB and the FSB
Subsidiaries, dated the Closing Date, addressed to and in form and substance
satisfactory to UPC, to the effect that:
(i) FSB is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Tennessee;
(ii) each FSB Subsidiary is duly
organized, validly existing, and in good standing under the laws of
its jurisdiction of incorporation;
(iii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by FSB and
FEB and (assuming that this Reorganization Agreement is a binding
obligation of UPC and INTERIM and the Plan of Merger is a binding
obligation of UPC and INTERIM) constitutes a valid and binding
obligation of FSB and FEB, enforceable in accordance with its terms,
subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and to the application of equitable
principles and judicial discretion; and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 61
<PAGE> 155
(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 FSB or any FSB Subsidiary of this Reorganization Agreement
or any of the documents to be executed and delivered by FSB and any
FSB Subsidiary in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of FSB or any FSB Subsidiary or appropriate
government officials; (ii) in the case of matters of law governed by the laws
of the states in which they are not licensed, reasonably rely upon the opinions
of legal counsel duly licensed in such states and may be limited, in any event,
to Federal Law and the State of Tennessee; and (iii) incorporate, be guided by,
and be interpreted in accordance with, the Legal Opinion Accord of the ABA
Section of Business Law (1991);
(h) Other Business Combinations, Etc. Neither FSB
nor any FSB Subsidiary shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which FSB or any FSB Subsidiary
would merge; consolidate with; effect a business combination with; sell any
substantial part of FSB's or any FSB Subsidiary's assets; acquire a significant
part of the shares or assets of any other Person or entity (financial or
otherwise); adopt any "poison pill" or other type of anti- takeover
arrangement, any shareholder rights provision, any "golden parachute" or
similar program which would have the effect of materially decreasing the value
of FSB or any FSB Subsidiary or the benefits of acquiring the FSB Common Stock;
(i) Maintenance of Certain Covenants, Etc. At
the time of Closing (i) the total assets of FSB shall be not less than
$109,776,000; (ii) the equity capital of FSB and FEB shall have been not less
than $7,844,000 as of December 31, 1994, and shall have increased since that
time through normal earnings growth; (iii) the tangible equity capital of FSB
and FEB shall be not less than its stated level as of December 31, 1994, and
shall have increased since that time through normal earnings growth; (iv)
neither FSB nor any FSB Subsidiary shall have issued or repurchased from the
date hereof any additional equity or debt securities, or any rights to purchase
or repurchase such securities, except as set forth in this Agreement
(therefore, there shall be not more than 343,499.7 shares of FSB Common Stock
validly issued and outstanding at the Effective Time of the Merger); (v) from
December 31, 1994, there shall have been no extraordinary sale of assets, nor
any investment portfolio restructuring by either FSB or any FSB Subsidiary;
(vi) neither FSB nor any FSB Subsidiary shall have issued or granted since
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 62
<PAGE> 156
December 31, 1994, through the Closing Date any FSB Stock Options; (vii) from
the date hereof, except as permitted in Section 7.3(c)(v) of this
Reorganization Agreement, FSB shall not have declared or paid any cash
dividends prior to Closing; provided, however, in the event the Closing should
not have occurred by June 30, 1995, FSB shall be permitted to declare and pay a
cash dividend on shares of the FSB Common Stock for the period from June 30,
1995 to the Closing Date at a dividend rate calculated as if the FSB Record
Holders had held shares of UPC Series Preferred Stock as of June 30, 1995,
unless such dividend is accrued on the shares of UPC Series E Stock to be
issued to the FSB Record Holders at Closing; and (viii) the Merger can be
accounted for as a tax- free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended. The criteria and calculations set forth
above shall be determined in accordance with GAAP assuming that FSB and each
FSB Subsidiary shall have been operated consistently in the normal course of
their business; provided, however, that the effects of any balance sheet
expansion through abnormal, unusual, nonrecurring or out of the ordinary
borrowings or by the realization of extraordinary or nonrecurring gains or
other income from the disposition of assets or liabilities or through similar
transactions shall be eliminated from the calculations;
(j) Non-Compete Agreements. Each member of the Board of
Directors of FSB (other than members of the FSB Board of Directors who also
serve as Officers of FSB) shall have entered into a non-compete agreement with
UPC and FSB substantially in the form of UPC's standard form of non-compete
agreement, a copy which is annexed hereto as Exhibit 8.2(j), providing for a
term of three (3) years from Closing and covering the Counties in Tennessee in
which FSB and FEB operate; and such Board Member shall not be involved in any
way with the formation or organization of a new financial institution in such
counties;
(k) Tax Opinion. UPC shall have received a written
opinion from counsel to the effect that the transactions contemplated by this
Reorganization Agreement and the Plan of Merger will constitute one or more
tax-free reorganizations under Section 368 of the Internal Revenue Code and
that the FSB Record Holders will not recognize any gain or loss to the extent
that such FSB Record Holders exchange shares of FSB Common Stock for shares of
UPC Series E Preferred Stock as contemplated by this Reorganization Agreement
and the Plan of Merger assuming that the shares of FSB Common Stock so
exchanged by such FSB Record Holders are held by them as capital assets at the
time of such exchange; or
(l) Receipt of Affiliate Letters. Pursuant to the
provisions of Section 6.2 of this Reorganization Agreement, UPC
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 63
<PAGE> 157
shall have received a written commitment in form and substance satisfactory to
UPC and its counsel (an "Affiliate Letter") from each FSB Record Holder who
would be deemed an Affiliate of FSB at the time of Closing under the Securities
Laws and who accepts shares of UPC Series E Preferred Stock as Consideration
for the cancellation, exchange and conversion of his shares of FSB Common Stock
pursuant to the terms and conditions of this Reorganization Agreement,
committing to UPC that such FSB Record Holder shall not pledge, assign, sell,
transfer, devise, otherwise alienate or take any action which would eliminate
or diminish the risk of owning or holding the shares of UPC Series E Preferred
Stock to be received by such FSB Record Holder upon consummation of the Merger,
nor enter into any formal or informal agreement to pledge, assign, sell or
transfer, devise, or otherwise alienate his right, title and interests in any
of the shares of UPC Series E Preferred Stock to be delivered by UPC to such
FSB Record Holder pursuant to the terms and conditions of this Reorganization
Agreement except in accordance with the Securities Laws and consistent with
recording the Merger as a tax-free reorganization.
8.3 Conditions to Obligations of All Parties. The
obligation of each party to effect the transactions contemplated hereby shall
be subject to the fulfillment, at or prior to the Closing, of the following
conditions:
(a) No Pending or Threatened Claims. That no
claim, action, suit, investigation or other proceeding shall be pending or
threatened before any court or governmental agency which presents a substantial
risk of the restraint or prohibition of the transactions contemplated by this
Reorganization Agreement or the obtaining of material damages or other relief
in connection therewith; and
(b) Governmental Approvals and Acquiescence
Obtained. The Parties hereto shall have received all applicable Governmental
Approvals for the consummation of the transactions contemplated herein and all
waiting periods incidental to such approvals or notices given shall have
expired.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 64
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ARTICLE 9
TERMINATION
9.1 Termination. This Reorganization Agreement and the
Plan of Merger may be terminated at any time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By UPC or INTERIM, should FSB or any FSB
Subsidiary fail to conduct its business pursuant to FSB's and such FSB
Subsidiary's Covenants made in Article 7;
(c) By UPC, INTERIM or FSB in the event the
Closing shall not have occurred by July 31, 1995 (the "Target Date"), unless
the failure of the Closing to occur shall be due to the failure of the Party
seeking to terminate this Agreement to perform its obligations hereunder in a
timely manner. If UPC shall have filed any and all applications to obtain the
requisite Government Approvals within thirty (30) days of the date hereof, and
if the Closing shall not have occurred solely because of a delay caused by a
government regulatory agency or authority in its review of the application
before it, then FSB and any FSB Subsidiary that is a party to this
Reorganization Agreement shall, upon UPC's written request, extend the Closing
Date until such time as all Government Approvals have been obtained and any
stipulated waiting periods have expired; provided, however, the Closing Date
shall not be extended under the provisions of this Section 9.1(c) beyond
December 31, 1995;
(d) By either UPC, INTERIM or FSB, upon written
notice to the other Party, upon denial of any Governmental Approval necessary
for the consummation of the Merger (or should such approval be conditioned upon
a substantial deviation from the transactions contemplated); provided, however,
that either UPC or FSB may, upon written notice to the other, extend the term
of this Reorganization Agreement for only one sixty (60) day period to
prosecute diligently and overturn such denial, provided that such denial has
been appealed within ten (10) business days of the receipt thereof;
(e) By UPC or INTERIM in the event the conditions
set forth in Sections 8.2 or 8.3 are not satisfied in all material respects as
of the Closing Date, or by FSB 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;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 65
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(f) By UPC or INTERIM in the event that there
shall have been, in UPC's good faith opinion, a material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), prospects, operations, liquidity,
income, condition (financial or otherwise) or net worth of FSB or any FSB
Subsidiary taken as a whole, or upon the occurrence of any event or
circumstance which may have the effect of limiting or restricting UPC's voting
power or other rights normally enjoyed by the registered holders of the FSB
Common Stock which are the subject of the instant transaction;
(g) By UPC, INTERIM or FSB in the event that
there shall have been a material breach of any obligation of the other Party
hereunder and such breach shall not have been remedied within thirty (30) days
after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied;
(h) By UPC or INTERIM should FSB or any FSB
Subsidiary enter into any letter of intent or agreement with a view to being
acquired by or effecting a business combination with any other Person; or any
agreement to merge, to consolidate, to combine or to sell a material portion of
its assets or to be acquired in any other manner by any other Person or to
acquire a material amount of assets or a material equity position in any other
Person, whether financial or otherwise;
(i) By UPC or INTERIM should FSB or any FSB
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 FSB or any FSB Subsidiary to raise additional
capital or to sell a substantial portion of its assets;
(j) By either Party, within thirty (30) days from
the date of this Reorganization Agreement, in the event such Party, based on
the Party's opportunity to conduct a preliminary due diligence review of the
books, records and operations of the other Party as provided for in Section 2.3
of this Reorganization Agreement, in good faith determines in it sole
discretion that the results of the review conducted by such Party or its agents
do not support and reinforce the reviewing Party's preliminary expectations as
to the sustained growth and earnings prospects of the reviewed Party;
(k) By FSB in the event that there shall have
been, in FSB's good faith opinion, a material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise),
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 66
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prospects, operations, liquidity, income, condition (financial or otherwise) or
net worth of UPC; or
(l) By FSB in the event that UPC shall have
entered into any letter of intent, agreement or understanding for a change in
control of UPC by a third-party with a banking presence in Obion County,
Tennessee.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or (l) of this
Section 9.1, it shall give notice to the other Party, in writing, of its
election in the manner prescribed in Section 10.1 ("Notices") of this
Reorganization Agreement.
9.2 Effect of Termination. In the event that this
Reorganization Agreement should be terminated pursuant to Section 9.1 hereof,
all further obligations of the Parties under this Reorganization Agreement
shall terminate without further liability of any Party to another; provided,
however, that a termination under Section 9.1 hereof shall not relieve any
Party of any liability for a breach of this Reorganization Agreement or for any
misstatement or misrepresentation made hereunder prior to such termination, or
be deemed to constitute a waiver of any available remedy for any such breach,
misstatement or misrepresentation.
ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. Any notice, request, demand and other
communication which either Party hereto may desire or may be required hereunder
to give shall be in writing and shall be deemed to be duly given if delivered
personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
If to UPC or INTERIM:
Union Planters Corporation
Post Office Box 387 (mailing)
Memphis, Tennessee 38147
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 67
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7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Fax: (901) 383-2877
Attn: Mr. Jackson W. Moore, President
Gary A. Simanson,
Associate General Counsel
If to FSB: First State Bancorporation Inc.
213 Church Avenue North
Dyersburg, Tennessee 38025
Fax: (901) 287-0772
Attn: Mr. Percy E. Smith
Chairman and Chief Executive Officer
With a copy to: Baker, Donelson, Bearman & Caldwell
511 Union Street, Suite 1700
Post Office Box 190613
Nashville, Tennessee 37219
Fax: (615) 726-0464
Attn: Steven J. Eisen, Esq.
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the
date reflected in the proof or evidence of delivery, or if none, on the date
actually received.
10.2 Assignability and Parties in Interest. This
Reorganization Agreement shall not be assignable by any of the Parties hereto;
provided, however, that UPC may assign, set over and transfer all, or any part
of its rights and obligations under this Reorganization Agreement to any one or
more of its present or future Affiliates. This Reorganization Agreement shall
inure to the benefit of, and be binding only upon the Parties hereto and their
respective successors and permitted assigns and no other Persons.
10.3 Governing Law. This Reorganization Agreement shall
be governed by, and construed and enforced in accordance with, the internal
laws, and not the laws pertaining to choice or conflicts of laws, of the State
of Tennessee, unless and to the extent that federal law controls. Any dispute
arising between the Parties in connection with the transactions which are the
subject of this Reorganization Agreement shall be heard in a court of competent
jurisdiction located in Tennessee.
10.4 Counterparts. This Reorganization Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute but one and the same
instrument.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 68
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10.5 Best Efforts. FSB, each FSB Subsidiary, UPC and
INTERIM each agrees to use its best efforts to complete the transactions
contemplated by this Reorganization Agreement; provided, however, that the use
of best efforts by UPC shall not obligate UPC or INTERIM to obtain or to
provide FSB or any FSB Subsidiary additional capital in an amount, to divest
any Subsidiary or branch, or to meet any other condition which may be imposed
by any Regulatory Authority as a condition to approval which UPC or INTERIM
shall deem, in good faith, to be unreasonable in the circumstances.
10.6 Publicity. The Parties agree that press releases
and other public announcements to be made by any of them with respect to the
transactions contemplated hereby shall be subject to mutual agreement.
Notwithstanding the foregoing, each of the Parties hereto may respond to
inquiries relating to this Reorganization Agreement and the transactions
contemplated hereby by the press, employees or customers without any notice or
further consent of the other Parties.
10.7 Entire Agreement. This Reorganization Agreement,
together with the Plan of Merger which is Exhibit A hereto, the Schedules,
Annexes, Exhibits and certificates required to be delivered hereunder and any
amendments or addenda hereafter executed and delivered in accordance with
Section 10.9 hereof constitute the entire agreement of the Parties hereto
pertaining to the transaction contemplated hereby and supersede all prior
written and oral (and all contemporaneous oral) agreements and understandings
of the Parties hereto concerning the subject matter hereof. The Schedules,
Annexes, Exhibits and certificates attached hereto or furnished pursuant to
this Reorganization Agreement are hereby incorporated as integral parts of this
Reorganization Agreement. Except as provided herein, by specific language and
not by mere implication, this Reorganization Agreement is not intended to
confer upon any other person not a Party to this Reorganization Agreement any
rights or remedies hereunder.
10.8 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any
way the validity or enforceability of the remaining portions or 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 69
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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 FSB shall each pay its own fees and expenses (including, without
limitation, legal fees and expenses) incurred by it in connection with the
transactions contemplated hereunder.
10.12 Finders and Brokers. UPC, INTERIM, FSB and each FSB
Subsidiary represent and warrant to each other that they have employed no
broker or finder in connection with the transactions described in this
Reorganization Agreement under an arrangement pursuant to which a fee is, or
may be due to such broker or finder as a result of the execution of this
Reorganization Agreement or the closing of the transactions contemplated
herein. This section shall survive the termination of this Reorganization
Agreement.
10.13 Equitable Remedies. The Parties hereto agree that,
in the event of a breach of this Reorganization Agreement by FSB or any FSB
Subsidiary, UPC and INTERIM will be without an adequate remedy at law by reason
of the unique nature of FSB and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 70
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each FSB Subsidiary. In recognition thereof, in addition to (and not in lieu
of) any remedies at law which may be available to UPC and INTERIM, UPC, and
INTERIM shall be entitled to obtain equitable relief, including the remedies of
specific performance and injunction, in the event of a breach of this
Reorganization Agreement by FSB or any FSB Subsidiary, and no attempt on the
part of UPC or INTERIM to obtain such equitable relief shall be deemed to
constitute an election of remedies by UPC or INTERIM which would preclude UPC
or INTERIM from obtaining any remedies at law to which it would otherwise be
entitled. FSB and each FSB Subsidiary covenant that they shall not contend in
any such proceeding that UPC or INTERIM is not entitled to a decree of specific
performance by reason of having an adequate remedy at law.
10.14 Attorneys' Fees. If any Party hereto shall bring an
action at law or in equity to enforce its rights under this Reorganization
Agreement (including an action based upon a misrepresentation or the breach of
any warranty, covenant, agreement or obligation contained herein), the
prevailing Party in such action shall be entitled to recover from the other
Party its reasonable costs and expenses necessarily incurred in connection with
such action (including fees, disbursements and expenses of attorneys and costs
of investigation).
10.15 Survival of Representations and Warranties. All
representations and warranties made by the Parties hereto or in any instrument
or document furnished in connection herewith, shall survive the Closing and any
investigation at any time made by or on behalf of the Parties hereto and shall
expire two (2) years after the Effective Time of the Merger except as to any
matter which is based upon willful fraud with respect to which the
representations and warranties set forth in this Reorganization Agreement shall
expire only upon expiration of the applicable statutes of limitation. Nothing
in this Section 10.15 shall limit FSB's, any FSB Subsidiary's, UPC's or
INTERIM's rights or remedies for misrepresentations, breaches of this
Reorganization Agreement or any other improper action or inaction by the other
Party hereto prior to the its termination.
10.16 No Waiver. No failure, delay or omission of or by
any Party in exercising any right, power or remedy upon any breach or default
of any other Party shall impair any such rights, powers or remedies of the
Party not in breach or default, nor shall it be construed to be a waiver of any
such right, power or remedy, or an acquiescence in any similar breach or
default; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Party of any provisions of this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 71
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Reorganization Agreement must be in writing and must be executed by the Parties
to this Reorganization Agreement and shall be effective only to the extent
specifically set forth in such writing.
10.17 Remedies Cumulative. All remedies provided in this
Reorganization Agreement, by law or otherwise, shall be cumulative and not
alternative.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 72
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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.
FIRST STATE BANCORPORATION, INC.
By:
-------------------------------
Percy E. Smith
Its: Chairman and Chief
Executive Officer
ATTEST:
- ------------------------------
Mack M. Forrester, Secretary
FIRST EXCHANGE BANK
By:
-------------------------------
Percy E. Smith
Its: Chairman and Chief
Executive Officer
ATTEST:
- ------------------------------
Mack M. Forrester, Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 73
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UNION PLANTERS CORPORATION
By:
---------------------------
Jackson W. Moore
Its: President
ATTEST:
- ------------------------------
E. James House, Secretary
FSB ACQUISITION COMPANY, INC.
By:
---------------------------
Jackson W. Moore
Its: President
ATTEST:
- ------------------------------
E. James House, Secretary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 74
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PLAN OF MERGER EXHIBIT A
REVISED TO REFLECT LETTER AGREEMENT DATED APRIL 4, 1995
SETTING FORTH THE PLAN OF MERGER
OF
FIRST STATE BANCORPORATION, INC.
(A TENNESSEE CORPORATION)
WITH AND INTO
FSB ACQUISITION COMPANY, INC.
(A TENNESSEE CORPORATION)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the 24th day of February, 1995, by and between FIRST STATE BANCORPORATION, INC.
("FSB"), a corporation chartered and existing under the laws of the State of
Tennessee which is a registered bank holding company and whose principal
offices are located at 221 Church Street, Tiptonville, Lake County, Tennessee
38079; UNION PLANTERS CORPORATION ("UPC"), a corporation organized and existing
under the laws of the State of Tennessee having its principal office at 7130
Goodlett Farms Parkway, Memphis, Shelby County, Tennessee 38018 and which is
registered as a bank holding company under the Bank Holding Company Act; and
FSB ACQUISITION COMPANY, INC. ("INTERIM"), a corporation chartered and existing
under the laws of the State of Tennessee, whose principal place of business is
located at 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee
38018, and which is a wholly-owned subsidiary of UPC. All of the authorized,
issued and outstanding shares of capital stock of INTERIM are owned and held of
record by UPC.
PREAMBLE
WHEREAS, UPC, INTERIM and FSB have entered into an Agreement and Plan
of Reorganization dated as of the 24th day of February, 1995 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as an integral part thereof, and which has been amended by Letter
Agreement dated April 4, 1995, providing for the merger of FSB with and into
INTERIM (which would be the Surviving Corporation) and the acquisition of all
of the FSB Common Stock outstanding immediately prior to the Effective Time of
the Merger by UPC for the Consideration set forth in the Reorganization
Agreement and this Plan of Merger; and
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WHEREAS, As provided in the Reorganization Agreement, UPC has caused
INTERIM to join in this Plan of Merger by executing and delivering same; and
WHEREAS, The Boards of Directors of UPC, INTERIM and FSB are each of
the opinion that the interests of their respective corporations and their
corporations' respective shareholders would best be served if FSB were to be
merged with and into INTERIM, which would survive the Merger, on the terms and
conditions provided in the Reorganization Agreement and in this Plan of Merger,
and as a result of such Merger becoming effective, the Surviving Corporation
would continue as a wholly-owned subsidiary of UPC.
NOW, THEREFORE, in consideration of the covenants and agreements of
the Parties contained herein, FSB, UPC and INTERIM hereby make, adopt and
approve this Plan of Merger in order to set forth the terms and conditions for
the merger of FSB with and into INTERIM (the "Merger").
ARTICLE I.
DEFINITIONS
1.1 As used in this Plan of Merger and in any amendments
hereto, all capitalized terms herein shall have the meanings assigned to such
terms in the Reorganization Agreement unless otherwise defined herein.
ARTICLE 2
CAPITALIZATION
2.1 FSB ACQUISITION COMPANY, INC.. The authorized capital
stock of INTERIM consists of 1,000 shares of common stock having a par value of
$1.00 per share (the "INTERIM Common Stock") and no shares of preferred stock.
As of the date of this Plan of Merger, 1,000 shares of INTERIM Common Stock are
issued and outstanding, and no shares of INTERIM Common Stock are held by it as
treasury stock. All such issued and outstanding shares of INTERIM Common Stock
are owned beneficially and of record by UPC.
2.2 FIRST STATE BANCORPORATION, INC. The authorized capital
stock of FSB consists of 1,000,000 shares of common stock having a par value of
$1.00 per share (the "FSB Common Stock"), and no shares of preferred stock (the
"FSB Preferred Stock). As of the date hereof, 343,499.7 shares of FSB Common
Stock were issued and outstanding, no shares of FSB Common Stock were held by
FSB as FSB Treasury Stock and no shares of FSB Preferred Stock were issued and
outstanding.
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ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent
corporation to the Merger is:
FSB ACQUISITION COMPANY, INC.
and
FIRST STATE BANCORPORATION, INC.
3.2 Surviving Corporation. The Surviving Corporation shall be:
FSB ACQUISITION COMPANY, INC.
which as of the Effective Time of the Merger shall continue to be named:
FSB ACQUISITION COMPANY, INC.
3.3 Terms and Conditions of Merger. The Merger shall be
consummated only pursuant to, and in accordance with this Plan of Merger and
the Reorganization Agreement. Conditioned upon the satisfaction or lawful
waiver (by the Party or Parties entitled to the benefit thereof) of all
conditions precedent to consummation of the Merger, the Merger will become
effective on the date and at the time (the "Effective Time of the Merger") of
the filing of a Articles of Merger with the Secretary of State of the State of
Tennessee, or at such later time and/or date as may be agreed upon by the
parties and set forth in the Articles of Merger. At the Effective Time of the
Merger, FSB shall be merged with and into INTERIM which will survive the
Merger, and the separate existence of FSB shall cease thereupon, and without
further action, INTERIM shall thereafter possess all of the assets, rights,
privileges, appointments, powers, licenses, permits and franchises of both FSB
and INTERIM, whether of a public or private nature, and shall be subject to all
of the liabilities, restrictions, disabilities, and duties of both FSB and
INTERIM.
3.4 Charter. At the Effective Time of the Merger, the Charter
of INTERIM , as in effect immediately prior to the Effective Time of the
Merger, shall constitute the Charter of INTERIM as the Surviving Corporation,
unless and until the same shall be amended as provided by law and the terms of
such Charter.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of
INTERIM, as in effect immediately prior to the Effective Time of the Merger,
shall continue to be its Bylaws as
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the Surviving Corporation, unless and until amended or repealed as provided by
law, its Charter and such Bylaws.
3.6 Directors and Officers. The directors and officers of
INTERIM in office immediately prior to the Effective Time of the Merger shall
be the directors and officers of the Surviving Corporation, to hold office as
provided in the Charter and Bylaws of the Surviving Corporation, unless and
until their successors shall have been elected or appointed and shall have
qualified or they shall be removed as provided therein.
3.7 Name. The name of INTERIM as the Surviving Corporation
following the Merger, shall remain:
FSB ACQUISITION COMPANY, INC.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 The INTERIM Common Stock. At the Effective Time of the
Merger, each share of $1.00 par value common stock of INTERIM (the
"INTERIM Common Stock") issued and outstanding immediately prior to the
Effective Time of The Merger shall continue as outstanding common stock of the
Surviving Corporation.
4.2 Conversion and Cancellation of Shares of FSB. At the
Effective Time of the Merger, each share of $10.00 par value common stock of
FSB issued and outstanding immediately prior to the Effective Time of the
Merger shall, by virtue of the Merger becoming effective and without any
further action on the part of anyone, be converted, exchanged and cancelled as
provided in Section 4.3 hereof.
4.3 Exchange of FSB Shares; Exchange Ratio. At the Effective
Time of the Merger, the outstanding shares of FSB Common Stock held by the FSB
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 FSB and shall, except for those
shares held by any FSB Record Holder having properly perfected such holder's
dissenters' rights and maintained the perfected status of such dissenters'
rights through the Effective Time of the Merger, automatically be converted
exclusively into, and constitute only the right of the FSB Record Holders to
receive in exchange for their shares of FSB Common Stock, whole
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shares of UPC Series E Preferred Stock and a cash payment in settlement of any
remaining fractional share of UPC Series E Preferred Stock in accordance with
the terms and conditions of this Section 4.3. The shares of UPC Series E
Preferred Stock and the cash settlement of any remaining fractional share of
UPC Series E Preferred Stock deliverable by UPC to the FSB 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 Series E Preferred Stock to be exchanged for each
share of FSB Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger (based on there being no more than 343,499.7
shares of FSB Common Stock issued and outstanding at the Effective Time of the
Merger) shall be based on an exchange ratio (the "Exchange Ratio") as
determined and set forth in this Section 4.3. The Exchange Ratio shall be
determined as follows:
(i) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be greater than or
equal to $27.00 per share of UPC Series E Preferred Stock but less
than or equal to $33.00 per share of UPC Series E Preferred Stock (the
"Collar"), the Exchange Ratio shall be fixed at 1.185433 shares of UPC
Series E Preferred Stock for each share of FSB Common Stock issued and
outstanding at the Effective Time of the Merger;
(ii) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be greater than
$33.00 per share of UPC Series E Preferred Stock (the "Ceiling"), the
Exchange Ratio shall be fixed at 1.185433 shares of UPC Series E
Preferred Stock for each share or FSB Common Stock; provided, however,
UPC would have the right to either deliver the fixed Exchange Ratio of
1.185433 or to terminate the transaction contemplated in this
Reorganization Agreement; provided, however, should UPC elect to
terminate the transaction under this provision, FSB would have the
unilateral right to reinstate the transaction by accepting in exchange
for each share of FSB Common Stock issued and outstanding that number
of shares of UPC Series E Preferred Stock at the Current Market Price
Per Share sufficient to equal $39.12 per share of FSB Common Stock;
and
(iii) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be less than $27.00
per share of UPC Series E Preferred Stock (the "Floor"), the Exchange
Ratio shall be fixed at 1.1854333 shares of UPC Series E Preferred
Stock for each share of FSB
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Common Stock; provided, however, FSB shall have the right to
either accept the fixed Exchange Ratio of 1.1854333 or to terminate the
transaction contemplated in this Reorganization Agreement; provided,
however, should FSB elect to terminate the transaction under this
provision, UPC would have the unilateral right to reinstate the
transaction by delivering in exchange for each share of FSB Common
Stock issued and outstanding that number of shares of UPC Series E
Preferred Stock at the Current Market Price Per Share sufficient to
equal $32.01 per share of FSB Common Stock.
The Exchange Ratio as determined in this Section 4.3 shall be based on an
aggregate of no more than 343,499.7 shares of FSB Common Stock validly issued
and outstanding immediately prior to the Effective Time of the Merger;
provided, however, that no fractional shares of UPC Series E Preferred Stock
shall be issued and if, after aggregating all of the shares of UPC Series E
Preferred Stock to which a FSB Record Holder is entitled based upon the
Exchange Ratio, there shall be a fractional share of UPC Series E Preferred
Stock remaining, such fractional share shall be settled by a cash payment
therefor pursuant to the Mechanics of Payment of the Purchase Price set forth
in Section 4.4 hereof, which shall be calculated based upon the Current Market
Price Per Share of one (1) full share of UPC Series E Preferred Stock.
(1) DEFINITION OF "CURRENT MARKET PRICE
PER SHARE." The "Current Market Price Per Share" shall be the average
closing price per share of the "last" real time trades (i.e., closing
price) of the UPC Series E Preferred Stock quoted on the NASDAQ/NMS
(as published in The Wall Street Journal) for each of the ten (10)
NASDAQ/NMS general market trading days next preceding the Closing Date
on which the NASDAQ/NMS was open for business (the "Pricing Period").
In the event the UPC Series E Preferred Stock does not trade on one or
more of the trading days during the Pricing Period (a "No Trade
Date"), any such No Trade Date shall be disregarded in computing the
average closing price per share of UPC Series E Preferred Stock and
the average shall be based upon the "last" real time trades and number
of days on which the UPC Series E Preferred Stock actually traded
during the Pricing Period.
(2) EFFECTS OF DISSENTERS' RIGHTS ON THE
EXCHANGE RATIO. Should FSB Record Holders representing at least 10%
of the shares of FSB Common Stock issued and outstanding at the time
of Closing perfect such FSB Record Holder's Dissenters' Rights
pursuant to the Tennessee Code and maintain the perfected status of
such Dissenters' Rights through the Closing Date, UPC and INTERIM
shall have the right, exercisable in their sole discretion, to either
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terminate this Reorganization Agreement or, subject to the prior
approval of the FSB Board of Directors, reduce the per share
Consideration to be delivered by UPC hereunder by an amount sufficient
to off-set against the Consideration any amounts paid, or to be paid,
by UPC in excess of $35.56 per share of FSB Common Stock in
satisfaction of such Dissenters' Rights.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF FSB.
Should FSB effect any stock splits, reverse stock splits, stock
dividends or similar changes in its respective capital accounts
subsequent to the date of this Reorganization Agreement but prior to
the Effective Time of the Merger, the Exchange Ratio shall be adjusted
in such a manner as the Board of Directors of UPC shall deem in good
faith to be fair and reasonable in order to give effect to such
changes.
4.4 Mechanics of Payment of the Consideration. Within five
days after the Effective Time of the Merger and the receipt of a certified list
of all of the FSB Record Holders, the Corporate Trust Department of Union
Planters National Bank, Memphis, Tennessee (the "Exchange Agent") shall deliver
to each of the FSB Record Holders such materials and information as may be
deemed necessary by the Exchange Agent to advise the FSB Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the FSB Common Stock in order for the FSB 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 FSB Record Holders at the addresses set forth on a certified shareholder
list to be delivered by FSB to UPC at the Closing (the "Shareholder List"). As
soon as reasonably practicable thereafter, the FSB Record Holders of all of the
outstanding shares of FSB 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 FSB 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 FSB 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 FSB Common Stock, the
Exchange Agent shall, on
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or prior to the 5th day after the receipt of such certificates, mail to the
former FSB Shareholders in exchange for the certificate(s) surrendered by them,
the Consideration to be paid for each such FSB Shareholder's shares of FSB
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 FSB Common
Stock of a FSB Record Holder, subject to the provisions of this Section 4.4,
shall be deemed for all corporate purposes to represent and evidence only the
right to receive the Consideration into which such FSB Record Holder's shares
of FSB 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 FSB Record Holder's FSB Common Stock shall have been surrendered as
provided above, the Consideration payable to the FSB Record Holder(s) of the
cancelled shares as of any time after the Effective Date shall not be paid to
the FSB Record Holder(s) of such certificate(s) until such certificates shall
have been surrendered in the manner required. Each FSB 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
FSB 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 FSB Record Holder is entitled, provided
that each such FSB 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 FSB Shareholder.
4.5 Stock Transfer Books. At the Effective Time of the Merger,
the stock transfer books of FSB shall be closed and no transfer of shares of
FSB Common Stock shall be made thereafter.
4.6 Effects of the Merger. At the Effective Time of the
Merger, the separate existence of FSB shall cease, and FSB shall
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be merged with and into INTERIM 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 FSB and
INTERIM.
4.7 Transfer of Assets. At the Effective Time of the Merger,
all rights, assets, licenses, permits, franchises and interests of FSB and
INTERIM in and to every type of property, whether real, personal, or mixed,
whether tangible or intangible, and to choses in action shall be deemed to be
vested in INTERIM 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 FSB 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 FSB or the Surviving Corporation.
4.9 Dissenters' Rights of FSB Shareholders. Any FSB Record
Holder of shares of FSB Common Stock who shall comply strictly with the
provisions of Sections 48-23-201 et seq. of the Tennessee Code, shall be
entitled to dissent from the Merger and to seek those appraisal remedies
afforded by the Tennessee Code. Such an FSB Shareholder is referred to herein
as an "FSB Dissenting Shareholder." However, UPC and INTERIM shall not be
obligated to consummate the Merger if FSB Record Holders holding or controlling
more than ten percent (10%) of the shares of the FSB Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall have
perfected and maintained in perfected status their Dissenters' Rights in
accordance with the Tennessee Code and the perfected status of said Dissenters'
Rights shall have continued to the time of Closing.
4.10 Approvals of Shareholders of FSB and INTERIM. In order to
become effective, the Merger must be approved by the respective shareholders of
FSB and of INTERIM at meetings to be called for that purpose by their
respective Boards of Directors, or by their unanimous action by written consent
complying fully with the laws of Tennessee.
4.11 FSB Stock Options. Except as described in Section 2.7 of
the Reorganization Agreement, there are no validly issued and outstanding FSB
Stock Options. Therefore, at the Effective Time
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of the Merger, there will be no FSB Stock Options issued and outstanding except
as described in Section 2.7 of the Reorganization Agreement. It is expected
that at the Effective Time of the Merger any validly issued and outstanding FSB
Stock Options will either be exercised by the holders thereof, repurchased by
FSB or converted into options to acquire shares of UPC Series E Preferred Stock
at the election of the holders thereof.
ARTICLE 5
AMENDMENTS AND WAIVERS
5.1 AMENDMENTS. To the extent permitted by law, this Plan
of Merger may be amended unilaterally by UPC and INTERIM as set forth in
Section 10.9(d) of the Reorganization Agreement; provided, however, that the
provisions of Section 4.3 of this Plan of Merger relating to the manner or
basis upon which shares of FSB 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 FSB
Record Holders determined as provided in Section 4.3 of this Plan of Merger nor
shall this Plan of Merger be amended to permit UPC to utilize assets other than
shares of Series E Preferred Stock and cash or good funds to make payment of
the Consideration as provided in Section 3.1(e) of the Reorganization Agreement
at any time after the Shareholders' Meeting without the requisite approval
(except as provided for in the Reorganization Agreement) of the FSB Record
Holders of the shares of FSB Common Stock outstanding, and that no amendment to
this Plan of Merger shall modify the requirements of regulatory approval as set
forth in Section 8.3(b) of the Reorganization Agreement.
5.2 AUTHORITY FOR AMENDMENTS AND WAIVERS. Prior to the
Effective Time of the Merger, UPC and INTERIM, acting through their respective
Boards of Directors or chief executive officers or presidents or other
authorized officers, shall have the right to amend this Plan of Merger to
postpone the Effective Time of the Merger to a date and time subsequent to the
time of filing of the Plan of Merger with the Tennessee Secretary of State, to
waive any default in the performance of any term of this Plan of Merger by FSB,
to waive or extend the time for the compliance or fulfillment by FSB of any and
all of its obligations under this Plan of Merger, and to waive any or all of
the conditions precedent to the obligations of UPC and INTERIM under this Plan
of Merger, except any condition that, if not satisfied, would result in the
violation of any law or applicable governmental regulation. Prior to the
Effective Time of the Merger, FSB, acting through its Board of Directors or
chief executive officer or president or other authorized officer, shall have
the right to
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 84
<PAGE> 178
amend this Plan of Merger to postpone the Effective Time of the Merger to a
date and time subsequent to the time of filing of the Plan of Merger with the
Tennessee Secretary of State, to waive any default in the performance of any
term of this Plan of Merger by UPC or INTERIM, to waive or extend the time for
the compliance or fulfillment by UPC or INTERIM of any and all of their
obligations under this Plan of Merger, and to waive any or all of the
conditions precedent to the obligations of FSB under this Plan of Merger except
any condition that, if not satisfied, would result in the violation of any law
or applicable governmental regulation.
ARTICLE 6
MISCELLANEOUS
6.1 NOTICES. All notices or other communications which
are required or permitted hereunder shall be in writing and sufficient if
delivered by hand, by facsimile transmission, or by registered or certified
mail, postage pre-paid to the persons at the addresses set forth below (or at
such other addresses or facsimile numbers as may hereafter be designated as
provided below), and shall be deemed to have been delivered as of the date
received by the Party to which, or to whom it is addressed:
If to UPC or INTERIM:
Union Planters Corporation
Post Office Box 387 (mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38018
Fax: (901) 383-2877
Attn: Mr. Jackson W. Moore, President
Gary A. Simanson,
Associate General Counsel
If to FSB: First State Bancorporation Inc.
213 Church Avenue North
Dyersburg, Tennessee 38025
Fax: (901) 287-0772
Attn: Mr. Percy E. Smith
Chairman and Chief Executive Officer
With a copy to: Baker, Donelson, Bearman & Caldwell
511 Union Street, Suite 1700
Post Office Box 190613
Nashville, Tennessee 37219
Fax: (615) 726-0464
Attn: Steven J. Eisen, Esq.
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 85
<PAGE> 179
or at such other address as shall be furnished in writing by any of the Parties
to the others by notice given as provided in this section 6.1.
6.2 GOVERNING LAW. Except to the extent federal law shall
be controlling, this Plan of Merger shall be governed by and construed and
enforced in accordance with the laws of the State of Tennessee disregarding,
however, the Tennessee conflicts of laws rules.
6.3 CAPTIONS. The Captions heading the Sections in this
Plan of Merger are for convenience only and shall not affect the construction
or interpretation of this Plan of Merger.
6.4 COUNTERPARTS. This Plan of Merger may be executed in
two or more counterparts, each of which shall be deemed an original instrument,
but all of which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger
to be duly executed and delivered by its duly authorized officers as of the
date first above written.
ATTEST: UNION PLANTERS CORPORATION
__________________________ By:___________________________
E. James House Jackson W. Moore
Its: Secretary Its: President
ATTEST: FSB ACQUISITION COMPANY, INC.
__________________________ By:___________________________
E. James House Jackson W. Moore
Its: Secretary Its: President
ATTEST: FIRST STATE BANCORPORATION, INC.
_____________________________ By:___________________________
Mack M. Forrester Percy E. Smith
Its: Secretary Its: Chairman and
Chief Executive Officer
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 86
<PAGE> 180
(UNION PLANTERS
CORPORATION LOGO)
April 4, 1995
Percy E. Smith, President
First State Bancorp, Inc.
213 Church Avenue North
P. O. Box 1869
Dyersburg, Tennessee 38025
Re: Acquisition of First State Bancorp, Inc. by Union Planters
Corporation -- Notice of Revised Structure of Transaction
Dear Mr. Smith:
Please be advised, Union Planters Corporation ("UPC") hereby exercises its
right of election under Article 2, Section 2.5 and gives notice of such
election in accordance with Article 10, Section 10.1, of that certain Agreement
and Plan of Reorganization (the "Reorganization Agreement") dated as of
February 24, 1995, by and Between UPC, FSB Acquisition Company, Inc.
("INTERIM"), First State Bancorp, Inc. ("FSB") and First Exchange Bank ("FEB"),
to revise the structure of the transaction from a reverse merger of INTERIM
with and into FSB, to a forward merger of FSB with and into INTERIM, with
INTERIM surviving the merger.
This Notice shall serve as an amendment to the Reorganization Agreement, and
the Reorganization Agreement shall be deemed to reflect and set forth the
merger of FSB with and into INTERIM in all contexts where the Reorganization
Agreement previously set forth or described the effects of the merger of
INTERIM with and into FSB. Prior to the Closing of the transaction, the
parties to the Reorganization Agreement shall also execute a revised Plan of
Merger (Exhibit A to the Reorganization Agreement) setting forth and reflecting
the merger of FSB with and into INTERIM and the legal results thereof.
UNION PLANTERS CORPORATION
/s/ Gary A. Simanson
- --------------------
Gary A. Simanson
Associate General Counsel
ACKNOWLEDGED AND AGREED THIS 4TH DAY OF APRIL, 1995,
FIRST STATE BANCORP, INC.
Percy E. Smith
President
P.O. Box 387 * Memphis, Tennessee 38147
<PAGE> 181
APPENDIX C
Tennessee Business Corporation Act -- Dissenters' Rights
Tennessee Code Annotated Title 48, Chapter 23
including TCA Sections 48-23-101 through 302
<PAGE> 182
CHAPTER 23
BUSINESS CORPORATIONS--DISSENTERS' RIGHTS
<TABLE>
<S> <C>
SECTION. SECTION.
PART 1--RIGHT TO DISSENT AND OBTAIN 48-23-203. Dissenters' notice.
PAYMENT FOR SHARES 48-23-204. Duty to demand payment.
48-23-101. Definitions. 48-23-205. Share restrictions.
48-23-102. Right to dissent. 48-23-206. Payment.
48-23-103. Dissent by nominees and 48-23-207. Failure to take action.
beneficial owners. 48-23-208. After-acquired shares.
48-23-209. Procedure if shareholder
dissatisfied with payment
or offer.
PART 2--PROCEDURE FOR EXERCISE OF
DISSENTERS' RIGHTS PART 3--JUDICIAL APPRAISAL OF SHARES
48-23-201. Notice of dissenters' 48-23-301. Court action.
rights. 48-23-302. Court costs and counsel fees.
48-23-202. Notice of intent to demand
payment.
</TABLE>
PART 1--RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
48-23-101. DEFINITIONS--(1) "Beneficial shareholder" means the person who is
a beneficial owner of shares held by a nominee as the record shareholder;
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under sec. 48-23-102 and who exercises that right when and in the
manner required by secs. 48-23-201--48-23-209;
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the corporate action
that give rise to the shareholder's right to dissent until the date of payment,
at the average auction rate paid on United States treasury bills with a
maturity of six (6) months (or the closest maturity thereto) as of the auction
date for such treasury bills closest to such effective date;
(6) "Record shareholder" means the person in whose name shares are registered
in the records of a corporation or the beneficial owner of shares to the extent
of the rights granted by a nominee certificate on file with a corporation; and
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
(Acts 1986, ch. 887, sec. 13.01)
48-23-102. RIGHT TO DISSENT.--(a) A shareholder is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party:
Appendix C - Page 1
<PAGE> 183
(A) If shareholder approval is required for the merger by sec.
48-21-103 or the charter and the shareholder is entitled to vote on the merger;
or
(B) If the corporation is a subsidiary that is merged with its parent
under sec. 48-21-104;
(2) Consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all
of the net proceeds of the sale will be distributed to the shareholders within
one (1) year after the date of sale;
(4) An amendment of the charter that materially and adversely effects rights
in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the shares
to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through issuance of
shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share, if the fractional share is to be acquired for cash under
sec. 48-16-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent
the charter, bylaws, or a resolution of the board of directors provides that
voting or nonvoting shareholders are entitled to dissent and obtain payment for
their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares under
this chapter may not challenge the corporate action creating his entitlement
unless the action is unlawful or fraudulent with respect to the shareholder or
the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder may
dissent as to any shares of a security which, as of the date of the
effectuation of the transaction which would otherwise give rise to dissenters'
rights, is listed on an exchange registered under Section 6 of the Securities
Exchange Act of 1934, as amended, or is a "national market system security," as
defined in rules promulgated pursuant to the Securities Exchange Act of 1934,
as amended (Acts 1986, ch. 887, sec. 13.02)
48-23-103. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.--(a) A record
shareholder may assert dissenters' rights as to fewer than all the shares
registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
Appendix C - Page 2
<PAGE> 184
are determined as if the shares as to which he dissents and his other shares
were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares of
any one (1) or more classes held on his behalf only if:
(1) He submits to the corporation the record shareholder's written consent to
the dissent not later than the time the beneficial shareholder asserts
dissenters' rights; and
(2) He does so with respect to all shares of the same class of which he is
the beneficial shareholder or over which he has power to direct the vote.
(Acts 1986, ch. 887, sec. 13.03)
PART 2--PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
48-23-201. NOTICE OF DISSENTER'S RIGHTS.--(a) If proposed corporate action
creating dissenters' rights under sec. 48-23-102 is submitted to a vote at
a shareholders' meeting, the meeting notice must state that shareholders are or
may be entitled to assert dissenters' rights under this chapter and be
accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under sec. 48-23-102
is taken without a vote of shareholders, the corporation shall notify in
writing all shareholders entitled to assert dissenters' rights that the action
was taken and send them the dissenters' notice described in sec. 48-23-203.
(c) A corporation's failure to give notice pursuant to this section will not
invalidate the corporate action. (Acts 1986, ch. 887, sec. 13.20.)
48-23-202. NOTICE OF INTENT TO DEMAND PAYMENT.--(a) If proposed corporate
action creating dissenters' rights under sec. 48-23-102 is submitted to a
vote at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights:
(1) Must deliver to the corporation, before the vote is taken, written notice
of his intent to demand payment for his shares if the proposed action is
effectuated; and
(2) Must not vote his shares in favor of the proposed action. No such
written notice of intent to demand payment is required of any shareholder to
whom the corporation failed to provide the notice required by sec. 48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for his shares under this chapter. (Acts 1986, ch. 887,
sec. 13.21.)
48-23-203. DISSENTERS' NOTICE.--(a) If proposed corporate action creating
dissenters' rights under sec. 48-23-102 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of sec. 48-23-202.
(b) The dissenters' notice must be sent no later than ten (10) days after the
corporate action was authorized by the shareholders or effectuated, whichever
is the first to occur, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of the
shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the principal terms of the
proposed corporate action and requires that the person asserting dissenters'
Appendix C - Page 3
<PAGE> 185
rights certify whether or not he acquired beneficial ownership of the shares
before that date;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than one (1) nor more than two (2) months after the
date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to Sec.
48-23-201 (Acts 1986, ch. 887 sec. 13.22.)
48-23-204. DUTY TO DEMAND PAYMENT.--(a) A shareholder sent a dissenters'
notice described in sec. 48-23-203 must demand payment, certify whether he
acquired beneficial ownership of the shares before the date required to be set
forth in the dissenters' notice pursuant to sec. 48-23-203 (b)(3), and
deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the effectuation of the proposed corporate
action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenters' notice, is
not entitled to payment for his shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless
the corporation with which it was filed, or the surviving corporation, consents
thereto. (Acts 1986, ch. 887, sec. 13.23.)
48-23-205. SHARE RESTRICTIONS.--(a) The corporation may restrict the
transfer of uncertificated shares from the date the demand for their payment is
received until the proposed corporate action is effectuated or the restrictions
released under sec. 48-23- 207.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the effectuation of the proposed corporate action.
(Acts 1986, ch. 887, sec. 13.24.)
48-23-206. PAYMENT.--(a) Except as provided in sec. 48-23-208, as soon
as the proposed corporate action is effectuated, or upon receipt of a payment
demand, whichever is later, the corporation shall pay each dissenter who
complied with sec. 48-23-204 the amount the corporation estimates to be the
fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year ending not
more than sixteen (16) months before the date of payment, an income statement
for that year, a statement of changes in shareholders' equity for that year,
and the latest available interim financial statements, if any;
(2) A statement of the corporation's estimate of the fair value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under sec.
48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent a copy
of this chapter to the shareholder pursuant to sec. 48-23-201 or sec.
48-23-203. (Acts 1986, ch. 887, sec. 13.25.)
Appendix C - Page 4
<PAGE> 186
48-23-207. FAILURE TO TAKE ACTION.--(a) If the corporation does not
effectuate the proposed action that gave rise to the dissenters' rights within
two (2) months after the date set for demanding payment and depositing share
certificates, the corporation shall return the deposited certificates and
release the transfer restrictions imposed on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under sec. 48-23-203 and repeat the payment demand
procedure. (Acts 1986, ch. 887, sec. 13.26.)
48-23-208. AFTER-ACQUIRED SHARES.--(a) A corporation may elect to withhold
payment required by sec. 48-23-206 from a dissenter unless he was the
beneficial owner of the shares before the date set forth in the dissenters'
notice as the date of the first announcement to news media or to shareholders
of the principal terms of the proposed corporate action.
(b) To the extent the corporation elects to withhold payment under subsection
(a), after effectuating the proposed corporate action, it shall estimate the
fair value of the shares, plus accrued interest, and shall pay this amount to
each dissenter who agrees to accept it in full satisfaction of his demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand payment under sec. 48-23-209.
(Acts 1986, ch. 887, sec. 13.27.)
48-23-209. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.--(a)
A dissenter may notify the corporation in writing of his own estimate of the
fair value of his shares and amount of interest due, and demand payment of his
estimate (less any payment under sec. 48-23-206), or reject the
corporation's offer under sec. 48-23-208 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under sec. 48-23-206 or
offered under sec. 48-23-208 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under sec. 48-23-206 within two
(2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action, does
not return the deposited certificates or release the transfer restrictions
imposed on uncertificated shares within two (2) months after the date set for
demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a)
within one (1) month after the corporation made or offered payment for his
shares. (Acts 1986, ch. 887, sec. 13.28.)
PART 3--JUDICIAL APPRAISAL OF SHARES
48-23-301. COURT ACTION.--(a) If a demand for payment under sec. 48-23-209
remains unsettled, the corporation shall commence a proceeding within two (2)
months after receiving the payment demand and petition the court to determine
the fair value of the shares and accrued interest. If the corporation does
not commence the proceeding within the two-month period, it shall pay each
dissenter whose demand remains unsettled the amount demanded.
Appendix C - Page 5
<PAGE> 187
(b) The corporation shall commence the proceeding in a court of record having
equity jurisdiction in the county where the corporation's principal office (or,
if none in this state, its registered office) is located. If the corporation
is a foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled, parties to the proceeding as in an
action against their shares and all parties must be served with a copy of the
petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one (1) or more
persons as appraisers to receive evidence and recommend decision on the
question of fair value. The appraisers have the powers described in the order
appointing them, or in any amendment to it. The dissenters are entitled to the
same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of his
shares, plus accrued interest, exceeds the amount paid by the corporation; or
(2) For the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under sec. 48-23-208.
(Acts 1986, ch. 887, sec. 13.03.)
48-23-302. COURT COSTS AND COUNSEL FEES.--(a) The court in an appraisal
proceeding commenced under sec. 48-23-301 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under sec. 48-23-209.
(b) The court may also assess the fees and expenses of counsel and experts
for the respective parties, in amounts the courts find equitable:
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the requirements
of secs. 48-23-201--48-23-209; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good faith with respect to
the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those service should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited. (Acts 1986, ch. 887, 13.31.)
Appendix C - Page 6
<PAGE> 188
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 attorney's 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 the in the right of the corporation against
amounts paid in settlement and reasonable expenses, including attorney's
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.
II-1
<PAGE> 189
ITEM 21. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2 -- Agreement and Plan of Reorganization, dated February
24, 1995, by and between Union Planters Corporation,
FSB Acquisition Company, Inc., First State
Bancorporation, Inc., and First Exchange Bank,
including Letter Amendment dated April 4,
1995 to same, along with the Plan of Merger annexed
thereto as Exhibit A (included as collective Appendix
B to the Prospectus)
3(a) -- Restated Charter of Incorporation of Union Planters
Corporation, as amended December 17, 1992
(incorporated by reference to Exhibit 3(a) to the
Annual Report on Form 10-K of Union Planters
Corporation dated December 31, 1993)
5 -- Opinion of Gary A. Simanson, Esquire, Associate
General Counsel to Union Planters Corporation,
regarding legality of the 8% Cumulative, Convertible
Preferred Stock, Series E, having no par value of
Union Planters Corporation
12 -- Union Planters Corporation Computation of Ratio of Earnings
to Combined Fixed Charges and Preferred Stock Dividends.
23(a) -- Consent of Gary A. Simanson, Esq. (included in Exhibit
5)
23(b) -- Consent of Price Waterhouse LLP
23(c) -- Consent of Dunn, Creswell, Sparks, Smith, Horne &
Downing
24 -- Power of Attorney (included in signature pages)
99(a) -- Form of Proxy
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 Registration 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.
II-2
<PAGE> 190
(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 herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel, the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction, the question whether
such indemnification by its is public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(5) To repond 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 this 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> 191
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 14th day of April, 1995.
DATE: April 14, 1995
UNION PLANTERS CORPORATION
By: /s/
------------------------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and Chief Executive Officer
We, the undersigned directors and officers of Union Planters Corporation do
hereby constitute and appoint E. James House, Jr. and M. Kirk Walters, and
each of them, our true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for us and in our name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and we do
hereby ratify and confirm all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Chairman of the Board, April 14, 1995
- ------------------------ Chief Executive Officer,
Benjamin W. Rawlins, Jr. Director (Principal
Executive Officer)
/s/ Executive Vice President April 14, 1995
- ------------------------ and Chief Financial
John W. Parker Officer (Principal
Financial Officer)
/s/ Senior Vice President, April 14, 1995
- ------------------------ Treasurer and Chief
M. Kirk Walters Accounting Officer
/s/ Director April 14, 1995
- ------------------------
Albert M. Austin
Director April , 1995
- ------------------------ ---
Marvin E. Bruce
Director April , 1995
- ------------------------ ---
George W. Bryan
</TABLE>
II-4
<PAGE> 192
<TABLE>
<S> <C> <C>
/s/ Director April 14, 1995
- ------------------------
Robert B. Colbert, Jr.
Director April , 1995
- ------------------------ --
C. J. Lowrance, III
/s/ President and Director April 14, 1995
- ------------------------
Jackson W. Moore
/s/ Director April 14, 1995
- ------------------------
Stanley D. Overton
Director April , 1995
- ------------------------ --
V. Lane Rawlins
/s/ Director April 14, 1995
- ------------------------
Mike P. Sturdivant
Director April , 1995
- ------------------------ --
Richard A. Trippeer, Jr.
/s/ Director April 14, 1995
- ------------------------
Milton J. Womack
</TABLE>
II-5
<PAGE> 193
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
------- ----------- -------------
<S> <C> <C> <C>
2 -- Agreement and Plan of Reorganization, dated February
24, 1995, by and between Union Planters Corporation,
FSB Acquisition Company, Inc., First State
Bancorporation, Inc., and First Exchange Bank of
Obion, including Letter Amendment dated April 4,
1995 to same, along with the Plan of Merger annexed
thereto as Exhibit A (included as collective Appendix
B to the Prospectus)
3(a) -- Restated Charter of Incorporation of Union Planters
Corporation, as amended December 17, 1992
(incorporated by reference to Exhibit 3(a) to the
Annual Report on Form 10-K of Union Planters
Corporation dated December 31, 1993)
5 -- Opinion of Gary A. Simanson, Esquire, Associate
General Counsel to Union Planters Corporation,
regarding legality of the 8% Cumulative, Convertible
Preferred Stock, Series E, having no par value of
Union Planters Corporation
12 -- Union Planters Corporation and Subsidiaries
Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
23(a) -- Consent of Gary A. Simanson, Esq. (included in Exhibit
5)
23(b) -- Consent of Price Waterhouse LLP
23(c) -- Consent of Dunn, Creswell, Sparks, Smith, Horne &
Downing
24 -- Power of Attorney (included in signature pages)
99(a) -- Form of Proxy
</TABLE>
<PAGE> 1
EXHIBIT 5
LOGO
UNION PLANTERS CORPORATION
April 10, 1995
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38088
Re: 407,196 shares of the 8% Cumulative, Convertible
Preferred Stock, Series E, no par value per share,
having a stated value of $25.00 per share of Union
Planters Corporation ("UPC") and 508,995 shares of
UPC Common Stock, $5.00 par value per share
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 407,196 shares of UPC's 8%
Cumulative, Convertible Preferred Stock, Series E (the "Shares") which may be
issued by UPC pursuant to an Agreement and Plan of Reorganization dated as of
February 24, 1995, by and between UPC, FSB Acquisition Company, Inc., First
State Bancorporation, Inc. and First Exchange Bank (the "Agreement"). The
Shares are convertible into 508,995 shares of UPC Common Stock, $5.00 par
value, at a rate of one share of Series E Preferred Stock for 1.25 shares of
UPC Common Stock.
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; and
<PAGE> 2
Union Planters Corporation
April 10, 1995
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.
3. The shares of UPC Common Stock into which the Shares are convertible
have been duly authorized and when issued by UPC in accordance with a
conversion of the Shares, the shares of UPC Common Stock 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 Preferred 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,
By: /s/ Gary A. Simanson
--------------------
Gary A. Simanson, Associate General Counsel
Union Planters Corporation
<PAGE> 1
Exhibit 12
Page 1 of 2
Union Planters Corporation
Computation of Ratio of Earnings to Combined
Fixed Charges & Preferred Stock Dividends
(Fixed Charges Without Deposit Interest)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1994 1993 1992 1991 1990
----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Earnings before Income Taxes,
Extraordinary Item & Accounting Changes $ 79,369 $ 127,396 $ 87,111 $ 54,433 $ 40,651
Add:
Interest Expense & Amortization
of Debt Issuance Costs 39,964 20,483 13,595 19,579 36,063
Portion of Operating Lease Rents
Representative of the Interest Factor 2,929 3,239 2,471 2,328 2,807
---------- ---------- ---------- ---------- ----------
Earnings As Adjusted $ 122,262 $ 151,118 $ 103,177 $ 76,340 $ 79,521
========== ========== ========== ========== ==========
Preferred Dividend Requirements $ 8,553 $ 8,468 $ 6,166 $ 1,013 $ 352
Ratio of Earnings before Income
Taxes to Net Earnings (1) 135% 142% 138% 127% 115%
---------- ---------- ---------- ---------- ----------
Preferred Dividend Factor 11,547 12,025 8,509 1,287 405
---------- ---------- ---------- ---------- ----------
Fixed Charges:
Interest on Short-term borrowings 20,082 7,230 8,040 14,383 26,746
Interest on FHLB Advances & other
Long-term Debt 19,882 13,253 5,555 5,196 9,317
---------- ---------- ---------- ---------- ----------
Total Interest Expense & Amortization
of Debt Issuance Costs 39,964 20,483 13,595 19,579 36,063
---------- ---------- ---------- ---------- ----------
Capitalized Interest Expense 0 0 0 807 288
Portion of Operating Lease Rents
Representative of the Interest
Factor 2,929 3,239 2,471 2,328 2,807
---------- ---------- ---------- ---------- ----------
Combined Fixed Charges &
Preferred Stock Dividends $ 54,440 $ 35,747 $ 24,575 $ 24,001 $ 39,563
========== ========== ========== ========== ==========
Ratio of Earnings to Combined
Fixed Charges & Preferred Stock
Dividends (2) 2.25 x 4.23 x 4.20 x 3.18 x 2.01 x
========== ========== ========== ========== ==========
</TABLE>
(1) Represents earnings before income taxes divided by earnings before
extraordinary item and accounting changes which adjusts preferred stock
dividends to a pretax basis.
(2) For the purpose of computing these ratios, earnings represent earnings
before income taxes, extraordinary item and accounting changes, preferred
dividend factor and fixed charges. Fixed charges represent the preferred
dividend factor, interest expense (exclusive of interest on deposits in
one case and inclusive of interest in the other), capitalized interest
expense, amortization of debt issuance costs and one-third (the portion
deemed representative of the interest factor) of all operating rents.
<PAGE> 2
Exhibit 12
Page 2 of 2
Union Planters Corporation
Computation of Ratio of Earnings to Combined
Fixed Charges & Preferred Stock Dividends
(Fixed Charges With Deposit Interest)
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1994 1993 1992 1991 1990
----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Earnings before Income Taxes,
Extraordinary Item & Accounting Changes $ 79,369 $ 127,396 $ 87,111 $ 54,433 $ 40,651
Add:
Interest Expense & Amortization
of Debt Issuance Costs 275,779 233,680 222,630 279,097 344,562
Portion of Operating Lease Rents
Representative of the Interest Factor 2,929 3,239 2,471 2,328 2,807
---------- ---------- ---------- ---------- ----------
Earnings As Adjusted $ 358,077 $ 364,315 $ 312,212 $ 335,858 $ 388,020
========== ========== ========== ========== ==========
Preferred Dividend Requirements $ 8,553 $ 8,468 $ 6,166 $ 1,013 $ 352
Ratio of Earnings before Income
Taxes to Net Earnings (1) 135% 142% 138% 127% 115%
---------- ---------- ---------- ---------- ----------
Preferred Dividend Factor 11,547 12,025 8,509 1,287 405
---------- ---------- ---------- ---------- ----------
Fixed Charges:
Deposits 235,815 213,197 209,035 259,518 308,499
Interest on Short-term borrowings 20,082 7,230 8,040 14,383 26,746
Interest on FHLB Advances & other
Long-term Debt 19,882 13,253 5,555 5,196 9,317
---------- ---------- ---------- ---------- ----------
Total Interest Expense & Amortization
of Debt Issuance Costs 275,779 233,680 222,630 279,097 344,562
---------- ---------- ---------- ---------- ----------
Capitalized Interest Expense 0 0 0 807 288
Portion of Operating Lease Rents
Representative of the Interest
Factor 2,929 3,239 2,471 2,328 2,807
---------- ---------- ---------- ---------- ----------
Combined Fixed Charges &
Preferred Stock Dividends $ 290,255 $ 248,944 $ 233,610 $ 283,519 $ 348,062
========== ========== ========== ========== ==========
Ratio of Earnings to Combined
Fixed Charges & Preferred Stock
Dividends (2) 1.23 x 1.46 x 1.34 x 1.18 x 1.11 x
========== ========== ========== ========== ==========
</TABLE>
(1) Represents earnings before income taxes divided by earnings before
extraordinary item and accounting changes which adjusts preferred stock
dividends to a pretax basis.
(2) For the purpose of computing these ratios, earnings represent earnings
before income taxes, extraordinary item and accounting changes, preferred
dividend factor and fixed charges. Fixed charges represent the preferred
dividend factor, interest expense (exclusive of interest on deposits in
one case and inclusive of interest in the other), capitalized interest
expense, amortization of debt issuance costs and one-third (the portion
deemed representative of the interest factor) of all operating rents.
<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 26, 1995, which appears on page 35 of
Union Planters Corporation's 1994 Annual Report to Shareholders, which is
incorporated by reference in its Annual Report on Form 10-K for the year ended
December 31, 1994. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Memphis, Tennessee
April 14, 1995
<PAGE> 1
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Union Planters Corporation of our report
dated February 7, 1995, except for Note 18, as to which the date is February
24, 1995, related to the financial statements of First State Bancorporation,
Inc. and Subsidiaries, which appear in such Prospectus. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
Dunn, Creswell, Sparks, Smith, Horne & Downing
Union City, Tennessee
April 11, 1995
<PAGE> 1
PROXY EXHIBIT 99(a)
FIRST STATE BANCORPORATION, INC.
No. of Shares _____________
213 CHURCH AVENUE NORTH
DYERSBURG, TENNESSEE 38025
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Percy E. Smith and James E. McFarlin, or
either of them acting alone, as proxies, each with the power to appoint such
person's substitute, and hereby authorizes them to vote, as designated below,
all shares of common stock of First State Bancorporation, Inc. held of record
by the undersigned on April 21, 1995, at the Special Meeting of Shareholders to
be held on Wednesday, May 24, 1995, or at any adjournments or postponements
thereof.
1. APPROVAL OF AGREEMENT AND PLAN OF REORGANIZATION BY AND BETWEEN UNION
PLANTERS CORPORATION, FSB ACQUISITION COMPANY, INC., FIRST STATE
BANCORPORATION, INC. AND FIRST EXCHANGE BANK DATED AS OF FEBRUARY 24,
1995, ALONG WITH THE PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A, BOTH
AS SUBSEQUENTLY AMENDED BY LETTER AGREEMENT DATED APRIL 4, 1995.
FOR APPROVAL OF REORGANIZATION AGREEMENT AND THE
PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A _____
AGAINST APPROVAL OF REORGANIZATION AGREEMENT AND
THE PLAN OF MERGER ANNEXED THERETO AS EXHIBIT A _____
2. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Special Meeting.
(Continued on other side)
<PAGE> 2
(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: _______________________, 1995
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.
