<PAGE> 1
Filed pursuant to Rule 424(b)(1)
Registration No. 33-62141
EASTERN NATIONAL BANK
799 Brickell Plaza
Miami, Florida 33131
September 15, 1995
TO THE SHAREHOLDERS OF EASTERN NATIONAL BANK
You are cordially invited to attend a Special Meeting of Shareholders
of Eastern National Bank ("ENB") to be held at the executive offices of ENB
located at 799 Brickell Plaza, Tenth Floor, Miami, Florida, at 2:00 p.m.
Eastern Time on Monday, October 16, 1995.
At the Special Meeting you will have the opportunity to consider and
vote on a proposal to approve an Agreement and Plan of Reorganization dated as
of April 25, 1995, as amended by that certain Letter Agreement dated July 28,
1995, (collectively, the "Reorganization Agreement"), along with the Merger
Agreement annexed thereto as Exhibit A, pursuant to which ENB Interim National
Bank ("Interim"), a wholly-owned subsidiary of Union Planters Corporation
("UPC"), a bank holding company headquartered in Memphis, Tennessee, would be
merged with and into ENB (the "Merger"). The Boards of Directors of ENB and
UPC have approved the Reorganization Agreement and the Merger Agreement annexed
thereto as Exhibit A and the Merger contemplated thereby.
In the Merger, shareholders of ENB would receive in exchange for each
of their shares of ENB's common stock, $16.00 par value per share, outstanding
immediately prior to the effective time of the merger: (i) cash in the amount
of $9.86 (the "Cash Payment"); (ii) .6958 of one share of UPC's 8% Cumulative,
Convertible Preferred Stock, Series E, having no par value (the "Series E
Preferred Stock"); and (iii) UPC's unregistered, unsecured notes (the "UPC
Negotiable Notes") in three series having an aggregate principal amount equal
to $31.80 and bearing interest at eight (8%) percent per annum (except as
described in the Reorganization Agreement); provided, however, that any ENB
shareholder who would otherwise be entitled to receive less than 100 full
shares of Series E Preferred Stock or a UPC Negotiable Note of any one of the
three series in a principal amount of less than $100,000 would receive cash
instead of shares of the Series E Preferred Stock (based on a conversion price
equal to the highest price at which the Series E Stock should trade on the
effective date of the Merger) and UPC Negotiable Notes. At the time the
Reorganization Agreement was negotiated, the value of the Series E Preferred
Stock to be received by the shareholders of ENB was approximately $21.83 per
share of ENB common stock based on an exchange ratio of .6958 of one share of
Series E Preferred Stock for each share of ENB common stock and a current
market price of $31.38 per share for the Series E Preferred Stock. The last
trade of the Series E Preferred Stock on September 12, 1995, was $38.63 per
share. Each share of Series E Preferred Stock is convertible at the holder's
option into 1.25 shares of UPC's Common Stock. The annexed Notice of Special
Meeting of Shareholders and combination Prospectus/Proxy Statement explain the
Merger, the consideration, the Reorganization Agreement and the Merger Agreement
annexed thereto as Exhibit A and provide specific information relative to the
Special Meeting. Please read these materials carefully and thoughtfully
consider the information contained in them. The approvals of not only ENB's
shareholders but also of certain federal and state governmental regulatory
agencies are required to consummate the Merger as well as the satisfaction of
certain contractual conditions to closing.
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.
Your Board of Directors has approved the Reorganization Agreement and
believes that the Merger is in the best interests of ENB and the shareholders
of ENB. Accordingly, the Board of Directors of ENB unanimously recommends that
you vote "FOR" approval of the Reorganization Agreement and the Merger being
considered.
Sincerely,
Eastern National Bank
/s/ Jose J. Valdes-Fauli
Jose J. Valdes-Fauli
President
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME
<PAGE> 2
EASTERN NATIONAL BANK
799 BRICKELL PLAZA
MIAMI, FLORIDA 33131
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 16, 1995
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Eastern
National Bank ("ENB") has been called by the Board of Directors of ENB and will
be held at the executive offices of Eastern National Bank, 799 Brickell Plaza,
Tenth Floor, Miami, Florida , on Monday, October 16, 1995, at 2:00 p.m.
Eastern Time, for the following purposes:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Reorganization dated as of April 25, 1995, as amended by that certain Letter
Agreement dated July 28, 1995 (the "Reorganization Agreement"), together with
the Merger Agreement annexed thereto as Exhibit A, by and between ENB, a
national banking association; Union Planters Corporation ("UPC"), a
Tennessee-chartered bank holding company headquartered in Memphis, Tennessee;
and ENB Interim National Bank ("Interim"), an interim national bank to be
organized as a wholly-owned subsidiary of UPC. The Reorganization Agreement
provides for the merger (the "Merger") of Interim with and into ENB whereupon
the shareholders of ENB would receive consideration of three types: a cash
payment in the amount of $9.86 (the "Cash Payment"); .6958 of one share of
Union Planters Corporation's 8% Cumulative, Convertible Preferred Stock, Series
E, having no par value (the "Series E Preferred Stock"); and three series of
UPC's unregistered, unsecured notes (the "UPC Negotiable Notes") in aggregate
principal amount equal to $31.80, in exchange for each of their shares of ENB
common stock having a par value of $16.00 per share (the "ENB Common Stock");
provided, however, that any ENB shareholder who would be otherwise entitled to
receive less than 100 full shares of Series E Preferred Stock or any fractional
share of Series E Preferred Stock would receive cash instead of shares of such
Series E Preferred Stock (based on a conversion price equal to the highest
price at which the Series E Preferred Stock should trade through the NASDAQ
National Market System on the effective date of the Merger) and, provided
further, that any ENB shareholder who would be otherwise entitled to receive a
UPC Negotiable Note of any one series having a principal amount of less than
$100,000 would receive cash in lieu of such series of UPC Negotiable Notes to
which they would otherwise be entitled. The method of determining the amount
of cash, the number of shares of Series E Preferred Stock and the aggregate
principal amount of each series of the UPC Negotiable Notes to be received as
the consideration is described in the accompanying Prospectus/Proxy Statement
under the heading "THE MERGER--Terms of the Merger" and in Section 3.1(e) of
the Reorganization Agreement (as amended by the letter agreement dated July 28,
1995). The Reorganization Agreement and the Merger Agreement annexed thereto
as Exhibit A and the Merger are more fully described in the accompanying
Prospectus/Proxy Statement; and
<PAGE> 3
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 ENB HAVE THE RIGHT TO DISSENT FROM THE MERGER PURSUANT TO, AND
IN ACCORDANCE WITH, TITLE 12, SECTION 215 OF THE UNITED STATES CODE ANNOTATED.
COPIES OF SAID SECTION OF THE UNITED STATES CODE ANNOTATED ACCOMPANY THIS
NOTICE AS APPENDIX D TO THE ANNEXED PROSPECTUS AND PROXY STATEMENT REFERRED TO
THEREIN FOR CONVENIENCE AS THE "PROSPECTUS."
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 in person, your proxy appointment can be disregarded if you wish and you
may vote your own shares.
Only holders of ENB Common Stock of record at the close of business on
September 14, 1995, will be entitled to receive notice of, and to vote at the
Special Meeting of Shareholders and at any adjournments or postponements
thereof.
By Order of the Board of Directors
/s/ Jose J. Valdes-Fauli
Jose J. Valdes-Fauli
President
Miami, Florida
Dated: September 15, 1995
THE BOARD OF DIRECTORS OF EASTERN NATIONAL BANK, BY UNANIMOUS VOTE, RECOMMENDS
THAT THE HOLDERS OF EASTERN NATIONAL BANK COMMON STOCK VOTE "FOR" APPROVAL OF
THE REORGANIZATION AGREEMENT AND RELATED PROPOSALS.
<PAGE> 4
PROSPECTUS
317,459 SHARES OF
8% CUMULATIVE, CONVERTIBLE PREFERRED STOCK, SERIES E
UNION PLANTERS CORPORATION
PROXY STATEMENT
EASTERN NATIONAL BANK
SPECIAL MEETING TO BE HELD MONDAY, OCTOBER 16, 1995
This Prospectus and Proxy Statement (hereinafter referred to for
convenience as the "Prospectus") relates to up to 317,459 shares of 8%
Cumulative, Convertible Preferred Stock, Series E (the "Series E Preferred
Stock"), having no par value but having a stated value of $25.00 per share (the
"Stated Value") of Union Planters Corporation ("UPC"), a Tennessee-chartered
bank holding company which is also registered as a savings and loan holding
company, to be issued to shareholders of Eastern National Bank ("ENB"), a
national banking association, in a merger (the "Merger") in which ENB Interim
National Bank ("Interim"), an interim national bank to be organized as a
wholly-owned subsidiary of UPC, would be merged with and into ENB pursuant to
an Agreement and Plan of Reorganization dated as of April 25, 1995, by and
between ENB, Interim and UPC as amended by Letter Agreement dated as of July
28, 1995 (the "Reorganization Agreement"), along with the Merger Agreement
annexed thereto as Exhibit A. In the Merger, shareholders of ENB would receive
in exchange for each of their shares of ENB's common stock, $16.00 par value
per share (the "ENB Common Stock"), outstanding immediately prior to the
effective time of the merger: (i) cash in the amount of $9.86 (the "Cash
Payment"); (ii) .6958 of one share of Series E Preferred Stock; and (iii) UPC's
three series of unregistered, unsecured notes (the "UPC Negotiable Notes") in
aggregate principal amount equal to $31.80 and bearing interest at eight (8%)
percent per annum (subject to adjustment as described herein); provided,
however, that any ENB shareholder who would otherwise be entitled to receive
less than 100 full shares of Series E Preferred Stock or any fractional share
of Series E Preferred Stock shall receive cash instead of such Series E
Preferred Stock (based on a conversion price equal to the highest price at
which the Series E Preferred Stock should trade through the facilities of the
NASDAQ/NMS [as defined below] on the effective date of the Merger) and,
provided further, that any ENB shareholder who would be entitled to receive a
UPC Negotiable Note of any one series having an aggregate principal amount of
less than $100,000 shall receive instead cash equal to the principal amount of
such series of UPC Negotiable Notes. The method of determining the number of
shares of Series E Preferred Stock and the aggregate principal amount of the
UPC Negotiable Notes of each series to be received as consideration is
described below under the heading "THE MERGER--Terms of the Merger" and in
Section 3.1(e) of the Reorganization Agreement, a copy of which is annexed as
Appendix B to this Prospectus.
Holders of shares of Series E Preferred Stock are entitled to receive
cash dividends at the annual rate of 8% of the Stated Value, i.e. $2.00 per
share or $.50 per share, payable quarterly when and if declared, on the 15th
day of February, May, August and November. Dividends on the Series E Preferred
Stock are cumulative. Moreover, holders of Series E Preferred Stock are
entitled to a preferential distribution per share equal to the Stated Value
plus accrued and unpaid dividends (whether or not declared) upon the
dissolution of UPC. Each share of Series E Preferred Stock is convertible at
any time at the option of the holder into 1.25 shares of UPC's common stock,
$5.00 par value ("UPC Common Stock"), and may be redeemed for cash at the
option of UPC at any time on or after March 31, 1997 upon prior written consent
of the Board of Governors of the Federal Reserve System and with prior notice
to the holder and an opportunity to convert the Series E Preferred Stock to UPC
Common Stock, at a redemption price of $25.00 per share plus dividends (whether
or not declared) accrued and accumulated
<PAGE> 5
but unpaid at the redemption date. Shares of Series E Preferred Stock
generally have no voting rights but may be voted in certain limited instances
provided by law and UPC's Charter.
The annexed Notice of Special Meeting of Shareholders and this
Prospectus explain the Merger, the Reorganization Agreement and the Merger
Agreement annexed thereto as Exhibit A, and provide specific information
relative to the Special Meeting. Please read these materials carefully and
thoughtfully consider the information contained in them. In addition to the
satisfaction of certain contractual conditions, the prior approvals of not only
ENB's shareholders but also of certain federal and state governmental
regulatory agencies are required in order to consummate the Merger.
Shares of the Series E Preferred Stock are now, and the Series E
Preferred Stock to be issued in connection with the Merger will be, listed
through the facilities of the National Association of Securities Dealers'
National Market System ("NASDAQ/NMS") under the symbol "UPCPO." Shares of UPC
Common Stock are now, and the shares of UPC Common Stock into which the Series
E Preferred Stock may be converted will be 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 September 12, 1995, was $38.63
per share. The last reported sale price of UPC Common Stock on the NYSE on
September 12, 1995, was $30.75 per share. Although market prices are subject to
fluctuation, if the current market value of the Series E Preferred Stock should
continue to be $38.63 per share, the market value of the Series E Preferred
Stock to be received by the ENB shareholders would be approximately $26.88 per
share of ENB Common Stock.
This Prospectus also constitutes a proxy statement and is furnished to
holders of ENB Common Stock in connection with the solicitation of proxies by
the ENB Board of Directors (the "ENB Board") for use at a Special Meeting of
ENB shareholders to be held at 2:00 p.m. Eastern Time on Monday, October 16,
1995, at the executive offices of ENB, 799 Brickell Plaza, Tenth Floor, Miami,
Florida 33131 and at any adjournments or postponements thereof (the "Special
Meeting"). At the Special Meeting, holders of ENB Common Stock of record as of
the close of business on September 14, 1995, will consider and vote upon a
proposal to approve the Reorganization Agreement and the Merger Agreement
annexed thereto as Exhibit A. Upon consummation of the proposed Merger: (i)
all outstanding shares of ENB Common Stock (with the exception of those shares
held by any ENB shareholders with respect to which dissenters' rights shall
have been perfected in accordance with Federal law) would be converted
exclusively into the right to receive the "Consideration" to which the ENB
shareholders are entitled as more particularly described in Section 3.1(e) of
the Reorganization Agreement, and (ii) Interim would be merged with and into
ENB which would survive the Merger and would thereafter continue to conduct its
business under the name Union Planters Bank of Florida, N.A. as a wholly-owned
subsidiary of UPC.
All information contained in this Prospectus pertaining to UPC and its
subsidiaries, including Interim, has been supplied by UPC, and all information
pertaining to ENB has been supplied by ENB. This Prospectus and the
accompanying proxy appointment cards are first being mailed to shareholders of
ENB on or about September 15, 1995.
THE SHARES OF SERIES E PREFERRED STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS
OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE SAVINGS ASSOCIATION INSURANCE FUND, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS--PROXY STATEMENT IS SEPTEMBER 15, 1995.
<PAGE> 6
AVAILABLE INFORMATION
UPC is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by UPC can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
regional offices of the Commission located at Room 1228, 75 Park Place, New
York, New York 10007 and 500 West Madison Street, Chicago, Illinois 60661-2511.
Copies of such material can be obtained by mail from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, such reports, proxy statements and other
information concerning UPC can be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005. UPC has filed with
the Commission a Registration Statement (No. 33-62141) 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
and the UPC Common Stock into which it may be converted. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the Exhibits thereto. Certain items have been 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 otherwise 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 Quarterly Reports on Form 10-Q for the three-month
periods ended March 31, 1995 and 1994 and for the three- and
six-month periods ended June 30, 1995 and 1994;
3. 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;
4. UPC's Current Report on Form 8-K dated December 31, 1994, as
filed January 13, 1995 and amended on January 31, 1995.
5. UPC's Current Report on Form 8-K dated April 27, 1995, as
filed on April 27, 1995;
6. UPC's Current Report on Form 8-K dated June 20, 1995, as filed
on June 27, 1995;
7. UPC's Current Report on Form 8-K dated July 27, 1995, as filed
on July 27, 1995;
(i)
<PAGE> 7
8. UPC's Current Reports on Form 8-K dated August 21, 1995, as
filed on August 22, 1995 and dated August 22, 1995, as filed
on August 22, 1995;
9. 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; and
10. 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.
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" which is
Exhibit 13 to said Form 10-K) 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 the
Series E 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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE, 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 E. JAMES HOUSE, JR.,
SECRETARY, UNION PLANTERS CORPORATION, P.O. BOX 387, MEMPHIS, TENNESSEE 38147,
(901) 383-6584. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY OCTOBER 9, 1995.
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 ENB SINCE THE DATE
HEREOF OR THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF.
(ii)
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<S> <C>
AVAILABLE INFORMATION (i)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE (i)
SUMMARY 1
Parties to the Merger 1
Special Meeting of ENB Shareholders 3
Votes Required; Record Date 3
Terms of the Merger 3
Effective Date 5
Reasons for the Merger; Recommendations of Board of Directors 5
Fairness Opinion of The Robinson-Humphrey Company, Inc. 5
Conditions; Regulatory Approvals 6
Management after the Merger 6
Shareholders' Dissenters' Rights 6
Certain Federal Income Tax Consequences 7
Accounting Treatment 7
Market Prices of Preferred Stock and Common Stock 7
Selected Consolidated Financial Data and Recent Developments 9
Pro Forma Condensed Consolidated Financial Information 15
THE SPECIAL MEETING 21
Time and Place of Special Meeting; Solicitation of Proxies 21
Votes Required 22
Shareholders' Dissenters' Rights 22
Recommendation 23
THE MERGER 23
Background of and Reasons for the Merger 24
Fairness Opinion of The Robinson-Humphrey Company, Inc. 25
Terms of the Merger 27
Effective Date and Effective Time of the Merger 29
Surrender of Certificates 29
Conditions to Consummation of the Merger 30
Regulatory Approvals 32
Conduct of Business Pending the Merger 33
Payment of Dividends 33
Waiver and Amendment; Termination 33
Management after the Merger 34
ENB Executive Compensation 36
Interests of Certain Persons in the Merger 37
Certain Federal Income Tax Consequences 37
Accounting Treatment 37
Expenses 38
Resales of Series E Preferred Stock 38
</TABLE>
(iii)
<PAGE> 9
<TABLE>
<S> <C>
CERTAIN REGULATORY CONSIDERATIONS 38
DESCRIPTION OF THE UPC COMMON AND PREFERRED STOCK 39
The UPC Common Stock 40
The Series E Preferred Stock 40
Other Preferred Stock of UPC 44
CERTAIN PROVISIONS THAT MAY HAVE AN ANTI-TAKEOVER EFFECT 45
EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS 46
Removal of Directors 46
Required Shareholder Votes 46
Election of Directors 47
Method of Casting Votes 47
EASTERN NATIONAL BANK 48
General 48
Lending Activities 48
Property 49
Competition 49
Legal Proceedings 49
Market Price of ENB Common Stock 49
Certain Beneficial Holders of ENB Common Stock 49
Holdings of ENB Common Stock by ENB Management 50
EASTERN NATIONAL BANK MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 51
Overview 51
Results of Operations For The Six Months Ended June 30, 1995 and 1994 51
Financial Condition - June 30, 1995
Results Of Operations For The Years Ended December 31, 1994 and 1993 54
Financial Condition - December 31, 1994 55
VALIDITY OF SERIES E PREFERRED STOCK AND UPC COMMON STOCK 73
EXPERTS 73
INDEX TO APPENDICES 74
</TABLE>
(iv)
<PAGE> 10
Appendix A-1 Eastern National Bank Consolidated Financial
Statements as of December 31, 1994 and 1993 and
for the years ended December 31, 1994, 1993 and 1992
Appendix A-2 Eastern National Bank unaudited Consolidated Financial
Statements as of June 30, 1995 and for the six-month
periods ended June 30, 1995 and 1994
Appendix B Agreement and Plan of Reorganization dated as of April
25, 1995,
as amended by that certain Letter Agreement dated as of
July 28, 1995, along with the Merger Agreement annexed
as Exhibit A thereto.
Appendix C Fairness Opinion of The Robinson-Humphrey Company, Inc.
Appendix D United States Code Annotated, Title 12, Section
215(b)-(d) concerning the rights of dissenting
shareholders.
(v)
<PAGE> 11
SUMMARY
THE FOLLOWING SUMMARY IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF
ALL MATERIAL FACTS REGARDING UPC, ENB AND THE MATTERS TO BE CONSIDERED AT THE
SPECIAL MEETING, AND IS QUALIFIED IN ALL RESPECTS BY THE INFORMATION APPEARING
ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, THE APPENDICES
HERETO AND THE DOCUMENTS REFERRED TO HEREIN.
PARTIES TO THE MERGER
UPC. Union Planters Corporation ("UPC") is a multi-state bank
holding company and savings and loan holding company headquartered in Memphis,
Tennessee. At June 30, 1995, UPC had total consolidated assets of
approximately $9.7 billion, loans of approximately $6.1 billion, deposits of
approximately $8.3 billion and shareholders' equity of approximately $812
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 June 30, 1995, UPC's ratio of
nonperforming loans to total loans was .41% and its ratio of nonperforming
assets to loans and foreclosed property was .51%. The ratio of UPC's allowance
for losses on loans to total loans at such date was 1.95% and the ratio of
UPC's allowance for losses on loans to nonperforming loans was 475%. Also at
such date, UPC's Tier 1 risk-based capital, total risk-based capital and
leverage ratios were 12.98%, 15.49% and 7.96%, respectively.
UPC conducts its business activities through its principal bank
subsidiary, the $2.1 billion Union Planters National Bank, founded in 1869 and
headquartered in Memphis, Tennessee; 31 other bank subsidiaries; and two
savings and loan subsidiaries located in Tennessee, Mississippi, Arkansas,
Louisiana, Alabama and Kentucky (collectively, the "Banking Subsidiaries").
See "- Recent Developments Affecting UPC." Through its Banking Subsidiaries,
UPC provides a diversified range of financial services in the communities in
which they operate, including traditional banking services; 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 379
banking offices. UPC's assets are allocable by state to its banking offices
approximately as follows: $5.9 billion in Tennessee, $2.4 billion in
Mississippi, $682 million in Arkansas, $501 million in Louisiana, $267 million
in Alabama and $108 million in Kentucky.
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of UPC's business. UPC 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.
As of June 20, 1995, UPC entered into a definitive agreement with Capital
Bancorporation, Inc. ("Capital") for the merger of Capital with and into CBI
Acquisition Company, Inc., a wholly-owned subsidiary of UPC (the "Capital
Acquisition"). At June 30, 1995, Capital had total consolidated assets of
approximately $1.1 billion, loans of approximately $850 million, deposits of
$975 million and shareholders' equity of $78 million. For additional
information regarding the acquisition of Capital and the impact of the
acquisition of Capital and ENB on the financial condition of UPC, see "--Recent
Developments Affecting UPC" and "--ProForma Condensed Consolidated Financial
Information." For a discussion of UPC's acquisition
<PAGE> 12
program and its management's philosophy on that subject, see the caption "UPC's
Pending Acquisitions" (on pages 10 and 11) and Note 2 to UPC's audited
Consolidated Financial Statements for the years ended December 31, 1994 and
1993 (on pages 43 through 47) which are included in UPC's Annual Report to
Shareholders which is Exhibit 13 to UPC's Annual Report on Form 10-K for the
year ended December 31, 1994, which Exhibit 13 is incorporated by reference
herein to the extent indicated. 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 incurring of additional
indebtedness by UPC, and could have a dilutive effect on the earnings or book
value per share of UPC. Moreover, significant charges against earnings are
sometimes required incidental to acquisitions. For acquisitions which are
currently pending, see "-- Recent Developments Affecting UPC."
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
UPC's 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 is expected to 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 the 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.
ENB. Eastern National Bank is a national banking association
headquartered in Miami, Florida. Its main office is located at 799 Brickell
Plaza in Miami, Florida. ENB has five full-service branch offices, all located
in Dade County, Florida. At June 30, 1995, ENB had total assets of $266.3
million, total deposits of $235.1 million, and total shareholders' equity of
$20.6 million. For the six-month period ended June 30, 1995, ENB had net
income of $1.2 million.
ENB offers traditional banking services including commercial,
consumer, and real estate loans; deposit accounts; and private banking
services. ENB has approximately 124 full-time-equivalent employees.
ENB has been in operation in Miami since 1969. It opened its branches
at Brickell and Coral Gables, Florida in 1983 and 1988, respectively, and now
also has branches at Hialeah, Kendall and Miami West Airport. ENB has one
subsidiary, ENB Holdings, Inc. which manages and owns the building where ENB's
main office is located. At June 30, 1995, ENB Holdings, Inc. had total assets
of $4.8 million. ENB's telephone number (main office) is (305) 347-1520.
INTERIM. ENB Interim National Bank is to be an interim national bank
headquartered in Miami, Florida organized solely for the purpose of
consummating the Merger. Interim will be organized by UPC as a wholly-owned
subsidiary and will have its main office at 799 Brickell Plaza, Miami, Florida
33131. In the Merger, Interim would be merged with and into ENB which would
survive the Merger as the
2
<PAGE> 13
resulting bank (hereinafter, as the context requires, the "Resulting Bank") and
after the Merger would operate as a wholly-owned subsidiary of UPC under the
name Union Planters Bank of Florida, N.A.
SPECIAL MEETING OF ENB SHAREHOLDERS
A Special Meeting (the "Special Meeting") of the Shareholders of ENB
will be held on Monday, October 16, 1995, at 2:00 p.m. Eastern Time, at the
executive offices of ENB located at 799 Brickell Plaza, Tenth Floor, Miami,
Florida 33131, to consider and vote upon a proposal to approve the
Reorganization Agreement (as amended by the Letter Agreement dated July 28,
1995) and the Merger Agreement annexed thereto as Exhibit A. See "THE SPECIAL
MEETING."
VOTES REQUIRED; RECORD DATE
Only holders of ENB Common Stock of record at the close of business on
September 14, 1995 (the "Record Date") will be entitled to receive notice of,
and vote at the Special Meeting. The affirmative votes of the holders of at
least two-thirds (2/3) of the 456,250 shares of ENB Common Stock outstanding on
the Record Date are required to approve the Reorganization Agreement and the
Merger Agreement annexed thereto as Exhibit A.
The directors and executive officers of ENB (the "Management Group")
held beneficially and of record, as of the Record Date, 379 shares or
approximately .084% of the outstanding shares of ENB Common Stock which ENB
Management has advised they intend to vote in favor of the proposed Merger.
ENB has also been advised by the Trustees of the ENB Revocable Trust and by
Eastern Overseas Bank Ltd., respectively the record holders of 432,379 shares
(94.768%) and 22,803 shares (4.998%) of ENB's outstanding shares, that they
intend to vote all of their shares of ENB Common Stock in favor of approval of
the Reorganization Agreement and the Merger Agreement annexed thereto as
Exhibit A. Should the ENB Revocable Trust alone do so, the requirement of ENB
shareholder approval would be satisfied. See "THE SPECIAL MEETING."
TERMS OF THE MERGER
Upon consummation of the Merger, each share of ENB Common Stock which
shall be outstanding immediately prior to the Effective Time of the Merger
(except for those shares with respect to which dissenters' rights shall have
been perfected in accordance with Federal law) will be converted exclusively
into the right to receive the consideration stipulated in the Reorganization
Agreement (the "Consideration"). Section 3.1(e) of the Reorganization
Agreement describes the method of determining the amount of Consideration to be
received by the ENB shareholders in exchange for their shares of ENB Common
Stock.
In the Merger, the persons who shall be shareholders of record of ENB
immediately prior to the Effective Time of the Merger (the "ENB Record
Holders") would receive in exchange for each of their shares of ENB's common
stock, the Consideration consisting of the following three components: (i)
cash in the amount of $9.86 (the "Cash Payment"); (ii) .6958 of one share of
Series E Preferred Stock; and (iii) UPC Negotiable Notes issued in three
series, in aggregate principal amount equal to $31.80 and bearing interest at
eight (8%) percent per annum; provided, however, that any ENB Record Holder who
would otherwise be entitled to receive less than 100 full shares of Series E
Preferred Stock or to receive a UPC Negotiable Note of any one of the three
series in an aggregate principal amount of less than $100,000 would receive,
respectively, cash in an amount equal to the "highest trade price" of the
Series E Preferred
3
<PAGE> 14
Stock through the facilities of the NASDAQ/NMS on the effective date of the
Merger or the next day on which the Series E Preferred Stock trades (the
"Highest Trade Price") for each whole share of Series E Preferred Stock to
which such ENB Record Holder would otherwise be entitled, and cash in an amount
equal to the aggregate principal amount of UPC Negotiable Notes to which such
Record Holder would otherwise be entitled. See "THE MERGER--Terms of the
Merger" for a detailed description of the components of the Consideration.
The number of shares of Series E Preferred Stock to be received as
part of the Consideration for each share of ENB Common Stock outstanding
immediately prior to the effective time of the Merger is based upon an exchange
ratio (the "Preferred Stock Exchange Ratio") of .6958 of one share of Series E
Preferred Stock for each share of ENB Common Stock. The last trade of the
Series E Preferred Stock on September 12, 1995, was $38.63 per share. As of
such date, the value of the Series E Preferred Stock to be received by the ENB
Record Holders would have been approximately $26.88 per share of ENB common
stock.
ENB Record Holders entitled to receive UPC Negotiable Notes would
receive UPC Negotiable Notes (in three series) each bearing interest at eight
(8%) percent per annum. The principal amounts, maturity dates and interest
payment dates of the UPC Negotiable Notes of each of the three series are as
follows:
(i) the UPC Negotiable Notes, Series I (the "Series I Notes") shall be
issued in principal amount equal to $15.90 per share of ENB Common
Stock and shall be payable as to principal on the one-year anniversary
of the effective date of the Merger and as to interest quarterly
beginning on the first day of the calendar quarter subsequent to the
quarter in which the effective date of the Merger shall occur; (ii)
the UPC Negotiable Notes, Series II (the "Series II Notes") shall be
issued in principal amount equal to $12.61 per share of ENB Common
Stock and shall be payable as to principal on March 31, 1997 and as to
interest quarterly beginning on the first day of the calendar quarter
subsequent to the quarter in which the effective date of the Merger
shall occur; and (iii) the UPC Negotiable Notes, Series III (the
"Series III Notes") shall be issued in principal amount equal to $3.29
per share of ENB Common Stock and shall be payable as to principal on
September 30, 1997 and as to interest quarterly beginning on the first
day of the calendar quarter subsequent to the quarter in which the
effective date of the Merger shall occur (subject to actual receipt by
the Resulting Bank of moneys equal to or in excess of amounts due on
the Series III Notes in repayment of certain loans made by ENB to
Aerovias Venezolanas, S.A., a Venezuelan corporation (the "Scheduled
Borrower") which are currently in default and which are more
particularly described in the Reorganization Agreement).
Thus, in addition to his or her $9.86 per share Cash Payment, an ENB
Record Holder who shall hold less than 6,290 shares of ENB Common Stock would
receive in lieu of any Consideration in the form of UPC Negotiable Notes of all
Series, a cash payment equal to $31.80 multiplied by the number of shares of
ENB Common Stock held and an ENB Record Holder who shall hold less than 144
shares of ENB Common Stock would receive in lieu of any Consideration in the
form of Series E Preferred Stock a cash payment equal to the Highest Trade
Price, multiplied by the number of whole and fractional shares of shares of
Series E Preferred Stock to which an ENB Record Holder would otherwise be
entitled. The Highest Trade Price of the Series E Preferred Stock on September
12, 1995 was $38.63 per share. Accordingly, if the market should be the same
on the Effective Date of the Merger, an ENB Record
4
<PAGE> 15
Holder who shall hold less than 144 shares of ENB Common Stock would receive in
the aggregate approximately $68.54 in cash in exchange for each share of ENB
Common Stock held (and no Series E Preferred Stock and no UPC Negotiable
Notes). The market price of the Series E Preferred Stock may change
significantly prior to the Effective Date of the Merger.
EFFECTIVE DATE
The Merger will become effective at the time specified in the Official
Certification of Merger (the "Certification") issued by the Office of the
Comptroller of the Currency (the "Comptroller") in accordance with Federal Law
(the "Effective Time of the Merger"). Such Certification is generally issued
within ten (10) days of request by the parties made following receipt of all
regulatory approvals. Assuming the timely receipt of all prior regulatory
approvals, the expiration of all statutory waiting periods and the satisfaction
or waiver of all contractual conditions to closing set forth in the
Reorganization Agreement, it is expected that the Merger would become effective
on or about December 31, 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"). Only the ENB Record Holders will be entitled to receive the
Consideration for the Merger pursuant to the Reorganization Agreement and the
Merger Agreement annexed thereto as Exhibit A.
REASONS FOR THE MERGER; RECOMMENDATIONS OF BOARD OF DIRECTORS
The Board of Directors of ENB (the "ENB Board") believes the Merger is
fair to, and in the best interests of ENB and its shareholders and unanimously
recommends that ENB's shareholders vote "FOR" approval of the Reorganization
Agreement and the Merger Agreement annexed thereto as Exhibit A. The ENB
Board, after consideration of a number of alternatives available to ENB and
ENB's shareholders, believes that the Merger will enable the ENB shareholders
to participate in opportunities for investment value and growth. The Merger
and the resulting affiliation with UPC's banking network would give ENB's
banking offices access to a substantially larger base of capital and enhanced
regulatory and operating expertise and would permit ENB's banking offices to
expand services beyond those presently provided. Moreover, affiliation with
UPC will enhance the ability of the banking offices presently operated by ENB
to compete more effectively in the Southeast Florida marketplace and to enjoy
certain economies of scale in their banking operations. See "THE
MERGER--Background of and Reasons for the Merger."
FAIRNESS OPINION OF THE ROBINSON-HUMPHREY COMPANY, INC.
ENB has retained The Robinson-Humphrey Company, Inc.
("Robinson-Humphrey") as its financial advisor in connection with the Merger
and requested that Robinson-Humphrey render its opinion with respect to the
fairness from a financial point of view to the ENB shareholders of the
Consideration to be received by them in the Merger. Robinson-Humphrey rendered
its written opinion to ENB's Board of Directors (the "ENB Board") to the effect
that as of April 25, 1995, the Consideration to be received by the ENB
shareholders in the Merger was fair from a financial point of view, to such
shareholders. The fairness opinion sets forth a description of assumptions
made and matters considered by Robinson-Humphrey, and contains certain
limitations and qualifications. A copy of the fairness opinion is attached as
Appendix C to this Prospectus, and the description set forth herein is
qualified in its entirety by reference to the opinion.
For additional information, see "THE MERGER--Fairness Opinion of The
Robinson-Humphrey Company, Inc." herein and the copy of the fairness opinion
attached hereto as Appendix C.
5
<PAGE> 16
CONDITIONS; REGULATORY APPROVALS
Consummation of the Merger is subject to various conditions, including
receipt of the approval of the ENB shareholders, receipt of the required prior
regulatory approvals and satisfaction of certain 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 Office of the Comptroller of the Currency (the "Comptroller");
the Board of Governors of the Federal Reserve System (the "Federal Reserve"),
and the Florida Department of Banking and Finance (the "Florida Department").
Applications for such approvals are expected to be submitted to each of the
respective regulatory agencies within thirty (30) days after the date of the
Special Meeting. There can be no assurance as to when or if UPC and ENB will
receive the necessary regulatory approvals. See "THE MERGER--Conditions to
Consummation of the Merger," "--Regulatory Approvals" and "--Conduct of
Business Pending the Merger" and "CERTAIN REGULATORY CONSIDERATIONS."
MANAGEMENT AFTER THE MERGER
At the Effective Time of the Merger, the persons who are serving
immediately prior thereto as officers or directors of ENB shall cease to be
officers or directors of ENB (then operating as Union Planters Bank of Florida,
N.A.) as the bank resulting from and surviving the Merger. Such individuals as
shall be designated by UPC shall be elected or appointed effective immediately
following the Effective Time of the Merger and thereafter shall hold office as
provided in the Articles of Association and ByLaws of the Resulting Bank. It
is anticipated that the persons named below will be elected or appointed to
serve as officers and directors of the Resulting Bank unless and until their
successors shall have been duly elected or appointed and have qualified.
Certain of the directors of the two merging banks would continue as directors
of the Resulting Bank:
Carole Fewell Abel L. Iglesias
Robert L. Jamerson, Jr. Caridad Campos
Jose J. Valdes-Fauli Robert E. Diaz
Melvin Wolfe Isis Valle
See "THE MERGER--Management After the Merger."
SHAREHOLDERS' DISSENTERS' RIGHTS
Any shareholder of ENB entitled to vote on the proposed Reorganization
Agreement and Merger Agreement annexed thereto as Exhibit A has the right to
receive in cash, the appraised value of his or her shares of ENB Common Stock
upon compliance with United States Code Annotated, Title 12, Section 215(b)-(d)
(the "Statute") a copy of which is annexed to this Prospectus as Appendix D.
Shareholders wishing to dissent from the Reorganization Agreement are urged to
read carefully "THE SPECIAL MEETING--Shareholders' Dissenters' Rights" and
Appendix D and should consult with their own legal advisors.
6
<PAGE> 17
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
It is expected that for federal income tax purposes the Merger will
not qualify as a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, for federal income
tax purposes the ENB Record Holders will be treated as if they had sold their
stock in a taxable transaction and will realize and recognize gain or loss (if
any) to the extent of the cash, the value of the Series E Preferred Stock and
UPC Negotiable Notes received as the Consideration for their ENB Common Stock.
An ENB Record Holder may also recognize gain or loss by reason of receiving
cash in lieu of a fractional share or as a result of the exercise of
Dissenters' Rights. See "THE MERGER--Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT
The Merger is intended to be accounted for as a "purchase" under
generally accepted accounting principles ("GAAP") as described in Accounting
Principles Board Opinion No. 16 and the interpretations thereof. See "THE
MERGER-- Accounting Treatment."
MARKET PRICES OF PREFERRED STOCK AND 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 36.39 30.25 .50
Third Quarter through September 12, 1995 38.94 33.75 .50
Fourth Quarter NA NA .50
------
Total $ 2.00
======
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
======
</TABLE>
7
<PAGE> 18
<TABLE>
<S> <C> <C> <C>
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>
--------------
NA - Not Applicable
The last reported sale price of Series E Preferred Stock on the
NASDAQ/NMS on September 12, 1995, which was the last practicable date prior to
the mailing of this Prospectus, was $38.63 per share. Each share of the Series
E Preferred Stock is convertible at any time at the option of the holder into
1.25 shares of UPC Common Stock.
UPC Common Stock. The UPC Common Stock is listed and traded on the
NYSE (symbol: UPC). The following table sets forth for the periods indicated
the high and low closing sale prices of the UPC Common Stock on the NYSE and
the cash dividends declared per share for the periods indicated:
<TABLE>
<CAPTION>
CASH
PRICE RANGE DIVIDENDS
----------- DECLARED
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
1995
First Quarter $24.50 $20.88 $.23
Second Quarter 28.13 23.13 .25
Third Quarter
Through September 12, 1995 30.75 26.13 .25
----
Total $.73
====
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
====
</TABLE>
The last reported sale price of UPC Common Stock on the NYSE as of
September 12, 1995, which was the last practicable date prior to the mailing of
this Prospectus, was $30.75 per share.
8
<PAGE> 19
ENB Common Stock. The ENB Common Stock is not listed for trading on
a national securities exchange or otherwise publicly traded in any established
securities market. ENB is not aware of any active market or trading in the
shares of ENB Common Stock. See "EASTERN NATIONAL BANK -- Market Price of ENB
Common Stock."
SELECTED CONSOLIDATED FINANCIAL DATA AND RECENT DEVELOPMENTS
Selected Consolidated Financial Data. The tables on pages 10 - 13 present for
UPC and ENB on an historical basis, selected unaudited consolidated
financial data for the five years ended December 31, 1994 and for the six-month
periods ended June 30, 1995 and 1994. The information for UPC has been derived
from the consolidated financial statements of UPC, including the audited
consolidated financial statements of UPC incorporated in this Prospectus by
reference to Exhibit 13 to UPC's 1994 Annual Report on Form 10-K, dated
December 31, 1994 and the unaudited interim financial statements for the three-
and six-month periods ended June 30, 1995 included in UPC's quarterly report on
Form 10-Q dated June 30, 1995, and should be read in conjunction therewith and
with the notes thereto. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
The information for ENB has been derived from consolidated financial
statements, including the consolidated financial statements of ENB annexed as
Appendices A-1 and A-2 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,
consisting only of normal recurring adjustments, necessary to arrive at a fair
statement of interim results of operations of UPC and ENB, have been included.
Recent Developments. Certain information concerning UPC's Consummated
and Pending Acquisitions is presented on page 14 below.
9
<PAGE> 20
UPC Selected Consolidated Financial Data
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31, (1)
-------------------------- ----------------------------------------
1995 1994 1994 1993 1992
------------ ------------ ------------ ------------ ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Net interest income $ 199,089 $ 188,528 $ 388,278 $ 343,710 $ 281,148
Provision for losses on loans 3,686 1,800 3,636 16,558 27,182
Investment securities gains (losses) (3) 274 (20,298) 4,495 14,019
Other noninterest income 71,773 56,389 113,860 115,430 98,590
Noninterest expense 169,095 168,863 398,835 319,681 279,464
----------- ----------- ----------- ----------- -----------
Earnings before income taxes,
extraordinary item, and accounting
changes 98,078 74,528 79,369 127,396 87,111
Applicable income taxes 31,197 22,889 20,761 37,420 23,861
----------- ----------- ----------- ----------- -----------
Earnings before extraordinary item and
accounting changes 66,881 51,639 58,608 89,976 63,250
Extraordinary item-defeasance of debt,
net of taxes - - - (3,206) -
Accounting changes, net of taxes - - - 5,782 -
----------- ----------- ----------- ----------- -----------
Net earnings $ 66,881 $ 51,639 $ 58,608 92,552 63,250
=========== =========== =========== =========== ===========
Per Common Share Data (2)
Primary
Earnings before extraordinary item and
accounting changes $ 1.56 $ 1.18 $ 1.25 2.31 1.79
Extraordinary item-defeasance of debt,
net of taxes - - - (.09) -
Accounting changes, net of taxes - - - .16 -
Net earnings 1.56 1.18 1.25 2.38 1.79
Fully diluted
Earnings before extraordinary item and
accounting changes 1.49 1.14 1.25 2.23 1.77
Extraordinary item-defeasance of debt,
net of taxes - - - (.08) -
Accounting changes, net of taxes - - - .15 -
Net earnings 1.49 1.14 1.25 2.30 1.77
Cash dividends .48 .42 .88 .72 .60
Book value 17.86 16.64 16.01 16.29 14.02
Balance Sheet Data (at period end)
Total assets $ 9,745,439 $ 10,090,999 $ 10,015,069 9,029,893 7,493,004
Loans, net of unearned income 6,085,087 5,388,459 5,949,128 4,653,368 3,585,769
Allowance for losses on loans 118,675 122,823 122,089 114,353 89,827
Investment securities 2,506,948 3,672,357 2,962,144 3,295,644 2,793,950
Deposits 8,263,263 8,341,007 8,417,842 7,671,621 6,441,991
Short-term borrowings 140,434 534,101 415,171 275,537 321,976
Long-term debt (3)
Parent company 114,816 114,764 114,790 114,729 74,292
Subsidiary banks 298,607 226,873 226,161 195,442 21,756
Total shareholders' equity 811,520 768,747 730,707 682,002 529,496
Average assets 9,787,388 9,961,386 10,025,383 8,857,216 6,934,718
Average shareholders' equity 779,517 769,170 778,232 639,874 494,529
Average shares outstanding (in thousands)
Primary 40,514 40,004 40,055 35,311 31,910
Fully diluted 45,005 44,486 40,397 39,541 34,754
<CAPTION>
Years Ended December 31, (1)
-----------------------------
1991 1990
------------ ------------
(Dollars in thousands, except per share data)
<S> <C> <C>
Income Statement Data
Net interest income $ 233,790 $ 206,529
Provision for losses on loans 34,203 26,304
Investment securities gains (losses) 2,624 83
Other noninterest income 90,697 92,076
Noninterest expense 238,475 231,733
----------- -----------
Earnings before income taxes,
extraordinary item, and accounting
changes 54,433 40,651
Applicable income taxes 11,537 5,408
----------- -----------
Earnings before extraordinary item and
accounting changes 42,896 35,243
Extraordinary item-defeasance of debt,
net of taxes - -
Accounting changes, net of taxes - -
----------- -----------
Net earnings $ 42,896 $ 35,243
=========== ===========
Per Common Share Data (2)
Primary
Earnings before extraordinary item and
accounting changes $ 1.32 $ 1.03
Extraordinary item-defeasance of debt,
net of taxes - -
Accounting changes, net of taxes - -
Net earnings 1.32 1.03
Fully diluted
Earnings before extraordinary item and
accounting changes 1.32 1.03
Extraordinary item-defeasance of debt,
net of taxes - -
Accounting changes, net of taxes - -
Net earnings 1.32 1.03
Cash dividends .48 .48
Book value 12.77 11.77
Balance Sheet Data (at period end)
Total assets $ 5,928,496 $ 6,095,531
Loans, net of unearned income 3,132,924 3,376,435
Allowance for losses on loans 67,989 67,505
Investment securities 1,777,754 1,773,508
Deposits 5,145,181 5,182,379
Short-term borrowings 222,510 362,364
Long-term debt (3)
Parent company 38,163 44,662
Subsidiary banks 10,083 4,469
Total shareholders' equity 425,970 383,349
Average assets 5,928,927 6,096,808
Average shareholders' equity 398,651 386,800
Average shares outstanding (in thousands)
Primary 31,752 33,738
Fully diluted 32,105 34,078
</TABLE>
10
<PAGE> 21
UPC Selected Consolidated Financial Data (continued)
<TABLE>
<CAPTION>
Six Months Ended
June 30, (6) Years Ended December 31, (1)
------------------- -----------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------ ------- ------ ------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Profitability and Capital Ratios
Return on average assets 1.38 % 1.05 % .58 % 1.04 % .91 % .72 % .58 %
Return on average common equity 18.48 14.33 7.40 15.55 13.48 10.80 9.12
Net interest income (taxable-equivalent)
to average earning assets (4) 4.62 4.35 4.39 4.44 4.62 4.54 4.02
Loans/deposits 73.64 64.60 70.67 60.66 55.66 60.89 65.15
Common and preferred dividend payout
ratio 34.14 35.45 64.68 31.81 35.72 35.66 43.08
Equity/assets (period end) 8.33 7.62 7.30 7.55 7.07 7.19 6.29
Average shareholders' equity/average
total assets 7.96 7.72 7.76 7.22 7.13 6.72 6.34
Leverage ratio (5) 7.96 7.43 7.18 7.23 7.11 7.10 6.18
Tier 1 capital to risk-weighted
assets (5) 12.98 13.68 12.22 13.58 13.35 11.91 9.98
Total capital to risk-weighted
assets (5) 15.49 16.29 14.75 16.40 15.44 14.13 12.09
Asset Quality Ratios
Allowance/period end loans 1.95 2.28 2.05 2.46 2.51 2.17 2.00
Nonperforming loans/total loans .41 .47 .32 .59 1.32 1.09 1.07
Allowance/nonperforming loans 475 487 641 414 190 200 187
Nonperforming assets/loans and
foreclosed properties .51 .63 .42 .78 1.69 1.74 1.81
Provision/average loans .12 .07 .07 .37 .77 1.04 .78
Net charge-offs/average loans .24 .10 .09 .30 .60 1.02 .85
----------------------
</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) Profitability and capital ratios for the six months ended June 30, 1995 and
1994 are presented on an annualized basis.
11
<PAGE> 22
ENB SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
------------------------------------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- --------- ---------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 6,126 $ 5,357 $ 10,841 $ 9,780 $ 8,350 $ 6,387 $ 5,457
Provision for loan losses 460 375 750 825 1,079 950 490
Noninterest income 1,400 1,269 3,332 2,621 2,083 1,545 1,114
Noninterest expense 5,150 4,718 10,683 8,926 6,937 6,095 5,113
---------- --------- --------- ---------- ----------- ----------- -----------
Income before income taxes 1,916 1,533 2,740 2,650 2,417 887 968
Income taxes 761 635 1,109 1,015 881 337 368
---------- --------- --------- ---------- ----------- ----------- -----------
Net income $ 1,155 $ 898 $ 1,631 $ 1,635 $ 1,536 $ 550 $ 600
========== ========= ========= ========== =========== =========== ===========
PER COMMON SHARE DATA(1)
Net income $ 2.54 $ 1.97 $ 3.58 $ 3.58 $ 3.37 $ 1.79 $ 2.12
Book value 45.25 40.91 42.43 39.22 35.64 32.27 30.58
BALANCE SHEET DATA (AT PERIOD END)
Total assets $ 266,252 $ 246,407 $ 242,213 $ 240,185 $ 230,883 $ 171,016 $ 133,316
Loans, net of unearned interest 164,637 149,888 139,339 155,801 159,260 114,991 92,071
Allowance for loan losses 1,623 1,787 1,612 1,807 1,835 1,034 711
Investment securities 58,357 65,916 62,320 35,456 33,093 28,800 21,799
Interest-bearing deposits in other
financial institutions 290 782 384 2,483 4,654 4,289 1,349
Deposits 235,112 221,710 218,638 212,912 205,174 148,889 114,191
Total shareholders' equity 20,647 18,664 19,360 17,895 16,259 14,722 9,172
Average assets 251,498 253,148 250,083 230,968 201,386 153,134 124,453
Average shareholders' equity 20,190 18,290 18,672 17,159 15,489 9,450 8,414
Average shares outstanding 456,250 456,250 456,250 456,250 456,243 307,162 282,415
Average loans 153,353 152,694 148,254 160,431 135,411 102,275 83,399
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 0.92% 0.71% 0.65% 0.71% 0.76% 0.36% 0.50%
Return on average stockholders'
equity 11.44% 9.82% 8.74% 9.53% 9.92% 5.82% 7.17%
Net yield on interest earning assets 5.37% 4.82% 4.79% 4.62% 4.52% 4.28% 4.56%
Loans/deposits 70.02% 67.61% 63.73% 73.18% 77.62% 77.23% 80.63%
Equity/assets (period end) 7.75% 7.57% 7.99% 7.45% 7.04% 8.61% 6.88%
Average shareholders' equity/
average total assets 8.03% 7.23% 7.47% 7.43% 7.69% 6.17% 6.91%
Leverage ratio(2) 8.07% 7.22% 7.66% 7.58% 7.86% 9.20% 7.13%
Tier 1 capital to risk-weighted
assets(2) 11.49% 10.71% 11.52% 9.82% 9.63% 13.56% 10.44%
Total capital to risk-weighted
assets(2) 11.68% 10.93% 12.49% 10.83% 10.74% 14.54% 11.30%
</TABLE>
12
<PAGE> 23
ENB SELECTED CONSOLIDATED FINANCIAL DATA (continued)
<TABLE>
<CAPTION>
Six Months Ended
June 30, Years Ended December 31,
------------------------------------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---------- ---------- --------- ---------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSET QUALITY RATIOS
Allowance/period end loans 0.99% 1.19% 1.16% 1.16% 1.15% 0.90% 0.77%
Nonperforming loans/total loans 1.72% 2.52% 2.94% 2.99% 2.84% 0.99% N/A
Allowance/nonperforming loans 57.45% 47.26% 39.14% 38.50% 40.24% 89.99% N/A
Nonperforming assets/loans and
foreclosed property(3) 2.34% 2.77% 3.17% 3.20% 3.25% 1.54% 0.69%
Provision/average loans 1.06% 1.17% 0.51% 0.51% 0.80% 0.93% 0.60%
Net charge-offs/average loans 0.29% 0.62% 0.64% 0.53% 0.21% 0.61% 0.38%
</TABLE>
(1) ENB has not paid any cash dividends.
(2) The risk-based capital ratios are based upon capital guidelines
presented by federal regulatory authorities. Under those guidelines, the
required minimum Tier 1 and Total capital to risk-weighted assets are 4%
and 8%, respectively. The required minimum leverage ratio of Tier 1
capital to total adjusted assets is 3% to 5%.
(3) Nonperforming assets include nonaccrual loans plus foreclosed assets.
13
<PAGE> 24
RECENT DEVELOPMENTS AFFECTING UPC
UPC's Pending Acquisitions. Consistent with UPC's acquisition strategy,
UPC has entered into definitive agreements pursuant to which management
believes it is probable that UPC will acquire the following financial
institutions in addition to ENB (collectively, the "Consummated and Pending
Acquisitions"):
<TABLE>
<CAPTION>
CONSIDERATION
----------------------------------------
APPROXIMATE
INSTITUTION ASSET SIZE VALUE TYPE
----------- -------------- ----------- ----
<S> <C> <C> <C>
(In millions)
First State Bancorporation and its $ 110 $ 13.5 388,497 shares of
subsidiary, First Exchange Bank, Series E Preferred
Dyersburg, Tennessee* Stock
Capital Bancorporation, Inc., 1,115 109.3 Approximately
Cape Girardeau, Missouri, 4,200,000 shares of
and its subsidiaries, Capital Bank UPC Common
of Cape Girardeau County, Capital Stock**
Bank of Columbia, Capital Bank
of Southwest Missouri, Capital
Bank & Trust, Capital Bank of
Sikeston, Capital Bank of Perryville, N.A.,
Maryland Avenue Bancorporation, Inc.
Century State Bancshares, Inc. and
Capital Bank, a Federal Savings Bank
(Jonesboro, Arkansas)
Planters Bank & Trust Company 60 9.5 Approximately
Forrest City, Arkansas 341,000 shares of
UPC Common
Stock**
----- -----
Totals $1,285 $132.3
===== =====
</TABLE>
_______________
*Acquisition completed July 1, 1995.
**Maximum number of shares of UPC Common Stock estimated to be issued.
Reorganization of Union Planters Bank of Mississippi. At the end of August,
1995, fifty-five (55) of the branches now held by Union Planters Bank of
Mississippi ("UPBM") (formerly Sunburst Bank, Mississippi) will be transferred
to two newly-formed and two existing regional banking subsidiaries of UPC.
While the separation of the branches previously held by UPBM will have no
material impact on the consolidated financial condition of UPC, it will promote
the identification of individual branch operations within their local
communities.
14
<PAGE> 25
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following tables contain unaudited consolidated pro forma
condensed financial information including a balance sheet at June 30, 1995 and
statements of earnings for the six-month period ended June 30, 1995 and the
years ended December 31, 1994, 1993 and 1992. The pro forma statements reflect
pro forma historical results for (i) UPC for all periods; and (ii) UPC,
Capital, other Consummated and Pending Acquisitions and the retirement of debt
and preferred stock related to the Capital Acquisition. The acquisition of ENB
and the other Consummated and Pending Acquisitions set forth in the table on
page 14 (except the Capital Acquisition) are not material to UPC and therefore
are not presented separately in these pro forma statements. The Capital
Acquisition meets the significant subsidiary test and proforma financial
information is presented for all periods. The unaudited pro forma financial
information reflects the pending acquisitions using the purchase method of
accounting, except for Planters Bank & Trust Co. and Capital Bancorporation,
Inc. which are expected to be accounted for as poolings of interests. The
unaudited pro forma financial information should be read in conjunction with
the historical consolidated financial statements of UPC and ENB, respectively,
and in conjunction with the information presented in UPC's Quarterly Report on
Form 10-Q dated June 30, 1995 and UPC's Current Reports on Form 8-K dated July
20, 1995, August 21, 1995 and August 22, 1995. Pro forma results are not
necessarily indicative of future operating results. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE" and "Appendices A-1 and A-2."
15
<PAGE> 26
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
UNION
PLANTERS,
OTHER
CONSUMMATED
AND PENDING
ACQUISITIONS,
AND RETIREMENT
UNION OF DEBT AND
PLANTERS PREFERRED STOCK
---------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 434,175 $ 479,521
Interest-bearing deposits at financial
institutions 35,020 39,490
Federal funds sold and securities
purchased under agreements to resell 56,351 124,651
Trading account securities 210,775 210,775
Loans held for resale 54,136 59,384
Investment securities
Available for sale, at fair value 1,501,600 1,546,000
Held to maturity, at amortized cost 1,005,348 1,180,821
Loans 6,115,497 7,226,571
Less: Unearned income (30,410) (33,926)
Allowance for losses on loans (118,675) (135,382)
--------- ----------
Net loans 5,966,412 7,057,263
Premises and equipment 199,170 241,816
Accrued interest receivable 83,191 95,229
Goodwill and other intangibles 46,940 73,929
Other assets 152,321 162,408
--------- ----------
Total assets $9,745,439 $11,271,287
========= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $1,244,678 $ 1,420,373
Certificates of deposit of $100,000
and over 585,569 754,988
Other interest-bearing 6,433,016 7,449,927
--------- ----------
Total deposits 8,263,263 9,625,288
Short-term borrowings 140,434 173,212
FHLB advances 291,630 298,614
Long-term debt 121,793 134,793
Accrued interest, expenses, and taxes 76,672 85,530
Other liabilities 40,127 46,005
--------- ----------
Total liabilities 8,933,919 10,363,442
--------- ----------
Shareholders' equity
Preferred stock
Convertible 87,298 104,586
Nonconvertible 0 -
Common stock 202,766 225,502
Additional paid-in capital 74,960 99,377
Net unrealized gain (loss) on available
for sale securities 926 662
Retained earnings 445,570 477,718
--------- ----------
Total shareholders' equity 811,520 907,845
--------- ----------
Total liabilities and
shareholders' equity $9,745,439 $11,271,287
========= ==========
</TABLE>
16
<PAGE> 27
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
SIX MONTHS ENDING JUNE 30, 1995
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UNION PLANTERS,
OTHER
CONSUMMATED
AND PENDING
ACQUISITIONS,
AND RETIREMENT
UNION OF DEBT AND
PLANTERS PREFERRED STOCK
Interest income ------------ --------------
<S> <C> <C>
Interest and fees on loans $ 270,725 $ 319,716
Interest on investment securities
Taxable 68,017 74,362
Tax-exempt 15,700 16,158
Interest on deposits at financial institutions 902 922
Interest on federal funds sold and securities
purchased under agreements to resell 2,258 2,965
Interest on trading account securities 6,005 6,005
Interest on loans held for resale 1,239 1,357
----------- -----------
Total interest income 364,846 421,485
----------- -----------
Interest expense
Interest on deposits 145,520 171,471
Interest on short-term borrowings 7,146 7,921
Interest on FHLB advances and long-term debt 13,091 13,940
----------- -----------
Total interest expense 165,757 193,332
----------- -----------
Net interest income 199,089 228,153
Provision for losses on loans 3,686 5,882
----------- -----------
Net interest income after provision
for losses on loans 195,403 222,271
----------- -----------
Noninterest income
Service charges on deposit accounts 33,888 37,000
Investment securities gains (3) (3)
Other income 37,885 41,499
----------- -----------
Total noninterest income 71,770 78,496
----------- -----------
Noninterest expense
Salaries and employee benefits 78,383 90,694
Net occupancy expense 12,443 15,267
Equipment expense 14,276 15,447
Other expense 63,993 73,070
----------- -----------
Total noninterest expense 169,095 194,478
----------- -----------
Earnings before income taxes 98,078 106,289
Applicable income taxes 31,197 34,796
----------- -----------
Net earnings $ 66,881 $ 71,493
=========== ===========
Earnings per common share
Primary $ 1.56 $ 1.50
Fully diluted 1.49 1.42
Weighted average shares outstanding
(in thousands)
Primary 40,514 44,641
Fully diluted 45,005 49,997
</TABLE>
17
<PAGE> 28
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDING DECEMBER 31, 1994
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UNION
PLANTERS,
OTHER
CONSUMMATED
AND PENDING
ACQUISITIONS,
AND RETIREMENT
UNION OF DEBT AND
PLANTERS PREFERRED STOCK
Interest income ------------ ------------
<S> <C> <C>
Interest and fees on loans $ 460,617 $ 543,236
Interest on investment securities
Taxable 156,429 168,017
Tax-exempt 32,406 33,375
Interest on deposits at financial institutions 718 839
Interest on federal funds sold and securities
purchased under agreements to resell 3,637 3,725
Interest on trading account securities 9,143 9,143
Interest on loans held for resale 1,107 1,573
----------- -----------
Total interest income 664,057 759,908
----------- -----------
Interest expense
Interest on deposits 235,815 274,514
Interest on short-term borrowings 20,082 21,386
Interest on FHLB advances and long-term debt 19,882 21,529
----------- -----------
Total interest expense 275,779 317,429
----------- -----------
Net interest income 388,278 442,479
Provision for losses on loans 3,636 6,288
----------- -----------
Net interest income after provision
for losses on loans 384,642 436,191
----------- -----------
Noninterest income
Service charges on deposit accounts 52,590 58,807
Investment securities losses (20,298) (20,297)
Other income 61,270 68,428
----------- -----------
Total noninterest income 93,562 106,938
----------- -----------
Noninterest expense
Salaries and employee benefits 160,862 184,468
Net occupancy expense 25,750 31,652
Equipment expense 26,451 29,238
Other expense 185,772 203,973
----------- -----------
Total noninterest expense 398,835 449,331
----------- -----------
Earnings before income taxes 79,369 93,798
Applicable income taxes 20,761 27,109
----------- -----------
Net earnings $ 58,608 $ 66,689
=========== ===========
Earnings per common share
Primary $ 1.25 $ 1.29
Fully diluted 1.25 1.29
Weighted average shares outstanding
(in thousands)
Primary 40,055 44,082
Fully diluted 40,397 44,424
</TABLE>
18
<PAGE> 29
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1993
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UNION
PLANTERS
UNION AND
PLANTERS CAPITAL
Interest income ------------ ------------
<S> <C> <C>
Interest and fees on loans $ 375,567 $ 425,967
Interest on investment securities
Taxable 151,538 157,403
Tax-exempt 29,825 30,507
Interest on deposits at financial institutions 1,742 1,862
Interest on federal funds sold and securities
purchased under agreements to resell 5,092 6,175
Interest on trading account securities 6,194 6,194
Interest on loans held for resale 7,432 7,438
----------- -----------
Total interest income 577,390 635,546
----------- -----------
Interest expense
Interest on deposits 213,197 238,019
Interest on short-term borrowings 7,230 8,203
Interest on FHLB advances and long-term debt 13,253 14,291
----------- -----------
Total interest expense 233,680 260,513
----------- -----------
Net interest income 343,710 375,033
Provision for losses on loans 16,558 17,950
----------- -----------
Net interest income after provision
for losses on loans 327,152 357,083
----------- -----------
Noninterest income
Service charges on deposit accounts 46,532 49,490
Investment securities gains (losses) 4,495 4,506
Other income 68,898 73,566
----------- -----------
Total noninterest income 119,925 127,562
----------- -----------
Noninterest expense
Salaries and employee benefits 150,383 163,711
Net occupancy expense 23,356 25,393
Equipment expense 23,986 25,989
Other expense 121,956 131,357
----------- -----------
Total noninterest expense 319,681 346,450
----------- -----------
Earnings before income taxes, extraordinary
items, and accounting changes 127,396 138,195
Applicable income taxes 37,420 41,168
----------- -----------
Earnings before extraordinary items
and accounting changes $ 89,976 $ 97,027
=========== ===========
Earnings per common share
Primary $ 2.31 $ 2.24
Fully diluted 2.23 2.18
Weighted average shares outstanding
(in thosands)
Primary 35,311 38,914
Fully diluted 39,541 43,144
</TABLE>
19
<PAGE> 30
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1992
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UNION
PLANTERS
UNION AND
PLANTERS CAPITAL
Interest income ------------ ------------
<S> <C> <C>
Interest and fees on loans $ 314,814 $ 358,948
Interest on investment securities
Taxable 142,663 147,303
Tax-exempt 22,238 22,846
Interest on deposits at financial institutions 4,915 4,985
Interest on federal funds sold and securities
purchased under agreements to resell 5,250 6,229
Interest on trading account securities 6,648 6,648
Interest on loans held for resale 7,250 7,250
----------- -----------
Total interest income 503,778 554,209
----------- -----------
Interest expense
Interest on deposits 209,035 234,070
Interest on short-term borrowings 8,040 9,086
Interest on FHLB advances and long-term debt 5,555 5,842
----------- -----------
Total interest expense 222,630 248,998
----------- -----------
Net interest income 281,148 305,211
Provision for losses on loans 27,182 29,071
----------- -----------
Net interest income after provision
for losses on loans 253,966 276,140
----------- -----------
Noninterest income
Service charges on deposit accounts 35,590 37,750
Investment securities gains (losses) 14,019 14,019
Other income 63,000 65,756
----------- -----------
Total noninterest income 112,609 117,525
----------- -----------
Noninterest expense
Salaries and employee benefits 116,764 125,769
Net occupancy expense 19,401 20,793
Equipment expense 18,836 20,331
Other expense 124,463 130,772
----------- -----------
Total noninterest expense 279,464 297,665
----------- -----------
Earnings before income taxes 87,111 96,000
Applicable income taxes 23,861 27,048
----------- -----------
Net earnings $ 63,250 $ 68,952
=========== ===========
Earnings per common share
Primary $ 1.79 $ 1.75
Fully diluted 1.77 1.73
Weighted average shares outstanding
(in thousands)
Primary 31,910 35,463
Fully diluted 34,754 38,307
</TABLE>
20
<PAGE> 31
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES
Each copy of this Prospectus mailed to holders of record of ENB Common
Stock is accompanied by a proxy appointment card furnished in connection with
the ENB 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 2:00 p.m. Eastern Time on Monday, October 16, 1995, at ENB's
executive offices located at 799 Brickell Plaza, Tenth Floor, Miami, Florida
33131. Only holders of record of ENB Common Stock at the close of business on
September 14, 1995, are entitled to receive notice of, and to vote at, the
Special Meeting. At the Special Meeting, ENB shareholders will consider and
vote upon a proposal to approve the Reorganization Agreement and the Merger
Agreement annexed thereto as Exhibit A. The shareholders would also act upon
such other matters as may properly be brought before the Special Meeting or any
adjournments or postponements thereof. Management is not aware of any other
matters to be acted upon at the Special Meeting.
HOLDERS OF ENB COMMON STOCK ARE REQUESTED TO COMPLETE, DATE AND SIGN
THE ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO ENB 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 MERGER AGREEMENT
ANNEXED THERETO AS EXHIBIT A (BUT WILL NOT BE SUFFICIENT, WITHOUT FURTHER
ACTION, TO PERFECT DISSENTERS' RIGHTS). ENB SHAREHOLDERS SHOULD NOT FORWARD
ANY STOCK CERTIFICATES WITH THEIR PROXY APPOINTMENT CARDS.
Any holder of ENB 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
Eastern National Bank, 799 Brickell Plaza, Miami, Florida 33131, Attention:
Corporate Secretary, provided such notice or proxy appointment is actually
received by ENB 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 shall have been filed with the
Corporate Secretary or other person responsible for tabulating the votes on
behalf of ENB. The shares of ENB Common Stock represented by properly executed
proxy appointments received will be voted "FOR" (or "AGAINST," as indicated)
approval of the Reorganization Agreement and the Merger Agreement annexed
thereto as Exhibit A. If any other matters are properly presented at the
Special Meeting for consideration, the persons named in the ENB 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 ENB for the purpose
of soliciting additional proxy appointments. ENB is unaware of any matter to
be presented at the Special Meeting other than the proposal to approve the
Reorganization Agreement.
21
<PAGE> 32
The cost of soliciting proxies from holders of ENB Common Stock will
be borne by ENB. Such solicitation will be made by mail but also may be made
by telephone or in person by the directors, officers and employees of ENB (who
will receive no additional compensation for doing so).
VOTES REQUIRED
The affirmative votes of the holders of at least two-thirds (2/3) of
the outstanding shares of ENB Common Stock entitled to vote at the Special
Meeting are required in order to approve the Reorganization Agreement.
Therefore, a failure to return a properly executed proxy appointment card or
alternatively to vote in person at the Special Meeting will have the same
effect as a vote against the Reorganization Agreement (but will not be legally
sufficient without further action by the ENB shareholder to perfect his or her
dissenters' rights). As of the Record Date, there were 456,250 shares of ENB
Common Stock outstanding and entitled to vote at the Special Meeting, with each
share entitled to one vote.
The directors and executive officers of ENB (the "Management Group")
held beneficially and of record as of the Record Date 379 shares or
approximately .084% of the outstanding shares of ENB Common Stock. ENB has
been advised by the members of the Management Group that they intend to vote
their shares for the Reorganization Agreement and the Merger. ENB Management
has also been advised by Eastern Overseas Bank Ltd. and by the Trustees of the
ENB Revocable Trust, respectively the record holders or beneficial owners of
22,803 shares (4.998%) and 432,379 shares (94.768%) of the outstanding ENB
Common Stock, that these two shareholders intend to vote, or cause their shares
to be voted in favor of the Reorganization Agreement and the Merger. Should
the ENB Revocable Trust alone do so, the requirement of shareholder approval
would be satisfied.
SHAREHOLDERS' DISSENTERS' RIGHTS
Any shareholder of ENB entitled to vote on the Merger has the right to
receive in cash, the appraised value of his or her shares of ENB Common Stock
upon compliance with Title 12, subsections 215(b)-(d) of the United States Code
Annotated (the "Statute"), a copy of which is annexed to this Prospectus as
Appendix D. A shareholder may not dissent as to less than all of the shares
which he or she beneficially owns. A nominee or fiduciary may not dissent on
behalf of a beneficial owner as to less than all of the shares of such
beneficial owner held of record by such nominee or fiduciary. A beneficial
owner asserting dissenters' rights to shares held on his or her behalf must
notify ENB in writing of the name and address of the record holder of the
shares, if known to him or her.
Any ENB shareholder may enforce his or her dissenters' rights either
(i) by voting against the Reorganization Agreement and the Merger Agreement
annexed thereto as Exhibit A (either personally or by proxy) or (ii) by giving
notice in writing (the "Objection Notice") to the Corporate Secretary of ENB at
or prior to the Special Meeting of Shareholders approving the Reorganization
Agreement and the Merger Agreement annexed hereto as Exhibit A that he or she
dissents from the Merger. In order to perfect a shareholder's dissent, within
30 days after the Effective Date of the Merger the dissenting shareholder must
also deliver written demand for payment (the "Demand Letter") to the Resulting
Bank, which Demand Letter must be accompanied by the certificates formerly
representing the ENB shares owned by the dissenting shareholder. Any
dissenting shareholder who shall fail to make the demand shall be bound by the
terms of the Merger regardless of whether he voted his shares against the
Merger at the Special Meeting. Consequently, any ENB shareholder desiring to
exercise his or her dissenters' rights and rights to payment for his or her
shares is urged to consult his or her legal advisers before attempting to
exercise such rights.
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Within the 90-day period following the Effective Date of the Merger,
the value of the shares held by such dissenting shareholders shall be
determined by three appraisers as of the date on which the shareholders meeting
authorizing the Merger was concluded. One appraiser shall be selected by the
dissenting shareholders (by vote of the holders of a majority of the aggregate
number of dissenting shares held by all dissenting shareholders) and the second
appraiser shall be selected by the Resulting Bank. The third appraiser shall
be chosen by the other two so chosen. The valuation agreed to by any two of
the three appraisers shall be the valuation of the dissenting shares and shall
be paid promptly to the dissenting shareholders who have properly requested
payment; provided, however, that if the value so fixed shall be unsatisfactory
to any dissenting shareholder who shall have properly requested payment, that
shareholder may, within five days after being notified of the appraised value,
appeal to the Comptroller, who shall cause a final and binding reappraisal to
be made.
If within the 90-day period following the Effective Date of the
Merger, one of the appraisers should not have been selected for any reason, or
if the appraisers should have failed to determine the value of the dissenting
shareholders' shares, the Comptroller shall, upon written request of any
interested party, cause an appraisal to be made which shall be final and
binding upon all parties. The expenses of the Comptroller in making an
appraisal or reappraisal (upon appeal by a dissenting shareholder) shall be
borne by the Resulting Bank. If no written request should be served upon the
Comptroller within five days of the expiration of the 90-day period, then all
dissenting shareholders shall be bound by the appraisal or reappraisal last to
occur; provided, however, that if UPC shall receive any consideration in excess
of that paid to the dissenting shareholders upon auction of the Series E
Preferred Stock to which such dissenting shareholders would have been entitled
as provided in Section 215(d), such excess consideration shall be paid to the
dissenting shareholders promptly upon receipt.
The foregoing summary of the applicable provisions of Sections
215(b)-(d) of the Statute is not intended to be a complete statement of such
provisions, and is qualified in its entirety by reference to such Section, a
copy of which is annexed to this Prospectus as Appendix D. FAILURE TO COMPLY
WITH THESE PROCEDURES WILL CAUSE THE ENB SHAREHOLDER TO LOSE HIS OR HER
DISSENTERS' RIGHTS TO RECEIVE IN CASH PAYMENT FOR THE SHARES. CONSEQUENTLY,
ANY ENB 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.
For a discussion of certain federal income tax consequences in
connection with exercising Dissenters' Rights, see "THE MERGER - Certain
Federal Income Tax Consequences."
RECOMMENDATION
For the reasons described below, the ENB Board has adopted the
Reorganization Agreement and the Merger Agreement and believes that the Merger
is in the best interest of ENB and its shareholders and recommends that
shareholders of ENB vote "FOR" approval of the Reorganization Agreement and the
annexed Merger Agreement.
THE MERGER
The following information concerning the Merger, insofar as it relates
to matters contained in the Reorganization Agreement or the Merger Agreement
annexed thereto as Exhibit A, is qualified in its entirety by reference to the
Reorganization Agreement and the Merger Agreement which are annexed
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hereto as Appendix B. ENB shareholders are urged to read carefully the
Reorganization Agreement and the Merger Agreement annexed thereto as Exhibit A.
BACKGROUND OF AND REASONS FOR THE MERGER
Background. Eastern National Bank is a national banking association
headquartered in Miami, Florida. Its main office is located at 799 Brickell
Plaza in Miami, Florida. At June 30, 1995, the Company had total assets of
$266.3 million, total deposits of $235.1 million, and total shareholders'
equity of $20.6 million. For the six-month period ended June 30, 1995, ENB had
net income of $1.2 million.
ENB offers traditional banking services including commercial,
consumer, and real estate loans, deposit accounts, and private banking
services. ENB had approximately 124 full-time-equivalent employees as of June
30, 1995.
ENB has been in operation in Miami since 1969. It currently operates
branches at Hialeah, Brickell, Kendall, Miami West Airport and in Coral Gables.
ENB has one subsidiary, ENB Holdings, Inc. The book value of assets held by
ENB Holdings on June 30, 1995, was $4.8 million.
Economic and regulatory changes, including advances in technology and
increased competition and regulatory complexity, have been the impetus to
consolidation within the banking industry. In Florida, a number of banks and
bank holding companies have, during the past few years, been acquired or have
engaged in merger or consolidation transactions due to these pressures.
From time to time, the ENB Board and the management of ENB have
considered various strategies for ENB, including its sale.
In September, 1994 the ENB Board decided to pursue the sale of ENB and
engaged Robinson-Humphrey on September 23, 1994 to act as its exclusive agent
in the sale of ENB. With the assistance of Robinson-Humphrey, the ENB Board
prepared an offering memorandum and package of information to be disseminated
to potential purchasers and compiled a selective list of potential purchasers
to be contacted. Beginning in November of 1994, Robinson-Humphrey made
preliminary inquiries of the persons on the ENB Board's list of potential
purchasers (including UPC) and a limited number of them expressed an interest
in receiving further information about ENB. Copies of the offering memorandum
and information package were sent to only those who expressed an interest
following those preliminary contacts.
On December 11, 1994, Benjamin W. Rawlins, Jr., Chairman of the Board
and Chief Executive Officer of UPC, met with Jose J. Valdes-Fauli, President of
ENB, and representatives of Robinson-Humphrey to discuss possible acquisition
alternatives. Mr. Rawlins submitted a preliminary proposal to ENB on January
19, 1995 following which ENB and UPC entered into exclusive negotiations. No
other proposals were received for the purchase of ENB.
After further negotiation, a mutual review by the parties of the
respective operations of the respective parties and receipt of the fairness
opinion of Robinson-Humphrey by the ENB Board, UPC and ENB executed the
Reorganization Agreement as of April 25, 1995 (a copy of which, together with
the Merger Agreement, is annexed to this Prospectus as Appendix B), which was
approved by the ENB Board at a special meeting on April 11, 1995, and ratified
by the Board of Directors of UPC (the "UPC Board") at its regular meeting held
on April 27, 1995. The Reorganization Agreement was revised and reexecuted
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on June 30, 1995 in order to clarify certain ambiguities in the original terms
of the Reorganization Agreement. In addition, the Reorganization Agreement was
amended by Letter Agreement dated as of July 28, 1995 (a copy of which Letter
Agreement is included in Appendix B to this Prospectus.
ENB Reasons. In light of the foregoing, the ENB Board has voted
unanimously to recommend approval by the ENB shareholders of the Reorganization
Agreement and the Merger Agreement annexed thereto as Exhibit A for, among
others, the following reasons:
(i) The consideration to be paid by UPC. See "THE MERGER -- Terms
of the Merger." Based on a market price per share of $31.38 for Series E
Preferred Stock (determined as of the date of the Reorganization Agreement,
April 25, 1995), the Cash Payment and the UPC Negotiable Notes, the transaction
value of the consideration to be delivered by UPC reflected a price-to-book
multiple of approximately 1.50 times ENB's book value as of December 31, 1994,
and a price-to- earnings multiple of 17.78 (based on 1994 net income). A
representative of Robinson-Humphrey advised the ENB Board that these multiples
compared favorably with the ratios of recently completed comparable bank merger
transactions in Florida;
(ii) The trends in the banking industry are toward consolidation and
increased regulation; particularly, recent changes have resulted in an
environment in which community banks have commanded and for some indefinite
future period will command, attractive purchase prices; and the ENB Board
sought to take advantage of this environment;
(iii) ENB will benefit from UPC's capital, operations and regulatory
expertise and management talent, and may achieve certain economies of scale in
its banking operations;
(iv) Since no dividends have been paid by ENB since 1985, the annual
dividend yield on the Series E Preferred Stock offered in exchange for the ENB
Common Stock exceeds the historical yield on the ENB Common Stock for which it
would be exchanged and there is a much broader and more liquid market for the
Series E Preferred Stock, which is listed on the NASDAQ/NMS.
UPC Reasons. Management of UPC has recommended to the UPC Board and
the UPC Board has approved the Merger and the Reorganization Agreement along
with the Merger Agreement annexed thereto as Exhibit A, because (i) ENB has
experienced steady and continued growth, (ii) ENB which is active in
international trade and finance provides UPC the opportunity to expand into an
area into which it has sought to establish a market, and (iii) UPC believes
that by providing ENB with access to the UPC capital base and other banking
resources, the banking offices presently operated by ENB will be well
positioned to compete in its respective markets in the face of enhanced
competition from larger, better capitalized institutions.
FAIRNESS OPINION OF THE ROBINSON-HUMPHREY COMPANY, INC.
General. ENB retained The Robinson-Humphrey Company, Inc.
("Robinson-Humphrey") to act as its financial adviser in connection with the
Merger. Robinson-Humphrey has rendered an opinion to ENB's Board of Directors
that, based on the matters set forth therein, the Consideration to be received
pursuant to the Merger is fair, from a financial point of view, to the ENB
shareholders. The text of such opinion is set forth in full in Appendix C to
this Prospectus and should be read in its entirety by shareholders of ENB.
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The Consideration to be received by the ENB Record Holders in the
Merger was determined by ENB and UPC in their negotiations. No limitations
were imposed by the ENB Board or management upon Robinson-Humphrey with respect
to the investigations made or the procedures followed by Robinson-Humphrey in
rendering its opinion.
In connection with rendering its opinion to the ENB Board,
Robinson-Humphrey performed a variety of financial analyses. However, the
preparation of a fairness opinion involves determinations as to the most
appropriate and relevant methods of financial analysis and the application of
those methods to the particular circumstances, and, therefore, such an opinion
is not readily susceptible to summary description. Robinson-Humphrey, in
conducting its analysis and in arriving at its opinion, has not conducted a
physical inspection of any of the properties or assets of ENB or UPC, and has
not made or obtained any independent valuation or appraisals of any properties,
assets or liabilities of ENB or UPC. Robinson-Humphrey has assumed and relied
upon the accuracy and completeness of the financial and other information that
was provided to it by ENB and UPC or that was publicly available. Its opinion
is necessarily based on economic, market and other conditions as in effect on,
and the information made available to it as of the date of, its analyses.
Valuation Methodologies. In connection with its opinion on the Merger
and the presentation of that opinion to the ENB Board, Robinson-Humphrey
performed two valuation analyses with respect to ENB: (i) an analysis of
comparable prices and terms of recent transactions involving banks buying
banks; and (ii) a discounted cash flow analysis. Each of these methodologies
is discussed briefly below.
Comparable Transaction Analysis. Robinson-Humphrey performed
an analyses of premiums paid for selected banks with
comparable characteristics to ENB. Comparable transactions
were considered to be transactions since January 1, 1994,
where the seller was a bank located in Florida with assets
less than $300 million.
Based on the foregoing transactions, the analysis yielded a
range of transaction values to book value of 1.01 times to
2.61 times, with a mean of 1.82 times and a median of 1.69
times. These compare to a transaction value for the Merger of
approximately 1.50 times ENB's book value as of December 31,
1994.
The analysis yielded a range of transaction values as a
multiple of tangible book value for the comparable
transactions ranging from 1.01 times to 2.61 times, with a
mean of 1.82 times and a median of 1.69 times. These compare
to a transaction value to tangible book value at December 31,
1994 of approximately 1.54 times for the Merger.
The analysis yielded a range of transaction values at a
multiple of trailing twelve month earnings. These values
ranged from 9.32 times to 33.77 times, with a mean of 20.49
times and a median of 18.31 times. These compare to a
transaction value to the December 31, 1994 trailing twelve
months earnings of 17.78 times for the Merger.
The analysis yielded a range of transaction values as a
percent of total assets. These values ranged from 6.65
percent to 24.14 percent, with a mean of 15.08 percent and a
median of 13.73 percent. These compare to a transaction value
to the December 31, 1994 total assets of 11.97 percent for the
Merger.
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No company or transaction used in these or comparable
transaction analyses is identical to ENB. Accordingly, an
analysis of the foregoing necessarily involves complex
considerations and judgments, as well as other factors that
affect the public trading value or the acquisition value of
the company to which it is being compared.
Discounted Cash Flow Analysis. Using discounted cash flow
analysis, Robinson-Humphrey estimated the present value of the
future stream of after-tax cash flows that ENB could produce
through 1999, under various circumstances, assuming that ENB
performed in accordance with the earnings/return projections
of management at the time that ENB entered into acquisition
discussions in November, 1994. Robinson- Humphrey estimated
the terminal value for ENB at the end of the period by
applying multiples of earnings ranging from 8.0 times to 10.0
times and then discounting the cash flow streams, dividends
paid to shareholders and terminal value using differing
discount rates (ranging from 10.0 percent to 12.0 percent)
chosen to reflect different assumptions regarding the required
rates of return of ENB and the inherent risk surrounding the
underlying projections. This discounted cash flow analysis
indicated a reference range of $23.1 million to $27.8 million
for ENB.
Compensation of Robinson-Humphrey. Pursuant to an engagement letter
dated September 23, 1994 between ENB and Robinson-Humphrey, ENB agreed to pay
Robinson-Humphrey a $50,000 Fairness Opinion Fee and an incremental Success Fee
(to be paid at closing) equal to 1.00% of the principal amount of any
consideration paid, less the Fairness Opinion Fee. ENB has also agreed to
indemnify and hold harmless Robinson-Humphrey and its officers and employees
against certain liabilities in connection with its services under the
engagement letter, except for liabilities resulting from the negligence of
Robinson-Humphrey.
As part of its investment banking business, Robinson-Humphrey is
regularly engaged in the valuation of securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. ENB's Board of Directors decided to retain
Robinson-Humphrey based on its experience as a financial advisor in mergers and
acquisitions of financial institutions, particularly transactions in the
Southeastern region of the United States, and its knowledge of financial
institutions and ENB in particular.
TERMS OF THE MERGER
At the Effective Time of the Merger, Interim will merge with and into
ENB with ENB surviving the Merger as the Resulting Bank and operating after the
Effective Time of the Merger under the name Union Planters Bank of Florida,
N.A. In this manner ENB and its five branches would be acquired by UPC. In
the Merger, each share of ENB Common Stock outstanding immediately prior to the
Effective Time of the Merger, other than shares with respect to which
Dissenters' Rights shall have been perfected as described above, will be
converted exclusively into the right of the ENB Record Holder to receive the
Consideration provided for in the Reorganization Agreement and the Merger
Agreement as described in the following paragraph.
The method of determining the amount of Consideration to be delivered
to the ENB Record Holders is stipulated in Section 3.1(e) of the Reorganization
Agreement. Under Section 3.1(e), the ENB Record Holders would receive for each
of their shares of ENB Common Stock outstanding immediately prior to the
Effective Time of the Merger: (i) cash in the amount of $9.86 (the "Cash
Payment"); (ii) .6958
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of one share of Series E Preferred Stock; and (iii) the "UPC Negotiable Notes
issued in three series, in aggregate principal amount equal to $31.80 and
bearing interest at eight (8%) percent per annum; provided, however, that any
ENB Record Holder who would otherwise be entitled to receive less than 100 full
shares of Series E Preferred Stock or a UPC Negotiable Note of any series in an
aggregate principal amount of less than $100,000 would receive in lieu thereof,
respectively, cash in an amount equal to the "Highest Trade Price" of the
Series E Preferred Stock through the facilities of the NASDAQ/NMS on the
Effective Date of the Merger (or if the Series E Preferred Stock should not
trade on that date, on the next succeeding date on which it trades) (the
"Highest Trade Price") for each whole share of Series E Preferred Stock to
which such ENB Record Holder would otherwise be entitled, and cash in an amount
equal to the aggregate principal amount of such UPC Negotiable Notes to which
such Record Holder would otherwise be entitled.
Thus, in addition to his or her $9.86 per share Cash Payment, an ENB
Record Holder who shall hold less than 6,290 shares of ENB Common Stock would
receive in lieu of any Consideration in the form of UPC Negotiable Notes a cash
payment equal to $31.80 multiplied by the number of shares of ENB Common Stock
held and an ENB Record Holder who shall hold less than 144 shares of ENB Common
Stock would receive in lieu of any Consideration in the form of Series E
Preferred Stock a cash payment equal to the Highest Trade Price on the
Effective Date of the Merger multiplied by the product of the number of whole
and fractional shares of ENB Common Stock held multiplied by .6958. The
Highest Trade Price of the Series E Preferred Stock on September 12, 1995 which
was the last practicable date prior to the mailing of this Prospectus was
$38.63. Accordingly, subject to normal market fluctuations, an ENB Record
Holder who shall hold less than 144 shares of ENB Common Stock would receive in
the aggregate approximately $68.54 in exchange for each share of ENB Common
Stock held.
The number of shares of Series E Preferred Stock to be received as
part of the Consideration for each share of ENB Common Stock outstanding
immediately prior to the Effective Time of the Merger is based upon an exchange
ratio (the "Preferred Stock Exchange Ratio") of .6958 of one share of Series E
Preferred Stock for each share of ENB Common Stock. The Preferred Stock
Exchange Ratio was determined as of the date of the Reorganization Agreement
based on the "Current Market Price Per Share" of the Series E Preferred Stock
which is defined as the average closing price per share of the "last" real time
trades (i.e., the closing price) of the UPC Series E Preferred Stock quoted on
the NASDAQ/NMS (as published in the Wall Street Journal Eastern Edition) for
each of the ten (10) NASDAQ/NMS general market trading days next preceding the
date of the Reorganization Agreement (April 25, 1995) on which the NASDAQ/NMS
was open for business. At the time the Reorganization Agreement was
negotiated, the value of the Series E Preferred Stock to be received by the ENB
Record Holders was approximately $21.83 per share of ENB common stock based on
an exchange ratio of .6958 of one share of Series E Preferred Stock for each
share of ENB Common Stock and a current market price of $31.38 per share for
the Series E Preferred Stock. The last trade of the Series E Preferred Stock
on September 12, 1995, was $38.63 per share. If the Series E Preferred Stock
continues to trade in excess of the Current Market Price Per Share, the value
of the Series E Preferred Stock to be received by the ENB Record Holders should
exceed the $21.83 per share value determined as of the date of the
Reorganization Agreement.
The ENB Record Holders entitled to receive UPC Negotiable Notes would
receive UPC Negotiable Notes (in three series) each bearing interest at eight
(8%) percent per annum. The aggregate principal amount, maturity dates and
interest payment dates of the UPC Negotiable Notes of each of the three series
are as follows:
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(i) the UPC Negotiable Notes, Series I (the "Series I Notes") shall be
issued in principal amount equal to $15.90 per share of ENB Common
Stock and shall be payable as to principal on the one-year anniversary
of the Effective Date of the Merger and as to interest quarterly
beginning on the first day of the calendar quarter subsequent to the
quarter in which the Effective Date of the Merger shall occur; (ii)
the UPC Negotiable Notes, Series II (the "Series II Notes") shall be
issued in principal amount equal to $12.61 per share of ENB Common
Stock and shall be payable as to principal on March 31, 1997 and as to
interest quarterly beginning on the first day of the calendar quarter
subsequent to the quarter in which the Effective Date of the Merger
shall occur; and (iii) the UPC Negotiable Notes, Series III (the
"Series III Notes") shall be issued in principal amount equal to $3.29
per share of ENB Common Stock and shall be payable (subject to actual
receipt by ENB or the Resulting Bank of moneys equal to or in excess
of amounts due on the Series III Notes in repayment of certain loans
made by ENB to the Scheduled Borrower which are currently in default
and which are more particularly described in Section 3.1(e)(c)(iii) of
the Reorganization Agreement) as to principal on September 30, 1997
and as to interest quarterly beginning on the first day of the
calendar quarter subsequent to the quarter in which the Effective Date
of the Merger shall occur.
No fractional shares of Series E Preferred Stock will be issued in the
transaction and if, after aggregation of all shares (and fractional shares) of
Series E Preferred Stock to which an ENB Record Holder shall be entitled, an
ENB Record Holder should be entitled to any fraction of a share of Series E
Preferred Stock, cash will be paid by UPC in lieu of such remaining fractional
share on the assumption that the Series E Preferred Stock has a value per share
equal to the Highest Trade Price on the Effective Date of the Merger.
Holders of ENB Common Stock on the Record Date for the Special Meeting
will have the right to dissent from the Reorganization Agreement and the Merger
Agreement and receive a cash payment equal to the appraised value of their
shares, all in conformity with Title 12, Section 215 of the Statute. See "THE
SPECIAL MEETING--Shareholders' Dissenters' Rights."
EFFECTIVE DATE AND EFFECTIVE TIME OF THE MERGER
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 ENB, the parties
will request issuance of the Official Certification of Merger from the
Comptroller. The Effective Time of the Merger will be the time specified in
the Certification issued by the Comptroller. The Effective Date of the Merger
will be the day on which the Effective Time of the Merger occurs. It is
presently expected that request will be made to the Comptroller that the
Effective Time of the Merger occur on or about December 31, 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, the
Corporate Trust Department of Union Planters National Bank, acting in the
capacity of exchange agent for the parties (the "Exchange Agent"), will mail to
each ENB Record Holder a form letter of transmittal, together with instructions
and a return mailing envelope (collectively, the "Exchange Materials") to
facilitate the exchange of such holder's certificates formerly representing
shares of ENB Common Stock for the Consideration.
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HOLDERS OF ENB COMMON STOCK WHO DO NOT INTEND TO EXERCISE THEIR
DISSENTERS' RIGHTS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE THE
EXCHANGE MATERIALS FROM THE EXCHANGE AGENT.
Upon receipt of the Exchange Materials, ENB 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 ENB Common Stock to the Exchange Agent in the
return envelope provided. Provided the Exchange Agent shall have received the
certificates and related documentation completed in proper form, as soon as
practicable after the Effective Time of the Merger UPC will issue, and the
Exchange Agent will mail, to the ENB Record Holder a certificate representing
the whole number of shares of Series E Preferred Stock, the UPC Negotiable
Notes of each series in aggregate principal amount to which such holder is
entitled pursuant to the Reorganization Agreement and a check in the amount of
any cash consideration (including any cash consideration which may be payable
with respect to a remaining fractional share of Series E Preferred Stock). No
consideration will be delivered to an ENB Record Holder unless and until such
holder shall have properly delivered to the Exchange Agent certificates
formerly representing the shares of ENB Common Stock owned by him and in
respect of which he claims payment is due, or such documentation, if
applicable, and security in respect of lost or stolen certificates as may be
required by the Reorganization Agreement or the Exchange Materials.
No dividend or other distribution with respect to the Series E
Preferred Stock or interest with respect to a UPC Negotiable Note will be paid
or delivered to the holder of any unsurrendered ENB certificate(s) 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 interest, dividends and distributions, without interest thereon.
After the Effective Time of the Merger, there will be no further
transfers on ENB's stock transfer books of those shares of ENB Common Stock
issued and outstanding immediately prior to the Effective Time of the Merger.
If certificates representing shares of ENB 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, ENB, the Exchange Agent, nor any other person shall be
liable to any former holder of ENB 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 ENB Common Stock shall have
been lost, stolen or destroyed, the Exchange Agent will deliver the
consideration properly payable with respect to the shares formerly represented
by 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, the Resulting Bank and the
Exchange Agent as required by the Exchange Materials.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of UPC and ENB to effect the Merger are
subject to the satisfaction of the following conditions prior to the Effective
Time of the Merger: (i) approval of the Reorganization Agreement and the Merger
Agreement and the transactions contemplated thereby by the affirmative votes
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of the holders of at least two-thirds (2/3) of the total shares of ENB Common
Stock outstanding on the Record Date; (ii) approval of the Reorganization
Agreement and the transactions contemplated thereby by each of the Federal
Reserve, the Comptroller and the Florida Department and the expiration of any
statutory waiting periods; (iii) receipt of all other regulatory and
contractual consents necessary to consummate the transactions contemplated by
the Reorganization Agreement; (iv) the satisfaction of all other requirements
prescribed by law as conditions precedent to the consummation of the
transactions contemplated by the Reorganization Agreement; (v) none of UPC, ENB
or Interim shall be subject to any order, decree or injunction of a court or
agency which presents a substantial risk of the restraint or prohibition of the
consummation of the Merger or the obtaining of material damages or other relief
in connection therewith; (vi) the Registration Statement of which this
Prospectus forms a part shall have become effective, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the
Commission; and (vii) receipt of a written opinion from counsel to UPC that the
Merger may be recorded as a taxable stock purchase by UPC and that no gain or
loss will be recognized by UPC, Interim or ENB.
The obligations of UPC and Interim to effect the Merger are further
subject to the satisfaction, or waiver by UPC, of the following conditions: (i)
UPC shall have received a legal opinion, dated the date of closing, from
counsel to ENB as to the good standing of ENB, 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 ENB
set forth in the Reorganization Agreement shall, in all material respects, be
true on, or complied with by, the Effective Date of the Merger 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 ENB to
such effect; (iii) there shall have been no damage to or destruction of, or
taking of any property of ENB or any material adverse change in the business,
financial condition, results of operations or prospects of ENB; (iv) ENB 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 ENB to UPC; (v) ENB shall
have maintained certain asset and capital covenants and refrained from
declaring or paying any dividends subsequent to December 31, 1994 (except such
dividends as are permitted to be declared at Closing in the event Closing
should occur after September 30, 1995); (vi) Jose J. Valdes-Fauli shall have
entered into an employment agreement and non-compete agreement with UPC and the
Resulting Bank (in the form annexed as Schedule 8.2(j) to the Reorganization
Agreement); and (vii) UPC shall have received letters from all ENB executive
officers, directors and shareholders who would be deemed affiliates of ENB
committing not to pledge, assign, sell or take any action which would diminish
the risk of owning the Series E Preferred Stock except in accordance with the
Federal securities laws.
The obligation of ENB to effect the Merger is further subject to the
satisfaction or waiver by ENB, of the following conditions: (i) ENB 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 will, in all
material respects, be true on, or complied with by, the Effective Date of the
Merger as if made on such date (except to the extent they relate by their terms
to an earlier date) and ENB shall have received a certificate signed by certain
officers of UPC to that effect; (iii) ENB shall have received from UPC
certificates from UPC executive officers
31
<PAGE> 42
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; (iv) ENB shall have received
from the Exchange Agent a certificate evidencing receipt of funds sufficient to
satisfy the Cash Payment, executed notes representing that part of the
Consideration to be satisfied by delivery of UPC Negotiable Notes, the
certificates representing the Series E Preferred Stock (and cash for any
fractional shares) and cash in an amount sufficient to pay cash in lieu of
Series E Preferred Stock and UPC Negotiable Note under the circumstances set
forth in the Reorganization Agreement; (v) there shall have been no material
adverse change in the business, financial condition, results of operation or
prospects of UPC; and (vi) ENB shall have received an opinion from The
Robinson-Humphrey Company, Inc. within five (5) days prior to Closing
confirming their opinion dated April 25, 1995 that the Consideration to be
received by the ENB Shareholders is fair to the ENB Shareholders from a
financial point of view.
No assurance can be provided as to when, if ever, the regulatory
consents and approvals necessary to consummate the Merger will be obtained (or,
if so obtained, that such consents and approvals will not contain conditions or
requirements which would materially reduce the benefits of, and result in
abandonment of the Merger) or whether all of the other conditions precedent to
the Merger will be satisfied or waived by the party lawfully permitted to do
so.
REGULATORY APPROVALS
The Merger and its related transactions are subject to prior approval
by (i) the Board of Governors of the Federal Reserve System (the "Federal
Reserve") under Section 3(a) of the Bank Holding Company Act; (ii) the Office
of the Comptroller of the Currency (the "Comptroller") and (iii) the Department
of Banking and Finance of the State of Florida under Chapter 655 of the Florida
Statutes. The Bank Holding Company Act, as amended, requires that the Federal
Reserve take into consideration, among other factors, the financial and
managerial resources and future prospects of the institutions and the
convenience and needs of the communities to be served. Applications for such
approvals have not yet been filed and are expected to be filed promptly
following the date of the Special Meeting. The Bank Holding Company Act
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 Comptroller should find 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 also has the
authority to deny an application if it should conclude 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, as amended.
Under the Bank Holding Company Act, the Merger may not be consummated
earlier than the 15th day following the date of approval by the Federal
Reserve, during which period the United States Department of Justice is
afforded an opportunity 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 should specifically order otherwise. As of
the date of this Prospectus, applications have not been filed with any of the
regulatory authorities. 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.
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<PAGE> 43
The Merger may not lawfully proceed in the absence of the requisite
regulatory approvals. 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 ENB's business pending consummation of the Merger. In particular,
the Reorganization Agreement provides that, except as otherwise provided in the
Reorganization Agreement and/or with the written consent of UPC, ENB may not,
among other things; (i) amend its articles of association or bylaws; (ii)
permit any lien or security interest to exist in respect to any share of stock
held by ENB; (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 ENB Common Stock; (iv) issue or sell any ENB Common
Stock or sell or otherwise dispose of a substantial part of ENB's assets or
earning power; (v) dispose of, discontinue or acquire any material assets or
earning power 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 ENB or its subsidiaries may terminate same at will
without liability, except for past services rendered by the employee; (ix)
adopt any new, or make any change in or termination of any existing, benefit
plan; (x) enter into any new lease agreement or service contract; (xi) make any
capital expenditures in excess of $25,000 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 ENB Common Stock if such extension of
credit would exceed 2% of the capital of ENB 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 ENB's fiduciary capacity. Moreover, ENB
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
ENB is prohibited under Section 7.3(c) of the Reorganization Agreement
from paying dividends or making any other type of distribution with respect to
the ENB Common Stock, except that ENB is permitted to declare and pay a one-
time cash dividend at Closing, the amount of which shall be equal to any
interest foregone on the Cash Payment and the UPC Negotiable Notes at a rate of
8% per annum from September 30, 1995 to the Closing Date.
WAIVER AND AMENDMENT; TERMINATION
Prior to the Effective Date of the Merger, any condition to closing
set forth in the Reorganization Agreement may (to the extent permitted 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 ENB; provided, however,
that no such amendment may be effected after shareholder approval of the
Reorganization Agreement and the Merger Agreement without approval of the ENB
shareholders if the effect of such amendment would be to change the amount or
the type of consideration to be delivered and/or paid in the Merger to the ENB
Record Holders.
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<PAGE> 44
The Reorganization Agreement may be terminated at any time prior to
the Effective Date of the Merger, either before or after approval by the ENB
shareholders, as follows: (i) by the mutual consent of the parties; (ii) by UPC
if ENB should violate any affirmative or negative covenant in respect to the
operation of its business; (iii) by UPC or ENB if the Closing Date shall not
have, with certain exceptions, occurred by March 31, 1996, unless the failure
should be due to the failure of the party seeking to terminate; (iv) by either
party if any governmental or regulatory approval should be denied and not
successfully appealed within certain time limits; (v) by either party if the
other party's conditions shall not have been satisfied in all material respects
or waived as of the Closing Date or if the other party shall have committed a
material breach which shall not have been cured within 30 days after the
breaching party receives notice of such breach; (vi) by either party if there
shall have been a material adverse change in the business, properties,
liabilities, prospects or net worth of the other party; or (vii) by UPC should
ENB enter into any business combination or any letter of intent or agreement
with respect thereto with any other person or if ENB should enter into a formal
capital plan in cooperation with any applicable banking regulator.
In the event of the valid termination of the Reorganization Agreement
by either UPC or ENB, the Reorganization Agreement and the Merger Agreement
shall become void, and there will be no liability on the part of either party
or their officers or directors except for liability for breach of the
Reorganization Agreement or for any misstatement or misrepresentation made
prior to such termination.
MANAGEMENT AFTER THE MERGER
The Reorganization Agreement and the Merger Agreement provide that
after the Effective Time of the Merger, Union Planters Bank of Florida, N.A.,
as the Resulting Bank, would be managed by a board of directors and executive
officers consisting of the following persons certain of whom currently serve on
the Board of Directors of ENB and/or in the positions indicated opposite their
names in the following table:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH EASTERN NATIONAL BANK*
---- --- -----------------------------------
<S> <C> <C>
Carole Fewell 47 Director
Robert L. Jamerson, Jr. 44 Director
Jose J. Valdes-Fauli 43 Chairman, President and C.E.O.
Melvin Wolfe 53 Director
Abel L. Iglesias 33 Executive V.P. - Loan Administration
Isis Valle 43 Senior V.P. - Human Resources
Caridad H. Campos 56 Senior V.P. - Finance & Operations
Robert E. Diaz 36 Senior V.P. - International
</TABLE>
*Messrs. Juan Santaella and Julio Leanez, both of whom are foreign nationals,
will not be eligible to continue to serve on the Board of Directors of ENB
following the Effective Time of the Merger. As of the date of this Prospectus,
the vacancy to be created at the Effective Date of the Merger has not been
filled.
The Principal occupations of the above persons for at least the past five years
are as follows:
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<PAGE> 45
Ms. Fewell is a real estate broker with Robert J. Fewell Company, Inc., a
family owned business specializing in the commercial management and development
of retail, office and industrial space and has served on the Board of Directors
of ENB for seven years.
Mr. Jamerson, a director of ENB since 1992, is an attorney. Since 1981, Mr.
Jamerson has been a shareholder and director of Jamerson, Sutton & Surles, P.A.
where he is currently President.
Mr. Valdes-Fauli, has been President and Chief Executive Officer of ENB since
1985. In addition to serving on the ENB Board, Mr. Valdes-Fauli serves as the
President of the Board of Directors of Mercy Hospital Foundation, the Chairman
of Metro-Dade Art in Public Places and as a member of the board of directors of
several other community organizations.
Mr. Wolfe, a director of ENB for over ten years, is an attorney and currently
practices with the firm of Wolfe & Gross, P.A. Mr. Wolfe is also a director of
Equity Bank, Del Ray Beach, Florida, and the President and sole shareholder of
Suncoast Capital Corporation, a real estate and mortgage firm.
All officers and directors of ENB serve one-year terms but may be
reelected or reappointed, as the case may be as provided in ENB's Bylaws.
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<PAGE> 46
ENB EXECUTIVE COMPENSATION
During the past three years, compensation has been paid to certain executive
officers by ENB. The following table sets forth the compensation received by
Jose J. Valdes-Fauli, the President and Chief Executive Officer of ENB; Abel L.
Iglesias, Executive Vice President-Loan Administration; and Isis Valle, Senior
Vice President-Human Resources for the periods indicated. ENB has no 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 (2) AWARDS SARS PAYOUTS COMPENSATION (3)
-------- ---- --------- ----- ---------------- ------ -------- ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Valdes-Fauli 1994 $186,576 $11,150 $11,574.78 - - - $9,600.00
President/CEO 1993 186,576 14,206 5,985.98 - - - 9,600.00
1992 179,400 24,352 4,497.00 - - - 9,600.00
A. Iglesias 1994 82,500 38,450 1,701.77 6,000.00
Executive
Vice President-
Loan Administration
I. Valle 1994 69,000 27,140 4,463.81 6,000.00
Senior Vice
President-
Human Resources
--------------------
</TABLE>
(1) Information under "Salary" includes fees for service as a director of
ENB.
(2) Reflects annual contributions by ENB to 401-K Profit Sharing Plan
Account.
(3) Reflects automobile and insurance benefits and club dues.
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<PAGE> 47
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The directors and officers of ENB own approximately .084% of the
outstanding shares of ENB Common Stock issued and outstanding and will receive
the Merger consideration described above. Certain officers of ENB (as
described under "THE MERGER--Management after the Merger") are expected to
become officers of the Resulting Bank at the Effective Time of the Merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FEDERAL INCOME TAX DISCUSSION SET FORTH BELOW IS ABBREVIATED IN
NATURE AND IS INCLUDED FOR GENERAL INFORMATION ONLY. FURTHER, THE FEDERAL
INCOME TAX DISCUSSION BELOW DOES NOT ADDRESS THE TAX CONSEQUENCES OF THE
MERGER, INCLUDING BUT NOT LIMITED TO ANY WITHHOLDING OBLIGATION, UPON ENB
RECORD HOLDERS WHO ARE NOT RESIDENT CITIZENS OF THE UNITED STATES. THE ENB
RECORD HOLDERS 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, FOREIGN AND OTHER TAX LAWS.
General. Although structured as a merger, the Merger will not qualify
as a tax-free reorganization pursuant to Section 368 of the Code. Rather, for
federal income tax purposes, the Merger will be treated as a taxable stock
purchase by UPC. Accordingly, (i) no gain or loss will be recognized by either
UPC, Interim or ENB as a result of the Merger, and (ii) gain or loss will be
recognized by the ENB Record Holders to the extent that the fair market value
of the Consideration received in exchange for their shares shall exceed their
federal income tax basis thereof.
Receipt of UPC Negotiable Notes. To the extent that UPC Negotiable
Notes are received by ENB Record Holders in exchange for ENB Common Stock, such
UPC Negotiable Notes may qualify for reporting of gain, if any, pursuant to the
installment method of Code Section 453, subject to the limitations imposed by
Sections 453, 453A and 453B and regulations promulgated thereunder.
Additionally, taxpayers who hold installment obligations from all sources,
including UPC Negotiable Notes, in the face amount of $5,000,000 or more may be
subject to an interest charge on Federal income taxes deferred by virtue of the
installment sales rules.
Cash Received by Holders of ENB Common Stock Who Perfect their
Dissents. A shareholder of ENB who shall perfect his or her dissenters' rights
under applicable law and who shall receive a cash payment for the "fair market
value" of his shares of ENB 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 ENB 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 ENB 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 is intended to be accounted for by UPC as a "purchase."
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<PAGE> 48
EXPENSES
The Reorganization Agreement provides, in general, that UPC, ENB and
Interim 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 ENB executive officer, director or
shareholder who shall be deemed as of the date of the Special Meeting to be an
"affiliate" of ENB and therefore an "underwriter" with respect to the Series E
Preferred Stock received for purposes of Rule 145 under the Securities Act.
Affiliates may not sell their shares of Series E Preferred Stock acquired in
connection with the Merger except pursuant to an effective registration
statement under the Securities Act (other than on Form S-4) 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 ENB generally
include individuals or entities that control, are controlled by or are under
common control with, ENB and include its executive officers, directors, or
holders of ten percent (10%) or more of the ENB Common Stock. UPC will place
restrictive legends on certificates representing Series E Preferred Stock
issued to all persons who are deemed by UPC to be "underwriters" under Rule
145. The form of the restrictive legend is set forth in Section 2.6 of the
Reorganization Agreement (pages 12 and 13 of Appendix B to this Prospectus).
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").
Thus, UPC is subject to Federal Reserve and OTS regulation, supervision and
reporting requirements. UPC's Banking Subsidiaries which are national banking
associations are subject to supervision and examination by both the Office of
the Comptroller of the Currency (the "Comptroller") and the Federal Deposit
Insurance Corporation (the "FDIC"). State-chartered bank subsidiaries of UPC
which are members of the Federal Reserve System are subject to supervision and
examination by both the Federal Reserve and the state banking authorities of
the states in which they are located. State-chartered bank subsidiaries which
are not members of the Federal Reserve System are subject to supervision and
examination by both 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 Banking Subsidiaries. In addition to the
impact of regulation, the Banking Subsidiaries are also 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.
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<PAGE> 49
As FDIC-insured, national banking associations, ENB and Interim are
subject to the regulation and supervision of both the Comptroller and the FDIC.
Thus both ENB and Interim are subject to regulation similar in scope to that of
UPC's other subsidiaries which are FDIC-insured national banking associations.
Some of the many subjects of governmental 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.
In the area of FDIC insurance assessments, Federal regulators have
recently reduced the annual premiums for most of the nation's banks as a result
of having reached required capital levels in its insurance fund. Under the new
premium schedule, the annual premiums range from $.04 to $.31 for every $100 of
deposits as opposed to a range of $.23 to $.31 under the old assessment
schedule. For a detailed description of FDIC insurance assessment
requirements, see Part I, Item 1 of UPC's Annual Report on Form 10-K dated
December 31, 1994 as noted above and UPC's Quarterly Report on Form 10-Q for
the three- and six-month periods ended June 30, 1995. Based on UPC's current
deposit levels, it is estimated that UPC's deposit insurance expense will be
reduced approximately $12 million annually. The change is expected to be
effective during the third quarter and may result in retroactive application to
the second quarter of 1995. As of June 30, 1995, UPC had approximately $6.7
billion of deposits in the Bank Insurance Fund and $1.6 billion of deposits in
the Savings Association Insurance Fund.
DESCRIPTION OF THE UPC COMMON AND PREFERRED STOCK
UPC's Charter of Incorporation ("Charter") currently authorizes the
issuance of 100,000,000 shares of common stock having a par value of $5.00 per
share (the "UPC Common Stock") and 10,000,000 shares of preferred stock having
no par value (the "UPC Preferred Stock"). As of July 31, 1995, 40,875,967
shares of UPC Common Stock were issued and outstanding and approximately
782,000 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 969,000 shares were authorized for
issuance pursuant to said plans but not yet subject to option grants or
otherwise issued; and approximately 4,710,292 shares were authorized for
issuance and reserved for conversion of certain outstanding shares of UPC
Preferred Stock. In addition, as of July 31, 1995, 3,540,419 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"); and 3,496,419 shares of UPC's 8%
Cumulative, Convertible Preferred Stock, Series E (the "Series E Preferred
Stock"). As of September 12, 1995, none of UPC's 250,000 authorized shares of
Series A Preferred Stock were issued and outstanding nor is management aware of
the existence of circumstances from which it may be inferred that such issuance
is imminent. 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.
39
<PAGE> 50
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. Union
Planters National Bank, a wholly-owned subsidiary of UPC, is the Registrar,
Transfer Agent and Dividend Disbursing Agent for shares of UPC Common Stock and
Preferred Stock. Its street address is Union Planters National Bank, Corporate
Trust Department, 6200 Poplar Avenue, Third Floor, Memphis, Tennessee 38119.
Its mailing address is P.O. Box 387, Memphis, Tennessee 38147.
Dividends. Subject to the preferential dividend rights applicable to
outstanding 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, only 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; however, UPC has no such arrangements in
effect at the date hereof.
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 required 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.
THE SERIES E PREFERRED STOCK
General. Pursuant to its Charter, as amended, UPC is authorized to
issue 4,500,000 shares of Series E Preferred Stock. 3,496,419 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 ENB Record Holders, the shares of Series
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<PAGE> 51
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,
and (ii) 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 (Corporate Trust Department) 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 to the Current
Report on Form 8-K of Union Planters Corporation dated August 22, 1995. Said
Exhibit 3 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 December 1, 1995, the first Quarterly Dividend
Payment Date for the Series E Preferred Stock offered hereby would be February
15, 1996. 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 as may be fixed by the Board of
Directors, not more than 30 days nor less than 10 days preceding the Quarterly
Dividend Payment Date.
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, 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
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<PAGE> 52
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
related 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;
however, UPC has no such arrangements in effect at the date hereof.
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 shall be made 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 should be 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 ranking on a parity with the Series
E 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
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<PAGE> 53
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
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 at the election of the record
holder 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 which
would be 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 UPC Common Stock issuable upon conversion thereof.
Voting Rights. Except as indicated below and 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 payment of 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 UPC 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 UPC Preferred Stock 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
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<PAGE> 54
Stock or of the holders thereof; provided, however, that any increase in the
amount of authorized UPC Common Stock or UPC Preferred Stock or the creation
and issuance of any other class of capital stock or series of UPC 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.
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, and, when and if ever issued, UPC's Series A Preferred
Stock. UPC has redeemed all of its outstanding Series C and Series D 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 in certain
other limited circumstances.
Series D Preferred Stock. In connection with the July, 1992
acquisition of Southeastern Bancshares, Inc., UPC issued in a private offering
253,655 shares of Series D Preferred Stock. As of July 1, 1995, all holders of
the Series D Preferred Stock had converted their shares to a like number of
shares of UPC Common Stock.
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<PAGE> 55
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
holders thereof, as such, will have no rights as shareholders of UPC, thus they
would have no right to vote or to receive dividends on the Series A 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 impose 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
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<PAGE> 56
Charter or Bylaws. The Tennessee BCA also severely limits the extent to which
UPC or any of its officers or directors could be held liable for resisting any
business combination.
The Tennessee Control Share Acquisition Act (the "Tennessee CSAA")
restricts the voting powers of shares acquired by a party once a specific level
of control is acquired unless certain conditions are met. Specifically, the
Tennessee CSAA provides that "Control Shares" will not have the voting rights
to which they normally would be entitled unless approved by the other
shareholders at an annual or special meeting. "Control shares" are shares
that, in the absence of the Tennessee CSAA, would give the acquirer voting
power within any of the following ranges of all of the voting power of UPC: (i)
one-fifth or more but less than one-third; (ii) one-third or more but less than
a majority; or (iii) a majority or more.
The provisions described above might be deemed to make UPC less
attractive as a candidate for acquisition by another company than would
otherwise be the case in the absence of such provisions. For example, if
another company should seek to acquire a controlling interest of less than 66
2/3% of the outstanding shares of UPC Common Stock, the acquirer would not
thereby obtain the ability to replace a majority of the UPC Board until at
least the second annual meeting of shareholders following the acquisition, and
furthermore the acquirer would not obtain the ability immediately to effect a
merger, consolidation or other similar business combination unless the
described conditions were met. As a result, UPC's shareholders may be deprived
of opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices in a takeover context. The 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 Date of the Merger, shareholders of ENB (except for
any ENB shareholder who shall have effectively exercised his or her dissenters'
rights) automatically will become holders of the Series E Preferred Stock, 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 holders of
UPC and ENB Common Stock.
REMOVAL OF DIRECTORS
ENB Directors may be removed with or without cause by the vote of the
holders of a majority of the shares entitled to vote at any meeting called for
that purpose.
In contrast, 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
ENB's Articles of Association ("Charter") and Bylaws contain no
provisions requiring more than a majority vote of all shares entitled to vote
on any particular matter that may be subjected to a shareholder vote unless the
question is one upon which, by express provision of Federal law, a larger or
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<PAGE> 57
different vote should be required, in which case the express statutory
provision shall govern. The UPC Charter provides that the vote of 66 2/3% or
more of the shares entitled to vote shall 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 is executed providing for such merger, sale or other
disposition, the corporation, person or entity into which UPC would be merged
or to which its assets would be sold is the beneficial owner of 10% or more of
the outstanding capital stock of UPC.
ELECTION OF DIRECTORS
ENB's Bylaws provide for only one class of directors, and shareholders
are entitled to elect all of ENB's directors annually. Cumulative voting for
the election of directors is permitted. The number of directors may be fixed
from time to time by a majority of the entire ENB Board, but in no event shall
the number of directors be less than five nor more than twenty-five (25).
In contrast, UPC's bylaws provide for a classified board of directors
consisting of three classes with staggered terms of three years each.
Therefore, UPC shareholders are entitled to elect only one class, i.e.,
approximately one-third of UPC's directors annually. The number of UPC
directors shall be not less than seven (7) nor more than twenty-five (25). To
increase the number of directors, 66 2/3% of the directors then in office must
concur.
METHOD OF CASTING VOTES
Voting Rights. Except as required by law, the holders of Series E
Preferred Stock are generally not entitled to vote other than to authorize the
issuance by UPC of equity securities having rights, preferences or privileges
senior to the Series E Preferred Stock and similar matters. See "The UPC
Series E Preferred Stock-Voting Rights." Except as provided by law or the UPC
Charter, each holder of UPC Common Stock shall have one vote on all matters
voted upon by shareholders in respect of each share of UPC Common Stock held.
Holders of UPC Common Stock do not have cumulative voting rights.
Federal law provides that each common shareholder of a bank shall be
entitled to one vote for each share of stock held by him on each matter
submitted at a meeting of shareholders; provided, however, that in electing
directors, each shareholder shall have cumulative voting rights, i.e., he or
she shall be entitled to as many votes as shall equal the number of shares of
stock held multiplied by the number of directors to be elected, which votes may
be cast for one candidate or distributed among as many candidates and in such
numbers as he or she shall see fit. Cumulative voting rights are granted by
Federal law, since the ENB Charter and Bylaws do not prohibit it, however
cumulative voting is of little practical value to the minority shareholders of
ENB due to the ownership of 94.768% of the outstanding shares by the ENB
Revocable Trust.
Reservation of Shares. Such number of shares of UPC Common Stock as
may from time to time be required for such purpose shall be reserved for
issuance (i) upon conversion of any shares of UPC Preferred Stock or any other
obligation of UPC convertible into shares of UPC Common Stock which shall be at
the time outstanding, and (ii) upon the exercise of any outstanding options or
warrants to purchase shares of UPC Common Stock.
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<PAGE> 58
EASTERN NATIONAL BANK
GENERAL
Eastern National Bank is a commercial bank headquartered in Miami,
Florida. Its main office is located at 799 Brickell Plaza in Miami, Florida
33131. At June 30, 1995, ENB had total assets of $266.3 million, total
deposits of $235.1 million, and total shareholders' equity of $20.6 million.
For the six months ended June 30, 1995, ENB earned $1.2 million.
ENB offers traditional banking services including commercial,
consumer, and real estate loans, deposit accounts, and private banking
services. ENB has approximately 124 full-time-equivalent employees.
ENB has been in operation in Miami since 1969. It opened branches at
Brickell and in Coral Gables in 1983 and 1988, respectively, and now also has
branches at Hialeah, Kendall and Miami West Airport. ENB has one subsidiary,
ENB Holdings, Inc. ("ENB Holdings") which manages and owns the building where
ENB's headquarters are located. At June 30, 1995, ENB Holdings had total
assets of $4.8 million.
LENDING ACTIVITIES
On June 30, 1995, based on the regulatory loan classification system,
ENB's loan portfolio consisted of 55.30% in loans secured by real estate, 7.75%
in loans to individuals, and 36.95% in commercial and other loans.
<TABLE>
<CAPTION>
Composition of ENB Loan Portfolio
At June 30, 1995
----------------
(Dollars in Thousands)
Percent of
Real estate loans: Amount Total
------ -----
<S> <C> <C>
Construction and Land
Development $ 13,852 8.36%
1-4 Family 17,160 10.35
Commercial and
other 51,167 30.87
Secured Multi-Family 9,488 5.72
------ -----
Total real estate 91,667 55.30
Loans to individuals 12,845 7.75
Commercial and other 61,246 36.95
------ ------
TOTAL LOANS $165,758 100.00%
======= ======
</TABLE>
Real Estate Loans. Loans secured by real estate included
approximately $17.2 million of residential (1-4 family) mortgage loans of which
all but approximately $4.1 million were secured by first liens. Substantially
all of ENB's residential real estate loans include balloon principal payments
with original maturities of one to four years. An additional $51.1 million of
real estate loans consisted of commercial real estate loans included with other
commercial loans which are secured by real estate.
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Consumer Loans. Consumer loans amounted to 12.8 million or 7.75% of
total loans at June 30, 1995. These loans include personal lines of credit and
installment loans for automobiles and other expenditures.
Commercial and Other. Commercial and other loans amounted to $61.2
million or 36.95% of total loans at June 30, 1995. Commercial loans include
working capital loans and lines of credit to small businesses in ENB's market
area.
PROPERTY
ENB or its wholly-owned subsidiary, ENB Holdings, Inc., own, free of
any encumbrances, the property on which ENB's main office and branch offices
are located. ENB also holds from time to time real estate acquired through
foreclosure.
COMPETITION
ENB competes with numerous other commercial banks and other financial
institutions in Dade County and contiguous counties in Florida. There are
other commercial banks, savings and loan institutions, credit unions, mutual
funds, investment companies and other companies offering competing financial
services in Dade and its contiguous Counties.
LEGAL PROCEEDINGS
As of the date of this Prospectus, there were no significant legal
proceedings pending against ENB.
MARKET PRICE OF ENB COMMON STOCK
The ENB Common Stock has no established trading market. ENB has not
declared any dividends on the ENB Common Stock or any other capital stock of
ENB since 1985.
CERTAIN BENEFICIAL HOLDERS OF ENB COMMON STOCK
The following table sets forth certain information as of the Record
Date with respect to those known to ENB to be beneficial owners of more than
five percent (5%) of the ENB Common Stock:
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<PAGE> 60
<TABLE>
<CAPTION>
Name and Address of Number of % of
Beneficial Owner Shares Total
---------------- --------- -----
<S> <C> <C>
ENB Revocable Trust (1) 432,379 94.768%
c/o Mr. Alcides Avila
Holland & Knight
701 Brickell Avenue
Suite 3000
Miami, Florida 33131
Eastern Overseas Bank Ltd. (2) 22,803 4.998%
444 Brickell Avenue #51-302
Miami, Florida 33131
------ ------
TOTAL 455,182 99.768%
----------------------- ======= ======
</TABLE>
(1) A trust of which the Trustees are Juan Santaella, Oscar Zamora and
Julio C. Leanez. Messrs. Santaella and Leanez are directors or
executive officers of ENB.
(2) Mr. Santaella, Chairman of the Board of ENB, is the President and
Chief Executive Officer of Eastern Overseas Bank, Ltd.
HOLDINGS OF ENB COMMON STOCK BY ENB MANAGEMENT
The following officers and directors of ENB held the following amounts
and percentages of the outstanding ENB Common Stock as of the Record Date:
<TABLE>
<CAPTION>
Number of % of
Name Shares Total
---- ----------- -----
<S> <C> <C>
Carole Fewell 63 .014%
Robert L. Jamerson, Jr. 63 .014
Julio C. Leanez 63 .014
Juan Santaella 64 .014
Jose J. Valdes-Fauli 63 .014
Melvin Wolfe 63 .014
----- ----
All Officers and Directors
as a group 379 .084%
===== ====
</TABLE>
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EASTERN NATIONAL BANK MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and tabular data analyze major factors and trends
regarding the consolidated financial condition of Eastern National Bank ("ENB")
and Subsidiary as of December 31, 1994 and 1993 and June 30, 1995 and 1994, and
the consolidated results of operations of ENB and for each of the years ended
December 31, 1994 and 1993 and the six-month periods ended June 30, 1995 and
1994. This discussion should be read in conjunction with the audited
consolidated financial statements and the notes thereto as of December 31, 1994
and 1993 and for each of the three years in the period ended December 31, 1994
and the unaudited consolidated financial statements and the notes thereto as of
June 30, 1995 and for the six months ended June 30, 1995 and 1994 as presented
in Appendix A of this Prospectus/Proxy Statement.
OVERVIEW
For a summary of selected consolidated financial data as of and for the
years ended December 31, 1990 through 1994, and for the six month periods ended
June 30, 1995 and 1994 see page 12 of this Prospectus. Since December 31,
1990, total assets have grown from $133 million to $266 million at June 30,
1995.
ENB's net income for the year ended December 31, 1993 was $1,635,000
representing the highest level of earnings for the five-year period ended
December 31, 1994, and net income of $550,000 for the year ended December 31,
1991, which represents the lowest earnings for the same five year period.
Management expects modest growth to continue in both assets and income;
however, such growth is dependent upon the economics of the markets served by
Eastern National Bank, its relative competitiveness in its local market and
other factors which are discussed below. Eastern National Bank is
headquartered in Miami, Florida.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994
Net Income. Net income for the six months ended June 30, 1995 was $1.2
million, an increase of $257,000 over 1994 net income of $898,000 for the
comparable period. Income per share was $2.54 in 1995 and $1.97 in 1994. 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 six months ended June 30, 1995 was
.92% compared to .71% for 1994. The return on average shareholders' equity for
1995 was 11.44% compared to 9.82% for the six months ended June 30, 1995. ENB
has neither declared nor paid dividends to common shareholders for the six
month periods ended June 30, 1995 and 1994.
Net Interest Income. Net interest income was $6.1 million for the six months
ended June 30, 1995 compared to $5.4 million for the six months ended June 30,
1994. The fluctuation in net interest income has arisen from a combination of
increasing yields and rates combined with overall increases in volumes on
interest-bearing assets and liabilities. The increase in yields and volumes on
interest-bearing assets have increased at a greater pace than the rates paid on
interest-bearing liabilities.
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Provision for Loan Losses. ENB's provisions for loan losses for the six
months ended June 30, 1995 and 1994 amounted to $460,000 and $375,000,
respectively. ENB effected recoveries of $119,000 and $50,000 for the six
months ended June 30, 1995 and 1994, respectively. For the six month periods
ended June 30, 1995 and 1994, gross charge-offs were $568,000 and $445,000,
respectively.
The level of nonperforming assets has decreased over the last year and
management expects continued decrease due to improvements in the loan
portfolio. The loan-to-deposit ratio increased from 67.61% at June 30, 1994 to
70.02% in 1995. Management expects future loan demand to remain fairly
constant at current levels. Future provisions for loan losses are dependent
upon various factors, including the economy, loan growth and composition,
levels of nonperforming assets and loan loss experience. The amounts of
nonperforming loans represent risks in the loan portfolio; however, a major
portion of such loans is collateralized to various degrees and should not be
interpreted as losses.
Other Income. Other income is primarily related to service charges on deposits
and other fees for services as well as rental income and net investment
securities gains and losses. Total other income for the six months ended June
30, 1995 was $1.4 million, a $131,000 increase from the $1.3 million reported
for 1994.
Other Expense. Total other expenses for the six months ended June 30, 1995
were $5.2 million or $432,000 more than the $4.7 million reported for 1994.
Salaries, wages and benefits totaled $2.8 million for the six months ended
June 30, 1995 compared to $2.4 million for the six months ended June 30, 1994.
The $400,000 increase was due to an increase in management salaries and the
rate for accrual of bonuses. Management does not project any significant
changes in the amount of these expenses.
Occupancy and equipment expense totaled $821,000 for the six months ended
June 30, 1995 compared to $835,000 for the six months ended June 30, 1995.
Management does not expect any significant changes in the amount of such
expenses based on planned capital expenditures.
Management continues to monitor the level of noninterest expenses to
identify the possibility of cost reductions where applicable; however, no
significant reductions are expected.
Income Taxes. Income tax expense totaled $761,000 and $635,000 for the six
months ended June 30, 1995 and 1994, respectively. These amounts represent
effective tax rates of 40% and 41% for the six months ended June 30, 1995 and
1994, respectively. Management expects that future effective tax rates will
remain at levels commensurate with that of 1995.
FINANCIAL CONDITION - JUNE 30, 1995
Total assets had increased at June 30, 1995 to $266.3 million as compared to
$242.2 million at December 31, 1994. This increase was funded by an increase
in deposits of $16 million to $235 million at June 30, 1995 as compared to $219
million at December 31, 1994.
Loans. Total loans, net of unearned income, at June 30, 1995 were $163.0
million, compared to $139.3 million at December 31, 1994. Loans increased by
$23.7 million. This increase is attributable to more loans to foreign banks to
provide export financing.
Investment Securities. Investment securities totaled $58.4 million at June 30,
1995, compared to $62.3 million at December 31, 1994. Investments in
securities are generally made as an alternative deployment
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<PAGE> 63
of available funds. Accordingly, the level of investment securities in the
future and their classification as available-for-sale or held-to-maturity will
depend on various factors, including loan demand and management's ability to
attract loans and deposits.
Money Market Assets. Federal funds sold and interest-bearing deposits in other
financial institutions totaled $17.8 million at June 30, 1995, compared to
$14.9 million at December 31, 1994, an increase of approximately $2.9 million.
The increase reflects the reinvestment of these funds from governmental
securities.
Foreclosed Assets. Foreclosed assets were $1,050,000 and $335,000 at June 30,
1995 and 1994, respectively.
Deposits. Customer deposits totaled $235.1 million as of June 30, 1995, a
$16.5 million increase over total deposits of $218.6 million as of December 31,
1994. The increase was primarily due to more competitive pricing by ENB.
Included in deposits are $45.2 million of time deposits greater than or equal
to $100,000 at June 30, 1995. At June 30, 1995, ENB's loan to deposit ratio
was 70.02%, compared to 63.73% at December 31, 1994.
Capital. Total shareholders' equity as of June 30, 1995 was $20.6 million,
compared to $19.3 million at December 31, 1994. Net income for the six months
ended June 30, 1995 was $1,155,000. Capital was also increased by a $132,000
change in the valuation allowance for investment securities classified as
available for sale.
At June 30, 1995, Eastern National Bank Tier 1 and Total Capital to
risk-weighted assets ratios were 11.49% and 11.68%, respectively, compared to
11.52% and 12.49%, respectively, at year end 1994. The regulatory agencies
required "well-capitalized" institutions to have Tier 1 and Total Capital
ratios of 5% 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. ENB's leverage ratio at
June 30, 1995 was 8.07% compared to 7.55% at year end 1994. The regulatory
guideline is 5% for "well-capitalized" institutions.
Liquidity and Asset/Liability Management. ENB is restricted under banking
regulations as to the amount of dividends that may be paid to shareholders.
Although it could have done so, ENB elected not to pay dividends in 1995.
For the six months ended June 30, 1995 and 1994, ENB generated cash flows
from operating activities of $2.0 million and $1.6 million, respectively.
Management expects future operating cash flows to be sufficient in amount
necessary to enable ENB to meet its obligations.
Sources and Use of Funds. ENB has a variety of sources of funds
available, but its primary source is the taking of deposits from customers,
both individual and business, within its market area. The net increase in
deposits was $18.5 million for the six months ended June 30, 1995. Management
believes that the rates offered for deposits are competitive with other
financial institutions in the ENB market area. ENB does not gather deposits
through any brokered means. ENB also derives funds from maturities and sales
of investment securities, which totaled $14.8 million for the six months ended
June 30, 1995.
ENB's primary use of funds is the making of loans to customers. The loan
to deposit ratio of 70.02% at June 30, 1995 represented a 9.9% increase in the
loan to deposit ratio of 63.73% at December 31, 1994. The net increase in
loans for the six months ended June 30, 1995 was $25.0 million. A secondary
use
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<PAGE> 64
of funds is the purchasing of debt securities for investment purposes. For the
six months ended June 30, 1995, investment purchases totaled $10.4 million.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
Net Income. Net income for 1994 was $1,631,000, a decrease of $4,000 over 1993
net income of $1,635,000. Income per share was $3.58 in 1994 and 1993. 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 .65%
compared to .71% for 1993. The return on average shareholders' equity for 1994
was 8.74% compared to 9.53% for the year ended December 31, 1993. ENB had
neither declared nor paid dividends to common shareholders for the year ended
December 31, 1994 and 1993.
Net Interest Income. Net interest income, the major component of ENB's income,
is the amount by which interest and fees generated by earning assets exceeds
the total interest cost of the funds used to carry them. Table 2 - Average
Balance Sheet and Interest Yields/Rates provides an analysis of the net
interest income for the years ended December 31, 1994, 1993 and 1992.
Net interest income was $10.8 million for the year ended December 31, 1994
compared to $9.8 million for the year ended December 31, 1993. The fluctuation
in net interest income has arisen from a combination of increasing yields and
rates combined with overall increases in volumes on interest-bearing assets and
liabilities. The increases in yields and volumes on interest-bearing assets
have increased at a greater pace than the rates paid on interest-bearing
liabilities.
Provision for Loan Losses. The allowance for loan losses has been, in the
opinion of management, maintained at a level sufficient to provide for losses
inherent in the loan portfolio. The level of provisions for the loan losses is
based on past loan experience, growth and composition of the loan portfolio, as
well as current economic conditions. ENB's provisions for loan losses for
years ended December 31, 1994 and 1993 amounted to $750,000 and $825,000,
respectively. ENB effected recoveries of $82,000 and $126,000 for the year
ended December 31, 1994 and 1993, respectively. For the years ended December
31, 1994 and 1993 gross charge-offs were $1,027,000 and $979,000, respectively.
Table 7, which follows this discussion, presents an analysis of the
Allowance for Loan Losses for the years ended December 31, 1990 through 1994
while Table 6 presents analysis of the Nonperforming Assets for the same
period. The level of nonperforming assets has decreased over the last year and
management expects continued decrease due to improvements in the loan
portfolio. The loan-to-deposit ratio decreased from 80.63% in 1990 to 63.73%
in 1994 as the demand for quality loans decreased. Management expects future
loan demand to remain fairly constant at current levels. Future provisions for
loan losses are dependent upon various factors, including the economy, loan
growth and composition, levels of nonperforming assets and loan loss
experience. The amounts of nonperforming loans represent risks in the loan
portfolio; however, a major portion of such loans is collateralized to various
degrees and should not be interpreted as losses.
Other Income. Other income is primarily attributable to service charges on
deposits and other fees for services as well as rental income and net
investment securities gains and losses. Total other income for 1994 was $3.3
million, a $.7 million increase from the $2.6 million reported for 1993. The
increase is primarily attributed to an increase in rental income in 1994 in
connection with ENB's purchase of its corporate headquarters in October, 1993.
Other changes in other income from 1993 to 1994 were not attributable to any
significant individual items.
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<PAGE> 65
Management continues to seek new sources of other income; however, no
significant growth or the maintenance of current levels of other income can be
assured.
Other Expense. Total other expenses for 1994 were $10.7 million or $1.8
million more than the $8.9 million reported for 1993.
Salaries, wages and benefits totaled $5.1 million for the year ended
December 31, 1994 compared to $4.3 million for the year ended December 31,
1993. Management does not project any significant changes in the amount of
these expenses.
Occupancy and equipment expense totaled $2.4 million for the year ended
December 31, 1994 compared to $1.5 million for the year ended December 31,
1993. The increase is primarily attributed to ENB's purchase of its corporate
headquarters in October, 1993 which resulted in a $700,000 increase in
occupancy expenses. Occupancy expense also increased by $200,000 reflecting
higher depreciation due to the purchase of a computer for in-house processing.
Other operating expense remained fairly level for the last two years.
Such expenses totaled $3.2 million for 1994 compared to $3.1 million for 1993.
Management does not project any significant changes in the amount of these
expenses. Management continues to monitor the level of noninterest expenses to
identify the possibility of cost reductions where applicable; however, no
significant reductions are expected.
Income Taxes. Income tax expense totaled $1.1 million and $1.0 million for the
years ended December 31, 1994 and 1993, respectively. These amounts represent
effective tax rates of 40% and 38% for the years ended December 31, 1994 and
1993, respectively. Management expects that future effective tax rates will
remain at levels commensurate with that of 1994.
FINANCIAL CONDITION - December 31, 1994
Total assets had increased at December 31, 1994 to $242.2 million as
compared to $240.2 million at December 31, 1993. This increase was funded by
an increase in deposits of $6 million to $219 million at December 31, 1994 as
compared to $213 million at December 31, 1993.
Loans. Total loans, net of unearned income, at December 31, 1994 were $139.3
million, compared to $155.8 million at December 31, 1993. Loans decreased by
$16.5 million. This decrease is attributable to a $16 million decline in
commercial loans due to the Venezuelan liquidity situation and the lack of new
business from that market coupled with weak domestic loan demand.
Table 6 - Nonperforming Assets sets forth information on the nonperforming
loans within the loan portfolio for the five years from December 31, 1990
through 1994. Although the amounts shown represent risks in the loan
portfolio, the major portion of the loans are collateralized to various degrees
and should not be interpreted as losses.
All potential problem loans have been disclosed in Table 6. 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.
Allowance for Loan Losses. In determining the amount of the provision for loan
losses and the level of the 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, loan-growth trends, adverse classifications at recent
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<PAGE> 66
regulatory examinations, general economic conditions in the market area, and a
review of individual loans to identify potential credit problems. The
allowance for loan losses is maintained at a level considered adequate by
management to provide for potential losses in the existing loan portfolio. In
evaluating the adequacy of the allowance, management makes certain estimates
and assumptions which are susceptible to change in the near term. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based upon changes in economic
conditions. Management believes that the level of the allowance for loan
losses is adequate in relation to the size, mix and quality of the loan
portfolio at December 31, 1994. Table 7 - Allowance for Loan Losses sets forth
an analysis of loan loss experience for the five years from 1990 through 1994.
Table 8 - Allocation of the Allowance for Loan Losses sets forth the
breakdown of the allowance for loan losses by loan category for the five years
from December 31, 1990 through 1994. Management believes that the allowance
can be allocated by category only on an estimated basis. The allocation of the
allowance to each category is not necessarily indicative of future losses and
does not restrict the use of the allowance to absorb losses in any category.
Investment Securities. Investment securities totaled $62.3 million at December
31, 1994, compared to $35.1 million at December 31, 1993. The increase of
$27.2 million is attributable to lower than expected commercial loan demand.
Investments in securities are generally made as an alternative deployment of
available funds. Accordingly, the level of investment securities in the future
and their classification as available-for-sale or held-to-maturity will depend
on various factors, including loan demand and management's ability to attract
loans and deposits.
As of December 31, 1994, the amortized cost of investment securities
(including securities classified as available for sale) was less than the
market value by $3.2 million, or 5.2%. Table 4 - Investment Securities
Portfolio Maturities and Yields provides an analysis of the maturities and
yields of the investment portfolio as of December 31, 1994.
Money Market Assets. Federal funds sold and interest-bearing deposits in other
financial institutions totaled $14.9 million at December 31, 1994, compared to
$23.5 million at December 31, 1993, a decrease of approximately $8.6 million.
The decrease reflects the reinvestment of these funds in government securities.
Foreclosed Assets. Foreclosed assets were $335,000 at December 31, 1994 and
1993.
Deposits. Average balances and average rates paid on deposits are reflected in
Table 2 - Average Balance Sheet and Interest Yield/Rates.
Customer deposits totaled $218.6 million as of December 31, 1994, a $5.7
million increase over total deposits of $212.9 million as of December 31, 1993.
The increase was primarily due to the introduction of a new Savings Plus
product. This product paid a slightly higher rate for balances over $10,000.
Table 10 - Average Deposits shows the increase.
Included in deposits are $34.3 million and $39.5 million of time deposits
greater than or equal to $100,000 at December 31, 1994 and 1993, respectively.
At December 31, 1994, ENB's loan to deposit ratio was 63.73%, compared to
73.18% at December 31, 1993.
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Capital. Total shareholders' equity as of December 31, 1994 was $19.3 million,
compared to $17.9 million at December 31, 1993. Net income for the year ended
December 31, 1994 was $1,631,000 which is offset by a valuation allowance of
$165,000 at December 31, 1994 for investment securities classified as available
for sale.
The key to continued growth and profitability of ENB is to maintain
adequate levels of capital. The capital adequacy of a bank 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 December 31, 1994,
Eastern National Bank was, and now is, in this category.
The regulatory capital guidelines divide capital into two tiers, Tier 1
capital and Tier 2 capital. Tier 1 capital of ENB consists of shareholders'
equity excluding goodwill and the unrealized loss on available-for-sale
investment 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, Eastern National Bank Tier 1 and Total capital to
risk-weighted assets ratios were 11.52% and 12.49%, respectively, compared to
9.82% and 10.83%, 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. Eastern National Bank's leverage ratio at December 31,
1994 was 7.66% compared to 7.58% at year end 1993. The regulatory guideline is
5% for "well-capitalized" institutions.
Liquidity and Asset/Liability Management. ENB views liquidity and
asset/liability management as the ability to assure that funds will be
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 ENB monitors and
attempts to control the mix and maturities of its assets and liabilities in
order to maximize net interest income. Management maintains balances of
federal funds sold, interest bearing deposits in other financial institutions
and available-for-sale investment securities in amounts it believes necessary
to meet daily cash needs. With the available-for-sale investment securities
portfolio, management can, in its 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.
ENB is restricted under banking regulations as to the amount of dividends
that may be paid to shareholders. Although it could have done so, ENB elected
not to pay dividends in 1994 and 1993.
For the years ended December 31, 1994 and 1993, ENB generated cash flows
from operating activities of $2.9 million and $2.5 million, respectively.
Management expects future operating cash flows to be sufficient in amount
necessary to enable ENB to meet its obligations.
Sources and Uses of Funds. ENB has a variety of sources of funds available,
but its primary source is the taking of deposits from customers, both
individual and business, within its market area. ENB's deposit acquisition
strategy is to rely on a core deposit base of demand deposits as well as
savings and time
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deposits under $100,000. Next, ENB utilizes time deposits $100,000 and over
for additional sources of funds. At December 31, 1994, the percentage of time
deposits $100,000 and over to total deposits was 15.7% compared to 18.5% at
December 31, 1993. The net increase in deposits was $5.7 million in 1994 and
$7.7 million in 1993. Management believes that the rates offered for deposits
are competitive with other financial institutions in the ENB market area. ENB
does not gather deposits through any brokered means.
ENB also derives funds from maturities of investment securities, which
totaled $28.7 million and $27.0 million in 1994 and 1993, respectively.
ENB's primary use of funds is the making of loans to customers. The loan
to deposit ratio of 63.73% at December 31, 1994 represented a 9.5% decrease in
the loan to deposit ratio of 73.18% at December 31, 1993. ENB's Selected
Consolidated Financial Data on page 12 indicates that the relative overall size
of its loan portfolio has decreased as evidenced by the trend of decline in the
loan to deposit ratio. ENB's loan portfolio is comprised of loans to
individuals and businesses secured by various types of collateral and in
certain circumstances the loans are extended on an unsecured basis. The
composition of the loan portfolio is presented in Note 3 to the consolidated
financial statements at December 31, 1994 and 1993, respectively, which are
annexed to the Prospectus as Appendix A.
A secondary use of funds is the purchasing of debt securities for
investment purposes. During 1994, the investment portfolio averaged 28% of
total earning assets compared to 15% in 1993. Table 12 presents the
composition of the investment securities portfolio at December 31, 1994 and
includes the average yields and maturities of the portfolio. The portfolio is
comprised of U.S. Treasury obligations, obligations of U.S. Government
agencies, and other securities. While ENB may continue to upgrade or
reposition the portfolio, management has not in the past nor does it intend in
the future to trade securities for profit or to depend upon securities gains as
a regular source of income. At December 31, 1994, the amortized cost of the
investment portfolio exceeded its fair value by approximately 5.2%.
Effective January 1, 1994, ENB adopted Statement of Financial Accounting
Standards ("SFAS") No. 115 Accounting for Certain Investments in Debt and
Equity Securities. The new standard addresses the accounting for investments
in equity securities that have readily determinable fair values and for all
investments in debt securities. The investment securities covered by this
standard are required to be reported in one of three categories: (I) debt
securities which the institution has a positive intent and ability to hold to
maturity are classified as "held-to-maturity" securities and reported at
amortized cost; (ii) debt and equity securities that are bought and held
principally for the purpose of selling them in the near term are classified as
"trading securities" and reported at fair value, with the unrealized gains and
losses included in earnings; and (iii) debt and equity securities not
classified as either held-to-maturity securities or trading securities are
classified as "available-for-sale" securities and reported at fair value, with
unrealized gains and losses excluded from earnings and reported, net of
deferred taxes, as a separate component of shareholders' equity.
In connection with the adoption of SFAS No. 115,, securities with a
carrying value of $7.9 million were transferred to the available-for-sale
category at fair value, with a net unrealized gain of $18,000 net of deferred
income taxes, which was reflected as a separate component of shareholders'
equity. The remaining securities were classified as held-to-maturity which
will continue to be carried at amortized cost adjusted for amortization of
premiums and accretion of discounts. Management has the intent and ability to
hold until maturity those securities classified as such. The initial adoption
did not have any effect on the results of operations of ENB.
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At December 31, 1994, ENB's commitments to extend credit totaled $48
million. However, some commitments are expected to expire without being drawn
upon and may not result in cash requirements. Accordingly, management is of
the opinion that the sources of funds discussed above, together with the level
of investment securities carried in the available-for-sale portfolio, will be
sufficient to enable ENB to meet its obligations as they arise and to fund
future net growth.
Regulatory Assessments. ENB is required to pay certain fees to the FDIC and
the Office of the Comptroller of the Currency. 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, ENB paid 26 cents per $100 of
deposits and had $218.6 million of insured deposits as of December 31, 1994.
FDIC deposit insurance and regulatory assessments totaled $609,000 and
$540,000 for the years ended December 31, 1994 and 1993, respectively.
Effects of Inflation. A bank's asset and liability structure is primarily
monetary in nature, that is, fixed in terms of monetary amounts. Consequently,
the impact of inflation on a bank differs significantly from its impact on an
industrial company. Factors such as interest rates have a more significant
impact on a bank's performance than does general inflation. Interest rates do
not necessarily move in the same direction, or at the same magnitude, as the
price of other goods and services.
IMPACT OF ACCOUNTING STANDARDS TO BE ADOPTED
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 or as a practical
expedient, at the loan's observable market price or fair value of the loan's
underlying collateral if the loan is collateral dependent. ENB adopted SFAS
No. 114 as of January 1, 1995. Adoption of the Statement did not have a
material effect on ENB's financial condition or results of operations.
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TABLE 1
SUMMARY OF CONSOLIDATED RESULTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Interest income $ 16,207 $ 14,319 $ 13,275 $ 12,683 $ 12,049
Interest expense 5,366 4,539 4,925 6,296 6,592
---------- ---------- ----------- ---------- ----------
Net interest income 10,841 9,780 8,350 6,387 5,457
Provision for losses on loans 750 825 1,079 950 490
---------- ---------- ----------- ---------- ----------
Net interest income after provision 10,091 8,955 7,271 5,437 4,967
for losses on loans ---------- ---------- ----------- ---------- ----------
Noninterest income:
Service fees 2,032 1,840 1,105 887 657
Other income 1,300 781 978 658 457
---------- ---------- ----------- ---------- ----------
Total noninterest income 3,332 2,621 2,083 1,545 1,114
---------- ---------- ----------- ---------- ----------
Noninterest expense
Salaries and employee benefits 5,056 4,265 3,499 2,852 2,518
Net occupancy expense 2,422 1,539 1,217 1,269 1,151
Other expense 3,205 3,122 2,221 1,974 1,444
---------- ---------- ----------- ---------- ----------
Total noninterest expense 10,683 8,926 6,937 6,095 5,113
---------- ---------- ----------- ---------- ----------
Income before taxes 2,741 2,650 2,417 887 968
Taxes 1,110 1,015 881 337 368
---------- ---------- ----------- ---------- ----------
Net income $ 1,631 $ 1,635 $ 1,536 $ 550 $ 600
========== ========== =========== ========== ==========
</TABLE>
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TABLE 2
AVERAGE BALANCE SHEET AND INTEREST YIELDS/RATES (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------------------------
1 9 9 4 1 9 9 3 1 9 9 2
--------------------------- -------------------------- ---------------------------
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 bearing assets:
Federal funds sold $ 14,809 $ 580 3.92% $ 14,088 $ 414 2.94% $ 12,300 $ 365 2.97%
Interest bearing deposits in other
financial institutions(1) 774 42 5.43% 5,674 297 5.23% 4,472 183 4.09%
Taxable investment securities 62,508 3,022 4.83% 31,442 1,499 4.77% 32,661 1,408 4.31%
Loans, net of unearned interest (2) 148,254 12,564 8.47% 160,431 12,110 7.55% 135,411 11,319 8.36%
-------- -------- ---- -------- -------- ----- -------- ------- -----
Total interest earning assets 226,345 16,208 7.16% 211,635 14,320 6.77% 184,843 13,275 7.18%
-------- -------- ---- -------- -------- ----- --------- ------- -----
Noninterest earning assets:
Cash and due from banks 8,471 8,690 8,766
Premises and equipment 10,921 6,261 4,425
Other assets 6,077 6,253 4,787
Less allowance for loan losses (1,731) (1,871) (1,435)
-------- -------- --------
Total assets $250,083 $230,968 $201,386
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest bearing liabilities:
Money market accounts $ 76,826 1,610 2.10% $ 66,549 1,505 2.26% $ 48,199 1,358 2.82%
NOW accounts 13,869 235 1.69% 15,857 312 1.97% 11,970 237 1.98%
Savings deposits 24,488 823 3.36% 8,067 164 2.03% 5,107 122 2.39%
Certificates of deposits of $100,000
and over 36,060 1,655 4.59% 48,674 1,792 3.68% 53,484 2,210 4.13%
Other time deposits 24,262 966 3.98% 20,101 686 3.41% 21,570 890 4.13%
Securities sold under agreements to
repurchase 4,108 78 1.90% 4,586 80 1.74% 5,366 109 2.03%
-------- -------- ---- -------- -------- ----- -------- ------- -----
Total interest bearing liabilities 179,613 5,367 2.99% 163,834 4,539 2.77% 145,696 4,926 3.38%
-------- -------- ---- -------- -------- ----- -------- ------- -----
Noninterest bearing liabilities:
Demand deposits 48,168 47,037 37,664
Other liabilities 3,630 2,938 2,539
Shareholders' equity 18,672 17,159 15,489
-------- -------- --------
Total liabilities and shareholders'
equity $250,083 $230,968 $201,388
======== ======== ========
NET INTEREST INCOME $ 10,841 $ 9,781 $ 8,349
======== ======== =======
NET YIELD ON INTEREST EARNING ASSETS 4.79% 4.62% 4.52%
==== ===== =====
</TABLE>
(1) Yields are calculated on historical cost and exclude the impact of the
unrealized loss on available-for-sale investment securities.
(2) Nonaccruing loans are included in the daily average loan amount
outstanding and income on such loans, which are immaterial in amounts,
is recognized as received. Loan fees are included in the interest
amounts for loans, but in each case were immaterial in amount.
61
<PAGE> 72
TABLE 3
ANALYSIS OF VOLUME AND RATE CHANGES (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1994 versus 1993 1993 versus 1992
------------------------------- -------------------------------
Increase Increase
(Decrease) (Decrease)
Due to Change Due to Change
in (1): in (1):
----------------- ------------------
Total Total
Average Average Increase Average Average Increase
Volume Rate (Decrease) Volume Rate (Decrease)
------ ------- ---------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits in other financial institutions $ (265) $ 10 $ (255) $ 56 $ 58 $ 114
Federal funds sold 22 144 166 53 (4) 49
Investment securities 1,504 19 1,523 (54) 145 91
Loans (958) 1,412 454 1,957 (1,166) 791
-------- -------- -------- -------- -------- --------
TOTAL INTEREST INCOME 303 1,585 1,888 2,012 (967) 1,045
-------- -------- -------- -------- -------- --------
INTEREST EXPENSE
Money market accounts 218 (113) 105 451 (304) 147
NOW accounts (36) (41) (77) 76 (1) 75
Savings deposits 499 160 659 63 (21) 42
Certificates of deposit of $100,000 and over (523) 386 (137) (189) (229) (418)
Other time deposits 156 124 280 (54) (150) (204)
Securities sold under agreements to repurchase (9) 7 (2) (15) (14) (29)
-------- -------- -------- -------- -------- --------
TOTAL INTEREST EXPENSE 305 523 828 332 (719) (387)
-------- -------- -------- -------- -------- --------
CHANGE IN NET INTEREST INCOME (2) 1,062 1,060 1,680 (248) 1,432
======== ======== ======== ======== ======== ========
PERCENTAGE INCREASE IN NET INTEREST INCOME OVER PRIOR
PERIOD 10.84% 17.15%
======== ========
</TABLE>
(1) The change 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.
62
<PAGE> 73
TABLE 4
INVESTMENT SECURITIES PORTFOLIO MATURITIES AND YIELDS DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
WEIGHTED
BOOK VALUE AVERAGE YIELD
---------- -------------
<S> <C> <C>
AVAILABLE-FOR-SALE
------------------
U.S. Treasury securities:
One to five years $ 4,994 4.74%
---------
4,994 4.74%
---------
U.S. Government Agency securities:
Within one year 3,946 6.11%
One to five years 2,000 6.10%
---------
5,946 6.10%
---------
Other securities:
Within one year 500 5.70%
---------
Total available-for-sale investments $ 11,440 5.49%
=========
HELD-TO-MATURITY
----------------
U.S. Government Agency securities:
Within one year $ 5,501 4.93%
One to five years 37,983 5.04%
Five to ten years 6,000 5.12%
---------
49,484 5.03%
Other securities:
Within one year 1,661 6.88%
---------
Total held-to-maturity investments $ 51,145
=========
</TABLE>
63
<PAGE> 74
TABLE 5
COMPOSITION OF LOAN PORTFOLIO (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Commercial, financial, and agricultural $ 46,153 $ 62,012 $ 70,402 $ 52,542 $ 49,924
Real estate -- construction 13,403 12,199 13,052 17,664 11,001
Real estate -- mortgage
Secured by 1-4 family residential 10,419 12,041 16,981 10,430 15,942
Other mortgage loans 47,651 46,381 42,264 23,984 8,992
Home equity 6,782 6,823 8,566 4,598 -
Consumer
Credit cards and other related plans 82 54 - - -
Other consumer loans 11,947 10,109 9,116 6,894 7,178
Loans to Banks in foreign countries 3,779 7,189 - - -
--------- ---------- ---------- ---------- -----------
Total loans 140,216 156,808 160,381 116,112 93,037
Less: Unearned income 877 1,007 1,121 1,121 966
--------- ---------- ---------- ---------- -----------
Total loans, net of unearned income $ 139,339 $ 155,801 $ 159,260 $ 114,991 $ 92,071
========= ========== ========== ========== ===========
</TABLE>
64
<PAGE> 75
TABLE 6
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------
1994 1993 1992 1991 1990
--------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $ 4,119 $ 4,693 $ 4,560 $ 1,149 $ -
--------- ---------- ---------- ---------- -----------
Total nonperforming loans 4,119 4,693 4,560 1,149 -
--------- ---------- ---------- ---------- -----------
Foreclosed property
Other real estate owned, net 335 335 678 646 646
--------- ---------- ---------- ---------- -----------
Total foreclosed properties 335 335 678 646 646
--------- ---------- ---------- ---------- -----------
Total nonperforming assets $ 4,454 $ 5,028 $ 5,238 $ 1,795 $ 646
========= ========== ========== ========== ===========
Loans 90 days or more past due and not on
nonaccrual status $ 42 $ 236 $ 196 $ 1,635 $ 49
========= ========== ========== ========== ===========
Nonperforming loans as a percentage of loans 2.94% 2.99% 2.84% 0.99% 0.00%
Non performing assets as a percentage of loans plus
foreclosed properties 3.17% 3.20% 3.25% 1.54% 0.69%
Allowance for loan losses as a percentage of
nonperforming loans 39.14% 38.50% 0.24% 89.99% N/A
Loans 90 days or more past due and not on nonaccrual
status as a percentage of loans 0.03% 0.15% 0.12% 1.41% 0.05%
</TABLE>
65
<PAGE> 76
TABLE 7
ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 1,807 $ 1,835 $ 1,034 $ 711 $ 535
---------- ---------- ---------- ---------- ----------
Loans charged off
Commercial, financial, and agricultural 928 967 303 666 129
Real estate -- mortgage - - 8 - 156
Consumer 99 12 29 21 63
---------- ---------- ---------- ---------- ----------
Total charge-offs 1,027 979 340 687 348
---------- ---------- ---------- ---------- ----------
Recoveries on loans previously charged off
Commercial, financial, and agricultural 80 117 60 44 29
Consumer 2 9 2 16 5
---------- ---------- ---------- ---------- ----------
Total recoveries 82 126 62 60 34
---------- ---------- ---------- ---------- ----------
Net charge-offs 945 853 278 627 314
Provision charged to expense 750 825 1,079 950 490
---------- ---------- ---------- ---------- ----------
Balance at end of period $ 1,612 $ 1,807 $ 1,835 $ 1,034 $ 711
========== ========== ========== ========== ==========
Loans, net of unearned income, at end of period $ 139,339 $ 155,801 $ 159,260 $ 114,991 $ 92,071
========== ========== ========== ========== ==========
Average loans, net of unearned income, during period $ 148,254 $ 160,431 $ 135,411 $ 102,275 $ 83,399
========== ========== ========== ========== ==========
Ratios:
Allowance at end of period to loans, net of unearned income 1.16% 1.16% 1.15% .90% .77%
Allowance at end of period to average loans, net of
unearned income 1.09% 1.13% 1.36% 1.01% .87%
Net charge-offs to average loans, net of unearned income .64% .53% .21% .61% .38%
</TABLE>
66
<PAGE> 77
TABLE 8
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES BY CATEGORY OF LOANS AND THE
PERCENTAGE OF LOANS BY CATEGORY TO TOTAL LOANS OUTSTANDING
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990
-------------------- ------------------- ------------------- ------------------ ------------------
Percentage Percentage Percentage Percentage Percentage
of Loans to of Loans to of Loans to of Loans to of Loans to
Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans
------ ----------- ------ ----------- ------ ----------- ----- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial,
and agricultural $1,322 32.92% $ 1,167 39.58% $ 1,115 43.90% $ 715 45.27% $ 217 53.66%
Real estate 202 55.81% 526 49.36% 641 50.42% 256 48.79% 410 38.62%
Consumer 88 8.58% 114 6.48% 79 5.68% 63 5.94% 83 7.72%
Foreign banks - 2.69% - 4.58% - 0.00% - 0.00% - 0.00%
------ ------- ------- ------- ------- ------- ------ -------- ----- -------
Total $1,612 100.00% $ 1,807 100.00% $ 1,835 100.00% $1,034 100.00% $ 710 0.00%
====== ======= ======= ======= ======= ======= ====== ======== ===== =======
</TABLE>
67
<PAGE> 78
TABLE 9
RATE SENSITIVITY ANALYSIS AT DECEMBER 31, 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Interest-Sensitive Within
-------------------------------------------------------------------
0-90 91-180 181-365 Over Noninterest
Days Days Days 1 Year Bearing Total
--------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets
Loans and leases $ 15,506 $ 22,452 $ 11,273 $ 86,866 $ 4,119 $ 140,216
Investment securities 38,699 7,230 2,095 14,296 62,320
Other earning assets 14,884 14,884
Other assets 24,793 24,793
--------- --------- ---------- ---------- ---------- ----------
Total assets $ 69,089 $ 29,682 $ 13,368 $ 101,162 $ 28,912 $ 242,213
========= ========= ========== ========== ========== ==========
Sources of funds
Money market deposits $ 62,981 $ 62,981
Other savings and time deposits 57,797 4,278 13,603 611 76,289
Time deposits over $100,000 15,908 10,478 7,248 636 34,270
Securities sold under agreements 962 962
to repurchase
Long-term debt
Noninterest-bearing deposits 45,098 45,098
Other liabilities 3,253 3,253
Shareholders' equity 19,360 19,360
--------- --------- ---------- ---------- ---------- ----------
Total sources of funds $ 137,648 $ 14,756 $ 20,851 $ 1,247 $ 67,711 $ 242,213
========= ========= ========== ========== ========== ==========
Interest rate sensitivity gap $ (69,559) $ 14,926 $ (7,483) $ 99,915 $ (38,799)
Cumulative interest rate
sensitivity gap $ (69,559) $ (53,633) $ (61,116) $ 38,799 $ 0
Cumulative gap as a
percentage of total assets (28)% (22)% (25)% 16% 0%
</TABLE>
____________________
Management has made the following assumptions in the above analysis:
(a) Assets and liabilities are generally assigned to a period based upon
their earliest repricing period when the repricing is less than the
contractual maturity.
(b) Nonaccrual loans are included in the noninterest-bearing category.
(c) Investment securities available for sale are currently treated in the
same manner as comparable securities in the investment securities held to
maturity portfolio in that they are scheduled according to the earlier of
their contractual maturities or earliest repricing dates; however, the
maturities of callable agency securities are scheduled according to their
call dates when valued at a premium to par.
68
<PAGE> 79
TABLE 10 AVERAGE
DEPOSITS(1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
------------------------------------------------------
1994 1993 1992
-------------- --------------- ---------------
<S> <C> <C> <C>
Noninterest bearing demand $ 48,168 $ 47,037 $ 37,664
Interest-bearing demand(2) 90,695 82,406 60,169
Savings 24,488 8,067 5,107
Time 59,130 67,575 74,011
-------------- --------------- ---------------
Total average deposits $ 222,481 $ 205,085 $ 176,951
============== =============== ===============
</TABLE>
(1) Table 2 presents the average rate paid on the above deposit categories for
the three years ended December 31, 1994.
(2) Includes money market savings accounts and NOW accounts.
69
<PAGE> 80
TABLE 11
TIME DEPOSIT MATURITIES $100,000 OR GREATER
AS OF DECEMBER 31, 1994 (DOLLARS IN
THOUSANDS)
<TABLE>
<S> <C>
3 months or less $ 15,908
Over 3 months through 12 months 17,726
Over 12 months 635
------------
Total $ 34,269
============
</TABLE>
70
<PAGE> 81
TABLE 12
INVESTMENT SECURITIES AND OTHER EARNING ASSETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
---------------------------------------------------
1994 1993 1992
-------------- -------------- -------------
<S> <C> <C> <C>
Held to maturity:
U.S. Government obligations:
U.S. Treasury $ - $ 13,942 $ 7,082
U.S. Government Agencies 49,484 19,240 21,970
-------------- ------------- -------------
Total U.S. Government obligations 49,484 33,182 29,052
Other investment securities 1,661 2,274 4,041
-------------- ------------- -------------
Total held to maturity 51,145 35,456 33,093
-------------- ------------- -------------
Available-for-sale:
U.S. Government Obligations
U.S. Treasury 4,817 - -
U.S. Government Agencies 5,859 - -
-------------- ------------- -------------
Total U.S. Government Obligations 10,676 - -
Other investment securities 499 - -
-------------- ------------- -------------
Total available-for-sale 11,175 - -
-------------- ------------- -------------
Total investment securities 62,320 35,456 33,093
Interest-bearing deposits in other financial institutions 384 2,483 4,654
Federal funds sold 14,500 21,000 14,600
-------------- ------------- -------------
Total investment securities and
money market assets $ 77,204 $ 58,939 $ 52,347
============== ============= =============
</TABLE>
71
<PAGE> 82
TABLE 13
RISK-BASED CAPITAL
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
TIER 1 CAPITAL
Shareholders' equity $ 19,360 $ 17,895 $ 16,259
Less goodwill (361) (398) (436)
Add unrealized loss on
available for sale securities 164 - -
------------ ------------ ------------
TOTAL TIER 1 CAPITAL 19,163 17,497 15,823
TIER 2 CAPITAL
Allowance for losses on loans 1,612 1,807 1,835
------------ ------------ ------------
TOTAL CAPITAL $ 20,775 $ 19,304 $ 17,658
============ ============ ============
RISK-WEIGHTED ASSETS $ 166,280 $ 178,182 $ 164,356
============ ============ ============
RATIOS
Equity to assets 7.99% 7.45% 7.04%
Leverage 7.66% 7.58% 7.86%
Tier 1 capital to risk-weighted assets 11.52% 9.82% 9.63%
Total capital to risk-weighted assets 12.49% 10.83% 10.74%
</TABLE>
Regulatory minimums for institutions considered "well-capitalized" are 5%, 6%,
and 10% for the leverage, Tier 1 capital to risk-weighted assets, and Total
capital to risk-weighted assets ratios, respectively.
72
<PAGE> 83
VALIDITY OF SERIES E PREFERRED STOCK AND UPC COMMON STOCK
The validity of the shares of the Series E Preferred Stock and UPC
Common Stock offered hereby will be passed upon by E. James House, Jr.,
Secretary and Manager of the Legal Department of UPC. E. James House, Jr. is
an officer of, 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 balance sheets of Eastern National Bank and
Subsidiary as of December 31, 1994 and 1993 and the consolidated statements of
income, changes in shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1994, included in this Prospectus as
Appendix A-1 have been included herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
The consolidated balance sheets of Capital Bancorporation, Inc. and
its subsidiaries as of December 31, 1994 and 1993, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1994, incorporated in
this Prospectus by reference to the Current Report on Form 8-K, dated August
21, 1995 of Union Planters Corporation have been audited by KPMG Peat Marwick
LLP, independent certified public accountants, as stated in their report which
is incorporated herein by reference and in reliance on the report on such firm
given upon their authority as experts in accounting and auditing.
73
<PAGE> 84
UNION PLANTERS CORPORATION
INDEX TO APPENDICES
APPENDIX
NUMBER
--------
<TABLE>
<S> <C> <C>
A -- Eastern National Bank Consolidated Financial Statements
A-1 -- Eastern National Bank Audited Consolidated Financial
Statements as of December 31, 1994 and 1993 and for the years
ended December 31, 1994, 1993 and 1992.
A-2 -- Eastern National Bank Unaudited Consolidated Financial
Statements as of June 30, 1995 and for the six-month periods
ended June 30, 1995 and 1994.
B -- Agreement and Plan of Reorganization between Union Planters
Corporation, Eastern National Bank and ENB Interim National
Bank dated as of April 25, 1995, as amended by that certain
Letter Agreement dated July 28, 1995, together with the
related Merger Agreement annexed as Exhibit A thereto.
C -- Fairness Opinion of The Robinson-Humphrey Company, Inc.
D -- Excerpt from the United States Code Annotated, Title 12,
Section 215, as amended which provides for Shareholders'
Dissenters' Rights.
</TABLE>
<PAGE> 85
APPENDIX A-1
EASTERN NATIONAL BANK
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1994 AND 1993 AND FOR THE YEARS
ENDED DECEMBER 31, 1994, 1993 AND 1992
<PAGE> 86
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
Eastern National Bank
We have audited the accompanying consolidated balance sheets of Eastern
National Bank and Subsidiary as of December 31, 1994 and 1993, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1994. These
financial statements are the responsibility of the Bank's 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 audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Eastern National
Bank and Subsidiary as of December 31, 1994 and 1993, and the consolidated
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 Bank changed its method
of accounting for investment securities in 1994.
/s/ Coopers & Lybrand LLP
-------------------------
Miami, Florida
January 27, 1995
1
<PAGE> 87
EASTERN NATIONAL BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1994 and 1993
<TABLE>
<CAPTION>
1994 1993
-------------- ---------------
ASSETS
<S> <C> <C>
Cash and due from banks $ 9,978,989 $ 11,923,375
Federal funds sold 14,500,000 21,000,000
-------------- ---------------
Total cash and cash equivalents 24,478,989 32,923,375
Interest-bearing deposits in other financial institutions 384,055 2,482,500
Investment securities:
Available for sale (amortized cost December 31, 1994:
$11,439,901) 11,175,270 -
Held to maturity (fair value: $48,174,531 and
$35,471,965, respectively) 51,145,209 35,455,833
Loans, net 137,726,428 153,993,641
Bank premises and equipment, net 11,430,793 10,177,709
Customers' acceptance liability 1,891,586 1,663,164
Other assets 3,980,726 3,488,734
-------------- ---------------
Total assets $ 242,213,056 $ 240,184,956
============== ===============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Deposits:
Demand $ 45,097,880 $ 56,791,552
Money market accounts 62,981,259 71,214,604
Savings and NOW accounts 47,352,840 26,013,209
Time deposits of $100,000 or more 34,269,459 39,475,065
Other time deposits 28,936,252 19,418,024
-------------- ---------------
Total deposits 218,637,690 212,912,454
Securities sold under agreements to repurchase 962,282 6,811,660
Accrued interest and other liabilities 1,361,119 903,027
Acceptances outstanding 1,891,586 1,663,164
-------------- ---------------
Total liabilities 222,852,677 222,290,305
-------------- ---------------
Commitments (Notes 4 and 7)
Shareholders' equity:
Common stock - par value $16; 1,000,000 shares
authorized, 456,250 issued and outstanding in
1994 and 1993, respectively 7,300,000 7,300,000
Surplus 5,304,055 5,304,055
Accumulated earnings 6,921,718 5,290 596
Net unrealized loss on securities available for sale (165,394) -
-------------- ---------------
Total shareholders' equity 19,360,379 17,894,651
-------------- -------------
Total liabilities and shareholders' equity $ 242,213,056 $ 240,184,956
============== ===============
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE> 88
EASTERN NATIONAL BANK AND SUBSIDIARY
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:
Interest and fees on loans $ 12,563,439 $ 12,109,771 $ 11,318,753
Interest on deposits in other financial institutions 41,970 297,278 182,907
Interest on investment securities - taxable 3,021,916 1,498,605 1,408,341
Interest on federal funds sold 579,780 413,705 365,306
--------------- --------------- --------------
Total interest income 16,207,105 14,319,359 13,275,307
--------------- --------------- --------------
Interest expense:
Interest on money market accounts 1,609,826 1,504,810 1,357,613
Interest on savings and NOW accounts 1,057,609 475,910 419,149
Interest on time deposits 2,620,389 2,478,390 3,039,294
Other, principally funds placed by affiliates and
other borrowings 78,013 80,241 109,439
--------------- --------------- --------------
Total interest expense 5,365,837 4,539,351 4,925,425
--------------- --------------- --------------
Net interest income 10,841,268 9,780,008 8,349,812
Provision for loan losses 750,000 825,000 1,079,000
--------------- --------------- --------------
Net interest income after provision
for loan losses 10,091,268 8,955,008 7,270,812
--------------- --------------- --------------
Other income:
Service fees 2,031,985 1,840,380 1,104,554
Letters of credit and bankers' acceptance fees 237,071 327,553 329,741
Other income 1,066,929 441,956 442,059
Security gains (losses), net (3,632) 10,742 207,123
--------------- --------------- --------------
Total other income 3,332,353 2,620,631 2,083,477
--------------- --------------- --------------
Other expense:
Salaries and employee benefits 5,056,035 4,265,361 3,498,724
Occupancy expense of bank premises 2,422,229 1,538,544 1,216,898
Other operating expense 3,204,635 3,122,211 2,221,446
--------------- --------------- --------------
Total other expense 10,682,899 8,926,116 6,937,068
--------------- --------------- --------------
Income before income taxes 2,740,722 2,649,523 2,417,221
Provision for income taxes 1,109,600 1,014,600 880,500
--------------- --------------- --------------
Net income $ 1,631,122 $ 1,634,923 $ 1,536,721
=============== =============== ==============
Net income per share $ 3.58 $ 3.58 $ 3.37
=============== =============== ==============
Weighted average shares outstanding 456,250 456,250 456,243
=============== =============== ==============
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE> 89
EASTERN NATIONAL BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY for the years ended
December 31, 1994, 1993 and 1992
<TABLE>
<CAPTION>
Net
Unrealized
Gains (Losses)
Common Stock on Securities
---------------------- Accumulated Available
Shares Par Value Surplus Earnings for Sale Total
--------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1991 456,220 $ 7,299,520 $ 5,303,485 $ 2,118,952 $ - $ 14,721,957
Net income - - - 1,536,721 - 1,536,721
--------- ----------- ------------ ------------ ------------ ------------
Balance at December 31, 1992 456,220 7,299,520 5,303,485 3,655,673 - 16,258,678
Issuance of common stock 30 480 570 - - 1,050
Net income - - - 1,634,923 - 1,634,923
--------- ----------- ------------ ------------ ------------ ------------
Balance at December 31, 1993 456,250 7,300,000 5,304,055 5,290,596 - 17,894,651
Adjustment for change in method
of accounting for investment
securities - - - - 17,645 17,645
Change in net unrealized gains
(losses) of securities
available for sale, net of
income taxes of $99,237 - - - - (183,039) (183,039)
Net income - - - 1,631,122 - 1,631,122
--------- ----------- ------------ ------------ ------------ ------------
Balance at December 31, 1994 456,250 $ 7,300,000 $ 5,304,055 $ 6,921,718 $ (165,394) $ 19,360,379
========= =========== ============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 90
EASTERN NATIONAL BANK AND SUBSIDIARY
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 $ 1,631,122 $ 1,634,923 $ 1,536,721
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 750,000 825,000 1,079,000
Depreciation and amortization, net of accretion 409,105 331,193 489,689
Loss on sale of premises and equipment 36,247 16,240 4,567
Loss (gain) on sale of investment securities 3,632 (10,742) (207,123)
(Increase) decrease in interest receivable (653,227) 518,348 12,781
Increase (decrease) in interest payable 194,933 (816,893) (139,389)
Other, net 485,848 - (405,093)
------------- ------------- ---------------
Net cash provided by operating activities 2,857,660 2,498,069 2,371,153
------------- ------------- ---------------
Cash flows from investing activities:
Purchase of interest bearing deposits in other
financial institutions (289,604) (43,263,548) (6,936,727)
Proceeds from sales and maturities of interest
bearing deposits in other financial institutions 2,385,000 45,430,548 6,572,243
Securities held to maturity:
Proceeds from sales and maturities 23,742,275 26,959,069 26,064,714
Purchases (48,442,282) (29,114,267) (30,181,530)
Securities available for sale:
Proceeds from maturities 4,925,000 - -
Proceeds from sales 7,975,179 - -
Purchases (14,939,901) - -
Net decrease (increase) in loans 15,517,213 2,566,617 (44,584,185)
Proceeds from sale of premises and equipment 20,500 149,912 351
Purchases of premises and equipment (2,071,284) (6,140,904) (959,440)
------------- ------------- ---------------
Net cash used in investing activities (11,177,904) (3,412,573) (50,024,574)
------------- ------------- ---------------
Cash flows from financing activities:
Net increase in demand, money market, savings,
NOW accounts, time and other deposits 5,725,236 7,677,354 56,285,315
Net (decrease) increase in funds placed by
affiliates and other borrowings (5,849,378) 146,425 1,262,352
Proceeds from issuance of common stock - 1,050 -
------------- ------------- ---------------
Net cash (used in) provided by
financing activities (124,142) 7,824,829 57,547,667
------------- ------------- ---------------
(Decrease) increase in cash and cash equivalents (8,444,386) 6,910,325 9,894,246
Cash and cash equivalents at beginning of year 32,923,375 26,013,050 16,118,804
------------- ------------- ---------------
Cash and cash equivalents at end of year $ 24,478,989 $ 32,923,375 $ 26,013,050
============= ============= ===============
Supplemental disclosures:
Interest paid $ 5,170,904 $ 4,604,136 $ 5,064,884
============= ============= ===============
Income tax payments $ 747,000 $ 1,280,850 $ 1,055,737
============= ============= ===============
</TABLE>
See accompanying notes to consolidated financial statements
5
<PAGE> 91
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies:
Eastern National Bank (the Bank) is a 95% controlled subsidiary of ENB
Revocable Trust, a British Virgin Islands corporation.
The accounting policies and reporting practices of the Bank conform to
the predominant practices in the banking industry and are based on
generally accepted accounting principles. The following is a summary
of the more significant accounting policies of the Bank.
Consolidation
The consolidated financial statements of Eastern National Bank (the
Bank) include the accounts of the Bank and its wholly-owned subsidiary
(from August 12, 1993, date of inception of subsidiary) which owns a
building and land partly occupied by the Bank. Significant
intercompany transactions have been eliminated.
Cash Equivalents
Cash equivalents include cash on hand, amounts due from banks and
federal funds sold.
Investment Securities
On January 1, 1994, the Bank adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. The Statement requires
applicable debt and equity securities to be classified into three
categories: held-to-maturity, available-for-sale, or trading.
Securities classified as held to maturity are those debt securities
the Bank has both the positive intent and ability to hold to maturity
regardless of changes in market conditions, liquidity needs or changes
in general economic conditions. These securities are carried at cost
adjusted for amortization of premium and accretion of discount,
computed by the interest method over their contractual lives.
6
<PAGE> 92
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. Summary of Significant Accounting Policies, Continued:
Securities classified as available for sale are those debt securities
that the Bank intends to hold for an indefinite period of time, but
not necessarily to maturity. Any decision to sell a security
classified as available for sale would be based on various factors,
including significant movements in interest rates, changes in the
maturity mix of the Bank's assets and liabilities, liquidity needs,
regulatory capital considerations, and other similar factors.
Securities available for sale are carried at fair value. Unrealized
gains or losses are reported as increases or decreases in
shareholders' equity.
In accordance with the Statement, prior period financial statements
have not been restated to reflect the change in accounting principle.
The opening balance of shareholders' equity increased by $17,645 to
reflect the net unrealized gain on securities classified as
available-for-sale that were previously classified as held for
investment and carried at amortized cost.
Prior to 1994, investment securities were stated at cost adjusted for
amortization of premiums and accretion of discounts since it was
management's intention to hold investment securities for the
foreseeable future. From time to time management had decided to sell
certain securities prior to maturity for liquidity, tax planning or
other valid business purposes.
Realized gains or losses on the sales of investment securities are
determined by the specific identification method. Interest income on
investment securities is accrued monthly as earned.
Loans, Allowance for Loan Losses and Loan Fees
Loans are carried at the principal amount outstanding reduced by
unearned discount on certain installment loans and by an allowance for
loan losses. Interest is accrued based upon the principal balance
outstanding.
The Bank provides for loan losses by charges to current operations in
amounts sufficient to maintain the allowance at an adequate level
based on factors which, in management's judgement, deserve current
recognition in estimating loan losses. Such factors include changes
in prevailing economic conditions, historical experience, changes in
the character and size of the loan portfolio, and the overall
creditworthiness of the borrowers.
Loans are charged against the allowance for loan losses at such time
as management considers them uncollectible in the normal course of
business. Accrual of interest on loans is discontinued when, in the
opinion of management, its collectibility is doubtful. Classification
of a loan as non-accrual is not necessarily indicative of a potential
loss of principal.
7
<PAGE> 93
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. Summary of Significant Accounting Policies, Continued:
Loan origination and commitment fees are deferred and amortized over
the life of the related loan.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed on the straight-line method
over the estimated useful life of each type of asset. Leasehold
improvements are amortized over the remaining term of the applicable
leases or their useful lives, whichever is shorter.
Maintenance and repairs are charged to expense as incurred;
improvements and betterments are capitalized. When items are retired
or are otherwise disposed of, the related costs and accumulated
depreciation are removed from the accounts and any resulting gains or
losses are credited or charged to income.
Goodwill
The excess of cost over the fair value of the underlying net assets
and certain costs incurred in a branch acquisition of approximately
$574,600, net of accumulated amortization of approximately $214,000
and $176,000, as of December 31, 1994 and 1993, respectively, is being
amortized on a straight-line basis over fifteen years and is included
in other assets in the accompanying balance sheets. Management
periodically evaluates whether events or circumstances have occurred
that would result in impairment in the value or life of goodwill.
Other Real Estate
Other real estate acquired by foreclosure or other remedies is carried
at the lower of the recorded amount of the loan or the estimated net
realizable value reduced by estimated selling costs. When a reduction
of the recorded amount to the net realizable value is required at the
time of foreclosure, the difference is charged to the allowance for
loan losses. Any subsequent reduction is charged to other real estate
expense and a valuation reserve is established for the potential
declines in appraised values. Other real estate of approximately
$335,000 is included in other assets in the accompanying balance
sheets at December 31, 1994 and 1993.
8
<PAGE> 94
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. Summary of Significant Accounting Policies, Continued:
Income Taxes
Effective January 1, 1993, the Company adopted the provisions of SFAS
No. 109, Accounting for Income Taxes. Pursuant to this statement,
deferred income taxes are recognized for the tax consequences in
future years for differences between the tax basis of assets and
liabilities and their financial reporting amounts at each year-end
based on enacted tax laws and statutory tax rates applicable to the
time periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized. The
implementation of the new statement did not have a material impact on
the Bank's financial statements.
Prior to 1993, deferred taxes were computed in accordance with APB
Opinion No. 11, Accounting for Income Taxes, based on timing
differences in the recognition of income and expense for financial
reporting and for income tax purposes.
Employee Benefit Plan
The Bank has established a qualified contributory profit sharing plan
covering substantially all eligible employees. The Bank's
contribution to the plan was approximately $48,000, $33,000 and
$31,000 for fiscal years 1994, 1993 and 1992, respectively.
Capital and Reserve Requirements
Bank regulations limit the amount of dividends that may be paid
without prior approval of the Bank's regulatory agency. Payment of
dividends are generally limited to earnings of the Bank, as defined
for regulatory purposes, for the current period and the full two
preceding years.
Bank regulatory agencies also require banks to maintain certain
capital levels based both on the amount of carrying asset value and an
adjusted asset valuation determined on an assigned risk basis. The
amount of dividends that may be paid is also subject to these capital
requirements. As of December 31, 1994, the Bank was in compliance
with these requirements.
The Bank is also required to maintain noninterest bearing reserve
balances with the Federal Reserve Bank. At December 31, 1994 and
1993, the balances required to be maintained for such purposes
amounted to $1,407,000 and $2,648,000, respectively.
9
<PAGE> 95
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
1. Summary of Significant Accounting Policies, Continued:
Future Impact of Recently Issued Accounting Pronouncement
The Financial Accounting Standards Board has issued Statement No. 114,
Accounting by Creditors for Impairment of a Loan, which becomes
effective for fiscal years beginning after December 15, 1994. The
Statement generally requires impaired loans to be measured on the
present value of expected future cash flows discounted at the loan's
effective interest rate or as an expedient, at the loan's observable
market price or the fair value of the collateral if the loan is
collateral dependent. A loan is impaired when it is probable the
creditor will be unable to collect all contractual principal and
interest payments due in accordance with the terms of the loan
agreement. Adoption of the Statement is not expected to have a
significant impact on the Bank's financial position.
2. Investment Securities:
The amortized cost, gross unrealized gains, gross unrealized losses
and estimated market values of investment securities are summarized as
follows:
<TABLE>
<CAPTION>
December 31, 1994
--------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------- ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Available for Sale
Securities:
U.S. Treasury
securities $ 4,993,639 $ - $ 176,744 $ 4,816,895
Obligations of other
U.S. government
agencies and
corporations 5,946,262 - 87,022 5,859,240
Corporate bonds 500,000 - 865 499,135
--------------- ------------ --------------- ---------------
$ 11,439,901 $ - $ 264,631 $ 11,175,270
=============== ============ =============== ===============
Held to Maturity Securities:
Obligations of other
U.S. government
agencies and
corporations $ 49,483,809 $ - $ 2,954,416 $ 46,529,393
Obligations of foreign
government and/or
entities 1,283,250 - 16,262 1,266,988
Other securities 378,150 - - 378,150
--------------- ------------ --------------- ---------------
$ 51,145,209 $ - $ 2,970,678 $ 48,174,531
=============== ============ =============== ===============
</TABLE>
10
<PAGE> 96
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. Investment Securities, Continued:
<TABLE>
<CAPTION>
December 31, 1993
--------------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
--------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Held to Maturity Securities:
U.S. Treasury
securities $ 13,942,024 $ 6,629 $ 3,533 $ 13,945,120
Obligations of other
U.S. government
agencies and
corporations 19,240,181 32,832 34,467 19,238,546
Obligations of
foreign government
and/or entities 1,395,478 7,862 76 1,403,264
Other securities 378,150 - - 378,150
Corporate bonds 500,000 6,885 - 506,885
--------------- ------------- --------------- ---------------
$ 35,455,833 $ 54,208 $ 38,076 $ 35,471,965
=============== ============= =============== ===============
</TABLE>
The amortized cost and estimated market value of investment securities
at December 31, 1994, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
Available for Sale Held to Maturity
------------------------------- --------------------------------
Estimated Estimated
Amortized Fair Amortized Market
Cost Value Cost Value
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Due in one year or less $ 4,446,262 $ 4,443,135 $ 7,064,022 $ 6,966,438
Due after one year through
five years 6,993,639 6,732,135 38,081,187 35,654,493
Due after five years through
ten years - - 6,000,000 5,553,600
-------------- ------------- -------------- -------------
$ 11,439,901 $ 11,175,270 $ 51,145,209 $ 48,174,531
============== ============= ============== =============
</TABLE>
Proceeds from sales of investments held to maturity during 1994 were
$4,976,171 and resulted in realized gross gains and losses of $0 and
$3,863, respectively. Such investments were sold within three months
of their respective maturities. Proceeds from sales of securities
available for sale during 1994 were $7,975,179 and resulted in realized
gross gains of $4,186 and gross losses of $3,950. Proceeds from sales
of investment securities during 1993 were $7,995,270 and resulted in
realized gross gains and losses of $10,742 and $0, respectively.
Proceeds from sales of investment securities during 1992 were
$17,186,102 and resulted in realized gross gains and losses of $207,123
and $0, respectively.
11
<PAGE> 97
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
2. Investment Securities, Continued:
Investment securities having a carrying value of approximately
$8,645,000 and $9,490,000 at December 31, 1994 and 1993, respectively,
were pledged to secure public and trust funds on deposit and
securities sold under agreements to repurchase.
3. Loans:
A summary of the distribution of loans by type, is as follows:
<TABLE>
<CAPTION>
December 31,
---------------------------------------
1994 1993
----------------- -----------------
<S> <C> <C>
Commercial, financial and agricultural $ 46,153,104 $ 62,011,144
Real estate - mortgage 64,851,692 65,245,415
Real estate - construction 13,403,443 12,198,631
Consumer 12,028,579 10,163,352
Banks in foreign countries 3,779,380 7,189,860
----------------- -----------------
140,216,198 156,808,402
Unearned discount (391,168) (454,278)
Deferred loan fees (486,274) (552,948)
----------------- -----------------
139,338,756 155,801,176
Allowance for loan losses (1,612,328) (1,807,535)
----------------- ------------------
Loans, net $ 137,726,428 $ 153,993,641
================= =================
</TABLE>
As of December 31, 1994 and 1993, loans of approximately $14,855,000
and $28,603,000, respectively, were collateralized by deposits.
As of December 31, 1994 and 1993, the Bank had non-accrual loans of
$4,119,000 and $4,693,000, respectively. Non-accrual loans at
December 31, 1994 included $1,483,000 due from Venezuelan borrowers.
The interest income on these loans for 1994 and 1993 would have been
$353,230 and $323,300, respectively, had these loans performed in
accordance with their original terms.
12
<PAGE> 98
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
3. Loans, Continued:
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------
1994 1993 1992
--------------- ---------------- ---------------
<S> <C> <C> <C>
Balance at beginning of year $ 1,807,535 $ 1,835,208 $ 1,033,572
Provision charged to operations 750,000 825,000 1,079,000
Losses (1,027,701) (979,046) (339,430)
Recoveries 82,494 126,373 62,066
--------------- ---------------- ---------------
Balance at end of year $ 1,612,328 $ 1,807,535 $ 1,835,208
=============== ================ ===============
</TABLE>
4. Bank Premises and Equipment:
Bank premises and equipment were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1994 1993
----------------- ----------------
<S> <C> <C>
Land $ 2,193,375 $ 2,193,375
Building and improvements 6,411,563 5,390,070
Leasehold improvements 1,208,920 950,794
Furniture, fixtures and
equipment 3,866,343 3,676,145
Construction in progress 360,703 163,911
---------------- ----------------
14,040,904 12,374,295
Accumulated depreciation
and amortization (2,610,111) (2,196,586)
---------------- -----------------
Bank premises and equipment, net $ 11,430,793 $ 10,177,709
================ ================
</TABLE>
Depreciation and amortization of bank premises and equipment amounted
to $761,453, $497,947 and $421,142 in 1994, 1993 and 1992,
respectively.
13
<PAGE> 99
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
4. Bank Premises and Equipment, Continued:
The Bank is obligated under non-cancelable operating leases for bank
premises. The following is a schedule of minimum lease commitments
outstanding that have an initial or remaining lease term in excess of
one year, net of future minimum noncancelable subleases of $390,500:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
1995 $ 294,000
1996 294,000
1997 294,000
1998 226,000
1999 248,000
2000 and thereafter 1,332,000
----------------
$ 2,688,000
================
</TABLE>
Rent expense was approximately $391,000, $370,000 and $381,000 in
1994, 1993 and 1992, respectively.
5. Other Income and Operating Expense:
The major components of other income and other operating expense are
as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1994 1993 1992
--------------- ---------------- ---------------
<S> <C> <C> <C>
Other income:
Rental $ 775,020 $ 199,369 $ -
Other 291,909 242,587 442,059
--------------- ---------------- ---------------
$ 1,066,929 $ 441,956 $ 442,059
=============== ================ ===============
</TABLE>
14
<PAGE> 100
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. Other Income and Operating Expense, Continued:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1994 1993 1992
--------------- ---------------- ---------------
<S> <C> <C> <C>
Other operating expense:
Computer conversion $ - $ 96,085 $ -
Data processing 71,181 123,770 161,343
FDIC and OCC insurance 608,838 540,458 394,614
Advertising 161,279 158,162 108,775
General bank insurance 104,124 70,338 85,746
Tangible and intangible tax 146,964 194,102 136,295
Legal fees 228,875 263,701 231,359
Telephone 259,506 170,167 123,443
Other real estate owned expense 76,830 60,696 54,965
Stationery and supplies 205,715 177,520 125,462
Travel and entertainment 128,936 100,626 94,520
Consulting fees 134,545 124,323 67,827
Armored carrier and courier 101,401 81,729 52,178
Accounting and auditing fees 65,202 95,640 49,098
Other service fees 143,582 77,241 25,232
Appraisal fees 7,625 82,278 -
Postage and freight 90,206 75,107 59,369
Contributions 48,610 67,820 19,250
Public relations 108,656 73,697 54,721
Other 512,560 488,751 377,249
--------------- ---------------- ---------------
$ 3,204,635 $ 3,122,211 $ 2,221,446
=============== ================ ===============
</TABLE>
6. Income Taxes:
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------
1994 1993 1992
--------------- ---------------- ---------------
<S> <C> <C> <C>
Current:
Federal $ 895,800 $ 778,500 $ 1,153,900
State 72,700 43,000 99,700
Foreign 85,500 56,000 -
--------------- ---------------- ---------------
1,054,000 877,500 1,253,600
--------------- ---------------- ---------------
Deferred:
Federal 54,100 129,100 (323,900)
State 1,500 8,000 (49,200)
--------------- ---------------- ---------------
55,600 137,100 (373,100)
--------------- ---------------- ---------------
Total $ 1,109,600 $ 1,014,600 $ 880,500
=============== ================ ===============
</TABLE>
15
<PAGE> 101
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
6. Income Taxes, Continued:
The following table provides a reconciliation between the Federal
income tax rate and the Bank's effective income tax rate:
<TABLE>
<CAPTION>
Percent of
Pretax Income
------------------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Income tax at Federal income tax rate 34% 34% 34%
State and foreign income taxes 4 3 1
Other 2 1 1
------- -------- -------
40% 38% 36%
======= ======== =======
</TABLE>
Deferred tax assets/liabilities are comprised of the following:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1994 1993
------------ --------------
<S> <C> <C>
Deferred tax assets:
Losses on loans and other real estate $ 334,306 $ 385,113
Interest on non-accrual loans 98,570 102,889
Unrealized loss on securities 99,237 -
Other deferred items 34,735 23,894
-------------- --------------
Total deferred tax assets 566,848 511,896
-------------- --------------
Deferred tax liabilities:
Depreciation 222,619 211,325
-------------- --------------
Total deferred tax liabilities 222,619 211,325
-------------- --------------
Net deferred tax asset $ 344,229 $ 300,571
============== ==============
</TABLE>
7. Related Party Transactions:
At December 31, 1993, interest bearing deposits in other financial
institutions included $1,600,000 invested with an affiliate, Eastern
Overseas Bank. The 1993 deposit accrued interest at 6.75% and matured
February 4, 1994. Interest income on such deposits for 1994, 1993 and
1992 amounted to $10,000, $108,000 and $57,000, respectively.
16
<PAGE> 102
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
7. Related Party Transactions, Continued:
At December 31, 1994 and 1993, securities sold under agreements to
repurchase include approximately $350,000 and $3,482,000,
respectively, from affiliates. Interest expense on such deposits for
1994, 1993 and 1992 amounted to approximately $21,000, $36,000 and
$34,000, respectively.
8. Financial Instruments With Off-Balance-Sheet Risk and With
Concentrations of Credit Risk:
Off-Balance-Sheet Risk
The Bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business in order to meet the financing
needs of its customers. These financial instruments include
commitments to extend credit and standby and commercial letters of
credit. Those instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in
the balance sheets. The Bank uses the same credit policies in making
commitments and conditional obligations as it does for
on-balance-sheet instruments.
Commitments to extend credit generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Total
commitments to extend credit as of December 31, 1994 and 1993 included
$44,398,000 and $34,124,000, respectively, in floating rate loan
commitments and $4,057,000 and $2,897,000 respectively, in fixed rate
loan commitments. The 1994 fixed rate commitments were at rates
ranging from 5.47% to 10.5%, and expire on various dates through
September 1995. The Bank evaluates each customer's creditworthiness
on a case- by-case basis. The amount of collateral obtained if deemed
necessary by the Bank upon extension of credit is based on
management's credit evaluation of the counterparty.
Standby and commercial letters of credit are conditional commitments
issued by the Bank to guarantee the performance of a customer to a
third party. Those guarantees are primarily issued to support private
borrowing or performance arrangements. The credit risk involved in
issuing letters of credit is essentially the same as that involved in
extending loan facilities to customers. At December 31, 1994, the
Bank had approximately $2,220,000 and $2,759,000 in irrevocable
standby and commercial letters of credit, respectively, outstanding of
which $1,656,000 and $460,000, respectively, were collateralized by
cash. At December 31, 1993, the Bank had approximately $2,094,000 and
$2,510,000 in irrevocable standby and commercial letters of credit,
respectively, outstanding of which $1,357,000 and $704,000,
respectively, were collateralized by cash.
17
<PAGE> 103
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
8. Financial Instruments With Off-Balance-Sheet Risk and With
Concentrations of Credit Risk, Continued:
Concentrations of Credit Risk
The Bank primarily grants loans on which South Florida real estate is
collateral. The borrowers ability to honor their contracts is
substantially dependent upon the general economic conditions of the
region, particularly as it relates to the real estate and construction
industry. In addition, at December 31, 1994 and 1993, loans to
foreign borrowers, primarily Venezuelans, amounted to approximately
$15,001,000 and $30,331,000, respectively, of which approximately
$9,099,000 and $22,600,000, respectively, were collateralized by cash.
Commitments to extend credit to foreign borrowers, principally foreign
banks, totalled $19,320,000 as of December 31, 1994.
The Bank also owns investments in securities of foreign government
and/or entities. At December 31, 1994 and 1993, the carrying value of
such investments amounted to approximately $1,283,000 and $1,395,000,
respectively.
9. Disclosures About Fair Value of Financial Instruments:
The following methods and assumptions were used to estimate the fair
value of each significant class of financial instruments for which it
is practicable to estimate that value:
Cash and Due from Banks, Federal Funds Sold
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
Investment Securities
The fair value of investment securities equals quoted market price, if
available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities. Note 2
to the financial statements provides information on estimated fair
values at December 31, 1994 and 1993.
Loan Receivables
A significant portion of loans receivable is comprised of prime-based
loans and cash collateralized loans, the fair value for these types of
loans is the carrying amount of the loan. At December 31, 1994,
prime-based loans amounted to $87,217,000 and cash collateralized
loans amounted to $14,855,000. At December 31, 1993, prime-based
loans amounted to $85,885,000 and cash collateralized loans amounted
to $28,603,000. Nonaccrual loans have not been valued because it is
not practical to estimate a fair value for such loans.
18
<PAGE> 104
EASTERN NATIONAL BANK AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
9. Disclosures About Fair Value of Financial Instruments, Continued:
Deposit Liabilities
The fair value of demand deposits, savings and NOW accounts, money
market deposits and funds placed by affiliates and other borrowings is
the amount payable on demand (carrying amount) at December 31, 1994
and 1993. The fair value of fixed-maturity certificates of deposit is
estimated using the rates currently offered for deposits of similar
remaining maturities. At December 31, 1994 and 1993, the fair value
of time deposits approximated their carrying value and included time
deposits of $40,934,000 and $50,323,000, respectively, due within six
months of year-end.
Commitments to Extend Credit and Standby Letters of Credit
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of
the counterparties. The fair value of letters of credit is based on
fees currently charged for similar agreements. At December 31, 1994
and 1993, letters of credit of approximately $3,631,000 and $3,036,000
were scheduled to expire within six months of year-end. The fair
value of these commitments approximate the carrying amount.
19
<PAGE> 105
APPENDIX A-2
EASTERN NATIONAL BANK
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 1995 AND FOR THE SIX-MONTH PERIODS
ENDED JUNE 30, 1995 AND 1994
<PAGE> 106
EASTERN NATIONAL BANK AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET (Unaudited)
June 30, 1995
(Dollars in thousands, except per share data)
<TABLE>
<S> <C>
ASSETS
Cash and due from banks $ 9,536
Federal funds sold 17,500
-------------
Total cash and cash equivalents 27,036
Interest-bearing deposits at other financial institutions 290
Investment securities:
Available for sale 6,962
Held to maturity 51,395
Loans, net 163,014
Bank premises and equipment, net 9,725
Customers' acceptance liability 2,724
Other assets 5,106
-------------
Total assets $ 266,252
=============
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C>
Deposits:
Noninterest-bearing $ 47,306
Other interest-bearing, including NOW accounts of $14,422 142,603
Certificates of deposit of $100,000 and over 45,203
-------------
Total deposits 235,112
Accrued interest and other liabilities 2,097
Securities sold under agreements to repurchase 5,672
Acceptances outstanding 2,724
-------------
Total liabilities 245,605
-------------
Shareholders' equity:
Common stock, $16 par value; 1,000,000 shares authorized,
456,250 shares issued and outstanding 7,300
Additional paid-in capital 5,304
Retained earnings 8,077
Net unrealized loss on securities available-for-sale (34)
-------------
Total shareholders' equity 20,647
-------------
Total liabilities and shareholders' equity $ 266,252
=============
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements
1
<PAGE> 107
EASTERN NATIONAL BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
for the six months ended June 30, 1995 and 1994
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994
-------------- -------------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 7,549 $ 6,116
Interest on investment securities - taxable 1,569 1,351
Interest on federal funds sold 404 289
Interest on deposits in other financial institutions 13 29
------------- -------------
Total interest income 9,535 7,785
------------- -------------
Interest expense:
Deposits 3,347 2,365
Other borrowings 62 63
------------- -------------
Total interest expense 3,409 2,428
------------- -------------
Net interest income 6,126 5,357
Provision for loan losses 460 375
------------- -------------
Net interest income after provision for loan losses 5,666 4,982
------------- -------------
Other income:
Service fees 849 898
Other 551 371
------------- -------------
Total other income 1,400 1,269
------------- -------------
Other expense:
Salaries and employee benefits 2,767 2,424
Occupancy expense of bank premises 821 835
Other operating expense 1,562 1,459
------------- -------------
Total other expense 5,150 4,718
------------- -------------
Income before income taxes 1,916 1,533
Provision for income taxes 761 635
------------- -------------
Net income $ 1,155 $ 898
============= =============
Net income per share $ 2.54 $ 1.97
============= =============
Weighted average shares outstanding 456,250 456,250
============= =============
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements
2
<PAGE> 108
EASTERN NATIONAL BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY (Unaudited)
for the six months ended June 30, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Net
Unrealized
Gains
(Losses) on
Additional Securities
Common Paid-in Retained Available
Stock Capital Earnings For Sale Total
--------- ----------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 $ 7,300 $ 5,304 $ 6,922 $ (166) $ 19,360
Net income - - 1,155 - 1,155
Change in net unrealized
gain (loss) on securities
available for sale - - - 132 132
---------- ------------ ---------- ------------ -----------
Balance at June 30, 1995 $ 7,300 $ 5,304 $ 8,077 $ (34) $ 20,647
========== ============ ========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements
3
<PAGE> 109
EASTERN NATIONAL BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
for the six months ended June 30, 1995 and 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,155 $ 898
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 460 375
Depreciation and amortization, net of accretion 142 181
Loss on sale of premises and equipment 29 17
Gain on sale of investment securities - (4)
Increase in interest receivable and other assets (504) (605)
Increase in interest payable and other liabilities 736 717
----------- -----------
Net cash provided by operating activities 2,018 1,579
----------- -----------
Cash flows from investing activities:
Purchases of interest-bearing deposits in other financial institutions - (194)
Proceeds from maturities of interest bearing deposits in other
financial institutions 94 1,895
Securities held to maturity:
Proceeds from maturities 7,783 10,442
Proceeds from sales - 4,981
Purchases (7,970) (46,289)
Securities available for sale:
Proceeds from maturities 6,993 500
Proceeds from sales - 8,072
Purchases (2,470) (7,978)
Net (increase) decrease in loans (25,028) 5,474
Purchase of premises and equipment (513) (1,285)
Proceeds from sale of premises and equipment 466 -
----------- -----------
Net cash used in investing activities (20,645) (24,382)
----------- -----------
Cash flows from financing activities:
Net increase in deposit accounts 16,474 8,104
Net increase in other borrowed funds 4,710 (3,845)
----------- ------------
Net cash provided by financing activities 21,184 4,259
----------- -----------
Decrease in cash and cash equivalents 2,557 (18,544)
Cash and cash equivalents at beginning of period 24,479 32,931
----------- -----------
Cash and cash equivalents at end of year $ 27,036 $ 14,387
=========== ===========
Cash paid for interest $ 3,196 $ 2,450
=========== ===========
Cash paid for income taxes $ 563 $ 200
=========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements
4
<PAGE> 110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
for the Six Months Ended June 30, 1995
Note 1 - Basis of Presentation
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. The foregoing financial statements
are unaudited; however, in the opinion of management, all adjustments,
including only normal recurring adjustments, necessary for a fair presentation
of the consolidated financial statements have been included. The accounting
policies followed by Eastern National Bank and Subsidiary (the "Bank") for
interim financial reporting are consistent with the accounting policies
followed for annual financial reporting. The financial statements and notes
included herein should be read in conjunction with the notes to the
consolidated financial statements for the year ended December 31, 1994.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted in accordance with the rules of the Securities and Exchange
Commission.
Note 2 - Accounting Change
Effective January 1, 1995, the Bank adopted the provisions of Statement of
Financial Accounting Standards No. 114, Accounting by Creditors for Impairment
of a Loan. The Statement generally requires impaired loans to be measured on
the present value of expected future cash flows discounted at the loan's
effective interest rate or as an expedient, at the loan's observable market
price or the fair value of the collateral if the loan is collateral dependent.
A loan is impaired when it is probable the creditor will be unable to collect
all contractual principal and interest payments due in accordance with the
terms of the loan agreement. Adoption of the Statement did not have a
significant impact on the Bank's financial position.
Note 3 - Pending Merger
In April 1995, the Board of Directors of the Bank approved an Agreement and
Plan of Reorganization with Union Planters Corporation ("UPC") whereby the two
parties intend to effectuate a merger of the Bank with and into a subsidiary of
UPC. The consideration to be paid consists of the following: (i) a payment of
$4,500,000 in cash, (ii) the issuance of approximately 317,459 shares of UPC
Series E Preferred Stock, and (iii) $14,500,000 in UPC, negotiable,
unregistered, unsecured notes having an interest rate of 8% per annum which
matures on various terms ranging from the one year anniversary date of the
merger to September, 1997. Notes in the amount of approximately $1.5 million
are payable on September 30, 1997 subject to the repayment of certain loans
which are currently in default.
The merger is dependent upon the approval of the shareholders of the Bank and
various regulatory agencies. Additionally, the Bank is restricted from certain
activities prior to the consummation of the transaction.
5
<PAGE> 111
APPENDIX B
AGREEMENT AND PLAN OF REORGANIZATION DATED AS OF APRIL 25, 1995,
ALONG WITH THE MERGER AGREEMENT ANNEXED
AS EXHIBIT A THERETO
<PAGE> 112
AGREEMENT AND PLAN OF REORGANIZATION
DATED as of April 25, 1995
Between
UNION PLANTERS CORPORATION and
ENB INTERIM NATIONAL BANK
and
EASTERN NATIONAL BANK
<PAGE> 113
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
AGREEMENT AND PLAN OF REORGANIZATION . . . . . . . . . . . . . 1
AGREEMENT . . . . . . . . . . . . . . . . . . . 3
ARTICLE 1 . . . . . . . . . . . . . . . . . . . 3
DEFINITIONS . . . . . . . . . . . . . . . . . . . 3
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 . . . . . . . . . . . . . . . . . . . 9
TERMS OF THE REORGANIZATION . . . . . . . . . . . . . . . 9
2.1 The Reorganization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Organization of ENB INTERIM NATIONAL BANK . . . . . . . . . . . . . 9
(b) The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2 Articles of Association, Bylaws, Directors, Officers and Name of the
Resulting Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Articles of Association . . . . . . . . . . . . . . . . . . . . . . 10
(b) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Officers and Directors . . . . . . . . . . . . . . . . . . . . . . 10
(d) Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 Due Diligence Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.4 Availability of Information . . . . . . . . . . . . . . . . . . . . . . . . 11
2.5 UPC's Right to Revise the Structure of the Transaction . . . . . . . . . . . 11
2.6 Holding Period of UPC Common Stock . . . . . . . . . . . . . . . . . . . . . 12
2.7 Restrictive Legend - UPC Negotiable Notes . . . . . . . . . . . . . . . . . 13
2.8 ENB Stock Options and Treasury Stock . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 3 . . . . . . . . . . . . . . . . . . . 14
DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . 14
3.1 Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Satisfaction of Conditions to Closing . . . . . . . . . . . . . . . 14
(b) Effective Time of the Merger . . . . . . . . . . . . . . . . . . . 14
(c) Conversion of Shares of INTERIM . . . . . . . . . . . . . . . . . . 14
(d) Conversion and Cancellation of Shares of ENB . . . . . . . . . . . 15
(e) Conversion and Exchange of ENB Shares; Exchange Ratio . . . . . . . 15
(f) Mechanics of Payment of the Consideration . . . . . . . . . . . . . 20
(g) Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . 22
(h) Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . 23
(i) Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . 23
(j) Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . 23
(k) Dissenting Shareholders' Rights . . . . . . . . . . . . . . . . . . 23
(l) ENB Stock Options and Treasury Stock . . . . . . . . . . . . . . . 23
3.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
i
<PAGE> 114
<TABLE>
<S> <C> <C>
ARTICLE 4 . . . . . . . . . . . . . . . . . . . 24
REPRESENTATIONS AND WARRANTIES OF UPC . . . . . . . . . . . . 24
4.1 Organization and Corporate Authority . . . . . . . . . . . . . . . . . . . . 24
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 Government Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.5 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.6 UPC Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.7 Exchange Act and Listing Filings . . . . . . . . . . . . . . . . . . . . . . 27
4.8 The UPC Common Stock and UPC Series E Preferred Stock . . . . . . . . . . . 28
4.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.10 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 29
4.11 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . 30
4.12 Bank Secrecy Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.13 Fair Lending Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.14 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 5 . . . . . . . . . . . . . . . . . . . 31
REPRESENTATIONS AND WARRANTIES OF ENB . . . . . . . . . . . . 31
5.1 Organization and Qualification of ENB and Subsidiaries . . . . . . . . . . . 31
5.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.4 Government and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . 33
5.5 Compliance With Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.6 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.7 ENB Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.8 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.9 Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.10 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.11 ENB Subsidiaries and Representative Offices . . . . . . . . . . . . . . . . 36
5.12 Condition of Fixed Assets and Equipment . . . . . . . . . . . . . . . . . . 37
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.14 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.15 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.17 Labor and Employment Matters . . . . . . . . . . . . . . . . . . . . . . . . 42
5.18 Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.19 Capitalization of ENB . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.20 Sole Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.21 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.22 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . 44
5.23 Allowance for Possible Loan or ORE Losses . . . . . . . . . . . . . . . . . 45
5.24 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.25 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.26 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.27 Material Contract Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
ii
<PAGE> 115
<TABLE>
<S> <C> <C>
5.28 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.29 Bank Secrecy Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.30 Fair Lending Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.31 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 6 . . . . . . . . . . . . . . . . . . . 50
COVENANTS OF UPC . . . . . . . . . . . . . . . . . . 50
6.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . 51
6.3 Registration of UPC Series E Preferred Stock and
UPC Common Stock under the Securities Laws . . . . . . . . . . . . . . . . . 51
6.4 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.5 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 7 . . . . . . . . . . . . . . . . . . . 53
COVENANTS OF ENB . . . . . . . . . . . . . . . . . . 53
7.1 Proxy Statement; ENB Shareholder Approval . . . . . . . . . . . . . . . . . 53
7.2 Conduct of Business -- Affirmative Covenants . . . . . . . . . . . . . . . . 53
7.3 Conduct of Business -- Negative Covenants . . . . . . . . . . . . . . . . . 55
ARTICLE 8 . . . . . . . . . . . . . . . . . . . 58
CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . 58
8.1 Conditions to the Obligations of ENB . . . . . . . . . . . . . . . . . . . . 58
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . 58
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
(d) Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
(e) Opinion of UPC's and INTERIM' Counsel . . . . . . . . . . . . . . . 59
(f) Inspections Permitted . . . . . . . . . . . . . . . . . . . . . . . 61
(g) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . 61
(h) Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.2 Conditions to the Obligations of UPC and INTERIM . . . . . . . . . . . . . . 61
(a) Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
(b) Representations and Warranties . . . . . . . . . . . . . . . . . . 62
(c) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(d) Destruction of Property . . . . . . . . . . . . . . . . . . . . . . 62
(e) Inspections Permitted . . . . . . . . . . . . . . . . . . . . . . . 63
(f) No Material Adverse Change . . . . . . . . . . . . . . . . . . . . 63
(g) Opinion of ENB's Counsel . . . . . . . . . . . . . . . . . . . . . 63
(h) Other Business Combinations, Etc . . . . . . . . . . . . . . . . . 64
(i) Maintenance of Certain Covenants, Etc . . . . . . . . . . . . . . . 64
(j) Employment Agreement and Non-Compete Agreement . . . . . . . . . . 65
(k) Receipt of Affiliate Letters . . . . . . . . . . . . . . . . . . . 65
8.3 Conditions to Obligations of All Parties . . . . . . . . . . . . . . . . . . 65
(a) No Pending or Threatened Claims . . . . . . . . . . . . . . . . . . 66
(b) Government Approvals and Acquiescence Obtained . . . . . . . . . . 66
</TABLE>
iii
<PAGE> 116
<TABLE>
<S> <C> <C>
(c) Effective Registration Statement and No Stop Orders . . . . . . . . 66
(d) Tax Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE 9 . . . . . . . . . . . . . . . . . . . 66
TERMINATION . . . . . . . . . . . . . . . . . . . 66
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE 10 . . . . . . . . . . . . . . . . . . . 69
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . 69
10.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.2 Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . 70
10.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.7 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.9 Modifications, Amendments and Waivers . . . . . . . . . . . . . . . . . . . 71
10.10 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.11 Payment of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.13 Equitable Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.14 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.15 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . 73
10.16 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.17 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
iv
<PAGE> 117
AGREEMENT AND PLAN OF REORGANIZATION
(As revised and reexecuted June 30 , 1995)
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement") dated as of the 25th day of April, 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; ENB INTERIM NATIONAL BANK ("INTERIM"), a national banking association to
be formed and chartered under the laws of the United States of America as a
wholly-owned subsidiary of UPC and whose principal place of business shall be
located at 799 Brickell Plaza, Miami, Dade County, Florida 33131; and EASTERN
NATIONAL BANK ("ENB"), a national banking association chartered and existing
under the laws of the United States of America and whose principal offices are
located at 799 Brickell Plaza, Miami, Dade County, Florida 33131;
UPC, INTERIM and ENB are sometimes referred to herein as the "Parties."
Juan Santaella, a natural person residing in the United States of America; and
Julio Leanez, a natural person residing in the United States of America (each
individually referred to herein as a "Trustee" and collectively as the
"Trustees"), each joins in this Reorganization Agreement, in his capacity as a
co-trustee of that certain trust known as the "ENB Revocable Trust" which is
the holder of record for the beneficial owners (the "Beneficiaries") of 432,379
shares of ENB Common Stock, for the sole purpose of evidencing their
acknowledgment and agreement with the agreements, terms, conditions,
representations, warranties, covenants, obligations and undertakings entered
into, accepted, undertaken and agreed to by ENB in this Reorganization
Agreement and the accompanying Merger Agreement.
Eastern Overseas Bank LTD, a ________________________ ("EOB") which is the
beneficial owner and holder of record of 22,803 shares of ENB Common Stock,
joins in this Reorganization Agreement for the sole purpose of evidencing its
acknowledgement and agreement with the agreements, terms, conditions,
representations, warranties, covenants, obligations and undertakings entered
into, accepted, undertaken and agreed to by ENB in this Reorganization
Agreement and the accompanying Merger Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 1
<PAGE> 118
RECITALS
A. ENB desires to have itself acquired by UPC on the terms and
subject to the conditions set forth in this Reorganization Agreement and the
accompanying Merger Agreement (attached hereto as Exhibit A) (the "Merger
Agreement").
B. The Board of Directors of ENB deems it desirable and in the
best interests of ENB and the shareholders of ENB (the "ENB Shareholders") that
INTERIM be merged with and into ENB (which would survive the merger) on the
terms and subject to the conditions set forth in this Reorganization Agreement
and in the manner provided in this Reorganization Agreement and the Merger
Agreement.
C. The Boards of Directors of UPC and INTERIM deem it desirable
and in the best interests of UPC, INTERIM and the shareholders of UPC and
INTERIM that INTERIM be merged with and into ENB 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 Merger Agreement.
D. The respective Boards of Directors of UPC, INTERIM and ENB
have each adopted (or will each adopt) resolutions setting forth and adopting
this Reorganization Agreement and the Merger Agreement, and have directed that
this Reorganization Agreement and the Merger Agreement and all resolutions
adopted by said Boards of Directors and by the ENB 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 Office of the Comptroller of the Currency (the "Comptroller"),
the Department of Banking and Finance of the State of Florida (the "FSBD") and
such other regulatory agencies or authorities as may be necessary in order to
obtain all governmental authorizations required to consummate the proposed
Merger (as defined herein) in accordance with this Reorganization Agreement,
the Merger Agreement 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> 119
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 ENB" shall have the meaning
assigned to such term in Section 5.7 of this Reorganization Agreement.
"BALANCE SHEET DATE" shall have the meaning assigned to such
term in Section 5.8 of this Reorganization Agreement.
"BHCA" shall mean the Bank Holding Company Act of 1956, as
amended.
"BUSINESS DAY" shall mean any Monday, Tuesday, Wednesday,
Thursday or Friday that is not a federal or state holiday generally recognized
by banks in Tennessee or Florida.
"CASH PAYMENT" shall have the meaning assigned to such term in
Section 3.1(e) of this Reorganization Agreement and shall be a component of the
Consideration deliverable by UPC and INTERIM to the ENB Record Holders in
accordance with the terms and conditions of this Reorganization Agreement.
"CERCLA" shall have the meaning set forth in Section 5.15(a)
of this Reorganization Agreement.
"CLOSING" shall have the meaning assigned to such term in
Section 3.1(a) of this Reorganization Agreement.
"CLOSING DATE" shall have the meaning assigned to such term in
Section 3.2 of this Reorganization Agreement.
"COMPTROLLER" shall mean the Office of the Comptroller of the
Currency or any successor thereto.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 3
<PAGE> 120
"CONSIDERATION" shall mean the value to be received by the ENB
Record Holders in exchange for their ENB Common Stock, and shall consist of (i)
the Cash Payment, (ii) shares of UPC Series E Preferred Stock, and (iii) the
UPC Negotiable Notes, with such value to be determined as provided in Article
3, Section 3.1(e), of this Reorganization Agreement.
"CONTROL" shall have the meaning assigned to such term in
Section 2(a)(2) of the Bank Holding Company Act of 1956, as amended.
"DEPOSITS" shall mean all deposits (including, but not limited
to, certificates of deposit, savings accounts, NOW accounts and checking
accounts) of ENB.
"EFFECTIVE DATE" shall mean that date on which the Effective
Time of the Merger shall have occurred.
"EFFECTIVE TIME OF THE MERGER" shall have the meaning assigned
in Section 3.3 of the Plan of Merger and Section 3.1(b) of this Reorganization
Agreement.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ENB " means Eastern National Bank, a national banking
association chartered and existing under the laws of the United States of
America, having its principal place of business at 799 Brickell Plaza, Miami,
Dade County, Florida 33131.
"ENB COMMON STOCK" has the meaning assigned to such term in
Section 3.1(d) of this Reorganization Agreement.
"ENB COMPANIES" shall mean ENB and all of its Subsidiaries.
"ENB 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 ENB or any ENB Subsidiary, to or for the benefit of the officers,
directors or employees of ENB or any ENB Subsidiary.
"ENB RECORD HOLDERS" means the holders of record of all of the
issued and outstanding shares of ENB Common Stock immediately prior to the
Effective Time of the Merger.
"ENB SHAREHOLDERS" shall have the meaning assigned to such
term in Recital B of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 4
<PAGE> 121
"ENB STOCK OPTIONS" shall have the meaning assigned to such
term in Section 3.1(l) of this Reorganization Agreement.
"EOB" shall have the meaning assigned to such term in the
Preambles to this Reorganization Agreement.
"EXCHANGE AGENT" shall mean Union Planters National Bank,
Memphis, Tennessee, acting through its Corporate Trust Department.
"EXCHANGE RATIO" shall have the meaning assigned to such term
in Section 3.1(e) of this Reorganization Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE" shall mean the Board of Governors of the
Federal Reserve System and shall include the Federal Reserve Bank of St. Louis
acting under delegated authority.
"FLORIDA CODE" means the Florida Code Annotated, as amended.
"FLORIDA COMPTROLLER" shall mean the Office of the Comptroller
of the Department of Banking and Finance of the State of Florida.
"FSBD" shall mean the Department of Banking and Finance of the
State of Florida.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"GOVERNMENT APPROVALS" shall have the meaning assigned to such
term in Section 4.4 of this Reorganization Agreement.
"HAZARDOUS SUBSTANCES" shall have the meaning set forth in
Section 5.15(a) of this Reorganization Agreement.
"INTERIM" shall mean ENB Interim National Bank, a national
banking association to be formed and chartered under the laws of the United
States of America as a wholly-owned subsidiary of UPC with its principal place
of business located at 799 Brickell Plaza, Miami, Dade County, Florida 33131.
"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> 122
"MERGER" shall, as described in Section 2.1 of this
Reorganization Agreement, mean the consolidation or merger of INTERIM with and
into ENB, which shall survive the Merger as the Resulting Bank.
"MERGER AGREEMENT" shall mean the Merger Agreement
substantially in the form of Exhibit A hereto to be executed by authorized
representatives of ENB, UPC and INTERIM and filed with the Comptroller along
with the Articles of Merger in accordance with the National Banks Consolidation
Acts, 12 U.S.C.A. Sections 215 - 215b, and 12 U.S.C.A. Section 1828(c) and
providing for the Merger of INTERIM with and into ENB as contemplated by
Section 2.1 of this Reorganization Agreement.
"NASDAQ/NMS" shall mean the National Association of Securities
Dealers Automated Quotation System -- National Market System, or its successor,
upon which shares of the UPC Series E Preferred Stock are quoted for trading.
"NYSE" shall mean the New York Stock Exchange, or its
successor, upon which shares of the UPC Common Stock are listed for trading.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"OFFICER" shall have the meaning set forth in Section 5.8(k)
of this Reorganization Agreement.
"PARTIES" shall mean UPC, INTERIM, ENB, ENB Revocable Trust
and EOB collectively; UPC and INTERIM on the one hand, or ENB, ENB Revocable
Trust and EOB 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.
"PROPERTY" shall have the meaning assigned to such term in
Section 5.15(a) of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 6
<PAGE> 123
"PROXY STATEMENT" shall mean the proxy statement to be used by
ENB to solicit proxies with a view to securing the approval of the ENB
Shareholders of this Reorganization Agreement and the Merger Agreement.
"REALTY" means the real property of ENB owned or leased by ENB
or any Subsidiary of ENB.
"RECORDS" means all available records, original instruments
and other documentation, pertaining to ENB, ENB's assets (including plans and
specifications relating to the Realty), ENB's liabilities, the ENB 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 ENB's, business by
UPC and ENB on and after the Effective Time of the Merger as it was conducted
prior to the Closing Date.
"REGULATORY AUTHORITIES" shall mean, collectively, the
Comptroller, the Federal Reserve, the FSBD, the FDIC, the SEC, or any other
state or federal governmental or quasi-governmental entity which has, or may
hereafter have, jurisdiction over any of the transactions described in this
Reorganization Agreement.
"RELEASE" shall have the meaning assigned to such term in
Section 5.15(b)(i) of this Reorganization Agreement.
"REORGANIZATION AGREEMENT" means this Agreement and Plan of
Reorganization, as amended to the date hereof, together with the Merger
Agreement (Exhibit A), and all Exhibits and Schedules annexed to, and
incorporated by specific reference as a part of, this Reorganization Agreement.
"RESULTING BANK" shall mean ENB as the bank resulting from the
consummation of the Merger as set forth in Section 2.1 of this Reorganization
Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall mean all reports, proxy statements and
registration statements filed, or required to be filed, by a Party or any of
its Subsidiaries pursuant to the Securities Laws, whether filed, or required to
be filed, with the SEC, the Comptroller, the FDIC or with any other Regulatory
Authority pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the rules
and regulations of the SEC
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 7
<PAGE> 124
promulgated thereunder, as well as the similar state securities laws and any
similar rules and regulations promulgated by the applicable federal bank
Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the meeting of the ENB
Shareholders to be held pursuant to Section 7.1 of this Reorganization
Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all of those corporations, banks,
associations or other entities of which the entity in question owns or controls
5% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 5% or more of the outstanding
equity securities is owned directly or indirectly by its parent; provided,
however, that there shall not be included any such entity acquired through
foreclosure or in satisfaction of a debt previously contracted in good faith,
any such entity that owns or operates an automatic teller machine interchange
network, any such entity that is a joint venture of the parent or of a
Subsidiary of the parent, or any such entity the equity securities of which are
owned or controlled in a fiduciary capacity or through a small business
investment corporation.
"TARGET DATE" shall have the meaning set forth in Section
9.1(c) of this Reorganization Agreement.
"TRUST" shall mean that certain trust known as the "ENB
Revocable Trust" which is the holder of record for the Beneficiaries (as
defined in the Preambles) of 432,379 shares of ENB Common Stock.
"UPC" shall mean Union Planters Corporation, a
Tennessee-chartered bank holding company which is also registered as a savings
and loan holding company having its executive offices at 7130 Goodlett Farms
Parkway, 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, 1993 and 1994 and each subsequent
December 31 prior to the Effective Time of the Merger, and (ii) the related
unaudited consolidated balance sheets and related consolidated statements of
earnings, of changes in shareholders' equity, and of cash flows (including
related notes) of UPC and its
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 8
<PAGE> 125
Subsidiaries for each of the quarters ended or ending after January 1, 1995, as
filed by UPC in SEC Documents.
"UPC NEGOTIABLE NOTES" shall have the meaning assigned to such
term in Section 3.1(e) of this Reorganization Agreement and shall be a
component of the Consideration deliverable by UPC and INTERIM to the ENB Record
Holders in accordance with the terms and conditions of this Reorganization
Agreement.
"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 have the meaning assigned
to such term in Section 4.5 of this Reorganization Agreement, and a portion of
such shares shall be a component of the Consideration deliverable by UPC and
INTERIM to the ENB Record Holders in accordance with the terms and conditions
of this Reorganization Agreement.
ARTICLE 2
TERMS OF THE REORGANIZATION
2.1 The Reorganization.
(a) Organization of ENB INTERIM NATIONAL BANK.
After execution of this Reorganization Agreement, UPC shall cause an interim
bank to be organized under the laws of the United States of America as a
wholly- owned subsidiary of UPC. The name of said subsidiary will be ENB
INTERIM NATIONAL BANK ("INTERIM"), or another appropriate name to be selected
by UPC. The sole purpose of INTERIM shall be to function as a party to the
reorganization contemplated by this Reorganization Agreement and INTERIM shall
not engage in any other activity prior to the Effective Time of the Merger.
(b) The Merger. Subject to the terms and conditions
of this Reorganization Agreement and of the Merger Agreement (which is annexed
hereto as Annex A and is incorporated by reference as a part of this
Reorganization Agreement), at the Effective Time of the Merger, INTERIM shall
be merged with and into ENB in accordance with the Merger Agreement and the
provisions of the National Banks Consolidation Acts, 12 U.S.C.A. Sections 215 -
215b, and 12 U.S.C.A. Section 1828(c) and with the effect provided in the
Merger Agreement and said Sections. ENB shall be the entity surviving the
Merger and the Resulting Bank and, as a result of the Merger becoming
effective, shall become a wholly-owned subsidiary of UPC and shall continue to
be governed
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 9
<PAGE> 126
by the laws of the United States of America. The Merger shall be consummated
pursuant to the terms of this Reorganization Agreement, the execution and
delivery of which has been duly approved and adopted by a majority of the Board
of Directors of UPC and a majority of the Board of Directors of ENB, and
pursuant to the terms of the Merger Agreement. Upon the organization of
INTERIM, UPC shall become and be the holder of record of all of the outstanding
shares of INTERIM Common Stock and shall cause INTERIM to execute and to join
in the Merger Agreement and, upon all of UPC's conditions to Closing having
been met, to carry out the Merger Agreement. UPC shall provide the
Consideration to which the ENB Record Holders shall be entitled upon conversion
of the ENB Common Shares held in their names immediately prior to the Effective
Time of the Merger. The members of the Board of Directors of ENB have agreed
to and shall, subject to their fiduciary duties, recommend to the ENB
Shareholders that the ENB Shareholders approve this Reorganization Agreement
and the Merger Agreement. The Merger Agreement sets forth the terms of, and
procedures for effecting the Merger, establishes the method of determining the
value of the Consideration which the ENB Record Holders will receive upon
consummation of the Merger, and the method of, and procedures for, UPC
delivering or paying the Consideration to the ENB Record Holders in exchange
for their ENB Common Stock upon the Merger becoming effective.
2.2 Articles of Association, Bylaws, Directors, Officers
and Name of the Resulting Bank.
(a) Articles of Association. Immediately after
the Effective Time of the Merger, the Articles of Association of ENB, as in
effect immediately prior to the Effective Time of the Merger, shall continue to
constitute the Articles of Association of ENB as the Resulting Bank, unless and
until the same shall be amended thereafter as provided by law and the terms of
such Articles of Association.
(b) Bylaws. At the Effective Time of the Merger,
the Bylaws of ENB, as in effect immediately prior to the Effective Time of the
Merger, shall continue to be the Bylaws of ENB as the Resulting Bank, unless
and until amended or repealed as provided by law, its Articles of Association
and such Bylaws.
(c) Officers and Directors. The officers and
directors of ENB in office immediately prior to the Effective Time of the
Merger shall at the Effective Time of the Merger no longer serve as officers or
directors of the Resulting Bank unless such officers or directors shall be
reelected or reappointed by UPC to serve as an officer or director of the
Resulting Bank, and such qualified persons as UPC shall appoint and elect
immediately subsequent to the Effective Time of The
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 10
<PAGE> 127
Merger as officers or directors of the Resulting Bank shall serve as the
officers and directors of the Resulting Bank, to hold office as provided in the
Articles of Association and Bylaws of the Resulting Bank, unless and until
their successors shall have been elected or appointed and shall have qualified
or until they shall have been removed in the manner provided therein.
(d) Name. The name of ENB as the Resulting Bank
following the Merger shall remain unchanged and continue to be:
EASTERN NATIONAL BANK
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, and shall cause its agents, representatives and employees to keep
confidential, all non-public information received by the disclosing Party in
connection with the provisions of this Section 2.4.
2.5 UPC's Right to Revise the Structure of the
Transaction. UPC shall have the right with the consent of the Board of
Directors of ENB, which consent shall not be unreasonably withheld, to revise
the structure of the transaction (whether prior to or subsequent to ENB
Shareholder Approval) to achieve tax benefits or for any other reason which UPC
may reasonably deem advisable; provided, however, that UPC shall not have the
right, without the approval of the Board of Directors of ENB, to make any
revision to the structure of the transaction (i)
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 11
<PAGE> 128
which changes the amount of the Consideration which the ENB Record Holders are
entitled to receive (determined in the manner provided in Section 3.1(e) of
this Reorganization Agreement); (ii) changes the intended tax-free effects of
the transaction to UPC or ENB; or (iii) which would permit UPC to pay the
Consideration other than by delivery of the Cash Payment, shares of UPC Series
E Preferred Stock registered with the SEC (in the manner described in Section
6.2 of this Reorganization Agreement), and the UPC Negotiable Notes to the ENB
Record Holders; or (iii) which would unreasonably delay the Parties from
obtaining all necessary Regulatory Approvals. Notwithstanding the limitations
set forth in the previous sentence, UPC shall have the unilateral right, in its
sole discretion, to revise the structure of the transaction as it shall deem
necessary in order to assure that the transactions contemplated hereby shall
qualify as a reverse triangular merger for the purposes of Sections
368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code. UPC may exercise this
right of revision by giving written Notice to ENB in the manner provided in
Section 10.1 of this Reorganization Agreement, which Notice shall be in the
form of an amendment to this Reorganization Agreement or in the form of an
Amended and Restated Agreement and Plan of Reorganization.
2.6 Holding Period of UPC Common Stock. ENB, the ENB
Revocable Trust and EOB each hereby acknowledges and agrees that any ENB Record
Holder who would be deemed an Affiliate of ENB 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, her or its
shares of ENB Common Stock pursuant to the terms and conditions of this
Reorganization Agreement, shall not pledge, assign, sell, transfer, devise,
otherwise alienate the shares of UPC Series E Preferred Stock to be received by
such ENB 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 ENB Record Holder
pursuant to the terms and conditions of this Reorganization Agreement except in
accordance with the Securities Laws. ENB further acknowledges and agrees that
any UPC Series E Preferred Stock Certificates issued in connection with the
Merger to ENB Record Holders who would be deemed Affiliates of ENB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 12
<PAGE> 129
COMMISSION ("SEC") THEREUNDER. NO SALE, TRANSFER 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 IN ACCORDANCE WITH THE
REQUIREMENTS OF SEC RULES 144 AND 145 OR OTHER APPLICABLE EXEMPTIONS
FROM REGISTRATION UNDER THE SECURITIES ACT.
2.7 Restrictive Legend - UPC Negotiable Notes. ENB, Trust
and EOB each hereby acknowledges and agrees that, in order for the UPC
Negotiable Notes to qualify under the Internal Revenue Code as portfolio
indebtedness to the holder thereof the UPC Negotiable Notes shall at all times
be held by, or for the benefit of, non-United States of America residents
and/or foreign corporations. The UPC Negotiable Notes shall, if possible, be
structured as to provide that any payments of principal and interest thereunder
shall not be subject to any United States withholding or other taxes. ENB
further acknowledges and agrees that any UPC Negotiable Notes issued in
connection with the Merger to ENB Record Holders shall be subject to and bear a
restrictive legend substantially in the form as follows:
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION SHALL BE SUBJECT TO
LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAWS, INCLUDING THE
LIMITATIONS PROVIDED IN SECTIONS 165(J) AND 1287(A) OF THE INTERNAL
REVENUE CODE OF 1986. BY ACCEPTING THIS OBLIGATION, THE HOLDER
REPRESENTS AND WARRANTS THAT IT IS NOT A UNITED STATES PERSON, OTHER
THAN AN EXEMPT RECIPIENT DESCRIBED IN SECTION 6049(B)(4) OF THE
INTERNAL REVENUE CODE OF 1986, AND THE REGULATIONS PROMULGATED BY THE
INTERNAL REVENUE SERVICE THEREUNDER.
2.8 ENB Stock Options and Treasury Stock. As of the date
of this Reorganization Agreement, except as set forth on Schedule 2.8 hereto,
there are no validly issued and outstanding options to purchase shares of ENB
Common Stock; and no other options, rights, warrants, scrip or similar rights
to purchase shares of ENB Common Stock (collectively, the "ENB Stock Options")
are (or have been) issued and outstanding by ENB. Except as set forth on
Schedule 2.8 hereto, at the Effective Time of the Merger, there will be no
issued and outstanding ENB Stock Options. Except as set forth on Schedule 2.8
hereto, as of the date of this Reorganization Agreement, ENB has not
repurchased any shares of its capital stock. Except as set forth on Schedule
2.8 hereto, as of the date of this Reorganization Agreement, there are no
shares of ENB Common Stock held by ENB as Treasury Stock, nor will there be any
such shares at the Effective Time of the Merger.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 13
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ARTICLE 3
DESCRIPTION OF TRANSACTION
3.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After
the transactions contemplated herein have been approved by the shareholders of
ENB and INTERIM, and each other condition to the obligations of the Parties
hereto has been satisfied or, if lawfully permitted, waived by the Party or
Parties entitled to the benefits thereof, other than those conditions which are
to be satisfied by delivery of documents by any Party to any other Party, a
closing (the "Closing") will be held on the date (the "Closing Date") and at
the time of day and place referred to in Section 3.2 of this Reorganization
Agreement. At the Closing the Parties shall deliver the certificates, letters
and opinions which constitute conditions to the Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions of such other Parties to consummate the Merger as such other Parties
may reasonably require. If all conditions to the obligations of each of the
Parties have been satisfied or lawfully waived by the Party entitled to the
benefits thereof, the Parties shall, at the Closing, duly execute Articles of
Merger for filing with the Comptroller and immediately thereafter UPC shall
file or cause to be filed such Articles of Merger with the Comptroller and the
appropriate local authorities, and INTERIM and ENB shall take all steps
necessary or desirable to consummate the Merger in accordance with all
applicable laws, rules and regulations and the Merger Agreement which is
attached hereto as Exhibit A and incorporated by reference as part of this
Reorganization Agreement. The Parties shall thereupon take such other and
further actions as UPC shall reasonably direct or as may be required by law or
this Reorganization Agreement to consummate the transactions contemplated
herein.
(b) Effective Time of the Merger. Upon the
satisfaction of all conditions to Closing, the Merger shall become effective on
the date and at the time of filing of Articles of Merger with the Comptroller
and the appropriate local authorities 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
or in a Certificate of Merger issued by the Comptroller (the "Effective Time of
the Merger").
(c) Conversion of Shares of INTERIM. At the
Effective Time of the Merger, each share of $50.00 par value common stock of
INTERIM (the "INTERIM Common Stock") issued and outstanding immediately prior
to the Effective Time of the Merger
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 14
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shall, by virtue of the Merger becoming effective and without any further
action on the part of anyone, become one share of the issued and outstanding
common stock of the Resulting Bank.
(d) Conversion and Cancellation of Shares of ENB.
At the Effective Time of the Merger, each share of $16.00 par value common
stock of ENB (the "ENB Common Stock") which shall be 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, except with respect to such shares of ENB Common Stock as to
which dissenters' rights shall have been perfected and shall remain perfected
at the Effective Time of the Merger.
(e) Conversion and Exchange of ENB Shares;
Exchange Ratio. At the Effective Time of the Merger, the outstanding shares of
ENB Common Stock held by the ENB 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
ENB and shall, except for those shares of ENB Common Stock held and registered
in the name of any ENB Shareholder of record on the Record Date who shall have
perfected his dissenters' rights and shall have continued such perfected
dissenting status through the Effective Time of the Merger, automatically be
converted exclusively into, and constitute only the right of the ENB Record
Holders collectively to receive in exchange for their shares of ENB Common
Stock: (i) a payment in the aggregate amount of $4,500,000.00 by wire transfer
in accordance with written instructions to be provided by the ENB Revocable
Trust (the "Cash Payment"); (ii) whole shares of UPC Series E Preferred Stock
and a cash payment in settlement of any ENB Record Holder's remaining
fractional share of UPC Series E Preferred Stock; and (iii) $14,500,000 in
aggregate principal amount of UPC negotiable, unregistered, unsecured notes
issued in three series (as hereinafter described) with the notes of each of the
three series bearing interest at the rate of eight percent (8%) per annum (the
"UPC Negotiable Notes"), in accordance with the terms and conditions of this
Section 3.1(e). The Cash Payment, the shares of UPC Series E Preferred Stock
and the cash settlement of any remaining fractional share of UPC Series E
Preferred Stock, and the UPC Negotiable Notes deliverable by UPC to the ENB
Record Holders pursuant to the terms of this Reorganization Agreement are
sometimes collectively referred to herein as the "Consideration."
The Consideration per share of ENB Common Stock shall be determined as follows:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 15
<PAGE> 132
(A) The Cash Payment to be delivered for each share of ENB Common Stock
issued and outstanding immediately prior to the Effective Time of the
Merger (based on there being no more than 456,250 shares of ENB Common
Stock issued and outstanding immediately prior to the Effective Time
of the Merger) shall be fixed at Nine Dollars and Eighty-Six Cents
($9.86) per share of ENB Common Stock (the "Cash Payment Exchange
Ratio").
(B) The number of shares of UPC Series E Preferred Stock to be exchanged
for each share of ENB Common Stock issued and outstanding immediately
prior to the Effective Time of the Merger (based on there being no
more than 456,250 shares of ENB Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger) shall be based
on an exchange ratio (the "Series E Exchange Ratio") as determined and
set forth in this Subsection 3.1(e)(B). The Series E Exchange Ratio
shall be determined as follows:
(i) In the event the Current Market Price
Per Share (as defined below) of UPC Series E Preferred Stock should be
less than or equal to $31.50 per share of UPC Series E Preferred
Stock, the Series E Exchange Ratio shall be fixed at .6958 shares of
UPC Series E Preferred Stock for each share of ENB Common Stock issued
and outstanding immediately prior to the Effective Time of the Merger;
and
(ii) In the event the Current Market Price
Per Share of UPC Series E Preferred Stock should be greater than
$31.50 per share of UPC Series E Preferred Stock, the Series E
Exchange Ratio shall be equal to the quotient of 21.9178
($10,000,000.00 / 456,250 shares of ENB Common Stock issued and
outstanding at the Effective Time of the Merger) divided by the
Current Market Price Per Share of one share of UPC Series E Preferred
Stock for each share of ENB Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger.
(C) The UPC Negotiable Notes (and cash to be paid in lieu of certain small
denomination UPC Negotiable Notes as hereinafter provided) to be
delivered for each share of ENB Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger (based on there
being no more than 456,250 shares of ENB Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger)
shall be delivered in three series the aggregate principal amount of
which shall be equal to Thirty-One Dollars and Eighty Cents ($31.80)
per share of ENB Common Stock (the "Negotiable Note Exchange Ratio"),
and shall be
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 16
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in the principal amounts, have the maturity dates and be subject to
the following terms and conditions:
(i) There shall be delivered one or more
UPC Negotiable Notes in the aggregate principal amount of $15.90 per
share of ENB Common Stock which shall be payable as to principal on
that date which is twelve (12) months subsequent to the Effective Date
of the Merger and as to interest quarterly beginning on the first day
of the calendar quarter subsequent to the calendar quarter in which
the Effective Date of the Merger shall occur (the "Series I Notes");
(ii) There shall be delivered one or more
UPC Negotiable Notes in the aggregate principal amount of $12.61 per
share of ENB Common Stock which shall be payable as to principal on
March 31, 1997 and as to interest quarterly beginning on the first day
of the calendar quarter subsequent to the calendar quarter in which
the Effective Date of the Merger shall occur (the " Series II Notes");
(iii) There shall be delivered one or more
UPC Negotiable Notes (the "Series III Notes") in the principal amount
of $3.29 per share of ENB Common Stock which Notes, subject to the
exceptions set forth below, shall be payable as to principal on
September 30, 1997 and shall be payable as to interest quarterly
beginning on the first day of the calendar quarter subsequent to the
calendar quarter in which the Effective Date of the Merger shall
occur. The Series III Notes are intended to evidence UPC's obligation
to pay additional consideration conditioned upon the receipt of
payments on that certain extension of credit by ENB to the "Borrower"
described in Schedule 3.1(e) hereof (the "Schedule 3.1(e) Loan" or the
"Loan"). For purposes of this Subsection 3.1(e)(C)(iii), all payments
made on the Schedule 3.1(e) Loan, however described at the time, shall
be deemed to have been applied: first, to reimbursement of any unpaid
expenses which shall have been incurred by ENB or by any successor
holder(s) of the Schedule 3.1(e) Loan with respect to said Loan and
which the Borrower shall be legally obligated to pay (the "Loan
Expenses"); second, to the payment of interest accrued on said Loan
from the date of its inception; and third, to the payment of
principal. UPC shall have no obligation to pay any installment of
interest should Loan Expenses in any amount be unreimbursed on the
interest payment date or should payments on the Loan have been
insufficient to pay in full not only all Loan Expenses but also any
interest accrued at the stipulated rate from the Schedule 3.1(e)
Loan's inception through the Effective Date of the Merger. Moreover,
the amount of an installment
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 17
<PAGE> 134
of interest shall not exceed the lesser of: (i) the unpaid interest
accrued on the Series III Notes at 8% per annum subsequent to the
Effective Date of the Merger or (ii) the amount of interest both
accrued and paid on the Schedule 3.1(e) Loan subsequent to the
Effective Date of the Merger. Should all Loan Expenses, interest,
principal and other obligations of the Borrower under the Schedule
3.1(e) Loan be paid in full on or before September 30, 1997, UPC shall
pay the unpaid amount of principal and accrued interest on the Series
III Notes within 10 days thereafter; provided, however, that UPC shall
have no obligation to pay the principal prior to March 31, 1997.
Should any obligation of the Borrower on the Schedule 3.1(e) Loan (the
"Scheduled Borrower") remain unpaid at September 30, 1997, the holder
of the Schedule 3.1(e) Loan shall promptly assign to the then
holder(s) of the Series III Notes in proportion to their respective
interests in the Series III Notes, without any recourse against such
assignor(s), all of the right, title and interest of the holders of
the Schedule 3.1(e) Loan whereupon UPC shall be entitled to a credit
against UPC's obligations under the Series III Notes in an amount
equal to the aggregate amount of any unsatisfied obligations of the
Scheduled Borrower. Thereupon, UPC shall be entitled to discharge its
obligations under the Series III Notes by paying in full the
outstanding balance thereunder after application of such credit. The
Series III Notes shall be appropriately annotated to put any
subsequent holder on notice of the foregoing stipulations such that
the same cannot be acquired without notice by a holder so as to have
the status of a "holder in due course."
The UPC Negotiable Notes need (i) not be registered under the Securities Laws,
(ii) shall be unsecured, (iii) shall bear interest from the Effective Date of
the Merger at the rate of eight percent (8%) per annum payable as set forth in
Subsection 3.1(e)(C) above, and (iv) shall be subject to the restrictions on
the resale or transfer thereof imposed under the Securities Laws and shall bear
a restrictive legend to that effect. The parties hereby agree to use their
best efforts to assure that the UPC Negotiable Notes shall qualify as portfolio
indebtedness and shall bear the restrictive legend set forth in Section 2.7 of
this Reorganization Agreement to that effect.
The Trustees of the ENB Revocable Trust and EOB have also joined in this
Agreement for the purpose of warranting and representing that their present
intention is to hold to maturity the Series I, Series II and Series III
Negotiable Notes and that they have no present intention to sell or otherwise
dispose of, or to transfer the same or any interest in the same subject,
however, to the remote possibility that the ENB Revocable Trust could be
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 18
<PAGE> 135
terminated and the net assets held by the trustees distributed to the
beneficiaries thereof. If and when this should occur, UPC would cooperate in
reissuing the Notes of each such Series in denominations requested by the
Trustees in order to facilitate any such liquidating distributions.
The Cash Payment Exchange Ratio, the Negotiable Note Exchange Ratio, and the
Series E Exchange Ratio are collectively referred to herein as the "Exchange
Ratios."
The Exchange Ratios shall be based on an aggregate of no more than 456,250
shares of ENB Common Stock being issued and outstanding immediately prior to
the Effective Time of the Merger; provided, however, that no certificates
representing less than one thousand (1,000) shares of UPC Series E Preferred
Stock and no fractional shares of UPC Series E Preferred Stock shall be issued
and if, after aggregating all of the shares and fractional shares of UPC Series
E Preferred Stock to which an ENB Record Holder is entitled based upon the
Series E Exchange Ratio, there would be less than 1,000 full shares of UPC
Series E Preferred Stock or a fractional share of UPC Series E Preferred Stock
remaining, such whole shares and any fractional share shall be settled by a
cash payment therefor based upon a value of $31.50 for one (1) full share of
UPC Series E Preferred Stock; provided, further, that UPC shall not issue any
UPC Negotiable Notes of any series having a principal amount less than
$100,000.00 and if, after aggregating the principal amounts of any series of
UPC Negotiable Notes to which an ENB Record Holder would be entitled based upon
the Negotiable Note Exchange Ratios, there would be a principal amount of less
than $100,000.00 remaining with respect to such series, such principal amount
below $100,000.00 shall be settled by a cash payment therefor based upon a
value of $15.90 per share of ENB Common Stock with respect to any Series I
Note, $12.61 per share of ENB Common Stock with respect to any Series II Note
and $3.29 per share of ENB Common Stock with respect to any Series III Note so
exchanged.
(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., the
closing price) of the UPC Series E Preferred Stock quoted on the
NASDAQ/NMS (as published inThe Wall Street Journal Eastern Edition)
for each of the ten (10) NASDAQ/NMS general market trading days next
preceding the date of this Reorganization Agreement on which the
NASDAQ/NMS was open for business (the "Pricing Period"). In the event
the UPC Series E Preferred Stock should not trade on one or more of
the trading days included in the Pricing Period (a "No Trade Date"),
any such No Trade Date shall be
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 19
<PAGE> 136
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 the number of days on which the UPC Series
E Preferred Stock actually traded during the Pricing Period.
(2) EFFECT OF PERFECTION OF DISSENTERS'
RIGHTS ON THE EXCHANGE RATIO. Should ENB Record Holders representing
at least in the aggregate five percent (5%) of the shares of ENB
Common Stock issued and outstanding at the time of Closing have
perfected such ENB Record Holder's dissenters' rights in the manner
described in Section 215 of the United States Code and maintained the
perfected status of such dissenters' rights through the Closing Date,
UPC and INTERIM shall have the right, exercisable in their sole
discretion, to terminate this Reorganization Agreement or, with the
approval of the Board of Directors of ENB, reduce the Consideration to
be delivered by UPC hereunder by an amount sufficient to off-set
against the Consideration any amounts in excess of the Consideration
stipulated herein paid, or to be paid, by the Resulting Bank in
satisfaction of such dissenters' rights.
(3) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF UPC OR
ENB. Should either UPC or ENB effect any stock splits, reverse stock
splits, stock dividends or similar changes in their respective capital
accounts subsequent to the date as of which this Reorganization
Agreement is executed but prior to the Effective Time of the Merger,
the Exchange Ratio shall be adjusted proportionately in such a manner
as the Board of Directors of UPC and the Board of Directors of ENB
shall agree in good faith to be fair and reasonable in order to give
effect to such changes.
(f) Mechanics of Payment of the Consideration.
At the Closing and upon receipt by UPC from ENB of a certified copy of a list
of all of the ENB Record Holders (the "Shareholder List") and the proper
submission of certificate(s) formerly representing and evidencing ownership of
the shares of ENB Common Stock, the Exchange Agent shall deliver to the former
ENB Shareholders in exchange for the certificate(s) surrendered by them, the
Consideration to be paid for each such ENB Record Holder's shares of ENB Common
Stock evidenced by the certificate or certificates which were converted
exclusively into the right to receive the Consideration upon the Merger
becoming effective and thereupon cancelled. Within five days after the
Effective Time of the Merger, the Exchange Agent shall deliver to each of the
Record Holders whose certificates were not surrendered at Closing such
materials and information deemed necessary by the
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 20
<PAGE> 137
Exchange Agent to advise any ENB Record Holders of the procedures required for
proper surrender of their certificates formerly evidencing and representing
shares of the ENB Common Stock in order for the ENB Record Holders to receive
the Consideration. Such materials shall include, without limitation, a Letter
of Transmittal, an Instruction Sheet, and a return envelope addressed to the
Exchange Agent (collectively the "Shareholder Materials"). All Shareholder
Materials shall be sent by First Class United States mail to the ENB Record
Holders at the addresses set forth on the Shareholder List. As soon as
reasonably practicable thereafter, the ENB Record Holders of all of the
outstanding shares of ENB 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 ENB
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 ENB
Common Stock received by it (including the prompt return of any defective
submissions with instructions as to those actions which the Exchange Agent may
deem necessary to remedy any defects). Upon receipt of the proper submission
of the certificate(s) formerly representing and evidencing ownership of the
shares of ENB Common Stock, the Exchange Agent shall, as soon as reasonably
practicable thereafter, mail to the ENB Record Holders in exchange for the
certificate(s) surrendered by them, the Consideration to be paid for each such
ENB Record Holder's shares of ENB Common Stock evidenced by the certificate or
certificates which shall have been 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 ENB Common Stock of an ENB 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 ENB Record Holder's shares of ENB Common Stock were converted 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 ENB Record Holder's ENB Common Stock shall have
been surrendered as provided above, the Consideration payable to the ENB Record
Holder(s) of the cancelled shares as of any time after the Effective Date shall
not be paid to the ENB Record Holder(s) of such certificate(s) until such
certificates shall have been surrendered in the manner required. No dividends
or other distributions which shall otherwise be payable on the shares of UPC
Series E Preferred Stock constituting part of the Consideration and no interest
on the UPC Negotiable Notes
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 21
<PAGE> 138
constituting part of the Consideration shall be paid to any ENB Record Holders
entitled to receive such shares or notes until such persons shall have
surrendered in accordance with the Shareholder Materials their certificates
formerly representing shares of ENB Common Stock. Upon such proper surrender,
there shall be paid to such person in whose name the shares of UPC Series E
Preferred Stock and the UPC Negotiable Notes shall be issued (i) any dividends
or other distributions, the record date of which shall have occurred between
the Effective Time of the Merger and such surrender, with respect to such
shares of UPC Common Stock, without interest thereon, and (ii) any interest
accrued and payable prior to such surrender with respect to such UPC Negotiable
Notes, without interest thereon. Each ENB Shareholder will be responsible for
all federal, state and local taxes which may be incurred by him or her on
account of his or her receipt of the Consideration to be paid in the Merger.
The ENB Record Holder(s) of any certificate(s) which shall have been lost or
destroyed may nevertheless, subject to the provisions of this Section 3.1(f),
receive without interest thereon the Consideration to which each such ENB
Record Holder is entitled, provided that each such ENB 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 shall
have been duly executed by a corporate surety satisfactory to UPC and the
Exchange Agent, indemnifying the Resulting Bank, 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 ENB Shareholder.
If any of the Consideration due or other payments to
be paid or delivered to the ENB Record Holders is not paid or delivered within
the time period specified by any applicable laws concerning abandoned property,
escheat or similar laws, and if such failure to pay or deliver such
Consideration occurs or arises out of the fact that such property is not
claimed by the proper owner thereof, the Resulting Bank or the Exchange Agent
shall be entitled to dispose of any such Consideration or other payments in
accordance with applicable laws concerning abandoned property, escheat or
similar laws.
(g) Stock Transfer Books. At the Effective Time
of the Merger, the stock transfer books of ENB shall be closed and no transfer
of shares of ENB Common Stock shall be made thereafter.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 22
<PAGE> 139
(h) Effects of the Merger. As of the Effective
Time of the Merger, the separate existence of INTERIM shall cease, and INTERIM
shall be merged with and into ENB which, as the Resulting Bank, 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 ENB and INTERIM.
(i) Transfer of Assets. At the Effective Time of
the Merger, all rights, assets, licenses, permits, franchises and interests of
ENB 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 ENB as the Resulting Bank 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 Resulting Bank shall become and be liable for all
debts, liabilities, obligations and contracts of ENB 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 ENB or INTERIM.
(k) Dissenting Shareholders' Rights. Any ENB
Record Holder of shares of ENB Common Stock who shall comply strictly with the
provisions of 12 U.S.C.A. Section 215 et seq., shall be entitled to dissent
from the Merger and to seek those appraisal remedies afforded by the United
States Code. Such an ENB Shareholder is referred to herein as an "ENB
Dissenting Shareholder." However, UPC and INTERIM shall not be obligated to
consummate the Merger if ENB Record Holders holding or controlling more than
five percent (5%) of the shares of the ENB 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
United States Code and the perfected status of said dissenters' rights shall
have continued to the time of Closing.
(l) ENB Stock Options and Treasury Stock. As of
the date of this Reorganization Agreement, except as set forth on Schedule 2.8
hereto, there are no options, rights, warrants, scrip or similar rights issued
and outstanding by ENB to purchase shares of ENB Common Stock (the "ENB Stock
Options"). Therefore, except as set forth on Schedule 2.8 hereto, at the
Effective Time of the Merger there will be no issued or outstanding ENB Stock
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 23
<PAGE> 140
Options. As of the date of this Reorganization Agreement, except as set forth
on Schedule 2.8 hereto, there are no shares of ENB Common Stock held by ENB as
Treasury Stock.
3.2 Time and Place of Closing. The Closing shall take
place at 10:00 a. m. on the Business Day next preceding the date on which the
Effective Time of the Merger is expected to occur, or at such other time as the
Parties, acting through their chief executive officers, presidents or chief
financial officers, may mutually agree (the "Closing Date"). The place of
Closing shall be at Union Planters Corporation, Administrative Center,
Executive Offices (Fourth Floor), 7130 Goodlett Farms Parkway, Memphis, Shelby
County, Tennessee 38018. The Closing may be held at such other time and place
as may be mutually agreed upon by the Parties.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF UPC
As of the date hereof and as of the Effective Time of the
Merger, UPC and INTERIM represent and warrant to ENB as follows:
4.1 Organization and Corporate Authority. UPC is a
corporation (and INTERIM will be a national banking association) duly
organized, validly existing and in good standing under the laws of the State of
Tennessee and the United States of America, respectively, and (i) have, in all
material respects, all requisite corporate power and authority to own, operate
and lease their material properties and carry on their businesses as they are
currently being conducted; (ii) are in good standing and are duly qualified to
do business in each jurisdiction where the character of their properties owned
or held under lease or the nature of their business makes such qualification
necessary; and (iii) have in effect all federal, state, local and foreign
governmental authorizations, permits and licenses necessary for them to own or
lease their properties and assets and to carry on their businesses as they are
currently being conducted. Neither UPC nor INTERIM 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 government authority. The corporate Charters and Bylaws of
UPC and the Articles of Association and Bylaws of INTERIM, as amended to date,
are (or in the case of INTERIM will be) in full force and effect as of the date
of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 24
<PAGE> 141
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 Merger Agreement and to consummate the transactions contemplated hereby and
thereby. This Reorganization Agreement, and all other agreements contemplated
to be executed in connection herewith by UPC and/or INTERIM, have been (or upon
execution by INTERIM will have been) duly executed and delivered by UPC and/or
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 and the Merger Agreement, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof 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 or Bylaws of
UPC or the Articles of Association or Bylaws of INTERIM; or any material
judgment, decree, order, regulatory letter of understanding or award of any
court, governmental body, authority 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 or 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,
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letter of understanding, prohibition, injunction or decree of any court or
other governmental body of competent jurisdiction or any law which would
prevent the execution of this Reorganization Agreement or the Merger Agreement
by UPC or INTERIM, its delivery to ENB or the consummation of the transactions
contemplated hereby and thereby, and no action or proceeding is pending against
UPC or INTERIM in which the validity of this Reorganization Agreement, any of
the transactions contemplated hereby or any action which has been taken by any
of the Parties in connection herewith or in connection with any of the
transactions contemplated hereby is at issue.
4.4 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by UPC
or INTERIM in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by UPC or
INTERIM, except for: (a) the prior approval of the Board of Governors of the
Federal Reserve System (the "Federal Reserve") of the Merger under the Bank
Holding Company Act of 1956, as amended; (b) the Office of the Comptroller of
the Currency (the "Comptroller") under the Bank Merger Act, as amended; and (c)
the prior approval of the Department of Banking and Finance of the State of
Florida ("FSBD") under Chapter 655 of the Florida Code and the regulations
promulgated by the FSBD 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, effective April 27, 1994, 100,000,000 shares of
common stock having a par value of $5.00 per share (the "UPC Common Stock").
As of December 31, 1994, 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, 1994,
40,179,474 shares of UPC Common Stock were validly issued and outstanding.
Except as described in Schedule 4.5 hereto, UPC is the holder,
directly or indirectly, of all of the outstanding capital stock of its
Subsidiaries, except for director qualifying shares.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 26
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(b) The authorized capital stock of INTERIM shall
consist of 100,000 shares of common stock having a par value of $50.00 per
share (the "INTERIM Common Stock") and no preferred stock. As of the date
hereof, INTERIM shall issue all 100,000 shares of the authorized INTERIM Common
Stock to UPC. Therefore, at the Effective Time of the Merger UPC shall be 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 ENB true and complete copies of: (i)
UPC's audited Consolidated Financial Statements for the calendar years ended
December 31, 1993 and 1994 (as originally issued, but without giving effect to
subsequently effected business combinations accounted for as poolings of
interests); (ii) UPC's unaudited consolidated financial statements for each of
the calendar quarters ending in calendar year 1994 and thereafter, ending prior
to the Closing Date; and (iii) upon issuance thereof, UPC's audited
Consolidated Financial Statements for the calendar year ending December 31,
1995. 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. Since the date of the most recent SEC Document filed by UPC, UPC
has not suffered a material adverse change on its business, operations or
financial condition taken as a whole.
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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 27
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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 ENB Record Holders in exchange for all of the ENB 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 as a component 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 ENB
Record Holders in exchange for all of the ENB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 28
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Subsidiary and that are not reflected in the UPC Financial Statements or (ii)
has been brought by or on behalf of any employee employed or formerly employed
by UPC or any UPC Subsidiary that would have a material adverse impact on UPC
or any UPC Subsidiary.
4.10 Labor and Employment Matters. Except as reflected
in Schedule 4.10 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which UPC or any UPC Subsidiary is a party or by which
any of them is bound; (ii) employment, profit sharing, deferred compensation,
bonus, stock option, purchase, retainer, consulting, retirement, welfare or
incentive plan or contract to which UPC or any UPC Subsidiary is a party or by
which it is bound; or (iii) plan or agreement under which "fringe benefits"
(including, but not limited to, vacation plans or programs, sick leave plans or
programs and related benefits) are afforded any of the employees of UPC or any
UPC Subsidiary. No party to any such agreement, plan or contract is in default
with respect to any material term or condition thereof, nor has any event
occurred which, through the passage of time or the giving of notice, or both,
would constitute a default thereunder or would cause the acceleration of any
obligation of any party thereto. Neither UPC nor any UPC Subsidiary has
received notice from any governmental agency of any alleged violation of
applicable laws that remains unresolved respecting employment and employment
practices, terms and conditions of employment and wages and hours. UPC and
each UPC Subsidiary have complied in all material respects with all applicable
laws, rules and regulations relating to the employment of labor, including
those related to its employment practices, employee disabilities, wages, hours,
collective bargaining and the payment and withholding of taxes and other sums
as required by the appropriate governmental authorities, and UPC and each UPC
Subsidiary have withheld and paid to the appropriate governmental authorities
or are holding for payment not yet due to such authorities, all amounts
required to be withheld from the employees of UPC and each UPC Subsidiary and
are not liable for any arrears of wages, taxes, penalties or other sums for
failure 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 29
<PAGE> 146
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 ENB prior to the date of this
Reorganization Agreement, or (ii) except obligations or liabilities incurred in
the ordinary course of its business consistent with past practices, or (iii)
except as contemplated under this Reorganization Agreement. Except as
described in Schedule 4.11 hereto, since December 31, 1994, neither UPC nor any
UPC Subsidiary has incurred or paid any obligation or liability which would be
material to the financial condition or operations of UPC or such UPC
Subsidiary, except for obligations paid in connection with transactions made by
it in the ordinary course of its business consistent with past practices, laws
and regulations applicable to UPC or any UPC Subsidiary.
4.12 Bank Secrecy Act. Except as set forth in Schedule 4.12
hereto, neither UPC nor any UPC Subsidiary has been cited for any violation of,
and UPC and all UPC Subsidiaries are in substantial compliance with, the Bank
Secrecy Act and other similar State or Federal laws or regulations which
establish reporting and record keeping requirements with respect to currency
transactions or transactions involving monetary instruments.
4.13 Fair Lending Laws. Except as set forth in Schedule 4.13
hereto, neither UPC nor any UPC Subsidiary has been cited for any violation of,
and UPC and all UPC Subsidiaries are in substantial compliance with, the Fair
Housing Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure
Act, the Community Reinvestment Act, the Americans with Disabilities Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and other
similar State or Federal fair lending laws.
4.14 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 ENB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 30
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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 ENB by UPC and INTERIM
pursuant hereto were or will be complete and accurate copies of such documents.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ENB
Both as of the date hereof and as of the Effective Time of the Merger,
ENB represents and warrants to UPC and INTERIM as follows:
5.1 Organization and Qualification of ENB and
Subsidiaries. ENB is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America
and (a) has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as it is currently being
conducted; (b) is in good standing and is duly qualified to do business in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its business makes such qualification necessary; and (c) engages
only in activities (and hold properties only of the types) permitted by the
United States Code and the rules and regulations promulgated by the Comptroller
thereunder or the FDIC for national banks. Each ENB Subsidiary is duly
chartered, validly existing and in good standing under the laws of the state or
jurisdiction of its incorporation and (a) has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as it is currently being conducted and (b) is in good standing and is duly
qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business makes such
qualification necessary. ENB and each of its Subsidiaries have in effect all
federal, state, local and foreign governmental authorizations, permits and
licenses necessary for them to own or lease their respective properties and
assets and to carry on their business as it is currently being conducted.
ENB's deposit accounts are insured by the FDIC to the fullest extent permitted
under applicable law.
5.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) ENB has all requisite power and authority to
execute and deliver this Reorganization Agreement and the Merger Agreement and
to consummate the transactions contemplated hereby
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 31
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and thereby. The execution and delivery of this Reorganization Agreement and
the Merger Agreement and the consummation of the proposed transaction have been
duly authorized by majorities of the entire Board of Directors of ENB and,
except for the approval of the ENB Shareholders, no other corporate proceedings
on the part of ENB are necessary to authorize the execution and delivery of
this Reorganization Agreement and the Merger Agreement 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 ENB have been (or upon execution will have been) duly executed and
delivered by ENB and constitute (or upon execution will constitute) legal,
valid and enforceable obligations of ENB, subject, as to enforceability, to
applicable bankruptcy, insolvency, receivership, conservatorship,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and to the application of equitable principles and
judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Merger Agreement, the consummation of the
transaction contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof will not result in a violation or breach of any of the terms
or provisions of, or constitute a default under (or an event which, with the
passage of time or the giving of notice, or both, would constitute a default
under), or conflict with, or permit the acceleration of, any obligation under
any material mortgage, lease, covenant, agreement, indenture or other
instrument to which ENB or any ENB Subsidiary is a party or by which ENB or any
ENB Subsidiary is bound; the Articles of Association or Bylaws of ENB; or any
material judgment, decree, order, regulatory letter of understanding or award
of any court, governmental body, authority or arbitrator by which ENB or any
ENB Subsidiary is bound; or any material permit, concession, grant, franchise,
license, law, statute, ordinance, rule or regulation applicable to ENB or any
ENB 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 ENB
or any ENB Subsidiary, except that the Government Approvals shall be required
in order for ENB or any ENB Subsidiary to consummate the Merger.
5.3 No Legal Bar. ENB is not a party to, or subject to,
or bound by, any agreement or judgment, order, letter of understanding, writ,
prohibition, injunction or decree of any court or other governmental authority
or body, or any law which would prevent the execution of this Reorganization
Agreement or the Merger Agreement by ENB, the delivery thereof to UPC and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 32
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INTERIM, or the consummation of the transaction contemplated hereby and
thereby, and no action or proceeding is pending against ENB 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 ENB
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 ENB in order to
avoid forfeiture or impairment of such rights.
5.5 Compliance With Law. ENB and all ENB Subsidiaries
hold all licenses, franchises, permits and authorizations necessary for the
lawful conduct of their respective businesses, and ENB, as the owner of the
Realty has 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 ENB's properties or over any other part of ENB'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 ENB subsequent to the Closing of the transactions contemplated
herein without any consent or approval. Neither ENB nor any ENB Subsidiary has
received notice of any proceeding for the suspension or revocation of any such
license, franchise, permit, or authorization and no such proceeding is pending
or has been threatened by any governmental authority.
5.6 Charter Documents. Included in Schedule 5.6 hereto
are true and correct copies of the Articles of Association and Bylaws of ENB.
The Articles of Association and Bylaws of ENB, as amended to date, are in full
force and effect.
5.7 ENB Financial Statements. Accompanying Schedule 5.7
hereto are true copies of the audited consolidated statements of condition of
ENB as of December 31, 1994, and December 31, 1993, and the related statements
of income and changes in capital funds of ENB for the years ended December 31,
1994, and 1993 (the "Audited Financial Statements of ENB") and the comparative
interim (or annual) financial statements for any subsequent
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 33
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quarter (or year) ending after December 31, 1994 and prior to the Closing Date.
Except as set forth in Schedule 5.7 hereto, such financial statements (i) were
prepared from the books and records of ENB; (ii) were prepared in accordance
with generally accepted accounting principles consistently applied; (iii)
accurately present ENB's financial condition and the results of its operations
and changes in stockholders' equity as at the relevant dates thereof and for
the periods covered thereby; (iv) do contain or reflect all necessary
adjustments and accruals for an accurate presentation of ENB's financial
condition and the results of ENB's operations and cash flows for the periods
covered by such financial statements; (v) do contain and reflect adequate
provisions for loan losses, for ORE reserves and for all reasonably
anticipatable liabilities for all taxes, federal, state, local or foreign, with
respect to the periods then ended; and (vi) do contain and reflect 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 material transaction by ENB 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 ENB;
(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 ENB or their future use and
operation by ENB;
(d) any acquisition or disposition by ENB of any
property or asset of ENB, whether real or personal, having a fair market value,
singularly or in the aggregate, in an amount greater than Fifty Thousand
Dollars ($50,000), 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 ENB, except to secure extensions of credit in the ordinary course of
business and in conformity with past practice;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 34
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(f) any amendment, modification or termination of
any contract or agreement, relating to ENB, to which ENB is a party which would
have a material adverse effect upon the financial condition or operations of
ENB;
(g) any increase in, or commitment to increase,
the compensation payable or to become payable to any officer, director,
employee or agent of ENB, 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 ENB, 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 ENB, or in the accounting policies or
practices therein reflected;
(j) any release or discharge of any material
obligation or liability of any person or entity related to or arising out of
any loan made by ENB 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 ENB to any Officer, director or 2% shareholder of ENB
or any Affiliate of ENB; or to any member of the immediate family of such
Officer, director or 2% shareholder of ENB or any Affiliate of ENB; or to any
Person in which such Officer, director or 2% shareholder directly or indirectly
owns beneficially or of record ten percent (10%) or more of any class of equity
securities in the case of a corporation, or of any equity interest, in the case
of a partnership or other non-corporate entity; or to any trust or estate in
which such Officer, director or 2% shareholder has a ten percent (10%) or more
beneficial interest; or as to which such Officer, director or 2% shareholder
serves as a trustee or in a similar capacity. As used in this Section,
"Officer" shall refer to a person who holds the title of chairman, president,
executive vice president, senior vice president, controller, secretary, cashier
or treasurer or who performs the normal duties of such officer whether or not
he or she is compensated for such service or has an official title.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 35
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5.9 Deposits. To the best of the knowledge, information
and belief of the management of ENB, none of the ENB Deposits is a "brokered"
Deposit or subject to any encumbrance, legal restraint or other legal process.
Except as set forth in Schedule 5.9, no portion of the Deposits represents a
Deposit by any Affiliate of ENB.
5.10 Properties. Except as described in Schedule 5.10 hereto
or adequately reserved against in the Audited Financial Statements of ENB, ENB
and each ENB 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 ENB as being owned by ENB or
any ENB Subsidiary as of the dates thereof. All buildings, and all fixtures,
equipment, and other property and assets that are material to the business of
ENB and its Subsidiaries on a consolidated basis, held under leases or
subleases by ENB or any ENB 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 ENB Companies provide adequate coverage against
loss, and the fidelity bonds in effect as to which any of the ENB Companies is
a named insured are believed to be sufficient.
5.11 ENB Subsidiaries and Representative Offices. Schedule
5.11 hereto lists all of the active and inactive ENB Subsidiaries and
representative offices as of the date of this Reorganization Agreement and
describes generally the business activities conducted, or permitted to be
conducted, by each ENB Subsidiary and representative office. No equity
securities of any of the ENB Subsidiaries are or may become required to be
issued (other than to ENB) 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 ENB Subsidiary, and there are no contracts, commitments,
understandings, or arrangements by which any ENB Subsidiary is bound to issue
(other than to ENB) any additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock. All of the shares of capital stock of each ENB Subsidiary held by ENB
or by any ENB Subsidiary are fully paid and nonassessable and are owned
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 36
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by ENB or such ENB Subsidiary free and clear of any claim, lien, or encumbrance
of any nature whatsoever, whether perfected or not.
5.12 Condition of Fixed Assets and Equipment. Except as
disclosed in Schedule 5.12 hereto, each item of ENB's fixed assets and
equipment having a net book value in excess of Twenty-Five Thousand Dollars
($25,000) included in the Fixed Assets is in sufficient 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 ENB and each ENB 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 reasonably expected to result
in a determination materially adverse to ENB or any ENB Subsidiary except as
fully reserved for in the Audited Financial Statements of ENB. All taxes,
interest, additions, and penalties due with respect to completed and settled
examinations or concluded litigation have been paid.
(b) Neither ENB nor any ENB 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 ENB and all ENB 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 ENB, and have been made with respect to periods ending
after December 31, 1994.
(d) Deferred taxes of ENB and each ENB Subsidiary
have been provided for in accordance with GAAP.
(e) To the best knowledge of ENB, neither the
Internal Revenue Service nor any foreign, state, local or other taxing
authority is now asserting or threatening to assert
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 37
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against ENB or any ENB Subsidiary any deficiency or claim for additional taxes,
or interest thereon or penalties in connection therewith. All material income,
payroll, withholding, property, excise, sales, use, franchise and transfer
taxes, and all other taxes, charges, fees, levies or other assessments, imposed
upon ENB 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 ENB or any ENB Subsidiary, either have been paid in full, or
have been properly accrued and reflected in the Audited Financial Statements of
ENB 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 ENB or any ENB
Subsidiary, or to the best knowledge of ENB threatened against or affecting
ENB, any ENB Subsidiary or any of their assets, before any court or arbitrator
or any governmental body, agency or official that (i) would be reasonably
expected to, if decided against ENB or the ENB Subsidiary, have a material
adverse impact on the business, properties, assets, liabilities, condition
(financial or other) or prospects of ENB and that are not reflected in the
Audited Financial Statements of ENB or (ii) has been brought by or on behalf of
any employee employed or formerly employed by ENB or any ENB Subsidiary that
would have a material adverse impact on ENB or any ENB Subsidiary.
5.15 Hazardous Materials. To the best of the knowledge,
information and belief of the management of ENB, except as set forth in
Schedule 5.15 hereto:
(a) ENB and all ENB Subsidiaries have obtained
all permits, licenses and other authorizations which are required to be
obtained by ENB 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 ENB or any ENB Subsidiary is in
compliance with the terms and conditions of all of such permits, licenses and
authorizations, and is also in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in any Applicable Environmental Laws or in
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated or approved thereunder, except as
described in detail in Schedule 5.15(a) hereto. For purposes hereof, the
following terms shall have the following meanings:
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 38
<PAGE> 155
"APPLICABLE ENVIRONMENTAL LAWS" shall mean all federal, state,
local and municipal environmental laws, rules or regulations to the extent
applicable to the Property, including, but not limited to, (a) the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq. ("CERCLA"); (b) the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901 et seq. "RCRA"; (c) the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; (d) the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; (e) the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1471 et seq.; (f) the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; (g) the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 et seq.; (h) the National Environmental Policy Act, 42
U.S.C. Section 4321 et seq.; (i) the Rivers and Harbours Act of 1899, 33 U.S.C.
Section 401 et seq.; (j) the Occupational Safety and Health Act, 29 U.S.C.
Section 651 et seq.; (k) the Safe Drinking Water Act, 42 U.S.C. Section 300(f)
et seq.; (l) the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; (m)
the Florida Water and Air Pollution Control Act, Section 8-4-101 et seq. of the
Florida Code of 1987 Annotated; (n) the Florida Solid Waste Management Act,
Section 8-6-201 et seq. of the Florida Code of 1987 Annotated; (o) the
Hazardous Waste Management Act of 1979, Section 8-7-301 et seq. of the Florida
Code of 1987 Annotated; (p) the Florida Resource Reclamation Act of 1979,
Section 8-7-301 et seq. of the Florida Code of 1987 Annotated; (q) the
Emergency Response Fund Act, Section 8-7- 401 et seq. of the Florida Code of
1987 Annotated; (r) Remedial Act Trust Fund Act, Section 8-7-501 et seq. of the
Florida Code of 1987 Annotated; (s) the Florida statute dealing with Regulated
Substance Storage Tanks, 8-7-801 et seq. of the Florida Code of 1987
Annotated; (t) the Petroleum Storage Tank Trust Fund Act, Sections 8-7-901 et
seq. of the Florida Code of 1987 Annotated; (u) any amendments to the foregoing
Acts as adopted from time to time on or before the Closing; and (v) any rule,
regulation, order, injunction, judgment, declaration or decree implementing or
interpreting any of the foregoing Acts, as amended.
"HAZARDOUS SUBSTANCES" shall mean any substance, material,
waste, or pollutant that is now (or prior to the Closing) listed, defined,
characterized or regulated as hazardous, toxic or dangerous under or pursuant
to any statute, law, ordinance, rule or regulation of any federal, state,
regional, county or local governmental authority having jurisdiction over the
Property of ENB or any ENB Subsidiary or its use or operation, including,
without limitation, (a) any substance, material, element, compound, mixture,
solution, waste, chemical or pollutant listed, defined, characterized or
regulated as hazardous, toxic or dangerous under any Applicable Environmental
Laws, (b) petroleum, petroleum derivatives or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 39
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by-products, and other hydrocarbons, (c) polychlorinated biphenyls (PCBs),
asbestos and urea formaldehyde, and (d) radioactive substances, materials or
waste.
"PROPERTY" shall be deemed to include, but shall not be
limited to, all real property owned, controlled, leased or held by ENB or a ENB
Subsidiary, in whole or in part, solely or in a joint venture or other business
arrangement, either for operational or investment purposes, and whether
assigned, purchased, or obtained through foreclosure (or similar action) or in
satisfaction of debts previously contracted.
(b) In addition, except as set forth in Schedule
5.15(b) hereto:
(i) No notice, notification, demand,
request for information, citation, summons or order has been issued,
no complaint has been filed, no penalty has been assessed and no
investigation or review is pending by any governmental or other entity
with respect to any alleged failure by ENB or any ENB Subsidiary to
have any permit, license or authorization required in connection with
the conduct of the business of ENB or any ENB 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 ENB or any Affiliate of ENB 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 ENB's or any ENB Subsidiary's occupancy
thereof, or during the occupancy thereof by any assignee or sublessee
of ENB or any ENB Subsidiary, except in compliance with all Applicable
Environmental Laws;
(iii) There are no Hazardous Substances
being stored at any Property or located in, on or upon, any Property
(including the subsurface thereof) or installed or affixed to
structures or equipment on the Property; and there are no underground
storage tanks for Hazardous Substances, active or abandoned, at any
Property; and
(iv) No Hazardous Substances have been
Released in a reportable quantity, where such a quantity has been
established by statute, ordinance, rule, regulation or order, at, on
or under any Property.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 40
<PAGE> 157
(c) Neither ENB nor any Affiliate of ENB has
transported or arranged for the transportation of any Hazardous Substances to
any location which is listed on the National Priorities List under CERCLA,
listed for possible inclusion on the National Priorities List by the
Environmental Protection Agency in the CERCLA Information System ("CERCLIS") or
on any similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against
the owner of the Property for cleanup costs, remedial work, damages to natural
resources or for personal injury claims, including, but not limited to, claims
under CERCLA.
(d) Except as set forth in Schedule 5.15(d), no
Hazardous Substances have been generated, recycled, treated, stored, disposed
of or Released by, ENB or any Affiliate of ENB 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 ENB or any Affiliate
of ENB 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 ENB, 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
ENB or any Affiliate of ENB in relation to any Property, which have not been
made available to UPC.
(h) ENB is not aware of any facts which might
suggest that ENB or any ENB Subsidiary has engaged in any management practice
with respect to any of its past or existing borrowers which could reasonably be
expected to subject ENB or any ENB 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).
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 41
<PAGE> 158
5.16 Insurance. ENB has paid all material amounts due
and payable under any insurance policies and guaranties applicable to ENB or
ENB's assets and operations; all such insurance policies and guaranties are in
full force and effect; and ENB and all of ENB's material Realty and other
material properties are insured against fire, casualty, theft, loss, and such
other events against which it is customary to insure, all such insurance
policies being in amounts that are adequate and consistent with past practice
and experience.
5.17 Labor and Employment Matters. To the best of the
knowledge, information and belief of the management of ENB, except as reflected
in Schedule 5.17 hereto, there is no (i) collective bargaining agreement or
other labor agreement to which ENB or any ENB 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 ENB or any ENB 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 ENB or any
ENB 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 ENB nor any ENB 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. ENB and
each ENB 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 ENB and each ENB
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 ENB and each ENB Subsidiary and
are not liable for any arrears of wages, taxes, penalties or other sums for
failure to comply with any of the foregoing. There are no unfair labor practice
complaint against ENB or any ENB Subsidiary pending before the National Labor
Relations Board or any state or local agency; pending labor strike or other
labor trouble affecting ENB or any ENB Subsidiary; labor grievance pending
against ENB or any ENB Subsidiary; pending representation question respecting
the employees of ENB or any ENB Subsidiary; pending arbitration
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 42
<PAGE> 159
proceedings arising out of or under any collective bargaining agreement to
which ENB or any ENB Subsidiary is a party; or to the best knowledge of ENB,
any basis for which a claim may be made under any collective bargaining
agreement to which ENB or any ENB Subsidiary is a party.
5.18 Records and Documents. The Records of ENB are and
will be sufficient to enable ENB to continue conducting ENB's business as a
national banking association under similar standards as it has previously
conducted such business.
5.19 Capitalization of ENB. The authorized capital stock
of ENB consists of 1,000,000 shares of common stock having a par value of
$16.00 per share (the "ENB Common Stock") and no shares of preferred stock or
any other class of equity security. As of the date of this Reorganization
Agreement, 456,250 shares of ENB Common Stock were issued and outstanding and
no shares of ENB Common Stock were held by ENB as treasury stock. All of the
outstanding ENB Common Stock is validly issued, fully-paid and nonassessable
and has not been issued in violation of any preemptive rights of any ENB
Shareholder. Except as described in Section 3.1(l) of this Reorganization
Agreement or as described on Schedule 5.19 hereto, as of the date hereof, there
are no outstanding securities or other obligations which are convertible into
ENB Common Stock or into any other equity or debt security of ENB, 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 ENB Common Stock or any other equity or debt
security of ENB. Accordingly, immediately prior to the Effective Time of the
Merger, there will be not more than 456,250 shares of ENB Common Stock issued
and outstanding. Except as set forth in Schedule 5.19 hereto, ENB owns and is
the beneficial record holder of, and has good and freely transferable title to,
all of the shares of capital stock in any ENB Subsidiary.
5.20 Sole Agreement. With the exception of this
Reorganization Agreement, neither ENB, nor any ENB Subsidiary has been or is 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 ENB or any Subsidiary of
ENB (or any of their assets) in any business combination of any kind; or any
agreement obligating ENB to issue or sell or authorize the sale or transfer of
ENB Common Stock or the capital stock of any ENB Subsidiary. Except as
described in Schedule 5.20 hereto, there are no shares of capital stock or
other equity securities of ENB outstanding, except for shares of ENB Common
Stock presently issued and outstanding, and there are no outstanding options,
warrants, scrip, rights to subscribe to, calls or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 43
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commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of ENB, or
contracts, commitments, understandings, or arrangements by which ENB or 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 contracts, commitments, understandings, or
arrangements by which ENB or any ENB Subsidiary is or may be bound to transfer
or issue to any third party any shares of the capital stock of any ENB
Subsidiary, and there are no contracts, agreements, understandings or
commitments relating to the right of ENB to vote or to dispose of any such
shares.
5.21 Disclosure. The information concerning, and
representations and warranties made by, ENB set forth in this Reorganization
Agreement, or in the Schedules of Exceptions of ENB hereto, or in any document,
statement, certificate or other writing furnished or to be furnished by ENB 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 by ENB pursuant hereto were
complete and accurate copies of such documents.
5.22 Absence of Undisclosed Liabilities. Except as described
in Schedule 5.22 hereto, neither ENB nor any ENB Subsidiary has any obligation
or liability (contingent or otherwise) that is material to the financial
condition or operations of ENB or any ENB Subsidiary, or that, when combined
with all similar obligations or liabilities, would be material to the financial
condition or operations of ENB or any ENB Subsidiary (i) except as disclosed in
the ENB Financial Statements delivered to UPC prior to the date of this
Reorganization Agreement or (ii) except obligations or liabilities incurred in
the ordinary course of its business consistent with past practices or (iii)
except as contemplated under this Reorganization Agreement. Since December 31,
1994, neither ENB nor any ENB Subsidiary has incurred or paid any obligation or
liability which would be material to the financial condition or operations of
ENB or such ENB Subsidiary, except for obligations paid in connection with
transactions made by it in the ordinary course of its business consistent with
past practices, laws and regulations applicable to ENB or any ENB Subsidiary.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 44
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5.23 Allowance for Possible Loan or ORE Losses. The
allowance for possible loan losses shown on the consolidated Audited Financial
Statements of ENB is adequate in all material respects to provide for
anticipated losses with respect to 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 ENB does not have any Loan which has been
criticized or classified by its bank examiners or by its independent auditors
in reports provided to the management of ENB by such reviewing parties as
"Other Assets Especially Mentioned," "Substandard," "Doubtful" or "Loss" or as
a "Potential Problem Loan."
The allowance for possible losses on other real estate ("ORE") shown
on the consolidated Audited Financial Statements of ENB 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 material
respects to provide for anticipated losses in ORE owned or held by ENB or any
ENB Subsidiary and the net book value of ORE on the Balance Sheet of Audited
Financial Statements of ENB is the net realizable value of the ORE in
accordance with Statement of Position 92-3.
5.24 Compliance with Laws. To the best of ENB's knowledge,
information and belief, except as described in Schedule 5.24 hereto, ENB and
each ENB 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 ENB or any
ENB Subsidiary, or which would or could reasonably be expected to subject ENB
or any ENB 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 ENB or any
ENB 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 ENB or any ENB Subsidiary, (ii) threatening to
revoke any license, franchise, permit, or governmental authorization which is
material to the financial condition or operations of ENB or any ENB Subsidiary,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 45
<PAGE> 162
or (iii) requiring ENB or any ENB Subsidiary to enter into a cease and desist
order, consent, agreement, or memorandum of understanding.
5.25 Employee Benefit Plans. (a) ENB has previously
provided to UPC true and complete copies of each "employee benefit plan," as
defined in ERISA, which, to the best of its knowledge, is subject to any
provision of ERISA and covers any employee, whether active or retired, of ENB
or any ENB Subsidiary, together with the most recent annual report (Form 5500
including, if applicable, Schedule B thereto) prepared in connection with any
such plan. Such plans are hereinafter referred to collectively as the
"Employee Plans", and each such Employee Plan is listed in Schedule 5.25(a)
hereto. Each Employee Plan which is intended to be qualified under Section
401(a) of the Internal Revenue Code, is so qualified. Except as disclosed in
Schedule 5.25(a) hereto, all Employee Plans were in effect for substantially
all of calendar year 1994 and there has been no material amendment thereof
(other than amendments required to comply with applicable law) or material
increase in the cost thereof or benefits thereunder on or after January 1,
1995.
(b) ENB has furnished to UPC true and complete
copies and descriptions of each plan or arrangement maintained or otherwise
contributed to by ENB or any ENB Subsidiary which is not an Employee Plan and
which (exclusive of base salary and base wages) provides for any form of
current or deferred compensation, bonus, stock option, profit sharing, benefit,
retirement, incentive, group health or insurance, welfare plan (including, but
not limited to, "employee welfare benefit plans" as that term is defined in
ERISA), or similar plan or arrangement for the benefit of any employee or class
of employees, whether active or retired, of ENB or any ENB Subsidiary (such
plans and arrangements being collectively referred to herein as "Benefit
Arrangements" and all such Benefit Arrangements of ENB and ENB's Subsidiaries
are listed on Schedule 5.25(b) hereto). Except as disclosed in Schedule
5.25(b) hereto, there are no other Benefit Arrangements of the ENB 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(b) hereto or as was required by applicable law, there has been with
respect to Benefit Arrangements no material amendment thereof or material
increase in the cost thereof or benefits payable thereunder on or after January
1, 1995, and no material increase in the base salary and wage levels of ENB or
any ENB 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(b)
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 46
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hereto, there has been no material increase in the compensation of or benefits
payable to any senior executive employee of ENB or any ENB Subsidiary since
January 1, 1995, nor any employment, severance or similar contract entered into
with any such employee, nor any amendment to any such contract, since January
1, 1995. Except as disclosed in Schedule 5.25(b) hereto, there is no contract,
agreement or Benefit Arrangement covering any employee of ENB or any ENB
Subsidiary which individually or collectively could give rise to the payment of
any amount which would constitute an "excess parachute payment," as such term
is defined in Section 280(G) of the Internal Revenue Code.
(c) With respect to all Employee Plans and Benefit
Arrangements, ENB and each ENB Subsidiary are in substantial compliance with
the requirements prescribed by any and all statutes, governmental or court
orders, or rules or regulations currently in effect, including but not limited
to ERISA and the Internal Revenue Code, applicable to such Employee Plans or
Benefit Arrangements. No condition exists that could constitute grounds for
the termination of any Employee Plan under Section 4042 of ERISA; no
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975
of the Internal Revenue Code, has occurred with respect to any Employee Plan,
or any other employee benefit plan maintained by ENB or any ENB Subsidiary
which is covered by Title I of ERISA, which could subject any person (other
than a person for whom neither ENB nor any ENB Subsidiary is directly or
indirectly responsible) to liability under Title I of ERISA or to the
imposition of any tax under Section 4975 of the Internal Revenue Code which
could have an adverse effect on the business, assets, financial condition,
results of operations or prospects of any ENB Company; no Employee Plan subject
to Part III of Subtitle B of Title I of ERISA or Section 412 of the Internal
Revenue Code, or both, has incurred any "accumulated funding deficiency," as
defined in Section 412 of the Code, whether or not waived; neither ENB nor any
ENB Subsidiary has failed to make any contribution or pay any amount due and
owing as required by the terms of any Employee Plan or Benefit Arrangement; no
Benefit Arrangement has incurred, nor does any Benefit Arrangement have, any
unfunded plan liabilities, whether or not waived; neither ENB nor any ENB
Subsidiary has incurred or expects to incur, directly or indirectly, any
liability under Title IV of ERISA arising in connection with the termination
of, or a complete or partial withdrawal from, any plan covered or previously
covered by Title IV of ERISA which could constitute a liability of UPC or any
of its Affiliates (including ENB or any ENB Subsidiary) at or after the
Effective Time of the Merger. Except as disclosed in Schedule 5.25(c) hereto,
to the best knowledge, information and belief of ENB, no condition exists that
could subject any person (other than a person for whom neither ENB nor any ENB
Subsidiary
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 47
<PAGE> 164
is directly or indirectly responsible) to liabilities, damages, losses, taxes
or sanctions that arise under Sections 106(b), 162(i) and 4980B of the Internal
Revenue Code or Sections 601 through 608 of ERISA for failure to comply with
the continuation health care coverage requirements of Sections 162(k) and 4980B
of the Internal Revenue Code with respect to any current or former employee,
including their beneficiaries, of ENB or any ENB Subsidiary.
(d) Except as described in Schedule 5.25(d) hereto,
each Employee Plan or Benefit Arrangement and each personal services contract,
fringe benefit, consulting contract or similar arrangement with or for the
benefit of any officer, director, employee or other person can be terminated by
ENB (or by INTERIM as the Resulting Bank) within a period of 30 days following
the Effective Time of the Merger, without payment of any amount as a penalty,
bonus, premium, severance pay or other compensation for such termination. Any
amounts representing or attributable to overfunding for a ENB defined benefit
plan may be returned to ENB or any ENB Subsidiary in accordance with the
respective plan's arrangements as described in the respective plan's organic
documents.
5.26 Material Contracts. Except as reflected in the ENB
Financial Statements, or as described in Schedule 5.26 hereto, neither ENB nor
any ENB 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 ENB 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
ENB as of the date of this Reorganization Agreement.
5.27 Material Contract Defaults. To the best of the
knowledge, information and belief of the management of ENB, neither ENB nor any
ENB Subsidiary is in default in any respect under any material 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 ENB or any ENB 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.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 48
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5.28 Reports. Since January 1, 1990, ENB has filed all
reports and statements, together with any amendments required to be made with
respect thereto, that it was required to file with (i) the Comptroller; (ii)
the FDIC, including, but not limited to, Call Reports and FFIEC 034 and proxy
statements; and (iv) any other applicable federal or state securities or
banking authorities (except, in the case of federal or state securities
authorities, filings that are not material). As of their respective dates,
each of such reports and documents, including the financial statements,
exhibits, and schedules thereto, complied in all material respects with all of
the requirements of their respective forms and all of the statutes, rules, and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed. All such reports were true and complete in all material respects
and did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. ENB has previously provided to UPC true and correct copies of all
such reports filed by ENB after January 1, 1990.
5.29 Bank Secrecy Act. Except as set forth in Schedule 5.29
hereto, neither ENB nor any ENB Subsidiary has been cited for any violation of,
and ENB and all ENB Subsidiaries are in substantial compliance with, the Bank
Secrecy Act and other similar State or Federal laws or regulations which
establish reporting and record keeping requirements with respect to currency
transactions or transactions involving monetary instruments.
5.30 Fair Lending Laws. Except as set forth in Schedule 5.30
hereto, neither ENB nor any ENB Subsidiary has been cited for any violation of,
and ENB and all ENB Subsidiaries are in substantial compliance with, the Fair
Housing Act, the Equal Credit Opportunity Act, the Home Mortgage Disclosure
Act, the Community Reinvestment Act, the Americans with Disabilities Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and other
similar State or Federal fair lending laws.
5.31 Statements True and Correct. None of the information
prepared by, or on behalf of, ENB or any ENB Subsidiary regarding ENB or any
ENB Subsidiary included or to be included in the Proxy Statement to be mailed
to ENB'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 ENB, be false or misleading with respect to
any
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 49
<PAGE> 166
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 ENB or any ENB 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 thirty (30) days after
receipt of the approval of the ENB Shareholders of this Reorganization
Agreement, UPC shall file any and all applications with the appropriate
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 Merger
Agreement with reasonable promptness. UPC shall pay all fees and expenses
arising in connection with such applications for regulatory approval. UPC
agrees to provide the appropriate Regulatory Authorities with the information
required by such authorities in connection with UPC's applications for
regulatory approval and UPC agrees to use its best efforts to obtain such
regulatory approvals, and any other approvals and consents as may be required
for the Closing, as promptly as practicable; provided, however, that nothing in
this Section 6.1 shall be construed to obligate UPC to take any action to meet
any condition required to obtain prior regulatory approval if UPC shall, in
UPC's sole discretion, deem such condition to be unreasonable or to constitute
a significant impediment upon UPC's ability to carry on its business or
acquisition programs or to require UPC to increase UPC's capital ratios to
amounts in excess of the Federal Reserve's minimum capital ratio guidelines
which may be in effect from time to time. UPC shall provide ENB with a copy of
all applications filed by UPC with the Regulatory Authorities in connection
with the transactions contemplated in this Reorganization Agreement and shall
fully advise ENB of the status of all such pending applications.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 50
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6.2 Conduct of Business -- Affirmative Covenants. Unless the
prior written consent of ENB shall have been obtained and, except as otherwise
contemplated herein:
(a) UPC and INTERIM, at their own cost and expense,
shall use their reasonable best efforts to secure all necessary consents and
all consents and releases, if any, required of UPC, INTERIM 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; and
(b) At all times to and including, and as of, the
Closing, UPC and INTERIM shall inform ENB 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 UPC
and INTERIM in all material respects; 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.
6.3 Registration of UPC Series E Preferred Stock and UPC
Common Stock under the Securities Laws. UPC shall cooperate with ENB in the
preparation of the ENB 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 ENB 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.
6.4 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 ENB or
the ENB Subsidiaries and all employees of ENB and the ENB Subsidiaries
immediately prior to the Effective Time of the Merger who shall continue as
employees of ENB, as the Resulting Bank 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 51
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term is defined in ERISA, on an equal basis with employees of UPC or any UPC
Subsidiaries with comparable positions, compensation, and tenure as of the
Effective Date of the Merger. Service with ENB or with any ENB Subsidiary
prior to the Effective Time of the Merger by such former ENB Company employees
will be deemed service with UPC for purposes of determining eligibility for
participation and vesting in such employee benefit plans of UPC and UPC's
Subsidiaries. In its sole discretion, UPC may elect to postpone until the
first day of January next following the Effective Time of the Merger the
participation of the employees of ENB and ENB's Subsidiaries in the employee
benefit plans maintained by UPC or UPC's Subsidiaries; provided, however,
during any such postponement period, the ENB Employee Plans and all related
employee benefit plans shall continue in full force and effect, except as
expressly modified or amended by the terms of this Reorganization Agreement, or
until such time as the plan is replaced by a benefit plan maintained by UPC.
6.5 Indemnification. Subsequent to the Effective Time of
the Merger:
(a) UPC shall cause ENB to, and ENB shall, indemnify,
defend and hold harmless the present and former officers, directors, employees
and agents of ENB against all losses, expenses, claims, damages or liabilities
arising out of actions or omissions occurring on or prior to the Effective Time
of the Merger, including, without limitation, the transactions contemplated by
this Reorganization Agreement, to the full extent permitted by applicable law;
(b) In the event ENB should (i) consolidate or merge with
or into any other association, corporation or other legal entity and should not
be the continuing, resulting or surviving association or other legal entity as
the result of such consolidation or merger, or (ii) transfer all or
substantially all of its assets or liabilities to any person, association,
corporation or other legal entity, the obligations of UPC and ENB set forth in
Section 6.5(a) shall be continued by UPC and ENB and by any successors to, or
assigns of, UPC and ENB resulting from such consolidation or merger; and
(c) UPC shall use its reasonable best efforts to maintain
ENB's existing directors' and officers' liability insurance policy; provided,
however, UPC and ENB may substitute therefore policies or coverage (including
UPC's existing policy) providing at least comparable coverage and containing
terms and conditions no less favorable to the directors and officers of ENB
than those in effect as of the date of this Reorganization Agreement.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 52
<PAGE> 169
ARTICLE 7
COVENANTS OF ENB
7.1 Proxy Statement; ENB Shareholder Approval. ENB shall
call the Shareholders Meeting to be held as soon as reasonably practicable
after the date of this Reorganization Agreement and shall use its best efforts
to ensure that such meeting is held not later than December 31, 1995, for the
purpose of (i) approving this Reorganization Agreement and the Merger
Agreement, and (ii) voting upon such other related matters as it deems
appropriate. In connection with the Shareholders Meeting, (i) ENB shall, with
UPC's assistance, prepare a Proxy Statement to be filed with the SEC as part of
UPC's registration statement and with any other appropriate Regulatory
Authority; shall mail or cause to be mailed such Proxy Statement to its
shareholders and shall provide UPC the opportunity to review and comment on the
Proxy Statement at least five (5) business days prior to the filing of the
Proxy Statement with the Regulatory Authorities for prior review and at least
five (5) business days prior to the mailing of the Proxy Statement to the ENB
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 ENB
shall recommend (subject to compliance with their legal and fiduciary duties as
advised by counsel) to ENB Shareholders the approval of this Reorganization
Agreement and the Merger Agreement; and (iv) ENB shall use its best efforts,
subject to compliance with its legal and fiduciary duty as advised by counsel,
to obtain such ENB 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) ENB shall, and shall cause each ENB Subsidiary
to:
(i) Operate its business only in the usual,
regular, and ordinary course;
(ii) Preserve intact its business
organizations and assets and maintain its rights and franchises;
(iii) Take no action, unless otherwise
required by law, rule or regulation, that would (A) adversely affect
the ability of any of them or UPC to obtain any necessary approvals of
Regulatory Authorities required to consummate the transactions
contemplated by this
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 53
<PAGE> 170
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 its obligations under, all material contracts;
(v) Use its reasonable best efforts to 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 ENB or such ENB 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 reasonable best efforts to
retain ENB's present customer base and to facilitate the retention of
such customers by ENB and its branches after the Effective Time of the
Merger; and
(vii) Use its reasonable best efforts to
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 ENB 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 ENB's customer
relationships;
(b) ENB agrees to use its reasonable best efforts to
assist UPC in obtaining the Government Approvals necessary to complete the
transactions contemplated hereby and does not know of any reason that such
Government Approvals cannot be obtained, and ENB shall provide to UPC or to the
appropriate Regulatory Authorities all information reasonably required to be
submitted in connection with obtaining such approvals;
(c) ENB, at its own cost and expense, shall use its
reasonable best efforts to secure all necessary consents and all consents and
releases, if any, required of ENB or third parties and shall comply with all
applicable laws, regulations and rulings in connection with this Reorganization
Agreement and the consummation of the transactions contemplated hereby;
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 54
<PAGE> 171
(d) At all times to and including, and as of, the
Closing, ENB 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 ENB in all material
respects; 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;
(e) On and after the Closing Date, ENB and the ENB
Revocable Trust 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, ENB 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 ENB. ENB shall provide reasonable
assistance to UPC in its investigation of matters relating to ENB; and
(g) Subject to the terms and conditions of this
Reorganization Agreement, ENB agrees to use all reasonable efforts and to take,
or to cause to be taken, all actions, and to do, or to cause to be done, all
things necessary, proper, or advisable under applicable laws and regulations to
consummate and make effective, with reasonable promptness after the date of
this Reorganization Agreement, the transactions contemplated by this
Reorganization Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining or other order
adversely affecting the ability of the Parties to consummate the transactions
contemplated by this Reorganization Agreement. ENB 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, ENB covenants and
agrees that it will neither do, nor agree or commit to do, nor permit any ENB
Subsidiary to do or commit or agree to do, except for existing
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 55
<PAGE> 172
commitments or agreements which have previously been disclosed to UPC, any of
the following without the prior written consent of the chief executive officer,
president, or chief financial officer of UPC, which consent will not be
unreasonably withheld:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Merger Agreement, amend its Articles of
Association 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 Merger Agreement; or (ii) split or otherwise
subdivide its capital stock; or (iii) recapitalize in any way; or (iv) declare
a stock dividend on the ENB Common Stock; or (v) except as expressly permitted
in Section 8.2(i) of this Reorganization Agreement, declare or pay any cash or
in kind dividend on the ENB Common Stock; or
(d) Except as expressly permitted by this
Reorganization Agreement, acquire direct or indirect control over any
corporation, association, firm, organization or other entity, other than in
connection with (i) mergers, acquisitions, or other transactions approved in
writing by UPC, (ii) internal reorganizations or consolidations involving
existing Subsidiaries, (iii) foreclosures in the ordinary course of business
and not knowingly exposing it to liability by reason of Hazardous Substances,
(iv) acquisitions of control in its fiduciary capacity, or (v) the creation of
new subsidiaries organized to conduct or continue activities otherwise
permitted by this Reorganization Agreement; or
(e) Except as expressly permitted by this
Reorganization Agreement or the Merger Agreement, (i) issue, sell, agree to
sell, or otherwise dispose of or otherwise permit to become outstanding any
additional shares of ENB Common Stock, or any other capital stock of ENB or of
any ENB Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are sold or otherwise transferred to ENB or any ENB Subsidiary, or (ii) sell,
agree to sell, or
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 56
<PAGE> 173
otherwise dispose of any substantial part of the assets or earning power of ENB
or of any ENB Subsidiary; or (iii) sell, agree to sell, or otherwise dispose of
any asset of ENB or any ENB 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 ENB 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 ENB or any ENB
Subsidiary to ENB or another ENB Subsidiary] in excess of an aggregate of
$50,000 (for ENB and its Subsidiaries on a consolidated basis) except in the
ordinary course of the business of ENB or such ENB 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) Except for existing commitments set forth on
Schedule 7.3(g) hereto, grant any increase in compensation or benefits to any
of its employees or officers, except in accordance with past practices or as
required by law; pay any bonus except in accordance with past practices; enter
into any severance agreements with any of its officers or employees; grant any
material increase in fees or other increases in compensation or other benefits
to any director of ENB or of any ENB 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 ENB (or
its successor) does 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 57
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law or that, in the opinion of counsel, is necessary or advisable to maintain
the tax-qualified status of any such plan; or
(j) Enter into any new service contracts, purchase
contracts or lease agreements that are material to ENB or any ENB Subsidiary;
or
(k) Make any capital expenditure in excess of
$25,000, except for purchases, repairs, renewals or replacements in the
ordinary course of business; or
(l) Enter into any transactions other than in the
ordinary course of business; or
(m) Except in the ordinary course of business and
consistent with past practices, grant or commit to grant any new extension of
credit to any officer, director or holder of 2% or more of the outstanding ENB
Common Stock, or to any corporation, partnership, trust or other entity
controlled by any such person, if such extension of credit, together with all
other credits then outstanding to the same borrower and all affiliated persons
of such borrower, would exceed two percent (2%) of the capital of ENB or amend
the terms of any such credit outstanding on the date hereof.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions to the Obligations of ENB. Unless waived
in writing by ENB, the obligation of ENB 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 58
<PAGE> 175
Reorganization Agreement, ENB 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' 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 Merger Agreement) 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 and that the signature of
each person set forth on such certificate is his or her
genuine signature;
(C) the charter documents of UPC
and INTERIM attached to such certificate remain in full force
and effect; and
(D) UPC and INTERIM are in good
standing under their respective corporate charters; and
(ii) a certificate signed respectively by
duly authorized officers of UPC or 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. ENB 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 in
escrow (i) funds sufficient to satisfy the Cash Payment, (ii) executed notes
representing the UPC Negotiable Notes, and (iii) certificates evidencing and
representing that number of shares of UPC Series E Preferred Stock and cash
funds, sufficient to meet the obligations of UPC to the ENB Record Holders to
deliver the Consideration at the Closing under this Reorganization Agreement
and the Merger Agreement;
(e) Opinion of UPC's and INTERIM' Counsel. ENB
shall have been furnished with an opinion of counsel to UPC and
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 59
<PAGE> 176
INTERIM, dated as of the Closing Date, addressed to and in form and substance
satisfactory to ENB, 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 national banking association
duly organized, validly existing, and in good standing under the laws
of the United States of America;
(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 ENB) 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
charter or articles of association, as applicable, or bylaws or, to
the best of the knowledge, information and belief (without making
special inquiry) of such counsel, any material contracts, agreements
or other commitments of UPC or INTERIM;
(iv) to the knowledge of such counsel
after due inquiry, no consent or approval by any Regulatory 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; and
(v) the shares of UPC Series E Preferred
Stock (and the shares of UPC Common Stock into which such shares of
UPC Series E Preferred Stock would be convertible) to be issued in the
names of the ENB Record Holders and delivered in exchange for their
ENB Common Stock will be duly authorized, validly issued, fully paid
and non-assessable.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of UPC or INTERIM or appropriate government
officials; (ii) in the case of matters
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 60
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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 laws of 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);
(f) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, UPC and INTERIM shall have
afforded ENB 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 UPC
and INTERIM, and UPC and INTERIM shall have caused all UPC and INTERIM
personnel to provide reasonable assistance to ENB in its investigation of
matters relating to UPC and INTERIM;
(g) 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 UPC or INTERIM
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 UPC
or INTERIM, ENB may elect either (i) to close the contemplated transaction in
accordance with the terms of this Reorganization Agreement or (ii) to terminate
this Reorganization Agreement without penalty; and
(h) Fairness Opinion. Within forty-five (45)
days subsequent to the date of this Reorganization Agreement, ENB shall have
received a fairness opinion from The Robinson-Humphrey Company, Inc. in form
and substance satisfactory to ENB confirming the fairness of the Consideration
to be received by the ENB Shareholders in the Merger from a financial point of
view of the ENB Shareholders, and within five (5) days prior to the Closing ENB
shall have received an update to such opinion confirming the fairness of the
Consideration to be received by the ENB Shareholders in the Merger from a
financial point of view to the ENB Shareholders.
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 ENB to be performed at or before the Closing Date
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 61
<PAGE> 178
pursuant to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The
representations and warranties of ENB 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 ENB dated as of the Closing
Date certifying that:
(A) ENB's Board of Directors has
duly adopted resolutions (copies of which shall be attached to
such certificate) approving the substantive terms of this
Reorganization Agreement (including the Merger Agreement) 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 ENB is an officer of
ENB, holding the office or offices specified therein and that
the signature of each person set forth on such certificate is
his or her genuine signature;
(C) the charter documents of ENB
attached to such certificate remain in full force and effect;
and
(D) ENB is in good standing under
its corporate charter; and
(ii) a certificate signed by the Chief
Executive Officer or Executive Vice President of ENB 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
ENB which materially reduces
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 62
<PAGE> 179
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 ENB; provided, however, that the
availability of insurance coverage shall be taken into account in determining
whether there has been such a material adverse impact or material reduction in
market value. In the event of such damage, destruction, order, limitation or
restriction, UPC or INTERIM may elect either (i) to close the contemplated
transaction in accordance with the terms of this Reorganization Agreement or
(ii) to terminate this Reorganization Agreement without penalty;
(e) Inspections Permitted. Between the date of
this Reorganization Agreement and the Closing Date, ENB 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 ENB. ENB shall
have caused all ENB personnel to provide reasonable assistance to UPC in its
investigation of matters relating to ENB;
(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 ENB 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 ENB, UPC may elect
either (i) to close the contemplated transaction in accordance with the terms
of this Reorganization Agreement or (ii) to terminate this Reorganization
Agreement without penalty;
(g) Opinion of ENB's Counsel. UPC shall have
been furnished with an opinion of counsel to ENB, dated the Closing Date,
addressed to and in form and substance satisfactory to UPC, to the effect that:
(i) ENB is a national banking
association duly organized, validly existing, and in good standing
under the laws of the United States of America;
(iii) this Reorganization Agreement has
been duly and validly authorized, executed and delivered by ENB and
(assuming that this Reorganization Agreement is a binding obligation
of UPC and INTERIM and the Merger Agreement is a binding obligation of
UPC and INTERIM) constitutes a valid and binding obligation of ENB
enforceable in accordance with its terms, subject as to enforceability
to applicable bankruptcy, insolvency,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 63
<PAGE> 180
reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and to the application of equitable
principles and judicial discretion; and
(iv) to the knowledge of such counsel
after due inquiry, no consent or approval, which has not already been
obtained, by any governmental authority is required for execution and
delivery by ENB of this Reorganization Agreement or any of the
documents to be executed and delivered by ENB in connection herewith.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of ENB 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 laws of the State of Florida; 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. ENB shall
not have entered into any agreement, letter of intent, understanding or other
arrangement pursuant to which ENB would merge; consolidate with; effect a
business combination with; sell any substantial part of ENB'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 ENB or the benefits of acquiring the ENB Common Stock;
(i) Maintenance of Certain Covenants, Etc. At
the time of Closing (i) the total consolidated assets of ENB shall be not less
than $242,000,000 at Closing, (ii) the tangible equity capital of ENB shall
have increased since December 31, 1994 through normal earnings, (iii) ENB
shall have no more than 456,250 shares of common stock outstanding at Closing,
being its only class of stock issued and outstanding, (iv) there shall have
been no extraordinary sales of assets or investment portfolio restructuring
since December 31, 1994, and (v) there shall have been no dividend declaration
by ENB since December 31, 1994; provided, however, in the event the Closing
should not have occurred on or prior to September 30, 1995, ENB shall have the
right to declare and pay a one-time cash dividend at Closing equal to the
interest foregone on the Cash Payment and the UPC Negotiable Notes at a rate of
8% per annum calculated from
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 64
<PAGE> 181
September 30, 1995 to the Closing Date. The criteria and calculations set
forth above shall be determined in accordance with GAAP assuming that ENB shall
have been operated consistently in the normal course of its business; provided,
however, that the effects of any balance sheet expansion through abnormal,
unusual or out of the ordinary borrowings or by the realization of
extraordinary gains or other income from the disposition of assets or
liabilities or through similar transactions shall be eliminated from the
calculations;
(j) Employment Agreement and Non-Compete
Agreement. Jose Valdes-Fauli, President of ENB, shall have entered into an
employment agreement and a non-compete agreement with UPC and/or ENB
substantially in the form of UPC's standard form of employment agreement and
standard form of non-compete agreement, copies of which are annexed hereto as
Schedule 8.2(j), appointing (upon ratification of the Board of Directors of
ENB) Jose Valdes-Fauli as Chairman, President and Chief Executive Officer of
ENB (unless the failure to execute such agreements shall be due to the death,
disability or incapacity of Jose Valdes-Fauli), providing for a term of not
less than three (3) years and incorporating a non-compete clause covering the
State of Florida, the State in which ENB currently operates and does business
in and has a present intention to do business in; and
(k) Receipt of Affiliate Letters. Pursuant to
the provisions of Section 2.6 of this Reorganization Agreement, UPC shall have
received a written commitment in form and substance satisfactory to UPC and its
counsel (an "Affiliate Letter") from each ENB Record Holder who would be deemed
an Affiliate of ENB 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 ENB Common Stock
pursuant to the terms and conditions of this Reorganization Agreement,
committing to UPC that such ENB 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 ENB 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
ENB Record Holder pursuant to the terms and conditions of this Reorganization
Agreement except in accordance with the Securities Laws and consistent with
recording the transaction as a tax-free reorganization to UPC, INTERIM and ENB.
8.3 Conditions to Obligations of All Parties. The
obligation of each party to effect the transactions contemplated
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 65
<PAGE> 182
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 which is not dismissed, concluded or resolved with
prejudice to the claimant within sixty (60) days from the filing of such claim,
action, suit, investigation or other proceeding;
(b) Government Approvals and Acquiescence
Obtained. The Parties hereto shall have received all applicable Government
Approvals for the consummation of the transactions contemplated herein and all
waiting periods incidental to such approvals or notices given shall have
expired;
(c) Effective Registration Statement and No Stop
Orders. An S-4 Registration Statement encompassing the Proxy
Statement-Prospectus shall have been filed with the SEC, such registration
statement shall have become effective and no stop order shall have been issued
or in effect by the SEC with respect to such registration statement or the
shares of UPC Series E Preferred Stock to be issued pursuant thereto; and
(d) Tax Opinion. UPC and ENB shall have received
a written opinion from counsel to UPC to the effect that the transactions
contemplated by this Reorganization Agreement and the Merger Agreement will
qualify as a reverse triangular merger for purposes of Section 368(a)(1)(A) and
(a)(2)(E) of the Internal Revenue Code such that the transaction may be
recorded as a tax-free reorganization to UPC, INTERIM and ENB.
ARTICLE 9
TERMINATION
9.1 Termination. This Reorganization Agreement and the
Merger Agreement 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 ENB or any ENB
Subsidiary fail to conduct its business pursuant to ENB's Covenants made in
Article 7; or by ENB, should UPC or any UPC
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 66
<PAGE> 183
Subsidiary fail to conduct its business pursuant to UPC's and INTERIM's
Covenants made in Article 6;
(c) By UPC, INTERIM or ENB in the event the
Closing shall not have occurred by March 31, 1996 (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; provided, however, if UPC shall have delivered to the
appropriate Regulatory Authorities in preliminary form, in order to receive
pre-filing comments, any and all applications to obtain the requisite
Government Approvals no later than thirty (30) days following approval by the
ENB Shareholders, 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 ENB shall, upon UPC's written request, extend
the Closing Date for a reasonable time in order for UPC to obtain all
Government Approvals and for the expiration of any stipulated waiting periods,
but in any event not later than June 30, 1996;
(d) By either UPC, INTERIM or ENB, upon written
notice to the other Party, upon denial of any Government Approval necessary for
the consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transaction contemplated); provided, however,
that either UPC or ENB 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 shall
have been appealed within ten (10) business days of the receipt thereof;
(e) By UPC or INTERIM if the conditions set forth
in Sections 8.2 or 8.3 are not satisfied in all material respects as of the
Closing Date, or by ENB if the conditions set forth in Section 8.1 or 8.3 are
not satisfied in all material respects as of the Closing Date, and such failure
has not been waived prior to the Closing;
(f) By UPC or INTERIM in the event that there
shall have been, in UPC's good faith opinion, a material adverse change in the
business, property, assets (including loan portfolios), liabilities (whether
absolute, accrued, contingent or otherwise), prospects, operations, liquidity,
income, condition (financial or otherwise) or net worth of ENB, 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 ENB Common Stock which are the subject
of the instant transaction; or by ENB in the event that there shall have been,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 67
<PAGE> 184
in ENB's good faith opinion, a material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), prospects, operations, liquidity, income,
condition (financial or otherwise) or net worth of UPC or INTERIM taken as a
whole;
(g) By UPC, INTERIM or ENB 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 ENB or any ENB
Subsidiary enter into any letter of intent or agreement with a view to being
acquired by or effecting a business combination with any other Person; or any
agreement to merge, to consolidate, to combine or to sell a material portion of
its assets or to be acquired in any other manner by any other Person or to
acquire a material amount of assets or a material equity position in any other
Person, whether financial or otherwise; or by ENB should UPC enter into any
letter of intent or agreement with a view to being acquired by or effecting a
business combination with any other Person; or any agreement to merge, to
consolidate, to combine or to sell a material portion of its assets or to be
acquired in any other manner by any other Person; or
(i) By UPC or INTERIM should ENB or any ENB
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 ENB to raise additional capital or to sell a
substantial portion of its assets; or by ENB should UPC or any UPC Subsidiary
enter into any formal agreement, letter of understanding, memorandum or other
similar arrangement with any bank regulatory authority establishing a formal
capital plan requiring UPC to raise additional capital or to sell a substantial
portion of its assets.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e), (f), (g), (h) or (i) of this Section 9.1, it
shall give notice to the other Party, in writing, of its election in the manner
prescribed in Section 10.1 ("Notices") of this Reorganization Agreement.
9.2 Effect of Termination. In the event that this
Reorganization Agreement should be terminated pursuant to Section 9.1 hereof,
all further obligations of the Parties under this Reorganization Agreement to
consummate the Merger shall terminate without further liability of any Party to
another; provided,
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 68
<PAGE> 185
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:
<TABLE>
<S> <C>
If to ENB: Eastern National Bank
799 Brickell Plaza
Miami, Florida 33131
Fax: (305) 347-1521
Attention: Jose J. Valdes-Fauli
President and Chief Executive Officer
With a copy to: Alcides I. Avila, Esq.
Holland and Knight
701 Brickell Avenue
Suite 3000
Miami, Florida 33131
Fax: (305) 789-7799
If to UPC or INTERIM:
Union Planters Corporation
P.O. Box 387 (mailing address)
Memphis, Tennessee 38147
or 7130 Goodlett Farms Parkway (deliveries)
Memphis, Tennessee 38088
Fax: (901) 383-2939
Attn: Jackson W. Moore, President
E. James House, Legal Counsel
</TABLE>
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the
date reflected in the proof or evidence of delivery, or if none, on the date
actually received.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 69
<PAGE> 186
10.2 Assignability and Parties in Interest. This
Reorganization Agreement shall not be assignable by any of the Parties hereto;
provided, however, that UPC may assign, set over and transfer all, or any part
of its rights and obligations under this Reorganization Agreement to any one or
more of its present or future Affiliates; provided, however, such assignment
shall not change the form or nature of Consideration to be received by the ENB
Record Holders. This Reorganization Agreement shall inure to the benefit of,
and be binding only upon the Parties hereto and their respective successors and
permitted assigns and no other Persons.
10.3 Governing Law. This Reorganization Agreement shall
be governed by, and construed and enforced in accordance with, the internal
laws, and not the laws pertaining to choice or conflicts of laws, of the State
of Tennessee, unless and to the extent that federal law controls. Any dispute
arising between the Parties in connection with the transactions which are the
subject of this Reorganization Agreement shall be heard in a court of competent
jurisdiction located in Shelby County, Tennessee; provided, however, any
dispute arising between the Parties with respect to the performance of UPC of
the Covenants of UPC set forth in Article 6 and elsewhere in this
Reorganization Agreement shall be heard in a court of competent jurisdiction
located in Dade County, Florida and the Parties shall submit to the
jurisdiction of such court.
10.4 Counterparts. This Reorganization Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute but one and the same
instrument.
10.5 Best Efforts. ENB, 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 or INTERIM shall not obligate UPC or INTERIM to obtain or to provide UPC or
INTERIM 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.
10.7 Entire Agreement. This Reorganization Agreement,
together with the Merger Agreement which is Exhibit A hereto, the Schedules,
Annexes, Exhibits and certificates
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 70
<PAGE> 187
required to be delivered hereunder and any amendments or addenda hereafter
executed and delivered in accordance with Section 10.9 hereof constitute the
entire agreement of the Parties hereto pertaining to the transaction
contemplated hereby and supersede all prior written and oral (and all
contemporaneous oral) agreements and understandings of the Parties hereto
concerning the subject matter hereof. The Schedules, Annexes, Exhibits and
certificates attached hereto or furnished pursuant to this Reorganization
Agreement are hereby incorporated as integral parts of this Reorganization
Agreement. Except as provided herein, by specific language and not by mere
implication, this Reorganization Agreement is not intended to confer upon any
other person not a Party to this Reorganization Agreement any rights or
remedies hereunder.
10.8 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any
way the validity or enforceability of the remaining portions or provisions
hereof in such jurisdiction or rendering that or any other portions or
provisions of this Reorganization Agreement invalid, illegal or unenforceable
in any other jurisdiction.
10.9 Modifications, Amendments and Waivers. At any time
prior to the Closing or termination of this Reorganization Agreement, the
Parties may, to the extent permitted by law, solely by written agreement
executed by their duly authorized officers:
(a) extend the time for the performance of any of
the obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations
and warranties made by the other Party contained in this Reorganization
Agreement or in the Annexes, Schedules or Exhibits hereto or any other document
delivered pursuant to this Reorganization Agreement;
(c) waive compliance with any of the covenants or
agreements of the other Party contained in this Reorganization Agreement; and
(d) amend or add to any provision of this
Reorganization Agreement or the Merger Agreement; 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
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 71
<PAGE> 188
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 ENB 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 and ENB represent
and warrant to each other that, except for the engagement by ENB of The
Robinson-Humphrey Company, Inc. as its financial advisor, they have employed no
broker or finder in connection with the transactions described in this
Reorganization Agreement under an arrangement pursuant to which a fee is, or
may be due to such broker or finder as a result of the execution of this
Reorganization Agreement or the closing of the transaction contemplated herein.
This section shall survive the termination of this Reorganization Agreement.
10.13 Equitable Remedies. The Parties hereto agree that, in
the event of a breach of this Reorganization Agreement by ENB, UPC and INTERIM
will be without an adequate remedy at law by reason of the unique nature of
ENB. 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 ENB, 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. ENB covenants that it 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).
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 72
<PAGE> 189
10.15 Survival of Representations and Warranties. All
representations and warranties made by the Parties hereto or in any instrument
or document furnished in connection herewith, shall survive the Closing and any
investigation at any time made by or on behalf of the Parties hereto and shall
expire at the Effective Time of the Merger except as to any matter which is
based upon willful fraud with respect to which the representations and
warranties set forth in this Reorganization Agreement shall expire only upon
expiration of the applicable statutes of limitation. Nothing in this Section
10.15 shall limit ENB'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 its termination.
10.16 No Waiver. No failure, delay or omission of or by any
Party in exercising any right, power or remedy upon any breach or default of
any other Party shall impair any such rights, powers or remedies of the Party
not in breach or default, nor shall it be construed to be a waiver of any such
right, power or remedy, or an acquiescence in any similar breach or default;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of any Party
of any provisions of this Reorganization Agreement must be in writing and must
be executed by the Parties to this Reorganization Agreement and shall be
effective only to the extent specifically set forth in such writing.
10.17 Remedies Cumulative. All remedies provided in this
Reorganization Agreement, by law or otherwise, shall be cumulative and not
alternative.
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 73
<PAGE> 190
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.
<TABLE>
<S> <C>
EASTERN NATIONAL BANK
By: /S/ Jose Valdes-Fauli
--------------------------------
Jose Valdes-Fauli
Its: President and
Chief Executive Officer
ATTEST:
/s/ Sonia Herrero
---------------------------
Assistant Vice President
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
---------------------------------
Jackson W. Moore
Its: President
ATTEST:
/s/ E. James House, Jr.
---------------------------
Secretary
ENB INTERIM NATIONAL BANK
By: /s/ Jackson W. Moore
---------------------------------
Its: President
ATTEST:
/s/ E. James House, Jr.
---------------------------
Secretary
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 74
<PAGE> 191
<TABLE>
<S> <C>
ENB REVOCABLE TRUST
/s/ Dulce Gierson /s/ Juan Santaella
----------------------- -----------------------
Witness Juan Santaella, Trustee
/s/ Dulce Gierson /s/Julio C. Leanez
----------------------- -----------------------
Witness Julio Leanez, Trustee
EASTERN OVERSEAS BANK LTD.
By: /s/ Juan Santaella
-------------------------------
--------------,----------------
ATTEST:
By:/s/ Julio C. Leanez
---------------------------
---------------,-----------
</TABLE>
AGREEMENT AND PLAN OF REORGANIZATION - PAGE 75
<PAGE> 192
ANNEX A
AGREEMENT TO MERGE
BETWEEN
ENB INTERIM NATIONAL BANK
AND
EASTERN NATIONAL BANK
UNDER THE CHARTER AND ARTICLES OF ASSOCIATION OF
EASTERN NATIONAL BANK
UNDER THE TITLE OF
EASTERN NATIONAL BANK
THIS AGREEMENT TO MERGE (the "Merger Agreement") is made and
entered into as of the __th day of __________, 1995, by and among ENB INTERIM
NATIONAL BANK, a national banking association organized and existing under the
laws of the United States of America with its main office located in Miami,
Florida ("INTERIM"); and EASTERN NATIONAL BANK ("ENB" or the "Receiving
Association" or the "Continuing Bank" as the context may require), a national
banking association organized and existing under the laws of the United States
of America with its main office located in Miami, Florida. INTERIM and the
Receiving Association, are each acting pursuant to resolutions of their
respective Boards of Directors adopted by the vote of a majority of their
respective directors pursuant to the authority given by, and in accordance
with, the provisions of the National Banks Consolidation Acts, as amended, and
with the approval of the holders of not less than two thirds of their
respective outstanding voting shares.
W I T N E S S E T H
WHEREAS, pursuant to the provisions of an Agreement and Plan
of Reorganization dated April 25, 1995, by and between Union Planters
Corporation ("UPC"), a Tennessee-chartered corporation and the bank holding
company parent of INTERIM; INTERIM; and ENB (the "Reorganization Agreement"),
the parties thereto have agreed to undertake a corporate reorganization whereby
INTERIM would be merged with and into ENB with ENB being the resulting bank;
and
WHEREAS, the Receiving Association is a national banking
association duly organized, validly existing and in good
PLAN OF MERGER - EXHIBIT A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 76
<PAGE> 193
standing under the laws of the United States of America with its principal
office located in the City of Miami, County of Dade, State of Florida, having a
common stock account of $__,___,000 divided into 456,250 shares of the par
value of Sixteen Dollars ($16) each, additional paid-in capital of $__,___,000
and retained earnings of $__,___,000 as of June 30, 1995, for a total of
$__,___,000 (based on applicable regulatory accounting principles); and
WHEREAS, INTERIM is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America with its principal office located in the City of Miami,
County of Dade, State of Florida, having no preferred stock and a common stock
account of $5,000,000 divided into 100,000 shares of the par value of Fifty
Dollars ($50.00) each, additional paid-in capital of $0.00 and retained
earnings of $0.00 as of June 30, 1995, for a total of $5,000,000 (based on
applicable regulatory accounting principles); and
WHEREAS, all of the shares of common stock of the Receiving
Association are owned beneficially and of record by the ENB Shareholders; and
WHEREAS, all of the shares of common stock of INTERIM are
owned beneficially and of record by UPC; and
WHEREAS, the Board of Directors of INTERIM, the Board of
Directors of the Receiving Association, UPC as the holder of all of the
outstanding shares of INTERIM, and at least two-thirds (2/3) of the ENB
Shareholders have each approved this Merger Agreement and have authorized its
execution, delivery and performance;
NOW THEREFORE, in consideration of the premises and for other
good and valuable considerations, the receipt and sufficiency of which are
hereby acknowledged, INTERIM and the Receiving Association hereby enter into
this Merger Agreement and prescribe the terms and conditions of the merger of
INTERIM with and into the Receiving Association and the manner of carrying the
said bank merger into effect (the "Bank Merger"), as follows:
Section 1. Definitions. As used in this Merger Agreement and
in any amendments hereto, the following terms shall have the following meanings
respectively:
"Bank Merger" shall mean the merger of INTERIM with and into ENB as
the Receiving Association as provided in Article 2 of the Reorganization
Agreement and to be effected pursuant to this Merger Agreement.
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
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<PAGE> 194
"Comptroller" shall mean the office of the Comptroller of the Currency.
"Continuing Bank" shall mean the Receiving Association upon and as of
the Effective Time of the Bank Merger.
"Effective Time of the Bank Merger" shall mean the date and time
specified for the effectiveness of the Bank Merger in the official
certification letter to be issued by the Comptroller.
"ENB Common Stock" shall mean the $16.00 par value common stock of ENB.
"INTERIM Common Stock" shall mean the $50.00 par value common stock of
INTERIM.
"Party" shall mean either INTERIM or the Receiving Association and
"Parties" shall mean INTERIM and the Receiving Association.
Section 2. Merger; Closing. INTERIM shall be merged with and
into the Receiving Association under the Charter and Articles of Association of
the Receiving Association pursuant to the provisions of, and with the effect
provided in, the National Banks Consolidation Acts, 12 U.S.C. Sections 215 -
215b. The closing of the transactions contemplated hereby (the "Closing")
shall take place as soon as practicable after the receipt of all necessary
regulatory approvals.
Section 3. Name; Bylaws; Offices. Upon and as of the
Effective Time of the Bank Merger, the name of the Continuing Bank shall be
EASTERN NATIONAL BANK, its Articles of Association shall be as set forth in
Exhibit A hereto and made a part hereof, its Bylaws shall be the existing
Bylaws of the Receiving Association, and the head office and established branch
offices and facilities (including CBCTS) of INTERIM shall become established
branch offices and facilities of the Continuing Bank. The head office,
established branch offices and facilities (including CBCTS) of the Receiving
Association shall be the head office, established offices and facilities
(including CBCTS) of the Continuing Bank.
Section 4. Property and Rights of Continuing Bank. Upon and
as of the Effective Time of the Bank Merger, the corporate existence of INTERIM
and the Receiving Association shall, as provided by the National Banks
Consolidation Acts, be merged into and continued in the Continuing Bank, and
the Continuing Bank shall be deemed to be the same association as INTERIM and
the Receiving Association. Upon and as of the Effective Time of the Bank
Merger, all rights, franchises and
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
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<PAGE> 195
interests of INTERIM and the Receiving Association, respectively, in and to
every type of property (real, personal and mixed) and choses in action shall be
transferred to and vested in the Continuing Bank by virtue of the Bank Merger
without any deed or other transfer, and the Continuing Bank, without any order
or other action on the part of any court or otherwise, shall hold and enjoy all
rights of property, franchises and interests, including appointments,
designations and nominations, and all other rights and interests as trustee,
executor, administrator, registrar or transfer agent of stocks and bonds,
guardian of estates, assignee, receiver, and committee of estates of lunatics,
and in every other fiduciary capacity, in the same manner and to the same
extent as such rights, franchises and interests were held or enjoyed by INTERIM
and the Receiving Association immediately before the Effective Time of the Bank
Merger.
Section 5. Liabilities Assumed. Upon and as of the Effective
Time of the Bank Merger, the Continuing Bank shall be liable for all then
existing liabilities of INTERIM and the Receiving Association. All then
existing deposits, debts, liabilities, obligations and contracts of INTERIM and
the Receiving Association, whether matured or unmatured; whether accrued,
absolute, contingent or otherwise; and whether or not reflected or reserved
against on balance sheets, books of account or records of INTERIM or the
Receiving Association, as the case may be, shall be those of the Continuing
Bank and shall not be released or impaired by the Bank Merger. All then
existing rights of creditors and other obligees and all liens on property of
either INTERIM or the Receiving Association shall be preserved unimpaired.
Section 6. Directors and Officers. Upon and as of the
Effective Time of the Bank Merger, (i) the Board of Directors of the Continuing
Bank shall consist of all persons who are directors of INTERIM immediately
prior to the Effective Time of the Bank Merger and such directors of the
Receiving Association as UPC shall identify prior to the Effective Time of the
Bank Merger, and (ii) the officers of INTERIM immediately prior to the
Effective Time of the Bank Merger and such officers of the Receiving
Association as UPC shall identify prior to the Effective Time of the Bank
Merger shall be officers of the Continuing Bank; provided, however, that
nothing herein shall be deemed to restrict in any way the rights of the
shareholders and directors of the Continuing Bank at any time after the
Effective Time of the Bank Merger to nominate, elect, select or remove, as the
case may be, such directors and officers of the Continuing Bank as they shall
see fit.
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 79
<PAGE> 196
Section 7. Effect on Stock and Capital. Upon and as of the
Effective Time of the Bank Merger, and by reason of the Bank Merger becoming
effective:
1. ENB Common Stock. Each share of ENB Common Stock
issued and outstanding immediately prior to the Effective Time of the Bank
Merger, except for shares as to which dissenters' rights are perfected pursuant
to 12 U.S.C. Section 215, shall at and after the Effective Time of the Bank
Merger be automatically cancelled for the Consideration set forth in Section
3.1(e) of the Reorganization Agreement and cease to be issued and outstanding
shares of ENB Common Stock.
2. Capital Accounts of Continuing Bank. The amounts
of the capital stock, additional paid-in capital and retained earnings accounts
of the Continuing Bank at the Effective Time of the Bank Merger, the capital
structures of the Receiving Association and INTERIM as of June 30, 1995, the
pro forma capital structures of the Receiving Association and INTERIM as of the
Effective Time of the Bank Merger, but immediately prior to the Effective Time
of the Bank Merger (assuming the date of the Effective Time of the Bank Merger
is September 1, 1995), and the pro forma capital structure of the Continuing
Bank immediately after the consummation of the Bank Merger are as set forth on
Exhibit B hereto.
3. Outstanding Stock of Continuing Bank. The shares
of preferred and common capital stock of INTERIM issued and outstanding at the
Effective Time of the Bank Merger shall automatically and without further
action on the part of anyone become issued and outstanding shares of the
preferred stock and common stock of the Continuing Bank.
Section 8. Conditions to Obligations of Receiving Association.
The obligations of the Receiving Association to proceed with the Closing are
subject to the satisfaction at or prior to the Closing of all of the conditions
set forth in this Section 8, any one or more of which, to the extent that they
may lawfully be waived, may be waived, in whole or in part, by the Receiving
Association.
1. Shareholder Approval. The holders of two-thirds
of the outstanding shares of the common stock of the Receiving Association
shall have approved the Bank Merger (such approval having already been received
from the ENB Shareholders).
2. Regulatory Approval. All of the transactions
contemplated by the Reorganization Agreement and this Merger Agreement shall
have received all necessary approvals, orders and consents from all necessary
governmental authorities, each such
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 80
<PAGE> 197
approval, order or consent to have been granted either unconditionally or with
such condition or limitation as would not materially outweigh or result in a
material impairment of the economic benefit reasonably expected to be derived
by the ENB Shareholders and the Receiving Association from the Bank Merger.
All such approvals, orders and consents shall be in effect at the Effective
Time of the Bank Merger. All required waiting periods for the transactions
contemplated hereby shall have expired since receipt by the Receiving
Association, UPC and INTERIM of all required approvals from the Comptroller.
3. Orders or Decrees. Consummation by Receiving
Association of the transactions contemplated hereby and by the Reorganization
Agreement shall not violate any order or decree of any court or governmental
body having competent jurisdiction or any applicable law or regulation.
4. Governmental Actions. There shall not be any
governmental suit, action or proceeding pending or threatened which seeks to
prevent or challenges in any other manner or otherwise seeks relief in respect
of the transactions contemplated by the Reorganization Agreement or this Merger
Agreement.
5. Conditions of Reorganization Agreement. All
conditions to the obligations of UPC and INTERIM under the Reorganization
Agreement shall have been satisfied or waived.
Section 9. Conditions to Obligations of UPC and INTERIM. The
obligations of UPC and INTERIM to proceed with the Closing are subject to the
satisfaction, at or prior to the Closing, of all of the conditions set forth in
this Section 9, any one or more of which, to the extent they may be lawfully
waived, may be waived, in whole or in part, by UPC and INTERIM.
1. Shareholder Approval. The holders of two thirds
of the outstanding common stock of INTERIM shall have approved the Bank Merger
(such approval having already been received from UPC as the sole shareholder of
INTERIM).
2. Regulatory Approval. The transactions
contemplated by this Merger Agreement and the Reorganization Agreement shall
have received all necessary approvals, orders and consents from all necessary
governmental authorities, each such approval, order or consent to have been
granted either unconditionally or with such condition or limitation as would
not materially outweigh or result in a material impairment of the economic
benefit reasonably expected to be derived by UPC and INTERIM from the Bank
Merger. All such approvals, orders and consents shall be in effect at the
Effective Time of the Bank
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 81
<PAGE> 198
Merger. All required waiting periods for each of the transactions contemplated
hereby shall have elapsed since receipt by the Receiving Association, INTERIM
and UPC of all required approvals from the Comptroller.
3. Orders or Decrees. Consummation by UPC or INTERIM
of the transactions contemplated hereby or by the Reorganization Agreement
shall not violate any order or decree of any court or governmental body having
competent jurisdiction or any applicable law or regulation.
4. Governmental Actions. There shall not be any
governmental suit, action or proceeding pending or threatened which seeks to
prevent or which challenges in any other manner or otherwise seeks relief in
respect of this Merger Agreement or any of the transactions contemplated
hereby.
5. Conditions of Reorganization Agreement. All
conditions to the obligations of ENB under the Reorganization Agreement shall
have been satisfied or waived.
Section 10. Miscellaneous.
1. Approvals. This Merger Agreement and the Bank
Merger shall have been ratified and confirmed by the affirmative votes of the
holders of at least two-thirds of the outstanding shares of the Receiving
Association, and by UPC, the registered holder of all outstanding shares of
INTERIM). The Bank Merger shall become effective on the date specified in the
official certification letter to be issued by the Comptroller.
2. Succession. This Merger Agreement shall be
binding upon, and shall inure to the benefit of the Parties and their
respective successors and assigns, provided, however, that neither this Merger
Agreement nor any right hereunder may be assigned by any party without the
consent of the other party hereto.
3. Entire Agreement; Amendments; Etc. This Merger
Agreement and the Reorganization Agreement, including the Exhibits hereto and
the Exhibits to the Reorganization Agreement, constitute the entire agreement
of the Parties hereto with respect to the Bank Merger and supersedes all other
prior agreements, if any, with respect thereto. This Merger Agreement may be
amended, and any provision hereof waived, but only in a writing signed by the
party against whom such amendment or waiver is sought to be enforced. Except
as otherwise expressly provided herein, no person other than the parties hereto
shall have any right hereunder or be entitled to the benefit of any provision
hereof.
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 82
<PAGE> 199
4. Counterparts. This Merger Agreement may be
executed in one or more counterparts, all of which shall together constitute
one and the same instrument and shall become effective when one or more
counterparts hereof have been signed by INTERIM and by a majority of the
directors of INTERIM and delivered to the Receiving Association and one or more
counterparts hereof have been signed by the Receiving Association and a
majority of the directors of the Receiving Association and delivered to
INTERIM.
5. Governing Law. This Merger Agreement shall be
governed by and construed in accordance with the laws of the State of
Tennessee, except as to matters governed by federal law, including the national
banking laws as contained in Title 12 of the United States Code.
IN WITNESS WHEREOF, INTERIM and the Receiving Association have caused
this Merger Agreement to be executed by their duly authorized officers and the
corporate seal of the Receiving Association to be hereunto affixed as of the
date first above written, and directors constituting a majority of the members
of the Boards of Directors of INTERIM and of the Receiving Association have
hereunto, or on counterparts hereof, subscribed their names.
ENB INTERIM NATIONAL BANK
[SEAL]
By:
---------------------------
Jackson W. Moore
President
ATTEST:
---------------------
E. J. House
Secretary
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 83
<PAGE> 200
EASTERN NATIONAL BANK
By:
------------------------
Jose Valdes-Fauli
President
ATTEST:
---------------------
Secretary
Signatures of Directors of EASTERN NATIONAL BANK, the Receiving
Association:
------------------------- ------------------------
------------------------- ------------------------
------------------------- ------------------------
------------------------- ------------------------
------------------------- ------------------------
------------------------- ------------------------
------------------------- ------------------------
------------------------- ------------------------
Being a majority of the Directors of EASTERN NATIONAL BANK.
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 84
<PAGE> 201
--------------------------------------------
Signatures of the Directors of ENB INTERIM NATIONAL BANK
--------------------------- -------------------------
--------------------------- -------------------------
---------------------------
being a majority of the Directors of ENB INTERIM NATIONAL BANK
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 85
<PAGE> 202
STATE OF TENNESSEE
SS.
COUNTY OF SHELBY
On this _______ day of _____________ 1995, before me, a notary public
for the state and county aforesaid, personally came Jackson W. Moore, as
President, and E. James House, as Secretary, of ENB Interim National Bank, to
me personally known, and each in his said capacity acknowledged the foregoing
instrument to be the act and deed of said national banking association and the
seal affixed thereto to be its seal; and came also
--------------------------- -------------------------
--------------------------- -------------------------
--------------------------- -------------------------
being a majority of the Board of Directors of ENB Interim National Bank, and
each of them acknowledged said instrument to be the act and deed of said
national banking association and of himself or herself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
[SEAL]
---------------------------------
Notary Public, State of Tennessee
My commission expires
-----------
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 86
<PAGE> 203
STATE OF FLORIDA
SS.
COUNTY OF DADE
On this _____ day of____________, 1995, before me, a notary public
for the county and state aforesaid, personally came Jose Valdes-Fauli, as
President and _____________, as Secretary, of Eastern National Bank, a national
banking association chartered under the Acts of Congress, to me personally
known, and each in his said capacity acknowledged the foregoing instrument to
be the act and deed of said Eastern National Bank; and came also
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
------------------------- -------------------------
being a majority of the members of the Board of Directors of Eastern National
Bank, a national banking association chartered under the Acts of Congress, and
each of them acknowledged said instrument to be the act and deed of said
national banking association and of himself as director thereof.
WITNESS my official seal and signature this day and year aforesaid.
[SEAL]
----------------------------------
Notary Public, State of Tennessee
My commission expires
------------
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 87
<PAGE> 204
EXHIBIT A
The Articles of Association of the Continuing Bank.
EXHIBIT B
The capital accounts of the Continuing Bank.
MERGER AGREEMENT - ANNEX A TO AGREEMENT AND PLAN OF REORGANIZATION
PAGE 88
<PAGE> 205
LOGO
UNION PLANTERS CORPORATION
July 28, 1995
Eastern National Bank
799 Brickell Plaza
Miami, Florida 33131
Gentlemen:
This refers to the Agreement and Plan of Reorganization dated as of April 25,
1995 (the "Agreement") between Union Planters Corporation ("UPC"); ENB Interim
National Bank, a wholly-owned subsidiary of UPC; and Eastern National Bank
("ENB") and others. This letter is intended to set forth certain amendments,
clarifications, additional agreements and undertakings of each of the above
parties and each of such parties agrees that this letter shall become and be an
integral part of the Agreement (as referred to in Section 10.7 thereof) and is
being delivered by the parties in order to eliminate any inequities occasioned
by a material increase subsequent to the Pricing Period in the market value of
UPC's 8% Cumulative, Convertible Preferred Stock, Series E (the "UPC Series E
Preferred Stock") shares of which are to be delivered as a portion of the
Consideration to be received by certain of the Shareholders of ENB in the
Merger. All terms used herein without definition shall have the same meaning
as ascribed in the Agreement.
Accordingly, in consideration of the parties having entered into the Agreement
and for other good and valuable considerations, the receipt and sufficiency of
which is hereby acknowledged, it is hereby further agreed that the following
amendments shall be made to the Agreement:
A. The second full paragraph on page 19 of the Agreement (as revised and
reexecuted on June 30, 1995) shall be amended and restated in its
entirety as follows:
The Exchange Ratios shall be based on an aggregate of no more than
456,250 shares of ENB Common Stock being issued and outstanding
immediately prior to the Effective Time of the Merger; provided,
however, that no certificate representing less than one hundred (100)
shares of UPC Series E Preferred Stock and no certificate representing
fractional shares of UPC Series E Preferred Stock shall be issued and
if, after aggregating all of the shares and fractional shares of UPC
Series E Preferred Stock to which an ENB Record Holder shall be
entitled based upon the Series E Exchange Ratio,
<PAGE> 206
there should be less than 100 full shares of UPC Series E Preferred
Stock or a fractional share of UPC Series E Preferred Stock remaining,
such whole shares and any fractional share shall be settled by a cash
payment therefor based upon the highest price at which one or more
full shares of the Series E Preferred Stock shall trade through the
NASDAQ/NMS on the Effective Date of the Merger (or, if the Effective
Date should not be a day on which the NASDAQ/NMS is open for business,
the next day on which the UPC Series E Preferred Stock trades through
the NASDAQ/NMS) for each full share of UPC Series E Preferred Stock;
provided, further, that UPC shall not issue any UPC Negotiable Note of
any series having a principal amount less than $100,000.00 and if,
after aggregating the principal amount of any series of UPC Negotiable
Note to which an ENB Record Holder would be entitled based upon the
Negotiable Note Exchange Ratios, there should be a principal amount of
less than $100,000.00 remaining with respect to such series, such
principal amount of less than $100,000.00 shall be settled by a cash
payment therefor based upon a value of $15.90 per share of ENB Common
Stock with respect to any Series I Note, $12.61 per share of ENB
Common Stock with respect to any Series II Note and $3.29 per share of
ENB Common Stock with respect to any Series III Note so exchanged.
2
<PAGE> 207
Upon execution of this letter (or counterparts thereof) by the parties hereto,
this letter shall become and constitute a part of the Agreement.
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
--------------------------------------
Its: President
ATTEST:
/s/ E. James House, Jr.
-----------------------------
Secretary
ENB INTERIM NATIONAL BANK
By: /s/ Jackson W. Moore
--------------------------------------
Its: President
ATTEST:
/s/ E. James House, Jr.
-----------------------------
Secretary
EASTERN NATIONAL BANK
By: /s/ Jose J. Valdes-Fauli
--------------------------------------
Its: President and Chief Executive Officer
ATTEST:
/s/ Julio C. Leanez
-----------------------------
Secretary
ENB REVOCABLE TRUST
/s/ Dulce M. Gierson /s/ Juan Santaella
----------------------------- --------------------------------------
Witness Juan Santaella, Trustee
/s/ Dulce M. Gierson /s/ Julio C. Leanez
----------------------------- --------------------------------------
Witness Julio Leanez, Trustee
3
<PAGE> 208
EASTERN OVERSEAS BANK LTD.
By: /s/ Juan Santaella /s/ Julio C. Leanez
-------------------, -------------------
ATTEST:
By: /s/ Oscar Zamora Lares
-------------------, -----------
4
<PAGE> 209
APPENDIX C
FAIRNESS OPINION OF
THE ROBINSON-HUMPHREY COMPANY, INC.
<PAGE> 210
THE ROBINSON-HUMPHREY COMPANY, INC.
April 25, 1995
Board of Directors
Eastern National Bank
799 Brickell Plaza
Miami, Florida 33131
Gentlemen:
In connection with the proposed acquisition of Eastern National Bank
("ENB") by Union Planters Corporation ("UPC") (the "Merger"), you have asked us
to render an opinion as to whether the financial terms of the Merger, as
provided in the Agreement and Plan of Reorganization dated as April 25, 1995
among such parties (the "Merger Agreement"), are fair, from a financial point
of view, to the stockholders of ENB. Under the terms of the Merger, ENB will
be acquired for total consideration, in cash and securities, of $29,000,000.
Our firm, as part of its investment banking business, is frequently
involved in the valuation of securities as related to public underwritings,
private placements, mergers, acquisitions, recapitalizations and other
purposes.
In connection with our study for rendering this opinion, we have
reviewed the Merger Agreement, ENB's financial results for fiscal years 1989
through 1994, and certain documents and information we deem relevant to our
analysis. We have also held discussions with senior management of ENB for the
purpose of reviewing the historical and current operations of, and outlook for
ENB, industry trends, the terms of the proposed Merger, and related matters.
We have also studied published financial data concerning certain other
publicly traded financial institutions which we deem comparable to ENB as well
as certain financial data relating to acquisitions of other financial
institutions that we deem relevant or comparable. In addition, we have
reviewed other published information, performed certain financial analyses and
considered other factors and information which we deem relevant.
We have reviewed similar information and data relating to UPC,
including its historical financial statements, from fiscal 1989 through 1994.
In rendering this opinion, we have relied upon the accuracy of the
Merger Agreement, the financial information listed above, and other information
furnished to us by ENB and UPC. We have not separately verified this
information nor have we made an independent evaluation of any of the assets or
liabilities of ENB and UPC.
Based upon the foregoing and upon current market and economic
conditions, we are of the opinion that, from a financial point of view, the
terms of the Merger as provided in the Merger Agreement are fair to the
stockholders of ENB.
Very truly yours,
/s/ The Robinson-Humphrey Company, Inc.
THE ROBINSON-HUMPHREY COMPANY, INC.
<PAGE> 211
APPENDIX D
UNITED STATES CODE ANNOTATED, TITLE 12, SECTION 215
PROVIDING FOR SHAREHOLDERS' DISSENTERS' RIGHTS
<PAGE> 212
(B) LIABILITY OF CONSOLIDATED ASSOCIATION; CAPITAL STOCK;
DISSENTING SHAREHOLDERS
The consolidated association shall be liable for all liabilities of
the respective consolidating banks or associations. The capital stock of such
consolidated association shall not be less than that required under existing
law for the organization of a national bank in the place in which it is
located: Provided, That if such consolidation shall be voted for at such
meetings by the necessary majorities of the shareholders of each association
and State bank proposing to consolidate, and thereafter the consolidation shall
be approved by the Comptroller, any shareholder of any of the associations or
State banks so consolidated who has voted against such consolidation at the
meeting of the association or bank of which he is a stockholder, or who has
given notice in writing at or prior to such meeting to the presiding officer
that he dissents from the plan of consolidation, shall be entitled to receive
the value of the shares so held by him when such consolidation is approved by
the Comptroller upon written request made to the consolidated association at
any time before thirty days after the date of consummation of the
consolidation, accompanied by the surrender of his stock certificates.
(C) VALUATION OF SHARES
The value of the shares of any dissenting shareholder shall be
ascertained, as of the effective date of the consolidation, by an appraisal
made by a committee of three persons, composed of (1) one selected by the vote
of the holders of the majority of the stock, the owners of which are entitled
to payment in cash; (2) one selected by the directors of the consolidated
banking association; and (3) one selected by the two so selected. The
valuation agreed upon by any two of the three appraisers shall govern. If the
value so fixed shall not be satisfactory to any dissenting shareholder who has
requested payment, that shareholder may, within five days after being notified
of the appraised value of his shares, appeal to the Comptroller, who shall
cause a reappraisal to be made which shall be final and binding as to the value
of the shares of the appellant.
(D) APPRAISAL BY COMPTROLLER; EXPENSES OF CONSOLIDATED
ASSOCIATION; SALE AND RESALE OF SHARES; STATE APPRAISAL AND CONSOLIDATION LAW
If, within ninety days from the date of consummation of the
consolidation, for any reason one or more of the appraisers is not selected as
herein provided, or the appraisers fail to determine the value of such shares,
the Comptroller shall upon written request of any interested party cause an
appraisal to be made which shall be final and binding on all parties. The
expenses of the Comptroller in making the reappraisal or the appraisal, as the
case may be, shall be paid by the consolidated banking association. The value
of the shares ascertained shall be promptly paid to the dissenting shareholders
by the consolidated banking association. Within thirty days after payment has
been made to all dissenting shareholders as provided for in this section the
shares of stock of the consolidated banking association which would have been
delivered to such dissenting shareholders had they not requested payment shall
be sold by the consolidated banking association at an advertised public
auction, unless some other method of sale is approved by the Comptroller, and
the consolidated banking association shall have the right to purchase any of
such shares at such public auction if it is the highest bidder therefor, for
the purpose of reselling such shares within thirty days thereafter to such
person or persons and at such price not less than par as its board of directors
by resolution may determine. If the shares are sold at public auction at a
price greater than the amount paid to the dissenting shareholders the excess in
such sale price shall be paid to such shareholders. The appraisal of such
shares of stock in any State bank shall be determined in the manner prescribed
by the law of the State in such cases, rather than as provided in this section,
if such provision is made in the State law; and no such consolidation shall be
in contravention of the law of the State under which such bank is incorporated.
