<PAGE> 1
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-09121
August 8, 1996
To the Shareholders of
BancAlabama, Inc.:
You are cordially invited to attend a Special Meeting of the Shareholders
(the "Special Meeting") of BancAlabama, Inc. ("BancAlabama") to be held at the
main office of BancAlabama located at 312 Clinton Avenue, Huntsville, Alabama,
at 2:00 P.M., local time, on September 12, 1996, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve an Agreement and Plan of Merger (the "Agreement") which
provides for the merger (the "Merger") of BancAlabama with and into BNF Bancorp,
Inc. ("BNF"), a wholly-owned subsidiary of Union Planters Corporation ("UPC"),
with the effect that BNF shall be the surviving corporation resulting from the
Merger. Upon consummation of the Merger, each share of BancAlabama common stock
issued and outstanding (except for certain shares held by BancAlabama or UPC, or
their respective subsidiaries, in each case other than shares held in a
fiduciary capacity or as a result of debts previously contracted, and except for
shares held by shareholders who perfect their statutory appraisal rights) will
be exchanged for 0.5907 of a share of UPC common stock (subject to possible
adjustment as described in the accompanying Proxy Statement/Prospectus), with
cash being paid in lieu of issuing fractional shares.
Enclosed are the (i) Notice of Special Meeting, (ii) Proxy
Statement/Prospectus, (iii) Proxy for the Special Meeting, (iv) BancAlabama's
Annual Report to Shareholders for the year ended December 31, 1995, and (v)
BancAlabama's Quarterly Report on Form 10-Q for the three months ended March 31,
1996. The Proxy Statement/Prospectus describes in more detail the Agreement and
the proposed Merger, including a description of the conditions to consummation
of the Merger and the effects of the Merger on the rights of BancAlabama
shareholders. Please read these materials carefully and consider thoughtfully
the information set forth in them.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AGREEMENT AND
CONSUMMATION OF THE MERGER CONTEMPLATED THEREBY, AND UNANIMOUSLY RECOMMENDS THAT
YOU VOTE FOR APPROVAL OF THE AGREEMENT.
It is important to understand that approval of the Agreement will require
the affirmative vote of a majority of the votes entitled to be cast at the
Special Meeting by the holders of the issued and outstanding shares of
BancAlabama common stock. Accordingly, whether or not you plan to attend the
Special Meeting, you are urged to complete, sign, and return promptly the
enclosed proxy card. If you attend the Special Meeting, you may vote in person
if you wish, even if you previously have returned your proxy card. The proposed
Merger with UPC is a significant step for BancAlabama and your vote on this
matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR APPROVAL OF THE
AGREEMENT BY MARKING THE ENCLOSED PROXY CARD "FOR" ITEM ONE.
We look forward to seeing you at the Special Meeting.
Sincerely,
W. R. Collins
Chairman and Chief Executive Officer
<PAGE> 2
BANCALABAMA, INC.
312 Clinton Avenue
Huntsville, Alabama 35801
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 2:00 P.M. ON SEPTEMBER 12, 1996
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders (the
"Special Meeting") of BancAlabama, Inc. ("BancAlabama") will be held at 312
Clinton Avenue, Huntsville, Alabama, on September 12, 1996, at 2:00 P.M., local
time, for the following purposes:
1. Merger. To consider and vote upon a proposal to approve an
Agreement and Plan of Merger, dated as of April 26, 1996 (the "Agreement"),
by and among BancAlabama, Union Planters Corporation, a Tennessee
corporation ("UPC"), and BNF Bancorp, Inc., a Delaware corporation and a
wholly-owned subsidiary of UPC ("BNF"), pursuant to which (i) BancAlabama
will merge (the "Merger") with and into BNF, (ii) each share of the $1.00
par value common stock of BancAlabama ("BancAlabama Common Stock") issued
and outstanding at the effective time of the Merger will be exchanged for
0.5907 of a share of the $5.00 par value common stock of UPC, and the
associated "Preferred Share Rights" (as hereinafter defined), subject to
possible adjustment, and cash in lieu of any fractional share, and (iii)
UPC will assume the obligations of BancAlabama under various stock plans
and programs and adopt substitute plans where appropriate, all as more
fully described in the accompanying Proxy Statement/Prospectus. A copy of
the Agreement is set forth in Appendix A to the accompanying Proxy
Statement/Prospectus and is hereby incorporated by reference herein.
2. Other Business. To transact such other business as may come
properly before the Special Meeting or any adjournments or postponements of
the Special Meeting.
Notice of Appraisal Rights. If Proposal 1 above is approved and the
Merger contemplated thereby is consummated, each holder of shares of
BancAlabama Common Stock would have the right to demand appraisal of such
holder's shares of BancAlabama Common Stock and would be entitled to the
rights and remedies of Section 262 of the Delaware General Corporation Law
("DGCL"). The right of any such shareholder to any such rights and remedies
is contingent upon consummation of the Merger. In addition, the right of
any such shareholder to such rights and remedies is contingent upon strict
compliance with the requirements set forth in Section 262 of the DGCL, the
full text of which is attached as Appendix B to the accompanying Proxy
Statement/Prospectus. For a summary of the requirements of Section 262 of
the DGCL, see "Description of Transaction -- Dissenters' Rights" in the
accompanying Proxy Statement/Prospectus.
Only shareholders of record at the close of business on July 31, 1996, will
be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. Approval of the Agreement requires the
affirmative vote of a majority of the votes entitled to be cast at the Special
Meeting by holders of the issued and outstanding shares of BancAlabama Common
Stock and not just a majority of the shares present.
THE BOARD OF DIRECTORS OF BANCALABAMA UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT.
BY ORDER OF THE BOARD OF DIRECTORS
JEAN D. SNEAD
Secretary
Huntsville, Alabama
August 8, 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE SPECIAL MEETING.
<PAGE> 3
PROSPECTUS
COMMON STOCK, $5.00 PAR VALUE
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS OF
BANCALABAMA, INC.
This Prospectus of Union Planters Corporation, a bank holding company
organized and existing under the laws of the State of Tennessee "UPC"), relates
to up to 490,354 shares of common stock, $5.00 par value, of UPC (together
with associated "Preferred Share Rights" (as defined herein), "UPC Common
Stock"), including shares to be subject to assumed options and grants, which are
issuable to the shareholders of BancAlabama, Inc., a bank holding company
organized and existing under the laws of the State of Delaware ("BancAlabama"),
upon consummation of the proposed merger (the "Merger") described herein by
which BancAlabama will merge with and into BNF Bancorp, Inc. ("BNF"), a Delaware
corporation and a wholly-owned subsidiary of UPC, pursuant to the terms of the
Agreement and Plan of Merger, dated as of April 26, 1996 (the "Agreement"), by
and among UPC, BancAlabama and BNF.
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of common stock, par value
$1.00 per share, of BancAlabama ("BancAlabama Common Stock") will be converted
into and exchanged for 0.5907 of a share of UPC Common Stock, subject to certain
possible adjustments described herein (the "Exchange Ratio").
The Exchange Ratio is adjustable upward only if certain conditions are
met concerning the quoted price of UPC Common Stock, and then only with the
concurrence of both BancAlabama and UPC. The Board of Directors of BancAlabama
would likely invoke the adjustment mechanism in the Agreement if the conditions
permit, in which case UPC must determine whether to proceed with the Merger at
a higher Exchange Ratio. In making this determination, the principal factors
UPC will consider include the projected effect of the Merger on UPC's pro forma
earnings and book value per share and whether UPC's assessment of BancAlabama's
earning potential as part of UPC justifies the issuance of an increased number
of UPC's shares. If UPC declines to adjust the Exchange Ratio, BancAlabama may
elect to proceed without the adjustment. In making such determination, the
principal factors the Board of Directors of BancAlabama would consider include,
without limitation whether the Merger remains in the best interest of
BancAlabama and its stockholders, despite a decline in UPC's stock price, and
whether the consideration to be received by the holders of BancAlabama Common
Stock remains fair from a financial point of view. In addition, in the event
UPC should decline to adjust the Exchange Ratio and BancAlabama should
determine to proceed without adjustment, UPC and BancAlabama intend to review
the circumstances prevailing at the time and to determine whether to resolicit
the BancAlabama shareholders at such time. See "Description of Transaction --
Possible Adjustment of Exchange Ratio."
This Prospectus also serves as a Proxy Statement of BancAlabama, and is
being furnished to the shareholders of BancAlabama in connection with the
solicitation of proxies by the Board of Directors of BancAlabama for use at its
special meeting of shareholders (including any adjournment or postponement
thereof, the "Special Meeting"), to be held on September 12, 1996, to consider
and vote upon the Agreement, the Merger and the other transactions contemplated
therein. This Proxy Statement/Prospectus ("Proxy Statement") and related
materials enclosed herewith are being mailed to shareholders of BancAlabama on
or about August 9, 1996.
Each holder of shares of BancAlabama Common Stock has the right to dissent
from the Merger and to demand appraisal and payment of the fair value of such
holder's shares of BancAlabama Common Stock if the Merger is approved and
consummated. The right of any such shareholder to such rights and remedies is
contingent upon strict compliance with the requirements set forth in Section 262
of the Delaware General Corporation Law ("DGCL"), the full text of which is
attached as Appendix B hereto. A shareholder of BancAlabama who wishes to
dissent from the Merger must not vote any shares of BancAlabama Common Stock in
favor of the Merger. See "Description of Transaction -- Dissenters' Rights."
---------------------
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 PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS,
OR OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
---------------------
THE DATE OF THIS PROXY STATEMENT IS AUGUST 8, 1996.
<PAGE> 4
AVAILABLE INFORMATION
Both UPC and BancAlabama are subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, is required to file reports, proxy and information
statements, and other information with the Securities and Exchange Commission
(the "SEC"). Copies of such reports, proxy and information statements, and other
information can be obtained, at prescribed rates, from the SEC by addressing
written requests for such copies to the Public Reference Section at the SEC at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition,
such reports, proxy and information statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
The shares of UPC Common Stock are listed and traded on the New York Stock
Exchange (the "NYSE") under the symbol "UPC", and reports, proxy and information
statements, and other information concerning UPC also may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
This Proxy Statement constitutes part of the Registration Statement on Form
S-4 of UPC (including any exhibits and amendments thereto, the "Registration
Statement") filed with the SEC under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities offered hereby. This Proxy
Statement does not include all of the information in the Registration Statement,
certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. For further information about UPC and the securities
offered hereby, reference is made to the Registration Statement. The
Registration Statement may be inspected and copied, at prescribed rates, at the
SEC's public reference facilities at the addresses set forth above.
All information contained in this Proxy Statement or incorporated herein by
reference with respect to UPC was supplied by UPC, and all information contained
in this Proxy Statement or incorporated herein by reference with respect to
BancAlabama was supplied by BancAlabama.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION
OF THE SECURITIES BEING OFFERED PURSUANT TO THIS PROXY STATEMENT SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF UPC OR BANCALABAMA OR THE INFORMATION SET FORTH OR INCORPORATED BY
REFERENCE HEREIN SINCE THE DATE OF THIS PROXY STATEMENT.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by UPC pursuant to
the Exchange Act are hereby incorporated by reference herein:
(a) UPC's Annual Report on Form 10-K for the year ended December 31,
1995 (provided that any information included or incorporated by reference
in response to Items 402(a)(8), (i), (k), or (1) of Regulation S-K of the
SEC shall not be deemed to be incorporated herein and is not part of the
Registration Statement);
(b) UPC's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996;
(c) UPC's Current Reports on Form 8-K dated January 5, March 8,
April 1, April 2, April 18, 1996, May 21, 1996; May 22, 1996 and July 18,
1996;
i
<PAGE> 5
(d) The description of the current management and Board of Directors
contained in the Proxy Statement pursuant to Section 14(a) of the Exchange
Act for UPC's Annual Meeting of Shareholders held April 25, 1996.
(e) UPC's Registration Statement on Form 8-A 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;
(f) 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.
The following documents previously filed with the SEC by BancAlabama
pursuant to the Exchange Act are hereby incorporated by reference herein:
(a) BancAlabama's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (provided that any information included or incorporated
by reference in response to Items 402(a)(8), (i), (k) or (1) of Regulation
S-K of the SEC shall not be deemed to be incorporated herein and is not a
part of the Registration Statement);
(b) BancAlabama's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996; and
(c) BancAlabama's Current Report on Form 8-K dated May 7, 1996.
All documents filed by UPC pursuant to Sections 13(a), 13(c), 14, or 15(d)
of the Exchange Act after the date of this Proxy Statement and prior to final
adjournment of the Special Meeting together with this Proxy Statement shall be
deemed to be incorporated by reference in this Proxy Statement and to be a part
hereof from the date of filing of such documents. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes hereof to the
extent that a statement contained herein or in any subsequently filed document
which also is, or is deemed to be, incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed to constitute a part hereof, except as so modified or superseded.
BancAlabama will provide each shareholder of BancAlabama a copy of
BancAlabama's Annual Report to Shareholders for the year ended December 31,
1995 and a copy of BancAlabama's Quarterly Report on Form 10-Q for the three
months ended March 31, 1996, together with this Proxy Statement.
UPC will provide without charge, upon the written or oral request of any
person, including any beneficial owner, to whom this Proxy Statement is
delivered, a copy of any and all information (excluding certain exhibits)
relating to UPC that has been incorporated by reference in the Registration
Statement. Such requests should be directed to E. James House, Jr., Secretary
and Manager of the Legal Department, Union Planters Corporation, 7130 Goodlett
Farms Parkway, Memphis, Tennessee 38018 (telephone (901) 383-6584). BancAlabama
will provide without charge, upon the written or oral request of any person,
including any beneficial owner, to whom this Proxy Statement is delivered, a
copy of any and all information (excluding certain exhibits) relating to
BancAlabama that has been incorporated by reference in the Registration
Statement of which this Proxy Statement is a part. Such requests should be
directed to Jean D. Snead, Vice President and Corporate Secretary, BancAlabama,
Inc., 312 Clinton Avenue, Huntsville, Alabama 35801 (telephone (205) 533-5548).
In order to ensure timely delivery of the documents, any request should be made
by September 8, 1996.
ii
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY...................................................................................................... 1
The Parties................................................................................................ 1
Meeting of Shareholders.................................................................................... 2
The Merger................................................................................................. 2
Comparative Market Prices of Common Stock.................................................................. 6
Equivalent and Pro Forma Per Share Data.................................................................... 7
Selected Financial Data.................................................................................... 9
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION....................................................... 13
SPECIAL MEETING OF BANCALABAMA SHAREHOLDERS.................................................................. 19
Date, Place, Time, and Purpose............................................................................. 19
Record Dates, Voting Rights, Required Votes, and Revocability of Proxies................................... 19
Solicitation of Proxies.................................................................................... 19
Recommendation............................................................................................. 20
DESCRIPTION OF TRANSACTION................................................................................... 21
General.................................................................................................... 21
Possible Adjustment of Exchange Ratio...................................................................... 21
Effect of the Merger on Stock Options...................................................................... 23
Background of and Reasons for the Merger................................................................... 24
Opinion of BancAlabama's Financial Advisor................................................................. 26
Effective Time of the Merger............................................................................... 28
Distribution of UPC Stock Certificates..................................................................... 28
Conditions to Consummation of the Merger................................................................... 29
Regulatory Approvals....................................................................................... 30
Waiver, Amendment, and Termination......................................................................... 30
Dissenters' Rights......................................................................................... 31
Conduct of Business Pending the Merger..................................................................... 33
Management and Operations After the Merger................................................................. 35
Interests of Certain Persons in the Merger................................................................. 35
Certain Federal Income Tax Consequences.................................................................... 36
Accounting Treatment....................................................................................... 38
Expenses and Fees.......................................................................................... 38
Resales of UPC Common Stock................................................................................ 38
Option Agreement........................................................................................... 39
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS............................................................... 41
Anti-takeover Provisions Generally......................................................................... 41
Authorized Capital Stock................................................................................... 42
Amendment of Charter and Bylaws............................................................................ 43
Classified Board of Directors and Absence of Cumulative Voting............................................. 44
Director Removal and Vacancies............................................................................. 44
Limitations on Director Liability.......................................................................... 45
Indemnification............................................................................................ 45
Special Meeting of Shareholders............................................................................ 46
Actions by Shareholders Without a Meeting.................................................................. 46
Shareholder Nominations and Proposals...................................................................... 47
Business Combinations...................................................................................... 47
Dissenters' Rights of Appraisal............................................................................ 50
Shareholders' Rights to Examine Books and Records.......................................................... 51
Dividends.................................................................................................. 51
COMPARATIVE MARKET PRICES AND DIVIDENDS...................................................................... 51
BUSINESS OF BANCALABAMA...................................................................................... 53
BUSINESS OF UPC.............................................................................................. 54
General.................................................................................................... 54
Recent Developments........................................................................................ 55
CERTAIN REGULATORY CONSIDERATIONS............................................................................ 58
General.................................................................................................... 58
Payment of Dividends....................................................................................... 59
Capital Adequacy........................................................................................... 60
Support of Subsidiary Institutions......................................................................... 61
Prompt Corrective Action................................................................................... 61
FDIC Insurance Assessments................................................................................. 62
DESCRIPTION OF UPC CAPITAL STOCK............................................................................. 64
UPC Common Stock........................................................................................... 64
UPC Preferred Stock........................................................................................ 65
OTHER MATTERS................................................................................................ 65
SHAREHOLDER PROPOSALS........................................................................................ 65
EXPERTS...................................................................................................... 66
OPINIONS..................................................................................................... 66
</TABLE>
APPENDICES:
Appendix A -- Agreement and Plan of Merger, dated as of April 26, 1996, by and
among Union Planters Corporation, BancAlabama, Inc. and BNF
Bancorp, Inc.
Appendix B -- Section 262 of the Delaware General Corporation Law Relating to
Appraisal Rights
Appendix C -- Opinion of Alex Sheshunoff & Co.
iii
<PAGE> 7
SUMMARY
The following is a summary of certain information contained in this Proxy
Statement and the documents incorporated herein by reference. This summary is
not intended to be a complete description of the matters covered in this Proxy
Statement and is qualified in its entirety by the more detailed information
appearing elsewhere or incorporated by reference in this Proxy Statement.
Shareholders are urged to read carefully the entire Proxy Statement, including
the Appendices. As used in this Proxy Statement, the terms "UPC" and
"BancAlabama" refer to those entities, respectively, and, where the context
requires, to those entities and their respective subsidiaries.
THE PARTIES
BancAlabama. BancAlabama, a Delaware corporation, is a bank holding
company registered with the Board of Governors of the Federal Reserve System
("Federal Reserve") under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). Through its wholly-owned subsidiary, BankAlabama-Huntsville,
BancAlabama operates five full service branches and three supermarket branch
offices in the Huntsville, Alabama area and one supermarket branch office in
nearby Madison, Alabama, and offers a broad range of banking and banking-related
services. As of March 31, 1996, BancAlabama had total consolidated assets of
approximately $99 million, total consolidated deposits of approximately $90
million, and total consolidated shareholders' equity of approximately $7
million. The principal executive offices of BancAlabama are located at 312
Clinton Avenue, Huntsville, Alabama 35801, and its telephone number at such
address is (205) 533-5548. Additional information with respect to BancAlabama
and its subsidiary is included in documents incorporated by reference in this
Proxy Statement. See "Available Information," "Documents Incorporated by
Reference," and "Business of BancAlabama."
UPC. UPC, a Tennessee corporation, is a bank holding company registered
with the Federal Reserve under the BHC Act and a savings and loan holding
company registered with the Office of Thrift Supervision under the Home Owners
Loan Act, as amended ("HOLA"). As of March 31, 1996, UPC had total consolidated
assets of approximately $11.4 billion, total consolidated loans of
approximately $7.1 billion, total consolidated deposits of approximately $9.5
billion, and total consolidated shareholders' equity of approximately $993
million.
UPC conducts its business activities through its principal bank subsidiary,
the $2.2 billion asset Union Planters National Bank, founded in 1869 and
headquartered in Memphis, Tennessee, 33 other bank subsidiaries and two savings
bank subsidiaries located in Tennessee, Mississippi, Missouri, Arkansas,
Louisiana, Alabama, and Kentucky (collectively, the "UPC Banking Subsidiaries").
Through the UPC Banking Subsidiaries, UPC provides a diversified range of
financial services in the communities in which it operates, 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 loans.
Through the UPC Banking Subsidiaries, UPC operates approximately 402
banking offices. UPC's assets are allocable by state to its banking offices
(before consolidating adjustments) approximately as follows: $6.0 billion in
Tennessee, $2.4 billion in Mississippi, $1.0 billion in Missouri, $915 million
in Arkansas, $548 million in Louisiana, $249 million in Alabama and $110
million in Kentucky.
Acquisitions have been, and are expected to continue to be, an important
part of the expansion of UPC's business. UPC completed four acquisitions in
1992, 12 in 1993, 13 in 1994, and three in 1995, adding approximately $1.6
billion in total assets in 1992, $1.3 billion in 1993, $3.8 billion in 1994,
and $1.3 billion in 1995. UPC has completed two acquisitions in 1996, adding
approximately $122 million in assets. Prior to the date hereof, UPC has entered
into definitive agreements to acquire five additional institutions with total
assets of approximately $4.0 billion (collectively, the "Other Pending
Acquisitions"). For additional information regardng the Other Pending
Acquisitions, see "Pro Forma Condensed Consolidated Financial Information," and
"Business of UPC -- Recent Developments." For a discussion of UPC's acquisition
program and UPC management's philosophy on that subject, see Note 2 to UPC's
audited consolidated financial statements for the years ended December 31,
1995, 1994, and 1993 (on pages 41
<PAGE> 8
through 43) contained 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, 1995, which
Exhibit 13 is incorporated by reference herein to the extent indicated herein.
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Future acquisitions may entail the
payment by UPC of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of UPC
capital stock or the incurring of additional indebtedness by UPC, and could have
a dilutive effect on the earnings or book value per share of UPC Common Stock.
Moreover, significant charges against earnings are sometimes required incidental
to acquisitions. For a description of acquisitions which are currently pending,
see "Business of UPC -- Recent Developments."
BNF, a Delaware corporation, is a savings and loan holding company
registered with the OTS under the HOLA. BNF is a wholly-owned subsidiary of
UPC. As of March 31, 1996, BNF had total consolidated assets of approximately
$250.0 million, total consolidated deposits of approximately $226.5 million,
and total consolidated shareholders' equity of approximately $16.7 million.
The principal executive offices of UPC are located at 7130 Goodlett Farms
Parkway, Memphis, Tennessee 38018, and its telephone number at such address is
(901) 383-6000. Additional information with respect to UPC and its subsidiaries
is included in documents incorporated by reference in this Proxy Statement. See
"Available Information," "Documents Incorporated by Reference," and "Business of
UPC."
MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the holders of BancAlabama
Common Stock in connection with the solicitation by the BancAlabama Board of
Directors of proxies for use at the Special Meeting at which BancAlabama
shareholders will be asked to vote upon (i) a proposal to approve the Agreement
and (ii) such other business as may properly come before the meeting. The
Special Meeting will be held at the main office of BancAlabama located at 312
Clinton Avenue, Huntsville, Alabama, at 2:00 P.M. local time, on September 12,
1996. See "Special Meeting of BancAlabama Shareholders -- Date, Place, Time, and
Purpose."
BancAlabama's Board of Directors has fixed the close of business on July
31, 1996, as the record date (the "BancAlabama Record Date") for determination
of the shareholders entitled to notice of and to vote at the Special Meeting.
Only holders of record of shares of BancAlabama Common Stock on the BancAlabama
Record Date will be entitled to notice of and to vote at the Special Meeting.
Each share of BancAlabama Common Stock is entitled to one vote. Shareholders who
execute proxies retain the right to revoke them at any time prior to the proxies
being voted at the Special Meeting. On the BancAlabama Record Date, there were
703,122 shares of BancAlabama Common Stock issued and outstanding. See "Special
Meeting of BancAlabama Shareholders -- Record Dates, Voting Rights, Required
Votes, and Revocability of Proxies."
Approval of the Agreement and the Merger contemplated thereby requires the
affirmative vote of a majority of the votes entitled to be cast at the Special
Meeting by the holders of the issued and outstanding shares of BancAlabama
Common Stock and not just a majority of the shares present. Directors and
executive officers of BancAlabama and their affiliates are entitled to vote
32.5% of the outstanding shares of BancAlabama Common Stock. See "Special
Meeting of BancAlabama Shareholders -- Record Dates, Voting Rights, Required
Votes, and Revocability of Proxies."
THE MERGER
General. The Agreement provides for the acquisition of BancAlabama by UPC
pursuant to the merger of BancAlabama with and into BNF, a wholly-owned
subsidiary of UPC. At the Effective Time, each share of BancAlabama Common Stock
then issued and outstanding (excluding shares held by BancAlabama, UPC, or their
respective subsidiaries, in each case other than shares held in a fiduciary
capacity or as a result of debts previously contracted and excluding shares held
by shareholders who perfect their statutory appraisal rights)
2
<PAGE> 9
will be converted into and exchanged for 0.5907 of a share of UPC Common Stock,
subject to possible adjustment as described below (the "Exchange Ratio").
In the event both of the following conditions are satisfied, (i) the
"Average Closing Price" (defined in the Agreement as the average of the daily
last sale prices of UPC Common Stock quoted on the NYSE-Composite Transactions
List (as reported by The Wall Street Journal or, if not reported thereby,
another authoritative source as selected by UPC) for the ten consecutive full
trading days on which such shares are traded on the NYSE ending at the close of
trading on the later of the date of the Special Meeting and the date on which
the last required consent of any regulatory authority required for the Merger
shall be received (the "Determination Date")) is less than $24.245 and (ii) (1)
the quotient obtained by dividing the Average Closing Price by $30.306 (the "UPC
Ratio") is less than (2) the quotient obtained by dividing the weighted average
of the closing prices (the "Index Price") of 16 bank holding companies
designated in the Agreement (the "Index Group") on the Determination Date by the
Index Price on April 26, 1996, less 15% (the "Index Ratio"), then BancAlabama
will have the right to terminate the Agreement unless UPC elects to adjust the
Exchange Ratio in the manner described under "Description of
Transaction -- Possible Adjustment of Exchange Ratio." Under no circumstances
would the Exchange Ratio be less than .5907 of a share of UPC Common Stock for
each share of BancAlabama Common Stock. The possible upward adjustment of the
Exchange Ratio depends on the factors mentioned above and is not subject to a
contractual limit. See "Description of Transaction -- Possible Adjustment of
Exchange Ratio."
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any BancAlabama shareholder would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of UPC Common
Stock multiplied by the market value of one share of UPC Common Stock at the
Effective Time. The market value of one share of UPC Common Stock at the
Effective Time shall be the closing price of such common stock on the
NYSE-Composite Transactions List (as reported by The Wall Street Journal or, if
not reported thereby, another authoritative source as selected by UPC) on the
last trading day preceding the Effective Time. See "Description of
Transaction -- General."
The Agreement also contemplates that at the Effective Time, each award,
option, or other right to purchase or acquire shares of BancAlabama Common Stock
pursuant to stock options, stock appreciation rights, or stock awards
("BancAlabama Options") granted by BancAlabama under the BancAlabama Stock
Plans, as that term is defined in the Agreement, which are outstanding at the
Effective Time, whether or not exercisable, will be converted into and become
rights with respect to UPC Common Stock on a basis adjusted to reflect the
Exchange Ratio. See "Description of Transaction -- Effect of the Merger on Stock
Options."
As of the BancAlabama Record Date, BancAlabama had 703,122 shares of
BancAlabama Common Stock issued and outstanding and 127,000 additional shares of
BancAlabama Common Stock subject to BancAlabama Options. Taking into account
the Exchange Ratio of 0.5907 of a share of UPC Common Stock for each share of
BancAlabama Common Stock it is anticipated that upon consummation of the Merger,
UPC would issue approximately 415,334 shares of UPC Common Stock, excluding
shares subject to assumed options or grants. Accordingly, UPC would then have
issued and outstanding approximately 46,535,647 shares of UPC Common Stock based
on the number of shares of UPC Common Stock issued and outstanding on June 30,
1996.
Reasons for the Merger, Recommendations of the Board of Directors of
BancAlabama. The Board of Directors of BancAlabama believes that the Agreement
and the Merger are in the best interests of BancAlabama and its shareholders.
THE BANCALABAMA DIRECTORS UNANIMOUSLY RECOMMEND THAT BANCALABAMA SHAREHOLDERS
VOTE FOR APPROVAL OF THE AGREEMENT. EACH MEMBER OF THE BOARD OF DIRECTORS OF
BANCALABAMA HAS AGREED TO VOTE THE SHARES OF BANCALABAMA COMMON STOCK OVER WHICH
SUCH MEMBER HAS VOTING AUTHORITY (OTHER THAN IN A FIDUCIARY CAPACITY) IN FAVOR
OF THE AGREEMENT. The Board of Directors of BancAlabama believes that the Merger
will result in a company with expanded opportunities for profitable growth and
that the combined resources and capital of BancAlabama and UPC will provide an
enhanced ability to compete in
3
<PAGE> 10
the changing and competitive financial services industry. See "Description of
Transaction -- Background of and Reasons for the Merger."
In unanimously approving the Agreement, BancAlabama's directors considered,
among other things, BancAlabama's and UPC's financial condition, the financial
terms and the income tax consequences of the Merger, the likelihood of the
Merger being approved by regulatory authorities without undue conditions or
delay, legal advice concerning the proposed Merger, the views of Alex Sheshunoff
& Co. ("Sheshunoff") as to the fairness of the Exchange Ratio, from a financial
point of view, to the shareholders of BancAlabama, and in general the fairness
of the terms of the Merger to BancAlabama shareholders. See "Description of
Transaction -- Background of and Reasons for the Merger."
Opinion of Financial Advisor. Sheshunoff has rendered an opinion to
BancAlabama that, based on and subject to the procedures, matters, and
limitations described in its opinion and such other matters as it considered
relevant, as of the date of its opinion, the Exchange Ratio is fair, from a
financial point of view, to the shareholders of BancAlabama. The opinion of
Sheshunoff dated as of April 26, 1996 is attached as Appendix C to this Proxy
Statement. BancAlabama shareholders are urged to read the opinion in its
entirety for a description of the procedures followed, matters considered, and
limitations on the reviews undertaken in connection therewith. See "Description
of Transaction -- Opinion of BancAlabama's Financial Advisor."
Effective Time. Subject to the conditions to the obligations of the
parties to effect the Merger, the Effective Time will occur on the date and at
the time that the Certificate of Merger becomes effective with the Delaware
Secretary of State. Unless otherwise agreed upon by BancAlabama and UPC, and
subject to the conditions to the obligations of the parties to effect the
Merger, the parties will use their reasonable efforts to cause the Effective
Time to occur on such date as may be designated by UPC within 20 days following
the last to occur of (i) the effective date (including the expiration of any
applicable waiting period) of the last consent of any regulatory authority
required for the Merger and (ii) the date on which the shareholders of
BancAlabama approve the matters relating to the Agreement required to be
approved by such shareholders by applicable law. See "Description of
Transaction -- Effective Time of the Merger," "-- Conditions to Consummation of
the Merger," and "-- Waiver, Amendment, and Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER AND REGULATORY
APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO THE MERGER
CAN OR WILL BE SATISFIED. BANCALABAMA AND UPC ANTICIPATE THAT ALL CONDITIONS TO
THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE MERGER CAN BE
CONSUMMATED DURING THE FOURTH QUARTER OF 1996. HOWEVER, DELAYS IN THE
CONSUMMATION OF THE MERGER COULD OCCUR.
Exchange of Stock Certificates. Promptly after the Effective Time, UPC
will cause Union Planters National Bank, Memphis, Tennessee, acting in its
capacity as exchange agent for UPC (the "Exchange Agent"), to mail to each
holder of record of a certificate or certificates (collectively, the
"Certificates") which, immediately prior to the Effective Time, represented
outstanding shares of BancAlabama Common Stock, a letter of transmittal and
instructions for use in effecting the surrender and cancellation of the
Certificates in exchange for certificates representing shares of UPC Common
Stock. Cash will be paid to the holders of BancAlabama Common Stock in lieu of
the issuance of any fractional shares of UPC Common Stock. In no event will the
holder of any surrendered Certificate(s) be entitled to receive interest on any
cash to be issued to such holder, and in no event will BancAlabama, UPC, or the
Exchange Agent be liable to any holder of BancAlabama Common Stock for any UPC
Common Stock or dividends thereon or cash delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat, or similar law.
Regulatory Approvals and Other Conditions. The Federal Reserve has issued
its consent to the Merger and no other regulatory approvals are required for
consummation of the Merger.
4
<PAGE> 11
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of BancAlabama shareholders, receipt
of an opinion of counsel as to the tax-free nature of certain aspects of the
Merger, receipt of a letter from the independent accountants of UPC that the
Merger will qualify for pooling-of-interests accounting treatment, and certain
other conditions. In particular, the Merger is subject to a condition that, on
the last business day prior to the Effective Time: (i) the total consolidated
assets of BancAlabama must not be less than $95 million, and (ii) the
shareholders' equity of BancAlabama must be no less than $7,241,211. See
"Description of Transaction -- Regulatory Approvals" and "-- Conditions to
Consummation of the Merger."
Waiver, Amendment, and Termination. The Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by mutual action of
the Boards of Directors of BancAlabama and UPC, or by the action of the Board of
Directors of either company under certain circumstances, including if (i) the
Merger is not consummated by March 1, 1997, unless the failure to consummate by
such time is due to a breach of the Agreement by the party seeking to terminate
or (ii) in certain circumstances, adjustments are not made to the Exchange
Ratio. If for any reason the Merger is not consummated, BancAlabama will
continue to operate as a bank holding company under its present management. To
the extent permitted by law, the Agreement may be amended upon the written
agreement of UPC and BancAlabama without the approval of shareholders; provided,
however, that the provisions of the Agreement relating to the manner or basis in
which shares of UPC Common Stock will be exchanged for BancAlabama Common Stock
may not be amended in any material respect after the Special Meeting without the
requisite approval of the holders of the issued and outstanding shares of
BancAlabama Common Stock entitled to vote thereon. See "Description of
Transaction -- Possible Adjustment of Exchange Ratio" and "-- Waiver, Amendment,
and Termination."
Dissenters' Rights. Pursuant to DGCL Section 262, the holders of
BancAlabama Common Stock have dissenters' rights with respect to the Merger. Any
BancAlabama shareholder who does not vote in favor of the proposal to approve
the Agreement and the Merger contemplated thereby and who complies with certain
requirements of the applicable provisions of the DGCL may have the right to an
appraisal and payment for such person's shares of BancAlabama Common Stock.
TO PERFECT DISSENTERS' RIGHTS OF APPRAISAL, A HOLDER OF BANCALABAMA COMMON
STOCK MUST STRICTLY COMPLY WITH THE APPLICABLE STATUTORY PROVISIONS, A COPY OF
WHICH PROVISIONS IS ATTACHED TO THIS PROXY STATEMENT AS APPENDIX B. ANY HOLDER
OF BANCALABAMA COMMON STOCK WHO RETURNS A SIGNED PROXY BUT WHO FAILS TO PROVIDE
VOTING INSTRUCTIONS WITH RESPECT TO THE PROPOSAL TO APPROVE THE AGREEMENT AND
THE MERGER CONTEMPLATED THEREBY WILL BE DEEMED TO HAVE VOTED IN FAVOR OF SUCH
PROPOSAL AND WILL NOT BE ENTITLED TO ASSERT DISSENTERS' RIGHTS OF APPRAISAL. See
"Description of Transaction -- Dissenters' Rights."
Interests of Certain Persons in the Merger. Certain members of
BancAlabama's management and Board of Directors have interests in the Merger in
addition to their interests as shareholders of BancAlabama generally. Those
interests relate to, among other things, change in control agreements,
employment agreements with UPC, and provisions in the Agreement regarding
indemnification and eligibility for certain UPC employee benefits. See
"Description of Transaction -- Interests of Certain Persons in the Merger."
Certain Federal Income Tax Consequences of the Merger. It is intended that
the Merger will be treated as a reorganization within the meaning of Section
368 of the Internal Revenue Code of 1986, as amended (the "Code"). Consummation
of the Merger is conditioned upon receipt by BancAlabama and UPC of an opinion
of Alston & Bird substantially to this effect. Accordingly, no gain or loss
will be recognized by a BancAlabama shareholder upon the exchange of such
shareholder's shares of BancAlabama Common Stock solely for shares of UPC Common
Stock. Subject to the provisions and limitations of Section 302(a) of the Code,
gain or loss will be recognized with respect to cash received in lieu of
fractional shares. Gain recognition, if any, will not be in excess of the
amount of cash received. TAX CONSEQUENCES OF THE MERGER FOR INDIVIDUAL
TAXPAYERS CAN VARY, HOWEVER, AND ALL BANCALABAMA SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT OF THE MERGER ON THEM
UNDER FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS. For a further discussion of
the federal income tax consequences of the Merger, see "Description of
Transaction -- Certain Federal Income Tax Consequences."
5
<PAGE> 12
Accounting Treatment. It is intended that the Merger will be accounted for
as a pooling of interests for accounting and financial reporting purposes. See
"Description of Transaction -- Accounting Treatment."
Certain Differences in Shareholders' Rights. At the Effective Time,
BancAlabama shareholders, whose rights are governed by BancAlabama's Certificate
of Incorporation, as amended, and Bylaws and by the DGCL, will automatically
become UPC shareholders, and their rights as UPC shareholders will be determined
by UPC's Restated Charter and Bylaws and by the Tennessee Business Corporation
Act (the "TBCA"). The rights of UPC shareholders differ from the rights of
BancAlabama shareholders in certain important respects, some of which constitute
additional anti-takeover provisions provided for in UPC's governing documents.
See "Effect of the Merger on Rights of Shareholders."
Option Agreement. BancAlabama, as issuer, and UPC, as grantee, entered
into a stock option agreement (the "Option Agreement") pursuant to which
BancAlabama granted UPC an option to purchase, under certain circumstances and
subject to certain possible adjustments and limitations, up to 139,921 shares of
BancAlabama Common Stock at a price of $10.29 per share. Notwithstanding the
foregoing, under the terms of the Option Agreement, UPC will be precluded from
purchasing in excess of that number of shares of BancAlabama Common stock which
has a "spread value" (defined generally as the difference between the value of
BancAlabama Common Stock and the per share exercise price of the option
multiplied by the number of shares to be purchased) that exceeds $550,000. The
Option Agreement is exercisable upon the occurrence of certain events that
create the potential for another party to acquire control of BancAlabama. To the
knowledge of BancAlabama, no such event which would permit exercise of the
Option Agreement has occurred as of the date of this Proxy Statement. The Option
Agreement was granted by BancAlabama as a condition of and in consideration for
UPC's entering into the Agreement and is intended to increase the likelihood
that the Merger will be effected by making it more difficult and more expensive
for a third party to acquire control of BancAlabama. See "Description of
Transaction -- Option Agreement."
Conduct of Business Pending the Merger. Each Party has agreed in the
Agreement to, among other things, operate its business only in the ordinary
course and to take no action that would adversely affect its ability to perform
its covenants and agreements under the Agreement. In addition, BancAlabama has
agreed not to take certain actions relating to the operation of BancAlabama
pending consummation of the Merger without the prior written consent of UPC,
except as otherwise permitted by the Agreement, including, among other things:
(i) becoming responsible for any obligation for borrowed money in excess of an
aggregate of $100,000, except in the ordinary course of business in accordance
with past practices; (ii) paying any dividends, exchanging any shares of its
capital stock, or, subject to certain exceptions, issuing any additional shares
of its capital stock or giving any person the right to acquire any such shares;
(iii) acquiring control over any other entity; (iv) subject to certain
exceptions, granting any increase in compensation or benefits, or paying any
bonus, to any of its directors, officers, or employees; or (v) modifying or
adopting any employee benefit plans, including any employment contract. See
"Description of Transaction -- Conduct of Business Pending the Merger."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Shares of UPC Common Stock are traded on the NYSE under the symbol "UPC."
There is no established public market in which shares of BancAlabama Common
Stock are regularly traded. Rather, buyers and sellers of BancAlabama Common
Stock are matched by a national brokerage firm, or by BancAlabama, as an
accommodation. The following table sets forth the reported closing price per
share for UPC Common Stock, the last bid quotation for BancAlabama Common Stock
and the equivalent per share prices (as explained below) for BancAlabama Common
Stock on April 26, 1996, the last full business day preceding the public
announcement of the execution of the Agreement, and the latest practicable
date for each of the parties prior to the mailing of this Proxy Statement.
<TABLE>
<CAPTION>
BANCALABAMA
EQUIVALENT
BANCALABAMA UPC PER
MARKET PRICE PER SHARE AT: COMMON STOCK COMMON STOCK SHARE PRICE
- ------------------------------------------------------ ------------ ------------ ------------
<S> <C> <C> <C>
April 26, 1996........................................ $14.00 $ 30.125 $17.79
August 1, 1996 as to BancAlabama and.................. 13.00 30.25 17.88
August 5, 1996 as to UPC........................... ------------ ------------ ------------
</TABLE>
6
<PAGE> 13
The "BancAlabama Equivalent Per Share Price" of a share of BancAlabama
Common Stock at each specified date represents the closing sale price of a
share of UPC Common Stock on such date multiplied by the Exchange Ratio of
0.5907. See "Comparative Market Prices and Dividends."
There can be no assurance as to what the market price of the UPC Common
Stock will be if and when the Merger is consummated.
EQUIVALENT AND PRO FORMA PER SHARE DATA
The following table sets forth certain comparative per share data
relating to earnings before extraordinary items and accounting changes, cash
dividends, and book value on (i) an historical basis for UPC and BancAlabama;
(ii) a pro forma combined basis per share of UPC Common Stock, giving effect to
the Merger all Recently Completed Acquisitions (as defined under "Business of
UPC -- Recent Developments"), and the Other Pending Acquisitions, except the
acquisition of Financial Bancshares, Inc. ("FBI Acquisition") in St. Louis,
Missouri (see "BUSINESS OF UPC - Recent Developments - Pending Acquisitions,")
and (iii) an equivalent pro forma basis per share of BancAlabama Common Stock,
giving effect to the Merger, all Recently Completed Acquisitions and the Other
Pending Acquisitions, except the FBI Acquisition. The UPC pro forma combined
information and the BancAlabama equivalent pro forma information give effect to
the Merger, all Recently Completed Acquisitions and the Other Pending
Acquisitions, except for the FBI Acquisition, and reflect the Exchange Ratio of
0.5907 of a share of UPC Common Stock for each share of BancAlabama Common
Stock. The Merger is accounted, for as a pooling of interests and all Recently
Completed Acqusitions and the Other Pending Acquisitions are accounted for as
described under "Business of UPC -- Recent Developments." See "Description of
Transaction -- Accounting Treatment." The pro forma data are presented for
information purposes only and are not necessarily indicative of the results of
operations or combined financial position that would have resulted had the
Merger, the Recently Completed Acquisitions or the Other Pending Acquisitions
been consummated at the dates or during the periods indicated, nor are they
necessarily indicative of future results of operations or combined financial
position.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical consolidated financial statements
of UPC and BancAlabama, including the respective notes thereto. See "Documents
Incorporated by Reference," "-- Selected Financial Data," and "Business of
UPC -- Recent Developments."
7
<PAGE> 14
UNION PLANTERS CORPORATION
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Three Months
Ended Year Ended December 31, (1)
March 31, ---------------------------------
1996 1995 1994 1993
------------ ---------------------------------
<S> <C> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
UPC
Primary $0.82 $2.82 $1.28 $2.24
Fully diluted 0.78 2.70 1.28 2.18
BANCALABAMA 0.30 0.87 0.66 0.45
UPC pro forma (all Recently Completed and
Other Pending Acquisitions and BancAlabama) (2)
Primary 0.79 2.65 1.52 2.17
Fully diluted 0.76 2.57 1.52 2.11
BancAlabama equivalent pro forma (all Recently Completed
and Other Pending Acquisitions and BancAlabama) (1)
Primary 0.47 1.57 0.90 1.28
Fully diluted 0.45 1.52 0.90 1.25
CASH DIVIDENDS PER SHARE
UPC 0.27 0.98 0.88 0.72
BancAlabama - - - -
BancAlabama equivalent pro forma (1) 0.16 0.58 0.52 0.43
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
UPC $19.76 $19.24
BancAlabama 10.30 10.27
UPC pro forma (all Recently Completed and Other
Pending Acquisitions and BancAlabama) 19.32 18.63
BancAlabama pro forma equivalent (all Recently Completed
and Other Pending Acquisitions and BancAlabama) (1) 11.41 11.00
</TABLE>
__________________________
(1) The equivalent pro forma per share data for BancAlabama are computed by
multiplying UPC's pro forma information by .5907, the Exchange Ratio.
(2) See also, "BUSINESS OF UPC--Recent Developments."
8
<PAGE> 15
SELECTED FINANCIAL DATA
The following tables present for UPC, selected consolidated financial data
for the five-year period ended December 31, 1995 and for the three-month period
ended March 31, 1996, and for BancAlabama, selected consolidated financial data
for the five-year period ended December 31, 1995 and for the three-month periods
ended March 31, 1996 and 1995. 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 Proxy Statement by reference to
UPC's 1995 Annual Report on Form 10-K for the year ended December 31, 1995 and
UPC's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, and
should be read in conjunction therewith and with the notes thereto. See
"Documents Incorporated By Reference." The information for BancAlabama has been
derived from the consolidated financial statements of BancAlabama incorporated
in this Proxy Statement by reference to BancAlabama's Annual Report on Form 10-K
for the year ended December 31, 1995 and BancAlabama's Quarterly Report on Form
10-Q for the quarter ended March 31, 1996, and should be read in conjunction
therewith and with the notes thereto. See "Documents Incorporated by Reference."
Historical results are not necessarily indicative of results to be expected for
any future period. In the opinion of both the management of UPC and BancAlabama,
all adjustments, consisting only of normal recurring adjustments necessary to
arrive at a fair statement of interim results of operations of UPC and
BancAlabama, have been included.
9
<PAGE> 16
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31, (1) Years Ended December 31,
---------------------- --------------------------------------
1996 1995 1995 1994
-------- -------- --------- --------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $115,473 $108,839 $447,431 $423,114
Provision for losses on loans 7,981 2,222 22,231 4,894
Investment securities gains (losses) 60 (21) 476 (20,298)
Other noninterest income 40,137 36,100 157,176 121,103
Noninterest expense 89,152 90,665 382,164 427,697
-------- -------- -------- --------
Earnings before income taxes, extraordinary item,
and accounting changes 58,537 52,031 200,688 91,328
Applicable income taxes 19,393 16,374 65,286 25,467
-------- -------- -------- --------
Earnings before extraordinary item and accounting changes 39,144 35,657 135,402 65,861
Extraordinary item - defeasance of debt, net of taxes - - - -
Accounting changes, net of taxes - - - -
-------- -------- -------- --------
Net earnings $ 39,144 $ 35,657 $135,402 $ 65,861
======== ======== ======== ========
PER COMMON SHARE DATA
Primary
Earnings before extraordinary item and accounting changes $ 0.82 $ 0.75 $ 2.82 $ 1.28
Extraordinary item - defeasance of debt, net of taxes - - - -
Accounting changes, net of taxes - - - -
Net earnings 0.82 0.75 2.82 1.28
Fully diluted
Earnings before extraordinary item and accounting changes 0.78 0.72 2.70 1.28
Extraordinary item - defeasance of debt, net of taxes - - - -
Accounting changes, net of taxes - - - -
Net earnings 0.78 0.72 2.70 1.28
Cash dividends 0.27 0.23 0.98 0.88
Book value 19.76 17.13 19.24 16.08
<CAPTION>
Years Ended December 31,
-----------------------------------
1993 1992 1991
-------- -------- ---------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $375,033 $305,211 $256,537
Provision for losses on loans 17,950 29,071 35,960
Investment securities gains (losses) 4,506 14,019 2,633
Other noninterest income 123,056 103,506 95,415
Noninterest expense 346,450 297,665 255,906
-------- -------- --------
Earnings before income taxes, extraordinary item,
and accounting changes 138,195 96,000 62,719
Applicable income taxes 41,168 27,048 14,443
-------- -------- --------
Earnings before extraordinary item and accounting changes 97,027 68,952 48,276
Extraordinary item - defeasance of debt, net of taxes (3,206) - -
Accounting changes, net of taxes 5,782 - -
-------- -------- --------
Net earnings $ 99,603 $ 68,952 $ 48,276
======== ======== ========
PER COMMON SHARE DATA
Primary
Earnings before extraordinary item and accounting changes $ 2.24 $ 1.75 $ 1.35
Extraordinary item - defeasance of debt, net of taxes (0.08) - -
Accounting changes, net of taxes 0.15 - -
Net earnings 2.31 1.75 1.35
Fully diluted
Earnings before extraordinary item and accounting changes 2.18 1.73 1.35
Extraordinary item - defeasance of debt, net of taxes (0.07) - -
Accounting changes, net of taxes 0.13 - -
Net earnings 2.24 1.73 1.35
Cash dividends 0.72 0.60 0.48
Book value 16.25 14.08 12.88
</TABLE>
(continued on following page)
10
<PAGE> 17
UPC SELECTED CONSOLIDATED FINANCIAL DATA
(continued)
<TABLE>
<CAPTION>
Three Months Ended
March 31, (1) Years Ended December 31,
-------------------------- ---------------------------------
1996 1995 1995 1994
----------- ------------ ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Total assets $11,368,682 $10,784,332 $11,277,116 $10,985,020
Loans, net of unearned income 7,091,737 6,797,363 7,069,853 6,721,597
Allowance for losses on loans 136,277 135,410 133,487 133,966
Investment securities 2,951,092 2,836,777 2,774,890 3,084,110
Deposits 9,522,876 9,133,076 9,447,736 9,253,165
Short-term borrowings 236,220 222,415 241,023 455,010
Long-term debt (3)
Parent company 214,761 114,803 214,758 114,790
Subsidiary banks 257,705 321,074 270,500 241,218
Total shareholders' equity 992,865 860,488 966,331 805,147
Average assets 11,275,752 10,853,933 10,954,895 10,948,979
Average shareholders' equity 956,499 850,666 899,615 850,934
Average shares outstanding (in thousands)
Primary 45,752 44,515 45,008 43,741
Fully diluted 50,463 48,995 49,618 44,083
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.40 % 1.33 % 1.24 % 0.60 %
Return on average common equity 17.35 18.16 15.92 7.61
Net interest income (taxable-equivalent) to
average earning assets (2) 4.61 4.57 4.59 4.36
Loans/deposits 74.47 74.43 74.83 72.64
Common and preferred dividend payout ratio 36.07 30.44 37.55 62.50
Equity/assets (period end) 8.73 7.98 8.57 7.33
Average shareholders' equity/average total assets 8.48 7.84 8.21 7.77
Leverage ratio (4) 8.22 7.61 8.09 7.15
Tier 1 capital to risk-weighted assets (4) 12.89 12.46 12.64 11.88
Total capital to risk-weighted assets (4) 16.58 14.84 16.35 14.27
ASSET QUALITY RATIOS
Allowance/period end loans 1.92 1.99 1.89 1.99
Nonperforming loans/total loans (5) 0.50 0.38 0.48 0.32
Allowance/nonperforming loans (5) 387 521 391 614
Nonperforming assets/loans and foreclosed properties (6) 0.59 0.48 0.59 0.43
Provision/average loans 0.45 0.13 0.32 0.08
Net charge-offs/average loans 0.33 0.08 0.36 0.09
<CAPTION>
Years Ended December 31,
-------------------------------------
1993 1992 1991
----------- ---------- ----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Total assets $9,919,944 $8,331,073 $6,566,973
Loans, net of unearned income 5,293,850 4,193,149 3,613,945
Allowance for losses on loans 125,499 100,282 74,739
Investment securities 3,431,081 2,935,665 1,864,871
Deposits 8,445,760 7,171,191 5,698,062
Short-term borrowings 300,414 343,452 244,513
Long-term debt (3)
Parent company 114,729 74,292 38,163
Subsidiary banks 212,149 38,463 18,790
Total shareholders' equity 751,844 595,106 475,128
Average assets 9,706,356 7,586,827 6,555,009
Average shareholders' equity 707,788 551,650 442,756
Average shares outstanding (in thousands)
Primary 38,914 35,463 34,569
Fully diluted 43,144 38,307 34,922
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.03 % 0.91 % 0.74 %
Return on average common equity 15.10 13.11 10.95
Net interest income (taxable-equivalent) to
average earning assets (2) 4.40 4.57 4.48
Loans/deposits 62.68 58.47 63.42
Common and preferred dividend payout ratio 32.64 36.12 34.51
Equity/assets (period end) 7.58 7.14 7.24
Average shareholders' equity/average total assets 7.29 7.27 6.75
Leverage ratio (4) 7.21 7.07 7.06
Tier 1 capital to risk-weighted assets (4) 13.10 12.85 11.66
Total capital to risk-weighted assets (4) 15.74 14.83 13.80
ASSET QUALITY RATIOS
Allowance/period end loans 2.37 2.39 2.07
Nonperforming loans/total loans (5) 0.58 1.22 1.01
Allowance/nonperforming loans (5) 411 196 205
Nonperforming assets/loans and foreclosed properties (6) 0.78 1.58 1.60
Provision/average loans 0.35 0.72 0.95
Net charge-offs/average loans 0.28 0.55 0.92
___________________________________________
</TABLE>
(1) Interim period ratios have been annualized where applicable.
(2) Average balances and calculations do not include the impact of the net
unrealized gain or loss on available for sale securities.
(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 Federal Home Loan Bank ("FHLB") advances.
(4) 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).
(5) Nonperforming loans include loans on nonaccrual status and restructured
loans.
(6) Nonperforming assets include nonperforming loans and foreclosed
properties.
11
<PAGE> 18
BANCALABAMA SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31, (1) Years Ended December 31,
------------------ ----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 1,132 $ 876 $ 3,945 $ 3,161 $ 2,755 $ 2,654 $ 1,832
Provision for loan losses 59 90 377 165 547 1,094 724
Investment securities gains (losses) 2 (11) 5 7 267 171 58
Other noninterest income 234 263 952 910 854 661 584
Noninterest expense 978 924 3,603 3,537 3,252 3,102 2,140
------- ------- ------- ------- ------- ------- -------
Earnings (loss) before income taxes 331 114 922 376 77 (710) (390)
Provision (benefit) for income taxes 118 52 383 (28) (175) 7 (43)
------- ------- ------- ------- ------- ------- -------
Net income (loss) $ 213 $ 62 $ 539 $ 404 $ 252 ($717) ($ 347)
======= ======= ======= ======= ======= ======= =======
PER COMMON SHARE DATA
Net income (loss) (2) $ 0.30 $ 0.10 $ 0.87 $ 0.66 $ 0.45 ($1.32) ($0.66)
Book value at end of period (3) 10.30 8.57 10.27 8.13 8.58 7.93 9.22
BALANCE SHEET DATA (AT PERIOD END)
Total assets $98,564 $71,648 $97,947 $65,311 $59,050 $64,236 $68,397
Loans, net of unearned income 63,329 47,475 60,496 47,280 38,465 37,900 38,569
Allowance for losses on loans 618 578 594 505 596 563 573
Investment securities 22,525 11,206 21,233 8,410 12,722 17,562 13,600
Deposits 89,766 65,135 89,202 56,146 51,402 58,594 62,148
Short-term borrowings 834 - 857 - - - -
Long-term debt - 914 - 932 1,014 1,092 1,162
Total shareholders' equity 7,241 5,252 7,119 4,985 5,259 4,307 4,844
Average assets (4) 96,749 68,477 80,025 61,290 62,120 67,550 55,451
Average shareholders' equity (4) 7,196 5,169 5,788 4,982 4,441 4,964 5,006
Average shares outstanding
(in thousands) 702 613 617 613 560 542 525
PROFITABILITY AND CAPITAL RATIOS
Return on average assets (4) 0.88% 0.37% 0.67% 0.66% 0.41% (1.06)% (0.63)%
Return on average common equity (4) 11.87 4.86 9.31 8.11 5.67 (14.44) (6.93)
Net interest income to average earning
assets (4) 5.28 5.91 5.56 5.92 5.15 4.56 3.88
Loan to deposits 70.55 72.89 67.82 84.21 74.83 64.68 62.06
Shareholders' equity to total assets
(period end) 7.35 7.33 7.27 7.63 8.91 6.70 7.08
Average shareholders' equity to
average total assets (4) 7.44 7.55 7.23 8.13 7.15 7.35 9.03
Leverage ratio (5) 7.22 7.96 7.29 8.32 8.31 6.11 7.29
Tier 1 capital to risk-weighted assets (5) 9.45 10.06 9.65 10.06 11.86 9.59 10.44
Total capital to risk-weighted assets (5) 10.30 11.15 10.51 11.02 13.11 10.79 11.69
ASSET QUALITY RATIOS
Allowance to loans (period end) 0.98 1.22 0.98 1.07 1.55 1.49 1.49
Nonperforming loans to total loans (6) 0.37 0.76 0.95 0.98 1.86 2.11 4.40
Allowance to nonperforming loans (6) 264 160 104 109 83 70 34
Nonperforming assets to loans and
foreclosed properties (7) 1.22 1.17 1.26 1.15 2.08 2.69 5.30
Provision for loan losses to average 0.39 0.77 0.71 0.39 1.45 2.69 2.09
loans
Net charge-offs to average loans 0.23 0.23 0.54 0.60 1.37 2.72 1.37
</TABLE>
- ------------------------------------
(1) Interim period ratios are annualized where applicable.
(2) Per common share net income (loss) computed on primary basis as exercise
price of options exceeds book value of common stock and the exercise of
options would have no dilutive effect upon calculation.
(3) Based upon the number of shares outstanding at the end of the period.
Includes unrealized gain (loss) on securities available-for-sale totalling
($164), $37, and ($677) at March 31, 1996, December 31, 1995, and 1994,
respectively.
(4) For 1993 through 1996, average balances are computed from daily balances,
except for the holding company, where average balances are based on
month-end balances. For 1991 and 1992, averages are based on month-end
balances.
(5) The risk-based capital ratios are based upon capital guidelines prescribed
by bank regulatory authorities. Under those guidelines, the required
minimum Tier 1 and Total capital to risk-weighted asset ratios are 4% and
8%, respectively. The required minimum leverage ratio of Tier 1 capital
to total adjusted assets is 4%.
(6) Nonperforming loans include loans on nonaccrual status and restructured
loans.
(7) Nonperforming assets include nonperforming loans and foreclosed properties.
12
<PAGE> 19
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following tables contain unaudited pro forma condensed consolidated
financial statements including a balance sheet at March 31, 1996 and statements
of earnings for the three months ended March 31, 1996 and for the years ended
December 31, 1995, 1994, and 1993. These statements present on a pro forma
basis historical results for (i) UPC for all periods, (ii) UPC and Leader
Financial Corporation, ("Leader") Memphis, Tennessee, a savings and loan
holding company, and its subsidiary, Leader Federal Bank for Savings, with
total assets of $3,178 million, for all periods, and (iii) UPC, BancAlabama,
and the Other Pending Acquisitions, except for the FBI Acquisition, as of March
31, 1996 and for the three months ended March 31, 1996 and for the twelve
months ended December 31, 1995 (see "Business of UPC--Recent
Developments--Pending Acquisitions").
The unaudited pro forma condensed consolidated financial statements also
reflect UPC's Recently Completed Acquisitions (as defined in "Business of UPC
- -- Recent Developments"): (i) First Bancshares of Eastern Arkansas, Inc. and
its subsidiary, First National Bank of West Memphis, Arkansas, with total
assets of $60 million and (ii) First Bancshares of N.E. Arkansas, Inc. and its
subsidiary, First National Bank of Osceola, Arkansas, with total assets of $62
million. Both acquisitions were accounted for using the purchase method of
accounting. Additionally, these statements reflect the acquisition of Leader by
UPC ("Leader Merger"), the BancAlabama Merger and certain of UPC's Other
Pending Acquisitions (as defined in "Business of UPC -- Recent Developments"):
(i) Valley Federal Savings Bank ("Valley Federal") in Sheffield, Alabama, with
total assets of $119 million, which is expected to be accounted for using the
pooling-of-interests method of accounting; (ii) Eastern National Bank ("ENB"),
a $286 million bank located in Miami, Florida, which is expected to be
accounted for using the purchase method of accounting; and (iii) Franklin
Financial Group, Inc. ("FFGI") in Morristown, Tennessee, a savings and loan
holding company and its subsidiary, Franklin Federal Savings Bank, with total
assets of $137 million, which is expected to be accounted for using the
pooling-of-interests method of accounting. As noted above, the FBI Acquisition
is not included.
The operating results for Valley Federal and FFGI included in the unaudited
pro forma statement of earnings have been converted from their respective fiscal
year end (September 30) to UPC's fiscal year end (December 31) by adding their
respective first quarter operating results for the current year and subtracting
first quarter operating results for the previous year.
The Recently Completed Acquisitions and the Other Pending Acquisitions,
except for the Leader Merger, and the BancAlabama Merger are not considered
significant to UPC from a financial statement presentation standpoint.
Therefore, the financial information for the transactions expected to be
accounted for using the pooling-of-interests method of accounting have been
restated only for the current period.
The unaudited pro forma condensed consolidated financial statements include
adjustments necessary to record the entities that have been or are expected to
be acquired using the purchase method of accounting. Eliminations have been made
for significant intercompany transactions.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the consolidated historical financial statements of
UPC and Leader which are incorporated by reference herein, and in conjunction
with the information presented in UPC's Current Reports on Form 8-K dated March
8, 1996, April 1, 1996, May 21, 1996 and May 22, 1996, which are incorporated by
reference herein. Pro forma results are not necessarily indicative of future
operating results. Certain nonrecurring charges as discussed in "Business of
UPC -- Recent Developments -- Earnings Considerations Related to Pending
Acquisitions" have not been included in the unaudited pro forma condensed
consolidated financial statements. See "Documents Incorporated by Reference."
13
<PAGE> 20
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31,1996
(Dollars in thousands)
<TABLE>
<CAPTION>
UPC, BANCALABAMA,
RECENTLY
COMPLETED
ACQUISITIONS
UPC AND OTHER
AND PENDING
UPC LEADER ACQUISITIONS
----------- ----------- ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 475,211 $ 504,180 $ 529,275
Interest-bearing deposits at financial
institutions 3,820 4,279 4,968
Federal funds sold and securities
purchased under agreements to resell 182,199 275,199 295,593
Trading account assets 134,926 134,926 134,926
Loans held for resale 91,007 121,146 121,146
Available for sale securities, at fair value 2,951,092 3,707,083 3,830,916
Loans 7,123,637 9,200,349 9,632,384
Less: Unearned income (31,900) (41,041) (42,617)
Allowance for losses on loans (136,277) (159,404) (163,573)
----------- ----------- -----------
Net loans 6,955,460 8,999,904 9,426,194
Premises and equipment 229,725 248,999 268,903
Accrued interest receivable 100,811 175,219 179,396
Goodwill and other intangibles 62,141 62,141 70,877
Other assets 182,290 314,425 320,749
----------- ----------- -----------
Total assets $11,368,682 $14,547,501 $15,182,943
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 1,364,399 $ 1,565,921 $ 1,629,387
Certificates of deposit of $100,000
and over 784,327 944,410 1,012,358
Other interest-bearing 7,374,150 8,595,236 9,020,196
----------- ----------- -----------
Total deposits 9,522,876 11,105,567 11,661,941
Short-term borrowings 236,220 825,340 832,433
FHLB advances 256,178 836,756 847,610
Long-term debt 216,288 228,470 242,304
Accrued interest, expenses, and taxes 104,846 142,704 145,987
Other liabilities 39,409 159,621 162,835
----------- ----------- -----------
Total liabilities 10,375,817 13,298,458 13,893,110
----------- ----------- -----------
Shareholders' equity
Preferred stock
Convertible 91,810 91,810 98,262
Nonconvertible 0 0 0
Common stock 228,012 303,682 308,445
Additional paid-in capital 117,044 129,217 149,030
Net unrealized gain on available
for sale securities 19,145 27,500 27,164
Retained earnings 536,854 696,834 706,932
Treasury stock 0 0 0
----------- ----------- -----------
Total shareholders' equity 992,865 1,249,043 1,289,833
----------- ----------- -----------
Total liabilities and
shareholders' equity $11,368,682 $14,547,501 $15,182,943
=========== =========== ===========
</TABLE>
14
<PAGE> 21
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UPC, BANCALABAMA,
RECENTLY
COMPLETED
ACQUISITIONS
UPC AND OTHER
AND PENDING
UPC LEADER ACQUISITIONS
-------- -------- -----------------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $164,033 $ 210,344 $220,679
Interest on investment securities
Taxable 35,735 49,546 51,575
Tax-exempt 7,550 7,666 7,666
Interest on deposits at financial institutions 57 62 91
Interest on federal funds sold and securities
purchased under agreements to resell 4,818 6,169 6,328
Interest on trading account assets 2,387 2,387 2,387
Interest on loans held for resale 1,427 1,793 1,793
-------- --------- --------
Total interest income 216,007 277,967 290,519
-------- --------- --------
Interest expense
Interest on deposits 89,994 108,919 114,310
Interest on short-term borrowings 2,934 11,303 11,353
Interest on FHLB advances and long-term debt 7,606 16,065 16,527
-------- --------- --------
Total interest expense 100,534 136,287 142,190
-------- --------- --------
Net interest income 115,473 141,680 148,329
Provision for losses on loans 7,981 9,492 9,962
-------- --------- --------
Net interest income after provision
for losses on loans 107,492 132,188 138,367
Noninterest income
Service charges on deposit accounts 16,641 17,770 18,410
Bank card income 5,159 5,389 5,389
Mortgage servicing income 2,443 8,043 8,073
Trust service income 2,290 2,290 2,290
Profits and commissions from trading activities 2,207 2,207 2,207
Investment securities gains 60 60 57
Other income 11,397 13,186 13,930
-------- --------- --------
Total noninterest income 40,197 48,945 50,356
-------- --------- --------
Noninterest expense
Salaries and employee benefits 43,428 50,577 53,286
Net occupancy expense 6,816 7,645 8,465
Equipment expense 7,260 8,375 8,375
Other expense 31,648 38,160 40,144
-------- --------- --------
Total noninterest expense 89,152 104,757 110,270
-------- --------- --------
Earnings before income taxes 58,537 76,376 78,453
Applicable income taxes 19,393 25,772 26,669
-------- --------- --------
Net earnings $ 39,144 $ 50,604 $ 51,784
======== ========= ========
Earnings per common share
Primary $ 0.82 $ 0.79 $ 0.79
Fully diluted 0.78 0.76 0.76
Weighted average shares outstanding
(in thousands)
Primary 45,752 61,494 62,994
Fully diluted 50,463 66,258 68,081
</TABLE>
15
<PAGE> 22
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UPC, BANCALABMA,
RECENTLY
COMPLETED
ACQUISITIONS
UPC AND OTHER
AND PENDING
UPC LEADER ACQUISITIONS
-------- --------- ----------------
<S> <C> <C> <C>
Interest Income
Interest and fees on loans $636,769 $ 804,420 $ 853,145
Interest on investment securities
Taxable 137,453 177,272 188,736
Tax-exempt 31,816 32,313 32,576
Interest on deposits at financial institutions 1,910 1,936 2,067
Interest on federal funds sold and securities
purchased under agreements to resell 12,095 17,041 17,503
Interest on trading account assets 12,774 12,774 12,774
Interest on loans held for resale 3,865 5,318 5,318
-------- ---------- ----------
Total interest income 836,682 1,051,074 1,112,119
-------- ---------- ----------
Interest expense
Interest on deposits 347,859 422,360 449,182
Interest on short-term borrowings 12,825 33,856 34,076
Interest on FHLB advances and long-term debt 28,567 58,917 61,949
-------- ---------- ----------
Total interest expense 389,251 515,133 545,207
-------- ---------- ----------
Net interest income 447,431 535,941 566,912
Provision for losses on loans 22,231 27,381 30,898
-------- ---------- ----------
Net interest income after provision
for losses on loans 425,200 508,560 536,014
Noninterest income
Service charges on deposit accounts 71,611 75,694 79,583
Bank card income 20,103 20,740 20,740
Mortgage servicing income 9,835 36,645 36,645
Trust service income 8,010 8,010 8,010
Profits and commissions from trading activities 10,441 10,441 10,441
Investment securities gains 476 409 373
Other income 37,176 42,110 45,485
-------- ---------- ----------
Total noninterest income 157,652 194,049 201,277
-------- ---------- ----------
Noninterest expense
Salaries and employee benefits 171,325 197,855 212,104
Net occupancy expense 27,192 30,447 34,044
Equipment expense 30,156 34,405 34,405
Other expense 153,491 180,498 193,512
-------- ---------- ----------
Total noninterest expense 382,164 443,205 474,065
-------- ---------- ----------
Earnings before income taxes 200,688 259,404 263,226
Applicable income taxes 65,286 86,649 89,467
-------- ---------- ----------
Net earnings $135,402 $ 172,755 $ 173,759
======== ========== ==========
Earnings per common share
Primary $ 2.82 $ 2.72 $ 2.65
Fully diluted 2.70 2.64 2.57
Weighted average shares outstanding
(in thousands)
Primary 45,008 60,385 61,879
Fully diluted 49,618 64,995 67,053
</TABLE>
16
<PAGE> 23
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
UPC
AND
UPC LEADER
-------- --------
<S> <C> <C>
Interest Income
Interest and fees on loans $517,032 $644,690
Interest on investment securities
Taxable 162,012 193,276
Tax-exempt 32,999 33,415
Interest on deposits at financial institutions 734 748
Interest on federal funds sold and securities
purchased under agreements to resell 4,472 6,862
Interest on trading account assets 9,143 9,143
Interest on loans held for resale 1,573 2,396
-------- --------
Total interest income 727,965 890,530
-------- --------
Interest expense
Interest on deposits 262,572 317,721
Interest on short-term borrowings 21,300 28,277
Interest on FHLB advances and long-term debt 20,979 38,927
-------- --------
Total interest expense 304,851 384,925
-------- --------
Net interest income 423,114 505,605
Provision for losses on loans 4,894 9,661
-------- --------
Net interest income after provision
for losses on loans 418,220 495,944
Noninterest income
Service charges on deposit accounts 55,551 59,564
Bank card income 10,953 11,386
Mortgage servicing income 9,621 31,060
Trust service income 7,990 7,990
Profits and commissions from trading activities 6,639 6,639
Investment securities losses (20,298) (22,515)
Other income 30,349 42,365
-------- --------
Total noninterest income 100,805 136,489
-------- --------
Noninterest expense
Salaries and employee benefits 175,218 201,532
Net occupancy expense 28,041 31,638
Equipment expense 28,698 32,618
Other expense 195,740 221,048
-------- --------
Total noninterest expense 427,697 486,836
-------- --------
Earnings before income taxes 91,328 145,597
Applicable income taxes 25,467 45,174
-------- --------
Net earnings $ 65,861 $100,423
======== ========
Earnings per common share
Primary $ 1.28 $ 1.52
Fully diluted 1.28 1.52
Weighted average shares outstanding
(in thousands)
Primary 43,741 59,587
Fully diluted 44,083 59,929
</TABLE>
17
<PAGE> 24
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>
UPC
AND
UPC LEADER
-------- --------
<S> <C> <C>
Interest Income
Interest and fees on loans $425,967 $531,417
Interest on investment securities
Taxable 157,403 186,966
Tax-exempt 30,507 30,596
Interest on deposits at financial institutions 1,862 1,884
Interest on federal funds sold and securities
purchased under agreements to resell 6,175 8,569
Interest on trading account assets 6,194 6,194
Interest on loans held for resale 7,438 8,163
-------- --------
Total interest income 635,546 773,789
-------- --------
Interest expense
Interest on deposits 238,019 298,312
Interest on short-term borrowings 8,203 8,203
Interest on FHLB advances and long-term debt 14,291 27,984
-------- --------
Total interest expense 260,513 334,499
-------- --------
Net interest income 375,033 439,290
Provision for losses on loans 17,950 22,660
-------- --------
Net interest income after provision
for losses on loans 357,083 416,630
Noninterest income
Service charges on deposit accounts 49,490 53,723
Bank card income 10,393 10,884
Mortgage servicing income 9,595 28,266
Trust service income 7,643 7,643
Profits and commissions from trading activities 13,787 13,787
Investment securities gains 4,506 3,508
Other income 32,148 39,951
-------- --------
Total noninterest income 127,562 157,762
-------- --------
Noninterest expense
Salaries and employee benefits 163,711 186,703
Net occupancy expense 25,393 28,476
Equipment expense 25,989 30,345
Other expense 131,357 163,364
-------- --------
Total noninterest expense 346,450 408,888
-------- --------
Earnings before income taxes, extraordinary
items, and accounting changes 138,195 165,504
Applicable income taxes 41,168 51,864
-------- --------
Earnings before extraordinary items
and accounting changes $ 97,027 $113,640
======== ========
Earnings per common share before extraordinary items
and accounting changes (1)
Primary $ 2.24 $ 2.17
Fully diluted 2.18 2.11
Weighted average shares outstanding
(in thousands)
Primary 38,914 43,192
Fully diluted 43,144 47,422
- ---------------------
</TABLE>
(1) - Leader was organized on March 18, 1993 in connection with the conversion
of its principal subsidiary, Leader Federal Bank for Savings and
subsidiaries, from a federal mutual savings bank to a federally-chartered
capital stock savings bank. Accordingly, the calculation of pro forma
earnings per share on a pooled basis is based on Leader's fourth quarter
net income since the stock conversion occured on September 30, 1993.
18
<PAGE> 25
SPECIAL MEETING OF BANCALABAMA SHAREHOLDERS
DATE, PLACE, TIME, AND PURPOSE
This Proxy Statement is being furnished to the holders of BancAlabama
Common Stock in connection with the solicitation by the BancAlabama Board of
Directors of proxies for use at the Special Meeting at which BancAlabama
shareholders will be asked to vote upon a proposal to approve the Agreement.
The Special Meeting will be held at 312 Clinton Avenue, Huntsville, Alabama, at
2:00 P.M., local time, on September 12, 1996. See "Description of Transaction."
RECORD DATES, VOTING RIGHTS, REQUIRED VOTES, AND REVOCABILITY OF PROXIES
The close of business on July 31, 1996, has been fixed as the BancAlabama
Record Date for determining holders of outstanding shares of BancAlabama Common
Stock entitled to notice of and to vote at the Special Meeting. Only holders of
BancAlabama Common Stock of record on the books of BancAlabama at the close of
business on the BancAlabama Record Date are entitled to notice of and to vote at
the Special Meeting. As of the BancAlabama Record Date, there were 703,122
shares of BancAlabama Common Stock issued and outstanding and held by 324
holders of record.
Holders of BancAlabama Common Stock are entitled to one vote on each matter
considered and voted upon at the Special Meeting for each share of BancAlabama
Common Stock held of record as of the BancAlabama Record Date. To hold a vote on
any proposal, a quorum must be assembled, which requires that a majority of the
shares of BancAlabama Common Stock issued and outstanding and entitled to vote
be present in person or represented by proxy. In determining whether a quorum
exists at the Special Meeting for purposes of all matters to be voted on, all
votes "for" or "against," as well as all abstentions, will be counted. The vote
required for the approval of the Agreement is a majority of the shares of
BancAlabama Common Stock entitled to be cast at the Special Meeting by holders
of the issued and outstanding shares of BancAlabama Common Stock and not just a
majority of the shares present. Consequently, with respect to the proposal to
approve the Agreement, abstentions and broker non-votes will be counted as part
of the base number of votes to be used in determining if the proposal has
received the requisite number of base votes for approval. Thus, an abstention
or a broker non-vote will have the same effect as a vote "against" such
proposal.
Shares of BancAlabama Common Stock represented by properly executed
proxies, if such proxies are received in time for exercise and not revoked, will
be voted in accordance with the instructions indicated on the proxies. IF NO
INSTRUCTIONS ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR APPROVAL OF THE
AGREEMENT AND, IN THE DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER MATTER
WHICH MAY COME PROPERLY BEFORE THE SPECIAL MEETING. IF NECESSARY, THE PROXY
HOLDER MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING IN ORDER
TO PERMIT FURTHER SOLICITATION OF PROXIES IN THE EVENT THERE ARE NOT SUFFICIENT
VOTES TO APPROVE THE FOREGOING PROPOSAL AT THE TIME OF THE SPECIAL MEETING.
HOWEVER, NO PROXY HOLDER WILL VOTE ANY PROXIES VOTED "AGAINST" APPROVAL OF THE
AGREEMENT "FOR" A PROPOSAL TO ADJOURN THE SPECIAL MEETING.
FAILURE BOTH TO RETURN THE PROXY CARD AND TO VOTE IN PERSON AT THE SPECIAL
MEETING WILL HAVE THE EFFECT OF A VOTE CAST AGAINST APPROVAL OF THE AGREEMENT.
A BancAlabama shareholder who has given a proxy may revoke it at any time
prior to its exercise at the Special Meeting by (i) giving written notice of
revocation to the Secretary of BancAlabama, (ii) properly submitting to
BancAlabama a duly executed proxy bearing a later date or (iii) attending the
Special Meeting and voting in person. All written notices of revocation and
other communications with respect to revocation of proxies should be addressed
as follows: BancAlabama, Inc., 312 Clinton Avenue, Huntsville, Alabama 35801;
Attention: Jean D. Snead, Vice President and Corporate Secretary.
The directors and executive officers of BancAlabama and their affiliates
beneficially owned, as of the BancAlabama Record Date, 228,740 shares (or
approximately 32.5% of the issued and outstanding shares) of BancAlabama Common
Stock.
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers, and employees of
BancAlabama by mail, in person, or by telephone or telegraph. Such persons will
receive no additional compensation for such services. BancAlabama may make
arrangements with brokerage firms and other custodians, nominees, and
fiduciaries, if any, for the forwarding of solicitation materials to the
beneficial owners of BancAlabama Common Stock held of record by such persons.
Any such brokers, custodians, nominees, and fiduciaries will be reimbursed for
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the reasonable out-of-pocket expenses incurred by them for such services. All
expenses associated with the solicitation of proxies, other expenses associated
with the Special Meeting, and expenses related to the printing and mailing of
this Proxy Statement, will be shared by UPC and BancAlabama as provided in the
Agreement. See "Description of Transaction -- Expenses and Fees."
RECOMMENDATION
THE BOARD OF DIRECTORS OF BANCALABAMA HAS UNANIMOUSLY APPROVED THE
AGREEMENT AND THE MERGER CONTEMPLATED THEREBY, BELIEVES THAT THE PROPOSAL TO
APPROVE THE AGREEMENT AND THE MERGER CONTEMPLATED THEREBY IS IN THE BEST
INTERESTS OF BANCALABAMA AND ITS SHAREHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT
THE BANCALABAMA SHAREHOLDERS VOTE FOR APPROVAL OF THE PROPOSAL TO APPROVE THE
AGREEMENT AND THE MERGER CONTEMPLATED THEREBY.
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DESCRIPTION OF TRANSACTION
The following information describes material aspects of the Merger. This
description does not purport to be complete and is qualified in its entirety by
reference to the Appendices hereto, including the Agreement and the Stock Option
Agreement, which is attached as Appendix A to this Proxy Statement and
incorporated herein by reference. All shareholders are urged to read the
Appendices in their entirety.
GENERAL
The Agreement provides for the acquisition of BancAlabama by UPC pursuant
to the merger of BancAlabama with and into BNF, a wholly-owned subsidiary of
UPC. At the Effective Time, each share of BancAlabama Common Stock then issued
and outstanding (excluding shares held by BancAlabama, UPC, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or as
a result of debts previously contracted and excluding shares held by
shareholders who perfect their statutory appraisal rights) will be converted
into and exchanged for 0.5907 of a share of UPC Common Stock, subject to
possible adjustment as described below (the "Exchange Ratio").
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any BancAlabama shareholder would be entitled upon consummation of the
Merger, in an amount equal to such fractional part of a share of UPC Common
Stock multiplied by the market value of one share of UPC Common Stock at the
Effective Time. The market value of one share of UPC Common Stock at the
Effective Time shall be the closing price of such common stock quoted on the
NYSE-Composite Transactions List (as reported by The Wall Street Journal or, if
not reported thereby, another authoritative source as selected by UPC) on the
last trading day preceding the Effective Time.
As of the BancAlabama Record Date, BancAlabama had 703,122 shares of
BancAlabama Common Stock issued and outstanding and 127,000 additional shares of
BancAlabama Common Stock subject to BancAlabama Options. Taking into account
the Exchange Ratio of 0.5907 of a share of UPC Common Stock for each share of
BancAlabama Common Stock, it is anticipated that upon consummation of the
Merger, UPC would issue approximately 415,334 shares of UPC Common Stock,
excluding shares subject to assumed options or grants. Accordingly, UPC would
then have issued and outstanding approximately 46,535,647 shares of UPC Common
Stock based on the number of shares of UPC Common Stock issued and outstanding
on June 30, 1996. Additional shares of UPC Common Stock are expected to be
issued in connection with the Other Pending Acquisitions. See "BUSINESS OF
UPC--Recent Developments--Pending Acquisitions."
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
Under certain circumstances, the Exchange Ratio could be adjusted pursuant
to certain provisions in the Agreement; under no circumstances would the
Exchange Ratio be less than 0.5907 of a share of UPC Common Stock for each share
of BancAlabama Common Stock. An adjustment could occur only if BancAlabama's
Board of Directors elects by majority vote to terminate the Agreement pursuant
to the provisions of the Agreement described below, and if UPC then elects to
avoid termination of the Agreement by adjusting the Exchange Ratio.
BancAlabama is not obligated to consummate the Merger with UPC if both:
(a) the average closing price of UPC Common Stock (the "Average
Closing Price") (as reported on the New York Stock Exchange ("NYSE")
Composite Transactions List during the period of 10 consecutive full
trading days ending on the later of the date on which the last required
consent to the Merger of any regulatory authority is received and the
date on which approval of the Merger by the shareholders of BancAlabama
is received (the "Determination Date")) is less than $24.245;
and
(b) (i) the number obtained by dividing the Average Closing Price by
$30.306 (the "UPC Ratio") is less than (ii) the number obtained by dividing
the average of the common stock of the closing prices of the bank holding
companies defined as the "Index Group" in the Agreement (the "Index
Average Closing Price") on the
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Determination Date by the Index Average Closing Price on April 26, 1996,
less 15% (the "Index Ratio").
In such case, BancAlabama has the right to terminate the Agreement during
the ten-day period commencing two days after the Determination Date by giving
UPC prompt notice of that decision. BancAlabama may withdraw its termination
notice at any time during that ten-day period. During the five-day period after
receipt of such notice, UPC has the option to increase the consideration payable
to BancAlabama shareholders by adjusting the Exchange Ratio in the manner
described below. UPC IS UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO. If UPC
elects to adjust the Exchange Ratio, it must give BancAlabama prompt notice of
that election and of the adjusted Exchange Ratio, in which case BancAlabama must
proceed with the Merger.
These conditions reflect the parties' agreement that BancAlabama's
shareholders will assume the risk of declines in the value of UPC Common Stock
to $24.245. Any adjustment of the Exchange Ratio below a decline in the price of
UPC Common Stock to $24.245 would be dependent on whether the price of UPC
Common Stock lags behind a market basket of comparable bank holding company
stocks (the Index Group referenced above) by more than 15%.
If the Average Closing Price is less than $24.245 per share and the
UPC Ratio is less than the Index Ratio, the Board of Directors of BancAlabama
has the right to elect to terminate the Agreement so as to require UPC to
consider increasing the Exchange Ratio. UPC would then determine whether to
proceed with the Merger at the higher adjusted Exchange Ratio. In making this
determination, the principal factors UPC will consider include the projected
effect of the Merger on UPC's pro forma earnings and code value per share and
whether UPC's assessment of BancAlabama's earning potential as part of UPC
justifies the issuance of an increased number of UPC's shares. If UPC declines
to adjust the Exchange Ratio, BancAlabama may elect to proceed without the
adjustment, provided it does so within 12 days of the Determination Date. In
making such determination, the principal factors the Board of Directors of
BancAlabama would consider include, without limitation, whether the Merger
remains in the best interest of BancAlabama and its shareholders, despite a
decline in UPC's stock price, and whether the consideration to be received by
the holders of BancAlabama Common Stock remains fair from a financial point of
view.
BancAlabama and UPC concur that BancAlabama will resolicit approval of the
Merger from holders of BancAlabama Common Stock if (i) BancAlabama is entitled
to and gives UPC notice of termination and UPC declines to adjust the Exchange
Ratio and (ii) the Board of Directors of BancAlabama elects to proceed with the
Merger without an adjustment to the Exchange Ratio, and then UPC and
BancAlabama intend to review the circumstances prevailing at the time and to
determine whether to resolicit the BancAlabama shareholders at such time.
The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the numerical examples, it has been assumed that the
deal price is $17.90, the initial Exchange Ratio is 0.5907, the beginning price
of UPC Common Stock is $30.306, and the beginning Index Price is $100.)
(1) The first scenario occurs if the Average Closing Price is not less
than $24.245. Under this scenario, regardless of any comparison between the
UPC Ratio and the Index Ratio, there would be no adjustment to the Exchange
Ratio, even though the value of the consideration to be received by
BancAlabama shareholders would have fallen from a pro forma $17.90 per
share to $14.32 per share.
(2) The second scenario occurs if the Average Closing Price declines
to less than $24.245, but does not decline by significantly more (i.e., by
more than 15%) than the common stocks of the Index Group. Under this
scenario, there again would be no adjustment to the Exchange Ratio, even
though the consideration received by UPC shareholders would have fallen
from a pro forma $17.90 per share to an amount based on the then declined
value of UPC Common Stock.
(3) The third scenario arises where the Average Closing Price declines
below $24.245 and the UPC Ratio is below the Index Ratio. Under this
scenario, the adjustment in the Exchange Ratio is designed to ensure that
the BancAlabama shareholders receive shares of UPC Common Stock having a
value (based upon the Average Closing Price) that corresponds to not more
than either $24.00 or a 15% decline from the stock price performance
reflected by the Index Group.
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For example, if the Average Closing Price were $23.00, and the ending
Index Average Closing Price were $93.00, the UPC Ratio (0.76) would be
below the Index Ratio (0.78, or 0.93 minus 0.15), BancAlabama could
terminate the Agreement unless UPC elected within five days to increase
the Exchange Ratio to equal 0.6062, which represents the lesser of (a)
0.6164 [the result of dividing $14.18 (the product of $24.00 and the
0.5907 Exchange Ratio) by the Average Closing Price ($23.00), rounded to
the nearest thousandth] and (b) 0.6062 [the result of dividing the Index
Ratio (0.78) times 0.5907 by the UPC Ratio (0.76), rounded to the
nearest thousandth]. Based upon the assumed $23.00 Average Closing
Price, the new Exchange Ratio would represent a value to the BancAlabama
shareholders of $13.94 per share.
If the Average Closing Price were $23.00, and the ending Index Average
Closing Price were $105.00, the UPC Ratio (0.76) would be below the
Index Ratio (0.90, or 1.05 minus 0.15), BancAlabama could terminate the
Agreement unless UPC elected within five days to increase the Exchange
Ratio to equal 0.6164, which represents the lesser of (a) 0.6164 [the
result of dividing $14.18 (the product of $24.00 and the 0.5907 Exchange
Ratio) by the Average Closing Price ($23.00), rounded to the nearest
thousandth] and (b) 0.6995 [the result of dividing the Index Ratio
(0.90) times 0.5907 by the UPC Ratio (0.76), rounded to the nearest
thousandth]. Based upon the assumed $23.00 Average Closing Price, the
new Exchange Ratio would represent a value to the BancAlabama
shareholders of $14.18 per share.
BancAlabama shareholders should be aware that the actual market value of a
share of UPC Common Stock at the Effective Time and at the time certificates for
those shares are delivered following surrender and exchange of certificates for
shares of BancAlabama Common Stock may be more or less than the Average Closing
Price. BancAlabama shareholders are urged to obtain information on the trading
value of UPC Common Stock that is more recent than that provided in this Proxy
Statement. See "Comparative Market Prices and Dividends."
EFFECT OF THE MERGER ON STOCK OPTIONS
The Agreement contemplates that at the Effective Time, each BancAlabama
Option granted by BancAlabama under the BancAlabama Stock Plans, as that term
is defined in the Agreement, which are outstanding at the Effective Time,
whether or not exercisable, will be converted into and become options with
respect to UPC Common Stock, and UPC will assume each BancAlabama Option, in
accordance with the terms of the BancAlabama Stock Plan and stock option or
other agreement by which it is evidenced, except that from and after the
Effective Time, (i) UPC and its Salary and Benefits Committee will be
substituted for BancAlabama and the Committee of BancAlabama's Board of
Directors (including, if applicable, the entire Board of Directors of
BancAlabama) administering such BancAlabama Stock Plan, (ii) each BancAlabama
Option assumed by UPC may be exercised solely for shares of UPC Common Stock
(or cash in case of stock appreciation rights), (iii) the number of shares of
UPC Common Stock subject to such BancAlabama Option will be equal to the number
of shares of BancAlabama Common Stock subject to such BancAlabama Option
immediately prior to the Effective Time multiplied by the Exchange Ratio, and
(iv) the per share exercise price under each such BancAlabama Option will be
adjusted by dividing the per share exercise price under each such BancAlabama
Option by the Exchange Ratio and rounding up to the nearest cent.
Notwithstanding the provisions of clause (iii) of the preceding sentence, UPC
will not be obligated to issue any fraction of a share of UPC Common Stock upon
exercise of BancAlabama Options and any fraction of a share of UPC Common Stock
that otherwise would be subject to a converted BancAlabama Option will
represent the right to receive a cash payment equal to the product of such
fraction and the difference between the market value of one share of UPC Common
Stock and the per share exercise price of such BancAlabama Option. The market
value of one share of UPC Common Stock will be the closing price of such common
stock on the NYSE-Composite Transaction List (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative source selected by
UPC) on the last trading day preceding the Effective Time.
All contractual restrictions or limitations on transfer with respect to
BancAlabama Common Stock awarded under the BancAlabama Stock Plans or any other
plan, program, or arrangement of any BancAlabama Company, to the extent that
such restrictions or limitations will not have already lapsed, and
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except as otherwise expressly provided in such plan, program, or arrangement,
will remain in full force and effect with respect to shares of UPC Common Stock
into which such restricted stock is converted pursuant to the Agreement.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. To enhance long-term shareholder value, the
management of BancAlabama recognized that expansion of the bank's financial
services into new markets would be required. The management of BancAlabama was
aware that expansion into new markets would be made difficult by a number of
significant developments in the financial services industry, including increased
emphasis on automation, specialization of products and services, increasing
competition from other financial institutions, and a trend toward industry
consolidation and geographic expansion coupled with relaxation of regulatory
restrictions on the interstate conduct of business by financial institutions.
For these reasons, the management believed that additional equity capital would
be required to finance any significant market expansion effort and that the
success of any such effort could not be assured. Alternatively, the management
of BancAlabama recognized that merger with another financial services
institution having substantially greater financial resources than the company
could also enhance long-term shareholder value.
The management of BancAlabama was aware that UPC had acquired BNF, a
savings and loan holding company based in Decatur, Alabama, which is
approximately 20 miles from the principal offices of BancAlabama. On November
3, 1995, William R. Collins, Chairman of the Board of BancAlabama, telephoned
Benjamin W. Rawlins, Chairman of the Board of Directors of UPC, to inform Mr.
Rawlins that BancAlabama was considering several strategic planning
alternatives, including raising additional equity capital to make possible
acquisitions and to expand into new markets. Mr. Collins asked Mr. Rawlins
whether UPC would consider selling BancAlabama any of the bank facilities
recently acquired by UPC in Alabama or whether UPC had an interest in a
strategic alliance with BancAlabama. Mr. Rawlins replied that UPC was not
interested in selling any of its Alabama banking facilities, but that UPC might
be interested in discussing a possible acquisition of BancAlabama by UPC. This
telephone conference led to a meeting between Mr. Collins and Mr. Rawlins in
Huntsville, Alabama on December 15, 1995, at which time a possible merger of
the companies was discussed. At this meeting, concern was expressed regarding
whether UPC could successfully integrate the combined operations of BNF and
BancAlabama in the North Alabama financial services market. Thereafter, Mr.
Collins held several meetings with William D. Powell, President of BNF, to
discuss integration of the operations of BNF and BancAlabama. As a result of
these meetings, the parties concluded that an acquisition of BancAlabama by UPC
would be complementary to BNF.
On February 24, 1996, Mr. Collins and Mr. Rawlins met and discussed a
proposed merger. On February 26, 1996, Mr. Collins discussed the status of the
negotiations with the Acquisition Committee of the BancAlabama Board of
Directors. On March 2, 1996, Mr. Rawlins and Mr. Collins reached a preliminary
understanding regarding a proposed merger of BancAlabama into UPC or a
subsidiary of UPC. On March 5, 1996, Mr. Collins discussed the proposed merger
with the Acquisition Committee and was instructed to negotiate a letter of
intent with UPC. At a meeting of the Board of Directors of BancAlabama held on
March 11, 1996, the directors considered the proposed merger offer from UPC.
Although BancAlabama was not soliciting offers for a sale of BancAlabama and had
no merger negotiations with any other potential acquirers, the Board decided to
pursue the offer of UPC because of UPC's financial stability, the continuing
consolidation in the financial services industry and the value of the offer
relative to other alternatives available to BancAlabama to enhance shareholder
value. General meetings, telephone conversations, exchanges of information,
preliminary due diligence and additional negotiations occurred between March 2,
1996 and March 22, 1996, when UPC presented BancAlabama a letter of intent. At a
meeting on March 25, 1996, held to discuss and consider the letter of intent,
the Board of Directors unanimously authorized Mr. Collins to sign the letter of
intent. The letter of intent specified that the merger was conditioned upon a
mutually satisfactory definitive merger agreement, favorable due diligence
reviews and an opinion from BancAlabama's financial adviser that the transaction
would be fair to the shareholders of BancAlabama from a financial point of view.
On March 28, 1996, BancAlabama engaged the services of Sheshunoff to render to
the Board of Directors its opinion regarding the fairness of the transaction to
the shareholders from a financial point of view. After
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extensive negotiations, meetings, due diligence reviews, exchanges of
information, discussions with BancAlabama's legal counsel, Lanier Ford Shaver &
Payne P.C., and discussions with representatives of Sheshunoff, a definitive
merger agreement was presented for consideration by the Board of Directors at a
meeting on April 25, 1996. Prior to the Board meeting on April 25, 1996, copies
of the proposed merger agreement were circulated to the directors. After
considering and discussing the comments of legal counsel, the opinion of
Sheshunoff that, as of the date of the Board meeting, the consideration to be
paid was fair to the shareholders of BancAlabama, the comments of a
representative of Sheshunoff and the comments of the management directors, the
Board of Directors of BancAlabama unanimously approved the Agreement for the
reasons set out in the following section.
BancAlabama's Reasons for the Merger. In reaching its conclusion to
approve the Merger, the BancAlabama Board of Directors consulted with
BancAlabama's senior management, as well as with its financial and legal
advisors, and considered various factors, including the following:
(a) The financial terms of the Merger. The presentation by Sheshunoff
indicating that the transaction multiples for BancAlabama, based on the
Exchange Ratio in the Merger and the UPC Common Stock price on April 26,
1996, compared favorably with the other transactions reviewed by
Sheshunoff, and represented multiples of 1.70 times BancAlabama's book
value as of March 31, 1996 (excluding unrealized losses on securities
available-for-sale), 23.39 times BancAlabama's 1995 earnings and 14.82
times March 31, 1996 annualized quarterly results, and 12.80 percent of
BancAlabama total assets as of March 31, 1996.
(b) The effect on shareholder value of BancAlabama remaining
independent compared to the effect of its combining with UPC. In this
respect the Board considered several matters. First, the Board considered
whether it was reasonable to anticipate that BancAlabama, as an independent
enterprise, could meet the earnings projections necessary to produce a
value comparable to the value to be received in the Merger. Second, the
Board took into account that BancAlabama had special value to UPC in
enhancing its deposit market share position in the Huntsville, Alabama
market area and that UPC had the ability to realize certain cost savings in
the Merger to support the price being paid. Third, the Board was advised by
management that continued investment in technology by BancAlabama necessary
to support its delivery systems would be significant.
(c) Certain financial information about BancAlabama and UPC. Such
information included, but was not limited to, information with regard to
recent and historical stock performance, valuation analyses, pro forma
analyses, comparative financial and operating performance data, acquisition
capacity analyses, and comparable merger and acquisition transactions as
presented by Sheshunoff. The Board also considered the results of the due
diligence reviews of UPC made by BancAlabama management, including, among
other things, projected financial results, securities portfolio and
derivatives positions, regulatory ratings, contingencies, credit policies
and processes and asset quality.
(d) Advice of financial advisor and fairness opinion. The opinion of
Sheshunoff (including the assumptions and financial information and
projections relied upon by Sheshunoff in arriving at such opinion) that, as
of April 26, 1996, the Exchange Ratio was fair to the shareholders of
BancAlabama from a financial point of view. See "-- Opinion of
BancAlabama's Financial Advisor."
(e) Certain nonfinancial information and terms of agreements.
Copies of the Agreement and the Option Agreement were distributed to
the Board and Lanier Ford Shaver & Payne P.C. counsel to BancAlabama,
generally summarized their material provisions. The Board considered that
under the Agreement it would have the right to terminate the Agreement in
the event of a significant decline in the price of UPC Common Stock prior
to consummation of the Merger unless UPC then elected to increase the
Exchange Ratio as specified in the Agreement. The Board was advised that
UPC made the Option Agreement a condition of the transaction, and the
Board considered that the existence of such an agreement might discourage
third parties from seeking to acquire BancAlabama. The Board took into
account that it is expected that the Merger will be tax-free (other than
with respect to cash paid in lieu of fractional shares) to BancAlabama
shareholders for federal income tax purposes. See "-- Possible Adjustment
of Exchange Ratio," "-- Interests of Certain Persons in the Merger," "--
Certain Federal Income Tax Consequences," and "-- Option Agreement."
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(f) Regulatory approvals. The likelihood of obtaining the regulatory
approvals that would be required with respect to the Merger. See
"-- Regulatory Approvals."
(g) Impact on BancAlabama constituencies. The general impact of the
Merger on the various constituencies served by BancAlabama, including its
customers, employees, communities, and others.
The foregoing discussion of the information and factors considered by the
BancAlabama Board is not intended to be exhaustive but includes all material
factors considered by the BancAlabama Board. In reaching its determination to
approve the Merger, the BancAlabama Board did not assign any relative or
specific weights to different factors. After deliberating with respect to the
Merger and the other transactions contemplated thereby, and considering, among
other things, the matters discussed above and the opinion of Sheshunoff referred
to above, the BancAlabama Board unanimously approved the Agreement and the
transactions contemplated thereby, including the Option Agreement, as being in
the best interests of BancAlabama and its shareholders. Each member of the Board
of Directors of BancAlabama has agreed to vote the shares of BancAlabama Common
Stock over which such member has voting authority (other than in a fiduciary
capacity) in favor of the Agreement.
BANCALABAMA'S BOARD OF DIRECTORS RECOMMENDS THAT BANCALABAMA SHAREHOLDERS
VOTE FOR APPROVAL OF THE AGREEMENT.
UPC's Reasons for the Merger. In approving the Agreement and the Merger,
the UPC Board considered a number of additional factors concerning the benefits
of the Merger. Without assigning any relative or specific weights to the
factors, the UPC Board of Directors considered the following additional material
factors:
(a) a review, based in part on a presentation by UPC's management, of
(i) the business, operations, earnings, and financial condition, including
the capital levels and asset quality, of BancAlabama on an historical,
prospective, and pro forma basis and in comparison to other financial
institutions in the area, (ii) the demographic, economic, and financial
characteristics of the markets in which BancAlabama operates, including
existing competition, history of the market areas with respect to financial
institutions, and average demand for credit, on an historical and
prospective basis, and (iii) the results of UPC's due diligence review of
BancAlabama; and
(b) a variety of factors affecting and relating to the overall
strategic focus of UPC, including UPC's desire to expand into markets in
the general vicinity of its core markets.
The senior management of UPC determined that the Merger was in the best
interests of UPC and its shareholders and approved the Agreement on April 26,
1996. The Agreement and the transactions contemplated thereby were subsequently
ratified and approved by the Board of Directors of UPC on July 18, 1996.
OPINION OF BANCALABAMA'S FINANCIAL ADVISOR
General
BancAlabama retained Sheshunoff to act as its financial advisor in
connection with the Merger with UPC. Sheshunoff has rendered an opinion dated
April 26, 1996, to BancAlabama's Board of Directors that, based on the matters
set forth therein, the Exchange Ratio to be received pursuant to the Merger is
fair, from a financial point of view, to BancAlabama's shareholders. The text of
such opinion dated April 26, 1996 is set forth in the exhibits to this Proxy
Statement/Prospectus and should be read in its entirety by shareholders of
BancAlabama.
The Exchange Ratio to be received by BancAlabama shareholders in the Merger
was determined by BancAlabama and UPC in their negotiations. No limitations were
imposed by the Board of Directors or management of BancAlabama upon Sheshunoff
with respect to the investigations made or the procedures followed by Sheshunoff
in rendering its opinion.
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In connection with rendering its opinion to BancAlabama's Board of
Directors, Sheshunoff performed a variety of financial analyses. However, the
preparation of a fairness opinion involves various 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. Sheshunoff, in conducting its
analysis and in arriving at its opinion, has not conducted a physical inspection
of any of the properties or assets of BancAlabama, and has not made or obtained
any independent valuation or appraisals of any properties, assets or liabilities
of BancAlabama. Sheshunoff has assumed and relied upon the accuracy and
completeness of the financial and other information that was provided to it by
BancAlabama 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, Sheshunoff performed two
valuation analyses with respect to BancAlabama: (i) an analysis of comparable
prices and terms of recent transactions involving the sale of banking
organizations; and (ii) a discounted cash flow analysis. For purposes of the
comparable transaction analyses, UPC Common Stock was valued at $30.375 per
share, which was the price of UPC Common Stock on April 24, 1996. Each of these
methodologies is discussed briefly below.
COMPARABLE TRANSACTION ANALYSES. Sheshunoff performed analyses of
premiums paid for selected banking organizations with comparable characteristics
to BancAlabama. Comparable transactions were considered to be transactions where
the seller was a bank with total assets less than $500 million that sold for
100% common stock in Alabama and the target institution was located in one of
the surrounding states from January 1, 1995 through April 24, 1996.
Based on the first of the foregoing transactions, financial institutions
purchasing banks with the above-mentioned criteria, the analysis yielded a range
of purchase prices to book value multiples of 1.11 times to 2.70 times, with an
average of 1.95 times and a median of 1.98 times. These compare to a transaction
value for the Merger of approximately 1.70 times BancAlabama's book value as of
March 31, 1996 (excluding unrealized losses on securities available-for-sale).
The analysis yielded a range of purchase prices as a multiple of trailing
12-month earnings per share from 10.32 times to 22.13 times, with an average of
15.59 times and a median of 15.39 times. These compare to a transaction value
for the Merger of 23.39 times BancAlabama's 1995 earnings and 14.82 times March
31, 1996 annualized quarterly results.
The analysis yielded a range of purchase prices as a percent of total
assets from 11.20 percent to 29.47 percent, with an average of 17.97 percent and
a median of 17.60 percent. These compare to a transaction value to March 31,
1996 assets of 12.80 percent for the Merger.
No company or transaction used in the comparable transaction analyses is
identical to BancAlabama. 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 of the company to which it is
being compared.
DISCOUNTED CASH FLOW ANALYSIS. Using discounted cash flow analysis,
Sheshunoff estimated the present value of the future stream of after-tax cash
flows that BancAlabama could produce through 2000, under various circumstances,
assuming that BancAlabama performed in accordance with the earnings/return
projections of management. Sheshunoff estimated the terminal value for
BancAlabama at the end of the period by applying multiples of earnings ranging
from 8 times to 12 times and then discounting the cash flow streams, dividends
paid to the shareholders (assuming up to 100 percent of earnings are paid out in
dividends while maintaining a 6.0 percent tier 1 leverage ratio) and terminal
value using differing discount rates ranging from 14.0 percent to 18.0 percent
chosen to reflect different assumptions regarding the required rates of return
of BancAlabama and the inherent risk surrounding the underlying projections.
This discounted cash flow analysis indicated a range of $13.66 per share to
$21.22 per share.
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Sheshunoff also performed a cash flow analysis using an estimated terminal
value for BancAlabama at the end of the period by applying multiples of book
value ranging from 0.80 times to 1.50 times and then discounting the cash flow
streams, dividends paid to the shareholders (assuming up to 100 percent of
earnings are paid out in dividends while maintaining a 6.0 percent tier 1
leverage ratio) and terminal value using differing discount rates ranging from
14.0 percent to 18.0 percent chosen to reflect different assumptions regarding
the required rates of return of BancAlabama and the inherent risk surrounding
the underlying projections. This discounted cash flow analysis indicated a range
of $8.94 per share to $14.75 per share.
Compensation of Sheshunoff
Pursuant to an engagement letter dated March 28, 1996, between BancAlabama
and Sheshunoff, BancAlabama agreed to pay Sheshunoff a $12,000 fairness opinion
fee. BancAlabama has also agreed to indemnify and hold harmless Sheshunoff 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 Sheshunoff.
As part of its investment banking business, Sheshunoff is regularly engaged
in the valuation of securities in connection with mergers and acquisitions,
private placements, and valuations for estate, corporate and other purposes.
BancAlabama's Board of Directors decided to retain Sheshunoff based on its
experience as a financial advisor in mergers and acquisitions of financial
institutions, and its knowledge of financial institutions.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect the
Merger, the Effective Time will occur on the date and at the time that the
Delaware Certificate of Merger reflecting the Merger becomes effective with the
Secretary of State of the State of Delaware. Unless otherwise agreed upon in
writing by UPC and BancAlabama, and subject to the terms and conditions of the
Agreement, the parties will use their reasonable efforts to cause the Effective
Time to occur on such date as may be designated by UPC within 20 days following
the last to occur of (i) the effective date (including the expiration of any
applicable waiting period) of the last consent of any regulatory authority
having authority over and approving or exempting the Merger, and (ii) the date
on which the shareholders of BancAlabama approve the matters relating to this
Agreement to the extent such approval is required by applicable law.
No assurance can be provided that the necessary shareholder and regulatory
approvals can be obtained or that other conditions precedent to the Merger can
or will be satisfied. BancAlabama and UPC anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the fourth quarter of 1996. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either BancAlabama or UPC generally may terminate
the Agreement if the Merger is not consummated by March 1, 1997, unless the
failure to consummate the transactions contemplated by the Agreement on or
before such date is caused by any willful breach of the Agreement by the party
seeking termination. See "-- Conditions to Consummation of the Merger" and
"-- Waiver, Amendment, and Termination."
DISTRIBUTION OF UPC STOCK CERTIFICATES
Promptly after the Effective Time, UPC and BancAlabama will cause Union
Planters National Bank, Memphis, Tennessee, acting in its capacity as Exchange
Agent, to mail to the former shareholders of BancAlabama a letter of
transmittal, together with instructions for the exchange of the Certificates
representing shares of BancAlabama Common Stock for certificates representing
shares of UPC Common Stock.
BANCALABAMA SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for BancAlabama Common
Stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of BancAlabama
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Common Stock surrendering such items a certificate or certificates representing
the number of shares of UPC Common Stock to which such holder is entitled and a
check for the amount to be paid in lieu of any fractional share (without
interest), if any, together with all undelivered dividends or distributions in
respect of such shares (without interest thereon), if any. UPC will not be
obligated to deliver the consideration to which any former holder of BancAlabama
Common Stock is entitled as a result of the Merger until the holder surrenders
such holder's certificates representing the shares of BancAlabama Common Stock.
Whenever a dividend or other distribution is declared by UPC on UPC Common
Stock, the record date for which is at or after the Effective Time, the
declaration will include dividends or other distributions on all shares issuable
pursuant to the Agreement, but no dividend or other distribution payable after
the Effective Time with respect to UPC Common Stock will be paid to the holder
of any unsurrendered BancAlabama Common Stock Certificate until the holder duly
surrenders such certificate. Upon surrender of such BancAlabama Common Stock
Certificate, however, both the UPC Common Stock certificate, together with all
undelivered dividends or other distributions (without interest) and any
undelivered cash payments to be paid in lieu of fractional shares (without
interest), will be delivered and paid with respect to each share represented by
such certificate.
At the Effective Time, the stock transfer books of BancAlabama will be
closed to holders of BancAlabama Common Stock immediately prior to the Effective
Time and there will be no transfer of shares of BancAlabama Common Stock on
BancAlabama's stock transfer books. If Certificates representing shares of
BancAlabama Common Stock are presented for transfer after the Effective Time,
they will be canceled and exchanged for the shares of UPC Common Stock and a
check for the amount due in lieu of fractional shares and undelivered dividends,
if any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions, including
(i) receipt of the approval of the shareholders of BancAlabama of the
Agreement, and the consummation of the transactions contemplated thereby,
including the Merger as and to the extent required by the law or by the
provisions of any governing instrument, (ii) receipt of certain regulatory
approvals required for consummation of the Merger, (iii) receipt of a written
opinion of counsel from Alston & Bird as to the tax-free nature of the Merger
(except to the extent of cash received), (iv) receipt of approval of the shares
of UPC Common Stock issuable pursuant to the Merger for listing on the NYSE,
subject to official notice of issuance, (v) the Registration Statement being
declared effective under the 1933 Act, (vi) the accuracy, as of the date of the
Agreement and as of the Effective Time, of the representations and
warranties of BancAlabama and UPC as set forth in the Agreement, (vii) the
performance of all agreements and the compliance with all covenants of
BancAlabama and UPC as set forth in the Agreement, (viii) receipt by UPC and
BancAlabama of copies of a letter from Price Waterhouse LLP, addressed to UPC,
dated as of the date of filing of the Registration Statement with the SEC and
as of the Effective Time, to the effect that the Merger will qualify for
pooling-of-interests accounting treatment; (ix) receipt of all consents
required for consummation of the Merger or for the preventing of any default
under any contract or permit which, if not obtained or made, is reasonably
likely to have, individually or in the aggregate, a material adverse effect;
(x) the absence of any law or order or any action taken by any court,
governmental, or regulatory authority prohibiting, restricting, or making
illegal the consummation of the transaction; (xi) receipt by UPC of agreements
from each affiliate of BancAlabama, to the extent necessary to assure in the
reasonable judgment of UPC that the transactions contemplated will qualify for
pooling-of-interests accounting treatment; (xii) on the last business day prior
to the Effective Time, the total consolidated assets of BancAlabama, as
determined in accordance with generally accepted accounting principles, must be
not less than $95 million; (xiii) on the last business day prior to the
Effective Time, the shareholders' equity of BancAlabama, as determined in
accordance with generally accepted accounting principles, must be no less than
$7,241,211; and (xiv) satisfaction of certain other conditions, including the
receipt of certain legal opinions and various certificates from the officers of
BancAlabama and UPC. See "-- Regulatory Approvals" and "-- Waiver, Amendment,
and Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. In the event the Merger is not effected on or before
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March 1, 1997, the Agreement may be terminated and the Merger abandoned by a
vote of a majority of the Board of Directors of either BancAlabama or UPC. See
"-- Waiver, Amendment, and Termination."
REGULATORY APPROVALS
THE MERGER MAY NOT PROCEED IN THE ABSENCE OF RECEIPT OF THE REQUISITE
REGULATORY APPROVAL OF THE FEDERAL RESERVE. BancAlabama and UPC are not aware
of any material governmental approvals or actions that are required for
consummation of the Merger. Should any other approval or action be required, it
presently is contemplated that such approval or action would be sought.
On August 6, 1996, the Federal Reserve, pursuant to Section 3 of the
BHC Act approved the Merger. In evaluating the Merger, the Federal Reserve
considers, 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. The relevant statutes prohibit the Federal Reserve
from approving any Merger if (i) it would result in a monopoly or be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States or (ii) its
effect in any section of the country may be to substantially lessen competition
or to tend to create a monopoly, or if it would be a restraint of trade in any
other manner, unless the Federal Reserve finds that any anticompetitive effects
are outweighed clearly by the public interest and the probable effect of the
transaction in meeting the convenience and needs of the communities to be
served. Under the BHC Act, the Merger may not be consummated until August 22,
1996, the 15th day following the date of the Federal Reserve approval, during
which time the United States Department of Justice may challenge the
transaction on antitrust grounds. The commencement of any antitrust action
would stay the effectiveness of the approval of the agencies, unless a court of
competent jurisdiction specifically orders otherwise.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the Agreement may be amended by a
subsequent writing signed by each of the parties upon the approval of the Boards
of Directors of each of the parties, whether before or after shareholder
approval of the Agreement has been obtained; provided, that after any such
approval by the holders of BancAlabama Common Stock, there shall be made no
amendment that modifies in any material respect the consideration to be received
by the holders of BancAlabama Common Stock without the further approval of such
shareholders. In addition, prior to or at the Effective Time, either BancAlabama
or UPC, or both, acting through their respective Boards of Directors, chief
executive officers, or other authorized officers may waive any default in the
performance of any term of the Agreement by the other party, may waive or extend
the time for the compliance or fulfillment by the other party of any and all of
its obligations under the Agreement, and may waive any of the conditions
precedent to the obligations of such party under the Agreement, except any
condition that, if not satisfied, would result in the violation of any
applicable law or governmental regulation. No such waiver will be effective
unless written and unless executed by a duly authorized officer of BancAlabama
or UPC, as the case may be.
The Agreement may be terminated and the Merger abandoned at any time prior
to the Effective Time (i) by the mutual consent of the Boards of Directors of
BancAlabama and UPC; (ii) by the Board of Directors of BancAlabama or UPC (a) in
the event of any inaccuracy of any representation or warranty of the other party
contained in the Agreement which cannot be or has not been cured within 30 days
after giving written notice to the breaching party of such inaccuracy and which
inaccuracy would provide the terminating party the ability to refuse to
consummate the Merger under the applicable standards set forth in the
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Agreement (provided that the terminating party is not then in breach of any
representation or warranty contained in the Agreement under the applicable
standards set forth in the Agreement or in material breach of any covenant or
other agreement contained in the Agreement), (b) in the event of a material
breach by the other party of any covenant or agreement contained in the
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided that the
terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement), (c) if the Merger is not consummated by March 1, 1997, provided
that the failure to consummate is not caused by any willful breach of the
Agreement by the party electing to terminate, (d) if (1) any consent of any
regulatory authority required for consummation of the Merger and the other
transactions contemplated by the Agreement has been denied by final
nonappealable action, or if any action taken by such authority is not appealed
within the time limit for appeal or (2) the shareholders of BancAlabama fail to
vote their approval of the matters submitted for the approval by such
shareholders at the Special Meeting, or (e) if any of the conditions precedent
to the obligations of such party to consummate the Merger cannot be satisfied,
fulfilled, or waived by the appropriate party by March 1, 1997, (provided that
the terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement); (iii) by the Board of Directors of BancAlabama pursuant to the
relevant provisions of the Agreement described in " -- Possible Adjustment of
Exchange Ratio" or by UPC (a) pursuant to the relevant provisions in the
Agreement described in " -- Possible Adjustment of Exchange Ratio" or (b) in the
event that the Board of Directors of BancAlabama shall have failed to reaffirm
its approval of the Merger and the related transactions to the exclusion of any
other acquisition proposal, or shall have affirmed, recommended or authorized
entering into any other acquisition proposal.
If the Merger is terminated as described above, the Agreement will become
void and have no effect, except that certain provisions of the Agreement,
including those relating to the obligations to share certain expenses, maintain
the confidentiality of certain information obtained, and return all documents
obtained from the other party under the Agreement, will survive. In addition,
termination of the Agreement will not relieve any breaching party from liability
for any uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination. Finally, the Option Agreement will be
governed by its own terms as to its termination. See "-- Expenses and Fees" and
"-- Option Agreement."
DISSENTERS' RIGHTS
If the Merger is consummated, holders of BancAlabama Common Stock will be
entitled to have the "fair value" of their shares of BancAlabama Common Stock at
the Effective Time (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) judicially determined and paid to
them in cash, together with interest, if any, by complying with the provisions
of Section 262 of the DGCL ("Section 262").
Shareholders of record who desire to exercise their appraisal rights must
satisfy all of the following conditions. A written demand for appraisal of their
BancAlabama Common Stock must be delivered to BancAlabama before the taking of
the vote of the BancAlabama shareholders at the Special Meeting on approval of
the Agreement. Such demand will be sufficient if it reasonably informs
BancAlabama of the shareholder's identity and that the shareholder intends
thereby to demand appraisal of such holder's shares. This written demand for
appraisal of shares must be in addition to and separate from voting against,
abstaining from voting, or failing to vote on adoption of the Agreement. Voting
against, abstaining from voting, or failing to vote on adoption of the Agreement
will not constitute a demand for appraisal within the meaning of Section 262.
Shareholders electing to exercise their appraisal rights under Section 262
must not vote for adoption of the Agreement. Voting for adoption of the
Agreement, or delivering a proxy in connection with the Special Meeting (unless
the proxy specifies a vote against, or abstaining from voting on, adoption of
the Agreement), will constitute a waiver of a shareholder's right of appraisal
and will nullify any written demand for appraisal submitted by the shareholder.
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A demand for appraisal must be executed by or for the shareholder of
record, fully and correctly, as such shareholder's name appears on such holder's
Certificates. If the BancAlabama Common Stock is owned of record in a fiduciary
capacity, such as by a trustee, guardian, or custodian, such demand must be
executed by the fiduciary. If the BancAlabama Common Stock is owned of record by
more than one person, as in a joint tenancy or tenancy in common, such demand
must be executed by all joint owners. An authorized agent, including an agent
for two or more joint owners, may execute the demand for appraisal for a
shareholder of record; however, the agent must identify the record owner and
expressly disclose the fact that, in exercising the demand, such holder is
acting as agent for the record owner.
A record owner, such as a broker who holds shares of BancAlabama Common
Stock as a nominee for others may exercise appraisal rights with respect to the
shares held for all or less than all beneficial owners of shares as to which the
holder is the record owner. In such case, the written demand must set forth the
number of shares covered by such demand. Where the number of shares is not
expressly stated, the demand will be presumed to cover all shares of BancAlabama
Common Stock outstanding in the name of such record owner.
Shareholders who elect to exercise appraisal rights should mail or deliver
their written demands to: BancAlabama, Inc., 312 Clinton Avenue, Huntsville,
Alabama 35801; Attention: Jean D. Snead, Vice President and Corporate Secretary.
The written demand for appraisal should specify the shareholder's name and
mailing address, the number of shares of BancAlabama Common Stock owned, and
state that the shareholder is thereby demanding appraisal. Within ten days after
the Effective Time, UPC must provide notice of the Effective Time to all
shareholders who have complied with Section 262 and have not voted for adoption
of the Agreement.
Within 120 days after the Effective Time, either UPC or any shareholder who
has complied with the foregoing requirements of Section 262 and who is otherwise
entitled to appraisal rights may file a petition in the Delaware Court of
Chancery demanding a determination of the fair value of shares of the dissenting
shareholders. If a petition for an appraisal is timely filed, after a hearing on
such petition, the Court of Chancery will determine which shareholders are
entitled to appraisal rights and will appraise the shares of BancAlabama Common
Stock owned by such shareholders, determining the fair value of such shares,
exclusive of any element of value arising from the accomplishment or expectation
of the Merger, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining fair value, the court
is to take into account all relevant factors. In Weinberger v. UOP, Inc., et
al., decided February 1, 1983, the Delaware Supreme Court expanded the
considerations that could be considered in determining fair value in an
appraisal proceeding, stating that " . . . proof of value by any techniques or
methods which are generally considered acceptable in the financial community and
otherwise admissible in court. . ." should be considered, and that ". . . [f]air
price obviously requires consideration of all relevant factors involving the
value of a company . . ." The Delaware Supreme Court stated that in making this
determination of fair value the court must consider ". . . market value, asset
value, dividends, earnings prospects, the nature of the enterprise and any other
facts which were known or which could be ascertained as of the date of merger
and which throw any light on future prospects of the merged corporation . . ."
The court further stated that ". . . elements of future value, including the
nature of the enterprise, which are known or susceptible of proof as of the date
of the merger and not the product of speculation, may be considered . . ."
However, the court noted that Section 262 provides that fair value is to be
determined ". . . exclusive of any element of value arising from the
accomplishment or expectation of the merger . . .".
The fair value of shares determined under Section 262 could be more than,
the same as, or less than the consideration BancAlabama shareholders are
entitled to receive pursuant to the Agreement if they do not seek appraisal of
their shares. Investment banking opinions as to fairness from a financial point
of view are not necessarily opinions as to fair value under Section 262.
At the hearing on such petition filed in the Court of Chancery, the court
will determine the shareholders who have complied with Section 262 and who have
become entitled to rights. The court may require dissenting shareholders to
submit their stock certificates to the Register in Chancery for notation thereon
of the pendency of the appraisal proceedings. Failure of a dissenting
shareholder to submit such holder's certificates may result in the dismissal of
such shareholder's appraisal proceedings.
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The cost of the appraisal proceeding may be determined by the Court of
Chancery and taxed against the parties as the court deems equitable in the
circumstances. Upon application of a dissenting shareholder, the court may order
that all or a portion of the expenses incurred by any dissenting shareholder in
connection with the appraisal proceeding, including, without limitation,
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all shares of BancAlabama Common Stock entitled to
appraisal. In the absence of such a determination or assessment, each party
bears its own expenses.
Any shareholder who has duly demanded appraisal in compliance with Section
262 will not, after the Effective Time, be entitled to vote for any purpose the
shares of BancAlabama Common Stock subject to such demand or to receive payment
of dividends or other distributions, if any, on such shares, except for
dividends or distributions payable to shareholders of record as of a date prior
to the Effective Time.
At any time within 60 days after the Effective Time, any former holder of
BancAlabama Common Stock will have the right to withdraw a demand for appraisal
and to accept the consideration offered in the Agreement. After this period,
such holder may withdraw such holder's demand for appraisal only with the
consent of UPC. If no petition for appraisal is filed with the Court of Chancery
within 120 days after the Effective Time, shareholders' rights to appraisal
shall cease and all shareholders will be entitled to receive the consideration
provided in the Agreement. Inasmuch as UPC has no obligation to file such a
petition, and has no present intention to do so, any shareholder who desires
such a petition to be filed is advised to file it on a timely basis. However, no
petition timely filed in the Court of Chancery demanding appraisal will be
dismissed as to any shareholder without the approval of the court, and such
approval may be conditioned upon such terms as the court deems just.
Within 120 days after the Effective Time, any shareholder who has complied
with the foregoing requirements of Section 262 is entitled, upon written
request, to receive from UPC a statement setting forth the aggregate number of
shares not voted in favor of the Merger and the aggregate number of holders of
shares who have demanded appraisal. Such written statement shall be mailed to
such shareholder within ten days of such holder's request.
The foregoing is only a summary of the rights of dissenting holders of
BancAlabama Common Stock. Any holder of BancAlabama Common Stock who intends to
dissent should carefully review the text of the Delaware statutory law set forth
in Appendix B to this Proxy Statement and should also consult with such holder's
attorney. The failure of a BancAlabama shareholder to follow precisely the
procedures summarized above and set forth in Appendix B to this Proxy Statement,
may result in loss of appraisal rights. No further notice of the events giving
rise to appraisal rights or any steps associated therewith will be furnished to
holders of BancAlabama Common Stock, except as indicated above or otherwise
required by law.
In general, any dissenting shareholder who perfects such holder's right to
be paid the "fair value" of such holder's BancAlabama Common Stock in cash will
recognize taxable gain or loss for federal income tax purposes upon receipt of
such cash. See "-- Certain Federal Income Tax Consequences."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, BancAlabama has agreed that unless the prior
written consent of UPC has been obtained, and except as otherwise expressly
contemplated in the Agreement, BancAlabama will (i) operate its business only in
the usual, regular, and ordinary course, (ii) preserve intact its business
organization and assets and maintain its rights and franchises, (iii) use its
reasonable efforts to maintain its current employee relationships, and (iv) take
no action which would (a) materially adversely affect the ability of any party
to obtain any consents required for the transactions contemplated by the
Agreement without imposition of a condition or restriction of the type referred
to in the Agreement or prevent the transactions contemplated by the Agreement,
including the Merger, from qualifying for pooling-of-interests account treatment
or as a reorganization within the meaning of Section 368(a) of the Code (see
"-- Certain Federal Income Tax Consequences"), or (b) materially adversely
affect the ability of any party to perform its covenants and agreements under
the Agreement.
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In addition, BancAlabama has agreed that, except as specifically permitted
by the Agreement, prior to the earlier of the Effective Time or termination of
the Agreement, BancAlabama will not, except with the prior written consent of
the chief executive officer, president, or chief financial officer of UPC or as
expressly contemplated or permitted by the Agreement, agree or commit to do, or
permit any of its subsidiaries to agree or commit to do, any of the following:
(i) amend the Charter, Bylaws, or other governing instruments of any BancAlabama
company; (ii) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a BancAlabama company to another
BancAlabama company) in excess of an aggregate of $100,000 (for the BancAlabama
companies on a consolidated basis) except in the ordinary course of business of
the BancAlabama subsidiaries consistent with past practices (which shall
include, for BancAlabama subsidiaries that are depository institutions, the
creation of deposit liabilities, purchases of federal funds, advances from the
Federal Reserve Bank or the Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency securities), or impose, or
suffer the imposition, on any asset of any BancAlabama company of any lien or
permit any such lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and liens in effect as of the date
of the Agreement that were previously disclosed to UPC by BancAlabama); (iii)
repurchase, redeem, or otherwise acquire or exchange (other than exchanges in
the ordinary course under employee benefit plans), directly or indirectly, any
shares, or any securities convertible into any shares, of the capital stock of
any BancAlabama company, or declare or pay any dividend or make any other
distribution in respect of any BancAlabama capital stock; (iv) except pursuant
to the Agreement, or pursuant to the exercise of stock options outstanding as of
the date of the Agreement and pursuant to the terms of the stock options on the
date of the Agreement, or pursuant to the Option Agreement, issue, sell, pledge,
encumber, authorize the issuance of, enter into any contract to issue, sell,
pledge, encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of BancAlabama Common Stock, or any other
capital stock of any BancAlabama company, or any stock appreciation rights, or
any option, warrant, conversion, or other right to acquire any such stock, or
any security convertible into any such stock; (v) adjust, split, combine, or
reclassify any capital stock of any BancAlabama company or issue or authorize
the issuance of any other securities in respect of or in substitution for shares
of BancAlabama Common Stock or sell, lease, mortgage, or otherwise dispose of or
otherwise encumber any shares of capital stock of any BancAlabama subsidiary
(unless any such shares of stock are sold or otherwise transferred to another
BancAlabama company) or any assets having a book value in excess of $200,000
other than in the ordinary course of business for reasonable and adequate
consideration; (vi) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of five years
or less, or Federal Home Loan Bank stock, purchase any securities or make any
material investment, either by purchase of stock or securities, contributions to
capital, asset transfers, or purchase of any assets, in any person other than a
wholly-owned BancAlabama subsidiary, or otherwise acquire direct or indirect
control over any person, with certain exceptions; (vii) grant any increase in
compensation or benefits to the employees or officers of any BancAlabama
company, except in accordance with past practices as previously disclosed to UPC
by BancAlabama or as required by law; pay any severance or termination pay or
any bonus other than pursuant to written policies or written contracts in effect
on the date of the Agreement, and previously disclosed to UPC by BancAlabama;
enter into or amend any severance agreements with officers of any BancAlabama
company; or grant any material increase in fees or other increases in
compensation or other benefits to directors of any BancAlabama company except in
accordance with past practices as previously disclosed to UPC by BancAlabama;
(viii) voluntarily accelerate the vesting of any stock options or other
stock-based compensation or employee benefits other than the acceleration of
vesting which occurs under a benefit plan upon a change of control of
BancAlabama; (ix) enter into or amend any employment contract between any
BancAlabama company and any person (unless such amendment is required by law)
that the BancAlabama company 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; (x) adopt any new employee benefit plan of
any BancAlabama company or make any material change in or to any existing
employee benefit plans of any BancAlabama company other than any such change
that is required by law or that, in the opinion of counsel, is necessary or
advisable to maintain the tax qualified status of any such plan, or make any
distribution from such employee benefit plans, except as required by law, the
terms of the plans, or
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consistent with past practices; (xi) make any significant change in any tax or
accounting methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in tax laws or regulatory accounting
requirements or generally accepted accounting principles; (xii) commence or
settle any litigation other than in accordance with past practice or settle any
litigation involving any liability of any BancAlabama company for material money
damages or restrictions upon the operations of any BancAlabama company; or
(xiii) enter into, modify, amend or terminate any material contract (excluding
certain contracts specifically addressed in the Agreement) or waive, release,
compromise or assign any material rights or claims.
The Agreement also provides that from the date of the Agreement until the
earlier of the Effective Time or the termination of the Agreement, UPC covenants
and agrees that it will (i) continue to conduct its business and the business of
its subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the UPC Common Stock and the business prospects of the UPC
companies and (ii) take no action which would (a) materially adversely affect
the ability of any party to obtain any consents required for the transactions
contemplated by the Agreement without imposition of a condition or restriction
of the type referred to in the Agreement or prevent the transactions
contemplated by the Agreement, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Code, or (b) materially adversely affect the
ability of any party to perform its covenants and agreements under the
Agreement; provided, that any UPC company may acquire any other company or
discontinue or dispose of any of its assets or business if such action is, in
the judgment of UPC, desirable in the conduct of the business of UPC and its
subsidiaries. See "-- Certain Federal Income Tax Consequences."
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Consummation of the Merger will not alter the present management team or
Board of Directors of UPC. Information concerning the management of UPC is
included in the documents incorporated herein by reference. See "Documents
Incorporated by Reference." For additional information regarding the interests
of certain persons in the Merger, see "-- Interests of Certain Persons in the
Merger."
BNF will be the surviving corporation resulting from the Merger and shall
continue to be governed by the laws of the State of Delaware and operate in
accordance with its Certificate of Incorporation ("Certificate") and Bylaws as
in effect on the date, and immediately prior to the Effective Time, of the
Agreement until otherwise amended or repealed after the Effective Time.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
General. Certain members of BancAlabama management and of the BancAlabama
Board of Directors have interests in the Merger that are in addition to any
interests they may have as shareholders of BancAlabama generally. These
interests include, among other things, provisions in the Agreement relating to
indemnification of BancAlabama directors and officers, and certain severance and
other employee benefits, as described below.
Indemnification and Insurance. The Agreement provides that UPC will
indemnify, defend and hold harmless the present and former directors, officers,
employees, and agents of the BancAlabama companies against all liabilities
arising out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by the Agreement and the Option
Agreement) to the full extent permitted under Delaware law and by BancAlabama's
Certificate of Incorporation or Bylaws, or to the full extent covered by
existing insurance policies of BancAlabama as in effect as of the date of the
Agreement. In any case in which approval by UPC is required to effectuate any
indemnification, UPC shall direct, at the election of the indemnified party, the
determination of any such approval will be made by independent counsel mutually
agreed upon between UPC and the indemnified party.
BancAlabama Executive Arrangements. Officers of BancAlabama are employees
at will, and none of the officers of BancAlabama has a written employment
contract. William R. Collins, Chairman of the Board and Chief Executive Officer
of BancAlabama, has an Executive Benefit Agreement effective January 3, 1995,
with BancAlabama which provides a split-dollar life insurance benefit to Mr.
Collins. This agreement will be
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assumed by BNF in the Merger. After the Merger, UPC and William R. Collins will
enter into an employment agreement wherein Mr. Collins will be employed by UPC
in an executive capacity for a period of one year with successive one-year
renewal options with compensation equal to the annual base salary received by
Mr. Collins from BancAlabama as of the date of the Agreement. If Mr. Collins'
employment is terminated by UPC without cause, UPC will be obligated to pay Mr.
Collins his compensation until he attains age 70.
Director and Officer Stock Options. BancAlabama has a Nonstatutory Stock
Option Plan ("BancAlabama Option Plan") for officers, directors, and employees
whereby options are granted to purchase shares of BancAlabama's Common Stock at
an option price as determined by BancAlabama's Board of Directors. Options
granted under this plan cannot exceed the aggregate of 132,000 and no options
can be granted after the year 1999. Pursuant to the Agreement, each option
issued under the BancAlabama Option Plan that is outstanding at the Effective
Time will be converted into an option to purchase that number of whole shares
of UPC Common Stock (and cash in lieu of fractional shares as previously
described herein) equal to the number of shares of BancAlabama Common Stock
subject to such option multiplied by the Exchange Ratio. The per share
exercise price under each such option shall be adjusted by dividing the per
share exercise price under each such option by the Exchange Ratio and rounding
up to the nearest cent. As a result of the change in control of BancAlabama,
at the Effective Time, all participants shall become fully vested in all options
granted to them pursuant to the provisions of the BancAlabama Option Plan.
The following table sets forth with respect to executive officers
individually and all executive officers as a group (collectively, the "Executive
Officer Group"): (i) the number of shares covered by options held by such
persons, (ii) the weighted average exercise price of all such options held by
such persons, and (iii) the aggregate value (i.e., stock price less option
exercise price) of all such options based upon the per share value of
BancAlabama Common Stock on the Record Date. As noted above, all BancAlabama
stock options are currently exercisable. There are no outside director stock
options.
<TABLE>
<CAPTION>
WEIGHTED AVERAGE AGGREGATE
EXERCISE PRICE VALUE OF
OPTIONS HELD PER OPTION OPTIONS
------------ ---------------- ---------
<S> <C> <C> <C>
W. R. Collins........................................ 60,000 $10.00 $ 240,000
Jean D. Snead........................................ 10,000 10.00 40,000
Robert F. Harwell.................................... 10,000 10.00 40,000
Michael J. Williams.................................. 10,000 10.00 40,000
Robert E. DeNeefe.................................... 10,000 11.00 30,000
Executive Officer Group (5 persons).................. 100,000 10.10 390,000
</TABLE>
Other Matters Relating to BancAlabama Employee Benefit Plans. The
Agreement also provides that, after the Effective Time, UPC will provide
generally to officers and employees of the BancAlabama companies who, at or
after the Effective Time, become officers or employees of a UPC company,
employee benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of UPC Common Stock, except as set forth
in the Agreement), on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the UPC companies to their
similarly situated officers and employees. For purposes of participation and
vesting (but not benefit accrual) under such employee benefit plans, the service
of the employees of the BancAlabama Companies prior to the Effective Time shall
be treated as service with a UPC company participating in such employee benefit
plans. The Agreement further provides that the Surviving Corporation will cause
its subsidiaries to honor, in accordance with their terms, all employment,
severance, consulting, and other compensation contracts disclosed to UPC between
any BancAlabama company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the BancAlabama benefit plans.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE MATERIAL ANTICIPATED FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO BANCALABAMA SHAREHOLDERS. THIS SUMMARY IS BASED ON
THE FEDERAL INCOME TAX LAWS AS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT
DOES NOT TAKE INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS,
INCLUDING AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN
JUDICIAL OR ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT.
THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY
PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT
ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO BANCALABAMA
SHAREHOLDERS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE,
AS FOREIGN PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE
COMPANIES, AND CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY
CONSEQUENCES OF THE MERGER UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS.
BANCALABAMA SHAREHOLDERS, THEREFORE, ARE
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URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO
THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION
AND EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND OTHER TAX LAWS, AND THE
IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
The Merger is intended to constitute a "reorganization" within the meaning
of section 368(a) of the Code, with BancAlabama and UPC each intended to qualify
as a "party to a reorganization" under section 368(b) of the Code, in which case
the following tax consequences will generally result (subject to the limitations
and qualifications referred to herein):
(a) The Merger will qualify as a reorganization within the meaning of
Sections 368(a) of the Code. Each of BancAlabama, BNF, and UPC will be a
party to a reorganization within the meaning of Section 368(b).
(b) No gain or loss will be recognized by BancAlabama upon the
transfer of its assets to BNF in exchange solely for UPC Common Stock and
the assumption by BNF of the liabilities of BancAlabama.
(c) No gain or loss will be recognized by UPC and BNF on receipt by
BNF of BancAlabama's assets in exchange for UPC Common Stock.
(d) The basis of BancAlabama's assets in the hands of BNF will, in
each case, be the same as the basis of those assets in the hands of
BancAlabama immediately prior to the transaction.
(e) The holding period of the assets of BancAlabama in the hands of
BNF will, in each case, include the period during which such assets were
held by BancAlabama.
(f) No gain or loss will be recognized by a BancAlabama shareholder
upon the receipt of UPC Common Stock solely in exchange for their shares of
BancAlabama Common Stock.
(g) The basis of the UPC Common Stock received by a BancAlabama
shareholder in the transaction will be the same as the basis of the
BancAlabama Common Stock surrendered in exchange therefore less the
basis allocated to any fractional share of UPC Common Stock settled by
cash payment.
(h) The holding period of the UPC Common Stock received by a
BancAlabama shareholder (including the holding period of any fractional
share interest) will include the holding period of the BancAlabama Common
Stock surrendered in exchange therefor, provided the BancAlabama Common
Stock was held as a capital asset on the date of the exchange.
(i) The payment of cash in lieu of fractional shares of UPC Common
Stock will be treated as if the fractional shares were issued as part of
the exchange and then redeemed by UPC. These cash payments will be treated
as having been received as distributions in full payment in exchange for
the fractional shares of UPC Common Stock redeemed as provided in Section
302(a). Generally, any gain or loss recognized upon such exchange will be
capital gain or loss, provided the fractional share would constitute a
capital asset in the hands of the exchanging shareholder.
(j) Where solely cash is received by a BancAlabama shareholder in
exchange for his shares of BancAlabama Common Stock pursuant to the
exercise of dissenters' rights of appraisal, such cash will be treated as
having been received in redemption of his shares of BancAlabama Common
Stock, subject to the provisions and limitations of Section 302 of the
Code.
A federal income tax ruling with respect to this transaction was not
requested from the Internal Revenue Service ("IRS"). Instead, Alston & Bird,
counsel to UPC, will render an opinion to BancAlabama and UPC concerning certain
federal income tax consequences of the proposed Merger under federal income tax
law. It is such firm's opinion that, based upon the assumption the Merger is
consummated in accordance with Delaware law and in conformity with the
representations made by the management of BancAlabama and UPC, the transaction
will constitute a "reorganization" within the meaning of section 368(a) of the
Code ("Tax Opinion"). The Tax Opinion does not address any state, local, or
other tax consequences of the Merger. The Tax Opinion does not bind the IRS nor
preclude the IRS from adopting a contrary position. In addition,
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the Tax Opinion will be subject to certain assumptions and qualifications and
will be based on the truth and accuracy of certain representations made by the
management of BancAlabama and UPC, as to, among other things, the fact that
there is no plan or intention by any of the shareholders of BancAlabama who own
one percent (1%) or more of the outstanding BancAlabama Common Stock, and to the
best of the knowledge of the management of BancAlabama, the remaining
BancAlabama shareholders have no plan or intention, to sell, exchange, or
otherwise dispose of a number of shares of UPC Common Stock that they will
receive in the Merger that will reduce on the part of the BancAlabama
shareholders such shareholders' ownership of UPC Common Stock to a number of
shares having an aggregate value as of the date of the Merger of less than fifty
percent (50%) of the aggregate value of all of the stock of BancAlabama
outstanding immediately prior to the Merger.
A successful IRS challenge to the "reorganization" status of the Merger
would result in a BancAlabama shareholder recognizing gain or loss with respect
to each share of BancAlabama Common Stock surrendered equal to the difference
between the shareholder's basis in such share and the fair market value, as of
the Effective Time of the Merger, of the UPC Common Stock received in exchange
therefor. In such event, a BancAlabama shareholder's aggregate basis in the UPC
Common Stock received would equal its fair market value and his or her holding
period for such stock would begin the day after the Merger.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests. Under the pooling-of-interests method of accounting, the recorded
amounts of the assets and liabilities of BancAlabama will be carried forward at
their previously recorded amounts, and due to BancAlabama not being significant
to UPC, only the current year financial information will be restated as though
BancAlabama and UPC had been combined at the beginning of the year.
In order for the Merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding BancAlabama Common
Stock must be exchanged for UPC Common Stock with substantially similar terms.
There are certain other criteria that must be satisfied in order for the Merger
to qualify as a pooling of interests, some of which criteria cannot be satisfied
until after the Effective Time. In addition, it is a condition to closing that
Price Waterhouse LLP deliver a letter to UPC, dated as of the Effective Time, to
the effect the Merger will qualify for pooling-of-interests accounting
treatment.
For information concerning certain conditions to be imposed on the exchange
of BancAlabama Common Stock for UPC Common Stock in the Merger by affiliates of
BancAlabama and certain restrictions to be imposed on the transferability of the
UPC Common Stock received by those affiliates in the Merger in order, among
other things, to ensure the application of pooling-of-interests accounting
treatment, see "-- Resales of UPC Common Stock."
EXPENSES AND FEES
The Agreement provides, in general, that each of the parties will bear and
pay its own expenses in connection with the transactions contemplated by the
Agreement, including fees and expenses of its own financial or other
consultants, investment bankers, accountants, and counsel, except that each of
UPC and BancAlabama will bear and pay one-half of the printing costs in
connection with the Registration Statement and this Proxy Statement.
RESALES OF UPC COMMON STOCK
Shares of UPC Common Stock to be issued to shareholders of BancAlabama
in connection with the Merger will be registered under the Securities Act. All
shares of UPC Common Stock received by holders of BancAlabama Common Stock and
all shares of UPC Common Stock issued and outstanding immediately prior to the
Effective Time, upon consummation of the Merger will be freely transferable by
those shareholders of BancAlabama not deemed to be "Affiliates" of BancAlabama
or UPC. "Affiliates" generally are defined as persons or entities who control,
are controlled by, or are under common control with BancAlabama or UPC at the
time of the Special Meeting (generally, executive officers, directors and 10%
shareholders).
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Rules 144 and 145 promulgated under the Securities Act restrict the sale of
UPC Common Stock received in the Merger by Affiliates and certain of their
family members and related interests. Generally speaking, during the two years
following the Effective Time, Affiliates of BancAlabama or UPC may resell
publicly the UPC Common Stock received by them in the Merger within certain
limitations as to the amount of UPC Common Stock sold in any three-month period
and as to the manner of sale. After the two-year period, such Affiliates of
BancAlabama who are not affiliates of UPC may resell their shares without
restriction. The ability of Affiliates to resell shares of UPC Common Stock
received in the Merger under Rule 144 or 145 as summarized herein generally will
be subject to UPC's having satisfied its Exchange Act reporting requirements for
specified periods prior to the time of sale. Affiliates will receive additional
information regarding the effect of Rules 144 and 145 on their ability to resell
UPC Common Stock received in the Merger. Affiliates also would be permitted to
resell UPC Common Stock received in the Merger pursuant to an effective
registration statement under the Securities Act or an available exemption from
the Securities Act registration requirements. This Proxy Statement does not
cover any resales of UPC Common Stock received by persons who may be deemed to
be Affiliates of BancAlabama or UPC.
BancAlabama has agreed to use its reasonable efforts to cause each person
who may be deemed to be an Affiliate of BancAlabama to execute and deliver to
UPC not later than 30 days prior to the Effective Time, an agreement (each, an
"Affiliate Agreement") providing that such Affiliate will not sell, pledge,
transfer, or otherwise dispose of any BancAlabama Common Stock held by such
Affiliate except as contemplated by the Agreement or the Affiliate Agreement,
and will not sell, pledge, transfer or otherwise dispose of any UPC Common Stock
received by such Affiliate upon consummation of the Merger (i) except in
compliance with the Securities Act and the rules and regulations thereunder and
(ii) until such time as financial results covering 30 days of combined
operations of UPC and BancAlabama have been published. If the Merger will
qualify for pooling-of-interests accounting treatment, shares of UPC Common
Stock issued to such affiliates of BancAlabama in exchange for shares of
BancAlabama Common Stock shall not be transferable until such time as financial
results covering at least 30 days of combined operations of UPC and BancAlabama
have been published, regardless of whether each such Affiliate has provided an
Affiliate Agreement (and UPC shall be entitled to place restrictive legends upon
certificates for shares of UPC Common Stock issued to affiliates of
BancAlabama). Certificates representing shares of BancAlabama Common Stock
surrendered for exchange by any person who is an Affiliate of BancAlabama for
purposes of Rule 145(c) under the Securities Act shall not be exchanged for
certificates representing shares of UPC Common Stock until UPC has received such
a written agreement from such person. Prior to publication of such results, UPC
will not transfer on its books any shares of UPC Common Stock received by an
Affiliate pursuant to the Merger. The stock certificates representing UPC Common
Stock issued to Affiliates in the Merger may bear a legend summarizing the
foregoing restrictions. See "-- Conditions to Consummation of the Merger."
OPTION AGREEMENT
As an inducement and a condition to UPC entering into the Agreement,
BancAlabama and UPC entered into the Option Agreement, pursuant to which
BancAlabama granted UPC an option (the "Option") entitling it to purchase up to
139,921 shares (representing 19.9% of the shares issued and outstanding before
giving effect to the exercise of such Option) of BancAlabama Common Stock under
the circumstances described below, at a cash price per share equal to $10.29,
subject to possible adjustment in certain circumstances. Notwithstanding the
foregoing, under the terms of the Option Agreement, UPC will be precluded from
purchasing in excess of that number of shares of BancAlabama Common stock which
has a "spread value" (defined generally as the difference between the value of
BancAlabama Common Stock and the per share exercise price of the option
multiplied by the number of shares to be purchased) that exceeds $550,000. This
description of the Option Agreement and the Option does not purport to be
complete and is qualified in its entirety by reference to the Option Agreement,
which is filed as an exhibit to this Registration Statement and incorporated
herein by reference.
Subject to applicable law and regulatory restrictions, UPC may exercise the
Option, in whole or in part, if, but only if, a Purchase Event (as defined
below) occurs prior to the Option's termination; provided that
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UPC, at the time, is not in material breach of the Option Agreement or the
Agreement. As defined in the Option Agreement, "Purchase Event" means either of
the following events:
(a) without UPC's written consent, BancAlabama authorizing,
recommending, publicly proposing, or publicly announcing an intention to
authorize, recommend, or propose or entering into an agreement with any
third party to effect (i) a merger, consolidation, or similar transaction
involving BancAlabama or any of its subsidiaries (other than transactions
solely between BancAlabama's subsidiaries), (ii) except as permitted by the
Agreement, the disposition, by sale, lease, exchange, or otherwise, of 35%
or more of the consolidated assets of BancAlabama and its subsidiaries or
(iii) the issuance, sale, or other disposition (including by way of merger,
consolidation, share exchange or any similar transaction) of securities
representing 35% or more of the voting power of BancAlabama or any of its
subsidiaries; or
(b) any third party acquiring beneficial ownership, or the right to
acquire beneficial ownership of, or the formation of any group (as defined
under the Exchange Act) that beneficially owns or has the right to acquire
beneficial ownership of, 35% or more of the outstanding shares of
BancAlabama Common Stock.
The Option will terminate upon the earliest of the following:
(a) the Effective Time;
(b) termination of the Agreement in accordance with the terms thereof
prior to the occurrence of a Purchase Event or a Preliminary Purchase Event
(other than a termination of the Agreement under certain circumstances
involving a willful breach by BancAlabama) (a "Default Termination");
(c) 15 months after termination of the Agreement by UPC pursuant to a
Default Termination;
and
(d) 15 months after termination of the Agreement (other than pursuant
to a Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event.
As defined in the Option Agreement, "Preliminary Purchase Event" includes
either of the following events:
(a) commencement or filing of a registration statement under the
Securities Act by any third party of a tender offer or exchange offer to
purchase any shares of BancAlabama Common Stock such that, upon
consummation of such offer, such person would own or control 15% or more of
the then-outstanding shares of BancAlabama Common Stock (a "Tender Offer"
or an "Exchange Offer," respectively); or
(b) failure of the shareholders of BancAlabama to approve the
Agreement at the meeting of such shareholders held for the purpose of
voting on the Agreement, the failure to have such meeting or the
cancellation thereof prior to termination of the Agreement, or the
withdrawal or modification by BancAlabama's Board of Directors in a manner
adverse to UPC of the recommendation of the Board of Directors with respect
to the Agreement after public announcement that a third party (i) made, or
disclosed an intention to make, a proposal to engage in an acquisition
transaction, (ii) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer or
(iii) filed an application under certain federal statutes for approval to
engage in an acquisition transaction.
In the event of any change in BancAlabama Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares, or
similar transaction, the type and number of securities subject to the Option,
and the purchase price per share, as the case may be, will be adjusted
appropriately. In the event that any additional shares of BancAlabama Common
Stock are issued after April 26, 1996 (other than pursuant to an event described
in the preceding sentence), the number of shares of BancAlabama Common Stock
subject to the Option will be adjusted so that, after such issuance, it,
together with any shares of BancAlabama Common Stock previously issued pursuant
to the Option Agreement, equals 19.9% of the number of shares then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option and subject to the limitation on Spread Value, described above.
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Upon the occurrence of a Repurchase Event (as defined below) that occurs
prior to the exercise or termination of the Option, at the request of UPC,
delivered within 12 months of the Repurchase Event, BancAlabama will, subject to
regulatory restrictions, be obligated to repurchase the Option and any shares of
BancAlabama Common Stock therefor purchased pursuant to the Option Agreement at
a specified price which in no case will exceed $550,000.
As defined in the Option Agreement, a "Repurchase Event" shall occur if (i)
any person (other than UPC or any UPC subsidiary) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the Exchange
Act), or the right to acquire beneficial ownership, or any "group" (as such term
is defined under the Exchange Act) shall have been formed which beneficially
owns or has the right to acquire beneficial ownership of 50% or more of the
then-outstanding shares of BancAlabama Common Stock, or (ii) any of the
following transactions is consummated: (a) BancAlabama consolidates with or
merges into any person, other than UPC or one of UPC's subsidiaries, and is not
the continuing or surviving corporation of such consolidation or merger; (b)
BancAlabama permits any person, other than UPC or one of UPC's subsidiaries, to
merge into BancAlabama and BancAlabama shall be the continuing or surviving
corporation, but, in connection with such merger, the then-outstanding shares of
BancAlabama Common Stock shall be changed into or exchanged for stock or other
securities of BancAlabama or any other person or cash or any other property or
the outstanding shares of BancAlabama Common Stock immediately prior to such
merger shall after such merger represent less than 50% of the outstanding shares
and share equivalents of the merged company; or (c) BancAlabama sells or
otherwise transfers all or substantially all of its assets to any person, other
than UPC or one of UPC's subsidiaries.
In the event that prior to the exercise or termination of the Option,
BancAlabama enters into an agreement to engage in any of the transactions
described in clause (ii) of the definition of Repurchase Event above, the
agreement governing such transaction must make proper provision so that the
Option will, upon consummation of such transaction, be converted into, or
exchanged for, an option with terms similar to the Option, at the election of
UPC, of either the acquiring person or any person that controls the acquiring
person.
After the occurrence of a Purchase Event, UPC may assign the Option
Agreement and its rights thereunder in whole or in part.
Upon the occurrence of certain events, BancAlabama has agreed to file with
the SEC and to cause to become effective certain registration statements under
the Securities Act with respect to dispositions by UPC and its assigns of all or
part of the Option and/or any shares of BancAlabama Common Stock into which the
Option is exercisable.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
As a result of the Merger, holders of BancAlabama Common Stock will be
exchanging their shares of a Delaware corporation governed by the DGCL and
BancAlabama's Certificate of Incorporation, as amended (the "Certificate"), and
Bylaws, for shares of UPC, a Tennessee corporation governed by the Tennessee Act
and UPC's Charter of Incorporation, as amended (the "Charter"), and Bylaws.
Certain significant differences exist between the rights of BancAlabama
shareholders and those of UPC shareholders. The differences deemed material by
BancAlabama and UPC are summarized below. In particular, UPC's Charter and
Bylaws contain several provisions that may be deemed to have an anti-takeover
effect in that they could impede or prevent an acquisition of UPC unless the
potential acquirer has obtained the approval of UPC's Board of Directors. The
following discussion is necessarily general; it is not intended to be a complete
statement of all differences affecting the rights of shareholders and their
respective entities, and it is qualified in its entirety by reference to the
DGCL and the Laws of Tennessee as well as to UPC's Charter and Bylaws and
BancAlabama's Certificate and Bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
The provisions of UPC's Charter and Bylaws described below under the
headings, "-- Authorized Capital Stock," "-- Amendment of Charter and Bylaws,"
"-- Classified Board of Directors and Absence of
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Cumulative Voting," "-- Director Removal and Vacancies," "-- Limitations on
Director Liability," "-- Indemnification," "-- Special Meeting of Shareholders,"
"-- Actions by Shareholders Without a Meeting," "-- Shareholder Nominations and
Proposals" and "-- Business Combinations" are referred to herein as the
"Protective Provisions." In general, one purpose of the Protective Provisions is
to assist UPC's Board of Directors in playing a role if any group or person
attempts to acquire control of UPC, so that the Board can further protect the
interests of UPC and its shareholders as appropriate under the circumstances,
including, if the Board determines that a sale of control is in their best
interests, by enhancing the Board's ability to maximize the value to be received
by the shareholders upon such a sale.
Although UPC's management believes the Protective Provisions are,
therefore, beneficial to UPC's shareholders, the Protective Provisions also may
tend to discourage some takeover bids. 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. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that the Protective Provisions discourage undesirable
proposals, UPC may be able to avoid those expenditures of time and money.
The Protective Provisions also may discourage open market purchases by a
potential acquirer. Such purchases may increase the market price of UPC Common
Stock temporarily, enabling shareholders to sell their shares at a price higher
than that which otherwise would prevail. In addition, the Protective Provisions
may decrease the market price of UPC Common Stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. The Protective Provisions also
may make it more difficult and time consuming for a potential acquirer to obtain
control of UPC through replacing the Board of Directors and management.
Furthermore, the Protective Provisions may make it more difficult for UPC's
shareholders to replace the Board of Directors or management, even if a majority
of the shareholders believe such replacement is in the best interests of UPC. As
a result, the Protective Provisions may tend to perpetuate the incumbent Board
of Directors and management.
AUTHORIZED CAPITAL STOCK
UPC. UPC's Charter authorizes the issuance of up to (i) 100,000,000 shares
of UPC Common Stock, of which 46,129,307 shares were issued and outstanding as
of July 31, 1996, and (ii) 10,000,000 of no par value preferred stock ("UPC
Preferred Stock"), of which no shares of UPC Series A Preferred Stock, and
3,489,336 shares of UPC Series E Preferred Stock were issued and outstanding as
of July 31, 1996. UPC's Board of Directors may authorize the issuance of
additional shares of UPC Common Stock without further action by UPC's
shareholders, unless such action is required in a particular case by applicable
laws or regulations or by any stock exchange upon which UPC's capital stock may
be listed.
Similarly, with certain exceptions, UPC's Board of Directors may issue,
without any further action by the shareholders, shares of UPC Preferred Stock,
in one or more classes or series, with such voting, conversion, dividend, and
liquidation rights as specified in UPC's Charter. In providing for the issuance
of such shares, UPC's Board of Directors may determine, among other things, the
distinctive designation and number of shares comprising a series of preferred
stock, the dividend rate or rates on the shares of such series and the relation
of such dividends to the dividends payable on other classes of stock, whether
the shares of such series shall be convertible into or exchangeable for shares
of any other class or series of UPC capital stock, the voting powers if any of
such series, and any other preferences, privileges, and powers of such series.
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of UPC, the holders of any series of UPC
Preferred Stock will have priority over holders of UPC Common Stock.
The authority to issue additional shares of UPC Common Stock or Preferred
Stock provides UPC with the flexibility necessary to meet its future needs
without the delay resulting from seeking shareholder approval. The authorized
but unissued shares of UPC Common Stock and UPC Preferred Stock will be issuable
from time to time for any corporate purpose, including, without limitation,
stock splits, stock dividends, employee benefit and compensation plans,
acquisitions, and public or private sales for cash as a means of raising
capital. Such shares could be used to dilute the stock ownership of persons
seeking to obtain control of UPC. In
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addition, the sale of a substantial number of shares of UPC voting stock to
persons who have an understanding with UPC concerning the voting of such shares,
or the distribution or declaration of a dividend of shares of UPC voting stock
(or the right to receive UPC voting stock) to UPC shareholders, may have the
effect of discouraging or increasing the cost of unsolicited attempts to acquire
control of UPC.
In 1989, the UPC Board of Directors adopted a Share Purchase Rights Plan
("Preferred Share Rights Plan") and distributed a dividend of one Preferred
Share Unit Purchase Right ("Preferred Share Right") for each outstanding share
of UPC Common Stock. In addition, under the Preferred Share Rights Plan, one
Preferred Share Right is to be automatically, and without further action by UPC,
distributed in respect to each share of UPC Common Stock issued after adoption
of the Preferred Share Rights Plan. The Preferred Share 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 Preferred Share 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 Preferred Share Rights would separate from UPC Common Stock
and each holder of a Preferred Share Right (other than the potential acquiror)
would be entitled to purchase certain equity securities at prices below their
market value. UPC has authorized 750,000 shares of Series A Preferred Stock for
issuance under the Preferred Share Rights Plan and no shares have been issued as
of the date of this Proxy Statement. Until a Preferred Share Right is exercised,
the holder thereof, as such, has no rights of a shareholder of UPC, including
the right to vote or receive dividends.
BancAlabama. BancAlabama's Certificate authorizes the issuance of up to
(i) 2,000,000 shares of BancAlabama Common Stock, of which 703,122 shares were
issued and outstanding as of the BancAlabama Record Date, and (ii) 500,000
shares of $1.00 par value preferred stock ("BancAlabama Preferred Stock"), of
which no shares had been issued as of the BancAlabama Record Date. BancAlabama's
Board of Directors may authorize the issuance of additional authorized shares of
BancAlabama Common Stock without further action by BancAlabama's shareholders,
unless such action is required in a particular case by applicable laws or
regulations or by any stock exchange upon which BancAlabama's capital stock may
be listed.
Subject to certain provisions of the DGCL, BancAlabama's Board of Directors
may issue, without any further action by the shareholders, shares of BancAlabama
Preferred Stock, in one or more classes or series, with such voting, conversion,
dividend, and liquidation rights as the board may specify. In establishing and
issuing shares of BancAlabama Preferred Stock, BancAlabama's Board of Directors
may designate that BancAlabama Preferred Stock will have voting rights in excess
of one vote per share or will vote as a separate class on any or all matters,
thus diluting the voting power of the BancAlabama Common Stock. The board also
may designate that BancAlabama Preferred Stock will have dividend rights that
are cumulative and that receive preferential treatment compared to BancAlabama
Common Stock, and that such BancAlabama Preferred Stock will have liquidation
rights with priority over BancAlabama Common Stock in the event of BancAlabama's
liquidation.
AMENDMENT OF CHARTER AND BYLAWS
UPC. The Charter of UPC generally provides that amendments thereto may be
adopted in any manner permitted by the TBCA. The TBCA generally provides that a
corporation's charter may be amended by a majority of votes entitled to be cast
on the amendment, subject to any condition the board of directors may place on
its submission of the amendment to the shareholders. The Charter requires a vote
of two-thirds or more of the shares of capital stock entitled to vote in an
election of directors to amend the articles of the Charter governing directors
and to remove a director from office whether with or without cause. A two-thirds
vote is also required to amend, alter or repeal the article of the Charter
relating to business combinations.
The Board of Directors may adopt, amend, or repeal the Bylaws by a majority
vote of the entire Board of Directors. The Bylaws adopted by the Board of
Directors may then be further amended or repealed by an action of UPC's
shareholders.
UPC's Charter also provides that all corporate powers of UPC shall be
exercised by the Board of Directors except as otherwise provided by law. The
Board may designate an executive committee consisting of
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five or more directors and may authorize such committee to exercise all of the
authority of the Board, including the authority to adopt, amend and repeal the
Bylaws, to submit any action to the shareholders, to fill vacancies on the Board
or any committee, to declare dividends or other corporate distributions, and to
issue or reissue any capital stock or any warrant, right or option to acquire
capital stock of the corporation.
BancAlabama. The Certificate of BancAlabama generally provides that the
Certificate may be amended or repealed by the affirmative vote of a majority of
the shares entitled to vote thereon and a majority of the shares of each class
entitled to vote thereon, as prescribed by the DGCL. However, the provisions of
BancAlabama's Certificate relating to amendment of the article of the
Certificate relating to directors, and the article of the Certificate relating
to business combinations may be amended or repealed only by the affirmative vote
of the holders of at least seventy-five percent of BancAlabama's outstanding
voting stock.
Pursuant to BancAlabama's Certificate, the Board of Directors generally has
the power to alter, amend, repeal, or adopt Bylaws. The Bylaws adopted by the
Board may be altered, amended, or repealed, and new Bylaws may be adopted, by
the shareholders.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
UPC. The Charter of UPC provides that UPC's Board of Directors is divided
into three classes, with each class to be as nearly equal in number as possible.
The directors in each class serve three-year terms of office. The effect of
UPC's having a classified Board of Directors is that only approximately
one-third of the members of the Board are elected each year, which effectively
requires two annual meetings for UPC's shareholders to change a majority of the
members of the Board. The purpose of dividing UPC's Board of Directors into
classes is to facilitate continuity and stability of leadership of UPC by
ensuring that experienced personnel familiar with UPC will be represented on
UPC's Board at all times, and to permit UPC's management to plan for the future
for a reasonable time. However, by potentially delaying the time within which an
acquirer could obtain working control of the Board, this provision may
discourage some potential mergers, tender offers, or takeover attempts.
Pursuant to the Charter of UPC, each shareholder is entitled to one vote
for each share of UPC Common Stock held and is not entitled to cumulative voting
rights in the election of directors. With cumulative voting, a shareholder has
the right to cast a number of votes equal to the total number of such holder's
shares multiplied by the number of directors to be elected. The shareholder has
the right to distribute all of his votes in any manner among any number of
candidates or to accumulate such shares in favor of one candidate. Directors are
elected by a plurality of the total votes cast by all shareholders. With
cumulative voting, it may be possible for minority shareholders to obtain
representation on the Board of Directors. Without cumulative voting, the holders
of more than 50% of the shares of UPC Common Stock generally have the ability to
elect 100% of the directors. As a result, the holders of the remaining UPC
Common Stock effectively may not be able to elect any person to the Board of
Directors. The absence of cumulative voting thus could make it more difficult
for a shareholder who acquires less than a majority of the shares of UPC Common
Stock to obtain representation on UPC's Board of Directors.
BancAlabama. As allowed by the DGCL, BancAlabama's Bylaws contain a
provision similar to the provision in the Bylaws of UPC that requires that the
Board of Directors shall be divided into three classes serving staggered
three-year terms, with the terms of one class of directors to expire each year.
Pursuant to the Bylaws of BancAlabama, each shareholder generally is entitled to
one vote for each share of BancAlabama Common Stock held and is not entitled to
cumulative voting rights in the election of directors.
DIRECTOR REMOVAL AND VACANCIES
UPC. UPC's Charter provides that a director may be removed by the
shareholders only upon the affirmative vote of the holders of two-thirds of the
voting power of all shares of capital stock entitled to vote generally in the
election of directors. The purpose of this provision is to prevent a majority
shareholder from circumventing the classified board system by removing directors
and filling the vacancies with new individuals selected by that shareholder.
Accordingly, the provision may have the effect of impeding efforts to gain
control of the Board of Directors by anyone who obtains a controlling interest
in UPC Common Stock. Vacancies on
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the board of directors may be filled by the board of directors or shareholders,
as provided under the UPC Bylaws and the TBCA. The term of a director appointed
to fill a vacancy expires at the next meeting of shareholders at which directors
are elected.
BancAlabama. The DGCL provides that, unless the corporation's certificate
of incorporation provides otherwise, the shareholders of a corporation that has
a classified board (as described above) may remove a director only for cause. In
addition, the DGCL provides that, unless the corporation's certificate of
incorporation provides for a higher voting requirement, directors may be removed
by the holders of a majority of the shares then entitled to vote in the election
of such directors. BancAlabama's Certificate and Bylaws provide that directors
may be removed with cause and by the affirmative vote of at least a majority of
all shares entitled to vote in the election of such director or directors.
LIMITATIONS ON DIRECTOR LIABILITY
UPC. UPC's Charter does not address the issue of director liability to the
corporation.
BancAlabama. BancAlabama's Certificate contains a provision limiting
directors' liability to the corporation or its shareholders. Under BancAlabama's
Certificate, as allowed by Section 102 of the DGCL, a BancAlabama director will
not have personal liability to BancAlabama or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
any breach of the director's duty of loyalty to BancAlabama or its shareholders,
(ii) for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law, (iii) for any act or omission under
Section 174 of the DGCL (involving certain unlawful dividends and stock
purchases or redemptions) or (iv) for any transaction from which the director
derived an improper personal benefit. This provision would absolve directors of
personal liability for negligence in the performance of duties, even gross
negligence. It would not permit, however, a director to be exculpated for
liability for actions involving conflicts of interest or breaches of the
traditional duty of loyalty to BancAlabama and its shareholders, and it would
not affect the availability of injunctive or other equitable relief to
BancAlabama or its shareholders.
INDEMNIFICATION
UPC. Under the TBCA, subject to certain exceptions, a corporation may
indemnify an individual made a party to a proceeding, because he is or was a
director, against liability incurred in the proceeding if (i) he conducted
himself in good faith; (ii) he reasonably believed (a) in the case of conduct in
his official capacity with the corporation, that his conduct was in the best
interests of the corporation, and (b) in all other cases, that his conduct was
at least not opposed to the corporation's best interests; and (iii) in the case
of any criminal proceeding, he had no reasonable cause to believe his conduct
was unlawful (the "Standard of Conduct"). Moreover, unless limited by its
articles of incorporation, a corporation must indemnify a director who was
wholly successful, on the merits or otherwise, in the defense of any proceeding
to which he was a party because he is or was a director of the corporation
against reasonable expenses incurred by him in connection with the proceeding.
Expenses incurred by a director in defending a proceeding may be paid by the
corporation in advance of the final disposition of such proceeding upon receipt
of a written affirmation by the director of his good faith belief that he or she
has met the Standard of Conduct and an undertaking by or on behalf of a director
to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the corporation against such expenses. Before any
such indemnification is made, it must be determined that such indemnification
would not be precluded by Part 5 of the TBCA.
A director may also apply for court-ordered indemnification under certain
circumstances. Unless a corporation's articles of incorporation provide
otherwise, (i) an officer of a corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered indemnification to
the same extent as a director; (ii) the corporation may indemnify and advance
expenses to an officer, employee, or agent of the corporation to the same extent
as to a director; and (iii) a corporation may also indemnify and advance
expenses to an officer, employee, or agent who is not a director to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract.
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UPC's Charter and Bylaws provide for the indemnification of its directors
and officers, to the fullest extent permitted by Tennessee law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, or persons controlling UPC pursuant to
the foregoing provisions, UPC has been informed that, in the opinion of the SEC,
such indemnification is against public policy as expressed in the 1933 Act and
is therefore unenforceable.
BancAlabama. BancAlabama's Bylaws provide that BancAlabama will indemnify
any director or any officer elected by the Board of Directors, and may indemnify
any other officer, employee, or agent of BancAlabama (or any such person serving
at the request of BancAlabama in one of those capacities for another
corporation, partnership, trust, or other enterprise) who was, is, or is
threatened to be, made a party to any action, suit, or proceeding, not brought
by or in the right of BancAlabama, by reason of the fact that he is or was such
a director, officer, employee, or agent, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by that individual in connection with that action, if he acted in a
manner reasonably believed to be in or not opposed to the best interests of
BancAlabama and, with respect to any criminal proceeding, if he had no reason to
believe that his conduct was unlawful.
BancAlabama's Bylaws further provide that BancAlabama will indemnify any
director or any officer elected by the Board of Directors, and may indemnify any
other officer or any other employee or agent of BancAlabama (or any such person
serving at the request of BancAlabama in one of such capacities for another
corporation, partnership, trust, or other enterprise) who was, is, or is
threatened to be, made a party to any action or suit by or in the right of
BancAlabama to procure a judgment in its favor, by reason of the fact that he is
or was such a director, officer, employee, or agent, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of that action, if he acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of
BancAlabama, except that no indemnification will be made in respect to any
claim, issue, or matter as to which he is judged liable to BancAlabama unless,
and only to the extent that, the court in which that action was brought
determines upon application that, in view of all the circumstances of the case,
he is fairly and reasonably entitled to indemnity for such expenses as the court
deems proper. Under its Bylaws, BancAlabama may pay the expenses incurred by an
officer, director, employee, or agent of BancAlabama in defending a civil or
criminal action, suit, or proceeding in advance of the final disposition of that
action upon receipt of an undertaking by or on behalf of the individual to repay
the amount advanced if it ultimately is determined that he is not entitled to be
indemnified by BancAlabama as authorized by Article VII of the Bylaws.
SPECIAL MEETING OF SHAREHOLDERS
UPC. UPC's Bylaws provide that special meetings of shareholders may be
called, unless otherwise prescribed by law, for any purpose or purposes whatever
at any time by the Chairman of the Board, the President, the Secretary, or the
holders of not less than one-tenth of the shares entitled to vote at such
meeting.
BancAlabama. The DGCL provides that special meetings of shareholders may
be called by such persons as may be authorized by a corporation's certificate of
incorporation or bylaws. BancAlabama's Certificate provides that special
meetings of shareholders may be called only by resolution of a majority of the
Board of Directors. Because a special meeting may be necessary for a potential
acquirer to gain control of BancAlabama, this requirement could discourage or
make more difficult an attempt to gain control of BancAlabama, and could tend to
perpetuate the incumbent directors and management.
ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
UPC. The Charter and Bylaws of UPC provide that any action required or
permitted to be taken by UPC shareholders at a duly called meeting of
shareholders may be effected by the unanimous written consent of the
shareholders entitled to vote on such action.
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BancAlabama. The Bylaws of BancAlabama state that any action required or
permitted to be taken by the shareholders must be effected by a duly called
annual or special meeting and may not be effected by written consent.
SHAREHOLDER NOMINATIONS AND PROPOSALS
UPC. UPC's Charter and Bylaws do not address whether a shareholder may
nominate members of the Board of Directors.
BancAlabama. BancAlabama's Certificate provides that in addition to the
right of the Board of Directors to nominate members of the Board, nominations
for the election of directors may be made by any shareholder subject to certain
procedural requirements. A shareholder wishing to nominate a person for
membership to the Board of Directors must give notice of such nomination to the
Secretary not less than 14 days and no more than 50 days prior to any meeting of
shareholders called for the election of directors. The shareholder's notice must
contain certain information about the nominee as set forth in BancAlabama's
Certificate. The Chairman of the shareholders' meeting may determine and declare
to the meeting that the nomination was not made in accordance with the
requirements set forth in the Certificate. Such determination is nonappealable
and thereby causes the nomination to be disregarded.
BUSINESS COMBINATIONS
UPC. The Charter of UPC requires the affirmative vote of the holders of
two-thirds of UPC's outstanding Common 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. A two-thirds vote is not required for any
merger or consolidation of UPC with or into any corporation or entity of which a
majority of the outstanding shares of all classes of capital stock entitled to
vote in the election of directors is owned by UPC or any UPC company.
The requirement of a supermajority vote of shareholders to approve certain
business transactions, as described above, may discourage a change in control of
UPC by allowing a minority of UPC's shareholders to prevent a transaction
favored by the majority of the shareholders. Also, in some circumstances, the
Board of Directors could cause a two-thirds vote to be required to approve a
transaction thereby enabling management to retain control over the affairs of
UPC and their positions with UPC. The primary purpose of the supermajority vote
requirement, however, is to encourage negotiations with UPC's management by
groups or corporations interested in acquiring control of UPC and to reduce the
danger of a forced merger or sale of assets.
As a Tennessee corporation, UPC is or could be subject to various
legislative acts set forth in Chapter 35 of Title 48 of the Tennessee Code,
which imposes certain restrictions on business combinations, including, but not
limited to, combinations with interested shareholders similar to those described
above.
The Tennessee Business Combination Act 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 of Directors before the interested shareholder became
such, and the business combination satisfies any other applicable requirements
imposed by law or by UPC's Charter or Bylaws. The Tennessee Business Combination
Act 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")
generally provides that any person or group of persons that acquires the power
to vote more than specified levels (one-fifth, one-third or a majority) of the
shares of certain Tennessee corporations will not have the right to vote such
shares unless granted voting rights by the holders of a majority of the votes
entitled to be cast, excluding "interested shares."
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Interested shares are those shares held by the acquiring person, officers of the
corporation, and employees of the corporation who are also directors of the
corporation. If approval of voting power for the shares is obtained at one of
the specified levels, additional shareholder approval is required when a
shareholder seeks to acquire the power to vote shares at the next level. In the
absence of such approval, the additional shares acquired by the shareholder may
not be voted until they are transferred to another person in a transaction other
than a control share acquisition. The Tennessee CSAA applies only to those
Tennessee corporations whose charters or bylaws contain an express declaration
that control share acquisitions in respect of the shares of such corporations
are governed by and subject to the provisions of such act. UPC's Charter and
Bylaws do not currently contain such an express declaration.
The Tennessee Greenmail Act ("Tennessee GA") prohibits a Tennessee
corporation having a class of voting stock registered or traded on a national
securities exchange or registered with the SEC pursuant to Section 12(g) of the
Exchange Act from purchasing, directly or indirectly, any of its shares at a
price above the market value of such shares (defined as the average of the
highest and lowest closing market price of such shares during the 30 trading
days preceding the purchase or preceding the commencement or announcement of a
tender offer if the seller of such shares has commenced a tender offer or
announced an intention to seek control of the corporation) from any person who
holds more than 3% of the class of securities to be purchased if such person has
held such shares for less than two years, unless the purchase has been approved
by the affirmative vote of a majority of the outstanding shares of each class of
voting stock issued by such corporation or the corporation makes an offer, of at
least equal value per share, to all holders of shares of such class.
The Tennessee Business Combination Act provides that no Tennessee
corporation having any class of voting stock registered or traded on a national
securities exchange or registered with the SEC pursuant to Section 12(g) of the
Exchange Act or any of its officers or directors may be held liable at law or in
equity for either having failed to approve the acquisition of shares by an
interested shareholder on or before the date such shareholder became an
interested shareholder, or for seeking to enforce or implement the provisions of
the Tennessee Business Combination Act or the Tennessee CSAA, or for failing to
adopt or recommend any charter or bylaw amendment or provision in respect of any
one or more of these acts or the Tennessee GA, or for opposing any merger,
exchange, tender offer or significant disposition of the assets of the resident
domestic corporation or any subsidiary of such corporation because of a good
faith belief that such merger, exchange, tender offer or significant disposition
of assets would adversely affect the corporation's employees, customers,
suppliers, the communities in which the corporation or its subsidiaries operate
or are located or any other relevant factor if such factors are permitted to be
considered by the board of directors under the corporation's charter in
connection with the merger, exchange, tender offer or significant disposition of
assets.
The acts described above along with the provisions of UPC's Charter
regarding business combinations 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 acquiror would not thereby obtain the ability to replace a
majority of the UPC Board of Directors until at least the second annual meeting
of shareholders following the acquisition, and furthermore the acquiror 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 of
Directors 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 of
Directors and management.
BancAlabama. The DGCL requires the approval of the Board of Directors and
the holders of a majority of the outstanding stock of BancAlabama entitled to
vote thereon for mergers or consolidations, and for sales, leases, or exchanges
of substantially all of BancAlabama's property and assets. The DGCL permits
BancAlabama to merge with another corporation without obtaining the approval of
BancAlabama's sharehold-
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ers if: (i) BancAlabama is the surviving corporation of the merger; (ii) the
merger agreement does not amend BancAlabama's Certificate; (iii) each share of
BancAlabama stock outstanding immediately prior to the effective date of the
merger is to be an identical outstanding or treasury share of BancAlabama after
the merger; and (iv) any authorized unissued shares or treasury shares of
BancAlabama Common Stock to be issued or delivered under the plan of merger plus
those initially issuable upon conversion of any other securities or obligations
to be issued or delivered under such plan do not exceed 20% of the shares of
BancAlabama Common Stock outstanding immediately prior to the effective date of
the merger. As a result, BancAlabama's Board of Directors could effect
significant acquisitions and issue significant amounts of BancAlabama capital
stock on terms that may dilute the interests of existing BancAlabama
shareholders, without seeking shareholder approval.
Section 203 of the DGCL ("Section 203"). Section 203 generally prohibits
any person who acquires 15% or more of a corporation's outstanding voting stock
(an "Interested Stockholder") from entering into any "Business Combination" with
the corporation for three years, unless one of the specified exceptions applies.
"Business Combination" is defined generally to include mergers and
consolidations, dispositions of the corporation's assets, transactions resulting
in the issuance or transfer by the corporation of its stock, transactions having
the effect of increasing the proportionate share of the stock of any class or
series of the corporation, and the receipt by the Interested Stockholder of
certain financial benefits provided by or through the corporation.
That three-year prohibition does not apply, however, if (i) the
corporation's Board of Directors approved the Business Combination or approved
(in advance) the transaction that resulted in 15% ownership, (ii) in the
transaction in which the Interested Stockholder acquired 15% ownership, that
shareholder acquired at least 85% of the voting stock outstanding when the
transaction was initiated (excluding shares owned by officer-directors and
certain employee stock plans); or (iii) the Business Combination subsequently is
approved by the Board of Directors and authorized at a shareholders' meeting by
at least 66-2/3% of the outstanding voting stock, excluding the stock owned by
the Interested Stockholder. In addition, Section 203 does not apply at all if
(i) the corporation's original certificate of incorporation expressly elects to
avoid application of Section 203, (ii) the Board of Directors amended the
corporation's bylaws within 90 days of the effective date of Section 203
expressly to avoid application of Section 203; (iii) the corporation's
shareholders amend the certificate or bylaws to avoid application of Section 203
(although such amendment will not be effective for 12 months); (iv) the
corporation's voting stock is not listed on a national securities exchange,
authorized for quotation on an interdealer quotation system on a registered
national securities association, or held of record by more than 2,000
shareholders (unless the corporation nonetheless elects to be governed by
Section 203); (v) the shareholder acquires 15% ownership inadvertently and then
disposes of sufficient shares to eliminate that status; or (vi) the Business
Combination is proposed after the public announcement, or the publication of
notice, of a proposed business-combination type of transaction and prior to the
consummation or abandonment of such transaction. Because the Board of Directors
of BancAlabama has approved the Merger, the provisions of Section 203 would not
apply to the Merger.
BancAlabama has expressly chosen not to be governed by Section 203 by the
adoption of Article Nine of BancAlabama's Certificate which contains certain
provisions relating to Business Combinations (as defined therein). Article Nine
generally defines "Interested Stockholder" as a beneficial owner of at least 10%
of the outstanding voting stock of the corporation, or an affiliate or assignee
of an Interested Stockholder. Generally stated, pursuant to Article Nine, a
Business Combination between BancAlabama and an Interested Stockholder must be
either:
(a) approved by the vote of the holders of at least 75% of the
outstanding voting stock; or
(b) approved by a majority of the "Disinterested Directors " (as
defined in Article Nine); and
(c) effected in a manner that meets specified requirements as to
price, form of consideration, and procedure.
Article Nine does not affect the shareholder voting requirement, if any, in
connection with a business combination that does not involve an Interested
Stockholder. It also does not affect any shareholder voting
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<PAGE> 56
requirement in connection with any business combination if BancAlabama's
shareholders receive consideration substantially equivalent to the consideration
previously paid by the Interested Stockholder for its shares of BancAlabama
voting stock or the Fair Market Value of BancAlabama Common Stock on the
"Announcement Date" or "Determination Date" (as defined in Article Nine).
Because the Board of Directors of BancAlabama has approved the Merger, the
provisions of Article Nine do not apply to the Merger.
The provisions of Article Nine are designed to encourage any person or
entity seeking to acquire BancAlabama to negotiate with the Board of Directors,
with the goal that any resulting transaction would be structured to provide all
of the shareholders with their pro rata share of any acquisition premium, and
that shareholders would be protected against coercive or unfair purchase offers
and "freeze-out" transactions. Those provisions may have the effect, however, of
discouraging or rendering more difficult takeover attempts not previously
approved by the Board of Directors (including takeover attempts that certain
shareholders may deem to be in their interests), and of perpetuating the
incumbent directors and management.
Ordinarily, then, unless a corporation expressly has chosen not to be
governed by Section 203, a 15% shareholder generally may not engage in a
business combination with the corporation for three years, unless he has the
prior approval of the Board of Directors or the post-combination approval of the
Board and two-thirds of the outstanding voting shares, or unless the shareholder
acquired at least 85% ownership when he acquired 15% ownership. BancAlabama
specifically elected to adopt Article Nine instead of being governed by Section
203. BancAlabama's Board of Directors determined that Article Nine better served
the long-term interests of BancAlabama and its shareholders. Part of the
rationale underlying that determination was that, unlike Section 203, Article
Nine does not prohibit a business combination altogether for any amount of time;
rather, it places certain substantive and procedural requirements on any such
combination, whenever it may occur. Thus, Article Nine is more conducive to
business combinations in that such a combination can be consummated at any time
if the fair price and procedural requirements contained therein are satisfied.
At the same time, Article Nine is less conducive to those combinations in that
its requirements do not disappear after three years.
DISSENTERS' RIGHTS OF APPRAISAL
UPC. Under the TBCA, a shareholder is generally entitled to dissent from a
corporate action, and obtain payment of the fair value of his shares in the
event of: (i) consummation of a plan of merger to which the corporation is a
party, unless shareholder approval is not required by the TBCA; (ii)
consummation of a plan of share exchange to which the corporation is a party as
the corporation whose shares will be acquired if the shareholder is entitled to
vote on the Plan; (iii) consummation of a sale or exchange of substantially all
of the corporation's property other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or to a plan by which substantially all of the net proceeds of the sale
will be distributed in cash to the shareholders within one year after the date
of sale; (iv) an amendment of the charter that materially and adversely affects
rights in respect of a dissenter's shares because it (a) alters or abolishes a
preferential right of the shares, (b) creates, alters, or abolishes a right in
respect of redemption of the shares, including a provision respecting a sinking
fund for the redemption or repurchase of the shares, (c) alters or abolishes a
preemptive right of the holder of the shares to acquire shares or other
securities, (d) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights, or (e)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under the TBCA; or
(v) any corporate action taken pursuant to a shareholder vote, to the extent the
charter, bylaws, or a resolution of the board of directors provide that voting
or nonvoting shareholders are entitled to dissent and obtain payment for their
shares. UPC's Charter and Bylaws do not provide for any such additional
dissenters' rights.
BancAlabama. The rights of appraisal of dissenting shareholders of
BancAlabama are governed by the DGCL. Pursuant thereto, except as described
below, any shareholder has the right to dissent from any merger of which
BancAlabama could be a constituent corporation. No appraisal rights are
available, however, for (i) the shares of any class or series of stock that is
either listed on a national securities exchange, quoted on
50
<PAGE> 57
the Nasdaq National Market System, or held of record by more than 2,000
shareholders or (ii) any shares of stock of the constituent corporation
surviving a merger if the merger did not require the approval of the surviving
corporation's shareholders, unless, in either case, the holders of such stock
are required by an agreement of merger or consolidation to accept for that stock
something other than: (a) shares of stock of the corporation surviving or
resulting from the merger or consolidation; (b) shares of stock of any other
corporation that will be listed at the effective time of the merger on a
national securities exchange, quoted on the Nasdaq National Market System, or
held of record by more than 2,000 shareholders; (c) cash in lieu of fractional
shares of stock described in clause (a) or (b) immediately above; or (d) any
combination of the shares of stock and cash in lieu of fractional shares
described in clauses (a) through (c) immediately above.
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
UPC. The TBCA provides that a shareholder may inspect and copy books and
records during regular business hours, if he or she gives the corporation
written notice of his or her demand at least five business days before the date
of the inspection. The written demand must be made in good faith and for a
proper purpose and must describe with reasonable particularity the purpose of
the request and the records the shareholder desires to inspect.
BancAlabama. The DGCL similarly provides that a shareholder may inspect
books and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as a
shareholder.
DIVIDENDS
UPC. UPC's ability to pay dividends on UPC Common Stock is governed by
Tennessee corporate law. Under Tennessee corporate law, dividends may be paid so
long as the corporation would be able to pay its debts as they become due in the
ordinary course of business and the corporation's total assets would not be less
than the sum of its total liabilities plus the amount that would be needed, if
the corporation were to be dissolved at the time of the distribution, to satisfy
the preferential rights upon dissolution to shareholders whose preferential
rights are superior to those receiving the distribution.
There are various statutory limitations on the ability of UPC's Banking
Subsidiaries to pay dividends to UPC. See "Certain Regulatory
Considerations -- Payment of Dividends."
BancAlabama. The DGCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus, or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by BancAlabama are derived from its
subsidiary depository institution. There are various statutory limitations on
the ability of BancAlabama's subsidiary depository institution to pay dividends
to BancAlabama. See "Certain Regulatory Considerations -- Payment of Dividends."
COMPARATIVE MARKET PRICES AND DIVIDENDS
UPC Common Stock is traded on the NYSE under the symbol "UPC." There is no
established public market in which shares of BancAlabama Common Stock are traded
regularly. Rather, since January 1996, buyers and sellers of BancAlabama Common
Stock have been matched by a national brokerage firm, and prior to that date by
BancAlabama, as an accommodation. The following table sets forth, for the
indicated periods, (i) the high and low closing prices for UPC Common Stock as
reported on the NYSE-Composite Transactions List, (ii) the high and low bid
quotations of BancAlabama Common Stock and (iii) the cash
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<PAGE> 58
dividends declared per share of UPC Common Stock and BancAlabama Common Stock
for the periods indicated.
<TABLE>
<CAPTION>
BANCALABAMA
UPC ------------------------------
------------------------------ CASH
CASH DIVIDENDS
PRICE RANGE DIVIDENDS PRICE RANGE DECLARED
---------------- DECLARED ---------------- PER
HIGH LOW PER SHARE HIGH LOW SHARE(1)
------ ------ ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter................................ $31.75 $29.00 $.27 $11.00 $10.50 --
Second Quarter............................... 31.25 29.63 .27 14.00 11.00 --
Third Quarter (through August 1 as to
BancAlabama and August 5 as to UPC......... 30.50 28.63 .27 13.00 13.00
----
Total................................. .81
====
1995
First Quarter................................ $24.50 $20.88 $.23 $10.50 $10.50 --
Second Quarter............................... 28.13 23.13 .25 10.50 10.50 --
Third Quarter................................ 30.25 26.13 .25 10.50 10.00 --
Fourth Quarter............................... 32.25 29.63 .25 11.00 10.50 --
----
Total................................. $.98
====
1994
First Quarter................................ $26.25 $23.13 $.21 $10.50 $10.00 --
Second Quarter............................... 28.75 24.75 .21 10.50 10.00 --
Third Quarter................................ 26.00 23.50 .23 10.50 10.00 --
Fourth Quarter............................... 24.50 19.63 .23 10.50 10.00 --
----
Total................................. $.88
====
</TABLE>
- ---------------
(1) No dividends have been declared or paid by BancAlabama since its
origination.
The closing price of UPC Common Stock as reported on the NYSE-Composite
Transactions List on August 5, 1996 and the average of the high and low bid
quotations of BancAlabama Common Stock on August 1, 1996 were $30.25 and $13.00,
respectively. On April 26, 1996, the last business day prior to public
announcement of the proposed Merger, the closing price of UPC Common Stock as
reported on the NYSE-Composite Transactions List and the sales price of
BancAlabama Common Stock were $30.125 and $14.00, respectively.
The holders of UPC Common Stock are entitled to receive dividends when and
if declared by the Board of Directors out of funds legally available therefor.
Although UPC currently intends to continue to pay quarterly cash dividends on
the UPC Common Stock, there can be no assurance that UPC's dividend policy will
remain unchanged after completion of the Merger. The declaration and payment of
dividends thereafter will depend upon business conditions, operating results,
capital and reserve requirements, and the Board of Directors' consideration of
other relevant factors. The Agreement prohibits BancAlabama from paying any
dividends on BancAlabama Common Stock during the pendency of the Merger.
UPC and BancAlabama are each legal entities separate and distinct from
their subsidiaries and their revenues depend in significant part on the payment
of dividends and fees from their subsidiary depository institutions. UPC's and
BancAlabama's subsidiary depository institutions are subject to certain legal
restrictions on the amount of dividends and fees they are permitted to pay.
See "Certain Regulatory Considerations -- Payment of Dividends."
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<PAGE> 59
BUSINESS OF BANCALABAMA
BancAlabama, a Delaware corporation, is a bank holding company registered
with the Federal Reserve under the BHC Act. Through its wholly-owned subsidiary,
BankAlabama-Huntsville, BancAlabama operates five full service branch and three
supermarket branch offices in the Huntsville, Alabama area and one supermarket
branch office in nearby Madison, Alabama, and offers a broad range of banking
and banking-related services.
In February of 1993, BankAlabama-Huntsville established BancAlabama
Financial Services, Inc. ("BFS"), a wholly-owned Alabama subsidiary corporation.
The subsidiary acts as an agent for sales of various types of annuities, mutual
funds and insurance policies.
As of March 31, 1996, BancAlabama had total consolidated assets of
approximately $99 million, total consolidated deposits of approximately $90
million, and total consolidated shareholders' equity of approximately $7
million. The principal executive offices of BancAlabama are located at 312
Clinton Avenue, Huntsville, Alabama 35801, and its telephone number at such
address is (205) 533-5548. Additional information with respect to BancAlabama
and its subsidiary is included in documents incorporated by reference in this
Proxy Statement certain of which are provided herewith. See "Available
Information," "Documents Incorporated by Reference" and "Certain Regulatory
Considerations."
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<PAGE> 60
BUSINESS OF UPC
GENERAL
UPC, a Tennessee corporation, is a bank holding company registered with the
Federal Reserve under the BHC Act and a savings and loan holding company
registered with the OTS under the HOLA, as amended. As of March 31, 1996, UPC
had total consolidated assets of approximately $11.4 billion, total
consolidated loans of $7.1 billion, total consolidated deposits of
approximately $9.5 billion, and total consolidated shareholders' equity of
approximately $993 million.
UPC conducts its business activities through its principal bank subsidiary,
the $2.2 billion asset Union Planters National Bank, founded in 1869 and
headquartered in Memphis, Tennessee, 35 other bank subsidiaries and two savings
bank subsidiaries located in Tennessee, Mississippi, Arkansas, Louisiana,
Alabama, Missouri, and Kentucky. Through the UPC Banking Subsidiaries, UPC
provides a diversified range of financial services in the communities in which
it operates, 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 loans.
Through the UPC Banking Subsidiaries, UPC operates approximately 402
banking offices. UPC's assets are allocable by state to its banking offices
(before consolidating adjustments) approximately as follows: $6.0 billion in
Tennessee, $2.4 billion in Mississippi, $1.0 billion in Missouri, $922 million
in Arkansas, $548 million in Louisiana, $249 million in Alabama and $110 million
in Kentucky.
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of UPC's business. UPC completed four
acquisitions in 1992, 12 in 1993, 13 in 1994, and three in 1995, adding
approximately $1.6 billion in total assets in 1992, $1.3 billion in 1993, $3.8
billion in 1994, and $1.3 billion in 1995. Since December 31, 1995, UPC has
completed the acquisition of two financial institutions located in Arkansas.
Prior to the date hereof, UPC had entered into definitive agreements to
acquire five additional financial institutions with total assets of $4.0
billion. For information with respect to these pending acquisitions see "--
Recent Developments--Pending Acquisitions." For a discussion of UPC's
acquisition program and UPC management's philosophy on that subject, see Note
2 to UPC's audited consolidated financial statements for the years ended
December 31, 1995, 1994, and 1993 (on pages 41 through 43) contained 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, 1995, which Exhibit 13 is
incorporated by reference herein to the extent indicated herein.
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Future acquisitions may entail the
payment by UPC of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of UPC
capital stock or the incurring of additional indebtedness by UPC, and could have
a dilutive effect on the earnings or book value per share of UPC Common Stock.
Moreover, significant charges against earnings are sometimes required incidental
to acquisitions. For a description of acquisitions which are currently pending,
see "-- Recent Developments."
The principal executive offices of UPC are located at 7130 Goodlett Farms
Parkway, Memphis, Tennessee 38018, and its telephone number at such address is
(901) 383-6000. Additional information with respect to UPC and its subsidiary is
included in documents incorporated by reference in this Proxy Statement. See
"Available Information" and "Documents Incorporated by Reference."
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<PAGE> 61
RECENT DEVELOPMENTS
Recently Completed Acquisitions. Since December 31, 1995, UPC has
completed the acquisition of the following institutions (collectively, the
"Recently Completed Acquisitions").
<TABLE>
<CAPTION>
CONSIDERATION
---------------------
APPROXIMATE
INSTITUTION ASSET SIZE VALUE TYPE
- --------------------------------------------------------------- ------------- ------------- -----
(IN MILLIONS)
<S> <C> <C> <C>
First Bancshares of Eastern Arkansas, Inc., West Memphis,
Arkansas, and its subsidiary, First National Bank of West
Memphis, Arkansas............................................ $ 60 $10.9 Cash
First Bancshares of N.E. Arkansas, Inc., Osceola, Arkansas, and
its subsidiary, First National Bank of Osceola, Arkansas..... 62 9.2 Cash
------ ------
TOTALS............................................... $ 122 $20.1
======= =======
</TABLE>
Pending Acquisitions. UPC has entered into definitive agreements to
acquire the following five financial institutions in addition to BancAlabama
which UPC's management considers probable of consummation and which are
expected to close in 1996 or the first quarter of 1997, (collectively, the
"Other Pending Acquisitions").
<TABLE>
<CAPTION>
INSTITUTION ASSET SIZE TYPE OF CONSIDERATION
- ---------------------------------------- ------------- ----------------------------
(IN MILLIONS)
<S> <C> <C>
Leader Financial Corporation, Memphis,
Tennessee, and its subsidiary, Leader
Federal Bank for Savings(1)............ $ 3,178 Approximately 16.6 million
shares of UPC Common Stock
Eastern National Bank, Miami, Florida(2). 286 Cash, Notes and UPC Series E
Preferred Stock(3)
Franklin Financial Group, Inc.,
Morristown, Tennessee, and its
subsidiary, Franklin Federal Savings
Bank................................... 137 Approximately 738,000 shares
of UPC Common Stock
Valley Federal Savings Bank, Sheffield,
Alabama................................ 119 Approximately 435,000 shares
of UPC Common Stock
Financial Bancshares, Inc., St. Louis,
Missouri, and its subsidiaries: First
Financial Bank of St. Louis, Missouri;
Citizens First Financial Bank of
Dexter, Missouri; First Financial Bank
of Southeast Missouri of Sikeston,
Missouri; First Financial Bank of
Mississippi County of East Prairie,
Missouri, and First Financial Bank of
Ste. Genevieve, Missouri(4)............ 326 Approximately 1.2 million
shares of UPC Common Stock
----------
TOTALS......................... $ 4,046
==========
</TABLE>
55
<PAGE> 62
- ---------------
(1) Reference is made to UPC's Current Reports on Form 8-K dated March 8, 1996,
April 1, 1996, April 2, 1996, April 18, 1996, May 21, 1996 and May 22,
1996, incorporated by reference herein, for additional information
concerning the acquisition of Leader.
(2) UPC's management expects to complete the acquisition of ENB on or before
December 31, 1996, provided that disputes between ENB's shareholders and
agencies of the Republic of Venezuela and others in the United States
District Court for the Southern District of Florida shall have been
resolved to the satisfaction of UPC by that date.
(3) Cash in the amount of $4.5 million, UPC Promissory Notes in the aggregate
original principal amount of $14.5 million, and up to 317,458 shares of
Series E Preferred Stock of UPC.
(4) The FBI Acquisition is not included in the "Equivalent and Pro Forma Per
Share Data" or the "Pro Forma Condensed Consolidated Financial
Information" and was not included in UPC's pro forma financial statements
in UPC's Current Report on Form 8-K dated May 22, 1996. The definitive
agreement was executed June 27, 1996 and was subject to a 30-day due
diligence period ending July 27, 1996. Since this definitive agreement
was executed after the pro forma financial statements were filed and this
acquisition is not considered significant to the overall pro forma
financial information of UPC, the pro formas were not amended to include
FBI.
Earnings Considerations Related to Pending Acquisitions. It is expected
that either UPC or the institutions to be acquired in connection with the
Merger and the Other Pending Acquisitions will incur charges related to such
acquisitions and to the assimilation of those institutions into the UPC
organization. Anticipated charges would arise from matters such as, but not
limited to, legal and accounting fees, financial advisory fees, consulting
fees, payment of contractual benefits triggered by a change of control, early
retirement and involuntary separation and related benefits, costs associated
with elimination of duplicate facilities and branch closures, data processing
charges, cancellation of vendor contracts, the potential for additional
provisions for loan losses and similar costs which normally arise from the
consolidation of operational activities.
Aggregate charges expected to arise with respect to the Merger and the
Other Pending Acquisitions have been preliminarily estimated to be between $17
million and $22 million after taxes, which does not include a potential
after-tax charge of approximately $6 million for the recapture of Leader
Federal Bank for Savings' thrift bad debt reserve, which, under existing law,
would be triggered by the merger of Leader Federal Bank for Savings into Union
Planters National Bank ("UPNB"), UPC's principal subsidiary, and certain other
banking subsidiaries. Legislation passed by both the House and Senate on August
2, 1996, and awaiting signature by the President of the United States as of
August 5, 1996, would substantially decrease the federal income taxes
associated with a recapture of a thrift institution's bad debt reserve. There
is no assurance that such pending legislation will be signed into law by the
President. Should the President veto the bad debt reserve legislation not
pass this year, UPC may still merge Leader Federal Bank for Savings into UPNB,
thereby triggering a recapture of Leader Federal Bank for Savings' bad debt
reserve and incurring expense of approximately $6 million, should it be
determined that the cost savings associated with the consolidation of Leader
Federal Bank for Savings' and UPNB's banking operations would exceed the tax
expense. UPC is unable to predict if or when such bad debt reserve recapture
legislation will be signed into law. In addition, the range of estimated
potential charges set forth above does not take into account any potential
assessment for recapitalization of the Savings Association Insurance Fund
("SAIF") discussed below. See "Certain Regulatory Considerations."
To the extent that UPC's recognition of these acquisition-related charges
are contingent upon consummation of a particular transaction, those charges
would be recognized in the period in which such transaction closes. This range
of potential charges is based on currently available information as well as
preliminary estimates and is subject to change. The range is provided as a
preliminary estimate of the significant charges which may in the aggregate be
required and should be viewed accordingly. These charges are not reflected in
the pro forma consolidated financial statements.
Earnings Considerations Relating to Potential Special Regulatory
Assessment. There are several proposals currently under consideration by the
U.S. Congress, the purpose of which is to provide additional financing for the
SAIF and to provide for interest payments on the Financing Corporation ("FICO")
bonds issued in connection with earlier Congressional efforts to support the
then failing thrift industry. A common feature of these proposals is a one-time
special assessment of from 70 to 85 basis points on all deposits insured by the
SAIF ($0.70 to $0.85 per $100 of covered deposits) ("SAIF-Insured Deposits").
All SAIF-Insured Deposits may not be subject to an assessment at the 70 to 85
basis point level. Those SAIF-Insured Deposits which have been acquired by banks
in so-called Oakar transactions ("Oakar Deposits") may be assessed at a lower
rate (one proposal suggests 20% lower). In addition to the special assessment on
SAIF-Insured
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<PAGE> 63
Deposits, the proposals also contemplate annual assessments on deposits which
are insured by the Bank Insurance Fund ("BIF") ("BIF Deposits"). The assessment
on BIF Deposits would be for the purpose of providing financial support to pay
approximately $600 million annually in interest on the FICO bonds until they
mature in 2017. It is unknown at this time what the assessment level will be on
BIF Deposits, but it has been suggested that the assessment will be
approximately 2.4 basis points ($0.024 per $100 of covered deposits). The
proposals generally provide that such assessments will reduce the paying
institution's taxable income. At March 31, 1996, UPC's Banking Subsidiaries
held approximately $1.4 billion in SAIF-Insured Deposits, approximately $1.0
billion of which are Oakar Deposits. At March 31, 1996, Leader held
approximately $1.6 billion in SAIF-Insured Deposits and the Other Pending
Acquisitions held approximately $217 million in SAIF-Insured Deposits. If the
Leader Merger, the Merger, all Recently Completed Acquisitions and all
Other Pending Acquisitions had been consummated by March 31, 1996, then UPC's
subsidiaries would have held approximately $3.2 billion in SAIF-Insured
Deposits, approximately $1.0 billion of which would have been Oakar Deposits,
assuming the savings associations to be acquired (Leader, Valley Federal and
Franklin Federal) had not been merged into other UPC Banking Subsidiaries.
Should the proposed legislation be adopted at levels indicated, both UPC and
Leader, as well as all other financial institutions with insured deposits,
would be required to take significant charges in relation to these special
assessments. These proposals to recapitalize the SAIF have not passed and are
under strong criticism by the banking industry. It is questionable whether any
such legislation will actually pass in 1996, however, UPC does expect some form
of legislation to be passed in the near future relative to the recapitalization
of the SAIF and that such legislation will provide for special assessments at
or above the levels discussed above against both SAIF-Insured Deposits and BIF
Deposits.
A number of other related proposals are also under consideration relating
to the elimination of the thrift charter and the conversion of all
federally-chartered thrifts to state-chartered banks or national banks, the
merger of the OTS into the Office of the Comptroller of the Currency ("OCC"),
and the recapture of the post-1987 bad debt reserves of savings institutions. It
is not expected that any such proposals, would have a material adverse impact on
UPC, either before or after considering the pending acquisitions, except to the
extent such proposals are currently in a definitive form, are subject to
amendment, and UPC is unable to predict with any accuracy the impact any such
proposals will have on UPC and its subsidiaries when and if actually passed. See
"Certain Regulatory Considerations."
UPC's Second Quarter 1996 Operating Results. The following table presents
certain unaudited information for UPC for the three- and six-month periods
ended June 30, 1996 and 1995. Reference is made to UPC's press release dated
July 18, 1996, which is included in UPC's Current Report on Form 8-K dated
July 18, 1996. See "Documents Incorporated by Reference."
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, (1) June 30, (1)
--------------------- ----------------------------
1996 1995 1996 1995
--------- -------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $116,843 $110,725 $ 232,316 $ 219,564
Provision for losses on loans 7,870 2,316 15,851 4,538
Investment securities gains (losses) 6 18 66 (3)
Other noninterest income 41,267 39,607 81,404 75,707
Noninterest expense 89,210 93,706 178,362 184,371
Earnings before income taxes 61,036 54,328 119,573 106,359
Applicable income taxes 20,393 17,877 39,786 34,251
Net earnings 40,643 36,451 79,787 72,108
PER COMMON SHARE DATA
Net earnings
- primary $ 0.84 $ 0.77 $ 1.66 $ 1.52
- fully diluted 0.80 0.73 1.58 1.45
Cash dividends 0.27 0.25 0.54 0.48
Book value 19.96 17.87
PROFITABILITY RATIOS
Return on average assets 1.45 % 1.35 % 1.42 % 1.34 %
Return on average common equity 17.44 17.88 17.40 18.01
Net interest income as a percentage of
average earning assets (taxable-equivalent basis) (3) 4.65 4.60 4.63 4.58
ASSET QUALITY DATA
Allowance for losses on loans $ 136,255 $ 132,884
Nonperforming loans 38,346 32,896
Nonperforming assets 45,264 39,947
Allowance for losses on loans to loans 1.90 % 1.91 %
Nonperforming loans to loans 0.53 0.47
Nonperforming assets to loans and foreclosed properties 0.63 0.57
Allowance/nonperforming loans 355 404
BALANCE SHEET DATA (AT PERIOD END)
Total assets $11,367,625 $10,921,482
Loans, net of unearned income 7,169,872 6,960,602
Investment securities
Available for sale (Amortized cost: $3,049,657 and $1,531,222) 3,053,759 1,532,593
Held to maturity (Fair value: $1,130,005 at June 30, 1995) - 1,106,952
Total deposits 9,343,893 9,291,329
Long-term debt (2) 473,144 440,814
Total shareholders' equity 1,007,608 897,066
CAPITAL RATIOS
Equity/assets 8.86 % 8.21 %
Leverage (3) 8.49 7.88
- -----------------------
</TABLE>
(1) Interim period ratios are annualized.
(2) Includes subsidiary banks' long-term debt (primarily FHLB advances) of
$259.7 million and $325.4 million at June 30, 1996 and 1995, respectively.
(3) Excludes the impact of the fair value adjustment for available for sale
securities.
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CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements of the
regulatory framework applicable to banks and bank holding companies and provides
certain specific information related to UPC and BancAlabama.
GENERAL
UPC and BancAlabama are both bank holding companies registered with the
Federal Reserve under the BHC Act. As such, UPC and BancAlabama and their
non-bank subsidiaries are subject to the supervision, examination, and reporting
requirements of the BHC Act and the regulations of the Federal Reserve. In
addition, as a savings and loan holding company, UPC is also registered with the
OTS and is subject to the regulation, supervision, examination, and reporting
requirements of the OTS.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require savings and loan holding
companies and other companies to obtain the prior approval of the OTS before
acquiring direct or indirect ownership or control of a savings association.
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy which is discussed below, and consideration of convenience and needs
issues includes the parties' performance under the Community Reinvestment Act of
1977 discussed in Part I, Item 1 of UPC's Annual Report on Form 10-K.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate
Banking Act"), which became effective in September 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that UPC and any other bank holding company located in Tennessee
may now acquire a bank located in any other state, and any bank holding company
located outside Tennessee may lawfully acquire any Tennessee-based bank,
regardless of state law to the contrary, in either case subject to certain
deposit-percentage limitations, aging requirements, and other restrictions. The
Interstate Banking Act also generally provides that, after June 1, 1997,
national and state-chartered banks may branch interstate through acquisitions of
banks in other states. By adopting legislation prior to that date, a state has
the ability either to "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether. As of the date of this Proxy Statement, none of the states in which
the banking subsidiaries of UPC or BancAlabama are located has either moved up
the date after which interstate branching will be permissible or "opted out."
Assuming no state action prior to June 1, 1997, UPC would be able to consolidate
all of its bank subsidiaries into a single bank with interstate branches
following that date.
The BHC Act generally prohibits UPC and BancAlabama from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In determining
whether a particular activity is permissible, the Federal Reserve must consider
whether the performance of such an activity reasonably can be expected to
produce benefits to the public, such as greater convenience, increased
competition, or gains in efficiency, that outweigh possible adverse effects,
such as
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undue concentration of resources, decreased or unfair competition, conflicts of
interest, or unsound banking practices. For example, factoring accounts
receivable, acquiring or servicing loans, leasing personal property, conducting
discount securities brokerage activities, performing certain data processing
services, acting as agent or broker in selling credit life insurance and certain
other types of insurance in connection with credit transactions, and performing
certain insurance underwriting activities all have been determined by the
Federal Reserve to be permissible activities of bank holding companies. The BHC
Act does not place territorial limitations on permissible nonbanking activities
of bank holding companies. Despite prior approval, the Federal Reserve has the
power to order a holding company or its subsidiaries to terminate any activity
or to terminate its ownership or control of any subsidiary when it has
reasonable cause to believe that continuation of such activity or such ownership
or control constitutes a serious risk to the financial safety, soundness, or
stability of any bank subsidiary of that bank holding company.
Each of the subsidiary depository institutions of UPC and BancAlabama is a
member of the FDIC, and as such, its deposits are insured by the FDIC to the
extent provided by law. Each such subsidiary is also subject to numerous state
and federal statutes and regulations that affect is business, activities, and
operations, and each is supervised and examined by one or more state or federal
bank regulatory agencies.
The regulatory agencies having supervisory jurisdiction over the respective
subsidiary institutions of UPC and BancAlabama (the FDIC and the applicable
state authority in the case of state-chartered nonmember banks, the OTS in the
case of federally chartered thrift institutions, the Federal Reserve in the case
of state-chartered member banks, and the OCC in the case of national banks)
regularly examine the operations of such institutions and have authority to
approve or disapprove mergers, consolidations, the establishment of branches,
and similar corporate actions. The federal and state banking regulators also
have the power to prevent the continuance or development of unsafe or unsound
banking practices or other violations of law.
PAYMENT OF DIVIDENDS
UPC and BancAlabama are legal entities separate and distinct from their
banking, thrift, and other subsidiaries. The principal sources of cash flow of
both UPC and BancAlabama, including cash flow to pay dividends to their
respective shareholders, are dividends from their subsidiary depository
institutions. There are statutory and regulatory limitations on the payment of
dividends by these subsidiary depository institutions to UPC and BancAlabama, as
well as by UPC and BancAlabama to their shareholders.
As to the payment of dividends, each of UPC's and BancAlabama's
state-chartered banking subsidiaries is subject to the respective laws and
regulations of the state in which such bank is located, and to the regulations
of the bank's primary federal regulator. UPC's and BankAlabama-Huntsville's
subsidiaries that are thrift institutions are subject to the OTS' capital
distributions regulation, and those that are national banks are subject to the
regulations of the OCC.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At March 31, 1996, under dividend restrictions imposed under federal and
state laws, the subsidiary depository institutions of UPC and BancAlabama,
without obtaining governmental approvals, could have lawfully declared
aggregate dividends to UPC and BancAlabama of approximately $30.9 million and
$24,000, respectively.
The payment of dividends by UPC and BancAlabama and their banking
subsidiaries may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
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CAPITAL ADEQUACY
UPC, BancAlabama, and their respective subsidiary depository institutions
are required to comply with the capital adequacy standards established by the
Federal Reserve in the case of UPC and BancAlabama, and the appropriate federal
banking regulator in the case of each of their subsidiary depository
institutions. There are two basic measures of capital adequacy for bank holding
companies and their subsidiary depository institutions that have been
promulgated by the Federal Reserve and each of the federal bank regulatory
agencies: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company to be considered in
compliance.
The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among depository
institutions and bank holding companies, to account for off-balance-sheet
exposure, and to minimize disincentives for holding liquid assets. Assets and
off-balance-sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital as a
percentage of total risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At March 31, 1996, UPC's consolidated Total Capital Ratio and its Tier 1 Capital
Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 16.58%
and 12.89%, respectively, and BancAlabama's consolidated Total Capital and Tier
1 Capital Ratios were 9.45% and 10.30%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for bank holding companies that
meet certain specified criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a Leverage
Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis points.
UPC's and BancAlabama's respective Leverage Ratios at March 31, 1996, were 8.22%
and 7.22%. The guidelines also provide that bank holding companies experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels without
significant reliance on intangible assets. Furthermore, the Federal Reserve has
indicated that it will consider a "tangible Tier 1 Capital Leverage Ratio"
(deducting all intangibles) and other indicia of capital strength in evaluating
proposals for expansion or new activities.
Each of UPC's and BancAlabama's subsidiary depository institutions is
subject to risk-based and leverage capital requirements adopted by its federal
banking regulatory, which are substantially similar to those adopted by the
Federal Reserve for bank holding companies. Each of the subsidiary depository
institutions was in compliance with applicable minimum capital requirements as
of March 31, 1996. Neither UPC, BancAlabama, nor any of their subsidiary
depository institutions has been advised by any federal banking agency of any
specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC and the OCC have, pursuant
to FDICIA, proposed an amendment to the risk-based capital standards that would
calculate the change in an institution's net economic value attributable to
increases and decreases in market interest rates and would require banks with
excessive interest rate risk exposure to hold additional amounts of capital
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against such exposures. The OTS has already included an interest-rate risk
component in its risk-based capital guidelines for savings associations that it
regulates.
SUPPORT OF SUBSIDIARY INSTITUTIONS
Under Federal Reserve policy, UPC and BancAlabama are expected to act as
sources of financial strength for, and to commit resources to support, each of
their respective banking subsidiaries. This support may be required at times
when, absent such Federal Reserve policy, UPC or BancAlabama may not be inclined
to provide it. In addition, any capital loans by a bank holding company to any
of its banking subsidiaries are subordinate in right of payment to deposits and
to certain other indebtedness of such banks. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a banking subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default." "Default"
is defined generally as the appointment of a conservator or receiver, and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of shareholders
of the insured depository institution or its holding company, but is subordinate
to claims of depositors, secured creditors, and holders of subordinated debt
(other than affiliates) of the commonly controlled insured depository
institution. The subsidiary depository institutions of UPC are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking or thrift affiliates, and a potential loss of
UPC's respective investments in such other subsidiary depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or greater,
a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be well capitalized. An institution with a
Total Capital Ratio of 8.0% or greater, a Tier 1 Capital Ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be adequately
capitalized. A depository institution that has a Total Capital Ratio of less
than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be undercapitalized. A depository institution that
has a Total Capital Ratio of less than 6.0%, a Tier 1 Capital Ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be significantly
undercapitalized, and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be critically
undercapitalized. For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A depository institution may be deemed to be in
a
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capitalization category that is lower than is indicated by its actual capital
position if it receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary depository
institution meet its capital restoration plan, subject to certain limitations.
The obligation of a controlling bank holding company under FDICIA to fund a
capital restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized, provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer.
At March 31, 1996, all of the subsidiary depository institutions of UPC and
BancAlabama had the requisite capital levels to qualify as well capitalized.
FDIC INSURANCE ASSESSMENTS
Pursuant to FDICIA, the FDIC adopted a new risk-based assessment system for
insured depository institutions that takes into account the risks attributable
to different categories and concentrations of assets and liabilities. The new
system, which went into effect on January 1, 1994, and replaced a transitional
system that the FDIC had utilized for the 1993 calendar year, assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized. These three categories are
substantially similar to the prompt corrective action categories described
above, with the undercapitalized category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes. An institution is also
assigned by the FDIC to one of three supervisory subgroups within each capital
group. The supervisory subgroup to which an institution is assigned is based on
a supervisory evaluation provided to the FDIC by the institution's primary
federal regulator and information which the FDIC determines to be relevant to
the institution's financial condition and the risk posed to the deposit
insurance funds (which may include, if applicable, information provided by the
institution's state supervisor). An institution's insurance assessment rate is
then determined based on the capital category and supervisory category to which
it is assigned. Under the risk-based assessment system, as well as the prior
transitional system, there are nine assessment risk classifications (i.e.,
combinations of capital
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groups and supervisory subgroups) to which different assessment rates are
applied. Assessment rates for members of both the BIF and the SAIF for the first
half of 1995, as they had been during 1994, ranged from 23 basis points (0.23%
of deposits) for an institution in the highest category (i.e., "well
capitalized" and "healthy") to 31 basis points (0.31% of deposits) for an
institution in the lowest category (i.e., "undercapitalized" and "substantial
supervisory concern"). These rates were established for both funds to achieve a
designated ratio of reserves to insured deposits (i.e., 1.25%) within a
specified period of time.
Once the designated ratio for the BIF was reached during May 1995, the FDIC
was authorized to reduce the minimum assessment rate below 23 basis points and
to set future assessment rates at such levels that would maintain the BIF's
reserve ratio at the designated level. In August 1995, the FDIC adopted final
regulations reducing the assessment rates for BIF-member banks. Under the
revised schedule, BIF-insured banks, starting with the second half of 1995, paid
assessments ranging from 4.0 basis points to 31 basis points, with an average
assessment rate of 4.5 basis points. Refunds with interest were paid for
assessments for the month(s) after the month in which the designated reserve
ratio for the BIF was reached. Subsequently, on November 14, 1995, the FDIC
announced that, beginning in 1996, it would further reduce the deposit insurance
premiums for 92% of all BIF members in the highest capital and supervisory
categories to $2,000 per year, regardless of deposit size. At the same time, the
FDIC elected to retain the pre-existing assessment rate of 23 to 31 basis points
for SAIF members for the foreseeable future given the undercapitalized nature of
that insurance fund.
Several proposed bills have been introduced into the United States
legislature, the main purpose of which is to provide additional capitalization
of the SAIF and to provide funds to pay interest and/or principal on bonds
issued to finance governmental costs associated with the savings and loan
industry. A common feature of the proposed legislation is a one-time payment to
the SAIF and BIF by both savings associations and banks. The consideration of
these proposed bills is ongoing, and at this time it is impossible to state
with accuracy the amounts, if any, Leader and UPC, or any of their
subsidiaries, will be required to pay in connection with any such legislation
should it be passed, or the effect such payments, if any, will have on the
financial condition of Leader or UPC. See "BUSINESS OF UPC--Recent
Developments--Earnings Considerations Relating to Potential Special Regulatory
Assessment".
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Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that the institution has engaged in unsafe and unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, rule, order, or condition imposed by the FDIC.
DESCRIPTION OF UPC CAPITAL STOCK
UPC's Charter currently authorizes the issuance of 100,000,000 shares of
UPC Common Stock and 10,000,000 shares of UPC Preferred Stock. As of July 31,
1996, 46,129,307 shares of UPC Common Stock were issued and outstanding and
approximately 1,107,000 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 502,000 shares were
authorized for issuance pursuant to said plans but not yet subject to option
grants or otherwise issued; and approximately 4,758,492 shares were authorized
for issuance and reserved for conversion of certain outstanding shares of UPC
Preferred Stock. In addition, as of July 31, 1996, 3,489,336 shares of UPC's 8%
Cumulative, Convertible Preferred Stock, Series E (the "Series E Preferred
Stock") were issued and outstanding. As of July 31, 1996, none of UPC's
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.
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, UPC's Charter or Bylaws or the rules of the
NYSE. 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. Its 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 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
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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.
UPC PREFERRED STOCK
Series A Preferred Stock. UPC's Charter was amended on July 18, 1996
to increase the number of shares of Series A Preferred Stock authorized and
currently provides for the issuance of up to 750,000 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. The
amendment of UPC's Charter will become effective when filed with the Tennessee
Secretary of State. 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 Registration
Statement on Form 8-A, dated January 19, 1989, and filed February 1, 1989 (SEC
File No. 0-6919) which is incorporated by reference herein.
Series E Preferred Stock. 3,489,336 shares of Series E Preferred Stock
were outstanding as of July 31, 1996. Up to 317,458 shares of Series E
Preferred Stock are expected to be issued upon consummation of UPC's pending
acquisition of ENB, if and when adverse claims to ENB's stock shall have been
resolved to UPC's satisfaction in pending court proceedings. See "BUSINESS OF
UPC - Recent Developments - Other Pending Acquisitions." All shares of Series
E Preferred Stock have a stated value of $25.00 per share. Dividends are
payable at the rate of $0.50 per share per quarter and are cumulative. The
Series E Preferred Stock is convertible at the rate of 1.25 shares of UPC
Common Stock for each share of Series E Preferred Stock. The Series E Preferred
Stock is not subject to any sinking fund provisions and has no preemptive
rights. Such shares have a liquidation preference of $25.00 per share plus
unpaid dividends accrued thereon and, at UPC's option and with the prior
approval of the Federal Reserve, are subject to redemption by UPC at any time
or from time to time after March 31, 1997 at a redemption price of $25.00 per
share plus any unpaid dividends. Holders of Series E Preferred Stock have no
voting rights except as required by law and in certain other limited
circumstances. See "Certain Regulatory Considerations -- Payment of Dividends."
For a further description of UPC Common Stock, see "Effect of the Merger on
Rights of Shareholders."
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of
BancAlabama knows of no matters that will be presented for consideration at the
Special Meeting other than as described in this Proxy Statement. However, if any
other matters shall properly come before the Special Meeting or any adjournment
thereof and be voted upon, the enclosed proxy shall be deemed to confer
discretionary authority to the individuals named as proxies therein to vote the
shares represented by such proxy as to any such matters.
SHAREHOLDER PROPOSALS
UPC expects to hold its next annual meeting of shareholders after the
Merger during April 1997. Under SEC rules, proposals of UPC shareholders
intended to be presented at that meeting must be received by UPC at its
principal executive offices no later than the date specified in UPC's 1996
annual meeting proxy statement. It is not currently anticipated that BancAlabama
will hold its 1997 annual meeting unless the Merger should not be consummated.
In the event the Merger is not consummated, proposals of BancAlabama
shareholders intended to be presented at that meeting must be received by
BancAlabama at its principal executive offices no later than November 14, 1996.
65
<PAGE> 72
EXPERTS
The consolidated financial statements of Union Planters Corporation
incorporated in this Proxy Statement by reference to the Annual Report on Form
10-K of Union Planters Corporation for the year ended December 31, 1995, 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 BancAlabama, Inc. and subsidiary as of
December 31, 1995 and 1994, and the consolidated statements of operations,
changes in stockholders' equity, and cash flows for each of the three years in
the period ended December 31, 1995, incorporated by reference in this
Registration Statement, have been included herein in reliance on the report of
Browder & Associates, P.C., independent public accountants, given on the
authority of that firm as experts in auditing and accounting.
The consolidated statements of financial position of Leader and its
subsidiary as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
years in the three-year period ended December 31, 1995, incorporated in this
Proxy Statement by reference to UPC's Current Report on Form 8-K, dated April
1, 1996, 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 of such firm given upon their authority
as experts in accounting and auditing.
The report of KPMG Peat Marwick LLP refers to changes in the accounting
principles related to the adoption in 1994 of the provisions of the American
Institute of Certified Public Accountants' Statement of Position 93-6,
Employer's Accounting for Employee Stock Ownership Plans, and in 1993 of the
provisions of Financial Accounting Standards Board's Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement Benefits
Other than Pensions, and No. 115, Accounting for Certain Investments in Debt and
Equity Securities.
OPINIONS
The legality of the shares of UPC Common Stock to be issued in the Merger
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.
Certain tax consequences of the transaction have been passed upon by Alston
& Bird, Atlanta, Georgia.
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
BANCALABAMA, INC.
AND
UNION PLANTERS CORPORATION
DATED AS OF APRIL 26, 1996
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Parties................................................................................ A-6
Preamble............................................................................... A-6
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER.......................................... A-6
1.1 Merger....................................................................... A-6
1.2 Time and Place of Closing.................................................... A-6
1.3 Effective Time............................................................... A-6
1.4 Execution of Stock Option Agreement.......................................... A-7
1.5 UPC's Right to Revise the Structure of the Transaction....................... A-7
ARTICLE 2 -- TERMS OF MERGER........................................................... A-7
2.1 Articles of Incorporation.................................................... A-7
2.2 By-laws...................................................................... A-7
2.3 Directors and Officers....................................................... A-7
ARTICLE 3 -- MANNER OF CONVERTING SHARES............................................... A-8
3.1 Conversion of Shares......................................................... A-8
3.2 Anti-Dilution Provisions..................................................... A-8
3.3 Shares Held by BancAlabama or UPC............................................ A-8
3.4 Dissenting Shareholders...................................................... A-8
3.5 Fractional Shares............................................................ A-8
3.6 Conversion of Stock Options; Restricted Stock................................ A-9
ARTICLE 4 -- EXCHANGE OF SHARES........................................................ A-10
4.1 Exchange Procedures.......................................................... A-10
4.2 Rights of Former BancAlabama Shareholders.................................... A-10
REPRESENTATIONS AND WARRANTIES OF BANCALABAMA.......................................... A-11
5.1 Organization, Standing, and Power............................................ A-11
5.2 Authority; No Breach By Agreement............................................ A-11
5.3 Capital Stock................................................................ A-11
5.4 BancAlabama Subsidiaries..................................................... A-12
5.5 SEC Filings; Financial Statements............................................ A-12
5.6 Absence of Undisclosed Liabilities........................................... A-13
5.7 Absence of Certain Changes or Events......................................... A-13
5.8 Tax Matters.................................................................. A-13
5.9 Allowance for Possible Loan Losses........................................... A-14
5.10 Assets....................................................................... A-14
5.11 Intellectual Property........................................................ A-15
5.12 Environmental Matters........................................................ A-15
5.13 Compliance With Laws......................................................... A-16
5.14 Labor Relations.............................................................. A-16
5.15 Employee Benefit Plans....................................................... A-16
5.16 Material Contracts........................................................... A-17
5.17 Legal Proceedings............................................................ A-18
5.18 Reports...................................................................... A-18
5.19 Statements True and Correct.................................................. A-18
5.20 Accounting, Tax, and Regulatory Matters...................................... A-19
5.21 State Takeover Laws.......................................................... A-19
5.22 Charter Provisions........................................................... A-19
5.23 Support Agreements........................................................... A-19
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF UPC..................................... A-19
6.1 Organization, Standing, and Power............................................ A-19
6.2 Authority; No Breach By Agreement............................................ A-20
6.3 Capital Stock................................................................ A-20
6.4 SEC Filings; Financial Statements............................................ A-20
6.5 Absence of Undisclosed Liabilities........................................... A-21
6.6 Absence of Certain Changes or Events......................................... A-21
6.7 Tax Matters.................................................................. A-21
6.8 Environmental Matters........................................................ A-21
6.9 Compliance With Laws......................................................... A-22
6.10 Legal Proceedings............................................................ A-22
6.11 Reports...................................................................... A-22
6.12 Statements True and Correct.................................................. A-23
6.13 Accounting, Tax, and Regulatory Matters...................................... A-23
6.14 Matters Relating to BNF...................................................... A-23
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION.................................. A-23
7.1 Affirmative Covenants of BancAlabama......................................... A-23
7.2 Negative Covenants of BancAlabama............................................ A-24
7.3 Covenants of UPC............................................................. A-25
7.4 Adverse Changes in Condition................................................. A-25
7.5 Reports...................................................................... A-26
ARTICLE 8 -- ADDITIONAL AGREEMENTS..................................................... A-26
8.1 Registration Statement; Proxy Statement; Shareholder Approval................ A-26
8.2 Exchange Listing............................................................. A-26
8.3 Applications................................................................. A-26
8.4 Filings with State Offices................................................... A-26
8.5 Agreement as to Efforts to Consummate........................................ A-26
8.6 Investigation and Confidentiality............................................ A-27
8.7 Press Releases............................................................... A-27
8.8 Certain Actions.............................................................. A-27
8.9 Accounting and Tax Treatment................................................. A-27
8.10 State Takeover Laws.......................................................... A-27
8.11 Charter Provisions........................................................... A-27
8.12 Agreements of Affiliates..................................................... A-28
8.13 Employee Benefits and Contracts.............................................. A-28
8.14 Indemnification.............................................................. A-28
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE......................... A-29
9.1 Conditions to Obligations of Each Party...................................... A-29
9.2 Conditions to Obligations of UPC............................................. A-30
9.3 Conditions to Obligations of BancAlabama..................................... A-31
ARTICLE 10 -- TERMINATION.............................................................. A-32
10.1 Termination.................................................................. A-32
10.2 Effect of Termination........................................................ A-34
10.3 Non-Survival of Representations and Covenants................................ A-34
ARTICLE 11 -- MISCELLANEOUS............................................................ A-34
11.1 Definitions.................................................................. A-34
11.2 Expenses..................................................................... A-40
11.3 Brokers and Finders.......................................................... A-41
11.4 Entire Agreement............................................................. A-41
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
11.5 Amendments................................................................... A-41
11.6 Waivers...................................................................... A-41
11.7 Assignment................................................................... A-42
11.8 Notices...................................................................... A-42
11.9 Governing Law................................................................ A-42
11.10 Counterparts................................................................. A-42
11.11 Captions..................................................................... A-42
11.12 Interpretations.............................................................. A-43
11.13 Enforcement of Agreement..................................................... A-43
11.14 Severability................................................................. A-43
Signatures............................................................................. A-43
</TABLE>
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LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------------------------------------------------------------------------------
<C> <C> <S>
1. -- Form of Stock Option Agreement. (sec.sec. 1.4, 11.1).
2. -- Form of Support Agreement. (sec.sec. 5.23, 11.1).
3. -- Form of agreement of affiliates of BancAlabama. (sec.sec. 8.12, 9.2(d)).
4. -- Form of Supplemental Letter. (sec.sec. 7.2, 11.1).
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered
into as of April 26, 1996, by and between BANCALABAMA, INC. ("BancAlabama"), a
Delaware corporation having its principal office located in Huntsville, Alabama;
UNION PLANTERS CORPORATION ("UPC"), a Tennessee corporation having its principal
office located in Memphis, Tennessee; and BNF BANCORP, INC. ("BNF"), a Delaware
corporation, a wholly-owned subsidiary of UPC.
PREAMBLE
The Boards of Directors of BancAlabama and UPC are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of
BancAlabama by UPC pursuant to the merger of BancAlabama into and with BNF. At
the effective time of such merger, the outstanding shares of the common stock of
BancAlabama shall be converted into the right to receive shares of the common
stock of UPC (except as provided in Sections 3.3 and 3.5 of this Agreement). As
a result, shareholders of BancAlabama shall become shareholders of UPC and each
of the subsidiaries of BancAlabama shall continue to conduct its business and
operations as a wholly owned subsidiary of BNF. The transactions described in
this Agreement are subject to the approvals of the shareholders of BancAlabama,
the Board of Governors of the Federal Reserve System, the Office of Thrift
Supervision, the appropriate state regulatory authorities, and the satisfaction
of certain other conditions described in this Agreement. It is the intention of
the parties to this Agreement that the Merger for federal income tax purposes
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code, and for accounting purposes shall qualify for treatment
as a pooling of interests.
Simultaneously with the execution and delivery of this Agreement, as a
condition and inducement to UPC's willingness to enter into this Agreement,
BancAlabama and UPC are entering into a stock option agreement (the "Stock
Option Agreement"), in substantially the form of Exhibit 1 to this Agreement
pursuant to which BancAlabama is granting to UPC an option to purchase shares of
BancAlabama Common Stock. In addition, simultaneously with the execution and
delivery of this Agreement, as a condition and inducement to UPC's willingness
to consummate the transactions contemplated by this Agreement, each of
BancAlabama's directors will execute and deliver to UPC an agreement (a "Support
Agreement"), in substantially the form of Exhibit 2 to this Agreement.
Certain terms used in this Agreement are defined in Section 11.1 of this
Agreement.
NOW, THEREFORE, in consideration of the above and the mutual warranties,
representations, covenants, and agreements set forth herein, the parties agree
as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 Merger. Subject to the terms and conditions of this Agreement, at the
Effective Time, BancAlabama shall be merged with and into BNF in accordance with
the provisions of Section 251 of the DGCL and with the effect provided in
Section 259 of the DGCL (the "Merger"). BNF shall be the Surviving Corporation
resulting from the Merger and shall continue to be governed by the Laws of the
State of Delaware. The Merger shall be consummated pursuant to the terms of this
Agreement, which has been approved and adopted by the respective Boards of
Directors of BancAlabama and BNF.
1.2 Time and Place of Closing. The Closing will take place at 9:00 A.M. on
the date that the Effective Time occurs (or the immediately preceding day if the
Effective Time is earlier than 9:00 A.M.), or at such other time as the Parties,
acting through their chief executive officers or chief financial officers, may
mutually agree. The Closing shall be held at such place as may be mutually
agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions contemplated by this
Agreement shall become effective on the date and at the time the Certificate of
Merger reflecting the Merger shall become effective
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with the Secretary of State of the State of Delaware (the "Effective Time").
Subject to the terms and conditions hereof, unless otherwise mutually agreed
upon in writing by the chief executive officers or chief financial officers of
each Party, the Parties shall use their reasonable efforts to cause the
Effective Time to occur on such date as may be designated by UPC within 20 days
following the last to occur of (i) the effective date (including expiration of
any applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, and (ii)
the date on which the shareholders of BancAlabama approve this Agreement to the
extent such approval is required by applicable Law.
1.4 Execution of Stock Option Agreement. Simultaneously with the execution
of this Agreement by the Parties and as a condition thereto, BancAlabama is
executing and delivering to UPC the Stock Option Agreement pursuant to which
BancAlabama is granting to UPC an option to purchase shares of BancAlabama
Common Stock.
1.5 UPC's Right to Revise the Structure of the Transaction. UPC shall, in
its reasonable discretion, have the unilateral right to revise the structure of
the Merger contemplated by this Agreement in order to achieve tax benefits or
for any other reason which UPC may deem advisable; provided, however, that UPC
shall not have the right, without the approval of the Board of Directors of
BancAlabama, to make any revision to the structure of the Merger which: (i)
changes the amount of the consideration which the holders of shares of
BancAlabama Common Stock are entitled to receive (determined in the manner
provided in Section 3.1 of this Agreement); (ii) changes the intended tax-free
effects of the Merger to UPC, or the holders of shares of BancAlabama Common
Stock; (iii) would permit UPC to pay the consideration other than by delivery of
UPC Common Stock registered with the SEC (in the manner described in Section 4.1
of this Agreement); (iv) would be materially adverse to the interests of
BancAlabama or holders of shares of BancAlabama Common Stock; (v) would
unreasonably impede or delay consummation of the Merger; or (vi) would effect
any of the provisions in Sections 8.13 or 8.14 of this Agreement. UPC may
exercise this right of revision by giving written notice to BancAlabama in the
manner provided in Section 11.8 of this Agreement which notice shall be in the
form of an amendment to this Agreement or in the form of an Amended and Restated
Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Certificate of Incorporation. The Certificate of Incorporation of BNF
in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until otherwise amended or repealed.
2.2 By-laws. The By-laws of BNF in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until otherwise
amended or repealed.
2.3 Directors and Officers. The directors of BNF in office immediately
prior to the Effective Time, together with such additional persons as may
thereafter be elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the By-laws of the
Surviving Corporation. The officers of BNF in office immediately prior to the
Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the By-laws of the Surviving Corporation.
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ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 Conversion of Shares. Subject to the provisions of this Article 3, at
the Effective Time, by virtue of the Merger and without any action on the part
of UPC, BancAlabama, or the shareholders of either of the foregoing, the shares
of the constituent corporations shall be converted as follows:
(a) Each share of UPC Capital Stock, including any associated UPC
Rights, issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding from and after the Effective Time.
(b) Each share of BNF Common Stock issued and outstanding immediately
prior to the Effective Time shall remain issued and outstanding from and
after the Effective Time.
(c) Each share of BancAlabama Common Stock (excluding shares held by
any BancAlabama Company or any UPC Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted and
excluding shares held by shareholders who perfect their statutory appraisal
rights as provided in Section 3.4 of this Agreement) issued and outstanding
at the Effective Time shall cease to be outstanding and shall be converted
into and exchanged for the right to receive .5907 of a share of UPC Common
Stock (as subject to possible adjustment as set forth in Section 10.1(h) of
this Agreement, the "Exchange Ratio"). Pursuant to the UPC Rights
Agreement, each share of UPC Common Stock issued in connection with the
Merger upon conversion of BancAlabama Common Stock shall be accompanied by
a UPC Right.
3.2 Anti-Dilution Provisions. In the event UPC changes the number of
shares of UPC Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 Shares Held by BancAlabama or UPC. Each of the shares of BancAlabama
Common Stock held by any BancAlabama Company or by any UPC Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 Dissenting Shareholders. Any holder of shares of BancAlabama Common
Stock who perfects his or her appraisal rights in accordance with and as
contemplated by Section 262 of the DGCL shall be entitled to receive the value
of such shares in cash as determined pursuant to such provision of Law;
provided, that no such payment shall be made to any dissenting shareholder
unless and until such dissenting shareholder has complied with the applicable
provisions of the DGCL and surrendered to UPC the certificate or certificates
representing the shares for which payment is being made. In the event that after
the Effective Time a dissenting shareholder of BancAlabama fails to perfect, or
effectively withdraws or loses, his or her right to appraisal and of payment for
his or her shares, UPC shall issue and deliver the consideration to which such
holder of shares of BancAlabama Common Stock is entitled under this Article 3
(without interest) upon surrender by such holder of the certificate or
certificates representing shares of BancAlabama Common Stock held by such
holder. BancAlabama will establish an escrow account with an amount sufficient
to satisfy the maximum aggregate payment that may be required to be paid to
dissenting shareholders. Upon satisfaction of all claims of dissenting
shareholders, the remaining escrowed amount, reduced by payment of the fees and
expenses of the escrow agent, will be returned to the Surviving Corporation.
3.5 Fractional Shares. Notwithstanding any other provision of this
Agreement, each holder of shares of BancAlabama Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of UPC Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the market value of one share of UPC Common Stock at the Effective Time. The
market value of one share of UPC Common Stock at the Effective Time shall be the
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closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a shareholder in respect of any fractional shares.
3.6 Conversion of Stock Options; Restricted Stock.
(a) At the Effective Time, each option to purchase or other right with
respect to shares of BancAlabama Common Stock pursuant to stock options,
stock appreciation rights or other rights, including stock awards
("BancAlabama Options") granted by BancAlabama under the BancAlabama Stock
Plans, which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become rights with respect to UPC
Common Stock, and UPC shall assume each BancAlabama Option, in accordance
with the terms of the BancAlabama Stock Plan and stock option or other
agreement by which it is evidenced, except that from and after the
Effective Time, (i) UPC and its Salary and Benefits Committee shall be
substituted for BancAlabama and the Committee of BancAlabama's Board of
Directors (including, if applicable, the entire Board of Directors of
BancAlabama) administering such BancAlabama Stock Plan, (ii) each
BancAlabama Option assumed by UPC may be exercised solely for shares of UPC
Common Stock (or cash in the case of stock appreciation rights), (iii) the
number of shares of UPC Common Stock subject to such BancAlabama Option
shall be equal to the number of shares of BancAlabama Common Stock subject
to such BancAlabama Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, and (iv) the per share exercise price
under each such BancAlabama Option shall be adjusted by dividing the per
share exercise price under each such BancAlabama Option by the Exchange
Ratio and rounding up to the nearest cent. Notwithstanding the provisions
of clause (iii) of the preceding sentence, UPC shall not be obligated to
issue any fraction of a share of UPC Common Stock upon exercise of
BancAlabama Options and any fraction of a share of UPC Common Stock that
otherwise would be subject to a converted BancAlabama Option shall
represent the right to receive a cash payment upon exercise of such
converted BancAlabama Option equal to the product of such fraction and the
difference between the market value of one share of UPC Common Stock at the
time of exercise of such Option and the per share exercise price of such
Option. The market value of one share of UPC Common Stock at the time of
exercise of an Option shall be the closing price of such common stock on
the NYSE-Composite Transactions List (as reported by The Wall Street
Journal or, if not reported thereby, any other authoritative source
selected by UPC) on the last trading day preceding the date of exercise.
UPC and BancAlabama agree to take all necessary steps to effectuate the
foregoing provisions of this Section 3.6.
(b) As soon as practicable after the Effective Time, UPC shall deliver
to the participants in each BancAlabama Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants
subject to such BancAlabama Stock Plan shall continue in effect on the same
terms and conditions (subject to the adjustments required by Section 3.6(a)
after giving effect to the Merger). Within 30 days after the Effective
Time, UPC shall file a registration statement on Form S-3 or Form S-8, as
the case may be (or any successor or other appropriate forms), with respect
to the shares of UPC Common Stock subject to such options and shall use its
reasonable efforts to maintain the effectiveness of such registration
statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain
outstanding.
(c) All contractual restrictions or limitations on transfer with
respect to BancAlabama Common Stock awarded under the BancAlabama Stock
Plans or any other plan, program, or Contract of any BancAlabama Company,
to the extent that such restrictions or limitations shall not have already
lapsed (whether as a result of the Merger or otherwise), and except as
otherwise expressly provided in such plan, program, or Contract, shall
remain in full force and effect with respect to shares of UPC Common Stock
into which such restricted stock is converted pursuant to Section 3.1 of
this Agreement.
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ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective Time, UPC and
BancAlabama shall cause the exchange agent selected by UPC (the "Exchange
Agent") to mail to the former shareholders of BancAlabama appropriate
transmittal materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
BancAlabama Common Stock shall pass, only upon proper delivery of such
certificates to the Exchange Agent). The Exchange Agent may establish reasonable
and customary rules and procedures in connection with its duties. After the
Effective Time, each holder of shares of BancAlabama Common Stock (other than
shares to be canceled pursuant to Section 3.3 or as to which statutory
dissenters' rights have been perfected as provided in Section 3.4 of this
Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.5 of this Agreement, each holder of shares of BancAlabama
Common Stock issued and outstanding at the Effective Time also shall receive,
upon surrender of the certificate or certificates representing such shares, cash
in lieu of any fractional share of UPC Common Stock to which such holder may be
otherwise entitled (without interest). UPC shall not be obligated to deliver the
consideration to which any former holder of BancAlabama Common Stock is entitled
as a result of the Merger until such holder surrenders such holder's certificate
or certificates representing the shares of BancAlabama Common Stock for exchange
as provided in this Section 4.1. The certificate or certificates of BancAlabama
Common Stock so surrendered shall be duly endorsed as the Exchange Agent may
require. Any other provision of this Agreement notwithstanding, neither UPC nor
the Exchange Agent shall be liable to a holder of BancAlabama Common Stock for
any amounts paid or property delivered in good faith to a public official
pursuant to any applicable abandoned property Law. Adoption of this Agreement by
the shareholders of BancAlabama shall constitute ratification of the appointment
of the Exchange Agent.
4.2 Rights of Former BancAlabama Shareholders. At the Effective Time, the
stock transfer books of BancAlabama shall be closed as to holders of BancAlabama
Common Stock immediately prior to the Effective Time and no transfer of
BancAlabama Common Stock by any such holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions of
Section 4.1 of this Agreement, each certificate theretofore representing shares
of BancAlabama Common Stock (other than shares to be canceled pursuant to
Section 3.3 and 3.4 of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive the consideration provided
in Sections 3.1 and 3.5 of this Agreement in exchange therefor, subject,
however, to the Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the Effective Time which
have been declared or made by BancAlabama in respect of such shares of
BancAlabama Common Stock in accordance with the terms of this Agreement and
which remain unpaid at the Effective Time. Whenever a dividend or other
distribution is declared by UPC on the UPC Common Stock, the record date for
which is at or after the Effective Time, the declaration shall include dividends
or other distributions on all shares of UPC Common Stock issuable pursuant to
this Agreement, but no dividend or other distribution payable to the holders of
record of UPC Common Stock as of any time subsequent to the Effective Time shall
be delivered to the holder of any certificate representing shares of BancAlabama
Common Stock issued and outstanding at the Effective Time until such holder
surrenders such certificate for exchange as provided in Section 4.1 of this
Agreement. However, upon surrender of such BancAlabama Common Stock certificate,
both the UPC Common Stock certificate (together with all such undelivered
dividends or other distributions without interest) and any undelivered dividends
and cash payments payable hereunder (without interest) shall be delivered and
paid with respect to each share represented by such certificate.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BANCALABAMA
BancAlabama hereby represents and warrants to UPC as follows:
5.1 Organization, Standing, and Power. BancAlabama is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Assets. BancAlabama is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on BancAlabama.
5.2 Authority; No Breach By Agreement.
(a) BancAlabama has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery,
and performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of BancAlabama, subject to the approval of this Agreement by the holders of
a majority of the outstanding shares of BancAlabama Common Stock, which is
the only shareholder vote required for approval of this Agreement and
consummation of the Merger by BancAlabama. Subject to such requisite
shareholder approval, this Agreement (which for purposes of this sentence
shall not include the Stock Option Agreement) represents a legal, valid,
and binding obligation of BancAlabama, enforceable against BancAlabama in
accordance with its terms (except in all cases as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar 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 proceeding may be
brought).
(b) Neither the execution and delivery of this Agreement by
BancAlabama, nor the consummation by BancAlabama of the transactions
contemplated hereby, nor compliance by BancAlabama with any of the
provisions hereof, will (i) conflict with or result in a breach of any
provision of BancAlabama's Articles of Incorporation or By-laws, or (ii)
except as disclosed in Section 5.2 of the BancAlabama Disclosure
Memorandum, constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any material Asset of
any BancAlabama Company under, any Contract or Permit of any BancAlabama
Company, or, (iii) subject to receipt of the requisite Consents referred to
in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any BancAlabama Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and other
than Consents required from Regulatory Authorities, and other than notices
to or filings with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation with respect to any employee benefit plans, or under
the HSR Act, and other than Consents, filings, or notifications which, if
not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on BancAlabama, no notice to,
filing with, or Consent of, any public body or authority is necessary for
the consummation by BancAlabama of the Merger and the other transactions
contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of BancAlabama consists of (i)
2,000,000 shares of BancAlabama Common Stock, of which 703,122 shares are
issued and outstanding as of the date of this Agreement (exclusive of
treasury shares) and not more than 830,122 shares will be issued and
outstanding at the Effective Time, and (ii) 500,000 shares of preferred
stock, $1.00 par value, of which no shares are, or will
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be, issued and outstanding as of the date of this Agreement or at the
Effective Time, respectively. All of the issued and outstanding shares of
capital stock of BancAlabama are duly and validly issued and outstanding
and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of capital stock of BancAlabama has been issued in
violation of any preemptive rights of the current or past shareholders of
BancAlabama. BancAlabama has reserved 132,000 shares of BancAlabama Common
Stock for issuance under the BancAlabama Stock Plans, pursuant to which
options to purchase not more than 127,000 shares of BancAlabama Common
Stock are outstanding.
(b) Except as set forth in Section 5.3(a) of this Agreement, or as
provided in the Stock Option Agreement there are no shares of capital stock
or other equity securities of BancAlabama outstanding and no outstanding
Rights relating to the capital stock of BancAlabama.
5.4 BancAlabama Subsidiaries. BancAlabama has disclosed in Section 5.4 of
the BancAlabama Disclosure Memorandum all of the BancAlabama Subsidiaries that
are corporations (identifying its jurisdiction of incorporation, each
jurisdiction in which character of its Assets or the nature or conduct of its
business requires it to be qualified and/or licensed to transact business, and
the number of shares owned and percentage ownership interest represented by such
share ownership) and all of the BancAlabama Subsidiaries that are general or
limited partnerships or other non-corporate entities (identifying the Law under
which such entity is organized, each jurisdiction in which character of its
Assets or the nature or conduct of its business requires it to be qualified
and/or licensed to transact business, and the amount and nature of the ownership
interest therein of all BancAlabama Companies). BancAlabama or one of its wholly
owned Subsidiaries owns all of the issued and outstanding shares of capital
stock (or other equity interests) of each BancAlabama Subsidiary. No capital
stock (or other equity interest) of any BancAlabama Subsidiary are or may become
required to be issued (other than to another BancAlabama Company) by reason of
any Rights, and there are no Contracts by which any BancAlabama Subsidiary is
bound to issue (other than to another BancAlabama Company) additional shares of
its capital stock (or other equity interests) or Rights or by which any
BancAlabama Company is or may be bound to transfer any shares of the capital
stock (or other equity interests) of any BancAlabama Subsidiary (other than to
another BancAlabama Company). There are no Contracts relating to the rights of
any BancAlabama Company to vote or to dispose of any shares of the capital stock
(or other equity interests) of any BancAlabama Subsidiary. All of the shares of
capital stock (or other equity interests) of each BancAlabama Subsidiary held by
a BancAlabama Company are fully paid and nonassessable under the applicable
corporation or similar Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by the BancAlabama Company free and
clear of any Lien. Each BancAlabama Subsidiary is either a bank, a savings
association, partnership, limited liability corporation, or a corporation, and
each such Subsidiary is duly organized, validly existing, and (as to
corporations) in good standing under the Laws of the jurisdiction in which it is
incorporated or organized, and has the corporate power and authority necessary
for it to own, lease, and operate its Assets and to carry on its business as now
conducted. Each BancAlabama Subsidiary is duly qualified or licensed to transact
business as a foreign corporation in good standing in the States of the United
States and foreign jurisdictions where the character of its Assets or the nature
or conduct of its business requires it to be so qualified or licensed, except
for such jurisdictions in which the failure to be so qualified or licensed is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BancAlabama. The only BancAlabama Subsidiary that is a
depository institution is BankAlabama-Huntsville. BankAlabama-Huntsville is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund. The minute book and other organizational documents for each
BancAlabama Subsidiary have been made available to UPC for its review, and are
true and complete as in effect as of the date of this Agreement and accurately
reflect all amendments thereto and all proceedings of the Board of Directors and
shareholders thereof.
5.5 SEC Filings; Financial Statements.
(a) BancAlabama has filed and made available to UPC all SEC Documents
required to be filed by BancAlabama since December 31, 1992 (the
"BancAlabama SEC Reports"). The BancAlabama SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements
of the Securities Laws and (ii) did not, at the time they were filed (or,
if amended or superseded by a filing
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prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated in such BancAlabama SEC Reports or necessary in
order to make the statements in such BancAlabama SEC Reports, in light of
the circumstances under which they were made, not misleading. None of
BancAlabama's Subsidiaries is required to file any SEC Documents.
(b) Each of the BancAlabama Financial Statements (including, in each
case, any related notes) contained in the BancAlabama SEC Reports,
including any BancAlabama SEC Reports filed after the date of this
Agreement until the Effective Time, complied as to form in all material
respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be
indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and
fairly presented in all material respects the consolidated financial
position of BancAlabama and its Subsidiaries as at the respective dates and
the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or
are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount or effect and except as disclosed
in Section 5.5(b) of the BancAlabama Disclosure Memorandum.
5.6 Absence of Undisclosed Liabilities. To the Knowledge of BancAlabama,
no BancAlabama Company has any Liabilities that are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on BancAlabama,
except Liabilities which are accrued or reserved against in the consolidated
balance sheets of BancAlabama as of December 31, 1995, included in the
BancAlabama Financial Statements made available prior to the date of this
Agreement or reflected in the notes thereto. No BancAlabama Company has incurred
or paid any Liability since December 31, 1995, except for such Liabilities
incurred or paid (i) in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on BancAlabama or (ii) in connection
with the transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since December 31, 1995, except
as disclosed in the BancAlabama Financial Statements made available prior to the
date of this Agreement, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BancAlabama, and (ii) the BancAlabama
Companies have not taken any action, or failed to take any action, prior to the
date of this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of BancAlabama contained in this Agreement.
5.8 Tax Matters.
(a) Except as set forth in Section 5.8 of the BancAlabama Disclosure
Memorandum, all Tax Returns required to be filed by or on behalf of any of
the BancAlabama Companies have been timely filed or requests for extensions
have been timely filed, granted, and have not expired for periods ended on
or before December 31, 1994, and on or before the date of the most recent
fiscal year end immediately preceding the Effective Time, and all Tax
Returns filed are materially complete and accurate. All Taxes shown on
filed Tax Returns have been paid. There is no audit examination,
deficiency, or refund Litigation with respect to any Taxes, except as
reserved against in the BancAlabama Financial Statements made available
prior to the date of this Agreement. All Taxes and other Liabilities due
with respect to completed and settled examinations or concluded Litigation
have been paid. There are no Liens with respect to Taxes upon any of the
Assets of the BancAlabama Companies.
(b) None of the BancAlabama Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
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(c) Adequate provision for any Taxes due or to become due for any of
the BancAlabama Companies for the period or periods through and including
the date of the respective BancAlabama Financial Statements has been made
and is reflected on such BancAlabama Financial Statements.
(d) Deferred Taxes of the BancAlabama Companies have been provided for
in accordance with GAAP.
(e) Each of the BancAlabama Companies is in compliance with, and its
records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local
Tax Laws, and such records identify with specificity all accounts subject
to backup withholding under Section 3406 of the Internal Revenue Code.
(f) Except as set forth in Section 5.8 of the BancAlabama Disclosure
Memorandum, none of the BancAlabama Companies has made any payments, is
obligated to make any payments, or is a party to any Contract that could
obligate it to make any payments that would be disallowed as a deduction
under Section 280G or 162(m) of the Internal Revenue Code.
(g) There has not been an ownership change, as defined in Internal
Revenue Code Section 382(g), of the BancAlabama Companies that occurred
during or after any Taxable Period in which the Companies incurred a net
operating loss that carries over to any Taxable Period ending after
December 31, 1994.
(h) Except as set forth in Section 5.8 of the BancAlabama Disclosure
Memorandum, none of the BancAlabama Companies is a party to any tax
allocation or sharing agreement and none of the BancAlabama Companies has
been a member of an affiliated group filing a consolidated federal income
tax return (other than a group the common parent of which was BancAlabama)
has any Liability for taxes of any Person (other than BancAlabama and its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law) as a transferee or successor or
by Contract or otherwise.
5.9 Allowance for Possible Loan Losses. The allowance for possible loan or
credit losses (the "Allowance") shown on the consolidated balance sheets of
BancAlabama included in the most recent BancAlabama Financial Statements dated
prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of BancAlabama included in the BancAlabama Financial
Statements as of dates subsequent to the execution of this Agreement will be, as
of the dates thereof, in the reasonable opinion of management of BancAlabama
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known and reasonably anticipated losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables) of the BancAlabama Companies and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
the BancAlabama Companies as of the dates thereof.
5.10 Assets. Except as disclosed or reserved against in the BancAlabama
Financial Statements made available prior to the date of this Agreement, the
BancAlabama Companies have good and marketable title, free and clear of all
Liens, to all of their respective Assets. All tangible properties which are
material to BancAlabama's business on a consolidated basis are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with BancAlabama's past practices. All Assets
which are material to BancAlabama's business on a consolidated basis, held under
leases or subleases by any of the BancAlabama Companies, are held under valid
Contracts 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 brought), and each such
Contract is in full force and effect. The BancAlabama Companies currently
maintain insurance as set forth in Section 5.10 of the BancAlabama Disclosure
Memorandum. None of the BancAlabama Companies has received notice from any
insurance carrier that (i) such insurance will be canceled or that coverage
thereunder will be reduced or eliminated, or
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(ii) premium costs with respect to such policies of insurance will be
substantially increased. Except as set forth in Section 5.10 of the BancAlabama
Disclosure Memorandum, there are presently no claims pending under any such
policies of insurance and no notices have been given by any BancAlabama Company
under such policies.
5.11 Intellectual Property. All of the Intellectual Property rights of the
BancAlabama Companies are in full force and effect and constitute legal, valid,
and binding obligations of the respective parties thereto, and there have not
been, and, to the Knowledge of BancAlabama, there currently are not, any
Defaults thereunder by BancAlabama. A BancAlabama Company owns or is the valid
licensee of all such Intellectual Property rights free and clear of all Liens or
claims of infringement. Except as disclosed in Section 5.11 of the BancAlabama
Disclosure Memorandum, none of the BancAlabama Companies or, to the Knowledge of
BancAlabama, their respective predecessors has misused the Intellectual Property
rights of others and, to the Knowledge of BancAlabama, none of the Intellectual
Property rights as used in the business conducted by any such BancAlabama
Company infringes upon or otherwise violates the rights of any Person, nor has
any Person asserted a claim of such infringement. Except as disclosed in Section
5.11 of the BancAlabama Disclosure Memorandum, no BancAlabama Company is
obligated to pay any royalties to any Person with respect to any such
Intellectual Property. To the Knowledge of BancAlabama, each BancAlabama Company
owns or has the valid right to use all of the Intellectual Property rights which
it is presently using, or in connection with performance of any material
Contract to which it is a party. No officer, director, or employee of any
BancAlabama Company is party to any Contract which requires such officer,
director or employee to assign any interest in any Intellectual Property or keep
confidential any trade secrets, proprietary data, customer information, or other
business information or except as disclosed in Section 5.11 of the BancAlabama
Disclosure Memorandum, which restricts or prohibits such officer, director, or
employee from engaging in activities competitive with any Person, including any
BancAlabama Company.
5.12 Environmental Matters. Except as set forth in Section 5.12 of the
BancAlabama Disclosure Memorandum:
(a) To the Knowledge of BancAlabama, each BancAlabama Company, its
Participation Facilities, and its Operating Properties are, and have been,
in compliance with all Environmental Laws, except for violations which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BancAlabama.
(b) To the Knowledge of BancAlabama, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any BancAlabama Company or any of its Operating Properties
or Participation Facilities (or BancAlabama in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating
to the release into the environment of any Hazardous Material, whether or
not occurring at, on, under, adjacent to, or affecting (or potentially
affecting) a site owned, leased, or operated by any BancAlabama Company or
any of its Operating Properties or Participation Facilities, except for
such Litigation pending or threatened that is not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on
BancAlabama, nor to its Knowledge is there any reasonable basis for any
Litigation of a type described in this sentence.
(c) During the period of (i) any BancAlabama Company's ownership or
operation of any of their respective current properties, (ii) any
BancAlabama Company's participation in the management of any Participation
Facility, or (iii) any BancAlabama Company's holding of a security interest
in a Operating Property, to the Knowledge of BancAlabama, there have been
no releases of Hazardous Material in, on, under, adjacent to, or affecting
(or potentially affecting) such properties, except such as are not
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BancAlabama. Prior to the period of (i) any BancAlabama
Company's ownership or operation of any of their respective current
properties, (ii) any BancAlabama Company's participation in the management
of any Participation Facility, or (iii) any BancAlabama Company's holding
of a security interest in a Operating Property, to the Knowledge of
BancAlabama, there were no releases of Hazardous Material in, on, under, or
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affecting any such property, Participation Facility or Operating Property,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on BancAlabama.
5.13 Compliance with Laws. BancAlabama is duly registered as a bank
holding company under the BHC Act. Each BancAlabama Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit. Except as set forth in Section 5.13 of the BancAlabama
Disclosure Memorandum, none of the BancAlabama Companies:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business except where such violations
are not likely to have a Material Adverse Effect; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any BancAlabama Company
is not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, (ii) threatening to revoke any
Permits, or (iii) requiring any BancAlabama Company to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the payment of
dividends.
5.14 Labor Relations. No BancAlabama Company is the subject of any
Litigation asserting that it or any other BancAlabama Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other BancAlabama Company
to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving any BancAlabama
Company, pending or, to the Knowledge of BancAlabama, threatened, or to the
Knowledge of BancAlabama, is there any activity involving any BancAlabama
Company's employees seeking to certify a collective bargaining unit or engaging
in any other organization activity.
5.15 Employee Benefit Plans.
(a) BancAlabama has disclosed in Section 5.15 of the BancAlabama
Disclosure Memorandum, and has delivered or made available to UPC prior to
the execution of this Agreement copies in each case of, all pension,
retirement, profit-sharing, deferred compensation, stock option, employee
stock ownership, severance pay, vacation, bonus, or other incentive plan,
all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans,
and all other employee benefit plans or fringe benefit plans, including
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any BancAlabama Company or ERISA Affiliate thereof for
the benefit of employees, retirees, dependents, spouses, directors,
independent contractors, or other beneficiaries and under which employees,
retirees, dependents, spouses, directors, independent contractors, or other
beneficiaries are eligible to participate (collectively, the "BancAlabama
Benefit Plans"). Any of the BancAlabama Benefit Plans which is an "employee
pension benefit plan," as that term is defined in Section 3(2) of ERISA, is
referred to herein as a "BancAlabama ERISA Plan." Each BancAlabama ERISA
Plan which is also a "defined benefit plan" (as defined in Section 414(j)
of the Internal Revenue Code) is referred to herein as a "BancAlabama
Pension Plan." No BancAlabama Pension Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(b) To the Knowledge of BancAlabama, all BancAlabama Benefit Plans are
in compliance with the applicable terms of ERISA, the Internal Revenue
Code, and any other applicable Laws the breach or violation of which are
reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BancAlabama. Each BancAlabama ERISA Plan which is
intended to be qualified under Section 401(a) of the Internal Revenue Code
has received a favorable determination letter from the Internal Revenue
Service, and BancAlabama is not aware of any circumstances likely to result
in revocation of any such favorable determination letter. No BancAlabama
Company has engaged in a
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transaction with respect to any BancAlabama Benefit Plan that, assuming the
taxable period of such transaction expired as of the date hereof, would
subject any BancAlabama Company to a Tax imposed by either Section 4975 of
the Internal Revenue Code or Section 502(i) of ERISA.
(c) No BancAlabama Pension Plan has any "unfunded current liability,"
as that term is defined in Section 302(d)(8)(A) of ERISA, and the fair
market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated
in accordance with all applicable legal requirements. Since the date of the
most recent actuarial valuation, there has been (i) no material change in
the financial position of any BancAlabama Pension Plan, (ii) no change in
the actuarial assumptions with respect to any BancAlabama Pension Plan, and
(iii) no increase in benefits under any BancAlabama Pension Plan as a
result of plan amendments or changes in applicable Law which is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on BancAlabama or materially adversely affect the funding status of any
such plan. Neither any BancAlabama Pension Plan nor any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, currently or
formerly maintained by any BancAlabama Company, or the single-employer plan
of any entity which is considered one employer with BancAlabama under
Section 4001 of ERISA or Section 414 of the Internal Revenue Code or
Section 302 of ERISA (whether or not waived) (an "ERISA Affiliate") has an
"accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA. No BancAlabama Company has
provided, or is required to provide, security to a BancAlabama Pension Plan
or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(d) To the Knowledge of BancAlabama, within the six-year period
preceding the Effective Time, no Liability under Subtitle C or D of Title
IV of ERISA has been or, to the Knowledge of BancAlabama, is expected to be
incurred by any BancAlabama Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. No BancAlabama Company has incurred any withdrawal Liability
with respect to a multiemployer plan under Subtitle B of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate). No
notice of a "reportable event," within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any BancAlabama Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the BancAlabama Disclosure
Memorandum, no BancAlabama Company has any Liability for retiree health and
life benefits under any of the BancAlabama Benefit Plans and there are no
restrictions on the rights of such BancAlabama Company to amend or
terminate any such retiree health or benefit Plan without incurring
Liability thereunder.
(f) Except as disclosed in Section 5.15 of the BancAlabama Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of any
BancAlabama Company from any BancAlabama Company under any BancAlabama
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable
under any BancAlabama Benefit Plan, or (iii) result in any acceleration of
the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred compensation
entitlements (including entitlements under any executive compensation,
supplemental retirement, or employment agreement) of employees and former
employees of any BancAlabama Company and their respective beneficiaries,
other than entitlements accrued pursuant to funded retirement plans subject
to the provisions of Section 412 of the Internal Revenue Code or Section
302 of ERISA, have been fully reflected on the BancAlabama Financial
Statements to the extent required by and in accordance with GAAP.
5.16 Material Contracts. Except as disclosed in the BancAlabama SEC
Reports or as disclosed in Section 5.16 of the BancAlabama Disclosure
Memorandum, to the Knowledge of BancAlabama, none of the BancAlabama Companies,
nor any of their respective Assets, businesses, or operations, is a party to, or
is
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bound or affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $100,000, (ii) any Contract
relating to the borrowing of money by any BancAlabama Company or the guarantee
by any BancAlabama Company of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Home Loan Bank advances of depository
institution Subsidiaries, trade payables, and Contracts relating to borrowings
or guarantees made in the ordinary course of business, including letters of
credit), (iii) any Contracts which prohibit or restrict any BancAlabama Company
from engaging in any business activities in any geographic area, line of
business, or otherwise in competition with any other Person, (iv) any Contracts
between or among BancAlabama Companies, (v) any exchange-traded or
over-the-counter swap, forward, future, option, cap, floor, or collar financial
Contract, or any other interest rate or foreign currency protection Contract
(not disclosed in the BancAlabama Financial Statements delivered prior to the
date of this Agreement) which is a financial derivative Contract (including
various combinations thereof), and (vi) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a BancAlabama SEC Report
filed by BancAlabama with the SEC prior to the date of this Agreement that has
not been filed as an exhibit to a BancAlabama SEC Report (together with all
Contracts referred to in Sections 5.10 and 5.15(a) of this Agreement, the
"BancAlabama Contracts"). With respect to each BancAlabama Contract: (i) the
Contract is in full force and effect; (ii) no BancAlabama Company is in material
Default thereunder; (iii) no BancAlabama Company has repudiated or waived any
material provision of any such Contract; and (iv) no other party to any such
Contract is, to the Knowledge of BancAlabama, in material Default in any respect
or has repudiated or waived any material provision thereunder. Except as set
forth in Section 5.16 of the BancAlabama Disclosure Memorandum, all of the
indebtedness of any BancAlabama Company for money borrowed is prepayable at any
time by such BancAlabama Company without penalty or premium.
5.17 Legal Proceedings. To the Knowledge of BancAlabama, there is no
Litigation instituted, pending, or threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any BancAlabama Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on BancAlabama, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any BancAlabama Company. Section 5.17 of the BancAlabama Disclosure Memorandum
includes a summary report of all material Litigation as of the date of this
Agreement to which any BancAlabama Company is a party and which names a
BancAlabama Company as a defendant or cross-defendant.
5.18 Reports. Since January 1, 1992, or the date of organization if later,
each BancAlabama Company has timely 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 SEC, including, but not limited to, Forms 10-K,
Forms 10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities,
and (iii) any applicable state securities or banking authorities (except, in the
case of state securities authorities, failures to file which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
BancAlabama). 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 applicable Laws. As of its respective date, each
such report and document did not, in all material respects, 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 made therein, in light of the
circumstances under which they were made, not misleading.
5.19 Statements True and Correct. To the Knowledge of BancAlabama, no
statement, certificate, instrument, or other writing furnished or to be
furnished by any BancAlabama Company or any Affiliate thereof to UPC pursuant to
this Agreement or any other document, agreement, or instrument referred to
herein contains or will contain any untrue statement of material fact or will
omit to state a material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. To the
Knowledge of BancAlabama, none of the information supplied or to be supplied by
any BancAlabama Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by UPC with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
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any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any BancAlabama Company or any Affiliate thereof for inclusion in
the Proxy Statement to be mailed to BancAlabama's shareholders in connection
with the Shareholders' Meeting, and any other documents to be filed by a
BancAlabama Company or any Affiliate thereof with the SEC or any other
Regulatory Authority in connection with the transactions contemplated hereby,
will, at the respective time such documents are filed, and with respect to the
Proxy Statement, when first mailed to the shareholders of BancAlabama, be false
or misleading with respect to any material fact, or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, or, in the case of the Proxy
Statement or any amendment thereof or supplement thereto, at the time of the
Shareholders' Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any BancAlabama Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form in
all material respects with the provisions of applicable Law.
5.20 Accounting, Tax, and Regulatory Matters. No BancAlabama Company or
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance relating to BancAlabama that is reasonably likely to (i) prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such section.
5.21 State Takeover Laws. Each BancAlabama Company has taken all necessary
action to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable
"moratorium," "fair price," "business combination," "control share," or other
anti-takeover Laws of the State of Delaware (collectively, "Takeover Laws"),
including Section 203 of the DGCL.
5.22 Charter Provisions. Each BancAlabama Company has taken all action so
that the entering into of this Agreement and the consummation of the Merger and
the other transactions contemplated by this Agreement do not and will not result
in the grant of any rights to any Person under the Charter, By-laws or other
governing instruments of any BancAlabama Company or restrict or impair the
ability of UPC or any of its Subsidiaries to vote, or otherwise to exercise the
rights of a shareholder with respect to, shares of any BancAlabama Company that
may be directly or indirectly acquired or controlled by it.
5.23 Support Agreements. Each of the directors of BancAlabama has executed
and delivered to UPC an agreement in substantially the form of Exhibit 2 to this
Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UPC
Except as disclosed in the UPC Disclosure Memorandum, UPC hereby represents
and warrants to BancAlabama as follows:
6.1 Organization, Standing, and Power. UPC is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Tennessee, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. UPC is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on UPC.
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6.2 Authority; No Breach By Agreement.
(a) UPC has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly
authorized by all necessary corporate action in respect thereof on the part
of UPC. Subject to such requisite shareholder approval, this Agreement
(which for purposes of this sentence shall not include the Stock Option
Agreement) represents a legal, valid, and binding obligation of UPC,
enforceable against UPC in accordance with its terms (except in all cases
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar 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 proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by UPC, nor
the consummation by UPC of the transactions contemplated hereby, nor
compliance by UPC with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of UPC's Restated Charter of
Incorporation or By-laws, or (ii) constitute or result in a Default under,
or require any Consent pursuant to, or result in the creation of any Lien
on any Asset of any UPC Company under, any Contract or Permit of any UPC
Company, or (iii) subject to receipt of the requisite approvals referred to
in Section 9.1(b) of this Agreement, violate any Law or Order applicable to
any UPC Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and rules
of the NYSE, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or
the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on UPC,
no notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by UPC of the Merger and the other
transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of UPC consists of (i)
100,000,000 shares of UPC Common Stock, of which 45,565,914 shares are issued
and outstanding as of February 29, 1996, and (ii) 10,000,000 shares of UPC
Preferred Stock, of which no shares of UPC Series A Preferred Stock, 44,000
shares of UPC Series B Preferred Stock, and 3,496,419 shares of UPC Series E
Preferred Stock are issued and outstanding as of February 29,1996. All of the
issued and outstanding shares of UPC Capital Stock are, and all of the shares of
UPC Common Stock to be issued in exchange for shares of BancAlabama Common Stock
upon consummation of the Merger, when issued in accordance with the terms of
this Agreement, will be, duly and validly issued and outstanding and fully paid
and nonassessable under the TBCA. None of the outstanding shares of UPC Capital
Stock has been, and none of the shares of UPC Common Stock to be issued in
exchange for shares of BancAlabama Common Stock upon consummation of the Merger
will be, issued in violation of any preemptive rights of the current or past
shareholders of UPC. UPC has reserved for issuance a sufficient number of shares
of UPC Common Stock for the purpose of issuing shares of UPC Common Stock in
accordance with the provisions of Sections 3.1 and 3.6 of this Agreement.
6.4 SEC Filings; Financial Statements.
(a) UPC has filed and made available to BancAlabama all SEC Documents
required to be filed by UPC since December 31, 1992 (the "UPC SEC
Reports"). The UPC SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Laws
and (ii) did not, at the time they were filed (or, if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such UPC SEC Reports or necessary in
order to make the statements in such UPC SEC Reports, in light of the
circumstances under which they were made, not misleading. Except for
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UPC Subsidiaries that are registered as a broker, dealer, or investment
advisor, none of UPC's Subsidiaries is required to file any SEC Documents.
(b) Each of the UPC Financial Statements (including, in each case, any
related notes) contained in the UPC SEC Reports, including any UPC SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published
rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited interim statements, as permitted by
Form 10-Q of the SEC), and fairly presented in all material respects the
consolidated financial position of UPC and its Subsidiaries as at the
respective dates and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount or
effect.
6.5 Absence of Undisclosed Liabilities. No UPC Company has any Liabilities
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC, except Liabilities which are accrued or reserved against
in the consolidated balance sheets of UPC as of December 31, 1995, included in
the UPC Financial Statements made available prior to the date of this Agreement
or reflected in the notes thereto. No UPC Company has incurred or paid any
Liability since December 31, 1995, except for such Liabilities incurred or paid
(i) in the ordinary course of business consistent with past business practice
and which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC or (ii) in connection with the transactions
contemplated by this Agreement.
6.6 Absence of Certain Changes or Events. Since December 31, 1995, except
as disclosed in the UPC Financial Statements delivered prior to the date of this
Agreement or contemplated by pending federal legislation applicable to financial
institutions generally, (i) there have been no events, changes, or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC, and (ii) the UPC Companies have not
taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of UPC provided in Article 7 of this Agreement.
6.7 Tax Matters.
(a) All Tax Returns required to be filed by or on behalf of any of the
UPC Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1994, and on or before the date of the most recent fiscal year
end immediately preceding the Effective Time, and all Tax Returns filed are
materially complete and accurate. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation
with respect to any Taxes, except as reserved against in the UPC Financial
Statements delivered prior to the date of this Agreement. All Taxes and
other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid. There are no Liens with respect to
Taxes upon any of the Assets of the UPC Companies.
(b) Adequate provision for any Taxes due or to become due for any of
the UPC Companies for the period or periods through and including the date
of the respective UPC Financial Statements has been made and is reflected
on such UPC Financial Statements.
(c) Deferred Taxes of the UPC Companies have been provided for in
accordance with GAAP.
6.8 Environmental Matters.
(a) To the Knowledge of UPC, each UPC Company, its Participation
Facilities, and its Operating Properties are, and have been, in compliance
with all Environmental Laws, except for violations which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect
on UPC.
(b) To the Knowledge of UPC, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other
forum in which any UPC Company or any of its Operating
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Properties or Participation Facilities (or UPC in respect of such Operating
Property or Participation Facility) has been or, with respect to threatened
Litigation, may be named as a defendant (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law or (ii) relating
to the release into the environment of any Hazardous Material, whether or
not occurring at, on, under, adjacent to, or affecting (or potentially
affecting) a site owned, leased, or operated by any UPC Company or any of
its Operating Properties or Participation Facilities, except for such
Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC, nor to
its Knowledge is there any reasonable basis for any Litigation of a type
described in this sentence.
(c) During the period of (i) any UPC Company's ownership or operation
of any of their respective current properties, (ii) any UPC Company's
participation in the management of any Participation Facility, or (iii) any
UPC Company's holding of a security interest in a Operating Property, to
the Knowledge of UPC, there have been no releases of Hazardous Material in,
on, under, adjacent to, or affecting (or potentially affecting) such
properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on UPC. Prior to the period
of (i) any UPC Company's ownership or operation of any of their respective
current properties, (ii) any UPC Company's participation in the management
of any Participation Facility, or (iii) any UPC Company's holding of a
security interest in a Operating Property, to the Knowledge of UPC, there
were no releases of Hazardous Material in, on, under, or affecting any such
property, Participation Facility or Operating Property, except such as are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC.
6.9 Compliance with Laws. UPC is duly registered as a bank holding company
under the BHC Act and as a savings and loan holding company under the HOLA. Each
UPC Company has in effect all Permits necessary for it to own, lease, or operate
its material Assets and to carry on its business as now conducted, and there has
occurred no Default under any such Permit. No UPC Company:
(a) is in violation of any Laws, Orders, or Permits applicable to its
business or employees conducting its business except where such violations
are not likely to have a Material Adverse Effect; and
(b) has received any notification or communication from any agency or
department of federal, state, or local government or any Regulatory
Authority or the staff thereof (i) asserting that any UPC Company is not in
compliance with any of the Laws or Orders which such governmental authority
or Regulatory Authority enforces, (ii) threatening to revoke any Permits,
or (iii) requiring any UPC Company to enter into or consent to the issuance
of a cease and desist order, formal agreement, directive, commitment or
memorandum of understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its business, or in
any manner relates to its capital adequacy, its credit or reserve policies,
its management, or the payment of dividends.
6.10 Legal Proceedings. There is no Litigation instituted or pending, or,
to the Knowledge of UPC, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome) against any UPC Company, or against any Asset, interest,
or right of any of them, that is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any UPC Company.
6.11 Reports. Since January 1, 1992, or the date of organization if later,
each UPC Company 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 SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii)
any applicable state securities or banking authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on UPC). 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 applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact
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required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading.
6.12 Statements True and Correct. To the Knowledge of UPC, no statement,
certificate, instrument or other writing furnished or to be furnished by any UPC
Company or any Affiliate thereof to BancAlabama pursuant to this Agreement or
any other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. To the Knowledge of UPC, none of the
information supplied or to be supplied by any UPC Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by UPC with the
SEC, will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. None of the information
supplied or to be supplied by any UPC Company or any Affiliate thereof for
inclusion in the Proxy Statement to be mailed to BancAlabama's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by any UPC Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of BancAlabama, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any UPC Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
6.13 Accounting, Tax, and Regulatory Matters. No UPC Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance relating to UPC that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
6.14 Matters Relating to BNF. BNF is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Delaware, and has
the corporate power and authority to carry on its business as now conducted and
to own, lease, and operate its material Assets. BNF has the corporate power and
authority necessary to execute, deliver, and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of the
transactions contemplated herein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of BNF, subject to the approval of this Agreement by UPC as the sole
shareholder of BNF, which is the only shareholder vote required for approval of
this Agreement, and the consummation of the Merger by BNF.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of BancAlabama. Unless the prior written consent
of UPC shall have been obtained, which consent shall not be unreasonably
withheld and which consent will be given or denied within 10 business days of
receipt of written request for such consent, and except as otherwise expressly
contemplated herein, BancAlabama shall and shall cause each of its Subsidiaries
to (i) operate its business only in the usual, regular, and ordinary course,
(ii) preserve intact its business organization and Assets and maintain its
rights and franchises, and (iii) take no action which would (a) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
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restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement or prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.2 Negative Covenants of BancAlabama. Except as specifically permitted by
this Agreement, from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, BancAlabama covenants and
agrees that it will not do or agree or commit to do, or permit any of its
Subsidiaries to do or agree or commit to do, any of the following without the
prior written consent of the chief executive officer, president, or chief
financial officer of UPC, which consent shall not be unreasonably withheld and
which consent will be given or denied within 10 business days of receipt of
written request for such consent:
(a) amend the Charter, By-laws, or other governing instruments of any
BancAlabama Company, or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a BancAlabama Company to another
BancAlabama Company) in excess of an aggregate of $100,000 (for the
BancAlabama Companies on a consolidated basis) except in the ordinary
course of the business of BancAlabama Subsidiaries consistent with past
practices including refinancing existing obligations (which shall include,
for BancAlabama Subsidiaries that are depository institutions, creation of
deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase
agreements fully secured by U.S. government or agency securities), or
impose, or suffer the imposition, on any Asset of any BancAlabama Company
of any Lien or permit any such Lien to exist (other than in connection with
deposits, repurchase agreements, bankers acceptances, "treasury tax and
loan" accounts established in the ordinary course of business, the
satisfaction of legal requirements in the exercise of trust powers, and
Liens in effect as of the date hereof that are disclosed in the BancAlabama
Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other than
exchanges in the ordinary course under employee benefit plans), directly or
indirectly, any shares, or any securities convertible into any shares, of
the capital stock of any BancAlabama Company, or declare or pay any
dividend or make any other distribution in respect of BancAlabama's capital
stock; or
(d) except for this Agreement, or pursuant to the exercise of stock
options outstanding as of the date hereof and pursuant to the terms thereof
in existence on the date hereof, or pursuant to the Stock Option Agreement,
issue, sell, pledge, encumber, authorize the issuance of, enter into any
Contract to issue, sell, pledge, encumber, or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of
BancAlabama Common Stock or any other capital stock of any BancAlabama
Company, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of any
BancAlabama Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of BancAlabama
Common Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber any shares of capital stock of any BancAlabama Subsidiary (unless
any such shares of stock are sold or otherwise transferred to another
BancAlabama Company) or any Asset having a book value in excess of $200,000
other than in the ordinary course of business for reasonable and adequate
consideration; or
(f) except for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of five
years or less or Federal Home Loan Bank Stock, purchase any securities or
make any material investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of any Assets, in
any Person other than a wholly owned BancAlabama Subsidiary, or otherwise
acquire direct or indirect control over any Person, other than in
connection with (i) foreclosures in the ordinary course of business, (ii)
acquisitions of control by a
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depository institution Subsidiary in its fiduciary capacity, or (iii) the
creation of new wholly owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the employees or
officers of any BancAlabama Company, except in accordance with past
practice disclosed in Section 7.2(g) of the BancAlabama Disclosure
Memorandum or as required by Law; pay any severance or termination pay or
any bonus other than pursuant to written policies or written Contracts in
effect on the date of this Agreement and disclosed in Section 7.2(g) of the
BancAlabama Disclosure Memorandum; and enter into or amend any severance
agreements with officers of any BancAlabama Company; grant any material
increase in fees or other increases in compensation or other benefits to
directors of any BancAlabama Company except in accordance with past
practice disclosed in Section 7.2(g) of the BancAlabama Disclosure
Memorandum; or voluntarily accelerate the vesting of any stock options or
other stock-based compensation or employee benefits (other than the
acceleration of vesting which occurs under a benefit plan upon a change of
control of BancAlabama); or
(h) enter into or amend any employment Contract between any
BancAlabama Company and any Person (unless such amendment is required by
Law) that the BancAlabama Company 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; or
(i) adopt any new employee benefit plan of any BancAlabama Company or
terminate or withdraw from, or make any material change in or to, any
existing employee benefit plans of any BancAlabama Company other than any
such change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or make any distributions from such employee benefit plans, except as
required by Law, the terms of such plans or consistent with past practice;
or
(j) make any significant change in any Tax or accounting methods or
systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any BancAlabama
Company for material money damages or restrictions upon the operations of
any BancAlabama Company; or
(l) enter into, modify, amend, or terminate any material Contract
(excluding any loan Contract or other Contract specifically addressed in
(a) through (k), above) or waive, release, compromise, or assign any
material rights or claims.
7.3 Covenants of UPC. From the date of this Agreement until the earlier of
the Effective Time or the termination of this Agreement, UPC covenants and
agrees that it shall (i) continue to conduct its business and the business of
its Subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the UPC Common Stock and the business prospects of the UPC
Companies, and (ii) take no action which would (a) materially adversely affect
the ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the type
referred to in the last sentence of Section 9.1(b) of this Agreement or prevent
the transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (b) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement; provided, that the foregoing shall not prevent
any UPC Company from acquiring any other Assets or businesses or from
discontinuing or disposing of any of its Assets or business if such action is,
in the judgment of UPC, desirable in the conduct of the business of UPC and its
Subsidiaries.
7.4 Adverse Changes in Condition. Each Party agrees to give written notice
promptly to the other Party upon becoming aware of the occurrence or impending
occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations,
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warranties, or covenants contained herein, and to use its reasonable efforts to
prevent or promptly to remedy the same.
7.5 Reports. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in shareholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not material). As of their
respective dates, such reports filed with the SEC will comply in all material
respects with the Securities Laws and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder Approval. UPC
shall file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or securities Laws in connection with the issuance of the shares of UPC Common
Stock upon consummation of the Merger. BancAlabama shall furnish all information
concerning it and the holders of its capital stock as UPC may reasonably request
in connection with such action. BancAlabama shall call a Shareholders' Meeting,
to be held as soon as reasonably practicable after the Registration Statement is
declared effective by the SEC, for the purpose of voting upon approval of this
Agreement and such other related matters as it deems appropriate. In connection
with the Shareholder's Meeting, (i) BancAlabama shall prepare and file with the
SEC a Proxy Statement and mail such Proxy Statement to its shareholders, (ii)
the Parties shall furnish to each other all information concerning them that
they may reasonably request in connection with such Proxy Statement, (iii) the
Board of Directors of BancAlabama shall recommend (subject to compliance with
its fiduciary duties as advised by counsel) to its shareholders the approval of
the matters submitted for approval, and (iv) the Board of Directors and officers
of BancAlabama shall (subject to compliance with their fiduciary duties as
advised by counsel) use their reasonable efforts to obtain such shareholders'
approval.
8.2 Exchange Listing. UPC shall use its reasonable efforts to list, prior
to the Effective Time, on the NYSE, subject to official notice of issuance, the
shares of UPC Common Stock to be issued to the holders of BancAlabama Common
Stock or BancAlabama Options pursuant to the Merger, and UPC shall give all
notices and make all filings with the NYSE required in connection with the
transactions contemplated herein.
8.3 Applications. UPC shall prepare and file, and BancAlabama shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement.
8.4 Filings with State Offices. Upon the terms and subject to the
conditions of this Agreement, UPC and BancAlabama shall execute and file the
Articles of Merger with the Secretary of State of the State of Tennessee and the
Certificate of Merger with the Secretary of State of the State of Delaware in
connection with the Closing.
8.5 Agreement as to Efforts to Consummate. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order
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adversely affecting its ability to consummate the transactions contemplated
herein and to cause to be satisfied the conditions referred to in Article 9 of
this Agreement; provided, that nothing herein shall preclude either Party from
exercising its rights under this Agreement or the Stock Option Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
efforts to obtain all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement.
8.6 Investigation and Confidentiality.
(a) Prior to the Effective Time, each Party shall keep the other Party
advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it
and its Subsidiaries and of their respective financial and legal conditions
as the other Party reasonably requests, provided that such investigation
shall be reasonably related to the transactions contemplated hereby and
shall not interfere unnecessarily with normal operations. No investigation
by a Party shall affect the representations and warranties of the other
Party.
(b) Each Party shall, and shall cause its advisers and agents to,
maintain the confidentiality of all confidential information furnished to
it by the other Party concerning its and its Subsidiaries' businesses,
operations, and financial positions and shall not use or disclose such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to
the Effective Time, each Party shall promptly return or certify the
destruction of all documents and copies thereof, and all work papers
containing confidential information received from the other Party.
8.7 Press Releases. Prior to the Effective Time, BancAlabama and UPC shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 Certain Actions. Except with respect to this Agreement and the
transactions contemplated hereby, after the date of this Agreement, no
BancAlabama Company nor any Affiliate thereof nor any Representatives thereof
retained by any BancAlabama Company shall directly or indirectly solicit any
Acquisition Proposal by any Person. Except to the extent necessary to comply
with the fiduciary duties of BancAlabama's Board of Directors as advised by
counsel, no BancAlabama Company or any Affiliate or Representative thereof shall
furnish any non-public information that it is not legally obligated to furnish,
negotiate with respect to, or enter into any Contract with respect to, any
Acquisition Proposal, but BancAlabama may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. BancAlabama shall promptly notify UPC orally and in writing in the
event that it receives any inquiry or proposal relating to any such transaction.
BancAlabama shall (i) immediately cease and cause to be terminated any existing
activities, discussions, or negotiations with any Persons conducted heretofore
with respect to any of the foregoing, and (ii) direct and use its reasonable
efforts to cause all of its Representatives not to engage in any of the
foregoing.
8.9 Accounting and Tax Treatment. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for pooling-of-interests accounting
treatment and treatment as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 State Takeover Laws. Each BancAlabama Company shall take all
necessary steps to exempt the transactions contemplated by this Agreement from,
or if necessary challenge the validity or applicability of, any applicable
Takeover Law.
8.11 Charter Provisions. Each BancAlabama Company shall take all necessary
action to ensure that the entering into of this Agreement and the consummation
of the Merger and the other transactions contemplated hereby and thereby do not
and will not result in the grant of any rights to any Person under the Charter,
By-laws, or other governing instruments of any BancAlabama Company or restrict
or impair the ability of UPC or any of its Subsidiaries to vote, or otherwise to
exercise the rights of a shareholder with
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respect to, shares of any BancAlabama Company that may be directly or indirectly
acquired or controlled by it.
8.12 Agreement of Affiliates. BancAlabama has disclosed in Section 8.12 of
the BancAlabama Disclosure Memorandum all Persons whom it reasonably believes is
an "affiliate" of BancAlabama for purposes of Rule 145 under the 1933 Act.
BancAlabama shall use its reasonable efforts to cause each such Person to
deliver to UPC not later than 30 days prior to the Effective Time, a written
agreement, substantially in the form of Exhibit 3, providing that such Person
will not sell, pledge, transfer, or otherwise dispose of the shares of
BancAlabama Common Stock held by such Person except as contemplated by such
agreement or by this Agreement and will not sell, pledge, transfer, or otherwise
dispose of the shares of UPC Common Stock to be received by such Person upon
consummation of the Merger except in compliance with applicable provisions of
the 1933 Act and the rules and regulations thereunder and until such time as
financial results covering at least 30 days of combined operations of UPC and
BancAlabama have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies. If the Merger will qualify
for pooling-of-interests accounting treatment, shares of UPC Common Stock issued
to such affiliates of BancAlabama in exchange for shares of BancAlabama Common
Stock shall not be transferable until such time as financial results covering at
least 30 days of combined operations of UPC and BancAlabama have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this Section 8.12 (and UPC shall be entitled to
place restrictive legends upon certificates for shares of UPC Common Stock
issued to affiliates of BancAlabama pursuant to this Agreement to enforce the
provisions of this Section 8.12). UPC shall not be required to maintain the
effectiveness of the Registration Statement under the 1933 Act for the purposes
of resale of UPC Common Stock by such affiliates.
8.13 Employee Benefits and Contracts. Subject to the terms of the
Supplemental Letter following the Effective Time, UPC shall provide generally to
officers and employees of the BancAlabama Companies employee benefits under
employee benefit plans (other than stock option or other plans involving the
potential issuance of UPC Common Stock), on terms and conditions which when
taken as a whole are substantially similar to those currently provided by the
UPC Companies to their similarly situated officers and employees. For purposes
of participation and vesting (but not benefit accrual) under such employee
benefit plans, the service of the employees of the BancAlabama Companies prior
to the Effective Time shall be treated as service with a UPC Company
participating in such employee benefit plans. The Surviving Corporation shall,
and shall cause its Subsidiaries to, honor in accordance with their terms all
employment, severance, consulting, and other compensation Contracts disclosed in
Section 5.15 of the BancAlabama Disclosure Memorandum to UPC between any
BancAlabama Company and any current or former director, officer, or employee
thereof, and all provisions for vested benefits or other vested amounts earned
or accrued through the Effective Time under the BancAlabama Benefit Plans.
8.14 Indemnification.
(a) After the Effective Time, UPC shall indemnify, defend and hold
harmless the present and former directors, officers, employees, and agents
of the BancAlabama Companies (each, an "Indemnified Party") (including any
person who becomes a director, officer, employee, or agent prior to the
Effective Time) against all Liabilities (including reasonable attorneys'
fees and amounts paid in settlement or incurred in connection with
investigations) arising out of or in connection with actions or omissions
occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement and the Stock Option Agreement) to the full
extent permitted under Delaware Law and by BancAlabama's Certificate of
Incorporation and By-laws or to the full extent covered by existing
insurance policies of BancAlabama, as in effect on the date hereof,
including provisions relating to advances of expenses incurred in the
defense of any Litigation. Without limiting the foregoing, in any case in
which approval by UPC is required to effectuate any indemnification, UPC
shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel
mutually agreed upon between UPC and the Indemnified Party.
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(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.14, upon learning of any such Liability or
Litigation, shall promptly notify UPC thereof, provided that the failure so
to notify shall not affect the obligations of UPC under this Section 8.14
unless and to the extent such failure materially increases UPC's liability
under this Section 8.14. In the event of any such Litigation (whether
arising before or after the Effective Time), (i) UPC or the Surviving
Corporation shall have the right to assume the defense thereof and UPC
shall not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with such matters thereof, except that if
UPC or the Surviving Corporation elects not to assume the defense of such
matters, or counsel for the Indemnified Parties advises that there are
substantive issues which raise conflicts of interest between UPC or the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and UPC or the Surviving
Corporation shall pay all reasonable fees and expenses of such counsel for
the Indemnified Parties promptly as statements therefor are received;
provided, that UPC shall be obligated pursuant to this paragraph (b) to pay
for only one firm of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such Litigation, and (iii) UPC shall not be liable for any settlement
effected without its prior written consent which shall not be unreasonably
withheld; and provided further that the UPC or the Surviving Corporation
shall not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable Law.
(c) If the Surviving Corporation or any of its successors or assigns
shall consolidate with or merge into any other Person and shall not be the
continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in
each case, proper provision shall be made so that the successors and
assigns of the Surviving Corporation shall assume the obligations set forth
in this Section 8.14.
(d) UPC shall pay all reasonable costs, including attorneys' fees,
that may be incurred by any Indemnified Party in enforcing the indemnity
and other obligations provided for in this Section 8.14. The rights of each
Indemnified Party hereunder shall be in addition to any other rights such
Indemnified Party may have under applicable Law.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The respective obligations of
each Party to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by both Parties pursuant to Section 11.6 of
this Agreement:
(a) Shareholder Approval. The shareholders of BancAlabama shall have
approved this Agreement, and the consummation of the transactions
contemplated hereby, including the Merger, as and to the extent required by
Law or by the provisions of any governing instruments. UPC, as the sole
shareholder of BNF, shall have approved this Agreement, and the
consummation of the transactions contemplated hereby, including the Merger,
as and to the extent required by Law or by the provisions of any governing
instruments.
(b) Regulatory Approvals. All Consents of, filings and registrations
with, and notifications to, all Regulatory Authorities required for
consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is
necessary to consummate the transactions contemplated hereby shall be
conditioned or restricted in a manner (other than matters relating to the
raising of additional capital or the disposition of Assets or deposit
Liabilities) which in the reasonable judgment of the Board of Directors of
UPC would so materially adversely impact the financial or economic benefits
of
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the transactions contemplated by this Agreement that, had such condition or
requirement been known, UPC would not, in its reasonable judgment, have
entered into this Agreement.
(c) Consents and Approvals. Each Party shall have obtained any and
all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(d) Legal Proceedings. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement.
(e) Registration Statement. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of UPC Common Stock issuable
pursuant to the Merger shall have been received.
(f) Exchange Listing. The shares of UPC Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(g) Pooling Letters. Each of the Parties shall have received copies
of the letters, dated as of the date of filing of the Registration
Statement with the SEC and as of the Effective Time, addressed to UPC, from
Price Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
(h) Tax Matters. Each Party shall have received a written opinion of
counsel from Alston & Bird, in form reasonably satisfactory to such Parties
(the "Tax Opinion"), to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) the exchange in the Merger of BancAlabama Common Stock for UPC
Common Stock will not give rise to gain or loss to the shareholders of
BancAlabama with respect to such exchange (except to the extent of any cash
received), and (iii) none of BancAlabama or UPC will recognize gain or loss
as a consequence of the Merger (except for the inclusion in income any
amounts resulting from any required change in accounting methods and any
income and deferred gain recognized pursuant to Treasury regulations issued
under Section 1502 of the Internal Revenue Code). In rendering such Tax
Opinion, such counsel shall be entitled to rely upon representations of
officers of BancAlabama and UPC reasonably satisfactory in form and
substance to such counsel.
9.2 Conditions to Obligations of UPC. The obligations of UPC to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by UPC pursuant to Section 11.6(a) of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of BancAlabama
set forth in this Agreement shall be assessed as of the date of this
Agreement and as of the Effective Time with the same effect as though all
such representations and warranties had been made on and as of the
Effective Time (provided that representations and warranties which are
confined to a specified date shall speak only as of such date). The
representations and warranties of BancAlabama set forth in Section 5.3 of
this Agreement shall be true and correct (except for inaccuracies which are
de minimus in amount). The representations and warranties of BancAlabama
set forth in Sections 5.20, 5.21, and 5.22 of this Agreement shall be true
and correct in all material respects. There shall not exist inaccuracies in
the representations and warranties of BancAlabama set forth in this
Agreement (including the representations and warranties set forth in
Sections 5.3, 5.20, 5.21, and 5.22) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on BancAlabama; provided that, for purposes of this sentence
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only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" shall be deemed not
to include such qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of BancAlabama to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(c) Certificates. BancAlabama shall have delivered to UPC (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer in their corporate
capacities, not as individuals, to the effect that the conditions of its
obligations set forth in Section 9.2(a) and 9.2(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions duly adopted by
BancAlabama's Board of Directors and shareholders evidencing the taking of
all corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as UPC and its counsel
shall request.
(d) Affiliates Agreements. UPC shall have received from each
affiliate of BancAlabama the affiliates letter referred to in Section 8.12
of this Agreement, to the extent necessary to assure in the reasonable
judgment of UPC that the transactions contemplated hereby will qualify for
pooling-of-interests accounting treatment.
(e) Consolidated Assets. On the last business day prior to the
Effective Time, the total consolidated assets of BancAlabama, as determined
in accordance with GAAP, shall be not less than $95 million at the
Effective Time.
(f) Shareholders' Equity. On the last business day prior to the
Effective Time, the shareholders' equity of BancAlabama, as determined in
accordance with GAAP, shall be no less than $7,241,211.
9.3 Conditions to Obligations of BancAlabama. The obligations of
BancAlabama to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by BancAlabama pursuant to Section 11.6(b)
of this Agreement:
(a) Representations and Warranties. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of UPC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of UPC set forth in Section 6.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in amount). The
representations and warranties of UPC set forth in Section 6.13 of this
Agreement shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of UPC set
forth in this Agreement (including the representations and warranties set
forth in Sections 6.3 and 6.13) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on UPC; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(b) Performance of Agreements and Covenants. Each and all of the
agreements and covenants of UPC to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(c) Certificates. UPC shall have delivered to BancAlabama (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer in their corporate
capacities, not as individuals, to the effect that the conditions of its
obligations set forth in Section 9.3(a) and 9.3(b) of this Agreement have
been satisfied, and (ii) certified copies of resolutions
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duly adopted by UPC's Board of Directors evidencing the taking of all
corporate action necessary to authorize the execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as BancAlabama and its
counsel shall request.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of this Agreement,
and notwithstanding the approval of this Agreement by the shareholders of
BancAlabama, this Agreement may be terminated and the Merger abandoned at any
time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of UPC and the Board
of Directors of BancAlabama; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of BancAlabama and Section
9.3(a) in the case of UPC or in material breach of any covenant or other
agreement contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of BancAlabama and Section 9.3(a) of
this Agreement in the case of UPC; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of BancAlabama and Section
9.3(a) in the case of UPC or in material breach of any covenant or other
agreement contained in this Agreement) in the event of a material breach by
the other Party of any covenant or agreement contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i) any
Consent of any Regulatory Authority required for consummation of the Merger
and the other transactions contemplated hereby shall have been denied by
final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
shareholders of BancAlabama fail to vote their approval of this Agreement
and the transactions contemplated hereby as required by the DGCL at the
Shareholders' Meeting; or
(e) By the Board of Directors of either Party in the event that the
Merger shall not have been consummated by March 1, 1997, if the failure to
consummate the transactions contemplated hereby on or before such date is
not caused by any willful breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of BancAlabama and Section
9.3(a) in the case of UPC or in material breach of any covenant or other
agreement contained in this Agreement) in the event that any of the
conditions precedent to the obligations of such Party to consummate the
Merger cannot be satisfied or fulfilled by the date specified in Section
10.1(e) of this Agreement; or
(g) By UPC, if a "Purchase Event" as such term is defined in the Stock
Option Agreement, shall have occurred or by BancAlabama, if UPC (or its
assignee) exercises the Stock Option Agreement pursuant to Section 3
thereof or exercises its repurchase rights pursuant to Section 8 thereof;
or
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(h) By the Board of Directors of BancAlabama, if it determines by a
vote of a majority of the members of its entire Board, at any time during
the ten-day period commencing two days after the Determination Date, if
both of the following conditions are satisfied:
(1) the Average Closing Price shall be less than $24.245; and
(2) (i) the quotient obtained by dividing the Average Closing Price
by $30.306 (such number being referred to herein as the "UPC Ratio")
shall be less than (ii) the quotient obtained by dividing the Index
Price on the Determination Date by the Index Price on the Starting Date
and subtracting 0.15 from the quotient in this clause (2)(ii) (such
number being referred to herein as the "Index Ratio");
subject, however, to the following three sentences. If BancAlabama refuses
to consummate the Merger pursuant to this Section 10.1(h), it shall give
prompt written notice thereof to UPC; provided, that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing with
its receipt of such notice, UPC shall have the option to elect to increase
the Exchange Ratio to equal the lesser of (i) the quotient obtained by
dividing (1) the product of $24.00 and the Exchange Ratio (as then in
effect) by (2) the Average Closing Price, and (ii) the quotient obtained by
dividing (1) the product of the Index Ratio and the Exchange Ratio (as then
in effect) by (2) the UPC Ratio. If UPC makes an election contemplated by
the preceding sentence, within such five-day period, it shall give prompt
written notice to BancAlabama of such election and the revised Exchange
Ratio, whereupon no termination shall have occurred pursuant to this
Section 10.1(h) and this Agreement shall remain in effect in accordance
with its terms (except as the Exchange Ratio shall have been so modified),
and any references in this Agreement to "Exchange Ratio" shall thereafter
be deemed to refer to the Exchange Ratio as adjusted pursuant to this
Section 10.1(h).
For purposes of this Section 10.1(h), the following terms shall have the
meanings indicated:
"AVERAGE CLOSING PRICE" shall mean the average of the daily last sales
prices of UPC Common Stock as reported on the NYSE (as reported by The Wall
Street Journal or, if not reported thereby, another authoritative source as
chosen by UPC) for the 10 consecutive full trading days in which such
shares are traded on the NYSE ending at the close of trading on the
Determination Date.
"DETERMINATION DATE" shall mean the later of the date on which the
last required Consent of any Regulatory Authority required for the Merger
shall be received and the date on which approval of the Merger by the
shareholders of BancAlabama shall be received.
"INDEX GROUP" shall mean the 16 bank holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company
to be acquired or for such company to acquire another company or companies
in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index Group, the weights (which shall be determined based upon the
number of
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outstanding shares of common stock) shall be redistributed proportionately
for purposes of determining the Index Price. The 16 bank holding companies
and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
--------------------------------------------------------------- ---------
<S> <C>
AmSouth Bancorporation......................................... 7.66%
Central Fidelity Banks, Inc.................................... 5.25
Compass Bancshares, Inc........................................ 4.99
Crestar Financial Corporation.................................. 4.93
Deposit Guaranty Corporation................................... 2.56
Fifth Third Bancorp............................................ 13.14
First American Corporation..................................... 3.65
First Commerce Corporation..................................... 4.95
First Tennessee National Corporation........................... 4.53
First Virginia Banks, Inc...................................... 4.44
Mercantile Bancorporation, Inc................................. 7.24
Mercantile Bancshares Corporation.............................. 6.14
National Commerce Bancorp...................................... 3.24
Regions Financial Corporation.................................. 6.03
Signet Banking Corporation..................................... 7.73
Southern National Corporation.................................. 13.52
---------
Total.......................................................... 100.00%
=======
</TABLE>
"INDEX PRICE" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"STARTING DATE" shall mean the date of this Agreement.
If any company belonging to the Index Group or UPC declares or effects a
stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the date of this Agreement
and the Determination Date, the prices for the common stock of such company or
UPC shall be appropriately adjusted for the purposes of applying this Section
10.1(h).
10.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement and the Supplemental Letter shall become void and have no effect,
except that (i) the provisions of this Section 10.2 and Article 11 and Section
8.6(b) of this Agreement shall survive any such termination and abandonment, and
(ii) a termination pursuant to Sections 10.1(b), 10.1(c) or 10.1(f) of this
Agreement shall not relieve the breaching Party from Liability for an uncured
willful breach of a representation, warranty, covenant, or agreement giving rise
to such termination. The Stock Option Agreement shall be governed by its own
terms as to its termination.
10.3 Non-Survival of Representations and Covenants. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.12, 8.13, and 8.14 of this Agreement and
the provisions of the Supplemental Letter.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination
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involving such Party or any of its Subsidiaries or the acquisition of a
substantial equity interest in, or a substantial portion of the assets
of, such Party or any of its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly,
or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such Person; (ii) any
officer, director, partner, employer, or direct or indirect beneficial
owner of any 10% or greater equity or voting interest of such Person; or
(iii) any other Person for which a Person described in clause (ii) acts
in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Merger, including
the Stock Option Agreement and the Exhibits delivered pursuant hereto
and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character
and description, whether real, personal or mixed, tangible or
intangible, accrued or contingent, or otherwise relating to or utilized
in such Person's business, directly or indirectly, in whole or in part,
whether or not carried on the books and records of such Person, and
whether or not owned in the name of such Person or any Affiliate of such
Person and wherever located.
"BANCALABAMA COMMON STOCK" shall mean the $1.00 par value common
stock of BancAlabama.
"BANCALABAMA COMPANIES" shall mean, collectively, BancAlabama and
all BancAlabama Subsidiaries.
"BANCALABAMA DISCLOSURE MEMORANDUM" shall mean the written
information entitled "BancAlabama, Inc. Disclosure Memorandum" delivered
prior to the date of this Agreement to UPC describing in reasonable
detail the matters contained therein and, with respect to each
disclosure made therein, specifically referencing each Section of this
Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall not be deemed to be
disclosed for purposes of any other Section not specifically referenced
with respect thereto.
"BANCALABAMA FINANCIAL STATEMENTS" shall mean (i) the consolidated
statements of financial position (including related notes and schedules,
if any) of BancAlabama as of December 31, 1995, 1994 and 1993, and the
related statements of operations, stockholders' equity, cash flows
(including related notes and schedules, if any) for each of the three
fiscal years ended December 31, 1995, 1994 and 1993, as filed by
BancAlabama in SEC Documents, and (ii) the consolidated statements of
financial position of BancAlabama (including related notes and
schedules, if any) and related statements of operations, stockholders'
equity, and cash flows (including related notes and schedules, if any)
included in SEC Documents filed with respect to periods ended subsequent
to December 31, 1995.
"BANCALABAMA STOCK PLANS" shall mean the existing non-statutory
stock option plan of BancAlabama.
"BANCALABAMA SUBSIDIARIES" shall mean the Subsidiaries of
BancAlabama, which shall include the BancAlabama Subsidiaries described
in Section 5.4 of the BancAlabama Disclosure Memorandum and any
corporation, bank, savings association, or other organization acquired
as a Subsidiary of BancAlabama in the future and owned by BancAlabama at
the Effective Time.
"BANKALABAMA-HUNTSVILLE" shall mean BankAlabama-Huntsville, a
wholly-owned subsidiary of BancAlabama.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956,
as amended.
"BNF COMMON STOCK" shall mean the common stock of BNF.
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"CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by BNF and filed with the Secretary of State of the State of
Delaware relating to the Merger contemplated by Section 1.1 of this
Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
"CONTRACT" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking
of any kind or character, or other document to which any Person is a
party or that is binding on any Person or its capital stock, Assets, or
business.
"DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to a
right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase, or impose any Liability under,
any Contract, Order or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and
which are administered, interpreted or enforced by the United States
Environmental Protection Agency and state and local agencies with
jurisdiction over, and including common law in respect of, pollution or
protection of the environment, including the Comprehensive Environmental
Response Compensation and Liability Act, as amended, 42 U.S.C. 9601 et
seq. ("CERCLA"), the Resource Conservation and Recovery Act, as amended,
42 U.S.C. 6901 et seq. ("RCRA"), and other Laws relating to emissions,
discharges, releases, or threatened releases of any Hazardous Material,
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of any Hazardous
Material.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits
are hereby incorporated by reference herein and made a part hereof, and
may be referred to in this Agreement and any other related instrument or
document without being attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic
substance (as those terms are defined by any applicable Environmental
Laws) and (ii) any chemicals, pollutants, contaminants, petroleum,
petroleum products, or oil (and specifically shall include asbestos
requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by
Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor,
technology rights and licenses, computer software
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(including any source or object codes therefor or documentation relating
thereto), trade secrets, franchises, know-how, inventions, and other
intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references
to such Person being aware of a particular matter) shall mean those
facts that are known by the Chairman, President, Chief Financial
Officer, Chief Accounting Officer, Chief Credit Officer, or General
Counsel of such Person.
"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business, including those promulgated,
interpreted, or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (ii) for depository
institution Subsidiaries of a Party, pledges to secure deposits and
other Liens incurred in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or
other proceeding, or notice (written or oral) by any Person alleging
potential Liability or requesting information relating to or affecting a
Party, its business, its Assets (including Contracts related to it), or
the transactions contemplated by this Agreement, but shall not include
regular, periodic examinations of depository institutions and their
Affiliates by Regulatory Authorities.
"MATERIAL" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question; provided
that any specific monetary amount stated in this Agreement shall
determine materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change,
or occurrence which, individually or together with any other event,
change, or occurrence, has a material adverse impact on (i) the
financial position, business, or results of operations of such Party and
its Subsidiaries, taken as a whole, or (ii) the ability of such Party to
perform its obligations under this Agreement or to consummate the Merger
or the other transactions contemplated by this Agreement, provided that
"Material Adverse Effect" and "material adverse impact" shall not be
deemed to include the impact of (a) changes in banking and similar Laws
of general applicability or interpretations thereof by courts or
governmental authorities (b) changes in GAAP or regulatory accounting
principles generally applicable to banks, savings associations, and
their holding companies, (c) actions and omissions of a Party (or any of
its Subsidiaries) taken with the prior informed written consent of the
other Party in contemplation of the transaction contemplated hereby, and
(d) the direct effects of compliance with this Agreement on the
operating performance of the Parties, including expenses incurred by the
Parties in consummating the transactions contemplated by the Agreement.
"NASD" shall mean the National Association of Securities Dealers,
Inc.
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<PAGE> 110
"NYSE" shall mean the New York Stock Exchange, Inc.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"OPERATING PROPERTY" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or
Subsidiary holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with
respect to such property.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasijudicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court,
arbitrator, mediator, tribunal, administrative agency, or Regulatory
Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in
which the Party in question or any of its Subsidiaries participates in
the management and, where required by the context, said term means the
owner or operator of such facility or property, but only with respect to
such facility or property.
"PARTY" shall mean either BancAlabama, UPC, or BNF, and "PARTIES"
shall mean BancAlabama, UPC, and BNF.
"PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any
person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by
BancAlabama to solicit the approval of its shareholders of the
transactions contemplated by this Agreement, which shall include the
prospectus of UPC relating to the issuance of the UPC Common Stock to
holders of BancAlabama Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement on
Form S-4, including any pre-effective or post-effective amendments or
supplements thereto, filed with the SEC by UPC under the 1933 Act with
respect to the shares of UPC Common Stock to be issued to the
shareholders of BancAlabama in connection with the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of
the Governors of the Federal Reserve System, the Office of Thrift
Supervision (including its predecessor, the Federal Home Loan Bank
Board), the Office of the Comptroller of the Currency, the Federal
Deposit Insurance Corporation, all state regulatory agencies having
jurisdiction over the Parties and their respective Subsidiaries, the
NYSE, the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a
Person.
"RIGHTS" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings,
warrants, or other binding obligations of any character whatsoever
relating to, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person or by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights.
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"SEC DOCUMENTS" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed,
or required to be filed, by a Party or any of its Subsidiaries with any
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 any Regulatory Authority promulgated
thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders
of BancAlabama to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.
"STOCK OPTION AGREEMENT" shall mean the Stock Option Agreement of
even date herewith issued to UPC by BancAlabama, substantially in the
form of Exhibit 1.
"SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or
controls 10% or more of the outstanding equity securities either
directly or through an unbroken chain of entities as to each of which
10% or more of the outstanding equity securities is owned directly or
indirectly by its parent; provided, there shall not be included any such
entity acquired through foreclosure or any such entity the equity
securities of which are owned or controlled in a fiduciary capacity.
"SUPPLEMENTAL LETTER" shall mean the supplemental letter of even
date herewith relating to certain understandings and agreements in
addition to those included in this Agreement, substantially in the form
of Exhibit 4.
"SURVIVING CORPORATION" shall mean BNF as the surviving corporation
resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other
taxes, assessments, charges, fares, or impositions, including interest,
penalties, and additions imposed thereon or with respect thereto.
"TBCA" shall mean the Tennessee Business Corporation Act.
"UPC CAPITAL STOCK" shall mean, collectively, the UPC Common Stock,
the UPC Preferred Stock and any other class or series of capital stock
of UPC.
"UPC COMMON STOCK" shall mean the $5.00 par value common stock of
UPC.
"UPC COMPANIES" shall mean, collectively, UPC and all UPC
Subsidiaries.
"UPC DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Union Planters Corporation Disclosure Memorandum" delivered
prior to the date of this Agreement to BancAlabama describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto.
"UPC FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of UPC as of
December 31, 1995, 1994 and 1993, and the related statements of
earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for each of the three years ended
December 31, 1995, 1994 and 1993, as filed by UPC in SEC Documents, (ii)
the consolidated balance sheets of UPC (including related notes and
schedules, if any) and related statements of earnings, changes in
shareholders' equity, and cash flows (including related notes and
schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1995, and (iii) the pro forma
consolidated balance sheet (including related notes and schedules, if
any) of UPC as of December 31, 1995 and the related pro
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forma statements of earnings, changes in shareholders' equity, and cash
flows (including related notes and schedules, if any) and for each of
the three years ended December 31, 1995, 1994 and 1993, as filed by UPC
in the Current Report on Form 8-K filed with the SEC on April 2, 1996.
"UPC PREFERRED STOCK" shall mean the no par value preferred stock
of UPC and shall include the (i) Series A Preferred Stock, (ii) Series
B, $8.00 Nonredeemable, Cumulative, Convertible Preferred Stock ("UPC
Series B Preferred Stock"), and (iii) Series E, 8% Cumulative,
Convertible Preferred Stock, of UPC ("UPC Series E Preferred Stock").
"UPC RIGHTS" shall mean the preferred stock purchase rights issued
pursuant to the UPC Rights Agreement.
"UPC RIGHTS AGREEMENT" shall mean that certain Rights Agreement,
dated January 19, 1989, between UPC and UPNB, as Rights Agent.
"UPC SUBSIDIARIES" shall mean the Subsidiaries of UPC.
(b) The terms set forth below shall have the meanings ascribed thereto
in the referenced sections:
<TABLE>
<S> <C>
Allowance.............................................. Section 5.9
Average Closing Price.................................. Section 10.1(i)
Bank Merger............................................ Section 1.5
Closing................................................ Section 1.2
Determination Date..................................... Section 10.1(i)
Effective Time......................................... Section 1.3
ERISA Affiliate........................................ Section 5.15(c)
Exchange Agent......................................... Section 4.1
Exchange Ratio......................................... Section 3.1 (c)
Indemnified Party...................................... Section 8.14(a)
Index Group............................................ Section 10.1(i)
Index Price............................................ Section 10.1(i)
Index Ratio............................................ Section 10.1(i)
BancAlabama Benefit Plans.............................. Section 5.15(a)
BancAlabama Contracts.................................. Section 5.16
BancAlabama ERISA Plan................................. Section 5.15(a)
BancAlabama Options.................................... Section 3.6 (a)
BancAlabama Pension Plan............................... Section 5.15(a)
BancAlabama SEC Reports................................ Section 5.5 (a)
Merger................................................. Section 1.1
Starting Date.......................................... Section 10.1(i)
Starting Price......................................... Section 10.1(i)
Takeover Laws.......................................... Section 5.21
Tax Opinion............................................ Section 9.1 (h)
UPC Ratio.............................................. Section 10.1(i)
UPC SEC Reports........................................ Section 6.4 (a)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to include the
plural, and any plural term the singular. Whenever the words "include,"
"includes," or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section 11.2, each of the
Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and
fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel, except that each of the Parties shall
bear and pay one-half of the filing fees payable in connection with the
Registration
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Statement and the Proxy Statement and printing costs incurred in connection
with the printing of the Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or shall
be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 Brokers and Finders. Except for Alex Sheshunoff & Co. as to
BancAlabama, each of the Parties represents and warrants that neither it nor any
of its officers, directors, employees, or Affiliates has employed any broker or
finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his or its representing or being retained by
or allegedly representing or being retained by BancAlabama or UPC, each of
BancAlabama and UPC, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of any such claim.
11.4 Entire Agreement. Except as otherwise expressly provided herein, this
Agreement and the Supplemental Letter (including the other documents and
instruments referred to herein) constitute the entire agreement between the
Parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereto, written or oral.
Nothing in this Agreement expressed or implied, is intended to confer upon any
Person, other than the Parties or their respective successors, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
other than as provided in Section 8.14 of this Agreement.
11.5 Amendments. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement has been obtained; provided, that after
any such approval by the holders of BancAlabama Common Stock, there shall be
made no amendment that modifies in any material respect the consideration to be
received by the holders of BancAlabama Common Stock without the further approval
of such shareholders.
11.6 Waivers.
(a) Prior to or at the Effective Time, UPC, acting through its Board
of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by BancAlabama, to waive or extend the time for the compliance or
fulfillment by BancAlabama of any and all of its obligations under this
Agreement, and to waive any or all of the conditions precedent to the
obligations of UPC under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of UPC.
(b) Prior to or at the Effective Time, BancAlabama, acting through its
Board of Directors, chief executive officer, or other authorized officer,
shall have the right to waive any Default in the performance of any term of
this Agreement by UPC, to waive or extend the time for the compliance or
fulfillment by UPC of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
BancAlabama under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by a duly authorized officer of
BancAlabama.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of
this Agreement. No waiver of any condition or of the breach of any term
contained in this Agreement in one or more instances shall be deemed to be
or construed as a further or continuing waiver of such condition or breach
or a waiver of any other condition or of the breach of any other term of
this Agreement. The Closing of the Merger will constitute a waiver of all
outstanding conditions to the Closing.
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11.7 Assignment. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
BancAlabama: BancAlabama, Inc.
312 Clinton Avenue
Huntsville, Alabama 35801
Telecopy Number: (205) 551-9462
Attention: W.R. Collins
Chairman and Chief Executive Officer
Copy to Counsel: Lanier Ford Shaver & Payne P.C.
200 West Court Square
Suite 5000
Huntsville, Alabama 35801
Telecopy Number: (205) 533-9322
Attention: John R. Wynn
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 383-2877
Attention: Jackson W. Moore
President
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 383-2877
Attention: E.J. House, Jr.
General Counsel and Corporate Secretary
Alston & Bird
601 Pennsylvania Avenue
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
11.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Tennessee, without regard to any
applicable conflicts of Laws, except to the extent the Laws of the State of
Delaware apply.
11.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement are for reference
purposes only and are not part of this Agreement.
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11.12 Interpretations. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 Enforcement of Agreement. The Parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
11.14 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by officers thereunto as of the day and year first above written.
<TABLE>
<S> <C>
ATTEST: BANCALABAMA, INC.
By: /s/ JEAN D. SNEAD By: /s/ W.R. COLLINS
----------------------------------------- -----------------------------------------
Jean D. Snead W.R. Collins
Corporate Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. J. HOUSE, JR. By: /s/ JACKSON W. MOORE
----------------------------------------- ------------------------------------------
E.J. House, Jr. Jackson W. Moore
Secretary President
[CORPORATE SEAL]
ATTEST: BNF BANCORP, INC.
By: /s/ MILES A. WRIGHT By: /s/ WILLIAM D. POWELL
----------------------------------------- ------------------------------------------
Miles A. Wright William D. Powell
Secretary President
[CORPORATE SEAL]
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APPENDIX B
SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW
DELAWARE STATUTORY LAW RELATING TO APPRAISAL RIGHTS
262 APPRAISAL RIGHTS. (a) Any shareholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of his shares of stock under the
circumstances described in subsections (b) and (c) of this section. As used in
this section, the word "shareholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the shareholders entitled to receive notice of and to vote at
the meeting of shareholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holder of the surviving corporation as
provided in subsection (f) or (g) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of shareholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its shareholders who has such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each shareholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the shareholder and that the shareholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A shareholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
shareholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or 253 of this title, the surviving or resulting corporation, either before
the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the shareholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the shareholder at his address as it
appears on the records of the corporation. Any shareholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the shareholder and that the
shareholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any shareholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such shareholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any shareholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any shareholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the shareholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
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(f) Upon the filing of any such petition by a shareholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all shareholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the shareholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
shareholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the shareholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any shareholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such shareholder.
(h) After determining the shareholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining the fair rate of
interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any shareholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the shareholder entitled to an appraisal. Any
shareholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
shareholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such shareholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a shareholder, the Court may order all or a portion of the
expenses incurred by any shareholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and the fees and expenses of experts, to be charged pro rata against the
value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
shareholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to shareholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such shareholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either
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within 60 days after the effective date of the merger or consolidation as
provided in subsection (e) of his section or thereafter with the written
approval of the corporation, then the right of such shareholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the Court
of Chancery shall be dismissed as to any shareholder without the approval of the
Court, and such approval may be conditioned upon such terms as the Court deems
just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting shareholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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APPENDIX C
[ALEX SHESHUNOFF & CO. INVESTMENT BANKING LETTERHEAD]
April 26, 1996
Board of Directors
BancAlabama, Inc.
312 Clinton Avenue
Huntsville, Alabama 35804
Members of the Board:
We understand that BancAlabama, Inc., Huntsville, Alabama ("BancAlabama")
and Union Planters Corporation, Memphis, Tennessee ("UPC"), intend to enter into
an Agreement and Plan of Merger (the "Agreement"), which provides, among other
things, for the merger (the "Merger") of BancAlabama with and into UPC. Pursuant
to a draft copy of the Agreement, each share of BancAlabama Common Stock issued
and outstanding at the Effective Time shall cease to be outstanding and shall be
converted into and exchanged for the right to receive 0.5907 of a share of UPC
Common Stock, par value $5.00 (as subject to possible adjustment as set forth in
Section 10.1(i) of the Agreement, the "Exchange Ratio").
The terms and conditions of the Merger are more fully set forth in the
Agreement. Based upon 703,122 shares of BancAlabama Common Stock outstanding and
a stock price of $30.375 per share as of April 24, 1996 for UPC's Common Stock,
UPC will issue 415,334 common shares to BancAlabama shareholders for a total
transaction value of $12,615,770.
You have requested our opinion, as an independent financial advisor, as to
whether the Exchange Ratio pursuant to the Agreement is fair from a financial
point of view to the holders of BancAlabama Common Stock, as of the date hereof.
In connection with our opinion, we have: (i) reviewed a draft copy of the
Agreement; (ii) reviewed certain publicly available financial statements and
other information of BancAlabama and UPC; (iii) reviewed certain internal
financial statements and other financial and operating data concerning
BancAlabama and UPC; (iv) discussed the past and current operations and
financial condition and the prospects of BancAlabama and UPC with senior
executives; (v) reviewed certain historical market prices and trading volumes of
UPC and compared them to other publicly traded companies deemed relevant; (vi)
compared BancAlabama and UPC from a financial point of view with certain other
companies which we deemed to be relevant; (vii) reviewed the financial terms, to
the extent publicly available, of certain comparable merger transactions; and
(viii) performed such other analyses and examinations as we have deemed
appropriate.
We have assumed and relied upon without independent verification the
accuracy and completeness of the information reviewed by us for the purposes of
this opinion. In addition, we have not made an independent evaluation of the
assets or liabilities of BancAlabama and UPC, nor have we been furnished with
any such appraisals. In addition, we are not an expert in the evaluation of loan
portfolios for the purposes of assessing the adequacy of the allowance for
losses with respect thereto and have assumed that such allowances for each of
the companies are in the aggregate adequate to cover such losses. Our opinion is
necessarily based on economic, market and other conditions as in effect on, and
the information made available to us as of, the date hereof. With respect to
financial forecasts, we have assumed that they have been reasonably prepared and
reflect the best currently available estimates and judgments of management of
BancAlabama and UPC, as to the future financial performance of BancAlabama and
UPC, respectively, and we have assumed such forecasts and projections will be
realized in the amounts and at the times contemplated thereby.
In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any other party with respect to the acquisition of
BancAlabama or any of its assets.
Our opinion is limited to the fairness, from a financial point of view, to
the holders of BancAlabama Common Stock of the Exchange Ratio and does not
address BancAlabama's underlying business decision to
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undertake the Merger. Moreover, this letter, and the opinion expressed herein,
does not constitute a recommendation to any stockholder as to any approval of
the Merger or the Agreement. It is understood that this letter is for the
information of the Board of Directors of BancAlabama and may not be used for any
other purpose without our prior written consent, except that this opinion may be
included in its entirety in any filing made by BancAlabama with the Securities
and Exchange Commission with respect to the Merger.
Based upon and subject to the foregoing, we are of the opinion that, as of
the date hereof, the Exchange Ratio pursuant to the Agreement is fair to the
holders of BancAlabama Common Stock from a financial point of view.
Very truly yours,
/s/ ALEX SHESHUNOFF & CO.
INVESTMENT BANKING
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