<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the transition period ___ to ___.
Commission File No. 1-10160
-------
UNION PLANTERS CORPORATION
(Exact name of registrant as specified in its charter)
Tennessee 62-0859007
- ------------------------ ---------------------------------
(State of incorporation) (IRS Employer Identification No.)
7130 Goodlett Farms Parkway, Memphis, Tennessee 38018
- -------------------------------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (901) 580-6000
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Class Outstanding at April 30, 1997
- ------------------------- ------------------------------
Common stock $5 par value 66,233,926
<PAGE> 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE THREE MONTHS ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
Page
----
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements (Unaudited)
a) Consolidated Balance Sheet - March 31, 1997,
March 31, 1996, and December 31, 1996 3
b) Consolidated Statement of Earnings -
Three Months Ended March 31, 1997 and 1996 4
c) Consolidated Statement of Changes in
Shareholders' Equity - Three Months Ended
March 31, 1997 5
d) Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1997 and 1996 6
e) Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 27
Item 2. Changes in Securities 27
Item 3. Defaults Upon Senior Securities 27
Item 4. Submission of Matters to a Vote of Security Holders 27
Item 5. Other Information 27
Item 6. Exhibits and Reports on Form 8-K 27
Signatures 28
</TABLE>
2
<PAGE> 3
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
---------------------------- ------------
1997 1996 1996
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 479,431 $ 526,604 $ 594,535
Interest-bearing deposits at financial institutions 12,582 6,356 9,082
Federal funds sold and securities purchased
under agreements to resell 63,271 289,388 152,667
Trading account assets 164,683 134,926 225,336
Loans held for resale 85,140 121,156 58,622
Investment securities
Available for sale (Amortized cost: $2,978,517,
$3,650,571, and $2,916,051, respectively) 3,008,886 3,693,199 2,956,234
Held to maturity (Fair value: $188,954
at March 31, 1996) -- 187,426 --
Loans 10,390,452 9,648,834 10,464,176
Less: Unearned income (28,226) (37,221) (30,106)
Allowance for losses on loans (163,980) (166,825) (166,853)
------------ ------------ ------------
Net loans 10,198,246 9,444,788 10,267,217
Premises and equipment, net 258,796 266,680 260,971
Accrued interest receivable 205,971 181,710 211,082
FHA/VA claims receivable 87,903 54,711 78,241
Mortgage servicing rights 55,105 58,142 57,206
Goodwill and other intangibles 57,162 65,526 56,585
Other assets 255,288 211,525 294,785
------------ ------------ ------------
TOTAL ASSETS $ 14,932,464 $ 15,242,137 $ 15,222,563
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 1,716,830 $ 1,640,777 $ 1,730,721
Certificates of deposit of $100,000 and over 1,053,265 1,001,143 1,011,414
Other interest-bearing 8,625,206 9,150,969 8,748,127
------------ ------------ ------------
Total deposits 11,395,301 11,792,889 11,490,262
Short-term borrowings 321,377 834,389 449,146
Short- and medium-term bank notes 350,000 -- 400,000
Federal Home Loan Bank advances 808,203 840,205 889,985
Other long-term debt 383,362 239,620 383,731
Accrued interest, expenses, and taxes 165,897 148,083 141,455
Other liabilities 113,061 89,073 115,110
------------ ------------ ------------
TOTAL LIABILITIES 13,537,201 13,944,259 13,869,689
------------ ------------ ------------
Commitments and contingent liabilities -- -- --
Shareholders' equity
Convertible preferred stock 71,937 91,810 83,809
Common stock, $5 par value; 100,000,000 shares authorized;
66,010,936 issued and outstanding (63,471,443 at
March 31, 1996 and 64,927,320 at December 31, 1996) 330,055 317,357 324,637
Additional paid-in capital 196,441 146,503 177,372
Retained earnings 788,634 721,980 752,963
Unearned compensation (10,377) (5,799) (10,499)
Unrealized gain on available for sale securities 18,573 26,027 24,592
------------ ------------ ------------
TOTAL SHAREHOLDERS' EQUITY 1,395,263 1,297,878 1,352,874
------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 14,932,464 $ 15,242,137 $ 15,222,563
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 4
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------------------------
1997 1996
---------------------- ---------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $236,599 $220,585
Interest on investment securities
Taxable 39,895 52,182
Tax-exempt 7,267 7,793
Interest on deposits at financial institutions 87 136
Interest on federal funds sold and securities
purchased under agreements to resell 1,772 6,417
Interest on trading account assets 3,665 2,387
Interest on loans held for resale 1,616 1,672
-------- --------
Total interest income 290,901 291,172
-------- --------
INTEREST EXPENSE
Interest on deposits 106,386 115,318
Interest on short-term borrowings 7,748 11,895
Interest on long-term debt 21,491 16,217
-------- --------
Total interest expense 135,625 143,430
-------- --------
NET INTEREST INCOME 155,276 147,742
PROVISION FOR LOSSES ON LOANS 12,414 12,949
-------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOSSES ON LOANS 142,862 134,793
-------- --------
NONINTEREST INCOME
Service charges on deposit accounts 19,255 18,116
Mortgage servicing income 11,670 11,080
Bank card income 7,420 5,418
Trust service income 2,349 2,290
Profits and commissions from trading activities 2,001 2,207
Investment securities gains 116 61
Other income 14,641 14,585
-------- --------
Total noninterest income 57,452 53,757
-------- --------
NONINTEREST EXPENSE
Salaries and employee benefits 51,951 53,240
Net occupancy expense 8,064 8,141
Equipment expense 8,028 8,579
Other expense 41,186 48,011
-------- --------
Total noninterest expense 109,229 117,971
-------- --------
EARNINGS BEFORE INCOME TAXES 91,085 70,579
Applicable income taxes 31,893 23,427
-------- --------
NET EARNINGS $ 59,192 $ 47,152
======== ========
NET EARNINGS APPLICABLE TO COMMON SHARES $ 57,696 $ 45,316
======== ========
EARNINGS PER COMMON SHARE
Primary $ .86 $ .70
Fully diluted .84 .68
AVERAGE COMMON SHARES OUTSTANDING (IN THOUSANDS)
Primary 66,763 64,083
Fully diluted 70,824 68,845
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 5
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
CONVERTIBLE ADDITIONAL AVAILABLE
PREFERRED COMMON PAID-IN RETAINED UNEARNED FOR SALE
STOCK STOCK CAPITAL EARNINGS COMPENSATION SECURITIES TOTAL
------------ -------- ---------- --------- ------------ ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $ 83,809 $324,637 177,372 $ 752,963 $(10,499) $ 24,592 $1,352,874
Net earnings -- -- -- 59,192 -- -- 59,192
Cash dividends
Common Stock, $.32 per share -- -- -- (20,868) -- -- (20,868)
Preferred Stock, $.50 per share -- -- -- (1,496) -- -- (1,496)
Common stock issued under employee benefit plans
and dividend reinvestment plan,
net of stock exchanged -- 2,150 7,948 (1,157) 122 -- 9,063
Issuance of common stock for acquisitions -- 300 2,219 -- -- -- 2,519
Conversion of Series E preferred stock (11,872) 2,968 8,902 -- -- -- (2)
Change in net unrealized gain on
available for sale securities, net of taxes -- -- -- -- -- (6,019) (6,019)
-------- -------- -------- --------- -------- -------- ----------
BALANCE, MARCH 31, 1997 $ 71,937 $330,055 $196,441 $ 788,634 $(10,377) $ 18,573 $1,395,263
======== ======== ======== ========= ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 6
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
(DOLLARS IN THOUSANDS)
OPERATING ACTIVITIES
Net earnings $ 59,192 $ 47,152
Reconciliation of net earnings to net cash provided by operating activities:
Provision for losses on loans, other real estate,
and FHA/VA foreclosure claims 12,986 19,914
Depreciation and amortization of premises and equipment 6,068 6,644
Amortization and write-off of intangibles 4,922 5,147
Net accretion of investment securities (2,372) (2,246)
Net realized gains on sales of investment securities (116) (61)
Deferred income tax expense (benefit) 2,573 (2,794)
Decrease (increase) in assets
Trading account assets and loans held for resale 34,135 (46,266)
Other assets 40,654 2,383
Increase (decrease) in accrued interest, expenses, taxes, and other liabilities 20,671 (16,944)
Other, net 190 419
--------- ---------
Net cash provided by operating activities 178,903 13,348
--------- ---------
INVESTING ACTIVITIES
Net (increase) decrease in short-term investments (3,500) 10,298
Proceeds from sales of available for sale securities 11,191 16,832
Proceeds from maturities, calls, and prepayments of
available for sale securities 346,072 553,504
Purchases of available for sale securities (417,149) (680,641)
Proceeds from maturities, calls, and prepayments of
held to maturity securities -- 9,221
Purchases of held to maturity securities -- (316)
Net decrease (increase) in loans 52,167 (87,270)
Net cash received from acquisitions of financial institutions 218 53,579
Purchases of premises and equipment, net (3,608) (6,302)
--------- ---------
Net cash used by investing activities (14,609) (131,095)
--------- ---------
FINANCING ACTIVITIES
Net (decrease) increase in deposits (94,961) 7,367
Net decrease in short-term borrowings (176,543) (49,514)
Proceeds from long-term debt, net 229,817 144,525
Repayment of long-term debt (313,510) (64,270)
Proceeds from issuance of common stock 8,941 4,844
Cash dividends paid (22,538) (15,832)
--------- ---------
Net cash (used) provided by financing activities (368,794) 27,120
--------- ---------
Net decrease in cash and cash equivalents (204,500) (90,627)
Cash and cash equivalents at the beginning of the period 747,202 906,619
--------- ---------
Cash and cash equivalents at the end of the period $ 542,702 $ 815,992
========= =========
SUPPLEMENTAL DISCLOSURES
Cash paid for
Interest $ 130,000 $ 148,472
Taxes 1,330 2,936
Unrealized gain on available for sale securities 30,369 42,628
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 7
UNION PLANTERS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. PRINCIPLES OF ACCOUNTING
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles. The foregoing financial
statements are unaudited, however, in the opinion of management, all
adjustments, including normal recurring adjustments, necessary for a fair
presentation of the consolidated financial statements have been included.
The accounting policies followed by Union Planters Corporation and its
subsidiaries (collectively, the Corporation) for interim financial reporting
are consistent with the accounting policies followed for annual financial
reporting except as noted below. The notes included herein should be read in
conjunction with the notes to the consolidated financial statements included in
the Corporation's 1996 Annual Report to Shareholders, a copy of which is
Exhibit 13 to the Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996 (1996 10-K). Certain 1996 amounts have been reclassified to
be consistent with the 1997 financial reporting presentation.
NOTE 2. ACQUISITIONS
CONSUMMATED ACQUISITIONS
In a transaction accounted for as a purchase, the Corporation acquired
PFIC Corporation (PFIC) on February 27, 1997, exchanging 59,992 shares of the
Corporation's common stock for all of the outstanding common stock of PFIC.
PFIC is a third-party marketer of nontraditional bank products and had total
assets of $4.2 million at the date of acquisition. Goodwill of $2.7 million
resulted from the transaction.
Reference is made to Note 2 of the consolidated financial statements on
pages 45 through 46 of the Corporation's Annual Report to Shareholders for
information regarding acquisitions completed in 1996.
PENDING ACQUISITIONS
Through its acquisition program, the Corporation has two acquisitions of
financial institutions pending which are considered probable of consummation.
The Corporation would acquire aggregate total assets of approximately $160
million in those acquisitions.
NOTE 3. LOANS
Loans are summarized by type as follows:
<TABLE>
<CAPTION>
MARCH 31,
------------------------ DECEMBER 31,
1997 1996 1996
----------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Commercial, financial, and agricultural $ 1,534,270 $1,534,823 $ 1,537,535
Real estate - construction 438,062 421,942 446,946
Real estate - mortgage
Secured by 1-4 family residential 3,046,278 3,154,219 3,218,651
FHA/VA government-insured/guaranteed 1,518,394 1,036,043 1,477,459
Other mortgage 1,687,306 1,525,874 1,530,110
Home equity 229,610 210,863 228,511
Consumer
Credit cards and related plans 602,592 414,733 627,406
Other consumer 1,263,259 1,275,554 1,324,252
Direct lease financing 70,681 74,783 73,306
----------- ---------- -----------
TOTAL LOANS $10,390,452 $9,648,834 $10,464,176
=========== ========== ===========
</TABLE>
7
<PAGE> 8
Nonperforming loans are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Nonaccrual loans $53,060 $63,346
Restructured loans 2,394 2,546
------- -------
TOTAL NONPERFORMING LOANS $55,454 $65,892
======= =======
</TABLE>
Reference is made to the "Nonperforming Assets" section of "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for a
discussion of the change in nonaccrual loans.
NOTE 4. ALLOWANCE FOR LOSSES ON LOANS
The changes in the allowance for losses on loans for the three months ended
March 31, 1997 are summarized as follows (Dollars in thousands):
<TABLE>
<S> <C>
Balance, January 1, 1997 $ 166,853
Provision for losses on loans 12,414
Recoveries of loans previously charged off 4,126
Loans charged off (19,413)
---------
Balance, March 31, 1997 $ 163,980
=========
</TABLE>
As of March 31, 1997, the amount of the Corporation's impaired loans and
the disclosures related thereto were not significant.
NOTE 5. INVESTMENT SECURITIES
The amortized cost and fair value of investment securities are summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------------------------
UNREALIZED
AMORTIZED ---------- FAIR
COST GAINS LOSSES VALUE
---------- ------- ------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE SECURITIES
U.S. Government obligations
U.S. Treasury $ 874,398 $ 1,437 $ 2,006 $ 873,829
U.S. Government agencies
Collateralized mortgage obligations 129,780 333 593 129,520
Mortgage-backed 753,612 19,521 1,624 771,509
Other 596,094 701 3,191 593,604
---------- ------- ------- ----------
Total U.S. Government obligations 2,353,884 21,992 7,414 2,368,462
Obligations of states and political subdivisions 477,618 19,494 2,617 494,495
Other stocks and securities 147,015 247 1,333 145,929
---------- ------- ------- ----------
TOTAL AVAILABLE FOR SALE SECURITIES $2,978,517 $41,733 $11,364 $3,008,886
========== ======= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------
UNREALIZED
AMORTIZED ---------- FAIR
COST GAINS LOSSES VALUE
---------- ------- ------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE SECURITIES
U.S. Government obligations
U.S. Treasury $ 834,054 $ 4,123 $ 791 $ 837,386
U.S. Government agencies
Collateralized mortgage obligations 124,908 617 347 125,178
Mortgage-backed 806,160 21,106 978 826,288
Other 511,986 965 1,747 511,204
---------- ------- ------ ----------
Total U.S. Government obligations 2,277,108 26,811 3,863 2,300,056
Obligations of states and political subdivisions 487,489 20,746 2,265 505,970
Other stocks and securities 151,454 240 1,486 150,208
---------- ------- ------ ----------
TOTAL AVAILABLE FOR SALE SECURITIES $2,916,051 $47,797 $7,614 $2,956,234
========== ======= ====== ==========
</TABLE>
8
<PAGE> 9
Investment securities having a carrying value of approximately $1.1
billion at both March 31, 1997 and December 31, 1996 were pledged to secure
public and trust funds on deposit, securities sold under agreements to
repurchase, and Federal Home Loan Bank advances.
The following table presents the gross realized gains and losses on
available for sale investment securities for the three months ended March 31,
1997 and 1996.
<TABLE>
<CAPTION>
REALIZED GAINS REALIZED LOSSES
---- ------ ---------------
1997 1996 1997 1996
---- ----- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Available for sale securities $130 $70 $(15) $(9)
==== === ==== ===
</TABLE>
NOTE 6. OTHER NONINTEREST INCOME AND EXPENSE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1997 1996
------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
OTHER NONINTEREST INCOME
Credit life insurance commissions $ 2,087 $ 2,398
Gain on sale of residential mortgages 524 1,519
Customer ATM usage fees 1,977 978
VSIBG partnership earnings 679 1,163
Brokerage fee income 1,080 633
Annuity sales income 1,831 134
Sale of servicing 146 362
Other income 6,317 7,398
------- -------
TOTAL OTHER NONINTEREST INCOME $14,641 $14,585
======= =======
OTHER NONINTEREST EXPENSE
FDIC insurance $ 720 $ 2,151
Provision for losses on FHA/VA foreclosure claims 500 6,886
Amortization of mortgage servicing rights 2,956 2,925
Amortization of goodwill and other intangibles 1,966 2,272
Other contracted services 4,300 2,893
Postage and carrier 3,420 3,427
Advertising and promotion 2,917 3,254
Stationery and supplies 3,459 3,806
Communications 2,701 2,625
Other personnel services 1,768 1,735
Miscellaneous charge-offs 1,558 1,407
Legal fees 1,085 1,015
Merchant credit card charges 1,209 1,069
Taxes other than income 1,264 1,193
Dues, subscriptions, and contributions 995 996
Brokerage and clearing fees on trading activities 1,267 1,285
Travel 764 870
Accounting and audit fees 645 603
Insurance 582 732
Consultant fees 325 499
Federal Reserve fees 596 569
Other real estate expense 406 270
Other expense 5,783 5,529
------- -------
TOTAL OTHER NONINTEREST EXPENSE $41,186 $48,011
======= =======
</TABLE>
NOTE 7. INCOME TAXES
Applicable income taxes for the three months ended March 31, 1997, were
$31.9 million, resulting in an effective tax rate of 35.0%. Applicable income
taxes for the same period in 1996 were $23.4 million, resulting in an effective
tax rate of 33.2%. The tax expense applicable to
9
<PAGE> 10
investment securities gains for the three months ended March 31, 1997 and 1996
was $45,000 and $24,000, respectively.
At March 31, 1997, the Corporation had a net deferred tax asset of $81.1
million compared to $80.0 million at December 31, 1996. The net deferred tax
asset includes a deferred liability related to the net unrealized gain on
available for sale securities of $11.8 million and $15.6 million at those
dates, respectively. Management continues to believe that, based upon
historical earnings, normal operations will continue to generate sufficient
taxable income to realize the portion of the deferred tax asset that is
dependent upon the generation of future taxable income.
NOTE 8. BORROWINGS
SHORT-TERM BORROWINGS
Short-term borrowings include federal funds purchased and securities sold
under agreements to repurchase and other short-term borrowings. Federal funds
purchased arise primarily from the Corporation's market activity with its
correspondent banks and generally mature in one business day. Securities sold
under agreements to repurchase are secured by U. S. Government and agency
securities.
Short-term borrowings are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31,
---------------------- DECEMBER 31,
1997 1996 1996
-------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balances at quarter end:
Federal funds purchased and securities sold
under agreements to repurchase $288,629 $817,197 $438,104
Other short-term borrowings 32,748 17,192 11,042
-------- -------- --------
Total short-term borrowings $321,377 $834,389 $449,146
======== ======== ========
Federal funds purchased and securities sold
under agreements to repurchase
Daily average balance $346,527 $819,691 $889,793
Weighted average interest rate 4.68% 5.65% 5.41%
</TABLE>
SHORT- AND MEDIUM-TERM BANK NOTES
The Corporation's principal subsidiary, Union Planters National Bank
(UPNB), has a $1-billion short- and medium-term bank note program to supplement
UPNB's funding sources. Under the program UPNB may from time to time issue bank
notes having maturities ranging from 30 days to one year from their respective
issue dates (Short-Term Bank Notes) and bank notes having maturities of more
than one year to 30 years from their respective dates of issue (Medium-Term
Bank Notes). A summary of the bank notes follows.
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
------------------------ ------------------------
SHORT-TERM MEDIUM-TERM SHORT-TERM MEDIUM-TERM
BANK NOTES BANK NOTES BANK NOTES BANK NOTES
----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Balances at period end $ 215,000 $ 135,000 $ 265,000 $ 135,000
Variable rate notes 50,000 -- -- --
Fixed rate notes 165,000 135,000 265,000 135,000
Range of maturities 4/97-10/97 8/98-10/01 1/97-5/97 8/98-10/01
</TABLE>
FEDERAL HOME LOAN BANK (FHLB) ADVANCES
Certain of the Corporation's banking and thrift subsidiaries had
outstanding advances from the FHLB under Blanket Agreements for Advances and
Security Agreements (the Agreements). The Agreements enable these subsidiaries
to borrow funds from the FHLB to fund mortgage loan programs and to satisfy
certain other funding needs. The value of the mortgage-backed securities and
mortgage loans pledged under the Agreements must be maintained at not less than
115% and 150%, respectively, of the advances outstanding. At March 31, 1997,
the Corporation had an adequate
10
<PAGE> 11
amount of mortgage-backed securities and loans to satisfy the collateral
requirements. A summary of the advances is as follows.
<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER
1997 1996 1996
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at period end $ 808,203 $ 840,205 $ 889,985
Range of interest rates 3.25%-9.00% 3.25%-9.00% 3.25%-9.00%
Range of maturities 1997-2025 1996-2025 1997-2025
</TABLE>
OTHER LONG-TERM DEBT
The Corporation's other long-term debt is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31,
---------------------------- DECEMBER
1997 1996 1996
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Corporation-Obligated Mandatorily Redeemable
Capital Pass-through Securities of Subsidiary Trust
holding solely a Corporation-Guaranteed Related
Subordinated Note (Trust Preferred Securities) $198,947 $ -- $198,938
6 3/4% Subordinated Notes due 2005 99,492 99,432 99,477
6.25% Subordinated Notes due 2003 74,657 74,605 74,644
8 1/2% Subordinated Notes due 2002 -- 40,245 --
Other long-term debt 10,266 25,338 10,672
-------- -------- --------
Total other long-term debt $383,362 $239,620 $383,731
======== ======== ========
</TABLE>
NOTE 9. SHAREHOLDERS' EQUITY
PREFERRED STOCK
The Corporation's outstanding preferred stock, all of which is convertible
into shares of the Corporation's Common Stock, is summarized as follows:
<TABLE>
<CAPTION>
MARCH 31, MARCH 31, DECEMBER 31,
1997 1996 1996
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Preferred stock, without par value,
10,000,000 shares authorized
Series A Preferred Stock,
750,000 shares authorized, none issued $ -- $ -- $ --
Series B Preferred Stock -- 4,400 --
Series E, 8% Cumulative, Convertible, Preferred
Stock (stated at liquidation value of $25 per
share), 2,877,474 shares issued and
outstanding (3,496,419 at March 31, 1996, and
3,352,347 at December 31, 1996) 71,937 87,410 83,809
------- ------- -------
TOTAL PREFERRED STOCK $71,937 $91,810 $83,809
======= ======= =======
</TABLE>
NOTE 10. CONTINGENT LIABILITIES
The Corporation and/or various subsidiaries are parties to certain pending
or threatened civil actions which are described in Item 3, Part I of the
Corporation's 1996 10-K and in Note 19 to the Corporation's consolidated
financial statements on page 67 of the 1996 Annual Report to Shareholders (1996
Annual Report) which is included in the 1996 10-K as Exhibit 13. Two such
previously reported matters involve collateral protection insurance(CPI)-
related suits filed in Circuit Court, Greene County, Alabama by the same
person, Queen Ford. One of the suits, involving allegations of improper
"adjacent structure coverage" and demanding $10,000 in compensatory damages and
$50 million in punitive damages, was settled in the first quarter of 1997 for a
11
<PAGE> 12
nominal amount. Various other legal proceedings pending against the Corporation
and/or its subsidiaries have arisen in the ordinary course of business.
Based upon present information, including evaluations of certain actions
by outside counsel, management believes that neither the Corporation's
financial position, results of operations, nor liquidity will be materially
affected by the ultimate resolution of pending or threatened legal proceedings.
There were no significant developments during the first quarter of 1997 in any
pending or threatened actions which affected such opinion.
NOTE 11. SUBSEQUENT EVENT
On May 8, 1997, Union Planters Corporation and Magna Bancorp, Inc.
(Magna), the $1.3 billion parent company of Magnolia Federal Bank for Savings,
entered into an Agreement and Plan of Merger (the Agreement) pursuant to which
Magna will be acquired by Union Planters Corporation. The agreement calls for
Union Planters to exchange approximately .5165 shares of its Common Stock for
each common share of Magna. The merger is to be tax-free to Magna's
shareholders and is expected to be accounted for as a pooling of interests. The
merger is subject to Magna shareholder approval, regulatory approval, and
normal contractual obligations being met. The acquisition is expected to be
completed late in the third quarter or early in the fourth quarter of 1997. The
Agreement and a copy of the press release announcing the proposed merger are
included in this Form 10-Q as exhibits.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following provides a narrative discussion and analysis of significant
changes in the Corporation's results of operations and financial condition.
This discussion should be read in conjunction with the consolidated financial
statements and related financial analysis set forth in the Corporation's 1996
Annual Report, the interim unaudited consolidated financial statements and
notes for the three months ended March 31, 1997 included in Part I hereof, and
the supplemental financial data included in this discussion.
Certain of the information included in this discussion contains
forward-looking statements and information that are based on management's
belief as well as certain assumptions made by, and information currently
available to management. When used in this discussion, the words "anticipate,"
"project," "expect," and similar expressions are intended to identify
forward-looking statements. Although management of the Corporation believes
that the expectations reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations and projections
will prove to have been correct. Such forward-looking statements are subject to
certain risks, uncertainties, and assumptions. Should one or more of these
risks materialize, or should any such underlying assumptions prove to be
incorrect, actual results may vary materially from those anticipated,
estimated, projected, or expected. Among key factors that may have a direct
bearing on the Corporation's operating results are fluctuations in the economy;
the actions taken by the Federal Reserve for the purpose of influencing the
economy; the Corporation's ability to realize anticipated cost savings related
to both recently completed and pending acquisitions; the ability of the
Corporation to achieve anticipated revenue enhancements; its success in
assimilating acquired operations into the Corporation's culture, including its
ability to instill the Corporation's credit culture and approach to operating
efficiencies into acquired operations; the continued growth of the markets in
which the Corporation operates consistent with recent historical experience;
the absence of undisclosed material contingencies inherent in acquired
operations including asset quality and litigation contingencies; the enactment
of legislation impacting the operations of the Corporation; and the
Corporation's ability to expand into new markets and to maintain profit margins
in the face of pricing pressure.
12
<PAGE> 13
SELECTED FINANCIAL DATA
The following table presents selected financial highlights for the
three-month periods ended March 31, 1997 and 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------- PERCENTAGE
1997 1996 CHANGE
---------- ---------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Net earnings $ 59,192 $ 47,152 26%
Primary earnings per common share .86 .70 23
Fully diluted earnings per common share .84 .68 24
Return on average assets 1.61% 1.25%
Return on average common equity 18.50 15.86
Dividends per common share $ .32 $ .27 19
Net interest margin (FTE) 4.71% 4.37%
Interest rate spread (FTE) 4.03 3.62
Expense ratio 1.41 1.62
Efficiency ratio 50.42 55.63
Book value per common share $ 20.05 $ 19.00 6
Leverage ratio 10.26% 8.09%
Common share prices
High closing price $ 47.75 $ 31.75
Low closing price 38.38 29.00
Closing price at quarter end 40.63 30.25
</TABLE>
- ---------------------
Net interest margin = Net interest income as a percentage of earning assets
Interest rate spread = Difference in the yield on average earning assets and
the rate on average interest-bearing liabilities
Expense ratio = Operating net noninterest expense [noninterest expense minus
noninterest income, excluding significant nonrecurring revenues/expenses and
investment securities gains (losses)] divided by average assets
Efficiency ratio = Operating noninterest expense (excluding significant
nonrecurring expenses) divided by net interest income (FTE) plus noninterest
income, excluding significant nonrecurring revenues and investment securities
gains (losses)
FTE = Fully taxable-equivalent basis
13
<PAGE> 14
OPERATING RESULTS - THREE MONTHS ENDED MARCH 31, 1997
The table which follows presents the contributions to fully diluted
earnings per common share. A discussion of the operating results follows this
table.
UNION PLANTERS CORPORATION
CONTRIBUTIONS TO FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, EPS
------------------------- INCREASE
1997 1996 (DECREASE)
---------- ---------- ----------
<S> <C> <C> <C>
Net interest income-FTE $ 2.25 $ 2.21 $ .04
Provision for losses on loans (.18) (.19) .01
---------- ---------- ----------
Net interest income after provision
for losses on loans-FTE 2.07 2.02 .05
---------- ---------- ----------
Noninterest income
Service charges on deposit accounts .27 .26 .01
Mortgage servicing income .16 .16 --
Bank card income .10 .08 .02
Trust service income .03 .03 --
Profits and commissions from trading activities .03 .03 --
Investment securities gains (losses) -- -- --
Other income .22 .21 .01
---------- ---------- ----------
TOTAL NONINTEREST INCOME .81 .77 .04
---------- ---------- ----------
Noninterest expense
Salaries and employee benefits .73 .77 .04
Net occupancy expense .11 .12 .01
Equipment expense .11 .12 .01
Other expense .58 .70 .12
---------- ---------- ----------
TOTAL NONINTEREST EXPENSE 1.53 1.71 .18
---------- ---------- ----------
Earnings before income taxes-FTE 1.35 1.08 .27
Applicable income taxes-FTE .51 .40 (.11)
---------- ---------- ----------
Net earnings .84 .68 .16
Less preferred stock dividends -- -- --
---------- ---------- ----------
Fully diluted earnings per share $ .84 $ .68 $ .16
========== ========== ==========
Change in net earnings applicable
to fully diluted earnings per share
using previous year average shares outstanding $ .17
Change in average shares outstanding (.01)
----------
Change in net earnings $ .16
==========
Average fully diluted shares (in thousands) 70,824 68,845
========== ==========
</TABLE>
- --------------------
FTE = Fully taxable-equivalent
FIRST QUARTER EARNINGS OVERVIEW
For the first quarter of 1997, the Corporation reported record earnings of
$59.2 million, or $.84 per fully diluted common share. This compares to net
earnings for the same period in 1996 of $47.2 million, or $.68 per fully
diluted common share. The record earnings level resulted in a return on average
assets of 1.61% and a return on average common equity of 18.50% for the first
quarter of 1997 which compares to 1.25% and 15.86% for the same period in 1996.
The improvement in net earnings in 1997 is attributable to increases in
both net interest income and noninterest income along with decreases in
noninterest expense and the provision for losses on loans. The following is a
more complete discussion and analysis of the first quarter of 1997 operating
results compared to the same period in 1996.
14
<PAGE> 15
EARNINGS ANALYSIS
NET INTEREST INCOME
Net interest income (FTE) for the first quarter of 1997 was $159.3
million, a 4.8% increase over the first quarter of 1996 which was $151.9
million, and up $612,000 from the fourth quarter of 1996 which was $158.7
million. The improvement for the first quarter of 1997 compared to the same
period in 1996 is attributable to lower interest expense resulting from lower
funding costs. Additionally, higher loan volumes were funded by maturities and
sales of lower yielding investment securities. The improvement from the fourth
quarter of 1996 relates primarily to a decrease in average interest-bearing
liabilities partially offset by a decrease in average earning assets. Reference
is made to the Corporation's average balance sheet and analysis of volume and
rate changes which follow this discussion for additional information regarding
the changes in net interest income.
The net interest margin for the first quarter of 1997 was 4.71% which
compares to 4.37% and 4.44%, respectively, for the first and fourth quarters of
1996. The interest-rate spread increased to 4.03% for the first quarter of 1997
from 3.62% for the same period in 1996 and compared to 3.74% for the fourth
quarter of 1996.
INTEREST INCOME
The following table presents a breakdown of average earning assets for the
first quarter of 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996
------ ------
<S> <C> <C>
Average earning assets (Dollars in billions) $13.7 $14.0
Comprised of:
Loans 76% 69%
Investment securities 21 27
Other earning assets 3 4
- --------------------
Fully taxable-equivalent yield on average earning assets 8.73% 8.50%
</TABLE>
Interest income (FTE) decreased $447,000 for the first quarter of 1997
compared to the same period in 1996. The decrease is attributable primarily to
a $266 million decrease in average earning assets which accounted for
approximately $1.1 million of the decrease. The decrease was partially offset
by a 23-basis-point increase, or approximately $676,000, in the yield on
average earning assets which was attributable to a change in mix. Lower
yielding investment securities and federal funds sold were replaced by higher
yielding loans.
INTEREST EXPENSE
The following table presents a breakdown of average interest-bearing
liabilities for the first quarter of 1997 and 1996.
<TABLE>
<CAPTION>
1997 1996
----- -----
<S> <C> <C>
Average interest-bearing liabilities (Dollars in billions) $11.7 $11.8
Comprised of:
Deposits 83% 84%
Short-term borrowings 5 7
FHLB advances and long-term debt 12 9
- --------------------
Rate paid on average interest-bearing liabilities 4.70% 4.88%
</TABLE>
Interest expense decreased 5.4% in the first quarter of 1997 compared to
the same period in 1996. The decrease is due primarily to an 18-basis-point
decrease in rates paid on interest-bearing liabilities which accounted for $6.3
million of the decrease in interest expense. This decrease related primarily to
other time deposit and short-term borrowings. Approximately
15
<PAGE> 16
$434,000 of this decrease related to the termination of interest-rate swaps
that were outstanding in 1996. Also contributing to the decrease was a
$123-million decline in average interest-bearing liabilities which accounted
for $1.5 million of the decrease in interest expense. Lower yielding investment
securities and federal funds sold were used to reduce short-term borrowings.
Netted against the decrease in average interest-bearing liabilities was an
increase in long-term debt due primarily to the issuance of $200 million of
Trust Preferred Securities in December 1996 to take advantage of favorable
interest rates and a Federal Reserve Bank ruling that allows these securities
to be included in Tier 1 regulatory capital. The Corporation's lead bank, UPNB,
also established a bank note program to supplement its funding sources. See
Note 8 to the unaudited consolidated financial statements and the consolidated
average balance sheet for additional information regarding the Corporation's
long-term debt.
PROVISION FOR LOSSES ON LOANS
The provision for losses on loans for the first quarter of 1997 was $12.4
million, or .56% of average loans on an annualized basis, compared to $12.9
million, or .60% of average loans, for the same period in 1996. This also
compares to a provision for losses on loans of $15.7 million for the fourth
quarter of 1996. The provision for losses on loans continues to be impacted by
the level of credit card and other consumer charge-offs due to the record
numbers of personal bankruptcy filings. Reference is made to the "Allowance for
Losses on Loans" discussion for additional information regarding loan
charge-offs.
NONINTEREST INCOME
Noninterest income for the first quarter of 1997 was $57.5 million, an
increase of 6.9% over the same period in 1996 and a decrease of approximately
$2.2 from the fourth quarter of 1996. The major components of noninterest
income are presented on the face of the consolidated statement of earnings and
in Note 6 to the unaudited interim consolidated financial statements.
The increase in noninterest income for the first quarter of 1997 compared
to the same period last year is attributable primarily to service charges on
deposit accounts, bank card income, and annuity sales income. Service charges
on deposit accounts increased $1.1 million, or 6.3%, due primarily to the level
of customer activity. Bank card income increased $2.0 million, or 37.0%,
reflecting higher levels of customer activity and an increased number of
cardholder accounts. Annuity sales income increased $1.7 million due to
increased emphasis and sales efforts for these products. Investment securities
gains of $4.3 million in the fourth quarter of 1996 was the primary reason for
the decrease in noninterest income between the fourth quarter of 1996 and the
first quarter of 1997.
NONINTEREST EXPENSE
Noninterest expense for the first quarter of 1997 decreased $8.7 million
to $109.2 million which compares to $118.0 million for the first quarter of
1996 and $118.1 million (before merger-related and other significant charges of
$63.1 million) for the fourth quarter of 1996. The major components of
noninterest expense are detailed on the face of the consolidated statement of
earnings and in Note 6 to the unaudited interim consolidated financial
statements.
The decrease in noninterest expense for the first quarter of 1997 compared
to the same period in 1996 relates primarily to a $6.4 million decrease in the
provision for losses on FHA/VA foreclosure claims. The higher level of
provisions in 1996 related primarily to the rapid growth of FHA/VA
government-insured/guaranteed loans and the growth of the servicing portfolio.
In 1997 this rapid growth has not continued.
Also contributing to the decrease in noninterest expense were reductions
in FDIC insurance assessments and salaries and employee benefits. FDIC
insurance assessments decreased $1.4 million due to reductions in assessments
for "well-capitalized" banks. Reference is made to the "Regulatory Assessment"
discussion in the 1996 Annual Report to Shareholders. Salaries and employee
benefit expense decreased $1.3 million for the first quarter of 1997. The
decrease relates primarily to a reduction in the number of employees.
Full-time-equivalent employees at March 31, 1997 were 5,885 compared to 6,170
at March 31, 1996 and 5,914 at December 31, 1996.
16
<PAGE> 17
UNION PLANTERS CORPORATION AND SUBSIDIARIES
CONSOLIDATED DAILY AVERAGE BALANCE SHEET AND INTEREST RATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------------------------------------------------------
1997 1996
----------------------------------------------------- --------------------------
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------------ -------- ------ ------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-bearing deposits at
financial institutions $ 7,793 $ 87 4.53% $ 6,208 $136 8.81%
Federal funds sold and securities
purchased under agreements to resell 130,372 1,772 5.51 460,067 6,417 5.61
Trading account assets 196,758 3,665 7.55 120,952 2,387 7.94
Investment securities (1) (2)
Taxable 2,427,846 39,895 6.66 3,228,423 52,182 6.50
Tax-exempt 479,606 10,704 9.05 506,861 11,453 9.09
----------- -------- ----------- --------
Total investment securities 2,907,452 50,599 7.06 3,735,284 63,635 6.85
Loans, net of unearned income (1) 10,463,638 238,788 9.26 9,649,548 222,783 9.29
----------- -------- ----------- --------
TOTAL EARNING ASSETS (1) (2) 13,706,013 294,911 8.73 13,972,059 295,358 8.50
-------- --------
Cash and due from banks 456,549 467,232
Premises and equipment 256,562 267,801
Allowance for losses on loans (168,117) (167,332)
Other assets 685,783 572,555
----------- -----------
TOTAL ASSETS $14,936,790 $15,112,315
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts $ 1,662,964 $ 14,254 3.48% $ 1,826,067 $ 14,944 3.29%
Savings deposits 2,194,862 13,179 2.44 1,980,102 12,521 2.54
Certificates of deposit of
$100,000 and over 1,033,075 14,212 5.58 969,943 14,163 5.87
Other time deposits 4,837,388 64,741 5.43 5,153,618 73,690 5.75
Short-term borrowings 362,987 4,300 4.80 834,159 11,895 5.74
Short-term bank notes 241,667 3,448 5.79 - - -
Long-term debt
Federal Home Loan Bank advances 854,473 11,995 5.69 825,410 11,776 5.74
Subordinated capital notes 174,131 2,932 6.83 214,421 4,018 7.54
Medium-term bank notes 135,000 2,236 6.72 - - -
Trust Preferred Securities 198,942 4,128 8.42 - - -
Other 10,302 200 7.87 24,627 423 6.91
----------- -------- ----------- --------
TOTAL INTEREST-BEARING LIABILITIES 11,705,791 $135,625 4.70 11,828,347 143,430 4.88
-------- --------
Noninterest-bearing demand deposits 1,623,715 1,573,683
----------- -----------
TOTAL SOURCES OF FUNDS 13,329,506 13,402,030
Other liabilities 261,244 469,142
Shareholders' equity 1,346,040 1,241,143
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $14,936,790 $15,112,315
=========== ===========
NET INTEREST INCOME $159,286 $151,928
======== ========
INTEREST-RATE SPREAD 4.03% 3.62%
==== ====
NET INTEREST MARGIN 4.71% 4.37%
==== ====
- --------------------
(1) Taxable-equivalent adjustments:
Loans $ 573 $ 526
Investment securities 3,437 3,660
-------- --------
$ 4,010 $ 4,186
======== ========
</TABLE>
(2) Yields are calculated on historical cost and exclude the impact of the net
unrealized gain (loss) on available for sale securities.
17
<PAGE> 18
UNION PLANTERS CORPORATION AND SUBSIDIARIES
ANALYSIS OF VOLUME AND RATE CHANGES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 VERSUS 1996
----------------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
--------------------- TOTAL
AVERAGE AVERAGE INCREASE
VOLUME RATE (DECREASE)
---------- ------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INTEREST INCOME
Interest-bearing deposits at
financial institutions $ 29 $ (78) $ (49)
Federal funds sold and securities
purchased under agreements to resell (4,533) (112) (4,645)
Trading account assets 1,399 (121) 1,278
Investment securities (FTE) (14,821) 1,785 (13,036)
Loans, net of unearned income (FTE) 16,803 (798) 16,005
-------- ------- --------
TOTAL INTEREST INCOME (1,123) 676 (447)
-------- ------- --------
INTEREST EXPENSE
Money market accounts (1,445) 755 (690)
Savings deposits 1,231 (573) 658
Certificates of deposit of $100,000 and over 822 (773) 49
Other time deposits (4,671) (4,278) (8,949)
Short-term borrowings (3,092) (1,055) (4,147)
Long-term debt 5,689 (415) 5,274
-------- ------- --------
TOTAL INTEREST EXPENSE (1,466) (6,339) (7,805)
-------- ------- --------
CHANGE IN NET INTEREST INCOME (FTE) $ 343 $ 7,015 $ 7,358
======== ======= ========
PERCENTAGE INCREASE IN NET INTEREST
INCOME OVER PRIOR PERIOD 4.84%
========
</TABLE>
- --------------------
FTE - Fully taxable-equivalent
(1) The change due to both rate and volume has been allocated to change due to
volume and change due to rate in proportion to the relationship of the
absolute dollar amounts of the change in each.
18
<PAGE> 19
FINANCIAL CONDITION
The Corporation's total assets were $14.9 billion at March 31, 1997
compared to $15.2 billion at both March 31, 1996 and December 31, 1996. Average
assets were $14.9 billion for the first quarter of 1997 compared to $15.1
billion for the first quarter of 1996.
INVESTMENT SECURITIES
The Corporation's investment securities portfolio of $3.0 billion at March
31, 1997 consisted entirely of available for sale securities which are carried
on the balance sheet at fair value. This compares to investment securities of
$3.0 billion at December 31, 1996. At March 31, 1997 and December 31, 1996,
these securities had net unrealized gains of $30.4 million and $40.2 million,
respectively. Reference is made to Note 5 to the unaudited interim consolidated
financial statements which provides the composition of the investment portfolio
at March 31, 1997 and December 31, 1996.
U. S. Treasury and U. S. Government agency obligations represented
approximately 78.7% of the investment securities portfolio at March 31, 1997.
The Corporation has some credit risk in the investment portfolio, however,
management does not consider that risk to be significant.
The REMIC and CMO issues in the investment portfolio are 98% U. S.
Government agency issues; the remaining 2% are readily marketable, nonagency
collateralized mortgage obligations backed by agency-pooled collateral or
whole-loan collateral. All nonagency issues currently held are rated "AAA" by
either Standard & Poor's or Moody's. The REMIC and CMO portions of the
investment securities portfolio include approximately 56% in floating-rate
issues, the majority being indexed to LIBOR or PRIME. Normal practice is to
purchase investment securities at or near par value to reduce the risk of
premium write-offs on unexpected prepayments. The limited credit risk in the
investment portfolio at March 31, 1997 consisted of holdings of municipal
securities (16.4%), nonagency CMOs and mortgage-backed securities (.6%), and
corporate stocks, notes, debentures, and mutual funds (4.3%).
At March 31, 1997, the Corporation had approximately $65.9 million of
structured notes, which constituted approximately 2.2% of the investment
securities portfolio. Structured notes have uncertain cash flows which are
driven by interest-rate movements and may expose a company to greater market
risk than traditional medium-term notes. All of the Corporation's investments
of this type are U. S. Government agency issues (primarily Federal Home Loan
Bank and Federal National Mortgage Association). The structured notes vary in
type but primarily include step-up bonds and index-amortizing notes. These
securities are carried in the Corporation's available for sale securities
portfolio at fair value. The unrealized loss in these securities at March 31,
1997 was approximately $253,000. The market risk associated with the structured
notes is not considered material to the Corporation's financial position,
results of operations, or liquidity and involves no credit risk.
LOANS
Loans, net of unearned income, at March 31, 1997 were $10.4 billion
compared to $9.6 billion and $10.4 billion at March 31, 1996 and December 31,
1996, respectively. Average loans for the first quarter of 1997 were $10.5
billion, an 8.4% increase over $9.6 billion for the first quarter of 1996. Note
3 to the unaudited interim consolidated financial statements presents the
composition of the loan portfolio.
The growth in loans between March 31, 1997 and 1996 is attributable
primarily to FHA/VA government-insured/guaranteed loans which increased $482
million to $1.5 billion. Also contributing to the growth was a $188-million
increase in credit card loans and a $161-million increase in other real estate
loans (primarily commercial real estate loans). Compared to December 31, 1996,
loans declined approximately $74 million.
ALLOWANCE FOR LOSSES ON LOANS
The Corporation maintains the allowance for losses on loans at a level
which is believed adequate to absorb losses inherent in the loan portfolio. A
formal review is prepared quarterly to assess the risk in the portfolio and to
determine the adequacy of the allowance for losses on loans. The review
includes analyses of certain problem loans, historical loan loss experience,
the level of classified and nonperforming loans, reviews and evaluations of
specific loans,
19
<PAGE> 20
changes in the nature and volume of loans, the results of regulatory
examinations, and current and economic conditions and the related impact on
specific borrowers and industry groups. The review is presented to, and
approved by senior management and a committee of the Board of Directors.
The following table provides a reconciliation of the allowance for losses
on loans (the allowance) at the dates indicated and certain key ratios for the
three-month periods ended March 31, 1997 and 1996 and for the year ended
December 31, 1996.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------- FOR THE YEAR ENDED
1997 1996 DECEMBER 31, 1996
----------- ---------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
BALANCE AT THE BEGINNING OF PERIOD $ 166,853 $ 156,388 $ 156,388
LOANS CHARGED OFF
Commercial, financial, and agricultural 1,645 1,431 10,808
Real estate - construction 49 20 367
Real estate - mortgage 764 749 4,863
Consumer 4,650 4,351 20,346
Credit cards and related plans 12,304 6,181 27,657
Direct lease financing 1 5 48
----------- ---------- ----------
Total charge-offs 19,413 12,737 64,089
----------- ---------- ----------
RECOVERIES ON LOANS PREVIOUSLY CHARGED OFF
Commercial, financial, and agricultural 1,501 1,237 3,247
Real estate - construction 65 7 16
Real estate - mortgage 555 782 2,190
Consumer 1,581 1,329 4,940
Credit cards and related plans 421 390 1,912
Direct lease financing 3 2 4
----------- ---------- ----------
Total recoveries 4,126 3,747 12,309
----------- ---------- ----------
Net charge-offs 15,287 8,990 51,780
Provision charged to expense 12,414 12,949 57,395
Allowance related to the sale of certain loans - - (1,628)
Increase due to acquisitions - 6,478 6,478
----------- ---------- ----------
BALANCE AT END OF PERIOD $ 163,980 $ 166,825 $166,853
=========== ========== ==========
Total loans, net of unearned income,
at end of period $10,362,226 $9,611,613 $10,434,070
Less: FHA/VA government-insured/
guaranteed loans 1,518,394 1,036,043 1,477,459
----------- ---------- -----------
LOANS USED TO CALCULATE RATIOS $ 8,843,832 $8,575,570 $ 8,956,611
=========== ========== ===========
Average total loans, net of unearned income,
during period $10,463,638 $9,649,548 $ 9,894,427
Less: Average FHA/VA government-insured/
guaranteed loans 1,494,301 976,362 1,197,070
----------- ---------- -----------
AVERAGE LOANS USED TO CALCULATE RATIOS $ 8,969,337 $8,673,186 $ 8,697,357
=========== ========== ===========
RATIOS (1):
Allowance at end of period to loans,
net of unearned income 1.85% 1.95% 1.86%
Charge-offs to average loans,
net of unearned income (2) .88 .59 .74
Recoveries to average loans,
net of unearned income (2) .19 .17 .14
Net charge-offs to average loans,
net of unearned income (2) .69 .42 .60
Provision to average loans,
net of unearned income(2) .56 .60 .66
</TABLE>
- --------------------
(1) Ratio calculations exclude FHA/VA government-insured/guaranteed loans,
since they represent minimal credit risk.
(2) Amounts annualized for March 31, 1997 and 1996
20
<PAGE> 21
The allowance at March 31, 1997, was $164.0 million, a decrease of $2.9
million from December 31, 1996, and compared to $166.8 million at March 31,
1996. Net charge-offs for the first quarter of 1997 were $15.3 million compared
to $9.0 million at March 31, 1996 and compared to $18.1 million for the fourth
quarter of 1996. The increase in net charge-offs for the first quarter of 1997
compared to the same period in 1996 relates primarily to the credit card and
other consumer loan portfolios which have been impacted by a record number of
personal bankruptcy filings.
NONPERFORMING ASSETS
NONACCRUAL, RESTRUCTURED, AND PAST DUE LOANS AND FORECLOSED PROPERTIES
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------- -----------
1997 1996 1996
-------------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Nonaccrual loans $ 53,060 $ 50,841 $ 63,346
Restructured loans 2,394 5,836 2,546
-------- -------- --------
TOTAL NONPERFORMING LOANS 55,454 56,677 65,892
-------- -------- --------
Foreclosed property
Other real estate owned, net 15,351 9,302 15,531
Other foreclosed properties 1,092 1,390 989
-------- -------- --------
TOTAL FORECLOSED PROPERTIES 16,443 10,692 16,520
-------- -------- --------
TOTAL NONPERFORMING ASSETS $ 71,897 $ 67,369 $ 82,412
======== ======== ========
LOANS 90 DAYS OR MORE PAST DUE
AND NOT ON NONACCRUAL STATUS
FHA/VA government-insured/guaranteed loans $599,723 $523,724 $709,424
All other loans 19,089 18,967 22,707
-------- -------- --------
Total loans 90 days or more past due $618,812 $542,691 $732,131
======== ======== ========
- --------------------
RATIOS (1):
Nonperforming loans as a percentage of loans .63% .66% .74%
Nonperforming assets as a percentage of loans
plus foreclosed properties .81 .78 .92
Allowance for losses on loans as a percentage of
nonperforming loans 296 294 253
Loans 90 days or more past due and not on
nonaccrual status as a percentage of loans .22 .22 .25
</TABLE>
- --------------------
(1) FHA/VA government-insured/guaranteed loans are excluded from loans in the
ratio calculations.
21
<PAGE> 22
The breakdown of nonaccrual loans and loans 90 days or more past due and
not on nonaccrual status is as follows:
<TABLE>
<CAPTION>
LOANS 90 DAYS
NONACCRUAL LOANS OR MORE PAST DUE (1)
---------------------- ----------------------
MARCH 31, DECEMBER 31, MARCH 31, DECEMBER 31,
LOAN TYPE 1997 1996 1997 1996
- ----------------------------------------------- ---------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Secured by single family residential, including
FHA/VA government-insured/guaranteed loans $25,589 $34,464 $601,769 $711,151
Secured by nonfarm nonresidential 6,508 8,272 566 1,716
Other real estate 5,042 3,929 679 1,492
Commercial, financial, and agricultural,
including direct lease financing 11,865 12,111 1,020 1,841
Credit cards and related plans 83 39 11,294 11,520
Other consumer 3,973 4,531 3,484 4,411
------- ------- -------- --------
TOTAL $53,060 $63,346 $618,812 $732,131
======= ======= ======== ========
</TABLE>
(1) See the table on the previous page for the amount of FHA/VA
government-insured guaranteed/loans 90 days or more past due and not on
nonaccrual status.
As a percentage of loans and foreclosed properties, nonperforming assets
were .81% at March 31, 1997 compared to .78% at March 31, 1996 and compared to
.92% at December 31, 1996. The coverage of nonperforming loans (allowance for
losses on loans as a percentage of nonperforming loans) was 296% at March 31,
1997, which compares to 294% at March 31, 1996 and 253% at year end 1996. The
decrease in nonperforming loans from year end resulted from a change in the
application of the Corporation's nonaccrual loan policies with respect to
certain FHA/VA government-insured/guaranteed loans. The change provides for
consistent exclusion of all of the Corporation's FHA/VA loans from nonaccrual
status once the loans become 90 days or more past due, since FHA/VA loans are
government-insured/guaranteed and have minimal credit risks. This change
resulted in a decrease in nonaccrual loans (single family residential loans) of
approximately $7.0 million between year end 1996 and March 31, 1997 and did not
have a significant impact on interest income for the quarter. The remaining
decrease relates to collections of nonaccrual loans.
Loans 90 days or more past due and still accruing interest totaled $618.8
million at March 31, 1997. FHA/VA government-insured/guaranteed loans accounted
for $599.7 million of the total loans 90 days or more past due at March 31,
1997. These loans are government-insured/guaranteed and have minmal credit
risk. These loans totaled $523.7 million and $709.4 million at March 31, 1996
and December 31, 1996, respectively. Other loans 90 days or more past due
totaled $19.1 million at March 31, 1997, down $3.6 million from December 31,
1996.
POTENTIAL PROBLEM ASSETS
Potential problem assets consist of assets which are generally secured and
not currently considered nonperforming, but where information about possible
credit problems has caused management to have serious doubts as to the ability
of the borrowers to comply in the future with present repayment terms.
Historically, these assets have been loans which have become nonperforming. At
March 31, 1997, the Corporation had potential problem assets (all of which were
loans) of $17.0 million.
ASSET LIABILITY MANAGEMENT
The following table presents the Corporation's interest-rate sensitivity
(GAP) analysis at March 31, 1997. The GAP analysis is made as of that
point-in-time and could change significantly on a daily basis. This analysis is
not relied upon exclusively to evaluate the impact of, or predict how the
Corporation is positioned to react to changing interest rates. Other methods,
such as simulation analysis, are also considered in evaluating the
Corporation's interest-rate risk.
At March 31, 1997, the GAP analysis indicated that the Corporation was
liability sensitive with $722 million more liabilities than assets repricing
within one year. At 5% of total assets, this position was within management's
policy limit of 10% of total assets.
22
<PAGE> 23
Balance sheet simulation analysis has been conducted at March 31, 1997 to
determine the impact on net interest income for the coming twelve months under
several interest-rate scenarios. One such scenario uses rates at March 31,
1997, and holds the rates and volumes constant for simulation. When this
position is subjected to immediate and parallel shifts in interest rates ("rate
shocks") of 200 basis points rising and 200 basis points falling, the annual
impact on the Corporation's net interest income is a positive $8.4 million and
a negative $16.6 million pretax, respectively. Another simulation uses
management's conclusions as to a "most likely" scenario of rates increasing
approximately 50 basis points resulting in a $5.9 million pretax increase in
net interest income from the constant rate/volume projection. These scenarios
are within the Corporation's policy limit of 5% of shareholders' equity.
UNION PLANTERS CORPORATION AND SUBSIDIARIES
RATE SENSITIVITY ANALYSIS AT MARCH 31, 1997
<TABLE>
<CAPTION>
INTEREST-SENSITIVE WITHIN (1) AND (7)
---------------------------------------------------------------------------------------
NON-
0-30 31-90 91-180 181-365 1-2 2-5 OVER INTEREST-
DAYS DAYS DAYS DAYS YEARS YEARS 5 YEARS BEARING TOTAL
------ ------ ------ ------ ------ ------ ------- ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans and leases (2) (3) (4) $2,442 $ 513 $ 668 $1,307 $1,088 $2,840 $1,477 $ 55 $10,390
Investment securities (5) (6) 362 328 310 464 493 464 588 - 3,009
Other earning assets 215 110 - 1 - - - - 326
Other assets - - - - - - - 1,207 1,207
------ ------ ------ ------ ------ ------ ------ ------- -------
Total assets $3,019 $ 951 $ 978 $1,772 $1,581 $3,304 $2,065 $ 1,262 $14,932
====== ====== ====== ====== ====== ====== ====== ======= =======
SOURCES OF FUNDS
Money market deposits (7) (8) $ - $ 548 $ - $ 549 $ - $ 731 $ - $ - $ 1,828
Other savings and time deposits 807 1,419 1,020 1,066 659 1,797 29 - 6,797
Certificates of deposit of
$100,000 and over 227 208 206 230 135 46 1 - 1,053
Short-term borrowings 312 9 - - - - - - 321
Short- and medium-term bank notes 20 145 - 50 30 105 - 350
Federal Home Loan Bank
advances 217 398 2 5 12 35 139 - 808
Other long-term debt - 1 1 2 3 4 372 - 383
Noninterest-bearing deposits - - - - - - - 1,717 1,717
Other liabilities - - - - - - - 280 280
Shareholders' equity - - - - - - - 1,395 1,395
------ ------ ------ ------ ------ ------ ------ ------- -------
Total sources of funds $1,583 $2,728 $1,229 $1,902 $ 839 $2,718 $ 541 $ 3,392 $14,932
====== ====== ====== ====== ====== ====== ====== ======= =======
Interest-rate sensitivity gap $1,436 $(1,777) $ (251) $ (130) $ 742 $ 586 $1,524 $(2,130)
Cumulative interest rate
sensitivity gap (8) $1,436 $ (341) $ (592) $ (722) $ 20 $ 606 $2,130 $ -
Cumulative gap as a percentage
of total assets (8) 10% (2)% (4)% (5)% -% 4% 14% -%
</TABLE>
- --------------------
Management has made the following assumptions in presenting the above analysis:
(1) Assets and liabilities are generally scheduled according to their earliest
repricing dates regardless of their contractual maturities.
(2) Nonaccrual loans are included in the noninterest-bearing category.
(3) Fixed-rate mortgage loan maturities are estimated based on the currently
prevailing principal-prepayment patterns of comparable mortgage-backed
securities.
(4) Delinquent FHA/VA loans are scheduled based on foreclosure and repayment
patterns.
(5) The scheduled maturities of mortgage-backed securities and CMOs assume
principal prepayment of these securities on dates estimated by management,
relying primarily upon current and consensus interest-rate forecasts in
conjunction with the latest three-month historical prepayment schedules.
(6) Securities are generally scheduled according to their call dates when
valued at a premium to par.
(7) Money market deposits and savings deposits that have no contractual
maturities are scheduled according to management's best estimate of their
repricing in response to changes in market rates. The impact of changes in
market rates would vary by product type and market.
(8) If all money market, NOW, and savings deposits had been included in the
0-30 Days category above, the cumulative gap as a percentage of total
assets would have been negative (16%), (20%), (22%), (19%), and (14%), and
positive 4% and 14%, respectively, for the 0-30 Days, 31-90 Days, 91-180
Days, 181-365 Days, 1-2 Years, 2-5 Years, and over 5 Years categories at
March 31, 1996.
23
<PAGE> 24
DEPOSITS
The Corporation's core deposit base is its most important and stable
funding source and consists of deposits from the communities served by the
Corporation. Core deposits, along with available for sale securities and other
marketable earning assets, provide liquidity for the Corporation.
<TABLE>
<CAPTION>
AVERAGE DEPOSITS
------------------------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, DECEMBER 31,
-------------------------- -------------------
1997 1996 1996
----------- ------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Demand deposits $ 1,623,715 $ 1,573,683 $ 1,768,212
Money market accounts (1) 1,662,964 1,826,067 1,650,584
Savings deposits (2) 2,194,862 1,980,102 2,128,704
Other time deposits (3) 4,837,388 5,153,618 4,991,244
----------- ----------- -----------
Total core deposits 10,318,929 10,533,470 10,538,744
Certificates of deposit
of $100,000 and over 1,033,075 969,943 983,658
----------- ----------- -----------
Total average deposits $11,352,004 $11,503,413 $11,522,402
=========== =========== ===========
</TABLE>
- --------------------
(1) Includes money market savings accounts, High Yield accounts, and super NOW
accounts.
(2) Includes regular and premium savings accounts and NOW accounts.
(3) Includes certificates of deposit under $100,000, investment savings
accounts, and other time deposits.
Average deposits for the first quarter of 1997 were $11.4 billion, which
represents decreases of $151 million and $170 million, respectively, from the
average deposits for the first quarter of 1996 and the fourth quarter of 1996.
The decrease is primarily attributable to deposits of branches sold
(approximately $52 million of deposits), migration of deposits to other
investment products, and some deposit attrition in connection with
acquisitions.
LIQUIDITY
The Corporation requires liquidity sufficient to meet cash requirements
for deposit withdrawals, to make new loans and satisfy loan commitments, to
take advantage of attractive investment opportunities, and to repay borrowings
when they mature. Deposits, available for sale securities, and money market
investments are the Corporation's primary sources of liquidity. Liquidity is
also achieved through short-term borrowings, borrowings under available lines
of credit, and issuance of securities and debt instruments in the marketplace.
The Corporation has adequate liquidity to meet its operating requirements.
The parent company's sources of liquidity are management fees and
dividends received from subsidiaries, interest on advances to subsidiaries, and
interest on its available for sale investment securities. The large number of
financial institutions owned by the Corporation provides a diversified base for
the payment of dividends should one or more of the subsidiaries have capital
needs and be unable to pay dividends to the parent company. At March 31, 1997,
the parent company had cash and cash equivalents totaling $424.0 million and
net working capital of $474.1 million. At April 1, 1997, the Corporation's
banking subsidiaries could have paid dividends totaling $111.4 million without
prior regulatory approval. The actual amount of dividends that will be paid in
the second quarter of 1997 will be limited by management to approximately $34.1
million due to capital and liquidity requirements of individual financial
institutions. Future dividends will be dependent on the future earnings and
growth of the subsidiary financial institutions.
SHAREHOLDERS' EQUITY
The Corporation's total shareholders' equity increased by $42.4 million
from December 31, 1996 to $1.4 billion at March 31, 1997. The increase was due
to retained net earnings of $36.8 million and Common Stock issued in connection
with benefit plans and acquisitions of $11.6 million which was partially offset
by the net change in the unrealized gain on available for sale securities which
reduced shareholders' equity $6.0 million.
24
<PAGE> 25
CAPITAL ADEQUACY
The following tables present capital adequacy information for the
Corporation and the calculation of the Corporation's risk-based capital.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------- DECEMBER 31,
1997 1996 1996
--------- --------- ------------
CAPITAL ADEQUACY DATA
- ---------------------
<S> <C> <C> <C>
Total shareholders' equity/total assets
(at period end) 9.34% 8.52% 8.89%
Average shareholders' equity/average
total assets 9.01 8.21 8.40
Tier 1 capital/unweighted assets
(leverage ratio) (1) 10.26 8.09 9.61
Parent company long-term debt/equity 27.21 16.55 28.06
Dividend payout ratio 37.78 33.58 50.64
</TABLE>
- --------------------
(1) Based on period-end capital and quarterly adjusted average assets.
At March 31, 1997, total shareholders' equity was 9.34% of total assets
and the leverage ratio was 10.26% compared to 8.89% and 9.61%, respectively, at
December 31, 1996. The improvement in these ratios is attributable primarily to
the Corporation's retained net earnings.
The following table presents the Corporation's risk-based capital and
capital adequacy ratios. The Corporation's regulatory capital ratios qualify
the Corporation for the "well-capitalized" regulatory classification.
RISK-BASED CAPITAL
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------ DECEMBER 31,
1997 1996 1996
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
TIER 1 CAPITAL
Shareholders equity $1,395,263 $1,297,878 $1,352,874
Trust Preferred Securities and
minority interest in consolidated subsidiary 200,035 1,088 200,026
Less: Goodwill (47,280) (53,365) (46,129)
Disallowed deferred tax asset (1,777) (2,530) (1,867)
Unrealized gain on available
for sale securities (18,573) (26,027) (24,592)
---------- ---------- ----------
TOTAL TIER 1 CAPITAL 1,527,668 1,217,044 1,480,312
TIER 2 CAPITAL
Allowance for losses on loans 115,977 112,284 121,623
Qualifying long-term debt 174,149 174,037 174,121
---------- ---------- ----------
TOTAL CAPITAL BEFORE DEDUCTIONS 1,817,794 1,503,365 1,776,056
Less investment in unconsolidated subsidiaries (1,578) (2,877) (1,743)
---------- ---------- ----------
TOTAL CAPITAL $1,816,216 $1,500,488 $1,774,313
========== ========== ==========
RISK-WEIGHTED ASSETS $9,230,166 $8,928,135 $9,684,621
========== ========== ==========
Ratios as a percent of end of period
risk-weighted assets
Tier 1 capital 16.55% 13.63% 15.29%
Total capital 19.68 16.81 18.32
</TABLE>
25
<PAGE> 26
IMPACT OF PROPOSED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." The Statement establishes standards for computing and presenting
earnings per share (EPS). The Statement simplifies the standards for computing
EPS previously found in APB Opinion No. 15, "Earnings Per Share," and makes
them comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. The Statement requires dual
presentation of basic and diluted EPS on the face of the statement of earnings
and requires a reconciliation between basic EPS and diluted EPS.
Basic EPS excludes dilution and is computed by dividing net earnings
available to common shares by the weighted average number of common shares
outstanding. Diluted EPS reflects the potential dilution that could occur if
options, convertible securities, or other contracts to issue common stock were
to be exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. Diluted EPS is
computed similarly to the current fully diluted EPS pursuant to APB Opinion No.
15.
SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods; earlier application
is not permitted. The Statement requires restatement of all prior-period EPS
data presented. The following presents the Corporation's EPS under the current
and new requirements.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------- TWELVE MONTHS ENDED
1997 1996 DECEMBER 31, 1996
--------- --------- -------------------
<S> <C> <C> <C>
AS REPORTED
Primary EPS $.86 $.70 $1.95
Fully Diluted EPS .84 .68 1.92
PRO FORMA
Basic EPS .88 .71 1.99
Diluted EPS .84 .69 1.93
</TABLE>
26
<PAGE> 27
PART II -- OTHER INFORMATION
ITEM 1 -- LEGAL PROCEEDINGS
The information called for by this item is incorporated by reference to
Item 3, Part I of the Corporation's 1996 Form 10-K, Note 19 to the
Corporation's consolidated financial statements on page 67 of the 1996 Annual
Report, and Note 10 to the Corporation's unaudited interim consolidated
financial statements included herein.
ITEM 2 -- CHANGES IN SECURITIES
None.
ITEM 3 -- DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 -- OTHER INFORMATION
None
ITEM 6 -- EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
2 (a) -- Agreement and Plan of Reorganization by and Between Magna
Bancorp, Inc. and Union Planters Corporation dated as of May 8,
1997
2 (b) -- Stock Option Agreement, dated May 8, 1997, issued by Magna
Bancorp, Inc. to Union Planters Corporation
10 (a) -- Amended and Restated Employment Agreement of Benjamin W.
Rawlins, Jr.
10 (b) -- Amended and Restated Employment Agreement of Jackson W. Moore
10 (c) -- Union Planters Corporation 1992 Stock Incentive Plan as Amended
and Restated October 17, 1996 and Approved by Shareholders
April 17, 1997
10 (d) -- Amendment to Union Planters Corporation Supplemental Executive
Retirement Plan for Executive Officers
10 (e) -- Amendment No. 1 to Union Planters Corporation Executive
Deferred Compensation Plan for Executives
11 -- Computation of Per Share Earnings
27 -- Financial Data Schedule
(for SEC use only)
99 (a) -- Text of Press Release issued May 8, 1997 by Union Planters
Corporation announcing an Agreement to acquire Magna Bancorp,
Inc.
b) Reports on Form 8-K:
<TABLE>
<CAPTION>
Date of Current Report Subject
- ---------------------- -------------
<S> <C>
1. January 16, 1997 Press release announcing year
ended December 31, 1996 net
earnings
2. April 17, 1997 Press release announcing first
quarter 1997 net earnings
</TABLE>
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNION PLANTERS CORPORATION
-----------------------------
(Registrant)
Date: May 8, 1997
By: /s/ Benjamin W. Rawlins, Jr.
---------------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and
Chief Executive Officer
By: /s/ John W. Parker
---------------------------------
John W. Parker
Executive Vice President and
Chief Financial Officer
By: /s/ M. Kirk Walters
---------------------------------
M. Kirk Walters
Senior Vice President, Treasurer,
and Chief Accounting Officer
28
<PAGE> 29
UNION PLANTERS CORPORATION
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- ------------------------------
<S> <C>
2 (a) Agreement and Plan of Reorganization by and Between Magna
Bancorp, Inc. and Union Planters Corporation dated as of
May 8, 1997
2 (b) Stock Option Agreement, dated May 8, 1997, issued by Magna
Bancorp, Inc. to Union Planters Corporation
10 (a) Amended and Restated Employment Agreement of Benjamin W.
Rawlins, Jr.
10 (b) Amended and Restated Employment Agreement of Jackson W.
Moore
10 (c) Union Planters Corporation 1992 Stock Incentive Plan as
Amended and Restated October 17,1996 and Approved by
Shareholders April 17, 1997
10 (d) Amendment to Union Planters Corporation Supplemental
Executive Retirement Plan for Executive Officers
10 (e) Amendment No. 1 to Union Planters Corporation Executive
Deferred Compensation Plan for Executive
11 Computation of Per Share Earnings
27 Financial Data Schedule (for SEC use only)
99 (a) Text of Press Release issued May 8, 1997 by Union Planters
Corporation announcing an Agreement to acquire Magna
Bancorp, Inc.
</TABLE>
<PAGE> 1
EXHIBIT 2A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
MAGNA BANCORP, INC.
AND
UNION PLANTERS CORPORATION
DATED AS OF MAY 8, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Execution of Stock Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Restructure of Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 - TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Charter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 By-laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3 - MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Anti-Dilution Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Shares Held by Magna or UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.4 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.5 Conversion of Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 4 - EXCHANGE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1 Exchange Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Rights of Former Magna Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF MAGNA . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Magna Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.9 Allowance for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.10 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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5.15 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 Material Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.17 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.18 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.19 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.20 Accounting, Tax, and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.21 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.22 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.1 Organization, Standing, and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Authority; No Breach By Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.4 UPC Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.5 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.6 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Statements True and Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.14 Accounting, Tax, and Regulatory Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.1 Affirmative Covenants of Magna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.2 Negative Covenants of Magna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Covenants of UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.4 Adverse Changes in Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7.5 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 8 - ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.1 Registration Statement; Proxy Statement; Shareholder Approval . . . . . . . . . . . . . . . . 28
8.2 Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.3 Applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.4 Filings with State Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.5 Agreement as to Efforts to Consummate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.6 Investigation and Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.7 Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.9 Accounting and Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.10 State Takeover Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.11 Charter Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.12 Agreements of Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.13 Employee Benefits and Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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8.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
8.15 UPC Merger Subsidiary Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . . . . . . . . . . . . . . . . . 32
9.1 Conditions to Obligations of Each Party . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Conditions to Obligations of UPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9.3 Conditions to Obligations of Magna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE 10 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.3 Non-Survival of Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 11 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.3 Brokers and Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.5 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.6 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.7 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.11 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.12 Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.13 Enforcement of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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LIST OF EXHIBITS
Exhibit Number Description
1. PLAN OF MERGER. (Section 1.1).
2. FORM OF STOCK OPTION AGREEMENT. (Section Section
1.4, 11.1).
3. FORM OF AGREEMENT OF AFFILIATES OF MAGNA. (Section
Section 8.12, 9.2(D)).
4. FORM OF SUPPLEMENTAL LETTER. (Section Section 7.2,
11.1).
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<PAGE> 6
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made and entered into as of May 8, 1997, by and between MAGNA BANCORP, INC.
("Magna"), a Delaware corporation having its principal office located in
Hattiesburg, Mississippi; and UNION PLANTERS CORPORATION ("UPC"), a Tennessee
corporation having its principal office located in Memphis, Tennessee.
PREAMBLE
The Boards of Directors of Magna 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 Magna by UPC pursuant to the merger of a wholly owned, first-tier subsidiary
of UPC to be organized under the Laws of the State of Delaware ("UPC Merger
Subsidiary") with and into Magna. At the effective time of such merger, the
outstanding shares of the common stock of Magna shall be converted into the
right to receive shares of the common stock of UPC (except as provided in
Sections 3.3 and 3.4 of this Agreement). As a result, shareholders of Magna
shall become shareholders of UPC and Magna shall continue to conduct its
business and operations as a wholly owned subsidiary of UPC. The transactions
described in this Agreement are subject to the approvals of the shareholders of
UPC and Magna, the Board of Governors of the Federal Reserve System, the Office
of Thrift Supervision, and other applicable federal and 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.
Immediately after the execution and delivery of this
Agreement, as a condition and inducement to UPC's willingness to enter into this
Agreement, Magna and UPC are entering into a stock option agreement pursuant to
which Magna is granting to UPC an option to purchase shares of Magna Common
Stock.
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:
<PAGE> 7
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, UPC Merger Subsidiary shall be merged with
and into Magna in accordance with the provisions of Section 251 of the DGCL and
with the effect provided in Section 259 of the DGCL (the "Merger"). Magna
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 Magna and UPC and the Plan
of Merger, in substantially the form of Exhibit 1, which has been approved and
adopted by the Board of Directors of Magna and will be approved and adopted by
the Board of Directors of UPC Merger Subsidiary and UPC (in its capacity as
sole shareholder of UPC Merger Subsidiary) upon the organization of UPC Merger
Subsidiary.
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
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 30 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, (ii) the
date on which the shareholders of Magna approve this Agreement and the Plan of
Merger as required by applicable Law, and (iii) the date on which all other
conditions precedent to each Party's obligations hereunder shall have been
satisfied or waived (to the extent waivable by such Party).
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Simultaneously
with the execution of this Agreement by the Parties and as a condition thereto,
Magna is executing and delivering to UPC a stock option agreement (the "Stock
Option Agreement"), in substantially the form of Exhibit 2, pursuant to which
Magna is granting to UPC an option to purchase shares of Magna Common Stock.
1.5 RESTRUCTURE OF 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
Magna, to make any revision to the structure of the Merger which: (i) changes
the amount of the
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<PAGE> 8
consideration which the holders of shares of Magna 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 Magna 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 Magna or holders of shares of Magna
Common Stock; (v) would unreasonably impede or delay consummation of the
Merger; or (vi) would affect 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 Magna 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 CHARTER. The Charter of Magna in effect immediately
prior to the Effective Time shall be the Charter of the Surviving Corporation
until otherwise amended or repealed.
2.2 BY-LAWS. The By-laws of Magna 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 Magna 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 Magna 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.
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, UPC Merger Subsidiary, Magna, 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.
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<PAGE> 9
(b) Each share of UPC Merger Subsidiary Common Stock
issued and outstanding immediately prior to the Effective Time shall
cease to be outstanding and shall be converted into and exchanged for one
share of Magna Common Stock.
(c) Each share of Magna Common Stock (excluding shares
held by any Magna Company or any UPC Company, in each case other than in
a fiduciary capacity or as a result of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to
receive .5165 of a share of UPC Common Stock (as subject to possible
adjustment as set forth in Section 10.1(g) 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
Magna 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 MAGNA OR UPC. Each of the shares of
Magna Common Stock held by any Magna 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 FRACTIONAL SHARES. Notwithstanding any other
provision of this Agreement, each holder of shares of Magna 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 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.
3.5 CONVERSION OF STOCK OPTIONS.
(a) At the Effective Time, each option to
purchase or other right with respect to shares of Magna Common Stock pursuant
to stock options, stock appreciation rights or other rights, including stock
awards ("Magna Options") granted by Magna under the Magna 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 Magna Option, in accordance with the terms of the Magna Stock
Plan and stock option or
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<PAGE> 10
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 Magna and the Committee of Magna's Board of Directors
(including, if applicable, the entire Board of Directors of Magna) or other
independent committee administering such Magna Stock Plan, (ii) each Magna
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 Magna Option shall be equal to the number
of shares of Magna Common Stock subject to such Magna Option immediately prior
to the Effective Time multiplied by the Exchange Ratio and rounding down to the
nearest whole share, and (iv) the per share exercise price under each such
Magna Option shall be adjusted by dividing the per share exercise price under
each such Magna Option by the Exchange Ratio and rounding up to the nearest
cent. Notwithstanding the clauses (iii) and (iv) of the first sentence of this
Section 3.5, each Magna Option which is an "incentive stock option" shall be
adjusted as required by Section 424 of the Internal Revenue Code, and the
regulations promulgated thereunder, so as not to constitute a modification,
extension or renewal of the option, within the meaning of Section 424(h) of the
Internal Revenue Code. UPC and Magna agree to take all necessary steps to
effectuate the foregoing provisions of this Section 3.5.
(b) As soon as practicable after the Effective
Time, UPC shall deliver to the participants in each Magna Stock Plan an
appropriate notice setting forth such participant's rights pursuant thereto and
the grants subject to such Magna Stock Plan shall continue in effect on the
same terms and conditions (subject to the adjustments required by Section
3.5(a) after giving effect to the Merger), and UPC shall comply with the terms
of each Magna Stock Plan to ensure, to the extent required by, and subject to
the provisions of, such Magna Stock Plan, that Magna Options which qualified as
incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. 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) In approving this Agreement, Magna and the
Committee appointed by the Board of Directors of Magna in accordance with
paragraph 3 of the Magna Bancorp, Inc. 1990 Stock Option and Incentive Plan
agree not to permit the holders of options outstanding under such plan to
receive cash upon the Merger in an amount equal to the excess of the "Market
Value" of the Magna Common Stock subject to such option over the "Exercise
Price" of the shares subject to such option in accordance with Section 11 of
the Magna Bancorp, Inc. 1990 Stock Option and Incentive Plan.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective
Time, UPC and Magna shall cause the exchange agent selected by UPC (the
"Exchange Agent") to mail to the former shareholders of Magna appropriate
transmittal materials (which shall specify that delivery
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<PAGE> 11
shall be effected, and risk of loss and title to the certificates theretofore
representing shares of Magna 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 Magna Common Stock (other
than shares to be canceled pursuant to Section 3.3 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 3.4 of this
Agreement, each holder of shares of Magna 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 Magna Common Stock is entitled as a result of the Merger
until such holder surrenders such holder's certificate or certificates
representing the shares of Magna Common Stock for exchange as provided in this
Section 4.1. The certificate or certificates of Magna 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 Magna 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 Magna shall constitute ratification of the appointment of the
Exchange Agent.
4.2 RIGHTS OF FORMER MAGNA SHAREHOLDERS. At the
Effective Time, the stock transfer books of Magna shall be closed as to holders
of Magna Common Stock immediately prior to the Effective Time and no transfer
of Magna 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 Magna Common Stock (other than shares to be canceled pursuant to
Section 3.3 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 3.4 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 Magna in respect of such shares of Magna 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
beginning 30 days after the Effective Time 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 Magna 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
Magna 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
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hereunder (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MAGNA
Magna hereby represents and warrants to UPC as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Magna 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. Magna 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 Magna.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Magna has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and the Plan of Merger and to consummate the transactions contemplated hereby
and thereby. The execution, delivery, and performance of this Agreement and
the Plan of Merger, as appropriate, and the consummation of the transactions
contemplated herein and therein, including the Merger, have been duly and
validly authorized by all necessary corporate action in respect thereof on the
part of Magna, subject to the approval of this Agreement and the Plan of Merger
by the holders of a majority of the outstanding shares of Magna Common Stock,
which is the only shareholder vote required for approval of this Agreement and
the Plan of Merger and consummation of the Merger by Magna. Subject to such
requisite shareholder approval, this Agreement and the Plan of Merger (which
for purposes of this sentence shall not include the Stock Option Agreement)
represent legal, valid, and binding obligations of Magna, enforceable against
Magna in accordance with their respective 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) Except as set forth in Section 5.2 of the
Magna Disclosure Memorandum, neither the execution and delivery of this
Agreement or the Plan of Merger, as appropriate, by Magna, nor the consummation
by Magna of the transactions contemplated hereby or thereby, nor compliance by
Magna with any of the provisions hereof or thereof, will (i) conflict with or
result in a breach of any provision of Magna's Charter 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 material Asset of any Magna Company
under, any Contract or Permit of any Magna
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Company, other than Defaults that are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Magna, 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 Magna 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 NASD, 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 Magna, no
notice to, filing with, or Consent of, any public body or authority is
necessary for the consummation by Magna of the Merger and the other
transactions contemplated in this Agreement and the Plan of Merger.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Magna
consists of (i) 14,500,000 shares of Magna Common Stock, of which 13,754,266
shares are issued and outstanding as of the date of this Agreement (exclusive
of treasury shares) and not more than 13,884,977 shares will be issued and
outstanding at the Effective Time, and (ii) 500,000 shares of preferred stock,
$0.01 par value, of which no shares are, or will 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 Magna 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 Magna has been issued
in violation of any preemptive rights of the current or past shareholders of
Magna. Magna has reserved 144,136 shares of Magna Common Stock for issuance
under the Magna Stock Plans, pursuant to which options to purchase not more
than 119,136 shares of Magna Common Stock are outstanding and rights to receive
11,575 shares of Magna Common Stock are outstanding pursuant to stock
equivalents allocated to directors.
(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 Magna outstanding and no
outstanding Rights relating to the capital stock of Magna.
5.4 MAGNA SUBSIDIARIES. Magna has disclosed in Section
5.4 of the Magna Disclosure Memorandum all of the Magna 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 Magna 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 Magna Companies). Magna or one of its wholly owned
Subsidiaries owns all of the issued and
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outstanding shares of capital stock (or other equity interests) of each Magna
Subsidiary, except Magna Insurance is only 79% owned. No capital stock (or
other equity interest) of any Magna Subsidiary are or may become required to be
issued (other than to another Magna Company) by reason of any Rights, and there
are no Contracts by which any Magna Subsidiary is bound to issue (other than to
another Magna Company) additional shares of its capital stock (or other equity
interests) or Rights or by which any Magna Company is or may be bound to
transfer any shares of the capital stock (or other equity interests) of any
Magna Subsidiary (other than to another Magna Company). There are no Contracts
relating to the rights of any Magna Company to vote or to dispose of any shares
of the capital stock (or other equity interests) of any Magna Subsidiary. All
of the shares of capital stock (or other equity interests) of each Magna
Subsidiary held by a Magna 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 Magna Company free
and clear of any Lien. Each Magna 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 Magna 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 Magna. The only Magna Subsidiary that is a
depository institution is Magnolia Federal. Magnolia Federal 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 Savings
Association Insurance Fund. The minute book and other organizational documents
for each Magna 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) Magna has filed and made available to UPC all
SEC Documents required to be filed by Magna since June 30, 1993 (the "Magna SEC
Reports"). The Magna 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 Magna SEC Reports or necessary in order to
make the statements in such Magna SEC Reports, in light of the circumstances
under which they were made, not misleading. None of Magna's Subsidiaries is
required to file any SEC Documents.
(b) Each of the Magna Financial Statements
(including, in each case, any related notes) contained in the Magna SEC
Reports, including any Magna SEC Reports filed after the date of this Agreement
until the Effective Time, complied as to form in all material
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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 Magna 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.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Magna Company
has any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Magna, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Magna as of
June 30, 1996, included in the Magna Financial Statements made available prior
to the date of this Agreement or reflected in the notes thereto. No Magna
Company has incurred or paid any Liability since June 30, 1996, 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 Magna or (ii) in
connection with the transactions contemplated by this Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30,
1996, except as disclosed in the Magna Financial Statements made available
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 Magna, and
(ii) the Magna 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 Magna contained
in this Agreement.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on
behalf of any of the Magna 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, 1996, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, and, to the
Knowledge of Magna, all Tax Returns filed are 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 Magna 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 Magna Companies.
(b) None of the Magna Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such
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statutes that relate to years currently under examination by the Internal
Revenue Service or other applicable taxing authorities) that is currently in
effect.
(c) Adequate provision for any Taxes due or to
become due for any of the Magna Companies for the period or periods through and
including the date of the respective Magna Financial Statements has been made
and is reflected on such Magna Financial Statements.
(d) Deferred Taxes of the Magna Companies have
been provided for in accordance with GAAP.
(e) To the Knowledge of Magna, each of the Magna
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
Magna Disclosure Memorandum, none of the Magna 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 Magna 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, 1996.
(h) Except as set forth in Section 5.8 of the
Magna Disclosure Memorandum, none of the Magna Companies is a party to any tax
allocation or sharing agreement and none of the Magna 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 Magna) has any Liability for
taxes of any Person (other than Magna 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 Magna included in the most recent Magna Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Magna included in the Magna 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 Magna 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 Magna Companies and other extensions of credit (including
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letters of credit and commitments to make loans or extend credit) by the Magna
Companies as of the dates thereof.
5.10 ASSETS. Except as disclosed or reserved against in
the Magna Financial Statements made available prior to the date of this
Agreement or in Section 5.10 of the Magna Disclosure Memorandum, the Magna
Companies have good and marketable title, free and clear of all material Liens,
to all of their respective Assets. All tangible properties used in the
businesses of the Magna Companies are in good condition, reasonable wear and
tear excepted, and are usable in the ordinary course of business consistent
with Magna's past practices. All Assets which are material to Magna's business
on a consolidated basis, held under leases or subleases by any of the Magna
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. To the Knowledge of Magna, the
Magna Companies currently maintain insurance similar in amounts, scope, and
coverage to that maintained by other peer banking organizations. None of the
Magna 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 (ii) premium costs with respect to such policies of insurance
will be substantially increased. There are presently no claims pending under
any such policies of insurance and no notices have been given by any Magna
Company under such policies, except for routine claims, none of which is
material, or as disclosed in Section 5.17 of the Magna Disclosure Memorandum.
5.11 INTELLECTUAL PROPERTY. All of the Intellectual
Property rights of the Magna 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 Magna, there
currently are not, any Defaults thereunder by Magna. A Magna Company owns or
is the valid licensee of all such Intellectual Property rights free and clear
of all Liens or claims of infringement. None of the Magna Companies or, to the
Knowledge of Magna, their respective predecessors has misused the Intellectual
Property rights of others and, to the Knowledge of Magna, none of the
Intellectual Property rights as used in the business conducted by any such
Magna Company infringes upon or otherwise violates the rights of any Person,
nor has any Person asserted a claim of such infringement. To the Knowledge of
Magna, no Magna Company is obligated to pay any royalties to any Person with
respect to any such Intellectual Property. To the Knowledge of Magna, each
Magna 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 Magna 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, which restricts or prohibits such
officer, director, or employee from engaging in activities competitive with any
Person, including any Magna Company.
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5.12 ENVIRONMENTAL MATTERS. Except as set forth in
Section 5.12 of the Magna Disclosure Memorandum:
(a) To the Knowledge of Magna, each Magna
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 Magna.
(b) To the Knowledge of Magna, there is no
Litigation pending or threatened before any court, governmental agency, or
authority or other forum in which any Magna Company or any of its Operating
Properties or Participation Facilities (or Magna 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 Magna 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 Magna, nor is there any reasonable
basis for any Litigation of a type described in this sentence.
(c) During the period of (i) any Magna Company's
ownership or operation of any of their respective current properties, (ii) any
Magna Company's participation in the management of any Participation Facility,
or (iii) any Magna Company's holding of a security interest in a Operating
Property, to the Knowledge of Magna, 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 Magna. Prior to the period
of (i) any Magna Company's ownership or operation of any of their respective
current properties, (ii) any Magna Company's participation in the management of
any Participation Facility, or (iii) any Magna Company's holding of a security
interest in a Operating Property, to the Knowledge of Magna, 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
Magna.
5.13 COMPLIANCE WITH LAWS. Magna is duly registered as a
savings and loan holding company under the HOLA. Each Magna 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. None of the Magna Companies:
(a) to the Knowledge of Magna, is in violation of
any material Laws, Orders, or Permits applicable to its business or
employees conducting its business; 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 Magna Company is not in compliance with any of the Laws or
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Orders which such governmental authority or Regulatory Authority
enforces, (ii) threatening to revoke any Permits, or (iii) requiring any
Magna 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 Magna Company is the subject of
any Litigation asserting that it or any other Magna 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 Magna 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 Magna Company,
pending or threatened, or to the Knowledge of Magna, is there any activity
involving any Magna Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.15 EMPLOYEE BENEFIT PLANS.
(a) Magna has disclosed in Section 5.15 of the
Magna 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 Magna 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 "Magna Benefit Plans"). Any of the Magna 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 "Magna ERISA Plan." Each Magna 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 "Magna Pension Plan." No
Magna Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(b) All Magna 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 Magna. Each
Magna 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 Magna is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No Magna
Company has engaged in a transaction with respect to any Magna Benefit Plan
that, assuming the taxable period of such
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transaction expired as of the date hereof, would subject any Magna Company to a
Tax imposed by either Section 4975 of the Internal Revenue Code or Section
502(i) of ERISA.
(c) No Magna 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 Magna Pension Plan, (ii) no change in the actuarial
assumptions with respect to any Magna Pension Plan, and (iii) no increase in
benefits under any Magna 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 Magna or materially adversely affect
the funding status of any such plan. Neither any Magna Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any Magna Company, or the single-employer
plan of any entity which is considered one employer with Magna 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 Magna Company has provided, or is required to
provide, security to a Magna Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the
Effective Time, no Liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by any Magna Company with respect to any
ongoing, frozen, or terminated single-employer plan or the single-employer plan
of any ERISA Affiliate. No Magna 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 Magna 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
Magna Disclosure Memorandum, no Magna Company has any Liability for retiree
health and life benefits under any of the Magna Benefit Plans and there are no
restrictions on the rights of such Magna 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
Magna 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
Magna Company from any Magna Company under any Magna Benefit Plan or otherwise,
(ii) increase any benefits otherwise payable under any Magna Benefit Plan, or
(iii) result in any acceleration of the time of payment or vesting of any such
benefit.
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(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 Magna 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 Magna Financial Statements to the
extent required by and in accordance with GAAP.
5.16 MATERIAL CONTRACTS. Except as disclosed in the Magna
SEC Reports or as disclosed in Section 5.16 of the Magna Disclosure Memorandum,
none of the Magna Companies, nor any of their respective Assets, businesses, or
operations, is a party to, or is 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 $50,000, (ii) any Contract relating to the borrowing of money by any
Magna Company or the guarantee by any Magna 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), (iii) any
Contracts which prohibit or restrict any Magna 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 Magna
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 Magna 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 Magna SEC Report filed by Magna with the SEC prior to the date of
this Agreement that has not been filed as an exhibit to a Magna SEC Report
(together with all Contracts referred to in Sections 5.10 and 5.15(a) of this
Agreement, the "Magna Contracts"). With respect to each Magna Contract: (i)
the Contract is in full force and effect; (ii) no Magna Company is in Default
thereunder; (iii) no Magna 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 Magna, in Default in any respect or has repudiated or
waived any material provision thereunder. Except as set forth in Section 5.16
of the Magna Disclosure Memorandum, all of the indebtedness of any Magna
Company for money borrowed is prepayable at any time by such Magna Company
without penalty or premium.
5.17 LEGAL PROCEEDINGS. There is no Litigation instituted
or pending, or, to the Knowledge of Magna, 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 Magna 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 Magna, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Magna Company. Section 5.17 of the Magna Disclosure Memorandum includes a
summary report of all material Litigation as of the date of this
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Agreement to which any Magna Company is a party and which names a Magna Company
as a defendant or cross-defendant.
5.18 REPORTS. Since January 1, 1994, or the date of
organization if later, each Magna 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 Magna). As of their respective dates, or as
subsequently amended for minor corrections, 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. No statement,
certificate, instrument, or other writing furnished or to be furnished by any
Magna 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. None of the information supplied
or to be supplied by any Magna 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 Magna Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Magna's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a Magna 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 Magna, 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 Magna 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 Magna
Company or any Affiliate thereof has taken any action or has any Knowledge of
any fact or circumstance relating to Magna that is reasonably likely to (i)
prevent the transactions contemplated hereby, including
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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 Magna Company has taken
all necessary action to exempt the transactions contemplated by this Agreement
and the Plan of Merger from, or if necessary challenge the validity or
applicability of, any applicable "moratorium," "fair price," "business
combination," "control share," or other anti- takeover Laws (collectively,
"Takeover Laws"), including Section 203 of the DGCL.
5.22 CHARTER PROVISIONS. Each Magna Company has taken all
action so that the entering into of this Agreement and the Plan of Merger and
the consummation of the Merger and the other transactions contemplated by this
Agreement and the Plan of Merger 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 Magna 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 Magna Company that may be directly or indirectly
acquired or controlled by it.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UPC
Except as disclosed in the UPC Disclosure Memorandum, UPC
hereby represents and warrants to Magna 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.
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. This Agreement (which for purposes of this sentence shall not
include the Stock Option Agreement)
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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 or UPC Merger Subsidiary of the Merger
and the other transactions contemplated in this Agreement and the Plan of
Merger.
6.3 CAPITAL STOCK. The authorized capital stock of UPC
consists of (i) 100,000,000 shares of UPC Common Stock, of which 66,010,936
shares were issued and outstanding as of March 31, 1997 (exclusive of treasury
shares), and (ii) 10,000,000 shares of UPC Preferred Stock, of which no shares
of UPC Series A Preferred Stock, and 2,877,474 shares of UPC Series E Preferred
Stock, are issued and outstanding. 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 Magna 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
Tennessee Business Corporation Act. 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 Magna 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 3.5 of this
Agreement.
6.4 UPC SUBSIDIARIES. UPC or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of each UPC
Subsidiary. No equity securities of any UPC Subsidiary are or may become
required to be issued (other than to another UPC Company) by
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reason of any Rights, and there are no Contracts by which any UPC Subsidiary is
bound to issue (other than to another UPC Company) additional shares of its
capital stock or Rights or by which any UPC Company is or may be bound to
transfer any shares of the capital stock of any UPC Subsidiary (other than to
another UPC Company). There are no Contracts relating to the rights of any UPC
Company to vote or to dispose of any shares of the capital stock of any UPC
Subsidiary. All of the shares of capital stock of each UPC Subsidiary held by
a UPC Company are fully paid and nonassessable (except pursuant to 12 USC
Section 55 in the case of national banks and comparable, applicable state Law,
if any, in the case of state depository institutions) under the applicable
corporation Law of the jurisdiction in which such Subsidiary is incorporated or
organized and are owned by the UPC Company free and clear of any Lien. Each
UPC Subsidiary is either a bank or a corporation, and 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 UPC 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 UPC. Each
UPC Subsidiary that is a depository institution 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 or
Savings Association Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) UPC has filed and made available to Magna all
SEC Documents required to be filed by UPC since December 31, 1993 (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 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
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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.
6.6 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, 1996, 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, 1996, 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.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December
31, 1996, except as disclosed in the UPC Financial Statements made available
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 contained in this
Agreement.
6.8 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, 1996, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, and, to the
Knowledge of UPC, all Tax Returns filed are 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.
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6.9 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
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 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.
6.10 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) to the Knowledge of UPC, is in violation of
any material Laws, Orders, or Permits applicable to its business or
employees conducting its business; 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
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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.
6.11 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, 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 UPC, nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against any UPC
Company.
6.12 REPORTS. Since January 1, 1994, 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 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.
6.13 STATEMENTS TRUE AND CORRECT. No statement,
certificate, instrument or other writing furnished or to be furnished by any
UPC Company or any Affiliate thereof to Magna 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. 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 Magna'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 Magna, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to
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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.
6.14 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.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF MAGNA. Unless the prior
written consent of UPC shall have been obtained, and except as otherwise
expressly contemplated herein or as set forth in Section 7.1 of the Magna
Disclosure Memorandum, Magna 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
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 MAGNA. Except as specifically
contemplated by this Agreement or other documents or instruments executed in
connection with this Agreement, from the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, Magna
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:
(a) amend the Charter, By-laws, or other
governing instruments of any Magna Company; or
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(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a Magna Company
to another Magna Company) in excess of an aggregate of $250,000 (for the
Magna Companies on a consolidated basis) except in the ordinary course of
the business of Magna Subsidiaries consistent with past practices (which
shall include, for Magna 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
Magna Company of any Lien or permit any such Lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances,
advances from the Federal Reserve Board or Federal Home Loan Bank,
"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 Magna 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 Magna Company,
or declare or pay any dividend or make any other distribution in respect
of Magna's capital stock, provided that Magna may (to the extent legally
and contractually permitted to do so), but shall not be obligated to,
declare and pay regular quarterly cash dividends on the shares of Magna
Common Stock at a rate not in excess of $.15 per share with usual and
regular record and payment dates in accordance with past practice
disclosed in Section 7.2(c) of the Magna Disclosure Memorandum and such
dates may not be changed without the prior written consent of UPC,
provided, that, notwithstanding the provisions of Section 1.3, the
Parties shall cooperate in selecting the Effective Time to ensure that,
with respect to the quarterly period in which the Effective Time occurs,
the holders of Magna Common Stock do not become entitled to receive both
a dividend in respect of their Magna Common Stock and a dividend in
respect of UPC Common Stock or fail to be entitled to receive any
dividend; or
(d) except for this Agreement, or pursuant to the
exercise of stock options outstanding as of the date hereof or issuance
of shares to satisfy stock rights outstanding as of the date hereof, plus
dividend and accumulation rights, if any, and pursuant to the terms of
the Magna Stock Plans 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 Magna Common Stock or any other capital stock of any
Magna 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 Magna Company or issue or authorize the issuance of
any other securities in respect of or in
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substitution for shares of Magna Common Stock, or sell, lease, mortgage
or otherwise dispose of or otherwise encumber any shares of capital stock
of any Magna Subsidiary (unless any such shares of stock are sold or
otherwise transferred to another Magna Company) or any Asset having a
book value in excess of $250,000 other than in the ordinary course of
business for reasonable and adequate consideration; or
(f) except as disclosed in Section 7.2(f) of the
Magna Disclosure Memorandum and for purchases of U.S. Treasury securities
or U.S. Government agency securities, which in either case have
maturities of three years or less or Federal Home Loan Bank Stock,
purchase any securities or make any material investment, either by
purchase of stock of securities, contributions to capital, Asset
transfers, or purchase of any Assets, in any Person other than a wholly
owned Magna 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 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 Magna Company, except in
accordance with past practice disclosed in Section 7.2(g) of the Magna
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 Magna Disclosure Memorandum; and enter into or
amend any severance agreements with officers of any Magna Company; grant
any material increase in fees or other increases in compensation or other
benefits to directors of any Magna Company except in accordance with past
practice disclosed in Section 7.2(g) of the Magna 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 Magna); or
(h) enter into or amend any employment Contract
between any Magna Company and any Person (unless such amendment is
required by Law) that the Magna 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) except as disclosed in Section 7.2(i) of the
Magna Disclosure Memorandum, adopt any new employee benefit plan of any
Magna Company or terminate or withdraw from, or make any material change
in or to, any existing employee benefit plans of any Magna 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
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(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 Magna Company for money damages in excess of $100,000 or
restrictions upon the operations of any Magna Company; or
(l) other than in the ordinary course of business
consistent with past practice or as otherwise disclosed in Section 7.2(l)
of the Magna Disclosure Memorandum, enter into, modify, amend, or
terminate any material Contract (excluding any loan Contract) 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.
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, 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
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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. Magna shall
furnish all information concerning it and the holders of its capital stock as
UPC may reasonably request in connection with such action. Magna 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 the Plan of Merger and such other
related matters as it deems appropriate. In connection with the Shareholders'
Meeting, (i) Magna 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 Magna
shall recommend (subject to compliance with their 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 Magna shall (subject
to compliance with their fiduciary duties as advised by counsel) use their
reasonable efforts to obtain such shareholders' approvals.
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 Magna Common Stock or Magna 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 Magna
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. At
least three business days prior to filing, UPC shall provide Magna and its
counsel with copies of such applications. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Regulatory Authorities in connection with the transactions contemplated hereby
as soon as practicable upon their becoming available.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and
subject to the conditions of this Agreement, UPC Merger Subsidiary and Magna
shall execute and file the Certificate of Merger with the Secretary of State of
the State of Delaware in connection with the Closing.
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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 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
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.
(c) Magna shall use its reasonable efforts to
exercise its rights under confidentiality agreements entered into with Persons
which were considering an Acquisition Transaction with Magna to preserve the
confidentiality of the information relating to Magna provided to such Persons
and their Affiliates and Representatives.
8.7 PRESS RELEASES. Prior to the Effective Time, Magna
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 Plan of Merger and the transactions contemplated hereby and
thereby, after the date of this Agreement,
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no Magna Company nor any Affiliate thereof nor any Representatives thereof
retained by any Magna Company shall directly or indirectly solicit any
Acquisition Proposal by any Person. Except to the extent necessary to comply
with the fiduciary duties of Magna's Board of Directors as advised by counsel,
no Magna 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 Magna 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. Magna
shall promptly notify UPC orally and in writing in the event that it receives
any inquiry or proposal relating to any such transaction. Magna 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 Magna 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 Magna Company shall take
all necessary action to ensure that the entering into of this Agreement and the
Plan of Merger 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 Magna 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 Magna Company that may be directly or indirectly
acquired or controlled by it.
8.12 AGREEMENT OF AFFILIATES. Magna has disclosed in
Section 8.12 of the Magna Disclosure Memorandum all Persons whom it reasonably
believes is an "affiliate" of Magna for purposes of Rule 145 under the 1933
Act. Magna 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 Magna
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 Magna 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
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such affiliates of Magna in exchange for shares of Magna Common Stock shall not
be transferable until such time as financial results covering at least 30 days
of combined operations of UPC and Magna 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 Magna 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 to officers and employees of the Magna Companies employee benefits
under employee benefit and welfare plans, 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, vesting, and (except in the case of retirement plans) benefit
accrual under such employee benefit plans, the service of the employees of the
Magna Companies prior to the Effective Time shall be treated as service with a
UPC Company participating in such employee 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 Magna 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 expenses, judgments, fines and amounts paid in settlement) arising
out of 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 Magna's
Charter and By- laws 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.
(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 the defense thereof, except that if UPC or the Surviving
Corporation elects not to assume
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such defense 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; and
provided further that 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) The Surviving Corporation shall not be liable
for any settlement effected without its prior written consent which shall not
be unreasonably withheld. 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.
(d) 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.
8.15 UPC MERGER SUBSIDIARY ORGANIZATION. UPC shall
organize UPC Merger Subsidiary under the Laws of the State of Delaware. Prior
to the Effective Time, the outstanding capital stock of UPC Merger Subsidiary
shall consist of 1,000 shares of UPC Merger Subsidiary Common Stock, all of
which shares shall be owned by UPC. Prior to the Effective Time, UPC Merger
Subsidiary shall not (i) conduct any business operations whatsoever or (ii)
enter into any Contract or agreement of any kind, acquire any assets or incur
any Liability, except as may be specifically contemplated by this Agreement or
the Plan of Merger or as the Parties may otherwise agree. UPC, as the sole
stockholder of UPC Merger Subsidiary, shall vote prior to the Effective Time
the shares of UPC Merger Subsidiary Common Stock in favor of the Plan of
Merger.
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:
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(A) SHAREHOLDER APPROVAL. The shareholders of
Magna shall have approved this Agreement and the Plan of Merger, and the
consummation of the transactions contemplated hereby and thereby,
including the Merger, as and to the extent required by Law, by the
provisions of any governing instruments, or by the rules of the NASD.
(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 (including, but not limited to, any divestiture or
restrictions on the insurance activities of any Magna Companies) or
deposit Liabilities and associated branches) which in the reasonable
judgment of the Board of Directors of UPC would so materially adversely
impact the financial or economic benefits of 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 and the Plan of Merger.
(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
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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 LLP, 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
Magna Common Stock for UPC Common Stock will not give rise to gain or
loss to the shareholders of Magna with respect to such exchange (except
to the extent of any cash received), and (iii) none of Magna or UPC will
recognize gain or loss as a consequence of the Merger (except for the
inclusion in income of the amount of the bad-debt reserve maintained by
Magnolia Federal and any other 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 Magna 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 Magna 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 Magna 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 Magna 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
Magna 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 Magna; 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 Magna 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.
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(C) CERTIFICATES. Magna 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, 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 Magna'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 Plan of Merger, and the consummation of the
transactions contemplated hereby and thereby, all in such reasonable
detail as UPC and its counsel shall request.
(D) AFFILIATES AGREEMENTS. UPC shall have
received from each affiliate of Magna 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) EMPLOYMENT AGREEMENTS. Robert S. Duncan and
Lou Ann Poynter shall have entered into employment agreements with UPC,
substantially in the form of Appendices A and B, respectively, to the
Supplemental Letter.
9.3 CONDITIONS TO OBLIGATIONS OF MAGNA. The obligations
of Magna to perform this Agreement and the Plan of Merger and consummate the
Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by Magna 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 6.14 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 6.14) 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.
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(C) CERTIFICATES. UPC shall have delivered to
Magna (i) a certificate, dated as of the Effective Time and signed on its
behalf by its chief executive officer and its chief financial officer, 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 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 Magna 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 Magna, this Agreement and the Plan of Merger 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 Magna; 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 Magna 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
Magna 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 Magna 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
- 36 -
<PAGE> 42
limit for appeal, or (ii) the shareholders of Magna fail to vote their
approval of this Agreement and the transactions contemplated hereby as
required by the DGCL and the rules of the NASD at the Shareholders'
Meeting where the transactions were presented to such shareholders for
approval and voted upon; or
(e) By the Board of Directors of either Party in
the event that the Merger shall not have been consummated by March 31,
1998, 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 Magna 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 the Board of Directors of Magna, 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 the product of (i) 0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by
dividing the Average Closing Price by the Starting Price (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 Magna refuses to
consummate the Merger pursuant to this Section 10.1(g), 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 0.80, the Starting Price, 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 Magna of such
election and the revised Exchange Ratio, whereupon no termination shall
have occurred
- 37 -
<PAGE> 43
pursuant to this Section 10.1(g) 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(g).
For purposes of this Section 10.1(g), 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 20
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
(i) of the Shareholders' Meeting and (ii) on which the last
Consent of the Board of Governors of the Federal Reserve System or
the Office of Thrift Supervision shall be received.
"Index Group" shall mean the 17 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 outstanding shares of common
stock) shall be redistributed proportionately for purposes of
determining the Index Price. The 17 bank holding companies and
the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
------------------------------------------- ----------------
<S> <C>
AmSouth Bancorporation 4.87%
Central Fidelity Banks, Inc. 5.11
Compass Bancshares, Inc. 3.63
Deposit Guaranty Corporation 3.56
Fifth Third Bancorp 9.24
First American Corporation 2.60
First Commerce Corporation 3.39
First Tennessee National Corporation 5.62
First Virginia Banks, Inc. 2.83
Hibernia Corporation 11.25
Huntington Bancshares, Inc. 12.35
Mercantile Bancorporation, Inc. 5.30
National Commerce Bancorp 2.14
Regions Financial Corporation 5.80
Signet Banking Corporation 5.25
</TABLE>
- 38 -
<PAGE> 44
<TABLE>
<S> <C>
Southern National Corporation 9.55
Star Banc Corporation 7.50
------
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 fourth full trading
day after the announcement by press release of the Merger.
"Starting Price" shall mean the closing price per
share 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) on the Starting Date.
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(g).
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, the Plan of Merger, 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.
- 39 -
<PAGE> 45
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 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
Reorganization, 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.
"BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger
to be executed by Magna and filed with the Secretary of State of the
State of Delaware relating to the Merger as 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.
- 40 -
<PAGE> 46
"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 3, 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).
- 41 -
<PAGE> 47
"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 (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
- 42 -
<PAGE> 48
by this Agreement, but shall not include regular, periodic examinations
of depository institutions and their Affiliates by Regulatory
Authorities.
"MAGNA COMMON STOCK" shall mean the $0.01 par value common
stock of Magna.
"MAGNA COMPANIES" shall mean, collectively, Magna and all
Magna Subsidiaries.
"MAGNA DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Magna Bancorp, 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.
"MAGNA FINANCIAL STATEMENTS" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of Magna
as of June 30, 1996, 1995 and 1994, 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, 1996, 1995 and 1994, as filed by Magna in SEC Documents, and
(ii) the consolidated balance sheets of Magna (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 June 30, 1996.
"MAGNA STOCK PLANS" shall mean the existing stock option and
other stock-based compensation plans of Magna designated as follows: (i)
Magna Bancorp, Inc. 1990 Stock Option and Incentive Plan; (ii) Magna
Bancorp, Inc. Management Retention and Recognition Plan and (iii) Magna
Bancorp, Inc. / Magnolia Federal Bank For Savings Stock In lieu of Cash
Compensation Plan For Directors.
"MAGNA SUBSIDIARIES" shall mean the Subsidiaries of Magna,
which shall include the Magna Subsidiaries described in Section 5.4 of
the Magna Disclosure Memorandum and any corporation, bank, savings
association, or other organization acquired as a Subsidiary of Magna in
the future and owned by Magna at the Effective Time.
"MAGNOLIA FEDERAL" shall mean Magnolia Federal Bank for
Savings, a federal stock savings bank and a Magna Subsidiary.
"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.
- 43 -
<PAGE> 49
"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 (including the
expense associated with the vesting of benefits under the various
employee benefit plans of Magna as a result of the Merger constituting a
change of control) 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.
"NASDAQ NATIONAL MARKET" shall mean the National Market System
of the National Association of Securities Dealers Automated Quotations
System.
"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, quasi- judicial 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.
- 44 -
<PAGE> 50
"PARTY" shall mean either Magna or UPC, and "PARTIES" shall
mean both Magna and UPC.
"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.
"PLAN OF MERGER" shall mean the plan of merger providing for
the Merger, in substantially the form of Exhibit 1.
"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 Magna
to solicit the approval of its shareholders of the transactions
contemplated by this Agreement and the Plan of Merger, which shall
include the prospectus of UPC relating to the issuance of the UPC Common
Stock to holders of Magna Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, 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 Magna 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.
- 45 -
<PAGE> 51
"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 Magna to be held pursuant to Section 8.1 of this
Agreement, including any adjournment or postponements thereof.
"STOCK OPTION AGREEMENT" shall mean the Stock Option Agreement
of even date herewith issued to UPC by Magna, 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 Magna 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.
"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 Magna describing in reasonable
detail the matters contained therein and, with
- 46 -
<PAGE> 52
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, 1996, 1995 and 1994, 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, 1996, 1995 and 1994, as filed by UPC in SEC Documents, and
(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, 1996.
"UPC MERGER SUBSIDIARY" shall mean the wholly owned subsidiary
of UPC to be organized to effect the Merger under the Laws of the State
of Delaware and with the name of UPC Merger Subsidiary, Inc.
"UPC MERGER SUBSIDIARY COMMON STOCK" shall mean the $1.00 par
value common stock of UPC Merger Subsidiary.
"UPC PREFERRED STOCK" shall mean the no par value preferred
stock of UPC and shall include the (i) Series A Preferred Stock and (ii)
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 and any
corporation, bank, savings association, or other organization acquired as
a Subsidiary of UPC in the future and owned by UPC at the Effective Time.
(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(g)
Closing Section 1.2
Determination Date Section 10.1(g)
Effective Time Section 1.3
ERISA Affiliate Section 5.15(c)
</TABLE>
- 47 -
<PAGE> 53
<TABLE>
<S> <C>
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Indemnified Party Section 8.14(a)
Index Group Section 10.1(g)
Index Price Section 10.1(g)
Index Ratio Section 10.1(g)
Magna Benefit Plans Section 5.15(a)
Magna Contracts Section 5.16
Magna ERISA Plan Section 5.15(a)
Magna Options Section 3.5(a)
Magna Pension Plan Section 5.15(a)
Magna SEC Reports Section 5.5(a)
Merger Section 1.1
Starting Date Section 10.1(g)
Starting Price Section 10.1(g)
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
UPC Ratio Section 10.1(g)
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 UPC shall bear and
pay the filing fees payable in connection with the Registration Statement and
the Proxy Statement and the 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 Montgomery
Securities as to Magna and except for The Robinson- Humphrey Company, Inc. as
to UPC, 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 Magna or
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<PAGE> 54
UPC, each of Magna 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 (including the other documents and instruments
referred to herein or executed in connection with this Agreement) constitutes
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 Sections 8.12 and
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 and the Plan of Merger
has been obtained; provided, that after any such approval by the holders of
Magna Common Stock, there shall be made no amendment that modifies in any
material respect the consideration to be received by the holders of Magna
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 Magna, to waive or extend the time
for the compliance or fulfillment by Magna 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, Magna,
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 Magna 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 Magna.
(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.
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<PAGE> 55
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:
<TABLE>
<S> <C>
Magna: Magna Bancorp, Inc.
100 West Front Street
Hattiesburg, Mississippi 39403-1858
Telecopy Number: (601) 583-7100
Attention: Robert S. Duncan
Chairman of the Board and
Chief Executive Officer
Copy to Counsel: Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20005
Telecopy Number: (202) 682-0354
Attention: Barry P. Taff
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2877
Attention: Jackson W. Moore
President
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attention: E. James House, Jr.
Manager, Legal Division
</TABLE>
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<PAGE> 56
Alston & Bird LLP
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.
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.
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<PAGE> 57
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: MAGNA BANCORP, INC.
By: /s/ H. A. Moore, III By: /s/ Robert S. Duncan
--------------------------- ------------------------------------
H. A. Moore, III Robert S. Duncan
Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E.J. House, Jr. By: /s/ Benjamin W. Rawlins, Jr.
--------------------------- ------------------------------------
E.J. House, Jr. Benjamin W. Rawlins, Jr.
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
</TABLE>
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<PAGE> 1
EXHIBIT 2B
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of May 8, 1997, by and between Magna Bancorp, Inc., a Delaware corporation
("Issuer"), and Union Planters Corporation, a Tennessee corporation
("Grantee").
WHEREAS, Grantee and Issuer have entered into that certain Agreement and
Plan of Reorganization, dated as of May 8, 1997 (the "Merger Agreement"),
providing for, among other things, the merger of a wholly owned Subsidiary of
Grantee with and into Issuer, with Grantee as the surviving entity; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Merger Agreement, Grantee has required that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, Issuer and Grantee agree
as follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Merger Agreement.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 2,737,000 shares (as adjusted as set forth herein, the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of common stock, $0.01 par value per share ("Issuer Common
Stock"), of Issuer at a purchase price per Option Share (subject to adjustment
as set forth herein, the "Purchase Price") equal to $17.50; provided, however,
that in no event shall the number of shares of Issuer Common Stock for which
this Option is exercisable exceed 19.9% of the Issuer's issued and outstanding
shares of Issuer Common stock without giving effect to any shares subject to or
issued pursuant to the Option.
3. EXERCISE OF OPTION.
(a) Provided that (i) Grantee or Holder (as hereinafter
defined), as applicable, shall not be in material breach of its agreements or
covenants contained in this Agreement or the Merger Agreement, and (ii) no
preliminary or permanent injunction or other order against the delivery of
shares covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option, in whole
or in part, at any time and from time to time following the occurrence of a
Purchase Event; provided that the Option shall terminate and be of no further
force and effect upon the earliest to occur of (A) the Effective Time, (B)
termination of the Merger 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 Merger Agreement by Grantee pursuant to (i) Section
10.1(b) thereof (but only if such
<PAGE> 2
termination was a result of a willful breach by Issuer) or (ii) Section 10.1(c)
thereof (each a "Default Termination")), (C) 12 months after a Default
Termination, and (D) 12 months after any termination of the Merger Agreement
(other than a Default Termination) following the occurrence of a Purchase Event
or a Preliminary Purchase Event; provided further, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the Bank Holding Company Act of 1956, as amended
(the "BHC Act"), and the Home Owners' Loan Act of 1933, as amended (the
"HOLA"). The term "Holder" shall mean the holder or holders of the Option from
time to time, and which initially is the Grantee. The rights set forth in
Section 8 shall terminate when the right to exercise the Option terminates
(other than as a result of a complete exercise of the Option) as set forth
herein.
(b) As used herein, a "Purchase Event" means any of the
following events subsequent to the date of this Agreement:
(i) without Grantee's prior written consent, Issuer shall
have authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any Subsidiary of
Grantee) to effect an Acquisition Transaction (as defined below). As
used herein, the term Acquisition Transaction shall mean (A) a merger,
consolidation or similar transaction involving Issuer or any of its
Subsidiaries (other than transactions solely between Issuer's
Subsidiaries), (B) except as permitted pursuant to Section 7.1 of the
Merger Agreement, the disposition, by sale, lease, exchange or otherwise,
of Assets of Issuer or any of its Subsidiaries representing in either
case 25% or more of the consolidated assets of Issuer and its
Subsidiaries, or (C) the issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power of
Issuer or any of its Subsidiaries (any of the foregoing, an "Acquisition
Transaction"); or
(ii) any person (other than Grantee or any Subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act) of or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined under the Exchange Act), other than a group of which Grantee or
any of its Subsidiaries of Grantee is a member, shall have been formed
which beneficially owns or has the right to acquire beneficial ownership
of, 25% or more of the then-outstanding shares of Issuer Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of
the following events:
(i) any person (other than Grantee or any Subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 25% or more
of the then-
- 2 -
<PAGE> 3
outstanding shares of Issuer Common Stock (such an offer being referred
to herein as a "Tender Offer" or an "Exchange Offer," respectively); or
(ii) the holders of Issuer Common Stock shall not have
approved the Merger Agreement at the meeting of such shareholders held
for the purpose of voting on the Merger Agreement, such meeting shall not
have been held or shall have been canceled prior to termination of the
Merger Agreement, or Issuer's Board of Directors shall have withdrawn or
modified in a manner adverse to Grantee the recommendation of Issuer's
Board of Directors with respect to the Merger Agreement, in each case
after it shall have been publicly announced that any person (other than
Grantee or any Subsidiary of Grantee) shall have (A) made a proposal to
engage in an Acquisition Transaction, (B) commenced a Tender Offer or
filed a registration statement under the Securities Act with respect to
an Exchange Offer, or (C) filed an application (or given a notice),
whether in draft or final form, under any federal or state statute or
regulation (including a notice filed under the HSR Act and an application
or notice filed under the BHC Act, the HOLA, the Bank Merger Act, or the
Change in Bank Control Act of 1978) seeking the Consent to an Acquisition
Transaction from any federal or state governmental or regulatory
authority or agency.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) In the event Holder wishes to exercise the Option, it shall
send to Issuer a written notice (the date of which being herein referred to as
the "Notice Date") specifying (i) the total number of Option Shares it intends
to purchase pursuant to such exercise and (ii) a place and date not earlier
than three business days nor later than 15 business days from the Notice Date
for the closing (the "Closing") of such purchase (the "Closing Date"). If
prior Consent of any governmental or regulatory agency or authority is required
in connection with such purchase, Issuer shall cooperate with Holder in the
filing of the required notice or application for such Consent and the obtaining
of such Consent and the Closing shall occur immediately following receipt of
such Consents (and expiration of any mandatory waiting periods).
(e) Notwithstanding any other provision of this Agreement to the
contrary, in no event shall:
(i) Holder's (taking into account all other Holders) Total
Profit (as defined below) exceed $15 million and, if it otherwise would
exceed such amount, Holder, at its sole election, shall either (A) reduce
the number of shares of Issuer Common Stock subject to the Option, (B)
deliver to Issuer for cancellation Option Shares previously purchased by
Holder, (C) pay cash to Issuer, or (D) any combination of the foregoing,
so that Holder's actually realized Total Profit shall not exceed $15
million after taking into account the foregoing actions; and
(ii) the Option be exercised for a number of shares of
Issuer Common Stock as would, as of the date of exercise, result in a
Notional Total Profit (as defined below) of
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<PAGE> 4
more than $15 million; provided, that nothing in this clause (ii) shall
restrict any exercise of the Option permitted hereby on any subsequent
date.
As used in this Agreement, the term "Total Profit" shall mean the aggregate sum
(prior to the payment of taxes) of the following: (i) the amount received by
Holder pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 8; (ii) (x) the amount received by Holder pursuant to
Issuer's repurchase of Option Shares pursuant to Section 8, less (y) Holder's
purchase price for such Option Shares; (iii) (x) the net cash amounts received
by Holder pursuant to the sale of Option Shares (or any other securities into
which such Option Shares shall be converted or exchanged) to any unaffiliated
person, less (y) Holder's purchase price of such Option Shares; and (iv) any
amounts received by Grantee on the transfer of the Option (or any portion
thereof) to any unaffiliated person.
As used in this Agreement, the term "Notional Total Profit" with respect to any
number of shares of Issuer Common Stock as to which Holder may propose to
exercise the Option shall be the Total Profit determined as of the date of such
proposed exercise, assuming that the Option were exercised on such date for
such number of shares and assuming that such shares, together with all other
Option Shares held by Holder and its affiliates as of such date, were sold for
cash at the closing sale price per share of Issuer Common Stock as quoted on
the Nasdaq National Market (or, if Issuer Common Stock is not then quoted on
the Nasdaq National Market, the highest bid price per share as quoted on the
principal trading market or securities exchange on which such shares are traded
as reported by a recognized source chosen by Holder) as of the close of
business on the preceding trading day (less customary brokerage commissions).
(f) Grantee agrees, promptly following any exercise of all or
any portion of the Option, and subject to its rights under Section 8, to use
commercially reasonable efforts promptly to maximize the value of Option Shares
purchased, taking into account market conditions, the number of Option Shares,
the potential negative impact of substantial sales on the market price for
Issuer Common Stock, and availability of an effective registration statement to
permit public sale of Option Shares.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall (i) pay to Issuer, in
immediately available funds by wire transfer to a bank account designated by
Issuer, an amount equal to the Purchase Price multiplied by the number of
Option Shares to be purchased on such Closing Date, and (ii) present and
surrender this Agreement to the Issuer at the address of the Issuer specified
in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of
immediately available funds and surrender of this Agreement as provided in
Section 4(a), (i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be free and clear of all liens, claims, charges and
encumbrances of any kind whatsoever and subject to no pre-emptive rights, and
(B) if the Option is exercised in part only, an executed new agreement with the
same terms as this Agreement evidencing the right to
- 4 -
<PAGE> 5
purchase the balance of the shares of Issuer Common Stock purchasable
hereunder, and (ii) Holder shall deliver to Issuer a letter agreeing that
Holder shall not offer to sell or otherwise dispose of such Option Shares in
violation of applicable federal and state law or of the provisions of this
Agreement.
(c) In addition to any other legend that is required by
applicable law, certificates for the Option Shares delivered at each Closing
shall be endorsed with a restrictive legend which shall read substantially as
follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO
RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF MAY 8,
1997. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF
WITHOUT CHARGE UPON RECEIPT BY THE ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by delivery
of substitute certificate(s) without such legend if Holder shall have delivered
to Issuer a copy of a letter from the staff of the SEC, or an opinion of
counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby
represents and warrants to Grantee as follows:
(a) Issuer has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Issuer. This Agreement has
been duly executed and delivered by Issuer.
(b) Issuer has taken all necessary corporate and other action to
authorize and reserve and to permit it to issue, and, at all times from
the date hereof until the obligation to deliver Issuer Common Stock upon
the exercise of the Option terminates, will have reserved for issuance,
upon exercise of the Option, the number of shares of Issuer Common Stock
necessary for Holder to exercise the Option, and Issuer will take all
necessary corporate action to authorize and reserve for issuance all
additional shares of Issuer Common Stock or other securities which may be
issued pursuant to Section 7 upon exercise of the Option. The shares of
Issuer Common Stock to be issued upon due exercise of the Option,
including all additional shares of Issuer Common Stock or other
securities which may be issuable pursuant to Section 7, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid, and
nonassessable, and shall be delivered free and clear of all liens,
claims, charges,
- 5 -
<PAGE> 6
and encumbrances of any kind or nature whatsoever, including any
preemptive rights of any shareholder of Issuer.
6. REPRESENTATIONS AND WARRANTS OF GRANTEE. Grantee hereby
represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Grantee. This Agreement has
been duly executed and delivered by Grantee.
(b) This Option is not being, and any Option Shares or other
securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Laws.
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason
of a stock dividend, stock split, split- up, recapitalization, combination,
exchange of shares or similar transaction, the type and number of shares or
securities subject to the Option, and the Purchase Price therefor, shall be
adjusted appropriately, and proper provision shall be made in the agreements
governing such transaction so that Holder shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that
Holder would have received in respect of Issuer Common Stock if the Option had
been exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Issuer Common Stock are issued after
the date of this Agreement (other than pursuant to an event described in the
first sentence of this Section 7(a) or pursuant to this Option), the number of
shares of Issuer Common Stock subject to the Option shall be adjusted so that,
after such issuance, it, together with any shares of Issuer Common Stock
previously issued pursuant hereto, equals 19.9% of the number of shares of
Issuer Common Stock then issued and outstanding, without giving effect to any
shares subject to or issued pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement: (i) to
consolidate with or merge into any person, other than Grantee or one of its
Subsidiaries, and shall not be the continuing or surviving corporation of such
consolidation or merger; (ii) to permit any person, other than Grantee or one
of its Subsidiaries, to merge into Issuer and Issuer shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or exchanged
for stock or other securities of Issuer or any other person or cash or any
other property or the outstanding shares of Issuer 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 (iii) to
sell or otherwise transfer all or substantially all of its Assets to any
person, other than Grantee or one of
- 6 -
<PAGE> 7
its Subsidiaries, then, and in each such case, the agreement governing such
transaction shall make proper provisions so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set
forth herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of Grantee, of either (x) the Acquiring Corporation
(as defined below), (y) any person that controls the Acquiring Corporation, or
(z) in the case of a merger described in clause (ii), the Issuer (in each case,
such person being referred to as the "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the
Option, provided that, if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall be as similar as possible
and in no event less advantageous to Grantee. The Substitute Option Issuer
shall also enter into an agreement with the then-holder or holders of the
Substitute Option in substantially the same form as this Agreement, which shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of the Substitute Common Stock (as hereinafter defined) as is equal
to the Assigned Value (as hereinafter defined) multiplied by the number of
shares of the Issuer Common Stock for which the Option was theretofore
exercisable, divided by the Average Price (as hereinafter defined). The
exercise price of the Substitute Option per share of the Substitute Common
Stock (the "Substitute Purchase Price") shall then be equal to the Purchase
Price multiplied by a fraction in which the numerator is the number of shares
of the Issuer Common Stock for which the Option was theretofore exercisable and
the denominator is the number of shares for which the Substitute Option is
exercisable.
(e) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (x) the continuing
or surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (y) Issuer in a merger in which Issuer is the
continuing or surviving person, and (z) the transferee of all or any
substantial part of the Issuer's assets (or the assets of its
Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option Issuer upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the highest of (x) the
price per share of the Issuer Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than Grantee),
(y) the price per share of the Issuer Common Stock to be paid by any
person (other than the Grantee) pursuant to an agreement with Issuer, and
(z) the highest closing sales price per share of Issuer Common Stock
quoted on the Nasdaq National Market (or if Issuer Common Stock is not
quoted on the Nasdaq National Market, the highest bid price per share on
any day as quoted on the principal trading market or securities exchange
on which such shares are traded as reported by a recognized source chosen
by Grantee) within the six-month period immediately preceding the
agreement; provided, that in the event of a sale of less than all of
Issuer's assets, the Assigned Value
- 7 -
<PAGE> 8
shall be the sum of the price paid in such sale for such assets and the
current market value of the remaining assets of Issuer as determined by a
nationally recognized investment banking firm selected by Grantee (or by
a majority in interest of the Grantees if there shall be more than one
Grantee (a "Grantee Majority")), divided by the number of shares of the
Issuer Common Stock outstanding at the time of such sale. In the event
that an exchange offer is made for the Issuer Common Stock or an
agreement is entered into for a merger or consolidation involving
consideration other than cash, the value of the securities or other
property issuable or deliverable in exchange for the Issuer Common Stock
shall be determined by a nationally recognized investment banking firm
mutually selected by Grantee and Issuer (or if applicable, Acquiring
Corporation), provided that if a mutual selection cannot be made as to
such investment banking firm, it shall be selected by Grantee. (If there
shall be more than one Grantee, any such selection shall be made by a
Grantee Majority.)
(iv) "Average Price" shall mean the average closing price
of a share of the Substitute Common Stock for the one year immediately
preceding the consolidation, merger or sale in question, but in no event
higher than the closing price of the shares of the Substitute Common
Stock on the day preceding such consolidation, merger or sale; provided
that if Issuer is the issuer of the Substitute Option, the Average Price
shall be computed with respect to a share of common stock issued by
Issuer, the person merging into Issuer or by any company which controls
or is controlled by such merger person, as Grantee may elect.
(f) In no event pursuant to any of the foregoing paragraphs
shall the Substitute Option be exercisable for more than 19.9% of the aggregate
of the shares of the Substitute Common Stock outstanding prior to exercise of
the Substitute Option. In the event that the Substitute Option would be
exercisable for more than 19.9% of the aggregate of the shares of Substitute
Common Stock but for this clause (f), the Substitute Option Issuer shall make a
cash payment to Grantee equal to the excess of (i) the value of the Substitute
Option without giving effect to the limitation in this clause (f) over (ii) the
value of the Substitute Option after giving effect to the limitation in this
clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by Grantee (or a Grantee Majority).
(g) Issuer shall not enter into any transaction described in
subsection (b) of this Section 7 unless the Acquiring Corporation and any
person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and take all other actions that may be
necessary so that the provisions of this Section 7 are given full force and
effect (including, without limitation, any action that may be necessary so that
the shares of Substitute Common Stock are in no way distinguishable from or
have lesser economic value than other shares of common stock issued by the
Substitute Option Issuer).
(h) The provisions of Sections 8, 9, 10 and 11 shall apply, with
appropriate adjustments, to any securities for which the Option becomes
exercisable pursuant to this Section 7 and, as applicable, references in such
sections to "Issuer," "Option," "Purchase Price" and "Issuer Common Stock"
shall be deemed to be references to "Substitute Option Issuer," "Substitute
Option," "Substitute Purchase Price" and "Substitute Common Stock,"
respectively.
- 8 -
<PAGE> 9
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the request
of Holder at any time commencing upon the first occurrence of a Repurchase
Event (as defined in Section 8(d)) and ending 12 months immediately thereafter,
Issuer shall repurchase from Holder the Option and all shares of Issuer Common
Stock purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) the aggregate Purchase Price paid by Holder for any
shares of Issuer Common Stock acquired by Holder pursuant to the Option
with respect to which Holder then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7), multiplied
by the number of shares of Issuer Common Stock with respect to which the
Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or, in
the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer
shall, within ten business days after the Request Date, pay the Section 8
Repurchase Consideration to Holder in immediately available funds, and
contemporaneously with such payment Holder shall surrender to Issuer the Option
and the certificates evidencing the shares of Issuer Common Stock purchased
thereunder with respect to which Holder then has beneficial ownership, and
Holder shall warrant that it has sole record and beneficial ownership of such
shares and that the same are then free and clear of all liens, claims, charges
and encumbrances of any kind whatsoever. Notwithstanding the foregoing, to the
extent that prior notification to or Consent of any governmental or regulatory
agency or authority is required in connection with the payment of all or any
portion of the Section 8 Repurchase Consideration, Holder shall have the
ongoing option to revoke its request for repurchase pursuant to Section 8, in
whole or in part, or to require that Issuer deliver from time to time that
portion of the Section 8 Repurchase Consideration that it is not then so
prohibited from paying and promptly file the required notice or application for
Consent and expeditiously process the same (and each party shall cooperate with
the other in the filing of any such notice or application and the obtaining of
any such Consent). If any governmental or regulatory agency or authority
disapproves of any part of Issuer's proposed repurchase pursuant to this
Section 8,
- 9 -
<PAGE> 10
Issuer shall promptly give notice of such fact to Holder. If any governmental
or regulatory agency or authority prohibits the repurchase in part but not in
whole, then Holder shall have the right (i) to revoke the repurchase request or
(ii) to the extent permitted by such agency or authority, determine whether the
repurchase should apply to the Option and/or Option Shares and to what extent
to each, and Holder shall thereupon have the right to exercise the Option as to
the number of Option Shares for which the Option was exercisable at the Request
Date less the sum of the number of shares covered by the Option in respect of
which payment has been made pursuant to Section 8(a)(ii) and the number of
shares covered by the portion of the Option (if any) that has been repurchased.
Holder shall notify Issuer of its determination under the preceding sentence
within five business days of receipt of notice of disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all of
Holder's rights under this Section 8 shall terminate on the date of termination
of this Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means
the highest of (i) the highest price per share of Issuer Common Stock paid for
any such share by the person or groups described in Section 8(d)(i), (ii) the
price per share of Issuer Common Stock received by holders of Issuer Common
Stock in connection with any merger or other business combination transaction
described in Section 7(b)(i), 7(b)(ii) or 7(b)(iii), or (iii) the highest
closing sales price per share of Issuer Common Stock quoted on the Nasdaq
National Market (or if Issuer Common Stock is not quoted on the Nasdaq National
Market, the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are traded as reported by a
recognized source chosen by Holder) during the 60 business days preceding the
Request Date; provided, however, that in the event of a sale of less than all
of Issuer's Assets, the Applicable Price shall be the sum of the price paid in
such sale for such assets and the current market value of the remaining assets
of Issuer as determined by an independent nationally recognized investment
banking firm selected by Holder and reasonably acceptable to Issuer (which
determination shall be conclusive for all purposes of this Agreement), divided
by the number of shares of the Issuer Common Stock outstanding at the time of
such sale. If the consideration to be offered, paid or received pursuant to
either of the foregoing clauses (i) or (ii) shall be other than in cash, the
value of such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm selected by Holder and reasonably
acceptable to Issuer, which determination shall be conclusive for all purposes
of this Agreement.
(d) As used herein, "Repurchase Event" shall occur if (i) any
person (other than Grantee or any Subsidiary of Grantee) shall have acquired
actual ownership or control, or any "group" (as such term is defined under the
1934 Act) shall have been formed which shall have acquired actual ownership or
control, of 50% or more of the then-outstanding shares of Issuer Common Stock,
or (ii) any of the transactions described in Section 7(b)(i), 7(b)(ii) or
7(b)(iii) shall be consummated.
(e) In connection with the application of the provisions of this
Section 8, Grantee acknowledges (i) that Issuer's ability to fund the Section 8
Repurchase Consideration in accordance with the provisions of this Section 8
may be dependent upon the payment by Issuer's Subsidiaries of a capital
distribution or distributions ("Capital Distribution") to Issuer and that any
- 10 -
<PAGE> 11
such Capital Distribution will be subject to the prior approval of the Federal
Reserve Board and the principal federal and state regulatory agencies having
jurisdiction over Issuer's Subsidiary banks, and (ii) that, unless there has
been an agreement of the type described in Section 7(b), Issuer's obligations
under this Section 8 do not impose on Issuer an obligation to otherwise finance
the payment of the Section 8 Repurchase Consideration through the incurrence of
indebtedness or the issuance of capital instruments or securities by Issuer in
either case sufficient in amount to satisfy the payment of the Section 8
Repurchase Consideration. Accordingly, Issuer shall not be deemed to be in
breach of this Section 8 if, after making its best efforts to obtain regulatory
authorization for a Capital Distribution required to pay the Section 8
Repurchase Consideration, it is unable to do so.
9. REGISTRATION RIGHTS.
(a) Following termination of the Merger Agreement (provided that
the Option shall not have terminated), Issuer shall, subject to the conditions
of subparagraph (c) below, if requested by any Holder, including Grantee and
any permitted transferee ("Selling Holder"), as expeditiously as possible
prepare and file a registration statement under the Securities Laws if
necessary in order to permit the sale or other disposition of any or all shares
of Issuer Common Stock or other securities that have been acquired by or are
issuable to Selling Holder upon exercise of the Option in accordance with the
intended method of sale or other disposition stated by Holder in such request
(it being understood and agreed that any such sale or other disposition shall
be effected on a widely distributed basis so that, upon consummation thereof,
no purchaser or transferee shall beneficially own more than 2% of the shares of
Issuer Common Stock then outstanding), including, without limitation, a "shelf"
registration statement under Rule 415 under the Securities Act or any successor
provision, and Issuer shall use its best efforts to qualify such shares or
other securities for sale under any applicable state securities laws. Each
such Holder shall provide all information reasonably requested by Issuer for
inclusion in any registration statement to be filed hereunder.
(b) If Issuer at any time after the exercise of the Option
proposes to register any shares of Issuer Common Stock under the Securities
Laws in connection with an underwritten public offering of such Issuer Common
Stock, Issuer will promptly give written notice to Holder of its intention to
do so and, upon the written request of Holder given within 30 days after
receipt of any such notice (which request shall specify the number of shares of
Issuer Common Stock intended to be included in such underwritten public
offering by Selling Holder), Issuer will cause all such shares, the holders of
which shall have requested participation in such registration, to be so
registered and included in such underwritten public offering; provided, that
Issuer may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case of a registration solely to implement a dividend reinvestment or similar
plan, an employee benefit plan or a registration filed on Form S-4 or any
successor form, or a registration filed on a form which does not permit
registrations of resales; provided, further, that such election pursuant to
clause (i) may only be made once. If some but not all the shares of Issuer
Common Stock, with respect to which Issuer shall have received requests for
registration pursuant to this subparagraph (b), shall be excluded from such
registration, Issuer shall make appropriate allocation of shares to be
registered among Selling Holders and any other
- 11 -
<PAGE> 12
person (other than Issuer or any person exercising demand registration rights
in connection with such registration) who or which is permitted to register
their shares of Issuer Common Stock in connection with such registration pro
rata in the proportion that the number of shares requested to be registered by
each Selling Holder bears to the total number of shares requested to be
registered by all persons then desiring to have Issuer Common Stock registered
for sale.
(c) Issuer shall use all reasonable efforts to cause the
registration statement referred to in subparagraph (a) above to become
effective and to obtain all consents or waivers of other parties which are
required therefor and to keep such registration statement effective, provided,
that Issuer may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided Issuer shall
in good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Laws
pursuant to subparagraph (a) above:
(i) prior to the earliest of (A) termination of the
Merger Agreement pursuant to Section 10.1 thereof, (B) failure to obtain
the requisite shareholder approval pursuant to Section 9.1(a) of the
Merger Agreement, and (C) a Purchase Event or a Preliminary Purchase
Event;
(ii) more than once;
(iii) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which the
Selling Holders concerned were afforded the opportunity to register such
shares under the Securities Laws and such shares were registered as
requested; and
(iv) unless a request therefor is made to Issuer by
Selling Holders holding at least 25% or more of the aggregate number of
Option Shares then outstanding.
In addition to the foregoing, Issuer shall not be required
to maintain the effectiveness of any registration statement after the
expiration of 120 days from the effective date of such registration statement.
Issuer shall use all reasonable efforts to make any filings, and take all
steps, under all applicable state securities laws to the extent necessary to
permit the sale or other disposition of the Option Shares so registered in
accordance with the intended method of distribution for such shares, provided,
that Issuer shall not be required to consent to general jurisdiction or qualify
to do business in any state where it is not otherwise required to so consent to
such jurisdiction or to so qualify to do business.
(d) Except where applicable state law prohibits such payments,
Issuer will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of Issuer's counsel), accounting expenses, printing expenses, expenses of
underwriters, excluding discounts and commissions but including liability
insurance if Issuer so desires or the underwriters so require, and the
reasonable fees and expenses of any necessary special experts) in connection
with each registration pursuant to subparagraph
- 12 -
<PAGE> 13
(a) or (b) above (including the related offerings and sales by Selling Holders)
and all other qualifications, notifications or exemptions pursuant to
subparagraph (a) or (b) above. Underwriting discounts and commissions relating
to Option Shares and any other expenses incurred by such Selling Holders in
connection with any such registration (including expenses of Selling Holders'
counsel) shall be borne by such Selling Holders.
(e) In connection with any registration under subparagraph (a)
or (b) above Issuer hereby indemnifies the Selling Holders, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such expenses,
losses, claims, damages or liabilities of such indemnified party are caused by
any untrue statement or alleged untrue statement that was included by Issuer in
any such registration statement or prospectus or notification or offering
circular (including any amendments or supplements thereto) in reliance upon and
in conformity with, information furnished in writing to Issuer by such
indemnified party expressly for use therein, and Issuer and each officer,
director and controlling person of Issuer shall be indemnified by such Selling
Holder, or by such underwriter, as the case may be, for all such expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged
untrue, statement, that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such holder or such underwriter,
as the case may be, expressly for such use.
Promptly upon receipt by a party indemnified under this
subparagraph (e) of notice of the commencement of any action against such
indemnified party in respect of which indemnity or reimbursement may be sought
against any indemnifying party under this subparagraph (e), such indemnified
party shall notify the indemnifying party in writing of the commencement of
such action, but the failure so to notify the indemnifying party shall not
relieve it of any liability which it may otherwise have to any indemnified
party under this subparagraph (e). In case notice of commencement of any such
action shall be given to the indemnifying party as above provided, the
indemnifying party shall be entitled to participate in and, to the extent it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense of such action at its own expense, with counsel chosen by it
and satisfactory to such indemnified party. The indemnified party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel (other than
reasonable costs of investigation) shall be paid by the indemnified party
unless (i) the indemnifying party either agrees to pay the same, (ii) the
indemnifying party falls to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified party has been
advised by counsel that one or more legal defenses may be available to the
indemnifying party that may be contrary to the interest of the indemnified
party, in which case the indemnifying party shall be entitled to assume the
defense of such action notwithstanding its obligation to bear fees and
- 13 -
<PAGE> 14
expenses of such counsel. No indemnifying party shall be liable for any
settlement entered into without its consent, which consent may not be
unreasonably withheld.
If the indemnification provided for in this subparagraph (e)
is unavailable to a party otherwise entitled to be indemnified in respect of
any expenses, losses, claims, damages or liabilities referred to herein, then
the indemnifying party, in lieu of indemnifying such party otherwise entitled
to be indemnified, shall contribute to the amount paid or payable by such party
to be indemnified as a result of such expenses, losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative
benefits received by Issuer, all Selling Holders and the underwriters from the
offering of the securities and also the relative fault of Issuer, all Selling
Holders and the underwriters in connection with the statements or omissions
which resulted in such expenses, losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The amount paid or
payable by a party as a result of the expenses, losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, that in no case shall
any Selling Holder be responsible, in the aggregate, for any amount in excess
of the net offering proceeds attributable to its Option Shares included in the
offering. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. Any
obligation by any holder to indemnify shall be several and not joint with other
holders.
In connection with any registration pursuant to subparagraph
(a) or (b) above, Issuer and each Selling Holder (other than Grantee) shall
enter into an agreement containing the indemnification provisions of this
subparagraph (e).
(f) Issuer shall comply with all reporting requirements and will
do all such other things as may be necessary to permit the expeditious sale at
any time of any Option Shares by Holder in accordance with and to the extent
permitted by any rule or regulation promulgated by the SEC from time to time,
including, without limitation, Rules 144 and 144A.
(g) Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other
securities to be acquired upon exercise of the Option are then authorized for
quotation or trading or listing on the Nasdaq National Market or any other
securities exchange or any automated quotations system maintained by a
self-regulatory organization, Issuer, upon the request of Holder, will promptly
file an application, if required, to authorize for quotation or trading or
listing the shares of Issuer Common Stock or other securities to be acquired
upon exercise of the Option on the Nasdaq National Market or any other
securities exchange or any automated quotations system maintained by a
self-regulatory organization and will use its best efforts to obtain approval,
if required, of such quotation or listing as soon as practicable.
- 14 -
<PAGE> 15
11. DIVISION OF OPTION. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of Holder, upon
presentation and surrender of this Agreement at the principal office of Issuer
for other Agreements providing for Options of different denominations entitling
the holder thereof to purchase in the aggregate the same number of shares of
Issuer Common Stock purchasable hereunder. The terms "Agreement" and "Option"
as used herein include any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
Issuer of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Agreement, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, Issuer will execute and deliver a
new Agreement of like tenor and date. Any such new Agreement executed and
delivered shall constitute an additional contractual obligation on the part of
Issuer, whether or not the Agreement so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
12. MISCELLANEOUS.
(A) EXPENSES. Except as otherwise provided in Section 9, each
of the parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(B) WAIVER AND AMENDMENT. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(C) ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARY; SEVERABILITY.
This Agreement, together with the Merger Agreement and the other documents and
instruments referred to herein and therein, between Grantee and Issuer (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) is not intended to confer upon any person other
than the parties hereto (other than any transferees of the Option Shares or any
permitted transferee of this Agreement pursuant to Section 12(h) and other than
as provided in the Merger Agreement) any rights or remedies hereunder. If any
term, provision, covenant or restriction of this Agreement is held by a court
of competent jurisdiction or a federal or state governmental or regulatory
agency or authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
If for any reason such court or regulatory agency determines that the Option
does not permit Holder to acquire, or does not require Issuer to repurchase,
the full number of shares of Issuer Common Stock as provided in Sections 3 and
8 (as adjusted pursuant to Section 7), it is the express intention of Issuer to
allow Holder to acquire or to require Issuer to repurchase such lesser number
of shares as may be permissible without any amendment or modification hereof.
- 15 -
<PAGE> 16
(D) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Tennessee without regard
to any applicable conflicts of law rules.
(E) DESCRIPTIVE HEADINGS. The descriptive headings contained
herein are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(F) NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail
(return receipt requested) to the parties at the addresses set forth in the
Merger Agreement(or at such other address for a party as shall be specified by
like notice).
(G) COUNTERPARTS. This Agreement and any amendments hereto may
be executed in two counterparts, each of which shall be considered one and the
same agreement and shall become effective when both counterparts have been
signed, it being understood that both parties need not sign the same
counterpart.
(H) ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, except that Grantee may assign this
Agreement to a wholly owned Subsidiary of Grantee and Grantee may assign its
rights hereunder in whole or in part after the occurrence of a Purchase Event.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
(I) FURTHER ASSURANCES. In the event of any exercise of the
Option by Holder, Issuer and Holder shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such
exercise.
(J) SPECIFIC PERFORMANCE. The parties hereto agree that this
Agreement may be enforced by either party through specific performance,
injunctive relief and other equitable relief. Both parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for any
failure to perform this Agreement.
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<PAGE> 17
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
<TABLE>
<S> <C>
ATTEST: MAGNA BANCORP, INC.
By: /s/ H. A. Moore, III By: /s/ Robert S. Duncan
------------------------------------------ ---------------------------------------------------
H. A. Moore, III Robert S. Duncan
Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. J. House, Jr. By: /s/ Benjamin W. Rawlins, Jr.
------------------------------------------ ----------------------------------------------
E.J. House, Jr. Benjamin W. Rawlins, Jr.
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
</TABLE>
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<PAGE> 1
EXHIBIT 10 (A)
<PAGE> 2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of December 1, 1989, and
amended and restated as of April 17, 1997, by and between Union Planters
Corporation ("UPC") with offices at 67 Madison Avenue, Memphis, Tennessee and
Benjamin W. Rawlins, Jr., a resident of Memphis, Tennessee (hereinafter
referred to as "Officer").
WITNESSETH:
WHEREAS, it is the intention and desire of the parties to enter into a
formal agreement whereby two principal purposes will be served, to wit:
A. UPC will have the benefit of the employment of Officer during
the period covered by this Agreement; and
B. Officer will be an executive of UPC during the Period
hereinafter defined.
NOW, THEREFORE, in consideration of the employment of Officer by UPC,
of the mutual promises, covenants, representations and warranties contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1
EMPLOYMENT AND TERM
1.1 Employment. UPC hereby employs Officer, and Officer
hereby accepts such employment to perform the duties described in Section 2 of
this Agreement.
1.2 Term.
(a) Base Term. The current term of employment is scheduled
to expire on December 31, 1999, unless such term of employment is extended or
terminated by agreement of the parties or as provided herein.
(b) Extended Term if Acquired. Notwithstanding any other
provision hereof to the contrary, this Agreement shall be renewable for one (1)
additional three (3) year term, at Officer's option, exercisable by him
immediately prior to, upon or at any time following the occurrence of any one
of the following events (a "Change in Control"):
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of
25% or more of either (A) the then outstanding shares of common stock
of UPC (the
<PAGE> 3
"Outstanding Company Common Stock") or (B) the combined voting power
of the then outstanding voting securities of UPC entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a
Change in Control: (w) any acquisition directly from UPC, (x) any
acquisition by UPC, (y) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by UPC or any corporation
controlled by UPC, or (z) any acquisition by any Person pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 1.2(b); or
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of UPC (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by UPC's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of UPC (a "Business Combination"), in each case, unless,
following such Business Combination,
(A) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 65% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns UPC or all or
substantially all of UPC's assets either directly or through
one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may
be, and
(B) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of UPC or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such
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corporation except to the extent that such ownership
existed prior to the Business Combination, and
(C) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
The renewal term shall commence on the later of (i) the date of notice
of said three-year renewal, or (ii) the date of the Change in Control, and any
remaining period of the current employment term, and any extension thereof,
shall be canceled.
(c) Self-Termination after Change in Control. Notwithstanding
any other provision herein to the contrary, upon a Change in Control and
exercise of the option to renew for three (3) years, Officer may at any time
thereafter during the extended term of this Agreement, at his sole discretion,
resign from employment hereunder without penalty upon 90 days written notice
setting forth the effective date of said resignation. Upon resignation of
Officer, Officer shall be entitled to receive a lump sum payment equal to (i)
three (3) times Officer's Final Average Earnings (as defined in the following
sentence), plus (ii) any Tax Gross-Up Payment payable under Sections 1.2(e) and
(f). For purposes of this Agreement, Officer's Final Average Earnings shall be
the sum of (i) his highest base salary in effect during any calendar year
preceding his termination of employment, including the year in which such
termination occurs, and (ii) his highest annual bonus payable with respect to
any calendar year preceding his termination of employment, including the year
in which such termination occurs. Said lump sum payment shall be payable in
cash on the effective date of Officer's resignation. If for any reason the lump
sum payment is not paid on the date specified, then, in addition to the lump
sum payment, UPC shall pay interest thereon at the maximum rate permissible by
law and shall continue to pay Officer monthly compensation, which shall not be
a credit against the lump sum payment, in an amount equal to one-twelfth (1/12)
of Officer's Final Average Earnings until such lump sum is paid.
(d) Annual Extension. On December 31 of each year, unless UPC
notifies Officer that his employment under this Agreement will not be extended,
his employment under this Agreement shall automatically be extended for a one
(1) year period from such term set forth in Section 1.2(a) on the same terms
and conditions as are set forth herein; provided, however, that the term of
this Agreement may be extended only to such time as will provide for a term
ending at age sixty-five (65) years. If UPC elects not to extend Officer's
employment under this Agreement, as provided in the preceding sentence, it
shall do so by notifying Officer in writing within sixty (60) days prior to the
applicable December 31 date. If UPC so elects not to extend Officer's
employment under this Agreement, Officer shall have the right to either remain
as an employee for the remaining term of this Agreement (subject to Officer's
right to extend this Agreement under Section 1.2(b) at any time during the
remaining term if a Change in Control has occurred or shall occur) or terminate
this Agreement at any time during said term and receive in a lump sum on the
date of termination an amount equal to three (3) times his Final Average
Earnings (as defined in Section 1.2(c)), plus any Tax Gross-
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Up Payments required by Sections 1.2(e) and 1.2(f). If for any reason the lump
payment is not paid on the date specified, then, in addition to the lump sum
payment, UPC shall pay interest thereon at the maximum rate permissible by law
and shall continue to pay Officer monthly compensation, which shall not be a
credit against the lump sum payment, in an amount equal to one-twelfth (1/12)
of Officer's Final Average Earnings until such lump sum payment is paid. UPC
shall also pay to Officer such termination bonus as the UPC Board of Directors
may, in its discretion, determine. Officer's date of termination shall be the
December 31 following his election to terminate this Agreement. Additionally,
in the event this Agreement is not extended, all options, stock appreciation
rights, and other awards in the nature of rights that may be exercised, and all
awards of restricted stock, if any, issued to Officer under all stock incentive
plans of UPC shall immediately vest and be exercisable by Officer and all
restrictions thereon shall lapse.
(e) Income Tax Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding, in the event any payment or distribution by UPC to or
for the benefit of Officer, or any acceleration of any benefit (whether paid or
payable, distributed or distributable, or accelerated pursuant to the terms of
this Agreement or otherwise) is paid or payable, distributed or distributable,
or accelerated by reason of there having occurred a Change in Control,
including without limitation (i) any lump-sum, interest or
compensation-continuation payments under Section 1.2(c) of this Agreement, (ii)
a cash-out of options (including previously vested options) or an acceleration
of options pursuant to Section 4.3(b) following a Change in Control, (iii) any
income tax liability associated with stock options or restricted stock
accelerated by a Change in Control, (iv) any SERP or deferred compensation
payments accelerated by a Change in Control, (v) the payment or receipt of any
other benefit (cash or stock) triggered or accelerated by a Change in Control,
and (vi) an Excise Tax Gross-Up Payment under Section 1.2(f) below (in any such
case, a "Change in Control Benefit"), then Officer shall be entitled to receive
an additional payment (an "Income Tax Gross-Up Payment") in an amount equal to
the federal, state and local taxes (including income taxes and social security,
FICA, FUTA and other employment taxes) owed by Officer with respect to such
Change in Control Benefit such that after payment by Officer of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any taxes (and any interest and penalties
imposed with respect thereto) imposed upon the Income Tax Gross-Up Payment,
Officer retains an amount of the Income Tax Gross-Up Payment equal to the
federal, state and local taxes (including income taxes and social security,
FICA, FUTA and other employment taxes) imposed upon the Change in Control
Benefit.
(f) Excise Tax Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall
be determined that any payment or distribution by UPC to or for the benefit of
Officer (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 1.2(f)) (a "Parachute Payment")
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are
incurred by Officer with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Officer
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shall be entitled to receive an additional payment (an "Excise Tax Gross-Up
Payment") in an amount such that after payment by Officer of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Excise Tax
Gross-Up Payment, Officer retains an amount of the Excise Tax Gross-Up Payment
equal to the Excise Tax imposed upon the Parachute Payments.
(g) Calculation and Adjustment of Tax Gross-Up Payments.
(i) Subject to the provisions of Section 1.2(g)(ii), all
determinations required to be made under Sections 1.2(e) and 1.2(f), including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Price Waterhouse LLP or such other nationally recognized
public accounting firm as may be designated by Officer (the "Accounting Firm")
which shall provide detailed supporting calculations both to UPC and Officer
within 15 business days of the receipt of notice from Officer that there has
been a Change in Control Payment or a Parachute Payment, or such earlier time
as is requested by UPC. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change in
Control, Officer shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by UPC. Any Income Tax Gross-Up Payment
or Excise Tax Gross-Up Payment, as determined pursuant to Section 1.2(e) or
1.2(f), shall be paid by UPC to Officer within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon UPC and Officer. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Excise Tax
Gross-Up Payments which will not have been made by UPC should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that UPC exhausts its remedies pursuant to Section
1.2(g)(ii) and Officer thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by UPC to or for
the benefit of Officer.
(ii) Officer shall notify UPC in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by UPC
of the Income Tax Gross-Up Payment or the Excise Tax Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after Officer is informed in writing of such claim and shall
apprise UPC of the nature of such claim and the date on which such claim is
requested to be paid. Officer shall not pay such claim prior to the expiration
of the 30-day period following the date on which it gives such notice to UPC
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If UPC notifies Officer in writing prior to the
expiration of such period that it desires to contest such claim, Officer shall:
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(A) give UPC any information reasonably requested
by UPC relating to such claim,
(B) take such action in connection with contesting
such claim as UPC shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by UPC,
(C) cooperate with UPC in good faith in order
effectively to contest such claim, and
(D) permit UPC to participate in any proceedings
relating to such claim;
provided, however, that UPC shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Officer harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation of the foregoing provisions of this Section
1.2(g)(ii), UPC shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct Officer to pay
the tax claimed and sue for a refund or contest the claim in any permissible
manner, and Officer agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as UPC shall determine; provided, however, that if UPC
directs Officer to pay such claim and sue for a refund, UPC shall advance the
amount of such payment to Officer, on an interest-free basis and shall
indemnify and hold Officer harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Officer with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, UPC's control of the contest shall be
limited to issues with respect to which an Income Tax Gross-Up Payment or
Excise Tax Gross-Up Payment would be payable hereunder and Officer shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(iii) If, after the receipt by Officer of an amount advanced by UPC
pursuant to Section 1.2(g)(ii), Officer becomes entitled to receive any refund
with respect to such claim, Officer shall (subject to UPC's complying with the
requirements of Section 1.2(g)(ii)) promptly pay to UPC the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Officer of an amount advanced by
UPC pursuant to Section 1.2(g)(ii), a determination is made that Officer shall
not be entitled to any refund with respect to such claim and UPC does not
notify Officer in writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
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such advance shall be forgiven and shall not be required to be repaid and the
amount of such advance shall offset, to the extent thereof, the amount of
Income Tax Gross-Up Payment or Excise Tax Gross-Up Payment required to be paid.
SECTION 2
DUTIES
2.1 General Duties. Officer shall serve UPC as Chairman of the Board
and Chief Executive Officer, and as an executive officer of any subsidiary of
UPC to which he may be elected. Officer shall also be a member of the Boards of
Directors of UPC, and Bank, and such other Boards of subsidiaries to which he
may be elected. He shall also be a member of the Executive Committee of UPC and
Bank, and such other committees of the Boards of UPC, Bank and subsidiaries to
which he may be appointed. He shall perform such duties and responsibilities as
are customarily performed by persons acting in such capacities.
2.2 Extent of Service. During the term hereof, Officer agrees to
devote substantially his entire time, attention and skill to the performance of
his duties as Chairman of the Board and Chief Executive Officer of UPC. UPC
recognizes that Officer serves on several civic and corporate boards and that
such service does not conflict with the duties outlined above.
2.3 Best Efforts. Officer agrees that he will, at all times,
faithfully, industriously, and to the best of his ability, experience and
talents, perform all of the duties that may be required of and from him by the
Boards of Directors as described above.
2.4 Location. The duties of Officer shall be performed at UPC's
executive offices in the reasonable vicinity of Memphis, Tennessee. The
permanent location of the duties Officer is to perform shall not be moved
without Officer's consent. Officer shall also on a temporary basis perform such
duties at such other place or places as the Board of Directors of UPC shall
reasonably designate or as the interests or opportunities of the Board of
Directors of UPC shall reasonably require.
SECTION 3
COMPENSATION
3.1 Annual Base Salary. UPC shall pay Officer, and Officer shall
accept from UPC, in full payment for Officer's services hereunder, an annual
base salary in the minimum amount of Six Hundred Forty-Five Thousand Dollars
($645,000), payable twice monthly in periodic equal installments during the
year, which annual base salary shall be reviewed at least annually and may be
increased from time to time as determined by the Board of Directors of UPC.
3.2 Stock Options. Officer shall be entitled to participate in all of
UPC's stock option programs. Based upon satisfactory performance, it is
anticipated that Officer will be granted additional stock options from time to
time, such additional grants to be considered on an annual basis. Officer shall
be granted full protection against dilution of such options as is
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provided under the terms of the Stock Option Plans. In the event of a Change in
Control as defined in Section 1.2(b), or if UPC elects not to extend Officer's
employment under Section 1.2(d), then all options, stock appreciation rights,
and other awards in the nature of rights that may be exercised, and all awards
of restricted stock, if any, issued to Officer under all stock incentive plans
of UPC shall immediately vest and be exercisable by Officer and all
restrictions thereon shall lapse. Also, in the event of a Change in Control,
any stock or stock equivalents held in a deferred account on behalf of Officer
shall become immediately payable.
UPC shall take such action as may be necessary from time to
time to allow Officer to sell all stock issuable upon exercise of Officer's
options free of resale restrictions, including but not limited to the grant to
Officer of piggyback registration rights with respect to such stock. Such sales
may only be made under all existing securities laws.
3.3 Reimbursement of Expenses. UPC shall reimburse Officer for such
reasonable out-of-pocket expenses necessarily incurred by Officer while
rendering the services contemplated hereunder, and shall provide an appropriate
automobile to be used by Officer in the conduct of the business of UPC.
3.4 Tax Withholdinqs. UPC shall deduct from the regular monthly
compensation payable to Officer all federal, state and local income tax, social
security, FICA, FUTA, and other withholdings as required by law.
3.5 Annual Incentive Bonus, Executive Stock and Deferred Compensation
Plans. During the term hereof, and any renewal, Officer shall be eligible for
participation in any of UPC's and Bank's incentive bonus programs, executive
stock and deferred compensation plans. Bonuses for less than a full year of
service may be granted at the discretion of the Board. Any such bonuses shall
be paid within 90 days of the close of the fiscal year.
3.6 Annual Vacation. Officer shall be entitled to an annual vacation
period as set forth in UPC Personnel Policies Manual No. 5.04, as amended from
time to time.
3.7 Other Fringe Benefits. Officer shall have the following fringe
benefit programs made available to him: hospital and major medical coverage,
including dependent coverage; short term and long term disability and life
insurance. Officer shall also be entitled to participate in such other fringe
benefit programs as UPC shall have or shall make available from time to time to
senior executives. Further, UPC agrees to pay for or reimburse Officer for
expenses, including dues, for clubs of which Officer is a member, the
facilities of which Officer shall use from time to time in holding various
company functions or entertaining company employees, customers or guests.
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SECTION 4
TERMINATION
4.1 Termination by UPC. UPC may at any time terminate this Agreement and
the employment of Officer for Cause. For the purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure by Officer to substantially
perform his duties with UPC or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to Officer by the Board
of Directors of UPC, which demand specifically identifies the manner in which
Officer has not substantially performed his duties, and Officer fails to comply
with such demand within a reasonable time, or
(ii) the willful engaging by Officer in gross misconduct which is
materially and demonstrably injurious to UPC.
For purposes of this provision, no act or failure to act, on the part of
Officer, shall be considered "willful" or "gross misconduct" unless it is done,
or omitted to be done, by Officer in bad faith or without reasonable belief
that Officer's action or omission was in the best interests of UPC. Any act, or
failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of UPC or based upon the advice of counsel for UPC shall be
conclusively presumed to be done, or omitted to be done, by Officer in good
faith and in the best interests of UPC. The cessation of employment of Officer
shall not be deemed to be for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board of Directors of
UPC at a meeting of the Board called and held for that purpose (after
reasonable notice to Officer, and an opportunity for Officer, together with
counsel of his choice, to be heard before the Board), finding that, in good
faith opinion of the Board, Officer is guilty of the conduct set forth above in
clauses (i) or (ii) of this Section 4.1, and specifying the particulars thereof
in reasonable detail.
4.2 Effect on Parties.
(a) Termination for Cause. If UPC terminates this
Agreement as specified in 4.1 above then the rights of Officer after such
termination shall be as follows:
(i) Officer's salary which may have accrued through
termination and annual incentive bonus if such has been approved but
not paid shall be paid;
(ii) Officer shall be entitled to the option cash-out
or acceleration rights selected by UPC under Section 4.3(a) below.
(b) Termination by Resignation. If UPC notifies Officer of
its election, under Section 1.2(d), not to extend Officer's employment, then
Officer shall have the option
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cash-out or acceleration rights specified in Section 4.3(b) below together with
the rights specified under Section 1.2(d).
(c) Death or Disability. Upon Officer's death or Disability
(as defined below), then Officer's rights shall be as follows:
(i) Officer's salary which may have accrued through
termination and annual incentive bonus if such has been approved but
not paid shall be paid; and
(ii) Officer shall have the option cash-out or acceleration
rights specified in Section 4.3(b) below; and
(iii) Officer shall be titled to receive a lump sum equal to
three times his Final Average Earnings, payable within 30 days of
the date of death or termination of employment by reason of
Disability.
For purposes of this Agreement, "Disability" means a
mental or physical disability as determined by the Board in
accordance with standards and procedures similar to those under UPC's
employee long-term disability plan, if any. At any time that UPC does
not maintain such a long-term disability plan, Disability shall mean
the inability of Officer, as determined by the Board, to
substantially perform his regular duties and responsibility due to a
medically determinable physical or mental illness which has lasted
(or can reasonably be expected to last) for a period of six
consecutive months.
(d) Survival of Certain Obligations. Any termination by UPC pursuant
to Section 4.1 above shall not terminate UPC's rights and Officer's obligations
under the Confidential Information, Assistance in Litigation or Arbitration
Sections in this Agreement.
4.3 Option Cash-Out or Acceleration Rights.
(a) If UPC terminates Officer's employment pursuant to Section 4.1,
UPC shall have the option to, within 90 days after the effective date of such
termination, or such longer period as may be necessary under applicable laws
including Section 16(b) of the Exchange Act relating to short swing profits,
either (i) effect a cash lump sum settlement equal to the "spread" between the
exercise price of the UPC stock options (vested or unvested) held by Officer as
of the date of notice of termination and the closing trade price on NYSE (or
the fair market value of UPC's stock, as determined by the Board, if no longer
traded on the NYSE) as of the date of such termination, or (ii) declare all UPC
stock options issued to Officer fully vested and exercisable by Officer within
a one-year period from the date of notice of termination.
(b) If UPC terminates Officer's employment pursuant to Section 4.2(b)
or 4.2(c), or if Officer self-terminates under Section 1.2(c) or 1.2(d),
Officer or his Estate shall have the right to elect in writing within 90 days
after the effective date of such termination,
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either (i) a cash lump sum from UPC equal to the "spread" between the exercise
price of the UPC stock options (vested or unvested) held by Officer as of the
date of notice of termination and the closing trade price on NYSE (or the fair
market value of UPC's stock, as determined by the Board, if no longer traded on
the NYSE) as of the date of such termination, or (ii) full vesting of all UPC
stock options issued to Officer and the right to exercise each such option from
the date of termination through the remaining term of the option.
4.4 Resignation by Officer Absent a Change in Control or Non-Renewal.
Aside from Officer's rights under Sections 1.2(c) and 1.2(d), Officer may
terminate his employment hereunder, upon 90 days written notice, and such
termination shall terminate all of Officer's rights hereunder, and such
termination shall not affect UPC's rights hereunder. It is understood that a
resignation by Officer under Sections 1.2(c) or (d) shall not be construed as a
termination under this Section.
SECTION 5
CONFIDENTIAL INFORMATION
5.1 Officer recognizes that UPC's and Bank's business interests
require a fiduciary relationship between UPC, Bank and Officer and the fullest
practical protection and confidential treatment of the confidential information
relating to UPC and Bank. Officer acknowledges the reasonableness, in the
context of UPC's business, of the promises herein made and recognizes a just
purpose in UPC's protecting its confidential information. Officer acknowledges
that in the course of his association with UPC he may have in the past or may
in the future receive certain lists of UPC's prospective acquisition and
management agreements and other confidential information and knowledge
concerning the business of UPC (hereinafter collectively referred to as
"information") which UPC desires to protect. Officer understands that such
information is confidential and agrees not to reveal such information to anyone
outside UPC so long as the confidential or secret nature of the information
shall continue.
SECTION 6
ASSISTANCE IN LITIGATION
6.1 Officer shall, upon reasonable notice, furnish such information
and assistance to UPC as may reasonably be required by UPC in connection with
any litigation in which UPC or any of its subsidiaries or affiliates is, or may
become, a party.
SECTION 7
ARBITRATION
7.1 Methods. Any difference, claims or matters in dispute arising
among the parties out of this Agreement or connected herewith shall be
submitted by them to arbitration before a panel of three arbitrators selected
as follows: each party shall select an arbitrator from the American Arbitration
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Association's Approved List of Arbitrators. The arbitrators so selected by the
parties shall agree upon a third arbitrator and the three so selected shall
resolve the dispute under the duly promulgated rules and regulations of the
American Arbitration Association or its successor, and the pertinent provisions
of the laws of the State of Tennessee, relating to arbitration. The decision of
the arbitrators may be entered as a judgment in any Court in the State of
Tennessee or elsewhere. Any arbitrator selected who does not have experience
relating to the banking and financial services industry shall avail himself of
the counsel of an individual who has such experience. Costs of such arbitration
shall be borne as specified by the arbitrators.
7.2 Specific Performance. Notwithstanding Section 7.1 above, all
Provisions hereof are for the protection and are intended to be for the benefit
of the parties hereto and enforceable directly by and binding upon each party.
Each party hereto agrees that the remedy through arbitration or at law of the
other for any actual or threatened breach of this agreement would be inadequate
and that the other party shall be entitled to specific performance hereof or
injunctive relief or both, by temporary or permanent injunction or such other
appropriate judicial remedy, writ or order as may be decided by a court of
competent jurisdiction in addition to any damages which the complaining party
may be legally entitled to recover together with reasonable expenses of
arbitration, litigation, including attorney's fees incurred in connection
therewith as may be approved by such arbitrators or court.
SECTION 8
MISCELLANEOUS
8.1 Assignment by UPC. This Agreement shall inure to the benefit of
and be binding upon UPC and its successors and assigns. UPC will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of UPC to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that UPC would be required to perform it if no such succession
had taken place. As used in this Agreement, "UPC" shall mean UPC as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
8.2 Assignment by Officer. This is a personal agreement on the part of
Officer and may not be sold, assigned, transferred or conveyed by Officer
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Officer's legal
representatives.
8.3 Entire Agreement. This Agreement contains the entire agreement
among the parties hereto and there are no representations, inducements,
promises, agreements, arrangements or undertakings, oral or written, among the
parties as to the subject matter covered.
8.4 Severability. Should any part of this Agreement be declared
invalid for any reason, such invalidity shall not affect the validity of any
remaining portion hereof and such remaining portion shall continue in full
force and effect as if this Agreement had been originally executed without
including the invalid part.
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8.5 Governing Law. This Agreement and its performance shall be
interpreted and construed in accordance with the laws of the State of
Tennessee.
8.6 Titles. Titles and captions in no way define, limit, extend or
describe the scope of this Agreement nor the intent of any provision hereof.
8.7 Amendments. No changes, alterations, modifications, additions or
qualifications to the terms of this Agreement shall be made or be binding
unless made in writing and executed by the parties in the same manner as this
Agreement.
8.8 No Waiver. Failure by either party to enforce any right granted by
this Agreement shall not constitute a waiver of such right and waiver of any
provision of this Agreement shall not constitute a waiver of any other
provision.
8.9 Notices. Any notice, instrument or communication required or
permitted under this Agreement shall be deemed to have been effectively given
and made if in writing and if served whether by personal delivery to the party
for whom it is intended, or by being deposited, postage prepaid, registered or
certified mail, return receipt requested, in the United States mail, addressed
to the party for whom it is intended at the following addresses:
Officer: Benjamin W. Rawlins, Jr.
434 River Oaks Place
Memphis, Tennessee 38119
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attn: President
8.10 Full Settlement. UPC's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which UPC may have against Officer or others. In no
event shall Officer be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to Officer under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not Officer obtains other employment. UPC agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses, including
arbitration fees, which Officer may reasonably incur as a result of any contest
(regardless of the outcome thereof) by UPC, Officer or others of the validity
or enforceability of, or liability under, any provision of this Agreement or
any guarantee of performance thereof (including as a result of any contest by
Officer about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
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8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Agreement, this 17th day of April, 1997.
Attest: UNION PLANTERS CORPORATION
/s/ E. J. House, Jr.
- -------------------- By: /s/ M. Kirk Walters
-------------------------------
Title: Senior Vice President
and Treasurer
/s/ Benjamin W. Rawlins, Jr.
-------------------------------
Benjamin W. Rawlins, Jr.
Approved and Acknowledged:
UNION PLANTERS CORPORATION
SALARY AND BENEFITS COMMITTEE
By: /s/ Marvin E. Bruce
---------------------------
Chairman
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EXHIBIT 10 (B)
<PAGE> 2
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of December 1, 1989, and
amended and restated as of April 17, 1997, by and between Union Planters
Corporation ("UPC") with offices at 67 Madison Avenue, Memphis, Tennessee and
Jackson W. Moore, a resident of Memphis, Tennessee (hereinafter referred to as
"Officer").
W I T N E S S E T H:
WHEREAS, it is the intention and desire of the parties to enter into a
formal agreement whereby two principal purposes will be served, to wit:
A. UPC will have the benefit of the employment of Officer during the
period covered by this Agreement; and
B. Officer will be an executive of UPC during the Period hereinafter
defined.
NOW, THEREFORE, in consideration of the employment of Officer by UPC,
of the mutual promises, covenants, representations and warranties contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
SECTION 1
EMPLOYMENT AND TERM
1.1 Employment. UPC hereby employs Officer, and Officer hereby accepts
such employment to perform the duties described in Section 2 of this Agreement.
1.2 Term.
(a) Base Term. The current term of employment is scheduled to
expire on December 31, 1999, unless such term of employment is extended or
terminated by agreement of the parties or as provided herein.
(b) Extended Term if Acquired. Notwithstanding any other provision
hereof to the contrary, this Agreement shall be renewable for one (1)
additional three (3) year term, at Officer's option, exercisable by him
immediately prior to, upon or at any time following the occurrence of any one
of the following events (a "Change in Control"):
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of
25% or more of either (A) the then outstanding shares of common stock
<PAGE> 3
of UPC (the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of UPC entitled
to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a
Change in Control: (w) any acquisition directly from UPC, (x) any
acquisition by UPC, (y) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by UPC or any corporation
controlled by UPC, or (z) any acquisition by any Person pursuant to a
transaction which complies with clauses (A), (B) and (C) of subsection
(iii) of this Section 1.2(b); or
(ii) Individuals who, as of the date hereof,
constitute the Board of Directors of UPC (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by UPC's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of UPC (a "Business Combination"), in each case, unless,
following such Business Combination,
(A) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or
indirectly, more than 65% of, respectively, the then
outstanding shares of common stock and the combined voting
power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation
which as a result of such transaction owns UPC or all or
substantially all of UPC's assets either directly or through
one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may
be, and
(B) no Person (excluding any corporation
resulting from such Business Combination or any employee
benefit plan (or related trust) of UPC or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination
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<PAGE> 4
or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and
(C) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination.
The renewal term shall commence on the later of (i) the date of notice
of said three-year renewal, or (ii) the date of the Change in Control, and any
remaining period of the current employment term, and any extension thereof,
shall be canceled.
(c) Self-Termination after Change in Control. Notwithstanding
any other provision herein to the contrary, upon a Change in Control and
exercise of the option to renew for three (3) years, Officer may at any time
thereafter during the extended term of this Agreement, at his sole discretion,
resign from employment hereunder without penalty upon 90 days written notice
setting forth the effective date of said resignation. Upon resignation of
Officer, Officer shall be entitled to receive a lump sum payment equal to (i)
three (3) times Officer's Final Average Earnings (as defined in the following
sentence), plus (ii) any Tax Gross-Up Payment payable under Sections 1.2(e) and
(f). For purposes of this Agreement, Officer's Final Average Earnings shall be
the sum of (i) his highest base salary in effect during any calendar year
preceding his termination of employment, including the year in which such
termination occurs, and (ii) his highest annual bonus payable with respect to
any calendar year preceding his termination of employment, including the year
in which such termination occurs. Said lump sum payment shall be payable in
cash on the effective date of Officer's resignation. If for any reason the lump
sum payment is not paid on the date specified, then, in addition to the lump
sum payment, UPC shall pay interest thereon at the maximum rate permissible by
law and shall continue to pay Officer monthly compensation, which shall not be
a credit against the lump sum payment, in an amount equal to one-twelfth (1/12)
of Officer's Final Average Earnings until such lump sum is paid.
(d) Annual Extension. On December 31 of each year, unless UPC
notifies Officer that his employment under this Agreement will not be extended,
his employment under this Agreement shall automatically be extended for a one
(1) year period from such term set forth in Section 1.2(a) on the same terms
and conditions as are set forth herein; provided, however, that the term of
this Agreement may be extended only to such time as will provide for a term
ending at age sixty-five (65) years. If UPC elects not to extend Officer's
employment under this Agreement, as provided in the preceding sentence, it
shall do so by notifying Officer in writing within sixty (60) days prior to the
applicable December 31 date. If UPC so elects not to extend Officer's
employment under this Agreement, Officer shall have the right to either remain
as an employee for the remaining term of this Agreement (subject to Officer's
right to extend this Agreement under Section 1.2(b) at any time during the
remaining term if a Change in Control has occurred or shall occur) or terminate
this Agreement at any time during said term and receive in a lump sum on the
date of termination an amount equal to
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<PAGE> 5
three (3) times his Final Average Earnings (as defined in Section 1.2(c)), plus
any Tax Gross-Up Payments required by Sections 1.2(e) and 1.2(f). If for any
reason the lump payment is not paid on the date specified, then, in addition to
the lump sum payment, UPC shall pay interest thereon at the maximum rate
permissible by law and shall continue to pay Officer monthly compensation,
which shall not be a credit against the lump sum payment, in an amount equal to
one-twelfth (1/12) of Officer's Final Average Earnings until such lump sum
payment is paid. UPC shall also pay to Officer such termination bonus as the
UPC Board of Directors may, in its discretion, determine. Officer's date of
termination shall be the December 31 following his election to terminate this
Agreement. Additionally, in the event this Agreement is not extended, all
options, stock appreciation rights, and other awards in the nature of rights
that may be exercised, and all awards of restricted stock, if any, issued to
Officer under all stock incentive plans of UPC shall immediately vest and be
exercisable by Officer and all restrictions thereon shall lapse.
(e) Income Tax Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding, in the event any payment or distribution by UPC to or
for the benefit of Officer, or any acceleration of any benefit (whether paid or
payable, distributed or distributable, or accelerated pursuant to the terms of
this Agreement or otherwise) is paid or payable, distributed or distributable,
or accelerated by reason of there having occurred a Change in Control,
including without limitation (i) any lump-sum, interest or
compensation-continuation payments under Section 1.2(c) of this Agreement, (ii)
a cash-out of options (including previously vested options) or an acceleration
of options pursuant to Section 4.3(b) following a Change in Control, (iii) any
income tax liability associated with stock options or restricted stock
accelerated by a Change in Control, (iv) any SERP or deferred compensation
payments accelerated by a Change in Control, (v) the payment or receipt of any
other benefit (cash or stock) triggered or accelerated by a Change in Control,
and (vi) an Excise Tax Gross-Up Payment under Section 1.2(f) below (in any such
case, a "Change in Control Benefit"), then Officer shall be entitled to receive
an additional payment (an "Income Tax Gross-Up Payment") in an amount equal to
the federal, state and local taxes (including income taxes and social security,
FICA, FUTA and other employment taxes) owed by Officer with respect to such
Change in Control Benefit such that after payment by Officer of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any taxes (and any interest and penalties
imposed with respect thereto) imposed upon the Income Tax Gross-Up Payment,
Officer retains an amount of the Income Tax Gross-Up Payment equal to the
federal, state and local taxes (including income taxes and social security,
FICA, FUTA and other employment taxes) imposed upon the Change in Control
Benefit.
(f) Excise Tax Gross-Up Payment. Anything in this Agreement to the
contrary notwithstanding and except as set forth below, in the event it shall
be determined that any payment or distribution by UPC to or for the benefit of
Officer (whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 1.2(f)) (a "Parachute Payment")
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code"), or any interest or penalties are
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<PAGE> 6
incurred by Officer with respect to such excise tax (such excise tax, together
with any such interest and penalties, are hereinafter collectively referred to
as the "Excise Tax"), then Officer shall be entitled to receive an additional
payment (an "Excise Tax Gross-Up Payment") in an amount such that after payment
by Officer of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Excise Tax Gross-Up Payment, Officer retains an amount of the Excise
Tax Gross-Up Payment equal to the Excise Tax imposed upon the Parachute
Payments.
(g) Calculation and Adjustment of Tax Gross-Up Payments.
(i) Subject to the provisions of Section 1.2(g)(ii), all
determinations required to be made under Sections 1.2(e) and 1.2(f), including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by Price Waterhouse LLP or such other nationally recognized
public accounting firm as may be designated by Officer (the "Accounting Firm")
which shall provide detailed supporting calculations both to UPC and Officer
within 15 business days of the receipt of notice from Officer that there has
been a Change in Control Payment or a Parachute Payment, or such earlier time
as is requested by UPC. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change in
Control, Officer shall appoint another nationally recognized accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by UPC. Any Income Tax Gross-Up Payment
or Excise Tax Gross-Up Payment, as determined pursuant to Section 1.2(e) or
1.2(f), shall be paid by UPC to Officer within five days of the receipt of the
Accounting Firm's determination. Any determination by the Accounting Firm shall
be binding upon UPC and Officer. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Excise Tax
Gross-Up Payments which will not have been made by UPC should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that UPC exhausts its remedies pursuant to Section
1.2(g)(ii) and Officer thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by UPC to or for
the benefit of Officer.
(ii) Officer shall notify UPC in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by UPC
of the Income Tax Gross-Up Payment or the Excise Tax Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than ten
business days after Officer is informed in writing of such claim and shall
apprise UPC of the nature of such claim and the date on which such claim is
requested to be paid. Officer shall not pay such claim prior to the expiration
of the 30-day period following the date on which it gives such notice to UPC
(or such shorter period ending on the date that any payment of taxes with
respect to such claim is due). If UPC notifies
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<PAGE> 7
Officer in writing prior to the expiration of such period that it desires to
contest such claim, Officer shall:
(A) give UPC any information reasonably requested by
UPC relating to such claim,
(B) take such action in connection with contesting
such claim as UPC shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney
reasonably selected by UPC,
(C) cooperate with UPC in good faith in order
effectively to contest such claim, and
(D) permit UPC to participate in any proceedings
relating to such claim;
provided, however, that UPC shall bear and pay directly all costs and expenses
(including additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold Officer harmless, on an after-tax basis,
for any Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses. Without limitation of the foregoing provisions of this Section
1.2(g)(ii), UPC shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct Officer to pay
the tax claimed and sue for a refund or contest the claim in any permissible
manner, and Officer agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as UPC shall determine; provided, however, that if UPC
directs Officer to pay such claim and sue for a refund, UPC shall advance the
amount of such payment to Officer, on an interest-free basis and shall
indemnify and hold Officer harmless, on an after-tax basis, from any Excise Tax
or income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with respect
to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of Officer with
respect to which such contested amount is claimed to be due is limited solely
to such contested amount. Furthermore, UPC's control of the contest shall be
limited to issues with respect to which an Income Tax Gross-Up Payment or
Excise Tax Gross-Up Payment would be payable hereunder and Officer shall be
entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(iii)If, after the receipt by Officer of an amount advanced by UPC
pursuant to Section 1.2(g)(ii), Officer becomes entitled to receive any refund
with respect to such claim, Officer shall (subject to UPC's complying with the
requirements of Section 1.2(g)(ii)) promptly pay to UPC the amount of such
refund (together with any interest paid or credited thereon
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after taxes applicable thereto). If, after the receipt by Officer of an amount
advanced by UPC pursuant to Section 1.2(g)(ii), a determination is made that
Officer shall not be entitled to any refund with respect to such claim and UPC
does not notify Officer in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of Income Tax
Gross-Up Payment or Excise Tax Gross-Up Payment required to be paid.
SECTION 2
DUTIES
2.1 General Duties. Officer shall serve UPC as President and Chief
Operating Officer, and as an executive officer of any subsidiary of UPC to
which he may be elected. Officer shall also be a member of the Boards of
Directors of UPC, and Bank, and such other Boards of subsidiaries to which he
may be elected. He shall also be a member of the Executive Committee of UPC and
Bank, and such other committees of the Boards of UPC, Bank and subsidiaries to
which he may be appointed. He shall perform such duties and responsibilities as
are customarily performed by persons acting in such capacities.
2.2 Extent of Service. During the term hereof, Officer agrees to
devote substantially his entire time, attention and skill to the performance of
his duties as President and Chief Operating Officer of UPC. UPC recognizes that
Officer serves on several civic and corporate boards and that such service does
not conflict with the duties outlined above.
2.3 Best Efforts. Officer agrees that he will, at all times,
faithfully, industriously, and to the best of his ability, experience and
talents, perform all of the duties that may be required of and from him by the
Boards of Directors as described above.
2.4 Location. The duties of Officer shall be performed at UPC's
executive offices in the reasonable vicinity of Memphis, Tennessee. The
permanent location of the duties Officer is to perform shall not be moved
without Officer's consent. Officer shall also on a temporary basis perform such
duties at such other place or places as the Board of Directors of UPC shall
reasonably designate or as the interests or opportunities of the Board of
Directors of UPC shall reasonably require.
SECTION 3
COMPENSATION
3.1 Annual Base Salary. UPC shall pay Officer, and Officer shall
accept from UPC, in full payment for Officer's services hereunder, an annual
base salary in the minimum amount of Four Hundred Fifty-Five Thousand Dollars
($455,000), payable twice monthly in periodic equal installments during the
year, which annual base salary shall be reviewed at least annually and may be
increased from time to time as determined by the Board of Directors of UPC.
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3.2 Stock Options. Officer shall be entitled to participate in all of
UPC's stock option programs. Based upon satisfactory performance, it is
anticipated that Officer will be granted additional stock options from time to
time, such additional grants to be considered on an annual basis. Officer shall
be granted full protection against dilution of such options as is provided
under the terms of the Stock Option Plans. In the event of a Change in Control
as defined in Section 1.2(b), or if UPC elects not to extend Officer's
employment under Section 1.2(d), then all options, stock appreciation rights,
and other awards in the nature of rights that may be exercised, and all awards
of restricted stock, if any, issued to Officer under all stock incentive plans
of UPC shall immediately vest and be exercisable by Officer and all
restrictions thereon shall lapse. Also, in the event of a Change in Control,
any stock or stock equivalents held in a deferred account on behalf of Officer
shall become immediately payable.
UPC shall take such action as may be necessary from time to time to
allow Officer to sell all stock issuable upon exercise of Officer's options
free of resale restrictions, including but not limited to the grant to Officer
of piggyback registration rights with respect to such stock. Such sales may
only be made under all existing securities laws.
3.3 Reimbursement of Expenses. UPC shall reimburse Officer for such
reasonable out-of-pocket expenses necessarily incurred by Officer while
rendering the services contemplated hereunder, and shall provide an appropriate
automobile to be used by Officer in the conduct of the business of UPC.
3.4 Tax Withholdinqs. UPC shall deduct from the regular monthly
compensation payable to Officer all federal, state and local income tax, social
security, FICA, FUTA, and other withholdings as required by law.
3.5 Annual Incentive Bonus, Executive Stock and Deferred Compensation
Plans. During the term hereof, and any renewal, Officer shall be eligible for
participation in any of UPC's and Bank's incentive bonus programs, executive
stock and deferred compensation plans. Bonuses for less than a full year of
service may be granted at the discretion of the Board. Any such bonuses shall
be paid within 90 days of the close of the fiscal year.
3.6 Annual Vacation. Officer shall be entitled to an annual vacation
period as set forth in UPC Personnel Policies Manual No. 5.04, as amended from
time to time.
3.7 Other Fringe Benefits. Officer shall have the following fringe
benefit programs made available to him: hospital and major medical coverage,
including dependent coverage; short term and long term disability and life
insurance. Officer shall also be entitled to participate in such other fringe
benefit programs as UPC shall have or shall make available from time to time to
senior executives. Further, UPC agrees to pay for or reimburse Officer for
expenses, including dues, for clubs of which Officer is a member, the
facilities of which Officer shall use from time to time in holding various
company functions or entertaining company employees, customers or guests.
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SECTION 4
TERMINATION
4.1 Termination by UPC. UPC may at any time terminate this Agreement and
the employment of Officer for Cause. For the purposes of this Agreement,
"Cause" shall mean:
(i) the willful and continued failure by Officer to substantially
perform his duties with UPC or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental illness), after a
written demand for substantial performance is delivered to Officer by the Board
of Directors of UPC, which demand specifically identifies the manner in which
Officer has not substantially performed his duties, and Officer fails to comply
with such demand within a reasonable time, or
(ii) the willful engaging by Officer in gross misconduct which is
materially and demonstrably injurious to UPC.
For purposes of this provision, no act or failure to act, on the part of
Officer, shall be considered "willful" or "gross misconduct" unless it is done,
or omitted to be done, by Officer in bad faith or without reasonable belief
that Officer's action or omission was in the best interests of UPC. Any act, or
failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of UPC or based upon the advice of counsel for UPC shall be
conclusively presumed to be done, or omitted to be done, by Officer in good
faith and in the best interests of UPC. The cessation of employment of Officer
shall not be deemed to be for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the affirmative vote of
not less than a majority of the entire membership of the Board of Directors of
UPC at a meeting of the Board called and held for that purpose (after
reasonable notice to Officer, and an opportunity for Officer, together with
counsel of his choice, to be heard before the Board), finding that, in good
faith opinion of the Board, Officer is guilty of the conduct set forth above in
clauses (i) or (ii) of this Section 4.1, and specifying the particulars thereof
in reasonable detail.
4.2 Effect on Parties.
(a) Termination for Cause. If UPC terminates this Agreement as
specified in 4.1 above then the rights of Officer after such termination shall
be as follows:
(i) Officer's salary which may have accrued through
termination and annual incentive bonus if such has been approved but
not paid shall be paid;
(ii) Officer shall be entitled to the option cash-out or
acceleration rights selected by UPC under Section 4.3(a) below.
(b) Termination by Resignation. If UPC notifies Officer of its
election, under Section 1.2(d), not to extend Officer's employment, then
Officer shall have the option
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cash-out or acceleration rights specified in Section 4.3(b) below together with
the rights specified under Section 1.2(d).
(c) Death or Disability. Upon Officer's death or Disability
(as defined below), then Officer's rights shall be as follows:
(i) Officer's salary which may have accrued through
termination and annual incentive bonus if such has been
approved but not paid shall be paid; and
(ii) Officer shall have the option cash-out or
acceleration rights specified in Section 4.3(b) below; and
(iii) Officer shall be titled to receive a lump sum
equal to three times his Final Average Earnings, payable
within 30 days of the date of death or termination of
employment by reason of Disability.
For purposes of this Agreement, "Disability" means a
mental or physical disability as determined by the Board in
accordance with standards and procedures similar to those
under UPC's employee long-term disability plan, if any. At
any time that UPC does not maintain such a long-term
disability plan, Disability shall mean the inability of
Officer, as determined by the Board, to substantially perform
his regular duties and responsibility due to a medically
determinable physical or mental illness which has lasted (or
can reasonably be expected to last) for a period of six
consecutive months.
(d) Survival of Certain Obligations. Any termination by UPC
pursuant to Section 4.1 above shall not terminate UPC's rights and Officer's
obligations under the Confidential Information, Assistance in Litigation or
Arbitration Sections in this Agreement.
4.3 Option Cash-Out or Acceleration Rights.
(a) If UPC terminates Officer's employment pursuant to
Section 4.1, UPC shall have the option to, within 90 days after the effective
date of such termination, or such longer period as may be necessary under
applicable laws including Section 16(b) of the Exchange Act relating to short
swing profits, either (i) effect a cash lump sum settlement equal to the
"spread" between the exercise price of the UPC stock options (vested or
unvested) held by Officer as of the date of notice of termination and the
closing trade price on NYSE (or the fair market value of UPC's stock, as
determined by the Board, if no longer traded on the NYSE) as of the date of
such termination, or (ii) declare all UPC stock options issued to Officer fully
vested and exercisable by Officer within a one-year period from the date of
notice of termination.
(b) If UPC terminates Officer's employment pursuant to
Section 4.2(b) or 4.2(c), or if Officer self-terminates under Section 1.2(c) or
1.2(d), Officer or his Estate shall have the right to elect in writing within
90 days after the effective date of such termination,
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<PAGE> 12
either (i) a cash lump sum from UPC equal to the "spread" between the exercise
price of the UPC stock options (vested or unvested) held by Officer as of the
date of notice of termination and the closing trade price on NYSE (or the fair
market value of UPC's stock, as determined by the Board, if no longer traded on
the NYSE) as of the date of such termination, or (ii) full vesting of all UPC
stock options issued to Officer and the right to exercise each such option from
the date of termination through the remaining term of the option.
4.4 Resignation by Officer Absent a Change in Control or Non-Renewal.
Aside from Officer's rights under Sections 1.2(c) and 1.2(d), Officer may
terminate his employment hereunder, upon 90 days written notice, and such
termination shall terminate all of Officer's rights hereunder, and such
termination shall not affect UPC's rights hereunder. It is understood that a
resignation by Officer under Sections 1.2(c) or (d) shall not be construed as a
termination under this Section.
SECTION 5
CONFIDENTIAL INFORMATION
5.1 Officer recognizes that UPC's and Bank's business interests
require a fiduciary relationship between UPC, Bank and Officer and the fullest
practical protection and confidential treatment of the confidential information
relating to UPC and Bank. Officer acknowledges the reasonableness, in the
context of UPC's business, of the promises herein made and recognizes a just
purpose in UPC's protecting its confidential information. Officer acknowledges
that in the course of his association with UPC he may have in the past or may
in the future receive certain lists of UPC's prospective acquisition and
management agreements and other confidential information and knowledge
concerning the business of UPC (hereinafter collectively referred to as
"information") which UPC desires to protect. Officer understands that such
information is confidential and agrees not to reveal such information to anyone
outside UPC so long as the confidential or secret nature of the information
shall continue.
SECTION 6
ASSISTANCE IN LITIGATION
6.1 Officer shall, upon reasonable notice, furnish such information
and assistance to UPC as may reasonably be required by UPC in connection with
any litigation in which UPC or any of its subsidiaries or affiliates is, or may
become, a party.
SECTION 7
ARBITRATION
7.1 Methods. Any difference, claims or matters in dispute arising
among the parties out of this Agreement or connected herewith shall be
submitted by them to arbitration before a panel of three arbitrators selected
as follows: each party shall select an arbitrator from the American Arbitration
Association's Approved List of Arbitrators. The arbitrators so selected by the
parties shall agree upon a third arbitrator and the three so selected shall
resolve the dispute under the duly promulgated rules and regulations of the
American Arbitration
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<PAGE> 13
Association or its successor, and the pertinent provisions of the laws of the
State of Tennessee, relating to arbitration. The decision of the arbitrators
may be entered as a judgment in any Court in the State of Tennessee or
elsewhere. Any arbitrator selected who does not have experience relating to the
banking and financial services industry shall avail himself of the counsel of
an individual who has such experience. Costs of such arbitration shall be borne
as specified by the arbitrators.
7.2 Specific Performance. Notwithstanding Section 7.1 above, all
Provisions hereof are for the protection and are intended to be for the benefit
of the parties hereto and enforceable directly by and binding upon each party.
Each party hereto agrees that the remedy through arbitration or at law of the
other for any actual or threatened breach of this agreement would be inadequate
and that the other party shall be entitled to specific performance hereof or
injunctive relief or both, by temporary or permanent injunction or such other
appropriate judicial remedy, writ or order as may be decided by a court of
competent jurisdiction in addition to any damages which the complaining party
may be legally entitled to recover together with reasonable expenses of
arbitration, litigation, including attorney's fees incurred in connection
therewith as may be approved by such arbitrators or court.
SECTION 8
MISCELLANEOUS
8.1 Assignment by UPC. This Agreement shall inure to the benefit of
and be binding upon UPC and its successors and assigns. UPC will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of UPC to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that UPC would be required to perform it if no such succession
had taken place. As used in this Agreement, "UPC" shall mean UPC as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
8.2 Assignment by Officer. This is a personal agreement on the part of
Officer and may not be sold, assigned, transferred or conveyed by Officer
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by Officer's legal
representatives.
8.3 Entire Agreement. This Agreement contains the entire agreement
among the parties hereto and there are no representations, inducements,
promises, agreements, arrangements or undertakings, oral or written, among the
parties as to the subject matter covered.
8.4 Severability. Should any part of this Agreement be declared
invalid for any reason, such invalidity shall not affect the validity of any
remaining portion hereof and such remaining portion shall continue in full
force and effect as if this Agreement had been originally executed without
including the invalid part.
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<PAGE> 14
8.5 Governing Law. This Agreement and its performance shall be
interpreted and construed in accordance with the laws of the State of
Tennessee.
8.6 Titles. Titles and captions in no way define, limit, extend or
describe the scope of this Agreement nor the intent of any provision hereof.
8.7 Amendments. No changes, alterations, modifications, additions or
qualifications to the terms of this Agreement shall be made or be binding
unless made in writing and executed by the parties in the same manner as this
Agreement.
8.8 No Waiver. Failure by either party to enforce any right granted by
this Agreement shall not constitute a waiver of such right and waiver of any
provision of this Agreement shall not constitute a waiver of any other
provision.
8.9 Notices. Any notice, instrument or communication required or
permitted under this Agreement shall be deemed to have been effectively given
and made if in writing and if served whether by personal delivery to the party
for whom it is intended, or by being deposited, postage prepaid, registered or
certified mail, return receipt requested, in the United States mail, addressed
to the party for whom it is intended at the following addresses:
Officer: Jackson W. Moore
6486 May Creek Cove
Memphis, Tennessee 38119
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attn: Chairman of the Board
8.10 Full Settlement. UPC's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which UPC may have against Officer or others. In no
event shall Officer be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to Officer under any of the
provisions of this Agreement and such amounts shall not be reduced whether or
not Officer obtains other employment. UPC agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses, including
arbitration fees, which Officer may reasonably incur as a result of any contest
(regardless of the outcome thereof) by UPC, Officer or others of the validity
or enforceability of, or liability under, any provision of this Agreement or
any guarantee of performance thereof (including as a result of any contest by
Officer about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable federal rate
provided for in Section 7872(f)(2)(A) of the Code.
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<PAGE> 15
8.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Amended and
Restated Agreement, this 17th day of April, 1997.
Attest: UNION PLANTERS CORPORATION
/s/ E. J. House By: /s/ M. Kirk Walters
- --------------------- --------------------------------
Title: Senior Vice President and
Assistant Treasurer
/s/ Jackson W. Moore
-----------------------------------
Jackson W. Moore
Approved and Acknowledged:
UNION PLANTERS CORPORATION
SALARY AND BENEFITS COMMITTEE
By: /s/ Marvin E. Bruce
-----------------------------
Chairman
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<PAGE> 1
EXHIBIT 10 (C)
<PAGE> 2
UNION PLANTERS CORPORATION
1992 STOCK INCENTIVE PLAN
AS AMENDED OCTOBER 17, 1996
1. Definitions. In this Plan, except where the context otherwise
indicates, the following definitions apply:
a) "Agreement" means the written agreement implementing a grant
of an Option or an Award of Restricted Stock under the Plan.
b) "Board" means the Board of Directors of the Company.
c) "Code" means the Internal Revenue Code of 1986, as amended.
d) "Committee" means the committee referred to in Section 3.
Unless otherwise determined by the Board, the Stock Option
Committee of the Board shall be the Committee.
e) "Common Stock" means the authorized but unissued common
stock, par value $5, of the Company.
f) "Company" means Union Planters Corporation.
g) "Date of Exercise" means the date on which the Company
receives notice pursuant to Section 7 of the exercise of an
Option.
h) "Date of Grant" means the date on which an Option or
Restricted Stock is granted or awarded by the action of the
Committee.
i) "Director" means any person who is a director of the Company
or any Subsidiary.
j) "Director-Employee" means an Employee who is also a Director.
k) "Employee" means any person determined by the Committee to be
an employee of the Company or any Subsidiary, including
officers, Directors, and Director-Employees.
l) "Fair Market Value" of a share of Common Stock means the
amount equal to the closing price for a share of Common Stock
on the New York Stock Exchange as reported in THE WALL STREET
JOURNAL or, if the Common Stock is not traded on the New York
Stock Exchange, then the Fair Market Value of such Common
Stock as determined by the Committee pursuant to a reasonable
method adopted in good faith for such purpose.
m) "Incentive Stock Option" means an Option that qualifies as an
Incentive Stock Option under Section 422 of the Code.
n) "Nonstatutory Stock Option" means an Option which is not an
Incentive Stock Option.
o) "Officer" means any person who is an officer of the Company
or any Subsidiary.
p) "Option" means the right to purchase from the Company a
specified number of shares of Common Stock, which right shall
be designated as either an Incentive Stock Option or a
Nonstatutory Stock Option.
q) "Optionee" means an Employee to whom an Option or Restricted
Stock has been granted or awarded.
r) "Option Period" means the period during which an Option may
be exercised.
<PAGE> 3
s) "Option Price" means the price per share at which an Option
may be exercised.
t) "Plan" means the Union Planters Corporation 1992 Stock
Incentive Plan.
u) "Reload Option" means an Option granted to an Optionee upon
the surrender of shares of Common Stock in payment of an
Option Price upon the exercise of an Option. The Option Price
for any Reload Option shall be the Fair Market Value at the
date the Common Stock is surrendered as payment pursuant to
Section 3(d) (iv). Other terms of the Reload Option shall be
the same as contained in the Option Agreement relating to the
Option exercised.
v) "Restricted Stock" means shares of Common Stock awarded
pursuant to the provisions of Section 11.
w) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
x) "Subsidiary" means a corporation of which at least 50 percent
of the total combined voting power of all classes of stock is
held by the Company, either directly or through one or more
other Subsidiaries.
2. PURPOSE. The purposes of the Plan are: (1) to encourage stock
ownership by management and other key Employees in order to closely
associate their interests with the Company's shareholders by
reinforcing the relationship between Plan participants' rewards and
shareholder gains; (2) to maintain competitive compensation levels in
order to continue to attract highly talented persons; and (3) to
provide an incentive to management and other key Employees for
continuous employment with the Company or its Subsidiaries.
3. ADMINISTRATION The Plan shall be administered by the Committee, which
shall be appointed by the Board and consist of no fewer than three
disinterested members of the Board who (i) for at least one year prior
to serving on the Committee have not received, and who shall not
during their tenure on the Committee receive, any grant of stock
options or rights pursuant to the Plan or any other plan of the
Company, except as may be permitted for disinterested administrator
status under Exchange Act Rule 16b-3, and (ii) is not a current
employee of the Company, is not a former employee who receives
compensation for prior services (other than under a tax-qualified
retirement plan), has not been an officer of the Company, and does not
receive remuneration from the Company in any capacity other than as a
director in accordance with the requirements of Section 162(m) of the
Code. The Board shall have the power to fill vacancies on the
Committee or to replace members of the Committee with other members of
the Board at any time. In addition to any other powers granted to the
Committee, it shall have the following powers subject to the express
provisions of the Plan:
a) subject to the provisions of Sections 4, 6, and 11, to
determine in its sole discretion the Employees to whom
Options or Restricted Stock shall be granted or awarded under
the Plan, the number of shares which shall be subject to each
Option or Restricted Stock grant, the terms upon which, the
times at which, and the periods within which such Options may
be acquired and exercised, and the terms and conditions of
Restricted Stock awards;
b) to grant Options to, and to award Restricted Stock to,
Employees selected by the Committee in its sole discretion;
c) to determine all other terms and provisions of each
Agreement, which need not be identical;
d) without limiting the foregoing, to provide in its sole
discretion in an Agreement:
i) for an agreement by the Optionee to render services
to the Company or a Subsidiary upon such terms and
conditions as are specified in the Agreement,
provided that the Committee shall not
2
<PAGE> 4
have the power to commit the Company or any
Subsidiary to employ or otherwise retain any
Optionee;
ii) for restrictions on the transfer, sale, or other
disposition of Common Stock issued to the Optionee
upon the exercise of an Option or for other
restrictions permitted by Section 11 with respect to
Restricted Stock;
iii) for an agreement by the Optionee to resell to the
Company, under specified conditions, Common Stock
issued upon the exercise of his Option or awarded
as Restricted Stock; and
iv) for the payment of the Option Price upon the
exercise of an Option otherwise than in cash,
including without limitation by delivery (including
constructive delivery) of shares of Common Stock
(other than Restricted Stock) valued at Fair Market
Value on the Date of Exercise of the Option, or by a
combination of cash and shares of Common Stock;
v) for the automatic issuance of a Reload Option for
the same number of shares delivered as payment (or
partial payment) of the Option Price as provided in
Section 3(d)(iv) above and, to the extent authorized
by the Committee, for the number of shares used to
satisfy any tax withholding requirement incident to
the exercise of an Option as provided for in Section
12. The number of shares covered by a Reload Option
shall not exceed (1) the number of shares, if any,
surrendered as payment or (2) the number of shares
remaining available for granting under the Plan,
whichever shall be less. No Reload Options shall
issue to an Optionee who exercises any Option
pursuant to the terms of this Plan following
termination of his employment.
e) to construe and interpret the Agreements and the Plan;
f) to require, whether or not provided for in the pertinent
Agreement, of any person acquiring or exercising an Option or
acquiring Restricted Stock, at the time of such exercise or
acquisition, the making of any representations or agreements
which the Committee may deem necessary or advisable in order
to comply with the securities and tax laws of the United
States or of any state; and
g) to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.
Any determinations or actions made or taken by the Committee
pursuant to this Section shall be binding and final.
4. ELIGIBILITY. Participants in the Plan shall be selected by the
Committee from key Employees occupying responsible managerial or
professional positions and who have the ability to make a substantial
contribution to the success of the Company. In making this selection
and in determining the form and amount of grants and awards, the
Committee shall consider any factors deemed relevant, including the
individual's functions, responsibilities, value of services to the
Company or to its Subsidiaries, and past and potential contributions
to the Company's profitability and sound growth. Members of the
Committee shall not be eligible to receive awards or grants under the
Plan during their tenure on the Committee.
Options and Restricted Stock may be granted only to
Employees; provided, however, that Directors who are not also
full-time employees shall not be eligible to receive Incentive Stock
Options. An Employee who has been granted an Option or Restricted
Stock may be granted additional Options and Restricted Stock.
5. STOCK SUBJECT TO THE PLAN. There is hereby reserved for issuance upon
the exercise of Options granted under the Plan or the award of
Restricted Stock under the Plan an aggregate of 6,000,000 shares of
Common Stock. If an Option granted under the Plan expires or
terminates for any reason without having been fully exercised
3
<PAGE> 5
or if shares of Restricted Stock granted under the Plan are forfeited,
the unpurchased shares of Common Stock which had been subject to such
Option at the time of its expiration or termination or the forfeited
shares of Restricted Stock, as the case may be, shall become available
for awards by the Committee of other Options or Restricted Stock under
the Plan. The total number of shares of Common Stock available to
grant to any one Optionee will not exceed 20% of the total shares
subject to grant.
6. OPTIONS.
a) Each Option grant shall be evidenced by an Agreement, which
shall indicate whether the Option is intended to be a
Nonstatutory Stock Option or an Incentive Stock Option.
b) The Option Price shall be determined by the Committee, but in
no event shall the Option Price be less than the greater of
the Fair Market Value of the Common Stock determined as of
the Date of Grant or the par value of the Common Stock.
c) The Option Period shall be determined by the Committee and
specifically set forth in the Agreement; provided, however,
than an Option shall not be exercisable after ten years from
the Date of Grant.
d) To the extent that the aggregate fair market value
(determined on the date the Option is granted) of Common
Stock with respect to which an Incentive Stock Option is
exercisable for the first time by any Optionee during any
calendar year exceeds $100,000, such Option shall be treated
as a Nonstatutory Stock Option.
e) All Incentive Stock Options granted under the Plan shall
comply with the provisions of the Code governing incentive
stock options, and with all other applicable rules and
regulations.
f) The Committee may permit the Optionee to defer the issue or
transfer of Common Stock which would otherwise be issued or
transferred to such Optionee upon exercise of the Option.
Such deferral shall be at a time, in an amount, and in a
manner that is in accordance with the terms and conditions
established by the Committee.
7. EXERCISE OF OPTIONS. An Option shall, subject to the provisions of the
Agreement under which it was granted, be exercised in whole or in part
by the delivery to the Company of written notice of the exercise, in
such form as the Committee may prescribe, accompanied by full payment
for the Common Stock with respect to which the Option is exercised.
8. NONTRANSFERABILITY. Incentive Stock Options granted under the Plan
shall not be transferable otherwise than by will or the laws of
descent and distribution. Nonstatutory Stock Options granted under the
Plan shall not be transferable otherwise than by will or the laws of
descent and distribution, except as provided by the Committee and
specified in the Agreement.
9. DEATH OF OPTIONEE. Upon the death of an Optionee, any Option
exercisable on the date of death may be exercised by the Optionee's
estate or by a person who acquires the legal right to exercise such
Option by bequest or inheritance or otherwise, provided that such
exercise occurs within one year following date of death and within the
remaining Option Period. The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may have
terminated prior to death, but only to the extent of any Options
exercisable on the date of death.
10. RETIREMENT, DISABILITY, AND OTHER TERMINATION. Notwithstanding the
designation of an Option in an Agreement as an Incentive Stock Option,
the tax treatment available pursuant to Section 422 of the Code upon
the exercise of an Incentive Stock Option is not available to an
Optionee who exercises any Incentive
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<PAGE> 6
Option more than (i) 12 months after the date of termination of
employment due to permanent disability or (ii) three months after the
date of termination of employment due to retirement or for other
reasons.
11. RESTRICTED STOCK AWARDS. Restricted Stock awards under the Plan shall
consist of shares of Common Stock granted to an Employee that are
restricted against transfer, subject to forfeiture, and subject to
other terms and conditions intended to further the purpose of the Plan
as determined by the Committee. Restricted Stock awards shall be
evidenced by Agreements containing provisions setting forth the terms
and conditions governing such awards. Each such Agreement must contain
the following:
a) prohibitions against the sale, assignment, transfer,
exchange, pledge, hypothecation, or other encumbrance of (i)
the shares awarded as Restricted Stock, (ii) the right to
vote such shares, and (iii) the right to receive dividends
thereon during the restriction period applicable to such
shares; provided, however, that the Optionee shall have all
the other rights of a stockholder including, but not limited
to, the right to receive dividends and the right to vote such
shares;
b) at least one term, condition, or restriction constituting a
"substantial risk of forfeitures" as defined in Section 83(c)
of the Code;
c) such other terms, conditions, and restrictions as the
Committee in its discretion chooses to apply to the stock
(including, without limitation) provisions creating
additional substantial risks of forfeiture);
d) a requirement that each certificate representing shares of
Restricted Stock shall be deposited with the Company, or its
designee, and shall bear the following legend:
This certificate and shares of stock represented
hereby are subject to the terms and conditions
(including forfeiture and restrictions against
transfer) contained in the Union Planters
Corporation 1992 Stock Incentive Plan and an
Agreement entered into between the registered owner
and Union Planters Corporation. Release from such
terms and conditions shall be made only in
accordance with the provisions of the Plan and the
Agreement, a copy of each of which is on file in the
office of the Treasurer of Union Planters
Corporation.
e) the applicable period or periods of any terms, conditions, or
restrictions applicable to the Restricted Stock; provided,
however, that the Committee in its discretion may accelerate
the expiration of the applicable restriction period with
respect to any part or all of the shares awarded to an
Optionee; and
f) the terms and conditions upon which any restrictions upon
shares of Restricted Stock awarded shall lapse and new
certificates free of the foregoing legend shall be issued to
the Optionee or his legal representative.
The Committee may include in an Agreement that in
the event of an Optionee's termination of employment for any
reason prior to the lapse of restrictions, all shares of
Restricted Stock shall be forfeited by such Optionee to the
Company without payment of any consideration by the Company,
and neither the Optionee nor any successors, heirs, assigns,
or personal representatives of such Optionee shall thereafter
have any further rights or interest in such shares or
certificates.
12. WITHHOLDING TAXES. Whenever the Company proposes or is required to
issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the Optionee to remit to the Company
cash or Common Stock in an amount sufficient to satisfy any federal,
state and/or local withholding tax requirements prior to the delivery
of any certificate or certificates for such shares. Alternatively, the
Company may issue or transfer such shares of Common Stock net of the
number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares of Common Stock
shall be valued on
5
<PAGE> 7
the date the withholding obligation is incurred. All Optionees shall
have the right under the Plan to elect to pay withholding taxes in
cash, to have shares of Common Stock withheld, or to deliver
previously owned shares to satisfy withholding tax requirements upon
the exercise of an Option granted under the Plan or upon the
acquisition of Restricted Stock free of prior restrictions.
13. CAPITAL ADJUSTMENTS. The number and class of shares subject to each
outstanding Option or Restricted Stock grant, the Option Price, and
the aggregate number and class of shares for which awards thereafter
may be made shall be subject to such adjustment, if any, as the
Committee in its discretion deems appropriate to reflect such events
as stock dividends, stock splits, recapitalizations, mergers,
consolidations, or reorganizations of or by the Company; provided,
however, that any such adjustment shall not materially increase the
benefits accruing to Plan participants.
14. TERMINATION OR AMENDMENT. The Board shall have the power to terminate
the Plan and to amend it in any respect, provided, however, that after
the Plan has been approved by the stockholders of the Company, no
amendment of the Plan shall be made by the Board without approval of
the Company's stockholders to the extent stockholder approval of such
amendment is required by applicable law or regulation or the
requirements of the principal exchange or interdealer quotation system
on which the Common Stock is then listed or quoted. Unless required by
applicable law or governmental regulations, no termination or
amendment of the Plan shall adversely affect the rights or obligations
of the holder of any Option or Restricted Stock granted under the Plan
without his consent.
15. MODIFICATION, EXTENSION, RENEWAL AND SUBSTITUTION OF OPTIONS. Subject
to the terms and conditions and within the limitations of the Plan,
the Committee may modify, extend, or renew outstanding Options granted
under the Plan. Notwithstanding the foregoing, however, no
modification of an Option under the Plan shall, without the consent of
the Optionee, alter or impair any of such Optionee's rights or
obligations, unless required by applicable law or governmental
regulations. Anything contained herein to the contrary
notwithstanding, Options may, at the discretion of the Committee, be
granted under this Plan in substitution for options to purchase shares
of capital stock of another corporation which is merged into,
consolidated with, or all or a substantial portion of the property or
stock of which is acquired by, the Company or a Subsidiary. The terms
and conditions of the substitute options so granted may vary from the
terms and conditions set forth in this Plan to such extent as the
Committee may deem appropriate in order to conform, in whole or in
part, to the provisions of the options in substitution for which such
Options are granted. Such Options shall not be counted toward the
(20%) share limit set forth in the last sentence in Section 5, except
to the extent it is determined by the Committee that counting such
Options is required in order for the grants of such Options hereunder
to be eligible to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Code and the rules and
regulations thereunder.
16. EFFECTIVENESS OF THE PLAN. Following adoption by the Board, the Plan
shall take effect on the date approved by the stockholders of the
Company. Notwithstanding any provision to the contrary, all Options
and Restricted Stock shall be without force or effect unless the Plan
shall have been approved by the stockholders of the Company. Any Plan
amendments which require stockholder approval pursuant to Section 14
are subject to approval by vote of the stockholders of the Company
within 12 months after their adoption by the Board. Subject to such
approval, any such amendments shall be effective on the date on which
they are adopted by the Board. Options and Restricted Stock which are
dependent upon stockholder approval of a Plan amendment may be granted
prior to such approval, but shall be subject to such approval. The
date on which any Option or Restricted Stock grant dependent upon
stockholder approval of a Plan amendment is effective shall be the
Date of Grant for all purposes as if the Option or Restricted Stock
grant had not been subject to such approval; however, no Option or
Restricted Stock granted may be exercised prior to such stockholder
approval.
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<PAGE> 8
17. TERM OF THE PLAN. Unless sooner terminated by the Board pursuant to
Section 14, the Plan shall terminate on the date ten years after its
adoption by the Board, and no Options or Restricted Stock may be
granted after termination. The termination shall not affect the
validity of any Option or Restricted Stock outstanding on the date of
termination.
18. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as Directors or as members of the
Committee, the members of the Committee shall be indemnified by the
Company against the reasonable expenses, including attorneys' fees,
actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein,
to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any
Option or Restricted Stock granted or awarded hereunder, and against
all amounts reasonably paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or
proceeding, if such members acted in good faith and in a manner which
they believed to be in, and not opposed to, the best interests of the
Company.
19. GENERAL PROVISIONS.
a) The establishment of the Plan shall not confer upon any
Employee any legal or equitable right against the Company or
the Committee except as expressly provided in the Plan.
b) The Plan does not constitute inducement or consideration for
the employment of any Employee, nor is it a contract between
the Company and any Employee. Participation in the Plan shall
not give any Employee any right to be retained in the employ
of the Company. The Company retains the right to hire and
discharge any Employee at any time, with or without cause, as
if the Plan had never been adopted.
c) The interests of any Employee under the Plan are not subject
to the claims of creditors and may not in any way be
assigned, alienated, or encumbered.
d) The Plan shall be governed, construed, and administered in
accordance with the laws of the state of Tennessee and in
accordance with the intention of the Company that Incentive
Stock Options granted under the Plan qualify as such under
Section 422 of the Code, and that Options granted under the
Plan to Officers and Directors who are subject to Section 16
of the Exchange Act qualify as exempt transactions under
Exchange Act Rule 16b-3.
e) Each award under the Plan shall be subject to the requirement
that, if at any time the Committee shall determine that (i)
the listing, registration or qualification of the shares of
Common Stock subject or related thereto upon any securities
exchange or under any state or federal law, or (ii) the
consent or approval of any government regulatory body, or
(iii) an agreement by the Optionee with respect to the
disposition of shares of Common Stock is necessary or
desirable as a condition of, or in connection with, the
granting of such award or the issue or purchase of shares of
Common Stock thereunder, such award may not be consummated in
whole or in part unless such listing, registration,
qualification, consent, approval, or agreement shall have
been effected or obtained free of any conditions not
acceptable to the Committee.
<TABLE>
<CAPTION>
ORIGINAL PLAN APPROVAL: AMENDMENT NO. 1 APPROVAL:
<S> <C> <C> <C>
Board of Directors - February 20, 1992 Board of Directors - October 17, 1996
Shareholders - April 23, 1992 Shareholders - April 17, 1997
</TABLE>
7
<PAGE> 1
EXHIBIT 10(D)
<PAGE> 2
AMENDMENT TO
SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT
THIS AMENDMENT, dated as of April ___, 1997 by and between Union
Planters Corporation ("Employer") and _________________ ("Participant"), amends
that certain Supplemental Executive Retirement Agreement, dated as of February
23, 1995, by and between Employer and Participant (the "SERP").
WHEREAS, Employer and Participant desire to amend the SERP as provided
herein;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definition of "Change in Control". The current definition of the
term "Change in Control" in Section 1.6 of the SERP is hereby deleted in its
entirety and the following is substituted in lieu thereof:
"Change in Control" shall mean the occurrence of any of the following
events:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) of 25% or more
of either (A) the then outstanding shares of common stock of Employer
(the "Outstanding Company Common Stock") or (B) the combined voting
power of the then outstanding voting securities of Employer entitled
to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of
this subsection (i), the following acquisitions shall not constitute a
Change in Control: (w) any acquisition directly from Employer, (x) any
acquisition by Employer, (y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by Employer or any
corporation controlled by Employer, or (z) any acquisition by any
Person pursuant to a transaction which complies with clauses (A), (B)
and (C) of subsection (iii) of this Section 1.6; or
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of Employer (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or
<PAGE> 3
threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of Employer (a "Business Combination"), in each case,
unless, following such Business Combination,
(A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 65% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns Employer or all or
substantially all of Employer's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may
be, and
(B) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan
(or related trust) of Employer or such corporation resulting
from such Business Combination) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination, and
(C) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination.
2. Definition of "Disability". The current definition of the term
"Disability" in Section 1.8 of the SERP is hereby deleted in its entirety and
the following is substituted in lieu thereof:
"Disability" shall mean a mental or physical disability as determined
by the Board in accordance with standards and procedures similar to
those under Employer's employee long-term disability plan, if any. At
any time that Employer does not maintain such a long-term disability
plan, Disability shall mean the inability of Participant, as
determined by the Board, to substantially perform his regular duties
and responsibility due to a medically determinable physical or mental
illness which has lasted (or can reasonably be expected to last) for a
period of six consecutive months.
-2-
<PAGE> 4
3. Definition of "Final Average Earnings". The current definition of
the term "Final Average Earnings" in Section 1.12 of the SERP is hereby deleted
in its entirety and the following is substituted in lieu thereof:
"Final Average Earnings" shall mean the sum of (i) the Participant's
or Eligible Participant's highest base salary in effect during any
calendar year preceding his termination of employment, including the
year in which such termination occurs, and (ii) the Participant's or
Eligible Participant's highest annual bonus payable with respect to
any calendar year preceding his termination of employment, including
the year in which such termination occurs.
4. Excise Tax Provision. Section 5.14 of the SERP, relating to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, is hereby deleted in its entirety.
*****************************************************
The terms of the SERP not hereby amended shall be and remain in full
force and effect and are not affected by this Amendment.
IN WITNESS WHEREOF, Participant and Employer have duly executed this
Amendment as of the day and year first above written.
-----------------------------
-------------------
Participant
UNION PLANTERS CORPORATION
By:
--------------------------
-3-
<PAGE> 1
EXHIBIT 10 (E)
<PAGE> 2
AMENDMENT No. 1 TO
UNION PLANTERS CORPORATION
DEFERRED COMPENSATION PLAN FOR EXECUTIVES
WHEREAS, Union Planters Corporation (the "Company") maintains the
Union Planters Corporation Deferred Compensation Plan for Executives (the
"Plan"); and
WHEREAS, the Board of Directors of the Company has approved an
amendment to the Plan (i) to change the definition of "Change of Control" to be
consistent with the definition assigned such term in certain Company benefit
plans and agreements, (ii) to amend the excise tax provision of Section 10.14
to provide for a gross-up of income taxes on the excise tax gross-up payment,
and (iii) to eliminate a conflict between Section 10.14 and 10.15;
NOW, THEREFORE, the Plan be and hereby is amended as set forth herein;
provided that, to the extent that such amendments directly or indirectly affect
the benefits payable under the Plan, such amendments shall be effective with
respect to any Participant only upon his or her acknowledgment (or the written
acknowledgment by the Beneficiary of a deceased Participant) of this Amendment.
1. Definition of "Change of Control". Section 1.4 of the Plan is
hereby deleted in its entirety and the following is substituted in lieu
thereof:
1.4. "Change of Control" shall mean the occurrence of any of the
following events:
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended) of 25% or more
of either (A) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (w) any acquisition directly from the
Company, (x) any acquisition by the Company, (y) any acquisition by
any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, or (z)
any acquisition by any Person pursuant to a transaction which complies
with clauses (A), (B) and (C) of subsection (iii) of this Section 1.4;
or
(ii) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority
of the directors
<PAGE> 3
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board; or
(iii) Consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case,
unless, following such Business Combination,
(A) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and outstanding Company
Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more
than 65% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the
corporation resulting from such Business Combination
(including, without limitation, a corporation which as a
result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock
and Outstanding Company Voting Securities, as the case may
be, and
(B) no Person (excluding any corporation resulting
from such Business Combination or any employee benefit plan
(or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns,
directly or indirectly, 25% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of
such corporation except to the extent that such ownership
existed prior to the Business Combination, and
(C) at least a majority of the members of the board
of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action
of the Board, providing for such Business Combination.
2. Excise Tax Provision. Section 10.14 of the Plan is hereby deleted
in its entirety and the following is substituted in lieu thereof:
10.14. Payment of Taxes. Anything in the Plan to the contrary
notwithstanding, in the event it shall be determined that any payment
of benefits under this Plan (the "Plan Payment") would be subject to
the excise tax imposed by Section 4999 of the Code, or
-2-
<PAGE> 4
any interest or penalties are incurred by the Participant with respect
to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Participant shall be entitled to receive an additional
payment (an "Excise Tax Gross-Up Payment") in an amount such that
after payment by the Participant of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed
with respect thereto) and Excise Tax imposed upon the Excise Tax
Gross-Up Payment, Participant retains an amount of the Excise Tax
Gross-Up Payment equal to the Excise Tax imposed upon the Plan
Payment. The Excise Tax Gross-Up Payment will be made within two (2)
months following the Participant's termination of employment, once a
good faith determination has been made by either the Company or the
Participant that the Plan Payment is subject to the excise tax imposed
by Section 4999 of the Code.
4. Amendment to Section 10.15. Section 10.15 of the Plan is hereby
amended by adding the following clause to the beginning of the second sentence
thereof: "Except as provided in Section 10.14,".
*****************************************************
The terms of the Plan not hereby amended shall be and remain in full
force and effect and are not affected by this Amendment.
NOW, THEREFORE, this Amendment No. 1 is effective April __, 1997.
UNION PLANTERS CORPORATION
By:
-------------------------------
ACKNOWLEDGED AND AGREED TO by Participant as indicated below:
-----------------------------
Participant
-----------------------------
Date
-3-
<PAGE> 1
EXHIBIT 11
PAGE 1 OF 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
COMPUTATION OF PRIMARY EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1996
------------ ------------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
Average shares outstanding 65,361,121 62,848,176
Assumed exercise of options outstanding 1,402,109 1,234,486
------------ ------------
Primary average shares outstanding 66,763,230 64,082,662
============ ============
Net earnings $ 59,192 $ 47,152
Less: Preferred stock dividends
Series B -- (88)
Series E (1,496) (1,748)
------------ ------------
Net earnings applicable to common shares $ 57,696 $ 45,316
============ ============
Primary net earnings per common share $ .86 $ .70
============ ============
</TABLE>
<PAGE> 2
EXHIBIT 11
PAGE 2 OF 2
UNION PLANTERS CORPORATION AND SUBSIDIARIES
COMPUTATION OF FULLY DILUTED EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
1997 1996
------------ ------------
(DOLLARS IN THOUSANDS,
EXCEPT PER SHARE DATA)
<S> <C> <C>
FULLY DILUTED EARNINGS PER COMMON SHARE
Average shares outstanding 65,361,121 62,848,176
Assumed exercise of options outstanding 1,402,808 1,286,700
Assumed conversion of preferred stock outstanding:
Series B -- 339,768
Series E 4,060,006 4,370,524
------------ ------------
Fully diluted average shares outstanding 70,823,935 68,845,168
============ ============
Net earnings $ 59,192 $ 47,152
Less: Preferred stock dividends -- --
------------ ------------
Net earnings applicable to common shares $ 59,192 $ 47,152
============ ============
Fully diluted net earnings per common share $ .84 $ .68
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF UNION PLANTERS CORP. FOR THE 3 MONTH PERIOD ENDED MARCH
31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 479,431
<INT-BEARING-DEPOSITS> 12,582
<FED-FUNDS-SOLD> 63,271
<TRADING-ASSETS> 164,683
<INVESTMENTS-HELD-FOR-SALE> 3,008,886
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 10,447,366
<ALLOWANCE> 163,980
<TOTAL-ASSETS> 14,932,464
<DEPOSITS> 11,395,301
<SHORT-TERM> 536,377
<LIABILITIES-OTHER> 278,958
<LONG-TERM> 1,326,565
0
71,937
<COMMON> 330,055
<OTHER-SE> 993,271
<TOTAL-LIABILITIES-AND-EQUITY> 14,932,464
<INTEREST-LOAN> 238,215
<INTEREST-INVEST> 47,162
<INTEREST-OTHER> 5,524
<INTEREST-TOTAL> 290,901
<INTEREST-DEPOSIT> 106,386
<INTEREST-EXPENSE> 135,625
<INTEREST-INCOME-NET> 155,276
<LOAN-LOSSES> 12,414
<SECURITIES-GAINS> 116
<EXPENSE-OTHER> 109,229
<INCOME-PRETAX> 91,085
<INCOME-PRE-EXTRAORDINARY> 91,085
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 59,192
<EPS-PRIMARY> .86
<EPS-DILUTED> .84
<YIELD-ACTUAL> 8.73
<LOANS-NON> 53,060
<LOANS-PAST> 618,812
<LOANS-TROUBLED> 2,394
<LOANS-PROBLEM> 16,969
<ALLOWANCE-OPEN> 166,853
<CHARGE-OFFS> 19,413
<RECOVERIES> 4,126
<ALLOWANCE-CLOSE> 163,980
<ALLOWANCE-DOMESTIC> 163,980
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99(A)
<PAGE> 2
MAGNA BANCORP TO AFFILIATE WITH UNION PLANTERS
MEMPHIS, TENNESSEE (NYSE:UPC)-- May 8,1997--Union Planters Corporation, the $15
billion asset Memphis-based bank holding company and Magna Bancorp, Inc.
(NASDAQ:MGNL), the $1.3 billion asset parent company of Magnolia Federal Bank
for Savings, announced today they have agreed to merge.
The announcement was made jointly by Benjamin W. Rawlins, Jr., Chairman and CEO
of Union Planters and Robert S. Duncan, Chairman and CEO of Magna. The
agreement calls for Union Planters to exchange approximately .5165 shares of
its common stock for each common share of Magna. The transaction would be
valued at approximately $323 million or $23.50 per share based on Union
Planters May 8 closing stock price of $45.50.
The merger is to be tax-free to Magna shareholders and will be accounted for as
a pooling of interests. The merger is subject to Magna shareholder approval,
regulatory approval and normal contractual conditions being met, and is
expected to be completed during the late third or early fourth quarter of this
year.
In making the announcement, Ben Rawlins stated, "We are pleased that the Magna
team selected Union Planters as their long term partner. Magna's general
banking lines will increase our penetration in Mississippi, especially in
Jackson, Hattiesburg and the Gulf Coast while providing us entry into Mobile,
Alabama and their mortgage loan expertise will continue to strengthen our
strategic commitment to that business."
Bob Duncan commented, "Our board did an excellent job in determining the best
long term course for our customers, employees and shareholders alike. The
affiliation with Union Planters will mean our customers can expect an enhanced
level of convenience and a much broader product line. I personally look forward
to the opportunities that are ahead . We have always shared Union Planters'
commitment to community management and we look forward to continuing this
tradition."
Magna converted to a stock thrift from a mutual thrift in 1991 and is the
largest thrift and the sixth largest financial institution in Mississippi, as
well as the largest thrift in Alabama. After the merger, the combined Union
Planters affiliates will represent the third largest financial institution in
Mississippi.
Magnolia Federal operates 62 banking locations and 63 ATMs in Mississippi and
south Alabama; Union Planters has 112 offices and 120 ATMs in Mississippi. An
analysis is currently underway to determine which locations of
<PAGE> 3
the two organizations that are in proximity to each other will best serve
customer needs.
Magna's subsidiary, Magna Mortgage Company, is a major mortgage servicer with
over $3.1 billion in loan servicing which will be combined with Union Planters'
mortgage loan servicing that exceeds $10 billion, resulting in one of the
nation's largest secondary market mortgage servicing operations.
Union Planters, founded in 1869, has over 430 banking locations and 560 ATMs in
Tennessee, Mississippi, Missouri, Arkansas, Alabama, Louisiana and Kentucky. At
March 31, 1997 Union Planters was the 42nd largest banking institution in the
United States, serving the needs of over one million households.
For more information:
(Financial)
Jack W. Parker
Executive Vice President & CFO
Union Planters Corporation
7130 Goodlett Farms Parkway
Cordova, TN 38018
901.580.6781
(Media)
Bill Andrews
Senior Vice President
Union Planters Corporation
7130 Goodlett Farms Parkway
Cordova, TN 38018
901.580.2892
(Magna)
Lou Ann Poynter
President & COO
Magna Bancorp, Inc.
100 West Front Street
Hattiesburg, MS 39401
601.545.4756
