<PAGE> 1
As filed with the Securities and Exchange Commission on July 18, 1997
Registration No. 333-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
UNION PLANTERS CORPORATION
(Exact name of registrant as specified in its charter)
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TENNESSEE 6712 62-0859007
(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Identification No.)
Classification Code Number)
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7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6000
(Address, including zip code, and telephone number of
registrant's principal executive offices)
E. JAMES HOUSE, JR, ESQ.,
SECRETARY AND MANAGER OF THE LEGAL DEPARTMENT OF
UNION PLANTERS CORPORATION
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6495
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
R. NASH NEYLAND, ESQ.
Wyatt, Tarrant & Combs
6075 Poplar Avenue, Suite 650
Memphis, Tennessee 38119
(901) 537-1000
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
CALCULATION OF REGISTRATION FEE
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- ---------------------------------------------------------------------------------------------------------------------------
Proposed Maximum
Proposed Maximum Aggregate
Title of Each Class of Securities to be Amount to be Offering Price Offering Price Amount of
Registered Registered (1) Per Unit (2) (2) Registration Fee
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Common Stock, $5.00, par value per share, 612,233 $22.78 $13,946,667.74 $4,226.26
Shares (with
(and associated Preferred Share Rights) Preferred Share
Rights)
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(1) This Registration Statement covers the maximum number of shares of
common stock of the Registrant which is expected to be issued in
connection with the merger described herein.
(2) Estimated solely for the purpose of calculating the registration fee
and based, pursuant to Rule 457(f)(2) under the Securities Act of
1933, as amended, on the book value per share of the Common Stock of
SBT Bancshares, Inc. as of the latest practicable date prior to filing
this Registration Statement.
DELAYING AMENDMENT
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
UNION PLANTERS CORPORATION
CROSS REFERENCE OF ITEMS IN FORM S-4 TO PROSPECTUS
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ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
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A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and Facing Page, Cross Reference Sheet and
Outside Front Cover Page of Prospectus Outside Front Cover Page
2. Inside Front and Outside Back Cover Inside Front Cover and TABLE OF CONTENTS
Pages of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed *
Charges and Other Information
4. Terms of the Transaction SUMMARY and THE MERGER
5. Pro Forma Financial Information SUMMARY
6. Material Contracts with the Company *
Being Acquired
7. Additional Information Required for *
Reoffering by Persons and Parties Deemed
to be Underwriters
8. Interests of Named Experts and Counsel THE MERGER--The Fairness Opinion, LEGAL
OPINIONS and EXPERTS
9. Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
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ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
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B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 INCORPORATION OF CERTAIN DOCUMENTS BY
Registrants REFERENCE, SUMMARY, THE MERGER,
DESCRIPTION OF THE UPC COMMON AND
PREFERRED STOCK and EFFECT OF THE MERGER
ON RIGHTS OF SHAREHOLDERS
11. Incorporation of Certain Information by INCORPORATION OF CERTAIN DOCUMENTS BY
Reference REFERENCE
12. Information with Respect to S-2 or S-3 *
Registrants
13. Incorporation of Certain Information by *
Reference
14. Information with Respect to Registrants *
Other Than S-3 or S-2 Registrants
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 *
Companies
16. Information with Respect to S-2 or S-3 *
Companies
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ITEMS IN PART I OF FORM S-4 PROSPECTUS CAPTION OR LOCATION
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17. Information with Respect to Companies INCORPORATION OF CERTAIN DOCUMENTS BY
Other Than S-3 or S-2 Companies REFERENCE, SUMMARY, THE MERGER, BUSINESS
OF SBT, and MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION OF SBT
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or INCORPORATION OF CERTAIN DOCUMENTS BY
Authorizations are to be Solicited REFERENCE, THE SPECIAL MEETING, THE
MERGER, SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT OF SBT
and EFFECT OF THE MERGER ON RIGHTS OF
SHAREHOLDERS
19. Information if Proxies, Consents or *
Authorizations are not to be Solicited
or in an Exchange Offer
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* Omitted because the answer is negative or the item is inapplicable.
<PAGE> 5
SBT BANCSHARES, INC.
116 South Third Street
Selmer, Tennessee 38375-2114
_______ __, 1997
TO THE SHAREHOLDERS OF SBT BANCSHARES, INC.
You are cordially invited to attend a special meeting of the
shareholders of SBT Bancshares, Inc. ("SBT") to be held at the Selmer Civic
Center, 230 North Fifth Street, Selmer, Tennessee 38375, at [time], local time,
on [day, month & year] (the "Special Meeting").
At the Special Meeting you will have the opportunity to consider and
vote on a proposal to approve the Agreement and Plan of Reorganization dated as
of November 26, 1996, along with the Plan of Merger annexed thereto as Exhibit
A, (the "Reorganization Agreement"), pursuant to which SBT would be merged with
and into Union Planters Community Bancorp, Inc. ("Community"), a wholly-owned
subsidiary of Union Planters Corporation ("UPC"), a bank holding company
headquartered in Memphis, Tennessee (the "Merger"). As a result of the Merger,
SBT would be acquired by UPC and Selmer Bank & Trust Company (the "Bank") would
become a direct subsidiary of Community and an indirect subsidiary of UPC. The
Boards of Directors of SBT, UPC and Community have each unanimously approved
the Reorganization Agreement.
In the Merger, holders of SBT's common stock, $20.00 par value per
share ("SBT Common Stock") outstanding immediately prior to the Effective Time
of the Merger, would receive in exchange for each of their shares of SBT Common
Stock, 45.12 shares of UPC's common stock, $5.00 par value per share, ("UPC
Common Stock"). In no event would UPC issue a fractional share of UPC Common
Stock, but instead would make a cash payment to settle any fractional share
equal to the amount determined by multiplying the fraction by the last sale
price of UPC Common Stock on the New York Stock Exchange on the last trading
day prior to the Effective Time of the Merger.
Based on the market value of the UPC Common Stock on ___________ __,
1997, the value of the UPC Common Stock to be received for each share of SBT
Common Stock would be approximately $______. However, the value of UPC Common
Stock, which is traded on the New York Stock Exchange under the symbol "UPC",
is subject to fluctuation, and the value of the UPC Common Stock to be received
upon consummation of the Merger may be more or less than $_______.
The annexed Notice of Special Meeting of Shareholders and
Prospectus/Proxy Statement explain the Merger, the Exchange Ratio and the
Reorganization Agreement and provide more specific information related to the
Special Meeting. Please read these materials carefully and thoughtfully
consider the information contained in them. The approvals of not only SBT's
shareholders, but also those of certain federal and state governmental
regulatory agencies, are required to consummate the Merger. Only the holders
of record of SBT Common Stock on [record date for shareholders] are entitled to
vote at the Special Meeting.
<PAGE> 6
Whether or not you plan to attend the Special Meeting in person, you
are urged to complete, sign, date and promptly return the enclosed Proxy
Appointment Card to assure that your shares of SBT Common Stock will be voted
at the Special Meeting. There is included with this material a postage-paid
addressed envelope for returning your Proxy Appointment Card. No additional
postage is required if mailed in the United States.
Your Board of Directors has unanimously approved the Reorganization
Agreement and believes that the Merger is in the best interests of SBT and the
SBT shareholders. Accordingly, the Board of Directors of SBT unanimously
recommends that you vote "FOR" approval of the Reorganization Agreement and
Plan of Merger being considered.
Sincerely,
SBT Bancshares, Inc.
- ------------------------------------- -----------------------------------
By: Richard Rankin By: James E. Hanna
Chairman of the Board and Chief President and Cashier
Executive Officer
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME
<PAGE> 7
SBT BANCSHARES, INC.
116 SOUTH THIRD STREET
SELMER, TENNESSEE 38375-2114
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD [DAY, MONTH & YEAR]
NOTICE IS HEREBY GIVEN that a special meeting (the "Special Meeting") of the
shareholders of SBT Bancshares, Inc. ("SBT") has been called by the Board of
Directors of SBT and will be held at the Selmer Civic Center, 230 North Fifth
Street, Selmer, Tennessee 38375, on [day, month & year], at [time], local time,
for the following purposes:
1. To consider and vote upon a proposal to approve the Agreement
and Plan of Reorganization dated as of November 26, 1996 together with the Plan
of Merger annexed thereto as Exhibit A (collectively, the "Reorganization
Agreement") by and between SBT, Union Planters Corporation ("UPC"), a
Tennessee-chartered bank holding company headquartered in Memphis, Tennessee,
and Union Planters Community Bancorp, Inc. ("Community"), a wholly-owned
subsidiary of UPC, pursuant to which: (i) SBT would merge with and into
Community (the "Merger"); (ii) each share of SBT's common stock, $20.00 par
value per share ("SBT Common Stock"), issued and outstanding immediately prior
to the Effective Time of the Merger would be exchanged for 45.12 shares of the
common stock, $5.00 par value per share, of UPC ("UPC Common Stock"); and (iii)
Selmer Bank & Trust Company would become a wholly-owned subsidiary of
Community, all as more fully described in the accompanying Prospectus/Proxy
Statement. No fractional shares of UPC Common Stock would be issued, but
instead UPC would settle any fractional share with a cash payment determined by
multiplying the fraction by the last sale price of UPC Common Stock on the New
York Stock Exchange on the last trading day prior to the Effective Time of the
Merger; and
2. To transact such other business as may properly come before
the Special Meeting or any adjournments or postponements thereof. Management
is not aware of any other business to be transacted at the Special Meeting.
Only SBT shareholders of record at the close of business on [record
date for shareholders], will be entitled to receive notice of and to vote at
the Special Meeting and at any adjournments or postponements thereof.
SBT shareholders have appraisal rights under Delaware law and to
receive the "fair value" of their shares of SBT Common Stock in cash should the
Merger be consummated. However, in order to properly "perfect" statutory
appraisal rights, certain specific actions must be taken. See the accompanying
Prospectus/Proxy Statement and the copy of the Delaware statutes governing
dissenters' rights attached as Appendix G to the accompanying Prospectus/Proxy
Statement.
Whether or not you plan to attend the Special Meeting, please sign and
date the enclosed Proxy Appointment Card and return it at once in the stamped
return envelope in order to ensure that your shares of SBT Common Stock will be
represented at the Special Meeting. PLEASE DO NOT SEND IN ANY
<PAGE> 8
STOCK CERTIFICATES AT THIS TIME. If you should attend in person, your Proxy
Appointment Card can be revoked if you wish and you may vote in person your own
shares.
By Order of the Board of Directors
- ---------------------------------- ----------------------------
By: Richard Rankin By: James E. Hanna
Chairman of the Board and Chief President and Cashier
Executive Officer
Selmer, Tennessee
DATED: [date of notice]
THE BOARD OF DIRECTORS OF SBT BANCSHARES, INC., BY UNANIMOUS VOTE, RECOMMENDS
THAT SHAREHOLDERS OF SBT BANCSHARES, INC. VOTE "FOR" APPROVAL OF THE
REORGANIZATION AGREEMENT AND PLAN OF MERGER.
<PAGE> 9
PROSPECTUS
612,233 SHARES OF COMMON STOCK
OF
UNION PLANTERS CORPORATION
PROXY STATEMENT
SBT BANCSHARES, INC.
SPECIAL MEETING TO BE HELD [DAY, MONTH & YEAR]
This Prospectus and Proxy Statement (hereinafter referred to as the
"Prospectus/Proxy Statement") relates to up to 612,233 shares of the common
stock, $5.00 par value per share (together with associated Preferred Share
Rights (as defined herein), ("UPC Common Stock") of Union Planters Corporation
("UPC"), a Tennessee-chartered bank holding company, to be issued to holders of
the common stock, $20.00 par value per share ("SBT Common Stock") of SBT
Bancshares, Inc. ("SBT"), a Delaware-chartered bank holding company, upon
consummation of the merger (the "Merger") described herein. In the Merger, SBT
would be merged with and into Union Planters Community Bancorp, Inc.
("Community"), a Tennessee-chartered bank holding company and wholly-owned
subsidiary of UPC, pursuant to the terms of the Agreement and Plan of
Reorganization dated as of November 26, 1996, by and between SBT, UPC and
Community, along with the Plan of Merger ("Plan of Merger") annexed thereto as
Exhibit A (collectively, the "Reorganization Agreement"). As a result of the
Merger, SBT would be acquired by UPC and Selmer Bank and Trust Company (the
"Bank"), the wholly-owned subsidiary bank of SBT through which SBT operates,
would become a direct subsidiary of Community and an indirect subsidiary of
UPC. In the Merger, those persons who are record holders of SBT Common Stock
issued and outstanding immediately prior to the Effective Time of the Merger
("SBT Record Holders") would receive in exchange for each of their shares of
SBT Common Stock 45.12 shares of UPC Common Stock (the "Exchange Ratio"). The
Exchange Ratio is not subject to adjustment based upon fluctuations in the
market price of UPC Common Stock but may be adjusted in a manner deemed
reasonable by the Board of Directors of UPC (the "UPC Board") either in the
event of a stock split, reverse stock split, stock dividend or similar change
in the capital accounts of SBT or should there be more than 13,569 fully
diluted shares of SBT Common Stock outstanding immediately prior to the
Effective Time of the Merger.
Shares of the UPC Common Stock are now, and the UPC Common Stock to be
issued in connection with the Merger will be, listed for trading on the New
York Stock Exchange (the "NYSE") under the symbol "UPC." On November 25, 1996,
the business day prior to the announcement of the Merger, the last reported
sale price of UPC Common Stock on the NYSE was $39.875 per share. The last
reported sale price of UPC Common Stock on the NYSE on _____ ___, 1997, was
$_____ per share. Based on the market value of the UPC Common Stock on
__________ ___, 1997, the value of the UPC Common Stock to be received for each
share of SBT Common Stock would be approximately $_____. However, the value of
UPC Common Stock is subject to fluctuation, and the value of the UPC Common
Stock to be received by SBT Record Holders upon consummation of the Merger may
be more or less than $_______.
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This Prospectus also serves as a Proxy Statement of SBT and is being
furnished in connection with the solicitation of proxies by the Board of
Directors of SBT (the "SBT Board") for use at its special meeting of
shareholders (including any adjournments or postponements thereof) (the
"Special Meeting") to be held on [day, month & year], to consider and vote upon
the Reorganization Agreement and the Plan of Merger. The annexed Notice of
Special Meeting of Shareholders and this Prospectus/Proxy Statement explain the
Merger, the Exchange Ratio, the Reorganization Agreement and the Plan of Merger
and provide specific information relative to the Special Meeting. Please read
these materials carefully, and thoughtfully consider the information contained
in them.
All information contained in this Prospectus/Proxy Statement
pertaining to UPC and its subsidiaries (the "UPC Companies" and, any one of
them, a "UPC Company"), including Community, has been supplied by UPC and all
information pertaining to SBT and the Bank (collectively, the "SBT Companies"
and, either one of them, an "SBT Company") has been supplied by SBT. This
Prospectus/Proxy Statement and the accompanying proxy appointment card (the
"Proxy Appointment Card") are first being mailed to the SBT shareholders on or
about [mailing date].
THE SHARES OF UPC COMMON STOCK OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS
ACCOUNTS, OR OTHER OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC") OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION") OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS/PROXY STATEMENT IS [PROSPECTUS DATE].
<PAGE> 11
TABLE OF CONTENTS
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AVAILABLE INFORMATION (i)
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE (ii)
SUMMARY 1
The Parties 1
Special Meeting of SBT Shareholders 3
Votes Required; Record Date 3
The Merger 3
Reasons for the Merger; Recommendations of the SBT Board 4
The Fairness Opinion 4
Effective Time of the Merger 5
Exchange of Stock Certificates 5
Regulatory Approvals and Other Conditions 5
Waiver, Amendment and Termination 6
Limitation on Negotiations; Stock Option Agreement 6
Management after the Merger 7
Interests of Certain Persons in the Merger 7
Certain Federal Income Tax Consequences of the Merger 7
Accounting Treatment 8
Certain Differences in Shareholders' Rights 8
Appraisal Rights 8
Market Prices of Common Stock 9
Selected Consolidated Financial Data 10
Equivalent and Pro Forma Per Share Data 16
THE SPECIAL MEETING 18
Time and Place of Special Meeting; Solicitation of Proxies; Revocation 18
Votes Required 18
Voting 19
Appraisal Rights 19
Recommendation of the SBT Board 19
THE MERGER 19
General 19
Possible Adjustment of Exchange Ratio 20
Background of and Reasons for the Merger 20
The Fairness Opinion 21
Effective Time of the Merger 25
Exchange of Certificates 25
Conditions to Consummation of the Merger 25
Representations and Warranties 27
Regulatory Approvals 27
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Waiver, Amendment and Termination 27
Appraisal Rights 28
Conduct of Business Pending the Merger 30
Limitation on Negotiations 30
Management after the Merger 31
Employee Benefit Plans 31
Interests of Certain Persons in the Merger 31
Certain Federal Income Tax Consequences 32
Accounting Treatment 33
Expenses and Fees 34
Resales of UPC Common Stock 34
The Stock Option Agreement 35
BUSINESS OF SBT 37
General 37
Lending Activities 37
Property 37
Competition 37
Legal Proceedings 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OF SBT 38
Overview 38
Results Of Operations For The Years Ended December 31, 1996, 1995 and 1994 38
Results of Operations - Three Months Ended March 31, 1997 and 1996 40
Financial Condition 41
Liquidity and Asset/Liability Management 44
Sources and Uses of Funds 44
Regulatory Assessments 46
Effects of Inflation 46
Impact of Accounting Standards to be Adopted 46
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF SBT 50
CERTAIN REGULATORY CONSIDERATIONS 51
General 51
Payment of Dividends 53
Capital Adequacy 54
Support of Subsidiary Banks 55
Prompt Corrective Action 56
DESCRIPTION OF UPC COMMON AND PREFERRED STOCK 57
General 57
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UPC Common Stock 58
UPC Preferred Stock 60
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS 60
Anti-takeover Provisions Generally 61
Authorized Capital Stock 61
Amendment of Charter and Bylaws 63
Classified Board of Directors and Absence of Cumulative Voting 64
Director Removal and Vacancies 65
Limitations on Director Liability 65
Indemnification 65
Special Meeting of Stockholders 67
Actions by Stockholders Without a Meeting 67
Stockholder Nominations and Proposals 67
Business Combinations 68
Dissenters' Rights of Appraisal 72
Stockholders' Rights to Examine Books and Records 73
Dividends 73
LEGAL OPINIONS 74
EXPERTS 74
INDEX TO APPENDICES 75
A -- Agreement and Plan of Reorganization between Union Planters Corporation, Union Planters Community
Bancorp, Inc. and SBT Bancshares, Inc. dated as of November 26, 1996, together with the related
Plan of Merger annexed thereto as Exhibit 1
B -- Stock Option Agreement between SBT Bancshares, Inc and Union Planters Corporation, dated as of
November 26, 1996
C -- Audited Consolidated Financial Statements of SBT Bancshares, Inc. as of and for the year ended
December 31, 1996 (and notes thereto)
D -- Unaudited Consolidated Financial Statements of SBT Bancshares, Inc. as of December 31, 1995 and
for the two years ended December 31, 1995 (and notes thereto)
E -- Unaudited Interim Consolidated Financial Statements of SBT Bancshares, Inc. as of and for the
three months ended March 31, 1997 (and notes thereto)
F -- Fairness Opinion of Mercer Capital Management, Inc.
G -- Section 262 of the Delaware General Corporation Law, pertaining to applicable dissenters' rights
provisions
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AVAILABLE INFORMATION
UPC is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") and in accordance
therewith is required to file reports, proxy statements and other information
with the Commission. Copies of such reports, proxy statements and other
information, can be obtained, at prescribed rates, from the Commission by
addressing written requests for such copies to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements and other information can
be inspected and copied at the public reference facilities referred to above,
at the regional offices of the Commission at Room 1024, 7 World Trade Center,
13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, or, if such reports or
proxy statements have been filed electronically, through the Internet Web site
maintained by the Commission at (http://www.sec.gov). Furthermore, UPC Common
Stock is listed on the NYSE. Reports, proxy statements and other information
concerning UPC may be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005.
This Prospectus/Proxy Statement constitutes part of the Registration
Statement on Form S-4 of UPC (including any exhibits, appendices and amendments
thereto, the "Registration Statement") filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
securities offered hereby. This Prospectus/Proxy Statement does not contain
all of the information in the Registration Statement, certain portions of which
have been omitted consistent with the rules and regulations of the Commission.
For further information about UPC and the securities offered hereby, reference
is made to the Registration Statement. The Registration Statement may be
inspected and copied, at prescribed rates, at the Commission's public reference
facilities at the addresses set forth above.
Certain financial and other information relating to UPC is contained
in the documents indicated below under "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
All information contained in this Prospectus/Proxy Statement or
incorporated herein by reference with respect to UPC was supplied by UPC and
all information contained in this Prospectus/Proxy Statement or incorporated
herein by reference with respect to SBT was supplied by SBT. Although neither
UPC nor SBT has actual knowledge that would indicate that any statements or
information (including financial statements) relating to the other party
contained or incorporated herein are inaccurate or incomplete, neither UPC nor
SBT warrants the accuracy or completeness of such statements or information as
they relate to the other party.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS/PROXY STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS/PROXY STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS
PROSPECTUS/PROXY STATEMENT IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH AN OFFER OR
(i)
<PAGE> 15
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS/PROXY STATEMENT NOR ANY DISTRIBUTION OF THE SECURITIES BEING OFFERED
PURSUANT TO THIS PROSPECTUS/PROXY STATEMENT SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF UPC OR
SBT OR THE INFORMATION SET FORTH HEREIN SINCE THE DATE OF THIS PROSPECTUS/PROXY
STATEMENT.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by UPC
pursuant to the Exchange Act (Commission File No. 1-10160 except as otherwise
indicated) are hereby incorporated by reference herein:
(a) UPC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996;
(b) UPC's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(c) UPC's Current Reports on Form 8-K, dated January 16, 1997,
April 17, 1997 and July 17, 1997;
(d) The description of the current management and Board of
Directors of UPC contained in the Proxy Statement filed
pursuant to Section 14(a) of the Exchange Act for UPC's Annual
Meeting of Shareholders held April 17, 1997;
(e) UPC's Registration Statement on Form 8-A dated January 19,
1989, filed on February 1, 1989 (Commission File Number
0-6919), in connection with UPC's designation and
authorization of its Series A Preferred Stock; and
(f) The description of the UPC Common Stock contained in UPC's
Registration Statement under Section 12(b) of the Exchange Act
and any amendment or report filed for the purpose of updating
such description.
UPC's Annual Report on Form 10-K for the year ended December 31, 1996
incorporates by reference specific portions of UPC's Annual Report to
Shareholders for that year (UPC's "Annual Report to Shareholders" which is
Exhibit 13 to said Form 10-K) but does not incorporate other portions of UPC's
Annual Report to Shareholders. The portion of UPC's Annual Report to
Shareholders captioned "Letter to Shareholders" and certain other portions of
UPC's Annual Report to Shareholders not specifically incorporated into UPC's
Annual Report on Form 10-K are not incorporated herein and are not a part of
the Registration Statement.
All documents filed by UPC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus/Proxy Statement and
prior to the date of the Special Meeting shall be deemed to be incorporated by
reference into this Prospectus/Proxy Statement and to be a part hereof from the
date of filing of such documents. Any statement
(ii)
<PAGE> 16
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or in any subsequently
filed document which also is, or is deemed to be, incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part hereof, except as so
modified or superseded.
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF THESE
DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE WITHOUT CHARGE, UPON THE
WRITTEN OR ORAL REQUEST OF ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
THIS PROSPECTUS/PROXY STATEMENT IS DELIVERED. SUCH REQUESTS FOR DOCUMENTS
RELATING TO UPC SHOULD BE DIRECTED TO UNION PLANTERS CORPORATION, POST OFFICE
BOX 387, MEMPHIS, TENNESSEE 38147 (TELEPHONE (901) 580-6495), ATTENTION: E.
JAMES HOUSE, JR., SECRETARY. IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY REQUEST SHOULD BE MADE BY _____________ __, 1997.
(iii)
<PAGE> 17
SUMMARY
The following is a summary of certain information contained in this
Prospectus/Proxy Statement and the documents incorporated herein by reference.
This summary is not intended to be a complete description of the matters
covered in this Prospectus/Proxy Statement and is qualified in its entirety by
the more detailed information appearing elsewhere or incorporated by reference
into this Prospectus/Proxy Statement. SBT shareholders are urged to read
carefully the entire Prospectus/Proxy Statement, including each of the
Appendices. As used in this Prospectus/Proxy Statement, the terms "UPC" and
"SBT" refer to those entities, respectively, and, where the context requires,
to those entities and their respective subsidiaries.
THE PARTIES
Union Planters Corporation. UPC is a multi-state bank holding company
headquartered in Memphis, Tennessee. At March 31, 1997, UPC had total
consolidated assets of approximately $14.9 billion, total consolidated loans of
approximately $10.4 billion, total consolidated deposits of approximately $11.4
billion and total consolidated stockholders' equity of approximately $1.4
billion. As of that date, UPC was one of the fifty largest bank holding
companies in the United States and the largest independent bank holding company
headquartered in Tennessee as measured by total consolidated assets.
UPC conducts its business activities through its principal bank
subsidiary, the $5.7 billion asset Union Planters National Bank ("UPNB"),
founded in 1869 and headquartered in Memphis, Tennessee, and through 32 other
bank subsidiaries and one savings bank subsidiary (collectively, the "UPC
Banking Subsidiaries"), which are located in Tennessee, Mississippi, Missouri,
Arkansas, Louisiana, Alabama and Kentucky. Through the UPC Banking
Subsidiaries, UPC provides a diversified range of financial services in the
communities in which it operates, including consumer, commercial and corporate
lending; retail banking; and other financial services traditionally furnished
by full-service financial institutions. UPC also is engaged in mortgage
origination and servicing; investment management and trust services; the
issuance and servicing of credit and debit cards; the origination, packaging
and securitization of loans, primarily the government-guaranteed portions of
Small Business Administration loans; the purchase of delinquent Federal Housing
Administration and Department of Veterans Affairs ("FHA/VA")
government-insured/guaranteed loans from third parties and from the Government
National Mortgage Association ("GNMA") pools serviced for others; full service
and discount brokerage; and the sale of annuities and bank-eligible insurance
products.
Through the UPC Banking Subsidiaries, UPC operates approximately 433
banking offices and 560 automated teller machines. UPC's assets at March 31,
1997, are allocable by state to its banking offices (before consolidating
adjustments) approximately as follows: $9.9 billion in Tennessee, $2.3 billion
in Mississippi, $1.2 billion in Missouri, $750 million in Arkansas, $598
million in Louisiana, $442 million in Alabama and $116 million in Kentucky.
1
<PAGE> 18
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of UPC's business. UPC completed twelve
acquisitions in 1993, thirteen in 1994, three in 1995 and seven in 1996, adding
approximately $1.7 billion in total assets in 1993, $3.8 billion in 1994, $1.3
billion in 1995 and $4.2 billion in 1996. Thus far in 1997, UPC has entered
into definitive agreements to acquire four financial institutions in addition
to SBT, with aggregate total assets of approximately $1.8 billion at March 31,
1997 (collectively, the "Other Pending Acquisitions"). For additional
information regarding the Other Pending Acquisitions, see "--Recent
Developments Affecting UPC-Other Pending Acquisitions" and "Equivalent and Pro
Forma Per Share Data." For a discussion of UPC's acquisition program and UPC
management's philosophy on that subject, see the caption "Acquisitions" (on
page 6) and Note 2 to UPC's audited consolidated financial statements for the
years ended December 31, 1996, 1995 and 1994 (on pages 45 and 46) contained in
UPC's Annual Report to Shareholders which is Exhibit 13 to UPC's Annual Report
on Form 10-K for the year ended December 31, 1996, which Exhibit 13 is
incorporated by reference herein to the extent indicated above in
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Future acquisitions may entail the
payment by UPC of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of UPC
capital stock or the incurring of additional indebtedness by UPC, and could
have a dilutive effect on the earnings or book value per share of UPC Common
Stock.
UPC's corporate office is located at 7130 Goodlett Farms Parkway,
Memphis, Tennessee 38018, and its telephone number is (901) 580-6000.
Additional information concerning UPC is included in the documents incorporated
by reference into this Prospectus/Proxy Statement. See "AVAILABLE INFORMATION"
and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
SBT Bancshares, Inc. SBT is a Delaware-chartered bank holding company
headquartered in Selmer, Tennessee. Through Selmer Bank & Trust (the "Bank"),
SBT provides traditional deposit and lending services to individual and
corporate customers through its main office, two branch locations and one
drive-through facility. At March 31, 1997, on a consolidated basis, SBT had
total assets of approximately $102.1 million, total loans, net of unearned
income, of approximately $51.1 million, total deposits of approximately $87.7
million and total stockholders' equity of approximately $13.8 million.
SBT's corporate office is located at 116 South Third Street, Selmer,
Tennessee 38375-2114 and its telephone number is (901) 645-6187. Additional
information concerning SBT is included herein under various headings, including
but not limited to "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION OF SBT," and in the audited consolidated financial
statements (and notes thereto) of SBT for the year ended December 31, 1996, the
unaudited consolidated financial statements (and notes thereto) as of December
31, 1995 and for the two years ended December 31, 1995,
2
<PAGE> 19
and the unaudited interim financial statements as of and for the three months
ended March 31, 1997, copies of which are attached to this Prospectus/Proxy
Statement as Appendices C, D and E.
Union Planters Community Bancorp, Inc. Community is a bank holding
company and a wholly-owned subsidiary of UPC. Community's primary subsidiary
is Union Planters Bank of West Tennessee, Humboldt, Tennessee. Community's
corporate offices are located at 7130 Goodlett Farms Parkway, Memphis,
Tennessee 38018 and its telephone number is (901) 580-6000.
SPECIAL MEETING OF SBT SHAREHOLDERS
This Prospectus/Proxy Statement is being furnished to the holders of
SBT Common Stock in connection with the solicitation by the SBT Board of
proxies for use at the Special Meeting of the SBT shareholders to be held at
the Selmer Civic Center, 230 North Fifth Street, Selmer, Tennessee 38375, at
[time], local time, on [day, date & year]. At the Special Meeting, SBT
shareholders will be asked to consider and vote upon a proposal to approve the
Reorganization Agreement. See "THE SPECIAL MEETING."
VOTES REQUIRED; RECORD DATE
The SBT Board has fixed the close of business on [record date for
shareholders] as the record date (the "Record Date") for determination of the
shareholders entitled to notice of, and to vote at, the Special Meeting. Only
SBT shareholders of record on the Record Date will be entitled to receive
notice of and to vote at the Special Meeting. Each share of SBT Common Stock
is entitled to one vote. On the Record date, there were 13,569 shares of SBT
Common Stock issued and outstanding. The affirmative votes of the holders of
at least a majority of the shares of SBT Common Stock outstanding on the Record
Date are required to approve the Reorganization Agreement. See "THE SPECIAL
MEETING--Votes Required."
The directors and executive officers of SBT (the "SBT Management
Group") held 989 shares of SBT Common Stock as of the Record Date, or
approximately 7.28%, of the outstanding shares. The members of the SBT
Management Group have advised that they intend to vote "FOR" approval of the
Reorganization Agreement. Assuming that occurs, then 5,796 shares of the
remaining 12,580 shares of SBT Common Stock must be voted "FOR" approval of the
Reorganization Agreement in order to receive the requisite shareholder
approval. See "THE SPECIAL MEETING" and "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT OF SBT."
THE MERGER
The Reorganization Agreement provides for the acquisition of SBT by
UPC through the merger of SBT with and into Community, with Community surviving
the Merger. At the Effective Time of the Merger, each share of SBT Common
Stock issued and outstanding would
3
<PAGE> 20
be converted into, and exchanged for 45.12 shares of UPC Common Stock (the
"Exchange Ratio"), subject to possible adjustment as described under
"DESCRIPTION OF TRANSACTION--Possible Adjustment of Exchange Ratio."
No fractional shares of UPC Common Stock would be issued. Rather,
cash (without interest) would be paid in lieu of any fractional share interest
remaining after aggregating all whole and fractional shares to which any SBT
shareholder would be entitled upon consummation of the Merger, in an amount
equal to such fractional part of a share of UPC Common Stock multiplied by the
market value of one share of UPC Common Stock at the Effective Time of the
Merger. The market value of one share of UPC Common Stock at the Effective
Time of the Merger would be the last sale price of the UPC common stock on the
NYSE-Composite Transactions List (as published in The Wall Street Journal or,
if not published therein, another authoritative source as selected by UPC) on
the last trading day prior to the Effective Time of the Merger. (Hereinafter,
the shares of UPC Common Stock and any cash issuable to the SBT Record Holders
in the Merger in exchange for their shares of SBT Common Stock are referred to
collectively as the "Consideration"). See "THE MERGER--General."
As of the Record date, SBT had 13,569 shares of SBT Common Stock
issued and outstanding. Taking into account the Exchange Ratio of 45.12 shares
of UPC Common Stock for each share of SBT Common Stock, it is anticipated that
upon consummation of the Merger, UPC would issue approximately 612,233 shares
of UPC Common Stock, assuming no SBT shareholders exercise appraisal rights.
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE SBT BOARD
The SBT Board believes that the Reorganization Agreement and the
Merger are in the best interests of SBT and its shareholders and has approved
the matter to be voted upon by the SBT shareholders. The SBT Board recommends
that SBT shareholders vote "FOR" approval of the Reorganization Agreement. The
SBT Board believes that the Merger would result in a company with expanded
opportunities for profitable growth and that the combined resources and capital
of SBT and UPC would provide an enhanced ability to compete in the changing and
competitive financial services industry. See "THE MERGER--Background of and
Reasons for the Merger."
In approving the Reorganization Agreement, the SBT Board considered,
among other things, SBT's financial condition, the financial terms and the
income tax consequences of the Merger, the likelihood of the Merger being
approved by regulatory authorities without undue conditions or delay and, in
general, the fairness of the terms of the Merger to SBT's shareholders. See
"THE MERGER--Background of and Reasons for the Merger."
THE FAIRNESS OPINION
Mercer Capital Management, Inc. ("Mercer Capital") has rendered a
written opinion (the "Fairness Opinion") to the SBT Board that, based on and
subject to the procedures, matters and limitations described in its opinion and
such other matters as it considered relevant, as of the date
4
<PAGE> 21
of its opinion, and as of the date of this Prospectus/Proxy Statement, the
Exchange Ratio is fair, from a financial point of view, to the shareholders of
SBT. The opinion of Mercer Capital is attached as Appendix F to this
Prospectus/Proxy Statement. SBT shareholders are urged to read the opinion in
its entirety for a description of the procedures followed, matters considered,
and limitations on the reviews undertaken in connection therewith. See "THE
MERGER--The Fairness Opinion."
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time of the Merger would occur on the date and at the
time that the Articles of Merger reflecting the Merger become effective with
the Tennessee Secretary of State and that the Certificate of Merger becomes
effective with the Delaware Secretary of State. See "THE MERGER--Effective
Time of the Merger," "--Conditions to Consummation of the Merger," and
"--Waiver, Amendment and Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER OR
REGULATORY APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO
THE MERGER CAN OR WILL BE SATISFIED. SBT AND UPC ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WOULD BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED DURING THE FOURTH QUARTER OF 1997. HOWEVER, DELAYS
IN THE CONSUMMATION OF THE MERGER COULD OCCUR.
EXCHANGE OF STOCK CERTIFICATES
Promptly after the Effective Time of the Merger, UPC would cause Union
Planters National Bank, Memphis, Tennessee, acting in its capacity as exchange
agent for UPC (the "Exchange Agent"), to mail to each SBT Record Holder a
letter of transmittal, together with instructions as to how to effect the
surrender and cancellation of the certificate or certificates held by such SBT
Record Holder which, immediately prior to the Effective Time of the Merger,
represented outstanding shares of SBT Common Stock (the "SBT Certificates") in
exchange for certificates representing shares of UPC Common Stock. Cash would
be paid to the holders of SBT Common Stock in lieu of the issuance of any
fractional shares of UPC Common Stock. In no event would the holder of any
surrendered SBT Certificate be entitled to receive interest on any cash to be
issued to such holder, and in no event would SBT, UPC or the Exchange Agent be
liable to any holder of SBT Common Stock for any UPC Common Stock, dividends
thereon or cash delivered in good faith to a public official pursuant to
applicable abandoned property law.
REGULATORY APPROVALS AND OTHER CONDITIONS
The Merger is subject to approval by the Board of Governors of the
Federal Reserve System (the "Federal Reserve"). The Federal Reserve's approval
was received by UPC on January 28, 1997. SBT shareholders should clearly
understand that the receipt of regulatory approval of the Merger from the
Federal Reserve does not constitute a recommendation by the
5
<PAGE> 22
Federal Reserve or any other governmental agency, and should not be considered
as such. See "THE MERGER--Regulatory Approvals."
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of SBT shareholders, receipt of an
opinion of counsel as to the tax-free nature of certain aspects of the Merger,
receipt of a letter from the independent accountants of UPC that the Merger
would qualify for pooling of interests accounting treatment and certain other
conditions. See "--Certain Federal Income Tax Consequences of the Merger," "--
Accounting Treatment" and "THE MERGER--Conditions to Consummation of the
Merger."
WAIVER, AMENDMENT AND TERMINATION
Prior to the Effective Time of the Merger, either SBT or UPC may
unilaterally waive any default or obligation of the other party under, or any
condition precedent to its own obligations under, the Reorganization Agreement.
Any provision of the Reorganization Agreement, including all conditions
precedent to consummation of the Merger, may be amended (to the extent
permitted by law) by an agreement in writing which is approved by the UPC Board
and the SBT Board; provided, however, that the provisions of the Reorganization
Agreement relating to the manner or basis in which shares of UPC Common Stock
will be exchanged for SBT Common Stock may not be amended in any material
respect after the Special Meeting without the requisite approval of the issued
and outstanding shares of SBT Common Stock entitled to vote thereon.
The Reorganization Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time of the Merger by mutual
action of the Boards of Directors of SBT and UPC, or by the action of the Board
of Directors of either company under certain circumstances. If for any reason
the Merger should not be consummated, SBT would continue to operate as a bank
holding company under its present management. See "THE MERGER--Waiver,
Amendment and Termination."
LIMITATION ON NEGOTIATIONS; STOCK OPTION AGREEMENT
SBT is prohibited from soliciting or knowingly encouraging any
"Acquisition Proposal" (defined generally as any tender offer, exchange offer
or other proposal for a merger, consolidation, acquisition of all the stock,
assets or earning power of, or other business combination involving an SBT
Company or the acquisition of a substantial equity interest in, or a
substantial portion of the assets or earning power of, an SBT Company). See
"THE MERGER--Limitation on Negotiations."
In order to further increase the likelihood that the Merger will be
effected, SBT, as issuer, and UPC, as grantee, entered into a stock option
agreement (the "Stock Option Agreement") pursuant to which SBT granted UPC an
option to purchase, under certain circumstances and subject to certain
adjustments and limitations, up to 3,183 shares of SBT Common Stock at a price
of $957.00 per share. The Stock Option Agreement is exercisable upon the
occurrence of a "Purchase Event" (defined generally as an event: (1) in which
SBT shall have authorized,
6
<PAGE> 23
recommended or entered into an agreement with any person to effect (i) a
merger, consolidation or similar transaction involving an SBT Company, (ii) a
sale, lease, exchange or other disposition of 25% or more of the consolidated
assets of the SBT Companies, unless such disposition is made in the ordinary
course of business and would not materially adversely affect the ability of SBT
to perform its obligations under the Reorganization Agreement, or (iii) an
issuance, sale or disposition of securities representing 25% or more of the
voting power of an SBT Company; or (2) resulting in either any person or group
acquiring beneficial ownership of 25% or more of the then outstanding shares of
SBT Common Stock). The Stock Option Agreement was granted by SBT as a
condition of and as an inducement for UPC's entering into the Reorganization
Agreement. See "THE MERGER--The Stock Option Agreement," and the Stock Option
Agreement, a copy of which is attached hereto as Appendix B.
MANAGEMENT AFTER THE MERGER
The directors and officers of Community immediately prior to the
Effective Time of the Merger would continue as directors and officers of
Community, as the surviving company, following the Merger. Each of the current
officers and directors of Community is an officer or a director of UPC.
Information concerning the current management and the UPC Board is included in
the documents incorporated herein by reference. See "INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE."
While the directors and officers of SBT would be affected by the
Merger, it is expected that the directors and officers of the Bank would
continue to hold their respective positions after the Merger. This is
consistent with UPC's operational philosophy of having its subsidiary banks
operate autonomously in their respective communities with the banking decisions
being made, within broad guidelines established by UPC, by a local board of
directors and executive management. See "THE MERGER--Management after the
Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the SBT Management Group have interests in the
Merger in addition to their interests as shareholders of SBT generally. Those
interests relate to, among other things, the provision of three year employment
agreements for Richard L. Rankin as Chairman and Chief Executive Officer, and
James E. Hanna as President and Cashier, and the provisions in the
Reorganization Agreement regarding non-compete agreements. See "THE
MERGER--Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
It is intended that the Merger would be treated as a reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, no gain or loss would be recognized by an
SBT shareholder upon the exchange of such shareholder's SBT Common Stock for
shares of UPC Common Stock. Subject to the provisions and limitations of
Section 302(a) of the Code, gain or loss would be recognized with respect to
cash received
7
<PAGE> 24
in lieu of fractional shares. Gain recognition, if any, would not be in excess
of the amount of cash received. See "THE MERGER--Certain Federal Income Tax
Consequences." Consummation of the Merger is conditioned upon receipt by SBT
and UPC of an opinion of Wyatt, Tarrant & Combs substantially to this effect.
DUE TO THE INDIVIDUAL NATURE OF THE TAX CONSEQUENCES OF THE MERGER, SBT
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
EFFECT OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
For a further discussion of the federal income tax consequences of the Merger,
see "THE MERGER--Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT
It is intended that the Merger would be accounted for as a pooling of
interests for accounting and financial reporting purposes. Consummation of the
Merger is conditioned upon receipt by UPC of an opinion of Price Waterhouse LLP
substantially to this effect. See "THE MERGER--Accounting Treatment."
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS
At the Effective Time of the Merger, SBT shareholders, whose rights
are currently governed by Delaware General Corporation Law (the "DGCL") and by
SBT's Charter and Bylaws, would automatically become UPC shareholders and their
rights as UPC shareholders would be determined by the Tennessee Business
Corporation Act (the "TBCA"), UPC's Restated Charter (the "UPC Charter") and
UPC's Amended and Restated Bylaws (the "UPC Bylaws"). The rights of UPC
shareholders differ from the rights of SBT shareholders in certain important
respects. For a discussion of material differences between the rights of UPC
shareholders and the rights of SBT shareholders, see "EFFECT OF THE MERGER ON
RIGHTS OF SHAREHOLDERS."
APPRAISAL RIGHTS
SBT shareholders have the statutory right to an appraisal of their
shares of SBT Common Stock and to receive in cash the fair value of their
shares of SBT Common Stock if the Merger is actually consummated. A SBT
shareholder exercising appraisal rights must take certain specific actions in
order to properly "perfect" his or her statutory appraisal rights. Any SBT
shareholder who considers exercising appraisal rights with respect to the
Merger should carefully review the sections of this Prospectus/Proxy Statement
relative to appraisal rights, as well as Appendix G hereto, which is a copy of
Section 262 of the DGCL which establishes the appraisal rights of SBT
shareholders. See "THE SPECIAL MEETING--Appraisal Rights", "THE
MERGER--Appraisal Rights" and Section 262 of the DGCL, a copy of which is
attached hereto as Appendix G.
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<PAGE> 25
MARKET PRICES OF COMMON STOCK
UPC Common Stock. The UPC Common Stock is listed on the NYSE under
the symbol "UPC." It is anticipated that the shares of UPC Common Stock
issuable in the Merger in exchange for SBT Common Stock would be approved for
listing on the NYSE at or prior to the Effective Time of the Merger. The
following table sets forth for the periods indicated the high and low closing
sale prices of the UPC Common Stock on the NYSE and the cash dividends declared
per share of UPC Common Stock for the periods indicated:
<TABLE>
<CAPTION>
PRICE RANGE CASH DIVIDENDS
----------- DECLARED PER
HIGH LOW SHARE
---- --- --------------
<S> <C> <C> <C>
1997
First Quarter $47.75 $38.38 $ .320
Second Quarter 52.13 41.25 .375
Third Quarter .400
Through _____ ___, 1997 ------ ------ ------
TOTAL $1.095
======
1996
First Quarter $31.75 $29.00 $ 0.27
Second Quarter 31.25 29.63 0.27
Third Quarter 36.25 28.63 0.27
Fourth Quarter 41.38 34.63 0.27
------
TOTAL $ 1.08
======
1995
First Quarter $24.50 $20.88 $ 0.23
Second Quarter 28.13 23.13 0.25
Third Quarter 30.75 26.13 0.25
Fourth Quarter 32.25 29.63 0.25
------
Total $ 0.98
======
</TABLE>
On November 25, 1996, the business day prior to the date the Merger
was publicly announced, the last reported sale price of the UPC Common Stock on
the NYSE was $39.875 per share. On ______ __, 1997, the last sale price of UPC
Common Stock as reported on the NYSE was $_____ per share.
The holders of UPC Common Stock are entitled to receive dividends
when, as and if declared by the UPC Board out of funds legally available
therefor. Although UPC currently intends to continue to pay quarterly cash
dividends on the UPC Common Stock, there can be no
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<PAGE> 26
assurance that UPC's dividend policy would remain unchanged after completion of
the Merger. The declaration and payment of dividends thereafter would depend
upon business conditions, operation results, capital and reserve requirements,
the UPC Board's consideration of other relevant factors, and whether or not UPC
is otherwise restricted by contract or agreement from paying dividends. UPC
currently is a party to an agreement pursuant to which it would not be able to
pay dividends in the event of a default under the agreement or in certain other
circumstances. See "DESCRIPTION OF UPC COMMON AND PREFERRED STOCK--UPC Common
Stock--Dividends."
UPC is a legal entity separate and distinct from its subsidiaries and
its revenues depend in significant part on the payment of dividends and fees
from its subsidiary depository institutions. UPC's subsidiary depository
institutions are subject to certain legal restrictions on the amount of
dividends they are permitted to pay.
SBT Common Stock. SBT Common Stock has never been listed or publicly
traded on any securities exchange or actively traded in the over-the-counter
market. As of the Record Date the outstanding shares of SBT Common Stock were
held by approximately 253 holders of record. Although there is no established
market for shares of SBT Common Stock, management of SBT believes that shares
have traded in a range of $425 to $1,325 per share at various times over the
past year.
In each of its past two fiscal years SBT has paid cash dividends in
the amount of $12.00 per share. The Reorganization Agreement prohibits SBT
from paying any dividends while consummation of the Merger is pending, however,
UPC has agreed to allow SBT to declare and pay a cash dividend not to exceed
$9.00 per share, should the SBT Board determine to do so. See "THE
MERGER--Conduct of Business Pending the Merger." SBT's revenues are derived
primarily from dividends paid to it by the Bank. The amount of dividends that
the Bank may pay are restricted by federal and state banking laws and
regulations.
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables present for both UPC and SBT selected
consolidated financial data for each of the five years ended December 31, 1996,
and for the three months ended March 31, 1997 and 1996. The information for
UPC has been derived from the consolidated financial statements of UPC,
including the unaudited consolidated financial statements of UPC incorporated
into this Prospectus/Proxy Statement by reference to UPC's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1997, and the audited
consolidated financial statements of UPC incorporated into this
Prospectus/Proxy Statement by reference to UPC's 1996 Annual Report on Form
10-K for the year ended December 31, 1996, and should be read in conjunction
therewith and with the notes thereto. See "INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE."
The information for SBT has been derived from the audited consolidated
financial statements of SBT as of and for the year ended December 31, 1996,
the unaudited consolidated
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<PAGE> 27
financial statements of SBT as of December 31, 1995 and for the two years ended
December 31, 1995, and the unaudited interim financial statements of SBT as of
and for the three months ended March 31, 1997, copies of which are attached to
this Prospectus/Proxy Statement as Appendices C, D and E, and should be read in
conjunction therewith and with the notes thereto.
Historical results are not necessarily indicative of results to be
expected for any future period. In the opinions of the management of both UPC
and SBT, all adjustments, consisting only of normal recurring adjustments
necessary to arrive at a fair statement of results of operations of their
respective entities, have been included for the unaudited periods.
11
<PAGE> 28
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31,(1) Years Ended December 31, (1)
----------------------- -----------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- --------- --------- ---------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 155,276 $ 147,742 $ 605,962 $ 535,997 $ 504,500 $ 439,290 $ 357,365
Provision for losses on loans 12,414 12,949 57,395 27,381 9,661 22,660 37,367
Investment securities gains (losses) 116 61 4,081 409 (22,515) 3,508 11,880
Other noninterest income 57,336 53,696 222,250 203,014 160,109 154,254 136,162
Noninterest expense 109,229 117,971 570,634 452,635 486,836 408,888 362,028
---------- --------- --------- ---------- ----------- ----------- -----------
Earnings before income taxes,
extraordinary item, and
accounting changes 91,085 70,579 204,264 259,404 145,597 165,504 106,012
Applicable income taxes 31,893 23,427 70,526 86,648 45,174 51,864 30,219
---------- --------- --------- ---------- ----------- ----------- -----------
Earnings before extraordinary item
and accounting changes 59,192 47,152 133,738 172,756 100,423 113,640 75,793
Extraordinary item and accounting
changes, net of taxes - - - - - 637 2,847
---------- --------- --------- ---------- ----------- ----------- -----------
Net earnings $ 59,192 $ 47,152 $ 133,738 $ 172,756 $ 100,423 $ 114,277 $ 78,640
========== ========= ========= ========== =========== =========== ===========
PER COMMON SHARE DATA (2) & (5)
Primary
Earnings before extraordinary item
and accounting changes $ 0.86 $ 0.70 $ 1.95 $ 2.72 $ 1.52 $ 2.19 $ 1.75
Net earnings 0.86 0.70 1.95 2.72 1.52 2.20 1.75
Fully diluted
Earnings before extraordinary item
and accounting changes $ 0.84 $ 0.68 $ 1.92 $ 2.64 $ 1.52 $ 2.14 $ 1.73
Net earnings 0.84 0.68 1.92 2.64 1.52 2.15 1.73
Cash dividends 0.32 0.27 1.08 0.98 0.88 0.72 0.60
Book value 20.05 19.00 19.55 18.52 15.42 14.80 14.08
</TABLE>
(continued on following page)
12
<PAGE> 29
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
March 31,(1)
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Total assets $14,932,464 $15,242,137
Loans, net of unearned income 10,362,226 9,611,613
Allowance for losses on loans 163,980 166,825
Investment Securities 3,008,886 3,880,625
Deposits 11,395,301 11,792,889
Short-term borrowings 536,377 834,389
Long term debt (3)
Parent company 373,096 214,761
Subsidiary banks 953,469 865,064
Total shareholders' equity 1,395,263 1,297,878
Average assets 14,936,790 15,112,315
Average shareholders' equity 1,346,040 1,241,143
Average shares outstanding (in thousands)
Primary 66,763 64,083
Fully Diluted 70,824 68,845
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.61% 1.25%
Return on average common equity 18.50% 15.86%
Net interest income (taxable-equivalent)/
average earning assets (4) 4.71% 4.37%
Loans/deposits 90.93% 81.50%
Common and preferred dividend payout
ratio 37.78% 33.58%
Equity/assets (period end) 9.34% 8.52%
Average shareholders' equity/
average total assets 9.01% 8.21%
Leverage ratio 10.26% 8.09%
Tier 1 capital/risk-weighted
assets 16.55% 13.63%
Total capital/risk-weighted assets 19.68% 16.81%
ASSET QUALITY RATIOS (6)
Allowance/period end loans 1.85% 1.95%
Nonperforming loans/total loans 0.63% 0.66%
Allowance/nonperforming loans 296% 294%
Nonperforming assets/loans and foreclosed
properties 0.81% 0.78%
Provision/average loans 0.56% 0.60%
Net charge-offs/average loans 0.69% 0.42%
<CAPTION>
Years Ended December 31, (1)
--------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END)
Total assets $15,222,563 $14,383,222 $13,425,063 $11,866,609 $10,180,375
Loans, net of unearned income 10,434,070 9,041,059 8,436,650 6,615,884 5,364,377
Allowance for losses on loans 166,853 156,388 154,131 141,999 114,130
Investment Securities 2,956,234 3,573,054 3,592,482 3,854,767 3,370,321
Deposits 11,490,262 11,074,722 10,702,569 9,879,780 8,714,306
Short-term borrowings 714,146 838,283 699,838 300,414 343,452
Long term debt (3)
Parent company 373,459 214,758 114,790 114,729 74,292
Subsidiary banks 1,035,257 811,819 693,002 463,055 202,847
Total shareholders' equity 1,352,874 1,213,162 1,008,594 935,730 670,267
Average assets 15,274,782 13,661,748 13,105,179 11,565,505 9,475,049
Average shareholders' equity 1,283,575 1,119,232 1,042,990 813,140 623,869
Average shares outstanding (in thousands)
Primary 64,987 60,385 59,587 43,192 35,463
Fully Diluted 69,518 64,995 59,929 47,422 38,307
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 0.88% 1.26% 0.77% 0.99% 0.83%
Return on average common equity 10.61% 16.16% 9.76% 14.92% 13.15%
Net interest income (taxable-equivalent)/
average earning assets (4) 4.41% 4.38% 4.31% 4.29% 4.26%
Loans/deposits 90.81% 81.64% 78.83% 66.96% 61.56%
Common and preferred dividend payout
ratio 50.64% 32.74% 40.99% 28.34% 32.95%
Equity/assets (period end) 8.89% 8.43% 7.51% 7.89% 6.58%
Average shareholders' equity/
average total assets 8.40% 8.19% 7.96% 7.03% 6.58%
Leverage ratio 9.61% 8.08% 7.53% 7.62% 6.36%
Tier 1 capital/risk-weighted
assets 15.29% 13.39% 12.75% 14.07% 11.70%
Total capital/risk-weighted assets 18.32% 16.68% 14.97% 16.51% 13.64%
ASSET QUALITY RATIOS (6)
Allowance/period end loans 1.86% 1.92% 1.98% 2.27% 2.20%
Nonperforming loans/total loans 0.74% 0.56% 0.44% 0.65% 1.16%
Allowance/nonperforming loans 253% 344% 444% 346% 189%
Nonperforming assets/loans and foreclosed
properties 0.92% 0.67% 0.58% 0.96% 1.83%
Provision/average loans 0.66% 0.34% 0.14% 0.37% 0.74%
Net charge-offs/average loans 0.60% 0.34% 0.09% 0.27% 0.52%
</TABLE>
- ------------------------------
(1) Reference is made to "Basis of Presentation" in Note 1 to UPC's
consolidated financial statements contained in the 1996 Annual Report
to Shareholders.
(2) Share and per share amounts have been retroactively restated for
significant acquisitions accounted for as poolings of interests.
(3) Long-term debt includes Medium-Term Bank Notes, Federal Home Land Bank
(FHLB) advances, subordinated notes and debentures, obligations under
capital leases, mortgage indebtedness, Trust Preferred Securities,and
notes payable with maturities greater than one year.
(4) Average balances and calculations do not include the impact of the net
unrealized gain or loss on available for sale securities.
(5) Leader Financial Corporation (Leader) was organized as a holding
company on March 18, 1993 in connection with the conversion of its
principal subsidiary, Leader Federal Bank for Savings, from a federal
mutual savings bank to a federally-chartered capital stock savings
bank. (See Note 2 to UPC's consolidated financial statements contained
in the 1996 Annual Report to Shareholders). Accordingly, earnings per
share for the year ended December 31, 1992 is calculated using only
UPC's historical net earnings and the calculation of earnings per share
for the year ended December 31, 1993 is based on UPC's historical net
earnings for 1993 plus Leader's fourth quarter net earnings, since the
stock conversion occurred on September 30, 1993.
(6) FHA/VA government-insured/guaranteed loans have been excluded, since
they represent minimal credit risk to UPC.
13
<PAGE> 30
SBT SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE
MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
---------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- -------- -------- --------- --------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 938 $ 924 $ 3,805 $ 3,420 $ 3,468 $ 3,553 $ 3,752
Provision for loan losses 30 30 772 120 120 120 120
Noninterest income 76 64 214 152 194 360 330
Noninterest expense 473 390 1,646 1,712 1,864 1,900 1,885
--------- --------- -------- -------- --------- --------- --------
Earnings before income taxes 511 568 1,601 1,740 1,678 1,893 2,077
Income taxes 103 138 382 486 459 523 676
--------- --------- -------- -------- --------- --------- --------
Net earnings $ 408 $ 430 $ 1,219 $ 1,254 $ 1,219 $ 1,370 $ 1,401
========= ========= ======== ======== ========= ========= ========
PER COMMON SHARE DATA
Net earnings $ 30.07 $ 31.69 $ 89.84 $ 92.34 $ 89.18 $ 99.98 $ 99.94
Cash dividends - - 12.00 12.00 12.00 12.00 12.00
Book value 1,016.66 954.68 1,007.52 959.32 785.43 747.09 657.17
BALANCE SHEET DATA (AT PERIOD END)
Total assets $ 102,103 $ 98,710 $ 98,103 $ 95,169 $ 89,075 $ 83,155 $ 77,786
Loans, net of unearned income 51,085 49,226 52,635 48,038 44,136 37,251 33,873
Allowance for loan losses 1,096 478 1,052 492 590 604 441
Investment securities 40,189 41,777 38,766 39,786 36,361 36,618 38,174
Deposits 87,664 85,103 83,888 81,306 77,964 72,654 68,277
Total stockholders' equity 13,795 12,954 13,671 13,017 10,736 10,212 9,042
Average assets 98,951 95,955 96,873 91,377 85,115 79,745 75,816
Average stockholders' equity 13,768 13,238 13,583 11,909 10,720 9,530 8,396
Average shares outstanding 13,569 13,569 13,569 13,580 13,669 13,703 14,018
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.67% 1.80% 1.26% 1.37% 1.43% 1.72% 1.85%
Return on average stockholders'
equity 12.01 13.06 8.97 10.53 11.37 14.38 16.69
Efficiency ratio(3) 48.31 40.25 41.26 47.91 51.14 51.09 47.88
Net yield to average interest
earning assets 4.04 4.09 4.12 3.93 4.34 4.80 5.26
Loans/deposits 58.27 57.84 62.74 59.08 56.61 51.27 49.61
Common dividend payout ratio - - 13.36 13.00 13.46 12.00 12.01
Equity/assets (period end) 13.51 13.12 13.94 13.68 12.05 12.28 11.62
Average stockholders' equity/
average total assets 13.91 13.80 14.02 13.03 12.59 11.95 11.07
Leverage ratio(1) 13.93 13.29 13.81 13.48 13.24 12.81 11.93
Tier 1 capital to risk-weighted
assets(1) 26.22 25.06 25.27 25.04 24.29 24.64 23.54
Total capital to risk-weighted
assets(1) 27.48 26.00 26.53 26.04 25.54 25.89 24.68
ASSET QUALITY RATIOS
Allowance/period end loans 2.12 .96 1.97 1.01 1.32 1.60 1.28
Nonperforming loans/loans 0.18 .04 0.18 0.04 0.05 0.07 0.09
Nonperforming assets/loans
and foreclosed property(2) 0.18 .10 0.18 0.10 0.05 0.07 0.09
Provision/average loans 0.23 .25 1.53 0.26 0.30 0.34 0.36
Net charge-offs (recoveries)/
average loans (0.11) .36 0.42 0.47 0.33 (0.12) 0.11
</TABLE>
- ---------------------
(1) The risk-based capital ratios are based upon capital guidelines
presented by federal regulatory authorities. Under those guidelines,
the required minimum Tier 1 and Total capital to risk-weighted assets
are 4% and 8%, respectively. The required minimum leverage ratio of
Tier 1 capital to total adjusted assets is 3% to 5%.
(2) Nonperforming assets include nonaccrual loans plus foreclosed assets.
(3) Calculated as noninterest expense divided by net interest income plus
noninterest income less securities gains and losses.
14
<PAGE> 31
RECENT DEVELOPMENTS AFFECTING UPC
Other Pending Acquisitions. UPC has entered into definitive
agreements to acquire the following four financial institutions in addition to
SBT, which UPC's management considers probable of consummation and which are
expected to close in 1997 (collectively, the "Other Pending Acquisitions").
<TABLE>
<CAPTION>
ASSET SIZE
INSTITUTION (IN MILLIONS)(1) TYPE OF CONSIDERATION
- --------------------------------- ---------------- ---------------------
<S> <C> <C>
Magna Bancorp, Inc., Hattiesburg, $1,381 Approximately 7.1 million shares
Mississippi, and its subsidiaries of UPC Common Stock
including Magnolia Federal Bank
for Savings ("Magna")
First Acadian Bancshares, Inc., 80 Approximately 358,725 shares of
Thibodaux, Louisiana, and its UPC Common Stock
subsidiary, Acadian Bank ("FAB")
62 Approximately 210,526 shares of
Citizens of Hardeman County UPC Common Stock
Financial Services, Inc.
Whiteville, Tennessee, and its
subsidiary The Whiteville Bank
("Citizens")
304 Approximately 1,153,051 shares of
Sho-Me Financial Corporation, UPC Common Stock
Mount Vernon, Missouri, and its
subsidiary First Savings Bank, FSB
("Sho-Me")
------
$1,827
======
</TABLE>
(1) Approximate total assets at March 31, 1997.
Earnings Considerations Related to Other Pending Acquisitions. It is
expected that either UPC or the institutions to be acquired in connection with
the Merger and the Other Pending Acquisitions will incur charges arising from
such acquisitions and from the assimilation of those institutions into the UPC
organization. Anticipated charges would normally arise from matters such as,
but not limited to, legal and accounting fees, financial advisory fees,
consulting fees, payment of contractual benefits triggered by a change of
control, early retirement and involuntary separation and related benefits,
costs associated with the elimination of duplicate facilities, branch closures,
data processing charges, cancellation of vendor contracts, the potential for
additional provisions for loan losses and similar costs which normally arise
from the consolidation of operational activities.
Aggregate charges expected to arise with respect to the acquisition of
SBT and the Other Pending Acquisitions (primarily the Magna acquisition) have
been preliminarily estimated to be in the range of $9 million to $11 million
after taxes. To the extent that UPC's recognition of these acquisition-related
charges is contingent upon consummation of a particular transaction, those
charges would be recognized in the period in which such transaction closes.
The range is
15
<PAGE> 32
provided as a preliminary estimate of the significant charges which may in the
aggregate be required and should be viewed accordingly.
EQUIVALENT AND PRO FORMA PER SHARE DATA
The following table presents selected, comparative, unaudited per
share data for: (i) UPC Common Stock and SBT Common Stock on an historical
basis; (ii) UPC Common Stock on a pro forma basis, giving effect to the Merger
and all Other Pending Acquisitions; (iii) SBT Common Stock on an equivalent pro
forma basis, UPC only; and (iv) SBT Common Stock on an equivalent pro forma
basis, including the Merger and all Other Pending Acquisitions, for the periods
indicated. Pro forma per share data is not presented separately for SBT
because it would not be significantly different from UPC's results. See
"Recent Developments Affecting UPC-Other Pending Acquisitions."
The pro forma data for 1996 and the three month period ended March 31,
1997 reflect the Merger and all Other Pending Acquisitions as of January 1,
1996. The pro forma data for 1995 and 1994 reflect only the assumed
acquisition of Magna because the Other Pending Acquisitions are not considered
significant to UPC from a financial statement presentation standpoint. The pro
forma data reflects the Merger and UPC's Other Pending Acquisitions, all of
which except the Sho-Me transaction are expected to be accounted for using the
pooling of interests method of accounting. The Sho-Me transaction will be
accounted for as a purchase. See "--Recent Developments Affecting UPC-Other
Pending Acquisitions."
These data are not necessarily indicative of the results of the future
operations of either UPC, SBT or the Other Pending Acquisitions, or the actual
results that would have occurred had the Merger been consummated on January 1,
1996. The information is derived from, and should be read in conjunction with,
the historical consolidated financial statements of UPC (including related
notes thereto) which are incorporated by reference herein, and the historical
audited and unaudited consolidated financial statements of SBT (including
related notes thereto), which are included in this Prospectus/Proxy Statement
as Appendices C, D and E. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE," "--Selected Consolidated Financial Data" and "--Recent
Developments Affecting UPC."
16
<PAGE> 33
UNION PLANTERS CORPORATION
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Three Months Ended Year Ended December 31, (1)
March 31, 1997 --------------------------------------
--------------------- 1996 1995 1994
---- ---- ----
<S> <C> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
UPC
Primary $ 0.86 $ 1.95 $ 2.72 $ 1.52
Fully Diluted 0.84 1.92 2.64 1.52
SBT 30.07 89.84 92.34 89.18
UPC pro forma (all Other Pending
Acquisitions, including SBT)
Primary 0.85 2.00 2.74 1.59
Fully diluted 0.83 1.97 2.67 1.58
SBT equivalent pro forma (UPC only)(1)
Primary 38.80 87.98 122.73 68.58
Fully diluted 37.90 86.63 119.12 68.58
SBT equivalent pro forma (all Other
Pending Acquisitions, including SBT)(1)
Primary 38.35 90.24 123.63 71.74
Fully Diluted 37.45 88.89 120.47 71.29
CASH DIVIDENDS PER SHARE
UPC 0.32 1.08 0.98 0.88
SBT - 12.00 12.00 12.00
SBT equivalent pro forma (1) 14.44 48.73 44.22 39.71
</TABLE>
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
UPC $ 20.05 19.55
SBT 1,016.66 1,007.52
UPC pro forma (all Other Pending
Acquisitions, including SBT) 20.02 19.56
SBT equivalent pro forma (UPC only)(1) 904.66 882.10
SBT equivalent pro forma (all Other
Pending Acquisitions, including SBT)(1) 903.30 882.55
</TABLE>
- -----------------------------
(1) The equivalent pro forma per share data for SBT is computed by multiplying
UPC's information by 45.12, the Exchange Ratio.
17
<PAGE> 34
THE SPECIAL MEETING
TIME AND PLACE OF SPECIAL MEETING; SOLICITATION OF PROXIES; REVOCATION
Each copy of this Prospectus/Proxy Statement is accompanied by a Proxy
Appointment Card furnished in connection with the SBT Board's solicitation of
proxies for use at the Special Meeting and at any adjournments or postponements
thereof. The Special Meeting is scheduled to be held at the Selmer Civic
Center, 230 North Fifth Street, Selmer, Tennessee 38375, at [time], local time,
on [day, month & year]. Only SBT shareholders at the close of business on
[record date for shareholders] (the "Record Date") are entitled to receive
notice of and to vote at the Special Meeting. At the Special Meeting, SBT
shareholders will consider and vote upon a proposal to approve the
Reorganization Agreement, including the Plan of Merger. Holders of SBT Common
Stock are entitled to one vote on each matter considered and voted upon at the
Special Meeting for each share of SBT Common Stock held of record as of the
Record Date. If a signed Proxy Appointment Card is returned to SBT and the SBT
shareholder has not marked his or her vote with respect to the proposed Merger,
all of the shares represented by that Proxy Appointment Card will be voted
"FOR" approval of the Reorganization Agreement. If matters other than the
consideration of the proposed Merger properly come before the Special Meeting,
the proxy will be voted by the persons named therein in a manner which they
consider to be in the best interest of SBT. SBT's management is not aware of
any other matters to be acted upon at the Special Meeting.
SBT SHAREHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY APPOINTMENT CARD AND RETURN IT PROMPTLY TO SBT IN THE
ENCLOSED, POSTAGE-PAID ENVELOPE. FAILURE TO RETURN YOUR PROPERLY EXECUTED
PROXY APPOINTMENT CARD OR FAILURE TO VOTE AT THE SPECIAL MEETING WILL HAVE THE
SAME EFFECT AS A VOTE AGAINST THE APPROVAL OF THE REORGANIZATION AGREEMENT.
SBT SHAREHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR PROXY
APPOINTMENT CARDS.
Any SBT shareholder who has executed and delivered a Proxy Appointment
Card to SBT may nevertheless revoke it at any time before it is voted by
attending the Special Meeting and voting in person, by giving notice of
revocation in writing or by submitting a signed Proxy Appointment Card bearing
a later date by mail, delivery or facsimile to SBT Bancshares, Inc., 116 South
Third Street, Selmer, Tennessee 38375-2114, Attention: James E. Hanna, Cashier
(facsimile number (901) 645-6688), provided such notice or later dated Proxy
Appointment Card is actually received by SBT before the vote of SBT
shareholders has been taken.
In addition to solicitation of proxies from SBT shareholders by use of
the mail, proxies also may be solicited by personal interview, telephone and
facsimile by directors, officers and employees of SBT who will not be
specifically compensated for such services. It is possible that banks,
brokerage houses and other institutions, nominees or fiduciaries will be
requested to forward the soliciting materials to their principals and obtain
authorization for the execution of proxies. All costs of soliciting proxies,
assembling and mailing the Prospectus/Proxy Statement, all papers which now
accompany or hereafter may supplement the same, as well as reasonable
out-of-pocket expenses incurred by such banks, brokerage houses and other
institutions, nominees or fiduciaries for forwarding proxy materials to and
obtaining proxies from their principals, will be borne by SBT; provided,
however, that UPC and SBT, respectively, will bear the cost of all Commission
filing fees incurred in connection with the Merger and the costs of printing
the Prospectus/Proxy Statement in proportion to the relative sizes of their
respective assets.
VOTES REQUIRED
The affirmative votes of a majority of the outstanding shares of SBT
Common Stock entitled to vote at the Special Meeting are required in order to
approve the Reorganization Agreement. As of the Record Date, there were 13,569
shares of SBT Common Stock outstanding and entitled to vote at the Special
Meeting, with each share entitled to one vote.
18
<PAGE> 35
The SBT Management Group held beneficially as of the Record Date 989
shares, or approximately 7.28% of the outstanding shares of SBT Common Stock.
SBT has been advised by the members of the SBT Management Group that they
intend to vote their shares of SBT Common Stock "FOR" approval of the
Reorganization Agreement. Should all members of the SBT Management Group vote
"FOR" approval of the Reorganization Agreement, only 5,796 additional shares of
SBT Common Stock must be voted "FOR" approval of the Reorganization Agreement
in order to meet the shareholder approval requirements.
VOTING
A majority of the outstanding shares of SBT Common Stock present in
person or by proxy will constitute a quorum for the transaction of business at
the Special Meeting. Proxies marked to abstain from voting will be treated as
shares that are present at the Special Meeting for purposes of determining the
presence of a quorum for the transaction of business at the Special Meeting.
The proposal to approve the Reorganization Agreement requires the
affirmative votes of the holders of a majority (i.e., 6,785) of the 13,569
issued and outstanding shares of SBT Common Stock as of the Record Date.
Therefore, failure to return a properly executed Proxy Appointment Card or to
vote in person at the Special Meeting, and abstentions, will have the same
effect as a vote against approval of the Reorganization Agreement.
APPRAISAL RIGHTS
Holders of the SBT Common Stock have the right to dissent to the
Merger and, assuming the Merger is consummated, will have the right to receive
in cash an amount determined to be the "fair value" of their shares of SBT
Common Stock. In order to be entitled to fully exercise appraisal rights, SBT
shareholders must NOT vote for the Merger and must give written notice to SBT
that they intend to exercise their statutory appraisal rights prior to the time
the Merger is voted on at the Special Meeting. Certain other specific steps
must also be taken to properly "perfect" statutory appraisal rights. See "THE
MERGER--Appraisal Rights" and Section 262 of the DGCL, a copy of which is
attached hereto as Appendix G.
RECOMMENDATION OF THE SBT BOARD
For the reasons described below, the SBT Board has adopted and
approved the Reorganization Agreement and believes that the Merger is in the
best interest of SBT and the SBT shareholders and recommends that the SBT
shareholders vote "FOR" the approval of the Reorganization Agreement. See "THE
MERGER--Background of and Reasons for the Merger."
THE MERGER
The following information describes certain aspects of the Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Reorganization
Agreement attached as Appendix A to this Prospectus/Proxy Statement and
incorporated herein by reference. All shareholders are urged to read the
Appendix in its entirety.
GENERAL
The Reorganization Agreement provides for the acquisition of SBT by
UPC through the Merger of SBT with and into Community, a wholly-owned
subsidiary of UPC, with Community surviving the Merger. As a result thereof,
the Bank would become a direct, wholly-owned subsidiary of Community and an
indirect subsidiary of UPC. At the Effective Time of the Merger, each share of
SBT Common Stock issued and outstanding (excluding shares held by SBT, UPC or
their respective subsidiaries, in each case other than shares held in a
fiduciary capacity or in satisfaction of debts previously contracted) would be
converted exclusively into,
19
<PAGE> 36
and exchanged for, 45.12 shares of UPC Common Stock, subject to possible
adjustment as described in "--Possible Adjustment of Exchange Ratio" below.
Shares of SBT Common Stock held by SBT, UPC or their respective subsidiaries,
other than those shares held in a fiduciary capacity or in satisfaction of
debts previously contracted, would be canceled and retired with no
consideration at the Effective Time of the Merger.
No fractional shares of UPC Common Stock would be issued. Rather,
cash (without interest) would be paid in lieu of any fractional share interest
remaining after aggregating all whole and fractional shares to which any SBT
Record Holder would be entitled upon consummation of the Merger, in an amount
equal to such fractional part of a share of UPC Common Stock multiplied by the
closing price of the UPC Common Stock on the NYSE-Composite Transactions List
(as published by The Wall Street Journal or, if not published therein, any
other authoritative source selected by UPC) on the last trading day prior to
the Effective Time of the Merger.
As of the SBT Record Date, SBT had 13,569 shares of SBT Common Stock
issued and outstanding. Taking into the account the Exchange Ratio of 45.12
shares of UPC Common Stock for each share of SBT Common Stock which will be
validly issued and outstanding prior to the Effective Time of the Merger, it is
anticipated that, upon consummation of the Merger, UPC would issue
approximately 612,233 shares of UPC Common Stock.
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
The Exchange Ratio may be adjusted, in UPC's sole discretion, if SBT
effects any stock split, reverse stock split, stock dividend or similar change
in the number of outstanding shares of any of its capital stock, or should
there be more than 13,569 shares of SBT Common Stock outstanding prior to the
Effective Time of the Merger. Any such adjustment elected by UPC must be made
in good faith and be fair and reasonable in giving effect to such change in
SBT's capital account. SBT has covenanted not to: (1) issue, sell, pledge or
encumber any shares of SBT Common Stock or any other capital stock of an SBT
Company; or (2) adjust, split, combine or reclassify any capital stock of an
SBT Company.
BACKGROUND OF AND REASONS FOR THE MERGER
Background of the Merger. At an estate auction held in Selmer,
Tennessee on September 28, 1996, fifty shares of SBT Common Stock were sold for
an unprecedented price. Management of SBT realized that a number of
stockholders would be receptive to disposing of their stock holdings at or near
this price. Since only a small number of the outstanding shares of SBT Common
Stock could be repurchased by SBT from stockholders (20% of outstanding
shares), the SBT Board concluded that a merger was an acceptable alternative to
ensure that all SBT shareholders would be able to maximize the value of their
shares.
Management of SBT contacted UPC on September 30, 1996. A meeting was
held with Benjamin W. Rawlins, Jr., Chairman & CEO of UPC, that afternoon to
discuss a possible merger. The SBT Board met with Mr. Rawlins again on October
1, 1996. At that meeting, an agreement was made pursuant to which each issued
and outstanding share of SBT Common Stock would be exchanged for 45.12 shares
of UPC common stock in a tax-free transaction.
SBT's Reasons for the Merger. The SBT Board has determined that the
Reorganization Agreement and the Merger are in the best interests of SBT and
its shareholders. In evaluating the Reorganization Agreement and the Merger,
the SBT Board considered a variety of factors including:
(1) The fact that the price offered by UPC represents a
substantial gain to SBT shareholders. In the Merger, SBT shareholders
will receive 45.12 shares of UPC Common Stock for each share of SBT
Common Stock held immediately prior to the Effective Time of the
Merger;
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(2) The value being offered to SBT shareholders by UPC in
relation to the market value, book value and earnings per share of SBT
Common Stock;
(3) UPC's long-standing philosophy of community banking
which maintains local autonomy by keeping local management and boards
of directors in place;
(4) The fact that UPC Common Stock is traded on the NYSE,
which would increase the liquidity of the securities held by SBT
shareholders;
(5) Projections that the annual dividend of UPC Common
Stock will be in excess of four times the annual yield of SBT Common
Stock; and
(6) The trend in the banking industry is toward
consolidation and increased regulation. UPC's expertise and training
will assist SBT in keeping abreast of these changes in regulation and
operations.
(7) While the interest of most regional bank holding
companies has decreased, UPC is aggressive in merging and acquiring
community banks. SBT seeks to take advantage of the characteristics
of this present philosophy.
The foregoing discussion includes all of the material factors
considered by the SBT Board in determining to recommend that SBT shareholders
approve the Reorganization Agreement. The SBT Board did not quantify or
otherwise attempt to assign relative weights to the factors considered in
reaching its determination that the Reorganization Agreement and the Merger are
in the best interests of SBT shareholders.
THE SBT BOARD RECOMMENDS THAT SBT SHAREHOLDERS VOTE "FOR" APPROVAL OF
THE REORGANIZATION AGREEMENT.
THE FAIRNESS OPINION
Pursuant to a letter agreement dated as of October 7, 1996 (the
"Mercer Capital Agreement"), SBT retained Mercer Capital to act as its
financial advisor in connection with the rendering of a fairness opinion with
respect to the Merger. Mercer Capital is regularly engaged in the valuation of
businesses and their securities in connection with merger transactions and
other types of acquisitions and valuations for corporate and other purposes.
Pursuant to the terms of the Mercer Capital Agreement, Mercer Capital
acted as financial advisor to SBT in connection with the Merger. In connection
therewith, on June 27, 1997, Mercer Capital delivered a written opinion (the
"Fairness Opinion") to the SBT Board that, based upon and subject to the
various considerations set forth therein, as of the date of the Fairness
Opinion the consideration to be received for each share of SBT Common Stock
validly issued and outstanding immediately prior to the Effective Time of the
Merger is fair, from a financial point of view, to the holders of SBT Common
Stock. THE FULL TEXT OF THE FAIRNESS OPINION, WHICH SETS FORTH THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND QUALIFICATIONS AND
LIMITATIONS ON THE REVIEW UNDERTAKEN, IS ATTACHED AS APPENDIX F TO THIS
PROSPECTUS/PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE
DESCRIPTION OF SUCH OPINION SET FORTH HEREIN IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO APPENDIX F. HOLDERS OF SBT COMMON STOCK ARE URGED TO READ THE
FAIRNESS OPINION IN ITS ENTIRETY IN CONNECTION WITH THEIR CONSIDERATION OF THE
PROPOSED MERGER. HOWEVER, THE FAIRNESS OPINION SHOULD NOT BE CONSTRUED BY THE
HOLDERS OF SHARES OF SBT COMMON STOCK AS A RECOMMENDATION AS TO HOW THEY SHOULD
VOTE AT THE SPECIAL MEETING.
No limitations were imposed by SBT's Board with respect to the
investigations made or the procedures followed by Mercer Capital in rendering
its fairness opinion. Mercer Capital did not participate in the negotiations.
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As part of its investigation, Mercer Capital reviewed: (1) the
Reorganization Agreement; (2) UPC's annual reports for fiscal years 1992, 1993,
1994, 1995 and 1996; (3) UPC's Form 10-K for the fiscal years ended December
31, 1992, 1993, 1994, 1995 and 1996; (4) UPC's Form 10-Q for the quarter ended
March 31, 1997; (5) SBT's Call Reports as of March 31, 1997; (6) SBT's and
UPC's Form Y-9 LP and Y-9 C as of December 31, 1996; (7) SBT's and UPC's 1997
budgets; (8) historical market prices and trading volumes for UPC Common Stock;
(9) transaction data involving banks which have been acquired; and, (10) public
market pricing data of publicly traded banks which Mercer Capital deemed
comparable to UPC.
As part of its engagement, a representative of Mercer Capital visited
SBT management in Selmer. Factors considered in rendering the opinion include:
(1) terms of the Reorganization Agreement; (2) an analysis of the estimated
pro-forma changes in book value per share, earnings per share, and dividends
per share from the perspective of the SBT shareholders; (3) a review of UPC's
historical financial performance, historical stock pricing, the liquidity of
its shares and current pricing in relation to other publicly traded bank
holding companies; (4) tax consequences of the Merger for SBT shareholders; and
(5) restrictions placed on shares of UPC Common Stock to be received in the
Merger.
Mercer Capital did not compile nor audit UPC's or SBT's financial
statements, nor did Mercer Capital independently verify the information
reviewed. Mercer Capital relied upon such information as being complete and
accurate in all material respects. Mercer Capital did not make an independent
valuation of the loan portfolio, adequacy of the loan loss reserve or other
assets or liabilities of either institution.
Mercer Capital's opinion does not constitute a recommendation to any
SBT shareholder as to how the shareholder should vote on the proposed Merger;
nor did Mercer Capital express any opinion as to the prices at which any
security of UPC or SBT might trade in the future.
Transaction Overview. Mercer Capital noted that under the terms of the
Reorganization Agreement, SBT will be merged into Community, a wholly-owned
subsidiary of UPC. SBT shareholders will receive 45.12 shares of UPC Common
Stock for each share of SBT Common Stock they own immediately prior to the
Effective Time of the Merger. Given SBT's 13,569 outstanding common share
equivalents, UPC will issue 612,233 shares of UPC Common Stock to SBT
shareholders, assuming no SBT shareholders exercise dissenters' rights. The
Reorganization Agreement includes a "fixed" Exchange Ratio; accordingly, the
Exchange Ratio will not be adjusted for fluctuations in the stock prices of UPC
Common Stock prior to Closing.
On the date of announcement of the Reorganization Agreement, October
9, 1996, UPC Common Stock was trading in the vicinity of $35.00 per share,
which implied that SBT shareholders would receive an aggregate consideration of
$21.4 million, or $1,579.20 per share of SBT Common Stock. The implied
price/book ("P/B") ratio was about 175% of fully diluted book value per share
of SBT Common Stock, while the price/earnings ("P/E") ratio was 16.2x based
upon trailing twelve month earnings per share. Since then, UPC Common Stock
has trended up to a recent high of $50.87 per share. The current implied
aggregate consideration is $28.85 million, or $2,126.28 per share, based upon
the price of UPC Common Stock of $47.13 per share as of May 30, 1997. The
current implied P/B ratio is 209% , and the P/E ratio is 24x SBT's trailing
twelve month earnings, based upon SBT's financial data as of March 31, 1997.
Review of SBT Bancshares, Inc. Mercer Capital reviewed SBT's operating
strategy, historical financial performance, current financial position and
prospective financial performance based upon discussions with management.
Mercer Capital noted that SBT's Common Stock is not publicly traded and any
arms' length transactions are minimal.
SBT reported net income of $1.219 million in 1996, down slightly from
$1.254 million in 1995 and recorded an average ROA and ROE of 1.26% and 8.97%,
respectively. On a per share basis, earnings decreased to $89.84 per share
from $92.34 per share.
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During the trailing twelve month period ended March 31, 1997, SBT
reported net income of $1.197 million, or $88.22 per share. During the first
quarter of 1997, SBT reported unaudited earnings of $30.07 per share.
Valuation Analysis. The following discussion is intended to provide an
overview of the conclusions of the comparative pricing analysis. Among other
things, the analysis assumes a market value of $47.13 per share of UPC Common
Stock based on its trading value as of May 30, 1997.
TRANSACTION ANALYSIS
With regard to SBT, Mercer Capital reviewed prices paid for acquired
banks in relation to the sellers' book value and earnings as compiled by SNL
Securities. The data was divided into five groups with average and median P/E,
P/B and P/TB ratios calculated for calendar years 1990-1996 and year-to-date
through the first quarter of 1997:
1. All privately acquired U.S. commercial banks;
2. Southeast based commercial banks which have been acquired;
3. Mid-South based commercial banks which have been acquired;
4. Banks with $75 million to $125 million of assets which have
been acquired, and;
5. Banks with equity greater than 12% of equity which have been
acquired.
Mercer Capital's valuation analysis indicated an overall range of
value of a share of SBT Common Stock to be from $1,485.00 per share to
$2,215.00 per share. The overall median indicated values ranged from $1,630.00
per share to $2,100.00 per share. Mercer Capital noted that the implied price
for SBT of $2,216.51 per share, fell slightly above the cited range, and
compared favorably with price/earnings derived indications of value.
Pro Forma Analysis of Per Share Data
Mercer Capital analyzed the changes in pro forma dividends per share,
earnings per share and book value per share from the perspective of SBT's
shareholders. Mercer Capital did not represent or warrant that the actual pro
forma data reflected in this Prospectus/Proxy Statement would reflect that
which was developed in Mercer Capital's analysis.
With regard to the pro forma data, Mercer Capital made the following
observations:
1. Dividends Per Share. SBT has paid a dividend of $12.00 per
share annually since 1993. Given UPC's current quarterly
annualized dividend of $1.50 per share and the 45.12 exchange
ratio, SBT shareholders will experience a 464% increase in
their current annual dividend. In other words, following the
consummation of the Merger, a former SBT shareholder's
dividend income will rise from $12.00 per share to $67.68 per
exchange adjusted share of SBT Common Stock.
2. Earnings Per Share. Pro-forma trailing twelve months earnings
are estimated to total $162.43 per exchange adjusted share of
SBT Common Stock, an increase of 84.1% over SBT's reported
earnings of $88.22 per fully diluted share; and
3. Book Value per Share. Exchange adjusted book value per fully
diluted share of SBT Common Stock is estimated to total
$904.66 per share, a decrease of 11% over SBT's reported book
value of $1016.66 per share.
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Review of Union Planters Corporation. Mercer Capital reviewed UPC's
operating strategy, historical financial performance, current financial
position and prospective financial performance based upon UPC's publicly
available financial information. In addition, Mercer Capital reviewed the
historical and current market pricing of UPC Common Stock. Mercer Capital
noted that UPC Common Stock is listed on the NYSE. Based upon the May 31, 1997
market price of $47.13 per share of UPC Common Stock and 66.0 million
outstanding common shares, UPC's market capitalization was $3.1 billion.
Weekly volume during 1997 has averaged about 900 thousand shares, or 71% of
UPC's Common Stock on an annualized basis.
Since the announcement of the Reorganization Agreement, UPC's price
has appreciated 34% as UPC was previously trading a discount to public
companies of comparable size in relation to relative P/E and P/B ratios.
Mercer Capital did not make any representations or warranties,
however, regarding the price at which any security of UPC or SBT would trade at
in the future.
Other Considerations. In addition to the items discussed above, Mercer
Capital considered the following other factors in rendering its fairness
opinion:
1. All shares of UPC Common Stock received by shareholders of SBT
will be freely transferable, except shares received by persons
who are deemed to be "affiliates" of SBT as defined under Rule
145 of the Securities Act of 1933;
2. Given its size and market presence in Memphis, Nashville and
many secondary markets in its seven state region, UPC is an
acquisition candidate. Mercer Capital makes no
representations whether UPC will ever be acquired; or, if it
is acquired, whether shareholders will receive a premium
price; and,
3. It is presently anticipated that the transaction will be
treated as a tax-free reorganization under Section 368(a) of
the Code for federal income tax purposes. Thus, the Merger
will not trigger capital gains tax liabilities for SBT
shareholders.
Conclusion. Based upon the favorable pricing of the transaction and the
resulting pro-forma enhancement to dividends per share and earnings per share
experienced by SBT shareholders, it is Mercer Capital's opinion that the
transaction is fair from a financial point of view for the shareholders of SBT.
Compensation of Mercer Capital. Pursuant to its engagement letter, SBT agreed
to pay Mercer Capital a fee of $10,000 to prepare a valuation analysis of SBT.
SBT also agreed to indemnify Mercer Capital, its officers, employees and
agents, and to holder Mercer Capital, its officers, employees and agents
harmless from any and all obligations, claims, charges, expenses or costs of
any nature arising out of the engagement. The indemnification would not apply
if Mercer Capital were negligent in carrying out its duties.
Mercer Capital is a national valuation consulting and transaction
advisory firm which renders independent valuations and provides financial
advisory services, including the issuance of fairness opinions for mergers and
acquisitions, to financial institutions and businesses throughout the U.S.
Mercer Capital was formed in 1982 and was selected by the SBT Board to render a
fairness opinion to SBT' Board based upon Mercer Capital's extensive experience
in the banking industry.
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EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time of the Merger would occur on the date and at the
time that the Articles of Merger relating to the Merger become effective with
the Tennessee Secretary of State and a Certificate of Merger becomes effective
with the Delaware Secretary of State. No assurance can be provided that the
necessary shareholder and regulatory approvals can be obtained or that other
conditions precedent to the Merger can or would be satisfied. SBT and UPC
anticipate that all conditions to consummation of the Merger would be satisfied
so that the Merger can be consummated during the fourth quarter of 1997.
However, delays in the consummation of the Merger could occur. See
"--Conditions to Consummation of the Merger."
The Board of Directors of either SBT or UPC generally may terminate
the Reorganization Agreement if the Merger is not consummated by October 1,
1997, unless the failure to consummate by that date is the result of a willful
breach of the Reorganization Agreement by the party seeking termination. See
"--Waiver, Amendment and Termination."
EXCHANGE OF CERTIFICATES
Promptly after the Effective Time of the Merger, UPC and SBT would
cause the Exchange Agent to mail to the each SBT Record Holder a letter of
transmittal, together with instructions for the exchange of the SBT
Certificates previously representing shares of SBT Common Stock for
certificates representing shares of UPC Common Stock.
SBT SHAREHOLDERS SHOULD NOT SEND IN THEIR SBT CERTIFICATES UNTIL THEY
RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS FROM THE EXCHANGE AGENT.
Upon surrender to the Exchange Agent of SBT Certificates, together
with a properly completed letter of transmittal, there would be issued and
mailed to each SBT Record Holder who properly surrenders such items a
certificate or certificates representing the whole number of shares of UPC
Common Stock, after aggregation of all whole and fractional shares, to which
such SBT Record Holder is entitled, if any, and a check for the amount to be
paid in lieu of any remaining fractional share (without interest), together
with all undelivered dividends or distributions in respect of such shares
(without interest thereon). 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 of the Merger, the declaration would include dividends
or other distributions on all shares of UPC Common Stock issuable pursuant to
the Reorganization Agreement; however beginning 30 days after the Effective
Time of the Merger no dividend or other distribution payable after the
Effective Time of the Merger to the holders of UPC Common Stock would be paid
to any SBT Record Holder with respect to any SBT Common Stock Certificate which
has not yet been surrendered until such Certificate is surrendered in
accordance with the Exchange Agent's instructions. Upon surrender of such SBT
Common Stock Certificate, however, the UPC Common Stock certificate, together
with all undelivered dividends or other distributions (without interest), and
any undelivered cash payments to be paid in lieu of fractional shares (without
interest), would be delivered and paid with respect to each share represented
by such certificate.
After the Effective Time of the Merger, no transfers of shares of SBT
Common Stock would be recognized on SBT's stock transfer books.
CONDITIONS TO CONSUMMATION OF THE MERGER
The respective obligations of UPC and SBT to effect the Merger are
subject to the satisfaction, or waiver by the party entitled to the benefits
thereof, of various conditions prior to the Effective Time of the Merger,
including: (i) the approval of the Reorganization Agreement by the shareholders
of SBT; (ii) the receipt of all regulatory approvals required for consummation
of the Merger; (iii) the receipt of all consents required for consummation of
the Merger or for the preventing of any default under any contract or permit
which, if not obtained or made, is
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reasonably likely to have, individually or in the aggregate, a material adverse
effect on UPC or SBT; (iv) the absence of any law, order or other action of any
court or governmental or regulatory authority of competent jurisdiction which
prohibits, restricts or makes illegal the consummation of the Merger; (v) the
effectiveness of the Registration Statement and the receipt of all necessary
Commission and state approvals relating to the issuance or trading of the
shares of UPC Common Stock issuable pursuant to the Merger; (vi) the approval
of the shares of UPC Common Stock issuable pursuant to the Merger for listing
on the NYSE, subject to official notice of issuance; (vii) the receipt of a
letter from Price Waterhouse LLP addressed to UPC, dated as of the Effective
Time of the Merger, to the effect the Merger would qualify for pooling of
interests accounting treatment; and (viii) the receipt of a favorable opinion
of Wyatt, Tarrant & Combs as to the tax-free nature (except for cash received
in lieu of fractional shares) of the Merger. See "THE SPECIAL MEETING,"
"--Regulatory Approvals," "--Certain Federal Income Tax Consequences,"
"--Accounting Treatment" and "--Waiver, Amendment and Termination."
The obligations of UPC to effect the Merger are further subject to the
satisfaction, or waiver by UPC, of various conditions prior to the Effective
Time of the Merger, including: (i) the accuracy, as of the date of the
Reorganization Agreement and as of the Effective Time of the Merger, of the
representations and warranties of SBT as set forth in the Reorganization
Agreement; (ii) the performance of all agreements and the compliance with all
covenants of SBT as set forth in the Reorganization Agreement; (iii) the
receipt of various certificates from the officers of SBT; (iv) the receipt by
UPC from each affiliate of SBT of a written letter providing that, except as
contemplated by the Reorganization Agreement or in compliance with applicable
provisions of the Securities Act, such affiliate will not sell, pledge,
transfer or otherwise dispose of the shares of SBT Common Stock held, or the
shares UPC Common Stock to be received upon consummation of the Merger, by such
affiliate; (v) the receipt from SBT of an opinion of counsel that SBT is duly
organized, validly existing and in good standing under the laws of Delaware and
that SBT has valid authority to enter and perform the requirements of the
Reorganization Agreement; (vi) the compliance by SBT, at the time of the
closing of the Merger, with certain financial covenants, including one
requiring it to maintain total consolidated assets of at least $95 million;
(vii) the execution by each member of the SBT Board and each chairman of the
board, president or chief executive officer of the Bank of a non-compete
agreement with UPC, SBT and the Bank and (viii) the execution by Richard L.
Rankin, Chairman and Chief Executive Officer of SBT, and James E. Hanna,
President and Cashier of SBT, of employment agreements with SBT. See
"--Representations and Warranties," "--Resales of UPC Common Stock," "-
- -Employee Benefit Plans" and "--Waiver, Amendment and Termination."
The obligations of SBT to effect the Merger are further subject to
the satisfaction, or waiver by SBT, of various conditions prior to the
Effective Time of the Merger, including: (i) the accuracy, as of the date of
the Reorganization Agreement and as of the Effective Time of the Merger, of the
representations and warranties of UPC as set forth in the Reorganization
Agreement; (ii) the performance of all agreements and the compliance with all
covenants of UPC as set forth in the Reorganization Agreement; (iii) the
receipt of various certificates from the officers of UPC; (iv) the receipt from
UPC of an opinion of counsel that UPC is duly organized, validly existing and
in good standing under the laws of Delaware and that UPC has valid authority to
enter and perform the requirements of the Reorganization Agreement; and (v) the
offer by UPC of employment agreements to Richard L. Rankin, Chairman and Chief
Executive Officer of SBT, and James E. Hanna, President and Cashier of SBT.
See "--Representations and Warranties," "Employee Benefit Plans" and "--Waiver,
Amendment and Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or would be satisfied or lawfully waived by the
party permitted to do so. In the event the Merger should not be effected on or
before October 1, 1997, the Reorganization Agreement may be terminated and the
Merger abandoned by either the SBT Board or the UPC Board. See "--Waiver,
Amendment, and Termination."
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REPRESENTATIONS AND WARRANTIES
UPC and SBT have made certain representations and warranties to each
other in the Reorganization Agreement relating to, among other things, their
respective organization, standing and authority; their respective authority to
execute and deliver the Reorganization Agreement and to consummate the
transactions contemplated thereby and the absence of any breaches as a result
thereto; capital stock; filings with the Commission and financial statements;
the absence of any undisclosed liabilities or certain changes or events;
compliance with laws; legal proceedings; reports; the truth and accuracy of
various statements; and certain accounting, tax and regulatory matters. SBT
has made additional representations and warranties in the Reorganization
Agreement with respect to its subsidiaries; its financial statements; certain
tax matters; the adequacy of its allowance for possible loan losses; its
assets; its intellectual property rights; certain environmental matters; labor
relations; employee benefit plans; material contracts; the applicability of
various state takeover laws; compliance with provisions of SBT's Charter; and
the effectiveness of its charter documents.
REGULATORY APPROVALS
The Merger requires the prior approval of the Federal Reserve pursuant
to Section 3 of the Bank Holding Company Act (the "BHC Act"). In evaluating
the Merger, the Federal Reserve must consider, among other factors, the
financial and managerial resources and future prospects of the institutions and
the convenience and needs of the communities to be served. The relevant
statutes prohibit the Federal Reserve from approving the Merger if: (i) it
would result in a monopoly or be in furtherance of any combination or
conspiracy to monopolize or attempt to monopolize the business of banking in
any part of the United States; or (ii) its effect in any section of the country
may be to substantially lessen competition or to tend to create a monopoly, or
if it would be a restraint of trade in any other manner, unless the Federal
Reserve should find that any anticompetitive effects are outweighed clearly by
the public interest and the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. The Merger may not be
consummated until the 15th day following the date of the Federal Reserve
approval, during which time the United States Department of Justice would be
afforded the opportunity to challenge the transaction on antitrust grounds.
The commencement of any antitrust action would stay the effectiveness of the
approval of the agencies, unless a court of competent jurisdiction should
specifically order otherwise. UPC has filed the necessary applications for
prior approval to acquire SBT, and UPC has received the approval of the Federal
Reserve to consummate the Merger by letter dated January 28, 1997.
RECEIPT OF REGULATORY APPROVAL FROM THE FEDERAL RESERVE OR ANY OTHER
GOVERNMENTAL AGENCY IS NOT, AND SHOULD NOT BE CONSIDERED AS, A RECOMMENDATION
BY THE FEDERAL RESERVE OR ANY OTHER GOVERNMENTAL AGENCY FOR APPROVAL OF THE
MERGER BY SBT STOCKHOLDERS.
WAIVER, AMENDMENT AND TERMINATION
To the extent permitted by applicable law, SBT and UPC, with the
approval of their respective Boards of Directors, may amend the Reorganization
Agreement by a written agreement at any time before or after approval of the
Reorganization Agreement by the SBT shareholders; provided, however, that after
the Special Meeting, no amendment may in any material respect modify the
Consideration. Furthermore, UPC would have the unilateral right to revise the
structure of the Merger in order to achieve tax benefits or for any other
reason which UPC may deem advisable; provided, however, that UPC may not,
without the approval of the SBT Board, make any revision to the structure of
the Merger which would: (i) change the amount of the Consideration; (ii) change
the intended tax-free effect of the Merger to UPC, Community, SBT or any SBT
Record Holder; (iii) would permit UPC to pay the Consideration other than by
delivery of shares of UPC Common Stock registered with the Commission.
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In addition, prior to or at the Effective Time of the Merger, either
SBT or UPC, or both, acting through their respective Boards of Directors, chief
executive officers or other authorized officers, may: (i) waive any default in
the performance of any term of the Reorganization Agreement by the other party;
(ii) waive or extend the time for the compliance or fulfillment by the other
party of any and all of its obligations under the Reorganization Agreement; and
(iii) waive any or all of the conditions precedent to the obligations of the
other party under the Reorganization Agreement except any condition that, if
not satisfied, would result in the violation of any applicable law or
governmental regulation. No such waiver would be effective unless in a writing
executed by a duly authorized officer of SBT or UPC, as the case may be.
The Reorganization Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time of the Merger: (i) by the
mutual consent of the Boards of Directors of SBT and UPC; (ii) by the Board of
Directors of SBT or UPC (provided, in the case of (a), (b) and (e) below only,
that the terminating party is not then in breach of any representation or
warranty contained in the Reorganization Agreement under the applicable
standards set forth in the Reorganization Agreement or in material breach of
any covenant or other agreement contained in the Reorganization Agreement) (a)
in the event of any inaccuracy of any representation or warranty of the other
party contained in the Reorganization Agreement which cannot be, or has not
been, cured within 30 days after giving written notice to the breaching party
of such inaccuracy and which inaccuracy would provide the terminating party the
ability to refuse to consummate the Merger under the applicable standards set
forth in the Reorganization Agreement, (b) in the event of a material breach by
the other party of any covenant or agreement contained in the Reorganization
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, (c)
if any approval of any regulatory authority required for consummation of the
Merger and the other transactions contemplated by the Reorganization Agreement
has been denied by final nonappealable action, or if any action taken by such
authority is not appealed within the time limit for appeal or the shareholders
of SBT fail to approve of the Reorganization Agreement, (d) if the Merger is
not consummated by October 1, 1997, provided that the failure to consummate is
not due to a willful breach by the party electing to terminate, or (e) if any
of the conditions precedent to the obligations of such party to consummate the
Merger cannot be satisfied or fulfilled by October 1, 1997; or (iii) by UPC if
a "Purchase Event" (as defined below in "--The Stock Option Agreement) shall
have occurred or by SBT if UPC should exercise its option to purchase shares of
SBT Common Stock granted under the Stock Option Agreement. See "--
Representations and Warranties" and "--The Stock Option Agreement."
If the Merger should be terminated as described above, the
Reorganization Agreement would become void and have no effect, except that
certain provisions thereof, including those relating to the obligations to
share certain expenses, to maintain the confidentiality of certain information
obtained and with respect to the return of all documents obtained from the
other party under the Reorganization Agreement, would survive. In addition,
termination of the Reorganization Agreement would not relieve any breaching
party from liability for any uncured willful breach of a representation,
warranty, covenant or agreement giving rise to such termination, unless the
termination is the result of failure to obtain required regulatory approvals,
failure to obtain the approval of the SBT shareholders or failure to consummate
the Merger by October 1, 1997. Finally, the Stock Option Agreement would be
governed by its own terms as to its termination. See "--The Stock Option
Agreement."
APPRAISAL RIGHTS
SBT shareholders have the right to dissent to the Merger and to
receive the "fair value" of their shares of SBT Common Stock upon compliance
with statutory appraisal rights provided by Section 262 of the Delaware General
Corporation Law ("DGCL). A SBT shareholder electing to exercise appraisal
rights (a "Dissenting Shareholder"), must be careful to take the steps required
by Section 262 in order to properly "perfect" his appraisal rights. Failure to
properly perfect appraisal rights could prevent the Dissenting Shareholder from
obtaining the fair value of his shares of SBT Common Stock in cash. In such
event, (a "Failed Exercise"), the Dissenting Shareholder would only be entitled
to receive the shares of UPC Common Stock, and cash in lieu
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of fractional shares, that he would otherwise be entitled to receive upon
pursuant to the terms of the Reorganization Agreement. The following is a
discussion of the steps that a Dissenting Shareholder must take in order to
properly perfect his appraisal rights. The following discussion does not
purport to be exhaustive and is qualified by the terms of Section 262 of the
DGCL, a copy of which is attached to this Prospectus/Proxy Statement as
Appendix G, which is incorporated herein by reference.
In order to properly perfect appraisal rights, a Dissenting
Shareholder must deliver to SBT a written demand for appraisal of his shares of
SBT Common Stock. This written demand must be delivered to SBT prior to the
time the vote is taken on the proposed Merger at the Special Meeting. The
notice will be sufficient if it identifies the Dissenting Shareholder and
states that such Dissenting Shareholder intends to demand an appraisal for his
shares of SBT Common Stock. A vote AGAINST the Merger, whether in person or by
proxy, will NOT be sufficient to satisfy the written demand requirements of
Section 262. Further, the Dissenting Shareholder must NOT vote FOR the Merger.
Within ten days after the Effective Time of the Merger, UPC would
notify each Dissenting Shareholder who had timely given his written notice and
not voted For the Merger that the Merger had been consummated. Within 120 days
after the Effective time of the Merger, a Dissenting Shareholder who has
complied with Section 262 may file a petition in the Delaware Court of Chancery
demanding a determination of the value of the SBT Common Stock of all
Dissenting Shareholders who had complied with Section 262 and who had not
otherwise come to an agreement with UPC as to the value of their shares.
Within that 120 day time period a Dissenting Shareholder will be entitled to
make a written request that UPC supply to him a statement setting forth the
number of shares of SBT Common Stock which were not voted in favor of the
Merger and for which a demand for appraisal had been properly given and the
aggregate number of holders of such shares. UPC would be required to deliver
that statement within ten days of its receipt of the written request. During
that 120 day time period, Dissenting Shareholders and UPC may reach an
agreement as to the fair value of their shares, in which case those Dissenting
Shareholders would not be entitled to participate in the petition to the
Delaware Court of Chancery.
Upon the filing of a petition in the Delaware Court of Chancery,
service of a copy thereof will be served on UPC. UPC would then have 20 days
to file with the Court a verified list containing the names and addresses of
all Dissenting Shareholders who have demanded payment for their shares and with
whom agreements as to the value of their shares have not been reached. The
Registry in Chancery, if so ordered by the Court, would then give notice of the
time and place of the hearing of such petition to UPC and the Dissenting
Shareholders listed in the list filed by UPC. Notice of the time and place of
the hearing may be given by publication in a newspaper of general circulation
in Wilmington, Delaware.
At the hearing on the petition, the Court will determine the
Dissenting Shareholders who have complied with Section 262 and who have become
entitled to exercise appraisal rights. The Court may require such Dissenting
Shareholders to submit their certificates representing shares of SBT Common
Stock to the Registry of the Court for notation thereon of the pendency of the
appraisal proceedings. Failure to submit the certificate(s) may result in the
failing Dissenting Shareholder loosing his rights to the appraisal rights.
After the Court of Chancery has determined the identities of the
Dissenting Shareholders entitled to an appraisal, the Court would then
determine the "fair value" of the shares of SBT Common Stock to be paid to the
qualifying Dissenting Shareholders by UPC, together with a fair rate of
interest, if any. In determining the "fair value" of the shares of SBT Common
Stock, the Court would not include any element of value arising from the
accomplishment or expectation of the Merger. The Court may allow pre-trial
discovery with respect to the fair value determination.
Upon determining the "fair value" of the SBT Common Stock held by
qualifying Dissenting Shareholders, the Court would then direct that UPC pay
such amount, plus reasonable
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interest, if any, to the Dissenting Shareholders entitled thereto. However,
UPC would be required to make such payments only upon the surrender of the
certificates representing the shares of SBT Common Stock.
The Court may determine the costs of the proceeding and tax such costs
upon the parties as the Court deems equitable in the circumstances. If costs
are taxed to the Dissenting Shareholders, a Dissenting Shareholder may petition
the Court to charge those costs, as well as other expenses such as attorneys
fees and costs of experts, against the value of all shares entitled to an
appraisal.
See Appendix G hereto, which is a complete copy of Section 262 of the
DGCL, for the specifics of the rights and responsibilities of Dissenting
Shareholders with respect to appraisal rights.
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Reorganization Agreement, SBT has agreed that unless
the prior written consent of UPC has been obtained, and except as otherwise
expressly contemplated in the Reorganization Agreement, SBT would, among other
things: (i) operate its business only in the usual, regular and ordinary
course; and (ii) not undertake any action which would materially adversely
affect the ability of any party to perform their respective covenants and
agreements under the Reorganization Agreement.
In addition, SBT has agreed that, prior to the earlier of the
Effective Time of the Merger or termination of the Reorganization Agreement, it
would not, except with the prior written consent of UPC or as specifically
permitted by the Reorganization Agreement, agree or commit to undertake certain
actions, including, but not limited to, any of the following: (i) amend its
Charter (the "SBT Charter") or Bylaws (the "SBT Bylaws"); (ii) repurchase,
redeem or otherwise acquire or exchange any shares, or any securities
convertible into any shares, of the capital stock of an SBT Company; (iii)
declare or pay any dividend or make any other distribution in respect of any
SBT capital stock; provided, however, that SBT may declare and pay a cash
dividend of up to $9.00 per share should the SBT Board determine to do so; or
(iv) except pursuant to the Reorganization Agreement or the Stock Option
Agreement, issue, sell, pledge, encumber or authorize the issuance of, or
otherwise permit to become outstanding, any additional shares of SBT Common
Stock or any other capital stock of an SBT 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.
LIMITATION ON NEGOTIATIONS
The Reorganization Agreement provides that the SBT Companies shall not
solicit or knowingly encourage any Acquisition Proposal by any person.
Furthermore, except to the extent necessary to comply with the fiduciary duties
of the SBT Board, as advised by legal counsel, the SBT Companies are prohibited
from furnishing any non-public information that it is not legally obligated to
furnish, negotiating with respect to or entering into any agreement with
respect to, any Acquisition Proposal. SBT must promptly notify UPC immediately
following receipt of any Acquisition Proposal.
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MANAGEMENT AFTER THE MERGER
The Reorganization Agreement provides that Community's directors and
officers in place immediately prior to the Effective Time of the Merger would
continue to be the directors and officers of Community after the Effective Time
of the Merger until such directors or officers are replaced in accordance with
Community's charter and bylaws. The current directors and officers of
Community are employees of UPC.
While the directors and officers of SBT would be affected by the
Merger, it is expected that the directors and officers of Bank would continue
to hold their respective positions after the Merger. Furthermore, the
Reorganization Agreement prohibits UPC and Community from taking any action to
merge or consolidate the Bank with UPC or any affiliate of UPC for a period of
one year after the Effective Time of the Merger. In addition, Messrs. Richard
L. Rankin and James E. Hanna would be offered three year employment contracts
to serve as Chairman and Chief Executive Officer and President and Cashier,
respectively, of the Bank. These practices are consistent with UPC's
operational philosophy of having its subsidiary banks operate autonomously in
their respective communities with the banking decisions being made, within
broad guidelines established by UPC, by a local board of directors and
executive management. See "Interests of Certain Persons in the Merger."
EMPLOYEE BENEFIT PLANS
Following the Effective Time of the Merger, UPC would be obligated
under the Reorganization Agreement to provide to officers and employees of the
SBT 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 in (but not for vesting
or benefit accrual under) any such UPC employee benefit plan, the service of
the employees of the SBT Companies prior to the Effective Time of the Merger
would be treated as service with a UPC Company participating in such employee
benefit plan. In addition, to the extent permitted by law, following the
Effective Time of the Merger, all contributions to the SBT Employee Stock
Ownership Plan (the "SBT ESOP") would cease and participants in the SBT ESOP
who at that time continue to be employed by UPC would be entitled to
participate in UPC's Employee Stock Ownership Plan (the "UPC ESOP") to the same
extent as other employees of UPC. UPC would take such steps necessary to merge
the SBT ESOP with and into the UPC ESOP and would obtain such regulatory
determinations regarding the merger of the SBT ESOP into the UPC ESOP as may be
appropriate to ensure the qualified status of such plans and related trust
under the Code. If UPC determines that the SBT ESOP cannot be merged with and
into the UPC ESOP, then the SBT ESOP would be terminated, and all vested
benefits would be distributed to participants in accordance with applicable law
and the terms of the SBT ESOP.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of the SBT Management Group have interests in the
Merger that would be in addition to any interests they may have as shareholders
of SBT generally. These interests are set forth in provisions in the
Reorganization Agreement relating to employment agreements and non-compete
interests, as described below.
Prior to the closing and as a condition thereto, each member of the
Boards of Directors of SBT and the Bank would be required under the
Reorganization Agreement to execute a non-compete agreement with UPC and
Community providing that, for a term of three years from the date of the
closing, such persons would be prohibited from, among other things, becoming
involved in any way in the formation or organization of a new financial
institution in McNairy County, Tennessee. The members of the Boards of
Directors of SBT and the Bank would not receive any additional consideration
for their execution of non-compete agreements.
Additionally, Richard L. Rankin, as Chairman and Chief Executive
Officer of SBT, and James E. Hanna, as President and Cashier of SBT, would be
required under the Reorganization
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Agreement to execute three year employment agreements with UPC, Community and
the Bank which would become effective as of the date of the closing. Under
these employment agreements Mr. Rankin and Mr. Hanna would be provided
compensation and benefits substantially similar to those offered to similarly
situated executive officers of other UPC Banking Subsidiaries. Under these
employment agreements the executive officer's employment may be terminated with
or without cause; provided, however, that upon any termination by UPC without
cause, the executive would be entitled to receive an amount equal to the
greater of (i) the executive officer's base salary then in effect for the
remaining term of the agreement, or (ii) six month's base salary then in
effect. Neither Mr. Rankin nor Mr. Hanna currently have employment contracts
with SBT or the Bank.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The parties to the Merger have not and do not intend to seek a ruling
from the Internal Revenue Service (the "IRS") as to the federal income tax
consequences of the Merger. Instead, UPC and SBT have obtained the opinion of
Wyatt, Tarrant & Combs (counsel to UPC) (the "Tax Opinion") as to certain of
the expected federal income tax consequences of the Merger, a copy of which is
attached as an exhibit to the Registration Statement.
The Tax Opinion does not address, among other matters: (i) state,
local, foreign or other federal tax consequences of the Merger not specifically
addressed therein; (ii) federal income tax consequences to shareholders of SBT
subject to special rules under the Code, such as foreign persons, tax-exempt
organizations, insurance companies, financial institutions, dealers in stocks
and securities, and person who do not own such stock as a capital asset; (iii)
federal income tax consequences affecting shares of SBT stock acquired upon
exercise of stock options, stock purchase plan rights or otherwise as
compensation; and (iv) the tax consequences to holders of warrants, options or
other rights to acquire shares of such stock.
Subject to the conditions, qualifications, representations and
assumptions contained herein and in the Tax Opinion, counsel has opined that:
(1) The acquisition by Community of substantially all of
the assets of SBT in exchange for shares of UPC Common Stock and the
assumption of liabilities of SBT pursuant to the Merger will
constitute a reorganization within the meaning of Sections
368(a)(1)(A) and 368(a)(2)(D) of the Code.
(2) SBT, UPC and Community will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
(3) No gain or loss will be recognized by SBT as a result
of the Merger (except for the inclusion in income of the amount of the
bad-debt reserve maintained by SBT 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).
(4) No gain or loss will be recognized by Community or
UPC as a result of the Merger (except for the inclusion in income of
the amount of the bad-debt reserve maintained by SBT 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).
(5) The tax basis of the assets received by Community
will be the same as the tax basis of such assets of SBT immediately
prior to the Merger.
(6) The holding period of the assets of SBT received by
Community will in each instance include the period for which such
assets were held by SBT.
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(7) No gain or loss will be recognized by the
shareholders of SBT as a result of the exchange of SBT Common Stock
for UPC Common Stock pursuant to the Merger, except that a gain or
loss will be recognized on the receipt of any cash in lieu of a
fractional share. Assuming that the SBT Common Stock is a capital
asset in the hands of the respective SBT shareholders, any gain or
loss recognized as a result of the receipt of cash in lieu of a
fractional share will be a capital gain or loss equal to the
difference between the cash received and that portion of the holder's
tax basis in the SBT Common Stock allocable to the fractional share.
(8) The tax basis of UPC Common Stock to be received by
the shareholders of SBT will be the same as the tax basis of the SBT
Common Stock surrendered in exchange therefor (reduced by any amount
allocable to a fractional share interest for which cash is received).
(9) The holding period of the UPC Common Stock to be
received by shareholders of SBT will include the holding period of the
SBT Common Stock surrendered in exchange therefor, provided the SBT
shares were held as a capital asset by the shareholders of SBT on the
date of the exchange.
(10) A shareholder of SBT who perfects his appraisal rights
and who receives payment of the fair market value of his shares of SBT
Common Stock will be treated as having received such payment in
redemption of such stock. Such redemption will be subject to the
conditions and limitations of Section 302 of the Code.
The Tax Opinion is based on the Code, the Treasury Regulations
promulgated thereunder, judicial decisions and administrative pronouncements of
the IRS, all existing and in effect on the date of this Registration Statement
and all of which are subject to change at any time, possibly retroactively.
Any such change could have a material impact on the conclusions reached in the
Tax Opinion. The Tax Opinion represents only such counsel's best judgment as
to the expected federal income tax consequences of the Merger and is not
binding on the IRS or the courts. The IRS may challenge the conclusions stated
therein and shareholders of SBT may incur the cost and expense of defending
positions taken by them with respect to the Merger. A successful challenge by
the IRS could have material adverse consequences to the parties to the Merger,
including shareholders of SBT and UPC.
In rendering the Tax Opinion, counsel has relied, as to factual
matters, solely on the continuing accuracy of (i) the description of the facts
relating to the Merger contained in the Merger Agreement and this Registration
Statement, (ii) the factual representations and warranties contained in the
Merger Agreement and Registration Statement and related documents and
agreements, and (iii) certain factual matters addressed by representations made
by certain executive officers of SBT and UPC, as further described in the Tax
Opinion and the Exhibits thereunder. Events occurring after the date of the
Tax Opinion could alter the facts upon which the Tax Opinion is based, in which
event the conclusions reached therein and in this summary could be materially
impacted.
ACCORDINGLY, FOR ALL OF THE ABOVE REASONS, SHAREHOLDERS OF SBT AND UPC
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES
TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FEDERAL,
STATE, LOCAL AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
Consummation of the Merger is conditioned upon the eligibility of the
Merger to be accounted for as a pooling of interests. Under the pooling of
interests method of accounting, the recorded amounts of the assets and
liabilities of SBT would be carried forward at their previously recorded
amounts. Only the current year UPC financial information will be restated as
though SBT and UPC had been combined at the beginning of the year due to the
insignificance of SBT.
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In order for the Merger to qualify for pooling of interests accounting
treatment, substantially all (90% or more) of the outstanding SBT Common Stock
must be exchanged for UPC Common Stock with substantially similar terms. There
are certain other criteria that must be satisfied in order for the Merger to
qualify for pooling of interests accounting treatment.
For information concerning certain conditions to be imposed on the
exchange of SBT Common Stock for UPC Common Stock in the Merger by persons
deemed to be "affiliates" of SBT and certain restrictions to be imposed on the
transferability of the UPC Common Stock received by those affiliates in the
Merger in order, among other things, to ensure the availability of pooling of
interests accounting treatment, see "--Resales of UPC Common Stock."
EXPENSES AND FEES
The Reorganization Agreement provides, in general, that each of the
parties would bear and pay all direct costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated by the
Reorganization Agreement, including fees and expenses of its own financial or
other consultants, investment bankers, accountants and counsel, except that
each of UPC and SBT would bear and pay the filing fees and printing costs
incurred in connection with the Registration Statement and this
Prospectus/Proxy Statement based on the relative asset sizes of the parties at
December 31, 1995.
RESALES OF UPC COMMON STOCK
Shares of UPC Common Stock to be issued to SBT Record Holders in
connection with the Merger would be registered under the Securities Act. All
shares of UPC Common Stock received by SBT Record Holders upon consummation of
the Merger would be freely transferable by those shareholders of SBT who are
not deemed to be "Affiliates" of SBT or UPC. "Affiliates" generally are
defined as persons or entities who control, are controlled by or are under
common control with SBT or UPC (including, generally, executive officers and
directors).
Rules 144 and 145 promulgated by the Commission under the Securities
Act restrict the sale of UPC Common Stock received in the Merger by Affiliates
and certain of their family members and related interests. Generally speaking,
prior to the first anniversary of the Effective Time of the Merger, Affiliates
of SBT may resell publicly the UPC Common Stock received by them in the Merger
within certain limitations as to the amount of UPC Common Stock sold in any
three-month period and as to the manner of sale. After the one-year
anniversary of the Effective Time of the Merger, such Affiliates of SBT who do
not otherwise qualify as Affiliates of UPC, may resell their shares without
restriction. The ability of Affiliates to resell shares of UPC Common Stock
received in the Merger under Rule 144 or 145 as summarized herein generally
would be subject to UPC's having satisfied its Exchange Act reporting
requirements for specified periods prior to the time of sale. Affiliates would
receive additional information regarding the effect of Rules 144 and 145 on
their ability to resell UPC Common Stock received in the Merger. Affiliates
also would be permitted to resell UPC Common Stock received in the Merger
pursuant to an effective registration statement under the Securities Act or an
available exemption from the Securities Act registration requirements. This
Prospectus/Proxy Statement does not cover any resales of UPC Common Stock
received by persons who may be deemed to be Affiliates of SBT.
SBT has agreed to use its reasonable efforts to cause each person who
may be deemed to be an Affiliate of SBT to execute and deliver to UPC not later
than 30 days prior to the Effective Time of the Merger, a written agreement
(each, an "Affiliate Agreement") providing that such Affiliate will not sell,
pledge, transfer or otherwise dispose of the shares of SBT Common Stock held by
such Affiliate (except as contemplated by such Affiliate Agreement or by the
Reorganization Agreement) or any shares of UPC Common Stock obtained by such
Affiliate as a result of the Merger (i) except in compliance with the
Securities Act and the rules and regulations of the Commission thereunder and
(ii) in any case, until such time as financial results covering at least 30
days of combined operations of UPC and SBT shall have been published.
Consummation of the Merger is conditioned upon the receipt by UPC from each
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Affiliate of SBT of executed Affiliate Agreements. The stock certificates
representing UPC Common Stock issued in the Merger to persons who qualify as
Affiliates of SBT will bear a legend summarizing the foregoing restrictions.
See "--Conditions to Consummation of the Merger."
THE STOCK OPTION AGREEMENT
As a condition and an inducement to UPC entering into the
Reorganization Agreement, SBT and UPC entered into the Stock Option Agreement,
pursuant to which SBT granted UPC an option (the "Option") entitling UPC to
purchase up to 3,183 shares (representing 23.5% of the shares issued and
outstanding before giving effect to the exercise of such Option and 19.0% of
the shares which would be issued and outstanding subsequent to the exercise of
such Option) of SBT Common Stock under the circumstances described below, at a
cash price per share equal to $957.00, subject to adjustment in certain
circumstances. This description of the Stock Option Agreement and the Option
does not purport to be complete and is qualified in its entirety by reference
to the Stock Option Agreement, which is attached as an exhibit to Appendix B of
this Prospectus/Proxy Statement and is incorporated herein by reference.
Subject to the requirements of applicable law and regulations, UPC may
exercise the Option, in whole or in part, if, but only if, a "Purchase Event"
(as defined below) should occur prior to the Option's termination, provided
that UPC, at the time, is not in material breach of the Stock Option Agreement
or the Reorganization Agreement. As defined in the Stock Option Agreement,
"Purchase Event" means either of the following events:
(a) without UPC's prior written consent, SBT shall have
authorized, recommended, publicly proposed or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any third party to effect (i) a merger, consolidation
or similar transaction involving SBT or any of its subsidiaries (other
than transactions solely between SBT's subsidiaries); (ii) except as
permitted by the Reorganization Agreement, the disposition, by sale,
lease, exchange or otherwise, of 25% or more of the consolidated
assets of SBT and its subsidiaries; or (iii) 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 SBT or any of its subsidiaries; or
(b) any third party shall have acquired beneficial
ownership, or the right to acquire beneficial ownership, of 25% or
more of the outstanding shares of SBT Common Stock.
The Option would terminate at or upon the earliest of the following:
(a) the Effective Time of the Merger;
(b) termination of the Reorganization Agreement in
accordance with the terms thereof prior to the occurrence of a
Purchase Event or a "Preliminary Purchase Event" (as defined below)
(other than a termination of the Reorganization Agreement by UPC under
certain circumstances involving a breach by SBT of a representation,
warranty, covenant or agreement of SBT contained in the Reorganization
Agreement) (a "Default Termination");
(c) 12 months after termination of the Reorganization
Agreement by UPC pursuant to a Default Termination; and
(d) 12 months after termination of the Reorganization
Agreement (other than pursuant to a Default Termination) following the
occurrence of a Purchase Event or a "Preliminary Purchase Event."
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As defined in the Stock Option Agreement, "Preliminary Purchase Event"
includes either of the following events:
(a) commencement by any third party of, or filing by any
third party of a registration statement under the Securities Act with
respect to, a tender offer or exchange offer to purchase any shares of
SBT Common Stock such that, upon consummation of such offer, such
person would own or control 15% or more of the then outstanding shares
of SBT Common Stock (a "Tender Offer" or an "Exchange Offer,"
respectively); or
(b) failure of the shareholders of SBT to approve the
Reorganization Agreement at the Special Meeting, the failure to have
the Special Meeting (or another meeting for the purpose of voting on
the Reorganization Agreement) prior to termination of the
Reorganization Agreement, or the withdrawal or modification by the SBT
Board in a manner adverse to UPC of the recommendation of the SBT
Board with respect to the Reorganization Agreement after public
announcement that a third party: (i) made, or disclosed an intention
to make, a proposal to engage in an acquisition transaction; (ii)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer; or (iii) filed an
application under certain federal statutes for approval to engage in
an acquisition transaction.
In the event of any change in SBT Common Stock by reason of a stock
dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction, the type and number of securities subject to the Option
and the purchase price per share, as the case may be, would be adjusted
appropriately. In the event that any additional shares of SBT Common Stock
should be issued after November 26, 1996, the date of the Stock Option
Agreement (other than pursuant to an event described in the preceding
sentence), the number of shares of SBT Common Stock subject to the Option would
be adjusted so that, after such issuance, it, together with any shares of SBT
Common Stock previously issued pursuant to the Stock Option Agreement, would
equal 19% of the number of shares of SBT Common Stock then issued and
outstanding, without giving effect to any shares subject to or issued pursuant
to the Option.
Upon the occurrence of a "Repurchase Event" (as defined below) that
occurs prior to the exercise or termination of the Option, at the request of
UPC, delivered within 12 months of the Repurchase Event, SBT would, subject to
regulatory restrictions, be obligated to repurchase the Option and any shares
of SBT Common Stock theretofore purchased pursuant to the Stock Option
Agreement at a specified price.
As defined in the Stock Option Agreement, "Repurchase Event" would be
deemed to occur if: (i) any person (other than UPC or any UPC subsidiary) has
acquired beneficial ownership, or the right to acquire beneficial ownership, or
any group shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of 50% or more of the then outstanding shares of
SBT Common Stock; or (ii) a transaction has been consummated in which: (a) SBT
is consolidated with or merged into any person, other than a UPC Company, and
is not the continuing or surviving corporation of such consolidation or merger;
(b) any person, other than a UPC Company merges into SBT with SBT being the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of SBT Common Stock are changed into or exchanged for
stock, other securities, cash or other property other than SBT Common Stock, or
the outstanding shares of SBT Common Stock immediately prior to such merger
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (c) SBT sells or otherwise
transfers all or substantially all of its assets to any person, other than a
UPC Company.
In the event that prior to the exercise or termination of the Option,
SBT should enter into an agreement to engage in any of the transactions
described in clause (ii) of the definition of Repurchase Event above, the
Reorganization Agreement governing such transaction must make proper provision
so that the Option would, upon consummation of such transaction, be converted
into, or exchanged for, an option with terms similar to the Option, at the
election of UPC, of
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either the acquiring person or any person that controls the acquiring person
(or in the case of clause (ii)(b) above, SBT).
After the occurrence of a Purchase Event, UPC may without the consent
of SBT assign the Stock Option Agreement and its rights thereunder in whole or
in part.
Upon the occurrence of certain events, SBT has agreed to file with the
Commission and to cause to become effective certain registration statements
under the Securities Act with respect to dispositions by UPC and its assigns of
all or part of the Option and/or any shares of SBT Common Stock into which the
Option is exercisable.
BUSINESS OF SBT
GENERAL
SBT is subject to regulation and examination by the Federal Reserve,
the FDIC and the State of Tennessee. SBT operates one bank subsidiary, Selmer
Bank & Trust Company (the "Bank"), which is SBT's only subsidiary. The Bank is
a Tennessee-chartered bank headquartered in Selmer, Tennessee, with its main
office located at 116 South Third Street. As of March 31, 1997, SBT had total
assets of $102.1 million, total loans net of unearned income, of $51.1 million,
total deposits of $87.7 million, and total stockholders equity of $13.8
million. SBT's main office has been in operation in Selmer since 1919. A
nearby drive-through facility was opened in Selmer in 1984. SBT operates
branches in Bethel Springs and Ramer, Tennessee, both of which were opened in
1972.
SBT is engaged in the business of soliciting deposits from the general
public and using such deposits to originate loans or invest in residential and
other mortgage loans, commercial loans, consumer loans and, to a lesser extent,
agricultural loans, investments and other assets. SBT does not concentrate its
credit in any particular economic sector.
LENDING ACTIVITIES
The principal lending activity of SBT historically has been the
origination of conventional first mortgage single-family loans. SBT also makes
consumer/commercial loans, commercial real estate loans and, to a lesser
extent, agricultural loans.
As of March 31, 1997, SBT's loan portfolio totaled $51.1 million or
50% of its total assets. On that date, $29.5 million, or 58%, of the total
loan portfolio consisted of loans secured by mortgages on single family
dwellings and the remainder of the loan portfolio consisted of loans secured by
commercial real estate and consumer/commercial credits.
PROPERTY
SBT owns, free of any encumbrances, the property on which its main
office and branch offices are located. SBT also holds from time to time real
estate acquired through foreclosure.
COMPETITION
SBT competes with numerous other commercial banks and other financial
institutions in McNairy County, Hardeman County and Hardin County, Tennessee.
LEGAL PROCEEDINGS
As of the date of this Prospectus/Proxy Statement, SBT is not involved
in any significant legal proceeding.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION OF SBT
The following narrative discussion and tabular data provides an
analysis of major factors and trends regarding the consolidated financial
condition of SBT and the Bank as of March 31, 1997 and as of December 31, 1996
and 1995, and the consolidated results of operations of SBT and the Bank for
the three months ended March 31, 1997 and 1996 and for each of the years ended
December 31, 1996 and 1995. This discussion should be read in conjunction with
the audited consolidated financial statements, and the notes thereto, as of and
for the year ended December 31, 1996, and the unaudited consolidated financial
statements and the notes thereto as of and for the years ended December 31,
1995 and 1994 and for the three months ended March 31,1997 as presented in
Appendices C, D and E of this Prospectus/Proxy Statement.
OVERVIEW
For a summary of selected consolidated financial data as of and for
the years ended December 31, 1992 through 1996, and as of and for the three
months ended March 31, 1997 and 1996, see page 14 of this Prospectus/Proxy
Statement. Since December 31, 1992, total assets have grown from $77.8 million
to $102.1 million at March 31, 1997.
SBT's net earnings for the year ended December 31, 1992 were $1.40
million, representing the highest level of earnings for the five year period
ended December 31, 1996. Net earnings were $1.22 million for each of the years
ended December 31, 1996 and 1994, which represent the lowest earnings for the
same five year period. The results for 1996 were impacted by significant
provisions for losses on loans in the amount of $772,000 ($479,000
after-taxes), which management does not expect to continue.
Management expects modest growth to continue in both assets and
earnings; however, such growth is dependent upon the economies of the markets
served by SBT, its relative competitiveness in its local market and other
factors which are discussed below. SBT is a bank holding company headquartered
in Selmer, McNairy County, Tennessee.
RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Net Earnings. Net earnings for 1996 were $1.22 million, a decrease of
$35,000 over 1995 net earnings of $1.25 million. 1995 earnings increased
$35,000 as compared to 1994. Earnings per share were $89.84 in 1996, compared
to $92.34 in 1995 and $89.18 in 1994. A more detailed analysis of the
components of net earnings and the changes in such components is included under
the appropriate captions below.
The return on average assets for the year ended December 31, 1996 was
1.26% compared to 1.37% for 1995 and 1.43% for 1994. The return on average
stockholders' equity for 1996 was 8.97% compared to 10.53% for the year ended
December 31, 1995 and 11.37% for the year ended December 31, 1994. SBT's
efficiency ratio improved to 41.26% during 1996, as compared to 47.91% in 1995
and 51.14% in 1994. SBT declared and paid dividends to stockholders of
$163,000 ($12.00 per share) for each of the years ended December 31, 1996, 1995
and 1994.
Net Interest Income. Net interest income, the major component of
SBT's income, is the amount by which interest and fees generated by earning
assets exceeds the total interest cost of funds used to carry them. Net
interest income is affected by a number of factors including the level,
pricing, mix and maturity of earning assets and liabilities; interest rate
fluctuations; and asset quality. Net interest income was $3.8 million for the
year ended December 31, 1996 compared to $3.4 million for the year ended
December 31, 1995 and $3.5 million for the year ended December 31, 1994. The
improvement in 1996 as compared to 1995 is attributable to loan growth, higher
yields from loans and investment securities, and an increase in the net
interest margin from 3.93% in 1995 to 4.12% in 1996. The decrease in 1995 as
compared to 1994 is a result of lower yields on loans and investment securities
and a decrease in the net interest margin from 4.34% in 1994 to 3.93% in 1995.
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Provision for Losses on Loans. The allowance for losses on loans has
been, in the opinion of management, maintained at a level sufficient to provide
for losses inherent in the loan portfolio. The level of provisions for losses
on loans is based on past loan experience, growth and composition of the loan
portfolio, as well as current economic conditions. SBT recorded provisions for
losses on loans in the amount of $772,000 for the year ended December 31, 1996
and $120,000 for each of the years ended December 31, 1995 and 1994. The
current year provision is a result of (i) the deterioration of two specific
credits, (ii) management's decision to increase the allowance for losses on
loans to approximately 2% of outstanding loans due to the overall continued
deterioration in consumer credit, and (iii) overall growth in the loan
portfolio. The current year provision is not an indication of an overall
deterioration in SBT's asset quality or underwriting standards and is not
expected to continue. Only modest provisions consistent with 1992 through 1995
are expected in the near future. SBT experienced net charge-offs of $212,000,
$218,000 and $134,000 for the years ended December 31, 1996, 1995 and 1994,
respectively. See "Allowance for Losses on Loans" for additional information
regarding the provision for losses on loan.
Table 2, which follows this discussion, presents a Summary of Loan
Loss Experience for the three months ended March 31, 1997 and 1996 and for the
years ended December 31, 1992 through 1996 while Table 1 presents Nonperforming
Assets as of March 31, 1997 and 1996 and for each of the years ending December
31, 1992 through 1996. The level of nonperforming assets has increased
constantly over the last year; however, management expects no continued
significant increases. The loan-to-deposit ratio increased constantly from
49.6% in 1992 to 62.7% in 1996 as the demand for quality loans increased.
Management expects future loan demand to remain fairly constant at current
levels. Future provisions for losses on loans are dependent upon various
factors, including the economy, loan growth and composition, levels of
nonperforming assets and loan loss experience. The amounts of nonperforming
loans represent risks in the loan portfolio; however, a major portion of such
loans are collateralized to various degrees and should not be interpreted as
losses.
Noninterest Income. Noninterest income is primarily related to
service charges on deposits and other fees for services as well as net
investment securities gains and losses. Total noninterest income for 1996 was
$214,000, a $62,000 increase from the $152,000 reported for 1995. The increase
is primarily attributed to a $31,000 increase in net gains recognized on the
sale of investment securities and a $32,000 increase in service charge fees
received on deposits. 1995 noninterest income represented a $42,000 decrease
from $194,000 during 1994. The decrease was primarily attributed to $17,000 in
net gains on the sale of investment securities recorded in 1994, compared to
net losses on the sale of investment securities in the amount of $1,000 in
1995. Other changes in noninterest income from 1994 to 1996 were not
attributable to any significant individual items.
Management continues to seek new sources of noninterest income;
however, no significant growth or the maintenance of current levels of
noninterest income can be assured.
Noninterest Expense. Total noninterest expense for 1996 was $1.6
million or $66,000 less than the $1.7 million reported for 1995. Noninterest
expense for 1995 represents a $152,000 decrease from $1.9 million in 1994. The
overall decrease in noninterest expense from 1994 to 1996 is primarily
attributable to decreases in FDIC insurance premiums offset by other increases
as noted below. The remainder of the decreases are not attributable to any
other significant individual items.
The $88,000 decline in FDIC insurance expense from 1995 to 1996
relates to a decrease in the assessment on Bank Insurance Fund ("BIF") deposits
from $.23 per $100 of deposits per year to a minimum of $2,000 per year. The
decrease from 1994 to 1995 is a result of an FDIC insurance refund received
during 1995 in the amount of approximately $12,000, as well as a decrease in
the rates paid for such insurance. Also, during 1996, the FDIC further reduced
the amount of insurance assessments to zero for well-capitalized institutions.
The Bank falls into this category. See additional discussion in the
"Regulatory Assessments" section below.
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<PAGE> 56
Salaries, wages and benefits totaled $1,029,000 for the year ended
December 31, 1996 compared to $990,000 and $1,031,000 for the years ended
December 31, 1995 and 1994, respectively. Management does not project any
significant changes in the amounts of these expenses.
Occupancy and equipment expense has remained fairly constant for the
last three years. Occupancy and equipment expense totaled $347,000 for the year
ended December 31, 1996 compared to $320,000 and $366,000 for the years ended
December 31, 1995 and 1994, respectively. The changes from 1994 to 1996 are
not attributable to any significant individual items. Management plans to
expand its current drive-thru facility. Additional capital expenditures in the
amount of approximately $250,000 are expected during 1997. Management does not
expect any other significant increases for capital expenditures.
Management continues to monitor the level of noninterest expense to
identify cost reductions where applicable; however, no significant reductions
are expected.
Income Taxes. Income tax expense totaled $382,000, $486,000 and
$459,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
These amounts represent effective tax rates of 23.86%, 27.93% and 27.35% for
the years ended December 31, 1996, 1995 and 1994, respectively. The decrease
in the effective tax rate for 1996 is a result of increased levels of
investment securities which generate tax-exempt income. Management expects that
future effective tax rates will remain at levels commensurate with that of
1996.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Net Earnings. Net earnings for the three months ended March 31, 1997
were $408,000, a decrease of $22,000 from net earnings of $430,000 reported for
the same period in 1996. The decrease in net earnings is primarily
attributable to an increase in noninterest expense, offset partially by an
improvement in net interest income. A more detailed analysis of the components
of net earnings is included below.
The annualized return on average assets for the three months ended
March 31, 1997 was 1.67% versus 1.80% for the same period in 1996 and 1.26% for
the year ended December 31, 1996. The annualized return on average
shareholders' equity for the three months ended March 31, 1997 was 12.01%
compared to 13.06% for the same period in 1996 and 8.97% for the year ended
December 31, 1996.
Net Interest Income. Net interest income before the provision for
losses on loans was $938,000 and $924,000 for the three months ended March 31,
1997 and 1996, respectively. Total interest income increased to $1.83 million
for the three month ended March 31, 1997 from $1.78 million for the same period
in 1996. Total interest expense increased to $895,000 for the three months
ended March 31, 1997 from $851,000 for the same period in 1996. The increases
in total interest income are attributable to increases in the volume of
interest-bearing assets (primarily investments), and the increase in interest
expense is due to increases in volumes and rates of interest-bearing
liabilities.
Provision for Losses on Loans. The provision for losses on loans for
each of the three months ended March 31, 1997, and 1996 was $30,000. The
allowance for losses on loans, which was $1.1 million at March 31,1997 has
been, in management's opinion, sufficient to absorb any losses inherent in the
loan portfolio. Future provisions for losses on loans, if any, will be based
upon past loan experience, growth and composition of the loan portfolio, as
well as the then current and anticipated future economic conditions. The
allowance for losses on loans at March 31, 1997 represented 2.12% of loans, net
of unearned income, as of that date.
A summary of the activity in the allowance for losses on loans for the
three months ended March 31, 1997 and 1996 is set forth as follows (000's
omitted):
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<TABLE>
<CAPTION>
MARCH 31,
---------
1997 1996
---- ----
<S> <C> <C>
Balance - January 1 $ 1,052 $ 492
Provision charged to expense 30 30
Net loans recovered (charged-off) 14 (44)
------- -------
Balance at March 31 $ 1,096 $ 478
======= =======
</TABLE>
Loans past due 90 days or more and still accruing interest were
$349,000 and $153,000 at March 31, 1997 and December 31, 1996, respectively.
At March 31, 1997 and December 31, 1996, the Bank had $73,000 and $95,000,
respectively, in loans on nonaccrual status. Loans are placed on nonaccrual
status when they become past due 90 days or more as to principal or interest,
and in the opinion of management, are not in the process of collection or
otherwise well-secured.
Management has reviewed in detail all loans outstanding as of March
31, 1997 and believes there are no loans outstanding which are not past due or
on nonaccrual status as of March 31, 1997, which would cause management to have
serious doubts as to the ability of such borrowers to comply with the present
loan repayment terms.
The Bank's renewal policy consists of an item-by-item review of
maturing loans. Each maturing loan is evaluated to determine if such loan will
be renewed and if so, at what amount, rate and maturity. Generally, the Bank's
loan maturities are of a short duration for the purpose of interest rate risk
management.
Noninterest Income. Noninterest income for the three months ended
March 31, 1997 was $76,000, an increase of $12,000 from $64,000 for the same
period in 1996. The primary sources of noninterest income are service charges
and various fees on deposits. Additionally, income is derived from gains on
sales from the available-for-sale investment securities portfolio.
Noninterest Expense. Total noninterest expense for the three months
ended March 31, 1997 was $473,000, an $83,000 increase from the $390,000
reported for the same period in 1996. The increase is primarily a result of
increases in professional fees and data processing costs. The primary
components of noninterest expense are salaries and wages, occupancy and
equipment expenses and other miscellaneous operating expenses.
FINANCIAL CONDITION
Total assets have increased from $98.1 million at December 31, 1996 to
$102.1 million at March 31, 1997. This increase was funded by an increase in
deposits of $3.8 million to $87.7 million at March 31, 1997 as compared to
$83.9 million at December 31, 1996. Total assets were $95.2 million at
December 31, 1995.
Loans. Total loans, net of unearned income, at March 31, 1997 were
$51.1 million, a decrease of $1.5 million as compared to $52.6 million at
December 31, 1996. This decrease is attributable to fluctuations in the
overall loan demand for single-family mortgage loans and commercial loans and
increased local competition. Total loans, net of unearned income, at December
31, 1995 were $48.0 million. The composition of the portfolio continues to be
focused
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on single family mortgage loans and consumer loans. Management expects loan
growth to increase at moderate levels.
Table 1 - Nonperforming Assets sets forth information on the
nonperforming loans within the loan portfolio as of March 31, 1997 and 1996 and
for the years ending December 31, 1992 through 1996. Although the amounts shown
represent risks in the loan portfolio, the major portion of the loans are
collateralized to various degrees and should not be interpreted as losses.
All potential problem loans have been disclosed in Table 1. Potential
problem loans are those loans for which management has obtained information of
possible credit problems of the borrower, resulting in serious doubts as to the
ability of the borrower to comply with the present loan repayment terms.
Allowance for Losses on Loans. In determining the amount of the
provisions for losses on loans and allowance for losses on loans, management
considers past loan charge-offs, the level of past due and nonaccrual loans,
the size and mix of the portfolio, loan growth trends, adverse classifications
at recent regulatory examinations, general economic conditions in the market
area, and a review of individual loans to identify potential credit problems.
The allowance for losses on loans is maintained at a level considered adequate
by management to provide for potential losses in the existing loan portfolio.
In evaluating the adequacy of the allowance, management makes certain estimates
and assumptions which are susceptible to change in the near term. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based upon changes in economic
conditions. Management believes the level of the allowance for losses on loans
is adequate in relation to the size, mix and quality of the loan portfolio at
March 31, 1997.
Table 4 - Composition of Loan Portfolio details the types of loans in
the loan portfolio as of March 31, 1997 and 1996 and for each of the years
ending December 31, 1992 through 1996. Table 3 - Allocation of the Allowance
for Losses on Loans sets forth the breakdown of the allowance for losses on
loans by loan category as of March 31, 1997 and 1996, and for each of the years
ending December 31, 1992 through 1996. Management believes that the allowance
can be allocated by category only on an approximate basis. The allocation of
the allowance to each category is not necessarily indicative of future losses
and does not restrict the use of the allowance to absorb losses in any
category.
During 1995, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 114, Accounting by Creditors for
Impairment of a Loan (effective for fiscal years beginning after December 15,
1994), as amended by SFAS No. 118, Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosures. This standard prescribes a
valuation methodology for impaired loans as defined by the standard.
Generally, a loan is considered impaired if management believes that it is
probable that all amounts due will not be collected according to the
contractual terms stipulated in the loan agreement. An impaired loan must be
valued using the present value of expected future cash flows discounted at the
loan's effective interest rate, the loan's observable market price or fair
value of the loan's underlying collateral. SBT adopted the provisions of SFAS
No. 114 prospectively in 1995. The adoption of SFAS No. 114 did not have a
material effect on SBT's financial condition, results of operations or
liquidity.
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<PAGE> 59
Investment Securities. Investment securities totaled $40.2 million at
March 31, 1997, compared to $38.8 million and $39.8 million at December 31,
1996 and 1995, respectively. Investments in securities are generally made as
an alternative deployment of available funds. Accordingly, the level of
investment securities in the future and their classification as
available-for-sale or held-to-maturity will depend on various factors,
including loan demand and management's ability to attract loans and deposits.
The contractual maturities and amortized cost and fair value by investment
category of the investment securities portfolio are presented in Note 3 to the
consolidated financial statements as of December 31, 1996 and the unaudited
consolidated financial statements as of December 31, 1995, which are presented
in Appendices C and D.
Investment securities classified as available-for-sale are carried at
fair value, and held-to-maturity securities are carried at amortized cost. As
of March 31, 1997, the amortized cost of total investment securities exceeded
the fair value by $8,000, or .02%.
Money Market Assets. Federal funds sold totaled $6.4 million at March
31, 1997, compared to $1.5 million at December 31, 1996, an increase of $4.9
million. Federal funds sold totaled $2.0 million at December 31, 1995. The
level of federal funds sold is a function of the Company's liquidity position
and the overall level of loan demand.
Foreclosed Assets. There were no foreclosed assets at March 31, 1997
or December 31, 1996, as compared to $30,000 at December 31, 1995. The decline
is attributable to the sale of one property of real estate owned during 1995,
in which no gain or loss was realized.
Deposits. Customer deposits totaled $87.7 million as of March 31,
1997, a $3.8 million increase over total deposits of $83.9 million as of
December 31, 1996. Total deposits at December 31, 1995 were $81.3 million.
While the level of deposits fluctuates daily, management expects the level of
deposits to continue to increase at moderate levels.
Included in deposits are $6.0 million of time deposits greater than or
equal to $100,000 at March 31, 1997 and $5.5 million and $5.2 million at
December 31, 1996 and 1995, respectively. At March 31, 1997, the Bank's loan
to deposit ratio was 58.3%, compared to 62.7% and 59.1% at December 31, 1996
and 1995, respectively.
Capital. Total shareholders' equity as of March 31, 1997 was $13.8
million, compared to $13.7 million at December 31, 1996 and $13.0 million at
December 31, 1995. The 1997 net increase is due to net earnings of $408,000
offset by a reduction in the unrealized gain on available-for-sale investment
securities of $284,000. The 1996 net increase is due to net earnings of $1.22
million in 1996 and is offset by a reduction in the unrealized gain on
available-for-sale investment securities of $402,000 and dividends declared and
paid to shareholders during 1996 in the amount of $163,000.
The key to the continued growth and profitability of SBT is to
maintain adequate levels of capital. The capital adequacy of a bank is
determined based upon the level of capital as well as asset quality, liquidity,
asset mix, earnings history and economic conditions. Management's goal is to
maintain its bank in the "well-capitalized" category for regulatory capital.
At December 31, 1996, SBT was in this category.
The regulatory capital guidelines divide capital into two tiers, Tier
1 capital and Tier 2 capital. Tier 1 capital of SBT consists of stockholders'
equity, excluding the unrealized gain on
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<PAGE> 60
available-for-sale investment securities. Tier 2 capital includes the
allowance for losses on loans, with certain limitations. In determining the
risk-based capital requirements, assets are assigned risk weights of zero to
100 percent, depending upon the regulatory assigned levels of credit risk
associated with such assets. Off-balance-sheet items are included in the
calculation of risk-adjusted assets through conversion factors established by
regulatory agencies.
SBT's Tier 1 and total capital risk-weighted assets ratios were 26.22%
and 27.48%, respectively at March 31, 1997. At December 31, 1996, SBT's Tier 1
and total capital to risk-weighted assets ratios were 25.27% and 26.53%,
respectively, compared to 25.04% and 26.04%, respectively at year end 1995.
The regulatory agencies require "well-capitalized" institutions to have Tier 1
and Total capital ratios of 6% and 10%, respectively.
In addition to the risk-based capital requirements, the regulatory
agencies have established leverage capital requirements. This ratio is
computed by dividing Tier 1 capital by unadjusted (not risk-weighted) average
total assets. SBT's leverage ratio at March 31, 1997 was 13.93% compared to
13.81% and 13.48% at December 31, 1996 and 1995, respectively, and compared to
the regulatory guideline of 5% for "well-capitalized" institutions.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT.
SBT views liquidity and asset/liability management as the ability to
assure that funds are available to support bank requirements; that is, the
ability to allow depositors ready access to their monies and credit customers
available funds to meet their credit needs. It is also the process by which
SBT monitors and attempts to control the mix and maturities of its assets and
liabilities in order to maximize net interest income. Management maintains
balances of federal funds sold and available-for-sale investment securities in
amounts it believes necessary to meet SBT's daily cash needs. With the
available-for-sale investment securities portfolio, management can, at its
discretion, manage the liquidity and interest rate risk of the Bank.
Management does not foresee any particular matters which might immediately
threaten its ability to remain liquid.
SBT expects to pay dividends in 1997 of $9.00 per share in
anticipation of the pending merger as discussed in Note 13 to the December 31,
1996 consolidated financial statements in Appendix C. During the years ended
December 31, 1996, 1995 and 1994, SBT paid cash dividends to stockholders
totaling $163,000 or $12.00 per share. Note 12 to the December 31, 1996
consolidated financial statements of SBT provides a discussion of the
restrictions upon SBT's ability to pay dividends to stockholders.
For the three months ended March 31, 1997, SBT generated cash flows
from operating activities of $757,000, and for each of the years ended December
31, 1996, 1995 and 1994, SBT generated cash flows from operating activities of
$1.4 million. Management expects future operating cash flows to be sufficient
to allow SBT to meet its obligations.
SOURCES AND USES OF FUNDS.
The Bank's only source of funds has historically been the taking of
deposits from customers, both individual and business. The Bank's deposit
acquisition strategy is to rely on a core deposit base of demand deposits, as
well as savings and time deposits under $100,000. Next, the Bank utilizes time
deposits $100,000 and over and public deposits for additional sources of funds.
At March 31, 1997, the percentage of time deposits $100,000 and over to total
deposits was 6.8%. At December 31, 1996, the percentage of time deposits
$100,000 and over to total
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<PAGE> 61
deposits was 6.6% compared to 6.4% at December 31, 1995. The acquisition of
deposits are from customers, individuals and businesses within SBT's market
area. The net increase in deposits was $3.8 million for the three months ended
March 31, 1997, $2.6 million in 1996 and $3.3 million in 1995. Management
believes that the rates offered for deposits are competitive with other
financial institutions in the Bank's market area. The Bank does not gather
deposits through any brokered means.
The Bank also derives funds from maturities of investment securities,
which totaled $2.2 million for the three months ended March 31, 1997 and $8.2
million, $8.5 million and $10.4 million in 1996, 1995 and 1994, respectively.
The Bank's primary use of funds is the making of loans to customers.
The loan-to-deposit ratio of 58.3% at March 31, 1997 represented a 7% decrease
in the loan-to-deposit ratio of 62.7% at December 31, 1996. The loan-to-deposit
ratio was 59.1% at December 31, 1995. The table of SBT Selected Consolidated
Financial Data on page 14 indicates that the Bank's overall relative loan
portfolio size has tended to increase, as evidenced by the trend of increases
in the loan-to-deposit ratio. The Bank's loan portfolio is comprised of loans
to individuals and businesses secured by various collateral, and in certain
circumstances the loans are extended on an unsecured basis. The composition of
the loan portfolio is presented in Note 4 to the consolidated financial
statements at December 31, 1996 and the unaudited consolidated financial
statements at December 31, 1995, which are presented in Appendices C and D.
A secondary use of funds is the purchasing of debt securities for
investment purposes. At March 31, 1997, the investment portfolio represented
41.6% of total earnings assets. During 1996, the investment portfolio averaged
43.3% of total earning assets compared to 43.9% in 1995. The composition of
the investment securities portfolio at December 31, 1996 is presented in Note 3
to the consolidated financial statements at December 31, 1996 presented in
Appendix C and in Note 3 to the unaudited consolidated financial statements at
December 31, 1995 presented in Appendix D. The portfolio is comprised of
obligations of U.S. Government Agencies and obligations of states and local
governments. While the Bank may continue to upgrade or reposition the
portfolio, management has not in the past nor does it intend to in the future,
trade securities for profit or to depend upon securities gains as a regular
source of income. At March 31, 1997, the amortized cost of the investment
portfolio exceeded the fair value by approximately $8,000. In comparison, the
fair value exceeded the amortized cost by approximately $455,000 at December
31, 1996 and $1 million at December 31, 1995.
Effective January 1, 1994, SBT adopted SFAS No. 115 Accounting for
Certain Investments in Debt and Equity Securities. This standard addresses the
accounting for investments in equity securities that have readily determinable
fair values and for all investments in debt securities. The investment
securities covered by this standard are to be classified in one of three
categories: (i) debt securities for which the institution has a positive intent
and ability to hold to maturity are classified as "held-to-maturity" and
reported at amortized cost; (ii) debt and equity securities that are bought and
held principally for the purpose of selling them in the near term are
classified as "trading" and reported at fair value, with the unrealized gains
and losses included in earnings; and (iii) debt and equity securities not
classified as either held-to-maturity securities or trading securities are
classified as "available-for-sale" and reported at fair value, with unrealized
gains and losses excluded from earnings and reported net of deferred taxes as a
separate component of stockholders' equity.
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<PAGE> 62
In connection with the adoption of SFAS No. 115, approximately $24
million of securities were transferred to the available-for-sale category at
fair value, with a net unrealized gain of $1.1 million, net of deferred income
taxes, which was reflected as a separate component of stockholders' equity.
The remaining securities were classified as held-to-maturity which will
continue to be carried at amortized cost, adjusted for amortization of premiums
and accretion of discounts. Management has the intent and ability to hold until
maturity those securities classified as such.
On November 15, 1995, the Financial Accounting Standards Board
("FASB") issued a special report pertaining to the implementation of SFAS No.
115. Concurrent with the issuance of the report but no later than December 31,
1995, the FASB allowed for a reassessment of the appropriateness of the
classification of securities held at that time and to account for any resulting
reclassification at fair value. Reclassifications from the held-to-maturity
category that were a result of this one-time assessment would not call into
question the intent of the Company to hold other debt securities until maturity
in the future. Based upon this guidance, the Bank transferred approximately
$10.3 million of held-to-maturity investment securities to the
available-for-sale portfolio. The transfer had no impact on earnings.
The sale of $500,000 of held-to-maturity investment securities during
1995 was in response to requests made by the Company's primary regulatory
agency to sell such securities due to credit concerns.
REGULATORY ASSESSMENTS.
The Bank is required to pay certain fees to the Federal Deposit
Insurance Corporation ("FDIC") and the Tennessee Department of Financial
Institutions. The FDIC monitors risk-based capital requirements and requires
weaker institutions to pay higher deposit insurance premiums, while allowing
well-capitalized institutions to pay less. The deposit insurance assessments
currently range from zero for "well-capitalized" institutions to 23 cents per
$100 of deposits for the weakest institutions. These premiums were recently
reduced for Bank Insurance Fund institutions during 1995 and 1996, as well as a
refund to certain institutions during 1995. The Bank received a refund of
approximately $12,000 during 1995. For 1996, the Bank paid $1,000 for FDIC
deposit insurance. The Bank had $87.7 million of insured deposits as of March
31, 1997.
FDIC deposit insurance and regulatory assessments totaled $23,000 and
$111,000 for the years ended December 31, 1996 and 1995, respectively.
EFFECTS OF INFLATION.
A bank's asset and liability structure is primarily monetary in
nature, that is, fixed in terms of monetary amounts. Consequently, the impact
of inflation on a bank differs significantly from an industrial company.
Factors such as interest rates have a more significant impact on a bank's
performance than does general inflation. Interest rates do not necessarily
move in the same direction, or at the same magnitude, as the prices of other
goods and services.
IMPACT OF ACCOUNTING STANDARDS TO BE ADOPTED
SFAS NO. 123. During 1995, the FASB issued SFAS No. 123, Accounting
for Stock-Based Compensation, which is effective for fiscal years beginning
after December 15, 1995. The
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<PAGE> 63
Company has not adopted the provisions of SFAS No. 123, as no stock-based
compensation plans have been adopted by the Company.
SFAS NO. 125. During 1996, the FASB issued SFAS No. 125, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities, which is effective for transfers and servicing of financial assets
and extinguishment of liabilities occurring after December 31, 1996, and shall
be applied prospectively. The Company adopted the provisions of SFAS No. 125
during 1997, which had no material impact on the Company's financial position,
results of operations or liquidity.
SFAS NO. 128. During 1997, the FASB issued SFAS No. 128, Earnings Per
Share. The adoption of this statement is not expected to have a significant
impact on the Company's computation of earnings per share.
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<PAGE> 64
TABLE 1
NONPERFORMING ASSETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
------------- ----------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Nonaccrual loans $ 73 $ 19 $ 95 $ 19 $ 23 $ 26 $ 30
Other real estate owned and foreclosed
assets - 30 - 30 - - -
---- ---- ---- ---- ----- ----- ----
Total nonperforming assets $ 73 $ 49 $ 95 $ 49 $ 23 $ 26 $ 30
==== ==== ==== ==== ===== ===== ====
Loans past due 90 days or more and still accruing
interest $349 $151 $153 $ 89 $ 205 $ 218 $ 49
==== ==== ==== ==== ===== ===== ====
</TABLE>
TABLE 2
SUMMARY OF LOAN LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, DECEMBER 31,
------------------- ------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- ------- --------- ---------- ---------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Beginning balance $ 1,052 $ 492 $ 492 $ 590 $ 604 $ 441 $ 357
Provision for loan losses 30 30 772 120 120 120 120
Loans charged off:
Commercial, financial and
agricultural - (47) (70) (18) - (4) (16)
Real estate - mortgage - - - (60) - (56) (35)
Consumer (17) (20) (210) (198) (213) (59) (36)
--------- ------- --------- ---------- ---------- --------- --------
Total charge-offs (17) (67) (280) (276) (213) (119) (87)
--------- ------- --------- ---------- ---------- --------- --------
Recoveries :
Commercial, financial and
agricultural 1 - 8 3 5 110 16
--------
Real estate - mortgage - - - 20 - 33 10
Consumer 30 23 60 35 74 19 25
--------- ------- --------- ---------- ---------- --------- --------
Total recoveries 31 23 68 58 79 162 51
--------- ------- --------- ---------- ---------- --------- --------
Net recoveries (charge-offs) 14 (44) (212) (218) (134) 43 (36)
--------- ------- --------- ---------- ---------- --------- --------
Ending Balance $ 1,096 $ 478 $ 1,052 $ 492 $ 590 $ 604 $ 441
========= ======= ========= ========== ========== ========= ========
Loans, net of unearned income:
Period end $ 51,085 $49,226 $ 52,635 $ 48,038 $ 44,136 $ 37,251 $ 33,873
Average during year 51,913 48,538 50,578 46,825 40,332 35,501 33,446
Allowance for losses on loans
to period end loans, net
of unearned interest 2.12% .96% 1.97% 1.01% 1.32% 1.60% 1.28%
Allowance for losses on loans
to average loans, net of
unearned interest 2.11% .98% 2.08% 1.05% 1.46% 1.70% 1.32%
Net charge-offs (recoveries)
to average loans, net of
unearned interest (0.11%) .36% 0.42% 0.47% 0.33% (0.12)% 0.11%
</TABLE>
48
<PAGE> 65
TABLE 3
ALLOCATION OF THE ALLOWANCE LOSSES ON LOANS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
-------------------------------------- --------------------------------------
1997 1996 1996 1995
---- ---- ---- ----
Amount % Amount % Amount % Amount %
------ ------- -------- ------ -------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 60 5.47% $ 28 5.91 $ 50 6.54% $ 40 5.83%
Real estate
Secured by single-family
residential properties 626 57.10 277 57.89 680 57.02 270 57.29
Construction, land development
and other commercial 157 14.35 73 15.35 112 15.20 96 15.95
Consumer 253 23.08 100 20.85 210 21.24 86 20.93
------- ------ ----- ------ ------- ------ ------ ------
Total $ 1,096 100.00% $ 478 100.00% $ 1,052 100.00% $ 492 100.00%
======= ====== ===== ====== ======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1994 1993 1992
---- ---- ----
Amount % Amount % Amount %
------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
Commercial, financial and
agricultural $ 70 6.34% $ 90 7.90 $ 65 7.96
Real estate
Secured by single-family
residential properties 290 56.42 275 55.58 230 55.20
Construction, land
development and other
commercial 125 16.31 135 15.18 86 16.49
Consumer 105 20.93 104 21.34 60 20.35
------- ------ ----- ------ ------- ------
Total $ 590 100.00% $ 604 100.00% $ 441 100.00%
======= ====== ===== ====== ======= ======
</TABLE>
TABLE 4
COMPOSITION OF LOAN PORTFOLIO
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, DECEMBER 31,
---------------- --------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Commercial, agricultural and
financial $ 2,827 $ 2,951 $ 3,482 $ 2,845 $ 2,781 $ 2,987 $ 2,734
Real estate-construction
and other 5,841 5,961 5,946 5,989 5,532 5,660 5,627
Real estate - mortgage 29,521 28,883 30,377 27,909 25,277 20,994 18,954
Consumer 11,932 10,398 11,316 10,195 9,437 8,059 6,988
Other 1,577 1,700 2,152 1,779 1,773 73 34
-------- -------- --------- ---------- ---------- ---------- --------
Total loans 51,698 49,893 53,273 48,717 44,800 37,773 34,337
-------- -------- --------- ---------- ---------- ---------- --------
Unearned interest (613) (667) (638) (679) (664) (522) (464)
-------- -------- --------- ---------- ---------- ---------- --------
Net loans $ 51,085 $ 49,226 $ 52,635 $ 48,038 $ 44,136 $ 37,251 $ 33,873
======== ======== ========= ========== ========== ========== ========
</TABLE>
49
<PAGE> 66
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF SBT
Security ownership information with respect to all persons known to SBT to
be the beneficial owners of five percent (5%) or more of the outstanding shares
of SBT Common Stock and all directors and executive officers of SBT is shown in
the following table.
<TABLE>
<CAPTION>
Name & Address of Beneficial Amount & Nature of Percent
Owner (1) Beneficial Ownership of Class
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Selmer Bank & Trust ESOP 1,616 11.91%
Richard Rankin (2) 173 1.27%
J. R. Swaim, Jr. (3) 77 *
Gene Hanna (4) 146 1.08%
John Curtiss (3) 121 *
Joe Hailey (3) 75 *
Don Moore (3) 397 2.93%
All Directors and Executive Officers as a
Group (6 persons) 989 7.28%
</TABLE>
- ------------------
* less than 1%
(1) The address of all persons shown in the table above is 116 South Third
Street, Selmer, Tennessee 38375-2114.
(2) Chairman of the Board, Chief Executive Officer and Director of SBT.
(3) Director of SBT.
(4) President, Cashier and Director of SBT.
50
<PAGE> 67
CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material elements
of the regulatory framework applicable to banks and bank holding companies and
provides certain specific information related to UPC and SBT. A more complete
discussion of the federal and state regulatory environment within which UPC and
its bank and thrift subsidiaries operate is included in UPC's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, under the caption
GOVERNMENTAL SUPERVISION AND REGULATION OF FINANCIAL INSTITUTIONS.
GENERAL
UPC and SBT are both bank holding companies registered with the
Federal Reserve under the BHC Act. As such, UPC and SBT, and their respective
non-bank subsidiaries are subject to the supervision, examination, and
reporting requirements of the BHC Act and the regulations of the Federal
Reserve. In addition, as a savings and loan holding company, UPC is registered
with the Office of Thrift Supervision ("OTS") and is subject to regulation,
supervision, examination, and reporting requirements of the OTS.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or
control more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require savings and loan holding
companies and other companies to obtain the prior approval of the OTS before
acquiring direct or indirect ownership or control of a savings association.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint
of trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to
consider the financial and managerial resources and future prospects of the
bank holding companies and banks concerned and the convenience and needs of the
community to be served. Consideration of financial resources generally focuses
on capital adequacy, and consideration of convenience and needs issues includes
the parties' performance under the Community Reinvestment Act of 1977, as
amended (the "CRA").
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("Interstate Banking Act"), which became effective on September 29, 1995,
repealed the prior statutory restrictions on interstate acquisitions of banks
by bank holding companies, such that UPC, as well as any other bank holding
company located in Tennessee, may now acquire a bank or bank holding company
located in any other state, and any bank holding company located outside of
Tennessee may
51
<PAGE> 68
lawfully acquire any Tennessee-based bank, regardless of state law to the
contrary, in either case subject to certain deposit-percentage, aging
requirements, and other restrictions. The Interstate Banking Act also
generally provides that, after June 1, 1997, national and state-chartered banks
may branch interstate through acquisitions of banks in other states (whole bank
acquisitions), through the acquisition of existing branches of other banks in
other states (branch acquisitions) or through the establishment of a new branch
in another state (de novo branching), depending upon the laws of the states
involved. States have the ability either to "opt in" and allow interstate
branching, choosing whether to allow such by whole bank acquisition, branch
acquisition or de novo branching, or some combination thereof, or to "opt out"
and prohibit interstate branching altogether. Each state in which UPC has a
banking subsidiary has opted-in to interstate branching, but most states
currently limit interstate branching to whole bank acquisitions. Therefore,
UPC would be able to consolidate all of its bank subsidiaries into a single
bank with interstate branches, should it choose to do so. UPC has no current
plans to substantially consolidate all of its bank subsidiaries into one or a
few single banks, and anticipates limited use of interstate branching in
certain geographical areas.
The BHC Act generally prohibits bank holding companies such as UPC and
SBT from engaging in activities other than banking or managing or controlling
banks or other permissible subsidiaries, and from acquiring or retaining direct
or indirect control of any company engaged in any activities other than those
activities determined by the Federal Reserve to be so closely related to
banking or managing or controlling banks as to be a proper incident thereto.
In determining whether a particular activity is permissible, the Federal
Reserve must consider whether the performance of such an activity reasonably
can be expected to produce benefits to the public, such as greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices. For
example, factoring accounts receivable, acquiring or servicing loans, leasing
personal property, conducting discount securities brokerage activities,
performing certain data processing services, acting as agent or broker in
selling credit life insurance and certain other types of insurance in
connection with credit transactions, and performing certain insurance
underwriting activities all have been determined by the Federal Reserve to be
permissible activities of bank holding companies. The BHC Act does not place
territorial limitations on permissible non-banking activities of bank holding
companies. Despite prior approval, the Federal Reserve has the power to order
a holding company or its subsidiaries to terminate any activity or to terminate
its ownership or control of any subsidiary when it has reasonable cause to
believe that continuation of such activity or such ownership or control
constitutes a serious risk to the financial safety, soundness, or stability of
any bank subsidiary of that bank holding company.
Each of the bank and thrift subsidiaries of UPC, as well as the bank
subsidiary of SBT, is a member of the Federal Deposit Insurance Corporation
(the "FDIC"), and as such, their respective deposits are insured by the FDIC to
the maximum extent provided by law. Each such "insured" depository institution
is also subject to numerous state and federal statutes and regulations that
affect its business, activities, and operations, and each is supervised and
examined by one or more state or federal bank regulatory agencies.
Bank subsidiaries which are state-chartered banks and which are not
members of the Federal Reserve System, are subject to regulation, supervision,
and examination by the FDIC and
52
<PAGE> 69
the state banking authorities of the states in which they are located. Bank
subsidiaries which are national banking associations are subject to regulation,
supervision, and examination by the OCC and the FDIC. Thrift subsidiaries are
subject to regulation, supervision, and examination by the OTS and the FDIC.
The federal banking regulator for each of the bank and thrift subsidiaries, as
well as the appropriate state banking authorities in the case of those
depository institution subsidiaries that are state-chartered, regularly examine
the operations of banks and thrifts and are given authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The federal and state banking regulators also have the
power to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.
PAYMENT OF DIVIDENDS
UPC and SBT are each legal entities separate and distinct from their
respective bank, thrift, and other subsidiaries. The principal sources of cash
flow of both UPC and SBT, including the cash flow required to pay dividends to
their respective shareholders, are dividends and management fees received from
their bank and thrift subsidiaries. There are statutory and regulatory
limitations on the payment of dividends by these depository-institution
subsidiaries to UPC and SBT, as well as by UPC and SBT to their respective
shareholders.
All banks are subject to the respective laws and regulations of the
states in which they are chartered as to the payment of dividends. Each
national banking association subsidiary is required by federal law to obtain
the prior approval of the OCC for the payment of dividends if the total of all
dividends declared by the bank in any year would exceed the total of (i) such
bank's net profits (as defined and interpreted by regulation) for that year,
plus (ii) the retained net profits (as defined and interpreted by regulation)
for the preceding two years, less any required transfers to surplus. In
addition, national banks may lawfully pay only dividends to the extent that
their retained net profits (including the portion transferred to surplus)
exceed statutory bad debts (as defined by regulation).
If, in the opinion of its federal banking regulator, a bank or thrift
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the depository
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "--Prompt
Corrective Action." Moreover, the federal agencies have issued policy
statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
At March 31, 1997, under dividend restrictions imposed under federal
and state laws, the bank and thrift subsidiaries of UPC and the bank subsidiary
of SBT, without obtaining governmental approvals, could have lawfully declared
aggregate dividends to UPC and SBT of approximately $111.4 million and $10.5
million, respectively.
53
<PAGE> 70
The payment of dividends by UPC and SBT and their bank and thrift
subsidiaries may also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
UPC, SBT, and their respective bank and thrift subsidiaries are
required to comply with the capital adequacy standards established by the
Federal Reserve and, in the case of UPC, the OTS, and by the appropriate
federal banking regulator in the case of each of the bank and thrift
subsidiaries. There are two basic measures of capital adequacy for bank
holding companies and their bank and thrift subsidiaries that have been
promulgated by the Federal Reserve and each of the federal bank regulatory
agencies: a risk-based measure and a leverage measure. All applicable capital
standards must be satisfied for a bank holding company, or bank of thrift
subsidiary, to be considered to be "well-capitalized."
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items are assigned to broad risk categories, each with appropriate weighting.
The resulting capital ratios represent capital as a percentage of total
risk-weighted assets and off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
one-half of Total Capital must consist of common stock, minority interests in
the equity accounts of consolidated subsidiaries, noncumulative perpetual
preferred stock, and a limited amount of cumulative perpetual preferred stock,
less goodwill and certain other intangible assets ("Tier 1 Capital"). The
remainder may consist of subordinated debt, other preferred stock, and a
limited amount of loan loss reserves ("Tier 2 Capital"). At March 31, 1997,
UPC's consolidated Total Capital Ratio and its Tier 1 Risk-Based Capital Ratio
(i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 19.68% and
16.55%, respectively, and SBT's consolidated Total Capital and Tier 1
Risk-Based Capital Ratios were 27.48% and 26.22% respectively.
In addition, the Federal Reserve has established minimum leverage
ratio guidelines for bank holding companies. These guidelines provide for a
minimum ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less
goodwill and certain other intangible assets, of 3.0% for bank holding
companies that meet certain specified criteria, including having the highest
regulatory rating. All other bank holding companies generally are required to
maintain a Leverage Ratio of at least 3.0%, plus an additional cushion of 100
to 200 basis points. UPC's and SBT's respective Leverage Ratios at March 31,
1997, were 10.26% and 13.93%, respectively. The guidelines also provide that
bank holding companies experiencing internal growth or making acquisitions will
be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve has indicated that it will consider a
"Tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicia of capital strength in evaluating proposals for expansion or new
activities.
54
<PAGE> 71
Each of UPC's and SBT's respective bank and thrift subsidiaries is
subject to risk-based and leverage capital requirements adopted by its federal
banking regulator, which are substantially similar to those adopted by the
Federal Reserve for bank holding companies as discussed above. Each of UPC's
and SBT's respective bank and thrift subsidiaries was deemed to be
"well-capitalized" under applicable capital guidelines as of March 31, 1997.
Neither UPC, SBT, nor any of their respective bank and thrift subsidiaries has
been advised by any federal banking agency of any specific minimum capital
ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As
described below, substantial additional restrictions can be imposed upon
FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "--Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the OCC, and the FDIC have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
that would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital against such exposures. The OTS has already included an
interest-rate risk component in its risk-based capital guidelines for savings
associations that it regulates.
SUPPORT OF SUBSIDIARY BANKS
Under Federal Reserve policy, bank holding companies such as UPC and
SBT are expected to serve as a source of financial strength for, and to commit
their resources to support, each of its bank subsidiaries. This support may be
required at times when, absent such Federal Reserve policy, a bank holding
company may not be inclined to provide it. In addition, any capital loans by a
bank holding company to any of its bank or thrift subsidiaries are subordinate
in right of payment to deposits and to certain other indebtedness of such
banks. In the event of a bank holding company's bankruptcy, any commitment by
the bank holding company to a federal bank regulatory agency to maintain the
capital of a bank or thrift subsidiary would be assumed by the bankruptcy
trustee and entitled to priority of payment.
Under the Federal Deposit Insurance Act ("FDIA"), a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or receiver,
and "in danger of default" is defined generally as the existence of certain
conditions indicating that a default is likely to occur in the absence of
regulatory assistance. The FDIC's claim for damages is superior to claims of
shareholders of the insured depository institution or its holding company, but
is subordinate to claims of depositors, secured creditors, and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. The bank and thrift subsidiaries of
55
<PAGE> 72
UPC and SBT are subject to these cross-guarantee provisions. As a result, any
loss suffered by the FDIC in respect of any of these subsidiaries would likely
result in assertion of the cross-guarantee provisions, the assessment of such
estimated losses against the banks' or the thrifts' depository institution
affiliates, and a potential loss of UPC's investments in such other banking and
thrift subsidiaries.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of "prompt corrective action" to resolve
the problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to
a narrow exception, FDICIA requires the appropriate banking regulator to
appoint a receiver or conservator for an institution that is critically
undercapitalized. The federal banking agencies have specified by regulation
the relevant capital level for each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or
greater, a Tier 1 Risk-Based Capital Ratio of 6.0% or greater, and a Leverage
Ratio of 5.0% or greater and (ii) is not subject to any written agreement,
order, capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency is deemed to be "well capitalized." An
institution with a Total Capital Ratio of 8.0% or greater, a Tier 1 Risk-Based
Capital Ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or greater is
considered to be "adequately capitalized." A depository institution that has a
Total Capital Ratio of less than 8.0%, a Tier 1 Risk-Based Capital Ratio of
less than 4.0%, or a Leverage Ratio of less than 4.0% is considered to be
"undercapitalized." A depository institution that has a Total Capital Ratio of
less than 6.0%, a Tier 1 Risk-Based Capital Ratio of less than 3.0%, or a
Leverage Ratio of less than 3.0% is considered to be "significantly
undercapitalized," and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be "critically
undercapitalized." For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A depository institution may be deemed to be
in a capitalization category that is lower than is indicated by its actual
capital position if it receives an unsatisfactory examination rating.
An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
Under FDICIA, a bank holding company must guarantee that a subsidiary
depository institution will meet its capital restoration plan, subject to
certain limitations. The obligation of a controlling bank holding company
under FDICIA to fund a capital restoration plan is limited to the lesser of
5.0% of an undercapitalized subsidiary's assets or the amount required to meet
regulatory capital requirements. An undercapitalized institution is also
generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches, or engaging in any new line of
business, except in accordance with
56
<PAGE> 73
an accepted capital restoration plan or with the approval of the FDIC. In
addition, the appropriate federal banking agency is given authority with
respect to any undercapitalized depository institution to take any of the
actions it is required to, or may take with respect to a significantly
undercapitalized institution as described below if it determines "that those
actions are necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region"; (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized, provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer.
Each of UPC's and SBT's respective bank and thrift subsidiaries was
deemed to be "well-capitalized" under applicable capital guidelines as of March
31, 1997.
DESCRIPTION OF UPC COMMON AND PREFERRED STOCK
GENERAL
UPC's Charter currently authorizes the issuance of 100,000,000 shares
of common stock having a par value of $5.00 per share (the "UPC Common Stock")
and 10,000,000 shares of preferred stock having no par value (the "UPC
Preferred Stock"). As of June 30, 1997, 66,790,144 shares of UPC Common Stock
were issued and outstanding and approximately 2,947,000 shares were subject to
issuance through the exercise of options granted pursuant to UPC's 1992 and
1983 Stock Option Plans and other employee, officer and director benefit plans;
approximately 3,259,000 shares were authorized for issuance pursuant to said
plans but not yet subject to option grants or otherwise issued; and
approximately 3,166,545 shares were authorized for issuance and reserved for
conversion of certain outstanding shares of UPC Preferred Stock. In addition,
as of June 30, 1997, 2,533,236 shares of UPC's 8% Cumulative, Convertible
Preferred Stock, Series E (the "Series E Preferred Stock") were issued and
outstanding. As of June 30, 1997, none of UPC's 750,000 authorized shares of
Series A Preferred Stock were issued
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and outstanding nor is management aware of the existence of circumstances from
which it may be inferred that such issuance is imminent. THE CAPITAL STOCK OF
UPC DOES NOT REPRESENT OR CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT INSURED BY
THE FDIC OR ANY GOVERNMENTAL AGENCY.
UPC COMMON STOCK
General. Shares of UPC Common Stock may be issued at such time or
times and for such consideration (not less than the par value thereof) as the
UPC Board may deem advisable, subject to such limitations as may be set forth
in the laws of the State of Tennessee, UPC's Charter or Bylaws or the rules of
the NYSE. UPNB, a wholly-owned subsidiary of UPC, is the Registrar, Transfer
Agent and Dividend Disbursing Agent for shares of UPC Common Stock. Its street
address is Union Planters National Bank, Corporate Trust Department, 6200
Poplar Avenue, Third Floor, Memphis, Tennessee 38119. Its mailing address is
P.O. Box 387, Memphis, Tennessee 38147.
Dividends. Subject to the preferential dividend rights applicable to
outstanding shares of the UPC Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for purchase,
retirement or sinking funds, if any, for all outstanding UPC Preferred Stock,
the holders of the UPC Common Stock are entitled to receive, to the extent
permitted by law, only such dividends as may be declared from time to time by
the UPC Board.
UPC has the right to, and may from time to time, enter into borrowing
arrangements or issue other debt instruments, the provisions of which may
restrict payment of dividends and other distributions on UPC Common Stock and
UPC Preferred Stock. UPC has entered into such an arrangement which, under
certain circumstances, would prohibit UPC from paying dividends on, or making
any other distributions with respect to, any capital stock of UPC, including
the UPC Common Stock and Preferred Stock. In December, 1996 UPC caused to be
formed Union Planters Capital Trust A ("Capital Trust"), a Delaware statutory
business trust, for the purpose of issuing up to $200,000,000 of 8.20% Capital
Trust Pass-through Securities (SM) (TruPS (SM)) (the "Capital Securities"), all
of which are currently outstanding. UPC owns all of the common stock interests
in the Capital Trust and the Capital Securities represent preferred stock
interests in the Capital Trust. The proceeds received by the Capital Trust
from the sale of the common securities to UPC and the sale of the Capital
Securities in the offering was used by the Capital Trust to purchase
$206,186,000 of UPC's Junior Subordinated Deferrable Interest Debentures due
2026 (the "UPC Subordinated Debentures"). The only assets of the Capital Trust
are the UPC Subordinated Debentures. All payments to be made by UPC on the UPC
Subordinated Debentures, including but not limited to, interest payments and
payments upon redemption or maturity, are to be paid to a trustee for the
benefit of the holders of the Capital Securities; provided, however, that UPC's
rights to distributions as a common stock holder of the Capital Trust are
subordinated to the prior right of the holders of the Capital Securities.
Interest and other payments to be made on the UPC Subordinated Debentures is
coordinated with the distributions and other payments to be made on the Capital
Securities so that they are to be made on the same day; therefore, UPC's
payments on the UPC Subordinated Debentures flow through to the holders of the
Capital Securities and UPC as the holder of the common stock of the Capital
Trust.
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Interest on the UPC Subordinated Debentures and, therefore,
distributions on the Capital Securities accrue at 8.20% per annum, is
cumulative, and is payable semi-annually in arrears on June 15 and December 15
of each year, commencing June 15, 1997. UPC has the right, at any time and
subject to certain conditions, to defer payments of interest on the UPC
Subordinated Debentures for extension periods ("Extension Periods"), each not
exceeding 10 consecutive semiannual periods; provided, that no Extension Period
may extend beyond the maturity date of the UPC Subordinated Debentures. As a
consequence of UPC's extension of an interest payment period on the UPC
Subordinated Debentures, distributions on the Capital Securities would likewise
be deferred (though such distributions would continue to accrue with interest
thereon compounded semiannually (to the extent permitted by law), since
interest would continue to accrue, with interest thereon compounded
semiannually on the UPC Subordinated Debentures during any such Extension
Period (to the extent permitted by law).
In the event UPC exercises its right to extend an interest payment
period, or should UPC become in default under the UPC Subordinated Debentures,
such as in a failure to make an interest or other payment when due or should
UPC default under any other indebtedness for borrowed money where the aggregate
principal amount of such indebtedness accelerated due to such default exceeds
$25 million, then subject to certain exceptions, (i) UPC shall not declare or
pay any dividend on, make any distributions with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock or rights to acquire such capital stock or make any guarantee
payments with respect to the foregoing and (ii) UPC shall not make any payment
of interest on or principal of (or premium, if any, on), or repay, repurchase
or redeem, any debt securities issued by UPC which rank pari passu with or
junior to the UPC Subordinated Debentures.
The UPC Subordinated Debentures and the Capital Securities were
initially issued on December 12, 1996. UPC has no current intent to extend the
interest payment period and is currently aware of no fact that would lead it to
believe that it would otherwise default in the making of any payments due on
the UPC Subordinated Debt Securities. For a more detailed discussion with
respect to the Capital Securities and the UPC Subordinated Debentures, see Note
9, "Borrowings - Other Long-Term Debt" in the Union Planters Annual Report on
Form 10-K for the period ended December 31, 1996 on page 52 thereof. See,
"INCORPORATION BY REFERENCE."
Liquidation Rights. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of UPC, after
distribution in full of the preferential amounts required to be distributed in
connection with UPC's Capital Securities and those to be distributed to the
holders of UPC Preferred Stock, holders of UPC Common Stock will be entitled to
receive all of the remaining assets of UPC, of whatever kind, available for
distribution to stockholders ratably in proportion to the number of shares of
UPC Common Stock held. The UPC Board may distribute in kind to the holders of
UPC Common Stock such remaining assets of UPC or may sell, transfer or
otherwise dispose of all or any part of such remaining assets to any other
person or entity and receive payment therefor in cash, stock or obligations of
such other person or entity, and may sell all or any part of the consideration
so received and distribute any balance thereof in kind to holders of UPC Common
Stock. Neither the merger or consolidation of UPC with or into any other
corporation, nor the merger of any other corporation into UPC, nor any purchase
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or redemption of shares of stock of UPC of any class shall be deemed to be a
dissolution, liquidation or winding-up of UPC for purposes of this paragraph.
Because UPC is a holding company, its right and the rights of its
creditors and stockholders, including the holders UPC Common Stock and UPC
Preferred Stock, to participate in the distribution of the assets of a
subsidiary of UPC in connection with the subsidiary's liquidation or
recapitalization may be subject to prior claims of such subsidiary's creditors
except to the extent that UPC itself may be a creditor having recognized claims
against such subsidiary.
For a further discussion of UPC Common Stock, see "EFFECT OF MERGER ON
RIGHTS OF SBT STOCKHOLDERS."
UPC PREFERRED STOCK
Series A Preferred Stock. UPC's Charter provides for the issuance of
up to 750,000 shares (subject to adjustment by action of the UPC Board) of
Series A Preferred Stock under certain circumstances involving a potential
change in control of UPC. None of such shares are outstanding and management
is aware of no facts suggesting that issuance of such shares may be imminent.
The Series A Preferred Stock is described in more detail in UPC's Registration
Statement on Form 8-A dated January 19, 1989, and filed February 1, 1989
(Commission File No. 0-6919) which is incorporated by reference herein.
Series E Preferred Stock. 2,533,236 shares of Series E Preferred
Stock were outstanding as of June 30, 1997. All shares of Series E Preferred
Stock have a stated value of $25.00 per share. Dividends are payable at the
rate of $0.50 per share per quarter and are cumulative. The Series E Preferred
Stock is convertible at the election of the holder at the rate of 1.25 shares
of UPC Common Stock for each share of Series E Preferred Stock. The Series E
Preferred Stock is not subject to any sinking fund provisions and has no
preemptive rights. Such shares have a liquidation preference of $25.00 per
share plus unpaid dividends accrued thereon and, at UPC's option and with the
prior approval of the Federal Reserve, are subject to redemption by UPC at any
time at a redemption price of $25.00 per share plus any unpaid dividend.
Holders of Series E Preferred Stock have no voting rights except as required by
law and in certain other limited circumstances.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of SBT Common Stock will be
exchanging their shares of a Delaware corporation governed by the DGCL and
SBT's Certificate of Incorporation (the "Certificate"), and Bylaws, for shares
of UPC, a Tennessee corporation governed by the TBCA Act and UPC's Charter of
Incorporation, as amended (the "Charter"), and Bylaws. Certain significant
differences exist between the rights of SBT stockholders and those of UPC
stockholders. The differences deemed material by SBT and UPC are summarized
below. In particular, UPC's Charter and Bylaws contain several provisions that
may be deemed to have an anti-takeover effect in that they could impede or
prevent an acquisition of UPC unless the potential acquirer has obtained the
approval of UPC's Board of Directors. The following discussion is necessarily
general; it is not intended to be a complete statement of all differences
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affecting the rights of stockholders and their respective entities, and it is
qualified in its entirety by reference to the DGCL and the Laws of Tennessee as
well as to UPC's Charter and Bylaws and SBT's Certificate and Bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
The provisions of UPC's Charter and Bylaws described below under the
headings, "--Authorized Capital Stock," "Amendment of Charter and Bylaws,"
"--Classified Board of Directors and Absence of Cumulative Voting," "--Director
Removal and Vacancies," "--Limitations on Director Liability,"
"--Indemnification," "--Special Meeting of Stockholders," "--Actions by
Stockholders Without a Meeting," "--Stockholder Nominations and Proposals" and
"Business Combinations" are referred to herein as the "Protective Provisions."
In general, one purpose of the Protective Provisions is to assist UPC's Board
of Directors in playing a role if any group or person attempts to acquire
control of UPC, so that the Board can further protect the interests of UPC and
its stockholders as appropriate under the circumstances, including, if the
Board determines that a sale of control is in their best interests, by
enhancing the Board's ability to maximize the value to be received by the
stockholders upon such a sale.
Although UPC's management believes the Protective Provisions are,
therefore, beneficial to UPC's stockholders, the Protective Provisions also may
tend to discourage some takeover bids. As a result, UPC's stockholders may be
deprived of opportunities to sell some or all of their shares at prices that
represent a premium over prevailing market prices. On the other hand,
defeating undesirable acquisition offers can be a very expensive and
time-consuming process. To the extent that the Protective Provisions
discourage undesirable proposals, UPC may be able to avoid those expenditures
of time and money.
The Protective Provisions also may discourage open market purchases by
a potential acquirer. Such purchases may increase the market price of UPC
Common Stock temporarily, enabling stockholders to sell their shares at a price
higher than that which otherwise would prevail. In addition, the Protective
Provisions may decrease the market price of UPC Common Stock by making the
stock less attractive to persons who invest in securities in anticipation of
price increases from potential acquisition attempts. The Protective Provisions
also may make it more difficult and time consuming for a potential acquirer to
obtain control of UPC through replacing the Board of Directors and management.
Furthermore, the Protective Provisions may make it more difficult for UPC's
stockholders to replace the Board of Directors or management, even if a
majority of the stockholders believe such replacement is in the best interests
of UPC. As a result, the Protective Provisions may tend to perpetuate the
incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
UPC. UPC's Charter authorizes the issuance of up to (i) 100,000,000
shares of UPC Common Stock, of which 66,790,144 shares were issued and
outstanding as of June 30, 1997, and (ii) 10,000,000 of no par value preferred
stock ("UPC Preferred Stock"), of which no shares of UPC Series A Preferred
Stock, and 2,533,236 shares of UPC Series E Preferred Stock were issued and
outstanding as of June 30, 1997. UPC's Board of Directors may authorize the
issuance of additional shares of UPC Common Stock without further action by
UPC's
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stockholders, unless such action is required in a particular case by applicable
laws or regulations or by any stock exchange upon which UPC's capital stock may
be listed.
Similarly, with certain exceptions, UPC's Board of Directors may
issue, without any further action by the stockholders, shares of UPC Preferred
Stock, in one or more classes or series, with such voting, conversion,
dividends, and liquidation rights as specified in UPC's Charter. In providing
for the issuance of such shares, UPC's Board of Directors may determine, among
other things, the distinctive designation and number of shares comprising a
series of preferred stock, the dividend rate or rates on the shares of such
series and the relation of such dividends to the dividends payable on other
classes of stock, whether the shares of such series shall be convertible into
or exchangeable for shares of any other class or series of UPC capital stock,
the voting powers if any of such series, and any other preferences, privileges,
and powers of such series.
In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of UPC, the holders of any series of UPC
Preferred Stock will have priority over holders of UPC Common Stock.
The authority to issue additional shares of UPC Common Stock or
Preferred Stock provides UPC with the flexibility necessary to meet its future
needs without the delay resulting from seeking stockholder approval. The
authorized but unissued shares of UPC Common Stock and UPC Preferred Stock will
be issuable from time to time for any corporate purpose, including, without
limitation, stock splits, stock dividends, employee benefit and compensation
plans, acquisitions, and public or private sales for cash as a means of raising
capital. Such shares could be used to dilute the stock ownership of persons
seeking to obtain control of UPC. In addition, the sale of a substantial
number of shares of UPC voting stock to persons who have an understanding with
UPC concerning the voting of such shares, or the distribution or declaration of
a dividend of shares of UPC voting stock (or the right to receive UPC voting
stock) to UPC stockholders, may have the effect of discouraging or increasing
the cost of unsolicited attempts to acquire control of UPC.
In 1989, the UPC Board of Directors adopted a Share Purchase Rights
Plan ("Preferred Share Rights Plan") and distributed a dividend of one
Preferred Share Unit Purchase Right ("Preferred Share Right") for each
outstanding share of UPC Common Stock. In addition, under the Preferred Share
Rights Plan, one Preferred Share Right is to be automatically, and without
further action by UPC, distributed in respect to each share of UPC Common Stock
issued after adoption of the Preferred Share Rights Plan. The Preferred Share
Rights are generally designed to deter coercive takeover tactics and to
encourage all persons interested in potentially acquiring control of UPC to
treat each stockholder on a fair and equal basis. Each Preferred Share Right
trades in tandem with the share of UPC Common Stock to which it relates until
the occurrence of certain events indicating a potential change in control of
UPC. Upon the occurrence of such an event, the Preferred Share Rights would
separate from UPC Common Stock and each holder of a Preferred Share Right
(other than the potential acquirer) would be entitled to purchase certain
equity securities at prices below their market value. UPC has authorized
750,000 shares of Series A Preferred Stock for issuance under the Preferred
Share Rights Plan and no shares have been issued as of the date of this Proxy
Statement. Until a Preferred Share Right is exercised, the
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holder thereof, as such, has no rights of a stockholder of UPC, including the
right to vote or receive dividends.
SBT. SBT's Certificate authorizes the issuance of up to 50,000 shares
of SBT Common Stock, of which 13,569 shares were issued and outstanding as of
the Record Date, and no shares of preferred stock. SBT's Board of Directors
may authorize the issuance of additional authorized shares of SBT Common Stock
without further action by SBT's stockholders, unless such action is required in
a particular case by applicable laws or regulations or by any stock exchange
upon which SBT's capital stock may be listed. However, the total number of
authorized shares may not be increased above 50,000 shares unless 80% of the
outstanding shares vote in favor of such action. This provision may make it
more difficult for SBT to raise additional capital of to use its stock for
opportunities such as acquisitions.
AMENDMENT OF CHARTER AND BYLAWS
UPC. The Charter of UPC generally provides that amendments thereto
may be adopted in any manner permitted by the TBCA. The TBCA generally
provides that a corporation's charter may be amended by a majority of votes
entitled to be cast on the amendment, subject to any condition the board of
directors may place on its submission of the amendment to the stockholders.
The Charter requires a vote of two-thirds or more of the shares of capital
stock entitled to vote in an election of directors to amend the articles of the
Charter governing directors and to remove a director from office whether with
or without cause. A two-thirds vote is also required to amend, alter or repeal
the article of the Charter relating to business combinations.
The Board of Directors may adopt, amend, or repeal the Bylaws by a
majority vote of the entire Board of Directors. The Bylaws adopted by the
Board of Directors may then be further amended or repealed by an action of
UPC's stockholders.
UPC's Charter also provides that all corporate powers of UPC shall be
exercised by the Board of Directors except as otherwise provided by law. The
Board may designate an executive committee consisting of five or more directors
and may authorize such committee to exercise all of the authority of the Board,
including the authority to adopt, amend and repeal the Bylaws, to submit any
action to the stockholders, to fill vacancies on the Board or any committee, to
declare dividends or other corporate distributions, and to issue or reissue any
capital stock or any warrant, right or option to acquire capital stock of the
corporation.
SBT. The DGCL generally provides that the Certificate may be amended
or repealed by the affirmative vote of a majority of the shares entitled to
vote thereon at a duly constituted meeting of the stockholders called expressly
for such purpose, unless the certificate of incorporation provides otherwise.
SBT's Certificate provides that the provisions thereof relating to the number
and type of authorized shares (Article 4), mergers and similar transaction
(Article 5, mergers and similar transactions with holders of 20% or more of
SBT's outstanding Common Stock (Article 6), matters the Board of Directors may
consider in approving or disapproving a merger or similar transaction (Article
7) and the election and terms of directors (Article 9), may be amended or
repealed only by the affirmative vote of the holders of at least 80% of SBT's
outstanding voting stock.
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SBT's Certificate generally provides that the Board of Directors has
the power to alter, amend, repeal, or adopt the Bylaws. The stockholders may
alter, amend, or repeal the Bylaws adopted by the Board and may also adopt new
Bylaws, in either case by the affirmative vote of a majority of SBT's
outstanding voting stock.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
UPC. The Charter of UPC provides that UPC's Board of Directors is
divided into three classes, with each class to be as nearly equal in number as
possible. The directors in each class serve three-year terms of office. The
effect of UPC's having a classified Board of Directors is that only
approximately one-third of the members of the Board are elected each year,
which effectively requires two annual meetings for UPC's stockholders to change
a majority of the members of the Board. The purpose of dividing UPC's Board of
Directors into classes is to facilitate continuity and stability of leadership
of UPC by ensuring that experienced personnel familiar with UPC will be
represented on UPC's Board at all times, and to permit UPC's management to plan
for the future for a reasonable time. However, by potentially delaying the
time within which an acquirer could obtain working control of the Board, this
provision may discourage some potential mergers, tender offers, or takeover
attempts.
Pursuant to the Charter of UPC, each stockholder is entitled to one
vote for each share of UPC Common Stock held and is not entitled to cumulative
voting rights in the election of directors. With cumulative voting, a
stockholder has the right to cast a number of votes equal to the total number
of such holder's shares multiplied by the number of directors to be elected.
The stockholder has the right to distribute all of his votes in any manner
among any number of candidates or to accumulate such shares in favor of one
candidate. Directors are elected by a plurality of the total votes cast by all
stockholders. With cumulative voting, it may be possible for minority
stockholders to obtain representation on the Board of Directors. Without
cumulative voting, the holders of more than 50% of the shares of UPC Common
Stock generally have the ability to elect 100% of the directors. As a result,
the holders of the remaining UPC Common Stock effectively may not be able to
elect any person to the Board of Directors. The absence of cumulative voting
thus could make it more difficult for a stockholder who acquires less than a
majority of the shares of UPC Common Stock to obtain representation on UPC's
Board of Directors.
SBT. SBT's Certificate contains a provision similar to the provision
in the Bylaws of UPC that requires that the Board of Directors shall be divided
into three classes serving staggered three-year terms, with the terms of one
class of directors to expire each year. Pursuant to the Bylaws of SBT, each
stockholder generally is entitled to one vote for each share of SBT Common
Stock held and is not entitled to cumulative voting rights in the election of
directors.
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DIRECTOR REMOVAL AND VACANCIES
UPC. UPC's Charter provides that a director may be removed by the
stockholders for any reason only upon the affirmative vote of the holders of
two-thirds of the voting power of all shares of capital stock entitled to vote
generally in the election of directors. The purpose of this provision is to
prevent a majority stockholder from circumventing the classified board system
by removing directors and filling the vacancies with new individuals selected
by that stockholder. Accordingly, the provision may have the effect of
impending efforts to gain control of the Board of Directors by anyone who
obtains a controlling interest in UPC Common Stock. Vacancies on the board of
directors may be filled by the board of directors or stockholders, as provided
under the UPC Bylaws and the TBCA. The term of a director appointed to fill a
vacancy expires at the next meeting of stockholders at which directors are
elected.
SBT. The DGCL provides that, unless the corporation's certificate of
incorporation provides otherwise, the stockholders of a corporation that has a
classified board (as described above) may remove a director only for cause. In
additional, the DGCL provides that, unless the corporation's certificate of
incorporation provides for a higher voting requirement, directors may be
removed by the holders of a majority of the shares then entitled to vote in the
election of such directors. SBT's Certificate and Bylaws provide that
directors may be removed only for cause and by the affirmative vote of at least
a majority of the members of the Board of Directors or a majority of the
outstanding voting stock.
LIMITATIONS ON DIRECTOR LIABILITY
UPC. UPC's Charter does not address the issue of director liability
to the corporation.
SBT. SBT's Bylaws contains a provision limiting directors' liability
to the corporation or its stockholders. Under SBT's Certificate, as allowed by
Section 102 of the DGCL, a SBT director will not have personal liability to SBT
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to SBT or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for any act or omission under Section 174 of the DGCL (involving certain
unlawful dividends and stock purchases or redemptions) or (iv) for any
transaction from which the director derived an improper personal benefit. This
provision would absolve directors of personal liability for negligence in the
performance of duties, even gross negligence. It would not permit, however, a
director to be exculpated for liability for actions involving conflicts of
interest or breaches of the traditional duty of loyalty to SBT and its
stockholders, and it would not affect the availability of injunctive or other
equitable relief to SBT or its stockholders.
INDEMNIFICATION
UPC. Under the TBCA, subject to certain exceptions, a corporation may
indemnify an individual made a party to a proceeding, because he is or was a
director, against liability incurred in the proceeding if (i) he conducted
himself in good faith; (ii) he reasonably believed (a) in the case of conduct
in his official capacity with the corporation, that his conduct was in the best
interests of the corporation, and (b) in all other cases, that his conduct was
at least not opposed
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to the corporation's best interests; and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful (the
"Standard of Conduct"). Moreover, unless limited by its articles of
incorporation, a corporation must indemnity a director who was wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which he was a party because he is or was a director of the corporation against
reasonable expenses incurred by him in connection with the proceeding.
Expenses incurred by a director in defending a proceeding may be paid by the
corporation in advance of the final disposition of such proceeding upon receipt
of a written affirmation by the director of his good faith belief that he or
she has met the Standard of Conduct and an undertaking by or on behalf of a
director of his good faith belief that he or she has met the Standard of
Conduct and an undertaking by or on behalf of a director to repay such amount
unless it shall ultimately be determined that he is entitled to be indemnified
by the corporation against such expenses. Before any such indemnification is
made, it must be determined that such indemnification would not be precluded by
Part 5 of the TBCA.
A director may also apply for court-ordered indemnification under
certain circumstances. Unless a corporation's articles of incorporation
provide otherwise, (i) an officer of a corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered indemnification to
the same extent as a director; (ii) the corporation may indemnify and advance
expenses to an officer, employee, or agent of the corporation to the same
extent as to a director; and (iii) a corporation may also indemnify and advance
expenses to an officer, employee, or agent who is not a director to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract.
UPC's Charter and Bylaws provide for the indemnification of its
directors and officers, to the fullest extent permitted by Tennessee law.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, or persons controlling
UPC pursuant to the foregoing provisions. UPC has been informed that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the 1933 Act and is therefore unenforceable.
SBT. SBT's Bylaws provides that SBT will indemnify any director or
any officer elected by the Board of Directors, and may indemnify any other
officer, employee, or agent of SBT (or any such person serving at the request
of SBT in one of those capacities for another corporation, partnership, trust,
or other enterprise) who was, is, or is threatened to be, made a party to any
action, suit, or proceeding, by reason of the fact that he is or was such a
director, officer, employee, or agent, against expenses (including attorneys'
fee), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by that individual in connection with that action, if he acted in a
manner reasonably believed to be in or not opposed to the best interests of SBT
and, with respect to any criminal proceeding, if he had no reason to believe
that his conduct was unlawful.
The Certificate further provides that, to the extent permitted and
under the procedures required by the DGCL, any indemnitee has a right to
receive from the corporation the payment of expenses (including attorneys'
fees) actually and reasonably incurred by the indemnitee in connection with the
defense or settlement of that action in advance of the final adjudication of
the proceeding. Such advancement is conditioned upon the delivery by the
indemnitee to SBT
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of an undertaking to repay to SBT the amount of expenses paid by SBT on behalf
of the indemnitee.
SPECIAL MEETING OF STOCKHOLDERS
UPC. UPC's Bylaws provide that special meetings of stockholders may
be called, unless otherwise prescribed by law, for any purpose or purposes
whatever at any time by the Chairman of the Board, the President, the
Secretary, or the holders of not less than one-tenth of the shares entitled to
vote at such meeting.
SBT. The DGCL provides that special meetings of stockholders may be
called by such persons as may be authorized by a corporation's certificate of
incorporation or bylaws. SBT's Bylaws provide that special meetings of
stockholders may be called only by resolution of a majority of the whole Board
of Directors. Because a special meeting may be necessary for a potential
acquirer to gain control of SBT, this requirement could discourage or make more
difficult an attempt to gain control of SBT, and could tend to perpetuate the
incumbent directors and management.
ACTIONS BY STOCKHOLDERS WITHOUT A MEETING
UPC. The Charter and Bylaws of UPC provide that any action required
or permitted to be taken by UPC stockholders at a duly called meeting of
stockholders may be effected by the unanimous written consent of the
stockholders entitled to vote on such action.
SBT. The Certificate states that any action required or permitted to
be taken by the stockholders must be effected by a duly constituted meeting and
may not be effected by written consent.
STOCKHOLDER NOMINATIONS AND PROPOSALS
UPC. UPC's Charter and Bylaws do not address whether a stockholder
may nominate members of the Board of Directors.
SBT. SBT's Bylaws provide that in addition to the right of the Board
of Directors to nominate members of the Board, nominations for the election of
directors may be made by any stockholder subject to certain procedural
requirements. A stockholder wishing to nominate a person for membership to the
Board of Directors must deliver a written notice of such nomination to SBT,
with such notice to be received at SBT's principal executive offices, not less
than 30 days prior to any meeting of stockholders called for the election of
directors; provided, however, that if less than 40 days notice of such meeting
is given to the stockholders, the time period in which the notice must be
received is extended to close of business on the tenth day after the mailing
date of the meeting notice. The stockholder's notice must contain certain
information about the nominee and the nominating stockholder as set forth in
SBT's Certificate. The SBT officer presiding at the stockholders' meeting may
determine and declare to the meeting that the nomination was not made in
accordance with the requirements set forth in the Certificate and thereby cause
the nomination to be disregarded.
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BUSINESS COMBINATIONS
UPC. The Charter of UPC requires the affirmative vote of the holders
of two-thirds of UPC's outstanding Common Stock for approval of a merger,
consolidation, or a sale or lease of all or substantially all of the assets of
UPC if the other party to the transaction is a beneficial owner of 10% or more
of the outstanding shares of UPC. A two-thirds vote is not required for any
merger or consolidation of UPC with or into any corporation or entity of which
a majority of the outstanding shares of all classes of capital stock entitled
to vote in the election of directors is owned by UPC or any UPC company.
The requirement of a supermajority vote of stockholders to approve
certain business transactions, as described above, may discourage a change in
control of UPC by allowing a minority of UPC's stockholders to prevent a
transaction favored by the majority of the stockholders. Also, in some
circumstances, the Board of Directors could cause a two-thirds vote to be
required to approve a transaction thereby enabling management to retain control
over the affairs of UPC and their positions with UPC. The primary purpose of
the supermajority vote requirement, however, is to encourage negotiations with
UPC's management by groups or corporations interested in acquiring control of
UPC and to reduce the danger of a forced merger or sale of assets.
As a Tennessee corporation, UPC is or could be subject to various
legislative acts set forth in Chapter 35 of Title 48 of the Tennessee Code,
which imposes certain restrictions on business combinations, including, but not
limited to, combinations with interested stockholders similar to those
described above.
The Tennessee Business Combination Act generally prohibits a "business
combination" (generally defined to include mergers, share exchanges, sales and
leases of assets, issuances of securities, and similar transactions) by UPC or
a subsidiary with an "interested stockholder" (generally defined as any person
or entity which beneficially owns 10% or more of the voting power of any class
or series of UPC's stock then outstanding) within five years after the person
or entity becomes an interested stockholder, unless the business combination or
the transaction pursuant to which the interested stockholder became such was
approved by the UPC Board of Directors before the interested stockholder became
such, and the business combination satisfies any other applicable requirements
imposed by law or by UPC's Charter or Bylaws. The Tennessee Business
Combination Act also severely limits the extent to which UPC or any of its
officers or directors could be held liable for resisting any business
combination.
The Tennessee Control Share Acquisition Act (the "Tennessee CSAA")
generally provides that any person or group of persons that acquires the power
to vote more than specified levels (one-fifth, one-third or a majority) of the
shares of certain Tennessee corporations will not have the right to vote such
shares unless granted voting rights by the holders of a majority of the votes
entitled to be cast, excluding "interested shares." Interested shares are
those shares held by the acquiring person, officers of the corporation, and
employees of the corporation who are also directors of the corporation. If
approval of voting power for the shares is obtained at one of the specified
levels, additional stockholder approval is required when a stockholder seeks to
acquire the power to vote shares at the next level. In the absence of such
approval, the additional shares acquired by the stockholder may not be voted
until they are transferred to another person in a
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transaction other than a control share acquisition. The Tennessee CSAA applies
only to those Tennessee corporations whose charters or bylaws contain an
express declaration that control share acquisitions in respect of the shares of
such corporations are governed by and subject to the provisions of such act.
UPC's Charter and Bylaws do not currently contain such an express declaration.
The Tennessee Greenmail Act ("Tennessee GA") prohibits a Tennessee
corporation having a class of voting stock registered or traded on a national
securities exchange or registered with the SEC pursuant to Section 12(g) of the
Exchange Act from purchasing, directly or indirectly, any of its shares at a
price above the market value of such shares (defined as the average of the
highest and lowest closing market price of such shares during the 30 trading
days preceding the purchase or preceding the commencement or announcement of a
tender offer if the seller of such shares has commenced a tender offer or
announced an intention to seek control of the corporation) from any person who
holds more than 3% of the class of securities to be purchased if such person
has held such shares for less than two years, unless the purchase has been
approved by the affirmative vote of a majority of the outstanding shares of
each class of voting stock issued by such corporation or the corporation makes
an offer, of at least equal value per share, to all holders of shares of such
class.
The Tennessee Business Combination Act provides that no Tennessee
corporation having any class of voting stock registered or traded on a national
securities exchange or registered with the SEC pursuant to Section 12(g) of the
Exchange Act or any of its officers or directors may be held liable at law or
in equity for either having failed to approve the acquisition of shares by an
interested stockholder on or before the date such stockholder became an
interested stockholder, or for seeking to enforce or implement the provisions
of the Tennessee Business Combination Act or the Tennessee CSAA, or for failing
to adopt or recommend any charter or bylaw amendment or provision in respect of
any one or more of these acts or the Tennessee GA, or for opposing any merger,
exchange, tender offer or significant disposition of the assets of the resident
domestic corporation or any subsidiary of such corporation because of a good
faith belief that such merger, exchange, tender offer or significant
disposition of assets would adversely affect the corporation's employees,
customers, suppliers, the communities in which the corporation or its
subsidiaries operate or are located or any other relevant factor if such
factors are permitted to be considered by the board of directors under the
corporation's charter in connection with the merger, exchange, tender offer or
significant disposition of assets.
The acts described above along with the provisions of UPC's Charter
regarding business combinations might be deemed to make UPC less attractive as
a candidate for acquisition by another company than would otherwise be the case
in the absence of such provisions. For example, if another company should seek
to acquire a controlling interest of less than 66-2/3% of the outstanding
shares of UPC Common Stock, the acquiror would not thereby obtain the ability
to replace a majority of the UPC Board of Directors until at least the second
annual meeting of the stockholders following the acquisition, and furthermore
the acquiror would not obtain the ability immediately to effect a merger,
consolidation, or other similar business combination unless the described
conditions were met.
As a result, UPC's stockholders may be deprived of opportunities to
sell some or all of their shares at prices that represent a premium over
prevailing market prices in a takeover
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context. The provisions described above also may make it more difficult for
UPC's stockholders to replace the UPC Board of Directors or management, even if
the holders of a majority of the UPC Common Stock should believe that such
replacement is in the interests of UPC. As a result, such provisions may tend
to perpetuate the incumbent UPC Board of Directors and management.
SBT. The DGCL requires the approval of the Board of Directors and the
holders of a majority of the outstanding stock of SBT entitled to vote thereon
for mergers or consolidations, and for sales, leases, or exchanges of
substantially all of SBT's property and assets. The DGCL permits SBT to merge
with another corporation without obtaining the approval of SBT's stockholders
if: (i) SBT is the surviving corporation of the merger; (ii) the merger
agreement does not amend SBT's Certificate; (iii) each share of SBT stock
outstanding immediately prior to the effective date of the merger is to be an
identical outstanding or treasury share of SBT after the merger; and (iv) any
authorized unissued shares or treasury shares of SBT Common Stock to be issued
or delivered under the plan of merger plus those initially issuable upon
conversion of any other securities or obligations to be issued or delivered
under such plan do not exceed 20% of the shares of SBT Common Stock outstanding
immediately prior to the effective date of the merger. As a result, SBT's
Board of Directors could effect significant acquisitions and issue significant
amounts of SBT capital stock on terms that may dilute the interests of existing
SBT stockholders, without seeking stockholder approval.
Section 203 of the DGCL ("Section 203"). Section 203 generally
prohibits any person who acquires 15% or more of a corporation's outstanding
voting stock (an "Interested Stockholder") from entering into any "Business
Combination" with the corporation for three years, unless one of the specified
exceptions applies. "Business Combination" is defined generally to include
mergers and consolidations, dispositions of the corporation's assets,
transactions resulting in the issuance or transfer by the corporation of its
stock, transactions having the effect of increasing the proportionate share of
the stock of any class or series of the corporation, and the receipt by the
Interested Stockholder of certain financial benefits provided by or through the
corporation.
That three-year prohibition does not apply, however, if (i) the
corporation's Board of Directors approved the Business Combination or approved
(in advance) the transaction that resulted in 15% ownership, (ii) in the
transaction in which the Interested Stockholder acquired 15% ownership, that
stockholder acquired at least 85% of the voting stock outstanding when the
transaction was initiated (excluding shares owned by officer-directors and
certain employee stock plans); or (iii) the Business Combination subsequently
is approved by the Board of Directors and authorized at a stockholders' meeting
by at least 66-2/3% of the outstanding voting stock, excluding the stock owned
by the Interested Stockholder. In addition, Section 203 does not apply at all
if (i) the corporation's original certificate of incorporation expressly elects
to avoid application of Section 203, (ii) the Board of Directors amended the
corporation's bylaws within 90 days of the effective date of Section 203
expressly to avoid application of Section 203; (iii) the corporation's
stockholders amend the certificate or bylaws to avoid application of Section
203 (although such amendment will not be effective for 12 months); (iv) the
corporation's voting stock is not listed on a national securities exchange,
authorized for quotation on an interdealer quotation system on a registered
national securities association, or held of record by more than 2,000
stockholders (unless the corporation nonetheless elects to be governed by
Section 203); (v) the stockholder acquires 15% ownership inadvertently and then
disposes of sufficient shares to
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eliminate that status; or (vi) the Business Combination is proposed after the
public announcement, or the publication of notice, of a proposed
business-combination type of transaction and prior to the consummation or
abandonment of such transaction. Because the Board of Directors of SBT has
approved the Merger, the provisions of Section 203 would not apply to the
Merger.
SBT has expressly chosen not to be governed by Section 203 by the
adoption of Article 6 of SBT's Certificate which contains certain provisions
relating to business combinations. Article 6 generally defines a "Controlling
Party" to be a beneficial owner of at least 20% of the outstanding voting stock
of the corporation, or an affiliate or assignee of a Controlling Party.
Generally stated, pursuant to Article 6, a merger, consolidation or sale of all
or a significant portion of the assets of SBT involving a Controlling Person
must be either:
(a) approved by the vote of the holders of at least 80% of the
outstanding voting stock and by 67% of all outstanding voting
stock held by shareholders other than the Controlling Person;
or
(b) approved by a majority of the members of SBT's Board of
Directors; or
(c) effected in a manner that meets specified requirements as to
price, form of consideration, and procedure.
Article 6 does not affect the stockholder voting requirement in
connection with a similar business combination that does not involve a
Controlling Person. Article 6 will also generally not affect any stockholder
voting requirement in connection with any business combination if SBT's
stockholders receive the highest consideration previously paid by the
Controlling Person for its shares of SBT voting stock within the previous
three years. Because the Board of Directors of SBT has approved the Merger (as
described in paragraph (b) above), the provisions of Article 6 do not apply to
the Merger.
The provisions of Article 6 are designed to encourage any person or
entity seeking to acquire SBT to negotiate with the Board of Directors, with
the goal that any resulting transaction would be structured to provide all of
the stockholders with their pro rata share of any acquisition premium, and that
stockholders would be protected against coercive or unfair purchase offers and
"freeze-out" transactions. Those provisions may have the effect, however, of
discouraging or rendering more difficult takeover attempts not previously
approved by the Board of Directors (including takeover attempts that certain
stockholders may deem to be in their interests), and of perpetuating the
incumbent directors and management.
Ordinarily, then, unless a corporation expressly has chosen not to be
governed by Section 203, a 15% stockholder generally may not engage in a
business combination with the corporation for three years, unless he has the
prior approval of the Board of Directors or the post-combination approval of
the Board and two-thirds of the outstanding voting shares, or unless the
stockholder acquired at least 85% ownership when he acquired 15% ownership.
SBT specifically elected to adopt Article 6 instead of being governed by
Section 203. SBT's Board of Directors determined that Article 6 better served
the long-term interests of SBT and its stockholders. Part of the rationale
underlying that determination was that, unlike Section 203, Article 6 does not
prohibit a business combination altogether for any amount of time; rather, it
places certain substantive and
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procedural requirements on any such combination, whenever it may occur. Thus,
Article 6 is more conducive to business combinations in that such a combination
can be consummated at any time if the fair price and procedural requirements
contained therein are satisfied. At the same time, Article 6 is less conducive
to those combinations in that its requirements do not disappear after three
years.
DISSENTERS' RIGHTS OF APPRAISAL
UPC. Under the TBCA, a stockholder is generally entitled to dissent
from a corporate action, and obtain payment of the fair value of his shares in
the event of: (i) consummation of a plan of merger to which the corporation is
a party, unless stockholder approval is not required by the TBCA; (ii)
consummation of a plan of share exchange to which the corporation is party as
the corporation whose shares will be acquired if the stockholder is entitled to
vote on the Plan; (iii) consummation of a sale or exchange of substantially all
of the corporation's property other than in the usual and regular course of
business, if the stockholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or to a plan by which substantially all of the net proceeds of the sale
will be distributed in cash to the stockholders within one year after the date
of sale; (iv) an amendment of the charter that materially and adversely affects
rights in respect of a dissenter's shares because it (a) alters or abolishes a
preferential right of the shares, (b) creates, alters, or abolishes a right in
respect of redemption of the shares, including a provision respecting a sinking
fund for the redemption or repurchase of the shares, (c) alters or abolishes a
preemptive right of the holder of the shares to acquire shares or other
securities; (d) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights, or (e)
reduces the number of shares owned by the stockholder to a fraction of a share
if the fractional share so created is to be acquired for cash under the TBCA;
or (v) any corporate action taken pursuant to a stockholder vote, to the
extent the charter, bylaws, or a resolution of the board of directors provide
that voting or nonvoting stockholders are entitled to dissent and obtain
payment for their shares. UPC's Charter and Bylaws do not provide for any such
additional dissenters' rights.
SBT. The rights of appraisal of dissenting stockholders of SBT are
governed by the DGCL. Pursuant thereto, except as described below, any
stockholder has the right to dissent from any merger of which SBT could be a
constituent corporation and exercise his or her appraisal rights. No appraisal
rights are available, however, for (i) the shares of any class or series of
stock that is either listed on a national securities exchange, quoted on the
Nasdaq National Market System, or held of record by more than 2,000
stockholders or (ii) any shares of stock of the constituent corporation
surviving a merger if the merger did not require the approval of the surviving
corporation's stockholders, unless, in either case, the holders of such stock
are required by an agreement of merger or consolidation to accept for that
stock something other than: (a) shares of stock of the corporation surviving
or resulting from the merger or consolidation; (b) shares of stock of any other
corporation that will be listed at the effective time of the merger on a
national securities exchange, quoted on the Nasdaq National Market System, or
held of record by more than 2,000 stockholders; (c) cash in lieu of fractional
shares of stock described in clause (a) or (b) immediately above; or (d) any
combination of the shares of stock and cash in lieu of fractional shares
described in clauses (a) through (c) immediately above.
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Because SBT does not fall into any of the exceptions for appraisal
rights discussed above, SBT shareholders will have the right to dissent to the
merger and to exercise appraisal rights with respect thereto. For a more
complete discussion of appraisal rights of SBT shareholders, see "THE
MERGER--Appraisal Rights" and Appendix G hereto, which is a copy of Section 262
of the DGCL which establishes appraisal rights under Delaware law.
STOCKHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
UPC. The TBCA provides that a stockholder may inspect and copy books
and records during regular business hours, if he or she gives the corporation
written notice of his or her demand at least five business days before the date
of the inspection. The written demand must be made in good faith and for a
proper purpose and must describe with reasonable particularity the purpose of
the request and the records the stockholder desires to inspect.
SBT. The DGCL similarly provides that a stockholder may inspect books
and records upon written demand under oath stating the purpose of the
inspection, if such purpose is reasonably related to such person's interest as
a stockholder.
DIVIDENDS
UPC. UPC's ability to pay dividends on UPC Common Stock is governed
by Tennessee corporate law. Under Tennessee corporate law, dividends may be
paid so long as the corporation would be able to pay its debts as they become
due in the ordinary course of business and the corporation's total assets would
not be less than the sum of its total liabilities plus the amount that would be
needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution to
stockholders whose preferential rights are superior to those receiving the
distribution.
There are various statutory limitations on the ability of UPC's
Banking Subsidiaries to pay dividends to UPC. See "CERTAIN REGULATORY
CONSIDERATIONS--Payment of Dividends."
SBT. The DGCL provides that, subject to any restrictions in the
corporation's certificate of incorporation, dividends may be declared from the
corporation's surplus, or, if there is no surplus, from its net profits for the
fiscal year in which the dividend is declared and the preceding fiscal year.
Dividends may not be declared, however, if the corporation's capital has been
diminished to an amount less than the aggregate amount of all capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets. Substantially all of the funds
available for the payment of dividends by SBT are derived from its subsidiary
depository institution. There are various statutory limitations on the ability
of SBT's subsidiary depository institution to pay dividends to SBT. See
"CERTAIN REGULATORY CONSIDERATIONS--Payment of Dividends."
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LEGAL OPINIONS
The validity of the shares of the UPC Common Stock offered hereby
would be passed upon by E. James House, Jr., Secretary and Manager of the Legal
Department of UPC. E. James House, Jr. is an officer of, and receives
compensation from, UPC.
The tax consequences of the Merger to the SBT Record Holders, in
general, would be passed upon by Wyatt, Tarrant & Combs, counsel to UPC.
EXPERTS
The consolidated financial statements of Union Planters Corporation
incorporated in this Prospectus/Proxy Statement by reference to the Annual
Report on Form 10-K of Union Planters Corporation for the year ended December
31, 1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
The consolidated financial statements of SBT Bancshares, Inc. as of
December 31, 1996 and for the year then ended included in this Prospectus/Proxy
Statement have been so included in reliance on the report of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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UNION PLANTERS CORPORATION
INDEX TO APPENDICES
<TABLE>
<CAPTION>
APPENDIX
NUMBER
- --------
<S> <C> <C>
A -- Agreement and Plan of Reorganization between Union Planters Corporation, Union Planters Community
Bancorp, Inc. and SBT Bancshares, Inc. dated as of November 26, 1996, together with the related Plan of
Merger annexed thereto as Exhibit 1
B -- Stock Option Agreement between SBT Bancshares, Inc and Union Planters Corporation, dated as of November
26, 1996
C -- Audited Consolidated Financial Statements of SBT Bancshares, Inc. as of and for the year ended December
31, 1996 (and notes thereto)
D -- Unaudited Consolidated Financial Statements of SBT Bancshares, Inc. as of December 31, 1995 and for the
two years ended December 31, 1995 (and notes thereto)
E -- Unaudited Interim Consolidated Financial Statements of SBT Bancshares, Inc. as of and for the three
months ended March 31, 1997 (and notes thereto)
F -- Fairness Opinion of Mercer Capital Management, Inc.
G -- Section 262 of the Delaware General Corporation Law, pertaining to applicable appraisal rights
provisions
</TABLE>
<PAGE> 92
APPENDIX A
Agreement and Plan of Reorganization between Union Planters Corporation, Union
Planters Community Bancorp, Inc. and SBT Bancshares, Inc., dated as of
November 26, 1996, together with the related Plan of Merger annexed
thereto as Exhibit 1
<PAGE> 93
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF NOVEMBER 26, 1996
BETWEEN
UNION PLANTERS CORPORATION,
UNION PLANTERS COMMUNITY BANCORP, INC.
AND
SBT BANCSHARES, INC.
<PAGE> 94
<TABLE>
<S> <C>
RECITALS .................................................................... 1
ARTICLE 1
TERMS OF THE MERGER
1.1 Merger .............................................................. 2
1.2 Time and Place of Closing ........................................... 2
1.3 Effective Time ...................................................... 2
1.4 Charter ............................................................. 2
1.5 Bylaws .............................................................. 2
1.6 Name ................................................................ 2
1.7 Directors and Officers ............................................. 2
1.8 UPC's Right to Revise the Structure of the Transaction .............. 2
1.9 Execution of Stock Option Agreement ................................. 3
1.10 Execution of Employment Agreements and Non-Competition Agreements ... 3
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 Conversion; Cancellation and Exchange of Shares; Exchange Ratio ..... 3
2.2 Anti-Dilution Provisions ............................................ 5
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures ................................................. 5
3.2 Rights of Former SBT Record Holders ................................. 5
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SBT
4.1 Organization, Standing, and Power ................................... 6
4.2 Authority; No Breach By Agreement ................................... 6
4.3 Capital Stock ....................................................... 7
4.4 SBT Subsidiaries .................................................... 7
4.5 SBT Financial Statements ............................................ 8
4.6 Absence of Undisclosed Liabilities .................................. 9
4.7 Absence of Certain Changes or Events ................................ 9
4.8 Tax Matters ......................................................... 9
4.9 Allowance for Possible Loan Losses ................................ 10
4.10 Assets ............................................................ 11
4.11 Intellectual Property ............................................. 11
4.12 Environmental Matters ............................................. 12
4.13 Compliance with Laws .............................................. 12
4.14 Labor Relations ................................................... 12
4.15 Employee Benefit Plans ............................................ 13
4.16 Material Contracts ................................................ 14
4.17 Legal Proceedings ................................................. 15
4.18 Reports ........................................................... 15
4.19 Statements True and Correct ....................................... 15
4.20 Accounting, Tax, and Regulatory Matters ........................... 15
4.21 State Takeover Laws ............................................... 16
4.22 Charter Provisions ................................................ 16
4.23 Charter Documents ................................................. 16
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UPC
</TABLE>
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<TABLE>
<S> <C> <C>
5.1 Organization, Standing, and Power ................................. 16
5.2 Authority: No Breach By Agreement ................................. 16
5.3 Capital Stock ..................................................... 17
5.4 SEC Filings: Financial Statements ................................. 17
5.5 Absence of Undisclosed Liabilities ................................ 18
5.6 Absence of Certain Changes or Events .............................. 18
5.7 Compliance with Laws .............................................. 18
5.8 Legal Proceedings ................................................. 18
5.9 Reports ........................................................... 18
5.10 Statements True and Correct ....................................... 18
5.11 Accounting, Tax, and Regulatory Matters ........................... 19
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 Affirmative Covenants of SBT ...................................... 19
6.2 Negative Covenants of SBT ......................................... 19
6.3 Covenants of UPC .................................................. 21
6.4 Adverse Chances in Condition ...................................... 21
6.5 Reports ........................................................... 21
6.6 Charter, Name Change or Corporate Reorganization. ................. 22
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 Registration Statement: Proxy Statement: Shareholder Approvals .... 22
7.2 Exchange Listing .................................................. 22
7.3 Applications ...................................................... 22
7.4 Filings with State Offices ........................................ 23
7.5 Agreement as to Efforts to Consummate ............................. 23
7.6 Investigation and Confidentiality ................................. 23
7.7 Press Releases .................................................... 23
7.8 Certain Actions ................................................... 24
7.9 Accounting and Tax Treatment ...................................... 24
7.10 State Takeover Laws ............................................... 24
7.11 Charter Provisions ................................................ 24
7.12 Agreement of Affiliates ........................................... 24
7.13 Employee Benefits and Contracts ................................... 25
</TABLE>
ii
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<TABLE>
<S> <C> <C>
ARTICLE 8 CONDITIONS
PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 Conditions to Obligations of Each Party ........................... 25
8.2 Conditions to Obligations of UPC .................................. 26
8.3 Conditions to Obligations of SBT .................................. 28
ARTICLE 9
TERMINATION
9.1 Termination ....................................................... 29
9.2 Effect of Termination ............................................. 30
9.3 Non-Survival of Representations and Covenants ..................... 30
ARTICLE 10
GENERAL PROVISIONS
10.1 Definitions ....................................................... 30
10.2 Expenses .......................................................... 38
10.3 Brokers and Finders ............................................... 38
10.4 Entire Agreement .................................................. 38
10.5 Amendments ........................................................ 39
10.6 Waivers ........................................................... 39
10.7 Assignment ........................................................ 39
10.8 Notices ........................................................... 39
10.9 Governing Law ..................................................... 40
10.10 Counterparts ...................................................... 40
10.11 Captions .......................................................... 40
10.12 Interpretation .................................................... 40
10.13 Enforcement of Agreement .......................................... 40
10.14 Attorneys' Fees ................................................... 40
10.15 Severability ...................................................... 40
10.16 Remedies Cumulative ............................................... 41
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") dated as of the
26th day of November, 1996, by and between UNION PLANTERS CORPORATION ("UPC"),
a corporation chartered and existing under the laws of the State of Tennessee
which is registered both as a bank holding company and as a savings and loan
holding company and whose principal office is located at 7130 Goodlett Farms
Parkway, Memphis, Shelby County, Tennessee 38018; SBT BANCSHARES, INC. ("SBT"),
a corporation chartered and existing under the laws of the State of Delaware
which is registered as a bank holding company and whose principal office is
located at 116 S. Third Street, Selmer, McNairy County, Tennessee, and UNION
PLANTERS COMMUNITY BANCORP, INC. ("Merger Subsidiary" or "Surviving
Corporation" as the context may require), a corporation chartered and existing
under the laws of the State of Tennessee which is a wholly-owned subsidiary of
UPC and whose principal office is located at 7130 Goodlett Farms Parkway,
Memphis, Shelby County, Tennessee 38018.
Certain other capitalized terms used in this Agreement and in the Plan
of Merger are defined below in Section 10.1
RECITALS
A. SBT is the beneficial owner and holder of record of all of the
issued and outstanding shares of capital stock of Selmer Bank & Trust Co., a
state bank organized under the laws of the State of Tennessee having its main
office located at 116 S. Third Street, Selmer, McNairy County, Tennessee (the
"SBT Bank Subsidiary"), and SBT desires to have itself and, indirectly, all of
its assets, including the capital stock it owns the SBT Bank Subsidiary,
acquired by UPC on the terms and subject to the conditions set forth in this
Agreement and the Plan of Merger annexed hereto as Exhibit 1.
B. UPC desires to acquire SBT and, indirectly, SBT's assets,
including the capital stock of the SBT Bank Subsidiary, on the terms and
subject to the conditions set forth in this Agreement and the Plan of Merger.
C. The Board of Directors of SBT deems it desirable and in the
best interests of SBT, the Bank Subsidiary and the shareholders of SBT that SBT
be merged with and into Merger Subsidiary (which would survive the merger as
the Surviving Corporation, as defined herein) on the terms and subject to the
conditions set forth in this Agreement and in the manner provided in this
Agreement and the Plan of Merger (the "Merger") and has directed that this
Agreement and the Plan of Merger be submitted to the shareholders of SBT with
the recommendation that they be approved by them.
D. The Board of Directors of UPC, as a party to the Merger and as
sole shareholder of Merger Subsidiary, and Merger Subsidiary deem it desirable
and in the best interests of UPC and Merger Subsidiary and the shareholders of
UPC that SBT be merged with and into Merger Subsidiary on the terms and subject
to the conditions set forth in this Agreement and in the manner provided in
this Agreement and the Plan of Merger.
E. The respective Boards of Directors of UPC, Merger Subsidiary
and SBT have each adopted (or will each adopt) resolutions setting forth and
adopting this Agreement and the Plan of Merger, and have directed that this
Agreement and the annexed Plan of Merger and all resolutions adopted by said
Boards of Directors and by the SBT Shareholders related to this Agreement, be
submitted with appropriate applications to, and filed with all applicable
Regulatory Authorities as may be necessary in order to obtain all Consents
required to consummate the proposed Merger and the transactions contemplated in
this Agreement in accordance with this Agreement, the Plan of Merger and
applicable law.
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NOW THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
ARTICLE 1
TERMS OF THE MERGER
1.1 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time SBT shall be merged with and into the Merger
Subsidiary in accordance with the provisions of Section 48-21-102 of the
Tennessee Code and Section 252 of the General Corporation Law of the State of
Delaware, and with the effect provided in Section 48-21-108 of the Tennessee
Code and Section 252 of the General Corporation Law of the State of Delaware
(the "Merger"). Merger Subsidiary shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the Laws of the State of
Tennessee. 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 UPC, SBT, and Merger Subsidiary, and the Plan of Merger, in
substantially the form of Exhibit 1 which has been approved and adopted by the
Board of Directors of SBT and Merger Subsidiary and has or will be approved and
adopted by the Board of Directors of UPC (in its capacity as sole shareholder
of 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 the Union
Planters Administrative Center, Union Planters Corporation Executive Offices
(Fourth Floor), 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee
38018, or at such other place as the Parties, acting through their chief
executive officers or chief financial officers, may mutually agree.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time the
Articles of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Tennessee and the Secretary of State of the
State of Delaware ((the "Effective Time").
1.4 CHARTER. The Charter of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation until otherwise amended or repealed.
1.5 BYLAWS. The Bylaws of Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.
1.6 NAME. The name of Merger Subsidiary shall remain unchanged
after the Effective Time, unless and until otherwise renamed.
1.7 DIRECTORS AND OFFICERS. The directors and officers of Merger
Subsidiary in office immediately prior to the Effective Time, together with
such additional persons as may thereafter be elected or appointed, shall serve
as the directors and officers of the Surviving Corporation from and after the
Effective Time in accordance with the Bylaws of the Surviving Corporation,
unless and until their successors shall have been elected or appointed and
shall have qualified or until they shall have been removed in the manner
provided therein.
1.8 UPC'S RIGHT TO REVISE THE STRUCTURE OF THE TRANSACTION. UPC
shall have the unilateral right to revise the structure of the Merger in order
to achieve tax benefits or for any other reason which
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UPC may deem advisable; provided, however, that UPC shall not have the right,
without the approval of the Board of Directors of SBT, to make any revision to
the structure of the Merger which (i) changes the amount of the Consideration
which the SBT Record Holders are to receive as determined in the manner
provided in 2.1(c) of this Agreement; (ii) changes the intended tax-free effect
of the Merger to UPC, Merger Subsidiary, SBT to any SBT Record Holder; or (iii)
would permit UPC to pay the Consideration other than by delivery of shares of
UPC Common Stock registered with the SEC (in the manner described in Section
7.1 of this Agreement). UPC may exercise this right of revision by giving
written notice to SBT in the manner provided in Section 10.8 of this Agreement,
which notice shall be in the form of an amendment to this Agreement and the
Plan of Merger or in the form of an Amended and Restated Agreement and Amended
and Restated Plan of Merger.
1.9 EXECUTION OF STOCK OPTION AGREEMENT. Simultaneously with the
execution of this Agreement and the Plan of Merger by the Parties, and as a
condition thereto, SBT is executing and delivering to UPC a stock option
agreement (the "Stock Option Agreement"), a copy of which is attached hereto as
Exhibit 2 and incorporated herein by reference, pursuant to which SBT is
granting to UPC an option to purchase shares of SBT Common Stock under the
terms and conditions set forth therein.
1.10 EXECUTION OF EMPLOYMENT AGREEMENTS AND NON-COMPETITION
AGREEMENT. Prior to Closing and as a condition hereto, each member of the
Board of Directors of SBT and SBT Bank Subsidiary shall have executed a
Non-Compete Agreement with UPC and UPC Merger Subsidiary, substantially in the
form of Exhibit 3 attached hereto, providing for a term of three years from
Closing and covering McNairy County in Tennessee, and prohibiting, among other
things, such board members from becoming involved in any way in the formation
or organization of a new financial institution in such county (the Non-Compete
Agreements"). Further, Richard L. Rankin, as Chairman and Chief Executive
Officer, and James E. Hanna, as President/Cashier shall prior to Closing and
as a condition hereto executed a three year Employment Agreement with UPC and
UPC Merger Subsidiary to be effective as of Closing, substantially in the form
of Exhibit 4 (the "Employment Agreements") attached hereto.
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 CONVERSION; CANCELLATION AND EXCHANGE OF SHARES; EXCHANGE
RATIO. At the Effective Time, by virtue of the Merger becoming effective and
without any action on the part of UPC, Merger Subsidiary, SBT, or the
shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) UPC CAPITAL STOCK. Each share of UPC Capital Stock,
including any associated UPC Rights, issued and outstanding immediately prior
to the Effective Time shall remain issued and outstanding from and after the
Effective Time.
(b) MERGER SUBSIDIARY COMMON STOCK. Each share of Merger
Subsidiary common stock issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding after the Effective Time and
shall represent all of the issued and outstanding capital stock of Merger
Subsidiary as the Surviving Corporation.
(c) SBT COMMON STOCK. Each share of SBT Common Stock
(excluding shares held by any SBT 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
represent any interest (equity, shareholder or otherwise) in SBT and shall,
[except for those shares held by any SBT Record Holders who shall have properly
perfected such holders' dissenters' rights and shall have
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maintained the perfected status of such dissenters' rights through the
Effective Time ("SBT Dissenting Shareholders"), whose rights shall be governed
by the provisions of Section 262 of the General Corporation Law of the State of
Delaware, automatically be converted exclusively into, and constitute only the
right of each SBT Record Holder to receive in exchange for such holder's shares
of SBT Common Stock, the Consideration to which the SBT Record Holder is
entitled as provided in this Section 2.1(c).
(i) THE EXCHANGE RATIO. Subject to any
adjustments which may be required by an event described in Subsection
2.1(c)(iii) below, the number of shares of UPC Common Stock to be exchanged for
each share of SBT Common Stock which shall be validly issued and outstanding
immediately prior to the Effective Time shall be based on an exchange ratio
(the "Exchange Ratio") of 45.12 shares of UPC Common Stock for each share of
SBT Common Stock. The Exchange Ratio is based upon there being no more than an
aggregate of 13,569 fully diluted shares of SBT Common Stock validly issued and
outstanding immediately prior to the Effective Time. Therefore, the maximum
aggregate number of shares of UPC Common Stock which UPC would be required to
issue in exchange for all outstanding shares of SBT Common Stock, based on the
Exchange Ratio, would be 612,233 shares of UPC Common Stock. SBT Common Stock
held by any SBT Company, other than in a fiduciary capacity or as a result of
debts previously contracted, shall not be considered as outstanding immediately
prior to the Effective Time for purposes of the Exchange Ratio. No fractional
shares of UPC Common Stock shall be issued in the Merger and if, after
aggregating all of the whole and fractional shares of UPC Common Stock to which
a SBT Record Holder shall be entitled based upon the Exchange Ratio, there
should be a fractional share of UPC Common Stock remaining, such fractional
share shall be settled by a cash payment therefor pursuant to Article 3 of this
Agreement, which cash settlement shall be based upon the Current Market Price
Per Share (as defined below) of one full share of UPC Common Stock.
(ii) DEFINITION OF "CURRENT MARKET PRICE PER
SHARE." The "Current Market Price Per Share" shall be the average closing
price per share of UPC Common Stock on the NYSE Composite Transaction List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day prior to the
Effective Time.
(iii) EFFECT OF STOCK SPLITS, REVERSE STOCK SPLITS,
STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF SBT. Should SBT effect
any stock splits, reverse stock splits, stock dividends or similar changes in
its respective capital accounts subsequent to the date of this Agreement but
prior to the Effective Time, or should there be more than 13,569 fully diluted
shares of SBT Common Stock outstanding immediately prior to the Effective Time,
the Exchange Ratio may, in UPC's sole discretion if such change in the capital
accounts constitutes a breach of any of SBT's representations, warranties or
covenants, be adjusted in such a manner as the Board of Directors of UPC shall
deem in good faith to be fair and reasonable in order to give effect to such
changes. Notwithstanding the foregoing, nothing in this subparagraph (iii)
shall be deemed to be a waiver of the inaccuracy of any representation or
warranty or breach of any covenant by SBT set forth herein.
(d) SHARES HELD BY SBT OR UPC. Each of the shares of SBT
Common Stock held by any SBT 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.
(e) DISSENTERS' RIGHTS OF SBT SHAREHOLDERS. Any SBT
Record Holder who shall comply strictly with the provisions of Section 262 of
the General Corporation Law of the State of Delaware, ("SBT Dissenting
Shareholders"), shall be entitled to dissent from the Merger and to seek those
appraisal remedies afforded by Section 262 of the General Corporation Law of
the State of Delaware.
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2.2 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 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.
ARTICLE 3
EXCHANGE OF SHARES
3.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, UPC
and SBT shall cause the Exchange Agent to mail to the SBT Record Holders
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of SBT 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 SBT Record Holder of SBT Common Stock (other
than shares to be canceled pursuant to Section 2.1(d) 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 2.1(c) of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 3.2 of this Agreement. To the extent required by Section 2.1(c) of
this Agreement, each SBT Record Holder also shall receive, upon surrender of
the certificate or certificates representing his or her shares of SBT Common
Stock outstanding immediately prior to the Effective Time, 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 SBT Record Holder is entitled as a result of the
Merger until such SBT Record Holder surrenders such holder's certificate or
certificates representing the shares of SBT Common Stock for exchange as
provided in this Section 3.1. The certificate or certificates of SBT 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 SBT Record Holder 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 SBT shall constitute ratification of the appointment of the
Exchange Agent.
3.2 RIGHTS OF FORMER SBT RECORD HOLDERS. At the Effective Time,
the stock transfer books of SBT shall be closed as to holders of SBT Common
Stock outstanding immediately prior to the Effective Time, and no transfer of
SBT Common Stock by any SBT Record Holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions
of Section 3.1 of this Agreement, each certificate theretofore representing
shares of SBT Common Stock (other than shares to be canceled pursuant to
Section 2.1(d) of this Agreement) shall from and after the Effective Time
represent for all purposes only the right to receive the Consideration provided
in Section 2.1(c) 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 SBT in respect of such shares of SBT 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 a SBT Record Holder until such SBT Record
Holder surrenders his or her certificate or certificates evidencing SBT Common
Stock for exchange as provided in Section 3.1 of this Agreement. However, upon
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surrender of such SBT Common Stock certificate, both the UPC Common Stock
certificate (together with all such undelivered dividends or other
distributions, without interest) and any undelivered dividends and cash
payments payable hereunder (without interest), shall be delivered and paid with
respect to each share represented by such certificate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SBT
Except as disclosed in the SBT Disclosure Memorandum, SBT hereby
represents and warrants to UPC as follows:
4.1 ORGANIZATION, STANDING, AND POWER. SBT 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. SBT 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 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 SBT.
4.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) SBT has the corporate power and authority necessary
to execute, deliver, and perform its obligations under this Agreement and 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 SBT,
subject to the approval of this Agreement and Plan of Merger by the holders of
a majority (or such greater percentage as may be required by the Charter of SBT
or other applicable Law) of the outstanding shares of SBT 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 SBT. Subject to the receipt
of such requisite shareholder approval, this Agreement and the Plan of Merger
represent legal, valid, and binding obligations of SBT, enforceable against SBT
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 of 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 or the
Plan of Merger, as appropriate,. by SBT, nor the consummation by SBT of the
transactions contemplated hereby or thereby, nor compliance by SBT with any of
the provisions hereof or thereof will (i) conflict with or result in a breach
of any provision of SBT's Charter or Bylaws, or (ii) except as disclosed in
Section 4.2(b) of the SBT Disclosure Memorandum, constitute or result in a
Default under, or require any Consent pursuant to or result in the creation of
any Lien on any material Asset of any SBT Company under, any Contract or
Permits of any SBT Company, or (iii) subject to receipt of the requisite
Consents referred to in Section 7.3 of this Agreement, violate any Law or Order
applicable to any SBT 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 Laws, 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
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respect to any SBT Employee 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 SBT, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by SBT of the Merger and the other
transactions contemplated in this Agreement and the Plan of Merger.
(d) No SBT Company is a party to, or subject to, or bound by, any
agreement or judgment, order, letter of understanding, writ, prohibition,
injunction, or decree of any court or other governmental body of competent
jurisdiction, or any Law which would prevent the execution and delivery of this
Agreement and the Plan of Merger by SBT, or the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding is
pending against SBT Company in which the validity of this Agreement, the
transactions contemplated hereby or any other action which has been taken by
any other of such Parties in connection herewith or in connection with the
transaction contemplated hereby is at issue.
4.3 CAPITAL STOCK.
(a) The authorized capital stock of SBT consists of (i)
50,000 shares of SBT Common Stock, Twenty Dollars ($20.00) par value, of which
13,569 shares are issued and outstanding as of the date of this Agreement, and
not more than 13,569 shares will be issued and outstanding at the Effective
Time, and (ii) zero (0) shares of preferred stock 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 SBT are duly and validly issued and outstanding and are fully
paid and nonassessable under the General Corporation Law of the State of
Delaware and SBT's Charter. None of the outstanding shares of capital stock of
SBT has been issued in violation of any preemptive rights of the current or
past shareholders of SBT.
(b) Except as set forth in Section 4.3(a) of this
Agreement, or as provided in the Stock Option Agreement, as of the date of this
Agreement there are no options, Rights, warrants, scrip or similar rights of
any nature, including stock option, stock appreciation or similar rights,
issued and outstanding by SBT or any SBT Company to purchase shares of SBT
Common Stock, any other capital stock of SBT, or any other securities or
instruments of any nature which are convertible into or exchangeable for, or
which derive their value, in whole or in part from, shares of SBT Common Stock
or any other capital stock of SBT or any SBT Company. Therefore, at the
Effective Time there will be no issued and outstanding options, securities,
Rights or instruments of any nature whatsoever to purchase or otherwise acquire
shares of SBT Common Stock or any other capital stock of SBT or any SBT
Company, or which derive their value, in whole or in part from SBT Common Stock
or any other capital stock of any SBT Company.
4.4 SBT SUBSIDIARIES. SBT has disclosed in Section 4.4 of the SBT
Disclosure Memorandum all of the SBT Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which the
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 SBT Subsidiaries that are general or limited partnerships or
other non-corporate entities, including limited liability companies
(identifying the Law under which such entity is organized, each jurisdiction in
which the character of its Assets or the nature or conduct of its business
requires it to be qualified and/or licensed to business, and the amount and
nature of the ownership interest therein of all SBT Companies). SBT or one of
its wholly owned Subsidiaries owns all of the issued and outstanding shares of
capital stock (or other equity interests) of each SBT Subsidiary. No capital
stock (or other equity interest) of any SBT Subsidiary is or may become
required to be issued (other than to another SBT Company) by reason of any
Rights, and there are no Contracts by which any SBT Subsidiary is bound to
issue (other than to another SBT Company) additional shares of its capital
stock (or other equity interests) or Rights or by which any SBT Company is or
may be bound to transfer
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any shares of the capital stock (or other equity interests) of any SBT
Subsidiary (other than to another SBT Company). There are no Contracts
relating to the rights of any SBT Company to vote or to dispose of any shares
of the capital stock (or other equity interests) of any SBT Subsidiary. All of
the shares of capital stock (or other equity interests) of each SBT Subsidiary
held by a SBT 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 SBT Company free and clear of
any Lien. Each SBT 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 SBT 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 SBT. The only SBT Subsidiary that is a depository institution is SBT
Bank Subsidiary. SBT Bank Subsidiary is an "insured institution" as defined in
the Federal Deposit Insurance Act and applicable regulations thereunder, and
the Deposits in which are insured by the Bank Insurance Fund. The minute book
and other organizational documents and Records for each SBT 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.
4.5 SBT FINANCIAL STATEMENTS.
(a) SBT FINANCIAL STATEMENTS. SBT has delivered to UPC
(or will deliver, when available, with respect to periods ended after the date
of this Agreement) true, correct and complete copies of (i) the consolidated
statements of financial position (including related notes and schedules, if
any) of SBT as of September 30, 1996, and as of December 31, 1995, and December
31, 1994, and the related statements of operations, stockholders' equity, and
cash flows (including related notes and schedules, if any) for the nine months
ended September 30, 1996, and for each of the three fiscal years ended
December 31, 1995, 1994, and 1993, (ii) the consolidated statements of
financial position of SBT (including related notes and schedules, if any) and
related statements of operations, stockholders' equity, and cash flows
(including related notes and schedules, if any) with respect to any period
ending subsequent to September 30, 1996, and prior to the Closing Date, and
(iii) all Call Reports, including any amendments thereto, filed with any
Regulatory Authorities by each of SBT's Bank Subsidiaries for the years ended
December 31, 1995, 1994, 1993 and 1992, together with any correspondence with
the SEC or with any other Regulatory Authorities concerning any of the
aforesaid financial statements and Reports (the "SBT Financial Statements").
Such SBT Financial Statements (i) were (or will be) prepared from the Records
of SBT and/or each SBT Subsidiary; (ii) were (or will be) prepared in
accordance with GAAP (or, where applicable, regulatory accounting principles)
consistently applied; (iii) accurately present (or, when prepared, will
present) SBT's and each SBT Subsidiary's financial condition and the results of
its operations, changes in stockholders' equity and cash flows at the relevant
dates thereof and for the periods covered thereby; (iv) do contain or reflect
(or, when prepared, will contain and reflect) all necessary adjustments and
accruals for an accurate presentation of SBT's and each SBT Subsidiary's
financial condition and the results of SBT's and each SBT Subsidiary's
operations and cash flows for the periods covered by such financial statements;
(v) do contain and reflect (or, when prepared, will contain and reflect)
adequate provisions or Allowances for loan losses, for ORE reserves and for all
reasonably anticipatable Liabilities and Taxes, with respect to the periods
then ended; and (vi) do contain and reflect (or, when prepared, will contain
and reflect) adequate provisions for all reasonably anticipated liabilities for
Post Retirement Benefits Other Than Pensions ("OPEB") pursuant to SFAS Nos. 106
and 112.
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4.6 ABSENCE OF UNDISCLOSED LIABILITIES. No SBT Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on SBT, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of SBT as of
September 30, 1996, and December 31, 1995, included in the SBT Financial
Statements or reflected in the notes or schedules, if any, thereto, and
delivered with the SBT Disclosure Memorandum prior to the date of this
Agreement. No SBT Company has incurred or paid any Liability since December
31, 1995 except for such Liabilities incurred or paid 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
SBT.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as described in
Section 4.7 of the SBT Disclosure Memorandum, since the Balance Sheet Date
there has not been:
(a) any material transaction by any SBT Company which was
not undertaken in the ordinary course of business and in conformity with past
practice.
(b) any loss of a key employee or any damage, destruction
or loss, whether or not covered by insurance, which has had or which may be
reasonably expected to have in a Material Adverse Effect on any SBT Company.
(c) any acquisition or disposition by any SBT Company of
any Asset having a fair market value, singularly or in the aggregate for each
SBT Company, in an amount greater than Fifty Thousand Dollars ($50,000), except
in the ordinary course of business and in conformity with past practice.
(d) any mortgage, pledge or subjection to Lien, of any
kind on any of the Assets of any SBT Company, except to secure extensions of
credit in the ordinary course of business and in conformity with past practice.
(e) any amendment, modification or termination of any
Contract relating to any SBT Company or to which any SBT Company is a party
which would or may be reasonably expected to have a Material Adverse Effect on
SBT.
(f) any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee or
agent of any SBT Company, or any bonus payment or similar arrangement made to
or with any of such officers, directors, employees or agents, other than
routine increases made in the ordinary course of business not exceeding the
greater of ten percent (10%) per annum or $5,000 for any of them individually.
(g) any incurring of, assumption of, or taking of, by any
SBT Company, any Asset subject to any Liability, except for Liabilities
incurred or assumed or Assets taken subsequent to the Balance Sheet Date in the
ordinary course of business and in conformity with past practice.
(h) any material alteration in the manner of keeping the
books, accounts or Records of any SBT Company, or in the accounting policies or
practices therein reflected.
(i) any release or discharge (or partial release or
discharge) of any obligation or Liability of any Person related to or arising
out of any loan made by any SBT Company, except in the ordinary course of
business and in conformity with past practice.
4.8 TAX MATTERS.
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(a) All Tax Returns required to be filed by or on behalf
of any of the SBT 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, 1995, and on or before the date of the most recent fiscal
year end immediately preceding the Effective Time, and 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 fully reserved against in the SBT 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 SBT Companies.
(b) None of the SBT Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the SBT Companies for the period or periods through and including
the date of the respective SBT Financial Statements has been made and is
reflected on such SBT Financial Statements.
(d) Deferred Taxes of the SBT Companies have been
provided for in accordance with GAAP.
(e) Each of the SBT 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 IRC.
(f) Except as set forth in Section 4.8(f) of the SBT
Disclosure Memorandum, none of the SBT 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 28OG or 162(m) of the Internal Revenue Code.
(g) There has not been an ownership change, as defined in
the IRC Section 382(g), of any of the SBT 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, 1995.
(h) Except as set forth in Section 4.8(h) of the SBT
Disclosure Memorandum, none of the SBT Companies is a party to any tax
allocation or sharing agreement and none of the SBT 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 SBT) has any Liability for taxes of
any Person (other than SBT 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.
4.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance
for possible loan or credit losses, including any allowances or reserves for
losses on ORE and other collateral taken in satisfaction, or partial
satisfaction of a debt previously contracted, (the "Allowance") shown on the
consolidated balance sheets of SBT included in the most recent SBT Financial
Statements dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of SBT included in the SBT 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 SBT
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known and reasonably anticipated losses
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relating to or inherent in the loan and lease portfolios (including accrued
interest receivables and ORE reserves) of the SBT Companies and other
extensions of credit (including letters of credit and commitments to make loans
or extend credit) by the SBT Companies as of the dates thereof. Except as
described in Section 4.9 of the SBT Disclosure Memorandum (by loan type, loan
number, classification and outstanding balance), no SBT Company has any Loan or
other extension of credit which has been (or should have been in management's
reasonable opinion) classified as "Other Assets Especially Mentioned,"
"Substandard," "Doubtful" or "Loss", or similar classifications, that were not
classified in any SBT Company's most recent report of examination, a copy of
which has been made available to UPC for review prior to the date of this
Agreement. Section 4.9 of the SBT Disclosure Memorandum also lists all Loans
or extensions of credit which are included on SBT's or any SBT Company's "watch
list." The net book value of any SBT Company's assets acquired through
foreclosure in satisfaction of problem loans ("ORE") are carried on the balance
sheet of the SBT Financial Statements at fair value at the time of acquisition
less estimated selling costs which approximates the net realizable value of the
ORE in accordance with the American Institute of Certified Public Accountants'
Statement of Position 92-3.
4.10 ASSETS. Except as disclosed or reserved against in the SBT
Financial Statements made available prior to the date of this Agreement, the
SBT Companies have good and marketable title, free and clear of all Liens, to
all of their respective Assets. All tangible Assets used in the businesses of
the SBT Companies are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business consistent with SBT's past
practices. All Assets which are material to SBT's business on a consolidated
basis, held under leases or subleases by any of the SBT Companies, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceedings may be brought), and each
such Contract is in full force and effect. The SBT Companies currently
maintain insurance similar in amounts, scope, and coverage to that maintained
by other peer banking organizations. None of the SBT Companies has received
notice from any insurance carrier that (i) such insurance would 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.
Except as set forth in Section 4.10 of the SBT Disclosure Memorandum there are
presently no claims pending under any such policies of insurance and no notices
have been given by any SBT Company under such policies.
4.11 INTELLECTUAL PROPERTY. All of the Intellectual Property
rights of the SBT 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 SBT, there currently are not, any
Defaults thereunder by any SBT Company. A SBT 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 SBT Companies or, to the Knowledge of
SBT, their respective predecessors, has misused the Intellectual Property
rights of others and none of the Intellectual Property rights as used in the
business conducted by any such SBT Company infringes upon or otherwise violates
the rights of any Person, nor has any Person asserted a claim of such
infringement. Except as disclosed in Section 4.11 of the SBT Disclosure
Memorandum, no SBT Company is obligated to pay any royalties to any Person with
respect to any such Intellectual Property. Each SBT 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 SBT Company is
party to any Contract which requires such officer, director or employee to
assign any interest in any Intellectual Property or keep confidential any trade
secrets, proprietary data, customer information, or other business information
or except as disclosed in Section 4.11 of the SBT Disclosure Memorandum, which
restricts or prohibits such officer, director, or employee from engaging in
activities competitive with any Person, including any SBT Company.
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4.12 ENVIRONMENTAL MATTERS. Except as set forth in Section 4.12 of
the SBT Disclosure Memorandum:
(a) To the Knowledge of SBT, each SBT Company, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with an Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on SBT.
(b) To the Knowledge of SBT, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which any SBT Company or any of its Operating Properties or
Participation Facilities (or SBT 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 SBT 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 SBT, nor is there any reasonable basis for any Litigation of
a type described in this sentence.
(c) During the period of (i) any SBT Company's ownership
or operation of any of their respective current properties, (ii) any SBT
Company's participation in the management of any Participation Facility, or
(iii) any SBT Company's holding of a security interest in an Operating
Property, to the Knowledge of SBT, 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 SBT. Prior to the period of
(i) any SBT Company's ownership or operation of any of their respective current
properties, (ii) any SBT Company's participation in the management of any
Participation Facility, or (iii) any SBT Company's holding of a security
interest in an Operating Property, to the Knowledge of SBT, 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
SBT.
4.13 COMPLIANCE WITH LAWS. SBT is duly registered as a bank
holding company under the BHC Act. Each SBT Company has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Except as set forth in Section 4.13 of the SBT Disclosure Memorandum,
none of the SBT Companies:
(a) is in violation of any 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 SBT Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, (ii) threatening to revoke any
Permits, or (iii) requiring any SBT Company to enter into or consent to the
issuance of a cease and desist order, formal agreement, directive, 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.
4.14 LABOR RELATIONS. No SBT Company is the subject of any
Litigation asserting that it or any other SBT Company has committed an unfair
labor practice (within the meaning of the National Labor
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Relations Act or comparable state law) or seeking to compel it or any other SBT
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 SBT
Company, pending or threatened, or to the Knowledge of SBT, is there any
activity involving any SBT Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
4.15 EMPLOYEE BENEFIT PLANS.
(a) SBT has disclosed in Section 4.15(a) of the SBT
Disclosure Memorandum, and has delivered or made available to UPC prior to the
date 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 SBT 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 "SBT
Benefit Plans"). Any of the SBT 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 "SBT ERISA Plan." Each SBT 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 "SBT Pension Plan." No SBT Pension Plan is or has been
a multiemployer plan within the meaning of Section 3(37) of ERISA.
(b) All SBT 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 SBT. Each SBT
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 SBT is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No SBT
Company has engaged in a transaction with respect to any SBT Benefit Plan that,
assuming the taxable period of such on expired as of the date hereof, would
subject any SBT Company to a Tax imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.
(c) No SBT 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 evaluation, there has been (i) no material change in the
financial position of any SBT Pension Plan, (ii) no change in the actuarial
assumptions with respect to any SBT Pension Plan, and (iii) no increase in
benefits under any SBT 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 SBT or materially adversely affect the
funding status of any such plan. Neither any SBT Pension Plan nor any
"single-employer plan," within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any SBT Company, or the single-employer
plan of any entity which is considered one employer with SBT 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 SBT Company has provided, or is required to provide,
security to a SBT Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Internal Revenue Code.
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(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 SBT Company with respect to any ongoing, frozen,
or terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. No SBT 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 SBT Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) Except as disclosed in Section 4.15(e) of the SBT
Disclosure Memorandum, no SBT Company has any Liability for retiree health and
life benefits under any of the SBT Benefit Plans and there are no restrictions
on the rights of such SBT Company to amend or terminate any such retiree health
or benefit Plan without incurring Liability thereunder.
(f) Except as disclosed in Section 4.15(f) of the SBT
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 SBT Company from
any SBT Company under any SBT Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any SBT Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees
and former employees of any SBT 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 SBT Financial Statements to the extent
required by and in accordance with GAAP.
4.16 MATERIAL CONTRACTS. Except as disclosed in Section 4.16 of
the SBT Disclosure Memorandum, none of the SBT 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, (ii) any Contract relating to
the borrowing of money by any SBT Company or the guarantee by any SBT 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 SBT 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 SBT 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 SBT 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 SBT SEC Report (whether or not SBT is
subject to the filing requirements of the SEC) filed (or which would have been
filed if SBT were subject to the SEC reporting requirements) by SBT with the
SEC prior to the date of this Agreement (together with all Contracts referred
to in Sections 4.10 and 4.15(a) of this Agreement, (the "SBT Contracts"). With
respect to each SBT Contract: (i) the Contract is in full force and effect;
(ii) no SBT Company is in Default thereunder, (iii) no SBT 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 SBT, in Default in any
respect or has repudiated or waived any material provision thereunder. Except
as set forth in Section 4.16 of the SBT Disclosure
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Memorandum all of the indebtedness of any SBT Company for money borrowed is
prepayable at any time by such SBT Company without penalty or premium.
4.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of SBT, 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 SBT 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 SBT, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any SBT Company.
Section 4.17 of the SBT Disclosure Memorandum includes a report of all material
Litigation as of the date of this Agreement to which any SBT Company is a party
and which names a SBT Company as a defendant or cross-defendant.
4.18 REPORTS. Since January 1, 1991, or the date of organization
if later, each SBT 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, if applicable, including 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 SBT). 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 light of the circumstances under which they were made, not
misleading.
4.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any SBT Company 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 SBT
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 SBT
Company or any Affiliate thereof for inclusion in the Proxy Statement to be
mailed to SBT's shareholders in connection with the Shareholders' Meeting, and
any other documents to be filed by a SBT 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
SBT 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 SBT 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.
4.20 ACCOUNTING, TAX, AND REGULATORY MATTERS. No SBT Company or
any Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance relating to SBT that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-
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interests accounting treatment or as a reorganization within the meaning of
Section 368(a) of the IRC, or (ii) materially impede or delay receipt of any
Consents of Regulatory Authorities referred to in Section 8.1(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.
4.21 STATE TAKEOVER LAWS. Each SBT 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
262 of the General Corporation Law of the State of Delaware.
4.22 CHARTER PROVISIONS. Each SBT 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, Bylaws or other governing instruments
of any SBT 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 SBT Company that my be directly or indirectly
acquired or controlled by it.
4.23 CHARTER DOCUMENTS. SBT has previously provided UPC true and
correct copies of the Articles of Incorporation and Bylaws of SBT and the
Articles of Incorporation or Articles of Association or Articles of Agreement
and Bylaws of each SBT Company, as amended to date, and each are in full force
and effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UPC
Except as disclosed in the UPC Disclosure Memorandum, UPC hereby
represents and warrants to SBT as follows:
5.1 ORGANIZATION, STANDING, AND POWER. UPC and Merger Subsidiary
are both corporations duly organized, validly existing, and in good standing
under the Laws of the State of Tennessee, and each 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.
5.2 AUTHORITY: NO BREACH BY AGREEMENT.
(a) UPC and Merger Subsidiary each 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 Plan of
Merger (as to Merger Subsidiary) 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 and Merger Subsidiary including the approval of UPC in its capacity as the
sole shareholder of Merger Subsidiary. This Agreement represents a legal, valid,
and binding obligation of UPC, enforceable against UPC in accordance with its
terms (except in all cases as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar
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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, and Merger Subsidiary of the transactions
contemplated hereby, nor compliance by UPC and Merger Subsidiary with any of
the provisions hereof will (i) conflict with or result in a breach of any
provision of any UPC Company's Charter (or similar governing instrument) or
Bylaws, 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 8.1(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 the 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 and Merger Subsidiary of the Merger and the other
transactions contemplated in this Agreement.
5.3 CAPITAL STOCK. The authorized capital stock of UPC consists
of (i) 100,000,000 shares of UPC Common Stock, of which 63,476,721 shares are
issued and outstanding as of October 31, 1996, and (ii) 10,000,000 shares of
UPC Preferred Stock, of which no shares of UPC Series A Preferred Stock and
3,380,688 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 SBT
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 Code and the UPC Charter.
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 SBT 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 2.1(c) and 2.2 of this Agreement.
5.4 SEC FILINGS: FINANCIAL STATEMENTS.
(a) UPC has filed and made available to SBT 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, UPC Subsidiary 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
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regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of UPC
and its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount or effect.
5.5 ABSENCE OF UNDISCLOSED LIABILITIES. No UPC Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of UPC as of
September 30, 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 September 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 UPC or
(ii) in connection with the transactions contemplated by this Agreement.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1995, except as disclosed in the UPC Financial Statements delivered prior to
the date of this Agreement or contemplated by pending federal legislation
applicable to financial institutions generally, (i) there have been no events,
changes, or occurrences which have had, or are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC, and (ii)
the UPC Companies have not taken any action, or failed to take any action,
prior to the date of this Agreement, which action or failure, if taken after
the date of this Agreement, would represent or result in a material breach or
violation of any of the covenants and agreements of UPC provided in Article 6
of this Agreement.
5.7 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:
5.8 LEGAL PROCEEDINGS. There is no Litigation instituted
or pending, or, to the Knowledge of UPC, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against any UPC Company, or
against any Asset, interest, or right of any of them, that is reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on UPC.
5.9 REPORTS. Since January 1, 1996, UPC 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.
5.10 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 SBT pursuant to this
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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 SBT's Shareholders
in connection with the Shareholders' Meetings, 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
Joint Proxy Statement, when first mailed to the shareholders of SBT, 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' Meetings, 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' Meetings. 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.
5.11 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 or Merger Subsidiary 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 8.1(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 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 AFFIRMATIVE COVENANTS OF SBT. Unless the prior written
consent of UPC shall have been obtained, and except as otherwise expressly
contemplated herein, SBT shall, and shall cause each of its Subsidiaries to:
(i) operate its business only in the usual, regular, and ordinary course (which
shall include matters of the type set forth in Section 6.1 of the SBT
Disclosure Memorandum), (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 8.1(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 IRC or (b) materially adversely affect the ability of any Party
to perform its covenants and agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF SBT. Except as specifically permitted
by this Agreement from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, SBT 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:
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(a) amend the Charter, Bylaws, or other governing
instruments of any SBT Company, or
(b) incur any additional debt obligation or other
obligation for borrowed money (other than indebtedness of a SBT Company to
another SBT Company) in excess of an aggregate of $100,000 (for the SBT
Companies on a consolidated basis) except in the ordinary course of the
business of SBT Subsidiaries consistent with past practices (which shall
include, for SBT 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 SBT Company of any Lien or permit any such
Lien to exist (other than in connection with deposits, repurchase agreements,
bankers acceptances, "treasury tax and loan" accounts established in the
ordinary course of business, the satisfaction of legal requirements in the
exercise of trust powers, and Liens in effect as of the date hereof that are
disclosed in the SBT Disclosure Memorandum); or
(c) declare or pay any dividend or make any other
distribution in respect of SBT's capital stock, 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 SBT
Company; or
(d) except pursuant to this Agreement, or pursuant to the
terms thereof in existence on the date hereof, or pursuant to the Stock Option
Agreement, issue, sell, pledge, encumber, authorize the issuance of, enter into
any Contract to issue, sell, pledge, encumber, or authorize the issuance of or
otherwise permit to become outstanding, any additional shares of SBT Common
Stock or any other capital stock of any SBT 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 any stock equivalent
type rights; or
(e) adjust, split, combine or reclassify any capital
stock of any SBT Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of SBT Common Stock, or
sell, lease, mortgage or otherwise dispose of or otherwise encumber any shares
of capital stock of any SBT Subsidiary, or any Asset, other than in the
ordinary course of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or
U.S. Government agency securities, which in either case have maturities of
three years or less or Federal Home Loan Bank Stock, purchase any securities or
make any Material investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of any Assets, in any
Person other than a wholly owned SBT 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 SBT Company, except in accordance with past
practice disclosed in Section 6.2(g) of the SBT 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 6.2(g) of the SBT Disclosure Memorandum; and
enter into or amend any severance agreements with officers of any SBT Company;
grant any material increase in fees or other increases in compensation or other
benefits to directors of any SBT Company except in accordance with past
practice disclosed in Section 6.2(g) of the SBT Disclosure Memorandum; or
voluntarily accelerate the vesting of any stock
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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 SBT); or
(h) enter into or amend any employment Contract between
any SBT Company and any Person (unless such amendment is required by Law) that
the SBT Company does not have the unconditional right to terminate without
Liability (other than Liability for services already rendered), at any time on
or after the Effective Time; or
(i) adopt any new employee benefit plan of any SBT
Company or terminate or withdraw from, or make any material change in or to,
any existing employee benefit plans of any SBT Company other than any such
change that is required by Law or that, in the opinion of counsel is necessary
or advisable to maintain the tax qualified status of any such plan, or make any
distributions from such employee benefit plans, except as required by Law, the
terms of such plans or consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be
appropriate to conform to changes in Tax Laws or regulatory accounting
requirements or GAAP; or
(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of any SBT Company
for material money damages or restrictions upon the operations of any SBT
Company; or
(l) enter into, modify, amend, or terminate any material
Contract (excluding any loan Contract) or waive, release, compromise, or assign
any material rights or claims.
6.3 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 8.1(b) of
this Agreement or prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any Party to perform
its covenants and agreements under this Agreement, provided, that the
foregoing shall not prevent any UPC Company from acquiring any other Assets or
businesses or from discontinuing or disposing of any of its Assets or business
if such action is, in the judgment of UPC, desirable in the conduct of the
business of UPC and its Subsidiaries and would not, in the judgment of UPC,
likely delay the Effective Time to a date subsequent to the date set forth in
Section 9.1(e) of this Agreement.
6.4 ADVERSE CHANCES 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.
6.5 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
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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 or
any other Regulatory Authority pursuant to the Securities Laws, 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 or
other Regulatory Authorities pursuant to the Securities Laws will comply in all
material respects with the Securities Laws and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. Any financial
statements contained in any other reports to another Regulatory Authority shall
be prepared in accordance with Laws applicable to such reports.
6.6 CORPORATE REORGANIZATION. For a period of one year after the
Effective Time of the Merger, neither UPC or Merger Subsidiary shall take any
action to merge or consolidate SBT Bank Subsidiary with UPC or an Affiliate of
UPC. The covenants contained in this Section 6.6 may be waived by an
affirmative vote of the Board of Directors of SBT Bank Subsidiary at any time.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 REGISTRATION STATEMENT: PROXY STATEMENT: SHAREHOLDER
APPROVALS. 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. SBT shall
furnish all information concerning it and the holders of its capital stock as
UPC may reasonably request in connection with such action. SBT 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) UPC and SBT shall prepare and file with the SEC a Proxy Statement
and mail such Proxy Statement to the shareholders of SBT, (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 SBT shall recommend (subject to compliance with their fiduciary
duties as advised by counsel) to their shareholders the approval of the matters
submitted for approval, and (iv) the Board of Directors and officers of SBT
shall (subject to compliance with their fiduciary duties as advised by counsel)
use their reasonable efforts to obtain such shareholders' approvals.
7.2 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 SBT
Common Stock or SBT Stock 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.
7.3 APPLICATIONS. UPC shall prepare and file, and SBT 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 two
business days prior to filing UPC shall use its reasonable best efforts to
provide SBT 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
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Authorities in connection with the transactions contemplated hereby as soon as
practicable upon their becoming available.
7.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, UPC and SBT shall execute and file the Articles
of Merger with the Secretary of State of the State of Tennessee and the
Secretary of State of the State of Delaware, as applicable, in connection with
the Closing.
7.5 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 8 of this Agreement; provided, however, 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; provided, however, that nothing in this Section 7.5 shall be
construed to obligate UPC or Merger Subsidiary to take any action to meet any
condition required to obtain and Consent if UPC shall, in its sole discretion,
deem such condition to be unreasonable or to constitute a significant
impediment upon UPC's ability to carry on its business or acquisition programs
to require UPC to increase its capital ratios to amounts in excess of the
Federal Reserves minimum capital ratio guidelines which may from time to time
be in effect.
7.6 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) SBT shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons which are
considering an Acquisition Proposal with SBT to preserve the confidentiality of
the information relating to SBT provided to such Persons and their Affiliates
and Representatives.
7.7 PRESS RELEASES. Prior to the Effective Time, SBT 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 7.7
shall
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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.
7.8 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, no SBT Company nor any Affiliate thereof nor any
Representatives thereof retained by any SBT Company shall directly or
indirectly solicit or knowingly encourage any Acquisition Proposal by any
Person. Except to the extent necessary to comply with the fiduciary duties of
SBT's Board of Directors as advised by counsel, no SBT Company and no Affiliate
or Representative of SBT or any SBT Company shall furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, enter into or agree to enter into any Contract with respect to, any
Acquisition Proposal, but SBT 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. SBT shall promptly notify UPC orally and in writing in the event that
it receives any inquiry or proposal relating to any such transaction. SBT
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.
7.9 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.
7.10 STATE TAKEOVER LAWS. Each SBT 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.
7.11 CHARTER PROVISIONS. Each SBT 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, Bylaws, or other governing
instruments of any SBT 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 SBT Company that may be directly or
indirectly acquired or controlled by it.
7.12 AGREEMENT OF AFFILIATES. SBT has disclosed in Section 7.12 of
the SBT Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of SBT for purposes of Rule 145 under the 1933 Act. SBT 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 5, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of SBT 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 SBT have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. If the Merger will qualify for pooling-of-interests accounting
treatment, shares of UPC Common Stock issued to such affiliates of SBT in
exchange for shares of SBT Common Stock shall not be transferable until such
time as financial results covering at least 30 days of combined operations of
UPC and SBT 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
7.12 (and UPC shall be entitled to place
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restrictive legends upon certificates for shares of UPC Common Stock issued to
affiliates of SBT pursuant to this Agreement to enforce the provisions of this
Section 7.12). 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.
7.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, UPC shall provide to officers and employees of the SBT 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, but not vesting or benefit accrual
under any such UPC employee benefit plans, the service of the employees of the
SBT Companies prior to the Effective Time shall be treated as service with a
UPC Company participating in such employee benefit plan. Nothing herein shall
be deemed to have reduced, contracted, enlarged, undertaken, authorized,
approved or otherwise to have affected whatever contractual rights the officers
or employees of SBT may have under existing documentation other than as
expressly stated herein, and nothing herein shall be deemed to be an employment
contract, agreement or understanding, or offer of employment by UPC or any of
its direct or indirect Subsidiaries after the Effective Time. To the extent
permitted by applicable Law, following the Effective Date, all contributions to
the SBT Employee Stock Ownership Plan (the "SBT ESOP") shall cease, and
participants in the SBT ESOP who at that time continue to be employed by UPC
shall be entitled to participate in UPC's Employee Stock Ownership Plan (the
"UPC ESOP") to the same extent as other employees of UPC, and UPC shall take
such steps as are necessary to merge the SBT ESOP with and into the UPC ESOP
and shall obtain such regulatory determinations regarding the merger of the SBT
ESOP into the UPC ESOP as may be appropriate to ensure the qualified status of
such plans and related trust under the IRC. If it is determined by UPC that
the SBT ESOP can not be merged with and into the UPC ESOP, then the SBT ESOP
shall be terminated, and all vested benefits shall be distributed to
participants in accordance with applicable Law and the terms of the SBT ESOP.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 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
10.6 of this Agreement:
(a) SHAREHOLDER APPROVALS. The shareholders of SBT 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.
(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, 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.
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(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 8.1(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 the effectiveness thereof
shall have been initiated and be continuing, and all necessary approvals under
state securities Laws or the 1933 Act or 1934 Act relating to the issuance or
trading of the shares of UPC Common Stock issuable pursuant to the Merger shall
have been received.
(f) EXCHANGE LISTING. The shares of UPC Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(g) POOLING LETTERS. Each of the Parties shall have
received copies of the letters, dated as of the date of filing of the
Registration Statement with the SEC and as of the Effective Time, addressed to
UPC, from Price Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
(h) TAX MATTERS. Each Party shall have received a
written opinion of counsel from Wyatt, Tarrant & Combs in form reasonably
satisfactory to such Parties (the "Tax Opinion"), to the effect that (i) the
Merger would constitute a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code, (H) the exchange in the Merger of SBT Common
Stock for UPC Common Stock will not give rise to gain or loss to the
shareholders of SBT with respect to such exchange (except to the extent of any
cash received), and (ii) none of SBT 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 SBT 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 SBT and UPC reasonably
satisfactory in form and substance to such counsel.
8.2 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 10.6(a) of this
Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 8.2(a), the accuracy of the representations and warranties of SBT 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
SBT set forth in Section 4.3 of this Agreement shall be true and correct
(except for inaccuracies which are de minimus in amount). The representations
and warranties of SBT set forth in Sections 4.20, 4.21, and 4.22 of this
Agreement shall be true and correct in all material respects. There shall not
exist inaccuracies in the representations and warranties of SBT set forth in
this Agreement (including the representations and warranties set forth in
Sections 4.3, 4.20, 4.21, and 4.22)
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such that the aggregate effect of such inaccuracies has, or is reasonably
likely to have, a Material Adverse Effect on SBT, 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 SBT to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior
to the Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. SBT 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 8.2(a) and 8.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by SBT'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 hereby, all in such reasonable detail
as UPC and its counsel shall request.
(d) AFFILIATES AGREEMENTS. UPC shall have received from
each affiliate of SBT the affiliates letter referred to in Section 7.12 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) LEGAL OPINION. SBT shall have delivered to UPC an
opinion of counsel, dated as of the Closing Date, addressed to and in form and
substance satisfactory to UPC, to the effect that:
(i) SBT is a Delaware corporation duly organized,
validly existing, and in good standing under the laws of the State of Delaware.
(ii) This Agreement, including the Stock Option
Agreement, has been duly and validly authorized, executed and delivered on
behalf of SBT by a duly authorized officer or representative of SBT, and
(assuming this Agreement is a binding obligation of UPC) constitute a valid and
binding obligation of SBT enforceable in accordance with its terms, subject as
to enforceability to applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and subject to the application of equitable principles and judicial
discretion;
(iii) The execution, delivery and performance of
this Agreement, including the Stock Option 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 and shareholder action in respect thereof on the part of
SBT.
(f) MAINTENANCE OF CERTAIN COVENANTS, ETC. At the time
of Closing, (i) the total consolidated assets of SBT shall be not less than $95
million (ii) the total consolidated stockholders' equity of SBT shall have been
not less than $13 million at September 30, 1996, and shall have increased since
that date through earnings growth which shall have been declared as permitted
hereunder; (iii) the tangible equity capital of SBT shall be not less than its
reported level as of December 31, 1995, and shall have increased since that
time through earnings growth which shall have been declared as permitted
hereunder; (iv) SBT shall own, free and clear of any Liens, all of the
outstanding capital stock of SBT Bank Subsidiary; and (vi) from December 31,
1995, there shall have been no extraordinary sale of assets, nor any material
investment portfolio restructuring by any SBT Company. The financial criteria
and calculations set forth above shall be determined in accordance with GAAP
assuming that SBT and each other SBT Company
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shall have been operated consistently in the normal course of their respective
businesses; provided, however, that the effects of any balance sheet expansion
through abnormal, unusual, nonrecurring or out-of-the-ordinary borrowings or by
the realization of extraordinary or nonrecurring gains otherwise than in the
ordinary course of business or other income from the disposition of assets or
liabilities or through similar transactions shall be eliminated from the
calculations;
(g) NON-COMPETE AGREEMENTS. Each director of SBT and
each chairman of the board and each president or chief executive officer of
each SBT Bank Subsidiary shall have entered into a Non-Compete Agreement with
UPC, SBT and each SBT Bank Subsidiary substantially in the form of UPC's
standard form of non-compete agreement.
(h) EMPLOYMENT AGREEMENTS UPC shall have received
executed Employment Agreements from Richard L. Rankin as Chairman and Chief
Executive Officer and James E. Hanna, as President and Cashier.
8.3 CONDITIONS TO OBLIGATIONS OF SBT. The obligations of
SBT 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 SBT pursuant to Section 10.6(b)
of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 8.3(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 5.3 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 5.11 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 5.3 and 5.11) such
that the aggregate effect of such inaccuracies has, or is reasonably likely to
have, a Material Adverse Effect on UPC.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and
all of the agreements and covenants of UPC to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior
to the Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. UPC shall have delivered to SBT (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 8.3(a) and 8.3(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 SBT and its counsel shall request.
(d) LEGAL OPINION. UPC shall have delivered to SBT an
opinion of counsel, which may be in-house counsel of UPC, dated as of the
Closing Date, addressed to and in form and substance satisfactory to SBT, to
the effect that:
(i) UPC and Merger Subsidiary are Tennessee
corporations duly organized, validly existing, and in good standing under the
laws of the State of Tennessee;
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(ii) This Agreement and Plan of Merger has been
duly and validly authorized, executed and delivered on behalf of UPC and Merger
Subsidiary by a duly authorized officer or representative thereof, and
(assuming this Agreement is a binding obligation of UPC and Merger Subsidiary)
constitutes a valid and binding obligation of SBT enforceable in accordance
with its terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and subject to the application of
equitable principles and judicial discretion;
(iii) 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 and shareholder
action in respect thereof on the part of UPC and Merger Subsidiary.
(f) EMPLOYMENT AGREEMENTS. Richard L. Rankin as Chairman
and Chief Executive Officer, and James E. Hanna, as President and Cashier,
shall each been offered an Employment Agreement with UPC and/or Merger
Subsidiary substantially in the form of UPC's standard form of Employment
Agreement, a copy of which is annexed hereto as Exhibit 5, providing for a term
of three years from the Closing and such offer shall not have been withdrawn or
materially amended by UPC and/or Merger Subsidiary prior to Closing.
ARTICLE 9
TERMINATION
9.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of UPC or SBT, this Agreement and the Plan of Merger may be
terminated and the Merger abandoned at any time prior to the Effective Time, as
follows:
(a) By mutual consent of the Board of Directors of UPC
and the Board of Directors of SBT, 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 8.2(a) of this Agreement in the case of SBT and Section 8.3(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 consummate the Merger under the applicable
standard set forth in Section 8.2(a) of this Agreement in the case of SBT and
Section 8.3(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 8.2(a) of this Agreement in the case of SBT and Section 8.3(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 shall have been denied by final nonappealable action of such
Regulatory Authority or if any action taken by such Regulatory Authority is
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not appealed within the time limit for appeal or (ii) the shareholders SBT fail
to vote their approval of this Agreement and the transactions contemplated
hereby as required by Delaware Law and SBT's Charter and Bylaws, and the rules
of the NYSE or National Association of Securities Dealers, if applicable, at
the Shareholders' Meeting where this Agreement and the Plan of Merger 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 October 1, 1997, if
the failure to consummate the transactions contemplated hereby on or before
such date is not caused by any willful breach of this Agreement by the Party
electing to terminate pursuant to this Section 9.1 (e); and further, if UPC
shall have filed all applications to obtain the necessary Consents of banking
Regulatory Authorities within sixty (60) days of the date hereof, and if the
Closing shall not have occurred because of a delay caused by a bank Regulatory
Authority in its review of the application before it, or by the SEC in its
review of the Registration Statement to be filed by UPC, then SBT shall, upon
UPC's written request, extend the October 31, 1997 date for a reasonable time,
in no event less than thirty (30) days in order for UPC to obtain all Consents
of bank Regulatory Authorities required and/or all Consents of the SEC and any
other securities Regulatory Authorities, and for the expiration of any
stipulated waiting periods; 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 8.2(a) of this Agreement in the case of SBT and Section 8.3(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 9.1(e) of this Agreement; or
(g) By UPC, if a "Purchase Event" as such term is defined
in the Stock Option Agreement, shall have occurred or by SBT, if UPC (or its
assignee) exercises the Stock Option Agreement pursuant to Section 3 thereof or
exercises its repurchase rights pursuant to Section 8 thereof; or
9.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 of this Agreement, this
Agreement and the Plan of Merger shall become void and have no effect, except
that (i) the provisions of this Section 9.2 and Article 10 and Section 7.6(b)
of this Agreement shall survive any such termination and abandonment, (ii) a
termination pursuant to Sections 9.1(b), 9.1(c), 9.1(f) or 9.1(g) 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, and (iii) the Stock Option Agreement shall be
governed by its own terms.
9.3 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 9.3 and
Articles 1, 2, 3 and 10 and Sections 7.8, 7.12, and 7.13 of this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
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"ACQUISITION PROPOSAL" with respect to a Party shall
mean any tender offer or exchange offer or any proposal for a merger,
consolidation, acquisition of all of the stock or assets or earning power 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 or earning power of such Party or any of its Subsidiaries.
"AFFILIATE" of a Party means any Person, partnership,
corporation, association, limited liability company, business trust, or other
legal entity directly or indirectly controlling, controlled by or under common
Control, with that Party.
"AGREEMENT" shall mean this Agreement, the Plan of
Merger, including the Stock Option Agreement, and the Exhibits delivered
pursuant hereto and incorporated herein by reference.
"ALLOWANCES" shall mean the allowances for loan,
lease and other credit losses, including losses in connection with ORE, of any
Person.
"ARTICLES OF MERGER" shall mean the Articles of
Merger to be executed by UPC, Merger Subsidiary and SBT and filed with the
Secretary of State of the State of Tennessee and the Secretary of State of the
State of Delaware pursuant to Section 48-21-107 of the Tennessee Code and
Section 252 of the General Corporation Law of the State of Delaware, relating
to the merger of SBT with and into Merger Subsidiary as contemplated by this
Agreement and the Plan of Merger.
"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.
"BALANCE SHEET DATE" shall mean December 31, 1995.
"BHC ACT" shall mean the Bank Holding Company Act of
1956, as amended.
"BUSINESS DAY" shall mean any Monday, Tuesday,
Wednesday, Thursday or Friday that is not a federal or state holiday generally
recognized or observed by banks in the State of Tennessee and in the State of
Delaware.
"CONSIDERATION" shall mean the shares of UPC Common
Stock and the cash settlement of any remaining fractional share of UPC Common
Stock deliverable to the SBT Record Holders pursuant to Section 2.1(c) of this
Agreement.
"CLOSING" shall mean the consummation of the Merger.
"CLOSING DATE" shall mean the date on which the
Closing occurs.
"CONSENT" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or affirmation by any Person
pursuant to any Contract, Law, Order, or Permit.
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"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.
"CONTROL" shall have the meaning assigned to such
term in Section 2(a)(2) of the Bank Holding Company Act of 1956, as amended.
"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 or 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.
"DEPOSITS" shall mean all deposits (including, but
not limited to, certificates of deposit, savings accounts, NOW accounts and
checking accounts) of the SBT Bank Subsidiary and other deposit-taking
Affiliates.
"EFFECTIVE DATE" shall mean that date on which the
Effective Time of the Merger shall have occurred.
"EFFECTIVE TIME" shall mean the date and time that
the Articles of Merger shall become effective with the Secretary of State of
the State of Tennessee and with the Secretary of State of the State of
Delaware.
"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 any 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.
"EXCHANGE AGENT" shall mean Union Planters National
Bank, Memphis, Tennessee, a wholly-owned subsidiary of UPC, acting through its
Corporate Trust Department.
"EXCHANGE RATIO" shall mean the number of shares of
UPC Common Stock, and fractions thereof, to be exchanged for each share of SBT
Common Stock pursuant to Section 2.1(c) of this Agreement, subject to such
adjustments as may be provided in this Agreement and the Plan of Merger.
"EXHIBITS" 1 through 5, inclusive, shall mean the
Exhibits so marked, copies of which are attached to this Agreement. Such
Exhibits are hereby incorporated by reference herein
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and made a part hereof, and may be referred to in this Agreement and any other
related instrument or document without being attached hereto or thereto.
"FDIC" shall mean the Federal Deposit Insurance
Corporation.
"FEDERAL RESERVE" shall mean the Board of Governors
of the Federal Reserve System and shall include the Federal Reserve Bank of St.
Louis when acting under delegated authority.
"GAAP" shall mean generally accepted accounting
principles as in effect from time to time, consistently applied.
"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).
"HSR ACT" shall mean Section 7A of the Clayton Act,
as added by Title Ill 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.
"IRC" 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, Chief Executive Officer,
President, Chief Administrative Officer, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer or General Counsel of such Person, or
such other officer of such Person, regardless of title, charged with or
responsible for the oversight of a particular area, department or function to
which the subject matter relates.
"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.
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"LIEN" shall mean any conditional sale agreement,
default of title, easement, encroachment, encumbrance, hypothecation,
infringement, lien, mortgage, pledge, reservation, restriction, security
interest, title retention, or other security arrangement, or any adverse right
or interest, charge, or claim of any nature whatsoever of, on, or with respect
to any property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) for depository institution Subsidiaries
of a Party, pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business.
"LITIGATION" shall mean any action, arbitration,
cause of action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any Person
alleging potential Liability or requesting information relating to or affecting
a Party, its business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include regular,
periodic routine examinations of depository institutions and their Affiliates
by Regulatory Authorities.
"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.
"MERGER" shall mean the merger of SBT with and into
Merger Subsidiary, as described in Section 1.1 of this Agreement.
"NYSE" shall mean the New York Stock Exchange, or its
successor, upon which shares of the UPC Common Stock are listed for trading.
"1933 ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"1934 ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"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.
"ORE" shall mean real estate and other property
acquired through foreclosure, deed in lieu of foreclosure or similar procedures.
"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.
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"PARTY" shall mean either UPC and Merger Sub, on the
one hand, or SBT, and "Parties" shall mean UPC, Merger Subsidiary and SBT.
"PENSION PLAN" shall mean any employee pension
benefit plan as such term is defined in Section 3(2) of ERISA which is
maintained by the referenced Party.
"PERMIT" shall mean any federal, state, local, and
foreign governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a party or
that is or may be binding upon or inure to the benefit of any Person or its
securities, Assets or business.
"PERSON" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any person
acting in a representative capacity.
"PLAN OF MERGER" shall mean the plan of merger
providing for the Merger, in substantially the form of Exhibit 1.
"PROXY STATEMENT" shall mean the proxy statement to
be used by SBT to solicit proxies with a view to securing the approval of the
SBT shareholders of this Agreement and the Plan of Merger.
"RECORDS" means all available records, minutes of
meetings of the Board of Directors, committees and shareholders of a Party;
original instruments and other documentation, pertaining to a Party or any of
its Subsidiaries' or assets (including plans and specifications relating to any
realty), Liabilities, Deposits, Contracts, capital stock, and loans; and all
other business and financial records which are necessary or customary for use
in the conduct of such Person or any of such person's Subsidiary businesses on
and after the Effective Time as it was conducted prior to the Effective Time.
"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 SBT 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
Federal Reserve, the Office of Thrift Supervision (including its predecessor,
the Federal Home Loan Bank Board), the Office of the Comptroller of the
Currency, the FDIC, all state regulatory agencies having jurisdiction over the
Parties and their respective Subsidiaries, the NYSE, the National Association
of Securities Dealers and the SEC, or any respective successor thereto.
"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 which derive their value in whole or in part from
shares of the capital
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stock of a Person, including stock appreciation rights and phantom stock, or by
which a Person is or may be bound to issue additional shares of its capital
stock or other Rights.
"SBT BANK SUBSIDIARY" shall mean Selmer Bank & Trust
Co.
"SBT COMMON STOCK" shall mean the common stock of
SBT, $20.00 par value per share.
"SBT COMPANY(IES)" shall mean SBT and all of its
Subsidiaries, whether direct or indirect.
"SBT DISCLOSURE MEMORANDUM" shall mean the written
information entitled "SBT Holding Company Disclosure Memorandum" delivered
prior to the date of this Agreement pursuant to Section 1.9 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.
"SBT EMPLOYEE PLANS" shall mean any pension plans,
profit sharing plans, deferred compensation plans, stock option plans,
cafeteria plans, and any other such or related benefit plans or arrangements
offered or funded by SBT or any SBT Subsidiary, to or for the benefit of the
officers, directors, employees, independent contractors or consultants of SBT
or any SBT Subsidiary.
"SBT RECORD HOLDERS" means those Persons who shall be
the holders of record of any of the issued and outstanding shares of SBT Common
Stock immediately prior to the Effective Time.
"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.
"SEC" shall mean the United States Securities and
Exchange Commission, or any successor thereto.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934
Act, the Investment Company Act of 1940, as amended, the Investment Advisors
Act of 1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of the SEC promulgated thereunder, as well as any similar
state securities laws and any similar rules and regulations promulgated by the
applicable federal or state bank Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the special meeting
of the shareholders of SBT to be held pursuant to Section 7.1 of this
Agreement, including any adjournment or adjournments thereof.
"STOCK OPTION AGREEMENT" shall mean the Stock Option
Agreement of even date herewith issued to UPC by SBT, a copy of which is
attached hereto as Exhibit 2 and incorporated herein by reference.
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"SUBSIDIARIES" shall mean all of those Persons of
which the entity in question owns or controls 5% or more of the outstanding
voting equity securities or equity interest, either directly or through an
unbroken chain of entities as to each of which 5% or more of the outstanding
equity securities or equity interest is owned directly or indirectly by its
parent; provided, however, that there shall not be included any Person acquired
through foreclosure or in satisfaction of a debt previously contracted in good
faith, any such entity that owns or operates an automatic teller machine
interchange network, or any such Person the equity securities or equity
interest of which are owned or controlled in a fiduciary capacity or through a
small business development corporation.
"SURVIVING CORPORATION" shall mean Union Planters
Community Bancorp, Inc., as the corporation resulting from and surviving the
consummation of the Merger as set forth in Section 1.1 of this Agreement.
"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
"TENNESSEE CODE" shall mean the Tennessee Code
Annotated, as amended.
"UPC" shall mean Union Planters Corporation, a
corporation chartered and existing under the laws of the State of Tennessee
which is registered both as a bank holding company and as a savings and loan
holding company and whose principal offices are located at 7130 Goodlett Farms
Parkway, Memphis, Shelby County, Tennessee 38018.
"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 pursuant to Section 1.9
(post-signing due diligence period) to SBT describing in reasonable detail the
matters contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"UPC FINANCIAL STATEMENTS" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if any) of
UPC as of September 30, 1996, and as of December 31, 1995, and 1994, and the
related statements of earnings, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) for the nine months ended
September 30, 1996, and for each of the three years ended December 31, 1995,
1994, and 1993, as filed by UPC in SEC Documents, (ii) the consolidated balance
sheets of UPC (including related notes and schedules, if any) and related
statements of earnings, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to September 30, 1996.
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"UPC MERGER SUBSIDIARY" shall mean Union Planters
Community Bancorp, Inc., a wholly-owned subsidiary of UPC.
"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.
(b) 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."
10.2 EXPENSES.
(a) Except as otherwise provided in this Section
10.2, each of the Parties shall bear and pay all direct costs and expenses
incur-red by it or on its behalf in connection with the ones contemplated
hereunder, including filing, registration and application fees, printing
fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that each of the Parties
shall bear and pay the filing fees payable in connection with the Registration
Statement and the Proxy Statement and printing costs incurred in connection
with the printing of the Registration Statement and the Proxy Statement based
on the relative Asset sizes of the Parties at December 31, 1995.
(b) Nothing contained in this Section 10.2 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.
10.3 BROKERS AND FINDERS. Except as identified and described in
Section 10.3 of the SBT Disclosure Memorandum as to SBT, 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
ones 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 SBT or UPC, each of SBT 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.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the other documents and instruments referred
to herein) 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.
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10.5 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 SBT Common
Stock, there shall be made no amendment that modifies in any material respect
the Consideration to be received by the SBT Record Holders.
10.6 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 SBT, to waive or extend the time for the compliance
or fulfillment by SBT 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, SBT, 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 SBT
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 SBT.
(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.
10.7 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; provided, however, UPC
and/or UPC Merger Subsidiary may assign all of their rights hereunder to any
other wholly-owned Subsidiary whether now existing or hereinafter acquired or
organized. 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.
10.8 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 prepaid, 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:
If to UPC/Merger Sub: Union Planters Corporation
Post Office Box 387 (for mailing)
Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (for deliveries)
Memphis, Tennessee 38018
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Fax: (901) 383-2877
Attn: Mr. Jackson W. Moore, President
Telephone (901) 580-6093
Catherine S. Stallings, Esquire,
General Counsel/Secretary
Telephone (901) 580-6028
If to SBT: SBT Bancshares, Inc.
Post Office Box 249 (for mailing)
Selmer, Tennessee 38375-0249
116 South Third Street
Selmer, Tennessee 38375-2114
Fax: (901) 645-6688
Attn: Mr. Richard L. Rankin, Chairman and
Chief Executive Officer
Telephone (901) 645-6187, Ext. 18
10.9 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.
10.10 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 document.
10.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
10.12 INTERPRETATION. 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.
10.13 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.
10.14 ATTORNEYS' FEES. If any Party hereto shall bring an action at
law or in equity to enforce its rights under this Reorganization Agreement
(including an action based upon a misrepresentation or the breach of any
warranty, covenant, agreement or obligation contained herein), the prevailing
Party in such action shall be entitled to recover from the other Party its
reasonable costs and expenses necessarily incurred in connection with such
action (including fees, disbursements and expenses of attorneys and costs of
investigation).
10.15 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
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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.
10.16 REMEDIES CUMULATIVE. All remedies provided in this Agreement,
by Law or otherwise, shall be cumulative and not alternative.
IN WITNESS WHEREOF, each of the Parties hereto has duly
executed and delivered this Agreement or has caused this Agreement to be
executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the date first written above.
SBT BANCSHARES, INC.
By: /s/ Richard L. Rankin
-----------------------------------
Richard L. Rankin
Its: Chairman and Chief Executive
Officer
ATTEST:
/s/ James E. Hanna
- -----------------------------------
James E. Hanna, Secretary
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
-----------------------------------
Jackson W. Moore
Its: President and Chief
Operating Officer
ATTEST:
/s/ Catherine C. Stallings
- -----------------------------------
Catherine C. Stallings, Secretary
UNION PLANTERS COMMUNITY HOLDING, INC.
By: /s/ Jackson W. Moore
-----------------------------------
Jackson W. Moore
Its: Chairman and President
ATTEST:
/s/ Lynn L. Lanigan
- -----------------------------------
Lynn L. Lanigan, Secretary
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PLAN OF MERGER
OF
SBT BANCSHARES, INC.
WITH AND INTO
UNION PLANTERS COMMUNITY BANCORP, INC.
Pursuant to this Plan of Merger ("Plan of Merger") dated November 26,
1996, SBT Bancshares, Inc. ("SBT"), a corporation organized and existing under
the laws of the State of Delaware, shall be merged with and into Union Planters
Community Bancorp, Inc. ("Merger Subsidiary"), a corporation organized and
existing under the laws of the State of Tennessee, and which is a wholly owned
subsidiary of Union Planters Corporation ("UPC"), a corporation organized and
existing under the laws of the State of Tennessee.
ARTICLE 1
TERMS OF MERGER
1.1 The Merger. Subject to the terms and conditions of the Merger
Agreement and this Plan of Merger, at the Effective Time, SBT shall be merged
with and into Merger Subsidiary in accordance with the provisions of Section
252 of General Corporation Law of the State of Delaware and with the effect
provided in Section 252 of General Corporation Law of the State of Delaware
(the "Merger"). Merger Subsidiary shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the Laws of the State of
Tennessee. The Merger shall be consummated pursuant to the terms of the Merger
Agreement and this Plan of Merger.
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 the
Union Planters Administrative Center, Union Planters Corporation Executive
Offices (Fourth Floor), 7130 Goodlett Farms Parkway, Memphis, Shelby County,
Tennessee 38018, or at such other place as the Parties, acting through their
chief executive officers or chief financial officers, may mutually agree.
1.3 Effective Time. The Merger and other transactions
contemplated by the Merger Agreement and this Plan of Merger shall become
effective on the date and at the time the Articles of Merger reflecting the
Merger shall become effective with the Secretary of State of the State of
Tennessee and the Secretary of State of the State of Delaware (the "Effective
Time").
1.4 Charter. The Charter of Merger Subsidiary in effect
immediately prior to the Effective Time shall be the Charter of the Surviving
Corporation until otherwise amended or repealed.
1.5 Bylaws. The Bylaws of Merger Subsidiary in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.
1.6 Name. The name of Merger Subsidiary shall remain unchanged
after the Effective Time, unless and until otherwise renamed.
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1.7 Directors and Officers. The directors and officers of Merger
Subsidiary in office immediately prior to the Effective Time, together with
such additional persons as may thereafter be elected or appointed, shall serve
as the directors and officers of the Surviving Corporation from and after the
EffectiveTime in accordance with the bylaws of the Surviving Corporation,
unless and until their successors shall have been elected or appointed and
shall have qualified or until they shall have been removed in the manner
provided therein.
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 Conversion, Cancellation and Exchange of Shares; Exchange
Ratio. At the Effective Time, by virtue of the Merger becoming effective and
without any action on the part of UPC, Merger Subsidiary, SBT, or the
shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(a) UPC Capital Stock. Each share of UPC Capital Stock,
including any associated UPC Rights, issued and outstanding immediately prior
to the Effective Time shall remain issued and outstanding from and after the
Effective Time.
(b) Merger Subsidiary Common Stock. Each share of Merger
Subsidiary common stock issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding after the Effective Time and
shall represent all of the issued and outstanding capital stock of Merger
Subsidiary as the Surviving Corporation.
(c) SBT Common Stock. Each share of SBT Common Stock
(excluding shares held by any SBT 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 and held by the SBT
Record Holders shall cease to represent any interest (equity, shareholder or
otherwise) in SBT and shall, [except for those shares held by any SBT Record
Holders who shall have properly perfected such Holders' dissenters' rights and
shall have maintained the perfected status of such dissenters' rights through
the Effective Time ("SBT Dissenting Shareholders"), whose rights shall be
governed by the provisions of Section 262 of General Corporation Law of the
State of Delaware, automatically be converted exclusively into, and constitute
only the right of each such SBT Record Holder to receive in exchange for such
Holder's shares of SBT Common Stock, the Consideration to which the SBT Record
Holder is entitled as provided in this Section 2.1(c).
(1) The Exchange Ratio. Subject to any
adjustments which may be required by an event described in Subsection 2.1(c)(3)
below, the number of shares of UPC Common Stock to be exchanged for each share
of SBT Common Stock which shall be issued and outstanding immediately prior to
the Effective Time shall be based on an exchange ratio (the "Exchange Ratio")
of 45.12 shares of UPC Common Stock for each share of SBT Common Stock. The
Exchange Ratio is based upon there being no more than an aggregate of 13,569
shares of SBT Common Stock validly issued and outstanding immediately prior to
the Effective Time (which for purposes of the Exchange Ratio shall be
determined by counting all unexercised SBT Stock Options and any other Rights
issued and outstanding immediately prior to the Effective Time, if any, as if
they had been fully exercised prior to the Effective Time). Therefore,
assuming all SBT Stock Options and Rights, if any, had been exercised prior to
the Effective Time, the maximum aggregate number of shares of UPC Common Stock
which UPC would be required to issue in exchange for all outstanding shares of
SBT Common Stock, based on the Exchange Ratio, would be 612,233 shares of UPC
Common Stock. SBT Common Stock held by any SBT Company, other than in a
fiduciary capacity or as a result of debts previously contracted, shall not be
considered as outstanding immediately prior to the Effective Time for purposes
of the Exchange Ratio. No fractional shares of UPC
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Common Stock shall be issued in the Merger and if, after aggregating all of the
whole and fractional shares of UPC Common Stock to which a SBT Record Holder
shall be entitled based upon the Exchange Ratio, there should be a fractional
share of UPC Common Stock remaining, such fractional share shall be settled by
a cash payment therefor pursuant to Article 3 of this Plan of Merger, which
cash settlement shall be based upon the Current Market Price Per Share (as
defined below) of one (1) full share of UPC Common Stock.
(2) Definition of "Current Market Price Per
Share." The "Current Market Price Per Share" shall be the closing price per
share of the UPC Common Stock on the NYSE Composite Transaction List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day prior to the
Effective Date.
(3) Effect of Stock Splits, Reverse Stock Splits,
Stock Dividends and Similar Changes in the Capital Stock or Accounts of SBT.
Should SBT effect any stock splits, reverse stock splits, stock dividends or
similar changes in its respective capital accounts subsequent to the date of
this Agreement but prior to the Effective Time, or should there be more than
13,569 shares of SBT Common Stock outstanding immediately prior to the
Effective Time, determined consistent with Section 2.1(c)(1) above, the
Exchange Ratio may, in UPC's sole discretion if such change in the capital
accounts constitutes a breach of any of SBT's representations, warranties or
covenants, be adjusted in such a manner as the Board of Directors of UPC shall
deem in good faith to be fair and reasonable in order to give effect to such
changes. Notwithstanding the foregoing, nothing in this subparagraph (3) shall
be deemed to be a waiver of the inaccuracy of any representation or warranty or
breach of any covenant by SBT set forth herein.
(d) Shares Held by SBT or UPC. Each of the shares of SBT
Common Stock held by any SBT 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 EffectiveTime and no Consideration shall
be issued in exchange therefor.
(e) Dissenters' Rights of SBT Shareholders. Any SBT
Record Holder of shares of SBT Common Stock who shall comply strictly with the
provisions of Section 262 of General Corporation Law of the State of Delaware
("SBT Dissenting Shareholders"), shall be entitled to dissent from the Merger
and to seek those appraisal remedies afforded by the General Corporation Law of
the State of Delaware.
(f) 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 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.
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures. Promptly after the Effective Time, UPC
and SBT shall cause the Exchange Agent to mail to the SBT Record Holders
appropriate transmittal materials (which shall specify that delivery shall be
effected, and risk of loss and title to the certificates theretofore
representing shares of SBT 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 EffectiveTime, each SBT Record Holder of SBT Common Stock (other than
shares to be canceled pursuant to Section 2.1(d) of this Plan of Merger) issued
and outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall
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promptly upon surrender thereof receive in exchange therefor the Consideration
provided in Section 2.1(c) of this Plan of Merger, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 3.2 of this Plan of Merger. To the
extent required by Section 2.1(c) of this Plan of Merger, each SBT Record
Holder also shall receive, upon surrender of the certificate or certificates
representing his or her shares of SBT Common Stock outstanding immediately
prior to the Effective Time, 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 SBT Record
Holder is entitled as a result of the Merger until such SBT Record Holder
surrenders such holder's certificate or certificates representing the shares of
SBT Common Stock for exchange as provided in this Section 3.1. The certificate
or certificates of SBT 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 SBT
Record Holder 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 SBT shall constitute ratification of the
appointment of the Exchange Agent.
3.2 Rights of Former SBT Record Holders. At the Effective Time,
the stock transfer books of SBT shall be closed as to holders of SBT Common
Stock outstanding immediately prior to the Effective Time, and no transfer of
SBT Common Stock by any SBT Record Holder shall thereafter be made or
recognized. Until surrendered for exchange in accordance with the provisions
of Section 3.1 of this Plan of Merger, each certificate theretofore
representing shares of SBT Common Stock (other than shares to be canceled
pursuant to Section 2.1(d) of this Plan of Merger) shall from and after the
Effective Time represent for all purposes only the right to receive the
Consideration provided in Section 2.1 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 SBT in respect of such
shares of SBT 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 a
SBT Record Holder until such SBT Record Holder surrenders his or her
certificate or certificates evidencing SBT Common Stock for exchange as
provided in Section 3.1 of this Plan of Merger. However, upon surrender of
such SBT Common Stock certificate, both the UPC Common Stock certificate
(together with all such undelivered dividends or other distributions, without
interest) and any undelivered dividends and cash payments payable hereunder
(without interest), shall be delivered and paid with respect to each share
represented by such certificate.
ARTICLE 4
MISCELLANEOUS
4.1 Conditions Precedent. Consummation of the Merger by Merger
Subsidiary shall be conditioned on the satisfaction of or waiver by UPC of the
conditions precedent to the Merger set forth in Sections 8.1 and 8.2 of the
Merger Agreement. Consummation of the Merger by SBT shall be conditioned on
the satisfaction of, or waiver by SBT of, of the conditions precedent to the
Merger set forth in Sections 8.1 and 8.3 of the Merger Agreement.
4.2 Termination. This Plan of Merger may be terminated at any
time prior to the Effective Time by the Parties hereto as provided in Article 9
of the Merger Agreement.
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4.3 Amendments. To the extent permitted by Law, this Plan of
Merger may be amended by a subsequent writing signed by each of the Parties
upon the approval of the Boards of Directors of each of the Parties, whether
before or after shareholder approval of the Merger Agreement and this Plan of
Merger has been obtained; provided, that after any such approval by the holders
of SBT Common Stock, there shall be made no amendment that modifies in any
material respect the Consideration to be received by the SBT Record Holders.
4.4 Assignment. Except as expressly contemplated hereby, neither
this Plan of Merger nor the Merger Agreement, nor any of the rights, interests,
or obligations hereunder or thereunder 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, the Merger Agreement and
this Plan of Merger will be binding upon, inure to the benefit of and be
enforceable by the Parties and their respective successors and assigns.
4.5 Governing Law. This Plan of Merger shall be governed by and
construed in accordance with the Laws of the State of Tennessee, without regard
to any applicable conflicts of Laws.
4.6 Counterparts. This Plan of Merger 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 document.
4.7 Captions. The captions contained in this Plan of Merger are
for reference purposes only and are not part of this Plan of Merger.
4.8 Definitions. Except as otherwise specifically provided
herein, capitalized terms used herein have the meanings set forth in the Merger
Agreement.
IN WITNESS WHEREOF, each of the Parties hereto has duly
executed and delivered this Plan of Merger or has caused this Plan of Merger to
be executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the date first written above.
SBT BANCSHARES, INC.
By: /s/ Richard L. Rankin
-----------------------------------
Richard L. Rankin
Its: Chairman and Chief
Executive Officer:
ATTEST:
/s/ James E. Hanna
- -----------------------------------
James E. Hanna, Secretary
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
-----------------------------------
Jackson W. Moore
Its: President and Chief
Operating Officer
ATTEST:
/s/ Catherine C. Stallings
- -----------------------------------
Catherine C. Stallings
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/s/ Catherine C. Stallings
- -----------------------------------
Catherine C. Stallings, Secretary
UNION PLANTERS HOLDING CORPORATION
By: /s/ Jackson W. Moore
-----------------------------------
Jackson W. Moore
Its: President and Chief
Operating Officer
ATTEST:
/s/ Lynn L. Lanigan
- -----------------------------------
Lynn L. Lanigan, Secretary
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APPENDIX B
Stock Option Agreement between SBT Bancshares, Inc and Union Planters
Corporation, dated as of November 26, 1996
<PAGE> 145
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of November 26, 1996 (the
"Agreement"), by and between SBT Bancshares, Inc., a Tennessee corporation
("SBT"), and Union Planters Corporation, a Tennessee corporation ("UPC").
WHEREAS, UPC and SBT have entered into that certain Agreement and Plan
of Merger, dated as of November 26, 1996 (the "Merger Agreement"), providing
for, among other things, the merger of SBT with and into Union Planters
Community Bancorp, Inc., a wholly-owned subsidiary of UPC, with Union Planters
Community Bancorp, Inc., the wholly-owned subsidiary of UPC as the surviving
entity; and
WHEREAS, as a condition and inducement to UPC's execution of the
Merger Agreement, UPC has required that SBT agree, and SBT has agreed, to grant
UPC the Option (as defined below);
NOW, THEREFORE, in consideration of the respective representation,
warranties, covenants and agreement set forth herein and in the Merger
Agreement, and intending to be legally bound hereby, SBT and UPC 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, SBT hereby grants to UPC an irrevocable option (the "Option") to
purchase up to 3183 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, par value $20.00 per share ("SBT Common
Stock"), of SBT at a purchase price per Option Share (the "Purchase Price")
equal to $957.00 {the book value per share of SBT Common Stock calculated in
accordance with generally accepted accounting principals as of the last day of
the month preceding the month in which this Agreement is executed}.
3. Exercise of Option. (a) Provided that (i) UPC shall not be in
material breach of the 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, UPC 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
UPC pursuant to Section 9.1(b) (but only if such termination was a result of a
breach by SBT)
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or Section 9.1(c) thereof or by UPC and SBT pursuant to Section 9.1(a) thereof
if UPC shall at that time have been entitled to terminate the Merger Agreement
pursuant to Section 9.1(b) (but only if such termination was a result of a
breach by SBT) or Section 9.1(c) thereof (each a "Default Termination"), (C) 12
months after the termination of the Merger Agreement by UPC pursuant to a
Default Termination, provided, however, that the 12-month time period provided
herein shall be extended for 30 days in the event a Purchase Event or a
Preliminary Purchase Event shall have occurred or is discerned to be reasonably
likely to occur within the last 30 days of such 12-month period, and (D) 12
months after termination of the Merger Agreement (other than pursuant to a
Default Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event; and provided, further, that any purchase of shares
upon exercise of the Option shall be subject to compliance with applicable law,
including, without limitation, the BHC Act. 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 UPC's prior written consent, SBT 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 UPC or any subsidiary of UPC) 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 SBT or any of its
Subsidiaries (other than transactions solely between SBT's
Subsidiaries), (B) except as permitted pursuant to Section 6.1 of the
Merger Agreement, the disposition, by sale, lease, exchange or
otherwise, of assets of SBT or any of its Subsidiaries representing in
either case 25% or more of the consolidated assets of SBT and its
Subsidiaries, or (C) the issuance, sale or disposition of (including
by way of merger, consolidation, share exchange or any similar
transaction) securities representing 25% or more of the voting power
of SBT or any of its Subsidiaries (any of the foregoing an
"Acquisition Transaction"); or
(ii) any person (other than UPC or any subsidiary of UPC)
shall have acquired beneficial ownership (as such term is defined in
Rule 13d-3 promulgated under the 1934 Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under
the 1934 Act) 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 SBT Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) any person (other than UPC or any Subsidiary of UPC)
shall have commenced (as such term is defined in Rule 14d-2 under the
1934 Act), or shall have filed a registration statement under the 1933
Act with respect to, a tender offer or exchange offer to purchase any
shares of SBT Common Stock such that, upon consummation of such
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offer, such person would own or control 15% or more of the
then-outstanding shares of SBT Common Stock (such an offer being
referred to herein as a "Tender Offer" or an "Exchange Offer,"
respectively); or
(ii) the holders of SBT 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 SBT's Board of Directions shall have withdrawn or
modified in a manner adverse to UPC the recommendation of SBT'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 UPC
or any Subsidiary of UPC) shall have (A) made, or disclosed an
intention to make, a proposal to engage in an Acquisition Transaction,
(B) commenced a Tender Offer or filed a registration statement under
the 1933 Act with respect to an Exchange Offer, or (C) filed an
application (or given a notice), whether in draft or final form, under
the BHC Act, the Bank Merger Act, or the Change in Bank Control Act of
1978, for approval to engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the 1934 Act.
(d) In the event UPC wishes to exercise the Option, it shall send to
SBT 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
notification to or approval of the Federal Reserve, or any of the other
Regulatory Authorities is required in connection with such purchase, SBT shall
cooperate with UPC in the filing of the required notice or application for
approval and the obtaining of such approval and the Closing shall occur
immediately following such regulatory approvals (and any mandatory waiting
periods).
4. Payment and Delivery of Certificates. (a) On each Closing
Date, UPC shall (i) pay to SBT, in immediately available funds by wire transfer
to a bank account designated by SBT, an amount equal to the Purchase Price
multiplied by the number of Options Shares to be purchased on such Closing
Date, and (ii) present and surrender this Agreement to the SBT at the address
of the SBT specified in Section 12(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) SBT shall deliver to UPC (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 purchase the balance of the shares of
SBT Common Stock purchasable hereunder, and (ii) UPC
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shall deliver to SBT a letter agreeing that UPC 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 NOVEMBER 26, 1996. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE SBT 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 UPC shall have delivered to
SBT a copy of a letter from the staff of the SEC, or an opinion of counsel in
form and substance reasonably satisfactory to SBT and its counsel, to the
effect that such legend is not required for purposes of the 1933 Act.
5. Representations, Warranties and Covenants of SBT. SBT hereby
represents and warrants to UPC as follows:
(a) SBT 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 SBT.
This Agreement has been duly executed and delivered by SBT. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and compliance by SBT with any of the provisions hereof will not (i)
conflict with or result in a breach of any provision of its Articles of
Incorporation or Bylaws or a default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, condition or provisions
of any material note, bond, debenture, mortgage, indenture, license, material
agreement or other material instrument or obligation to which SBT is bound, or
(ii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to SBT or any of its properties or assets. No consent or approval
by any Regulatory Authority, other than compliance with applicable federal and
state securities and banking laws, and regulations of the Federal Reserve, is
required of SBT in connection with the execution and delivery by SBT of this
Agreement or the consummation by SBT of the transactions contemplated hereby.
(b) SBT 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 SBT Common Stock upon the exercise
of the Option terminates, will have reserved for issuance, upon exercise of the
Option, the number of shares of SBT Common Stock necessary for UPC to
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exercise the Option, and SBT will take all necessary corporate action to
authorize and reserve for issuance all additional shares of SBT Common Stock or
other securities which may be issued pursuant to Section 7 upon exercise of the
Option. The shares of SBT Common Stock to be issued upon due exercise of the
Option, including all additional shares of SBT 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, and encumbrances of any
kind or nature whatsoever, including any preemptive rights of any stockholder
of SBT.
(c) SBT shall give UPC prompt written notice of the occurrence of
a Purchase Event or a Preliminary Purchase Event or upon becoming aware of any
facts and circumstances which would lead a reasonably, prudent person to
believe that a Purchase Event or a Preliminary Purchase Event is reasonably
likely to occur.
6. Representations and Warrants of UPC. UPC hereby represents
and warrants to SBT that:
(a) UPC 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 UPC. This Agreement has been duly executed and delivered by UPC.
(b) This Option is not being, and any Option Shares or other
securities acquired by UPC 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 SBT 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
UPC shall receive, upon exercise of the Option, the number and class of shares
or other securities or property that UPC would have received in respect of SBT
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 SBT
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)), the number
of shares of SBT Common Stock subject to the Option shall be adjusted so that,
after such issuance, it, together with any shares of SBT Common Stock
previously issued pursuant hereto, equals 19% of the number of shares of SBT
Common Stock then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
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(b) In the event that SBT shall enter into an agreement: (i) to
consolidate with or merge into any person, other than UPC 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 UPC or one of
its Subsidiaries, to merge into SBT and SBT shall be the continuing or
surviving corporation, but, in connection with such merger, the then
outstanding shares of SBT Common Stock shall be changed into or exchanged for
stock or other securities of SBT or any other person or cash or any other
property or the outstanding shares of SBT 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 UPC or one of 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 UPC, 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 SBT
(in each case, such person being referred to as the "Substitute Option SBT").
(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 UPC. The Substitute Option SBT 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 SBT 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 SBT 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 SBT (if
other than SBT), (y) SBT in a merger in which SBT is the continuing or
surviving person, and (z) the transferee of all or any substantial
part of the SBT's assets (or the assets of its Subsidiaries).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the Substitute Option SBT upon exercise of the Substitute
Option.
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(iii) "Assigned Value" shall mean the highest of (w) the
price per share of the SBT Common Stock at which a Tender Offer or
Exchange Offer therefor has been made by any person (other than UPC),
(x) the price per share of the SBT Common Stock to be paid by any
person (other than the UPC) pursuant to an agreement with SBT, (y) the
highest closing sales price per share of SBT Common Stock quoted on
the NASDAQ National Market (or if SBT 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 UPC) within the six-month period immediately preceding the
agreement; and (z) in the event such shares are not so listed or
quoted on a principal trading market, the highest price any such
shares traded in an arm's length transaction within the twelve (12)
month period immediately preceding the agreement as determined by UPC
in good faith; provided, however that in the event of a sale of less
than all of SBT's assets, the Assigned Value shall be the sum of the
price paid in such sale for such assets and the current market value
of the remaining assets of SBT as determined by a nationally
recognized investment banking firm selected by UPC (or by a majority
in interest of the UPCs if there shall be more than one UPC (a "UPC
Majority")), divided by the number of shares of the SBT Common Stock
outstanding at the time of such sale. In the event that an exchange
offer is made for the SBT 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 SBT Common Stock shall be determined by a
nationally recognized investment banking firm mutually elected by UPC
and SBT (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 UPC. (If there shall be more than one UPC, any
such selection shall be made by a UPC 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 SBT is the SBT of the Substitute Option, the Average
Price shall be computed with respect to a share of common stock issued
by SBT, the person merging into SBT or by any company which controls
or is controlled by such merger person, as UPC may elect.
(f) In no event pursuant to any of the foregoing paragraphs shall
the Substitute Option be exercisable for more than 19% 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% of the aggregate of the shares of the Substitute
Common Stock but for this clause (f), the Substitute Option SBT shall make a
cash payment to UPC 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
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this clause (f). This difference in value shall be determined by a nationally
recognized investment banking firm selected by UPC (or a UPC Majority).
(g) SBT 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 SBT 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 the Substitute Common Stock are in no way distinguishable from or
have lesser economic value that other shares of common stock issued by the
Substitute Option SBT).
(h) The provisions of Sections 8, 9 and 10 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 "SBT," "Option," "Purchase Price" and "SBT Common Stock" shall be
deemed to be references to "Substitute Option SBT," "Substitute Option,"
"Substitute Purchase Price" and "Substitute Common Stock," respectively.
8. Repurchase at the Option of UPC. (a) Subject to the last
sentence of Section 3(a), at the request of UPC at any time commencing upon the
first occurrence of a Repurchase Event (as defined in Section 8(d) and ending
12 months immediately thereafter, SBT shall repurchase from UPC the Option and
all shares of SBT Common Stock purchased by UPC pursuant thereto with respect
to which UPC then has beneficial ownership. The date on which UPC 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 UPC for any
shares of SBT Common Stock acquired pursuant to the Option with
respect to which UPC then has beneficial ownership;
(ii) the excess, if any, of (x) the Applicable Price (as
defined below) for each share of SBT Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of SBT 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 UPC for
each share of SBT Common Stock with respect to which the Option has
been exercised and with respect to which UPC then has beneficial
ownership, multiplied by the number of such shares.
(b) If UPC exercises its rights under this Section 8, SBT shall,
within ten business days after the Request Date, pay the Section 8 Repurchase
Consideration to UPC in immediately available funds, and contemporaneously with
such payment UPC shall surrender to SBT the
8
<PAGE> 153
Option and the certificates evidencing the shares of SBT Common Stock purchased
thereunder with respect to which UPC then has beneficial ownership, and UPC
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 approval of the Federal Reserve, or any
other Regulatory Authority is required in connection with the payment of all or
any portion of the Section 8 Repurchase Consideration, UPC shall have the
ongoing option to revoke its request for repurchase pursuant to Section 8, in
whole or in part, or to require that the SBT 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
approval and expeditiously process the same (and each party shall cooperate
with the other in the filing of any such notice or application and the
obtainment of any such approval). If the Federal Reserve, or any other
Regulatory Authority disapproves of any part of SBT's proposed repurchase
pursuant to this Section 8, SBT shall promptly give notice of such fact to UPC.
If the Federal Reserve, or other Regulatory Authority prohibits the repurchase
in part but no in whole, then UPC shall have the right (i) to revoke the
repurchase request or (ii) to the extent permitted by the Federal Reserve, or
other Regulatory Authority, determine whether the repurchase should apply to
the Option and/or Option Shares and to what extent to each, an UPC 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. UPC shall notify SBT
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 UPC'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 SBT Common Stock paid for any
such share by the person or groups described in Section 8(d)(i); (ii) the price
per share of SBT Common Stock received by holders of SBT 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); (iii) the highest closing sales
price per share of SBT Common Stock quoted on the NASDAQ National Market (or if
SBT 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 UPC) during the 60 business days preceding the Request Date; and (iv)
in the event such shares are not so listed or quoted on a principal trading
market, the highest price any such shares traded in an arm's length transaction
within the twelve (12) month period immediately preceding the agreement as
determined by UPC in good faith; provided, however, that in the event of a
sale of less than all of SBT'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 SBT as determined by an independent nationally recognized
investment banking firm selected by UPC and reasonably acceptable to SBT (which
determination shall be
9
<PAGE> 154
conclusive for all purposes of this Agreement), divided by the number of shares
of the SBT 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 UPC and reasonably acceptable to
SBT, 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 UPC or any Subsidiary of UPC) shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the 1934
Act), or the right to acquire beneficial ownership, or any "group" (as such
term is defined under the 1934 Act) shall have been formed which beneficially
owns or has the right to acquire beneficial ownership, of 50% or more of the
then-outstanding shares of SBT Common Stock; or (ii) any of the transactions
described in Section 7(b)(i), 7(b)(ii), or 7(b)(iii) shall be consummated.
9. Registration Rights. (a) SBT shall, subject to the
conditions of subparagraph (c) below, if requested by UPC (or if applicable, a
UPC Majority), 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 SBT Common Stock or other securities
that have been acquired by or are issuable to UPC upon exercise of the Option
in accordance with the intended method of sale or other disposition stated by
UPC in such request, including, without limitation, a "shelf" registration
statement under Rule 415 under the 1933 Act or any successor provision, and SBT
shall use its best efforts to qualify such shares or other securities for sale
under any applicable state Securities Laws.
(b) If SBT at any time after the exercise of the Option proposes
to register any shares of SBT Common Stock under the Securities Laws in
connection with an underwritten public offering of such SBT Common Stock, SBT
will promptly give written notice to UPC (and any permitted transferee) of its
intention to do so and, upon the written request of UPC (or any such permitted
transferee of UPC) given within 30 days after receipt of any such notice (which
request shall specify the number of shares of SBT Common Stock intended to be
included in such underwritten public offering by UPC (or such permitted
transferee)), SBT 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 SBT 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; provided, further, that such election
pursuant to clause (i) may only be made one time. If some but not all the
shares of SBT Common Stock, with respect to which SBT shall have received
requests for registration pursuant to this subparagraph (b), shall be excluded
from such registration, SBT shall make appropriate allocation of shares to be
registered among UPC (and any such permitted transferee desiring to register
their shares) and any other person (other than SBT) who or which is permitted
to register their shares of SBT Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each such
10
<PAGE> 155
holder bears to the total number of shares requested to be registered by all
such holders then desiring to have SBT Common Stock registered for sale.
(c) SBT shall use all reasonable efforts to cause each
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 SBT may delay any registration of Option Shares required pursuant to
subparagraph (a) above for a period not exceeding 90 days provided SBT shall in
good faith determine that any such registration would adversely affect an
offering or contemplated offering of other securities by SBT, and SBT 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 9.1 thereof, (b) failure to
obtain the requisite stockholder approval pursuant to Section 8.1(a)
of the Merger Agreement, and (c) a Purchase Event or a Preliminary
Purchase Event;
(ii) on more than two occasions;
(iii) more than once during any calendar year;
(iv) within 90 days after the effective date of a
registration referred to in subparagraph (b) above pursuant to which
the holder or holders of the Option Shares concerned were afforded the
opportunity to register such shares under the Securities Laws and such
shares were registered as requested; and
(v) unless a request therefor is made to SBT by the
holder or holders of at least 25% or more of the aggregate number of
Option Shares then outstanding.
In addition to the foregoing, SBT shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. SBT shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable 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 SBT 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, SBT
will pay all expenses (including without limitation registration fees,
qualification fees, blue sky fees and expenses (including the fees and expenses
of counsel), accounting expenses, legal expenses including the reasonable fees
and expenses of one counsel to the holders whose Option Shares are being
registered, printing expenses, expenses of underwriters, excluding discounts
and commissions but including liability insurance if SBT so desires or the
underwriters so require,
11
<PAGE> 156
and the reasonable fees and expenses of any necessary special experts) in
connection with each registration pursuant to subparagraph (a) or (b) above
(including the related offerings and sales by holders of Option Shares) and all
other qualifications, notifications or exemptions pursuant to subparagraph (a)
or (b) above. Underwriting discounts and commissions relating to Option
Shares, fees and disbursements of counsel to the holders of Option Shares being
registered and any other expenses incurred by such holders in connection any
such registration shall be borne by such holders.
(e) In connection with any registration under subparagraph (a) or
(b) above SBT hereby indemnifies the holder of the Option Shares, and each
underwriter thereof, including each person, if any, who controls such holder or
underwriter within the meaning of Section 15 of the 1933 Act, against all
expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged 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, or alleged 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 SBT 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 SBT by such indemnified party expressly for use
therein, and SBT and each officer, director and controlling person of SBT shall
be indemnified by such holder of the Option Shares, 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 SBT 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 SBT 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 reasonably
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 fails to assume the defense of such action with counsel
satisfactory to the indemnified party, or (iii) the indemnified
12
<PAGE> 157
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 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 SBT, the selling shareholders and the underwriters from
the offering of the securities and also the relative fault of SBT, the selling
shareholders 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
the holders of the Option Shares 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 1933 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, SBT and each holder of any Option Shares (other than UPC) shall
enter into an agreement containing the indemnification provisions of the
subparagraph (e).
(f) SBT 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 the holder thereof 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. SBT shall at its
expense provide the holder of any Option Shares with any information necessary
in connection with the completion and filing of any reports or forms required
to be filed by them under the Securities Laws, or required pursuant to any
state securities laws or the rules of any stock exchange.
(g) SBT 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 UPC harmless, without limitation as to time, against any
and all liabilities, with respect to all such taxes.
10. Quotation; Listing. If SBT 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
13
<PAGE> 158
NASDAQ National Market or any securities exchange, SBT, upon the request of
UPC, will promptly file an application, if required, to authorize for quotation
or trading or listing the shares of SBT Common Stock or other securities to be
acquired upon exercise of the Option on the NASDAQ National Market or any
securities exchange and will use its best efforts to obtain approval, if
required, or such quotation or listing as soon as practicable.
11. Division of Option. This Agreement (and the Option granted
hereby) are exchangeable, without expense, at the option of UPC, upon
presentation and surrender of this Agreement at the principal office of SBT for
other Agreements providing for Options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of SBT
Common Stock purchasable hereunder. The terms "Agreement" and "Option" as used
herein including any other Agreements and related Options for which this
Agreement (and the Option granted hereby) may be exchanged. Upon receipt by
SBT 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, SBT 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
SBT, 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 10, 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 UPC and SBT (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 Sharers or any permitted
transferee of this Agreement pursuant to Section 13(h)) 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 Regulatory 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 Authority determines that the Option does not
permit UPC to acquire, or does not require SBT to repurchase, the full number
of shares of SBT Common Stock as provided in Sections 3 and 8 (as adjusted
pursuant to Section 7), it is the express intention of SBT to allow UPC to
acquire or to
14
<PAGE> 159
require SBT to repurchase such lesser number of shares as may be permissible
without any amendment or modification hereof.
(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 following addresses (or at such other address
for a party as shall be specified by like notice):
If to SBT to: SBT Bancshares, Inc.
116 S. Third Street
Selmer, Tennessee 38375-2114
Telephone Number: (901) 645-6187
Telecopy Number: (901) 645-6688
Attention: Richard L. Rankin, Chairman & CEO
If to UPC to: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38108
Telephone Number: (901) 580-6093
Telecopy Number: (901) 580-2877
Attention: Jackson W. Moore - President
and Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38108
Telephone Number: (901) 580-6028
Telecopy Number: (901) 580-2939
Attention: Catherine C. Stallings, Esq. -
General Counsel
with a copy to: Wyatt, Tarrant & Combs
6075 Poplar Avenue
Suite 650
Memphis, Tennessee 38119
Telephone Number: (901) 537-1023
Telecopy Number: (901) 537-1010
Attention: R. Nash Neyland, Esq.
15
<PAGE> 160
(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 prior
written consent of the other party, except that UPC may assign this Agreement
to a wholly owned subsidiary of UPC and UPC 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 UPC, SBT and UPC 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.
IN WITNESS WHEREOF, SBT and UPC 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.
SBT BANCSHARES, INC.
ATTEST:
By: /s/ James E. Hanna By: /s/ Richard L. Rankin
------------------------------- -----------------------------------
Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ Catherine C. Stallings By: /s/ Jackson W. Moore
------------------------------- -----------------------------------
Catherine C. Stallings Jackson W. Moore
Secretary President
[CORPORATE SEAL]
16
<PAGE> 161
APPENDIX C
Audited Consolidated Financial Statements of SBT Bancshares, Inc. as of and for
the year ended December 31, 1996 (and notes thereto)
<PAGE> 162
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
SBT Bancshares, Inc.
In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of income, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
SBT Bancshares, Inc. and its subsidiary (the "Company") at December 31, 1996,
and the results of their operations and their cash flows for the year in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
/s/ PRICE WATERHOUSE LLP
- ------------------------------
PRICE WATERHOUSE LLP
Memphis, Tennessee
February 7, 1997
<PAGE> 163
SBT BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ---------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Cash and due from banks $ 4,054
Federal funds sold 1,500
Investment securities
Available-for-sale (Amortized cost: $37,133) 37,607
Held-to-maturity (Fair value:$1,140) 1,159
Loans, net of unearned interest 52,635
Less: Allowance for losses on loans (1,052)
---------
Net loans 51,583
Premises and equipment, net 387
Accrued interest receivable 1,234
Income taxes receivable 356
Deferred tax asset, net 163
Other assets 60
---------
TOTAL ASSETS $ 98,103
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 11,598
Certificates of deposit of $100,000 and over 5,524
Other interest-bearing, including NOW accounts of $3,203 66,766
---------
Total deposits 83,888
Accrued interest payable 454
Other liabilities 90
---------
TOTAL LIABILITIES 84,432
Stockholders' equity
Common stock, $20 par value; 50,500 shares authorized, 15,500
issued and outstanding 310
Additional paid-in capital 70
Retained earnings 13,741
Unrealized gain on available-for-sale investment securities, net 294
Treasury stock, at cost, 1,931 shares (744)
---------
TOTAL STOCKHOLDERS' EQUITY 13,671
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 98,103
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 164
SBT BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
INTEREST INCOME
Interest and fees on loans $ 4,596
Interest on investment securities
Taxable 1,820
Nontaxable 783
Interest on federal funds sold 93
---------
Total interest income 7,292
---------
INTEREST EXPENSE
Interest on deposits 3,487
---------
Net interest income 3,805
Provision for losses on loans 772
---------
Net interest income after provision for losses on loans 3,033
NONINTEREST INCOME
Service charges on deposit accounts 145
Investment securities gains, net 30
Other 39
---------
Total noninterest income 214
---------
NONINTEREST EXPENSE
Salaries and employee benefits 1,029
Occupancy and equipment 347
Other 270
---------
Total noninterest expense 1,646
---------
EARNINGS BEFORE INCOME TAXES 1,601
Income taxes 382
---------
NET EARNINGS $ 1,219
=========
EARNINGS PER SHARE $ 89.84
=========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 13,569
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE> 165
SBT BANCSHARES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
AVAILABLE-
ADDITIONAL FOR-SALE
COMMON PAID-IN RETAINED INVESTMENT TREASURY
STOCK CAPITAL EARNINGS SECURITIES, NET STOCK TOTAL
----- ------- -------- --------------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $310 $70 $ 12,685 $ 696 $(744) $ 13,017
Net earnings -- -- 1,219 -- -- 1,219
Dividends - $12.00 per share -- -- (163) -- -- (163)
Change in unrealized gain on
available-for-sale investment
securities, net of applicable
taxes -- -- -- (402) -- (402)
---- --- -------- ----- ----- --------
Balance at December 31, 1996 $310 $70 $ 13,741 $ 294 $(744) $ 13,671
==== === ======== ===== ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 166
SBT BANCSHARES, INC. and SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net earnings $ 1,219
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses on loans 772
Depreciation 76
Investment securities gains, net (30)
Deferred tax benefit (213)
Net accretion of investment securities (183)
(Increase) in assets:
Accrued interest receivable (130)
Income taxes receivable (86)
Other assets (21)
Increase (decrease) in liabilities:
Accrued interest payable 23
Other liabilities (30)
--------
Net cash provided by operating activities 1,397
--------
INVESTING ACTIVITIES
Purchases of available-for-sale investment securities (16,695)
Proceeds from sale of available-for-sale investment securities 9,082
Proceeds from maturities and repayment of available-for-sale investment securities 7,914
Proceeds from maturities and repayment of held-to-maturity investment securities 285
Net increase in loans (4,809)
Purchases of premises and equipment (15)
Proceeds from sales of other real estate owned 30
--------
Net cash used by investing activities (4,208)
--------
FINANCING ACTIVITIES
Net increase in deposits 2,582
Cash dividends (163)
--------
Net cash provided by financing activities 2,419
--------
CASH AND CASH EQUIVALENTS
Net decrease (392)
Beginning of year 5,946
--------
End of year $ 5,554
========
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 3,464
Cash paid for income taxes 626
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 167
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. SBT Bancshares, Inc. (the "Company") is a Delaware
chartered bank holding company headquartered in Selmer, Tennessee. The Company
through its wholly-owned subsidiary, Selmer Bank & Trust Company (the "Bank"),
provides financial services to the communities in which it operates, including
consumer and commercial lending and other ancillary financial services
traditionally furnished by financial institutions.
The accounting and reporting policies of the Company and the Bank conform with
generally accepted accounting principles and general practices of the banking
industry. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The most significant estimate relates to the adequacy of
the allowance for losses on loans. Actual results could differ from those
estimates. The Company and the Bank are subject to the regulations of certain
federal and state agencies and undergo periodic examinations by those
regulatory agencies. The following is a description of the more significant
accounting policies:
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of the Company and the Bank after elimination of intercompany accounts
and transactions.
STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks and federal funds sold.
INVESTMENT SECURITIES. Statement of Financial Accounting Standards ("SFAS") No.
115, Accounting for Certain Investments in Debt and Equity Securities, which
was adopted by the Company effective January 1, 1994, addresses the accounting
for investments in equity securities that have readily determinable fair values
and for all investments in debt securities. The investment securities covered
by this standard are to be classified into three categories: (i) debt
securities for which the institution has a positive intent and ability to hold
to maturity are classified as "held-to-maturity" and reported at amortized
cost; (ii) debt and equity securities that are bought and held principally for
the purpose of selling them in the near term are classified as "trading" and
reported at fair value, with unrealized gains and losses included in earnings;
and (iii) debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as "available-for-sale" and
reported at fair value, with unrealized gains and losses excluded from earnings
and reported net of deferred taxes as a separate component of stockholders'
equity.
The Bank's investment portfolio consists of securities classified as
held-to-maturity and available-for-sale. Investment securities classified as
held-to-maturity consist of securities which management has the intent and
ability to hold to maturity, primarily investments held for tax purposes. These
securities are stated at cost adjusted for amortization of premiums and
accretion of discounts, which are recognized as adjustments to interest income
on a basis that approximates the constant yield method.
Gains and losses on the sale of investment securities are recorded when
realized on a specific identity basis or when, in the opinion of management, an
unrealized loss is other than temporary
6
<PAGE> 168
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
in nature. All investment securities transactions are recorded using a method
which approximates trade-date accounting.
LOANS. Loans are stated at the principal amount outstanding less unearned
interest. Interest income on loans is accrued using a simple interest method,
except for unearned income which is recorded as income using a method which
approximates the interest method. Loan origination fees and direct loan
origination costs are recognized currently as income and period costs,
respectively, and do not vary materially from the results that would be
recorded using the deferral method prescribed by SFAS No. 91, Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases.
Loans are generally placed on nonaccrual status and interest is not recorded
currently if payment in full of principal or interest is not expected or when
the payment of principal or interest is more than 90 days past due, unless it
is both well-secured and in the process of collection. Interest income
previously accrued is reversed at that time. Income recognition on installment
loans is discontinued and the loan is charged off when the full principal and
interest is determined uncollectible by management.
The Company adopted the provisions of SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, as amended by SFAS No. 118, Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures, during 1995. SFAS
No. 114 prescribes a valuation methodology for impaired loans as defined by the
statement. Generally, a loan is considered impaired if management believes that
it is probable that all amounts due will not be collected according to the
contractual terms in the loan agreement. An impaired loan must be valued using
the present value of expected cash flows discounted at the loan's effective
interest rate, the loan's observable market value, or the fair value of the
loan's underlying collateral. The adoption of these standards had no impact on
the allowance for losses on loans or on net income for the year ended December
31, 1996, and the related disclosures are not significant.
ALLOWANCE FOR LOSSES ON LOANS. The allowance for losses on loans represents
management's estimate of potential losses inherent in the existing loan
portfolio. The allowance for losses on loans is increased by provisions for
losses on loans charged to expense and reduced by loans charged off, net of
recoveries. Provisions for losses on loans are determined based on management's
evaluation of past loan loss experience, current and anticipated economic
conditions, the level of classified and nonperforming loans, the composition
and size of the portfolio, reviews and evaluations of specific loans, and the
results of regulatory examinations. The allowance for losses on loans is
maintained at a level considered adequate by management to provide for losses
in the existing loan portfolio. In evaluating the adequacy of the allowance,
management makes certain estimates and assumptions which are susceptible to
change in the near term. While management uses available information to
recognize losses on loans, future additions to the allowance may be necessary
based on changes in economic conditions.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost, less
accumulated depreciation. Depreciation provisions are computed principally on
accelerated methods over the estimated useful lives of the assets (buildings
and improvements - 10 to 30 years; furniture and fixtures - 5 to 7 years).
7
<PAGE> 169
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
OTHER REAL ESTATE. Other real estate represents real estate acquired through
foreclosure and is stated at the lower of the recorded amount of the loan or
the net realizable value (which approximates the fair value) of the underlying
real estate. Any losses at foreclosure are charged to the allowance for loan
losses. Any subsequent reduction is charged to expense.
INCOME TAXES. The Company and Bank file consolidated federal and state income
tax returns. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. If based on management's
estimates it is more likely than not that some portion or all of the deferred
tax assets will not be realized, a valuation allowance is provided.
EARNINGS PER SHARE. Earnings per share amounts are based on the weighted
average common shares outstanding.
FAIR VALUE OF FINANCIAL INSTRUMENTS. SFAS No. 126, Exemption from Certain
Required Disclosures about Financial Instruments for Certain Nonpublic Entities
provides exemption for certain entities from the requirements of SFAS No. 107,
Disclosures About Fair Value of Financial Instruments. The Company meets the
criteria for this exemption and has not presented such information.
NOTE 2 - RESTRICTIONS ON CASH
The Company is required by the Federal Reserve Board to maintain average
reserve balances. The average required balance to be maintained for such
purpose during 1996 was approximately $579,000, which is included in cash and
due from banks in the accompanying consolidated balance sheet.
8
<PAGE> 170
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
NOTE 3 - INVESTMENT SECURITIES
The amortized cost and fair value of investment securities at December 31, 1996
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED ---------- FAIR
COST GAINS LOSSES VALUE
----------- ------- -------- ---------
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
U.S. Government agencies
Mortgage-backed and related securities $ 21,513 $ 139 $ 174 $ 21,478
Obligations of states and political
subdivisions 15,620 555 46 16,129
----------- ------- -------- ---------
Total available-for sale $ 37,133 $ 694 $ 220 $ 37,607
=========== ======= ======== =========
HELD-TO-MATURITY
Obligations of states and political
subdivisions $ 1,159 $ 1 $ 20 $ 1,140
=========== ======= ======== =========
Total $ 38,292 $ 695 $ 240 $ 38,747
=========== ======= ======== =========
</TABLE>
The Company had gross realized gains of $47,000 and gross realized losses of
$17,000 during 1996.
The following table presents the contractual maturities of investment
securities at December 31, 1996 (in thousands):
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
-------------------------- ------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Maturing
Within one year $ 11,798 $ 11,785 $ 133 $ 134
After one but within five years 13,497 13,721 1,026 1,006
After five but within ten years 10,554 10,747 - -
After ten years 1,284 1,354 - -
----------- ----------- --------- ---------
Total $ 37,133 $ 37,607 $ 1,159 $ 1,140
=========== =========== ========= =========
</TABLE>
Expected maturities of mortgage-backed and related securities along with
certain obligations of states and political subdivisions may differ from
contractual maturities because borrowers have the right to call or prepay
obligations with or without call or prepayment penalties.
9
<PAGE> 171
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
Investment securities with a carrying and fair value of approximately $3.2
million at December 31, 1996 were pledged to secure public and trust funds on
deposit and for other purposes as required or permitted by law.
NOTE 4 - LOANS
Loans outstanding at December 31, 1996 are summarized as follows (in
thousands):
<TABLE>
<S> <C>
Commercial, financial and agricultural $ 3,482
Real estate
Secured by single-family residential properties 30,377
Commercial, construction and land development 5,946
Consumer 11,316
Other loans 2,152
--------
Total gross loans 53,273
Unearned interest (638)
--------
Total loans, net of unearned interest $ 52,635
========
Nonaccrual loans $ 95
========
Loans 90 days or more past due and still accruing interest $ 153
========
</TABLE>
There were no material outstanding unfunded commitments related to the above
nonperforming loans at December 31, 1996. Interest which would have been earned
under the original terms on nonaccrual loans did not materially differ from
that actually recorded.
CONCENTRATION OF CREDIT RISK. The Company's lending activities are concentrated
in McNairy, Hardeman and Hardin Counties, Tennessee. The Company's loan
portfolio is primarily concentrated in single-family residential and consumer
loans. The loans are collateralized by various security interests, including
but not limited to real estate, mortgages, equipment, automobiles and deposits.
In some instances loans are extended on an unsecured basis.
10
<PAGE> 172
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
FINANCIAL INSTRUMENTS. The Company, through the issuance of letters of credit,
is a party to financial instruments with off-balance-sheet credit risk in the
normal course of business in order to meet the financing needs of its
customers. These instruments involve, to varying degrees, elements of credit
risk and interest rate risk in excess of the amounts recognized in the
consolidated balance sheet. The Company follows the same credit policies in
making commitments and contractual obligations as it does for on-balance-sheet
instruments. The contractual amounts of these instruments reflect the extent of
involvement the Company has in particular classes of financial instruments.
Off-balance-sheet contractual amounts at December 31, 1996 in the form of
standby, commercial and similar letters of credit totaled $10,000. Letters of
credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party and are not reflected in the
Company's financial statements. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. The Company, in some cases, holds various types of collateral to
support those commitments for which collateral is deemed necessary.
The letter of credit outstanding at December 31, 1996 expires in 1997.
NOTE 5 - ALLOWANCE FOR LOSSES ON LOANS
The following summarizes the changes in the allowance for losses on loans for
the year ended December 31, 1996 (in thousands):
<TABLE>
<S> <C>
Balance, January 1, 1996 $ 492
Provision for losses on loans 772
Recoveries of loans previously charged off 68
Loans charged off (280)
-------
Balance, December 31, 1996 $ 1,052
=======
</TABLE>
11
<PAGE> 173
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
NOTE 6 - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1996 is as follows (in
thousands):
<TABLE>
<S> <C>
Land $ 155
Buildings and improvements 1,052
Furniture, fixtures and equipment 255
Automobiles 17
-------
1,479
Less accumulated depreciation (1,092)
-------
Premises and equipment, net $ 387
=======
</TABLE>
NOTE 7 - DEPOSITS
At December 31, 1996, the scheduled maturities of interest-bearing deposits are
as follows (in thousands):
<TABLE>
<S> <C>
1997 $ 51,051
1998 1,111
1999 318
2000 609
----------
Total time deposits 53,089
----------
Interest-bearing deposits with no stated maturity 19,201
----------
Total interest-bearing deposits $ 72,290
==========
</TABLE>
NOTE 8 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains an employee stock ownership plan (the "ESOP") which
covers substantially all full-time employees. The Company's annual
contributions to the ESOP are discretionary and are determined by the Board of
Directors. During 1996, the Company contributed $66,000 to the ESOP. The ESOP
is the most significant stockholder of the Company as of December 31, 1996 and
owns 1,616 shares of the Company's common stock, all of which were allocated to
participants.
12
<PAGE> 174
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 9 - PARENT COMPANY ONLY FINANCIAL INFORMATION
CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1996
----------
<S> <C>
ASSETS
Cash due from Bank (1) $ 63
Investment in the Bank (1) 13,608
----------
Total assets $ 13,671
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ -
Stockholders' equity 13,671
----------
Total liabilities and stockholders' equity $ 13,671
==========
</TABLE>
CONDENSED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
Dividends from Bank (1) $ 186
Equity in undistributed income of Bank (1) 1,033
---------
Net income $ 1,219
=========
</TABLE>
(1) Eliminated in consolidation
13
<PAGE> 175
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 9 - PARENT COMPANY ONLY FINANCIAL INFORMATION - CONTINUED
CONDENSED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1996
-----------------
<S> <C>
OPERATING ACTIVITIES
Net income $ 1,219
Equity in undistributed income of Bank (1,033)
-------
Net cash provided by operating activities 186
-------
FINANCING ACTIVITIES
Cash dividends paid (163)
-------
Net cash used by financing activities (163)
-------
CASH AND CASH EQUIVALENTS
Net increase 23
Beginning of year 40
-------
End of year $ 63
=======
</TABLE>
14
<PAGE> 176
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 10 - INCOME TAXES
The components of income tax expense for the year ended December 31, 1996 are
as follows (in thousands):
<TABLE>
<S> <C>
Current expense
Federal $ 465
State 130
-----
Total current expense 595
-----
Deferred benefit
Federal (179)
State (34)
-----
Total deferred benefit (213)
-----
Income tax expense $ 382
=====
</TABLE>
The net deferred tax asset is comprised of the following at December 31, 1996
(in thousands):
<TABLE>
<S> <C>
Gross deferred tax assets:
Allowance for loan losses $ 331
Accumulated depreciation on premises and equipment 12
-----
Total deferred tax assets 343
-----
Gross deferred tax liabilities:
Unrealized gain on available-for-sale investment securities (180)
-----
Deferred tax asset, net $ 163
=====
</TABLE>
15
<PAGE> 177
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
A reconciliation of the statutory federal income tax rate to the effective tax
rate for the year ended December 31, 1996 is as follows (dollars in thousands):
<TABLE>
<CAPTION>
% OF
PRE-TAX
AMOUNT INCOME
------ ------
<S> <C> <C>
Computed "expected" tax $ 544 34.00%
State income taxes, net of federal benefit 63 3.94
Tax-exempt income, net of disallowed interest expense (225) (14.08)
------- ------
Income tax expense $ 382 23.86%
======= ======
</TABLE>
NOTE 11 - RELATED PARTY TRANSACTIONS
The Company had outstanding loans to executive officers, directors, and
principal stockholders and their affiliates totaling $285,000 at December 31,
1996. During 1996, $232,000 in new loans were made and $190,000 were repaid.
These loans were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with unrelated persons. Management does not expect any losses from the
outstanding related party loans nor are any of these loans on nonaccrual
status.
The Company paid $3,700 in legal fees to a member of the Board of Directors
during 1996.
NOTE 12 - REGULATORY CAPITAL AND DIVIDENDS RESTRICTIONS
The Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's and the Bank's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company and the Bank must meet specific capital guidelines that
involve quantitative measures of the Company's and the Bank's assets,
liabilities, and certain off-balance-sheet items as calculated under regulatory
accounting practices. The Company's and the Bank's capital amounts and
classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.
16
<PAGE> 178
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and Tier I capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1996, that the
Company and the Bank meets all capital adequacy requirements to which it is
subject.
As of December 31, 1996, the most recent notification from the Federal Deposit
Insurance Corporation ("FDIC") categorized the Bank as well capitalized under
the regulatory framework for prompt corrective action. To be categorized as
well capitalized the Bank must maintain minimum total risk-based, Tier I
risk-based and Tier I leverage ratios as set forth in the table. There are no
conditions or events since that notification that management believes have
changed the Bank's category. The Company's actual and required capital amounts
and ratios are not materially different from the Bank's capital amounts and
ratios.
The Bank's actual capital amounts and ratios are as follows:
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996
Total Capital
(to Risk Weighted Assets) $ 14,045 26.53% $ 4,235 >8.0% $ 5,294 >10.0%
- -
Tier I Capital
(to Risk Weighted Assets) 13,378 25.27% 2,118 >4.0% 3,176 >6.0%
- -
Tier I Capital
(to Average Assets) 13,378 13.81% 3,875 >4.0% 4,844 >5.0%
- -
</TABLE>
The amount of dividends which the Bank may pay to the Company is limited by
applicable laws and regulations. The Bank is incorporated under the laws of the
state of Tennessee and may pay dividends only to the extent of their unreserved
and unrestricted additional paid-in capital and retained earnings. The FDIC,
the Bank's primary regulator, imposes no dollar limit on dividends paid by
state-chartered banks but requires maintenance of certain capital levels. The
Bank, at a minimum, must maintain total risk-based capital greater than or
equal to eight percent (8%) of risk adjusted total assets (as defined). Under
the current FDIC capital guidelines, the Bank could pay approximately $10.2
million in dividends. The above amounts may be paid but, as a practical matter,
other considerations, including past dividend levels, may affect management's
decision with respect to the payment of dividends.
Additionally, the Merger Agreement described in Note 13 restricts the payment
of dividends by the Company to stockholders prior to the consummation of the
transaction; however, the Company is not otherwise restricted in paying
dividends.
17
<PAGE> 179
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 13 - PENDING MERGER
In December 1996, the Board of Directors of the Company approved an Agreement
and Plan of Reorganization ("Merger Agreement") with another bank holding
company whereby the two parties intend to effectuate a merger of the Company
with and into a subsidiary of the other bank holding company. The merger is
dependent upon the approval of the stockholders of the Company and various
regulatory agencies. Additionally, the Company is restricted from certain
activities prior to the consummation of the transaction, including payment of
extraordinary dividends.
18
<PAGE> 180
APPENDIX D
Unaudited Consolidated Financial Statements of SBT Bancshares, Inc. as of
December 31, 1995 and for the two years ended December 31, 1995 (and notes
thereto)
19
<PAGE> 181
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------
<TABLE>
ASSETS
<S> <C>
Cash and due from banks $ 3,946
Federal funds sold 2,000
Investment securities:
Available-for-sale (Amortized cost: $37,219) 38,341
Held-to-maturity (Fair value: $1,336) 1,445
Loans, net of unearned interest 48,038
Less: Allowance for losses on loans (492)
--------
Net loans 47,546
Premises and equipment, net 448
Accrued interest receivable 1,104
Income taxes receivable 270
Other real estate owned 30
Other assets 39
--------
TOTAL ASSETS $ 95,169
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 11,492
Certificates of deposit of $100,000 and over 5,207
Other interest-bearing, including NOW accounts of $3,146 64,607
--------
Total deposits 81,306
Accrued interest payable 431
Deferred tax liability, net 295
Other liabilities 120
--------
TOTAL LIABILITIES 82,152
--------
Stockholders' equity
Common stock, $20 par value; 50,000 shares authorized, 15,500
issued and outstanding 310
Additional paid-in capital 70
Retained earnings 12,685
Unrealized gain on available-for-sale securities, net 696
Treasury stock, at cost, 1,931 shares (744)
--------
TOTAL STOCKHOLDERS' EQUITY 13,017
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 95,169
========
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
1
<PAGE> 182
<TABLE>
<CAPTION>
DECEMBER 31,
1995 1994
-------- -------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 4,196 $ 3,523
Interest on investment securities
Taxable 1,853 1,911
Nontaxable 615 513
Interest on federal funds sold 109 87
-------- -------
Total interest income 6,773 6,034
-------- -------
INTEREST EXPENSE
Interest on deposits 3,353 2,566
-------- -------
Net interest income 3,420 3,468
Provision for losses on loans 120 120
-------- -------
Net interest income after provision for losses on loans 3,300 3,348
NONINTEREST INCOME
Service charges on deposit accounts 115 119
Investment securities (losses) gains, net (1) 17
Other 38 58
-------- -------
Total noninterest income 152 194
NONINTEREST EXPENSE
Salaries and employee benefits 990 1,031
Occupancy and equipment 320 366
FDIC insurance premiums and regulatory assessments 111 184
Other 291 283
-------- -------
Total noninterest expense 1,712 1,864
-------- -------
EARNINGS BEFORE INCOME TAXES 1,740 1,678
Income taxes 486 459
-------- -------
NET EARNINGS $ 1,254 $ 1,219
======== =======
EARNINGS PER SHARE $ 92.34 $ 89.18
======== =======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 13,580 13,669
======== =======
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
2
<PAGE> 183
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS) ON
AVAILABLE-
ADDITIONAL FOR-SALE
COMMON PAID-IN RETAINED INVESTMENT TREASURY
STOCK CAPITAL EARNINGS SECURITIES, NET STOCK TOTAL
----- ------- -------- --------------- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994 $310 $70 $ 10,534 $ -- $ (702) $ 10,212
Cumulative effect of the adoption
of SFAS No. 115, net of
applicable taxes -- -- -- 1,097 -- 1,097
Net earnings -- -- 1,219 -- -- 1,219
Cash dividends - $12.00 per share -- -- (163) -- -- (163)
Change in unrealized (loss) gain
on available-for-sale investment
securities, net of applicable taxes -- -- -- (1,633) -- (1,633)
Other -- -- 4 -- -- 4
---- --- -------- ------- ------- --------
Balance at December 31, 1994 310 70 11,594 (536) (702) 10,736
Net earnings -- -- 1,254 -- -- 1,254
Cash dividends - $12.00 per share -- -- (163) -- -- (163)
Change in unrealized (loss) gain
on available-for-sale investment
securities, net of applicable taxes - -- -- -- 1,232 -- 1,232
Purchase of Treasury Stock
- 100 Shares -- -- -- -- (42) (42)
---- --- -------- ------- ------- --------
Balance at December 31, 1995 $310 $70 $ 12,685 $ 696 $ (744) $ 13,017
==== === ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
3
<PAGE> 184
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------
1995 1994
-------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 1,254 $ 1,219
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Provision for losses on loans 120 120
Provision for losses on other real estate owned 17 --
Depreciation 83 105
Deferred tax expense 37 6
Investment securities losses (gains), net 1 (17)
Net accretion of investment securities (107) (7)
(Increase) decrease in assets:
Accrued interest receivable (113) (28)
Income taxes receivable 1 (199)
Other assets (31) 108
Increase in liabilities:
Accrued interest payable 84 58
Other liabilities 92 28
-------- -------
Net cash provided by operating activities 1,438 1,393
-------- -------
INVESTING ACTIVITIES
Proceeds from sale of available-for-sale investment securities 8,711 1,023
Proceeds from sale of held-to-maturity investment securities (Note 3) 500 --
Purchases of available-for-sale investment securities (18,047) (4,920)
Purchases of held-to-maturity investment securities (1,016) (7,143)
Proceeds from maturities and repayment of available-for-sale investment securities 6,679 8,915
Proceeds from maturities and repayment of held-to-maturity investment securities 1,839 1,500
Net increase in loans (4,167) (7,019)
Purchases of premises and equipment (11) (77)
-------- -------
Net cash used by investing activities (5,512) (7,721)
-------- -------
FINANCING ACTIVITIES
Net increase in deposits 3,342 5,310
Purchases of treasury stock (42) --
Cash dividends paid (163) (163)
Other -- 4
-------- -------
Net cash provided by financing activities 3,137 5,151
-------- -------
CASH AND CASH EQUIVALENTS
Net decrease (937) (1,177)
Beginning of year 6,883 8,060
-------- -------
End of year $ 5,946 $ 6,883
======== =======
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 3,269 $ 2,505
Cash paid for income taxes 456 604
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
4
<PAGE> 185
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS. SBT Bancshares, Inc. (the "Company") is a Delaware
chartered bank holding company headquartered in Selmer, Tennessee. The Company
through its wholly-owned subsidiary, Selmer Bank & Trust Company (the "Bank"),
provides financial services to the communities in which it operates, including
consumer and commercial lending and other ancillary financial services
traditionally furnished by financial institutions.
The accounting and reporting policies of the Company and the Bank conform with
generally accepted accounting principles and general practices of the banking
industry. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. The most significant estimate relates to the adequacy of
the allowance for losses on loans. Actual results could differ from those
estimates. The Company and the Bank are subject to the regulations of certain
federal and state agencies and undergo periodic examinations by those
regulatory agencies. The following is a description of the more significant
accounting policies:
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of the Company and the Bank after elimination of intercompany accounts
and transactions.
STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks and federal funds sold.
INVESTMENT SECURITIES. Statement of Financial Accounting Standards ("SFAS") No.
115, Accounting for Certain Investments in Debt and Equity Securities, which
was adopted by the Company effective January 1, 1994, addresses the accounting
for investments in equity securities that have readily determinable fair values
and for all investments in debt securities. The investment securities covered
by this standard are to be classified into three categories: (i) debt
securities for which the institution has a positive intent and ability to hold
to maturity are classified as "held-to-maturity" and reported at amortized
cost; (ii) debt and equity securities that are bought and held principally for
the purpose of selling them in the near term are classified as "trading" and
reported at fair value, with unrealized gains and losses included in earnings;
and (iii) debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as "available-for-sale" and
reported at fair value, with unrealized gains and losses excluded from earnings
and reported net of deferred taxes as a separate component of stockholders'
equity.
5
<PAGE> 186
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The adoption of this Statement did not have any effect on the results of
operations. The Bank's investment portfolio consists of securities classified
as held-to-maturity and available-for-sale. Investment securities classified as
held-to-maturity consist of securities which management has the intent and
ability to hold to maturity, primarily investments held for tax purposes. These
securities are stated at cost adjusted for amortization of premiums and
accretion of discounts, which are recognized as adjustments to interest income
on a basis that approximates the constant yield method.
Gains and losses on the sale of investment securities are recorded when
realized on a specific identity basis or when, in the opinion of management, an
unrealized loss is other than temporary in nature. All investment securities
transactions are recorded using a method which approximates trade-date
accounting.
LOANS. Loans are stated at the principal amount outstanding less unearned
interest. Interest income on loans is accrued using a simple interest method,
except for unearned income which is recorded as income using a method which
approximates the interest method. Loan origination fees and direct loan
origination costs are recognized currently as income and period costs,
respectively, and do not vary materially from the results that would be
recorded using the deferral method prescribed by SFAS No. 91, Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and
Initial Direct Costs of Leases.
Loans are generally placed on nonaccrual status and interest is not recorded
currently if payment in full of principal or interest is not expected or when
the payment of principal or interest is more than 90 days past due, unless it
is both well-secured and in the process of collection. Interest income
previously accrued is reversed at that time. Income recognition on installment
loans is discontinued and the loan is charged off when the full principal and
interest is determined uncollectible by management.
The Company adopted the provisions of SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, as amended by SFAS No. 118, Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures, during 1995. SFAS
No. 114 prescribes a valuation methodology for impaired loans as defined by the
statement. Generally, a loan is considered impaired if management believes that
it is probable that all amounts due will not be collected according to the
contractual terms in the loan agreement. An impaired loan must be valued using
the present value of expected cash flows discounted at the loan's effective
interest rate, the loan's observable market value, or the fair value of the
loan's underlying collateral. The adoption of these standards had no impact on
the allowance for losses on loans or on net income for the year ended December
31, 1995, and the related disclosures are not significant.
ALLOWANCE FOR LOSSES ON LOANS. The allowance for losses on loans represents
management's estimate of potential losses inherent in the existing loan
portfolio. The allowance for losses on loans is increased by provisions for
losses on loans charged to expense and reduced by loans charged off, net of
recoveries. Provisions for losses on loans are determined based on
6
<PAGE> 187
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
management's evaluation of past loan loss experience, current and anticipated
economic conditions, the level of classified and nonperforming loans, the
composition and size of the portfolio, reviews and evaluations of specific
loans, and the results of regulatory examinations. The allowance for losses on
loans is maintained at a level considered adequate by management to provide for
losses in the existing loan portfolio. In evaluating the adequacy of the
allowance, management makes certain estimates and assumptions which are
susceptible to change in the near term. While management uses available
information to recognize losses on loans, future additions to the allowance may
be necessary based on changes in economic conditions.
PREMISES AND EQUIPMENT. Premises and equipment are stated at cost, less
accumulated depreciation. Depreciation provisions are computed principally on
accelerated methods over the estimated useful lives of the assets (buildings
and improvements - 10 to 30 years; furniture and fixtures - 5 to 7 years).
OTHER REAL ESTATE. Other real estate represents real estate acquired through
foreclosure and is stated at the lower of the recorded amount of the loan or
the net realizable value (which approximates the fair value) of the underlying
real estate. Any losses at foreclosure are charged to the allowance for loan
losses. Any subsequent reduction is charged to expense.
INCOME TAXES. The Company and Bank file consolidated federal and state income
tax returns. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. If based on management's
estimates that it is more likely than not that some portion or all of the
deferred tax assets will not be realized, a valuation allowance is provided.
EARNINGS PER SHARE. Earnings per share amounts are based on the weighted
average common shares outstanding.
NOTE 2 - RESTRICTIONS ON CASH
The Company is required by the Federal Reserve Board to maintain average
reserve balances. The average required balance to be maintained for such
purpose during 1995 was approximately $577,000, which is included in cash and
due from banks in the accompanying consolidated balance sheet.
7
<PAGE> 188
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
NOTE 3 - INVESTMENT SECURITIES
The amortized cost and fair value of investment securities at December 31, 1995
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
AVAILABLE-FOR-SALE
U.S. Treasury securities $ 501 $ 2 $ -- $ 503
U.S. Government agencies
Mortgage-backed and related securities 22,884 354 68 23,170
Obligations of states and political
subdivisions 13,834 856 22 14,668
------- ------ ---- -------
Total available-for sale $37,219 $1,212 $ 90 $38,341
======= ====== ==== =======
Held-to-maturity
Obligations of states and political
subdivisions $ 1,445 $ 3 $112 $ 1,336
------- ------ ---- -------
Total $38,664 $1,215 $202 $39,677
======= ====== ==== =======
</TABLE>
The Company had gross realized gains of $121,000 and $110,000 during 1995 and
1994, respectively. The Company had gross realized losses of $122,000 and
$93,000 during 1995 and 1994, respectively.
The following table presents the contractual maturities of investment
securities at December 31, 1995 (in thousands):
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE HELD-TO-MATURITY
------------------------ --------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
---------- ---------- -------- -------
<S> <C> <C> <C> <C>
Maturing
Within one year $ 12,216 $ 12,505 $ - $ -
After one but within five years 16,881 17,404 1,160 1,136
After five but within ten years 7,039 7,358 285 200
After ten years 1,083 1,074 - -
---------- ---------- -------- -------
Total $ 37,219 $ 38,341 $ 1,445 $ 1,336
========== ========== ======== =======
</TABLE>
Expected maturities of mortgage-backed and related securities and certain
obligations of states and political subdivisions may differ from contractual
maturities because borrowers have the right to call or prepay obligations with
or without call or prepayment penalties.
8
<PAGE> 189
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
On November 15, 1995, the Financial Accounting Standards Board ("FASB") issued
a special report pertaining to the implementation of Statement of Financial
Accounting Standards No. 115 Accounting for Certain Investments in Debt and
Equity Securities ("FAS 115"). Concurrent with the issuance of the report but
no later than December 31, 1995, the FASB allowed for a reassessment of the
appropriateness of the classification of securities held at that time and to
account for any resulting reclassification at fair value. Reclassifications
from the held-to-maturity category that were a result of this one-time
assessment would not call into question the intent of the Company to hold other
debt securities until maturity in the future. Based upon this guidance, SBT
transferred approximately $10.3 million of held-to-maturity investment
securities to the available-for-sale portfolio. The transfer had no impact on
earnings.
The sale of $500,000 of held-to-maturity investment securities during 1995 was
in response to requests made by the Company's primary regulatory agency to sell
such securities due to credit concerns.
Investment securities with a carrying value of approximately $2.1 million (fair
value of approximately $2.2 million) at December 31, 1995 were pledged to
secure public and trust funds on deposit and for other purposes as required or
permitted by law.
NOTE 4 - LOANS
Loans outstanding at December 31, 1995 are summarized as follows (in
thousands):
<TABLE>
<S> <C>
Commercial, financial and agricultural $ 2,845
Real estate
Secured by single-family residential properties 27,909
Commercial, construction and land development 5,989
Consumer 10,195
Other loans 1,779
--------
Total gross loans 48,717
Unearned interest (679)
--------
Total loans, net of unearned interest $ 48,038
========
Nonaccrual loans $ 19
Other real estate owned 30
--------
Nonperforming assets $ 49
========
Loans 90 days or more past due and still accruing interest $ 89
========
</TABLE>
9
<PAGE> 190
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
There were no material outstanding unfunded commitments related to the above
nonperforming loans at December 31, 1995. Interest which would have been earned
under the original terms on nonaccrual loans did not materially differ from
that actually recorded.
CONCENTRATION OF CREDIT RISK. The Company's lending activities are concentrated
in McNairy, Hardeman and Hardin Counties, Tennessee. The Company's loan
portfolio is primarily concentrated in single family residential and consumer
loans. The loans are collateralized by various security interests, including
but not limited to crops, mortgages, equipment, automobiles and deposits. In
some instances loans are extended on an unsecured basis.
FINANCIAL INSTRUMENTS. The Company is a party to financial instruments with
off-balance-sheet credit risk in the normal course of business in order to meet
the financing needs of its customers. These financial instruments represent
letters of credit. These instruments involve, to varying degrees, elements of
credit risk and interest rate risk in excess of the amounts recognized in the
consolidated balance sheet. The Company follows the same credit policies in
making commitments and contractual obligations as it does for on-balance-sheet
instruments. The contractual amounts of these instruments reflect the extent of
involvement the Company has in particular classes of financial instruments.
Off-balance-sheet contractual amounts at December 31, 1995 in the form of
standby, commercial and similar letters of credit totaled $10,000. Letters of
credit are conditional commitments issued by the Company to guarantee the
performance of a customer to a third party and are not reflected in the
Company's financial statements. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending loan facilities to
customers. The Company, in some cases, holds various types of collateral to
support those commitments for which collateral is deemed necessary. The letters
of credit outstanding at December 31, 1995 expires in 1996.
NOTE 5 - ALLOWANCE FOR LOAN LOSSES
The following summarizes the changes in the allowance for loan losses for the
years ended December 31, 1995 and 1994 (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1994
----- -----
<S> <C> <C>
Balance, January 1 $ 590 $ 604
Provision for loan losses 120 120
Recoveries of loans previously charged off 58 79
Amounts charged off (276) (213)
----- -----
Balance, December 31 $ 492 $ 590
===== =====
</TABLE>
10
<PAGE> 191
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 6 - PREMISES AND EQUIPMENT
A summary of premises and equipment at December 31, 1995 is as follows (in
thousands):
<TABLE>
<S> <C>
Land $ 155
Buildings and improvements 1,038
Furniture, fixtures and equipment 256
Automobiles 15
-------
1,464
Less accumulated depreciation (1,016)
-------
Premises and equipment, net $ 448
=======
</TABLE>
NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company maintains an employee stock ownership plan (the "ESOP") which
covers substantially all full-time employees. The Company's annual
contributions to the ESOP are discretionary and are determined by the Board of
Directors. During 1995 and 1994, the Company contributed $67,000 and $66,000,
respectively to the ESOP. The ESOP is the most significant stockholder of the
Company as of December 31, 1995 and owns 1,616 shares of the Company's common
stock, all of which were allocated to participants.
NOTE 8 - DIVIDEND RESTRICTIONS
The amount of dividends which the Bank may pay to the Company is limited by
applicable laws and regulations. The Bank is incorporated under the laws of the
state of Tennessee and may pay dividends only to the extent of their unreserved
and unrestricted additional paid-in capital and retained earnings. The Federal
Deposit Insurance Corporation ("FDIC"), the Bank's primary regulator, imposes
no dollar limit on dividends paid by state-chartered banks but requires
maintenance of certain capital levels. The Company, at a minimum, must maintain
total risk-based capital greater than or equal to eight percent (8%) of risk
adjusted total assets (as defined). Under the current FDIC capital guidelines,
the Company could pay approximately $8.9 million in dividends. The above
amounts may be paid but, as a practical matter, other considerations, including
past dividend levels, may affect management's decision with respect to the
payment of dividends.
11
<PAGE> 192
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 9 - PARENT COMPANY ONLY FINANCIAL INFORMATION
CONDENSED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
1995
----
<S> <C>
ASSETS
Cash due from Bank (1) $ 40
Investment in the Bank (1) 12,977
-------
TOTAL ASSETS $13,017
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ --
Stockholders' equity 13,017
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,017
=======
</TABLE>
CONDENSED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------
1995 1994
---- ----
<S> <C> <C>
Dividends from Bank (1) $ 186 $ 186
Equity in undistributed income of Bank (1) 1,068 1,033
-------- -----
NET INCOME $ 1,254 $1,219
======== ======
</TABLE>
(1) Eliminated in consolidation
12
<PAGE> 193
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
CONDENSED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------
1995 1994
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,254 $ 1,219
Equity in undistributed income of Bank (1,068) (1,033)
------- -------
Net cash provided by operating activities 186 186
------- -------
FINANCING ACTIVITIES
Cash dividends paid (163) (163)
Treasury stock purchases (42) --
------- -------
Net cash used in financing activities (205) (163)
------- -------
CASH AND CASH EQUIVALENTS
Net (decrease) increase (19) 23
Beginning of year 59 36
------- -------
End of year $ 40 $ 59
======= =======
</TABLE>
NOTE 10 - INCOME TAXES
The components of income tax expense for the years ended December 31, 1995 and
1994 are as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------
1995 1994
------- -------
<S> <C> <C>
Current expense
Federal $ 350 $ 354
State 98 99
------- -------
Total current expense 448 453
------- -------
Deferred expense
Federal 31 5
State 7 1
------- -------
Total deferred expense 38 6
------- -------
Income tax expense $ 486 $ 459
======= =======
</TABLE>
13
<PAGE> 194
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
The net deferred tax liability is comprised of the following at December 31,
1995 (in thousands):
<TABLE>
<S> <C>
Gross deferred tax assets:
Allowance for loan losses $ 119
Accumulated depreciation on premises and equipment 12
-----
Total deferred tax assets 131
-----
Gross deferred tax liabilities:
Unrealized gain on available-for-sale investment securities (426)
-----
Deferred tax liability, net $(295)
=====
</TABLE>
A reconciliation of the statutory federal income tax rate to the effective tax
rate for the years ended December 31, 1995 and 1994 is as follows (dollars in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994
------------------ ----------------
% OF % OF
PRE-TAX PRE-TAX
AMOUNT INCOME AMOUNT INCOME
------ ------ ------ ------
<S> <C> <C> <C> <C>
Computed "expected" tax $ 592 34.00% $ 571 34.00%
State income taxes, net of federal benefit 69 3.97 66 3.96
Tax-exempt income, net of disallowed interest expense (175) (10.04) (157) (9.36)
Other -- -- (21) (1.25)
----- ----- ----- -----
Income tax expense $ 486 27.93% $ 459 27.35%
===== ===== ===== =====
</TABLE>
NOTE 11 - RELATED PARTY TRANSACTIONS
The Company had outstanding loans to executive officers, directors, and
principal stockholders and their affiliates totaling $63,000 at December 31,
1995. During 1995, $15,000 in new loans were made and $66,000 repaid. These
loans were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
unrelated persons. Management does not expect any losses from the outstanding
related party loans nor are any of these loans on nonaccrual status.
14
<PAGE> 195
APPENDIX E
Unaudited Interim Consolidated Financial Statements of SBT Bancshares, Inc. as
of and for the three months ended March 31, 1997 (and notes thereto)
<PAGE> 196
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Cash and due from banks $ 3,357
Federal funds sold 6,400
Investment securities:
Available-for-sale (Amortized cost: $39,014) 39,030
Held-to-maturity (Fair value: $1,135) 1,159
Loans, net of unearned interest 51,085
Less: Allowance for losses on loans (1,096)
---------
Net loans 49,989
Premises and equipment, net 470
Accrued interest receivable 1,069
Income taxes receivable 244
Net deferred tax asset 337
Other assets 48
---------
TOTAL ASSETS $ 102,103
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 12,368
Certificates of deposit of $100,000 and over 5,954
Other interest-bearing, including NOW accounts of $2,962 69,342
---------
Total deposits 87,664
Accrued interest payable 440
Other liabilities 204
---------
TOTAL LIABILITIES 88,308
---------
Stockholders' equity
Common stock, $20 par value; 50,000 shares authorized, 15,500
issued and outstanding 310
Additional paid-in capital 70
Retained earnings 14,149
Unrealized gain on available-for-sale securities, net 10
Treasury stock, at cost, 1,931 shares (744)
---------
TOTAL STOCKHOLDERS' EQUITY 13,795
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 102,103
=========
</TABLE>
The accompanying notes are an integral part of these unaudited
consolidated financial statements.
1
<PAGE> 197
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31,
1997 1996
---- ----
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,158 $ 1,099
Interest on investment securities
Taxable 424 476
Nontaxable 209 162
Interest on federal funds sold 42 38
------- -------
Total interest income 1,833 1,775
------- -------
INTEREST EXPENSE
Interest on deposits 895 851
------- -------
Net interest income 938 924
Provision for losses on loans 30 30
------- -------
Net interest income after provision for losses on loans 908 894
NONINTEREST INCOME
Service charges on deposit accounts 31 36
Investment securities gains, net 35 19
Other 10 9
------- -------
Total noninterest income 76 64
------- -------
NONINTEREST EXPENSE
Salaries and employee benefits 247 239
Occupancy and equipment 31 28
Other 195 123
------- -------
Total noninterest expense 473 390
------- -------
EARNINGS BEFORE INCOME TAXES 511 568
Income taxes 103 138
------- -------
NET EARNINGS $ 408 $ 430
======= =======
Earnings per share $ 30.07 $ 31.69
======= =======
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 13,569 13,569
======= =======
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
2
<PAGE> 198
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
ADDITIONAL AVAILABLE-
COMMON PAID-IN RETAINED FOR-SALE TREASURY
STOCK CAPITAL EARNINGS SECURITIES, NET STOCK TOTAL
----- ------- -------- --------------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 $310 $70 $13,741 $ 294 $(744) $13,671
Net earnings -- -- 408 -- -- 408
Change in unrealized gain on
available-for-sale investment
securities, net of applicable taxes -- -- -- (284) -- (284)
==== === ======= ===== ===== =======
BALANCE AT MARCH 31, 1997 $310 $70 $14,149 $ 10 $(744) $13,795
==== === ======= ===== ===== =======
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
3
<PAGE> 199
SBT BANCSHARES, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31,
---------
1997 1996
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 408 $ 430
Adjustments to reconcile net earnings to net cash provided by operating activities:
Provision for losses on loans 30 30
Depreciation 14 18
Investment securities gains, net (35) (19)
Net accretion of investment securities (49) (33)
Decrease (increase) in assets:
Accrued interest receivable 165 40
Income taxes receivable 112 --
Other assets 12 (5)
(Decrease) increase in liabilities:
Accrued interest payable (14) (10)
Other liabilities 114 112
------- -------
Net cash provided by operating activities 757 563
------- -------
INVESTING ACTIVITIES
Proceeds from sales and maturities of available-for-sale investment securities 2,190 6,486
Purchases of available-for-sale investment securities (3,987) (9,220)
Net decrease (increase) in loans 1,564 (1,232)
Purchases of premises and equipment (97) --
------- -------
Net cash used by investing activities (330) (3,966)
------- -------
FINANCING ACTIVITIES
Net increase in deposits 3,776 3,797
------- -------
Net cash provided by financing activities 3,776 3,797
------- -------
CASH AND CASH EQUIVALENTS
Net increase 4,203 394
Beginning of the period 5,554 5,946
------- -------
End of the period $ 9,757 $ 6,340
======= =======
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 909 $ 861
======= =======
Cash (received) paid for income taxes $ (112) $ 52
======= =======
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
4
<PAGE> 200
SBT BANCSHARES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements reflect all
adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. The statements
should be read in conjunction with the summary of accounting policies and notes
to financial statements included in the Company's financial statements for the
year ended December 31, 1996. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted in accordance with the rules
of the Securities and Exchange Commission.
NOTE 2 - ACCOUNTING POLICIES
Reference is made to the accounting policies of the Company described in the
notes to consolidated financial statements for the year ended December 31,
1996. The Company has consistently followed those policies in preparing this
report.
NOTE 3 - PROPOSED MERGER
In December 1996, the Company executed a merger agreement with Union Planters
Corporation. Consummation of the merger is dependent upon the approval of the
shareholders and various regulatory agencies.
5
<PAGE> 201
APPENDIX F
Fairness Opinion of Mercer Capital Management, Inc.
<PAGE> 202
July 16, 1997
The Board of Directors
c/o Mr. Richard Rankin
Chairman of the Board of Directors
SBT Bancshares, Inc.
P.O. 249
Selmer, TN 38375
RE: Fairness Opinion Regarding the Proposed Acquisition of SBT Bancshares,
Inc. by Union Planters Corporation
Dear Directors:
Mercer Capitol Management, Inc. ("Mercer Capital") has been retained by the
Board of Directors of SBT Bancshares, Inc. ("SBT") to issue a fairness opinion
for the proposed merger between SBT and Union Planters Corporation ("UPC"). The
fairness opinion is issued from a financial point of view of behalf of SBT
shareholders.
Under the terms of the Agreement and Plan of Reorganization among Union
Planters Corporation, Community Bancorp, Inc. and SBT Bancshares, Inc. ("the
Agreement"), dated November 26, 1996, SBT will be merged into Community
Bancorp, Inc., a wholly owned subsidiary of UPC. As a result of the Merger, SBT
would be acquired by UPC and Selmer Bank and Trust Company ("Selmer Bank &
Trust"), the majority-owned subsidiary bank of SBT through which SBT operates,
would become a direct subsidiary of Union Planters Community Bancorp, Inc. and
an indirect subsidiary of UPC. SBT shareholders will receive 45.12 shares of
UPC for each share of SBT. Given SBT's 13,569 outstanding common share
equivalents, UPC will issue 612,233 common shares to SBT shareholders. The
Agreement includes a "fixed" exchange ratio; accordingly, the exchange ratio of
45.12 UPC shares per each SBT share will not be adjusted for fluctuations in
UPC's stock price prior to closing.
On the date of announcement of October 9, 1996, UPC was trading in the vicinity
of $35.00 per share, which implied that SBT shareholders would receive an
aggregate consideration of $21.4 million, or $1,579.20 per share. The implied
price/book ("P/B") radio was about 175% of fully diluted book value per share,
while the price/earnings ("P/E") ratio was 16.2x based upon trailing twelve
month earnings per share. Since then, UPC's shares have trended up to a recent
high of $50.87 per share. The current implied aggregate consideration is $28.85
million, or $2,126.28 per share, based upon UPC's price of $47.13 per share as
of May 30, 1997. The current implied P/B ratio is 209%, and the P/E ratio is
24x trailing twelve month earnings based upon SBT's financial data as of March
31, 1997.
<PAGE> 203
July 16, 1997
Page 8
- --------------------------
Given the fixed exchange ratio, the actual consideration received at closing
will differ from the current implied pricing if UPC's stock price increases or
decreases. Among other things, the transaction is subject to an affirmation of
this opinion based upon the price of UPC's shares at closing, general market
conditions, and the operating positions of both UPC and SBT at that time.
Mercer Capital did not compile nor audit SBT's or UPC's financial statements,
nor have we independently verified the information reviewed. We have relied
upon such information as being complete and accurate in all material respects.
We have not made an independent valuation of the loan portfolio, adequacy of
the loan loss reserve or other assets or liabilities of either institution.
Our opinion does not constitute a recommendation to any shareholder as to how
the shareholder should vote on the proposed merger; nor have we expressed any
opinion as to the prices at which any security of UPC or SBT might trade in the
future.
Based upon our analysis of the proposed transaction, it is our opinion that the
acquisition of SBT Bancshares, Inc. by Union Planters Corporation is fair from
a financial point of view for the shareholders of SBT.
Sincerely yours,
MERCER CAPITAL MANAGEMENT, INC.
/s/ Michael Julius, ASA, CFA
----------------------------
J. Michael Julius, ASA, CFA
Vice President
<PAGE> 204
APPENDIX G
Section 262 of the Delaware General Corporation Law, pertaining to applicable
dissenters' rights
<PAGE> 205
SS. 262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share"
mean and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 251, 252, 254, 257, 258 or 263 of this title:
(1) Provided, however, that no appraisal rights under this
section shall be available for the shares of any class or series of
stock which, at the record date fixed to determine the stockholders
entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation,
were either (i) listed on a national securities exchange or (ii) held
of record by more than 2,000 stockholders; and further provided that
no appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection,
appraisal rights under this section shall be available for the shares
of any class or series of stock of a constituent corporation if the
holders thereof are required by the terms of an agreement or merger or
consolidation pursuant to ss.ss. 251, 252, 254, 257, 258 and 263 of
this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or
resulting from such merger or consolidation;
b. Shares of stock of any other corporation which at
the effective date of the merger or consolidation will be
either listed on a national securities exchange or held of
record by more than 2,000 stockholders;
c. Cash in lieu of fractional shares of the
corporation described in the foregoing subparagraphs a. and
b. of this paragraph; or
d. Any combination of the shares of stock and cash
in lieu of fractional shares described in the foregoing
subparagraphs a., b,. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss. 253 of this title is
not owned by the parent corporation immediately prior to the merger,
appraisal rights shall be available for the shares of the subsidiary
Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its certificate
of incorporation, any merger or consolidation in which the corporation is a
constituent
1
<PAGE> 206
corporation or the sale of all or substantially all of the assets of the
corporation. If the certificate of incorporation contains such a provision, the
procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for approval
at a meeting of stockholders, the corporation, not less than 20 days
prior to the meeting, shall notify each of its stockholders who was
such on the record date for such meeting with respect to shares for
which appraisal rights are available pursuant to subsection (b) or (c)
hereof that appraisal rights are available for any or all of the
shares of the constituent corporations, and shall include in such
notice a copy of this section. Each stockholder electing to demand the
appraisal of his shares shall deliver to the corporation, before the
taking of the vote on the merger or consolidation, a written demand
for appraisal of his shares. Such demand will be sufficient if it
reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of
his shares. A proxy or vote against the merger or consolidation shall
not constitute such a demand. A stockholder electing to take such
action must do so by a separate written demand as herein provided.
Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify
each stockholder of each constituent corporation who has complied with
this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation
has become effective; or
(2) If the merger or consolidation was approved pursuant to
ss. 228 or 253 of this title, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or
within 10 days thereafter, shall notify each of the stockholders
entitled to appraisal rights of the effective date of the merger or
consolidation and that appraisal rights are available for any or all
of the shares of the constituent corporation, and shall include in
such notice a copy of this section. The notice shall be sent by
certified or registered mail, return receipt requested, addressed to
the stockholder at his address as it appears on the records of the
corporation. Any stockholder entitled to appraisal rights may, within
20 days after the date of mailing of the notice, demand in writing
from the surviving or resulting corporation the appraisal of his
shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who
has complied with subsections (a) and (d) hereof and who is otherwise entitled
to appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after his written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of the
period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
2
<PAGE> 207
(f) Upon the filing of any such petition by a stockholder, service of
a copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted his certificates of stock to the Register
in Chancery, if such is required, may participate fully in all proceedings
until it is finally determined that he is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple or
compound, as the Court may direct. Payment shall be so made to each such
stockholder, in the case of holders of uncertificated stock forthwith, and the
case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree may
be enforced as other decrees in the Court of Chancery may be enforced, whether
such surviving or resulting corporation be a corporation of this State or of
any state.
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation,
no stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective
3
<PAGE> 208
date of the merger or consolidation); provided, however, that if no petition
for an appraisal shall be filed within the time provided in subsection (e) of
this section, or if such stockholder shall deliver to the surviving or
resulting corporation a written withdrawal of his demand for an appraisal and
an acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e) of
this section or thereafter with the written approval of the corporation, then
the right of such stockholder to an appraisal shall cease. Notwithstanding the
foregoing, no appraisal proceeding in the Court of Chancery shall be dismissed
as to any stockholder without the approval of the Court, and such approval may
be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (8 Del. C. 1953, ss.
262; 56 Del. Laws, c. 50, 56 Del. Laws, c. 186, ss. 24; 57 Del. Laws, c. 148,
ss.ss. 27-29; 59 Del. Laws, c. 106 ss. 12; 60 Del. Laws, c. 371, ss.ss. 3- 12;
63 Del. Laws, c. 25, ss. 14; 63 Del. Laws, c. 152, ss.ss. 1, 2; 64 Del. Laws,
c. 112, ss.ss. 46-54; 66 Del. Laws, c. 136, ss.ss. 30-32; 66 Del. Laws, c. 352,
ss. 9; 67 Del. Laws, c. 376, ss.ss. 19, 20.)
4
<PAGE> 209
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Charter of the Registrant provides as follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the Corporation may indemnify
or purchase and maintain insurance to indemnify any of its directors, officers,
employees or agents and any persons who may serve at the request of the
Corporation as directors, officers, employees, trustees or agents of any other
corporation, firm, association, national banking association, state-chartered
bank, trust company, business trust, organization or any other type of entity
whether or not the Corporation shall have any ownership interest in such
entity. Such indemnification(s) may be provided for in the Bylaws or by
resolution of the Board of Directors or by appropriate contract with the person
involved.
Article V, INDEMNIFICATION, of the Registrant's Bylaws provides as follows:
The Corporation does hereby indemnify its directors and officers to the fullest
extent permitted by the laws of the State of Tennessee and by ARTICLE TWELFTH
of its Charter. The Corporation may indemnify any other person to the extent
permitted by the Charter and by applicable law.
Indemnification of corporate directors and officers is governed by Sections
48-18-501 through 48-18-509 of the Tennessee Business Corporation Act (the
"Act"). Under the Act, a person may be indemnified by a corporation against
judgments, fines, amounts paid in settlement and reasonable expenses (including
attorneys' fees) actually and necessarily incurred by him in connection with
any threatened or pending suit or proceeding or any appeal thereof (other than
an action by or in the right of the corporation), whether civil or criminal, by
reason of the fact that he is or was a director or officer of the corporation
or is or was serving at the request of the corporation as a director or
officer, employee or agent of another corporation of any type or kind, domestic
or foreign, if such director or officer acted in good faith for a purpose which
he reasonably believed to be in the best interest of the corporation and, in
criminal actions or proceedings only, in addition, had no reasonable cause to
believe that his conduct was unlawful. A Tennessee corporation may indemnify a
director or officer thereof in a suit by or in the right of the corporation
against amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred as a result of such suit
unless such director or officer did not act in good faith or with the degree of
diligence, care and skill which ordinarily prudent men exercise under similar
circumstances and in like positions.
A person who has been wholly successful, on the merits or otherwise, in the
defense of any of the foregoing types of suits or proceedings is entitled to
indemnification for the foregoing amounts. A person who has not been wholly
successful in any such suit or proceeding may be indemnified only upon the
order of a court or a finding that the director or officer met the required
statutory standard of conduct by (i) a majority vote of a disinterested quorum
of the board of Directors, (ii) the Board of Directors based upon the written
opinion of independent legal counsel to such effect, or (iii) a vote of the
shareholders.
II-1
<PAGE> 210
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C> <C>
2 -- Agreement and Plan of Reorganization dated as of November 26, 1997, by and
between Union Planters Corporation, Union Planters Community Bancorp, Inc.,
and SBT Bancshares, Inc., along with the Plan of Merger annexed thereto as
Exhibit 1 (included as Appendix A to the Prospectus) and the Stock Option
Agreement dated as of November 26, 1996 between UPC and SBT, annexed
thereto as Exhibit 2 (included as Appendix B to the Prospectus)
5 -- Opinion of E. James House, Jr., Esquire, Secretary and Manager of the Legal
Department of Union Planters Corporation, regarding legality of the Union
Planters Corporation Common Stock
8 -- Opinion of Wyatt, Tarrant & Combs regarding tax matters and consequences to
shareholders
23(a) -- Consent of E. James House, Jr., Esq. (included in Exhibit 5)
23(b) -- Consent of Wyatt, Tarrant & Combs (included in Exhibit 8)
23(c) -- Consent of Price Waterhouse LLP - Union Planters Corporation
23(d) -- Consent of Price Waterhouse LLP - SBT Bancshares, Inc.
23(e) -- Consent of Mercer Capital Management, Inc.
24 -- Power of Attorney (included in signature pages)
99(a) -- Form of Proxy
</TABLE>
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(2) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) That for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
II-2
<PAGE> 211
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(5) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to Items 4,
10(b), 11, or 13 of this Form S-4, within one business day of receipt
of such request, and to send the incorporated documents by first class
mail or other equally prompt means. This includes information
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
(6) To supply by means of a post-effective amendment all
information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.
(7) That prior to any public reoffering of the securities
registered hereunder through the use of a prospectus which is a part
of this registration statement, by any person or party who is deemed
to be an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the
applicable form.
(8) That every prospectus: (i) that is filed pursuant to
Paragraph (7) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Act and is used on connection
with and offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be
used until such amendment is effective, and that, for purposes of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-3
<PAGE> 212
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized in the City
of Memphis, State of Tennessee, on the 17th day of July, 1997.
DATE: July 17, 1997
UNION PLANTERS CORPORATION
By: /s/ Benjamin W. Rawlins, Jr.
----------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and Chief
Executive Officer
We, the undersigned directors and officers of Union Planters Corporation do
hereby constitute and appoint E. James House, Jr. and M. Kirk Walters, and each
of them, our true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for us and in our name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and we do
hereby ratify and confirm all that said attorneys-in-fact and agents, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Name Capacity Date
- ---- -------- ----
<S> <C> <C>
/s/ Benjamin W. Rawlins, Jr. Chairman of the Board, July 17, 1997
- ------------------------------------ Chief Executive Officer,
Benjamin W. Rawlins, Jr. Director (Principal
Executive Officer)
/s/ John W. Parker Executive Vice President July 17, 1997
- ------------------------------------ and Chief Financial
John W. Parker Officer (Principal
Financial Officer)
/s/ M. Kirk Walters Senior Vice President, July 17, 1997
- ------------------------------------ Treasurer and Chief
M. Kirk Walters Accounting Officer
/s/ Albert M. Austin Director July 17, 1997
- ------------------------------------
Albert M. Austin
/s/ Edgar H. Bailey Vice Chairman of the Board July 17, 1997
- ------------------------------------ and Director
Edgar H. Bailey
/s/ Marvin E. Bruce Director July 17, 1997
- ------------------------------------
Marvin E. Bruce
</TABLE>
II-4
<PAGE> 213
<TABLE>
<S> <C> <C>
Director
- ------------------------------------
George W. Bryan
/s/ James E. Harwood Director July 17, 1997
- ------------------------------------
James E. Harwood
/s/ Parnell S. Lewis, Jr. Director July 17, 1997
- ------------------------------------
Parnell S. Lewis, Jr.
/s/ C.J. Lowrance Director July 17, 1997
- ------------------------------------
C. J. Lowrance
/s/ Jackson W. Moore President, Chief Operating July 17, 1997
- ------------------------------------ Officer and Director
Jackson W. Moore
/s/ Stanley D. Overton Director July 17, 1997
- ------------------------------------
Stanley D. Overton
/s/ Dr. V. Lane Rawlins Director July 17, 1997
- ------------------------------------
Dr. V. Lane Rawlins
/s/ Donald F. Schuppe Director July 17, 1997
- ------------------------------------
Donald F. Schuppe
/s/ Mike P. Sturdivant Director July 17, 1997
- ------------------------------------
Mike P. Sturdivant
/s/ Richard A. Trippeer, Jr. Director July 17, 1997
- ------------------------------------
Richard A. Trippeer, Jr.
Director
- ------------------------------------
Spence L. Wilson
</TABLE>
II-5
<PAGE> 214
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C> <C>
2 -- Agreement and Plan of Reorganization dated as of November 26, 1997, by and
between Union Planters Corporation, Union Planters Community Bancorp, Inc.,
and SBT Bancshares, Inc., along with the Plan of Merger annexed thereto as
Exhibit 1 (included as Appendix A to the Prospectus) and the Stock Option
Agreement dated as of November 26, 1996 between UPC and SBT, annexed
thereto as Exhibit 2 (included as Appendix B to the Prospectus)
5 -- Opinion of E. James House, Jr., Esquire, Secretary and Manager of the Legal
Department of Union Planters Corporation, regarding legality of the Union
Planters Corporation Common Stock
8 -- Opinion of Wyatt, Tarrant & Combs regarding tax matters and consequences to
shareholders
23(a) -- Consent of E. James House, Jr., Esq. (included in Exhibit 5)
23(b) -- Consent of Wyatt, Tarrant & Combs (included in Exhibit 8)
23(c) -- Consent of Price Waterhouse LLP - Union Planters Corporation
23(d) -- Consent of Price Waterhouse LLP - SBT Bancshares, Inc.
23(e) -- Consent of Mercer Capital Management, Inc.
24 -- Power of Attorney (included in signature pages)
99(a) -- Form of Proxy
</TABLE>
II-6
<PAGE> 1
EXHIBIT 5
LEGAL OPINION OF E. JAMES HOUSE, JR.
AS TO VALIDITY OF SHARES OF UPC COMMON STOCK
<PAGE> 2
LOGO EXHIBIT 5
UNION PLANTERS CORPORATION
July 17, 1997
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 612,233 Shares of the Common Stock, $5.00 Par Value Per Share
of Union Planters Corporation, a Tennessee Corporation
("UPC")
Gentlemen:
The undersigned has participated in the preparation of a registration statement
on Form S-4 (the "Registration Statement") for filing with the Securities and
Exchange Commission in respect to not more than 612,233 shares of UPC's common
stock, $5.00 par value per share ("UPC Common Stock") which may be issued by
UPC pursuant to an Agreement and Plan of Reorganization dated as of November
26, 1996, by and between UPC, Union Planters Community Bancorp, Inc.
("Community") and SBT Bancshares, Inc. ("SBT") (the "Agreement").
For purposes of rendering the opinion expressed herein, the undersigned has
examined UPC's corporate charter and all amendments thereto; UPC's by-laws and
amendments thereto; the Reorganization Agreement and such of UPC's corporate
records as the undersigned has deemed necessary and material to rendering the
undersigned's opinion. The undersigned has relied upon certificates of public
officials and representations of UPC officials, and has assumed that all
documents examined by the undersigned as originals are authentic, that all
documents submitted to the undersigned as photocopies are exact duplicates of
original documents, and that all signatures on all documents are genuine.
Further, the undersigned is familiar with and has supervised all corporate
action taken in connection with the authorization of the issuance and offering
of the subject securities.
Based upon and subject to the foregoing and subsequent assumptions,
qualifications and exceptions, it is the undersigned's opinion that:
1. UPC is a duly organized and validly existing corporation in good standing
under the laws of the State of Tennessee and has all requisite power and
authority to issue, sell and deliver the subject securities, and to carry on
its business and own its property; and
2. The shares of UPC Common Stock to be issued by UPC pursuant to the Merger
have been duly authorized and when issued by UPC in accordance therewith, such
shares of UPC Common Stock will be fully paid and nonassessable.
The opinion expressed above is limited by the following assumptions,
qualifications and exceptions.
(a) The undersigned is licensed to practice law only in the State of
Tennessee and expresses no opinion with respect to the effect of any laws other
than those of the State of Tennessee and of the United States of America.
(b) The opinion stated herein is based upon statutes, regulations,
rules, court decisions and other authorities existing and effective as of the
date of this opinion, and the undersigned undertakes no responsibility to
update or supplement said opinion in the event of or in response to any
subsequent
<PAGE> 3
Union Planters Corporation
July 17, 1997
Page 2
changes in the law or said authorities, or upon the occurrence after the date
hereof of events or circumstances that, if occurring prior to the date hereof,
might have resulted in a different opinion.
(c) This opinion has been rendered solely for the benefit of Union
Planters Corporation and no other person or entity shall be entitled to rely
hereon without the express written consent of the undersigned.
(d) This opinion is limited to the legal matters expressly set forth
herein, and no opinion is to be implied or inferred beyond the legal matters
expressly so addressed.
The undersigned hereby consents to the undersigned being named as a party
rendering a legal opinion under the caption "Legal Opinions" in the Prospectus
constituting part of the Registration Statement and to the filing of this
opinion with the Securities and Exchange Commission as well as all state
regulatory bodies and jurisdictions where qualification is sought for the sale
of the subject securities.
The undersigned is an officer of, and receives compensation from UPC and
therefore is not independent from UPC.
Very truly yours,
UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr.
-----------------------------
E. James House, Jr.
Manager, Legal Department
<PAGE> 1
[WYATT, TARRANT & COMBS LETTERHEAD]
July 17, 1997
Board of Directors
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Gentlemen:
We have acted as counsel to Union Planters Corporation, a Tennessee
corporation ("UPC"), in connection with (i) the proposed merger (the "Merger")
of SBT Bancshares, Inc., a Delaware corporation ("SBT"), with and into Union
Planters Community Bancorp, Inc., a Tennessee corporation and a wholly-owned
subsidiary of UPC ("Community"), pursuant to the terms of the Agreement and Plan
of Reorganization by and among UPC, Community and SBT dated November 26, 1996
(the "Merger Agreement") and related Plan of Merger between UPC, Community and
SBT (collectively, the "Plan of Reorganization"), and (ii) the filing of the
registration statement by UPC on Form S-4 (together with all amendments and
exhibits thereto through the date hereof, the "Registration Statement"), under
the Securities Act of 1933, as amended (the "Act"), covering the shares of UPC
Common Stock to be issued pursuant to the Plan of Reorganization. Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Registration Statement.
In rendering this opinion we have examined such documents as we have
deemed relevant or necessary, including without limitation, the Plan of
Reorganization and the Registration Statement. In our examination, we have
assumed the genuineness of all signatures, the due execution and delivery of all
documents, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all
<PAGE> 2
Board of Directors
Union Planters Corporation
July 17, 1997
Page 2.
documents submitted to us as certified, conformed or copies, and the
authenticity of the originals of such copies.
As to factual matters, in rendering this opinion, we have relied solely
on and have assumed the present and continuing truth and accuracy of (i) the
description of the facts relating to the Merger contained in the Plan of
Reorganization and Registration Statement, (ii) the factual representations and
warranties contained in the Plan of Reorganization and Registration Statement
and related documents and agreements, and (iii) the factual matters addressed by
representations from certain executive officers of UPC, Community and SBT
contained in letters to us dated July 17, 1997, copies of which are attached as
Exhibit A and Exhibit B to this opinion (the "Representation Letters"). The
Representation Letters address various factual matters relevant to the
qualification of the Merger as a tax-deferred reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). The
initial and continuing truth and accuracy of all such factual matters
constitutes an integral basis for, and a material condition to, this opinion.
The scope of this opinion is limited strictly to the matters set forth
below and no other opinion may be implied or inferred beyond such matters.
Without limiting the foregoing sentence, we express no opinion as to (i) any of
the local, state, foreign or other federal tax consequences resulting from the
Merger, (ii) the federal income tax consequences to shareholders of SBT subject
to special rules under the Code, such as foreign persons, tax-exempt
organizations, insurance companies, financial institutions, dealers in stocks
and securities, and persons who do not own such stock as a capital asset, (iii)
the federal income tax consequences affecting shares of SBT Common Stock
acquired upon exercise of stock options, stock purchase plan rights or otherwise
as compensation; and (iv) the tax consequences to holders of warrants, options
or other rights to acquire shares of SBT Common Stock.
Subject to the qualifications, assumptions and conditions provided
herein, we are of the opinion that:
1. The acquisition by Community of substantially all of the assets of
SBT in exchange for shares of UPC Common Stock and the assumption of liabilities
of SBT pursuant to the Merger will constitute a reorganization within the
meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code.
2. SBT, UPC and Community will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
<PAGE> 3
Board of Directors
Union Planters Corporation
July 17, 1997
Page 3.
3. No gain or loss will be recognized by SBT as a result of the Merger
(except for the inclusion in income of the amount of the bad-debt reserve
maintained by SBT 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).
4. No gain or loss will be recognized by Community or UPC as a result
of the Merger (except for the inclusion in income of the amount of the bad-debt
reserve maintained by SBT 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).
5. The tax basis of the assets received by Community will be the same
as the tax basis of such assets of SBT immediately prior to the Merger.
6. The holding period of the assets of SBT received by Community will
in each instance include the period for which such assets were held by SBT.
7. No gain or loss will be recognized by the shareholders of SBT as a
result of the exchange of SBT Common Stock for UPC Common Stock pursuant to the
Merger, except that a gain or loss will be recognized on the receipt of any cash
in lieu of a fractional share. Assuming that the SBT Common Stock is a capital
asset in the hands of the respective SBT shareholders, any gain or loss
recognized as a result of the receipt of cash in lieu of a fractional share will
be a capital gain or loss equal to the difference between the cash received and
that portion of the holder's tax basis in the SBT Common Stock allocable to the
fractional share.
8. The tax basis of UPC Common Stock to be received by the shareholders
of SBT will be the same as the tax basis of the SBT Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
9. The holding period of the UPC Common Stock to be received by
shareholders of SBT will include the holding period of the SBT Common Stock
surrendered in exchange therefor, provided the SBT shares were held as a capital
asset by the shareholders of SBT on the date of the exchange.
10. A shareholder of SBT who perfects his dissenter's rights and who
receives payment of the fair market value of his shares of SBT Common Stock will
be treated as having received such payment in
<PAGE> 4
Board of Directors
Union Planters Corporation
July 17, 1997
Page 4.
redemption of such stock. Such redemption will be subject to the conditions and
limitations of Section 302 of the Code.
This opinion is based on the Code, the Treasury Regulations promulgated
thereunder, judicial decisions and administrative pronouncements of the Internal
Revenue Service ("IRS"), all existing and in effect on the date of this opinion
and all of which are subject to change at any time, possibly retroactively. Any
such change could materially alter the conclusions reached in this opinion. We
undertake no obligation to you or any other person to give notice of any such
change. As noted above, this opinion is limited strictly to the matters
expressly stated herein and no other opinion may be implied or inferred beyond
such matters. You should realize that this opinion is not binding on the IRS or
the courts.
This opinion is provided to you solely for purposes of complying with
the requirements of Item 21(a) of Form S-4 under the Act and section 8.1(h) of
the Merger Agreement. We hereby consent to the use of this opinion as an exhibit
to the Registration Statement and to the reference to this Firm in the
Registration Statement under the caption "Legal Matters." In giving this consent
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder. Without our prior
written consent, this opinion may not otherwise be quoted or referred to in
whole or in part in any report or document or furnished to any other person or
entity other than your counsel, your accountants or your employees, except in
response to a valid subpoena or other lawful process.
Very truly yours,
/s/ WYATT, TARRANT & COMBS
--------------------------
WYATT, TARRANT & COMBS
<PAGE> 1
EXHIBIT 23(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus/Proxy
Statement constituting part of this Registration Statement on Form S-4 of Union
Planters Corporation of our report dated January 16, 1997, which appears
beginning on page 37 of Union Planters Corporation's 1996 Annual Report to
Shareholders, which is incorporated by reference in its Annual Report on Form
10-K for the year ended December 31, 1996. We also consent to the reference to
us under the heading "Experts" in such Prospectus/Proxy Statement.
/s/ PRICE WATERHOUSE LLP
- ------------------------------
PRICE WATERHOUSE LLP
Memphis, Tennessee
July 17, 1997
<PAGE> 1
EXHIBIT 23(D)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus/Proxy Statement constituting
part of this Registration Statement on Form S-4 of Union Planters Corporation
of our report dated February 7, 1997 relating to the financial statements of
SBT Bancshares, Inc. as of and for the year ended December 31, 1996, which
appears in such Prospectus/Proxy Statement. We also consent to the reference to
us under the heading "Experts" in such Prospectus/Proxy Statement.
/s/ PRICE WATERHOUSE LLP
- ------------------------------
PRICE WATERHOUSE LLP
Memphis, Tennessee
July 17, 1997
<PAGE> 1
EXHIBIT 23(E)
CONSENT OF FINANCIAL ADVISOR
We hereby consent to the inclusion in this Registration Statement on
Form S-4 of our opinion, dated as of June 27, 1997 and to the references to our
firm in the Proxy Statement/Prospectus. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933 or the Rules and
Regulations of the Securities and Exchange Commission thereunder.
/s/ Mercer Capital Management, Inc.
- --------------------------------------
Mercer Capital Management, Inc.
July 17, 1997
<PAGE> 1
PROXY EXHIBIT 99(A)
REVOCABLE PROXY
SBT BANCSHARES, INC.
SPECIAL MEETING OF SHAREHOLDERS
[DAY, MONTH & YEAR]
The undersigned hereby appoints _________ _______ and ________
________ with full powers of substitution, to act as proxies for the
undersigned, to vote all shares of Common Stock of SBT Bancshares, Inc. ("SBT")
which the undersigned is entitled to vote at a Special Meeting of
Shareholders ("Special Meeting"), to be held at the Selmer Civic Center, 230
North Fifth Street, Selmer, Tennessee 38375, at [time] p.m., local time, on
[day, month & year], and at any and all adjournments thereof, as follows:
<TABLE>
<S> <C> <C> <C>
FOR AGAINST ABSTAIN
--- ------- -------
1. The approval of the Reorganization Agreement
(the "Reorganization Agreement"), dated
November 26, 1996, between Union Planters
Corp. ("UPC"), Union Planters Community
Bancorp, Inc. ("Community") and SBT
Bancshares, Inc. ("SBT"), including the Plan
of Merger attached thereto as Exhibit 1,
pursuant to which SBT would be merged with
and into Community (the "Merger"), with
Community surviving the Merger as a wholly- ---- ---- ----
owned subsidiary of UPC. ---- ---- ----
</TABLE>
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED OR
ANY OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED FOR
THE PROPOSITION STATED. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL
MEETING, THIS PROXY WILL BE VOTED AS DETERMINED BY A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE MEETING.
<PAGE> 2
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Special Meeting or at any adjournment thereof and after notification to the
Secretary of the Company at the Meeting of the shareholder's decision to
terminate this proxy, then the power of said attorneys and proxies shall be
deemed terminated and of no further force and effect.
The undersigned acknowledges receipt from SBT prior to the execution
of this proxy, of a notice of the Special Meeting and a Prospectus/Proxy
Statement dated July 17, 1997.
Dated:
-------------
- ---------------------------------- ---------------------------------
PRINT NAME OF SHAREHOLDER PRINT NAME OF SHAREHOLDER
- ---------------------------------- ---------------------------------
SIGNATURE OF SHAREHOLDER SIGNATURE OF SHAREHOLDER
Please sign exactly as your name appears on the envelope in which this card was
mailed. When signing as attorney, executor, administrator, trustee or guardian,
please give your full title. If shares are held jointly, each holder should
sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
