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As filed with the Securities and Exchange Commission on July 14, 1997
Registration No. 333-30239
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Pre-Effective Amendment No. 1 to
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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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 Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)
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7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6000
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
E. JAMES HOUSE, JR.
SECRETARY AND MANAGER OF THE LEGAL DEPARTMENT
UNION PLANTERS CORPORATION
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6584
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
WITH COPIES TO:
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FRANK M. CONNER III ROBERT S. DUNCAN CHRISTOPHER R. KELLY, P.C.
ALSTON & BIRD LLP CHAIRMAN AND CHIEF EXECUTIVE OFFICER SILVER,FREEDMAN & TAFF, L.L.P.
601 PENNSYLVANIA AVENUE, N.W. MAGNA BANCORP, INC. 1100 NEW YORK AVENUE, N.W.
NORTH BUILDING, SUITE 250 100 WEST FRONT STREET WASHINGTON, D.C. 20005
WASHINGTON, D.C. 20004 HATTIESBURG, MISSISSIPPI 39401 (202) 414-6100
(202) 508-3303 (601) 545-4756
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF SECURITIES TO THE PUBLIC:
As soon as practicable after the merger (the "Merger") described in 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. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE TIME 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 SECTION 8(A), SHALL
DETERMINE.
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MAGNA BANCORP, INC.
100 West Front Street
Hattiesburg, Mississippi 39401
July 14, 1997
TO THE STOCKHOLDERS OF
MAGNA BANCORP, INC.:
You are cordially invited to attend a special meeting of the
stockholders (the "Special Meeting") of Magna Bancorp, Inc. ("Magna") to be held
at the corporate office of Magna located in the Forrest Tower, Second Floor, 215
Forrest Street, Hattiesburg, Mississippi 39401, at 1:30 p.m., local time, on
August 20, 1997, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to adopt an Agreement and Plan of Reorganization (the "Agreement") by
and between Magna and Union Planters Corporation ("UPC") and a related Plan of
Merger pursuant to which Magna will merge (the "Merger") with a newly-formed,
wholly-owned subsidiary of UPC, with the effect that Magna will be the surviving
corporation resulting from the Merger. Upon consummation of the Merger, each
share of Magna common stock issued and outstanding (except for certain shares
held by Magna or UPC, or their respective subsidiaries, in each case other than
shares held in a fiduciary capacity or as a result of debts previously
contracted) will be converted into 0.5165 of a share of UPC common stock
(subject to possible adjustment as described in the accompanying Proxy
Statement/Prospectus), with cash being paid in lieu of issuing fractional
shares.
Enclosed are the (i) Notice of Special Meeting, (ii) Proxy
Statement/Prospectus, (iii) proxy card for the Special Meeting and (iv)
pre-addressed return envelope for the proxy card. The Proxy Statement/Prospectus
describes in more detail the Agreement and the proposed Merger, including a
description of the conditions to consummation of the Merger and the effects of
the Merger on the rights of Magna stockholders. Please read these materials
carefully and consider thoughtfully the information set forth in them.
Montgomery Securities, an investment banking firm, has issued its
opinion to your Board of Directors regarding the fairness, from a financial
point of view, of the consideration to be paid by UPC pursuant to the Agreement
as of the date of the opinion. A copy of the opinion is attached as Appendix C
to the Proxy Statement/Prospectus.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED AND ADOPTED THE
AGREEMENT AND THE PLAN OF MERGER AND CONSUMMATION OF THE MERGER CONTEMPLATED
THEREBY, AND UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ADOPTION OF THE AGREEMENT
AND THE PLAN OF MERGER.
Approval of the Agreement and the Plan of Merger will require the
affirmative vote of the holders of at least a majority of the issued and
outstanding shares of Magna common stock entitled to be voted at the Special
Meeting. Accordingly, whether or not you plan to attend the Special Meeting, you
are urged to complete, sign, and return promptly the enclosed proxy card. If you
attend the Special Meeting, you may vote in person even if you previously have
returned your proxy card. The proposed Merger with UPC is a significant step for
Magna and your vote on this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR ADOPTION OF
THE AGREEMENT AND THE PLAN OF MERGER BY MARKING THE ENCLOSED PROXY CARD "FOR"
ITEM 1.
We look forward to seeing you at the Special Meeting.
Sincerely,
ROBERT S. DUNCAN
Chairman and Chief Executive Officer
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MAGNA BANCORP, INC.
100 West Front Street
Hattiesburg, Mississippi 39401
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AT 1:30 P.M. ON AUGUST 20, 1997
NOTICE IS HEREBY GIVEN that a special meeting of the stockholders (the
"Special Meeting") of Magna Bancorp, Inc. ("Magna") will be held at the
corporate office of Magna located in the Forrest Tower, Second Floor, 215
Forrest Street, Hattiesburg, Mississippi, on August 20, 1997, at 1:30 p.m.,
local time, for the following purposes:
1. MERGER. To consider and vote upon a proposal to adopt the Agreement
and Plan of Reorganization, dated as of May 8, 1997 (the "Agreement"), by and
between Magna and Union Planters Corporation, a Tennessee corporation ("UPC")
and the related Plan of Merger (the "Plan of Merger"), by and between Magna and
UPC Merger Subsidiary, Inc., a wholly-owned subsidiary of UPC ("UPC Merger
Subsidiary"), pursuant to which (i) Magna will merge (the "Merger") with UPC
Merger Subsidiary, with the effect that Magna will be the surviving corporation
resulting from the Merger, (ii) each share of the $.01 par value common stock of
Magna ("Magna Common Stock") issued and outstanding at the effective time of the
Merger (except for certain shares held by Magna or UPC, or their respective
subsidiaries, in each case other than shares held in a fiduciary capacity or as
a result of debts previously contracted) will be converted into 0.5165 of a
share of the $5.00 par value common stock of UPC, and the associated "Preferred
Share Rights" (as defined in the accompanying Proxy Statement/Prospectus),
subject to possible adjustment, and cash in lieu of issuing any fractional
share, and (iii) UPC will assume the obligations of Magna under various stock
plans and adopt substitute plans where appropriate, all as more fully described
in the accompanying Proxy Statement/Prospectus. A copy of the Agreement is set
forth as Appendix A to the accompanying Proxy Statement/Prospectus and is
incorporated by reference herein.
2. OTHER BUSINESS. To transact such other business as may come
properly before the Special Meeting or any adjournments or postponements of the
Special Meeting.
Only stockholders of record at the close of business on July 11, 1997,
will be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. ADOPTION OF THE AGREEMENT AND THE PLAN OF
MERGER REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST A MAJORITY OF
THE ISSUED AND OUTSTANDING SHARES OF MAGNA COMMON STOCK ENTITLED TO BE VOTED AT
THE SPECIAL MEETING.
THE BOARD OF DIRECTORS OF MAGNA BANCORP, INC. UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS VOTE FOR ADOPTION OF THE AGREEMENT AND THE PLAN OF MERGER.
BY ORDER OF THE BOARD OF DIRECTORS
H.A. MOORE, III
Secretary
Hattiesburg, Mississippi
July 14, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE SPECIAL MEETING.
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PROSPECTUS
COMMON STOCK, $5.00 PAR VALUE
UNION PLANTERS CORPORATION
PROXY STATEMENT
FOR SPECIAL MEETING OF STOCKHOLDERS OF
MAGNA BANCORP, INC.
This Prospectus of Union Planters Corporation, a bank holding company
organized and existing under the laws of the State of Tennessee ("UPC"), relates
to up to 7,171,591 shares of common stock, $5.00 par value, of UPC (together
with associated "Preferred Share Rights" (as defined herein), "UPC Common
Stock"), including shares to be subject to assumed options and rights, which are
issuable to the stockholders of Magna Bancorp, Inc., a savings and loan holding
company organized and existing under the laws of the State of Delaware
("Magna"), upon consummation of the proposed merger (the "Merger") of Magna with
UPC Merger Subsidiary, Inc. ("UPC Merger Subsidiary"), a newly-formed,
wholly-owned, first-tier subsidiary of UPC, with the effect that Magna will be
the surviving corporation of the Merger. The Merger will be consummated pursuant
to the terms of the Agreement and Plan of Reorganization, dated as of May 8,
1997 (the "Agreement"), by and between UPC and Magna and the related Plan of
Merger (the "Plan of Merger"), by and between UPC Merger Subsidiary and Magna.
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of common stock, par value
$.01 per share, of Magna ("Magna Common Stock") will be converted into 0.5165 of
a share of UPC Common Stock, subject to certain possible adjustments described
herein (the "Exchange Ratio").
The Exchange Ratio is adjustable upward only if certain conditions are
met concerning the quoted price of UPC Common Stock. The Board of Directors of
Magna would likely invoke the adjustment mechanism in the Agreement if the
conditions permit by giving notice of its election to terminate, in which case
UPC must determine whether to proceed with the Merger at a higher Exchange
Ratio and avoid termination. In making this determination, the principal
factors UPC will consider include the projected effect of the Merger on UPC's
pro forma earnings per share and whether UPC's assessment of Magna's earning
potential as part of UPC justifies the issuance of an increased number of
shares of UPC Common Stock. If UPC declines to adjust the Exchange Ratio, Magna
may elect to proceed without the adjustment by withdrawing its election to
terminate. In making such determination, the Board of Directors of Magna will
consider whether the Merger remains in the best interest of Magna and its
stockholders, despite a decline in the price of UPC Common Stock, and whether
the consideration to be received by the holders of Magna Common Stock remains
fair from a financial point of view. See "DESCRIPTION OF THE TRANSACTION --
Possible Adjustment of Exchange Ratio."
This Prospectus also serves as the Proxy Statement of Magna, and is
being furnished to the stockholders of Magna in connection with the solicitation
of proxies by the Board of Directors of Magna for use at its special meeting of
stockholders (including any adjournment or postponement thereof, the "Special
Meeting"), to be held on August 20, 1997, to consider and vote upon the
Agreement and the Plan of Merger and the transactions contemplated therein.
This Proxy Statement/Prospectus ("Proxy Statement") and related materials
enclosed herewith are being mailed to stockholders of Magna on or about
July 15, 1997.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS, SAVINGS ACCOUNTS, OR OTHER
OBLIGATIONS OF A DEPOSITORY INSTITUTION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
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The date of this Proxy Statement is July 14, 1997.
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AVAILABLE INFORMATION
Each of UPC and Magna is subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, is required to file reports, proxy and information
statements, and other information with the Securities and Exchange Commission
(the "SEC"). Copies of such reports, proxy and information statements, and other
information can be obtained, at prescribed rates, from the SEC by addressing
written requests for such copies to the Public Reference Section at the SEC at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition,
such reports, proxy and information statements, and other information can be
inspected at the public reference facilities referred to above and at the
regional offices of the SEC at 7 World Trade Center, 13th Floor, New York, New
York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. The SEC also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
The shares of UPC Common Stock are listed and traded on the New York Stock
Exchange (the "NYSE") under the symbol "UPC," and reports, proxy and information
statements, and other information concerning UPC also may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005. The shares of
Magna Common Stock are traded on the Nasdaq National Market System (the
"Nasdaq/NMS") under the symbol "MGNL," and reports, proxy and information
statements, and other information concerning Magna also may be inspected at the
offices of the National Association of Securities Dealers, Inc. (the "NASD"),
1735 K Street, N.W., Washington, D.C. 20006.
This Proxy Statement constitutes part of the Registration Statement on
Form S-4 of UPC (including any exhibits and amendments thereto, the
"Registration Statement") filed with the SEC under the Securities Act of 1933,
as amended (the "Securities Act"), relating to the securities offered hereby.
This Proxy Statement does not include all of the information in the Registration
Statement, certain portions of which have been omitted pursuant to the rules and
regulations of the SEC. For further information about UPC and the securities
offered hereby, reference is made to the Registration Statement. The
Registration Statement may be inspected and copied, at prescribed rates, at the
SEC's public reference facilities at the addresses set forth above.
All information contained in this Proxy Statement or incorporated
herein by reference with respect to UPC was supplied by UPC, and all information
contained in this Proxy Statement or incorporated herein by reference with
respect to Magna was supplied by Magna.
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROXY STATEMENT DOES NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO PURCHASE, THE
SECURITIES OFFERED BY THIS PROXY STATEMENT IN ANY JURISDICTION TO OR FROM ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROXY STATEMENT NOR ANY DISTRIBUTION
OF THE SECURITIES BEING OFFERED PURSUANT TO THIS PROXY STATEMENT SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF UPC OR MAGNA OR THE INFORMATION SET FORTH OR INCORPORATED BY
REFERENCE HEREIN SINCE THE DATE OF THIS PROXY STATEMENT.
THIS PROXY STATEMENT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH
RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF UPC
FOLLOWING THE CONSUMMATION OF THE VARIOUS ACQUISITIONS AND MERGERS DISCUSSED
HEREIN (REFERRED TO HEREIN AS THE "PENDING ACQUISITIONS"), INCLUDING STATEMENTS
RELATING TO THE COST SAVINGS AND REVENUE ENHANCEMENTS THAT ARE EXPECTED TO BE
REALIZED FROM THE PENDING ACQUISITIONS AND THE EXPECTED IMPACT OF THE PENDING
ACQUISITIONS ON UPC'S FINANCIAL PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS
INVOLVE CERTAIN RISKS AND UNCERTAINTIES. FACTORS THAT MAY CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS
INCLUDE, AMONG OTHER THINGS, THE FOLLOWING POSSIBILITIES: (I) EXPECTED COST
SAVINGS FROM THE PENDING ACQUISITIONS CANNOT BE FULLY REALIZED; (II) DEPOSIT
ATTRITION, CUSTOMER LOSS OR REVENUE LOSS FOLLOWING THE PENDING ACQUISITIONS IS
GREATER THAN EXPECTED; (III) COMPETITIVE PRESSURE IN THE BANKING INDUSTRY
INCREASES SIGNIFICANTLY; (IV) COSTS OR DIFFICULTIES RELATED TO THE INTEGRATION
OF THE BUSINESSES OF UPC AND THE INSTITUTIONS TO BE ACQUIRED ARE GREATER THAN
EXPECTED; (V) CHANGES IN THE INTEREST RATE ENVIRONMENT REDUCE MARGINS; (VI)
GENERAL ECONOMIC CONDITIONS,
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EITHER NATIONALLY OR REGIONALLY, ARE LESS FAVORABLE THAN EXPECTED, RESULTING IN,
AMONG OTHER THINGS, A DETERIORATION IN CREDIT QUALITY; (VII) CHANGES OCCUR IN
THE REGULATORY ENVIRONMENT; (VIII) CHANGES OCCUR IN BUSINESS CONDITIONS AND
INFLATION; AND (IX) CHANGES OCCUR IN THE SECURITIES MARKETS. THE FORWARD-LOOKING
EARNINGS ESTIMATES INCLUDED IN THIS PROXY STATEMENT HAVE NOT BEEN EXAMINED OR
COMPILED BY THE INDEPENDENT PUBLIC ACCOUNTANTS OF UPC AND MAGNA, NOR HAVE SUCH
ACCOUNTANTS APPLIED ANY PROCEDURES THERETO. ACCORDINGLY, SUCH ACCOUNTANTS DO NOT
EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE ON THEM. FURTHER INFORMATION
ON OTHER FACTORS THAT COULD AFFECT THE FINANCIAL RESULTS OF UPC AFTER THE
PENDING ACQUISITIONS IS INCLUDED IN THE SEC FILINGS INCORPORATED BY REFERENCE
HEREIN.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed with the SEC by UPC pursuant
to the Exchange Act are hereby incorporated by reference herein (SEC File No.
1-10160):
(a) UPC's Annual Report on Form 10-K for the year ended December 31,
1996 (provided that any information included or incorporated by
reference in response to Items 402(a)(8), (i), (k), or (1) of
Regulation S-K of the SEC shall not be deemed to be incorporated
herein and is not part of the Registration Statement);
(b) UPC's Quarterly Report on Form 10-Q for the quarter ended March
31, 1997;
(c) UPC's Current Reports on Form 8-K dated January 16, 1997 and
April 17, 1997;
(d) The description of the current management and Board of Directors
contained in the Proxy Statement pursuant to Section 14(a) of the
Exchange Act for UPC's Annual Meeting of Stockholders held on
April 17, 1997;
(e) UPC's Registration Statement on Form 8-A dated January 19, 1989,
filed on February 1, 1989; (SEC File No. 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.
The following documents previously filed with the SEC by Magna pursuant
to the Exchange Act are hereby incorporated by reference herein (SEC File No.
0-18918):
(a) Magna's Annual Report on Form 10-K for the fiscal year ended June
30, 1996 (provided that any information included or incorporated
by reference in response to Items 402(a)(8), (i), (k) or (1) of
Regulation S-K of the SEC shall not be deemed to be incorporated
herein and is not a part of the Registration Statement);
(b) Magna's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1996, December 31, 1996 and March 31, 1997; and
(c) Magna's Current Report on Form 8-K dated May 14, 1997.
All documents filed by UPC and/or Magna pursuant to Sections 13(a),
13(c), 14, or 15(d) of the Exchange Act after the date of this Proxy Statement
and prior to final adjournment of the Special Meeting shall be deemed to be
incorporated by reference in this Proxy Statement and to be a part hereof from
the date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein or in any subsequently filed document which also is,
or is deemed to be, incorporated by reference
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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.
UPC will provide without charge, upon the written or oral request of
any person, including any beneficial owner, to whom this Proxy Statement is
delivered, a copy of any and all information (excluding certain exhibits)
relating to UPC that has been incorporated by reference in the Registration
Statement. Such requests should be directed to E. James House, Jr., Secretary
and Manager of the Legal Department, Union Planters Corporation, 7130 Goodlett
Farms Parkway, Memphis, Tennessee 38018 (telephone (901) 580-6584). Magna will
provide without charge, upon the written or oral request of any person,
including any beneficial owner, to whom this Proxy Statement is delivered, a
copy of any and all information (excluding certain exhibits) relating to Magna
that has been incorporated by reference in the Registration Statement of which
this Proxy Statement is a part. Such requests should be directed to H.A. Moore
III, Secretary, Magna Bancorp, Inc., 100 West Front Street, Hattiesburg,
Mississippi 39401 (telephone (601) 545-4756). In order to ensure timely delivery
of the documents, any request should be made by August 13, 1997.
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TABLE OF CONTENTS
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SUMMARY .................................................................. 1
The Parties ......................................................... 1
Meeting of Stockholders ............................................. 2
The Merger .......................................................... 3
Comparative Market Prices of Common Stock ........................... 7
Equivalent and Pro Forma Per Share Data ............................. 7
Selected Financial Data ............................................. 9
SPECIAL MEETING OF MAGNA STOCKHOLDERS .................................... 15
Date, Place, Time, and Purpose ...................................... 15
Record Date, Voting Rights, Required Vote and Revocability of Proxies 15
Solicitation of Proxies ............................................. 16
Recommendation ...................................................... 16
DESCRIPTION OF TRANSACTION ............................................... 17
General ............................................................. 17
Possible Adjustment of Exchange Ratio ............................... 17
Effect of the Merger on Magna Options ............................... 19
Background of and Reasons for the Merger ............................ 19
Opinion of Magna's Financial Advisor ................................ 23
Effective Time of the Merger ........................................ 26
Dissenters' Rights .................................................. 27
Distribution of UPC Stock Certificates .............................. 27
Conditions to Consummation of the Merger ............................ 28
Regulatory Approval ................................................. 28
Waiver, Amendment, and Termination .................................. 29
Conduct of Business Pending the Merger .............................. 30
Management and Operations After the Merger .......................... 32
Interests of Certain Persons in the Merger .......................... 32
Certain Federal Income Tax Consequences ............................. 34
Accounting Treatment ................................................ 36
Expenses and Fees ................................................... 36
Resales of UPC Common Stock ......................................... 36
Option Agreement .................................................... 37
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS ........................... 39
Anti-takeover Provisions Generally .................................. 40
Authorized Capital Stock ............................................ 40
Amendment of Charter and Bylaws ..................................... 42
Classified Board of Directors and Absence of Cumulative Voting ...... 42
Director Removal and Vacancies ...................................... 43
Limitations on Director Liability ................................... 43
Indemnification ..................................................... 43
Special Meeting of Stockholders ..................................... 45
Actions by Stockholders Without a Meeting ........................... 45
Stockholder Nominations and Proposals ............................... 45
Business Combinations ............................................... 45
Limitations on Ability to Vote Stock ................................ 48
Dissenters' Rights of Appraisal ..................................... 49
Stockholders' Rights to Examine Books and Records ................... 49
Dividends ........................................................... 49
COMPARATIVE MARKET PRICES AND DIVIDENDS .................................. 50
BUSINESS OF MAGNA ........................................................ 51
General ............................................................. 51
BUSINESS OF UPC .......................................................... 51
General ............................................................. 51
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Recent Developments ................................................. 52
CERTAIN REGULATORY CONSIDERATIONS ........................................ 54
General ............................................................. 54
Payment of Dividends ................................................ 55
Capital Adequacy .................................................... 56
Support of Subsidiary Institutions .................................. 57
Prompt Corrective Action ............................................ 57
DESCRIPTION OF UPC CAPITAL STOCK ......................................... 58
UPC Common Stock .................................................... 59
UPC Preferred Stock ................................................. 59
OTHER MATTERS ............................................................ 60
STOCKHOLDER PROPOSALS .................................................... 60
EXPERTS .................................................................. 60
OPINIONS ................................................................. 61
APPENDICES:
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Appendix A -- Agreement and Plan of Reorganization, dated as of May 8, 1997 by
and between Union Planters Corporation and Magna Bancorp, Inc.
Appendix B -- Plan of Merger of UPC Merger Subsidiary, Inc. into and with Magna
Bancorp, Inc.
Appendix C -- Opinion of Montgomery Securities
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SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROXY STATEMENT AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THIS SUMMARY
IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF THE MATTERS COVERED IN THIS
PROXY STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT. STOCKHOLDERS ARE URGED TO READ CAREFULLY THE ENTIRE PROXY STATEMENT,
INCLUDING THE APPENDICES. AS USED IN THIS PROXY STATEMENT, THE TERMS "UPC" AND
"MAGNA" REFER TO THOSE ENTITIES, RESPECTIVELY, AND, WHERE THE CONTEXT REQUIRES,
TO THOSE ENTITIES AND THEIR RESPECTIVE SUBSIDIARIES.
THE PARTIES
MAGNA. Magna, a Delaware corporation, is a savings and loan holding
company registered with the Office of Thrift Supervision ("OTS") under the Home
Owners' Loan Act, as amended ("HOLA"). Through its wholly-owned subsidiary,
Magnolia Federal Bank for Savings ("Magnolia Federal"), a federally chartered
savings bank, Magna operates a network of retail banking offices serving 24
counties in Mississippi, as well as the Mobile metropolitan area in Alabama, and
offers a variety of financial services to meet the needs of the communities it
serves. As of March 31, 1997, Magna had total consolidated assets of
approximately $1.4 billion, total consolidated deposits of approximately $911.7
million, and total consolidated stockholders' equity of approximately $132.2
million. The principal executive offices of Magna are located at 100 West Front
Street, Hattiesburg, Mississippi 39401, and its telephone number at such address
is (601) 545-4756. Additional information with respect to Magna and its
subsidiary is included elsewhere herein and in documents incorporated by
reference in this Proxy Statement. See "AVAILABLE INFORMATION," "DOCUMENTS
INCORPORATED BY REFERENCE," and "BUSINESS OF MAGNA."
UPC. UPC, a Tennessee corporation, is a bank holding company registered
with the Board of Governors of the Federal Reserve System ("Federal Reserve")
under the Bank Holding Company Act of 1956, as amended (the "BHC Act") and a
savings and loan holding company registered with the OTS under the HOLA. As of
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.
UPC conducts its business activities through its principal bank
subsidiary, the $5.7 billion asset Union Planters National Bank, founded in 1869
and headquartered in Memphis, Tennessee, and 32 other bank subsidiaries and one
savings bank subsidiary located in Tennessee, Mississippi, Missouri, Arkansas,
Louisiana, Alabama, and Kentucky (collectively, the "UPC Banking Subsidiaries").
Through the UPC Banking Subsidiaries, UPC provides a diversified range of
financial services in the communities in which it operates, including 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; and 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 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 ("ATMs"). UPC's total assets
at March 31, 1997 are allocable by state (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.
<PAGE> 11
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
Magna which had aggregate total assets of approximately $549 million at March
31, 1997 (collectively, the "Other Pending Acquisitions"). For additional
information regarding these acquisitions, see "BUSINESS OF UPC -- Recent
Developments." For a discussion of UPC's acquisition program and UPC
management's philosophy on that subject, see the caption "Acquisitions"
and Note 2 to UPC's audited consolidated financial statements for the years
ended December 31, 1996, 1995, and 1994 on pages 6 and 45-46, respectively,
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 herein.
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Future acquisitions may entail the
payment by UPC of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of UPC
capital stock or the incurring of additional indebtedness by UPC, and could have
a dilutive effect on the earnings or book value per share of UPC Common Stock.
Moreover, significant charges against earnings are sometimes required incidental
to acquisitions. For a description of acquisitions which are currently pending,
see "BUSINESS OF UPC -- Recent Developments."
The principal executive offices of UPC are located at 7130 Goodlett
Farms Parkway, Memphis, Tennessee 38018, and its telephone number at such
address is (901) 580-6000. Additional information with respect to UPC and its
subsidiaries is included elsewhere herein and in documents incorporated by
reference in this Proxy Statement. See "AVAILABLE INFORMATION," "DOCUMENTS
INCORPORATED BY REFERENCE" and "BUSINESS OF UPC."
MEETING OF STOCKHOLDERS
This Proxy Statement is being furnished to the holders of Magna Common
Stock in connection with the solicitation by the Magna Board of Directors of
proxies for use at the Special Meeting at which Magna stockholders will be asked
to vote upon (i) a proposal to adopt the Agreement and the Plan of Merger and
(ii) such other business as may properly come before the meeting. The Special
Meeting will be held at the corporate office of Magna located in the Forrest
Tower, Second Floor, 215 Forrest Street, Hattiesburg, Mississippi, at 1:30 p.m.
local time, on August 20, 1997. See "SPECIAL MEETING OF MAGNA STOCKHOLDERS --
Date, Place, Time, and Purpose."
Magna's Board of Directors has fixed the close of business on July 11,
1997 as the record date (the "Magna Record Date") for determination of the
stockholders entitled to notice of and to vote at the Special Meeting. Only
holders of record of shares of Magna Common Stock on the Magna Record Date will
be entitled to notice of and to vote at the Special Meeting. Each share of Magna
Common Stock is entitled to one vote. Stockholders who execute proxies retain
the right to revoke them at any time prior to the proxies being voted at the
Special Meeting. On the Magna Record Date, there were 13,754,266 shares of Magna
Common Stock issued and outstanding. See "SPECIAL MEETING OF MAGNA STOCKHOLDERS
- -- Record Date, Voting Rights, Required Vote and Revocability of Proxies."
Adoption of the Agreement and the Plan of Merger and the transactions
contemplated thereby requires the affirmative vote of the holders of at least a
majority of the issued and outstanding shares of Magna Common Stock entitled to
be voted at the Special Meeting. Directors and executive officers of Magna and
their affiliates are entitled to vote 25.8% of the outstanding shares of Magna
Common Stock. See "SPECIAL MEETING OF STOCKHOLDERS -- Record Date, Voting
Rights, Required Vote and Revocability of Proxies."
-2-
<PAGE> 12
THE MERGER
GENERAL. The Agreement provides for the acquisition of Magna by UPC
pursuant to the merger of Magna with a newly-formed, wholly-owned, first-tier
subsidiary of UPC with the effect that Magna will be the surviving corporation
resulting from the Merger. At the Effective Time, each share of Magna Common
Stock then issued and outstanding (excluding shares held by Magna, UPC, or their
respective subsidiaries, in each case other than shares held in a fiduciary
capacity or as a result of debts previously contracted) will be converted into
0.5165 of a share of UPC Common Stock, subject to possible adjustment as
described below (the "Exchange Ratio").
In the event both of the following conditions are satisfied, (i) the
"Average Closing Price" (defined in the Agreement as the average of the daily
last sale prices of UPC Common Stock quoted on the NYSE-Composite Transactions
List (as reported by The Wall Street Journal or, if not reported thereby,
another authoritative source as selected by UPC) for the 20 consecutive full
trading days on which such shares are traded on the NYSE ending at the close of
trading on the later of the date of the Special Meeting and the date on which
the last required consent of any regulatory authority required for the Merger
shall be received (the "Determination Date")) is less than $36.50 and (ii) (1)
the quotient obtained by dividing the Average Closing Price by $45.625 (the "UPC
Ratio") is less than (2) the quotient obtained by dividing the weighted average
of the closing prices (the "Index Price") of 17 bank holding companies
designated in the Agreement (the "Index Group") on the Determination Date by the
Index Price on May 14, 1997 less 15% (the "Index Ratio"), then Magna will have
the right to terminate the Agreement unless UPC elects to adjust the Exchange
Ratio in the manner described under "DESCRIPTION OF TRANSACTION--Possible
Adjustment of Exchange Ratio." Under no circumstances would the Exchange Ratio
be less than 0.5165 of a share of UPC Common Stock for each share of Magna
Common Stock. The possible upward adjustment of the Exchange Ratio depends on
the factors mentioned above and is not subject to a contractual limit. See
"DESCRIPTION OF TRANSACTION -- Possible Adjustment of Exchange Ratio."
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any Magna stockholder would be entitled upon consummation of the Merger,
in an amount equal to such fractional part of a share of UPC Common Stock
multiplied by the market value of one share of UPC Common Stock at the Effective
Time. The market value of one share of UPC Common Stock at the Effective Time
shall be the closing price of such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as selected by UPC) on the last trading
day preceding the Effective Time. See "DESCRIPTION OF TRANSACTION -- General."
At the Effective Time, each award, option, or other right to purchase
or acquire shares of Magna Common Stock ("Magna Options") granted by Magna or
acquired under the Magna Stock Plans, as that term is defined in the Agreement,
which are outstanding at the Effective Time, whether or not exercisable, will be
converted into and become rights with respect to UPC Common Stock on a basis
adjusted to reflect the Exchange Ratio. See "DESCRIPTION OF TRANSACTION --
Effect of the Merger on Magna Options."
As of the Magna Record Date, Magna had 13,754,266 shares of Magna
Common Stock issued and outstanding and 130,791 additional shares of Magna
Common Stock subject to Magna Options. Based upon an Exchange Ratio of 0.5165,
upon consummation of the Merger, UPC would issue approximately 7,104,078 shares
of UPC Common Stock, excluding shares subject to assumed Magna Options.
Accordingly, UPC would then have issued and outstanding approximately
74,054,595 shares of UPC Common Stock based on the number of shares of UPC
Common Stock issued and outstanding on May 31, 1997 (and excluding shares to be
issued pursuant to Other Pending Acquisitions and shares to be issued pursuant
to the exercise of stock options and for other purposes).
REASONS FOR THE MERGER, RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF
MAGNA. The Board of Directors of Magna believes that the Agreement, the Plan of
Merger, and the Merger are in the best interests of Magna and its stockholders.
THE MAGNA DIRECTORS UNANIMOUSLY RECOMMEND THAT MAGNA STOCKHOLDERS VOTE FOR
ADOPTION OF THE AGREEMENT AND THE PLAN OF MERGER. The Board of Directors of
Magna believes that the Merger will result in a company with expanded
opportunities for profitable growth and that the combined
-3-
<PAGE> 13
resources and capital of Magna and UPC will provide an enhanced ability to
compete in the changing and competitive financial services industry. See
"DESCRIPTION OF TRANSACTION -- Background of and Reasons for the Merger."
In unanimously approving the Agreement and the Plan of Merger, Magna's
directors considered, among other things, Magna's and UPC's financial condition,
the financial terms and income tax consequences of the Merger, the likelihood of
the Merger being approved by regulatory authorities without undue conditions or
delay, legal advice concerning the proposed Merger, the views of Montgomery
Securities as to the fairness of the Exchange Ratio, from a financial point of
view, to the stockholders of Magna, and the fairness of the terms of the Merger
to Magna stockholders. See "DESCRIPTION OF TRANSACTION -- Background of and
Reasons for the Merger."
OPINION OF FINANCIAL ADVISOR. Montgomery Securities ("Montgomery") has
rendered an opinion to Magna that, based on and subject to the procedures,
matters, and limitations described in its opinion and such other matters as it
considered relevant, as of the date of its opinion, the Exchange Ratio is fair,
from a financial point of view, to the stockholders of Magna. The opinion of
Montgomery dated as of May 8, 1997 is attached as Appendix C to this Proxy
Statement. Magna stockholders are urged to read the opinion in its entirety for
a description of the procedures followed, matters considered, and limitations on
the reviews undertaken in connection therewith. See "DESCRIPTION OF TRANSACTION
- -- Opinion of Magna's Financial Advisor."
EFFECTIVE TIME. Subject to the conditions to the obligations of the
parties to effect the Merger, the Effective Time will occur on the date and at
the time that the Certificate of Merger becomes effective with the Delaware
Secretary of State. Unless otherwise agreed upon by Magna and UPC, and subject
to the conditions to the obligations of the parties to effect the Merger, the
parties will use their reasonable efforts to cause the Effective Time to occur
on such date as may be designated by UPC within 30 days following the last to
occur of (i) the effective date (including the expiration of any applicable
waiting period) of the last consent of any regulatory authority required for the
Merger, (ii) the date on which the stockholders of Magna adopt the Agreement and
the Plan of Merger as required by applicable law, and (iii) the date on which
all other conditions precedent to each party's obligations under the Agreement
have been satisfied or waived (to the extent waivable). See "DESCRIPTION OF
TRANSACTION -- Effective Time of the Merger," "-- Conditions to Consummation of
the Merger," and "-- Waiver, Amendment, and Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY STOCKHOLDER AND
REGULATORY APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO
THE MERGER CAN OR WILL BE SATISFIED. MAGNA AND UPC ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED DURING THE FOURTH QUARTER OF 1997. HOWEVER, DELAYS IN
THE CONSUMMATION OF THE MERGER COULD OCCUR.
EXCHANGE OF STOCK CERTIFICATES. Promptly after the Effective Time, UPC
will cause Union Planters National Bank, Memphis, Tennessee, acting in its
capacity as exchange agent for UPC (the "Exchange Agent"), to mail to each
holder of record of a certificate or certificates (collectively, the
"Certificates") which, immediately prior to the Effective Time, represented
outstanding shares of Magna Common Stock, a letter of transmittal and
instructions for use in effecting the surrender and cancellation of the
Certificates in exchange for certificates representing shares of UPC Common
Stock. Cash will be paid to the holders of Magna Common Stock in lieu of the
issuance of any fractional shares of UPC Common Stock. In no event will the
holder of any surrendered Certificate(s) be entitled to receive interest on any
cash to be issued to such holder, and in no event will Magna, UPC, or the
Exchange Agent be liable to any holder of Magna Common Stock for any UPC Common
Stock or dividends thereon or cash delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat, or similar law.
-4-
<PAGE> 14
REGULATORY APPROVAL AND OTHER CONDITIONS. The Merger is subject to the
prior approval of the Federal Reserve. An application has been filed with this
regulatory authority for the requisite approval. THERE CAN BE NO ASSURANCE THAT
SUCH REGULATORY APPROVAL WILL BE OBTAINED OR AS TO THE TIMING OF ANY SUCH
APPROVAL.
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of Magna stockholders, receipt of an
opinion of counsel as to the tax-free nature of certain aspects of the Merger,
receipt of a letter from the independent accountants of UPC that the Merger will
qualify for pooling-of-interests accounting treatment, and certain other
conditions. See "DESCRIPTION OF TRANSACTION -- Regulatory Approval" and "--
Conditions to Consummation of the Merger."
WAIVER, AMENDMENT, AND TERMINATION. The Agreement may be terminated and
the Merger abandoned at any time prior to the Effective Time by mutual action of
the Boards of Directors of Magna and UPC, or by the action of the Board of
Directors of either company under certain circumstances, including, but not
limited to, if (i) the Merger is not consummated by March 31, 1998, unless the
failure to consummate by such date is due to a willful breach of the Agreement
by the party seeking to terminate or (ii) IN CERTAIN CIRCUMSTANCES, AN
ADJUSTMENT IS NOT MADE TO THE EXCHANGE RATIO. To the extent permitted by law,
the Agreement may be amended upon the written agreement of UPC and Magna without
the approval of stockholders, whether before or after adoption of the Agreement
and the Plan of Merger and the transactions contemplated thereby by Magna
stockholders; provided, that after such adoption, there shall be made no
amendment that modifies in any material respect the consideration to be received
by Magna stockholders, without the approval of such stockholders. See
"DESCRIPTION OF TRANSACTION -- Possible Adjustment of Exchange Ratio" and "--
Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS. Pursuant to DGCL Section 262, the holders of
Magna Common Stock do not have dissenters' rights with respect to the Merger.
See "DESCRIPTION OF TRANSACTION -- Dissenters' Rights."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain members of Magna's
management and Board of Directors have interests in the Merger in addition to
their interests as stockholders of Magna generally. These interests relate to:
(i) the election of one member of the Magnolia Federal Board of Directors, David
M. Thomas, to the UPC Board of Directors; (ii) the appointment of Robert S.
Duncan as Chairman of Magnolia Federal and the appointment of Lou Ann Poynter as
Chief Executive Officer of Magnolia Federal; (iii) the entering into employment
agreements with Mr. Duncan and Ms. Poynter in exchange for terminating their
existing employment agreements with Magna, including cancellation of their
rights to receive change in control payments of $2.3 million and $1.3 million,
respectively (which new agreements provide, in the case of Mr. Duncan, an annual
base salary of $199,000, together with other benefits applicable generally to
similarly situated officers of UPC or its affiliates and a stay bonus in the
amount of $895,000 for each of the three years following the Effective Time, in
addition to any other bonuses to which he may be entitled, and, in the case of
Ms. Poynter, an annual base salary of $225,000, together with other benefits
applicable generally to similarly situated officers of UPC or its affiliates,
and a stay bonus in the amount of $545,000 for each of the three years following
the Effective Time, in addition to any other bonuses to which she may be
entitled); (iv) the assumption by UPC of the Magna Options on a basis that
reflects the Exchange Ratio, including Magna Options held by certain executive
officers and the Director Group (as defined herein) entitling them to the
purchase or distribution of 130,791 shares of Magna Common Stock that have an
aggregate value (less exercise prices) of approximately $3.0 million (based upon
the $23.75 closing price of Magna Common Stock on the Nasdaq National Market
System on June 1, 1997); (v) the eligibility of the former employees of Magna
who become employees of UPC for certain employee benefits; and (vi) the
continued indemnification by UPC of the former directors, officers, employees
and agents of Magna and its subsidiaries following consummation of the Merger.
See "DESCRIPTION OF TRANSACTION -- Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. It is intended
that the Merger will be treated as a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986, as amended (the "Code").
Accordingly, no gain or loss will be recognized by a Magna stockholder upon the
exchange of such stockholder's shares of Magna Common Stock solely for shares of
UPC Common Stock (including any associated UPC Rights). Subject to the
provisions and limitations of Section 302(a) of the Code, gain or loss will be
-5-
<PAGE> 15
recognized with respect to cash received in lieu of fractional shares. Gain
recognition, if any, will not be in excess of the amount of cash received.
Consummation of the Merger is conditioned upon receipt by Magna and UPC of an
opinion of Alston & Bird LLP substantially to this effect. TAX CONSEQUENCES OF
THE MERGER FOR INDIVIDUAL TAXPAYERS CAN VARY, HOWEVER, AND ALL MAGNA
STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT
OF THE MERGER ON THEM UNDER FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS. For a
further discussion of the federal income tax consequences of the Merger, see
"DESCRIPTION OF TRANSACTION -- Certain Federal Income Tax Consequences."
ACCOUNTING TREATMENT. It is intended that the Merger will be accounted
for as a pooling of interests for accounting and financial reporting purposes.
See "DESCRIPTION OF TRANSACTION -- Accounting Treatment."
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS. At the Effective Time,
Magna stockholders, whose rights are governed by Magna's Certificate of
Incorporation, as amended, and Bylaws and by the DGCL, will automatically become
UPC stockholders, and their rights as UPC stockholders will be governed by UPC's
Restated Charter and Bylaws and the Tennessee Business Corporation Act (the
"TBCA"). The rights of UPC stockholders differ from the rights of Magna
stockholders in certain important respects, including with respect to certain
anti-takeover provisions provided for in UPC's Restated Charter and Bylaws. See
"EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS."
OPTION AGREEMENT. Magna, as issuer, and UPC, as grantee, entered into a
stock option agreement (the "Option Agreement") pursuant to which Magna granted
UPC an option to purchase, under certain circumstances and subject to certain
possible adjustments and limitations, up to 2,737,000 shares of Magna Common
Stock at a price of $17.50 per share. Notwithstanding anything to the contrary
contained in the Option Agreement, in no event may the Total Profit or the
Notional Total Profit (each as defined in the Option Agreement) of UPC exceed
$15 million. The Option Agreement is exercisable upon the occurrence of certain
events that create the potential for another party to acquire control of Magna.
To the knowledge of Magna, no such event which would permit exercise of the
Option Agreement has occurred as of the date of this Proxy Statement. The Option
Agreement was granted by Magna as a condition of and in consideration for UPC's
entering into the Agreement and is intended to increase the likelihood that the
Merger will be effected by making it more difficult and more expensive for a
third party to acquire control of Magna. See "DESCRIPTION OF TRANSACTION --
Option Agreement."
CONDUCT OF BUSINESS PENDING THE MERGER. Each party has agreed in the
Agreement to, among other things, operate its business and to take no action
that would materially adversely affect the ability of any party to perform its
covenants and agreements under the Agreement. In addition, Magna has agreed not
to take certain actions relating to the operation of Magna pending consummation
of the Merger without the prior written consent of UPC, except as otherwise
permitted by the Agreement, including, among other things: (i) becoming
responsible for any obligation for borrowed money in excess of an aggregate of
$250,000, except in the ordinary course of business consistent with past
practices; (ii) paying any dividends, except in accordance with past practices,
or, subject to certain exceptions, exchanging any shares of its capital stock,
issuing any additional shares of its capital stock or giving any person the
right to acquire any such shares; (iii) acquiring control over any other entity;
(iv) subject to certain exceptions, granting any increase in compensation or
benefits, or paying any bonus, to any of its directors, officers, or employees;
or (v) except as previously disclosed to UPC, modifying or adopting any employee
benefit plans, including any employment contract. See "DESCRIPTION OF
TRANSACTION -- Conduct of Business Pending the Merger."
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<PAGE> 16
COMPARATIVE MARKET PRICES OF COMMON STOCK
Shares of UPC Common Stock are traded on the NYSE under the symbol
"UPC." Shares of Magna Common Stock are traded in the over-the-counter market
and quoted on the Nasdaq/NMS under the symbol "MGNL." The following table sets
forth the reported closing sale prices per share for Magna Common Stock and UPC
Common Stock and the equivalent per share prices giving effect to the Merger
(as explained below) for Magna Common Stock on (i) May 8, 1997, the last
trading day preceding the public announcement of the execution of the
Agreement, and (ii) July 8, 1997, the last practicable date prior to the
mailing of this Proxy Statement.
<TABLE>
<CAPTION>
Magna UPC Equivalent Price
Common Stock Common Stock Per Magna Share(1)
------------ ------------ ------------------
<S> <C> <C> <C>
May 8, 1997 $18.25 $45.50 $23.50
July 8, 1997 26.25 $51.56 $26.63
</TABLE>
- -------------------------
(1) The equivalent price per share of Magna Common Stock at each specified
date represents the closing sale price of a share of UPC Common Stock on such
date multiplied by an Exchange Ratio of 0.5165. See "COMPARATIVE MARKET PRICES
AND DIVIDENDS."
There can be no assurance as to what the market price of the UPC Common
Stock will be if and when the Merger is consummated.
EQUIVALENT AND PRO FORMA PER SHARE DATA
The following table sets forth certain comparative per share data relating to
earnings before extraordinary items and accounting changes, cash dividends, and
book value on (i) a historical basis for UPC and Magna; (ii) a pro forma
combined basis per share of UPC Common Stock, giving effect to the Merger and
the "Other Pending Acquisitions" (as defined under "BUSINESS OF UPC -- Recent
Developments"); and (iii) an equivalent pro forma basis per share of Magna
Common Stock, giving effect to the Merger and the Other Pending Acquisitions.
The UPC pro forma combined information and the Magna equivalent pro forma
information give effect to the Merger and the Other Pending Acquisitions and
reflect an Exchange Ratio of 0.5165. The Merger and Other Pending Acquisitions,
except for the acquisition of Sho-Me Financial Corp., is expected to be
accounted for using the pooling-of-interests method of accounting. The
acquisition of Sho-Me Financial Corp. is expected to be accounted for using the
purchase method of accounting. The pro forma information for 1996 and the
three months ended March 31, 1997 reflect the acquisition of Magna and Other
Pending Acquisitions as of January 1, 1996. The pro forma information 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. See "DESCRIPTION OF TRANSACTION --
Accounting Treatment." The pro forma data are presented for information
purposes only and are not necessarily indicative of the results of operations
or combined financial position that would have resulted had the Merger or the
Other Acquisitions been consummated at the dates or during the periods
indicated, nor are they necessarily indicative of future results of operations
or combined financial position.
The operating results for Magna have been converted from its fiscal
year end (June 30) to UPC's fiscal year end (December 31) by adding its first
and second quarter operating results for the current fiscal year and subtracting
first and second quarter operating results for the previous year.
The information shown below should be read in conjunction with, and is
qualified in its entirety by, the historical consolidated financial statements
of UPC and Magna, including the respective notes thereto. See "DOCUMENTS
INCORPORATED BY REFERENCE," "-- Selected Financial Data," and "BUSINESS OF UPC
- -- Recent Developments."
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<PAGE> 17
UNION PLANTERS CORPORATION
MAGNA BANCORP, INC.
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Years Ended December 31, (1)
--------- -----------------------------------------------
1997 1996 1995 1994
--------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
UPC
Primary........................... $.86 $1.95 $2.72 $1.52
Fully Diluted..................... .84 1.92 2.64 1.52
UPC pro forma (Magna only)
Primary........................... .86 2.00 2.74 1.59
Fully diluted..................... .83 1.97 2.67 1.58
UPC pro forma (all Other Pending
Acquisitions, including Magna)
Primary............................ .85 2.00 2.74 1.59
Fully diluted...................... .83 1.97 2.67 1.58
Magna (2)............................ .40 1.26 1.51 1.10
Magna equivalent pro forma (Magna
only) (1)
Primary........................... .44 1.03 1.42 .82
Fully diluted..................... .43 1.02 1.38 .82
Magna equivalent pro forma (all Other
Pending Acquisitions, including Magna) (1)
Primary........................... .44 1.03 1.42 .82
Fully diluted..................... .43 1.02 1.38 .82
CASH DIVIDENDS PER SHARE
UPC.................................. .32 1.08 .98 .88
UPC pro forma (Magna only)........... .32 1.08 .98 .88
Magna................................ .15 .45 .20 .13
Magna equivalent pro forma (1)....... .17 .56 .51 .45
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------------- ----------------
<S> <C> <C>
BOOK VALUE PER COMMON STOCK
UPC.................................. $20.05 $19.55
UPC pro forma (Magna only)........... 19.92 19.46
UPC (all Other Pending Acquisitions,
including Magna)................... 20.02 19.56
Magna................................ 9.61 9.48
Magna equivalent pro forma (Magna 10.29 10.05
only)(1)...........................
Magna equivalent pro forma (all
Other Pending 10.34 10.10
Acquisitions, including Magna)(1)..
</TABLE>
- ---------------------------------------
(1) The equivalent pro forma per share data for Magna is computed by multiplying
UPC's pro forma information by an Exchange Ratio of 0.5165.
(2) Converted from fiscal year end (June 30) to UPC's fiscal year end (December
31).
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<PAGE> 18
SELECTED FINANCIAL DATA
The following tables present for UPC, selected consolidated financial
data for the five-year period ended December 31, 1996 and for the three-month
periods ended March 31, 1997 and March 31, 1996, and for Magna, selected
consolidated financial data for the five-year period ended June 30, 1996 and for
the nine-month periods ended March 31, 1997 and 1996. The information for UPC
has been derived from the consolidated financial statements of UPC, including
the audited consolidated financial statements of UPC incorporated in this Proxy
Statement by reference to UPC's 1996 Annual Report on Form 10-K for the year
ended December 31, 1996 and UPC's Quarterly Report on Form 10-Q for the quarters
ended March 31, 1997 and March 31, 1996, and should be read in conjunction
therewith and with the notes thereto. See "DOCUMENTS INCORPORATED BY REFERENCE."
The information for Magna has been derived from the consolidated financial
statements of Magna incorporated in this Proxy Statement by reference to Magna's
Annual Report on Form 10-K for the year ended June 30, 1996 and Magna's
Quarterly Report on Form 10-Q for the quarters ended September 30 and December
31, 1996, and March 31, 1997, and should be read in conjunction therewith and
with the notes thereto. See "DOCUMENTS INCORPORATED BY REFERENCE." Historical
results are not necessarily indicative of results to be expected for any future
period. In the opinion of the respective managements of UPC and Magna, all
adjustments (which include normal recurring adjustments and those related to
the adoption of new accounting principles) necessary to arrive at a fair
statement of interim results of operations of UPC and Magna, respectively, have
been included. With respect to UPC, results for the three months ended March
31, 1997, and with respect to Magna, results for the nine months ended March
31, 1997 are not necessarily indicative of results which may be expected for
any other interim period or for the year as a whole. See "BUSINESS OF UPC --
Recent Developments" for information concerning UPC's Other Acquisitions as
defined therein.
-9-
<PAGE> 19
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended
March 31, (1), (2)
--------------------------------
1997 1996
------------- -------------
(Dollars in thousands, except per share data)
<S> <C> <C>
INCOME STATEMENT DATA
Net interest income ................................. $ 155,276 $ 147,742
Provision for losses on loans ....................... 12,414 12,949
Investment securities gains (losses) ................ 116 61
Other noninterest income ............................ 57,336 53,696
Noninterest expense ................................. 109,229 117,971
------------- -------------
Earnings before income taxes,
extraordinary items, and
accounting changes ................................ 91,085 70,579
Applicable income taxes ............................. 31,893 23,427
------------- -------------
Earnings before extraordinary items
and accounting changes ............................ 59,192 47,152
Extraordinary item and accounting
changes, net of taxes ............................. -- --
------------- -------------
Net earnings .......................................... $ 59,192 $ 47,152
============= =============
PER COMMON SHARE DATA (1), (2), (5)
Primary
Earnings before extraordinary item
and accounting changes .......................... $ .86 $ .70
Net earnings ...................................... .84 .68
Fully diluted
Earnings before extraordinary item
and accounting changes........................... .86 .70
Net earnings ...................................... .84 .68
Cash dividends ...................................... .32 .27
Book value .......................................... 20.05 19.00
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 (2), (3)
Parent company .................................... 373,096 214,761
Subsidiary bank.................................... 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) (1)
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/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
Capital 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 (3)
Allowance/period-end loans .......................... 1.85 1.95
Nonperforming loans/total loans ..................... .63 .66
Allowance/nonperforming loans ....................... 296 294
Nonperforming assets/loans and
foreclosed properties ............................ .81 .78
Provision/average loans ............................. .56 .60
Net charge-offs/average loans ....................... .69 .42
</TABLE>
-10-
<PAGE> 20
<TABLE>
<CAPTION>
Years Ended December 31, (1), (2)
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income ......................... $ 605,962 $ 535,997 $ 504,500 $ 439,290 $ 357,365
Provision for losses on loans ............... 57,395 27,381 9,661 22,660 37,367
Investment securities gains (losses) ........ 4,081 409 (22,515) 3,508 11,880
Other noninterest income .................... 222,250 203,014 160,109 154,254 136,162
Noninterest expense ......................... 570,634 452,635 486,836 408,888 362,028
------------- ------------- ------------- ------------- -----------
Earnings before income taxes,
extraordinary items, and
accounting changes ........................ 204,264 259,404 145,597 165,504 106,012
Applicable income taxes ..................... 70,526 86,648 45,174 51,864 30,219
------------- ------------- ------------- ------------- -----------
Earnings before extraordinary items
and accounting changes .................... 133,738 17,756 100,423 113,640 75,793
Extraordinary item and accounting
changes, net of taxes ..................... -- -- -- 637 2,847
------------- ------------- ------------- ------------- -----------
Net earnings .................................. $ 133,738 $ 172,756 $ 100,423 $ 114,277 $ 78,640
============= ============= ============= ============= ===========
PER COMMON SHARE DATA (1), (2), (5)
Primary
Earnings before extraordinary item
and accounting changes .................. $ 1.95 $ 2.72 $ 1.52 $ 2.19 $ 1.75
Net earnings .............................. 1.95 2.72 1.52 2.20 1.75
Fully diluted
Earnings before extraordinary item
and accounting changes .................. 1.92 2.64 1.52 2.14 1.73
Net earnings .............................. 1.92 2.64 1.52 2.15 1.73
Cash dividends .............................. 1.08 .98 .88 .72 .60
Book value .................................. 19.55 18.52 15.42 14.80 14.08
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 (2), (3)
Parent company ............................ 373,459 214,758 114,790 114,729 74,292
Subsidiary bank ........................... 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)(1)
Primary ................................... 64,987 60,385 59,587 43,192 35,463
Fully diluted ............................. 69,518 64,995 59,929 47,422 38,307
</TABLE>
-11-
<PAGE> 21
<TABLE>
<CAPTION>
Years Ended December 31, (1), (2)
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets ................... .88% 1.26% .77% .99% .83%
Return on average common equity ............ 10.61 16.16 9.76 14.92 13.15
Net interest income average earning
assets .................................. 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
Capital 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 (3)
Allowance/period-end loans ................. 1.86 1.92 1.98 2.27 2.20
Nonperforming loans/total loans ............ .74 .56 .44 .65 1.16
Allowance/nonperforming loans .............. 253 344 444 346 189
Nonperforming assets/loans and
foreclosed properties ................... .92 .67 .58 .96 1.83
Provision/average loans .................... .66 .34 .14 .37 .74
Net charge-offs/average loans .............. .60 .34 .09 .27 .52
</TABLE>
- ----------------------------
(1) Reference is made to "Basis of Presentation" in Note 1 to UPC's audited
consolidated financial statements contained in the 1996 Annual Report
to Shareholders, which is incorporated by reference. See "DOCUMENTS
INCORPORATED BY REFERENCE."
(2) Share and per share amounts have been retroactively restated for
significant acquisitions accounted for as pooling of interests.
(3) Long-term debt includes Medium-Term Bank Notes, Federal Home Loan 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.
-12-
<PAGE> 22
MAGNA BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
--------------------------------
1997 1996
------------- -------------
(Dollars in thousands, except per share data)
<S> <C> <C>
INCOME STATEMENT DATA
Net interest income ................................. $ 48,963 $ 48,166
Provision for losses on loans ....................... 2,334 1,039
Investment securities gains (losses) ................ 1,036 375
Other noninterest income ............................ 27,334 26,973
Noninterest expense ................................. 54,840 50,200
------------- -------------
Earnings before income taxes,
extraordinary items, and
accounting changes ................................ 20,159 24,275
Applicable income taxes ............................. 7,298 8,612
------------- -------------
Earnings before extraordinary items
and accounting changes ............................ 12,861 15,663
Accounting changes, net of taxes .................... -- --
------------- -------------
Net earnings ........................................ $ 12,861 $ 15,663
============= =============
PER COMMON SHARE DATA (1)
Primary
Earnings before accounting changes ................ $ 0.93 $ 1.11
Net earnings ...................................... 0.93 1.11
Fully diluted
Earnings before accounting changes ................ 0.93 1.11
Net earnings ...................................... 0.93 1.11
Cash dividends ...................................... 0.45 0.18
Book value .......................................... 9.61 9.06
BALANCE SHEET DATA (AT PERIOD END)
Total assets ........................................ $ 1,383,130 $ 1,290,780
Loans, net of unearned income ....................... 911,837 905,832
Allowance for losses on loans ....................... 10,181 9,152
Investment securities ............................... 253,929 198,682
Deposits ............................................ 911,655 952,347
Short-term borrowings ............................... 202,427 95,000
Long-term debt (2) .................................. 94,082 97,890
Total shareholders' equity .......................... 132,245 126,078
Average assets ...................................... 1,311,842 1,202,579
Average shareholders' equity ........................ 128,392 120,666
Average shares outstanding (in thousands)(1)
Primary ........................................... 13,880 14,116
Fully diluted ..................................... 13,880 14,116
PROFITABILITY AND CAPITAL RATIOS
Return on average assets............................. 1.31% 1.74%
Return on average common equity...................... 13.36 17.31
Net interest income/average earning ................. 5.67 6.04
assets
Loans/deposits....................................... 100.02 95.12
Common and preferred dividend
payout ratio ..................................... 48.39 13.51
Equity/assets (period end) .......................... 9.56 9.77
Average shareholders' equity/
average total assets ............................. 9.79 10.03
Capital ratio ....................................... 8.02 7.60
Tier 1 capital/risk-weighted assets ................. 15.21 13.97
Total capital/risk-weighted assets .................. 16.45 15.10
ASSET QUALITY RATIOS (3)
Allowance/period-end loans .......................... 1.12 1.01
Nonperforming loans/total loans ..................... 2.32 2.58
Allowance/nonperforming loans ....................... 48.15 39.14
Nonperforming assets/loans and
foreclosed properties ............................ 3.51 3.61
Provision/average loans ............................. 0.35 0.16
Net charge-offs/average loans ....................... 0.24 0.17
</TABLE>
13
<PAGE> 23
<TABLE>
<CAPTION>
Years Ended June 30,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income ......................... $ 65,094 $ 62,708 $ 60,748 $ 56,884 $ 49,434
Provision for losses on loans ............... 1,633 418 688 1,573 4,681
Investment securities gains (losses) ........ 244 1,707 (129) 4,931 1,316
Other noninterest income .................... 37,372 33,539 24,160 13,740 17,875
Noninterest expense ......................... 68,026 66,310 58,527 48,566 43,978
------------- ------------- ------------- ------------- -----------
Earnings before income taxes,
extraordinary items, and
accounting changes ........................ 33,051 31,226 25,564 25,416 19,966
Applicable income taxes ..................... 11,942 12,201 9,930 9,415 10,158
------------- ------------- ------------- ------------- -----------
Earnings before extraordinary items
and accounting changes .................... 21,109 19,025 15,634 16,001 9,808
Accounting changes, net of taxes ............ -- -- 3,868 -- --
------------- ------------- ------------- ------------- -----------
Net earnings ................................ $ 21,109 $ 19,025 $ 19,502 $ 16,001 $ 9,808
============= ============= ============= ============= ===========
PER COMMON SHARE DATA (1)
Primary
Earnings before accounting changes ........ $ 1.50 $ 1.33 $ 1.10 $ 1.15 $ 0.72
Net earnings .............................. 1.50 1.33 1.37 1.15 0.72
Fully diluted
Earnings before accounting changes ........ 1.50 1.33 1.10 1.15 0.72
Net earnings .............................. 1.50 1.33 1.37 1.15 0.72
Cash dividends .............................. 0.25 0.18 0.08 0.04 0.04
Book value .................................. 9.18 8.20 6.85 5.61 4.49
BALANCE SHEET DATA (AT PERIOD END)
Total assets ................................ $ 1,308,658 $ 1,159,423 $ 1,115,169 $ 1,046,099 $ 927,510
Loans, net of unearned income ............... 873,214 807,799 724,738 744,332 750,296
Allowance for losses on loans ............... 9,452 9,213 9,781 9,661 8,496
Investment securities ....................... 240,762 164,912 204,763 123,987 86,010
Deposits .................................... 922,370 917,718 972,644 926,918 834,896
Short-term borrowings ....................... 125,000 100,000 -- -- 6,000
Long-term debt (2)
Subsidiary bank .......................... 96,961 -- 571 498 434
Total shareholders' equity .................. 125,819 115,319 96,238 78,771 62,729
Average assets .............................. 1,225,641 1,146,950 1,063,179 970,237 949,859
Average shareholders' equity ................ 121,762 104,082 89,148 70,518 56,594
Average shares outstanding (in thousands)(1)
Primary ................................... 14,099 14,261 14,261 14,004 13,749
Fully diluted ............................. 14,099 14,261 14,261 14,004 13,749
PROFITABILITY AND CAPITAL RATIOS
Return on average assets ..................... 1.72% 1.66% 1.83% 1.65% 1.03%
Return on average common equity .............. 17.34 18.28 21.88 22.69 17.33
Net interest income/average earning .......... 6.02 6.21 6.47 6.53 5.71
assets
Loans/deposits ............................... 94.67 88.02 74.51 80.30 89.87
Common and preferred dividend
payout ratio .............................. 16.67 13.86 6.20 3.41 4.96
Equity/assets (period end) ................... 9.61 9.95 8.63 7.53 6.76
Average shareholders' equity/
average total assets ...................... 9.93 9.07 8.39 7.27 5.96
Capital ratio ................................ 7.78 7.55 6.08 6.20 5.86
Tier 1 capital/risk-weighted assets .......... 14.73 14.12 11.89 11.10 10.58
Total capital/risk-weighted assets ........... 15.98 16.01 13.90 13.08 12.78
ASSET QUALITY RATIOS (3)
Allowance/period-end loans ................... 1.08 1.14 1.35 1.30 1.13
Nonperforming loans/total loans .............. 2.60 2.71 2.97 1.27 1.15
Allowance/nonperforming loans ................ 41.59 42.07 45.46 102.45 98.28
Nonperforming assets/loans and
foreclosed properties ..................... 3.73 3.49 3.63 2.44 2.62
Provision/average loans ...................... 0.19 0.05 0.09 0.22 0.64
Net charge-offs/average loans ................ 0.16 0.13 0.08 0.06 0.21
</TABLE>
- ----------------------------
(1) Shares and per share amounts have been retroactively restated for stock
splits and dividends.
(2) Long-term debt includes Federal Home Loan Bank advances and subordinate
debentures with maturities greater than one year.
(3) Non-performing assets consist of non-accruing loans, troubled debt
restructurings and foreclosed real estate. Non-performing assets do not
include accruing loans that are in a delinquent status.
-14-
<PAGE> 24
SPECIAL MEETING OF MAGNA STOCKHOLDERS
DATE, PLACE, TIME, AND PURPOSE
This Proxy Statement is being furnished to the holders of Magna Common
Stock in connection with the solicitation by the Magna Board of Directors of
proxies for use at the Special Meeting, and at any and all adjournments or
postponements thereof, at which Magna stockholders will be asked to vote upon a
proposal to adopt the Agreement and the Plan of Merger. The Special Meeting will
be held at the corporate offices of Magna in the Forrest Tower, Second Floor,
215 Forrest Street, Hattiesburg, Mississippi, at 1:30 p.m., local time, on
August 20, 1997. See "DESCRIPTION OF TRANSACTION."
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE AND REVOCABILITY OF PROXIES
The close of business on July 11, 1997, has been fixed as the Magna
Record Date for determining holders of outstanding shares of Magna Common Stock
entitled to notice of and to vote at the Special Meeting. Only holders of Magna
Common Stock of record on the books of Magna at the close of business on the
Magna Record Date are entitled to notice of and to vote at the Special Meeting.
As of the Magna Record Date, there were 13,754,266 shares of Magna Common Stock
issued and outstanding held by approximately 1,252 holders of record.
Holders of Magna Common Stock are entitled to one vote on each matter
considered and voted upon at the Special Meeting for each share of Magna Common
Stock held of record as of the Magna Record Date. To hold a vote on any
proposal, a quorum must be assembled, which requires that at least one-third of
the shares of Magna Common Stock issued and outstanding and entitled to vote be
present in person or represented by proxy. In determining whether a quorum
exists at the Special Meeting for purposes of all matters to be voted on, all
votes "for" or "against," as well as all abstentions, with respect to the
proposal receiving the most such votes, will be counted. Adoption of the
Agreement and the Plan of Merger requires an affirmative vote of the holders of
at least a majority of the issued and outstanding shares of Magna Common Stock
entitled to be voted at the Special Meeting. Consequently, with respect to the
proposal to adopt the Agreement and the Plan of Merger, abstentions and broker
non-votes will be counted as part of the base number of votes to be used in
determining if the proposal has received the requisite number of votes for
adoption. Thus, an abstention or a broker non-vote will have the same effect as
a vote "against" such proposal.
Shares of Magna Common Stock represented by properly executed proxies,
if such proxies are received in time for exercise and not revoked, will be voted
in accordance with the instructions indicated on the proxies. IF NO INSTRUCTIONS
ARE INDICATED, SUCH PROXIES WILL BE VOTED FOR ADOPTION OF THE AGREEMENT AND THE
PLAN OF MERGER AND, IN THE DISCRETION OF THE PROXY HOLDER, AS TO ANY OTHER
MATTER WHICH MAY COME PROPERLY BEFORE THE SPECIAL MEETING. IF NECESSARY, THE
PROXY HOLDER MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING IN
ORDER TO PERMIT FURTHER SOLICITATION OF PROXIES IN THE EVENT THERE ARE NOT
SUFFICIENT VOTES TO APPROVE THE FOREGOING PROPOSAL AT THE TIME OF THE SPECIAL
MEETING. HOWEVER, NO PROXY HOLDER WILL VOTE ANY PROXIES VOTED "AGAINST" ADOPTION
OF THE AGREEMENT AND THE PLAN OF MERGER "FOR" A PROPOSAL TO ADJOURN THE SPECIAL
MEETING.
FAILURE BOTH TO RETURN THE PROXY CARD AND TO VOTE IN PERSON AT THE
SPECIAL MEETING WILL HAVE THE EFFECT OF A VOTE CAST AGAINST THE AGREEMENT AND
THE PLAN OF MERGER.
A Magna stockholder who has given a proxy may revoke it at any time
prior to its exercise at the Special Meeting by (i) giving written notice of
revocation to the Secretary of Magna, (ii) properly submitting to Magna a duly
executed proxy bearing a later date, or (iii) attending the Special Meeting and
voting in person. All written notices of revocation and other communications
with respect to revocation of proxies should be addressed as follows: Magna
Bancorp, Inc., 100 West Front Street, Hattiesburg, Mississippi 39401; Attention:
H.A. Moore III, Corporate Secretary.
-15-
<PAGE> 25
The directors and executive officers of Magna and their affiliates
beneficially owned, as of the Magna Record Date, 3,554,663 shares (excluding
shares underlying Magna Options), or approximately 25.8% of the then issued
and outstanding shares of Magna Common Stock.
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers, and employees of
Magna by mail, in person, or by telephone or telegraph. Such persons will
receive no additional compensation for such services. Magna may make
arrangements with brokerage firms and other custodians, nominees, and
fiduciaries, if any, for the forwarding of solicitation materials to the
beneficial owners of Magna Common Stock held of record by such persons. Any such
brokers, custodians, nominees, and fiduciaries will be reimbursed for the
reasonable out-of-pocket expenses incurred by them for such services. All
expenses associated with the solicitation of proxies, other expenses associated
with the Special Meeting, and expenses related to the printing and mailing of
this Proxy Statement, will be shared by UPC and Magna as provided in the
Agreement. Magna has retained Regan & Associates, Inc. to assist in the
solicitation of proxies, for a fee estimated to be approximately $4,000 plus
reasonable out-of-pocket expenses. See "DESCRIPTION OF TRANSACTION -- Expenses
and Fees."
RECOMMENDATION
THE BOARD OF DIRECTORS OF MAGNA HAS UNANIMOUSLY APPROVED THE AGREEMENT,
THE PLAN OF MERGER, AND THE MERGER CONTEMPLATED THEREBY, BELIEVES THAT THE
PROPOSAL TO ADOPT THE AGREEMENT AND THE PLAN OF MERGER, INCLUDING THE MERGER
CONTEMPLATED THEREBY, IS IN THE BEST INTERESTS OF MAGNA AND ITS STOCKHOLDERS,
AND UNANIMOUSLY RECOMMENDS THAT THE MAGNA STOCKHOLDERS VOTE FOR APPROVAL OF THE
PROPOSAL TO ADOPT THE AGREEMENT AND THE PLAN OF MERGER.
-16-
<PAGE> 26
DESCRIPTION OF TRANSACTION
The following information describes material aspects of the Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Agreement and the
Plan of Merger, which are attached as Appendices A and B, respectively, to this
Proxy Statement and incorporated herein by reference. All stockholders are urged
to read the Appendices in their entirety.
GENERAL
The Agreement provides for the acquisition of Magna by UPC pursuant to
the merger of Magna with UPC Merger Subsidiary, a newly-formed, wholly-owned,
first-tier subsidiary of UPC, with the effect that Magna will be the surviving
corporation resulting from the Merger. At the Effective Time, each share of
Magna Common Stock then issued and outstanding (excluding shares held by Magna,
UPC, or their respective subsidiaries, in each case other than shares held in a
fiduciary capacity or as a result of debts previously contracted) will be
converted into 0.5165 of a share of UPC Common Stock, subject to possible
adjustment as described below (the "Exchange Ratio").
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any Magna stockholder 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 such common stock on the NYSE-Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
thereby, another authoritative source as selected by UPC) on the last trading
day preceding the Effective Time.
As of the Magna Record Date, Magna had 13,754,266 shares of Magna
Common Stock issued and outstanding and 130,791 additional shares of Magna
Common Stock subject to Magna Options. Based upon an Exchange Ratio of 0.5165,
upon consummation of the Merger, UPC would issue approximately 7,104,078 shares
of UPC Common Stock, excluding shares subject to assumed Magna Options.
Accordingly, UPC would then have issued and outstanding approximately
74,054,595 shares of UPC Common Stock based on the number of shares of UPC
Common Stock issued and outstanding on May 31, 1997 (and excluding shares to be
issued pursuant to Other Pending Acquisitions and shares to be issued pursuant
to the exercise of stock options and for other purposes).
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
Under certain circumstances, the Exchange Ratio could be adjusted
pursuant to certain provisions in the Agreement; under no circumstances would
the Exchange Ratio be less than 0.5165 of a share of UPC Common Stock for each
share of Magna Common Stock. An adjustment could occur only if Magna's Board of
Directors elects by majority vote to terminate the Agreement pursuant to the
provisions of the Agreement described below, and if UPC then elects to avoid
termination of the Agreement by adjusting the Exchange Ratio.
Magna is not obligated to consummate the Merger with UPC if both:
(a) the average of the daily last sales prices (the "Average Closing
Price") of UPC Common Stock (as reported on the NYSE Composite
Transactions List) for the 20 consecutive full trading days ending on
the later of the date on which the Special Meeting is held and the
date on which the last required consent of the Federal Reserve is
received (the "Determination Date") is less than $36.50, which
represents a 20% decline from $45.625 (the "Starting Price"), the
price per share of UPC Common Stock on May 14, 1997, the fourth full
trading day after the announcement by press release of the Merger
(the "Starting Date");
and
(b) (i) the number (the "UPC Ratio") obtained by dividing the Average
Closing Price by $45.625, the Starting Price, is less than (ii) the
number (the "Index Ratio") obtained by dividing the weighted average
of the closing prices of the common stock of the bank holding
companies defined as the "Index Group" in the Agreement (the "Index
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<PAGE> 27
Price") on the Determination Date by the Index Price on May 14, 1997,
the Starting Date, less 15%.
In such case, Magna has the right to terminate the Agreement during the
ten-day period commencing two days after the Determination Date by giving UPC
prompt notice of that decision. Magna may withdraw its termination notice at any
time during that ten-day period. During the five-day period after receipt of
such notice, UPC has the option to increase the consideration payable to Magna
stockholders by adjusting the Exchange Ratio in the manner described below. UPC
IS UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO. If UPC elects to adjust the
Exchange Ratio, it must give Magna prompt notice of that election and of the
adjusted Exchange Ratio, in which case no termination shall have occurred
pursuant to such right of termination.
These conditions reflect the parties' agreement that Magna's
stockholders will assume the risk of a decline in the value of UPC Common Stock
to $36.50. Any adjustment of the Exchange Ratio that would occur if the price of
UPC Common Stock declines to below $36.50 per share would be dependent on
whether the price of UPC Common Stock lags behind the weighted average price of
a market basket of comparable bank holding company common stocks (the Index
Group referenced above) by more than 15%.
If the Average Closing Price is less than $36.50 per share and the UPC
Ratio is less than the Index Ratio, the Board of Directors of Magna would likely
elect to terminate the Agreement so as to require UPC to consider increasing the
Exchange Ratio. UPC would then determine whether to proceed with the Merger at
the higher Exchange Ratio. In making this determination, the principal factors
UPC will consider include the projected effect of the Merger on UPC's pro forma
earnings per share and whether UPC's assessment of Magna's earning potential as
part of UPC justifies the issuance of an increased number of UPC's shares. If
UPC declines to adjust the Exchange Ratio, Magna may elect to proceed without
the adjustment by withdrawing its election to terminate, provided it does so
within 12 days of the Determination Date. In making such determination, the
Board of Directors of Magna will consider whether the Merger remains in the
best interest of Magna and its stockholders, despite a decline in UPC's stock
price, and whether the consideration to be received by the holders of Magna
Common Stock remains fair from a financial point of view.
The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the scenarios, it has been assumed that the initial
Exchange Ratio is 0.5165, the Starting Price of UPC Common Stock is $45.625,
and the Index Price as of the Starting Date is $100.)
(1) The first scenario occurs if the Average Closing Price is not less
than $36.50. Under this scenario, regardless of any comparison
between the UPC Ratio and the Index Ratio, there would be no
adjustment to the Exchange Ratio, even though the value of the
consideration to be received by Magna stockholders could have fallen
from a pro forma $23.56 per share, as of the Starting Date, to
$18.85 per share, as of the Determination Date.
(2) The second scenario occurs if the Average Closing Price is
less than $36.50, but does not represent a decline from the Starting
Price of significantly more (i.e., by more than 15%) than the
decline of the common stock prices of the Index Group. Under this
scenario, there also would be no adjustment to the Exchange Ratio,
even though the value of the consideration to be received by Magna
stockholders would have fallen from a pro forma $23.56 per share, as
of the Starting Date, to an amount based on the then lower price
per share of UPC Common Stock, as of the Determination Date.
(3) The third scenario occurs if the Average Closing Price is below
$36.50 and the UPC Ratio is below the Index Ratio. Under this
scenario, the adjustment in the Exchange Ratio is designed to ensure
that the Magna stockholders receive for each share of Magna Common
Stock held shares of UPC Common Stock having a value (based upon the
Average Closing Price) that corresponds to the lesser of $18.85 or a
15% decline from the stock price performance reflected by the Index
Group, whichever is less.
For example, if the Average Closing Price were $35.00, and the
Index Price, as of the Determination Date, were $95.00, the UPC Ratio
(.77) would be below the Index Ratio (.80, or .95 minus .15), Magna
could terminate the Agreement unless UPC elected within five days to
increase the Exchange
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<PAGE> 28
Ratio to equal .537, which represents the lesser of (a) .539 [the
result of dividing $18.85 (the product of $36.50 and the 0.5165
Exchange Ratio) by the Average Closing Price ($35.00), rounded to the
nearest thousandth] and (b) .537 [the result of dividing the Index
Ratio (.80) times 0.5165 by the UPC Ratio (.77), rounded to the
nearest thousandth]. Based upon the assumed $35.00 Average Closing
Price, the new Exchange Ratio would represent a value to the Magna
stockholders of $18.79 per share.
If the Average Closing Price were $35.00, and the Index Price,
as of the Determination Date, were $100, the UPC Ratio (.77) would be
below the Index Ratio (.85, or 1.00 minus .15), Magna could
terminate the Agreement unless UPC elected within five days to
increase the Exchange Ratio to equal .539, which represents the
lesser of (a) .539 [the result of dividing $18.85 (the product of
$36.50 and the 0.5165 Exchange Ratio) by the Average Closing Price
($35.00), rounded to the nearest thousandth] and (b) .570 [the result
of dividing the Index Ratio (.85) times 0.5165 by the UPC Ratio
(.77), rounded to the nearest thousandth]. Based upon the assumed
$35.00 Average Closing Price, the new Exchange Ratio would represent
a value to the Magna stockholders of $18.90 per share.
The actual market value of a share of UPC Common Stock at the Effective
Time and at the time certificates for those shares are delivered following
surrender and exchange of certificates for shares of Magna Common Stock may be
more or less than the Average Closing Price. Magna stockholders are urged to
obtain current market quotations for UPC Common Stock. See "COMPARATIVE MARKET
PRICES AND DIVIDENDS."
EFFECT OF THE MERGER ON MAGNA OPTIONS
At the Effective Time, each Magna Option granted by Magna under the
Magna Stock Plans, as that term is defined in the Agreement, which are
outstanding at the Effective Time, whether or not exercisable, will be converted
into and become rights with respect to UPC Common Stock, and UPC will assume
each Magna Option, in accordance with the terms of the Magna Stock Plan and
stock option or other agreement by which it is evidenced, except that from and
after the Effective Time, (i) UPC and its Salary and Benefits Committee will be
substituted for Magna and the Committee of Magna's Board of Directors
(including, if applicable, the entire Board of Directors of Magna or other
independent committee) administering such Magna Stock Plan, (ii) each Magna
Option assumed by UPC may be exercised solely for or converted into shares of
UPC Common Stock, (iii) the number of shares of UPC Common Stock subject to such
Magna Option (if applicable) will be equal to the number of shares of Magna
Common Stock subject to such Magna Option immediately prior to the Effective
Time multiplied by the Exchange Ratio, and (iv) the per share exercise price
under each such Magna Option will be adjusted by dividing the per share exercise
price under each such Magna Option by the Exchange Ratio and rounding up to the
nearest cent.
In approving the Agreement, Magna and the Committee appointed by the
Board of Directors of Magna in accordance with paragraph 3 of the Magna Bancorp,
Inc. 1990 Stock Option and Incentive Plan has agreed not to permit the holders
of options outstanding under such plan to receive cash upon the Merger in an
amount equal to the excess of the "Market Value" of the Magna Common Stock
subject to such option over the "Exercise Price" of the shares subject to such
option in accordance with Section 11 of the Magna Bancorp, Inc. 1990 Stock
Option and Incentive Plan.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. In the Summer of 1990, the officers and
directors of Magnolia Federal became aware that assets and deposits of thrift
institutions in Magnolia Federal's market area that had been taken over by the
Resolution Trust Corporation ("RTC") would be liquidated at attractive prices.
In order for Magnolia Federal to acquire these assets and deposits, additional
capital would be required to support the resulting growth. Management of
Magnolia Federal determined that a conversion from the mutual form of
organization to the stock form was the only source of the necessary capital. The
Board of Directors authorized the conversion in August 1990 and the conversion,
including the sale of $11.2 million of Magna Common Stock, was completed in
March 1991. Magna was organized as the holding company for Magnolia Federal in
connection with the conversion.
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<PAGE> 29
During the period from 1991 through 1995, Magnolia Federal employed the
additional capital generated by the conversion to, among other things, acquire
and consolidate RTC assets and deposits.
In January 1996, a number of concerns prompted management to review its
strategic alternatives. The acquisition market in 1996 was attractive but the
future of Magna was uncertain. The market value of the Magna Common Stock
reflected a high level of profitability resulting from an unusually wide
interest rate spread generated in part from the acquisitions of high-yielding
loans from the RTC. Management recognized that future increases in the value of
the Magna Common Stock would depend on continued growth and profitability. In
the current competitive environment for loans and deposits, Magnolia Federal's
financial condition and results of operations would tend to move towards
national averages, resulting in asset growth without significant increases in
profit or in the value of the Magna Common Stock. Additionally, the Magna Common
Stock had limited liquidity and a sale of a substantial amount of the stock by
any major stockholder could result in a decline in market price. Magnolia
Federal had achieved a technological advantage over its local competitors in the
early 1980s with an on-line data processing system, but this advantage no longer
existed and a major expenditure would have been required for new systems to
enable Magnolia Federal to compete effectively with products and services
available in the current environment. The huge expenditure for new systems also
represented an enormous operational risk. Mortgage loan delivery systems are
experiencing substantial change and the non-conforming home loan market has
become more competitive in recent years. Management recognized the necessity of
a larger distribution system to expand its existing non-conforming home loan
portfolio. In addition, it is possible that Congress will abolish the thrift
charter and thrifts will be merged into the commercial banking industry.
Management was concerned that regulators will require converted thrifts to
become more like commercial banks in their operations, with more emphasis on
commercial checking accounts and commercial loans and less long-term mortgage
lending. Offering these additional commercial bank products would require
specialization and expertise which current management does not possess and would
necessitate a major change in data systems, personnel and policies at
substantial risk.
In view of the uncertainties, management began the process of
collecting data and preparing a self-analysis to be considered by the Magna
Board of Directors. This analysis was completed in May 1996 and the Magna Board
of Directors instructed management to provide the preliminary data to four
investment banking companies for the purpose of selecting an advisor. The Board
of Directors also instructed management to engage the firm of Silver, Freedman &
Taff, L.L.P. ("SFT") as special counsel. The Board of Directors met with the
four prospective investment banker groups between July 23 and July 26, 1996 and,
on August 5, 1996, selected Montgomery as the investment banker to assist Magna
in evaluating its strategic alternatives. During late August and early September
1996, Montgomery contacted a number of financial institutions to determine their
level of interest in a possible acquisition of Magna. Nineteen institutions
signed confidentiality agreements and received certain public and non-public
financial and operating data regarding Magna (the "Confidential Memorandum").
Five institutions requested meetings in person with Magna management.
In June 1996, UPC had made an initial contact by a telephone call from
Chairman Benjamin W. Rawlins, Jr. to Magna Chairman Robert S. Duncan suggesting
an informal discussion. The initial meeting was delayed until the investment
banker selection process was completed. Montgomery followed up with an
invitation to send UPC the Confidential Memorandum. Because UPC was engaged in
the merger and consolidation of Leader Federal, the parties did not engage in
formal discussions until a meeting was held at UPC's offices in Memphis,
Tennessee on September 10, 1996. Attendees at this meeting included Mr. Duncan
and Lou Ann Poynter of Magna; Mr. Rawlins, Jackson W. Moore and John W. Parker
of UPC; and representatives of Montgomery. A second meeting of this group was
held in the offices of Magna in Hattiesburg, Mississippi on November 12, 1996.
At this meeting, a preliminary price of $20.25 was discussed, but on the
following day, the Magna Board of Directors elected to discontinue the
consideration of a sale at that time.
Mr. Duncan received a telephone call from Mr. Rawlins on January 2,
1997 suggesting a meeting between the managing officers of the companies in New
Orleans, Louisiana on January 21, 1997. Additional negotiations ensued and a
further meeting was held in Memphis among Messrs. Rawlins, Moore and Duncan and
Ms. Poynter on February 17, 1997. At this meeting, it was agreed that the
parties would proceed with negotiations and due diligence. On-site due diligence
was performed by UPC during the two-week period ended March 21, 1997 and Magna
performed its on-site due diligence of UPC between March 19 and March 23, 1997.
The investment
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<PAGE> 30
bankers for the parties continued to negotiate the financial terms of the
transaction. On April 23, 1997, an additional meeting was held at UPC's offices
in Memphis among Messrs. Rawlins, Moore and Duncan and Ms. Poynter and
representatives of Montgomery and The Robinson-Humphrey Company, Inc., UPC's
investment bankers. This meeting included a general discussion of merger issues
and a final agreement of the proposed exchange ratio.
During the following ten days, counsel for Magna and UPC completed a
preliminary draft of the proposed definitive agreement. A meeting of the Magna
Board of Directors was held in Washington, D.C. in the offices of SFT on May 2,
1997 to consider the proposed merger terms. This meeting included the Magna
Board of Directors and representatives of SFT and Montgomery. There was a
general discussion of the proposed transaction and a review of the draft
definitive agreement. Montgomery presented a financial analysis of the
transaction and the opinion that the transaction was fair. The meeting was
adjourned to permit the Board of Directors ample time to review and consider the
proposal and was reconvened by telephone at 4:00 p.m. on May 8, 1997. At this
meeting, the Board of Directors approved the Agreement, the Plan of Merger and
the transactions contemplated thereby.
MAGNA'S REASONS FOR THE MERGER. The terms of the Agreement, including
the consideration to be paid to Magna stockholders, were the result of arm's
length negotiations between the representatives of UPC and Magna. Among the
factors considered by the Board of Directors of Magna in deciding to approve and
recommend the Agreement, the Plan of Merger and the transactions contemplated
thereby were:
(a) the consideration to be paid to Magna stockholders in
relation to the market value, book value, earnings per share and
dividend rates of Magna Common Stock and UPC Common Stock;
(b) information concerning the financial condition,
results of operations, capital levels, asset quality and prospects of
Magna and UPC;
(c) the short-term and long-term impact the Merger will
have on the UPC consolidated results of operations, including
anticipated cost savings resulting from consolidations in certain
areas;
(d) the general structure of the transaction;
(e) the compatibility of management and business
philosophy;
(f) the likelihood of receiving the requisite regulatory
approvals in a timely manner;
(g) the general tax-free nature of the Merger to
stockholders of Magna;
(h) the ability of the combined enterprise to compete in
relevant banking and non-banking markets;
(i) industry and economic conditions, including trends in
the consolidation of the financial services industry;
(j) the impact of the Merger on the depositors, employees,
customers of and communities served by Magna through expanded
consumer lending and retail banking products and services; and
(k) the opinion of Magna's financial advisor as to the
fairness, from a financial point of view, of the consideration to be
paid to Magna stockholders.
In adopting the Agreement, the Plan of Merger and the transactions
contemplated thereby, Magna's Board of Directors was aware that (i) the
Agreement contains certain provisions prohibiting Magna from soliciting other
offers to acquire Magna (see " -- Conduct of Business Pending the Merger") and
(ii) UPC would be able to exercise its rights under the Option Agreement in
certain circumstances generally relating to the failure of Magna
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<PAGE> 31
to consummate the Merger because of another offer for Magna or a material change
or a potential material change in the ownership of Magna (see "-- Option
Agreement"). However, the Magna Board of Directors was also aware that such
terms were specifically bargained for and insisted upon by UPC as inducements to
enter into the Agreement, and that the obligations of the Magna Board of
Directors under the Agreement to recommend that Magna stockholders adopt the
Agreement, the Plan of Merger and the transactions contemplated thereby and to
use its reasonable efforts to obtain such adoption were explicitly made subject
to the fiduciary duties of the Magna Board of Directors as advised by counsel to
Magna. Accordingly, the Agreement expressly permits the Magna Board of
Directors, in the exercise of its fiduciary duties, to withdraw or change its
recommendation of the Agreement, the Plan of the Merger and the transactions
contemplated thereby and to suspend or terminate its efforts to obtain
stockholder adoption of the Agreement, the Plan of Merger and the transactions
contemplated at the Special Meeting (in such circumstances, however, UPC may
still be able to exercise its rights under the Option Agreement).
The Board of Directors of Magna also considered that under the
Agreement it would have the right to terminate the Agreement in the event of a
significant decline in the price of UPC Common Stock prior to consummation of
the Merger unless UPC then elected to increase the Exchange Ratio as specified
in the Agreement. See "-- Possible Adjustment of Exchange Ratio," "-- Interests
of Certain Persons in the Merger," "-- Certain Federal Income Tax Consequences,"
and "-- Option Agreement."
The foregoing discussion of the information and factors considered by
Magna's Board of Directors is not intended to be exhaustive but includes all
material factors considered by Magna's Board of Directors. In reaching its
determination to approve the Merger, Magna's Board of Directors did not assign
any relative or specific weights to different factors. After deliberating with
respect to the Merger and the other transactions contemplated thereby, and
considering, among other things, the matters discussed above and the opinion of
Montgomery referred to above, Magna's Board of Directors unanimously approved
the Agreement, the Plan of Merger and the transactions contemplated thereby,
including the Option Agreement, as being in the best interests of Magna and its
stockholders.
MAGNA'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT MAGNA
STOCKHOLDERS VOTE FOR ADOPTION OF THE AGREEMENT AND PLAN OF MERGER.
UPC'S REASONS FOR THE MERGER. In adopting the Agreement, the Plan of
Merger, and the Merger, the UPC Board of Directors considered a number of
additional factors concerning the benefits of the Merger. Without assigning any
relative or specific weights to the factors, the UPC Board of Directors
considered the following additional material factors:
(a) a review, based in part on a presentation by UPC's management, of
(i) the business, operations, earnings, and financial condition, including the
capital levels and asset quality, of Magna on an historical, prospective, and
pro forma basis and in comparison to other financial institutions in the area,
(ii) the demographic, economic, and financial characteristics of the markets in
which Magna operates, including existing competition, history of the market
areas with respect to financial institutions, and average demand for credit, on
an historical and prospective basis, and (iii) the results of UPC's due
diligence review of Magna; and
(b) a variety of factors affecting and relating to the overall
strategic focus of UPC, including UPC's desire to expand into markets in the
general vicinity of its core markets.
The Executive Committee of the Board of Directors of UPC determined
that the Merger was in the best interests of UPC and its stockholders and
approved the Agreement on April 17, 1997. The Agreement, the Plan of Merger, and
the transactions contemplated thereby were subsequently ratified and approved by
the Board of Directors of UPC on April 17, 1997.
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<PAGE> 32
OPINION OF MAGNA'S FINANCIAL ADVISOR
GENERAL. Pursuant to an engagement letter dated August 5, 1996 (the
"Engagement Letter"), Magna engaged Montgomery to identify opportunities for
maximizing stockholder value, including, among other things, a strategic
alliance with another entity. As part of its engagement, Montgomery provided a
full range of advisory services, including assisting Magna in the preparation of
a the Confidential Memorandum, contacting potentially interested buyers and the
development of a "bidding" process. Montgomery also agreed to render to Magna's
Board of Directors an opinion with respect to the fairness of the consideration
to be received by holders of Magna Common Stock, from a financial point of view,
in a potential sale of Magna. Montgomery is a nationally recognized investment
banking firm and, as part of its investment banking activities, is regularly
engaged in the valuation of businesses and their securities in connection with
merger transactions and other types of acquisitions, negotiated underwritings,
private placements and valuations for corporate and other purposes. Magna
selected Montgomery to render the opinion on the basis of its experience and
expertise in forming "strategic alliances" and its reputation in the banking and
investment communities.
At a meeting of Magna's Board of Directors on May 2, 1997, Montgomery
delivered its oral opinion that the Exchange Ratio was fair to the holders of
Magna Common Stock, from a financial point of view, as of the date of such
opinion. Montgomery's oral opinion was subsequently confirmed in writing as of
such date.
THE FULL TEXT OF MONTGOMERY'S WRITTEN OPINION TO MAGNA'S BOARD OF
DIRECTORS, DATED MAY 2, 1997, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED, AND LIMITATIONS OF THE REVIEW BY MONTGOMERY, IS ATTACHED AS APPENDIX
C TO THIS PROXY STATEMENT AND IS INCORPORATED HEREIN BY REFERENCE. THE FOLLOWING
SUMMARY OF MONTGOMERY'S OPINION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
FULL TEXT OF THE OPINION, WHICH SHOULD BE READ CAREFULLY AND IN ITS ENTIRETY. IN
FURNISHING SUCH OPINION, MONTGOMERY DOES NOT ADMIT THAT IT IS AN EXPERT WITH
RESPECT TO THE REGISTRATION STATEMENT OF WHICH THIS PROXY STATEMENT IS PART
WITHIN THE MEANING OF THE TERM "EXPERTS" AS USED IN THE SECURITIES ACT AND THE
RULES AND REGULATIONS PROMULGATED THEREUNDER NOR DOES IT ADMIT THAT ITS OPINION
CONSTITUTES A REPORT OR VALUATION WITHIN THE MEANING OF SECTION 11 OF THE
SECURITIES ACT. MONTGOMERY'S OPINION IS DIRECTED TO MAGNA'S BOARD OF DIRECTORS,
COVERS ONLY THE FAIRNESS OF THE EXCHANGE RATIO, FROM A FINANCIAL POINT OF VIEW,
AS OF THE DATE OF THE OPINION AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY
HOLDER OF MAGNA COMMON STOCK AS TO HOW SUCH STOCKHOLDER SHOULD VOTE AT THE MAGNA
SPECIAL MEETING.
In connection with its May 2, 1997 opinion, Montgomery, among other
things: (i) reviewed certain publicly available financial and other data with
respect to Magna and UPC, including the audited consolidated financial
statements of Magna for the fiscal years ended June 30, 1995 and 1996 and
unaudited consolidated financial statements of Magna for the nine months ended
March 31, 1997, the audited consolidated financial statements of UPC for the
fiscal years ended December 31, 1994, 1995 and 1996 and unaudited consolidated
financial statements of UPC for the three months ended March 31, 1997 and
certain other relevant financial and operating data relating to Magna and UPC
made available to Montgomery from published sources and, in the case of Magna,
from the internal records of Magna; (ii) reviewed a draft of the Agreement;
(iii) reviewed certain publicly available information concerning the trading of,
and the trading market for, Magna Common Stock and UPC Common Stock; (iv)
compared both Magna and UPC, from a financial point of view, with certain other
companies in the bank and thrift industry which Montgomery deemed to be
relevant; (v) considered the financial terms, to the extent publicly available,
of selected recent business combinations of companies in the thrift industry
which Montgomery deemed to be comparable, in whole or in part, to the Merger;
(vi) reviewed and discussed with representatives of the management of Magna
certain information of a business and financial nature regarding Magna furnished
to Montgomery by Magna including financial forecasts and related assumptions of
Magna; (vii) reviewed certain third-party analysts' estimates regarding UPC;
(viii) made inquiries regarding and discussed the Merger and the Agreement and
other matters related thereto with Magna's counsel; and (ix) performed such
other analyses and examinations as Montgomery deemed appropriate.
In connection with Montgomery's review, Montgomery did not assume any
obligation independently to verify the foregoing information and relied on its
being accurate and complete in all material respects. With respect to the
financial forecasts for Magna provided to Montgomery by Magna's management, upon
management's
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<PAGE> 33
advice and with Magna's consent, Montgomery assumed for purposes of its opinion
that the forecasts were reasonably prepared on bases reflecting the best
available estimates and judgment of Magna's management at the time of
preparation as to the future financial performance of Magna and that they
provided a reasonable basis upon which Montgomery could form its opinion.
Montgomery also assumed estimates from First Call as to the future financial
performance of UPC provided a reasonable basis upon which Montgomery could form
its opinion. Montgomery assumed that there were no material changes in Magna's
or UPC's assets, financial condition, results of operations, business or
prospects since the respective dates of their last financial statements made
available to Montgomery. Montgomery relied on independent accountants of Magna
as to all financial matters with respect to Magna, the Merger and the Merger
Agreement. Montgomery assumed that the Merger will be consummated in a manner
that complies in all respects with the applicable provisions of the Securities
Act, the Exchange Act and all other applicable federal and state statutes, rules
and regulations. Montgomery is not an expert in the evaluation of loan
portfolios for purposes of assessing the adequacy of the allowances for losses
with respect thereto and assumed, with Magna's consent, that such allowances for
each of Magna and UPC were in the aggregate adequate to cover such losses. In
addition, Montgomery did not assume responsibility for reviewing any individual
credit files, or making an independent evaluation, appraisal or physical
inspection of any of the assets or liabilities (contingent or otherwise) of
Magna or UPC, nor was Montgomery furnished with any such appraisals. Magna
informed Montgomery, and Montgomery assumed, that the Merger will be recorded as
a pooling of interests under generally accepted accounting principles. Finally,
Montgomery's opinion was based on economic, monetary and market and other
conditions as in effect on, and the information made available to Montgomery as
of the date of the opinion. Accordingly, although subsequent developments may
affect the opinion, Montgomery has not assumed any obligation to update, revise
or reaffirm its opinion.
Set forth below is a brief summary of the report presented by
Montgomery to Magna's Board of Directors on May 2, 1997 in connection with its
opinion. For purposes of the report, Montgomery assumed 13.880 million fully
diluted shares of Magna Common Stock outstanding, 7.2 million shares to be
issued by UPC in the Merger for 100% of the shares outstanding and Magna balance
sheet figures as of March 31, 1997.
ANALYSIS OF SELECTED MERGER TRANSACTIONS. Montgomery reviewed the
consideration paid in selected categories of thrift transactions. Specifically,
Montgomery reviewed thrift transactions from January 1, 1992 to April 30, 1997
involving (i) mergers in the Southeast region (includes: Alabama, Arkansas,
Florida, Georgia, Mississippi, North Carolina, South Carolina, Tennessee,
Virginia and West Virginia) with assets greater than $750 million and (ii)
national mergers where the seller's last 12 months' return on average assets
equaled or exceeded 1.0% and where transaction value exceeded $100 million. For
each transaction, Montgomery analyzed data illustrating, among other things,
purchase price to book value, purchase price to tangible book value, purchase
price to deposits, the ratio of the premium (i.e., purchase price in excess of
tangible book value) to core deposits, and purchase price to last 12 months'
("LTM") earnings.
A summary of the median multiples in the analysis is as follows:
<TABLE>
<CAPTION>
Price to Premium to Price to Number of
Price to Tangible Price to Core LTM Transactions
Transaction Categories Book Value Book Value Deposits Deposits Earnings Examined
- ------------------------------------------------- ---------- ---------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Mergers in the Southeast region
with assets greater than $750
million ................................ 1.42x 1.64x 14.86% 6.39% 15.05x 29
National sellers with a ROA greater
than 1.0% and with transaction
value greater than $100 million ........ 1.62x 1.69x 19.86% 9.55% 14.09x 35
</TABLE>
A summary of the results of Montgomery's analysis concerning the Merger is as
follows:
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<PAGE> 34
<TABLE>
<CAPTION>
Price to Premium to Price to
Price to Tangible Price to Core LTM
Book Value Book Value Deposits Deposits Earnings
---------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Magna/UPC.......................... 2.40x 2.50x 35.09% 22.24% 15.06x
</TABLE>
Montgomery used a group of 22 national thrift acquisitions announced
since January 1, 1992 with purchase prices of greater than $200 million and less
than $400 million where pricing information was available to analyze premiums
paid compared to the seller stock price at various times prior to the
announcement of the acquisition. These figures produced: (i) a median premium to
the seller's stock price one month prior to announcement of 29.3%; (ii) a median
premium to the seller's stock price six days prior to announcement of 21.7%; and
(iii) a median premium to the seller's stock price the day prior to announcement
of 17.8%. In comparison, UPC's offer of $23.05, based on an Exchange Ratio of
0.5165 and a stock price of $44.63 per share, exceeded Magna's stock price one
month prior to the announcement by 26.3%, Magna's stock price six days prior to
the announcement by 33.6% and Magna's stock price one day prior to the
announcement by 31.7%.
PRESENT VALUE ANALYSIS. In performing the present value analysis,
Montgomery estimated the future earnings per share and dividend payments of
Magna over a five-year period. The estimated earnings per share in the year 2001
was multiplied by an estimated price to earnings multiple ranging from 11.0x to
15.0x. This product was then added to the cumulative estimated dividends and the
sum of these two numbers was discounted to the present using a discount rate of
15%. This analysis indicated that the present value of Magna's future stock
price plus dividends ranged from $16.90 to $22.24 per share, as compared to
UPC's offer of $23.05 per share.
CONTRIBUTION ANALYSIS. Montgomery analyzed the contribution of each of
Magna and UPC to, among other things, total equity, assets, deposits and core
deposits of the pro forma combined companies for the period ending March 31,
1997 and projected net income for the calendar year ending December 31, 1997.
This analysis showed, among other things, that based on pro forma combined
balance sheets for Magna and UPC at March 31, 1997, Magna would have contributed
8.7% of the total equity, 8.5% of the total assets, 7.4% of the total deposits
and 7.6% of the total core deposits. The pro forma projected income statement
for the period ending December 31, 1997 showed that Magna would contribute 9.0%
of the net income. Based on an Exchange Ratio of 0.5165 of UPC Common Stock for
each share of Magna Common Stock, holders of Magna Common Stock would own
approximately 9.6% of the combined companies based on common shares outstanding
at March 31, 1997.
DILUTION ANALYSIS. Using earnings estimates and projected growth rates
for Magna provided by Magna's management and First Call and for UPC from First
Call, Montgomery compared estimated reported EPS ("Reported EPS") of UPC Common
Stock on a stand-alone basis to the Reported EPS of the UPC Common Stock for the
pro forma combined company for the calendar years 1997, 1998, 1999, 2000 and
2001. Montgomery noted that, based upon the First Call estimates after giving
effect to management's pre-tax cost savings estimates and certain assumptions as
to, among other things, the Merger consideration, the Merger would be accretive
to UPC's Reported EPS for the years ending December 31, 1997 through December
31, 2001. These estimates were used for purposes of this analysis only and are
not necessarily indicative of expected results or plans of Magna or the combined
transaction.
COMPARABLE COMPANY ANALYSIS. Using public and other available
information, Montgomery compared certain financial ratios of Magna and UPC,
including the ratio of net income to average total assets ("return on average
assets"), the ratio of net income to average total equity ("return on average
equity"), the ratio of equity to assets, the ratio of noninterest expense to
revenue ("efficiency"), net interest margin and numerous other credit ratios for
the three years ended December 31, 1996 and the three months ended March 31,
1997 for UPC. The analysis necessarily involved complex considerations and
judgments concerning differences in financial and operating characteristics of
the companies.
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DIVIDEND PICKUP ANALYSIS. In performing the dividend pickup analysis,
Montgomery analyzed the Exchange Ratio of 0.5165 of UPC Common Stock for each
share of Magna Common Stock based on Magna's and UPC's stock prices as of April
30, 1997 and applied it to UPC's current dividend per share of $1.50. This
analysis showed, among other things, that holders of Magna Common Stock would
receive a dividend of $0.77 per share or a 29.1% increase from Magna's current
dividend of $0.60 per share.
The summary set forth above does not purport to be a complete
description of the presentation by Montgomery to Magna's Board of Directors or
of the analyses performed by Montgomery. The preparation of a fairness opinion
is not necessarily susceptible to partial analysis or summary description.
Montgomery believes that its analyses and the summary set forth above must be
considered as a whole and that selecting a portion of its analyses and factors,
without considering all analyses and factors, would create an incomplete view of
the process underlying the analyses set forth in its presentation to Magna's
Board of Directors. In addition, Montgomery may have given various analyses more
or less weight than other analyses, and may have deemed various assumptions more
or less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to be
Montgomery's view of the actual value of Magna or the combined companies. The
fact that any specified analysis has been referred to in the summary above is
not meant to indicate that such analysis was given greater weight than any other
analysis.
In performing its analyses, Montgomery made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of Magna or UPC. The
analyses performed by Montgomery are not necessarily indicative of actual values
or actual future results, which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Montgomery's analysis of the fairness of the consideration to be received by the
holders of Magna Common Stock in the Merger and were provided to Magna's Board
of Directors in connection with the delivery of Montgomery's opinion. The
analyses do not purport to be appraisals or to reflect the prices at which a
company might actually be sold or the prices at which any securities may trade
at the present time or any time in the future. The forecasts used by Montgomery
in certain of its analyses are based on numerous variables and assumptions which
are inherently unpredictable and must be considered not certain of occurrence as
projected. Accordingly, actual results could vary significantly from those
contemplated in such forecasts.
As described above under "-- Background of and Reasons for the Merger,"
Montgomery's opinion and presentation to Magna's Board of Directors were among
the many factors taken into consideration by Magna's Board of Directors in
making its determination to approve the Merger Agreement.
Pursuant to the Engagement Letter, Magna paid Montgomery a retainer fee
of $75,000 upon engagement and a fee of $225,000 upon delivery of its May 2,
1997 fairness opinion. Based on the current transaction value, Montgomery will
receive an additional $1,200,000 upon the closing of the Merger. Accordingly, a
significant portion of Montgomery's fee is contingent upon the closing of the
Merger. Magna has also agreed to reimburse Montgomery for its reasonable
out-of-pocket expenses, including any fees and disbursements for Montgomery's
legal counsel and other experts retained by Montgomery. Magna has agreed to
indemnify Montgomery, its affiliates, and their respective partners, directors,
officers, agents, consultants, employees and controlling persons against certain
liabilities, including liabilities under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the Merger, the Effective Time will occur on the date and at the time that the
Delaware Certificate of Merger reflecting the Merger becomes effective with the
Secretary of State of the State of Delaware. Unless otherwise agreed upon in
writing by UPC and Magna, and subject to the terms and conditions of the
Agreement, the parties will use their reasonable efforts to cause the Effective
Time to occur on such date as may be designated by UPC within 30 days following
the last to occur of (i) the effective date (including the expiration of any
applicable waiting period) of the last consent of any regulatory authority
having authority over and approving or exempting the Merger, (ii) the date on
which the stockholders of Magna approve the matters relating to this Agreement
and the Plan of Merger to the extent such
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approval is required stockholder by applicable law, and (iii) the date on which
all other conditions precedent to each party's obligations under the Agreement
have been satisfied or waived (to the extent waivable).
No assurance can be provided that the necessary stockholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. Magna and UPC anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated during the fourth quarter of 1997. However, delays in the
consummation of the Merger could occur.
The Board of Directors of either Magna or UPC generally may terminate
the Agreement if the Merger is not consummated by March 31, 1998, unless the
failure to consummate the transactions contemplated by the Agreement on or
before such date is caused by any willful breach of the Agreement by the party
seeking termination. See "-- Conditions to Consummation of the Merger" and "--
Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS
Pursuant to DGCL Section 262, the holders of Magna Common Stock do not
have dissenters' rights with respect to the Merger.
DISTRIBUTION OF UPC STOCK CERTIFICATES
Promptly after the Effective Time, UPC and Magna will cause Union
Planters National Bank, Memphis, Tennessee, acting in its capacity as Exchange
Agent, to mail to the former stockholders of Magna a letter of transmittal,
together with instructions for the exchange of the Certificates representing
shares of Magna Common Stock for certificates representing shares of UPC Common
Stock.
MAGNA STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY
RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for Magna Common
Stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of Magna Common Stock surrendering such items a
certificate or certificates representing the number of shares of UPC Common
Stock to which such holder is entitled and a check for the amount to be paid in
lieu of any fractional share (without interest), if any, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon), if any. UPC will not be obligated to deliver the
consideration to which any former holder of Magna Common Stock is entitled as a
result of the Merger until the holder surrenders such holder's Certificates
representing the shares of Magna Common Stock. Whenever a dividend or other
distribution is declared by UPC on UPC Common Stock, the record date for which
is at or after the Effective Time, the declaration will include dividends or
other distributions on all shares issuable pursuant to the Agreement, but no
dividend or other distribution payable after the Effective Time with respect to
UPC Common Stock will be paid to the holder of any unsurrendered Magna Common
Stock Certificate until the holder duly surrenders such Certificate. Upon
surrender of such Magna Common Stock Certificate, however, both the UPC Common
Stock certificate, together with all undelivered dividends or other
distributions (without interest) and any undelivered cash payments to be paid in
lieu of fractional shares (without interest), will be delivered and paid with
respect to each share represented by such Certificate.
At the Effective Time, the stock transfer books of Magna will be closed
to holders of Magna Common Stock immediately prior to the Effective Time and
there will be no transfer of shares of Magna Common Stock on Magna's stock
transfer books. If Certificates representing shares of Magna Common Stock are
presented for transfer after the Effective Time, they will be canceled and
exchanged for the shares of UPC Common Stock and a check for the amount due in
lieu of fractional shares and undelivered dividends, if any, deliverable in
respect thereof.
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CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions, including
(i) receipt of the approval of the stockholders of Magna of the Agreement and
the Plan of Merger, and the consummation of the transactions contemplated
thereby, including the Merger as and to the extent required by the law or by the
provisions of any governing instrument or by the rules of the National
Association of Securities Dealers, Inc. ("NASD"), (ii) receipt of certain
regulatory approvals required for consummation of the Merger, (iii) receipt of a
written opinion of counsel from Alston & Bird LLP as to the tax-free nature of
the Merger (except to the extent of cash received), (iv) receipt of approval of
the shares of UPC Common Stock issuable pursuant to the Merger for listing on
the NYSE, subject to official notice of issuance, (v) the Registration Statement
being declared effective under the Securities Act, (vi) the accuracy, as of the
date of the Agreement and as of the Effective Time, of the representations and
warranties of Magna and UPC as set forth in the Agreement, (vii) the performance
of all agreements and the compliance with all covenants of Magna and UPC as set
forth in the Agreement, (viii) receipt by UPC of a letter from Price Waterhouse
LLP, dated as of the date of filing of the Registration Statement with the SEC
and as of the Effective Time, to the effect that the Merger will qualify for
pooling-of-interests accounting treatment; (ix) receipt of all consents required
for consummation of the Merger or for the preventing of any default under any
contract or permit which, if not obtained or made, is reasonably likely to have,
individually or in the aggregate, a material adverse effect on Magna or UPC; (x)
the absence of any law or order or any action taken by any court, governmental,
or regulatory authority prohibiting, restricting, or making illegal the
consummation of the transaction; (xi) receipt by UPC of agreements from each
affiliate of Magna, to the extent necessary to assure in the reasonable judgment
of UPC that the transactions contemplated will qualify for pooling-of-interests
accounting treatment; (xii) Robert S. Duncan and Lou Ann Poynter shall have
entered into employment agreements with UPC; and (xiii) satisfaction of certain
other conditions, including the receipt of certain legal opinions and various
certificates from the officers of Magna and UPC. See "-- Regulatory Approvals"
and "-- Waiver, Amendment, and Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. In the event the Merger is not effected on or before March
31, 1998, the Agreement may be terminated and the Merger abandoned by a vote of
a majority of the Board of Directors of either Magna or UPC. See "-- Waiver,
Amendment, and Termination."
REGULATORY APPROVAL
THE MERGER MAY NOT PROCEED IN THE ABSENCE OF RECEIPT OF THE REQUISITE
REGULATORY APPROVALS. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY APPROVALS
WILL BE OBTAINED OR AS TO THE TIMING OF SUCH APPROVALS. APPLICATIONS FOR THE
APPROVALS DESCRIBED BELOW HAVE BEEN SUBMITTED TO THE APPROPRIATE REGULATORY
AUTHORITIES.
It is a condition to the consummation of the Merger that UPC and Magna
shall have received all applicable regulatory approvals to consummate the
transactions contemplated by the Agreement, without the imposition of any
condition 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 the Agreement that, had such condition or
requirement been known, UPC would not, in its reasonable judgment, have entered
into the Agreement. There can be no assurance that such approvals will not
contain terms, conditions or requirements which cause such approvals to fail to
satisfy such condition to the consummation of the Merger.
Magna and UPC are not aware of any material governmental approvals or
actions that are required for consummation of the Merger, except as described
below. Should any other approval or action be required, it presently is
contemplated that such approval or action would be sought.
The Merger is subject to the prior approval of the Federal Reserve,
pursuant to Section 3 of 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, 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
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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 result in 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 30th day
(which the Federal Reserve may reduce to 15 days) 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.
The Merger also is subject to the approval of the Superintendent of
Banks for the State of Alabama and the Insurance Department of the State of
Mississippi. In its evaluation, this regulatory authority will take into account
considerations similar to those applied by the Federal Reserve.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the Agreement may be amended by a
subsequent writing signed by each of the parties upon the approval of the Boards
of Directors of each of the parties, whether before or after stockholder
adoption of the Agreement and the Plan of Merger has been obtained; provided,
that after any such approval by the holders of Magna Common Stock, there shall
be made no amendment that modifies in any material respect the consideration to
be received by the holders of Magna Common Stock without the further approval of
such stockholders. In addition, prior to or at the Effective Time, either Magna
or UPC, or both, acting through their respective Boards of Directors, chief
executive officers, or other authorized officers may waive any default in the
performance of any term of the Agreement by the other party, may waive or extend
the time for the compliance or fulfillment by the other party of any and all of
its obligations under the Agreement, and may waive any of the conditions
precedent to the obligations of such party under the Agreement, except any
condition that, if not satisfied, would result in the violation of any
applicable law or governmental regulation. No such waiver will be effective
unless written and unless executed by a duly authorized officer of Magna or UPC,
as the case may be.
The Agreement and the Plan of Merger may be terminated and the Merger
abandoned at any time prior to the Effective Time (i) by the mutual consent of
the Boards of Directors of Magna and UPC; (ii) by the Board of Directors of
Magna or UPC (a) in the event of any inaccuracy of any representation or
warranty of the other party contained in the Agreement which cannot be or has
not been cured within 30 days after giving written notice to the breaching party
of such inaccuracy and which inaccuracy would provide the terminating party the
ability to refuse to consummate the Merger under the applicable standards set
forth in the Agreement (provided that the terminating party is not then in
breach of any representation or warranty contained in the Agreement under the
applicable standards set forth in the Agreement or in material breach of any
covenant or other agreement contained in the Agreement), (b) in the event of a
material breach by the other party of any covenant or agreement contained in the
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided that the
terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement), (c) if the Merger is not consummated by March 31, 1998, provided
that the failure to consummate is not caused by any willful breach of the
Agreement by the party electing to terminate, (d) if (1) any consent of any
regulatory authority required for consummation of the Merger and the other
transactions contemplated by the Agreement has been denied by final
nonappealable action, or if any action taken by such authority is not appealed
within the time limit for appeal or (2) the stockholders of Magna fail to vote
their approval of the matters submitted for the approval by such stockholders at
the Special Meeting, or (e) if any of the conditions precedent to the
obligations of such party to consummate the Merger cannot be satisfied,
fulfilled, or waived by the appropriate party by March 31, 1998 (provided that
the terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement); or (iii) by the Board of Directors of Magna pursuant to the
relevant provisions of the Agreement described in " -- Possible Adjustment of
Exchange Ratio."
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If the Merger is terminated as described above, the Agreement and the
Plan of Merger will become void and have no effect, except that certain
provisions of the Agreement, including those relating to the obligations to
share certain expenses, maintain the confidentiality of certain information
obtained, and return all documents obtained from the other party under the
Agreement, will survive. In addition, termination of the Agreement will not
relieve any breaching party from liability for any uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. The Option Agreement will be governed by its own terms as to its
termination. See "-- Expenses and Fees" and "-- Option Agreement."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, Magna has agreed that unless the prior
written consent of UPC has been obtained, and except as otherwise expressly
contemplated in the Agreement, Magna will (i) operate its business only in the
usual, regular, and ordinary course, (ii) preserve intact its business
organization and assets and maintain its rights and franchises, 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 by the
Agreement without imposition of a condition or restriction of the type referred
to in the Agreement or prevent the transactions contemplated by the Agreement,
including the Merger, from qualifying for pooling-of-interests account treatment
or as a reorganization within the meaning of Section 368(a) of the Code (see "--
Certain Federal Income Tax Consequences"), or (b) materially adversely affect
the ability of any party to perform its covenants and agreements under the
Agreement.
In addition, Magna has agreed that, except as specifically contemplated
by the Agreement or other documents or instruments executed in connection with
the Agreement, prior to the earlier of the Effective Time or termination of the
Agreement, Magna will not, except with the prior written consent of the chief
executive officer, president, or chief financial officer of UPC (which consent
shall not be unreasonably withheld), agree or commit to do, or permit any of its
subsidiaries to agree or commit to do, any of the following: (i) amend the
Charter, Bylaws, or other governing instruments of Magna or any Magna subsidiary
(each a "Magna company" and together, the "Magna companies"); (ii) incur any
additional debt obligation or other obligation for borrowed money (other than
indebtedness of a Magna company to another Magna company) in excess of an
aggregate of $250,000 (for the Magna companies on a consolidated basis) except
in the ordinary course of business of the Magna subsidiaries consistent with
past practices (which shall include, for Magna subsidiaries that are depository
institutions, the creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or the Federal Home Loan Bank, and entry
into repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any asset of any Magna
company of any lien or permit any such lien to exist (other than in connection
with deposits, repurchase agreements, bankers acceptances, advances from the
Federal Reserve Board or Federal Home Loan Bank "treasury tax and loan" accounts
established in the ordinary course of business, the satisfaction of legal
requirements in the exercise of trust powers, and liens in effect as of the date
of the Agreement that were previously disclosed to UPC by Magna); (iii)
repurchase, redeem, or otherwise acquire or exchange (other than exchanges in
the ordinary course under employee benefit plans), directly or indirectly, any
shares, or any securities convertible into any shares, of the capital stock of
any Magna company, or declare or pay any dividend or make any other distribution
in respect of any Magna capital stock, provided that Magna may (to the extent
legally and contractually permitted to do so), but will not be obligated to,
declare and pay regular quarterly cash dividends on the shares of Magna Common
Stock at a rate not in excess of $.15 per share with usual and regular record
and payment dates in accordance with past practice previously disclosed and such
dates may not be changed without the prior written consent of UPC, provided,
that, notwithstanding any other provisions of the Agreement, the parties will
cooperate in selecting the Effective Time to ensure that, with respect to the
quarterly period in which the Effective Time occurs, the holders of Magna Common
Stock do not become entitled to receive both a dividend in respect of their
Magna Common Stock and a dividend in respect of UPC Common Stock or fail to be
entitled to receive any dividend; (iv) except pursuant to the Agreement, or
pursuant to the exercise of stock options or stock rights outstanding as of the
date of the Agreement, or pursuant to the Option Agreement, issue, sell, pledge,
encumber, authorize the issuance of, enter into any contract to issue, sell,
pledge, encumber, or authorize the issuance of, or otherwise permit to become
outstanding, any additional shares of Magna Common Stock, or any other capital
stock of any Magna company, or any stock appreciation rights, or any option,
warrant,
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conversion, or other right to acquire any such stock, or any security
convertible into any such stock; (v) adjust, split, combine, or reclassify any
capital stock of any Magna company or issue or authorize the issuance of any
other securities in respect of or in substitution for shares of Magna Common
Stock or sell, lease, mortgage, or otherwise dispose of or otherwise encumber
any shares of capital stock of any Magna subsidiary (unless any such shares of
stock are sold or otherwise transferred to another Magna company) or any assets
having a book value in excess of $250,000 other than in the ordinary course of
business for reasonable and adequate consideration; (vi) except as previously
disclosed by Magna and for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less, or Federal Home Loan Bank stock, purchase any securities or make
any material investment, either by purchase of stock or securities,
contributions to capital, asset transfers, or purchase of any assets, in any
person other than a wholly-owned Magna subsidiary, or otherwise acquire direct
or indirect control over any person, with certain exceptions; (vii) grant any
increase in compensation or benefits to the employees or officers of any Magna
company, except in accordance with past practices as previously disclosed to UPC
by Magna or as required by law; pay any severance or termination pay or any
bonus other than pursuant to written policies or written contracts in effect on
the date of the Agreement, and previously disclosed to UPC by Magna; enter into
or amend any severance agreements with officers of any Magna company; or grant
any material increase in fees or other increases in compensation or other
benefits to directors of any Magna company except in accordance with past
practices as previously disclosed to UPC by Magna; (viii) voluntarily accelerate
the vesting of any stock options or other stock-based compensation or employee
benefits other than the acceleration of vesting which occurs under a benefit
plan upon a change of control of Magna; (ix) enter into or amend any employment
contract between any Magna company and any person (unless such amendment is
required by law) that the Magna company does not have the unconditional right to
terminate without liability (other than liability for services already
rendered), at any time on or after the Effective Time; (x) except as previously
disclosed by Magna, adopt any new employee benefit plan of any Magna company or
make any material change in or to any existing employee benefit plans of any
Magna company other than any such change that is required by law or that, in the
opinion of counsel, is necessary or advisable to maintain the tax qualified
status of any such plan, or make any distribution from such employee benefit
plans, except as required by law, the terms of the plans, or consistent with
past practices; (xi) make any significant change in any tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in tax laws or regulatory accounting requirements or
generally accepted accounting principles; (xii) commence any litigation other
than in accordance with past practice or settle any litigation involving any
liability of any Magna company for money damages in excess of $100,000 or
restrictions upon the operations of any Magna company; or (xiii) other than in
the ordinary course of business consistent with past practice or as otherwise
previously disclosed by Magna, enter into, modify, amend or terminate any
material contract (excluding any loan contract) or waive, release, compromise or
assign any material rights or claims.
Magna has also agreed that, except with respect to the Agreement, Plan
of Merger and the transactions contemplated thereby, no Magna company or any
affiliate thereof shall directly or indirectly solicit any acquisition proposal
or, except to the extent necessary to comply with the fiduciary duties of
Magna's Board of Directors as advised by counsel, furnish any non-public
information that it is not legally obligated to furnish, negotiate with respect
to, or enter into any contract with respect to, any acquisition proposal, but
Magna may communicate information about such an acquisition proposal to its
stockholders if and to the extent that it is required to do so in order to
comply with its legal obligations as advised by counsel.
The Agreement also provides that from the date of the Agreement until
the earlier of the Effective Time or termination of the Agreement, UPC covenants
and agrees that it will (i) continue to conduct its business and the business of
its subsidiaries in a manner designed in its reasonable judgment, to enhance the
long-term value of the UPC Common Stock and the business prospects of the UPC or
its subsidiaries and (ii) take no action which would (a) materially adversely
affect the ability of any party to obtain any consents required for the
transactions contemplated by the Agreement without imposition of a condition or
restriction of the type referred to in the Agreement or prevent the transactions
contemplated by the Agreement, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Code, or (b) materially adversely affect the
ability of any party to perform its covenants and agreements under the
Agreement. See "-- Certain Federal Income Tax Consequences."
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MANAGEMENT AND OPERATIONS AFTER THE MERGER
Consummation of the Merger will not alter the present management team
or Board of Directors of UPC. Information concerning the management of UPC is
included in the documents incorporated herein by reference. See "DOCUMENTS
INCORPORATED BY REFERENCE." For additional information regarding the interests
of certain persons in the Merger, see "-- Interests of Certain Persons in the
Merger."
Magna will be the surviving corporation resulting from the Merger and
shall continue to be governed by the laws of the State of Delaware and operate
in accordance with its Certificate of Incorporation ("Certificate") and Bylaws
as in effect on the date, and immediately prior to the Effective Time, until
otherwise amended or repealed after the Effective Time.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of Magna's management and Magna's Board of
Directors have interests in the Merger that are in addition to any interests
they may have as stockholders of Magna generally. As more fully described below,
these interests relate to, among other things, provisions in the Agreement
regarding indemnification, eligibility for certain employee benefits, election
of certain individuals to the Board of Directors of UPC, and agreements by UPC
to enter into employment agreements with certain executive officers of Magna at
the Effective Time in exchange for such executive officers' terminating their
existing employment agreements with Magna and to induce such officers to remain
in the employ of UPC following the Effective Time.
POST-MERGER MANAGEMENT MATTERS. UPC has agreed to cause David M.
Thomas, a member of the Board of Directors of Magnolia Federal, to be appointed
to the UPC Board of Directors following consummation of the Merger, and to take
all action necessary to renominate Mr. Thomas for election to a full three-year
term as a member of the Board of Directors of UPC at the next annual meeting of
stockholders following the Effective Time. At the end of Mr. Thomas' full
three-year term, in lieu of renominating such individual for election to a
second three-year term as a director, UPC shall take all action necessary to
elect Lou Ann Poynter, President of Magna to the Board of Directors of UPC for a
three-year term, unless she is unavailable to serve or is currently serving as a
full-time employee of UPC, in which case Robert S. Duncan, Chairman and Chief
Executive Officer of Magna, will be nominated to the Board of Directors of UPC
for a three-year term.
Magna has previously entered into substantially identical employment
agreements with Mr. Duncan and Ms. Poynter, the terms of which are described in
detail in the 1996 Annual Meeting Proxy Statement of Magna (the "Magna
Employment Agreements"). UPC desires to seek the continued employment of Mr.
Duncan and Ms. Poynter after closing of the Merger and has agreed to offer
employment to Mr. Duncan and Ms. Poynter, pursuant to individual employment
contracts to be dated as of the Effective Time (each, a "UPC Employment
Agreement"). UPC will enter into each UPC Employment Agreement in consideration
of Mr. Duncan and Ms. Poynter terminating such officer's existing Magna
Employment Agreement and agreeing to continued employment under the UPC
Employment Agreement. In the case of Mr. Duncan, the UPC Employment Agreement
provides that Mr. Duncan will serve as Chairman of Magnolia Federal and in the
event Magnolia Federal is merged into or consolidated with another affiliate
bank or subsidiary of UPC, Mr. Duncan will be employed in an executive capacity
by such affiliate bank and will manage the Magna mortgage operation. In the case
of Ms. Poynter, the UPC Employment Agreement provides that Ms. Poynter will be
employed as Chief Executive Officer of Magnolia Federal and in the event
Magnolia Federal is merged into or consolidated with another affiliate bank or
subsidiary of UPC, Ms. Poynter will be employed in an executive capacity by such
affiliate bank and will perform duties and have responsibilities in scope
similar to Ms. Poynter's duties and responsibilities prior to the Merger. Each
of the UPC Employment Agreements with Mr. Duncan and Ms. Poynter will have a
three-year term.
During the employment term, Mr. Duncan and Ms. Poynter will receive
cash compensation consisting of a base salary of $199,000 and $225,000 per year,
respectively, and will be entitled to participation in all incentive, savings,
retirement and welfare plans, practices, policies, and programs applicable
generally to similarly situated officers of affiliate banks or subsidiaries of
UPC. In addition, each of the UPC Employment Agreements continues
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to provide for the vested, lifetime right to post-separation health benefits
provided to each of Mr. Duncan and Ms. Poynter and their respective spouses
under their existing Magna Employment Agreements.
To encourage Mr. Duncan and Ms. Poynter to maintain in the employ of
UPC following the Effective Time and in consideration of their agreement to
terminate their existing Magna Employment Agreements, including cancellation of
their rights to receive change in control payments in the amount of $2.3 million
and $1.3 million, respectively, UPC will pay Mr. Duncan and Ms. Poynter bonuses
in the amount of $895,000 and $545,000, respectively, for each of the three
years following the Effective Time. Such stay bonuses will be paid in a lump sum
on the first, second, and third anniversaries of the Effective Time. The
payments of such amounts will be accelerated or eliminated in the event the
employment of such individuals is terminated.
During the employment term and the remaining employment term after
termination of the executive's employment, each of Mr. Duncan and Ms. Poynter
have agreed to refrain, while within the State of Mississippi, directly or
indirectly, in any capacity, from rendering his or her services, or engaging or
having a financial interest in, any business that is competitive with any of
those business activities in which UPC or its subsidiaries is engaged as of the
date of executive's termination of employment, with certain exceptions.
MAGNA OPTIONS. Magna has granted the Magna Options to its executive
officers and directors under the Magna Bancorp, Inc. 1990 Stock Option and
Incentive Plan and Magna Bancorp, Inc./Magnolia Federal Bank for Savings Stock
in Lieu of Cash Compensation Plan for Directors (the "Director Deferred
Compensation Plan" and, collectively, the "Magna Stock Plans"). The Agreement
provides that UPC will assume any outstanding option or other rights with
respect to Magna Common Stock, whether vested or unvested, which have been
granted or acquired under the Magna Stock Plans on a basis reflecting the
Exchange Ratio.
The following table sets forth with respect to the directors of Magna
and Magnolia Federal as a group (the "Director Group") the number of shares of
Magna Common Stock covered by outstanding stock options held by such group as of
June 1, 1997. Stock options have not been granted to any Magna officer.
<TABLE>
<CAPTION>
Aggregate
Weighted Average Value of
Stock Exercise Price Stock
Options Held Per Option Options
------------ ---------- -------
<S> <C> <C> <C>
Director Group (four persons)......... 119,136 $.88545 $2,723,991
</TABLE>
In addition, certain directors of Magna and Magnolia Federal have
deferred director fees in the form of stock units pursuant to the Director
Deferred Compensation Plan. Each stock unit represents the right to receive one
share of Magna Common Stock pursuant to the terms of the Director Deferred
Compensation Plan. The following table sets forth with respect to certain
directors and the Director Group the number of stock units held by such persons
and group as of June 1, 1997:
<TABLE>
<CAPTION>
Stock Units
Held
-----------
<S> <C>
Robert S. Duncan....................... 3,028
H.A. Moore, III........................ 1,271
Lou Ann Poynter........................ 2,224
Director Group (six persons)........... 11,655
</TABLE>
OTHER MATTERS RELATING TO MAGNA EMPLOYEE BENEFIT PLANS. The Agreement
also provides that, after the Effective Time, UPC will provide to officers and
employees of the Magna companies who, at or after the Effective Time, become
officers or employees of a UPC company, employee benefits under employee benefit
and welfare
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plans, on terms and conditions which when taken as a whole are substantially
similar to those currently provided by the UPC companies to their similarly
situated officers and employees. For purposes of participation, vesting and
(except in the case of retirement plans) benefit accrual under such employee
benefit plans, the service of the employees of the Magna companies prior to the
Effective Time shall be treated as service with a UPC company participating in
such employee benefit plans. UPC will assume, in accordance with their terms,
and UPC shall, and shall cause Magna to, abide by all employment, severance,
consulting, and other compensation contracts disclosed to UPC between any Magna
company and any current or former director, officer or employee thereof. After
the Effective Time, Magna employees who continue their employment with UPC
shall receive past service credit for their service with Magna and the Magna
subsidiaries for purposes of eligibility, participation and vesting in UPC's
401(k) Plan and Magna's 401(k) Plan shall be merged with and into UPC's 401(k)
Plan. In addition, the Agreement further provides that the Magnolia Federal
Annual Bonus Accrual & Payment System ("Incentive Compensation Plan") will be
terminated as of June 30, 1997 with distribution of benefits to be made on such
date or as soon as practicable thereafter. Magna also has the right to
terminate the Salary Continuation Plan and associated individual salary
continuation agreements as of June 30, 1997, in exchange for a cash
distribution to the participants of an amount not to exceed the then-accrued
financial obligation of Magnolia Federal under such plan for financial
reporting purposes, subject to Magna or Magnolia Federal securing the consent
of all participants to such termination and the distribution to be made to each
such participant. In addition, the Agreement further provides that Magna shall
amend the current Magna Severence Pay Plan disclosed to UPC: (i) to include all
officers of Magna and its subsidiaries; (ii) to provide for a payment of one
year's salary to all officers with the title of senior vice president or
executive vice president whose employment is involuntarily terminated, without
cause, within 18 months of a change in control; (iii) to provide a severence
payment only to those persons who are involuntarily terminated, without cause,
within 18 months of a change in control; and (iv) to limit the benefits payable
under the Severance Pay Plan to an amount not to exceed $1.8 million on a
pre-tax basis.
INDEMNIFICATION AND INSURANCE. The Agreement provides that UPC will
indemnify, defend and hold harmless the present and former directors, officers,
employees, and agents of the Magna companies against all liabilities arising out
of actions or omissions occurring at or prior to the Effective Time (including
the transactions contemplated by the Agreement and the Option Agreement) to the
full extent permitted under Delaware law and by Magna's Certificate of
Incorporation or Bylaws, or to the full extent covered by existing insurance
policies of Magna as in effect as of the date of the Agreement. In any case in
which approval by UPC is required to effectuate any indemnification, UPC shall
direct, at the election of the indemnified party, the determination of any such
approval will be made by independent counsel mutually agreed upon between UPC
and the indemnified party.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE MATERIAL ANTICIPATED FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER TO MAGNA STOCKHOLDERS. THIS SUMMARY IS BASED ON
THE FEDERAL INCOME TAX LAWS AS NOW IN EFFECT AND AS CURRENTLY INTERPRETED; IT
DOES NOT TAKE INTO ACCOUNT POSSIBLE CHANGES IN SUCH LAWS OR INTERPRETATIONS,
INCLUDING AMENDMENTS TO APPLICABLE STATUTES OR REGULATIONS OR CHANGES IN
JUDICIAL OR ADMINISTRATIVE RULINGS, SOME OF WHICH MAY HAVE RETROACTIVE EFFECT.
THIS SUMMARY DOES NOT PURPORT TO ADDRESS ALL ASPECTS OF THE POSSIBLE FEDERAL
INCOME TAX CONSEQUENCES OF THE MERGER AND IS NOT INTENDED AS TAX ADVICE TO ANY
PERSON. IN PARTICULAR, AND WITHOUT LIMITING THE FOREGOING, THIS SUMMARY DOES NOT
ADDRESS THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO MAGNA STOCKHOLDERS
IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES OR STATUS (FOR EXAMPLE, AS FOREIGN
PERSONS, TAX-EXEMPT ENTITIES, DEALERS IN SECURITIES, INSURANCE COMPANIES, AND
CORPORATIONS, AMONG OTHERS). NOR DOES THIS SUMMARY ADDRESS ANY CONSEQUENCES OF
THE MERGER UNDER ANY STATE, LOCAL, ESTATE, OR FOREIGN TAX LAWS. MAGNA
STOCKHOLDERS, THEREFORE, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING TAX RETURN REPORTING
REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, FOREIGN, STATE, LOCAL, AND
OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
A federal income tax ruling with respect to this transaction has not
been, and will not be, requested from the Internal Revenue Service ("IRS").
Instead, Alston & Bird LLP, counsel to UPC, has rendered an opinion ("Tax
Opinion") to Magna and UPC concerning certain federal income tax consequences of
the proposed Merger under
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federal income tax law. It is such firm's opinion that, based upon the
assumption that the Merger is consummated in accordance with Delaware law and
the Agreement and in conformity with certain factual representations made by the
managements of Magna and UPC, the transaction will have the following federal
income tax consequences:
(a) The Merger will qualify as a reorganization within the
meaning of Sections 368(a) of the Code. Each of Magna, UPC Merger Subsidiary,
and UPC will be a party to a reorganization within the meaning of Section
368(b).
(b) No gain or loss will be recognized by Magna upon the
receipt of the assets of UPC Merger Subsidiary in exchange solely for Magna
Common Stock and the assumption by Magna of the liabilities of UPC Merger
Subsidiary.
(c) No gain or loss will be recognized by UPC or UPC Merger
Subsidiary on receipt by UPC of Magna Common Stock solely in exchange for the
assets of UPC Merger Subsidiary and the assumption by Magna of the liabilities
of UPC Merger Subsidiary.
(d) The basis of UPC Merger Subsidiary's assets in the
hands of Magna will, in each case, be the same as the basis of those assets in
the hands of UPC Merger Subsidiary immediately prior to the transaction.
(e) The holding period of the assets of UPC Merger
Subsidiary in the hands of Magna will, in each case, include the period during
which such assets were held by UPC Merger Subsidiary.
(f) No gain or loss will be recognized by a Magna
stockholder upon the receipt of UPC Common Stock (including any associated UPC
Rights) solely in exchange for its shares of Magna Common Stock.
(g) The basis of the UPC Common Stock received by a Magna
stockholder in the transaction will, in each instance, be the same as the basis
of the Magna Common Stock surrendered in exchange therefor less any basis
allocated to any fractional share of UPC Common Stock settled by cash payment.
(h) The holding period of the UPC Common Stock received by
a Magna stockholder (including the holding period of any fractional share
interest) will include the holding period of the Magna Common Stock surrendered
in exchange therefor, provided the Magna Common Stock was held as a capital
asset on the date of the exchange.
(i) The payment of cash in lieu of fractional shares of UPC
Common Stock will be treated as if the fractional shares were issued as part of
the exchange and then redeemed by UPC. These cash payments will be treated as
having been received as distributions in full payment in exchange for the
fractional shares of UPC Common Stock redeemed as provided in Section 302(a).
Generally, any gain or loss recognized upon such exchange will be capital gain
or loss, provided the fractional share would constitute a capital asset in the
hands of the exchanging stockholder.
The Tax Opinion does not address any state, local, or other tax
consequences of the Merger. The Tax Opinion does not bind the IRS nor preclude
the IRS from adopting a contrary position. In addition, the Tax Opinion will be
subject to certain assumptions and qualifications and will be based on the truth
and accuracy of certain representations made by the management of Magna and UPC,
as to, among other things, the fact that there is no plan or intention by any of
the stockholders of Magna who own 5% or more of the outstanding Magna Common
Stock, and to the best of the knowledge of the management of Magna, the
remaining Magna stockholders have no plan or intention, to sell, exchange, or
otherwise dispose of a number of shares of UPC Common Stock that they will
receive in the Merger that will reduce on the part of the Magna stockholders
such stockholders' ownership of UPC Common Stock to a number of shares having an
aggregate value as of the date of the Merger of less than 50% of the aggregate
value of all of the stock of Magna outstanding immediately prior to the Merger.
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A successful IRS challenge to the "reorganization" status of the Merger
would result in a Magna stockholder recognizing gain or loss with respect to
each share of Magna Common Stock surrendered equal to the difference between the
stockholder's adjusted tax basis in such share and the fair market value, as of
the Effective Time of the Merger, of the UPC Common Stock received in exchange
therefor. In such event, a Magna stockholder's aggregate basis in the UPC Common
Stock received would equal its fair market value and his or her holding period
for such stock would begin the day after the Merger.
ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a pooling of
interests. Under the pooling-of-interests method of accounting, the recorded
amounts of the assets and liabilities of Magna will be carried forward at their
previously recorded amounts, and current and prior period financial statements
will be restated for all periods as though Magna and UPC had been combined at
the beginning of the earliest period presented.
In order for the Merger to qualify for pooling-of-interests accounting
treatment, substantially all (90% or more) of the outstanding Magna Common Stock
must be exchanged for UPC Common Stock with substantially similar terms. There
are certain other criteria that must be satisfied in order for the Merger to
qualify as a pooling of interests, some of which criteria cannot be satisfied
until after the Effective Time. In addition, it is a condition to closing that
Price Waterhouse LLP deliver a letter to UPC, dated as of the date of filing of
the Registration Statement with the SEC and as of the Effective Time, to
the effect the Merger will qualify for pooling-of-interests accounting
treatment;
For information concerning certain conditions to be imposed on the
exchange of Magna Common Stock for UPC Common Stock in the Merger by affiliates
of Magna 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 Agreement provides that each of the parties will bear and pay its
own expenses in connection with the transactions contemplated by the Agreement,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that UPC will bear and pay
the filing fees payable in connection with the Registration Statement and this
Proxy Statement and the printing costs and certain other third-party costs in
connection with the Registration Statement and this Proxy Statement.
RESALES OF UPC COMMON STOCK
UPC Common Stock to be issued to stockholders of Magna in connection
with the Merger will be registered under the Securities Act. All shares of UPC
Common Stock received by holders of Magna Common Stock and all shares of UPC
Common Stock issued and outstanding immediately prior to the Effective Time,
will be freely transferable upon consummation of the Merger by those
stockholders of Magna not deemed to be "Affiliates" of Magna or UPC.
"Affiliates" generally are defined as persons or entities who control, are
controlled by, or are under common control with Magna or UPC at the time of the
Special Meeting (generally, executive officers, directors and 10% stockholders).
Rule 145 promulgated under the Securities Act restricts the sale of UPC
Common Stock received in the Merger by Affiliates and certain of their family
members and related interests. Under the Rule, during the one year following the
Effective Time, Affiliates of Magna or UPC may resell publicly the UPC Common
Stock received by them in the Merger within certain limitations as to the amount
of UPC Common Stock sold in any three-month period and as to the manner of sale.
After the one-year period, such Affiliates of Magna who are not Affiliates of
UPC may resell their shares without restriction. The ability of Affiliates to
resell shares of UPC Common Stock received in the Merger under Rule 145 will be
subject to UPC having satisfied its Exchange Act reporting requirements for
specified periods prior to the time of sale. Affiliates will receive additional
information regarding the effect of Rule 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
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<PAGE> 46
under the Securities Act or an available exemption from the Securities Act
registration requirements. This Proxy Statement does not cover any resales of
UPC Common Stock received by persons who may be deemed to be Affiliates of Magna
or UPC.
Magna has agreed to use its reasonable efforts to cause each person who
may be deemed to be an Affiliate of Magna to execute and deliver to UPC not
later than 30 days prior to the Effective Time, an agreement (each, an
"Affiliate Agreement") providing that such Affiliate will not sell, pledge,
transfer, or otherwise dispose of any Magna Common Stock held by such Affiliate
except as contemplated by the Agreement or the Affiliate Agreement, and will not
sell, pledge, transfer or otherwise dispose of any UPC Common Stock received by
such Affiliate upon consummation of the Merger (i) except in compliance with the
Securities Act and the rules and regulations thereunder and (ii) until such time
as financial results covering 30 days of combined operations of UPC and Magna
have been published. If the Merger will qualify for pooling-of-interests
accounting treatment, shares of UPC Common Stock issued to such Affiliates of
Magna in exchange for shares of Magna Common Stock shall not be transferable
until such time as financial results covering at least 30 days of combined
operations of UPC and Magna have been published, regardless of whether each such
Affiliate has provided an Affiliate Agreement (and UPC shall be entitled to
place restrictive legends upon certificates for shares of UPC Common Stock
issued to Affiliates of Magna). Certificates representing shares of Magna Common
Stock surrendered for exchange by any person who is an Affiliate of Magna for
purposes of Rule 145(c) under the Securities Act shall not be exchanged for
certificates representing shares of UPC Common Stock until UPC has received such
a written agreement from such person. Prior to publication of such results, UPC
will not transfer on its books any shares of UPC Common Stock received by an
Affiliate pursuant to the Merger. The stock certificates representing UPC Common
Stock issued to Affiliates in the Merger may bear a legend summarizing the
foregoing restrictions. See "-- Conditions to Consummation of the Merger."
OPTION AGREEMENT
As an inducement and a condition to UPC entering into the Agreement,
Magna and UPC entered into the Option Agreement, pursuant to which Magna granted
UPC an option (the "Option") entitling it to purchase up to 2,737,000 shares
(representing 19.9% of the shares issued and outstanding before giving effect to
the exercise of such option) of Magna Common Stock under the circumstances
described below, at a cash price per share equal to $17.50, subject to possible
adjustment in certain circumstances (the "Purchase Price"). This description of
the Option Agreement and the Option does not purport to be complete and is
qualified in its entirety by reference to the Option Agreement, which is filed
as an exhibit to this Registration Statement and incorporated herein by
reference.
Notwithstanding anything to the contrary contained in the Option
Agreement, in no event may the Total Profit (as defined below) of UPC exceed $15
million and, if it otherwise would exceed such amount, UPC, at its sole
election, must either (a) reduce the number of shares of Magna Common Stock
subject to the Option, (b) deliver to Magna for cancellation the shares of Magna
Common Stock previously purchased pursuant to the Option, (c) pay cash to Magna
or any combination thereof, so that UPC will not actually realize Total Profit
in excess of $15 million after taking into account the foregoing actions. In
addition, the Option may not be exercised for a number of shares as would, as of
the date of exercise, result in a Notional Total Profit (as defined below) of
more than $15 million; provided, however, that this limitation will not restrict
any exercise of the Option permitted by the Option Agreement on any subsequent
date.
"Total Profit" means the aggregate amount (before taxes) of the
following: (a) the amount received by UPC pursuant to Magna's repurchase of the
Option (or any portion thereof), (b)(i) the amount received by UPC pursuant to
Magna's repurchase of shares of Magna Common Stock purchased pursuant to the
Option, less (ii) the purchase price for such shares, (c)(i) the net cash
amounts received by UPC pursuant to the sale of Magna Common Stock purchased
pursuant to the Option (or any other securities into which such shares may be
converted or exchanged) to any unaffiliated party, less (ii) the purchase price
of such shares, and (d) any amounts received by UPC on the transfer of the
Option (or any portion thereof) to any unaffiliated party.
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"Notional Total Profit" means the Total Profit determined as of the
date of such proposed exercise assuming that the Option were exercised on such
date for such number of shares and assuming that such shares, together with all
other Magna Common Stock purchased pursuant to the Option held by UPC and its
affiliates as of such date, were sold for cash at the closing sale price per
share of Magna Common Stock as quoted on the Nasdaq National Market as of the
close of business on the preceding trading day (less customary brokerage
commissions).
Subject to applicable law and regulatory restrictions, UPC may exercise
the Option, in whole or in part, if, but only if, a Purchase Event (as defined
below) occurs prior to the Option's termination; provided that UPC, at the time,
is not in material breach of the Option Agreement or the Agreement. As defined
in the Option Agreement, "Purchase Event" means either of the following events:
(a) without UPC's written consent, Magna authorizing,
recommending, publicly proposing, or publicly announcing an intention to
authorize, recommend, or propose or entering into an agreement with any third
party to effect (i) a merger, consolidation, or similar transaction involving
Magna or any of its subsidiaries (other than transactions solely between Magna's
subsidiaries), (ii) except as permitted by the Agreement, the disposition, by
sale, lease, exchange, or otherwise, of 25% or more of the consolidated assets
of Magna and its subsidiaries or (iii) the issuance, sale, or other disposition
(including by way of merger, consolidation, share exchange or any similar
transaction) of securities representing 25% or more of the voting power of Magna
or any of its subsidiaries; or
(b) any third party acquiring beneficial ownership, or the
right to acquire beneficial ownership of, or the formation of any group (as
defined under the Exchange Act) that beneficially owns or has the right to
acquire beneficial ownership of, 25% or more of the outstanding shares of Magna
Common Stock.
The Option will terminate upon the earliest of the following:
(a) the Effective Time;
(b) termination of the Agreement in accordance with the
terms thereof prior to the occurrence of a Purchase Event or a Preliminary
Purchase Event (other than a termination of the Agreement under certain
circumstances involving a willful breach by Magna) (a "Default Termination");
(c) 12 months after termination of the Agreement by UPC
pursuant to a Default Termination; and
(d) 12 months after termination of the Agreement (other
than pursuant to a Default Termination) following the occurrence of a Purchase
Event or a Preliminary Purchase Event.
As defined in the Option Agreement, "Preliminary Purchase Event" includes either
of the following events:
(a) commencement or filing of a registration statement
under the Securities Act by any third party of a tender offer or exchange offer
to purchase any shares of Magna Common Stock such that, upon consummation of
such offer, such person would own or control 25% or more of the then-outstanding
shares of Magna Common Stock (a "Tender Offer" or an "Exchange Offer,"
respectively); or
(b) failure of the stockholders of Magna to approve the
Agreement and the Plan of Merger at the meeting of such stockholders held for
the purpose of voting on the Agreement, the failure to have such meeting or the
cancellation thereof prior to termination of the Agreement, or the withdrawal or
modification by Magna's Board of Directors in a manner adverse to UPC of the
recommendation of the Board of Directors with respect to the Agreement, in each
case, after public announcement that a third party (i) made 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 or given a notice under certain federal
statutes for approval or consent to engage in an acquisition transaction.
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In the event of any change in Magna 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 securities subject to the
Option, and the purchase price therefor shall be adjusted appropriately. In the
event that any additional shares of Magna Common Stock are issued after May 8,
1997 (other than pursuant to an event described in the preceding sentence), the
number of shares of Magna Common Stock subject to the Option will be adjusted so
that, after such issuance, it, together with any shares of Magna Common Stock
previously issued pursuant to the Option Agreement, equals 19.9% of the number
of shares then issued and outstanding, without giving effect to any shares
subject to or issued pursuant to the Option.
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, Magna will, subject to
regulatory restrictions, be obligated to repurchase the Option and any shares of
Magna Common Stock therefor purchased pursuant to the Option Agreement at a
specified price.
As defined in the Option Agreement, "Repurchase Event" shall occur if
(i) any person (other than UPC or any UPC subsidiary) shall have acquired actual
ownership or control, or any "group" (as such term is defined under the Exchange
Act) shall have been formed which has acquired actual ownership or control of
50% or more of the then-outstanding shares of Magna Common Stock, or (ii) any of
the following transactions is consummated: (a) Magna consolidates with or merges
into any person, other than UPC or one of UPC's subsidiaries, and is not the
continuing or surviving corporation of such consolidation or merger; (b) Magna
permits any person, other than UPC or one of UPC's subsidiaries, to merge into
Magna and Magna shall be the continuing or surviving corporation, but, in
connection with such merger, the then-outstanding shares of Magna Common Stock
shall be changed into or exchanged for stock or other securities of Magna or any
other person or cash or any other property or the outstanding shares of Magna
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) Magna sells or otherwise transfers all or substantially all of
its assets to any person, other than UPC or one of UPC's subsidiaries.
In the event that prior to the exercise or termination of the Option,
Magna enters into an agreement to engage in any of the transactions described in
clause (ii) of the definition of Repurchase Event above, the agreement governing
such transaction must make proper provision so that UPC will receive for each
share of Magna Common Stock subject to the option an amount of consideration
that would be received by a holder of Magna Common Stock in such transaction
less the Purchase Price.
After the occurrence of a Purchase Event, UPC may assign the Option
Agreement and its rights thereunder in whole or in part.
Upon the occurrence of certain events, Magna has agreed to file with
the SEC and to cause to become effective certain registration statements under
the Securities Act with respect to dispositions by UPC and its assigns of all or
part of the Option and/or any shares of Magna Common Stock into which the Option
is exercisable.
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
As a result of the Merger, holders of Magna Common Stock will be
exchanging their shares of a Delaware corporation governed by the DGCL and
Magna's Certificate of Incorporation, as amended (the "Certificate"), and
Bylaws, for shares of UPC, a Tennessee corporation governed by the TBCA and
UPC's Charter of Incorporation, as amended (the "Charter"), and Bylaws. Certain
significant differences exist between the rights of Magna stockholders and those
of UPC stockholders. In particular, UPC's Charter and Bylaws contain several
provisions that may be deemed to have an anti-takeover effect in that they could
impede or prevent an acquisition of UPC unless the potential acquirer has
obtained the approval of UPC's Board of Directors. The following discussion is
necessarily general; it is not intended to be a complete statement of all
differences affecting the rights of
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stockholders and their respective entities, and it is qualified in its entirety
by reference to the DGCL and the TBCA as well as to UPC's Charter and Bylaws and
Magna'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 of Directors of UPC can further
protect the interests of UPC and its stockholders as appropriate under the
circumstances, including, if the Board of Directors of UPC determines that a
sale of control is in the best interests of stockholders by enhancing the Board
of Directors' 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 66,689,908 shares were issued and
outstanding as of May 31, 1997, and (ii) 10,000,000 shares of no par value
preferred stock ("UPC Preferred Stock"), of which no shares of UPC Series A
Preferred Stock, and 2,578,098 shares of UPC Series E Preferred Stock were
issued and outstanding as of May 31, 1997. UPC's Board of Directors may
authorize the issuance of additional shares of UPC Common Stock without further
action by UPC's 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, dividend, and
liquidation rights as specified in UPC's Charter. In providing for the issuance
of such shares, UPC's Board of Directors may determine, among other things, the
distinctive designation and number of shares comprising a series of preferred
stock, the dividend rate or rates on the shares of such series and the relation
of such dividends to the dividends payable on other classes of stock, whether
the shares of such series shall be convertible into or exchangeable for shares
of any other class or series of UPC capital stock, the voting powers if any of
such series, and any other preferences, privileges, and powers of such series.
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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 acquiror)
would be entitled to purchase certain equity securities of UPC at prices below
their market value. UPC has authorized 750,000 shares of Series A Preferred
Stock for issuance under the Preferred Share Rights Plan and no shares have been
issued as of the date of this Proxy Statement. Until a Preferred Share Right is
exercised, the holder thereof, as such, has no rights of a stockholder of UPC,
including the right to vote or receive dividends.
MAGNA. Magna's Certificate authorizes the issuance of up to (i)
14,500,000 shares of Magna Common Stock, of which 13,754,266 shares were issued
and outstanding as of the Magna Record Date, and (ii) 500,000 shares of $.01 par
value preferred stock ("Magna Preferred Stock"), of which no shares had been
issued as of the Magna Record Date. Magna's Board of Directors may authorize the
issuance of additional authorized shares of Magna Common Stock without further
action by Magna's stockholders, unless such action is required in a particular
case by applicable laws or regulations or by any stock exchange upon which
Magna's capital stock may be listed.
Subject to certain provisions of the DGCL, Magna's Board of Directors
may provide for the issuance, without any further action by the stockholders, of
shares of Magna Preferred Stock, in one or more series, with such designations,
powers, preferences and rights as the board may specify, including voting,
conversion, dividend and liquidation rights. In establishing and issuing shares
of Magna Preferred Stock, Magna's Board of Directors may designate that Magna
Preferred Stock will have voting rights in excess of one vote per share or will
vote as a separate class on any or all matters, thus diluting the voting power
of the Magna Common Stock. The Board of Directors of Magna also may designate
that Magna Preferred Stock will have dividend rights that are cumulative and
that receive preferential treatment compared to Magna Common Stock, and that
such Magna Preferred Stock will have liquidation rights with priority over Magna
Common Stock in the event of Magna's liquidation. However, the Board of
Directors of Magna may not, without the affirmative vote of the holders of a
majority of Magna Common Stock, increase or decrease the number of authorized
shares of preferred stock. In no circumstance may the number of authorized
shares of preferred stock be decreased below the number of shares of preferred
stock outstanding.
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AMENDMENT OF CHARTER AND BYLAWS
UPC. The Charter of UPC provides that amendments thereto may be adopted
in any manner permitted by the TBCA. The TBCA 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 may also be amended
or repealed by action of UPC's stockholders.
UPC's Charter provides that all corporate powers of UPC shall be
exercised by the Board of Directors except as otherwise provided by law. The
Board of Directors 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 of Directors, including the authority to adopt, amend and repeal
the Bylaws, to submit any action to the stockholders, to fill vacancies on the
Board of Directors 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.
MAGNA. The Certificate of Magna provides that the Certificate may be
amended or repealed by the affirmative vote of both (i) at least two-thirds of
the directors in office at a duly constituted meeting of the Board of Directors
called expressly for such purpose and (ii) a majority of the shares entitled to
vote thereon at a duly constituted meeting of the stockholders called expressly
for such purpose; provided, that amendment of the articles of the Certificate
relating to directors, stockholder actions, amendment of the Certificate,
amendment of the Bylaws, certain business combinations, factors to consider in
connection with offers, limitations on payment of "greenmail," and
indemnification may be amended or repealed only by the affirmative vote of the
holders of at least 80% of Magna's outstanding voting stock.
Magna's Certificate provides that the Board of Directors has the power
to amend, repeal, or adopt the Bylaws. The stockholders may amend, repeal or
adopt the Bylaws upon the affirmative vote of the holders of at least 80% of
Magna'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 of Directors 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
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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.
MAGNA. As permitted by the DGCL, Magna's Bylaws contain a provision
similar to the provision in the Bylaws of UPC that requires that the Board of
Directors shall be divided into three classes serving staggered three-year
terms, with the term of one class of directors to expire each year. Pursuant to
the Bylaws of Magna, each stockholder is entitled to one vote for each share of
Magna Common Stock held and is not entitled to cumulative voting rights in the
election of directors.
DIRECTOR REMOVAL AND VACANCIES
UPC. UPC's Charter provides that a director may be removed by the
stockholders 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 impeding 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.
MAGNA. 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
addition, the DGCL provides that, unless the corporation's certificate of
incorporation provides for a higher voting requirement, directors may be removed
by the holders of a majority of the shares then entitled to vote in the election
of such directors. Magna's Certificate and Bylaws provide that directors may be
removed only for cause and only by the affirmative vote of at least 80% of all
shares entitled to vote in the election of directors, provided, however, that a
director who becomes ineligible to serve on the Board of Directors as set forth
in the Certificate shall be disqualified from office immediately without any
further action of the Board of Directors or stockholders.
LIMITATIONS ON DIRECTOR LIABILITY
UPC. UPC's Charter does not address the issue of director liability to
the corporation.
MAGNA. Magna's Certificate contains a provision limiting directors'
liability to the corporation or its stockholders. Under Magna's Certificate, as
allowed by Section 102 of the DGCL, a Magna director will not have personal
liability to Magna 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 Magna 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 Magna
and its stockholders, and it would not affect the availability of injunctive or
other equitable relief to Magna 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
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conducted himself in good faith; (ii) he reasonably believed (a) in the case of
conduct in his official capacity with the corporation, that his conduct was in
the best interests of the corporation, and (b) in all other cases, that his
conduct was at least not opposed to the corporation's best interests; and (iii)
in the case of any criminal proceeding, he had no reasonable cause to believe
his conduct was unlawful (the "Standard of Conduct"). Moreover, unless limited
by its articles of incorporation, a corporation must indemnify a director who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with the
proceeding. Expenses incurred by a director in defending a proceeding may be
paid by the corporation in advance of the final disposition of such proceeding
upon receipt of a written affirmation by the director of his good faith belief
that he or she has met the Standard of Conduct and an undertaking by or on
behalf of a director to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation against such
expenses. Before any such indemnification is made, it must be determined that
such indemnification would not be precluded by Part 5 of the TBCA.
A director may also apply for court-ordered indemnification under
certain circumstances. Unless a corporation's articles of incorporation provide
otherwise, (i) an officer of a corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered indemnification to
the same extent as a director; (ii) the corporation may indemnify and advance
expenses to an officer, employee, or agent of the corporation to the same extent
as to a director; and (iii) a corporation may also indemnify and advance
expenses to an officer, employee, or agent who is not a director to the extent,
consistent with public policy, that may be provided by its articles of
incorporation, bylaws, general or specific action of its board of directors, or
contract.
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
Securities Act and is therefore unenforceable.
MAGNA. Magna's Certificate provides that Magna will indemnify any
director or officer of Magna, and may indemnify any other officer, employee, or
agent of Magna (or any such person serving at the request of Magna 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' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by that individual in connection with that action, if he acted in a
manner reasonably believed to be in or not opposed to the best interests of
Magna 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 Magna of an undertaking to repay to Magna the amount of expenses paid by
Magna on behalf of the indemnitee if it is determined by final and nonappealable
judicial decision that such indemnitee is not entitled to be indemnified for
such expenses.
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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.
MAGNA. 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. Magna'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 Magna, this requirement could discourage or make
more difficult an attempt to gain control of Magna, 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.
MAGNA. 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.
MAGNA. Magna'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 Magna 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 Magna's Certificate. The Magna 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.
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
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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 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 TBCA 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.
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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 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 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.
MAGNA. The DGCL requires the approval of the Board of Directors and the
holders of a majority of the outstanding stock of Magna entitled to vote thereon
for mergers or consolidations, and for sales, leases, or exchanges of
substantially all of Magna's property and assets. The DGCL permits Magna to
merge with another corporation without obtaining the approval of Magna's
stockholders if: (i) Magna is the surviving corporation of the merger; (ii) the
merger agreement does not amend Magna's Certificate; (iii) each share of Magna
stock outstanding immediately prior to the effective date of the merger is to be
an identical outstanding or treasury share of Magna after the merger; and (iv)
any authorized unissued shares or treasury shares of Magna 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 Magna Common Stock
outstanding immediately prior to the effective date of the merger. As a result,
Magna's Board of Directors could effect significant acquisitions and issue
significant amounts of Magna capital stock on terms that may dilute the
interests of existing Magna 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 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
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prior to the consummation or abandonment of such transaction. Because the Board
of Directors of Magna has approved the Merger, the provisions of Section 203
would not apply to the Merger.
Article Eighth of the Magna Certificate requires that Business
Combinations (as defined therein) between Magna (or any majority-owned
subsidiary thereof) and an "Interested Stockholder" either:
(a) be approved by the vote of the holders of at least 80% of the
outstanding voting stock;
(b) be approved by a majority of the "Disinterested Directors "
(as defined in Article Eighth); or
(c) involve consideration per share generally equal to that paid
by the Interested Stockholder when it acquired its block of
stock.
Article Eighth defines "Interested Stockholder" as a beneficial owner
of at least 10% of the outstanding voting stock of the corporation, or an
affiliate or assignee of an Interested Stockholder.
Article Eighth does not affect the stockholder voting requirement, if
any, in connection with a business combination that does not involve an
Interested Stockholder. Article Eighth will also generally not affect any
stockholder voting requirement in connection with any business combination if
Magna's stockholders receive consideration which is at least equal to the
consideration previously paid by the Interested Stockholder for its shares of
Magna voting stock or the Fair Market Value of Magna Common Stock on the
"Announcement Date" or "Determination Date" (as defined in Article Eighth),
provided that the consideration received by the stockholders in the combination
is not less than what the Magna stockholders would receive in a liquidation,
dissolution, or winding-up of Magna. Because the Board of Directors of Magna has
approved the Merger (as described in paragraph (b) above), the provisions of
Article Eighth do not apply to the Merger.
The provisions of Article Eighth are designed to encourage any person
or entity seeking to acquire Magna 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.
LIMITATIONS ON ABILITY TO VOTE STOCK
UPC. UPC's Charter and Bylaws do not contain any provision restricting
a stockholder's ability to vote shares of UPC voting stock.
MAGNA. Magna's Certificate of Incorporation contains a provision that
prohibits a person who is the beneficial owner, directly or indirectly, of more
than 10% of Magna Common Stock from voting shares held in excess of the 10%
limit on any matter on which stockholders are entitled to vote.
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 a 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
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<PAGE> 58
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.
MAGNA. The rights of appraisal of dissenting stockholders of Magna are
governed by the DGCL. Pursuant thereto, except as described below, any
stockholder has the right to dissent from any merger of which Magna could be a
constituent corporation. No appraisal rights are available, however, for (i) the
shares of any class or series of stock that is either listed on a national
securities exchange, quoted on 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.
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.
MAGNA. 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."
MAGNA. 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
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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
Magna are derived from its subsidiary depository institution. There are various
statutory limitations on the ability of Magna's subsidiary depository
institution to pay dividends to Magna. See "CERTAIN REGULATORY CONSIDERATIONS --
Payment of Dividends."
COMPARATIVE MARKET PRICES AND DIVIDENDS
UPC Common Stock is traded on the NYSE under the symbol "UPC." Magna
Common Stock is quoted on the Nasdaq/NMS under the symbol "MGNL." The following
table sets forth, for the indicated periods, the high and low closing sale
prices for the UPC Common Stock and the Magna Common Stock as reported by the
NYSE and Nasdaq/NMS respectively, and the cash dividends declared per share of
UPC Common Stock and Magna Common Stock for the indicated periods. The stock
prices and dividend amounts have been restated to give effect to stock splits
and stock dividends. The stock prices do not include retail mark-ups,
mark-downs or commissions.
<TABLE>
<CAPTION>
UPC MAGNA
---------------------------------- ----------------------------------
Cash Cash
Dividends Dividends
Price Range Declared Price Range Declared
--------------------- Per --------------------- Per
High Low Share High Low Share
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
1997
First Quarter .................. $ 47.75 $ 38.38 $ .320 $ 20.25 $ 17.00 $ .15
Second Quarter ................. 52.13 41.25 .365 27.50 16.75 .15
Third Quarter (through
July 8, 1997) .................. 52.00 51.25 27.13 26.13 --
-------- --------
Total ........................ $ $ .30
======== ========
1996
First Quarter .................. $ 31.75 $ 29.00 $ .27 $ 15.88 $ 14.38 $ .08
Second Quarter ................. 31.25 29.63 .27 18.63 14.50 .07
Third Quarter .................. 36.25 28.63 .27 22.50 17.50 .15
Fourth Quarter ................. 41.38 34.63 .27 20.75 17.00 .15
-------- --------
Total ........................ $ .08 $ .45
======== ========
1995
First Quarter .................. $ 24.50 $ 20.88 $ .23 $ 10.38 $ 9.13 $ .05
Second Quarter ................. 28.13 23.13 .25 13.88 9.13 .05
Third Quarter .................. 30.75 26.13 .25 15.50 12.38 .05
Fourth Quarter ................. 32.25 29.63 .25 15.00 14.25 .05
-------- --------
Total ........................ $ .98 $ .20
======== ========
</TABLE>
On July 8, 1997, the last sale prices of UPC Common Stock and Magna
Common Stock as reported on the NYSE and Nasdaq National Market System,
respectively, were $51.56 and $26.25 per share, respectively. On May 8, 1997,
the last business day prior to public announcement of the proposed Merger, the
last sale prices of the UPC Common Stock and the Magna Common Stock as reported
by the NYSE and Nasdaq National Market System, respectively, were $45.50 and
$18.25, respectively.
The holders of UPC Common Stock are entitled to receive dividends when
and if declared by the Board of Directors out of funds legally available
therefor. Although UPC currently intends to continue to pay quarterly cash
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dividends on the UPC Common Stock, there can be no assurance that UPC's dividend
policy will remain unchanged after completion of the Merger. The declaration and
payment of dividends thereafter will depend upon business conditions, operating
results, capital and reserve requirements, and the Board of Directors'
consideration of other relevant factors. The Agreement provides that Magna may
declare and pay regular quarterly cash dividends on the shares of Magna Common
Stock at a rate not in excess of $0.15 per share in accordance with past
practice.
UPC and Magna are each legal entities separate and distinct from their
subsidiaries and their revenues depend in significant part on the payment of
dividends from their subsidiary depository institutions. UPC's and Magna's
subsidiary depository institutions are subject to certain legal restrictions on
the amount of dividends they are permitted to pay. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."
BUSINESS OF MAGNA
GENERAL
MAGNA. Magna, a Delaware corporation, is a savings and loan holding
company registered with the OTS under the HOLA. Through its wholly-owned
subsidiary, Magnolia Federal, a federally chartered savings bank, Magna operates
a network of retail banking offices serving 24 counties in Mississippi, as well
as the Mobile metropolitan area in Alabama, and offers a variety of financial
services to meet the needs of the communities its serves. As of March 31, 1997,
Magna had total consolidated assets of approximately $1.4 billion, total
consolidated deposits of approximately $911.7 million, and total consolidated
stockholders' equity of approximately $132.2 million. The principal executive
offices of Magna are located at 100 West Front Street, Hattiesburg, Mississippi
39401, and its telephone number at such address is (601) 545-4756. Additional
information with respect to Magna and its subsidiary is included in documents
incorporated by reference in this Proxy Statement. See "AVAILABLE INFORMATION,"
"DOCUMENTS INCORPORATED BY REFERENCE" and "CERTAIN REGULATORY CONSIDERATIONS."
BUSINESS OF UPC
GENERAL
UPC, a Tennessee corporation, is a bank holding company registered with
the Federal Reserve under the BHC Act and a savings and loan holding company
registered with the OTS under the HOLA. As of 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.
UPC conducts its business activities through its principal bank
subsidiary, the $5.7 billion asset Union Planters National Bank, founded in 1869
and headquartered in Memphis, Tennessee, 32 other bank subsidiaries and one
savings bank subsidiary 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 traditional banking services, 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
FHA/VA government-insured/guaranteed loans from third parties and from GNMA
pools serviced for others; full service and discount brokerage; and the sale of
annuities and bank-eligible insurance products.
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<PAGE> 61
Through the UPC Banking Subsidiaries, UPC operates approximately 433
banking offices and 560 ATMs. UPC's total 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.
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
Magna which had aggregate total assets of approximately $549 million at March
31, 1997. For information with respect to these acquisitions see "-- Recent
Developments." 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 Stockholders 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 herein.
UPC expects to continue to take advantage of the consolidation of the
financial services industry by further developing its franchise through the
acquisition of financial institutions. Future acquisitions may entail the
payment by UPC of consideration in excess of the book value of the underlying
net assets acquired, may result in the issuance of additional shares of UPC
capital stock or the incurring of additional indebtedness by UPC, and could have
a dilutive effect on the earnings or book value per share of UPC Common Stock.
Moreover, significant charges against earnings are sometimes required incidental
to acquisitions. For a description of acquisitions which are currently pending,
see "-- Recent Developments."
The principal executive offices of UPC are located at 7130 Goodlett
Farms Parkway, Memphis, Tennessee 38018, and its telephone number at such
address is (901) 580-6000. Additional information with respect to UPC and its
subsidiary is included in documents incorporated by reference in this Proxy
Statement. See "AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY
REFERENCE."
RECENT DEVELOPMENTS
RECENTLY COMPLETED ACQUISITION. Since December 31, 1996, UPC has
completed the acquisition of one institution (the "Recently Completed
Acquisition").
<TABLE>
<CAPTION>
Consideration
---------------------------
Approximate
Asset Size Value
Institution (In Millions) (In Millions) Type
- ----------------------------------------------- ------------- ------------- -----------
<S> <C> <C> <C>
PFIC Corporation $4.1 $2.5 Purchase
</TABLE>
OTHER PENDING ACQUISITIONS. UPC has entered into definitive agreements
to acquire the following financial institutions in addition to Magna
(collectively, the "Other Pending Acquisitions" and, together with the Recently
Completed Acquisition, the "Other Acquisitions") which UPC's management
considers probable of consummation and which are expected to close in 1997.
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<PAGE> 62
<TABLE>
<CAPTION>
Asset Size
Institution (In Millions)(1) Type of Consideration
------------------------------------------------ ---------------- --------------------------------
<S> <C> <C>
First Acadian Bancshares, Inc., Thibodaux, $ 80 Approximately 358,725 shares of
Louisiana, and its subsidiary, Acadian Bank UPC Common Stock
("FAB").
SBT Bancshares, Inc., Selmer, Tennessee, and its 102 Approximately 612,233 shares of
subsidiary, Selmer Bank & Trust Co. ("SBT") UPC Common Stock
Citizens of Hardemon County Financial Service, 63 Approximately 210,526 shares of
Inc., Whiteville, Tennessee, and its subsidiary, UPC Common Stock
The Whiteville Bank ("Citizens")
Sho-Me Financial Corp., Mt. Vernon Missouri 304 Approximately 1,153,051 shares of
and its subsidiary, 1st Savings Bank, f.s.b. UPC Common Stock
--------------
TOTALS $549
==============
</TABLE>
- ------------------------------
(1) 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 Other Pending Acquisitions will incur charges related to such acquisitions
and to the assimilation of those institutions into the UPC organization.
Anticipated charges would arise from matters such as, but not limited to, legal
and accounting fees, financial advisory fees, consulting fees, payment of
contractual benefits triggered by a change of control, early retirement and
involuntary separation and related benefits, costs associated with elimination
of duplicate facilities and branch closures, data processing charges,
cancellation of vendor contracts, the potential for additional provisions for
loan losses and similar costs which normally arise from the consolidation of
operational activities.
Aggregate charges expected to arise with respect to the acquisition of
Magna and the Other Pending Acquisitions 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 provided as a preliminary estimate
of the significant charges which may in the aggregate be required and should be
viewed accordingly.
This range of potential charges is based on currently available
information as well as preliminary estimates and is subject to change. These
changes are not reflected in the pro forma consolidated financial statements.
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<PAGE> 63
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. A more complete discussion
is included in UPC's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996. Information relating to Magna is included in the Magna Annual
Report on Form 10-K for the fiscal year ended June 30, 1996. See "AVAILABLE
INFORMATION" and "DOCUMENTS INCORPORATED BY REFERENCE."
GENERAL
UPC is a bank holding company registered with the Federal Reserve under
the BHC Act. As such, UPC and its non-bank subsidiaries are subject to the
supervision, examination, and reporting requirements of the BHC Act and the
regulations of the Federal Reserve. In addition, as a savings and loan holding
company, UPC is also registered with the OTS and is subject to the regulation,
supervision, examination, and reporting requirements of the OTS.
The BHC Act requires every bank holding company to obtain the prior
approval of the Federal Reserve before: (i) it may acquire direct or indirect
ownership or control of any voting shares of any bank if, after such
acquisition, the bank holding company will directly or indirectly own or control
more than 5.0% of the voting shares of the bank; (ii) it or any of its
subsidiaries, other than a bank, may acquire all or substantially all of the
assets of any bank; or (iii) it may merge or consolidate with any other bank
holding company. Similar federal statutes require savings and loan holding
companies and other companies to obtain the prior approval of the OTS before
acquiring direct or indirect ownership or control of a savings association.
The BHC Act further provides that the Federal Reserve may not approve
any transaction that would result in a monopoly or would be in furtherance of
any combination or conspiracy to monopolize or attempt to monopolize the
business of banking in any section of the United States, or the effect of which
may be substantially to lessen competition or to tend to create a monopoly in
any section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the community to be served. The Federal Reserve is also required to consider
the financial and managerial resources and future prospects of the bank holding
companies and banks concerned and the convenience and needs of the community to
be served. Consideration of financial resources generally focuses on capital
adequacy which is discussed below, and consideration of convenience and needs
issues includes the parties' performance under the Community Reinvestment Act of
1977.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 ("Interstate
Banking Act"), which became effective in September 1995, repealed the prior
statutory restrictions on interstate acquisitions of banks by bank holding
companies, such that UPC and any other bank holding company located in Tennessee
may now acquire a bank located in any other state, and any bank holding company
located outside Tennessee may lawfully acquire any Tennessee-based bank,
regardless of state law to the contrary, in either case subject to certain
deposit-percentage limitations, aging requirements, and other restrictions. The
Interstate Banking Act also generally provides that, after June 1, 1997,
national and state-chartered banks may branch interstate through acquisitions of
banks in other states. By adopting legislation prior to that date, a state has
the ability either to "opt in" and accelerate the date after which interstate
branching is permissible or "opt out" and prohibit interstate branching
altogether. None of the states in which the banking subsidiaries of UPC or Magna
are located has either moved up the date after which interstate branching will
be permissible or "opted out." Accordingly, UPC is able to consolidate all of
its bank subsidiaries into a single bank with interstate branches.
The BHC Act generally prohibits UPC 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
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<PAGE> 64
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 nonbanking activities of bank holding companies.
Despite prior approval, the Federal Reserve has the power to order a holding
company or its subsidiaries to terminate any activity or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that continuation of such activity or such ownership or control constitutes a
serious risk to the financial safety, soundness, or stability of any bank
subsidiary of that bank holding company.
Each of the subsidiary depository institutions of UPC is a member of
the FDIC, and as such, its deposits are insured by the FDIC to the extent
provided by law. Each such subsidiary is also subject to numerous state and
federal statutes and regulations that affect is business, activities, and
operations, and each is supervised and examined by one or more state or federal
bank regulatory agencies.
The regulatory agencies having supervisory jurisdiction over the
respective subsidiary companies of UPC and Magna (the FDIC and the applicable
state authority in the case of state-chartered nonmember banks, the OTS in the
case of federally chartered thrift institutions, the Federal Reserve in the
case of state-chartered member banks, the OCC in the case of national banks and
the state insurance department in the case of insurance subsidiaries) regularly
examine the operations of such companies and have authority to approve or
disapprove mergers, consolidations, the establishment of branches, and similar
corporate actions. The federal and state banking regulators also have the power
to prevent the continuance or development of unsafe or unsound banking
practices or other violations of law.
PAYMENT OF DIVIDENDS
UPC is a legal entity separate and distinct from its banking, thrift,
and other subsidiaries. The principal sources of cash flow of UPC, including
cash flow to pay dividends to its stockholders, are dividends from their
subsidiary depository institutions. There are statutory and regulatory
limitations on the payment of dividends by these subsidiary depository
institutions to UPC, as well as by UPC and Magna to their stockholders.
As to the payment of dividends, each of UPC's state-chartered banking
subsidiaries is subject to the respective laws and regulations of the state in
which such bank is located, and to the regulations of the bank's primary federal
regulator. UPC's subsidiaries that are thrift institutions are subject to the
OTS' capital distributions regulation, and those that are national banks are
subject to the regulations of the OCC.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency may
require, after notice and hearing, that such institution cease and desist from
such practice. The federal banking agencies have indicated that paying dividends
that deplete a depository institution's capital base to an inadequate level
would be an unsafe and unsound banking practice. Under the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt Corrective
Action." Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally only pay
dividends out of current operating earnings.
At March 31, 1997, under dividend restrictions imposed under federal
and state laws, the subsidiary depository institutions of UPC, without obtaining
governmental approvals, could declare aggregate dividends to UPC of
approximately $111.4 million.
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The payment of dividends by UPC and its banking subsidiaries may also
be affected or limited by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
UPC and its subsidiary depository institutions are required to comply
with the capital adequacy standards established by the Federal Reserve in the
case of UPC, and the appropriate federal banking regulator in the case of each
of its subsidiary depository institutions. There are two basic measures of
capital adequacy for bank holding companies and their subsidiary depository
institutions that have been promulgated by the Federal Reserve and each of the
federal bank regulatory agencies: a risk-based measure and a leverage measure.
All applicable capital standards must be satisfied for a bank holding company to
be considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among
depository institutions and bank holding companies, to account for
off-balance-sheet exposure, and to minimize disincentives for holding liquid
assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At March 31, 1997, UPC's consolidated Total Capital Ratio and its Tier 1 Capital
Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets) were 19.68%
and 16.55%, 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 Leverage Ratio at March 31, 1997, was 10.26%. The guidelines also provide
that bank holding companies experiencing internal growth or making acquisitions
will be expected to maintain strong capital positions substantially above the
minimum supervisory levels without significant reliance on intangible assets.
Furthermore, the Federal Reserve has indicated that it will consider a "tangible
Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other indicia of
capital strength in evaluating proposals for expansion or new activities.
Each of UPC's subsidiary depository institutions is subject to
risk-based and leverage capital requirements adopted by its federal banking
regulatory, which are substantially similar to those adopted by the Federal
Reserve for bank holding companies. Each of the subsidiary depository
institutions was in compliance with applicable minimum capital requirements as
of March 31, 1997. Neither UPC nor any of its subsidiary depository institutions
has been advised by any federal banking agency of any specific minimum capital
ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or thrift to a
variety of enforcement remedies, including issuance of a capital directive, the
termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business. As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements. See
"-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
capital requirements applicable to banking organizations beyond their current
levels. In this regard, the Federal Reserve, the FDIC and the OCC have, pursuant
to FDICIA, proposed an amendment to the risk-based capital standards that would
calculate the change in an institution's net economic value attributable to
increases and decreases in market interest rates and
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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 INSTITUTIONS
Under Federal Reserve policy, UPC is expected to act as a source of
financial strength for, and to commit resources to support, each of its banking
subsidiaries. This support may be required at times when, absent such Federal
Reserve policy, UPC may not be inclined to provide it. In addition, any capital
loans by a bank holding company to any of its banking subsidiaries are
subordinate in right of payment to deposits and to certain other indebtedness of
such banks. In the event of a bank holding company's bankruptcy, any commitment
by the bank holding company to a federal bank regulatory agency to maintain the
capital of a banking subsidiary will be assumed by the bankruptcy trustee and
entitled to a priority of payment.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution insured by the FDIC can be held liable for any loss incurred by, or
reasonably expected to be incurred by, the FDIC after August 9, 1989, in
connection with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default." "Default"
is defined generally as the appointment of a conservator or receiver, and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. The FDIC's claim for damages is superior to claims of stockholders
of the insured depository institution or its holding company, but is subordinate
to claims of depositors, secured creditors, and holders of subordinated debt
(other than affiliates) of the commonly controlled insured depository
institution. The subsidiary depository institutions of UPC are subject to these
cross-guarantee provisions. As a result, any loss suffered by the FDIC in
respect of any of these subsidiaries would likely result in assertion of the
cross-guarantee provisions, the assessment of such estimated losses against the
depository institution's banking or thrift affiliates, and a potential loss of
UPC's respective investments in such other subsidiary depository institutions.
PROMPT CORRECTIVE ACTION
FDICIA establishes a system of prompt corrective action to resolve the
problems of undercapitalized institutions. Under this system, which became
effective in December 1992, the federal banking regulators are required to
establish five capital categories (well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically
undercapitalized) and to take certain mandatory supervisory actions, and are
authorized to take other discretionary actions, with respect to institutions in
the three undercapitalized categories, the severity of which will depend upon
the capital category in which the institution is placed. Generally, subject to a
narrow exception, FDICIA requires the banking regulator to appoint a receiver or
conservator for an institution that is critically undercapitalized. The federal
banking agencies have specified by regulation the relevant capital level for
each category.
Under the final agency rules implementing the prompt corrective action
provisions, an institution that (i) has a Total Capital Ratio of 10% or greater,
a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage Ratio of 5.0% or
greater and (ii) is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by the appropriate
federal banking agency is deemed to be well capitalized. An institution with a
Total Capital Ratio of 8.0% or greater, a Tier 1 Capital Ratio of 4.0% or
greater, and a Leverage Ratio of 4.0% or greater is considered to be adequately
capitalized. A depository institution that has a Total Capital Ratio of less
than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage Ratio of less
than 4.0% is considered to be undercapitalized. A depository institution that
has a Total Capital Ratio of less than 6.0%, a Tier 1 Capital Ratio of less than
3.0%, or a Leverage Ratio of less than 3.0% is considered to be significantly
undercapitalized, and an institution that has a tangible equity capital to
assets ratio equal to or less than 2.0% is deemed to be critically
undercapitalized. For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A
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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 meet its capital restoration plan, subject to certain limitations.
The obligation of a controlling bank holding company under FDICIA to fund a
capital restoration plan is limited to the lesser of 5.0% of an undercapitalized
subsidiary's assets or the amount required to meet regulatory capital
requirements. An undercapitalized institution is also generally prohibited from
increasing its average total assets, making acquisitions, establishing any
branches, or engaging in any new line of business, except in accordance with an
accepted capital restoration plan or with the approval of the FDIC. In addition,
the appropriate federal banking agency is given authority with respect to any
undercapitalized depository institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution as described below if it determines "that those actions are
necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized, provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer.
At March 31, 1997, all of the subsidiary depository institutions of UPC
had the requisite capital levels to qualify as well capitalized.
DESCRIPTION OF UPC CAPITAL STOCK
UPC's Charter currently authorizes the issuance of 100,000,000 shares
of UPC Common Stock and 10,000,000 shares of UPC Preferred Stock. As of 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
and outstanding nor is management aware of the existence of circumstances from
which it may be inferred that such issuance is imminent. THE CAPITAL STOCK OF
UPC DOES NOT REPRESENT OR CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT INSURED BY
THE FDIC, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR
ANY GOVERNMENTAL AGENCY.
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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 of Directors may deem advisable, subject to such limitations as may be
set forth in the laws of the State of Tennessee, UPC's Charter or Bylaws or the
rules of the NYSE. Union Planters National Bank, a wholly-owned subsidiary of
UPC, is the Registrar, Transfer Agent and Dividend Disbursing Agent for shares
of UPC Common Stock. Its address is Union Planters National Bank, Corporate
Trust Department, 6200 Poplar Avenue, Third Floor, Memphis, Tennessee 38119.
Its mailing address is P.O. Box 387, Memphis, Tennessee 38147.
DIVIDENDS. Subject to the preferential dividend rights applicable to
outstanding shares of the UPC Preferred Stock and subject to applicable
requirements, if any, with respect to the setting aside of sums for purchase,
retirement or sinking funds, if any, for all outstanding UPC Preferred Stock,
the holders of the UPC Common Stock are entitled to receive, to the extent
permitted by law, only such dividends as may be declared from time to time by
the UPC Board of Directors.
UPC has the right to, and may from time to time, enter into borrowing
arrangements or issue other debt instruments, the provisions of which may
contain restrictions on payment of dividends and other distributions on UPC
Common Stock and UPC Preferred Stock; however, UPC has no such arrangements in
effect at the date hereof.
LIQUIDATION RIGHTS. In the event of the voluntary or involuntary
liquidation, dissolution, distribution of assets or winding-up of UPC, after
distribution in full of the preferential amounts required to be distributed to
the holders of UPC Preferred Stock, holders of UPC Common Stock will be entitled
to receive all of the remaining assets of UPC, of whatever kind, available for
distribution to stockholders ratably in proportion to the number of shares of
UPC Common Stock held. The UPC Board of Directors may distribute in kind to the
holders of UPC Common Stock such remaining assets of UPC or may sell, transfer
or otherwise dispose of all or any part of such remaining assets to any other
person or entity and receive payment therefor in cash, stock or obligations of
such other person or entity, and may sell all or any part of the consideration
so received and distribute any balance thereof in kind to holders of UPC Common
Stock. Neither the merger or consolidation of UPC into or with any other
corporation, nor the merger of any other corporation into UPC, nor any purchase
or redemption of shares of stock of UPC of any class, shall be deemed to be a
dissolution, liquidation or winding-up of UPC for purposes of this paragraph.
Because UPC is a holding company, its right and the rights of its
creditors and stockholders, including the holders of UPC Preferred Stock and UPC
Common Stock, to participate in the distribution of assets of a subsidiary on
its liquidation or recapitalization may be subject to prior claims of such
subsidiary's creditors except to the extent that UPC itself may be a creditor
having recognized claims against such subsidiary.
UPC PREFERRED STOCK
SERIES A PREFERRED STOCK. UPC's Charter provides for the issuance of up
to 750,000 shares (subject to adjustment by action of the UPC Board of
Directors) 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 (SEC 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 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
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$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 dividends.
Holders of Series E Preferred Stock have no voting rights except as required by
law and in certain other limited circumstances. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."
For a further description of UPC Common Stock, See "EFFECT OF THE
MERGER ON RIGHTS OF STOCKHOLDERS."
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of Magna
knows of no matters that will be presented for consideration at the Special
Meeting other than as described in this Proxy Statement. However, if any other
matters shall properly come before the Special Meeting or any adjournment or
postponement thereof and be voted upon, the enclosed proxy shall be deemed to
confer discretionary authority to the individuals named as proxies therein to
vote the shares represented by such proxy as to any such matters.
STOCKHOLDER PROPOSALS
UPC expects to hold its next annual meeting of stockholders after the
Merger on April 16, 1998. Under SEC rules, proposals of UPC stockholders
intended to be presented at that meeting must be received by UPC at its
principal executive offices no later than the date specified in UPC's 1997
annual meeting proxy statement. It is not currently anticipated that Magna will
hold its 1997 annual meeting unless the Merger should not be consummated. In the
event the Merger is not consummated, proposals of Magna stockholders intended to
be included in the proxy material for that meeting must have been received by
Magna at its principal executive offices no later than June 2, 1997.
EXPERTS
The consolidated financial statements of UPC and subsidiaries
incorporated in this Proxy Statement by reference to the Annual Report on Form
10-K 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 Magna and its subsidiaries as
of June 30, 1996 and 1995, and for each of the years in the three-year period
ended June 30, 1996, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
With respect to Magna's unaudited interim financial information for the
periods ended September 30, 1996 and 1995, December 31, 1996 and 1995 and March
31, 1997 and 1996, incorporated by reference herein, the independent certified
public accountants have reported that they applied limited procedures in
accordance with professional standards for a review of such information.
However, their separate reports included in Magna's quarterly reports on Form
10-Q for the quarters ended September 30, 1996, December 31, 1996 and March 31,
1997, and incorporated by reference herein, state that they did not audit and
they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
The accountants are not subject to the liability provisions of Section 11 of the
Securities Act for their reports on the unaudited interim financial information
because those reports are not a "report" or a "part" of the registration
statement prepared or certified by the accountants within the meaning of
Sections 7 and 11 of the Securities Act.
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OPINIONS
The legality of the shares of UPC Common Stock to be issued in the
Merger will be passed upon by E. James House, Jr., Secretary and Manager of the
Legal Department of UPC. E. James House, Jr. is an officer of, and receives
compensation from, UPC.
Certain tax consequences of the transaction have been passed upon by
Alston & Bird LLP, Atlanta, Georgia.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
MAGNA BANCORP, INC.
AND
UNION PLANTERS CORPORATION
DATED AS OF MAY 8, 1997
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TABLE OF CONTENTS
<TABLE>
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Parties................................................................................................... A-6
Preamble.................................................................................................. A-6
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER.............................................................. A-6
1.1 Merger......................................................................................... A-6
1.2 Time and Place of Closing...................................................................... A-6
1.3 Effective Time................................................................................. A-7
1.4 Execution of Stock Option Agreement............................................................ A-7
1.5 Restructure of Transaction..................................................................... A-7
ARTICLE 2 - TERMS OF MERGER............................................................................... A-7
2.1 Charter........................................................................................ A-7
2.2 By-laws........................................................................................ A-7
2.3 Directors and Officers......................................................................... A-7
ARTICLE 3 - MANNER OF CONVERTING SHARES................................................................... A-8
3.1 Conversion of Shares........................................................................... A-8
3.2 Anti-Dilution Provisions....................................................................... A-8
3.3 Shares Held by Magna or UPC.................................................................... A-8
3.4 Fractional Shares.............................................................................. A-8
3.5 Conversion of Stock Options.................................................................... A-8
ARTICLE 4 - EXCHANGE OF SHARES............................................................................ A-9
4.1 Exchange Procedures............................................................................ A-9
4.2 Rights of Former Magna Shareholders............................................................ A-10
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF MAGNA....................................................... A-10
5.1 Organization, Standing, and Power.............................................................. A-10
5.2 Authority; No Breach By Agreement.............................................................. A-10
5.3 Capital Stock.................................................................................. A-11
5.4 Magna Subsidiaries............................................................................. A-11
5.5 SEC Filings; Financial Statements.............................................................. A-12
5.6 Absence of Undisclosed Liabilities............................................................. A-12
5.7 Absence of Certain Changes or Events........................................................... A-13
5.8 Tax Matters.................................................................................... A-13
5.9 Allowance for Possible Loan Losses............................................................. A-14
5.10 Assets......................................................................................... A-14
5.11 Intellectual Property.......................................................................... A-14
5.12 Environmental Matters.......................................................................... A-15
5.13 Compliance With Laws........................................................................... A-15
5.14 Labor Relations................................................................................ A-15
5.15 Employee Benefit Plans......................................................................... A-16
5.16 Material Contracts............................................................................. A-17
5.17 Legal Proceedings.............................................................................. A-17
5.18 Reports........................................................................................ A-18
5.19 Statements True and Correct.................................................................... A-18
5.20 Accounting, Tax, and Regulatory Matters........................................................ A-18
5.21 State Takeover Laws............................................................................ A-18
5.22 Charter Provisions............................................................................. A-18
</TABLE>
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ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF UPC......................................................... A-19
6.1 Organization, Standing, and Power.............................................................. A-19
6.2 Authority; No Breach By Agreement.............................................................. A-19
6.3 Capital Stock.................................................................................. A-19
6.4 UPC Subsidiaries............................................................................... A-20
6.5 SEC Filings; Financial Statements.............................................................. A-20
6.6 Absence of Undisclosed Liabilities............................................................. A-21
6.7 Absence of Certain Changes or Events........................................................... A-21
6.8 Tax Matters.................................................................................... A-21
6.9 Environmental Matters.......................................................................... A-21
6.10 Compliance With Laws........................................................................... A-22
6.11 Legal Proceedings.............................................................................. A-22
6.12 Reports........................................................................................ A-22
6.13 Statements True and Correct.................................................................... A-22
6.14 Accounting, Tax, and Regulatory Matters........................................................ A-23
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION...................................................... A-23
7.1 Affirmative Covenants of Magna................................................................. A-23
7.2 Negative Covenants of Magna.................................................................... A-23
7.3 Covenants of UPC............................................................................... A-25
7.4 Adverse Changes in Condition................................................................... A-25
7.5 Reports........................................................................................ A-25
ARTICLE 8 - ADDITIONAL AGREEMENTS......................................................................... A-26
8.1 Registration Statement; Proxy Statement; Shareholder Approval.................................. A-26
8.2 Exchange Listing............................................................................... A-26
8.3 Applications................................................................................... A-26
8.4 Filings with State Offices..................................................................... A-26
8.5 Agreement as to Efforts to Consummate.......................................................... A-26
8.6 Investigation and Confidentiality.............................................................. A-27
8.7 Press Releases................................................................................. A-27
8.8 Certain Actions................................................................................ A-27
8.9 Accounting and Tax Treatment................................................................... A-37
8.10 State Takeover Laws............................................................................ A-28
8.11 Charter Provisions............................................................................. A-28
8.12 Agreements of Affiliates....................................................................... A-28
8.13 Employee Benefits and Contracts................................................................ A-28
8.14 Indemnification................................................................................ A-28
8.15 UPC Merger Subsidiary Organization............................................................. A-29
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............................................. A-29
9.1 Conditions to Obligations of Each Party........................................................ A-29
9.2 Conditions to Obligations of UPC............................................................... A-31
9.3 Conditions to Obligations of Magna............................................................. A-31
ARTICLE 10 - TERMINATION.................................................................................. A-32
10.1 Termination.................................................................................... A-32
10.2 Effect of Termination.......................................................................... A-34
10.3 Non-Survival of Representations and Covenants.................................................. A-35
ARTICLE 11 - MISCELLANEOUS................................................................................ A-35
11.1 Definitions.................................................................................... A-35
11.2 Expenses....................................................................................... A-41
11.3 Brokers and Finders............................................................................ A-41
11.4 Entire Agreement............................................................................... A-42
11.5 Amendments..................................................................................... A-42
11.6 Waivers........................................................................................ A-42
11.7 Assignment..................................................................................... A-42
</TABLE>
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11.8 Notices........................................................................................ A-42
11.9 Governing Law.................................................................................. A-43
11.10 Counterparts................................................................................... A-43
11.11 Captions....................................................................................... A-43
11.12 Interpretations................................................................................ A-44
11.13 Enforcement of Agreement....................................................................... A-44
11.14 Severability................................................................................... A-44
Signatures................................................................................................ A-45
</TABLE>
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LIST OF EXHIBITS
<TABLE>
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EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
1. Plan of Merger. (ss. 1.1).
2. Form of Stock Option Agreement. (ss.ss. 1.4, 11.1).
3. Form of agreement of affiliates of Magna. (ss.ss. 8.12, 9.2(d)).
4. Form of Supplemental Letter. (ss.ss. 7.2, 11.1).
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made
and entered into as of May 8, 1997, by and between MAGNA BANCORP, INC.
("Magna"), a Delaware corporation having its principal office located in
Hattiesburg, Mississippi; and UNION PLANTERS CORPORATION ("UPC"), a Tennessee
corporation having its principal office located in Memphis, Tennessee.
PREAMBLE
The Boards of Directors of Magna and UPC are of the opinion that the
transactions described herein are in the best interests of the parties and their
respective shareholders. This Agreement provides for the acquisition of Magna by
UPC pursuant to the merger of a wholly owned, first-tier subsidiary of UPC to be
organized under the Laws of the State of Delaware ("UPC Merger Subsidiary") with
and into Magna. At the effective time of such merger, the outstanding shares of
the common stock of Magna shall be converted into the right to receive shares of
the common stock of UPC (except as provided in Sections 3.3 and 3.4 of this
Agreement). As a result, shareholders of Magna shall become shareholders of UPC
and Magna shall continue to conduct its business and operations as a wholly
owned subsidiary of UPC. The transactions described in this Agreement are
subject to the approvals of the shareholders of UPC and Magna, the Board of
Governors of the Federal Reserve System, the Office of Thrift Supervision, and
other applicable federal and state regulatory authorities, and the satisfaction
of certain other conditions described in this Agreement. It is the intention of
the parties to this Agreement that the Merger for federal income tax purposes
shall qualify as a "reorganization" within the meaning of Section 368(a) of the
Internal Revenue Code, and for accounting purposes shall qualify for treatment
as a pooling of interests.
Immediately after the execution and delivery of this Agreement, as a
condition and inducement to UPC's willingness to enter into this Agreement,
Magna and UPC are entering into a stock option agreement pursuant to which Magna
is granting to UPC an option to purchase shares of Magna Common Stock.
Certain terms used in this Agreement are defined in Section 11.1 of
this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, UPC Merger Subsidiary shall be merged with and into Magna in
accordance with the provisions of Section 251 of the DGCL and with the effect
provided in Section 259 of the DGCL (the "Merger"). Magna shall be the Surviving
Corporation resulting from the Merger and shall continue to be governed by the
Laws of the State of Delaware. The Merger shall be consummated pursuant to the
terms of this Agreement, which has been approved and adopted by the respective
Boards of Directors of Magna and UPC and the Plan of Merger, in substantially
the form of Exhibit 1, which has been approved and adopted by the Board of
Directors of Magna and will be approved and adopted by the Board of Directors of
UPC Merger Subsidiary and UPC (in its capacity as sole shareholder of UPC Merger
Subsidiary) upon the organization of UPC Merger Subsidiary.
1.2 TIME AND PLACE OF CLOSING. The Closing will take place at
9:00 A.M. on the date that the Effective Time occurs (or the immediately
preceding day if the Effective Time is earlier than 9:00 A.M.), or at such other
time as the Parties, acting through their chief executive officers or chief
financial officers, may mutually agree. The Closing shall be held at such place
as may be mutually agreed upon by the Parties.
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1.3 EFFECTIVE TIME. The Merger and other transactions contemplated by
this Agreement shall become effective on the date and at the time the
Certificate of Merger reflecting the Merger shall become effective with the
Secretary of State of the State of Delaware (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the chief executive officers or chief financial officers of each
Party, the Parties shall use their reasonable efforts to cause the Effective
Time to occur on such date as may be designated by UPC within 30 days following
the last to occur of (i) the effective date (including expiration of any
applicable waiting period) of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger, (ii) the
date on which the shareholders of Magna approve this Agreement and the Plan of
Merger as required by applicable Law, and (iii) the date on which all other
conditions precedent to each Party's obligations hereunder shall have been
satisfied or waived (to the extent waivable by such Party).
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Simultaneously with the
execution of this Agreement by the Parties and as a condition thereto, Magna is
executing and delivering to UPC a stock option agreement (the "Stock Option
Agreement"), in substantially the form of Exhibit 2, pursuant to which Magna is
granting to UPC an option to purchase shares of Magna Common Stock.
1.5 RESTRUCTURE OF TRANSACTION. UPC shall, in its reasonable
discretion, have the unilateral right to revise the structure of the Merger
contemplated by this Agreement in order to achieve tax benefits or for any other
reason which UPC may deem advisable; provided, however, that UPC shall not have
the right, without the approval of the Board of Directors of Magna, to make any
revision to the structure of the Merger which: (i) changes the amount of the
consideration which the holders of shares of Magna Common Stock are entitled to
receive (determined in the manner provided in Section 3.1 of this Agreement);
(ii) changes the intended tax-free effects of the Merger to UPC or the holders
of shares of Magna Common Stock; (iii) would permit UPC to pay the consideration
other than by delivery of UPC Common Stock registered with the SEC (in the
manner described in Section 4.1 of this Agreement); (iv) would be materially
adverse to the interests of Magna or holders of shares of Magna Common Stock;
(v) would unreasonably impede or delay consummation of the Merger; or (vi) would
affect any of the provisions in Sections 8.13 or 8.14 of this Agreement. UPC may
exercise this right of revision by giving written notice to Magna in the manner
provided in Section 11.8 of this Agreement which notice shall be in the form of
an amendment to this Agreement or in the form of an Amended and Restated
Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Charter of Magna in effect immediately prior to the
Effective Time shall be the Charter of the Surviving Corporation until otherwise
amended or repealed.
2.2 BY-LAWS. The By-laws of Magna in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving Corporation until otherwise
amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of Magna in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the By-laws of
the Surviving Corporation. The officers of Magna in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the By-laws of the Surviving Corporation.
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ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of UPC, UPC Merger Subsidiary, Magna, or the shareholders of either
of the foregoing, the shares of the constituent corporations shall be converted
as follows:
(a) Each share of UPC Capital Stock, including any associated UPC
Rights, issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding from and after the Effective Time.
(b) Each share of UPC Merger Subsidiary Common Stock issued and
outstanding immediately prior to the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for one share of
Magna Common Stock.
(c) Each share of Magna Common Stock (excluding shares held by any
Magna company or any UPC Company, in each case other than in a fiduciary
capacity or as a result of debts previously contracted) issued and
outstanding at the Effective Time shall cease to be outstanding and shall
be converted into and exchanged for the right to receive .5165 of a share
of UPC Common Stock (as subject to possible adjustment as set forth in
Section 10.1(g) of this Agreement, the "Exchange Ratio"). Pursuant to the
UPC Rights Agreement, each share of UPC Common Stock issued in connection
with the Merger upon conversion of Magna Common Stock shall be accompanied
by a UPC Right.
3.2 ANTI-DILUTION PROVISIONS. In the event UPC changes the number of
shares of UPC Common Stock issued and outstanding prior to the Effective Time as
a result of a stock split, stock dividend, or similar recapitalization with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY MAGNA OR UPC. Each of the shares of Magna Common
Stock held by any Magna Company or by any UPC Company, in each case other than
in a fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Magna Common Stock exchanged pursuant to the
Merger who would otherwise have been entitled to receive a fraction of a share
of UPC Common Stock (after taking into account all certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the market value of one share of UPC Common Stock at the Effective Time. The
market value of one share of UPC Common Stock at the Effective Time shall be the
closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a shareholder in respect of any fractional shares.
3.5 CONVERSION OF STOCK OPTIONS.
(a) At the Effective Time, each option to purchase or other
right with respect to shares of Magna Common Stock pursuant to stock options,
stock appreciation rights or other rights, including stock awards ("Magna
Options") granted by Magna under the Magna Stock Plans, which are outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to UPC Common Stock, and UPC shall assume each Magna
Option, in accordance with the terms of the Magna Stock Plan and stock option or
other agreement by which it is evidenced, except that from and after the
Effective Time,
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(i) UPC and its Salary and Benefits Committee shall be substituted for Magna and
the Committee of Magna's Board of Directors (including, if applicable, the
entire Board of Directors of Magna) or other independent committee administering
such Magna Stock Plan, (ii) each Magna Option assumed by UPC may be exercised
solely for shares of UPC Common Stock (or cash in the case of stock appreciation
rights), (iii) the number of shares of UPC Common Stock subject to such Magna
Option shall be equal to the number of shares of Magna Common Stock subject to
such Magna Option immediately prior to the Effective Time multiplied by the
Exchange Ratio and rounding down to the nearest whole share, and (iv) the per
share exercise price under each such Magna Option shall be adjusted by dividing
the per share exercise price under each such Magna Option by the Exchange Ratio
and rounding up to the nearest cent. Notwithstanding the clauses (iii) and (iv)
of the first sentence of this Section 3.5, each Magna Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Internal Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. UPC and Magna agree to
take all necessary steps to effectuate the foregoing provisions of this Section
3.5.
(b) As soon as practicable after the Effective Time, UPC shall
deliver to the participants in each Magna Stock Plan an appropriate notice
setting forth such participant's rights pursuant thereto and the grants subject
to such Magna Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.5(a) after giving
effect to the Merger), and UPC shall comply with the terms of each Magna Stock
Plan to ensure, to the extent required by, and subject to the provisions of,
such Magna Stock Plan, that Magna Options which qualified as incentive stock
options prior to the Effective Time continue to qualify as incentive stock
options after the Effective Time. Within 30 days after the Effective Time, UPC
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the shares of UPC
Common Stock subject to such options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding.
(c) In approving this Agreement, Magna and the Committee
appointed by the Board of Directors of Magna in accordance with paragraph 3 of
the Magna Bancorp, Inc. 1990 Stock Option and Incentive Plan agree not to permit
the holders of options outstanding under such plan to receive cash upon the
Merger in an amount equal to the excess of the "Market Value" of the Magna
Common Stock subject to such option over the "Exercise Price" of the shares
subject to such option in accordance with Section 11 of the Magna Bancorp, Inc.
1990 Stock Option and Incentive Plan.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, UPC and
Magna shall cause the exchange agent selected by UPC (the "Exchange Agent") to
mail to the former shareholders of Magna appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of Magna Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent). The
Exchange Agent may establish reasonable and customary rules and procedures in
connection with its duties. After the Effective Time, each holder of shares of
Magna Common Stock (other than shares to be canceled pursuant to Section 3.3 of
this Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
consideration provided in Section 3.1 of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 4.2 of this Agreement. To the extent
required by Section 3.4 of this Agreement, each holder of shares of Magna Common
Stock issued and outstanding at the Effective Time also shall receive, upon
surrender of the certificate or certificates representing such shares, cash in
lieu of any fractional share of UPC Common Stock to which such holder may be
otherwise entitled (without interest). UPC shall not be obligated to deliver the
consideration to which any former holder of Magna Common Stock is entitled as a
result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of Magna Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of Magna Common
Stock so
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surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither UPC nor the Exchange Agent
shall be liable to a holder of Magna Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law. Adoption of this Agreement by the shareholders of Magna
shall constitute ratification of the appointment of the Exchange Agent.
4.2 RIGHTS OF FORMER MAGNA SHAREHOLDERS. At the Effective Time, the
stock transfer books of Magna shall be closed as to holders of Magna Common
Stock immediately prior to the Effective Time and no transfer of Magna Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Magna Common
Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.4 of
this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Magna in respect of such shares of Magna Common Stock in accordance with the
terms of this Agreement and which remain unpaid at the Effective Time. Whenever
a dividend or other distribution is declared by UPC on the UPC Common Stock, the
record date for which is at or after the Effective Time, the declaration shall
include dividends or other distributions on all shares of UPC Common Stock
issuable pursuant to this Agreement, but beginning 30 days after the Effective
Time no dividend or other distribution payable to the holders of record of UPC
Common Stock as of any time subsequent to the Effective Time shall be delivered
to the holder of any certificate representing shares of Magna Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 4.1 of this Agreement. However,
upon surrender of such Magna Common Stock certificate, both the UPC Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered dividends and cash payments payable
hereunder (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MAGNA
Magna hereby represents and warrants to UPC as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Magna is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Delaware, and has the corporate power and authority to carry on its business as
now conducted and to own, lease, and operate its Assets. Magna is duly qualified
or licensed to transact business as a foreign corporation in good standing in
the States of the United States and foreign jurisdictions where the character of
its Assets or the nature or conduct of its business requires it to be so
qualified or licensed, except for such jurisdictions in which the failure to be
so qualified or licensed is not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Magna.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Magna has the corporate power and authority necessary to
execute, deliver, and perform its obligations under this Agreement and the Plan
of Merger and to consummate the transactions contemplated hereby and thereby.
The execution, delivery, and performance of this Agreement and the Plan of
Merger, as appropriate, and the consummation of the transactions contemplated
herein and therein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of Magna,
subject to the approval of this Agreement and the Plan of Merger by the holders
of a majority of the outstanding shares of Magna Common Stock, which is the only
shareholder vote required for approval of this Agreement and the Plan of Merger
and consummation of the Merger by Magna. Subject to such requisite shareholder
approval, this Agreement and the Plan of Merger (which for purposes of this
sentence shall not include the Stock Option Agreement) represent legal, valid,
and binding obligations of Magna, enforceable against Magna
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in accordance with their respective terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Except as set forth in Section 5.2 of the Magna Disclosure
Memorandum, neither the execution and delivery of this Agreement or the Plan of
Merger, as appropriate, by Magna, nor the consummation by Magna of the
transactions contemplated hereby or thereby, nor compliance by Magna with any of
the provisions hereof or thereof, will (i) conflict with or result in a breach
of any provision of Magna's Charter or By-laws, or (ii) constitute or result in
a Default under, or require any Consent pursuant to, or result in the creation
of any Lien on any material Asset of any Magna Company under, any Contract or
Permit of any Magna Company, other than Defaults that are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Magna,
or (iii) subject to receipt of the requisite Consents referred to in Section
9.1(b) of this Agreement, violate any Law or Order applicable to any Magna
Company or any of their respective material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NASD, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Magna, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
Magna of the Merger and the other transactions contemplated in this Agreement
and the Plan of Merger.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Magna consists of (i)
14,500,000 shares of Magna Common Stock, of which 13,754,266 shares are issued
and outstanding as of the date of this Agreement (exclusive of treasury shares)
and not more than 13,884,977 shares will be issued and outstanding at the
Effective Time, and (ii) 500,000 shares of preferred stock, $0.01 par value, of
which no shares are, or will be, issued and outstanding as of the date of this
Agreement or at the Effective Time, respectively. All of the issued and
outstanding shares of capital stock of Magna are duly and validly issued and
outstanding and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of capital stock of Magna has been issued in violation of any
preemptive rights of the current or past shareholders of Magna. Magna has
reserved 144,136 shares of Magna Common Stock for issuance under the Magna Stock
Plans, pursuant to which options to purchase not more than 119,136 shares of
Magna Common Stock are outstanding and rights to receive 11,575 shares of Magna
Common Stock are outstanding pursuant to stock equivalents allocated to
directors.
(b) Except as set forth in Section 5.3(a) of this Agreement, or
as provided in the Stock Option Agreement there are no shares of capital stock
or other equity securities of Magna outstanding and no outstanding Rights
relating to the capital stock of Magna.
5.4 MAGNA SUBSIDIARIES. Magna has disclosed in Section 5.4 of the
Magna Disclosure Memorandum all of the Magna Subsidiaries that are corporations
(identifying its jurisdiction of incorporation, each jurisdiction in which
character of its Assets or the nature or conduct of its business requires it to
be qualified and/or licensed to transact business, and the number of shares
owned and percentage ownership interest represented by such share ownership) and
all of the Magna Subsidiaries that are general or limited partnerships or other
non-corporate entities (identifying the Law under which such entity is
organized, each jurisdiction in which character of its Assets or the nature or
conduct of its business requires it to be qualified and/or licensed to transact
business, and the amount and nature of the ownership interest therein of all
Magna Companies). Magna or one of its wholly owned Subsidiaries owns all of the
issued and outstanding shares of capital stock (or other equity interests) of
each Magna Subsidiary, except Magna Insurance is only 79% owned. No capital
stock (or other equity interest) of any
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Magna Subsidiary are or may become required to be issued (other than to another
Magna Company) by reason of any Rights, and there are no Contracts by which any
Magna Subsidiary is bound to issue (other than to another Magna Company)
additional shares of its capital stock (or other equity interests) or Rights or
by which any Magna Company is or may be bound to transfer any shares of the
capital stock (or other equity interests) of any Magna Subsidiary (other than to
another Magna Company). There are no Contracts relating to the rights of any
Magna Company to vote or to dispose of any shares of the capital stock (or other
equity interests) of any Magna Subsidiary. All of the shares of capital stock
(or other equity interests) of each Magna Subsidiary held by a Magna Company are
fully paid and nonassessable under the applicable corporation or similar Law of
the jurisdiction in which such Subsidiary is incorporated or organized and are
owned by the Magna Company free and clear of any Lien. Each Magna Subsidiary is
either a bank, a savings association, partnership, limited liability
corporation, or a corporation, and each such Subsidiary is duly organized,
validly existing, and (as to corporations) in good standing under the Laws of
the jurisdiction in which it is incorporated or organized, and has the corporate
power and authority necessary for it to own, lease, and operate its Assets and
to carry on its business as now conducted. Each Magna Subsidiary is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on Magna. The only Magna Subsidiary
that is a depository institution is Magnolia Federal. Magnolia Federal is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Savings Association Insurance Fund. The minute book and other organizational
documents for each Magna Subsidiary have been made available to UPC for its
review, and are true and complete as in effect as of the date of this Agreement
and accurately reflect all amendments thereto and all proceedings of the Board
of Directors and shareholders thereof.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Magna has filed and made available to UPC all SEC Documents
required to be filed by Magna since June 30, 1993 (the "Magna SEC Reports"). The
Magna SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in such
Magna SEC Reports or necessary in order to make the statements in such Magna SEC
Reports, in light of the circumstances under which they were made, not
misleading. None of Magna's Subsidiaries is required to file any SEC Documents.
(b) Each of the Magna Financial Statements (including, in each
case, any related notes) contained in the Magna SEC Reports, including any Magna
SEC Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of Magna
and its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Magna Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Magna, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Magna as of
June 30, 1996, included in the Magna Financial Statements made available prior
to the date of this Agreement or reflected in the notes thereto. No Magna
Company has incurred or paid any Liability since June 30, 1996, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not
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reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Magna or (ii) in connection with the transactions contemplated by this
Agreement.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1996, except
as disclosed in the Magna Financial Statements made available prior to the date
of this Agreement or contemplated by pending federal legislation applicable to
financial institutions generally, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Magna, and (ii) the Magna Companies
have not taken any action, or failed to take any action, prior to the date of
this Agreement, which action or failure, if taken after the date of this
Agreement, would represent or result in a material breach or violation of any of
the covenants and agreements of Magna contained in this Agreement.
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any
of the Magna Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and, to the Knowledge of Magna, all
Tax Returns filed are complete and accurate. All Taxes shown on filed Tax
Returns have been paid. There is no audit examination, deficiency, or refund
Litigation with respect to any Taxes, except as reserved against in the Magna
Financial Statements made available prior to the date of this Agreement. All
Taxes and other Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid. There are no Liens with
respect to Taxes upon any of the Assets of the Magna Companies.
(b) None of the Magna Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due (excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for
any of the Magna Companies for the period or periods through and including the
date of the respective Magna Financial Statements has been made and is reflected
on such Magna Financial Statements.
(d) Deferred Taxes of the Magna Companies have been provided for
in accordance with GAAP.
(e) To the Knowledge of Magna, each of the Magna Companies is in
compliance with, and its records contain all information and documents
(including properly completed IRS Forms W-9) necessary to comply with, all
applicable information reporting and Tax withholding requirements under federal,
state, and local Tax Laws, and such records identify with specificity all
accounts subject to backup withholding under Section 3406 of the Internal
Revenue Code.
(f) Except as set forth in Section 5.8 of the Magna Disclosure
Memorandum, none of the Magna Companies has made any payments, is obligated to
make any payments, or is a party to any Contract that could obligate it to make
any payments that would be disallowed as a deduction under Section 280G or
162(m) of the Internal Revenue Code.
(g) There has not been an ownership change, as defined in
Internal Revenue Code Section 382(g), of the Magna Companies that occurred
during or after any Taxable Period in which the Companies incurred a net
operating loss that carries over to any Taxable Period ending after December 31,
1996.
(h) Except as set forth in Section 5.8 of the Magna Disclosure
Memorandum, none of the Magna Companies is a party to any tax allocation or
sharing agreement and none of the Magna Companies has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common
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parent of which was Magna) has any Liability for taxes of any Person (other than
Magna and its Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law) as a transferee or successor
or by Contract or otherwise.
5.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible
loan or credit losses (the "Allowance") shown on the consolidated balance sheets
of Magna included in the most recent Magna Financial Statements dated prior to
the date of this Agreement was, and the Allowance shown on the consolidated
balance sheets of Magna included in the Magna Financial Statements as of dates
subsequent to the execution of this Agreement will be, as of the dates thereof,
in the reasonable opinion of management of Magna adequate (within the meaning of
GAAP and applicable regulatory requirements or guidelines) to provide for all
known and reasonably anticipated losses relating to or inherent in the loan and
lease portfolios (including accrued interest receivables) of the Magna Companies
and other extensions of credit (including letters of credit and commitments to
make loans or extend credit) by the Magna Companies as of the dates thereof.
5.10 ASSETS. Except as disclosed or reserved against in the Magna
Financial Statements made available prior to the date of this Agreement or in
Section 5.10 of the Magna Disclosure Memorandum, the Magna Companies have good
and marketable title, free and clear of all material Liens, to all of their
respective Assets. All tangible properties used in the businesses of the Magna
Companies are in good condition, reasonable wear and tear excepted, and are
usable in the ordinary course of business consistent with Magna's past
practices. All Assets which are material to Magna's business on a consolidated
basis, held under leases or subleases by any of the Magna Companies, are held
under valid Contracts enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. To the Knowledge of Magna, the Magna
Companies currently maintain insurance similar in amounts, scope, and coverage
to that maintained by other peer banking organizations. None of the Magna
Companies has received notice from any insurance carrier that (i) such insurance
will be canceled or that coverage thereunder will be reduced or eliminated, or
(ii) premium costs with respect to such policies of insurance will be
substantially increased. There are presently no claims pending under any such
policies of insurance and no notices have been given by any Magna Company under
such policies, except for routine claims, none of which is material, or as
disclosed in Section 5.17 of the Magna Disclosure Memorandum.
5.11 INTELLECTUAL PROPERTY. All of the Intellectual Property rights of
the Magna Companies are in full force and effect and constitute legal, valid,
and binding obligations of the respective parties thereto, and there have not
been, and, to the Knowledge of Magna, there currently are not, any Defaults
thereunder by Magna. A Magna Company owns or is the valid licensee of all such
Intellectual Property rights free and clear of all Liens or claims of
infringement. None of the Magna Companies or, to the Knowledge of Magna, their
respective predecessors has misused the Intellectual Property rights of others
and, to the Knowledge of Magna, none of the Intellectual Property rights as used
in the business conducted by any such Magna Company infringes upon or otherwise
violates the rights of any Person, nor has any Person asserted a claim of such
infringement. To the Knowledge of Magna, no Magna Company is obligated to pay
any royalties to any Person with respect to any such Intellectual Property. To
the Knowledge of Magna, each Magna Company owns or has the valid right to use
all of the Intellectual Property rights which it is presently using, or in
connection with performance of any material Contract to which it is a party. No
officer, director, or employee of any Magna Company is party to any Contract
which requires such officer, director or employee to assign any interest in any
Intellectual Property or keep confidential any trade secrets, proprietary data,
customer information, or other business information, which restricts or
prohibits such officer, director, or employee from engaging in activities
competitive with any Person, including any Magna Company.
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5.12 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.12 of the
Magna Disclosure Memorandum:
(a) To the Knowledge of Magna, each Magna Company, its
Participation Facilities, and its Operating Properties are, and have been, in
compliance with all Environmental Laws, except for violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Magna.
(b) To the Knowledge of Magna, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other forum in
which any Magna Company or any of its Operating Properties or Participation
Facilities (or Magna in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, adjacent to, or
affecting (or potentially affecting) a site owned, leased, or operated by any
Magna Company or any of its Operating Properties or Participation Facilities,
except for such Litigation pending or threatened that is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on Magna,
nor is there any reasonable basis for any Litigation of a type described in this
sentence.
(c) During the period of (i) any Magna Company's ownership or
operation of any of their respective current properties, (ii) any Magna
Company's participation in the management of any Participation Facility, or
(iii) any Magna Company's holding of a security interest in a Operating
Property, to the Knowledge of Magna, there have been no releases of Hazardous
Material in, on, under, adjacent to, or affecting (or potentially affecting)
such properties, except such as are not reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on Magna. Prior to the period of
(i) any Magna Company's ownership or operation of any of their respective
current properties, (ii) any Magna Company's participation in the management of
any Participation Facility, or (iii) any Magna Company's holding of a security
interest in a Operating Property, to the Knowledge of Magna, there were no
releases of Hazardous Material in, on, under, or affecting any such property,
Participation Facility or Operating Property, except such as are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Magna.
5.13 COMPLIANCE WITH LAWS. Magna is duly registered as a savings and
loan holding company under the HOLA. Each Magna Company has in effect all
Permits necessary for it to own, lease, or operate its material Assets and to
carry on its business as now conducted, and there has occurred no Default under
any such Permit. None of the Magna Companies:
(a) to the Knowledge of Magna, is in violation of any material
Laws, Orders, or Permits applicable to its business or employees conducting
its business; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Magna
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening
to revoke any Permits, or (iii) requiring any Magna Company to enter into
or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the
conduct of its business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the payment of
dividends.
5.14 LABOR RELATIONS. No Magna Company is the subject of any
Litigation asserting that it or any other Magna Company has committed an unfair
labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Magna Company to
bargain with any labor organization as to wages or conditions of employment, nor
is there any strike or other labor dispute involving any
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Magna Company, pending or threatened, or to the Knowledge of Magna, is there any
activity involving any Magna Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.
5.15 EMPLOYEE BENEFIT PLANS.
(a) Magna has disclosed in Section 5.15 of the Magna Disclosure
Memorandum, and has delivered or made available to UPC prior to the execution of
this Agreement copies in each case of, all pension, retirement, profit-sharing,
deferred compensation, stock option, employee stock ownership, severance pay,
vacation, bonus, or other incentive plan, all other written employee programs,
arrangements, or agreements, all medical, vision, dental, or other health plans,
all life insurance plans, and all other employee benefit plans or fringe benefit
plans, including "employee benefit plans" as that term is defined in Section
3(3) of ERISA, currently adopted, maintained by, sponsored in whole or in part
by, or contributed to by any Magna Company or ERISA Affiliate thereof for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (collectively, the "Magna Benefit Plans"). Any of
the Magna Benefit Plans which is an "employee pension benefit plan," as that
term is defined in Section 3(2) of ERISA, is referred to herein as a "Magna
ERISA Plan." Each Magna ERISA Plan which is also a "defined benefit plan" (as
defined in Section 414(j) of the Internal Revenue Code) is referred to herein as
a "Magna Pension Plan." No Magna Pension Plan is or has been a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(b) All Magna Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Magna. Each Magna
ERISA Plan which is intended to be qualified under Section 401(a) of the
Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Magna is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. No Magna
Company has engaged in a transaction with respect to any Magna Benefit Plan
that, assuming the taxable period of such transaction expired as of the date
hereof, would subject any Magna Company to a Tax imposed by either Section 4975
of the Internal Revenue Code or Section 502(i) of ERISA.
(c) No Magna Pension Plan has any "unfunded current liability,"
as that term is defined in Section 302(d)(8)(A) of ERISA, and the fair market
value of the assets of any such plan exceeds the plan's "benefit liabilities,"
as that term is defined in Section 4001(a)(16) of ERISA, when determined under
actuarial factors that would apply if the plan terminated in accordance with all
applicable legal requirements. Since the date of the most recent actuarial
valuation, there has been (i) no material change in the financial position of
any Magna Pension Plan, (ii) no change in the actuarial assumptions with respect
to any Magna Pension Plan, and (iii) no increase in benefits under any Magna
Pension Plan as a result of plan amendments or changes in applicable Law which
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Magna or materially adversely affect the funding status of any
such plan. Neither any Magna Pension Plan nor any "single-employer plan," within
the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by
any Magna Company, or the single-employer plan of any entity which is considered
one employer with Magna under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code or Section 302 of ERISA (whether or not waived) (an "ERISA
Affiliate") has an "accumulated funding deficiency" within the meaning of
Section 412 of the Internal Revenue Code or Section 302 of ERISA. No Magna
Company has provided, or is required to provide, security to a Magna Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective Time, no
Liability under Subtitle C or D of Title IV of ERISA has been or is expected to
be incurred by any Magna Company with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. No Magna Company has incurred any withdrawal Liability with respect
to a multiemployer plan under Subtitle B of Title IV of ERISA (regardless of
whether based on contributions of an ERISA Affiliate). No notice of a
"reportable event," within the meaning of Section 4043 of ERISA for which the
30-day reporting requirement has not been
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waived, has been required to be filed for any Magna Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof.
(e) Except as disclosed in Section 5.15 of the Magna Disclosure
Memorandum, no Magna Company has any Liability for retiree health and life
benefits under any of the Magna Benefit Plans and there are no restrictions on
the rights of such Magna Company to amend or terminate any such retiree health
or benefit Plan without incurring Liability thereunder.
(f) Except as disclosed in Section 5.15 of the Magna Disclosure
Memorandum, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, or
otherwise) becoming due to any director or any employee of any Magna Company
from any Magna Company under any Magna Benefit Plan or otherwise, (ii) increase
any benefits otherwise payable under any Magna Benefit Plan, or (iii) result in
any acceleration of the time of payment or vesting of any such benefit.
(g) The actuarial present values of all accrued deferred
compensation entitlements (including entitlements under any executive
compensation, supplemental retirement, or employment agreement) of employees and
former employees of any Magna Company and their respective beneficiaries, other
than entitlements accrued pursuant to funded retirement plans subject to the
provisions of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
have been fully reflected on the Magna Financial Statements to the extent
required by and in accordance with GAAP.
5.16 MATERIAL CONTRACTS. Except as disclosed in the Magna SEC Reports
or as disclosed in Section 5.16 of the Magna Disclosure Memorandum, none of the
Magna Companies, nor any of their respective Assets, businesses, or operations,
is a party to, or is bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting, or retirement Contract providing
for aggregate payments to any Person in any calendar year in excess of $50,000,
(ii) any Contract relating to the borrowing of money by any Magna Company or the
guarantee by any Magna Company of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, and Federal Home Loan Bank advances of depository
institution Subsidiaries, trade payables, and Contracts relating to borrowings
or guarantees made in the ordinary course of business), (iii) any Contracts
which prohibit or restrict any Magna Company from engaging in any business
activities in any geographic area, line of business, or otherwise in competition
with any other Person, (iv) any Contracts between or among Magna Companies, (v)
any exchange-traded or over-the-counter swap, forward, future, option, cap,
floor, or collar financial Contract, or any other interest rate or foreign
currency protection Contract (not disclosed in the Magna Financial Statements
delivered prior to the date of this Agreement) which is a financial derivative
Contract (including various combinations thereof), and (vi) any other Contract
or amendment thereto that would be required to be filed as an exhibit to a Magna
SEC Report filed by Magna with the SEC prior to the date of this Agreement that
has not been filed as an exhibit to a Magna SEC Report (together with all
Contracts referred to in Sections 5.10 and 5.15(a) of this Agreement, the "Magna
Contracts"). With respect to each Magna Contract: (i) the Contract is in full
force and effect; (ii) no Magna Company is in Default thereunder; (iii) no Magna
Company has repudiated or waived any material provision of any such Contract;
and (iv) no other party to any such Contract is, to the Knowledge of Magna, in
Default in any respect or has repudiated or waived any material provision
thereunder. Except as set forth in Section 5.16 of the Magna Disclosure
Memorandum, all of the indebtedness of any Magna Company for money borrowed is
prepayable at any time by such Magna Company without penalty or premium.
5.17 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of Magna, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any Magna Company, or against any Asset,
employee benefit plan, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Magna, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against any Magna Company.
Section 5.17 of the Magna Disclosure
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Memorandum includes a summary report of all material Litigation as of the date
of this Agreement to which any Magna Company is a party and which names a Magna
Company as a defendant or cross-defendant.
5.18 REPORTS. Since January 1, 1994, or the date of organization if
later, each Magna Company has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with (i) the SEC, including, but not limited to, Forms 10-K,
Forms 10-Q, Forms 8-K, and proxy statements, (ii) other Regulatory Authorities,
and (iii) any applicable state securities or banking authorities (except, in the
case of state securities authorities, failures to file which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Magna). As of their respective dates, or as subsequently amended for minor
corrections, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all material respects
with all applicable Laws. As of its respective date, each such report and
document did not, in all material respects, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
5.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by any Magna Company
or any Affiliate thereof to UPC pursuant to this Agreement or any other
document, agreement, or instrument referred to herein contains or will contain
any untrue statement of material fact or will omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information supplied or to be
supplied by any Magna Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by UPC with the SEC will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any Magna Company or any Affiliate thereof for inclusion in the
Proxy Statement to be mailed to Magna's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by a Magna Company or
any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Proxy Statement, when
first mailed to the shareholders of Magna, be false or misleading with respect
to any material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or, in the case of the Proxy Statement or any amendment thereof
or supplement thereto, at the time of the Shareholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meeting. All documents that
any Magna Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.20 ACCOUNTING, TAX, AND REGULATORY MATTERS. No Magna Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance relating to Magna that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such section.
5.21 STATE TAKEOVER LAWS. Each Magna Company has taken all necessary
action to exempt the transactions contemplated by this Agreement and the Plan of
Merger from, or if necessary challenge the validity or applicability of, any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws"), including Section
203 of the DGCL.
5.22 CHARTER PROVISIONS. Each Magna Company has taken all action so
that the entering into of this Agreement and the Plan of Merger and the
consummation of the Merger and the other transactions contemplated by this
Agreement and the Plan of Merger do not and will not result in the grant of any
rights to any
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Person under the Charter, By-laws or other governing instruments of any Magna
Company or restrict or impair the ability of UPC or any of its Subsidiaries to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of any Magna Company that may be directly or indirectly acquired or
controlled by it.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UPC
Except as disclosed in the UPC Disclosure Memorandum, UPC hereby
represents and warrants to Magna as follows:
6.1 ORGANIZATION, STANDING, AND POWER. UPC is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Tennessee, and has the corporate power and authority to carry on its business as
now conducted and to own, lease and operate its material Assets. UPC is duly
qualified or licensed to transact business as a foreign corporation in good
standing in the States of the United States and foreign jurisdictions where the
character of its Assets or the nature or conduct of its business requires it to
be so qualified or licensed, except for such jurisdictions in which the failure
to be so qualified or licensed is not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on UPC.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) UPC has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of UPC. This
Agreement (which for purposes of this sentence shall not include the Stock
Option Agreement) represents a legal, valid, and binding obligation of UPC,
enforceable against UPC in accordance with its terms (except in all cases as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement by UPC,
nor the consummation by UPC of the transactions contemplated hereby, nor
compliance by UPC with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of UPC's Restated Charter of Incorporation
or By-laws, or (ii) constitute or result in a Default under, or require any
Consent pursuant to, or result in the creation of any Lien on any Asset of any
UPC Company under, any Contract or Permit of any UPC Company, or (iii) subject
to receipt of the requisite approvals referred to in Section 9.1(b) of this
Agreement, violate any Law or Order applicable to any UPC Company or any of
their respective material Assets.
(c) Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
rules of the NYSE, and other than Consents required from Regulatory Authorities,
and other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
UPC or UPC Merger Subsidiary of the Merger and the other transactions
contemplated in this Agreement and the Plan of Merger.
6.3 CAPITAL STOCK. The authorized capital stock of UPC consists of
(i) 100,000,000 shares of UPC Common Stock, of which 66,010,936 shares were
issued and outstanding as of March 31, 1997 (exclusive of treasury shares), and
(ii) 10,000,000 shares of UPC Preferred Stock, of which no shares of UPC Series
A Preferred Stock, and 2,877,474 shares of UPC Series E Preferred Stock, are
issued and outstanding. All of the
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issued and outstanding shares of UPC Capital Stock are, and all of the shares of
UPC Common Stock to be issued in exchange for shares of Magna Common Stock upon
consummation of the Merger, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the Tennessee Business Corporation Act. None of the
outstanding shares of UPC Capital Stock has been, and none of the shares of UPC
Common Stock to be issued in exchange for shares of Magna Common Stock upon
consummation of the Merger will be, issued in violation of any preemptive rights
of the current or past shareholders of UPC. UPC has reserved for issuance a
sufficient number of shares of UPC Common Stock for the purpose of issuing
shares of UPC Common Stock in accordance with the provisions of Sections 3.1 and
3.5 of this Agreement.
6.4 UPC SUBSIDIARIES. UPC or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each UPC Subsidiary. No equity
securities of any UPC Subsidiary are or may become required to be issued (other
than to another UPC Company) by reason of any Rights, and there are no Contracts
by which any UPC Subsidiary is bound to issue (other than to another UPC
Company) additional shares of its capital stock or Rights or by which any UPC
Company is or may be bound to transfer any shares of the capital stock of any
UPC Subsidiary (other than to another UPC Company). There are no Contracts
relating to the rights of any UPC Company to vote or to dispose of any shares of
the capital stock of any UPC Subsidiary. All of the shares of capital stock of
each UPC Subsidiary held by a UPC Company are fully paid and nonassessable
(except pursuant to 12 USC Section 55 in the case of national banks and
comparable, applicable state Law, if any, in the case of state depository
institutions) under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the UPC Company
free and clear of any Lien. Each UPC Subsidiary is either a bank or a
corporation, and is duly organized, validly existing, and (as to corporations)
in good standing under the Laws of the jurisdiction in which it is incorporated
or organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each UPC Subsidiary is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC. Each UPC Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or Savings Association Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) UPC has filed and made available to Magna all SEC Documents
required to be filed by UPC since December 31, 1993 (the "UPC SEC Reports"). The
UPC SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Laws and (ii) did not, at the time
they were filed (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated in such
UPC SEC Reports or necessary in order to make the statements in such UPC SEC
Reports, in light of the circumstances under which they were made, not
misleading. Except for UPC Subsidiaries that are registered as a broker, dealer,
or investment advisor, none of UPC's Subsidiaries is required to file any SEC
Documents.
(b) Each of the UPC Financial Statements (including, in each
case, any related notes) contained in the UPC SEC Reports, including any UPC SEC
Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of UPC
and its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
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.
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6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No UPC Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of UPC as of
December 31, 1996, included in the UPC Financial Statements made available prior
to the date of this Agreement or reflected in the notes thereto. No UPC Company
has incurred or paid any Liability since December 31, 1996, except for such
Liabilities incurred or paid (i) in the ordinary course of business consistent
with past business practice and which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC or (ii) in
connection with the transactions contemplated by this Agreement.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
except as disclosed in the UPC Financial Statements made available prior to the
date of this Agreement or contemplated by pending federal legislation applicable
to financial institutions generally, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, and (ii) the UPC Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of UPC contained in this Agreement.
6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of any
of the UPC Companies have been timely filed or requests for extensions have been
timely filed, granted, and have not expired for periods ended on or before
December 31, 1996, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, and, to the Knowledge of UPC, all Tax
Returns filed are complete and accurate. All Taxes shown on filed Tax Returns
have been paid. There is no audit examination, deficiency, or refund Litigation
with respect to any Taxes, except as reserved against in the UPC Financial
Statements delivered prior to the date of this Agreement. All Taxes and other
Liabilities due with respect to completed and settled examinations or concluded
Litigation have been paid. There are no Liens with respect to Taxes upon any of
the Assets of the UPC Companies.
(b) Adequate provision for any Taxes due or to become due for
any of the UPC Companies for the period or periods through and including the
date of the respective UPC Financial Statements has been made and is reflected
on such UPC Financial Statements.
(c) Deferred Taxes of the UPC Companies have been provided for
in accordance with GAAP.
6.9 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of UPC, each UPC Company, its Participation
Facilities, and its Operating Properties are, and have been, in compliance with
all Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on UPC.
(b) To the Knowledge of UPC, there is no Litigation pending or
threatened before any court, governmental agency, or authority or other forum in
which any UPC Company or any of its Operating Properties or Participation
Facilities (or UPC in respect of such Operating Property or Participation
Facility) has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material, whether or not occurring at, on, under, adjacent to, or
affecting (or potentially affecting) a site owned, leased, or operated by any
UPC Company or any of its Operating Properties or Participation Facilities,
except for such Litigation pending or threatened that is not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on UPC, nor
is there any reasonable basis for any Litigation of a type described in this
sentence.
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(c) During the period of (i) any UPC Company's ownership or
operation of any of their respective current properties, (ii) any UPC Company's
participation in the management of any Participation Facility, or (iii) any UPC
Company's holding of a security interest in a Operating Property, to the
Knowledge of UPC, there have been no releases of Hazardous Material in, on,
under, adjacent to, or affecting (or potentially affecting) such properties,
except such as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC. Prior to the period of (i) any UPC
Company's ownership or operation of any of their respective current properties,
(ii) any UPC Company's participation in the management of any Participation
Facility, or (iii) any UPC Company's holding of a security interest in a
Operating Property, to the Knowledge of UPC, there were no releases of Hazardous
Material in, on, under, or affecting any such property, Participation Facility
or Operating Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC.
6.10 COMPLIANCE WITH LAWS. UPC is duly registered as a bank holding
company under the BHC Act and as a savings and loan holding company under the
HOLA. Each UPC Company has in effect all Permits necessary for it to own, lease,
or operate its material Assets and to carry on its business as now conducted,
and there has occurred no Default under any such Permit. No UPC Company:
(a) to the Knowledge of UPC, is in violation of any material
Laws, Orders, or Permits applicable to its business or employees conducting
its business; and
(b) has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any UPC
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces, (ii) threatening
to revoke any Permits, or (iii) requiring any UPC Company to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its
credit or reserve policies, its management, or the payment of dividends.
6.11 LEGAL PROCEEDINGS. There is no Litigation instituted or pending,
or, to the Knowledge of UPC, threatened (or unasserted but considered probable
of assertion and which if asserted would have at least a reasonable probability
of an unfavorable outcome) against any UPC Company, or against any Asset,
employee benefit plan, interest, or right of any of them, that is reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
UPC, nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against any UPC Company.
6.12 REPORTS. Since January 1, 1994, or the date of organization if
later, each UPC Company has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the SEC, including, but not limited to, Forms 10-K, Forms 10-Q,
Forms 8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii)
any applicable state securities or banking authorities (except, in the case of
state securities authorities, failures to file which are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on UPC). As
of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
6.13 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any UPC Company or
any Affiliate thereof to Magna pursuant to this Agreement or any other document,
agreement, or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the
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circumstances under which they were made, not misleading. None of the
information supplied or to be supplied by any UPC Company or any Affiliate
thereof for inclusion in the Registration Statement to be filed by UPC with the
SEC, will, when the Registration Statement becomes effective, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein not misleading. None of the information
supplied or to be supplied by any UPC Company or any Affiliate thereof for
inclusion in the Proxy Statement to be mailed to Magna's shareholders in
connection with the Shareholders' Meeting, and any other documents to be filed
by any UPC Company or any Affiliate thereof with the SEC or any other Regulatory
Authority in connection with the transactions contemplated hereby, will, at the
respective time such documents are filed, and with respect to the Proxy
Statement, when first mailed to the shareholders of Magna, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or, in the case of the Proxy Statement or
any amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting. All documents that any UPC Company or any Affiliate
thereof is responsible for filing with any Regulatory Authority in connection
with the transactions contemplated hereby will comply as to form in all material
respects with the provisions of applicable Law.
6.14 ACCOUNTING, TAX, AND REGULATORY MATTERS. No UPC Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance relating to UPC that is reasonably likely to (i) prevent the
transactions contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (ii) materially
impede or delay receipt of any Consents of Regulatory Authorities referred to in
Section 9.1(b) of this Agreement or result in the imposition of a condition or
restriction of the type referred to in the last sentence of such Section.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF MAGNA. Unless the prior written consent
of UPC shall have been obtained, and except as otherwise expressly contemplated
herein or as set forth in Section 7.1 of the Magna Disclosure Memorandum, Magna
shall and shall cause each of its Subsidiaries to (i) operate its business only
in the usual, regular, and ordinary course, (ii) preserve intact its business
organization and Assets and maintain its rights and franchises, and (iii) take
no action which would (a) materially adversely affect the ability of any Party
to obtain any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement or prevent the transactions
contemplated hereby, including the Merger, from qualifying for
pooling-of-interests accounting treatment or as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code, or (b) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
7.2 NEGATIVE COVENANTS OF MAGNA. Except as specifically contemplated
by this Agreement or other documents or instruments executed in connection with
this Agreement, from the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement, Magna covenants and agrees
that it will not do or agree or commit to do, or permit any of its Subsidiaries
to do or agree or commit to do, any of the following without the prior written
consent of the chief executive officer, president, or chief financial officer of
UPC, which consent shall not be unreasonably withheld:
(a) amend the Charter, By-laws, or other governing instruments
of any Magna Company; or
(b) incur any additional debt obligation or other obligation for
borrowed money (other than indebtedness of a Magna Company to another Magna
Company) in excess of an aggregate of
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$250,000 (for the Magna Companies on a consolidated basis) except in the
ordinary course of the business of Magna Subsidiaries consistent with past
practices (which shall include, for Magna Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank, and entry
into repurchase agreements fully secured by U.S. government or agency
securities), or impose, or suffer the imposition, on any Asset of any Magna
Company of any Lien or permit any such Lien to exist (other than in
connection with deposits, repurchase agreements, bankers acceptances,
advances from the Federal Reserve Board or Federal Home Loan Bank,
"treasury tax and loan" accounts established in the ordinary course of
business, the satisfaction of legal requirements in the exercise of trust
powers, and Liens in effect as of the date hereof that are disclosed in the
Magna Disclosure Memorandum); or
(c) repurchase, redeem, or otherwise acquire or exchange (other
than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Magna Company, or declare or pay any
dividend or make any other distribution in respect of Magna's capital
stock, provided that Magna may (to the extent legally and contractually
permitted to do so), but shall not be obligated to, declare and pay regular
quarterly cash dividends on the shares of Magna Common Stock at a rate not
in excess of $.15 per share with usual and regular record and payment dates
in accordance with past practice disclosed in Section 7.2(c) of the Magna
Disclosure Memorandum and such dates may not be changed without the prior
written consent of UPC, provided, that, notwithstanding the provisions of
Section 1.3, the Parties shall cooperate in selecting the Effective Time to
ensure that, with respect to the quarterly period in which the Effective
Time occurs, the holders of Magna Common Stock do not become entitled to
receive both a dividend in respect of their Magna Common Stock and a
dividend in respect of UPC Common Stock or fail to be entitled to receive
any dividend; or
(d) except for this Agreement, or pursuant to the exercise of
stock options outstanding as of the date hereof or issuance of shares to
satisfy stock rights outstanding as of the date hereof, plus dividend and
accumulation rights, if any, and pursuant to the terms of the Magna Stock
Plans in existence on the date hereof, or pursuant to the Stock Option
Agreement, issue, sell, pledge, encumber, authorize the issuance of, enter
into any Contract to issue, sell, pledge, encumber, or authorize the
issuance of, or otherwise permit to become outstanding, any additional
shares of Magna Common Stock or any other capital stock of any Magna
Company, or any stock appreciation rights, or any option, warrant,
conversion, or other right to acquire any such stock, or any security
convertible into any such stock; or
(e) adjust, split, combine or reclassify any capital stock of
any Magna Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Magna Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber any shares of capital stock of any Magna Subsidiary (unless any
such shares of stock are sold or otherwise transferred to another Magna
Company) or any Asset having a book value in excess of $250,000 other than
in the ordinary course of business for reasonable and adequate
consideration; or
(f) except as disclosed in Section 7.2(f) of the Magna
Disclosure Memorandum and for purchases of U.S. Treasury securities or U.S.
Government agency securities, which in either case have maturities of three
years or less or Federal Home Loan Bank Stock, purchase any securities or
make any material investment, either by purchase of stock of securities,
contributions to capital, Asset transfers, or purchase of any Assets, in
any Person other than a wholly owned Magna Subsidiary, or otherwise acquire
direct or indirect control over any Person, other than in connection with
(i) foreclosures in the ordinary course of business, (ii) acquisitions of
control by a depository institution Subsidiary in its fiduciary capacity,
or (iii) the creation of new wholly owned Subsidiaries organized to conduct
or continue activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of any Magna Company, except in accordance with past
practice disclosed in Section 7.2(g) of the Magna Disclosure Memorandum or
as required by Law; pay any severance or termination pay or any bonus other
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than pursuant to written policies or written Contracts in effect on the
date of this Agreement and disclosed in Section 7.2(g) of the Magna
Disclosure Memorandum; and enter into or amend any severance agreements
with officers of any Magna Company; grant any material increase in fees or
other increases in compensation or other benefits to directors of any Magna
Company except in accordance with past practice disclosed in Section 7.2(g)
of the Magna Disclosure Memorandum; or voluntarily accelerate the vesting
of any stock options or other stock-based compensation or employee benefits
(other than the acceleration of vesting which occurs under a benefit plan
upon a change of control of Magna); or
(h) enter into or amend any employment Contract between any
Magna Company and any Person (unless such amendment is required by Law)
that the Magna Company does not have the unconditional right to terminate
without Liability (other than Liability for services already rendered), at
any time on or after the Effective Time; or
(i) except as disclosed in Section 7.2(i) of the Magna
Disclosure Memorandum, adopt any new employee benefit plan of any Magna
Company or terminate or withdraw from, or make any material change in or
to, any existing employee benefit plans of any Magna Company other than any
such change that is required by Law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax qualified status of any such
plan, or make any distributions from such employee benefit plans, except as
required by Law, the terms of such plans or consistent with past practice;
or
(j) make any significant change in any Tax or accounting methods
or systems of internal accounting controls, except as may be appropriate to
conform to changes in Tax Laws or regulatory accounting requirements or
GAAP; or
(k) commence any Litigation other than in accordance with past
practice, settle any Litigation involving any Liability of any Magna
Company for money damages in excess of $100,000 or restrictions upon the
operations of any Magna Company; or
(l) other than in the ordinary course of business consistent
with past practice or as otherwise disclosed in Section 7.2(l) of the Magna
Disclosure Memorandum, enter into, modify, amend, or terminate any material
Contract (excluding any loan Contract) or waive, release, compromise, or
assign any material rights or claims.
7.3 COVENANTS OF UPC. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, UPC
covenants and agrees that it shall (i) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment, to
enhance the long-term value of the UPC Common Stock and the business prospects
of the UPC Companies, and (ii) take no action which would (a) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 9.1(b) of
this Agreement or prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.
7.4 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.5 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the
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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, such
financial statements will fairly present the consolidated financial position of
the entity filing such statements as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows for the
periods then ended in accordance with GAAP (subject in the case of interim
financial statements to normal recurring year-end adjustments that are not
material). As of their respective dates, such reports filed with the SEC will
comply in all material respects with the Securities Laws and will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any financial statements contained in any other reports to another
Regulatory Authority shall be prepared in accordance with Laws applicable to
such reports.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER APPROVAL.
UPC shall file the Registration Statement with the SEC, and shall use its
reasonable efforts to cause the Registration Statement to become effective under
the 1933 Act and take any action required to be taken under the applicable state
Blue Sky or securities Laws in connection with the issuance of the shares of UPC
Common Stock upon consummation of the Merger. Magna shall furnish all
information concerning it and the holders of its capital stock as UPC may
reasonably request in connection with such action. Magna shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and the Plan of Merger and such other
related matters as it deems appropriate. In connection with the Shareholders'
Meeting, (i) Magna shall prepare and file with the SEC a Proxy Statement and
mail such Proxy Statement to its shareholders, (ii) the Parties shall furnish to
each other all information concerning them that they may reasonably request in
connection with such Proxy Statement, (iii) the Board of Directors of Magna
shall recommend (subject to compliance with their fiduciary duties as advised by
counsel) to its shareholders the approval of the matters submitted for approval,
and (iv) the Board of Directors and officers of Magna shall (subject to
compliance with their fiduciary duties as advised by counsel) use their
reasonable efforts to obtain such shareholders' approvals.
8.2 EXCHANGE LISTING. UPC shall use its reasonable efforts to list,
prior to the Effective Time, on the NYSE, subject to official notice of
issuance, the shares of UPC Common Stock to be issued to the holders of Magna
Common Stock or Magna Options pursuant to the Merger, and UPC shall give all
notices and make all filings with the NYSE required in connection with the
transactions contemplated herein.
8.3 APPLICATIONS. UPC shall prepare and file, and Magna shall
cooperate in the preparation and, where appropriate, filing of, applications
with all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. At least three
business days prior to filing, UPC shall provide Magna and its counsel with
copies of such applications. The Parties shall deliver to each other copies of
all filings, correspondence and orders to and from all Regulatory Authorities in
connection with the transactions contemplated hereby as soon as practicable upon
their becoming available.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, UPC Merger Subsidiary and Magna shall execute and
file the Certificate of Merger with the Secretary of State of the State of
Delaware in connection with the Closing.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely
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affecting its ability to consummate the transactions contemplated herein and to
cause to be satisfied the conditions referred to in Article 9 of this Agreement;
provided, that nothing herein shall preclude either Party from exercising its
rights under this Agreement or the Stock Option Agreement. Each Party shall use,
and shall cause each of its Subsidiaries to use, its reasonable efforts to
obtain all Consents necessary or desirable for the consummation of the
transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep the other
Party advised of all material developments relevant to its business and to
consummation of the Merger and shall permit the other Party to make or cause to
be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and agents
to, maintain the confidentiality of all confidential information furnished to it
by the other Party concerning its and its Subsidiaries' businesses, operations,
and financial positions and shall not use such information for any purpose
except in furtherance of the transactions contemplated by this Agreement. If
this Agreement is terminated prior to the Effective Time, each Party shall
promptly return or certify the destruction of all documents and copies thereof,
and all work papers containing confidential information received from the other
Party.
(c) Magna shall use its reasonable efforts to exercise its
rights under confidentiality agreements entered into with Persons which were
considering an Acquisition Transaction with Magna to preserve the
confidentiality of the information relating to Magna provided to such Persons
and their Affiliates and Representatives.
8.7 PRESS RELEASES. Prior to the Effective Time, Magna and UPC shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the
Plan of Merger and the transactions contemplated hereby and thereby, after the
date of this Agreement, no Magna Company nor any Affiliate thereof nor any
Representatives thereof retained by any Magna Company shall directly or
indirectly solicit any Acquisition Proposal by any Person. Except to the extent
necessary to comply with the fiduciary duties of Magna's Board of Directors as
advised by counsel, no Magna Company or any Affiliate or Representative thereof
shall furnish any non-public information that it is not legally obligated to
furnish, negotiate with respect to, or enter into any Contract with respect to,
any Acquisition Proposal, but Magna may communicate information about such an
Acquisition Proposal to its shareholders if and to the extent that it is
required to do so in order to comply with its legal obligations as advised by
counsel. Magna shall promptly notify UPC orally and in writing in the event that
it receives any inquiry or proposal relating to any such transaction. Magna
shall (i) immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with respect
to any of the foregoing, and (ii) direct and use its reasonable efforts to cause
all of its Representatives not to engage in any of the foregoing.
8.9 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes and
agrees to use its reasonable efforts to cause the Merger, and to take no action
which would cause the Merger not, to qualify for pooling-of-interests accounting
treatment and treatment as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
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8.10 STATE TAKEOVER LAWS. Each Magna Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law.
8.11 CHARTER PROVISIONS. Each Magna Company shall take all necessary
action to ensure that the entering into of this Agreement and the Plan of Merger
and the consummation of the Merger and the other transactions contemplated
hereby and thereby do not and will not result in the grant of any rights to any
Person under the Charter, By-laws, or other governing instruments of any Magna
Company or restrict or impair the ability of UPC or any of its Subsidiaries to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of any Magna Company that may be directly or indirectly acquired or
controlled by it.
8.12 AGREEMENT OF AFFILIATES. Magna has disclosed in Section 8.12 of
the Magna Disclosure Memorandum all Persons whom it reasonably believes is an
"affiliate" of Magna for purposes of Rule 145 under the 1933 Act. Magna shall
use its reasonable efforts to cause each such Person to deliver to UPC not later
than 30 days prior to the Effective Time, a written agreement, substantially in
the form of Exhibit 3, providing that such Person will not sell, pledge,
transfer, or otherwise dispose of the shares of Magna Common Stock held by such
Person except as contemplated by such agreement or by this Agreement and will
not sell, pledge, transfer, or otherwise dispose of the shares of UPC Common
Stock to be received by such Person upon consummation of the Merger except in
compliance with applicable provisions of the 1933 Act and the rules and
regulations thereunder and until such time as financial results covering at
least 30 days of combined operations of UPC and Magna have been published within
the meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies. If the Merger will qualify for pooling-of-interests accounting
treatment, shares of UPC Common Stock issued to such affiliates of Magna in
exchange for shares of Magna Common Stock shall not be transferable until such
time as financial results covering at least 30 days of combined operations of
UPC and Magna have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies, regardless of whether each
such affiliate has provided the written agreement referred to in this Section
8.12 (and UPC shall be entitled to place restrictive legends upon certificates
for shares of UPC Common Stock issued to affiliates of Magna pursuant to this
Agreement to enforce the provisions of this Section 8.12). UPC shall not be
required to maintain the effectiveness of the Registration Statement under the
1933 Act for the purposes of resale of UPC Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Subject to the terms of the
Supplemental Letter, following the Effective Time, UPC shall provide to officers
and employees of the Magna Companies employee benefits under employee benefit
and welfare plans, on terms and conditions which when taken as a whole are
substantially similar to those currently provided by the UPC Companies to their
similarly situated officers and employees. For purposes of participation,
vesting, and (except in the case of retirement plans) benefit accrual under such
employee benefit plans, the service of the employees of the Magna Companies
prior to the Effective Time shall be treated as service with a UPC Company
participating in such employee benefit plans.
8.14 INDEMNIFICATION.
(a) After the Effective Time, UPC shall indemnify, defend and
hold harmless the present and former directors, officers, employees, and agents
of the Magna Companies (each, an "Indemnified Party") (including any person who
becomes a director, officer, employee, or agent prior to the Effective Time)
against all Liabilities (including reasonable attorneys' fees, and expenses,
judgments, fines and amounts paid in settlement) arising out of actions or
omissions occurring at or prior to the Effective Time (including the
transactions contemplated by this Agreement and the Stock Option Agreement) to
the full extent permitted under Delaware Law and by Magna's Charter and By-laws
as in effect on the date hereof, including provisions relating to advances of
expenses incurred in the defense of any Litigation. Without limiting the
foregoing, in any case in which approval by UPC is required to effectuate any
indemnification, UPC shall direct, at the election of the Indemnified Party,
that the determination of any such approval shall be made by independent counsel
mutually agreed upon between UPC and the Indemnified Party.
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(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 8.14, upon learning of any such Liability or
Litigation, shall promptly notify UPC thereof, provided that the failure so to
notify shall not affect the obligations of UPC under this Section 8.14 unless
and to the extent such failure materially increases UPC's liability under this
Section 8.14. In the event of any such Litigation (whether arising before or
after the Effective Time), (i) UPC or the Surviving Corporation shall have the
right to assume the defense thereof and UPC shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if UPC or the Surviving Corporation elects not
to assume such defense or counsel for the Indemnified Parties advises that there
are substantive issues which raise conflicts of interest between UPC or the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and UPC or the Surviving Corporation shall
pay all reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, that UPC shall be
obligated pursuant to this paragraph (b) to pay for only one firm of counsel for
all Indemnified Parties in any jurisdiction, (ii) the Indemnified Parties will
cooperate in the defense of any such Litigation, and (iii) UPC shall not be
liable for any settlement effected without its prior written consent; and
provided further that the Surviving Corporation shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
(c) The Surviving Corporation shall not be liable for any
settlement effected without its prior written consent which shall not be
unreasonably withheld. The Surviving Corporation shall not have any obligation
hereunder to any Indemnified Party when and if a court of competent jurisdiction
shall determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable Law.
(d) If the Surviving Corporation or any of its successors or
assigns shall consolidate with or merge into any other Person and shall not be
the continuing or surviving Person of such consolidation or merger or shall
transfer all or substantially all of its assets to any Person, then and in each
case, proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume the obligations set forth in this Section
8.14.
8.15 UPC MERGER SUBSIDIARY ORGANIZATION. UPC shall organize UPC Merger
Subsidiary under the Laws of the State of Delaware. Prior to the Effective Time,
the outstanding capital stock of UPC Merger Subsidiary shall consist of 1,000
shares of UPC Merger Subsidiary Common Stock, all of which shares shall be owned
by UPC. Prior to the Effective Time, UPC Merger Subsidiary shall not (i) conduct
any business operations whatsoever or (ii) enter into any Contract or agreement
of any kind, acquire any assets or incur any Liability, except as may be
specifically contemplated by this Agreement or the Plan of Merger or as the
Parties may otherwise agree. UPC, as the sole stockholder of UPC Merger
Subsidiary, shall vote prior to the Effective Time the shares of UPC Merger
Subsidiary Common Stock in favor of the Plan of Merger.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.6 of this Agreement:
(A) SHAREHOLDER APPROVAL. The shareholders of Magna shall have
approved this Agreement and the Plan of Merger, and the consummation of the
transactions contemplated hereby and thereby, including the Merger, as and
to the extent required by Law, by the provisions of any governing
instruments, or by the rules of the NASD.
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(B) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities
required for consummation of the Merger shall have been obtained or made
and shall be in full force and effect and all waiting periods required by
Law shall have expired. No Consent obtained from any Regulatory Authority
which is necessary to consummate the transactions contemplated hereby shall
be conditioned or restricted in a manner (other than matters relating to
the raising of additional capital or the disposition of Assets (including,
but not limited to, any divestiture or restrictions on the insurance
activities of any Magna Companies) or deposit Liabilities and associated
branches) which in the reasonable judgment of the Board of Directors of UPC
would so materially adversely impact the financial or economic benefits of
the transactions contemplated by this Agreement that, had such condition or
requirement been known, UPC would not, in its reasonable judgment, have
entered into this Agreement.
(C) CONSENTS AND APPROVALS. Each Party shall have obtained any
and all Consents required for consummation of the Merger (other than those
referred to in Section 9.1(b) of this Agreement) or for the preventing of
any Default under any Contract or Permit of such Party which, if not
obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(D) LEGAL PROCEEDINGS. No court or governmental or regulatory
authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits,
restricts, or makes illegal consummation of the transactions contemplated
by this Agreement and the Plan of Merger.
(E) REGISTRATION STATEMENT. The Registration Statement shall be
effective under the 1933 Act, no stop orders suspending the effectiveness
of the Registration Statement shall have been issued, no action, suit,
proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary
approvals under state securities Laws or the 1933 Act or 1934 Act relating
to the issuance or trading of the shares of UPC Common Stock issuable
pursuant to the Merger shall have been received.
(F) EXCHANGE LISTING. The shares of UPC Common Stock issuable
pursuant to the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
(G) POOLING LETTERS. Each of the Parties shall have received
copies of the letters, dated as of the date of filing of the Registration
Statement with the SEC and as of the Effective Time, addressed to UPC, from
Price Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
(H) TAX MATTERS. Each Party shall have received a written
opinion of counsel from Alston & Bird LLP, in form reasonably satisfactory
to such Parties (the "Tax Opinion"), to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) the exchange in the Merger of Magna Common
Stock for UPC Common Stock will not give rise to gain or loss to the
shareholders of Magna with respect to such exchange (except to the extent
of any cash received), and (iii) none of Magna or UPC will recognize gain
or loss as a consequence of the Merger (except for the inclusion in income
of the amount of the bad-debt reserve maintained by Magnolia Federal and
any other amounts resulting from any required change in accounting methods
and any income and deferred gain recognized pursuant to Treasury
regulations issued under Section 1502 of the Internal Revenue Code). In
rendering such Tax Opinion, such counsel shall be entitled to rely upon
representations of officers of Magna and UPC reasonably satisfactory in
form and substance to such counsel.
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9.2 CONDITIONS TO OBLIGATIONS OF UPC. The obligations of UPC to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by UPC pursuant to Section 11.6(a) of this Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.2(a), the accuracy of the representations and warranties of Magna set
forth in this Agreement shall be assessed as of the date of this Agreement
and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of Magna set forth in Section 5.3 of this Agreement shall be
true and correct (except for inaccuracies which are de minimus in amount).
The representations and warranties of Magna set forth in Sections 5.20,
5.21, and 5.22 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Magna set forth in this Agreement (including the
representations and warranties set forth in Sections 5.3, 5.20, 5.21, and
5.22) such that the aggregate effect of such inaccuracies has, or is
reasonably likely to have, a Material Adverse Effect on Magna; provided
that, for purposes of this sentence only, those representations and
warranties which are qualified by references to "material" or "Material
Adverse Effect" shall be deemed not to include such qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of Magna to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby
prior to the Effective Time shall have been duly performed and complied
with in all material respects.
(C) CERTIFICATES. Magna shall have delivered to UPC (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Section 9.2(a) and 9.2(b) of
this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by Magna's Board of Directors and shareholders
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement and the Plan of
Merger, and the consummation of the transactions contemplated hereby and
thereby, all in such reasonable detail as UPC and its counsel shall
request.
(D) AFFILIATES AGREEMENTS. UPC shall have received from each
affiliate of Magna the affiliates letter referred to in Section 8.12 of
this Agreement, to the extent necessary to assure in the reasonable
judgment of UPC that the transactions contemplated hereby will qualify for
pooling-of-interests accounting treatment.
(E) EMPLOYMENT AGREEMENTS. Robert S. Duncan and Lou Ann Poynter
shall have entered into employment agreements with UPC, substantially in
the form of Appendices A and B, respectively, to the Supplemental Letter.
9.3 CONDITIONS TO OBLIGATIONS OF MAGNA. The obligations of Magna to
perform this Agreement and the Plan of Merger and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Magna pursuant to Section 11.6(b) of this
Agreement:
(A) REPRESENTATIONS AND WARRANTIES. For purposes of this Section
9.3(a), the accuracy of the representations and warranties of UPC set forth
in this Agreement shall be assessed as of the date of this Agreement and as
of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective
Time (provided that representations and warranties which are confined to a
specified date shall speak only as of such date). The representations and
warranties of UPC set forth in Section 6.3 of this Agreement shall be true
and correct (except for inaccuracies which are de minimus in amount). The
representations and warranties of UPC set forth in Section 6.14 of this
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Agreement shall be true and correct in all material respects. There shall
not exist inaccuracies in the representations and warranties of UPC set
forth in this Agreement (including the representations and warranties set
forth in Sections 6.3 and 6.14) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on UPC; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to
"material" or "Material Adverse Effect" shall be deemed not to include such
qualifications.
(B) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all of the
agreements and covenants of UPC to be performed and complied with pursuant
to this Agreement and the other agreements contemplated hereby prior to the
Effective Time shall have been duly performed and complied with in all
material respects.
(C) CERTIFICATES. UPC shall have delivered to Magna (i) a
certificate, dated as of the Effective Time and signed on its behalf by its
chief executive officer and its chief financial officer, to the effect that
the conditions of its obligations set forth in Section 9.3(a) and 9.3(b) of
this Agreement have been satisfied, and (ii) certified copies of
resolutions duly adopted by UPC's Board of Directors evidencing the taking
of all corporate action necessary to authorize the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, all in such reasonable detail as Magna and its counsel
shall request.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Magna, this Agreement and the Plan of Merger may be terminated
and the Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of UPC and the
Board of Directors of Magna; or
(b) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Magna and Section 9.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement
which cannot be or has not been cured within 30 days after the giving of
written notice to the breaching Party of such inaccuracy and which
inaccuracy would provide the terminating Party the ability to refuse to
consummate the Merger under the applicable standard set forth in Section
9.2(a) of this Agreement in the case of Magna and Section 9.3(a) of this
Agreement in the case of UPC; or
(c) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Magna and Section 9.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot
be or has not been cured within 30 days after the giving of written notice
to the breaching Party of such breach; or
(d) By the Board of Directors of either Party in the event (i)
any Consent of any Regulatory Authority required for consummation of the
Merger and the other transactions contemplated hereby shall have been
denied by final nonappealable action of such authority or if any action
taken by such authority is not appealed within the time limit for appeal,
or (ii) the shareholders of Magna fail to vote their approval of this
Agreement and the transactions contemplated hereby as required by the DGCL
and the rules
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of the NASD at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the event that
the Merger shall not have been consummated by March 31, 1998, if the
failure to consummate the transactions contemplated hereby on or before
such date is not caused by any willful breach of this Agreement by the
Party electing to terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided that the
terminating Party is not then in breach of any representation or warranty
contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Magna and Section 9.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger cannot
be satisfied or fulfilled by the date specified in Section 10.1(e) of this
Agreement; or
(g) By the Board of Directors of Magna, if it determines by a
vote of a majority of the members of its entire Board, at any time during
the ten-day period commencing two days after the Determination Date, if
both of the following conditions are satisfied:
(1) the Average Closing Price shall be less than the
product of (i) 0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average
Closing Price by the Starting Price (such number being referred to
herein as the "UPC Ratio") shall be less than (ii) the quotient
obtained by dividing the Index Price on the Determination Date by the
Index Price on the Starting Date and subtracting 0.15 from the
quotient in this clause (2)(ii) (such number being referred to herein
as the "Index Ratio");
subject, however, to the following three sentences. If Magna refuses to
consummate the Merger pursuant to this Section 10.1(g), it shall give
prompt written notice thereof to UPC; provided, that such notice of
election to terminate may be withdrawn at any time within the
aforementioned ten-day period. During the five-day period commencing with
its receipt of such notice, UPC shall have the option to elect to increase
the Exchange Ratio to equal the lesser of (i) the quotient obtained by
dividing (1) the product of 0.80, the Starting Price, and the Exchange
Ratio (as then in effect) by (2) the Average Closing Price, and (ii) the
quotient obtained by dividing (1) the product of the Index Ratio and the
Exchange Ratio (as then in effect) by (2) the UPC Ratio. If UPC makes an
election contemplated by the preceding sentence, within such five-day
period, it shall give prompt written notice to Magna of such election and
the revised Exchange Ratio, whereupon no termination shall have occurred
pursuant to this Section 10.1(g) and this Agreement shall remain in effect
in accordance with its terms (except as the Exchange Ratio shall have been
so modified), and any references in this Agreement to "Exchange Ratio"
shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 10.1(g).
For purposes of this Section 10.1(g), the following terms shall have
the meanings indicated:
"Average Closing Price" shall mean the average of the daily last sales
prices of UPC Common Stock as reported on the NYSE (as reported by The Wall
Street Journal or, if not reported thereby, another authoritative source as
chosen by UPC) for the 20 consecutive full trading days in which such
shares are traded on the NYSE ending at the close of trading on the
Determination Date.
"Determination Date" shall mean the later of the date (i) of the
Shareholders' Meeting and (ii) on which the last Consent of the Board of
Governors of the Federal Reserve System or the Office of Thrift Supervision
shall be received.
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"Index Group" shall mean the 17 bank holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which
there shall not have been, since the Starting Date and before the
Determination Date, any public announcement of a proposal for such company
to be acquired or for such company to acquire another company or companies
in transactions with a value exceeding 25% of the acquiror's market
capitalization. In the event that any such company or companies are removed
from the Index Group, the weights (which shall be determined based upon the
number of outstanding shares of common stock) shall be redistributed
proportionately for purposes of determining the Index Price. The 17 bank
holding companies and the weights attributed to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
--------------------------------------------- ---------
<S> <C>
AmSouth Bancorporation 4.87%
Central Fidelity Banks, Inc. 5.11
Compass Bancshares, Inc. 3.63
Deposit Guaranty Corporation 3.56
Fifth Third Bancorp 9.24
First American Corporation 2.60
First Commerce Corporation 3.39
First Tennessee National Corporation 5.62
First Virginia Banks, Inc. 2.83
Hibernia Corporation 11.25
Huntington Bancshares, Inc. 12.35
Mercantile Bancorporation, Inc. 5.30
National Commerce Bancorp 2.14
Regions Financial Corporation 5.80
Signet Banking Corporation 5.25
Southern National Corporation 9.55
Star Banc Corporation 7.50
------
Total 100.00%
======
</TABLE>
"Index Price" on a given date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Starting Date" shall mean the fourth full trading day after the
announcement by press release of the Merger.
"Starting Price" shall mean the closing price per share of UPC Common
Stock as reported on the NYSE (as reported by The Wall Street Journal or,
if not reported thereby, another authoritative source as chosen by UPC) on
the Starting Date.
If any company belonging to the Index Group or UPC declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares, or similar transaction between the date of
this Agreement and the Determination Date, the prices for the common stock
of such company or UPC shall be appropriately adjusted for the purposes of
applying this Section 10.1(g).
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement, the Plan of Merger, and the Supplemental Letter shall become void and
have no effect, except that (i) the provisions of this Section 10.2 and Article
11 and Section 8.6(b) of this Agreement shall survive any such termination and
abandonment, and (ii) a termination pursuant to Sections 10.1(b), 10.1(c), or
10.1(f) of this Agreement shall not relieve the breaching Party from
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Liability for an uncured willful breach of a representation, warranty, covenant,
or agreement giving rise to such termination. The Stock Option Agreement shall
be governed by its own terms as to its termination.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4 and 11 and Sections 8.12, 8.13 and 8.14 of this Agreement and
the provisions of the Supplemental Letter.
ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized terms
set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" with respect to a Party shall mean any tender
offer or exchange offer or any proposal for a merger, acquisition of all of
the stock or assets of, or other business combination involving such Party
or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any of
its Subsidiaries.
"AFFILIATE" of a Person shall mean: (i) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by,
or under common control with such Person; (ii) any officer, director,
partner, employer, or direct or indirect beneficial owner of any 10% or
greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.
"AGREEMENT" shall mean this Agreement and Plan of Reorganization,
including the Stock Option Agreement and the Exhibits delivered pursuant
hereto and incorporated herein by reference.
"ASSETS" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not
carried on the books and records of such Person, and whether or not owned in
the name of such Person or any Affiliate of such Person and wherever
located.
"BHC ACT" shall mean the federal Bank Holding Company Act of 1956, as
amended.
"CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by Magna and filed with the Secretary of State of the State of
Delaware relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CONSENT" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"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.
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"DEFAULT" shall mean (i) any breach or violation of or default under any
Contract, Order, or Permit, (ii) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke, change
the current terms of, or renegotiate, or to accelerate, increase, or impose
any Liability under, any Contract, Order or Permit.
"DGCL" shall mean the Delaware General Corporation Law.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to pollution or
protection of human health or the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) and which
are administered, interpreted or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the
environment, including the Comprehensive Environmental Response Compensation
and Liability Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the
Resource Conservation and Recovery Act, as amended, 42 U.S.C. 6901 et seq.
("RCRA"), and other Laws relating to emissions, discharges, releases, or
threatened releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"EXHIBITS" 1 through 3, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred
to in this Agreement and any other related instrument or document without
being attached hereto.
"GAAP" shall mean generally accepted accounting principles, consistently
applied during the periods involved.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous substance, hazardous
material, hazardous waste, regulated substance, or toxic substance (as those
terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil
(and specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and
any polychlorinated biphenyls).
"HOLA" shall mean the Home Owners' Loan Act of 1933, as amended.
"HSR ACT" shall mean Section 7A of the Clayton Act, as added by Title II
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and
the rules and regulations promulgated thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights, patents, trademarks,
service marks, service names, trade names, applications therefor, technology
rights and licenses, computer software (including any source or object codes
therefor or documentation relating thereto), trade secrets, franchises,
know-how, inventions, and other intellectual property rights.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person (including references to
such Person being aware of a particular matter) shall mean those facts that
are known by the Chairman, President, Chief Financial Officer, Chief
Accounting Officer, Chief Credit Officer, or General Counsel of such Person.
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"LAW" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its
Assets, Liabilities or business, including those promulgated, interpreted,
or enforced by any Regulatory Authority.
"LIABILITY" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including
costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of
notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"LIEN" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention, or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property
Taxes not yet due and payable, and (ii) for depository institution
Subsidiaries of a Party, pledges to secure deposits and other Liens incurred
in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration, cause of action, claim,
complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the
transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.
"MAGNA COMMON STOCK" shall mean the $0.01 par value common stock of
Magna.
"MAGNA COMPANIES" shall mean, collectively, Magna and all Magna
Subsidiaries.
"MAGNA DISCLOSURE MEMORANDUM" shall mean the written information
entitled "Magna Bancorp, Inc. Disclosure Memorandum" delivered prior to the
date of this Agreement to UPC describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall not be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"MAGNA FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Magna as of June
30, 1996, 1995 and 1994, and the related statements of earnings, changes in
shareholders' equity, and cash flows (including related notes and schedules,
if any) for each of the three years ended December 31, 1996, 1995 and 1994,
as filed by Magna in SEC Documents, and (ii) the consolidated balance sheets
of Magna (including related notes and schedules, if any) and related
statements of earnings, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to June 30, 1996.
"MAGNA STOCK PLANS" shall mean the existing stock option and other
stock-based compensation plans of Magna designated as follows: (i) Magna
Bancorp, Inc. 1990 Stock Option and Incentive Plan; (ii) Magna Bancorp, Inc.
Management Retention and Recognition Plan and (iii) Magna Bancorp, Inc. /
Magnolia Federal Bank For Savings Stock In lieu of Cash Compensation Plan
For Directors.
"MAGNA SUBSIDIARIES" shall mean the Subsidiaries of Magna, which shall
include the Magna Subsidiaries described in Section 5.4 of I the Magna
Disclosure Memorandum and any corporation, bank, savings association, or
other organization acquired as a Subsidiary of Magna in the future and owned
by Magna at the Effective Time.
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"MAGNOLIA FEDERAL" shall mean Magnolia Federal Bank for Savings, a
federal stock savings bank and a Magna Subsidiary.
"MATERIAL" for purposes of this Agreement shall be determined in light
of the facts and circumstances of the matter in question; provided that any
specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change, or
occurrence which, individually or together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken
as a whole, or (ii) the ability of such Party to perform its obligations
under this Agreement or to consummate the Merger or the other transactions
contemplated by this Agreement, provided that "Material Adverse Effect" and
"material adverse impact" shall not be deemed to include the impact of (a)
changes in banking and similar Laws of general applicability or
interpretations thereof by courts or governmental authorities, (b) changes
in GAAP or regulatory accounting principles generally applicable to banks,
savings associations, and their holding companies, (c) actions and omissions
of a Party (or any of its Subsidiaries) taken with the prior informed
written consent of the other Party in contemplation of the transaction
contemplated hereby, and (d) the direct effects of compliance with this
Agreement (including the expense associated with the vesting of benefits
under the various employee benefit plans of Magna as a result of the Merger
constituting a change of control) on the operating performance of the
Parties, including expenses incurred by the Parties in consummating the
transactions contemplated by the Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NASDAQ NATIONAL MARKET" shall mean the National Market System of the
National Association of Securities Dealers Automated Quotations System.
"NYSE" shall mean the New York Stock Exchange, Inc.
"1933 ACT" shall mean the Securities Act of 1933, as amended.
"1934 ACT" shall mean the Securities Exchange Act of 1934, as amended.
"OPERATING PROPERTY" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or Subsidiary
holds a security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.
"ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"PARTICIPATION FACILITY" shall mean any facility or property in which
the Party in question or any of its Subsidiaries participates in the
management and, where required by the context, said term means the owner or
operator of such facility or property, but only with respect to such
facility or property.
"PARTY" shall mean either Magna or UPC, and "PARTIES" shall mean both
Magna and UPC.
"PERMIT" shall mean any federal, state, local, and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit, or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, Assets
or business.
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"PLAN OF MERGER" shall mean the plan of merger providing for the Merger,
in substantially the form of Exhibit 1.
"PERSON" shall mean a natural person or any legal, commercial, or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting
in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement used by Magna to
solicit the approval of its shareholders of the transactions contemplated by
this Agreement and the Plan of Merger, which shall include the prospectus of
UPC relating to the issuance of the UPC Common Stock to holders of Magna
Common Stock.
"REGISTRATION STATEMENT" shall mean the Registration Statement on Form
S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by UPC
under the 1933 Act with respect to the shares of UPC Common Stock to be
issued to the shareholders of Magna in connection with the transactions
contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of Thrift Supervision
(including its predecessor, the Federal Home Loan Bank Board), the Office of
the Comptroller of the Currency, the Federal Deposit Insurance Corporation,
all state regulatory agencies having jurisdiction over the Parties and their
respective Subsidiaries, the NYSE, the NASD, and the SEC.
"REPRESENTATIVE" shall mean any investment banker, financial advisor,
attorney, accountant, consultant, or other representative of a Person.
"RIGHTS" shall mean all arrangements, calls, commitments, Contracts,
options, rights to subscribe to, scrip, understandings, warrants, or other
binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock
of a Person or by which a Person is or may be bound to issue additional
shares of its capital stock or other Rights.
"SEC DOCUMENTS" shall mean all forms, proxy statements, registration
statements, reports, schedules, and other documents filed, or required to be
filed, by a Party or any of its Subsidiaries with any Regulatory Authority
pursuant to the Securities Laws.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the Investment
Company Act of 1940, as amended, the Investment Advisors Act of 1940, as
amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"SHAREHOLDERS' MEETING" shall mean the meeting of the shareholders of
Magna to be held pursuant to Section 8.1 of this Agreement, including any
adjournment or postponements thereof.
"STOCK OPTION AGREEMENT" shall mean the Stock Option Agreement of even
date herewith issued to UPC by Magna, substantially in the form of Exhibit
1.
"SUBSIDIARIES" shall mean all those corporations, banks, associations,
or other entities of which the entity in question owns or controls 10% or
more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 10% or more of the
outstanding equity securities is owned directly or indirectly by its parent;
provided, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
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"SUPPLEMENTAL LETTER" shall mean the supplemental letter of even date
herewith relating to certain understandings and agreements in addition to
those included in this Agreement, substantially in the form of Exhibit 4.
"SURVIVING CORPORATION" shall mean Magna as the surviving corporation
resulting from the Merger.
"TAX" or "TAXES" shall mean any federal, state, county, local, or
foreign income, profits, franchise, gross receipts, payroll, sales,
employment, use, property, withholding, excise, occupancy, and other taxes,
assessments, charges, fares, or impositions, including interest, penalties,
and additions imposed thereon or with respect thereto.
"UPC CAPITAL STOCK" shall mean, collectively, the UPC Common Stock, the
UPC Preferred Stock and any other class or series of capital stock of UPC.
"UPC COMMON STOCK" shall mean the $5.00 par value common stock of UPC.
"UPC COMPANIES" shall mean, collectively, UPC and all UPC Subsidiaries.
"UPC DISCLOSURE MEMORANDUM" shall mean the written information entitled
"Union Planters Corporation Disclosure Memorandum" delivered prior to the
date of this Agreement to Magna describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which such
disclosure is being made. Information disclosed with respect to one Section
shall be deemed to be disclosed for purposes of any other Section not
specifically referenced with respect thereto.
"UPC FINANCIAL STATEMENTS" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of UPC as of December
31, 1996, 1995 and 1994, and the related statements of earnings, changes in
shareholders' equity, and cash flows (including related notes and schedules,
if any) for each of the three years ended December 31, 1996, 1995 and 1994,
as filed by UPC in SEC Documents, and (ii) the consolidated balance sheets
of UPC (including related notes and schedules, if any) and related
statements of earnings, changes in shareholders' equity, and cash flows
(including related notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to December 31, 1996.
"UPC MERGER SUBSIDIARY" shall mean the wholly owned subsidiary of UPC to
be organized to effect the Merger under the Laws of the State of Delaware
and with the name of UPC Merger Subsidiary, Inc.
"UPC MERGER SUBSIDIARY COMMON STOCK" shall mean the $1.00 par value
common stock of UPC Merger Subsidiary.
"UPC PREFERRED STOCK" shall mean the no par value preferred stock of UPC
and shall include the (i) Series A Preferred Stock and (ii) Series E, 8%
Cumulative, Convertible Preferred Stock, of UPC ("UPC Series E Preferred
Stock").
"UPC RIGHTS" shall mean the preferred stock purchase rights issued
pursuant to the UPC Rights Agreement.
"UPC RIGHTS AGREEMENT" shall mean that certain Rights Agreement, dated
January 19, 1989, between UPC and UPNB, as Rights Agent.
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"UPC SUBSIDIARIES" shall mean the Subsidiaries of UPC and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of UPC in the future and owned by UPC at the Effective Time.
(b) The terms set forth below shall have the meanings ascribed
thereto in the referenced sections:
<TABLE>
<S> <C>
Allowance Section 5.9
Average Closing Price Section 10.1(g)
Closing Section 1.2
Determination Date Section 10.1(g)
Effective Time Section 1.3
ERISA Affiliate Section 5.15(c)
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Indemnified Party Section 8.14(a)
Index Group Section 10.1(g)
Index Price Section 10.1(g)
Index Ratio Section 10.1(g)
Magna Benefit Plans Section 5.15(a)
Magna Contracts Section 5.16
Magna ERISA Plan Section 5.15(a)
Magna Options Section 3.5(a)
Magna Pension Plan Section 5.15(a)
Magna SEC Reports Section 5.5(a)
Merger Section 1.1
Starting Date Section 10.1(g)
Starting Price Section 10.1(g)
Takeover Laws Section 5.21
Tax Opinion Section 9.1(h)
UPC Ratio Section 10.1(g)
UPC SEC Reports Section 6.4(a)
</TABLE>
(c) Any singular term in this Agreement shall be deemed to
include the plural, and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2, each of
the Parties shall bear and pay all direct costs and expenses incurred by it or
on its behalf in connection with the transactions contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that UPC shall bear and pay the filing fees
payable in connection with the Registration Statement and the Proxy Statement
and the printing costs incurred in connection with the printing of the
Registration Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall constitute or
shall be deemed to constitute liquidated damages for the willful breach by a
Party of the terms of this Agreement or otherwise limit the rights of the
nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Montgomery Securities as to Magna
and except for The Robinson-Humphrey Company, Inc. as to UPC, each of the
Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability
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for any financial advisory fees, investment bankers' fees, brokerage fees,
commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby. In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by Magna or UPC, each of Magna and UPC, as the
case may be, agrees to indemnify and hold the other Party harmless of and from
any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement (including the other documents and instruments referred to herein
or executed in connection with this Agreement) constitutes the entire agreement
between the Parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereto,
written or oral. Nothing in this Agreement expressed or implied, is intended to
confer upon any Person, other than the Parties or their respective successors,
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, other than as provided in Sections 8.12 and 8.14 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
shareholder approval of this Agreement and the Plan of Merger has been obtained;
provided, that after any such approval by the holders of Magna Common Stock,
there shall be made no amendment that modifies in any material respect the
consideration to be received by the holders of Magna Common Stock without the
further approval of such shareholders.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, UPC, acting through its
Board of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by Magna, to waive or extend the time for the compliance or
fulfillment by Magna of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of UPC under
this Agreement, except any condition which, if not satisfied, would result in
the violation of any Law. No such waiver shall be effective unless in writing
signed by a duly authorized officer of UPC.
(b) Prior to or at the Effective Time, Magna, acting through its
Board of Directors, chief executive officer, or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by UPC, to waive or extend the time for the compliance or fulfillment
by UPC of any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to the obligations of Magna under this
Agreement, except any condition which, if not satisfied, would result in the
violation of any Law. No such waiver shall be effective unless in writing signed
by a duly authorized officer of Magna.
(c) The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required
or permitted hereunder shall be in writing and sufficient if delivered by hand,
by facsimile transmission, by registered or certified mail, postage pre-paid, or
by courier or overnight carrier, to the persons at the addresses set forth below
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(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Magna: Magna Bancorp, Inc.
100 West Front Street
Hattiesburg, Mississippi 39403-1858
Telecopy Number: (601) 583-7100
Attention: Robert S. Duncan
Chairman of the Board and
Chief Executive Officer
Copy to Counsel: Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20005
Telecopy Number: (202) 682-0354
Attention: Barry P. Taff
UPC: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2877
Attention: Jackson W. Moore
President
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attention: E. James House, Jr.
Manager, Legal Division
Alston & Bird LLP
601 Pennsylvania Avenue
North Building, Suite 250
Washington, D.C. 20004
Telecopy Number: (202) 508-3333
Attention: Frank M. Conner III
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Tennessee, without regard to any
applicable conflicts of Laws, except to the extent the Laws of the State of
Delaware apply.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
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11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any party, whether under
any rule of construction or otherwise. No party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all parties
hereto.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.
ATTEST: MAGNA BANCORP, INC.
By:/s/ H. A. Moore, III By:/s/ Robert S. Duncan
----------------------------- -------------------------------
H. A. Moore, III Robert S. Duncan
Secretary Chairman of the Board and
Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By:/s/ E.J. House, Jr. By:/s/ Benjamin W. Rawlins, Jr.
----------------------------- -------------------------------
E.J. House, Jr. Benjamin W. Rawlins, Jr.
Secretary Chairman and Chief Executive Officer
[CORPORATE SEAL]
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APPENDIX B
PLAN OF MERGER
OF
UPC MERGER SUBSIDIARY, INC.
INTO AND WITH
MAGNA BANCORP, INC.
Pursuant to this Plan of Merger ("Plan of Merger"), UPC MERGER
SUBSIDIARY, INC. ("Merger Sub"), a corporation organized and existing under the
laws of the State of Delaware and a wholly owned subsidiary of UNION PLANTERS
CORPORATION, a corporation organized and existing under the laws of the State of
Tennessee ("UPC"), shall be merged into and with MAGNA BANCORP, INC., a
corporation organized and existing under the laws of the State of Delaware
("Magna").
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
1.1 "CERTIFICATE OF MERGER" shall mean the Certificate of
Merger to be executed by Merger Sub and Magna and filed with the Secretary of
State of the State of Delaware relating to the Merger as contemplated by Section
2.1 of this Plan of Merger.
1.2 "DGCL" shall mean the Delaware General Corporation Law.
1.3 "EFFECTIVE TIME" shall mean the date and time on which the
Merger becomes effective pursuant to the Laws of the State of Delaware as
defined in Section 2.2 of this Plan of Merger.
1.4 "EXCHANGE AGENT" shall mean the exchange agent selected by
UPC.
1.5 "INTERNAL REVENUE CODE" shall mean the Internal Revenue
Code of 1986, as amended, and the rules and regulations promulgated thereunder.
1.6 "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 federal or state regulatory agencies having jurisdiction over
a person or its Subsidiaries
1.7 "Magna COMMON STOCK" shall mean the $0.01 par value common
stock of Magna.
1.8 "Magna COMPANIES" shall mean, collectively, Magna and all
Magna Subsidiaries.
1.9 "MAGNA STOCK PLANS" shall have the meaning set forth in
the Merger Agreement.
1.10 "MERGER" shall mean the merger of Merger Sub into and
with Magna as provided in Section 2.1 of this Plan of Merger.
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1.11 "MERGER AGREEMENT" shall mean the Agreement and Plan of
Reorganization, dated as of May 8, 1997, by and between UPC and Magna.
1.12 "MERGER SUB COMMON STOCK" shall mean the $1.00 par value
common stock of Merger Sub.
1.13 "SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent; provided, there
shall not be included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a fiduciary
capacity.
1.14 "SURVIVING CORPORATION" shall refer to Magna as the
surviving corporation resulting from the Merger.
1.15 "TBCA" shall mean the Tennessee Business Corporation Act,
as in effect at the Effective Time.
1.16 "UPC COMMON STOCK" shall mean the $5.00 par value common
stock of UPC.
1.17 "UPC COMPANIES" shall mean, collectively, UPC and all UPC
Subsidiaries.
1.18 "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.
1.19 "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.
1.20 "UPC RIGHTS" shall mean the preferred stock purchase
rights issued pursuant to the UPC Rights Agreement.
1.21 "UPC RIGHTS AGREEMENT" shall mean that certain Rights
Agreement, dated January 19, 1989, between UPC and UPNB, as Rights Agent.
ARTICLE 2
TERMS OF MERGER
2.1 MERGER. Subject to the terms and conditions set forth in
this Plan of Merger, at the Effective Time, Merger Sub shall be merged into and
with Magna in accordance with the provisions of Section 251 of the DGCL and with
the effect provided in Section 259 of the DGCL. Magna shall be the Surviving
Corporation of the Merger and shall continue to be governed by the Laws of the
State of Delaware.
2.2 EFFECTIVE TIME. The Merger shall become effective on the
date and at the time the Certificate of Merger reflecting the Merger shall
become effective with the Secretary of State of the State of Delaware.
2.3 CHARTER. The Charter of Magna, as in effect immediately
prior to the Effective Time, shall remain in full force and effect following the
Effective Time as the Charter of the Surviving Corporation until otherwise
amended or repealed as provided by Law or by such Charter.
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2.4 BYLAWS. The Bylaws of Magna, as in effect immediately
prior to the Effective Time, shall continue in full force and effect as the
Bylaws of the Surviving Corporation until otherwise amended or repealed as
provided by Law or by such Bylaws.
2.5 DIRECTORS AND OFFICERS. The directors of Magna in office
immediately prior to the Effective Time, together with such additional persons
as may thereafter be elected, shall serve as the directors of the Surviving
Corporation from and after the Effective Time in accordance with the By-laws of
the Surviving Corporation. The officers of Magna in office immediately prior to
the Effective Time, together with such additional persons as may thereafter be
elected, shall serve as the officers of the Surviving Corporation from and after
the Effective Time in accordance with the By-laws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this
Article 3, at the Effective Time, by virtue of the Merger and without any action
on the part of UPC, Merger Sub, Magna, or the shareholders of either of the
foregoing, the shares of the constituent corporations shall be converted as
follows:
(a) Each share of UPC Capital Stock, including any
associated UPC Rights, issued and outstanding immediately prior
to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of Merger Sub Common Stock issued and
outstanding at the Effective Time shall cease to be outstanding
and shall be converted into one share of Magna Common Stock.
(c) Each share of Magna Common Stock (excluding shares
held by any Magna Company or any UPC Company, in each case other
than in a fiduciary capacity or as a result of debts previously
contracted) issued and outstanding at the Effective Time shall
cease to be outstanding and shall be converted into and exchanged
for the right to receive .5165 of a share of UPC Common Stock (as
subject to possible adjustment as set forth in Section 10.1(g) of
the Merger Agreement, the "Exchange Ratio"). Pursuant to the UPC
Rights Agreement, each share of UPC Common Stock issued in
connection with the Merger upon conversion of Magna Common Stock
shall be accompanied by a UPC Right.
3.2 ANTI-DILUTION PROVISIONS. In the event UPC changes the
number of shares of UPC Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, or similar
recapitalization with respect to such stock and the record date therefor (in the
case of a stock dividend) or the effective date thereof (in the case of a stock
split or similar recapitalization for which a record date is not established)
shall be prior to the Effective Time, the Exchange Ratio shall be
proportionately adjusted.
3.3 SHARES HELD BY MAGNA OR UPC. Each of the shares of Magna
Common Stock held by any Magna Company or by any UPC Company, in each case other
than in a fiduciary capacity or as a result of debts previously contracted,
shall be canceled and retired at the Effective Time and no consideration shall
be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, each holder of shares of Magna Common Stock exchanged pursuant
to the Merger who would otherwise have been entitled to receive a fraction of a
share of UPC Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the market value of one share of UPC Common Stock at the Effective Time. The
market value of one share of UPC Common Stock at the Effective Time shall be the
closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not
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reported thereby, any other authoritative source selected by UPC) on the last
trading day preceding the Effective Time. No such holder will be entitled to
dividends, voting rights, or any other rights as a shareholder in respect of any
fractional shares.
3.5 CONVERSION OF STOCK OPTIONS.
(a) At the Effective Time, each option to purchase or
other right with respect to shares of Magna Common Stock pursuant to stock
options, stock appreciation rights or other rights, including stock awards
("Magna Options") granted by Magna under the Magna Stock Plans, which are
outstanding at the Effective Time, whether or not exercisable, shall be
converted into and become rights with respect to UPC Common Stock, and UPC shall
assume each Magna Option, in accordance with the terms of the Magna Stock Plan
and stock option or other agreement by which it is evidenced, except that from
and after the Effective Time, (i) UPC and its Salary and Benefits Committee
shall be substituted for Magna and the Committee of Magna's Board of Directors
(including, if applicable, the entire Board of Directors of Magna) administering
such Magna Stock Plan, (ii) each Magna Option assumed by UPC may be exercised
solely for shares of UPC Common Stock (or cash in the case of stock appreciation
rights), (iii) the number of shares of UPC Common Stock subject to such Magna
Option shall be equal to the number of shares of Magna Common Stock subject to
such Magna Option immediately prior to the Effective Time multiplied by the
Exchange Ratio and rounding down to the nearest whole share, and (iv) the per
share exercise price under each such Magna Option shall be adjusted by dividing
the per share exercise price under each such Magna Option by the Exchange Ratio
and rounding up to the nearest cent. Notwithstanding the clauses (iii) and (iv)
of the first sentence of this Section 3.5, each Magna Option which is an
"incentive stock option" shall be adjusted as required by Section 424 of the
Internal Revenue Code, and the regulations promulgated thereunder, so as not to
constitute a modification, extension or renewal of the option, within the
meaning of Section 424(h) of the Internal Revenue Code. UPC and Magna agree to
take all necessary steps to effectuate the foregoing provisions of this Section
3.5.
(b) As soon as practicable after the Effective Time,
UPC shall deliver to the participants in each Magna Stock Plan an appropriate
notice setting forth such participant's rights pursuant thereto and the grants
subject to such Magna Stock Plan shall continue in effect on the same terms and
conditions (subject to the adjustments required by Section 3.5(a) after giving
effect to the Merger), and UPC shall comply with the terms of each Magna Stock
Plan to ensure, to the extent required by, and subject to the provisions of,
such Magna Stock Plan, that Magna Options which qualified as incentive stock
options prior to the Effective Time continue to qualify as incentive stock
options after the Effective Time. Within 30 days after the Effective Time, UPC
shall file a registration statement on Form S-3 or Form S-8, as the case may be
(or any successor or other appropriate forms), with respect to the shares of UPC
Common Stock subject to such options and shall use its reasonable efforts to
maintain the effectiveness of such registration statements (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding.
(c) In approving this Plan of Merger, Magna and the
Committee appointed by the Board of Directors of Magna in accordance with
paragraph 3 of the Magna Financial Corporation 1990 Stock Option and Incentive
Plan agree not to permit the holders of options outstanding under such plan to
receive cash upon the Merger in an amount equal to the excess of the "Market
Value" of the Magna Common Stock subject to such option over the "Exercise
Price" of the shares subject to such option in accordance with Section 11 of the
Magna Financial Corporation 1990 Stock Option and Incentive Plan.
ARTICLE 4
DELIVERY OF CONSIDERATION
4.1 EXCHANGE PROCEDURES. Promptly after the Effective
Time, UPC and Magna shall cause the Exchange Agent to mail to the former
shareholders of Magna appropriate transmittal materials (which shall
specify that delivery shall be effected, and risk of loss and title to the
certificates theretofore representing shares of Magna Common Stock shall pass,
only upon proper delivery of such certificates to the Exchange Agent). After
the
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Effective Time, each holder of shares of Magna Common Stock (other than shares
to be canceled pursuant to Section 3.3 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 promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Plan of Merger, together with all undelivered dividends
or distributions in respect of such shares (without interest thereon) pursuant
to Section 4.2 of this Plan of Merger. To the extent required by Section 3.4 of
this Plan of Merger, each holder of shares of Magna Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of UPC Common Stock to which such holder may be otherwise
entitled (without interest). UPC shall not be obligated to deliver the
consideration to which any former holder of Magna Common Stock is entitled as a
result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of Magna Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of Magna Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Plan of Merger notwithstanding, neither the
Surviving Corporation nor the Exchange Agent shall be liable to a holder of
Magna Common Stock for any amounts paid or property delivered in good faith to a
public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER MAGNA SHAREHOLDERS. At the Effective
Time, the stock transfer books of Magna shall be closed as to holders of Magna
Common Stock immediately prior to the Effective Time and no transfer of Magna
Common Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Plan of Merger, each certificate theretofore representing shares of Magna
Common Stock (other than shares to be canceled pursuant to Section 3.3 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 Sections 3.1
and 3.4 of this Plan of Merger in exchange therefor, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time which have been
declared or made by Magna in respect of such shares of Magna Common Stock in
accordance with the terms of this Plan of Merger and which remain unpaid at the
Effective Time. To the extent permitted by Law, former shareholders of record of
Magna shall be entitled to vote after the Effective Time at any meeting of UPC
shareholders the number of whole shares of UPC Common Stock into which their
respective shares of Magna Common Stock are converted, regardless of whether
such holders have exchanged their certificates representing Magna Common Stock
for certificates representing UPC Common Stock in accordance with the provisions
of this Plan of Merger. 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 issuable pursuant to this Plan of Merger, but beginning 30 days
after the Effective Time no dividend or other distribution payable to the
holders of record of UPC Common Stock as of any time subsequent to the Effective
Time shall be delivered to the holder of any certificate representing shares of
Magna Common Stock issued and outstanding at the Effective Time until such
holder surrenders such certificate for exchange as provided in Section 4.1 of
this Plan of Merger. However, upon surrender of such Magna Common Stock
certificate, both the UPC Common Stock certificate (together with all such
undelivered dividends or other distributions without interest) and any
undelivered dividends and cash payments to be paid for fractional share
interests (without interest) shall be delivered and paid with respect to each
share represented by such certificate.
ARTICLE 5
MISCELLANEOUS
5.1 CONDITIONS PRECEDENT. Consummation of the Merger by Merger
Sub shall be conditioned on the satisfaction of, or waiver by UPC of the
conditions precedent to the Merger set forth in Sections 9.1 and 9.2 of the
Merger Agreement. Consummation of the Merger by Magna shall be conditioned on
the satisfaction of, or waiver by Magna of, of the conditions precedent to the
Merger set forth in Sections 9.1 and 9.3 of the Merger Agreement.
5.2 TERMINATION. This Plan of Merger may be terminated at any
time prior to the Effective Time by the parties hereto as provided in Article 10
of the Merger Agreement.
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APPENDIX C
[MONTGOMERY SECURITIES LETTERHEAD]
May 2, 1997
Board of Directors
Magna Bancorp, Inc.
100 West Front Street
Hattiesburg, MS 39401
Gentlemen:
We understand that Magna Bancorp, Inc. a Delaware corporation
("Magna"), and Union Planters Corporation, a Tennessee corporation ("UPC"),
propose to enter into an Agreement and Plan of Reorganization to be dated on or
about May 8, 1997 (the "Merger Agreement"), pursuant to which a wholly-owned
subsidiary of UPC will be merged with and into Magna, which will be the
surviving entity and which will become a wholly-owned subsidiary of UPC (the
"Merger"). Pursuant to the Merger, as more fully described in the draft of the
Merger Agreement provided to us by management of Magna and as further described
to us by management of Magna, we understand that each outstanding share of the
common stock, $0.01 par value per share ("Magna Common Stock"), of Magna (other
than certain shares held by Magna, UPC and their respective affiliates) will be
converted into and exchangeable for 0.5165 of a share of the common stock, $5.00
par value per share ("UPC Common Stock"), of UPC, subject to possible adjustment
in certain circumstances should the Average Closing Price (as defined in the
Merger Agreement) of UPC Common Stock fall below specified levels (the
"Consideration"). The terms and conditions of the Merger are set forth in more
detail in the Merger Agreement.
You have asked for our opinion as investment bankers as to whether the
Consideration to be received by the stockholders of Magna pursuant to the Merger
is fair to such stockholders from a financial point of view, as of the date
hereof.
In connection with our opinion, we have, among other things: (i)
reviewed certain publicly available financial and other data with respect to
Magna and UPC, including the consolidated financial statements for recent years
and interim periods to March 31, 1997 and certain other relevant financial and
operating data relating to Magna and UPC made available to us from published
sources and, in the case of Magna, from the internal records of Magna; (ii)
reviewed the April 30, 1997 draft of the Merger Agreement; (iii) reviewed
certain publicly available information concerning the trading of, and the
trading market for, Magna Common Stock and UPC Common Stock; (iv) compared Magna
and UPC from a financial point of view with certain other companies in the
thrift and banking industries which we deemed to be relevant; (v) considered the
financial terms, to the extent publicly available, of selected recent business
combinations of companies in the thrift industry which we deemed to be
comparable, in whole or in part, to the Merger; (vi) reviewed and discussed with
representatives of the management of Magna certain information of a business and
financial nature regarding Magna, furnished to us by them, including financial
forecasts and related assumptions of Magna; (vii) reviewed certain third party
analysts' estimates regarding UPC; (viii) made inquiries regarding and discussed
the Merger and the Merger Agreement and other matters related thereto with
Magna's counsel; and (ix) performed such other analyses and examinations as we
have deemed appropriate.
In connection with our review, we have not assumed any obligation
independently to verify the foregoing information and have relied on its being
accurate and complete in all material respects. With respect to the financial
forecasts for Magna provided to us by its management, upon their advice and with
your consent we have assumed for purposes of our opinion that the forecasts have
been reasonably prepared on bases reflecting the best available estimates and
judgments of Magna's management at the time of preparation as to the future
financial
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performance of Magna and that they provide a reasonable basis upon which we can
form our opinion. We have also assumed with your consent that third party
analysts' estimates as to the future financial performance of UPC provide a
reasonable basis upon which we can form our opinion. We have assumed that there
have been no material changes in Magna's or UPC's assets, financial condition,
results of operations, business or prospects since the respective dates of
their last financial statements made available to us. We have relied on advice
of counsel and independent accountants to Magna as to all legal and financial
reporting matters with respect to Magna, the Merger and the Merger Agreement.
We have assumed that the Merger will be consummated in a manner that complies
in all respects with the applicable provisions of the Securities Act of 1933,
as amended (the "Securities Act"), the Securities Exchange Act of 1934 and all
other applicable federal and state statutes, rules and regulations. We are not
experts in the evaluation of loan portfolios for purposes of assessing the
adequacy of the allowances for losses with respect thereto and have assumed,
with your consent, that such allowances for each of Magna and UPC are in the
aggregate adequate to cover such losses. In addition, we have not assumed
responsibility for reviewing any individual credit files, or making an
independent evaluation, appraisal or physical inspection of any of the assets
or liabilities (contingent or otherwise) of Magna or UPC, nor have we been
furnished with any such appraisals. You have informed us, and we have assumed,
that the Merger will be recorded as a pooling of interests under generally
accepted accounting principles. Finally, our opinion is based on economic,
monetary and market and other conditions as in effect on, and the information
made available to us as of, the date hereof. Accordingly, although subsequent
developments may affect this opinion, we have not assumed any obligation to
update, revise or reaffirm this opinion.
We have further assumed with your consent that the Merger will be
consummated in accordance with the terms described in the Merger Agreement,
without any further amendments thereto, and without waiver by Magna of any of
the conditions to its obligations thereunder.
We have acted as financial advisor to Magna in connection with the
Merger and will receive a fee for our services, including rendering this
opinion, a significant portion of which is contingent upon the consummation of
the Merger.
Based upon the foregoing and in reliance thereon, it is our opinion as
investment bankers that the Consideration to be received by the stockholders of
Magna pursuant to the Merger is fair to such stockholders from a financial point
of view, as of the date hereof.
This opinion is directed to the Board of Directors of Magna in its
consideration of the Merger and is not a recommendation to any stockholder as to
how such stockholder should vote with respect to the Merger. Further, this
opinion addresses only the financial fairness of the Consideration to the
stockholders and does not address the relative merits of the Merger and any
alternatives to the Merger, Magna's underlying decision to proceed with or
effect the Merger, or any other aspect of the Merger. This opinion may not be
used or referred to by Magna, or quoted or disclosed to any person in any
manner, without our prior written consent, which consent is hereby given to the
inclusion of this opinion in any proxy statement or prospectus filed with the
Securities and Exchange Commission in connection with the Merger. In furnishing
this opinion, we do not admit that we are experts within the meaning of the term
"experts" as used in the Securities Act and the rules and regulations
promulgated thereunder, nor do we admit that this opinion constitutes a report
or valuation within the meaning of Section 11 of the Securities Act.
Very truly yours,
MONTGOMERY SECURITIES
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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 Amended and Restated
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 to the shareholders.
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<PAGE> 124
ITEM 21. EXHIBITS.
The following exhibits are filed herein or have been, as
noted, previously filed:
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ----------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Reorganization, dated as of May 8, 1997 by
and between Magna Bancorp, Inc. and Union Planters Corporation
(Included as Appendix A to the Proxy Statement included as part
of this Registration Statement.)
2.2 Plan of Merger between Magna Bancorp, Inc. and UPC Merger
Subsidiary. (Included as Appendix B to the Proxy Statement
included as part of this Registration Statement.)
*2.3 Stock Option Agreement, dated as of May 8, 1997 by and between
Union Planters Corporation and Magna Bancorp, Inc.
4.1 Restated Charter of Union Planters Corporation. (Incorporated
by reference to exhibit 3(a) to the Annual Report on Form 10-K
of UPC, dated December 31, 1996.)
4.2 Amended and Restated Bylaws of Union Planters Corporation.
(Incorporated by reference to exhibit 3(d) to the Annual Report
on Form 10-K of UPC, dated December 31, 1996 (File No. 0-6919).)
5.1 Opinion of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation, as to the
validity of the shares of UPC Common Stock.
8.1 Opinion of Alston & Bird LLP as to federal income tax
consequences.
*15.1 Letter of KPMG Peat Marwick LLP, independent auditors for Magna
Bancorp, Inc. regarding unaudited interim financial information.
*23.1 Consent of Price Waterhouse LLP, independent accountants for
Union Planters Corporation.
*23.2 Consent of KPMG Peat Marwick LLP, independent auditors for Magna
Bancorp, Inc.
23.3 Consent of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation (included in
Exhibit 5.1).
23.4 Consent of Alston & Bird LLP (included in Exhibit 8.1).
*23.5 Consent of Montgomery Securities.
*23.6 Consent of David M. Thomas.
*24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of proxy of Magna Bancorp, Inc.
</TABLE>
* Previously submitted with Registration Statement on Form S-4 filed on
June 27, 1997
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<PAGE> 125
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 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 in connection with an 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.
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<PAGE> 126
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Memphis, State of Tennessee on this the 11th day of July, 1997.
REGISTRANT
UNION PLANTERS CORPORATION
By: /s/ Benjamin W. Rawlins, Jr.
-----------------------------
Benjamin W. Rawlins, Jr.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on the 11th day of July, 1997.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ Benjamin W. Rawlins, Jr.* Chairman of the Board, Chief Executive
- ---------------------------------- Officer, Director (Principal July 11, 1997
Benjamin W. Rawlins, Jr. Executive Officer)
/s/ Jackson W. Moore * President, Chief Operating Officer,
- ---------------------------------- Director July 11, 1997
Jackson W. Moore
/s/ John W. Parker * Executive Vice President and
- ---------------------------------- Chief Financial Officer July 11, 1997
John W. Parker (Principal Financial Officer)
/s/ M. Kirk Walters * Senior Vice President, Treasurer,
- ---------------------------------- and Chief Accounting Officer July 11, 1997
M. Kirk Walters
/s/ Edgar H. Bailey * Vice Chairman of the Board
- ---------------------------------- and Director July 11, 1997
Edgar H. Bailey
</TABLE>
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<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
Director
- ----------------------------------
Albert M. Austin
/s/ Marvin E. Bruce * Director July 11, 1997
- ----------------------------------
Marvin E. Bruce
Director
- ----------------------------------
George W. Bryan
Director
- ----------------------------------
James E. Harwood
/s/ Parnell S. Lewis, Jr.* Director July 11, 1997
- ----------------------------------
Parnell S. Lewis, Jr.
/s/ C. J. Lowrance, III * Director July 11, 1997
- ----------------------------------
C. J. Lowrance, III
Director
- ----------------------------------
Stanley D. Overton
Director
- ----------------------------------
Dr. V. Lane Rawlins
/s/ Donald F. Schuppe * Director July 11, 1997
- ----------------------------------
Donald F. Schuppe
Director
- ----------------------------------
Mike P. Sturdivant
/s/ Richard A. Trippeer, Jr.* Director July 11, 1997
- ----------------------------------
Richard A. Trippeer, Jr.
Director
- ----------------------------------
Spence L. Wilson
</TABLE>
<TABLE>
<S> <C>
* By: /s/ E. James House, Jr. July 11, 1997
- ---------------------------------
E. James House, Jr.
as attorney-in-fact
</TABLE>
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<PAGE> 128
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
------ ------------------------------------------------------------------------------- -------------
<S> <C> <C>
*2.3 Stock Option Agreement, dated as of May 8, 1997 by and between
Union Planters Corporation and Magna Bancorp, Inc..............................
5.1 Opinion of E. James House, Jr., Secretary and Manager of the Legal
Department of Union Planters Corporation, as to the validity of the
shares of UPC Common Stock.....................................................
8.1 Opinion of Alston & Bird LLP as to federal income tax consequences.............
*15.1 Letter of KPMG Peat Marwick LLP, independent auditors for
Magna Bancorp, Inc., regarding unaudited interim financial
information ...................................................................
*23.1 Consent of Price Waterhouse LLP, independent accountants for
Union Planters Corporation.....................................................
*23.2 Consent of KPMG Peat Marwick LLP, independent auditors for
Magna Bancorp, Inc.............................................................
23.3 Consent of E. James House, Jr., Secretary and Manager of the
Legal Department of Union Planters Corporation (included in
Exhibit 5.1)...................................................................
*23.5 Consent of Montgomery Securities...............................................
*23.6 Consent of David M. Thomas.....................................................
99.1 Form of proxy of Magna Bancorp, Inc............................................
</TABLE>
* Previously submitted with Registration Statement on Form S-4 filed on June 27,
1997.
<PAGE> 1
EXHIBIT 5.1
<PAGE> 2
EXHIBIT 5.1
[UNION PLANTERS CORPORATION
LETTERHEAD]
June 27, 1997
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 7,171,591 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 7,171,591
shares of UPC's common stock, $5.00 par value per share, including accompanying
Preferred Share Rights, ("UPC Common Stock") which may be issued by UPC pursuant
to an Agreement and Plan of Reorganization, dated as of May 8, 1997, by and
between UPC and Magna Bancorp, Inc. ("Magna") (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 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.
3. The opinion expressed above is limited by the following
assumptions, qualifications, and exceptions.
<PAGE> 3
Union Planters Corporation
June 27, 1996
Page 2
(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 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 "Opinions" in the Proxy
Statement/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.
-2-
<PAGE> 1
EXHIBIT 8.1
<PAGE> 2
EXHIBIT 8.1
ALSTON&BIRD LLP
One Atlantic Center
1201 West Peachtree Street
Atlanta, Georgia 30309-3424
404-881-7000
Fax: 404-881-7777
Philip C. Cook Direct Dial: 404-881-7000
July 11, 1997
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Magna Bancorp, Inc.
100 West Front Street
Hattiesburg, Mississippi 39401
Re: Proposed Plan of Merger Involving Union Planters
------------------------------------------------
Corporation and Magna Bancorp, Inc.
-----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Union Planters Corporation ("UPC"), a
corporation organized and existing under the laws of the State of Tennessee, in
connection with the proposed merger of UPC Merger Subsidiary, Inc., a
wholly-owned first-tier subsidiary of UPC, to be organized under the Laws of the
State of Delaware ("UPC Merger Subsidiary"), with and into Magna Bancorp, Inc.
("Magna"), a Delaware corporation having its principal office located in
Hattiesburg, Mississippi, with Magna as the Surviving Corporation (the
"Merger"). The Merger will be effected pursuant to the Agreement and Plan of
Reorganization by and between UPC, Magna and UPC Merger Subsidiary made and
entered into as of May 8, 1997 (the "Agreement"). In our capacity as counsel to
UPC, our opinion has been requested with respect to certain of the federal
income tax consequences of the proposed Merger.
We have also been informed that; (i) Magnolia Federal Bank for Savings
("Magnolia Federal") will sell the assets and liabilities of its banking
operations in Collins, Mississippi and Grenada, Mississippi to third parties in
arms-length transactions as soon as practical (the "Divestiture"); (ii)
Magnolia may also sell its banking operations in certain Mississippi cities to
third parties in arms-length transactions (the "External Branch Sales");
601 Pennsylvania Avenue, N.W.
North Building, Suite 250
Washington, D.C. 20004-2601
<PAGE> 3
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 2
and (iii) Comserv, Inc. and Realty Services, Inc., both first-tier subsidiaries
of Magna, will be liquidated into Magna;
In addition, following the Merger: (i) Magna will be merged with and
into UPC, with UPC as the surviving corporation (the "Magna Merger"); (ii)
Magnolia Federal will sell the assets and liabilities of its banking operations
in five branches to Union Planters Bank of Northwest Mississippi, a first-tier
subsidiary of UPC, and Magnolia Federal will sell the assets and liabilities of
its banking operations in fourteen branches to Union Planters Bank of Central
Mississippi, a first-tier subsidiary of UPC (collectively the "Internal Branch
Sales") and together with the External Branch Sales the "Branch Sales");
(iii) UPC will contribute the stock of Magna Insurance Company, each a
first-tier subsidiary of UPC following the Merger and the Magna Merger, to
Union Planters Holding Corporation ("Holding"), also a first-tier subsidiary of
UPC, who in turn will contribute the stock of Magna Insurance Company to Union
Planters National Bank, a wholly-owned subsidiary of Holding, and second-tier
subsidiary of UPC (the "Stock Drop"); (iv) Magnolia Federal will sell for cash
the stock of Magna Mortgage Company to Union Planters Bank of Northwest
Tennessee, FSB, a first-tier subsidiary of UPC (the "Stock Sale"), and Magnolia
Federal will retain and use the cash proceeds in the ordinary course of its
business; and (v) Magnolia Federal will be merged with and into Union Planters
Bank of Southern Mississippi ("UPBSM"), a first-tier subsidiary of UPC with
UPBSM as the surviving corporation (the "Magnolia Merger").
In rendering this opinion, we have examined (i) the Internal Revenue
Code of 1986, as amended (the "Code") and Treasury regulations, (ii) the
legislative history of applicable sections of the Code, and (iii) appropriate
Internal Revenue Service and court decisional authority. In addition, we have
relied upon certain information made known to us as more fully described below.
All capitalized terms used herein without definition shall have the respective
meanings specified in the Agreement, and unless otherwise specified, all section
references herein are to the Code.
INFORMATION RELIED UPON
In rendering the opinions expressed herein, we have examined such
documents as we have deemed appropriate, including:
(1) the Agreement;
(2) the Registration Statement on Form S-4 filed by UPC with
the Securities and Exchange Commission under the Securities Act of 1933, on June
27, 1997, and as amended, including the Proxy Statement/Prospectus for the
Special Meeting of the stockholders of Magna; and
(3) such additional documents as we have considered relevant.
In our examination of such documents, we have assumed, with your
consent, that all documents submitted to us as photocopies faithfully reproduce
the originals thereof, that such originals are authentic, that all such
documents have been or will be duly executed to the extent required, and that
all statements set forth in such documents are
<PAGE> 4
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 3
accurate. We have also obtained such additional information and representations
as we have deemed relevant and necessary through consultation with various
officers and representatives of UPC and Magna.
With your consent, we have assumed that the stockholders of Magna
holding eighty percent (80%) of the total vote and value of the Magna Common
Stock outstanding immediately prior to the Merger will receive UPC Common Stock
in exchange for their Magna Common Stock. No opinion is expressed as to the tax
consequences of the Merger if this assumption is inaccurate.
You have advised us that the proposed transaction will enable the
combined organization to realize certain economies of scale and provide the
combined organization with expanded geographic markets. To achieve these goals,
the following will occur pursuant to the Agreement:
(1) UPC will form UPC Merger Subsidiary by transferring
property to UPC Merger Subsidiary solely in exchange for all the outstanding
shares of UPC Merger Subsidiary common stock ("UPC Merger Subsidiary Common
Stock").
(2) Subject to the terms and conditions of the Agreement, at
the Effective Time, UPC Merger Subsidiary shall be merged with and into Magna in
accordance with the provisions of Section 251 of the DGCL and with the effect
provided in Section 259 of the DGCL. Magna shall be the Surviving Corporation
resulting from the Merger and shall continue to be governed by the Laws of the
State of Delaware. The Merger shall be consummated pursuant to the terms of the
Agreement, which has been approved and adopted by the respective Boards of
Directors of Magna and UPC and the Plan of Merger, which has been approved and
adopted by the Board of Directors of Magna and will be approved and adopted by
the Board of Directors of UPC Merger Subsidiary and UPC (in its capacity as sole
stockholder of UPC Merger Subsidiary) upon the organization of UPC Merger
Subsidiary.
(3) Subject to the provisions of Article 3 of the Agreement,
at the Effective Time, by virtue of the Merger and without any action on the
part of UPC, Magna, UPC Merger Subsidiary, or the stockholders of the foregoing,
the shares of the constituent corporations shall be converted as follows:
(a) Each share of UPC Capital Stock, including any associated
UPC Rights, issued and outstanding immediately prior to the Effective
Time shall remain issued and outstanding from and after the Effective
Time.
<PAGE> 5
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 4
(b) Each share of UPC Merger Subsidiary Common Stock issued
and outstanding immediately prior to the Effective Time shall cease to
be outstanding and shall be converted into and exchanged for one share
of Magna Common Stock.
(c) Each share of Magna Common Stock (excluding shares held by
any Magna Company or any UPC Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted)
issued and outstanding at the Effective Time shall cease to be
outstanding and shall be converted into and exchanged for the right to
receive .5165 of a share of UPC Common Stock (as subject to possible
adjustment as set forth in Section 10.1(g) of the Agreement, the
"Exchange Ratio"). Pursuant to the UPC Rights Agreement, each share of
UPC Common Stock issued in connection with the Merger upon conversion
of Magna Common Stock shall be accompanied by a UPC Right.
(4) In the event UPC changes the number of shares of UPC
Common Stock issued and outstanding prior to the Effective Time as a result of a
stock split, stock dividend, or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date thereof (in the case of a stock split or similar recapitalization
for which a record date is not established) shall be prior to the Effective
Time, the Exchange Ratio shall be proportionately adjusted.
(5) Each of the shares of Magna Common Stock held by any Magna
Company or by any UPC Company, in each case other than in a fiduciary capacity
or as a result of debts previously contracted, shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
(6) Notwithstanding any other provision of the Agreement, each
holder of shares of Magna Common Stock exchanged pursuant to the Merger who
would otherwise have been entitled to receive a fraction of a share of UPC
Common Stock (after taking into account all certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest) in an amount
equal to such fractional part of a share of UPC Common Stock multiplied by the
market value of one share of UPC Common Stock at the Effective Time. The market
value of one share of UPC Common Stock at the Effective Time shall be the
closing price of such common stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a stockholder in respect of any fractional shares.
<PAGE> 6
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 5
(7) At the Effective Time, each option to purchase or other
right with respect to shares of Magna Common Stock pursuant to stock option,
stock appreciation rights or other rights, including stock awards ("Magna
Options") granted by Magna under the Magna Stock Plans, which are outstanding at
the Effective Time, whether or not exercisable, shall be converted into and
become rights with respect to UPC Common Stock, and UPC shall assume each Magna
Option, in accordance with the terms of the Magna Stock Plan and stock option or
other agreement by which it is evidenced on substantially the same terms and
conditions.
With your consent, we have also relied on certain factual matters
confirmed to us by you as true both now and as of the Effective Time:
(a) The fair market value of the UPC Common Stock, including
any associated UPC Rights and other property, if any, received by each Magna
stockholder will, in each instance, be approximately equal to the fair market
value of the Magna Common Stock surrendered in exchange therefor.
(b) There is no plan or intention by the stockholders of Magna
who own five percent (5%) or more of the Magna Common Stock, and to the best of
the knowledge of the management of Magna, there is no plan or intention on the
part of the remaining stockholders of Magna to sell, exchange, or otherwise
dispose of a number of shares of UPC Common Stock received in the Merger that
would reduce the Magna stockholders' ownership of UPC Common Stock to a number
of shares having a value, as of the date of the Merger, of less than fifty
percent (50%) of the value of all of the formerly outstanding Magna Common Stock
as of the same date. For purposes of this assumption, shares of Magna Common
Stock exchanged for cash or other property or exchanged for cash in lieu of
fractional shares of UPC Common Stock will be treated as outstanding Magna
Common Stock on the date of the Merger. Moreover, shares of Magna Common Stock
and shares of UPC Common Stock held by Magna stockholders and otherwise sold,
redeemed, or disposed of prior or subsequent to the Merger will be considered in
making this representation.
(c) Following the Merger, Magna will hold at least ninety
percent (90%) of the fair market value of its net assets and at least seventy
percent (70%) of the fair market value of its gross assets held immediately
prior to the Merger and at least ninety percent (90%) of the fair market value
of UPC Merger Subsidiary's net assets and at least seventy percent (70%) of the
fair market value of UPC Merger Subsidiary's gross assets held immediately prior
to the Merger. For purposes of this assumption, amounts paid by Magna or UPC
Merger Subsidiary to dissenters, amounts paid by Magna or UPC Merger Subsidiary
to stockholders who receive cash or other property, amounts used by Magna or UPC
Merger Subsidiary to pay reorganization expenses, and all redemptions
<PAGE> 7
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 6
and distributions (except for regular, normal dividends) made by Magna will be
included as assets of Magna or UPC Merger Subsidiary, respectively, immediately
prior to the Merger.
(d) Prior to the Merger, UPC will be in control of UPC Merger
Subsidiary. For purposes of this Tax Opinion, "control" means ownership of
eighty percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of all
other classes of stock.
(e) Magna has no plan or intention to issue additional shares
of Magna Common Stock after the Merger that would result in UPC losing control
of Magna.
(f) UPC has no plan or intention to reacquire any UPC Common
Stock issued in the Merger.
(g) Except as described in this Tax Opinion, UPC has no plan
or intention to liquidate Magna; to merge Magna with or into another
corporation; to sell or otherwise dispose of the Magna Common Stock except for
transfers of stock to corporations controlled by UPC; or to cause Magna to sell
or otherwise dispose of any of its assets or of any of the assets acquired from
UPC Merger Subsidiary, except for dispositions made in the ordinary course of
business or transfers of assets to a corporation controlled by Magna.
(h) The liabilities of UPC Merger Subsidiary assumed by Magna
(including the liabilities to which the transferred assets of UPC Merger
Subsidiary are subject), if any, were incurred by UPC Merger Subsidiary in the
ordinary course of its business.
(i) Following the Merger, Magna will continue its historic
business or use a significant portion of its historic business assets in a
business.
(j) UPC, UPC Merger Subsidiary, Magna, and the stockholders of
Magna will pay their respective expenses, if any, incurred in connection with
the Merger.
(k) There is no intercorporate indebtedness existing between
UPC and Magna or between UPC Merger Subsidiary and Magna that was issued,
acquired, or will be settled at a discount.
(l) In the Merger, shares of Magna Common Stock representing
control of Magna will be exchanged solely for UPC Common Stock. For purposes of
this assumption, shares of Magna Common Stock exchanged for cash or other
property
<PAGE> 8
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 7
originating with UPC will be treated as outstanding Magna Common Stock on the
date of the Merger.
(m) At the time of the Merger, Magna will not have outstanding
any warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire stock in Magna that, if exercised or
converted, would affect UPC's acquisition or retention of control of Magna.
(n) UPC does not own, nor has it owned during the past five
years, any Magna Common Stock.
(o) None of UPC, UPC Merger Subsidiary nor Magna is an
investment company. For purposes of the foregoing, an "investment company" is a
corporation that is a regulated investment company, a real estate investment
trust, or a corporation fifty percent (50%) or more of the value of whose total
assets are stock and securities and eighty percent (80%) or more of the value of
whose total assets are assets held for investment. In making the fifty percent
(50%) and eighty percent (80%) determinations under the preceding sentence,
stock and securities in any subsidiary corporation shall be disregarded and the
parent corporation shall be deemed to own its ratable share of the subsidiary's
assets, and a corporation shall be considered a subsidiary if the parent owns
fifty percent (50%) or more of the combined voting power of all classes of stock
entitled to vote, or fifty percent (50%) or more of the total value of shares of
all classes of stock outstanding.
(p) On the date of the Merger, the fair market value of the
assets of Magna will exceed the sum of its liabilities, plus the amount of
liabilities, if any, to which the assets are subject.
(q) Magna is not under the jurisdiction of a court in a case
under Title 11 of the United States Code or a receivership, foreclosure or
similar proceeding in a federal or state court.
(r) The payment of cash to Magna stockholders in lieu of
fractional shares of UPC Common Stock will not be a separately bargained for
consideration, but rather will represent a mere mechanical rounding of the
fractional share interests that may result from the Merger, and will be
undertaken solely for the purpose of avoiding the expense and inconvenience of
issuing and transferring fractional shares. The total cash consideration that
will be paid to Magna stockholders in lieu of fractional shares of UPC Common
Stock will represent less than one percent (1%) of the total consideration
issued
<PAGE> 9
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 8
in the Merger. No stockholder of Magna will receive an amount in cash greater
than the value of one full share of UPC Common Stock in lieu of fractional
shares.
(s) None of the compensation received by any
stockholder-employees of Magna will be separate consideration for, or allocable
to, any of their shares of Magna Common Stock. None of the shares of UPC Common
Stock received in the Merger by any stockholder-employees will be separate
consideration for, or allocable to, any employment agreement. Any compensation
paid to a Magna stockholder-employee who continues as an employee of UPC
subsequent to the Merger will be for services actually rendered and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services.
(t) At all times during the five-year period ending on the
effective date of the Merger, the fair market value of all of Magna's United
States real property interests was and will have been less than fifty percent
(50%) of the total fair market value of (a) its United States real property
interests, (b) its interests in real property located outside the United States,
and (c) its other assets used or held for use in a trade or business. For
purposes of the preceding sentence, (x) United States real property interests
include all interests (other than an interest solely as a creditor) in real
property and associated personal property (such as movable walls and
furnishings) located in the United States or the Virgin Islands and interests in
any corporation (other than a controlled corporation) owning any United States
real property interest, (y) Magna is treated as owning its proportionate share
(based on the relative fair market value of its ownership interest to all
ownership interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which Magna is a partner or beneficiary, and
(z) any such entity in turn is treated as owning its proportionate share of the
assets owned by any controlled corporation or any partnership, trust, or estate
in which the entity is a partner or beneficiary. As used in this paragraph,
"controlled corporation" means any corporation at least fifty percent (50%) of
the fair market value of the stock of which is owned by Magna, in the case of a
first-tier subsidiary of Magna or by a controlled corporation, in the case of a
lower-tier subsidiary.
(u) Magnolia will retain the proceeds from the Divestiture,
Stock Sale and Branch Sales and use such proceeds in its business.
(v) The Agreement, Magna Merger, Magnolia Merger, Stock Drop,
Divestiture, and Branch Sales represent the entire understanding of UPC, Magna,
and UPC Merger Subsidiary with respect to the Merger.
OPINIONS
Based solely on the information submitted and the representations set
forth above, we are of the opinion that:
<PAGE> 10
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 9
(1) Notwithstanding consummation of the planned
Divestiture, Branch Sales and Stock Drop simultaneous with or following the
Merger, the Merger will qualify as a reorganization within the meaning of
Sections 368(a) of the Code. Each of Magna, UPC Merger Subsidiary, and UPC will
be a party to a reorganization within the meaning of Section 368(b).
(2) No gain or loss will be recognized by Magna upon the
receipt of the assets of UPC Merger Subsidiary in exchange solely for Magna
Common Stock and the assumption by Magna of the liabilities of UPC Merger
Subsidiary.
(3) No gain or loss will be recognized by UPC or UPC Merger
Subsidiary on receipt by UPC of Magna Common Stock solely in exchange for the
assets of UPC Merger Subsidiary and the assumption by Magna of the liabilities
of UPC Merger Subsidiary.
(4) The basis of UPC Merger Subsidiary's assets in the hands
of Magna will, in each case, be the same as the basis of those assets in the
hands of UPC Merger Subsidiary immediately prior to the transaction.
(5) The holding period of the assets of UPC Merger Subsidiary
in the hands of Magna will, in each case, include the period during which such
assets were held by UPC Merger Subsidiary.
(6) No gain or loss will be recognized by a Magna stockholder
upon the receipt of UPC Common Stock (including any associated UPC Rights)
solely in exchange for its shares of Magna Common Stock.
(7) The basis of the UPC Common Stock received by a Magna
stockholder in the transaction will, in each instance, be the same as the basis
of the Magna Common Stock surrendered in exchange therefor less any basis
allocated to any fractional share of UPC Common Stock settled by cash payment.
(8) The holding period of the UPC Common Stock received by a
Magna stockholder (including the holding period of any fractional share
interest) will include the holding period of the Magna Common Stock surrendered
in exchange therefor, provided the Magna Common Stock was held as a capital
asset on the date of the exchange.
(9) The payment of cash in lieu of fractional shares of UPC
Common Stock will be treated as if the fractional shares were issued as part of
the exchange and
<PAGE> 11
Union Planters Corporation
Magna Bancorp, Inc.
July 11, 1997
Page 10
then redeemed by UPC. These cash payments will be treated as having been
received as distributions in full payment in exchange for the fractional shares
of UPC Common Stock redeemed as provided in Section 302(a). Generally, any gain
or loss recognized upon such exchange will be capital gain or loss, provided the
fractional share would constitute a capital asset in the hands of the exchanging
stockholder.
No opinion is expressed concerning (i) the tax consequences to the
parties to the Agreement of the inclusion in income of the amount of the
bad-debt reserve maintained by Magnolia Federal and any other amounts resulting
from any required change in accounting methods, (ii) the tax consequences to the
parties to the Agreement of any income and deferred gain recognized pursuant to
Treasury regulations issued under Section 1502 of the Code, (iii) the tax
consequences of the Stock Drop, the Branch Sales, the Divestiture, the Magnolia
Merger or any other transaction related to the Merger.
The opinions expressed herein are based upon existing statutory,
regulatory, and judicial authority, any of which may be changed at any time with
retroactive effect. In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained, and the
statements set out herein, which we have assumed are true on the date the Merger
is consummated. Our opinions cannot be relied upon if any of the facts contained
in such documents or if such additional information is, or later becomes,
inaccurate, or if any of the statements set out herein is, or later becomes,
inaccurate. Finally, our opinions are limited to the tax matters specifically
covered thereby, and we have not been asked to address, nor have we addressed,
any other tax consequences of the proposed Merger or related transactions.
This opinion is being provided solely for the use of Union Planters
Corporation, Magna Bancorp, Inc., and the stockholders of Magna Bancorp, Inc. No
other person or party shall be entitled to rely on this opinion.
Very truly yours,
ALSTON & BIRD LLP
By: /s/ Phillip C. Cook
---------------------
Philip C. Cook
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Proxy
Statement/Prospectus constituting part of this Registration Statement on Form
S-4 of Union Planters Corporation of our report dated January 16, 1997, which
appears 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 of the year ended December 31, 1996. We also consent to the reference to us
under the heading "EXPERTS" in such Proxy Statement/Prospectus.
/s/ PRICE WATERHOUSE LLP
Memphis, Tennessee
July 14, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Magna Bancorp, Inc.:
We consent to the use of our audit report dated August 23, 1996 on the
consolidated financial statements of Magna Bancorp, Inc. and subsidiaries as of
June 30, 1996 and 1995, and for each of the years in the three-year period ended
June 30, 1996, incorporated herein by reference, and to the reference to our
firm under the heading "EXPERTS" in the Proxy Statement/Prospectus.
/s/ KPMG PEAT MARWICK LLP
Jackson, Mississippi
July 14, 1997
<PAGE> 1
EXHIBIT 99.1
<PAGE> 2
MAGNA BANCORP, INC.
The undersigned hereby constitutes and appoints Robert S. Duncan and Lou Ann
Poynter, or either of them, as proxies, each with full power of substitution, to
vote the number of shares of common stock of Magna Bancorp, Inc. ("Magna") which
the undersigned would be entitled to vote if personally present at the Special
Meeting of Magna Stockholders to be held at the corporate office of Magna
located in the Forrest Tower, Second Floor, 215 Forrest Street, Hattiesburg,
Mississippi, at 1:30 p.m., local time, on August 20, 1997, and at any
adjournment or postponement thereof (the "Special Meeting") upon the proposal
described in the Proxy Statement/Prospectus and the Notice of Special Meeting of
Stockholders, both dated July 14, 1997, the receipt of which is acknowledged in
the manner specified below.
1. MERGER. To consider and vote upon a proposal to adopt the Agreement and
Plan of Reorganization, dated as of May 8, 1997, by and between Magna and
Union Planters Corporation, a Tennessee corporation ("UPC"), and the related
Plan of Merger (the "Plan of Merger"), by and between Magna and UPC Merger
Subsidiary, Inc., a wholly-owned subsidiary of UPC ("UPC Merger
Subsidiary"), pursuant to which (i) Magna will merge (the "Merger") with UPC
Merger Subsidiary, with the effect that Magna will be the surviving
corporation resulting from the Merger, (ii) each share of the $.01 par value
common stock of Magna issued and outstanding at the effective time of the
Merger will be converted into 0.5165 of a share of the $5.00 par value
common stock of UPC, and the associated "Preferred Share Rights" (as defined
in the accompanying Proxy Statement/Prospectus), subject to possible
adjustment, and cash in lieu of any fractional share, and (iii) UPC will
assume the obligations of Magna under various stock plans and adopt
substitute plans where appropriate, all as more fully described in the
accompanying Proxy Statement/Prospectus.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as your name appears below. When shares are held
jointly, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: 1997
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Signature
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Signature if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
MAGNA BANCORP, INC.,
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
