<PAGE> 1
As filed with the Securities and Exchange Commission on April 9, 1998
Registration No. 333-_____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------
UNION PLANTERS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
TENNESSEE 6712 62-0859007
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)
</TABLE>
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) 580-6596
(Name, address, including ZIP code, and telephone number, including area
code, of agent for service)
WITH COPIES TO:
Stewart E. Conner, Esq. R. James Straus, Esq.
Wyatt, Tarrant & Combs Brown, Todd & Heyburn, PLLC
2800 Citizens Plaza 400 West Market Street, 32nd Floor
Louisville, Kentucky 40202 Louisville, Kentucky 40202-3363
(502) 562-7223 (502) 589-5400
Approximate date of commencement of proposed sale of
securities to the public:
As soon as practicable after this Registration Statement becomes effective and
after conditions described in the Agreement and Plan of Merger have been
satisfied.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class Proposed maximum Proposed maximum
of securities Amount offering price aggregate Amount of
to be registered to be Registered per unit(1) offering price(1) registration fee
<S> <C> <C> <C> <C>
Common Stock, 6,364,897 shares $60.833 $ 387,197,876.50 $ 114,223.37
$5.00 par value (and associated Pre-
(and associated ferred Share Rights)
Preferred Share
Rights)
- ----------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
and based, pursuant to Rule 457(c) and (f) under the Securities Act of
1933, as amended, on the average of the high and low sales prices of
common stock of Peoples First Corporation as reported on the Nasdaq
National Market System on April 7, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
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</TABLE>
<PAGE> 2
PEOPLES FIRST CORPORATION
100 SOUTH FOURTH STREET
PADUCAH, KENTUCKY 42002
__________ __, 1998
TO THE SHAREHOLDERS OF PEOPLES FIRST CORPORATION:
You are cordially invited to attend a special meeting of the
shareholders (the "Special Meeting") of Peoples First Corporation ("Peoples") to
be held at the Executive Inn Riverfront located at Executive Inn Boulevard,
Paducah, Kentucky at 4:00 p.m., local time, on __________ __, 1998, notice of
which is enclosed.
At the Special Meeting, you will be asked to consider and vote
on a proposal to approve the Agreement and Plan of Merger (the "Agreement"), by
and between Peoples and Union Planters Corporation, a Tennessee corporation
("UPC"), and a related Plan of Merger (the "Plan of Merger") pursuant to which
Peoples will merge (the "Merger") with and into Union Planters Holding
Corporation, a wholly owned subsidiary of UPC organized under the laws of
Tennessee ("UPC Merger Subsidiary"), with the effect that UPC Merger Subsidiary
will be the surviving corporation resulting from the Merger. Upon consummation
of the Merger, each share of Peoples common stock issued and outstanding
(excluding certain shares held by Peoples 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 and exchanged
for the right to receive 0.6 shares of UPC common stock and the associated
"Preferred Share Rights" (as defined in the accompanying Proxy
Statement/Prospectus), 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, the Plan of Merger, 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 Peoples shareholders. Please read
these materials carefully and consider thoughtfully the information set forth in
them.
Keefe, Bruyette & Woods, Inc. and Stifel, Nicolaus & Company,
Inc., Peoples' financial advisors, have issued their opinions 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. Copies of the
opinions are attached as Appendix C to the Proxy Statement/Prospectus.
THE BOARD OF DIRECTORS OF PEOPLES HAS UNANIMOUSLY APPROVED AND
ADOPTED THE AGREEMENT AND THE PLAN OF MERGER AND APPROVED CONSUMMATION OF THE
MERGER CONTEMPLATED THEREBY, AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE
AGREEMENT AND THE PLAN OF MERGER.
Shareholders of Peoples are entitled to assert dissenters'
rights under Subtitle 13 of the Kentucky Business Corporation Act, a copy of
which is attached as Appendix D to the accompanying Proxy Statement/Prospectus.
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 returned your
proxy card. The proposed Merger with UPC is a significant step for Peoples and
your vote on this matter is of great importance.
<PAGE> 3
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO VOTE FOR
ADOPTION OF THE AGREEMENT AND THE PLAN OF MERGER BY MARKING THE ENCLOSED PROXY
CARD "FOR" ITEM ONE.
We look forward to seeing you at the Special Meeting.
Sincerely,
Aubrey W. Lippert
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 4
PEOPLES FIRST CORPORATION
100 SOUTH FOURTH STREET
PADUCAH, KENTUCKY 42002
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 4:00 P.M. ON __________ __, 1998
NOTICE IS HEREBY GIVEN that a special meeting of the
shareholders (the "Special Meeting") of Peoples First Corporation ("Peoples")
will be held at the Executive Inn Riverfront located at Executive Inn Boulevard,
Paducah, Kentucky, on __________ __, 1998, at 4:00 p.m., local time, for the
following purposes:
1. MERGER. To consider and vote upon a proposal to approve the
Agreement and Plan of Merger, dated as of November 17, 1997, as amended April 8,
1998 (the "Agreement"), by and between Peoples and Union Planters
Corporation, a Tennessee corporation ("UPC"), and the related Plan of Merger
(the "Plan of Merger"), by and between Peoples and Union Planters Holding
Corporation, a wholly owned subsidiary of UPC organized under the laws of
Tennessee ("UPC Merger Subsidiary"), pursuant to which (i) Peoples will merge
(the "Merger") with and into UPC Merger Subsidiary, with the effect that UPC
Merger Subsidiary will be the surviving corporation resulting from the Merger,
(ii) each share of the common stock of Peoples ("Peoples Common Stock") issued
and outstanding at the effective time of the Merger (excluding certain shares
held by Peoples 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 and exchanged for the right to receive 0.6
shares 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 Peoples under various stock
plans and adopt substitute plans where appropriate, all as more fully described
in the accompanying Proxy Statement/Prospectus. The text of the Agreement, as
restated to reflect the April __, 1998, amendment, and the Plan of Merger are
set forth as Appendix A and Appendix B, respectively, 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 shareholders of record at the close of business on _________ __,
1998 will be entitled to receive notice of and to vote at the Special Meeting or
any adjournment or postponement thereof.
Shareholders of Peoples are entitled to assert dissenters' rights under
Subtitle 13 of the Kentucky Business Corporation Act, a copy of which is
attached as Appendix D to the accompanying Proxy Statement/Prospectus.
<PAGE> 5
THE BOARD OF DIRECTORS OF PEOPLES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER.
BY ORDER OF THE BOARD OF DIRECTORS
AUBREY W. LIPPERT
Chairman of the Board, President and
Chief Executive Officer
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, DATE,
AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE PAID RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED AT THE SPECIAL MEETING.
<PAGE> 6
PROSPECTUS
COMMON STOCK, $5.00 PAR VALUE
UNION PLANTERS CORPORATION
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
OF PEOPLES FIRST CORPORATION
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 ___________ 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 shareholders of Peoples First Corporation, a
corporation organized and existing under the laws of the State of Kentucky
("Peoples"), upon consummation of the proposed merger (the "Merger") of Peoples
with and into Union Planters Holding Corporation, a wholly owned subsidiary of
UPC organized under the laws of Tennessee ("UPC Merger Subsidiary"), with the
effect that UPC Merger Subsidiary will be the surviving corporation of the
Merger. The Merger will be consummated pursuant to the terms of the Agreement
and Plan of Merger, dated as of November 17, 1997, as amended April 8, 1998
(the "Agreement"), by and between UPC, UPC Merger Subsidiary and Peoples, and
the related Plan of Merger (the "Plan of Merger"), by and between UPC Merger
Subsidiary and Peoples.
At the effective time of the Merger (the "Effective Time"), except as
described herein, each issued and outstanding share of common stock of Peoples
("Peoples Common Stock") will be converted into and exchanged for the right to
receive 0.6 shares of UPC Common Stock, subject to certain possible adjustments
described herein (the "Exchange Ratio"). Cash (without interest) will be paid in
lieu of the issuance of any fractional shares of UPC Common Stock. The reported
closing sales price of UPC Common Stock on March 31, 1998 was $_______________,
resulting in an equivalent price per Peoples share of $_________. See
"Summary-Comparative Market Prices of Common Stock."
The Exchange Ratio could be adjusted upward if the quoted price of UPC
Common Stock falls below certain minimum thresholds. Under the Merger Agreement,
Peoples may elect not to complete the Merger if the average closing sales price
of UPC Common Stock during the 20 trading day period ending on the date of the
Special Meeting either (i) falls below $48.65 (or $29.19 on a per Peoples share
equivalent basis), or (ii) both falls below $51.69 (or $31.01 on a per Peoples
share equivalent basis) and falls by more than 10% below the relative
performance of a specified group of bank holding company common stocks,
comparing closing sales prices on November 21, 1997 and on the date of the
Special Meeting. However, if Peoples elects not to complete the Merger in either
of these circumstances, UPC may, but is not obligated to, elect to cause the
Merger to be completed. To do so, UPC must increase the Exchange Ratio by the
amount necessary so that each share of Peoples Common Stock will be converted in
the Merger into shares of UPC Common Stock having value, based on the average
closing price, of $29.19 in the case of (i) above or, in the case of (ii) above,
the lesser of $31.01 or the price that would reflect a decline in the closing
sales price of UPC Common Stock that is 10% below the relative performance of
the group of bank holding company common stocks between November 21, 1997 and
the Special Meeting date. This adjustment formula is described in greater detail
under the heading "DESCRIPTION OF THE TRANSACTION-- Possible Adjustment of
Exchange Ratio."
This Prospectus also serves as the Proxy Statement of Peoples, and is
being furnished to the shareholders of Peoples in connection with the
solicitation of proxies by the Peoples Board for use at its special meeting of
shareholders (including any adjournment or postponement thereof, the "Special
Meeting"), to be held on ________ __, 1998, 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 shareholders of Peoples on or about _______ __,
1998.
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.
--------------------
The date of this Proxy Statement is ________ __, 1998.
<PAGE> 7
AVAILABLE INFORMATION
Each of UPC and Peoples 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 and copied 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. 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 Peoples Common Stock are
traded on the Nasdaq National Market System (the "Nasdaq National Market") under
the symbol "PFKY," and reports, proxy and information statements, and other
information concerning Peoples 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 Peoples was supplied by Peoples.
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 PEOPLES 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 MERGER AND THE OTHER ACQUISITIONS (AS DEFINED
UNDER "BUSINESS OF UPC -- RECENT DEVELOPMENTS"), INCLUDING STATEMENTS RELATING
TO THE COST SAVINGS AND REVENUE ENHANCEMENTS THAT ARE EXPECTED TO BE REALIZED
FROM THE MERGER AND THE OTHER ACQUISITIONS AND THE EXPECTED IMPACT OF THE MERGER
AND THE OTHER 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
-ii-
<PAGE> 8
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS INCLUDE, AMONG OTHER THINGS, THE
FOLLOWING POSSIBILITIES: (I) EXPECTED COST SAVINGS FROM THE MERGER AND THE OTHER
ACQUISITIONS CANNOT BE FULLY REALIZED; (II) DEPOSIT ATTRITION, CUSTOMER LOSS, OR
REVENUE LOSS FOLLOWING THE MERGER AND THE OTHER 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, 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; (IX) CHANGES OCCUR IN THE SECURITIES MARKETS;
AND (X) DISRUPTIONS OF THE OPERATIONS OF UPC OR ANY OF ITS SUBSIDIARIES, OR ANY
OTHER GOVERNMENTAL OR PRIVATE ENTITY AS A RESULT OF THE "YEAR 2000 PROBLEM." THE
FORWARD-LOOKING EARNINGS ESTIMATES INCLUDED IN THIS PROXY STATEMENT HAVE NOT
BEEN EXAMINED OR COMPILED BY THE INDEPENDENT PUBLIC ACCOUNTANTS OF UPC AND
PEOPLES, 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 MERGER AND THE OTHER 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, 1997 (provided that any information included or
incorporated by reference in response to Items 402(a)(8), (i),
(k), or (l) of Regulation S-K of the SEC shall not be deemed
to be incorporated herein and is not part of the Registration
Statement) ("UPC's 1997 Form 10-K");
(b) UPC's Current Reports on Form 8-K dated January 15, 1998,
February 23, 1998, April _, 1998 and April __, 1998;
(c) The description of the current management and Board of
Directors of UPC contained in the Proxy Statement of UPC filed
pursuant to Section 14(a) of the Exchange Act for UPC's Annual
Meeting of Shareholders to be held on April 16, 1998;
(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 document previously filed with the SEC by Peoples
pursuant to the Exchange Act are hereby incorporated by reference herein (SEC
File No. 0-16839):
Peoples' Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 ("Peoples' 1997 Form 10-K").
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<PAGE> 9
All documents filed by UPC and/or Peoples 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 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). PEOPLES 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 PEOPLES
THAT HAS BEEN INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT OF WHICH
THIS PROXY STATEMENT IS A PART. SUCH REQUESTS SHOULD BE DIRECTED TO EILEEN M.
DUOBINIS-GRAY, SECRETARY, PEOPLES FIRST CORPORATION, 100 SOUTH FOURTH STREET,
PADUCAH, KENTUCKY 42002 (TELEPHONE (502) 441-1314). IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY _________ __, 1998.
-iv-
<PAGE> 10
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY....................................................................................... 1
The Parties............................................................................... 1
Peoples............................................................................... 1
UPC................................................................................... 1
UPC Merger Subsidiary................................................................. 2
Meeting Of Shareholders................................................................... 2
The Merger................................................................................ 3
General............................................................................... 3
Effect Of The Merger On Employee Options.............................................. 4
Reasons For The Merger, Recommendations Of The Board Of Directors Of Peoples.......... 4
Opinions Of Financial Advisors........................................................ 5
Effective Time........................................................................ 5
Exchange Of Stock Certificates........................................................ 5
Regulatory Approval And Other Conditions.............................................. 5
Waiver, Amendment, And Termination.................................................... 6
Dissenters' Rights.................................................................... 6
Interests Of Certain Persons In The Merger............................................ 6
Certain Federal Income Tax Consequences Of The Merger................................. 6
Accounting Treatment.................................................................. 7
Certain Differences In Shareholders' Rights........................................... 7
Option Agreement...................................................................... 7
Conduct Of Business Pending The Merger................................................ 7
Comparative Market Prices Of Common Stock................................................. 8
Historical And Pro Forma Comparative Per Share Data....................................... 9
Selected Financial Data................................................................... 11
SPECIAL MEETING OF PEOPLES SHAREHOLDERS....................................................... 16
Date, Place, Time, And Purpose............................................................ 16
Record Date, Voting Rights, Required Vote, And Revocability Of Proxies.................... 16
Solicitation Of Proxies................................................................... 17
Recommendation............................................................................ 17
DESCRIPTION OF TRANSACTION.................................................................... 18
General................................................................................... 18
Possible Adjustment Of Exchange Ratio..................................................... 18
Effect Of The Merger On Options........................................................... 22
Right to Restructure Transaction.......................................................... 22
Background Of And Reasons For The Merger.................................................. 22
Background Of The Merger.............................................................. 22
Peoples' Reasons For The Merger and
Recommendation Of The Peoples Board................................................... 24
UPC's Reasons For The Merger.......................................................... 25
Opinions Of Peoples' Financial Advisors....................................................... 25
Opinion of Keefe, Bruyette & Woods, Inc................................................... 25
Transaction Overview.................................................................. 27
Selected Peer Group Analysis.......................................................... 27
Selected Transaction Analysis......................................................... 28
Contribution Analysis................................................................. 28
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
PAGE
<S> <C>
Pro Forma Merger Analysis............................................................. 29
Net Present Value Per Share Analysis.................................................. 29
Opinion of Stifel, Nicolaus & Company..................................................... 30
Contribution Analysis................................................................. 32
Accretion/Dilution Summary............................................................ 32
Pro Forma Effect on Financial Condition............................................... 32
Present Value Analysis................................................................ 32
Discounted Cash Flow Analysis......................................................... 33
Summary Analysis of Bank Merger Transactions.......................................... 33
Effective Time Of The Merger.............................................................. 34
Dissenters' Rights........................................................................ 34
Distribution Of UPC Stock Certificates.................................................... 36
Conditions To Consummation Of The Merger.................................................. 37
Regulatory Approval....................................................................... 38
Waiver, Amendment, And Termination........................................................ 38
Conduct Of Business Pending The Merger.................................................... 39
Management And Operations After The Merger................................................ 40
Interests Of Certain Persons In The Merger................................................ 41
General............................................................................... 41
Employment Agreements................................................................. 41
Officer Retention Agreements.......................................................... 42
Stock Options......................................................................... 42
Indemnification; Directors And Officers Insurance..................................... 43
Certain Federal Income Tax Consequences Of The Merger..................................... 43
Accounting Treatment...................................................................... 45
Expenses And Fees......................................................................... 45
Resales Of UPC Common Stock............................................................... 46
Option Agreement.......................................................................... 46
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS................................................ 49
Anti-Takeover Provisions Generally........................................................ 50
Authorized Capital Stock.................................................................. 50
UPC................................................................................... 50
Peoples............................................................................... 51
Amendment Of Charter And Bylaws........................................................... 52
UPC................................................................................... 52
Peoples............................................................................... 52
Classified Board Of Directors And Absence Of Cumulative Voting............................ 52
UPC................................................................................... 52
Peoples............................................................................... 53
Director Removal And Vacancies............................................................ 53
UPC................................................................................... 53
Peoples............................................................................... 53
Limitations On Director Liability......................................................... 53
UPC................................................................................... 53
Peoples............................................................................... 53
Indemnification........................................................................... 54
UPC................................................................................... 54
Peoples............................................................................... 54
Special Meeting Of Shareholders........................................................... 55
UPC................................................................................... 55
Peoples............................................................................... 55
</TABLE>
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<TABLE>
<CAPTION>
PAGE
<S> <C>
Actions By Shareholders Without A Meeting................................................. 55
UPC................................................................................... 55
Peoples............................................................................... 55
Shareholder Nominations And Proposals..................................................... 55
UPC................................................................................... 55
Peoples............................................................................... 55
Business Combinations..................................................................... 55
UPC................................................................................... 55
Peoples............................................................................... 57
Limitations On Ability To Vote Stock...................................................... 58
UPC................................................................................... 58
Peoples............................................................................... 58
Dissenters' Rights Of Appraisal........................................................... 58
UPC................................................................................... 58
Peoples............................................................................... 58
Shareholders' Rights To Examine Books And Records......................................... 58
UPC................................................................................... 58
Peoples............................................................................... 59
Dividends................................................................................. 59
UPC................................................................................... 59
Peoples............................................................................... 59
COMPARATIVE MARKET PRICES AND DIVIDENDS....................................................... 59
BUSINESS OF PEOPLES........................................................................... 61
General................................................................................... 61
Beneficial Ownership Of Peoples Common Stock.............................................. 61
BUSINESS OF UPC............................................................................... 63
General................................................................................... 63
Recent Developments....................................................................... 64
Recently Completed Acquisition........................................................ 64
Other Pending Acquisitions............................................................ 64
Earnings Considerations Related To The Merger And The Other Acquisitions.............. 65
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION........................................ 66
CERTAIN REGULATORY CONSIDERATIONS............................................................. 72
General................................................................................... 72
Payment Of Dividends...................................................................... 73
Capital Adequacy.......................................................................... 74
Support Of Subsidiary Institutions........................................................ 75
Prompt Corrective Action.................................................................. 75
DESCRIPTION OF UPC CAPITAL STOCK.............................................................. 77
UPC Common Stock.......................................................................... 77
General............................................................................... 77
Dividends............................................................................. 77
Liquidation Rights.................................................................... 77
UPC Preferred Stock....................................................................... 78
Series A Preferred Stock.............................................................. 78
Series E Preferred Stock.............................................................. 78
</TABLE>
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<TABLE>
<CAPTION>
PAGE
<S> <C>
OTHER MATTERS................................................................................. 78
SHAREHOLDER PROPOSALS......................................................................... 78
EXPERTS....................................................................................... 79
OPINIONS...................................................................................... 79
</TABLE>
Appendices APPENDICES
Appendix A Agreement and Plan of Merger, dated November 17, 1998, as
restated to reflect the amendment thereto, dated April 8,
1998, by and between Peoples First Corporation, Union Planters
Corporation, and Union Planters Holding Corporation (without
exhibits)
Appendix B Plan of Merger, dated November 17, 1998
Appendix C Opinions of Keefe, Bruyette & Woods, Inc. and and Stifel
Nicolaus & Company, Inc.
Appendix D Subtitle 13 of the Kentucky Business Corporation Act
-viii-
<PAGE> 14
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROXY STATEMENT AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE. THIS SUMMARY
IS NOT INTENDED TO BE A COMPLETE DESCRIPTION OF THE MATTERS COVERED IN THIS
PROXY STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT. SHAREHOLDERS ARE URGED TO READ CAREFULLY THE ENTIRE PROXY STATEMENT,
INCLUDING THE APPENDICES. AS USED IN THIS PROXY STATEMENT, THE TERMS "UPC" AND
"PEOPLES" REFER TO UNION PLANTERS CORPORATION AND PEOPLES FIRST CORPORATION,
RESPECTIVELY, AND, WHERE THE CONTEXT REQUIRES, TO THOSE ENTITIES AND THEIR
RESPECTIVE SUBSIDIARIES.
THE PARTIES
PEOPLES. Peoples, a Kentucky corporation, is a bank holding company
registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") under the Bank Holding Company Act of 1956, as amended (the
"BHC Act"). As of December 31, 1997, Peoples had total consolidated assets of
approximately $1.5 billion, total consolidated loans of approximately $1.1
billion, total consolidated deposits of approximately $1.2 billion, and total
consolidated shareholders' equity of approximately $154.7 million.
Peoples conducts a complete range of commercial and personal banking
activities in Western Kentucky and Northwestern Tennessee through its wholly
owned bank subsidiary, The Peoples First National Bank & Trust Company of
Paducah, ("Peoples Bank"). Peoples Bank operates 28 branches in ten Western
Kentucky counties and in Montgomery County, Tennessee.
The principal executive offices of Peoples are located at 100 South
Fourth Street, Paducah, Kentucky 42002 and its telephone number at such address
is (502) 441-1200. Additional information with respect to Peoples 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 PEOPLES."
UPC. UPC, a Tennessee corporation, is a bank holding company registered
with the Federal Reserve under the BHC Act. As of December 31, 1997, UPC had
total consolidated assets of approximately $18.1 billion, total consolidated
loans of approximately $12.7 billion, total consolidated deposits of
approximately $13.4 billion, and total consolidated shareholders' equity of
approximately $1.7 billion.
UPC conducts its business activities through its principal bank
subsidiary, the $15.5 billion asset Union Planters Bank, National Association
("UPB"), a multi-state national banking association, founded in 1869 and
headquartered in Memphis, Tennessee with branches in Tennessee, Arkansas,
Missouri, Kentucky, Alabama, Mississippi and Louisiana, one savings association
headquartered in Tennessee, two other Tennessee chartered banks headquartered in
Tennessee and one Florida chartered bank headquartered in Miami, Florida
(collectively, with UPB, the "UPC Banking Subsidiaries"). Through the UPC
Banking Subsidiaries, UPC provides a diversified range of financial services in
the communities in which it operates and maintains approximately 514 banking
offices and 651 automated teller machines ("ATMs"). UPC's total assets at
December 31, 1997 are allocable by state (before consolidating adjustments)
approximately as follows: $9.8 billion in Tennessee; $3.5 billion in
Mississippi; $2.2 billion in Florida; $1.2 billion in Missouri; $806 million in
Arkansas; $698 million in Louisiana; $449 million in Alabama; and $115 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 13 acquisitions
in 1994, three in 1995, seven in 1996, six in 1997, adding approximately $3.8
billion in total assets in 1994, $1.3 billion in 1995, $4.2 billion in 1996 and
$3.6 billion in 1997. Through April 1, 1998, UPC has completed the acquisition
of two institutions with approximately $539 million in total assets (the
"Recently Completed Acquisitions"). In addition, UPC was, as of that date, a
party to definitive agreements to acquire ten financial institutions, not
including Peoples,
<PAGE> 15
and to purchase certain branch locations and assume deposit liabilities of
California Federal Bank in Florida ("CalFed Branch Purchase")(collectively
referred to as the "Other Pending Acquisitions"). The Other Pending Acquisitions
had aggregate total assets of approximately $11.1 billion at December 31, 1997.
For purposes of this Proxy Statement, the "Recently Completed Acquisitions" and
"Other Pending Acquisitions" are collectively referred to as the "Other
Acquisitions". The largest of the Other Acquisitions is UPC's proposed
acquisition of Magna Group, Inc. ("MGR"), St. Louis, Missouri, which had total
consolidated assets of approximately $7.1 billion at December 31, 1997. MGR has
entered into a definitive agreement to acquire Charter Financial, Inc. and its
subsidiary, Charter Bank, S.B. (the "Charter Acquisition"), which MGR considers
probable of consummation. Charter is located in Sparta, Illinois, and had at
December 31, 1997, total assets of approximately $382 million, total deposits of
approximately $276 million, and total stockholders' equity of approximately
$58.4 million. The Charter Acquisition is expected to be accounted for as a
purchase. For purposes of this Proxy Statement, including the historical and
equivalent pro forma data, the terms "Other Acquisitions" and "Other Pending
Acquisitions" include the Charter Acquisition. For additional information, see
"BUSINESS OF UPC -- Recent Developments" and "PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION." For a discussion of UPC's acquisition program,
including a discussion of the significant charges UPC has incurred incidental to
acquisitions in the past three fiscal years, see the caption "Acquisitions"
(pages 10, 11 and 12) in UPC's 1997 Annual Report to Shareholders and Note 2 to
UPC's audited consolidated financial statements for the years ended December 31,
1997, 1996, and 1995 contained (pages 49 and 50) in such Annual Report to
Shareholders. UPC's 1997 Annual Report to Shareholders is included as Exhibit 13
to UPC's 1997 Form 10-K and 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 and other entities engaged in lines of
business permissible for banks and bank holding companies. 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 in connection with acquisitions. For a description of the acquisitions
in addition to the Merger 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."
UPC MERGER SUBSIDIARY. UPC Merger Subsidiary, a Tennessee corporation,
is a wholly owned subsidiary of UPC. UPC Merger Subsidiary is a bank holding
company which owns all of the common stock of UPB, all the outstanding stock of
Union Planters Bank of Florida and other permissible investments. The directors
and officers of UPC Merger Subsidiary are executive officers of UPC.
MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the holders of Peoples
Common Stock in connection with the solicitation by the Board of Directors of
Peoples (the "Peoples Board") of proxies for use at the Special Meeting at which
Peoples shareholders will be asked to vote upon (i) a proposal to approve the
Agreement and the Plan of Merger and (ii) such other business as may properly
come before the meeting but which is not now anticipated. The Special Meeting
will be held at the Executive Inn Riverfront located on Executive Inn Boulevard,
Paducah, Kentucky, at 4:00 p.m., local time, on __________, 1998. See "SPECIAL
MEETING OF PEOPLES SHAREHOLDERS -- Date, Place, Time, and Purpose."
The Peoples Board has fixed the close of business on ____________,
1998, as the record date (the "Record Date") for determination of the
shareholders entitled to notice of and to vote at the
2
<PAGE> 16
Special Meeting. Only holders of record of shares of Peoples Common Stock on the
Record Date will be entitled to notice of and to vote at the Special Meeting.
Each share of Peoples Common Stock is entitled to one vote. Shareholders who
execute proxies solicited by the Peoples Board retain the right to revoke them
at any time prior to the proxies being voted at the Special Meeting. On the
Record Date, there were 10,024,311 shares of Peoples Common Stock outstanding.
See "SPECIAL MEETING OF PEOPLES SHAREHOLDERS -- Record Date, Voting Rights,
Required Vote, and Revocability of Proxies."
Pursuant to Peoples' Articles of Incorporation, approval of the
Agreement and the Plan of Merger and the transactions contemplated thereby
requires the affirmative vote of the holders of a majority of the votes entitled
to be cast at the Special Meeting.
The directors and executive officers of Peoples (including immediate
family members and affiliated entities) owned, as of the Record Date, 777,438
shares (excluding shares underlying stock options), or approximately 7.8% of the
outstanding shares of Peoples Common Stock.
The directors and executive officers of UPC owned, as of the Record
Date, no shares of Peoples Common Stock. As of the Record Date, UPC held no
shares of Peoples Common Stock in a fiduciary capacity for others, or as a
result of debts previously contracted, and Peoples Bank held 847,181 shares of
Peoples Common Stock in a fiduciary capacity for others with respect to which
Peoples Bank has sole or shared voting power. See "SPECIAL MEETING OF PEOPLES
SHAREHOLDERS -- Record Date, Voting Rights, Required Vote, and Revocability of
Proxies."
For information with respect to beneficial owners of 5.0% or more of
the outstanding shares of Peoples Common Stock, see "BUSINESS OF PEOPLES --
Beneficial Ownership of Peoples Common Stock."
THE MERGER
GENERAL. The Agreement provides for the acquisition of Peoples by UPC
pursuant to the merger of Peoples with and into UPC Merger Subsidiary, a wholly
owned subsidiary of UPC organized under the laws of Tennessee, with the effect
that UPC Merger Subsidiary will be the surviving corporation of the Merger. At
the Effective Time, each share (other than shares (the "Dissenting Shares") of
Peoples Common Stock with respect to which the holder has properly perfected the
holder's rights to dissent under Subtitle 13 of Chapter 271B of the Kentucky
Business Corporation Act (the "KBCA")) of Peoples Common Stock then issued and
outstanding, including the associated Peoples Rights (as hereinafter defined)
(excluding shares held by Peoples, 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 and exchanged for the right to
receive 0.6 shares of UPC Common Stock, subject to possible adjustment as
described below (the "Exchange Ratio").
If either (A) (i) the Average Closing Price (as described below) of UPC
Common Stock is less than $51.69 (or $31.01 on a Peoples per share equivalent
basis) and (ii) the relative performance of UPC Common Stock (as measured by
comparing the Average Closing Price to $60.8125, which was the closing price of
UPC Common Stock on the fourth trading day after the public announcement of the
Merger) is more than 10% lower than the relative performance of the common
stocks of a specified group (the "Index Group") of bank holding companies (as
measured by comparing the Index Price on the date of the Special Meeting to the
Index Price on the fourth trading day after the public announcement of the
Merger), or (B) the Average Closing Price shall be less than $48.65 (or $29.19
on a Peoples per share equivalent basis), then Peoples may elect to terminate
the Agreement (the "Stock Price Termination Right") unless UPC increases the
Exchange Ratio in the case of a failure to satisfy the condition in clause (A),
to equal the lesser of (i) the number obtained by dividing the product of $51.69
and the Exchange Ratio by the Average Closing Price or (ii) the number obtained
by dividing the product of the Index Ratio and the Exchange Ratio by the Parent
Ratio, or in the case of a failure to satisfy the condition in clause (B), to
the number obtained by dividing the product of $48.65 and the Exchange Ratio by
the Average Closing
3
<PAGE> 17
Price. If the Merger is approved by the Peoples shareholders, the Peoples Board
could elect not to terminate the Agreement and to consummate the Merger without
resoliciting the Peoples shareholders even if Peoples' Stock Price Termination
Right is triggered. The Peoples Board would determine whether to exercise its
right to terminate the Agreement only after evaluating, in consultation with its
financial and legal advisors, the financial condition of UPC and Peoples and all
relevant facts and circumstances that exist at the time. If the Peoples Board
were to elect not to exercise its termination right, the value of the shares of
UPC Common Stock that Peoples shareholders would receive, based on the Exchange
Ratio and the Average Closing Price, would be (i) less than the lesser of $31.01
and the price that would reflect a decline in the market price of UPC Common
Stock since November 20, 1997, which is 10% more than the relative decline of
the Index Group stocks during the same period; (ii) less than $29.19; or (iii)
less than both.
Under no circumstances would the Exchange Ratio be less than 0.6 shares
of UPC Common Stock for each share of Peoples Common Stock. See "DESCRIPTION OF
TRANSACTION -- Possible Adjustment of Exchange Ratio."
The Average Closing Price will be 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 20 consecutive full trading days in which such shares are
traded on the NYSE ending at the close of trading on the date of the Special
Meeting.
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 Peoples shareholder would otherwise be entitled upon consummation of
the Merger, in an amount equal to such fraction multiplied by the closing price
of one share of UPC Common Stock on the NYSE (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."
EFFECT OF THE MERGER ON EMPLOYEE OPTIONS. At the Effective Time, each
option to purchase shares of Peoples Common Stock, pursuant to stock options
("Employee Options") granted by Peoples under the Peoples Stock Plans, as
defined in the Agreement, which are outstanding at the Effective Time, whether
or not exercisable, shall be assumed by UPC and will be converted into and
become an option with respect to UPC Common Stock on a basis adjusted to reflect
the Exchange Ratio. See "DESCRIPTION OF TRANSACTION -- Effect of the Merger on
Employee Options."
As of the Record Date, Peoples had 10,024,311 shares of Peoples Common
Stock issued and outstanding and 541,934 additional shares of Peoples Common
Stock subject to Employee Options. Based upon an Exchange Ratio of 0.6, upon
consummation of the Merger, UPC would issue up to approximately 6,014,586 shares
of UPC Common Stock, excluding shares subject to assumed Employee Options.
Accordingly, UPC would then have outstanding up to approximately _____________
shares of UPC Common Stock based on the number of shares of UPC Common Stock
outstanding on _____________, 1998 (and excluding shares to be issued pursuant
to Other 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
PEOPLES. The Peoples Board believes that the Agreement and the Merger are in the
best interests of Peoples and its shareholders. THE PEOPLES BOARD UNANIMOUSLY
RECOMMENDS THAT PEOPLES SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT AND THE
PLAN OF MERGER. The Peoples Board believes that the Merger will result in a
company with expanded opportunities for profitable growth and that the combined
resources and capital of Peoples 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, Peoples'
directors considered, among other things, UPC's business and financial
condition, the financial terms and income
4
<PAGE> 18
tax consequences of the Merger, the effect on shareholder value of Peoples
continuing as an independent entity compared to the effect of the Merger with
UPC, and the opinions of Keefe, Bruyette & Woods, Inc. ("KBW") and and Stifel
Nicolaus & Company, Inc. ("Stifel") as to the fairness of the Exchange Ratio,
from a financial point of view, to the shareholders of Peoples. See "DESCRIPTION
OF TRANSACTION -- Background of and Reasons for the Merger."
OPINIONS OF FINANCIAL ADVISORS. KBW and Stifel have rendered opinions
to the Peoples Board that, based on and subject to the procedures, matters, and
limitations described in their opinions and such other matters as they
considered relevant, as of the date of their opinions, the Exchange Ratio is
fair, from a financial point of view, to the shareholders of Peoples. The
opinions of KBW and Stifel dated as of the date of this Proxy Statement are
attached as Appendix C to this Proxy Statement. Peoples shareholders are urged
to read the opinions in their entirety for a description of the procedures
followed, matters considered, and limitations on the reviews undertaken in
connection therewith. See "DESCRIPTION OF TRANSACTION -- Opinions of Peoples'
Financial Advisors."
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 Kentucky Articles of Merger become effective with the
Secretary of State of the Commonwealth of Kentucky and the Tennessee Articles of
Merger become effective with the Secretary of State of the State of Tennessee.
Subject to the terms and conditions of the Agreement, unless otherwise agreed
upon by Peoples and UPC, the parties will use their reasonable efforts to cause
the Effective Time to occur on such date as may be designated by UPC within 45
days following the last to occur of (i) the effective date of the last consent
of any regulatory authority having authority over and approving or exempting the
Merger (taking into account any requisite waiting period in respect thereof),
(ii) the date on which the shareholders of Peoples approve the Agreement, and
(iii) the date on which all other conditions precedent (other than those
conditions which relate to actions to be taken at the Closing) to each party's
obligations under the Agreement have been satisfied or waived (to the extent
available by such party). See "DESCRIPTION OF TRANSACTION -- Effective Time of
the Merger," "-- Conditions to Consummation of the Merger," and "-- Waiver,
Amendment, and Termination."
NO ASSURANCE CAN BE PROVIDED THAT THE NECESSARY SHAREHOLDER AND
REGULATORY APPROVALS CAN BE OBTAINED OR THAT THE OTHER CONDITIONS PRECEDENT TO
THE MERGER CAN OR WILL BE SATISFIED. PEOPLES AND UPC ANTICIPATE THAT ALL
CONDITIONS TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE
MERGER CAN BE CONSUMMATED ON OR BEFORE _____________, 1998. HOWEVER, DELAYS IN
THE CONSUMMATION OF THE MERGER COULD OCCUR.
EXCHANGE OF STOCK CERTIFICATES. Promptly after the Effective Time, UPC
will cause UPB, 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 Peoples 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 Peoples Common Stock in lieu
of issuing 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 Peoples, UPC, or the
Exchange Agent be liable to any holder of Peoples Common Stock for any UPC
Common Stock or dividends thereon or cash delivered in good faith to a public
official pursuant to any applicable abandoned property, escheat, or similar law.
REGULATORY APPROVAL AND OTHER CONDITIONS. The Merger is subject to the
prior approval of the Federal Reserve. An application has been filed with each
of these regulatory authorities for the requisite approval. By letter dated
April 1, 1998, the Federal Reserve advised UPC that the Merger had been
approved.
5
<PAGE> 19
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of Peoples shareholders, receipt of
an opinion of counsel as to the tax-free nature of certain aspects of the
Merger, 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 consent
of the Peoples Board and the Board of Directors of UPC (the "UPC Board"), or by
the action of the Board of Directors of either company under certain
circumstances, including, but not limited to, (i) if the Merger is not
consummated by August 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, and
(ii) by the Peoples Board, in certain circumstances, if 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 Peoples without the approval of
shareholders, whether before or after approval of the Agreement and the Plan of
Merger by Peoples shareholders. See "DESCRIPTION OF TRANSACTION -- Possible
Adjustment of Exchange Ratio" and "-- Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS. Any shareholder of Peoples will have the right to
dissent from the Merger and to demand a determination of the fair value of the
shareholder's shares in the event the Merger is approved and the Merger
consummated. The right of any shareholder to receive the fair value of his or
her shares is contingent upon strict compliance with the provisions of Subtitle
13 of the KBCA, a copy of which is included as Appendix D to this Proxy
Statement/Prospectus. See "DESCRIPTION OF TRANSACTION-Dissenters' Rights."
Pursuant to Subtitle 13 of the KBCA, any holder of Peoples Common Stock
who desires to dissent from the Merger must initially take two actions to
perfect his or her rights. First, the shareholder must deliver to Peoples,
before the vote on the Merger is taken, written notice of his or her intent to
demand payment for his or her shares if the Merger is consummated. Merely voting
against the Merger or returning a proxy indicating a vote against the Merger
will not satisfy this notice requirement. Second, the shareholder must not vote
his or her shares in favor of the Merger. A shareholder's failure to vote with
respect to the Merger will not, by itself, constitute a waiver of that
shareholder's right to dissent under the KBCA. However, if a shareholder returns
a signed proxy but does not specify a vote against approval of the Merger or a
direction to abstain, the proxy, if not revoked, will be voted for approval of
the Merger, which will have the effect of waiving that shareholder's dissenter's
rights.
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain members of Peoples'
management and the Peoples Board have interests in the Merger in addition to
their interests as shareholders of Peoples generally. These interests relate to:
(i) the receipt, under certain circumstances, by the Executive Officers (as
defined herein) of certain economic benefits pursuant to the terms of their
respective employment agreements; (ii) the assumption by UPC of the Employee
Options on a basis that reflects the Exchange Ratio, including Employee Options
held by the "Executive Officer Group" (as defined herein) and the "Non-Executive
Officer Director Group" (as defined herein) entitling them, as of the Record
Date, to purchase in the aggregate 541,934 shares of Peoples Common Stock having
an aggregate value of approximately $12 million (based upon the $37.00 closing
price of Peoples Common Stock on the Nasdaq National Market on March 31, 1998);
and (iii) the continued indemnification by UPC of the former directors,
officers, employees, and agents of Peoples 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, for federal income tax purposes, no gain or loss will be recognized
by a Peoples shareholder upon the exchange of all of such shareholder's shares
of Peoples Common Stock solely for shares of UPC Common Stock (except with
respect to cash received in lieu of a fractional share of UPC Common Stock).
Consummation of the Merger is conditioned upon receipt by UPC of an opinion of
Wyatt, Tarrant & Combs and upon receipt by Peoples of an opinion of Brown, Todd
6
<PAGE> 20
& Heyburn PLLC substantially to this effect. TAX CONSEQUENCES OF THE MERGER FOR
INDIVIDUAL TAXPAYERS CAN VARY, HOWEVER, AND ALL PEOPLES SHAREHOLDERS ARE URGED
TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE EFFECT OF THE MERGER ON THEM
UNDER FEDERAL, STATE, LOCAL, AND FOREIGN TAX LAWS. For a further discussion of
the federal income tax consequences of the Merger, see "DESCRIPTION OF
TRANSACTION -- Certain Federal Income Tax Consequences of the Merger."
ACCOUNTING TREATMENT. It is intended that the Merger will be accounted
for as a pooling of interests transaction for accounting and financial reporting
purposes. See "DESCRIPTION OF TRANSACTION -- Accounting Treatment."
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS. At the Effective Time,
Peoples shareholders, whose rights are governed by Peoples' Amended and Restated
Articles of Incorporation, as amended (the "Articles"), and Bylaws (the
"Bylaws") and by the KBCA, will automatically become UPC shareholders, and their
rights as UPC shareholders will be governed by UPC's Restated Charter (the
"Charter") and Bylaws and the Tennessee Business Corporation Act (the "TBCA").
The rights of UPC shareholders differ from the rights of Peoples shareholders 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 SHAREHOLDERS."
OPTION AGREEMENT. Peoples, as issuer, and UPC, as grantee, entered into
a stock option agreement (the "Option Agreement"), which became effective on
November 17, 1997, pursuant to which Peoples granted UPC an option to purchase,
under certain circumstances and subject to certain possible adjustments and
limitations, up to 1,991,406 shares of Peoples Common Stock at a price of $33.00
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 Peoples. To the knowledge of
Peoples, no event that would permit exercise of the Option Agreement has
occurred as of the date of this Proxy Statement. The Option Agreement was
granted by Peoples 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 completed by making it more difficult and more expensive for a third
party to acquire control of Peoples. See "DESCRIPTION OF TRANSACTION -- Option
Agreement."
CONDUCT OF BUSINESS PENDING THE MERGER. Each party has agreed in the
Agreement to, among other things, take no action that would materially adversely
affect the ability of any party to perform its covenants and agreements under
the Agreement. In addition, Peoples has agreed not to take certain actions
relating to the operation of Peoples 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 $500,000, except in
the ordinary course of business consistent with past practices; (ii) paying any
dividends, except a quarterly dividend of no more than $0.24 per share of
Peoples Common Stock 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."
7
<PAGE> 21
COMPARATIVE MARKET PRICES OF COMMON STOCK
Shares of UPC Common Stock are traded on the NYSE under the symbol
"UPC." Shares of Peoples Common Stock are quoted on the Nasdaq National Market
under the symbol "PFKY." The following table sets forth the reported closing
sale prices per share for Peoples Common Stock and UPC Common Stock and the
equivalent per share prices giving effect to the Merger (as explained below) for
Peoples Common Stock on (i) November 17, 1997, the last trading day preceding
the public announcement of the execution of the Agreement, and (ii) April ____,
1998, the latest practicable date prior to the mailing of this Proxy Statement.
<TABLE>
<CAPTION>
Equivalent Price
PEOPLES COMMON STOCK UPC COMMON STOCK PER PEOPLES SHARE(1)
-------------------- ---------------- --------------------
<S> <C> <C> <C>
November 17, $31.88 $60.00 $36.00
1997
April ___, 1998
</TABLE>
- ---------------
(1) The equivalent price per share of Peoples 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 0.6. 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.
8
<PAGE> 22
HISTORICAL AND PRO FORMA COMPARATIVE 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 Peoples; (ii) a
pro forma combined basis per share of UPC Common Stock, giving effect to the
Merger only; (iii) a pro forma combined basis per share of UPC Common Stock,
giving effect to the Merger and the Other Acquisitions; (iv) an equivalent pro
forma basis per share of Peoples Common Stock, giving effect to the Merger only;
and (v) an equivalent pro forma basis per share of Peoples Common Stock, giving
effect to the Merger and the Other Acquisitions. The UPC pro forma combined
information and the Peoples equivalent pro forma information give effect to the
Merger and the Other Acquisitions and reflect an Exchange Ratio of 0.6. The
Merger, each of the Other Pending Acquisitions (with the exception of the
acquisitions of Duck Hill Bank, the Charter Acquisition and the CalFed Branch
Purchase) and the recently completed acquisition of Security Bancshares, Inc.
are expected to be accounted for using the pooling of interests method of
accounting. The recently completed acquisition of Sho-Me Financial Corp. and the
Other Pending Acquisitions of Duck Hill Bank, the Charter Acquisition and the
CalFed Branch Purchase are expected to be accounted for using the purchase
method of accounting. The pro forma information for 1997 reflects the
acquisition of Peoples and the Other Acquisitions as of January 1, 1997. The pro
forma information for 1996 and 1995 reflects only the acquisition of MGR,
Peoples, Ambanc Corp. ("Ambanc") and Merchants Bancshares, Inc. ("Merchants")
because the Other Acquisitions (other than MGR, Peoples, Ambanc and Merchants)
are not considered material to UPC from a financial statement presentation
standpoint. Furthermore, the pro forma impact of the CalFed Branch Purchase on
the pro forma statement of earnings for each of the three years presented has
been excluded due to the lack of information available for operation of the
branches on a historical basis. 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 pro forma data does not reflect preliminary estimates by
UPC of acquisition-related charges to be incurred in connection with
consummation of the Merger and the Other Acquisitions. For additional
information with respect to the estimated charges UPC anticipates it would incur
in connection with the Merger and the Other Acquisitions, see "BUSINESS OF UPC
- -- Recent Developments." For a discussion of UPC's acquisition program,
including a discussion of the significant charges UPC has incurred incidental to
its acquisition program over the past three fiscal years, see the caption
"Acquisitions" (on pages 10, 11 and 12) in UPC's 1997 Annual Report to
Shareholders and Note 2 to UPC's audited consolidated financial statements for
the years ended December 31, 1997, 1996 and 1995 (on pages 49 and 50) contained
in such UPC 1997 Annual Report to Shareholders. UPC's 1997 Annual Report to
Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K, and Exhibit 13
is incorporated by reference herein to the extent indicated herein.
See "DOCUMENTS INCORPORATED BY REFERENCE."
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 Peoples, including the respective notes thereto. See "DOCUMENTS
INCORPORATED BY REFERENCE," "-- Selected Financial Data," and "BUSINESS OF UPC
- -- Recent Developments."
9
<PAGE> 23
UNION PLANTERS CORPORATION
AND PEOPLES FIRST CORPORATION
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, (1)
----------------------------
1997 1996 1995
-------------------------------------------
<S> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
UPC
Basic $2.54 $2.13 $2.79
Diluted 2.45 2.05 2.66
UPC pro forma (Peoples Only)
Basic 2.55 2.19 2.78
Diluted 2.46 2.11 2.65
UPC pro forma (all Other Acquisitions
and Peoples)(2)
Basic 2.52 2.24 2.56
Diluted 2.45 2.17 2.46
Peoples
Basic 1.62 1.75 1.54
Diluted 1.59 1.72 1.51
Peoples equivalent pro forma (Peoples only)(1)
Basic 1.53 1.31 1.67
Diluted 1.48 1.27 1.59
Peoples equivalent pro forma (all Other Acquisitions
and Peoples)(1)(2)
Basic 1.51 1.34 1.54
Diluted 1.47 1.30 1.48
CASH DIVIDENDS PER SHARE
UPC $1.495 $1.08 $ .98
Peoples .82 .63 .48
Peoples equivalent pro forma (1) .90 .65 .59
DECEMBER 31, 1997
-----------------
BOOK VALUE PER COMMON SHARE
UPC $20.72
UPC pro forma (Peoples only) 21.07
UPC pro forma (all Other Acquisitions 21.73
and Peoples)
Peoples 15.46
Peoples equivalent pro forma (Peoples only)(1) 12.64
Peoples equivalent pro forma (all Other
Acquisitions and Peoples)(1) 13.04
</TABLE>
- ---------------
(1) The equivalent pro forma per share data for Peoples is computed by
multiplying UPC's pro forma information by an Exchange Ratio of 0.6.
(2) Pro forma information for 1996 and 1995 reflects only the acquisitions
of MGR, Ambanc, Merchants and Peoples; the remaining Other Acquisitions
are not considered material to UPC from a financial statement
presentation standpoint.
10
<PAGE> 24
SELECTED FINANCIAL DATA
The following tables present selected consolidated financial data for
UPC for the five-year period ended December 31, 1997, and selected consolidated
financial data for Peoples for the five-year period ended December 31, 1997. 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 1997 Form 10-K for
the year ended December 31, 1997 and should be read in conjunction therewith and
with the notes thereto. See "DOCUMENTS INCORPORATED BY REFERENCE." The
information for Peoples has been derived from the consolidated financial
statements of Peoples incorporated in this Proxy Statement by reference to
Peoples' 1997 Form 10-K for the year ended December 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. See "BUSINESS OF UPC - -- Recent
Developments" for information concerning UPC's Other Acquisitions as defined
therein.
11
<PAGE> 25
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,(1)
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 770,385 $ 744,852 $ 669,451 $ 627,439 $ 558,036
Provision for losses on loans 113,633 68,948 33,917 15,989 35,235
Investment securities gains
(losses) 2,104 4,099 1,433 (21,302) 6,686
Other noninterest income 359,506 316,403 292,277 237,129 228,996
Noninterest expense 697,704 731,817 607,189 634,965 550,045
----------- ----------- ----------- ----------- -----------
Earnings before income
taxes, extraordinary item,
and accounting changes 320,658 264,589 322,055 192,312 208,438
Applicable income taxes 111,897 93,115 110,799 63,058 66,570
----------- ----------- ----------- ----------- -----------
Earnings before extra-
ordinary item and
accounting changes 208,761 171,474 211,256 129,254 141,868
Extraordinary item and
accounting changes,
net of taxes - - - - 4,505
----------- ----------- ----------- ----------- -----------
Net earnings $ 208,761 $ 171,474 $ 211,256 $ 129,254 $ 146,373
=========== =========== =========== =========== ===========
PER COMMON SHARE DATA(2)
Basic
Earnings before extra-
ordinary item and
accounting changes $ 2.54 $ 2.13 $ 2.79 $ 1.67 $ 2.19
Net earnings 2.54 2.13 2.79 1.67 2.27
Diluted
Earnings before extra-
ordinary item and
accounting changes 2.45 2.05 2.66 1.63 2.13
Net earnings 2.45 2.05 2.66 1.63 2.21
Cash dividends 1.495 1.08 .98 .88 .72
Book value 20.72 19.57 18.34 15.28 14.50
BALANCE SHEET DATA
(AT PERIOD END)
Total assets $18,105,079 $18,330,588 $17,182,861 $15,893,162 $14,180,524
Loans, net of unearned
income 12,658,564 12,578,571 10,917,307 10,074,458 8,077,152
Allowance for losses on
loans 225,389 189,118 179,968 174,604 172,330
Investment securities 3,247,680 3,387,217 3,970,036 4,016,506 4,124,679
Total deposits 13,440,269 13,514,144 13,047,488 12,506,212 11,732,707
Short-term borrowings 831,627 961,051 974,416 887,074 392,980
Long-term debt(3)
Parent company 373,746 373,459 214,758 114,790 114,729
Subsidiary banks 1,176,158 1,332,534 1,087,273 819,982 481,193
Total shareholders' equity 1,746,866 1,618,883 1,450,546 1,202,686 1,111,158
Average assets 17,991,160 18,202,355 16,263,164 15,472,568 13,823,185
Average shareholders' equity 1,690,992 1,533,348 1,334,995 1,226,852 973,087
Average shares outstanding
(in thousands)(2)
Basic 80,336 77,240 72,512 71,678 56,169
Diluted 85,195 83,542 78,798 77,579 60,832
</TABLE>
12
<PAGE> 26
UNION PLANTERS CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
Years Ended December 31,(1)
---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.16% 0.94% 1.30% 0.84% 1.06%
Return on average common
equity 12.54 11.38 16.56 10.74 15.88
Net interest income (taxable-
equivalent)/average earning
assets(4) 4.79 4.56 4.60 4.56 4.58
Loans/deposits 94.18 93.08 83.67 80.56 68.84
Common and preferred
dividend payout ratio 54.96 44.57 29.25 35.03 24.42
Equity/assets (period end) 9.65 8.83 8.44 7.57 7.84
Average shareholders'
equity/average total assets 9.40 8.42 8.21 7.93 7.04
Leverage ratio 10.48 9.50 8.11 7.56 7.73
Tier 1 capital/risk-weighted
assets 15.51 14.92 13.28 12.58 13.65
Total capital/risk-weighted
assets 18.12 17.60 16.21 14.67 15.92
CREDIT QUALITY RATIOS(5)
Allowance/period end loans 1.99 1.72 1.82 1.87 2.27
Nonperforming loans/total
loans .92 .91 .85 .74 1.18
Allowance/nonperforming
loans 215 188 213 252 193
Nonperforming assets/loans
and foreclosed properties 1.13 1.21 1.09 1.08 1.76
Provision/average loans 1.01 .65 .35 .19 .47
Net charge-offs/average
loans .72 .61 .32 .27 .34
</TABLE>
- ------------------------------
(1) Reference is made to "Basis of Presentation" in Note 1 to UPC's
consolidated financial statements contained in the 1997 Annual Report
to Shareholders.
(2) Share and per share amounts have been retroactively restated for
significant acquisitions accounted for as poolings of interests and to
reflect the change in presentation of EPS as discussed in Notes 2 and
16 to the consolidated financial statements contained in UPC's 1997
Annual Report to Shareholders.
(3) Long-term debt includes Medium-Term Bank Notes, Federal Home Loan Bank
(FHLB) advances, Trust Preferred Securities, variable rate asset-backed
certificates, subordinated notes and debentures, obligations under
capital leases, mortgage indebtedness, 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) FHA/VA government-insured/guaranteed loans have been excluded, since
they represent minimal credit risk to UPC.
13
<PAGE> 27
PEOPLES FIRST CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 57,891 $ 54,114 $ 47,594 $ 45,549 $ 42,848
Provision for losses on loans 5,041 2,664 2,167 1,723 2,541
Investment securities gains
(losses) - - 178 62 41
Other noninterest income 10,548 8,535 7,766 7,014 6,642
Noninterest expense 39,280 34,843 32,158 32,312 29,373
---------- ---------- ---------- ---------- ----------
Earnings before income
taxes, extraordinary item,
and accounting changes 24,118 25,142 21,213 18,590 17,617
Applicable income taxes 7,931 7,978 6,446 5,465 4,807
--------- ---------- --------- ---------- ----------
Earnings before extra-
ordinary item and
accounting changes 16, 187 17,164 14,767 13,125 12,810
Extraordinary item and
accounting changes,
net of taxes -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net earnings $ 16,187 $ 17,164 $ 14,767 $ 13,125 $ 12,810
========== ========== ========== ========== ==========
PER COMMON SHARE DATA(2)
Basic
Earnings before extra-
ordinary item and
accounting changes $ 1.62 $ 1.75 $ 1.54 $ 1.35 $ 1.32
Net earnings 1.62 1.75 1.54 1.35 1.32
Diluted
Earnings before extra-
ordinary item and
accounting changes 1.59 1.72 1.51 1.32 1.30
Net earnings 1.59 1.72 1.51 1.32 1.30
Cash dividends 0.82 0.63 0.48 0.39 0.34
Book value 15.46 14.45 13.89 12.17 11.81
BALANCE SHEET DATA
(AT PERIOD END)
Total assets $1,500,997 $1,417,764 $1,287,596 $1,210,556 $1,156,506
Loans, net of unearned
income 1,103,847 1,038,315 914,497 805,947 704,037
Allowance for losses on
loans 16,442 14,795 13,371 12,188 10,715
Investment securities 316,493 304,311 306,642 333,527 375,366
Deposits 1,176,841 1,115,253 1,047,104 998,583 992,896
Short-term borrowings 114,472 132,167 93,469 84,567 32,502
Long-term debt
Parent company - - - - -
Subsidiary banks 43,104 14,013 7,757 9,536 16,555
Total shareholders' equity 154,727 144,549 128,172 110,263 106,371
Average assets 1,443,441 1,335,630 1,245,932 1,178,272 1,126,458
Average shareholders' equity 149,011 134,573 118,545 107,993 99,139
Average shares outstanding
(in thousands)
Basic 9,998 9,787 9,600 9,943 9,854
Diluted 10,188 9,956 9,804 9,730 9,705
</TABLE>
14
<PAGE> 28
PEOPLES FIRST CORPORATION AND SUBSIDIARIES
SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.12% 1.29% 1.19% 1.11% 1.14%
Return on average common
equity 10.86% 12.75% 12.46% 12.15% 12.92%
Net interest income (taxable-
equivalent)/average earning
assets 4.32% 4.41% 4.18% 4.28% 4.24%
Loans/deposits 93.80% 93.10% 87.34% 80.71% 70.91%
Common and preferred
dividend payout ratio 50.62% 36.00% 31.17% 28.89% 25.76%
Equity/assets (period end) 10.31% 10.20% 9.95% 9.11% 9.20%
Average shareholders'
equity/average total assets 10.31% 10.08% 9.51% 9.17% 8.80%
Leverage ratio 9.56% 9.55% 9.30% 8.82% 8.18%
Tier 1 capital/risk-weighted
assets 13.36% 13.15% 13.00% 13.05% 13.12%
Total capital/risk-weighted
assets 14.61% 14.33% 14.24% 14.31% 14.37%
CREDIT QUALITY RATIOS
Allowance/period end loans 1.49% 1.42% 1.46% 1.51% 1.52%
Nonperforming loans/total
loans 1.16% 1.17% 0.67% 0.63% 0.62%
Allowance/nonperforming
loans 126% 121% 196% 182% 163%
Nonperforming assets/loans
and foreclosed properties 1.18% 1.17% 0.74% 0.83% 0.93%
Provision/average loans 0.47% 0.28% 0.25% 0.23% 0.38%
Net charge-offs/average
loans 0.32% 0.18% 0.11% 0.03% 0.07%
</TABLE>
15
<PAGE> 29
SPECIAL MEETING OF PEOPLES SHAREHOLDERS
DATE, PLACE, TIME, AND PURPOSE
This Proxy Statement is being furnished to the holders of
Peoples Common Stock in connection with the solicitation by the Peoples Board of
proxies for use at the Special Meeting and at any adjournments or postponements
thereof at which Peoples shareholders will be asked to vote upon a proposal to
approve the Agreement and the Plan of Merger. The Special Meeting will be held
at the Executive Inn Riverfront located on Executive Inn Boulevard, Paducah,
Kentucky, at 4:00 p.m., local time, on ____________, 1998. See "DESCRIPTION OF
TRANSACTION."
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES
The close of business on ___________, 1998, has been fixed as
the Record Date for determining holders of outstanding shares of Peoples Common
Stock entitled to notice of and to vote at the Special Meeting. Only holders of
Peoples Common Stock of record on the books of Peoples at the close of business
on the Record Date are entitled to notice of and to vote at the Special Meeting.
As of the Record Date, there were 10,024,311 shares of Peoples Common Stock
issued and outstanding held by approximately 3,250 holders of record.
Each holder of record of shares of Peoples Common Stock on the
Record Date is entitled to cast one vote per share on the proposal to approve
the Agreement and the Plan of Merger, and on any other matter properly submitted
for the vote of the Peoples shareholders at the Special Meeting. The presence,
either in person or by properly executed proxy, of the holders of a majority of
the outstanding shares of Peoples Common Stock entitled to vote at the Special
Meeting is necessary to constitute a quorum at the Special Meeting.
Peoples intends to count shares of Peoples Common Stock present
in person at the Special Meeting but not voting, and shares of Peoples Common
Stock for which it has received proxies but with respect to which holders of
shares have abstained on any matter, as present at the Special Meeting for
purposes of determining the presence or absence of a quorum for the transaction
of business. Approval of the Agreement and Plan of Merger requires the
affirmative vote of a majority of the votes entitled to be cast at the Special
Meeting. Brokers who hold shares in street name for customers who are the
beneficial owners of such shares are prohibited from giving a proxy to vote
shares held for such customers on the approval of the Agreement and the Plan of
Merger without specific instructions from such customers. Any abstention,
non-voting share or "broker non-vote" with respect to such shares of Peoples
Common Stock will have the same effect as a vote AGAINST the approval of the
Agreement and the Plan of Merger.
Shares of Peoples Common Stock represented by properly executed
proxies that are received before voting at the Special Meeting 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 THE PROPOSAL TO
APPROVE THE AGREEMENT AND THE PLAN OF MERGER AND IN THE DISCRETION OF THE
PROXYHOLDER AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE SPECIAL
MEETING. IF NECESSARY, THE PROXYHOLDERS 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 PROXYHOLDER WILL VOTE ANY PROXIES
VOTED AGAINST APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER IN FAVOR OF A
PROPOSAL TO ADJOURN THE SPECIAL MEETING.
16
<PAGE> 30
A Peoples shareholder who has given a proxy solicited by the
Peoples Board 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 Peoples,
(ii) properly submitting to Peoples 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: Peoples First Corporation, 100 South Fourth
Street, Paducah, Kentucky 42002; Attention: Eileen M. Duobinis-Gray, Secretary.
The directors and executive officers of Peoples (including
immediate family members and affiliated entities) owned, as of the Record Date,
777,438 shares (excluding shares underlying Employee Options), or approximately
7.8% of the outstanding shares of Peoples Common Stock.
The directors and executive officers of UPC owned, as of the
Record Date, no shares of Peoples Common Stock. As of the Record Date, UPC held
no shares of Peoples Common Stock in a fiduciary capacity for others, or as a
result of debts previously contracted, and Peoples Bank held 847,181 shares of
Peoples Common Stock in a fiduciary capacity for others with respect to which
Peoples Bank has sole or shared voting power.
For information with respect to beneficial owners of 5.0% or
more of the outstanding shares of Peoples Common Stock, see "BUSINESS OF PEOPLES
- -- Beneficial Ownership of Peoples Common Stock."
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers, and
employees of Peoples by mail, in person, or by telephone or telegraph. Such
persons will receive no additional compensation for such services. Peoples 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 Peoples 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 Peoples as provided in the
Agreement. See "DESCRIPTION OF TRANSACTION -- Expenses and Fees."
RECOMMENDATION
THE PEOPLES BOARD HAS UNANIMOUSLY APPROVED THE AGREEMENT, THE
PLAN OF MERGER, AND THE MERGER CONTEMPLATED THEREBY, BELIEVES THAT THE PROPOSAL
TO APPROVE THE AGREEMENT AND THE PLAN OF MERGER IS IN THE BEST INTERESTS OF
PEOPLES AND ITS SHAREHOLDERS, AND RECOMMENDS THAT THE PEOPLES SHAREHOLDERS VOTE
FOR APPROVAL OF THE AGREEMENT AND THE PLAN OF MERGER.
17
<PAGE> 31
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 text of the
Agreement, as restated to reflect the April 8, 1998, amendment, and the Plan of
Merger, which are attached as Appendices A and B, respectively, to this Proxy
Statement. The Agreement and Plan of Merger are incorporated herein by
reference. All shareholders are urged to read the Appendices in their entirety.
GENERAL
The Agreement provides for the acquisition of Peoples by UPC
pursuant to the merger of Peoples with and into UPC Merger Subsidiary, a
corporation organized under the laws of the State of Tennessee, and a
wholly-owned subsidiary of UPC, with the effect that UPC Merger Subsidiary will
be the surviving corporation resulting from the Merger. At the Effective Time,
each share of Peoples Common Stock then issued and outstanding, including any
associated Peoples Rights, and except for Dissenting Shares (excluding shares
held by Peoples, 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 and exchanged for the right to receive 0.6
shares of UPC Common Stock and the associated Preferred Share Rights, 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 to which
any Peoples shareholder would be entitled upon consummation of the Merger, in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the closing price of such common stock on the NYSE (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 Record Date, Peoples had 10,024,311 shares of Peoples
Common Stock issued and outstanding and 541,934 additional shares of Peoples
Common Stock subject to Employee Options. Based upon an Exchange Ratio of 0.6,
upon consummation of the Merger, UPC would issue approximately 6,014,586 shares
of UPC Common Stock, excluding shares subject to assumed Employee Options.
Accordingly, UPC would then have outstanding approximately 89,879,769 shares of
UPC Common Stock based on the number of shares of UPC Common Stock outstanding
on March 31, 1998 (and excluding shares to be issued pursuant to Other
Acquisitions and shares to be issued pursuant to the exercise of stock options
and for other purposes).
As of March 31, 1998, UPC had 83,865,183 shares of UPC Common
Stock outstanding and approximately 8,548,615 shares of UPC Common Stock were
earmarked for issuance in connection with currently outstanding UPC stock
options, UPC's dividend reinvestment plan, and with respect to conversion rights
of currently outstanding UPC Series E Preferred Stock. Approximately 53,000,000
shares of UPC Common Stock are expected to be issued in connection with the
Merger and the Other Acquisitions. [At its Annual Shareholders Meeting held on
April 16, 1998 (the "UPC Annual Meeting"), UPC's shareholders approved an
amendment to the UPC Charter to increase the number of authorized shares of UPC
Common Stock by 200,000,000 shares for a total of 300,000,000 shares of
authorized UPC Common Stock. With such amendment, UPC will have a sufficient
number of shares of UPC Common Stock authorized by its Charter to consummate the
Merger and the Other Pending Acquisitions.]
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO
Under certain circumstances described below, the Exchange Ratio
could be adjusted pursuant to certain provisions of the Agreement. UNDER NO
CIRCUMSTANCES WOULD THE EXCHANGE RATIO BE LESS THAN 0.6 SHARES OF UPC COMMON
STOCK FOR EACH SHARE OF PEOPLES COMMON STOCK. An
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adjustment could occur only if the Peoples Board elects by a 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
increasing the Exchange Ratio.
Peoples may elect to terminate the Agreement (the "Stock Price
Termination Right") in EITHER of the two following circumstances:
(A) the Average Closing Price (as defined below) is less than
$48.65;
or
(B) (i) the Average Closing Price (as defined below) is less than
$51.69; and
(ii) (a) the number obtained by dividing the Average Closing
Price by $60.8125 is less than (b) the number 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 Price") on the date of
the Special Meeting by the Index Price on November 21, 1997, less 10%.
In either case, UPC has the option to avoid termination of the Agreement by
Peoples by increasing the Exchange Ratio. In the case of a failure to satisfy
clause (A) above, UPC may increase the Exchange Ratio to the number obtained by
dividing the product of 48.65 and the Exchange Ratio by the Average Closing
Price. In the case of a failure to satisfy clause (B) above, UPC may increase
the Exchange Ratio to equal the lesser of (i) the number obtained by dividing
the product of 51.69 and the Exchange Ratio by the Average Closing Price and
(ii) the number obtained by dividing the product of the Index Ratio and the
Exchange Ratio by the Parent Ratio. If the Merger is approved by the Peoples
shareholders, the Peoples Board could elect not to terminate the Agreement and
to consummate the Merger without resoliciting the Peoples shareholders even if
Peoples' Stock Price Termination Right is triggered.
The Average Closing Price is 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 20 consecutive full trading days in which such shares are
traded on the NYSE ending at the close of trading on the date of the Special
Meeting (the Determination Date). The Parent Ratio is the number obtained by
dividing the Average Closing Price by $60.8125.
These conditions reflect the parties' agreement that Peoples'
shareholders will assume the risk of declines in the value of UPC Common Stock
to $51.69. Any adjustment of the Exchange Ratio below a decline in the price of
UPC Common Stock to $51.69 would be dependent on whether the Average Closing
Price of UPC Common Stock is less than $48.65 or lags behind the trading prices
of a group of comparable bank holding company common stocks (the Index Group
referenced above) by more than 10%.
In making its determination of whether to terminate the
Agreement, the Peoples Board will take into account, consistent with its
fiduciary duties, all relevant facts and circumstances that exist at such time,
including, without limitation, information concerning the business, financial
condition, results of operations, and prospects of UPC (including the recent
performance of UPC Common Stock, the historical financial data of UPC, customary
statistical measurements of UPC's financial performance, and the future
prospects for UPC Common Stock following the Merger), and the advice of its
financial advisors and legal counsel. If the Peoples Board elects to terminate
the Agreement, 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 Peoples' earning potential as
part of UPC justifies the
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issuance of an increased number of UPC's shares. If UPC declines to adjust the
Exchange Ratio, Peoples may elect to proceed without the adjustment, provided it
does so within 12 days of the Determination Date. UPC IS UNDER NO OBLIGATION TO
ADJUST THE EXCHANGE RATIO.
The operation of the adjustment mechanism can be illustrated by
five scenarios. (For purposes of the scenarios, it has been assumed that the
initial Exchange Ratio is 0.6, the Starting Price of UPC Common Stock is
$60.8125, and the Index Price, as of the Starting Date, is $100.)
(1) The first scenario occurs if the Average Closing Price is equal to
$51.69 or more. Under this scenario, regardless of any comparison
between the UPC Ratio and the Index Ratio, there would be no possible
adjustment to the Exchange Ratio, even though the value of the
consideration to be received by Peoples shareholders could have fallen
from a pro forma $36.49 per share, as of the Starting Date, to $31.01
per share, as of the Determination Date.
(2) The second scenario occurs if the Average Closing Price is less than
$51.69, but does not represent a decline from the Starting Price of more
than 10% than the decline of the common stock prices of the Index Group.
Under this scenario, there also would be no possible adjustment to the
Exchange Ratio, even though the value of the consideration to be
received by Peoples shareholders would have fallen from a pro forma
$36.49 per share, as of the Starting Date, to an amount based on the
then lower Average Closing Price of UPC Common Stock, as of the
Determination Date.
(3) The third scenario occurs if the Average Closing Price declines below
$51.69, but not less than $48.65, and the UPC Ratio is below the Index
Ratio. Under this scenario, the adjustment in the Exchange Ratio is
designed to ensure that the Peoples shareholders receive shares of UPC
Common Stock having a value (based upon the Average Closing Price) that
corresponds to at least $51.69 or a price reflecting a 10% decline from
the stock price performance reflected by the Index Group, whichever is
less.
For example, if the Average Closing Price were $50, and the ending Index
Price, as of the Determination Date, were $95, the UPC Ratio (.8221)
would be below the Index Ratio (.85, or .95 minus .10), Peoples could
terminate the Agreement unless UPC elected within five days to increase
the Exchange Ratio to equal .6204, which represents the lesser of (a)
.6204 [the result of dividing $31.01 (the product of $51.69 and the 0.6
Exchange Ratio) by the Average Closing Price ($50), rounded to the
nearest thousandth] and (b) .6933 [the result of dividing the Index
Ratio (.95) times 0.6 by the UPC Ratio (.8221), rounded to the nearest
thousandth]. Based upon the assumed $50 Average Closing Price, the new
Exchange Ratio would represent a value to the Peoples shareholders of
$31.01 per share.
If the Average Closing Price were $50, and the ending Index Price, as of
the Determination Date, were $100, the UPC Ratio (.8221) would be below
the Index Ratio (.90, or 1.00 minus .10), Peoples could terminate the
Agreement unless UPC elected within five days to increase the Exchange
Ratio to equal .6204, which represents the lesser of (a) .6204 [the
result of dividing $31.01 (the product of $51.69 and the 0.6 Exchange
Ratio) by the Average Closing Price ($50), rounded to the nearest
thousandth] and (b) .6568 [the result of dividing the Index Ratio (.90)
times 0.6 by the UPC Ratio (.8221), rounded to the nearest thousandth].
Based upon the assumed $50 Average Closing Price, the new Exchange Ratio
would represent a value to the Peoples shareholders of $31.01 per share.
(4) The fourth scenario occurs if the Average Closing Price declines below
$48.65, but does not represent a decline from the Starting Price of more
than 10% than the decline of the common stock prices of the Index Group.
Under this scenario, the adjustment in the Exchange Ratio is
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<PAGE> 34
designed to ensure that the Peoples shareholders receive shares of UPC
Common Stock having a value (based upon the Average Closing Price) that
corresponds to at least $48.65.
For example, if the Average Closing Price were $45, Peoples could
terminate the Agreement unless UPC elected within five days to increase
the Exchange Ratio to equal .6487 [the result of dividing $29.19 (the
product of $48.65 and the 0.6 Exchange Ratio) by the Average Closing
Price ($45), rounded to the nearest thousandth]. Based upon the assumed
$45 Average Closing Price, the new Exchange Ratio would represent a
value to the Peoples shareholders of $29.19 per share.
(5) The fifth scenario occurs if the Average Closing Price declines below
$48.65 and the UPC Ratio is below the Index Ratio. Either of these would
trigger the Stock Price Termination Right. If Peoples were to exercise
its right to terminate under this scenario, it would be required to
choose one of these circumstances as the basis for the termination. That
choice will determine what type of adjustment to the Exchange Rate would
be required in order to avoid termination. Under this scenario, the
adjustment in the Exchange Ratio is designed to let Peoples choose
whether the Peoples shareholders receive shares of UPC Common Stock
having a value (based upon the Average Closing Price) that corresponds
to either (A) $48.65 or (B) a 10% decline from the stock price
performance reflected by the Index Group (up to $51.69).
For example, assume the Average Closing Price were $45, and the ending
Index Price, as of the Determination Date, were $85, the UPC Ratio (.74)
would be below the Index Ratio (.75, or .85 minus .10). Peoples could
terminate the Agreement unless UPC elected within five days to increase
the Exchange Ratio to equal either (A) .6487 [the result of dividing
$29.19 (the product of $48.65 and the 0.6 Exchange Ratio) by the Average
Closing Price ($45), rounded to the nearest thousandth], or (B) .6081
[the result of dividing the Index Ratio (.75) times 0.6 by the UPC Ratio
(.74), rounded to the nearest thousandth]. If Peoples were to select (A)
when it exercised its Stock Price Termination Right, the new Exchange
Ratio would represent a value to the Peoples shareholders of $29.19 per
share, based upon the assumed $45 Average Closing Price.
If the Average Closing Price were $45, and the ending Index Price, as of
the Determination Date, were $100, the UPC Ratio (.74), Peoples could
terminate the Agreement unless UPC elected within five days to increase
the Exchange Ratio to equal .6487 [the result of dividing $29.19 (the
product of $48.65 and the 0.6 Exchange Ratio) by the Average Closing
Price ($45), rounded to the nearest thousandth]. Alternatively, Peoples
could terminate the Agreement unless UPC elected within five business
days to increase the Exchange Ratio to equal .6892, which represents the
lesser of (i) .6892 [the result of dividing $31.01 (the product of
$51.69 and the 0.6 Exchange Ratio) by the Average Closing Price ($50),
rounded to the nearest thousandth], or (ii) .7297 [the result of
dividing the Index Ratio (.90, or 1.00 minus .10) times 0.6 by the UPC
Ratio (.74), rounded to the nearest thousandth]. If Peoples were to
exercise its right to terminate under this scenario based on the second
alternative, the new Exchange Ratio would represent a value to the
Peoples shareholders of $31.01 per share, based upon the assumed $45
Average Closing Price.
Based on the $__________ closing price of UPC Common Stock on
_______________, 1998, the Exchange Ratio would represent a value of $__________
per share of Peoples Common Stock.
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 Peoples Common
Stock may be more or less than the Average Closing Price. Peoples shareholders
are urged to obtain current market quotations for UPC Common Stock. See
"COMPARATIVE MARKET PRICES AND DIVIDENDS."
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EFFECT OF THE MERGER ON OPTIONS
At the Effective Time, each Employee Option granted under the
Peoples Stock Plans, as defined in the Agreement, that is outstanding at the
Effective Time, whether or not exercisable, will be converted into and become an
option with respect to UPC Common Stock, and UPC will assume each Employee
Option, in accordance with the terms of the Peoples 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 Peoples and the Committee of the Peoples Board (including, if
applicable, the entire Peoples Board) administering such Peoples Stock Plan,
(ii) each Employee 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 Employee Option will be
equal to the number of shares of Peoples Common Stock subject to such Employee
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 Employee Option will be adjusted by dividing the per share
exercise price under each such Employee Option by the Exchange Ratio and
rounding up to the nearest cent.
For information with respect to Employee Options held by the
Peoples Board and management, see "-- Interests of Certain Persons in the
Merger."
RIGHT TO RESTRUCTURE TRANSACTION
UPC has reserved the right to revise the structure of the Merger
in order to achieve tax benefits or for any other reason it deems advisable.
However, without the approval of the Peoples Board and, if required by the KBCA,
the Peoples shareholders, UPC may not make any revision to the structure of the
Merger which would: (i) change the amount of the consideration Peoples
shareholders are entitled to receive; (ii) change the intended tax-free effects
of the Merger to UPC, Peoples or Peoples shareholders or change the intended
pooling of interests accounting treatment; (iii) permit UPC to pay the
consideration for the Merger other than by delivery of UPC Common Stock
registered with the SEC; (iv) be materially adverse to the interests of Peoples
or adverse to the shareholders of Peoples; (v) materially impede or delay
consummation of the Merger; or (vi) require a vote of UPC shareholders under
relevant state law.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. Since the passage of legislation in
the 1980s permitting bank holding companies to operate in more than one state,
both the Western Kentucky banking market and the United States banking industry
as a whole have been consolidating at an accelerating pace. During this time,
Peoples acquired several banking institutions in Western Kentucky and Northern
Tennessee, becoming one of the largest regional bank holding companies
headquartered in Kentucky, with total assets of approximately $1.5 billion as of
December 31, 1997. Reviewing industry developments in the second quarter of
1997, senior executive officers concluded that Peoples needed to evaluate its
strategic plan to consider all possible alternatives for enhancing long-term
shareholder value in the current banking environment.
In June and July of 1997, Aubrey W. Lippert, Chairman of the
Board, President and Chief Executive Officer of Peoples, and Allan B. Kleet,
Principal Accounting Officer of Peoples, met with representatives of several
investment banking firms, including Keefe, Bruyette & Woods, Inc. (KBW) and
Stifel, Nicolaus & Company, Incorporated (Stifel), to discuss a strategic
planning process for Peoples.
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On July 16, 1997, the Executive Committee of Peoples' Board of
Directors met to consider several issues related to the strategic planning
process. Attending the meeting were Messrs. Lippert and Kleet, Executive
Committee Members Apperson, Dick, Hancock, Page, Pugh and Speck, representatives
of Brown, Todd & Heyburn PLLC ("BTH"), legal counsel to Peoples, and
representatives of Stifel. Employment agreements for Mr. Lippert and Mr. Kleet
were presented for the consideration of the Executive Committee and were
approved. See "The Merger--Interests of Certain Persons in the Merger." At the
meeting, representatives of Stifel, which has served as the principal market
maker for Peoples Common Stock, made a presentation outlining strategic planning
considerations for regional financial institutions. The presentation analyzed
the financial implications of various strategic alternatives available to
Peoples, focusing on the following alternatives: (i) Peoples remaining
independent and continuing to perform in accordance with the financial results
projected by management; (ii) the acquisition of Peoples by a larger regional
institution at an "appropriate" premium (in Stifel's view) to the current
trading price of Peoples Common Stock; and (iii) a "merger of equals" involving
Peoples and another comparably sized financial institution serving markets not
distant geographically to the Western Kentucky markets served by Peoples. After
discussion, the Executive Committee authorized Messrs. Lippert and Kleet to
initiate exploratory discussions with other regional financial institutions and
to engage one or more financial advisors to assist the Board of Directors in its
strategic planning process.
The Executive Committee met on September 11, 1997 to continue
its consideration of various strategic planning and other issues.
Representatives of KBW attended the September 11 meeting and presented an
overview of current trends among financial institutions, including the
consolidation among industry participants and the trading market for the
securities of regional financial institutions. KBW's presentation included an
analysis of various financial and other issues that related to the Board of
Directors' consideration of any proposal to acquire Peoples. Shortly thereafter,
Peoples engaged KBW as financial advisor to assist senior management in
identifying and contacting potential interested acquirors, to render its opinion
as to the financial fairness of the terms of any subsequent acquisition
transaction, and to provide other advisory services to the Board of Directors in
connection with the evaluation of acquisition proposals. In early October,
Peoples engaged Stifel to assist the Board of Directors in evaluating potential
acquisition proposals from the perspective of the principal market maker for
Peoples Common Stock, and to render its opinion as to the financial fairness of
any acquisition transaction.
In late September, representatives of KBW contacted several
regional bank holding companies to inquire about their interest in discussing a
possible transaction with Peoples. In early October, KBW distributed a
confidential information memorandum to the five institutions that expressed
interest and entered into a confidentiality agreement with Peoples. Three
companies, including UPC, submitted written indications of interest outlining
preliminary terms and conditions on which they would be willing to proceed with
negotiations with Peoples. The three preliminary proposals each provided for
consideration in the form of shares of the publicly traded common stock of the
bidder. Based on then current trading prices of each bidder's stock, the
indicated values of the consideration offered by the bidders were considered
comparable. All of the parties received additional information about Peoples,
and two of the responding parties conducted a due diligence investigation of
Peoples and submitted a revised proposal on November 10, 1997. The next day
Peoples' senior executives, in consultation with representatives of KBW and BTH,
evaluated the terms of the two proposals, other information about the two
bidders, and the financial returns Peoples would have to achieve to attain
comparable value for its shareholders. Mr. Lippert then authorized KBW to
contact senior executive officers of UPC to convey the general terms and
conditions on which Peoples would be willing to negotiate and enter into a
definitive agreement with UPC.
Mr. Lippert and Mr. Kleet, as well as representatives of KBW,
held several discussions with Benjamin W. Rawlins, Chairman and Chief Executive
Officer of UPC, and Jack W. Parker, Chief Financial Officer of UPC, and reached
agreement on the Exchange Ratio of 0.6 shares of UPC Common Stock for
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each outstanding share of Peoples Common Stock on November 12, 1997. During the
next several days, the senior executives of Peoples and their financial and
legal advisors negotiated the terms of the Acquisition Agreement (the Agreement
and Plan of Merger) and the other related agreements with their counterparts at
UPC.
The Acquisition Agreement and the related agreements were
presented for the approval of the Executive Committee and the Board of Directors
of Peoples, respectively, at separate meetings on November 17, 1997. At both
meetings, representatives of BTH reviewed the terms of the proposed Acquisition
Agreement, and representatives of both KBW and Stifel made presentations
analyzing the financial terms of the proposed Merger and delivered orally their
respective opinions that the terms of the Acquisition Agreement were fair from a
financial point of view. After extensive discussion, the Acquisition Agreement
and related agreements were approved unanimously by the Executive Committee and
the Board of Directors and were signed on behalf of Peoples and UPC shortly
thereafter. Both Peoples and UPC issued press releases to announce the signing
of the Acquisition Agreement before the beginning of trading on November 18,
1997.
PEOPLES' REASONS FOR THE MERGER AND RECOMMENDATION OF THE
PEOPLES BOARD. In reaching its decision to approve the Acquisition Agreement,
the Board of Directors of Peoples consulted with its legal and financial
advisors and with Peoples' senior executives. The Board considered a number of
factors in reaching its decision, including, but not limited to, the factors
listed below, but did not assign any specific weight or priority to the factors
it considered.
1. The financial terms of the Merger. The Board noted that
stocks of financial institutions were then trading at historically high
multiples of earnings and that in recent transactions, acquirors had paid
historically high premiums to acquire financial institutions comparable to
Peoples. Information provided by the Peoples' financial advisors indicated that
the Exchange Ratio compared favorably to the consideration paid in recent
acquisitions of comparable institutions. The Board also noted that Peoples would
have the right to terminate the Acquisition Agreement if the average market
trading price of UPC Common Stock for 20 consecutive trading days before the
Merger has received both regulatory and shareholder approval decreases to less
than $48.65 before the Merger. If such a decline in the price of UPC Common
Stock were to occur, the Board would have an opportunity to consult with its
financial and other advisors to determine the course of action best in the
interests of Peoples, its shareholders and other constituencies.
2. The effect on shareholder value of Peoples continuing as an
independent entity compared to the effect of the Merger with UPC. Analyses
presented by Peoples' financial advisors indicated that, based on certain
assumptions, Peoples would have to achieve annual growth in its earnings per
share significantly higher than its historical rates to provide the same value
to shareholders as the Merger. It was noted that with fewer acquisition
candidates in or surrounding the Western Kentucky markets currently served by
Peoples, and the more competitive acquisition environment generally, Peoples
would not be likely to achieve the same value to shareholders through an
aggressive acquisition strategy without incurring the risk of dilution to
Peoples' earnings per share. Moreover, the consolidation trend has also reduced
the number of larger regional financial institutions that could be expected to
have significant interest in Peoples and the Western Kentucky banking markets it
serves. It was also considered unlikely that Peoples could achieve the same
value to shareholders through a "merger of equals" with a comparably sized
regional financial institution.
3. Market, financial, and other information about UPC. The Board
evaluated historical financial and operational information about UPC. It was
noted that UPC Common Stock has demonstrated good long-term appreciation over a
ten-year business cycle. A stock-for-stock exchange with UPC would give Peoples
shareholders an opportunity to acquire in a tax-free transaction stock of a
company whose expected earning per share growth is faster than Peoples' own and
at a price representing a premium
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over the current trading price of Peoples Common Stock. It was also noted that
UPC is a larger financial institution serving more geographically diverse
markets than Peoples. Therefore, adverse changes in economic conditions would be
less likely to have a significant impact on UPC than on less diversified banking
companies or on Peoples, as an independent entity.
4. The impact of the Merger generally on the customers,
communities, and other constituencies served by Peoples. In this regard, the
Board of Directors regarded the banking and business philosophies of UPC and
Peoples to be compatible. The Board noted that UPC has a reputation of
commitment to the customers and employees of, and the community served by, its
affiliate banks.
5. The opinions of KBW and Stifel that the Merger is fair to
Peoples shareholders from a financial point of view. See "Opinion of Keefe,
Bruyette & Woods, Inc." and "Opinion of Stifel, Nicolaus & Company,
Incorporated."
Based on these factors, and such other factors as members of the
Board of Directors deemed relevant, the Peoples Board has unanimously approved
the Acquisition Agreement as being in the best interests of Peoples, its
shareholders, employees and customers, and the community served by Peoples. The
Peoples Board unanimously recommends that shareholders of Peoples vote "FOR"
approval of the Acquisition Agreement.
UPC'S REASONS FOR THE MERGER. In adopting the Agreement, the
Plan of Merger, and the Merger, the UPC Board considered a number of additional
factors concerning the benefits of the Merger. Without assigning any relative or
specific weights to the factors, the UPC Board 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 Peoples 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 Peoples
operates, including existing competition, history of the market areas
with respect to financial institutions, and average demand for credit,
on historical and prospective basis, and (iii) the results of UPC's due
diligence review of Peoples; 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 Southeast and the business lines pursued by Peoples.
The UPC Board determined that the Merger was in the best
interests of UPC and its shareholders and unanimously approved the proposed
Merger on _______, 1997.
OPINIONS OF PEOPLES' FINANCIAL ADVISORS
OPINION OF KEEFE, BRUYETTE & WOODS, INC. Peoples retained KBW as
financial advisor in connection with Peoples' consideration of a possible
business combination with a third party and to render an opinion with respect to
the fairness from a financial point of view of the consideration to be received
by the shareholders of Peoples therein. KBW was selected to act as Peoples'
financial advisor based upon its qualifications, expertise and reputation. KBW
specializes in rendering a range of investment banking services to banking
enterprises and regularly engages in the valuation of banking businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes.
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On November 17, 1997, at the meeting at which the Peoples Board
approved and adopted the Agreement and the transactions contemplated thereby,
KBW rendered its oral opinion to the Peoples Board that, as of such date, the
Consideration was fair to the shareholders of Peoples from a financial point of
view. KBW has reconfirmed its oral opinion of November 17, 1997 by delivering a
written opinion to the Peoples Board of Directors, dated the date of this
Prospectus-Proxy Statement to the effect that, as of the date thereof, the
Exchange Ratio was fair to the shareholders of Peoples from a financial point of
view.
THE FULL TEXT OF THE OPINION OF KBW, WHICH SETS FORTH A
DESCRIPTION OF THE PROCEDURES FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND
LIMITS ON THE REVIEW UNDERTAKEN, IS ATTACHED TO THIS PROSPECTUS-PROXY STATEMENT
AS ANNEX C AND IS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS ARE URGED TO
READ THE OPINION IN ITS ENTIRETY. KBW'S OPINION IS DIRECTED TO PEOPLES BOARD OF
DIRECTORS AND RELATES ONLY TO THE FAIRNESS OF THE EXCHANGE RATIO IN THE
AGREEMENT FROM A FINANCIAL POINT OF VIEW AND DOES NOT ADDRESS ANY OTHER ASPECT
OF THE PROPOSED MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE AT THE
SPECIAL MEETING. THE FOLLOWING SUMMARY OF THE OPINION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.
In rendering its opinion, KBW reviewed, analyzed and relied upon
the following material relating to the financial and operating condition of UPC
and Peoples: (i) the Merger Agreement; (ii) the Plan of Merger; (iii) the Option
Agreement; (iv) Annual Reports to Shareholders for the three years ended
December 31, 1996 for UPC and Peoples; (v) certain interim reports to
shareholders of UPC and Peoples and Quarterly Reports on Form 10-Q of UPC and
Peoples and certain other communications from UPC and Peoples to their
respective shareholders; (vi) other financial information concerning the
businesses and operations of UPC and Peoples furnished to KBW by UPC and Peoples
for the purpose of KBW's analysis, including certain internal financial analyses
and forecasts for UPC and Peoples prepared by senior management of UPC and
Peoples; (vii) certain publicly available information concerning the trading of,
and the trading market for, the Common Stock of UPC and Peoples; and (viii)
certain publicly available information with respect to banking companies and the
nature and terms of certain other transactions that KBW considered relevant to
its inquiry. Additionally, in connection with its written opinion attached as
Annex C to this Prospectus-Proxy Statement, KBW reviewed a draft of this
Prospectus-Proxy Statement in substantially the form hereof. KBW also held
discussions with senior management of UPC and Peoples concerning their past and
current operations, financial condition and prospects, as well as the results of
regulatory examinations. KBW also considered such financial and other factors as
it deemed appropriate under the circumstances and took into account its
assessment of general economic, market and financial conditions and its
experience in similar transactions, as well as its experience in securities
valuation and its knowledge of financial institutions, including banks, bank
holding companies, thrifts and finance companies generally. KBW's opinion was
necessarily based upon conditions as they existed and could be evaluated on the
date thereof and the information made available to KBW through the date thereof.
In conducting its review and arriving at its opinion, KBW relied
upon and assumed the accuracy and completeness of all of the financial and other
information provided to it or publicly available, and KBW did not attempt to
verify such information independently. KBW relied upon the managements of UPC
and Peoples as to the reasonableness and achievability of the financial and
operating forecasts (the assumptions and bases therefor) provided to KBW and
assumed that such forecasts reflected the best available estimates and judgments
of such managements and that such forecasts will be realized in the amounts and
in the time periods estimated by such managements. KBW also assumed, without
independent verification, that the aggregate allowances for loan losses for UPC
and Peoples are adequate to cover such losses. KBW did not make or obtain any
evaluations or appraisals of the property of UPC and Peoples, nor did KBW
examine any individual loan credit files.
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<PAGE> 40
The following is a summary of the material financial analyses
employed by KBW in connection with providing its oral opinion of November 17,
1997 and does not purport to be a complete description of all analyses employed
by KBW.
Transaction Overview. KBW reviewed the terms of the Merger,
including the Exchange Ratio and the aggregate transaction value. KBW calculated
the percentage ownership that shareholders of Peoples would own of UPC. Based on
the Exchange Ratio of 0.60, Peoples shareholders would receive approximately 6.3
million shares of UPC Common Stock in exchange for all the shares of Peoples
Common Stock. The UPC shares to be received by Peoples would represent
approximately 6.6% of the total number of UPC shares to be outstanding on a pro
forma basis. KBW also reviewed the implied value of the consideration offered
based upon the closing price of UPC Common Stock on November 14, 1997. The
implied value of the Peoples transaction was approximately $35.51 per share of
Peoples Common Stock, representing a 14% premium to the November 14, 1997 stock
price of $31.25 per share of Peoples Common Stock, or a total transaction value
of approximately $370 million. Based on the aggregate consideration offered
using the November 14, 1997 price for UPC Common Stock, KBW calculated the price
to: 1997 estimated earnings per share; 1998 estimated earnings per share; last
twelve months earnings per share; September 30, 1997 book value per share; and
September 30, 1997 tangible book value per share. This analysis yielded a price
to: 1997 estimated earnings of 19.9 times; 1998 estimated earnings of 17.2
times; trailing twelve months of operating earnings of 20.1 times; book value of
2.31 times; and tangible book value of 2.52 times.
Selected Peer Group Analysis. KBW compared the financial
performance and market performance of UPC and Peoples based on various financial
measures including earnings performance, operating efficiency, capital adequacy
and asset quality and various measures of market performance, including market
to book values, price to earnings, price to cash earnings and dividend yields of
comparable companies. For purposes of such analysis, the financial information
used by KBW for UPC and Peoples and the comparable companies was as of and for
the quarter ended September 30, 1997 and the market price information was as of
November 14, 1997. Additionally, estimated earnings and cash earnings per share
data were generated by either KBW's research department or by using estimates
from the Institutional Broker Estimates System ("IBES").
The set of comparable companies used as peers against Peoples
comprised of fifteen community banking companies having assets between $1.2
billion and $2.0 billion. The peer group and Peoples, respectively, had average
return on assets on an annualized basis of 1.27% and 1.19%; return on average
equity on an annualized basis of 14.56% and 11.39%; net interest margin on an
annualized basis of 4.39% and 4.32%; efficiency ratio on an annualized basis of
58.66% and 54.49%; non-interest income to revenue ratio (revenue defined by net
interest income plus non-interest income) of 25.86% and 16.05%; leverage ratio
of 8.73% and 9.75%; tier 1 capital ratio of 13.56% and 13.76%; total capital
ratio of 14.77% and 14.96%; non-performing assets to loans and real estate owned
of 0.71% and 0.74%; and loan loss reserve to loans of 1.31% and 1.40%.
KBW's analysis further showed, among other things, the following
concerning the market performance of the peer group and Peoples, respectively:
that the price to earnings multiple based on 1997 estimated earnings was 17.41
times and 16.89 times; that the price to earnings multiple based on 1998
estimated earnings was 15.40 times and 15.17 times; that the price to book value
multiple was 2.30 times and 2.04 times; that the price to tangible book value
multiple was 2.45 times and 2.22 times; that the dividend yield was 1.92% and
2.82%; and that the common dividend payout ratio was 33% and 48%.
The set of comparable companies used as peers against UPC
comprised of banks which compose the Index Group in the Merger Agreement. The
Index Group is comprised of fifteen large regional bank holding companies having
assets ranging between $4.5 billion to $30.0 billion with a median of $19.7
billion. The Index peer group and UPC, respectively, had return on average
assets on an
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<PAGE> 41
annualized basis of 1.43% and 1.69%; return on average equity on an annualized
basis of 17.98% and 17.93%; net interest margin on an annualized basis of 4.25%
and 4.71%; efficiency ratio on an annualized basis of 56.00% and 51.05%;
non-interest income to revenue ratio of 33.78% and 26.28%; leverage ratio of
7.49% and 10.96%; tier 1 capital ratio of 9.82% and 16.74%; total capital ratio
of 12.58% and 19.79%; non-performing assets to loans and real estate owned of
0.57% and 0.71%; and loan loss reserve to loans of 1.55% and 1.66%.
KBW's analysis showed, among other things, the following
concerning the market performance of Index peer group and UPC, respectively:
that the price to earnings multiple based on 1997 estimated earnings was 18.20
times and 17.31 times; that the price to earnings multiple based on 1998
estimated earnings was 16.25 times and 15.49 times; that the price to cash
earnings multiple based on 1997 estimated cash earnings was 17.46 times and
16.00 times; that the price to cash earnings multiple based on 1998 estimated
cash earnings was 15.58 times and 14.61 times; that the price to book value
multiple was 3.10 times and 2.78 times; that the price to tangible book value
was 3.55 times and 2.89 times; that the dividend yield was 2.19% and 2.70%; and
that the common dividend payout ratio was 40% and 47%.
KBW's analysis further showed the following concerning 1997 and
1998 earnings per share and cash earnings per shares growth rates. For the Index
peer group and UPC, respectively, the growth rates for estimated earnings per
share was 11.95% and 11.70%; the growth rates for estimated cash earnings per
share was 11.94% and 9.46%. In addition, the historical total return analysis
for the last three-year period for Index peer group and UPC, respectively, was
43.54% and 48.61%; for the last five-year period was 26.40% and 25.22%; and for
the last ten-year period was 23.86% and 23.89%.
Selected Transaction Analysis. KBW analyzed certain merger and
acquisition transactions based upon the acquisition price (at announcement)
relative to latest twelve months earnings, stated book value, stated tangible
book value and market price one day prior to announcement, and compared the
multiples so obtained to the same multiples that would be generated in the UPC
and Peoples transaction. The information analyzed was compiled by KBW from both
internal sources and a data firm that monitors and publishes transaction
summaries and descriptions of mergers and acquisitions in the financial services
industry. The analysis included a review and comparison of the average earnings,
book value and market multiples represented by a sample of recently completed or
announced transactions. The analysis included bank transactions which had a
value between $150 million and $750 million during 1997.
The banking transactions announced in 1997 that had values
within this range included: FirstMerit Corporation and CoBancorp, Inc.; CNB
Bancshares, Inc. and Pinnacle Financial; Zions Bancorp and Vectra Banking
Corporation; United Bankshares and George Mason Bankshares; Fulton Financial
Corporation and Keystone Heritage; Union Planters Corporation and Capital
Bancorp; Wachovia Corporation and 1st United Bancorp; Western Bancorp and Santa
Monica Bank; Hibernia Corporation and ArgentBank; Zions Bancorporation and GB
Bancorporation; Wachovia Corporation and Jefferson Bankshares; and Pacific
Century Financial and CU Bancorp. These 1997 bank transactions had an average
premium to: trailing earnings of 22.50 times; book of 2.85 times; tangible book
of 3.04 times; and, market of 1.17 times. In addition, the 1997 bank
transactions had a median premium to: trailing earnings of 21.39 times; book of
2.71 times; tangible book of 2.82 times; and, premium to market of 1.16 times.
The UPC and Peoples transaction using closing prices of November 14, 1997, had a
premium to: trailing earnings of 20.06 times; book of 2.31 times; tangible book
of 2.52 times; and, market of 1.14 times.
Contribution Analysis. KBW analyzed the relative contribution
made by each of UPC and Peoples to certain balance sheet and income statement
items including assets, deposits, shareholders' equity and trailing and
estimated net income. Based on the Exchange Ratio of 0.60 shares, the percentage
of the combined company to be issued to shareholders of Peoples would be
approximately 6.6%. The contribution analysis showed that under the Merger,
Peoples would contribute approximately
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<PAGE> 42
7.2% of the combined assets, 8.2% of the combined deposits, 8.3% of the combined
common shareholders' equity before merger related expenses, and 5.5% of the
combined third quarter annualized 1997 net income.
Pro Forma Merger Analysis. KBW analyzed certain pro forma
effects resulting from the Merger. This analysis indicated that, based on the
closing price of UPC Common Stock as of November 14, 1997, the Exchange Ratio
and assuming estimated expense savings of 30% of Peoples' non-interest expenses
within two years, the transaction would result in a slight decrease in 1998
estimated operating earnings per share and an unchanged estimated cash earnings
per share. The Merger would slightly increase book value per share and tangible
book value per share and slightly decrease the leverage ratio and return on
equity.
Net Present Value Per Share Analysis. KBW analyzed the net
present value of future free capital that would accrue to a holder of a share of
Peoples Common Stock assuming Peoples were to remain independent. Free capital
is defined as capital, generated through net income and the amortization of
nonqualifying intangible assets, which is not utilized for asset growth for
future fiscal years. This analysis assumed (i) projected 1998 net income
provided by management of Peoples with an assumed 8% annual net income growth;
(ii) projected average asset growth of 6%; (iii) Peoples would maintain a 7%
leverage ratio; (iv) market multiples (applicable multiples for Peoples if it
were to remain an independent institution) of 15 and 17 times earnings and
take-out multiples (applicable multiples that Peoples would achieve if the
company were sold) of 19 and 20 times for the fifth fiscal year; and (v)
discount rates of 12%, 13% and 14%. The analysis assumes that any initial and
future excess capital above the required amount to maintain a 7% leverage ratio
is free capital and, along with a terminal value, is present valued at different
multiples to earnings and discount rates. Based on such assumptions, KBW's
analysis indicated that the present value of a share of Peoples Common Stock, on
a standalone basis would range between $25.20 per share to $30.08 per share at
market multiples and $29.79 per share to $33.91 per share at take-out multiples.
KBW stated that the net present value analysis is a widely-used valuation
methodology but noted that it relies on numerous assumptions, including asset
and earnings growth rates, terminal values and discount rates. The analysis did
not purport to be indicative of the actual values or expected values of Peoples
Common Stock.
The foregoing description of the material analyses prepared by
KBW in connection with the rendering of its opinion is a summary, and does not
purport to be complete. The preparation of a fairness opinion is not necessarily
susceptible to partial analysis or summary description. KBW believes that its
analyses and the summary set forth above must be considered as a whole and that
selecting portions of its analyses without considering all analyses, or
selecting part of the above summary, without considering all factors and
analyses, would create an incomplete view of the processes underlying the
analyses set forth in KBW's presentations and opinion. The ranges of valuations
resulting from any particular analysis described above should not be taken to be
KBW's view of the actual value of UPC and Peoples. The fact that any specific
analysis has been referred to in the summary above is not meant to indicate that
such analysis was given greater weight than any other analyses.
In performing its analyses, KBW made numerous assumptions with
respect to industry performance, general business and economic conditions and
other matters, many of which are beyond the control of UPC and Peoples. The
analyses performed by KBW 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 KBW's
analysis of the fairness, from a financial point of view and were provided to
the Peoples Board in connection with the delivery of KBW's opinion. The analyses
do not purport to be appraisals or to reflect the prices at which a company
actually might be sold or the prices at which any securities may trade at the
present time or at any time in the future. In addition, as described above,
KBW's opinion, along with its presentation to the Peoples Board, was just
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<PAGE> 43
one of many factors taken into consideration by the Peoples Board in unanimously
approving the Merger Agreement.
Pursuant to the Engagement Letter dated August 14, 1997, Peoples
agreed to pay KBW a cash fee of $25,000 upon signing the Engagement Letter. In
addition, Peoples agreed to pay KBW a cash fee ("Contingent Fee") equal to 0.15%
of the market value of the aggregate consideration, plus 3.5% of any amount
exceeding $36.00 per share offered in exchange for the outstanding shares of
common stock of Peoples in the Merger. Based on the number of Peoples First
Common Stock on March 31, 1998, the closing price of UPC Common Stock on March
31, 1998 and the Exchange Ratio of 0.60 of a share of UPC Common Stock for each
share of Peoples Common Stock, the aggregate consideration for the Merger would
be $374 million and would generate a Contingent Fee of approximately $837,000 to
KBW. The actual amount of the Contingent Fee will depend upon the per share
value of UPC Common Stock and the number of shares of Peoples Common Stock
outstanding on the Effective Date. The fees paid prior to the Contingent Fee
payment will be credited against the Contingent Fee. Peoples has also agreed to
reimburse KBW for its reasonable out-of-pocket expenses, including the fees and
expenses of legal counsel and any other advisor retained by KBW. Peoples has
also agreed to indemnify KBW, its affiliates, and their respective partners,
directors, officers, agents, consultants, employees and controlling persons
against certain liabilities, including liabilities under the Federal securities
laws. In addition, KBW has provided, and may provide in the future, certain
investment banking services to Peoples from time to time, for which it has
received, and will receive, customary compensation.
In the ordinary course of its business as a broker-dealer, KBW
may, from time to time, purchase securities from, and sell securities to, UPC
and Peoples, and as a market maker in securities, KBW may from time to time have
a long or short position in, and buy or sell, equity securities of UPC and
Peoples for its own account and for the accounts of its customers. To the extent
that KBW has any such position as of the date of the fairness opinion attached
as Appendix C hereto, it has been disclosed to Peoples.
OPINION OF STIFEL, NICOLAUS & COMPANY. Peoples has retained
Stifel to act as financial advisor in connection with, and to render a fairness
opinion with respect to the Merger. Stifel is an investment banking and
securities firm with membership on all principal U.S. securities exchanges. As
part of its investment banking activities, Stifel is regularly engaged in the
valuation of businesses and their securities in connection with merger
transactions and other types of acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for corporate and other purposes. Stifel has rendered its opinion
that, based upon and subject to the various considerations set forth therein, as
of November 17, 1997, the Merger Consideration to be paid for each share of
Peoples Common Stock resulted in consideration that was fair, from a financial
point of view, to the holders of Peoples Common Stock. Stifel is familiar with
Peoples, having acted as the principal market maker for Peoples Common Stock and
as Peoples' financial advisor in connection with the Agreement and Plan of
Merger. Representatives of Stifel participated in certain portions of the
meeting of Peoples' Board of Directors on November 17, 1997 where the proposed
Merger was considered and certain officers of Peoples were authorized to enter
into the Agreement and Plan of Merger.
The full text of Stifel's opinion which sets forth the
assumptions made, matters considered and limitations of the review undertaken,
is attached as Appendix C to this Prospectus-Proxy Statement and is incorporated
herein by reference, and should be read in its entirety in connection with this
Prospectus- Proxy Statement. The summary of the opinion of Stifel set forth in
this Prospectus-Proxy Statement is qualified in its entirety by reference to the
full text of such opinion.
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<PAGE> 44
Stifel's opinion is directed only to the fairness of the Merger
Consideration from a financial point of view and does not constitute a
recommendation to any holders of Peoples Common Stock as to how such holders of
Peoples Common Stock should vote at the Special Meeting or as to any other
matter.
In connection with its opinion dated November 17, 1997, Stifel
reviewed and analyzed material bearing upon the financial and operating
condition of Peoples and UPC and material prepared in connection with the
merger, including among other things: (a) the Agreement and Plan of Merger; (b)
publicly available reports filed with the Commission by Peoples and by UPC; (c)
certain other publicly available financial and other information concerning
Peoples and UPC and the trading markets for the publicly traded securities of
Peoples and UPC; (d) certain other internal information, including projections
for Peoples and UPC, relating to Peoples and UPC prepared by the managements of
Peoples and UPC and furnished to Stifel for purposes of its analysis; and (e)
publicly available information concerning certain other banks and bank holding
companies, savings banks and savings and loan associations, savings and loan
holding companies, the trading markets for their securities and the nature and
terms of certain other merger and acquisition transactions believed relevant to
its inquiry. Stifel also met with certain officers and representatives of
Peoples to discuss the foregoing as well as other matters relevant to its
inquiry, including the past and current business operations, results of
regulatory examinations, financial condition and future prospects of Peoples and
UPC, both separately and on a combined basis. In addition, Stifel reviewed the
reported price and trading activity for Peoples and UPC Common Stock, compared
certain financial and stock market information for Peoples and UPC with similar
information for certain other companies, the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the commercial banking and thrift industries, and performed such other studies
and analyses as it considered appropriate. Stifel also took into account its
assessment of general economic, market and financial conditions and its
experience in other transactions, as well as its experience in securities
valuations and knowledge of the commercial banking and thrift industries
generally.
In conducting its review and arriving at its opinion, Stifel
relied upon and assumed the accuracy and completeness of the financial and other
information provided to it or publicly available and did not attempt
independently to verify the same. Stifel has relied upon the managements of
Peoples and UPC as to the reasonableness and achievability of the projections
(and the assumptions and basis therefore) provided to Stifel, and assumed that
such projections, including, without limitation, projected cost savings and
operating synergies resulting from the Merger, reflected the best currently
available estimates and judgments of such Peoples management and UPC
representatives and that such projections would be realized in the amounts and
time periods estimated. Stifel also assumed, without independent verification,
that the aggregate allowances for loan losses for Peoples and UPC were adequate
to cover such losses. Stifel did not conduct physical inspections of any of the
properties or assets of Peoples or UPC, and Stifel did not make or obtain, and
was not furnished with, any evaluations or appraisals of any properties, assets
or liabilities of Peoples and UPC. Stifel was retained by the Peoples Board to
express an opinion as to the fairness, from a financial point of view, to the
holders of Peoples Common Stock of the Merger Consideration.
In connection with rendering its opinion to the Peoples Board,
Stifel performed a variety of financial analyses that are summarized below. The
summary of the presentations by Stifel to the Board of Directors of Peoples as
set forth herein does not purport to be a complete description of such
presentations. Stifel believes that its analysis and the summary set forth
herein must be considered as a whole and that selecting portions of such
analyses and the factors considered therein, without considering all factors and
analyses, could create an incomplete view of the analyses and processes
underlying its opinions. The preparation of a fairness opinion is a complex
process involving subjective judgments and is not necessarily susceptible to
partial analysis or summary description. In its analyses, Stifel made numerous
assumptions with respect to industry performance, business and economic
conditions, and other matters, many of which are beyond the control of Peoples
or UPC. Any estimates
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<PAGE> 45
contained in Stifel's analyses are not necessarily indicative of actual future
values or results, which may be significantly more or less favorable than
suggested by such estimates. Estimates of values of companies do not purport to
be appraisals or necessarily reflect the actual prices at which companies or
their securities actually may be sold. No company or transaction utilized in
Stifel's analyses was identical to Peoples or UPC or the Merger. Accordingly,
such analyses are not based solely on arithmetic calculations; rather, they
involve complex considerations and judgments concerning differences in financial
and operating characteristics of the relevant companies, the timing of the
relevant transactions, and prospective buyer interest, as well as other factors
that could affect the public trading values of the company or companies to which
they are being compared. None of the analyses performed by Stifel was assigned a
greater significance by Stifel than any other.
The following is a summary of the financial analyses performed
by Stifel in connection with providing its opinion to Peoples' Board of
Directors on November 17, 1997, which was dated as of November 17, 1997.
Contribution Analysis. Stifel reviewed certain projected
financial information for the nine month period ended September 30, 1997
including net revenues before loan loss provisions, net revenues adjusted for
loan loss provisions, net income, total assets, loans, total deposits, and
stockholders' equity and compared the percentage contribution of Peoples to the
pro forma combined figures for Peoples and UPC and to the percentage of total
outstanding UPC Common Stock that would be owned by the Peoples stockholders as
a result of the Merger. The contribution analysis showed, among other things,
that Peoples would contribute 5.4% of combined net revenues before loan loss
provisions, 5.6% of combined net revenues adjusted for loan loss provisions,
5.8% of combined net income, 7.4% of combined total assets, 8.3% of combined
loans, 8.2% of combined total deposits, and 7.2% of combined stockholders'
equity, while receiving 7.0% of the outstanding shares in the combined
institution (before giving effect to the Other Acquisitions). Ownership figures
are based on an exchange ratio of 0.6 shares of UPC Common Stock for each share
of Peoples Common Stock.
Accretion/Dilution Summary. Stifel reviewed certain estimated
future operating and financial information developed by both Peoples and UPC for
the pro forma combined entity resulting from the Merger for the projected twelve
month period ended December 31, 1998. Based on this analysis, Stifel compared
Peoples' estimated future stand-alone per share earnings with such projected
figures for the pro forma combined entity for this twelve month period. The
Merger is projected to be accretive on a projected pro forma basis with respect
to earnings per share. Stifel also reviewed financial information developed by
both Peoples and UPC for the pro forma combined entity resulting from the Merger
for the period ended September 30, 1997. Based on this analysis, Stifel compared
Peoples' stand-alone book value per share and tangible book value with such
calculated figures for the pro forma combined entity at September 30, 1997. The
Merger is dilutive on a pro forma basis with respect to book value per share and
tangible book value per share.
Pro Forma Effect on Financial Condition. Stifel reviewed certain
estimated operating and financial information developed by both Peoples and UPC
for the pro forma combined entity resulting from the Merger for the nine month
period ended September 30, 1997. Based on this analysis, Stifel compared certain
of Peoples' stand-alone capital ratios with such estimated figures for the pro
forma combined entity for this period. The Merger is projected to increase
certain of Peoples' capital ratios, including total equity to total assets, and
tangible total equity to total assets, although Peoples' financial condition is
not materially changed as a result of the Merger.
Present Value Analysis. Applying discounted cash flow analysis
to the theoretical future earnings and dividends of Peoples and UPC, Stifel
compared the calculated value of a Peoples share to the calculated value of a
share of the combined entity. The analysis was based upon a range of assumed
returns on assets, an assumed annual asset growth rate, current dividend rates,
a range of assumed
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<PAGE> 46
price/earnings ratios, and a 10% discount rate. Stifel selected the range of
terminal price/earnings ratios on the basis of past and current trading
multiples for Peoples, UPC and other commercial banks. Based on this analysis,
Stifel concluded that the Merger increases the calculated value of a share of
Peoples Common Stock.
Discounted Cash Flow Analysis. Based upon estimates provided by
management of the future earnings and the range of profit improvements for the
pro forma combined entity, Stifel estimated the present value of future
dividends available to be paid by Peoples under various scenarios assuming UPC
maintains a capital level of approximately 6.5% of assets. Based upon
management's estimated profitability ranges and a range of discount rates, under
UPC ownership, Peoples could theoretically produce future cash flows to UPC with
a present value ranging from $18.22 per Peoples share to $47.16 per Peoples
share.
Summary Analysis of Bank Merger Transactions. Stifel analyzed
certain information relating to transactions in the banking industry, including
information for 295 acquisitions announced in the U.S. between November 11, 1996
and November 11, 1997, as well as for 86 bank acquisitions announced in the
Midwest Region of the U.S. during that same time period. Stifel also analyzed 15
bank acquisitions announced in the Southeast and Midwest Region of the U.S.
between November 11, 1996 and November 11, 1997 involving sellers with total
assets greater than $500 million. Stifel calculated the following ratios with
respect to the Merger and the selected transactions:
<TABLE>
<CAPTION>
Peoples First/ All Selected
UPC All U.S. Midwestern SE & MW
Ratios Merger Median Median Median
- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C>
Deal Price per share/Book Value 232% 216% 174% 281%
Deal Price per share/Tangible Book
Value 252% 222% 174% 297%
Adjusted Deal Price/6.50% Equity 323% 249% 222% 332%
Deal Price per share/Last 12 months
earnings per share 20.06x 18.44x 17.19x 21.39x
Deal Price/Assets 25.54% 19.52% 17.86% 22.76%
Premium over Tangible Book
Value/Deposits 19.26% 11.51% 9.29% 18.54%
Deal Price/Deposits 31.93% 22.41% 20.70% 28.73%
===== ===== ===== =====
</TABLE>
No company or transaction used in the above analyses as a
comparison is identical to UPC, Peoples, or the Merger. Accordingly, an analysis
of the results of the foregoing is not mathematical; rather, it involves complex
considerations and judgements concerning differences in financial and operating
characteristics of the companies and other facts that could affect the public
trading value of the companies to which they are being compared.
As described above, Stifel's opinion and presentation to the
Peoples Board of Directors were among the many factors taken into consideration
by the Peoples Board in making its determination to approve the Merger.
For Stifel's services in connection with the Merger, Peoples has
agreed to pay Stifel $300,000 pursuant to the terms of an engagement letter and
has agreed to reimburse Stifel for certain out-of-pocket expenses. Pursuant to
the engagement letter, Peoples has agreed to indemnify Stifel, its affiliates
and their respective partners, directors, officers, agents, consultants,
employees and controlling persons against certain liabilities, including
liabilities under the federal securities laws.
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<PAGE> 47
In the ordinary course of its business, Stifel actively trades
equity securities of Peoples and UPC for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities.
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 Kentucky Articles of Merger reflecting the Merger become effective with
the Secretary of State of the Commonwealth of Kentucky and the Tennessee
Articles of Merger reflecting the Merger become effective with the Secretary of
State of the State of Tennessee. Subject to the terms and conditions of the
Agreement, unless otherwise agreed upon in writing by UPC and Peoples, the
parties will use their reasonable efforts to cause the Effective Time to occur
on such date as may be designated by UPC within 45 days following the last to
occur of (i) the effective date of the last consent of any regulatory authority
having authority over and approving or exempting the Merger (taking into account
any requisite waiting period in respect thereof), (ii) the date on which the
shareholders of Peoples approve the Agreement, and (iii) the date on which all
other conditions precedent (other than those conditions which relate to actions
to be taken at the Closing) to each party's obligations under the Agreement have
been satisfied or waived (to the extent waivable by such party).
No assurance can be provided that the necessary shareholder and
regulatory approvals can be obtained or that other conditions precedent to the
Merger can or will be satisfied. Peoples and UPC anticipate that all conditions
to consummation of the Merger will be satisfied so that the Merger can be
consummated on or before ___________, 1998. However, delays in the consummation
of the Merger could occur.
The Board of Directors of either Peoples or UPC generally may
terminate the Agreement and the Plan of Merger if the Merger is not consummated
by August 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
Under Kentucky law, a shareholder entitled to vote on the Merger
may dissent and obtain payment of the fair value of his or her shares of Peoples
Common Stock if the Merger is approved by the shareholders of Peoples.
Generally, dissenters' rights are a shareholder's sole remedy for objecting to
the Merger. The following summary is not intended to and does not constitute a
complete statement or summary of each provision of the Kentucky Revised Statutes
relating to the rights of dissenting shareholders and is qualified in its
entirety by reference to Subtitle 13 of the KBCA which is attached as Appendix D
to this Proxy Statement/Prospectus. Accordingly, any holder of Peoples Common
Stock intending to exercise dissenters' rights is urged to review Appendix E
carefully and to consult his or her own legal counsel. EACH STEP MUST BE TAKEN
IN STRICT COMPLIANCE WITH THE APPLICABLE PROVISIONS OF SUBTITLE 13 IN ORDER FOR
A HOLDER OF PEOPLES COMMON STOCK TO PERFECT DISSENTERS' RIGHTS.
A shareholder wishing to exercise dissenters' rights must
deliver to Peoples, prior to the vote on the Merger at the Special Meeting, a
written notice of intent to demand payment for his or her shares if the Merger
is consummated and must refrain from voting in favor of the Merger. The written
notice of intent must be given in addition to and separate from a vote against
approval of the Merger Agreement
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(whether in person or by proxy); a vote against approval of the Merger Agreement
(whether in person or by proxy) will not constitute such a written notice. The
written notice of intent should be sent to Peoples First Corporation, 100 South
Fourth Street, Paducah, Kentucky 42002, Attention: Secretary. It is recommended
that all required documents to be delivered by mail be sent registered or
certified mail with return receipt requested.
PEOPLES SHAREHOLDERS ELECTING TO EXERCISE THEIR DISSENTERS'
RIGHTS UNDER SUBTITLE 13 OF THE KBCA MUST NOT VOTE FOR APPROVAL OF THE MERGER. A
VOTE BY A SHAREHOLDER AGAINST APPROVAL OF THE MERGER IS NOT REQUIRED IN ORDER
FOR THAT SHAREHOLDER TO EXERCISE DISSENTERS' RIGHTS. HOWEVER, IF A SHAREHOLDER
RETURNS A SIGNED PROXY FORM BUT DOES NOT SPECIFY A VOTE AGAINST APPROVAL OF THE
MERGER OR A DIRECTION TO ABSTAIN, IF NOT REVOKED, THE SHARES REPRESENTED BY THE
PROXY FORM WILL BE VOTED FOR APPROVAL OF THE MERGER, WHICH WILL HAVE THE EFFECT
OF WAIVING THAT SHAREHOLDER'S DISSENTERS' RIGHTS.
If the Merger is approved, within ten days after the Special
Meeting (or any adjournment thereof), Peoples will send to all shareholders
exercising their dissenters' rights ("Dissenters") written notice (the
"Dissenters' Notice") which will state where the Dissenter must send a demand
for payment and where and when his or her share certificates must be deposited;
enclose a form for demanding payment to be completed by the Dissenter and
returned to Peoples; establish the date (not less than 30 nor more than 60 days
after the delivery of the Dissenters' Notice) by which Peoples must receive the
demand for payment from the Dissenter; and enclose a copy of Subtitle 13 of the
KBCA. After a Dissenter receives the Dissenters' Notice, he or she must deliver
the demand for payment to Peoples and deposit his or her shares in accordance
with the Dissenters' Notice.
Upon its receipt of the demand for payment, Peoples will send to
each Dissenter a statement containing an estimate by Peoples of the fair value
of the Dissenter's shares as of the day before the date of the Special Meeting,
excluding any appreciation or depreciation in anticipation of the Merger, and
payment based on that estimate plus accrued interest. The payment will be
accompanied by an explanation of how interest was calculated along with the
balance sheet of Peoples as of the end of the most recent fiscal year, an income
statement, a statement of changes in shareholders' equity and the latest
available interim financial statement. In addition, the Dissenter will be
informed of his or her right to demand payment according to the Dissenter's own
estimate of the fair value.
Peoples is not required to send payment with the statement of
its estimate of fair value to a Dissenter who was not a beneficial owner of
Peoples Common Stock at the time of the first public announcement of the Merger
Agreement, but rather may offer to purchase the Dissenter's shares based on the
estimate. Any such Dissenter must either accept that amount in full satisfaction
or proceed with the exercise of his or her dissenters' rights.
Within 30 days after Peoples has delivered its estimate of fair
value, a Dissenter may notify Peoples of his or her own estimate of the fair
value of the shares and demand payment of the balance due under such estimate.
If an agreement is not reached as to the fair value of the
shares, then within 60 days after receiving the Dissenter's payment demand,
Peoples must file a petition in the Circuit Court of McCracken County requesting
the court to determine the fair value of the shares and the accrued interest. If
Peoples fails to institute such a proceeding, it will be required to pay each
Dissenter whose demand remains unsettled the amount demanded.
Each Dissenter who is a party to the proceeding is entitled to
the amount, if any, by which the court finds the fair value of his or her
shares, plus interest, exceeds the amount paid by Peoples. In an appraisal
proceeding, the Circuit Court of McCracken County will determine all costs of
the proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court
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will assess costs against Peoples, except that the court may assess costs
against all or some of the Dissenters, in amounts the court finds equitable, to
the extent the court finds the Dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment. The court may also assess the fees and
expenses of counsel and experts for the respective parties, in amounts the court
finds equitable as follows: [i] against Peoples and in favor of any or all
Dissenters if the court finds Peoples did not substantially comply with the
requirements set forth in Subtitle 13, or [ii] against either Peoples or a
Dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by Subtitle 13. If the
court finds that the services of counsel for any Dissenter were of substantial
benefit to other Dissenters similarly situated, and that the fees for those
services should not be assessed against Peoples, the court may award to these
counsel reasonable fees to be paid out of the amounts awarded the Dissenters who
benefited.
If Peoples does not consummate the Merger within 60 days after
the deadline for demanding payment and depositing certificates, it must return
all deposited shares. If Peoples fails to do so, the Dissenter may nevertheless
proceed with the exercise of his or her Dissenters' rights, and Peoples will
have no further right to terminate the Dissenters' rights by returning deposited
shares.
A record shareholder may dissent as to less than all of the
Peoples Common Stock registered in his or her name only if he or she dissents
with respect to all of the shares beneficially owned by any one person and
notifies Peoples in writing of the name and address of each person on whose
behalf the record shareholder is asserting dissenters' rights. In that event,
the rights of each party shall be determined as if the shares as to which the
shareholder has dissented and the shareholder's other shares were registered in
the names of different shareholders.
A beneficial shareholder may assert dissenters' rights as to
shares held on his or her behalf only if he or she submits to Peoples the record
shareholder's written consent to the dissent no later than the time such
beneficial shareholder asserts his or her dissenters' rights, and he or she
dissents as to all shares of which he or she is the beneficial owner or over
which he or she has the power to direct the vote.
SHAREHOLDERS OF PEOPLES SHOULD BE AWARE THAT FAILURE TO PROCEED
IN ACCORDANCE WITH THE PROVISIONS OF SUBCHAPTER 13 OF THE KBCA WILL RESULT IN A
LOSS OF A SHAREHOLDER'S RIGHT TO DISSENT AND IN HIS OR HER BEING BOUND BY THE
AGREEMENT AND THE MERGER.
DISTRIBUTION OF UPC STOCK CERTIFICATES
Promptly after the Effective Time, UPC and Peoples will cause
UPB, Memphis, Tennessee, acting in its capacity as Exchange Agent, to mail to
the former shareholders of Peoples a letter of transmittal, together with
instructions for the exchange of the Certificates representing shares of Peoples
Common Stock for certificates representing shares of UPC Common Stock.
PEOPLES SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL
THEY RECEIVE THE LETTER OF TRANSMITTAL AND INSTRUCTIONS.
Upon surrender to the Exchange Agent of Certificates for Peoples
Common Stock, together with a properly completed letter of transmittal, there
will be issued and mailed to each holder of Peoples 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
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of such shares (without interest thereon), if any. UPC will not be obligated to
deliver the consideration to which any former holder of Peoples Common Stock is
entitled as a result of the Merger until the holder surrenders such holder's
Certificates representing the shares of Peoples 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 Peoples Common Stock Certificate until the holder duly surrenders
such Certificate. Upon surrender, both the UPC Common Stock certificate,
together with all undelivered dividends or other distributions (without
interest) and any undelivered cash payment to be paid in lieu of a fractional
share (without interest), will be delivered and paid with respect to the shares
represented by such Certificate. If any Peoples Common Stock Certificate has
been lost, stolen, or destroyed, upon the submission of an affidavit claiming
the Certificate to be lost, stolen, or destroyed by the Shareholder of record
and, if required by UPC, the posting by such person of a bond in such amount as
UPC may reasonably direct as indemnity against any claim that may be made
against UPC with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen, or destroyed Certificate the shares of UPC
Common Stock and cash in lieu of fractional shares deliverable in respect
thereof pursuant to the Agreement.
At the Effective Time, the stock transfer books of Peoples will
be closed to holders of Peoples Common Stock and no transfer of shares of
Peoples Common Stock by any such holder will thereafter be made or recognized.
If Certificates representing shares of Peoples Common Stock are presented for
transfer after the Effective Time, they will be canceled and exchanged for
shares of UPC Common Stock and a check for the amount due in lieu of fractional
shares and undelivered dividends, if any, deliverable in respect thereof.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions,
including (i) receipt of the approval of the Agreement and the Plan of Merger by
holders of a majority of the outstanding Peoples Common Stock, (ii) receipt of
certain regulatory approvals required for consummation of the Merger, (iii)
receipt by UPC of a written opinion of counsel from Wyatt, Tarrant & Combs and
by Peoples of a written opinion of counsel from Brown, Todd & Heyburn, PLLC 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 Peoples and UPC as set forth in the
Agreement, (vii) the performance of all agreements and the compliance with all
covenants of Peoples and UPC as set forth in the Agreement, (viii) 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 Peoples or UPC, (ix) receipt by UPC and Peoples of a letter from Price
Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment, (x) the absence of any law or order
or any action taken by any court, governmental, or regulatory authority of
competent jurisdiction prohibiting, restricting, or making illegal the
consummation of the transactions contemplated by the Agreement (xi) receipt by
UPC of the approval of its shareholders of an amendment to its Restated Charter
increasing the number of authorized shares of UPC Common Stock to at least
150,000,000 and in any event to a sufficient number to consummate the Merger,
(xii) receipt by Peoples of opinions from KBW and Stifel to the effect that the
Merger is fair to Peoples shareholders from a financial point of view; and
(xiii) satisfaction of certain other conditions, including the receipt of
certain legal opinions and various certificates from the officers of Peoples and
UPC. See "-- Regulatory Approval" and "-- Waiver, Amendment, and Termination."
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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
August 31, 1998, the Agreement may be terminated and the Merger abandoned by a
vote of a majority of the Board of Directors of either Peoples or UPC. See "--
Waiver, Amendment, and Termination."
REGULATORY APPROVAL
THE MERGER MAY NOT PROCEED IN THE ABSENCE OF RECEIPT OF THE
REQUISITE REGULATORY APPROVAL. THERE CAN BE NO ASSURANCE THAT SUCH REGULATORY
APPROVAL WILL BE OBTAINED OR AS TO THE TIMING OF SUCH APPROVAL. APPLICATIONS FOR
THE APPROVAL DESCRIBED BELOW HAVE BEEN SUBMITTED TO THE APPROPRIATE REGULATORY
AUTHORITIES.
It is a condition to the consummation of the Merger that UPC and
Peoples 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 UPC Board would so materially
adversely impact the financial or economic benefits of the transactions
contemplated by the Agreement and the Plan of Merger 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.
Peoples 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 and the convenience and needs
of the communities to be served. The relevant statutes prohibit the Federal
Reserve from approving the Merger if (i) it would result in a monopoly or be in
furtherance of any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States or (ii) its
effect in any section of the country could 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. By letter dated April 1, 1998,
the Federal Reserve advised UPC that the Merger had been approved.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the Agreement may be amended by
a subsequent writing signed by each of the parties upon the approval of the
Boards of Directors of each of the parties, whether before or after shareholder
approval of the Agreement and the Plan of Merger has been obtained. In addition,
prior to or at the Effective Time, either Peoples or UPC, or both, acting
through their respective Boards of Directors, chief executive officers, or other
authorized officers, may waive any default in the
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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 Peoples 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 Peoples and UPC; (ii) by the Peoples Board
or the UPC Board (a) if any inaccuracy of any representation or warranty of the
other party contained in the Agreement 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 if a material breach by the other
party of any covenant or agreement contained in the Agreement 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 (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; (2) the shareholders of Peoples fail to vote
their approval of the Agreement and the transactions contemplated thereby as
required by the KBCA and the Agreement at the Special Meeting, or (3) the
shareholders of UPC, at the 1998 Annual Meeting of Shareholders of UPC, fail to
vote their approval of an amendment to the Restated Charter of UPC to increase
the number of authorized shares of UPC Common Stock, to the extent UPC would not
have sufficient authorized shares of UPC Common Stock available for issuance in
the Merger or (d) if the Merger is not consummated by August 31, 1998, provided
that the failure to consummate is not caused by any willful breach of the
Agreement by the party electing to terminate; or (iii) by the Peoples Board
pursuant to the relevant provisions of the Agreement described in " -- Possible
Adjustment of Exchange Ratio."
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, and maintain the confidentiality of certain information
obtained 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. 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
The Agreement obligates Peoples to conduct its business only in
the usual, regular, and ordinary course, before the Effective Time, and imposes
certain limitations on the operations of Peoples and its banking subsidiaries
before the Effective Time. Among other things, Peoples has agreed that, absent
the prior written consent of UPC and except as otherwise permitted by the
Agreement, it will not: (i) become responsible for any obligation for borrowed
money in excess of an aggregate of $500,000, except in the ordinary course of
business consistent with past practices; (ii) pay 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
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shares; (iii) acquire control over any other entity; (iv) subject to certain
exceptions, grant 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, modify or adopt any employee benefit plans, including any
employment contract. See Article 7 of the Agreement, which is attached as
Appendix A to this Proxy Statement. The Agreement authorizes Peoples to declare
and pay regular quarterly dividends on the Peoples Common Stock in accordance
with its past practice in an amount not to exceed $0.24 per share per quarter.
The Agreement contemplates that the Merger will be timed to occur at such a time
that the Peoples shareholders will not fail to receive a dividend during a
quarterly period, nor will they receive a dividend on both their Peoples Common
Stock and the UPC Common Stock they receive in the Merger during the same
quarterly period.
Peoples has also agreed that, except with respect to the
Agreement, the Plan of Merger, and the transactions contemplated thereby, no
Peoples company or any representative thereof shall directly or indirectly
solicit any acquisition proposal or, except to the extent necessary to comply
with the fiduciary duties of the Peoples Board 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 Peoples 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.
In the Agreement, UPC and Peoples each also agree not to take
any action which would (a) materially adversely affect its ability to obtain any
consents required for the transactions contemplated by 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 (see "-- Certain Federal Income
Tax Consequences of the Merger"), (b) materially adversely affect the ability of
any party to perform its covenants and agreements under the Agreement.
The Agreement also provides that, pending the Closing, UPC will
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 UPC or its subsidiaries and
generally not take any action with respect to certain types of acquisitions
(Acquisition Proposals, as defined in the Agreement), which could be reasonably
expected to result in the Merger not being consummated, although UPC and its
subsidiaries are not restricted from acquiring any other assets or businesses or
from discontinuing or disposing of any of its assets or business if such action
is, in the reasonable judgment of UPC, desirable in the conduct of the business
of UPC and the UPC subsidiaries and would not, in the reasonable judgment of
UPC, likely delay the Effective Time to a date subsequent to August 31, 1998.
See Section 7.3 of the Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Consummation of the Merger will not alter the present management
team or Board of Directors of UPC or UPC Merger Subsidiary. Information
concerning the management of UPC is included in the documents incorporated
herein by reference. See "DOCUMENTS INCORPORATED BY REFERENCE." The current
officers and directors of Peoples Bank will continue to serve in their
respective capacities on behalf of Peoples Bank. UPC Merger Subsidiary, as the
sole shareholder of Peoples Bank at that time, may alter the composition of the
Board of Directors of Peoples Bank. It is currently expected that Peoples Bank
would be merged with and into UPB as soon as practicable following the Effective
Time. At such time, executive officers of Peoples Bank could be offered
positions as regional officers of UPB and directors of Peoples Bank could be
offered positions as advisory directors of UPB. For additional
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information regarding the interests of certain persons in the Merger, see "--
Interests of Certain Persons in the Merger."
UPC Merger Subsidiary will be the surviving corporation
resulting from the Merger and shall continue to be governed by the laws of the
State of Tennessee and operate in accordance with its Charter and Bylaws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of Peoples' management and the Peoples
Board may be deemed to have certain interests in the Merger that are in addition
to their interests as shareholders of Peoples generally. The Peoples Board was
aware of these interests and considered them, among other matters, in approving
the Agreement and the transactions contemplated thereby.
EMPLOYMENT AGREEMENTS. Peoples is a party to employment
agreements with Aubrey W. Lippert and Allan B. Kleet dated as of July 17, 1997.
The agreements provide for minimum base salaries for Mr. Lippert and Mr. Kleet
of $290,000 and $181,385, respectively, and entitle them to receive certain
other employee benefits and to participate in incentive bonus, stock option, and
deferred compensation plans. The agreements provide for an initial term through
December 31, 1999.
On December 31 of each year the terms of the employment
agreements automatically extend for one year unless Peoples otherwise notifies
the officer within 60 days before the applicable renewal date. If Peoples
chooses not to extend the agreement, the officer may either remain until the end
of the then-current term of his agreement, or may choose to terminate the
agreement and be paid an amount equal to three times the sum of his highest base
salary and highest annual bonus earned in any year during his employment ("final
highest earnings").
The employment agreements provide that if the officer's
employment is terminated for cause, the officer will be provided base salary
through the date of termination plus any annual incentive bonus that has been
previously approved but not paid. If termination of employment is due to death
or disability, the officer will be provided base salary through the date of
termination plus any annual incentive bonus that has been previously approved
but not paid, and will receive a severance payment equal to three times his
final highest earnings (as defined above).
When Peoples and UPC entered into the Agreement on November 17,
1998, Messrs. Lippert and Kleet became entitled to certain rights provided by
the employment agreements upon the occurrence of a change in control of Peoples.
Messrs. Lippert and Kleet have the option to extend the terms of their
employment agreements for an additional three-year period, beginning on the
later of the date of the renewal notice or the date of the change in control.
Upon the commencement of any such renewal term, any remaining period of the
then-current term of the employment agreement will be canceled. During the
extended renewal term following a change in control, the officer may resign
without penalty upon 90 days prior notice and receive a lump-sum payment equal
to three times his final highest earnings (as defined above). With respect to
benefits paid, accrued or accelerated by virtue of a change in control, the
agreements require Peoples to make certain tax gross-up payments to cover the
income tax and excise tax liabilities of the officers with respect to such
benefits, including tax liabilities associated with the gross-up payments.
Peoples and UPC have entered into a letter agreement relating to
Mr. Lippert's service with UPC after the Merger. The letter agreement provides
that Mr. Lippert's employment agreement with Peoples will be terminated as of
the Effective Time, and Mr. Lippert will be paid the severance benefits
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to which he is entitled. Upon termination of the employment agreement, Mr.
Lippert will remain an employee at will at a mutually agreed upon compensation
level.
The letter agreement also provides that after the Merger, UPC
will issue an aggregate of 20,000 restricted shares of UPC Common Stock to the
executive management of Peoples Bank. The letter agreement contemplates that Mr.
Lippert will be awarded between 40% and 60 % of these restricted shares. The
restricted shares will vest over a five year period and will be conditioned upon
the continued employment of the recipient with UPC. A change in control of UPC
or the termination of the executive officer's employment without cause will
cause the restricted shares to automatically vest. Unvested restricted shares
will be forfeited if employment is terminated for any reason other than
termination by UPC without cause.
OFFICER RETENTION AGREEMENTS. Nine officers of Peoples are
covered by officer retention agreements that provide them certain protections in
the event of a change in control of Peoples (the "Retention Agreements"). The
Retention Agreements provide for a "contract period" beginning immediately
preceding a "change in control" and ending on December 31 of the second full
calendar year thereafter. The initial term of the agreement ends on December 31,
1999, and the officer's rights accrue only if a change in control occurs before
that date. The term of the Retention Agreement extends automatically for one
additional year on each December 31, unless Peoples elects not to extend such
period.
If the officer is terminated other than for cause during the
contract period, the employee will be entitled to receive a lump sum payment
equal to the sum of the officer's highest annual base salary for any year
preceding his termination of employment and the officer's highest annual bonus
payable for any year preceding his termination of employment. If the officer is
terminated for cause, the officer will be limited to his accrued salary through
termination and any annual incentive bonus that may have been approved but not
yet paid. Generally, "cause" includes the willful failure by the officer to
perform his duties or acts of gross misconduct.
STOCK OPTIONS. Peoples has granted Employee Options to executive
officers and directors under the Peoples Stock Plan. All Employee Options
outstanding not otherwise exercisable will become fully exercisable on the date
of the Agreement, which constituted a "change in control" under the plan. The
Agreement provides that UPC will assume any Employee Options outstanding at the
Effective Time on a basis adjusted to reflect the Exchange Ratio. See
"DESCRIPTION OF TRANSACTION -- Effect of the Merger on Employee Options."
The following table sets forth, with respect to (i) each
Executive Officer, (ii) a group consisting of all the Executive Officers (the
"Executive Officer Group"), and (iii) the Peoples Board as a group (the
"Non-Executive Officer Director Group"), the number of shares of Peoples Common
Stock covered by outstanding Employee Options held by such persons as of the
Record Date:
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<PAGE> 56
<TABLE>
<CAPTION>
Weighted
Options Average Aggregate
Currently Exercise Value of
Options Held Exercisable Per Option Option(1)
------------ ----------- ---------- ---------
<S> <C> <C> <C> <C>
Aubrey W. Lippert 157,476 157,476 12.14 $3,914,258
Allan B. Kleet 116,607 116,607 14.26 2,651,734
George B. Shaw 23,979 23,979 18.13 452,493
Dennis W. Kirtley -- -- -- --
David A. Long 16,461 16,461 19.29 291,447
Executive Officer Group 314,523 314,523 13.76 7,309,932
Non-Executive Officer
Director Group 25,468 25,468 10.46 675,807
</TABLE>
- ------------------------------
(1) Based on the closing price of Peoples Common Stock of $37.00 as quoted on
the Nasdaq National Market on March 31, 1998.
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. The Agreement
provides that UPC will, subject to the conditions set forth therein, indemnify
the present and former directors, officers, employees, and agents of Peoples and
its subsidiaries against all Liabilities (as defined in the Agreement) arising
out of actions or omissions occurring at or prior to the Effective Time
(including the transactions contemplated by the Agreement to the full extent
permitted under any of Kentucky law, Peoples' Articles and Bylaws, and any
indemnity agreements previously entered into by Peoples or any of its
subsidiaries and any director, officer, employee, or agent of Peoples or any of
its subsidiaries. This provision of the Agreement is consistently included in
UPC's standard form merger agreement and is not intended to broaden in any
manner the scope of indemnification to which the present and former directors,
officers, employees, and agents of Peoples and its subsidiaries are entitled,
but serves to ratify the legal obligations of Peoples and its subsidiaries (to
be assumed by UPC Merger Subsidiary upon consummation of the Merger) to provide
indemnification in accordance with Kentucky law, Peoples' Articles and Bylaws,
and any indemnification agreements to which Peoples or its subsidiaries is a
party with an indemnified person. The indemnification provided under the
provisions of such instruments will be subject to the same standards that are
currently applicable for determining whether indemnified parties are entitled to
indemnification under such instruments.
The Agreement further provides that UPC will, subject to the
conditions set forth in the Agreement, use its reasonable efforts to cause the
persons serving as officers and directors of Peoples immediately prior to the
Merger to be covered for a period of three years following the Effective Time by
Peoples' directors and officers liability insurance policy (or any equivalent
substitute therefor), provided that UPC will not be required to expend on an
annual basis more than 150% of the current annual amount expended by Peoples to
procure such insurance.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The parties to the Merger have not and do not intend to seek a
ruling from the Internal Revenue Service ("IRS") as to the federal income tax
consequences of the Merger. Instead, UPC has obtained the opinion of Wyatt,
Tarrant & Combs (counsel to UPC) and Peoples has obtained the opinion of Brown,
Todd & Heyburn PLLC (counsel to Peoples) (collectively, the "Tax Opinions") as
to certain of the expected federal income tax consequences of the Merger, copies
of which are attached as exhibits to the Proxy Statement.
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<PAGE> 57
The Tax Opinions do not address, among other matters: (i) state,
local, foreign or other federal tax consequences of the Merger not specifically
addressed therein; (ii) federal income tax consequences to shareholders of
Peoples subject to special rules under the Code, such as foreign persons,
tax-exempt organizations, insurance companies, financial institutions, dealers
in stocks and securities, and persons who do not own such stock as a capital
asset; (iii) federal income tax consequences affecting shares of Peoples stock
acquired upon exercise of stock options, stock purchase plan rights or otherwise
as compensation; (iv) the tax consequences to holders of warrants, options or
other rights to acquire shares of such stock; (v) the tax consequences of the
parties to the Agreement of the inclusion in income of the amount of the
bad-debt reserve maintained by Peoples and/or its subsidiaries and any other
amounts resulting from any required change in accounting methods; and (vi) the
tax consequences of the parties to the Agreement of any income and deferred gain
recognized pursuant to Treasury Regulations issued under Section 1502 of the
Code.
Subject to the conditions, qualifications, representations and
assumptions contained herein, and in the Tax Opinions, such counsel have opined
that:
[1] The acquisition by UPC Merger Subsidiary of substantially
all of the assets of Peoples in exchange for shares of UPC Common Stock and the
assumption of liabilities of Peoples pursuant to the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code.
[2] Peoples, UPC and UPC Merger Subsidiary will each be "a party
to a reorganization" within the meaning of Section 368(b) of the Code.
[3] No gain or loss will be recognized by Peoples as a result of
the Merger.
[4] No gain or loss will be recognized by UPC Merger Subsidiary
or UPC as a result of the Merger.
[5] No gain or loss will be recognized by the shareholders of
Peoples as a result of the exchange of Peoples Common Stock for UPC Common Stock
pursuant to the Merger, except that a gain or loss will be recognized on the
receipt of any cash in lieu of a fractional share. Assuming that the Peoples
Common Stock is a capital asset in the hands of the respective Peoples
shareholders, any gain or loss recognized as a result of the receipt of cash in
lieu of a fractional share will be a capital gain or loss equal to the
difference between the cash received and that portion of the holder's tax basis
in the Peoples Common Stock allocable to the fractional share.
[6] The tax basis of UPC Common Stock to be received by the
shareholders of Peoples will be the same as the tax basis of the Peoples Common
Stock surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received).
[7] The holding period of the UPC Common Stock to be received by
shareholders of Peoples will include the holding period of the Peoples Common
Stock surrendered in exchange therefor, provided the Peoples shares were held as
a capital asset by the shareholders of Peoples on the date of the exchange.
[8] A shareholder of Peoples who perfects his dissenter's rights
and who receives payment of the fair market value of his shares of Peoples
Common Stock will be treated as having received such payment in redemption of
such stock. Such redemption will be subject to the conditions and limitations of
Section 302 of the Code.
The Tax Opinions are based on the Code, the Treasury Regulations
promulgated thereunder, judicial decisions and administrative pronouncements of
the IRS, all existing and in effect on the date of this Proxy Statement and all
of which are subject to change at any time, possibly retroactively. Any such
change
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<PAGE> 58
could have a material impact on the conclusions reached in the Tax Opinions. The
Tax Opinions represent only such counsel's best judgment as to the expected
federal income tax consequences of the Merger and are not binding on the IRS or
the courts. The IRS may challenge the conclusions stated therein and
shareholders of Peoples may incur the cost and expense of defending positions
taken by them with respect to the Merger. A successful challenge by the IRS
could have material adverse consequences to the parties to the Merger, including
shareholders of Peoples and UPC.
In rendering the Tax Opinions, such counsel have relied, as to
factual matters, solely on the continuing accuracy of (i) the description of the
facts relating to the Merger contained in the Agreement and Proxy Statement,
(ii) the factual representations and warranties contained in the Agreement and
Proxy Statement and related documents and agreements, and (iii) certain factual
matters addressed by representations made by certain executive officers of
Peoples, UPC and UPC Merger Subsidiary, as further described in the Tax Opinions
and exhibits thereunder. Events occurring after the date of the Tax Opinions
could alter the facts upon which the Tax Opinions are based, in which event the
conclusions reached therein and in this summary could be materially impacted.
ACCORDINGLY, FOR ALL OF THE ABOVE REASONS, SHAREHOLDERS OF
PEOPLES AND UPC ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC
TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING THE APPLICABILITY AND EFFECT
OF FEDERAL, STATE, LOCAL AND OTHER TAX LAWS.
ACCOUNTING TREATMENT
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 Peoples will be carried
forward at their previously recorded amounts, and current and prior period
financial statements will be restated for all periods as though Peoples 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 Peoples
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 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 Peoples Common Stock for UPC Common Stock in the Merger by
affiliates of Peoples 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 each of
UPC and Peoples will bear and pay the filing fees payable in connection with the
Registration Statement and this Proxy Statement and the printing costs in
connection with the Registration Statement and this Proxy Statement based on the
relative asset sizes of the parties at December 31, 1996.
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<PAGE> 59
RESALES OF UPC COMMON STOCK
UPC Common Stock to be issued to shareholders of Peoples in
connection with the Merger will be registered under the Securities Act. All
shares of UPC Common Stock received by holders of Peoples 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 shareholders of Peoples not deemed to be "Affiliates" of Peoples or UPC.
"Affiliates" generally are defined as persons or entities who control, are
controlled by, or are under common control with Peoples or UPC at the time of
the Special Meeting (generally, executive officers, directors, and 10% or
greater shareholders).
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 Peoples 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 Peoples 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 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 Peoples or UPC.
Peoples has agreed to use its reasonable efforts to cause each
person who may be deemed to be an Affiliate of Peoples to execute and deliver to
UPC not later than 40 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 Peoples 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 Peoples have been published. If the Merger qualifies for
pooling-of-interests accounting treatment, shares of UPC Common Stock issued to
such Affiliates of Peoples in exchange for shares of Peoples Common Stock will
not be transferable until such time as financial results covering at least 30
days of combined operations of UPC and Peoples 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 Peoples). 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, Peoples and UPC entered into the Option Agreement which became
effective on November 17, 1997, pursuant to which Peoples granted UPC an option
(the "Option") entitling it to purchase up to 1,991,406 shares (representing
approximately 19.9% of the shares issued and outstanding before giving effect to
the issuance of additional shares of Peoples Common Stock pursuant to the
exercise of the Option) of Peoples Common
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<PAGE> 60
Stock under the circumstances described below, at a cash price per share equal
to $33.00, 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 the 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
$15.0 million and, if it otherwise would exceed such amount, UPC, at its sole
election, shall either (a) reduce the number of shares of Peoples Common Stock
subject to the Option, (b) deliver to Peoples for cancellation, without
consideration, the shares of Peoples Common Stock previously purchased pursuant
to the Option, (c) pay cash to Peoples or (d) any combination thereof, so that
UPC will not actually realize Total Profit (together with the Total Profit
realized by all other holders) in excess of $15.0 million after taking into
account the foregoing actions. In addition, the Option may not be exercised for
a number of shares of Peoples Common Stock as would, as of the date of exercise,
result in UPC's (taking into account all other holders) Notional Total Profit
(as defined below) exceeding $15.0 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 sum (before taxes) of the
following: (a) the amount received by UPC pursuant to Peoples' repurchase of the
Option (or any portion thereof); (b)(i) the amount received by UPC pursuant to
Peoples' repurchase of shares of Peoples Common Stock purchased pursuant to the
Option Agreement, less (ii) UPC's purchase price for such shares; (c)(i) the net
cash amounts received by UPC pursuant to the sale of Peoples 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) UPC's
purchase price of such shares; (d) any amounts received by UPC on the transfer
of the Option (or any portion thereof) to any unaffiliated party; and (e) any
equivalent amount with respect to a substitute option into which the Option
would convert in certain events.
"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 Peoples Common Stock purchased pursuant to the Option held by UPC and
its affiliates as of such date, were sold for cash at the closing market price
of Peoples Common Stock as of the close of business on the preceding trading day
(less customary brokerage commissions).
If no preliminary or permanent injunction or other order against
the delivery of the shares of Peoples Common Stock covered by the Option issued
by any court of competent jurisdiction is in effect, UPC may exercise the
Option, in whole or in part, at any time, from time to time, 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 prior written consent, Peoples 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 Peoples or any of its subsidiaries (other than transactions solely
between Peoples' 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 Peoples 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 Peoples or any of its
subsidiaries, in each case other than transactions involving Peoples or any
of its subsidiaries in which the voting securities outstanding immediately
prior thereto continue to represent (by either remaining outstanding
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<PAGE> 61
or being converted into securities of the surviving entity) at least 65% of
the combined voting power of the voting securities of Peoples or the
surviving entity outstanding immediately after the consummation of the
transaction)); or
(b) any person (other than UPC or any UPC subsidiary) acquiring
beneficial ownership (as such term is defined in Rule 13d-3 promulgated
under the Exchange Act), or the right to acquire beneficial ownership of, or
the formation of any "group" (as defined under the Exchange Act), other than
a group of which UPC or any UPC subsidiary is a member, that beneficially
owns or has the right to acquire beneficial ownership of, 25% or more of the
outstanding shares of Peoples Common Stock.
The Option will terminate upon the earliest of the following:
(a) the Effective Time;
(b) termination of the Agreement in accordance with its terms
before the occurrence of a Purchase Event or a Preliminary Purchase Event
(as defined below) (other than a termination of the Agreement under certain
circumstances involving generally a willful breach by Peoples of a
representation or warranty contained in the Agreement or a breach by Peoples
of a covenant contained in the Agreement) (a "Default Termination");
(c) 12 months after termination of the Agreement by UPC pursuant
to a Default Termination; or
(d) 12 months after termination of the Agreement following the
occurrence of a Purchase Event or a Preliminary Purchase Event.
As defined in the Option Agreement, "Preliminary Purchase Event"
includes 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 Peoples Common Stock such that, upon consummation of
such offer, such person would own or control 15% or more of the
then-outstanding shares of Peoples Common Stock (a "Tender Offer" or an
"Exchange Offer," respectively); or
(b) failure of the shareholders of Peoples Common Stock to
approve the Agreement and the Plan of Merger at the Special Meeting, the
failure to have the Special Meeting or another such meeting held for the
purpose of voting on the Agreement or the cancellation of such meeting prior
to termination of the Agreement, or the withdrawal or modification by the
Peoples Board in a manner adverse to UPC of the recommendation of the
Peoples Board 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 gave a notice under any federal or
state statutes or regulations for approval or consent to engage in an
acquisition transaction; or
(c) a third party's public announcement of a proposal to engage
in an acquisition transaction; or the filing of an application or notice
with any regulatory authority for approval to engage in an acquisition
transaction.
In the event of any change in Peoples 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
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<PAGE> 62
appropriately. In the event that any additional shares of Peoples Common Stock
are issued after November 17, 1997 (other than pursuant to an event described in
the preceding sentence), the number of shares of Peoples Common Stock subject to
the Option will be adjusted so that, after such issuance, it, together with any
shares of Peoples 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, Peoples will,
subject to regulatory restrictions, be obligated to repurchase the Option and
any shares of Peoples Common Stock purchased pursuant to the Option Agreement at
a specified price.
As defined in the Option Agreement, a "Repurchase Event" occurs
if (i) any person (other than UPC or any UPC subsidiary) acquires beneficial
ownership, or the right to acquire beneficial ownership, or any "group" (as such
term is defined under the Exchange Act) shall have been formed which
beneficially owns or has the right to acquire beneficial ownership of 50% or
more of the then-outstanding shares of Peoples Common Stock, or (ii) any of the
following transactions is consummated: (a) Peoples 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) Peoples
permits any person, other than UPC or one of UPC's subsidiaries, to merge into
Peoples and Peoples shall be the continuing or surviving corporation, but, in
connection with such merger, the then-outstanding shares of Peoples Common Stock
shall be changed into or exchanged for stock or other securities of Peoples or
any other person or cash or any other property or the outstanding shares of
Peoples 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) Peoples sells or otherwise transfers all or substantially
all of its assets to any person, other than UPC or one of UPC's subsidiaries.
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, Peoples 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 Peoples Common Stock
into which the Option is exercisable.
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
As a result of the Merger, holders of Peoples Common Stock will
be exchanging their shares of a Kentucky corporation governed by the KBCA and
Peoples' Articles and Bylaws, for shares of UPC, a Tennessee corporation
governed by the TBCA and UPC's Charter and Bylaws. Certain significant
differences exist between the rights of Peoples shareholders and those of UPC
shareholders. 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 acquiror has obtained the
approval of the UPC Board. The following discussion is necessarily general; it
is not intended to be a complete statement of all differences affecting the
rights of shareholders and their respective entities, and it is qualified in its
entirety by reference to the KBCA and the TBCA as well as to UPC's Charter and
Bylaws and Peoples' Articles and Bylaws.
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ANTI-TAKEOVER PROVISIONS GENERALLY
The provisions of UPC's Charter and Bylaws described below under
the headings, "-- Authorized Peoples 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 Shareholders," "-- Actions by
Shareholders Without a Meeting," "-- Shareholder Nominations and Proposals" and
"-- Business Combinations" are referred to herein as the "Protective
Provisions." In general, one purpose of the Protective Provisions is to assist
the UPC Board in playing a role if any group or person attempts to acquire
control of UPC, so that the UPC Board can further protect the interests of UPC
and its shareholders as appropriate under the circumstances, including, if the
UPC Board determines that a sale of control is in the best interests of UPC's
shareholders, by enhancing the UPC Board's ability to maximize the value to be
received by the shareholders upon such a sale.
Although UPC's management believes the Protective Provisions
are, therefore, beneficial to UPC's shareholders, the Protective Provisions also
may tend to discourage some takeover bids. As a result, UPC's shareholders may
be deprived of opportunities to sell some or all of their shares at prices that
represent a premium over prevailing market prices. On the other hand, defeating
undesirable acquisition offers can be a very expensive and time-consuming
process. To the extent that the Protective Provisions discourage undesirable
proposals, UPC may be able to avoid those expenditures of time and money.
The Protective Provisions also may discourage open market
purchases by a potential acquiror. Such purchases may increase the market price
of UPC Common Stock temporarily, enabling shareholders to sell their shares at a
price higher than that which otherwise would prevail. In addition, the
Protective Provisions may decrease the market price of UPC Common Stock by
making the stock less attractive to persons who invest in securities in
anticipation of price increases from potential acquisition attempts. The
Protective Provisions also may make it more difficult and time consuming for a
potential acquiror to obtain control of UPC through replacing the Board of
Directors and management. Furthermore, the Protective Provisions may make it
more difficult for UPC's shareholders to replace the Board of Directors or
management, even if a majority of the shareholders believe such replacement is
in the best interests of UPC. As a result, the Protective Provisions may tend to
perpetuate the incumbent Board of Directors and management.
AUTHORIZED CAPITAL STOCK
UPC. [With the amendment approved by shareholders of UPC at its
1998 Annual Meeting of Shareholders,] UPC's Charter authorizes the issuance of
up to (i) [300,000,000] shares of UPC Common Stock, of which 83,865,183 shares
were issued and outstanding as of March 31, 1998, 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 1,478,888 shares of UPC Series E Preferred Stock
were issued and outstanding as of March 31, 1998. The UPC Board may authorize
the issuance of additional shares of UPC Common Stock without further action by
UPC's shareholders, unless such action is required in a particular case by
applicable laws or regulations or by any stock exchange upon which UPC's capital
stock may be listed.
With certain exceptions, the UPC Board may issue, without any
further action by the shareholders, shares of UPC Preferred Stock, in one or
more classes or series, with such voting, conversion, dividend, and liquidation
rights as specified in UPC's Charter. In providing for the issuance of such
shares, the UPC Board 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
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series and the relation of such dividends to the dividends payable on other
classes of stock, whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or series of UPC capital stock, the
voting powers if any of such series, and any other preferences, privileges, and
powers of such series.
In the event of the voluntary or involuntary liquidation,
dissolution, distribution of assets, or winding up of UPC, the holders of any
series of UPC Preferred Stock will have priority over holders of UPC Common
Stock.
The authority to issue additional shares of UPC Common Stock or
UPC Preferred Stock provides UPC with the flexibility necessary to meet its
future needs without the delay resulting from seeking shareholder approval. The
authorized but unissued shares of UPC Common Stock (including such increased
number as may be approved by the UPC shareholders pursuant to the amendment
discussed above) 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 shareholders, may have the
effect of discouraging or increasing the cost of unsolicited attempts to acquire
control of UPC.
In 1989, the UPC Board adopted a Share Purchase Rights Plan
("Preferred Share Rights Plan") and distributed a dividend of one Preferred
Share Unit Purchase Right ("Preferred Share Right") for each outstanding share
of UPC Common Stock. In addition, under the Preferred Share Rights Plan, one
Preferred Share Right is to be automatically, and without further action by UPC,
distributed in respect to each share of UPC Common Stock issued after adoption
of the Preferred Share Rights Plan. The Preferred Share Rights are generally
designed to deter coercive takeover tactics and to encourage all persons
interested in potentially acquiring control of UPC to treat each shareholder on
a fair and equal basis. Each Preferred Share Right trades in tandem with the
share of UPC Common Stock to which it relates until the occurrence of certain
events indicating a potential change in control of UPC. Upon the occurrence of
such an event, the Preferred Share Rights would separate from UPC Common Stock
and each holder of a Preferred Share Right (other than the potential acquiror)
would be entitled to purchase certain equity securities 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 shareholder of UPC,
including the right to vote or receive dividends.
PEOPLES. Peoples' Articles authorize the issuance of up to
30,000,000 shares of Peoples Common Stock, of which 10,024,311 shares were
issued and outstanding as of the Record Date, and 6,000,000 shares of preferred
stock, none of which are issued or outstanding. The Peoples Board generally may
authorize the issuance of additional authorized shares of Peoples Common Stock
without further action by Peoples' shareholders upon receipt of valid
consideration in exchange for such shares.
On January 18, 1995, the Peoples Board declared a dividend
distribution of one right (a "Peoples Right") for each outstanding share of
Peoples Common Stock to stockholders of record at the close of business on
January 31, 1995 (the "Record Date"). Following adjustments for 5% stock
dividends on Peoples Common Stock declared on January 13, 1995, March 18, 1996
and March 20, 1997, the number of Peoples Rights associated with each share of
Peoples Common Stock is 0.8638. Each Peoples Right entitles the registered
holder to purchase from Peoples a unit consisting of one-hundredth of a share (a
"Unit") of Junior Participating Preferred Stock at a purchase price of $60.00
per Unit, subject to adjustment. The description and terms of the Peoples Rights
are set forth in a Rights Agreement dated
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as of January 18, 1995 (the "Peoples Rights Agreement") between Peoples and
Boatmen's Trust company, as Rights Agent. In connection with the transactions
contemplated by the Agreement, Peoples amended its Rights Agreement to provide
that the agreements entered into in connection with the Merger would not trigger
the Peoples Rights. Pursuant to the Agreement, Peoples agreed to terminate the
Peoples Rights Agreement and to take all steps necessary to cause all Peoples
Rights to cease to exist immediately prior to the Effective Time.
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 shareholders. The Charter requires a vote
of two-thirds or more of the shares of capital stock entitled to vote in an
election of directors to amend the articles of the Charter governing directors
and to remove a director from office whether with or without cause. A two-thirds
vote is also required to amend, alter, or repeal the article of the Charter
relating to business combinations.
The UPC Board 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 shareholders.
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 shareholders, 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.
PEOPLES. Certain provisions of Peoples' Articles may not be
amended, repealed, or otherwise changed without approval of the shareholders by
a variable supermajority vote.
The power to amend, alter, or repeal the Peoples Bylaws, and to
adopt new Bylaws is vested in the Peoples Board or the shareholders. The Bylaws
generally may be amended by resolution of a majority of the Board or a vote of a
majority of the shareholders.
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING
UPC. The Charter of UPC provides that the UPC Board is divided
into three classes, with each class to be as nearly equal in number as possible.
The directors in each class serve three-year terms of office. The effect of
UPC's having a classified Board of Directors is that only approximately
one-third of the members of the Board are elected each year, which effectively
requires two annual meetings for UPC's shareholders to change a majority of the
members of the Board. The purpose of dividing the UPC Board into classes is to
facilitate continuity and stability of leadership of UPC by ensuring that
experienced personnel familiar with UPC will be represented on the UPC Board at
all times, and to permit UPC's management to plan for the future for a
reasonable amount of time. However, by potentially delaying the time within
which an acquiror could obtain working control of the Board, this provision may
discourage some potential mergers, tender offers, or takeover attempts.
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Pursuant to the Charter of UPC, each shareholder is entitled to
one vote for each share of UPC Common Stock held and is not entitled to
cumulative voting rights in the election of directors. With cumulative voting, a
shareholder has the right to cast a number of votes equal to the total number of
such holder's shares multiplied by the number of directors to be elected. The
shareholder has the right to distribute all of his votes in any manner among any
number of candidates or to accumulate such shares in favor of one candidate.
Directors are elected by a plurality of the total votes cast by all
shareholders. With cumulative voting, it may be possible for minority
shareholders to obtain representation on the Board of Directors. Without
cumulative voting, the holders of more than 50% of the shares of UPC Common
Stock generally have the ability to elect 100% of the directors. As a result,
the holders of the remaining UPC Common Stock effectively may not be able to
elect any person to the Board of Directors. The absence of cumulative voting
thus could make it more difficult for a shareholder who acquires less than a
majority of the shares of UPC Common Stock to obtain representation on the UPC
Board.
PEOPLES. Kentucky law requires cumulative voting in the election
of directors. Under cumulative voting, each shareholder is entitled to vote the
number of shares owned by him on the record date multiplied by the number of
directors to be elected. Each shareholder may cast all of his votes for a single
nominee or may distribute his votes in any manner among as many candidates as
the shareholder sees fit.
Peoples' Articles authorize Peoples' Board to establish the
number of directors. The number of Peoples' directors is currently set at
seventeen. Peoples' directors are divided into three classes.
DIRECTOR REMOVAL AND VACANCIES
UPC. UPC's Charter provides that a director may be removed by
the shareholders only upon the affirmative vote of the holders of at least
two-thirds of the voting power of all shares of capital stock entitled to vote
generally in the election of directors. The purpose of this provision is to
prevent a majority shareholder from circumventing the classified board system by
removing directors and filling the vacancies with new individuals selected by
that shareholder. Accordingly, the provision may have the effect of impeding
efforts to gain control of the Board of Directors by anyone who obtains a
controlling interest in UPC Common Stock. Vacancies on the Board of Directors
may be filled by the Board of Directors or shareholders, as provided under the
UPC Bylaws and the TBCA. The term of a director appointed to fill a vacancy
expires at the next meeting of shareholders at which directors are elected.
PEOPLES. Peoples' Articles provide that the affirmative vote of
the holders of 80% of the combined voting power of the then outstanding shares
of stock entitled to vote generally in the election of directors, voting
together as a single class, is required to remove a director or the entire board
with or without cause. If less than the entire board is to be removed, no one of
the directors may be removed if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election of the class
of directors of which he is a part. Vacancies on the Peoples Board may be filled
by the Peoples Board, as provided under the Peoples Bylaws and the KBCA. The
term of a director appointed to fill a vacancy expires at the next meeting of
shareholders at which directors are elected.
LIMITATIONS ON DIRECTOR LIABILITY
UPC. UPC's Charter does not address the issue of director
liability to the corporation.
PEOPLES. Peoples' Articles limit the liability of directors to
Peoples and its shareholders to the extent permitted by KRS 271B.2-020. KRS
271B.2-020 does not relieve a director of his or her liability, monetary or
otherwise, for the following actions: (i) for any transaction in which the
director's personal
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financial interest is in conflict with the financial interest of the corporation
or its shareholders; (ii) for acts of omissions not in good faith or which
involve intentional misconduct or are known by the director to violate law;
(iii) actions involving an improper distribution in violation of KRS 271B.8-330;
and (iv) for any transaction from which the director derived an improper
personal benefit.
INDEMNIFICATION
UPC. Under the TBCA, subject to certain exceptions, a
corporation may indemnify an individual made a party to a proceeding, because he
or she is or was a director, against liability incurred in the proceeding if (i)
he or she conducted himself or herself in good faith; (ii) he or she reasonably
believed (a) in the case of conduct in his or her official capacity with the
corporation, that his or her conduct was in the best interests of the
corporation, and (b) in all other cases, that his or her conduct was at least
not opposed to the corporation's best interests; and (iii) in the case of any
criminal proceeding, he or she had no reasonable cause to believe his or her
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 or she was a party because he or she is or was a director of the
corporation against reasonable expenses incurred by him or her 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 or her
good faith belief that he or she has met the Standard of Conduct, a written
undertaking by or on behalf of a director to repay such amount if it shall
ultimately be determined that he or she is entitled to be indemnified by the
corporation against such expenses and a determination is made that the facts
known to those making the determination would preclude indemnification. Before
any such indemnification is made, it must be determined that such
indemnification would not be precluded by 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.
PEOPLES. Under Kentucky law, a corporation has broad powers of
indemnification. A person may be indemnified for judgments, penalties, fines,
settlements, and reasonable expenses incurred by that person in proceedings in
connection with the person's official capacity in the corporation.
Indemnification against reasonable legal expenses incurred by a person in such a
proceeding is mandatory when the person is wholly successful in the defense of
the proceeding. Peoples' Articles require Peoples to indemnify its directors,
officers, employees, and agents.
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SPECIAL MEETING OF SHAREHOLDERS
UPC. UPC's Bylaws provide that special meetings of shareholders
may be called, unless otherwise prescribed by law, for any purpose or purposes
whatever at any time by the Chairman of the Board, the President, the Secretary,
or the holders of not less than one-tenth of the shares entitled to vote at such
meeting.
PEOPLES. Kentucky law provides that special meetings of
shareholders of a Kentucky corporation may be called by its board of directors
or the persons authorized to do so by the articles of incorporation or bylaws,
or by holders of at least 33-1/3% (or such higher or lower percentage as is
contained in the articles of incorporation) of all votes entitled to be cast on
any issue at the special meeting.
Peoples' Bylaws provide that special meetings of its
shareholders may be called by its Chairman or Board of Directors, and must be
called by the Chairman or the Board at the request of holders of not less than
one-fifth of all shares of Peoples' Common Stock entitled to vote at the
meeting.
ACTIONS BY SHAREHOLDERS WITHOUT A MEETING
UPC. UPC's Charter and Bylaws provide that any action required
or permitted to be taken by UPC shareholders at a duly called meeting of
shareholders may be effected by the unanimous written consent of the
shareholders entitled to vote on such action.
PEOPLES. Peoples' Bylaws state that any action required or
permitted to be taken by the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the action taken.
SHAREHOLDER NOMINATIONS AND PROPOSALS
UPC. UPC's Charter and Bylaws do not address whether a
shareholder may nominate members of the Board of Directors.
Holders of UPC Common Stock are entitled to submit proposals to
be presented at an annual meeting of UPC shareholders. The UPC Bylaws provide
that any proposal of a shareholder which is to be presented at any annual
meeting of shareholders shall be sent so as to be received by UPC not less than
120 days in advance of the date of the proxy statement issued in connection with
the previous year's annual meeting.
PEOPLES. Peoples' Bylaws generally provide that any shareholder
of the corporation may nominate persons for election to the Board of Directors.
The shareholder must provide written notice of such nomination to the President
of Peoples not less than 14 days but not more than 50 days prior to the date of
the meeting at which the election of directors is to be held. The shareholder's
notice must set forth certain information relating to the person whom the
shareholder proposes to nominate.
BUSINESS COMBINATIONS
UPC. UPC's Charter requires the affirmative vote of the holders
of two-thirds or more of the outstanding UPC 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
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more of the outstanding shares of UPC. A two-thirds vote is not required for any
merger or consolidation of UPC with or into any corporation or entity of which a
majority of the outstanding shares of all classes of capital stock entitled to
vote in the election of directors is owned by UPC or any UPC company.
The requirement of a supermajority vote of shareholders to
approve certain business transactions, as described above, may discourage a
change in control of UPC by allowing a minority of UPC's shareholders to prevent
a transaction favored by the majority of the shareholders. Also, in some
circumstances, the Board of Directors could cause a two-thirds vote to be
required to approve a transaction thereby enabling management to retain control
over the affairs of UPC and their positions with UPC. The primary purpose of the
supermajority vote requirement, however, is to encourage negotiations with UPC's
management by groups or corporations interested in acquiring control of UPC and
to reduce the danger of a forced merger or sale of assets.
As a Tennessee corporation, UPC is or could be subject to
various legislative acts set forth in Chapter 103 of Title 48 of the Tennessee
Code, which impose certain restrictions on business combinations, including, but
not limited to, combinations with interested shareholders similar to those
described above.
The TBCA generally prohibits a "business combination" (generally
defined to include mergers, share exchanges, sales and leases of assets,
issuances of securities, and similar transactions) by UPC or a subsidiary with
an "interested shareholder" (generally defined as any person or entity which
beneficially owns 10% or more of the voting power of any class or series of
UPC's stock then outstanding) within five years after the person or entity
becomes an interested shareholder, unless the business combination or the
transaction pursuant to which the interested shareholder became such was
approved by the UPC Board before the interested shareholder became such, and the
business combination satisfies any other applicable requirements imposed by law
or by UPC's Charter or Bylaws. The TBCA 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 shareholder approval is required when a shareholder seeks to
acquire the power to vote shares at the next level. In the absence of such
approval, the additional shares acquired by the shareholder may not be voted
until they are transferred to another person in a transaction other than a
control share acquisition. The Tennessee CSAA applies only to those Tennessee
corporations whose charters or bylaws contain an express declaration that
control share acquisitions in respect of the shares of such corporations are
governed by and subject to the provisions of such act. UPC's Charter and Bylaws
do not currently contain such an express declaration.
The Tennessee Greenmail Act ("Tennessee GA") prohibits a
Tennessee corporation having a class of voting stock registered or traded on a
national securities exchange or registered with the SEC pursuant to Section
12(g) of the Exchange Act from purchasing, directly or indirectly, any of its
shares at a price above the market value of such shares (defined as the average
of the highest and lowest closing market price of such shares during the 30
trading days preceding the purchase or preceding the commencement or
announcement of a tender offer if the seller of such shares has commenced a
tender offer or announced an intention to seek control of the corporation) from
any person who holds more than 3% of the class of securities to be purchased if
such person has held such shares for less than two years,
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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 shareholder
on or before the date such interested shareholder's share acquisition date, or
for seeking to enforce or implement the provisions of the TBCA or the Tennessee
CSAA, or for failing to adopt or recommend any charter or bylaw amendment or
provision in respect of any one or more of these acts or the Tennessee GA, or
for opposing any merger, exchange, tender offer, or significant disposition of
the assets of the resident domestic corporation or any subsidiary of such
corporation because of a good faith belief that such merger, exchange, tender
offer, or significant disposition of assets would adversely affect the
corporation's employees, customers, suppliers, the communities in which the
corporation or its subsidiaries operate or are located or any other relevant
factor if such factors are permitted to be considered by the board of directors
under the corporation's charter in connection with the merger, exchange, tender
offer or significant disposition of assets.
The acts described above along with the provisions of UPC's
Charter regarding business combinations might be deemed to make UPC less
attractive as a candidate for acquisition by another company than would
otherwise be the case in the absence of such provisions. For example, if another
company should seek to acquire a controlling interest of less than 66-2/3% of
the outstanding shares of UPC Common Stock, the acquiror would not thereby
obtain the ability to replace a majority of the UPC Board until at least the
second annual meeting of shareholders following the acquisition, and furthermore
the acquiror would not obtain the ability immediately to effect a merger,
consolidation, or other similar business combination unless the described
conditions were met.
As a result, UPC's shareholders may be deprived of opportunities
to sell some or all of their shares at prices that represent a premium over
prevailing market prices in a takeover context. The provisions described above
also may make it more difficult for UPC's shareholders to replace the UPC Board
or management, even if the holders of a majority of the UPC Common Stock should
believe that such replacement is in the interests of UPC. As a result, such
provisions may tend to perpetuate the incumbent UPC Board and management.
PEOPLES. Except with respect to the election of directors and
matters that are required by statute to be submitted to shareholders, any act of
the shareholders of a Kentucky corporation requires that more votes be cast for
than against the matter at a meeting at which a quorum is present. The
affirmative vote of a majority of all the outstanding shares of a Kentucky
corporation entitled to vote is required to approve certain actions specified in
the corporate statutes such as mergers, share exchanges, certain sales of
assets, and amendments of the articles of incorporation, among other things.
Peoples' Articles require the affirmative vote of the holders of
at least two-thirds of the outstanding Shares of the voting stock of Peoples to
approve the sale of all or substantially all of the assets of Peoples or any
subsidiary; the sale of all or part of the shares of any subsidiary; the
distribution, by way of spin-off, dividend or other similar transaction of any
shares or assets of any subsidiary; any merger or consolidation to which Peoples
or any subsidiary is a party or any split-off or split-up of the Corporation.
The supermajority requirements would not apply if either the higher voting
requirements of Peoples' "fair price" article apply or the proposal was approved
by a majority of the directors then in office.
Peoples' Articles contain a "fair price" provision that requires
the affirmative vote of the holders of at least 80% of the outstanding shares of
Peoples voting stock to approve mergers, share exchanges
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and certain other "business combinations" as defined in the Articles) between
Peoples and an entity controlled by a beneficial owner of more than 20% of
Peoples' voting stock (an "Interested Shareholder"). The supermajority voting
provision does not apply if the transaction is either approved by a majority of
the members of the Board of Directors who are unaffiliated with the Interested
Shareholder or if certain minimum price and procedural requirements are met.
LIMITATIONS ON ABILITY TO VOTE STOCK
UPC. UPC's Charter and Bylaws do not contain any provision
restricting a shareholder's ability to vote shares of UPC voting stock.
PEOPLES. Peoples' Articles and Bylaws also do not contain any
provision restricting a shareholder's ability to vote shares of Peoples Common
Stock.
DISSENTERS' RIGHTS OF APPRAISAL
UPC. Under the TBCA, a shareholder is generally entitled to
dissent from a corporate action, and obtain payment of the fair value of his
shares in the event of: (i) consummation of a plan of merger to which the
corporation is a party, unless shareholder approval is not required by the TBCA;
(ii) consummation of a plan of share exchange to which the corporation is a
party as the corporation whose shares will be acquired if the shareholder is
entitled to vote on the plan; (iii) consummation of a sale or exchange of
substantially all of the corporation's property other than in the usual and
regular course of business, if the shareholder is entitled to vote on the sale
or exchange, including a sale in dissolution, but not including a sale pursuant
to court order or to a plan by which substantially all of the net proceeds of
the sale will be distributed in cash to the shareholders within one year after
the date of sale; (iv) an amendment of the charter that materially and adversely
affects rights in respect of a dissenter's shares because it (a) alters or
abolishes a preferential right of the shares, (b) creates, alters, or abolishes
a right in respect of redemption of the shares, including a provision respecting
a sinking fund for the redemption or repurchase of the shares, (c) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities, (d) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights, or (e)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under the TBCA; or
(v) any corporate action taken pursuant to a shareholder vote, to the extent the
charter, bylaws, or a resolution of the board of directors provide that voting
or nonvoting shareholders are entitled to dissent and obtain payment for their
shares. UPC's Charter and Bylaws do not provide for any such additional
dissenters' rights.
PEOPLES. The rights of appraisal of dissenting shareholders of
Peoples are governed by the KBCA, which generally provides for dissenters'
rights in similar events as under the TBCA. Peoples' Articles and Bylaws do not
provide for any additional dissenters' rights.
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
UPC. The TBCA provides that a shareholder may inspect and copy
books and records during regular business hours, if he or she gives the
corporation written notice of his or her demand at least five business days
before the date of the inspection. In order to inspect certain records, written
demand must also be made in good faith and for a proper purpose and must
describe with reasonable particularity the purpose of the request and the
records the shareholder desires to inspect.
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PEOPLES. The KBCA similarly provides that a shareholder may
inspect certain books and records if he or she gives the corporation written
demand stating the purpose of the inspection at least five business days before
the date he or she wishes to inspect the books and records. Under certain
instances, the demand must be made in good faith and for a proper purpose and
the records he or she desires to inspect must be directly related to the stated
purpose of such holder's inspection.
DIVIDENDS
UPC. UPC's ability to pay dividends on UPC Common Stock is
governed by Tennessee corporate law. Under Tennessee corporate law, dividends
may be paid so long as the corporation would be able to pay its debts as they
become due in the ordinary course of business and the corporation's total assets
would not be less than the sum of its total liabilities plus the amount that
would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution to
shareholders whose preferential rights are superior to those receiving the
distribution.
There are various statutory limitations on the ability of the
UPC Banking Subsidiaries to pay dividends to UPC. See "CERTAIN REGULATORY
CONSIDERATIONS -- Payment of Dividends."
PEOPLES. The KBCA provides that, subject to any restrictions in
the corporation's articles of incorporation, and other customary restrictions
similar to those contained in the TBCA, a Kentucky corporation may make
distributions to its shareholders. Substantially all of the funds available for
the payment of dividends by Peoples are derived from its subsidiary depository
institution. There are various statutory limitations on the ability of Peoples'
subsidiary depository institution to pay dividends to Peoples.
COMPARATIVE MARKET PRICES AND DIVIDENDS
UPC Common Stock is traded on the NYSE under the symbol "UPC."
Peoples Common Stock is quoted on the Nasdaq National Market under the symbol
"PFKY." The following table sets forth, for the indicated periods, the high and
low closing sale prices for the UPC Common Stock and Peoples Common Stock as
reported by the NYSE and Nasdaq National Market, respectively, and the cash
dividends declared per share of UPC Common Stock and Peoples 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.
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<TABLE>
<CAPTION>
UPC PEOPLES
---------------------------- ---------------------------
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>
1998
First Quarter $67.31 $58.38 $ .50 $39.88 $34.75 $.24
Second Quarter
(through April __,
1998) -- -- -- -- -- --
------ ----
Total $ .50 $.24
====== ====
1997
First Quarter $47.75 $38.38 $ .320 $26.50 $23.33 $.19
Second Quarter 52.13 41.25 .375 29.25 23.50 .19
Third Quarter 56.50 49.25 .400 34.75 27.75 .22
Fourth Quarter 67.88 57.00 .400 39.50 28.50 .22
------ ----
Total $1.495 $.82
====== ====
1996
First Quarter $31.75 $29.00 $ .27 $22.38 $19.50 $.14
Second Quarter 31.25 29.63 .27 22.62 19.76 .15
Third Quarter 36.25 28.63 .27 21.90 20.00 .15
Fourth Quarter 41.38 34.63 .27 24.29 20.95 .19
------ ----
Total $ 1.08 $.63
====== ====
</TABLE>
- ------------------------------
(1) These amounts have been adjusted to reflect 5% stock dividends declared on
Peoples Common Stock on January 17, 1996 and January 21, 1997.
On March 31, 1998, the last sale prices of UPC Common Stock and
Peoples Common Stock as reported on the NYSE and Nasdaq National Market,
respectively, were $62.19 and $37.00 per share, respectively. On November 17,
1997, the last business day prior to public announcement of the proposed Merger,
the last sale prices of the UPC Common Stock and Peoples Common Stock as
reported by the NYSE and Nasdaq National Market, respectively, were $60.00 and
$____, respectively.
The holders of UPC Common Stock are entitled to receive
dividends when and if declared by the Board of Directors out of funds legally
available therefor. Although UPC currently intends to continue to pay quarterly
cash dividends on the UPC Common Stock, there can be no assurance that UPC's
dividend policy will remain unchanged after completion of the Merger. The
declaration and payment of dividends thereafter will depend upon business
conditions, operating results, capital and reserve requirements, and the Board
of Directors' consideration of other relevant factors. The Agreement provides
that Peoples may not declare and pay cash dividends, other than regular
quarterly cash dividends, on the shares of Peoples Common Stock.
60
<PAGE> 74
UPC and Peoples 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
Peoples' 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 PEOPLES
GENERAL
Peoples, headquartered in Paducah, Kentucky, is a bank holding
company registered with the Federal Reserve under the BHC Act. In recent years,
Peoples has been one of the ten largest independent financial institutions
headquartered in Kentucky. Peoples conducts a complete range of commercial and
personal banking activities through its banking subsidiary, The Peoples First
National Bank & Trust Company of Paducah ("Peoples Bank"). Peoples Bank operates
28 branches in ten Western Kentucky counties and in Montgomery County,
Tennessee.
Peoples is a Kentucky corporation incorporated on March 1, 1983
to become the bank holding company for Peoples Bank. Since 1985, Peoples has
acquired six banking institutions in Western Kentucky and one in Northern
Tennessee that have been merged into Peoples Bank since 1994.
As of December 31, 1997, Peoples had total consolidated assets
of approximately $1.5 billion, total consolidated loans of approximately $1.1
billion, total consolidated deposits of approximately $1.2 billion, and total
consolidated shareholders' equity of approximately $155 million.
The principal executive offices of Peoples are located at 100
South Fourth Street, Paducah, Kentucky and its telephone number at such address
is (502) 441-1200. Additional information with respect to Peoples and its
subsidiaries is included elsewhere herein and in documents incorporated by
reference in this Proxy Statement. See "AVAILABLE INFORMATION" and "DOCUMENTS
INCORPORATED BY REFERENCE."
BENEFICIAL OWNERSHIP OF PEOPLES COMMON STOCK
The following table lists, as of December 31,1997, each holder
of record of Peoples Common Stock who had filed with Peoples a copy of a
Schedule 13D or a Schedule 13G, indicating that the filers individually, or with
a group, is, or may be deemed to be, a beneficial owner of 5.0% or more of the
outstanding shares of Peoples Common Stock.
61
<PAGE> 75
<TABLE>
<CAPTION>
Amount and Nature of
Percentage of
Name and Address Beneficial Ownership Percentage of Class(1)
---------------- -------------------- ----------------------
<S> <C> <C>
Peoples First National Bank 1,147,544 (2) 11.5%
and Trust Company
100 S. Fourth Street
P.O. Box 1920
Paducah, Kentucky 42001
All Directors and Officers of 1,165,406 11.2%
Peoples and Executive
Officers of its Subsidiary
banks as a Group (29 persons)
</TABLE>
- ------------------------------
(1) The calculation of percentage of class beneficially owned is based on the
shares of Peoples Common Stock outstanding on December 31, 1997.
(2) Includes 847,181 shares Peoples Bank holds in a fiduciary capacity, as
trustee, executor or otherwise, including 693,024 shares held with sole
voting and dispositive power, and 154,157 shares held with shared voting
and dispositive power. In addition, Peoples Bank holds 300,363 shares as
Trustee for the Peoples' Employee Stock Ownership Plan (the "ESOP"), with
respect to which Peoples Bank has sole dispositive power. Peoples Bank must
vote 300,363 shares as specifically directed by each ESOP member with
respect to the shares allocated to that member's account.
(3) The number of shares owned by individual directors and executive officers
of the Corporation and the nature of their beneficial ownership are set
forth in the table under "Item 10. Directors and Executive Officers of the
Registrant." Other officers of Peoples and executive officers of the Banks
beneficially own 114,562 shares.
(4) Shares of Common Stock subject to options that are or will become
exercisable within 60 days have been deemed outstanding for computing the
percentage of class of the group, whose members hold the options, but are
not deemed outstanding for computing the percentage of class of any other
person.
62
<PAGE> 76
BUSINESS OF UPC
GENERAL
UPC, a Tennessee corporation, is a bank holding company
registered with the Federal Reserve under the BHC Act. As of December 31, 1997,
UPC had total consolidated assets of approximately $18.1 billion, total
consolidated loans of approximately $12.7 billion, total consolidated deposits
of approximately $13.4 billion, and total consolidated shareholders' equity of
approximately $1.7 billion.
UPC conducts its business activities through its principal bank
subsidiary, the $15.5 billion asset UPB founded in 1869 and headquartered in
Memphis, Tennessee. Effective December 31, 1997, UPC consolidated substantially
all of its bank subsidiaries into UPB. It is likely that UPC will continue to
consolidate its various bank subsidiaries into UPB in the future, to the extent
allowed by law. Through the UPC Banking Subsidiaries, UPC provides a diversified
range of financial services in the communities in which it operates and
maintains approximately 514 banking offices and 651 ATMs. UPC's total assets at
December 31, 1997 are allocable by state to its banking offices (before
consolidating adjustments) approximately as follows: $9.8 billion in Tennessee;
$3.5 billion in Mississippi; $2.2 billion in Florida; $1.2 billion in Missouri;
$806 million in Arkansas; $698 million in Louisiana; $449 million in Alabama;
and $115 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 13 acquisitions
in 1994, three in 1995, seven in 1996, and 6 in 1997, adding approximately $3.8
billion in total assets in 1994, $1.3 billion in 1995, $4.2 billion in 1996, and
$3.6 billion in 1997. Through April 1, 1998, UPC has completed the acquisition
of two institutions with approximately $539 million in total assets (the
"Recently Completed Acquisitions"). In addition, UPC was, as of that date, a
party to definitive agreements to acquire ten financial institutions, in
addition to Peoples, and to purchase certain branch locations and assume deposit
liabilities of California Federal Bank in Florida ("CalFed Branch Purchase")
(collectively, the "Other Pending Acquisitions"). The Other Pending Acquisitions
had aggregate total assets of approximately $11.1 billion at December 31, 1997.
Collectively, the Recently Completed Acquisitions and the Other Pending
Acquisitions are referred to herein as the "Other Acquisitions." The largest of
the Other Pending Acquisitions is UPC's proposed acquisition of Magna Group,
Inc. ("MGR"), St. Louis, Missouri, which had total consolidated assets of
approximately $7.1 billion at December 31, 1997. MGR has entered into a
definitive agreement to acquire Charter Financial, Inc. and its subsidiary,
Charter Bank, S.B. (the "Charter Acquisition"), which MGR considers probable of
consummation. Charter is located in Sparta, Illinois, and had at December 31,
1997, total assets of approximately $382 million, total deposits of
approximately $276 million, and total stockholders' equity of approximately
$58.4 million. The Charter Acquisition is expected to be accounted for as a
purchase. For purposes of this Proxy Statement, including the historical and
equivalent pro forma data, the term "Other Acquisitions" and "Other Pending
Acquisitions" includes the Charter Acquisition. For information with respect to
these acquisitions see "-- Recent Developments." For a discussion of UPC's
acquisition program, see the caption "Acquisitions" (pages 10, 11 and 12) in
UPC's Annual Report to Shareholders and Note 2 to UPC's audited consolidated
financial statements for the years ended December 31, 1997, 1996, and 1995
(pages 49 and 50) contained in such Annual Report to Shareholders. UPC's Annual
Report to Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K and
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
63
<PAGE> 77
incidental to acquisitions. For a description of the acquisitions in addition to
the Merger 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 subsidiaries 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, 1997, UPC has
completed the acquisition of two institutions (the "Recently Completed
Acquisitions").
<TABLE>
<CAPTION>
Asset Size
Institution (In Millions) Type of Consideration
----------- ------------- ---------------------
<S> <C> <C>
Sho-Me Financial Corp. $374 Approximately 1,153,459
Mt. Vernon, Missouri and Shares of UPC Common Stock
its subsidiary, 1st Savings
Bank, f.s.b.
Security Bancshares, Inc., Des 165 Approximately 490,888 shares
Arc, Arkansas, and its subsid- of UPC Common Stock
iaries, Farmers & Merchants
Total ____
$539
====
</TABLE>
OTHER PENDING ACQUISITIONS. UPC has entered into definitive
agreements to acquire the following financial institutions in addition to
Peoples (collectively, the Other Pending Acquisitions and, together with the
Recently Completed Acquisitions, the "Other Acquisitions") which UPC's
management considers probable of consummation and which are expected to close in
1998.
<TABLE>
<CAPTION>
Asset Size Projected
Institution (in Millions)(1) Type of Consideration(2) Closing Date
----------- ---------------- ------------------------ ------------
<S> <C> <C> <C>
Magna Group, Inc., St. Louis, $7,075 Approximately 35,446,000 3rd Quarter
Missouri, and its subsidiaries, shares of UPC Common Stock 1998
including Magna Bank, NA., St
Louis, Missouri
Purchase of 24 branches and 1,465 $110 million deposit premium 3rd Quarter
assumption of $1.5 billion of in cash 1998
deposits of California Federal
Bank in Florida ("CalFed
Branch Purchase")
Ambanc Corp., Vincennes, 759 Approximately 3,398,000 shares 3rd Quarter
Indiana and its subsidiaries, of UPC Common Stock 1998
Ambank Illinois, N.A., and
Ambanc Indiana, N.A
</TABLE>
64
<PAGE> 78
<TABLE>
<CAPTION>
Asset Size Projected
Institution (in Millions)(1) Type of Consideration(2) Closing Date
----------- ---------------- ------------------------ ------------
<S> <C> <C> <C>
Merchants Bancshares, Inc., 546 Approximately 1,942,000 shares 2nd Quarter
Houston, Texas, and its of UPC Common Stock 1998
subsidiaries, including Mercha-
nts Bank, Houston, Texas
Alvin Bancshares, Inc., Alvin, 140 Approximately 425,000 shares 3rd Quarter
Texas, and its subsidiary, Alvin of UPC Common Stock 1998
State Bank, Alvin, Texas
CB&T, Inc., McMinnville, Ten- 268 Approximately 1,450,000 shares 2nd Quarter
nessee, and its subsidiary, City of UPC Common Stock 1998
Bank & Trust Company, McMi-
nnville, Tennessee
Capital Savings Bancorp, Inc., 242 Approximately 801,000 shares 2nd Quarter
Jefferson City, Missouri, and its of UPC Common Stock 1998
subsidiary, Capital Savings
Bank, FSB, Jefferson City, Mis-
souri
First National Bancshares of 211 Approximately 836,000 shares 2nd Quarter
Wetumpka, Inc., Wetumpka, of UPC Common Stock 1998
Alabama, and its subsidiary,
First National Bank, Wetumpka,
Alabama
Transflorida Bank, Boca Raton, 316 Approximately 1,655,000 shares 3rd Quarter
Florida of UPC Common Stock 1998
First Community Bancshares, 41 Approximately 129,000 shares 2nd Quarter
Inc., Middleton, TN, and its of UPC Common Stock 1998
subsidiary, Bank of Middleton,
Middleton, Tennessee
Duck Hill Bank, Duck Hill, Mis- 21 Approximately 42,000 shares 3rd Quarter
sissippi ------- of UPC Common Stock 1998
TOTAL $11,084
=======
</TABLE>
- ------------------------------
(1) Approximate total assets at December 31, 1997.
(2) Assumes no adjustment to shares pursuant to exchange rates adjustment
mechanisms.
EARNINGS CONSIDERATIONS RELATED TO THE MERGER AND THE OTHER
ACQUISITIONS. It is expected that either UPC or the institutions to be acquired
in connection with the Merger and the Other Acquisitions will incur charges
arising from such acquisitions and from the assimilation of those institutions
into the UPC organization. Most of the charges are expected to relate to MGR and
the Merger.
65
<PAGE> 79
Anticipated charges would normally arise from matters such as, but not limited
to, legal and accounting fees, financial advisory fees, consulting fees, payment
of contractual benefits triggered by a change of control, early retirement and
involuntary separation and related benefits, costs associated with elimination
of duplicate facilities and branch consolidations, data processing charges,
cancellation of vendor contracts, and the potential for additional provisions
for loan losses and other contingencies and similar costs which normally arise
from the consolidation of operational activities.
For a discussion of the significant charges UPC has incurred
over the past three years incidental to its acquisition program, see the caption
"Acquisitions" in UPC's Annual Report to Shareholders and Note 2 to UPC's
audited consolidated financial statements for the years ended December 31, 1997,
1996, and 1995 contained in such Annual Report to Shareholders. UPC's Annual
Report to Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K and
Exhibit 13 is incorporated by reference herein to the extent indicated herein.
The Merger and the Other Acquisitions (other than the
acquisition of Duck Hill Bank, the Charter Acquisition and the CalFed Purchase)
are expected to be accounted for as a pooling of interests. The Recently
Completed Acquisition of Sho-Me Financial Corp. was and the Other Pending
Acquisitions of Duck Hill Bank, the Charter Acquisition and the CalFed Purchase
are expected to be accounted for as purchases. UPC currently estimates incurring
aggregate pre-tax charges in the range of $160 million to $175 million in
connection with the consummation of the Merger and the Other Acquisitions. To
the extent that UPC's recognition of these merger-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 of anticipated charges to be incurred in connection
with consummating the Merger and the Other Acquisitions is a preliminary
estimate of the significant charges which may, in the aggregate, be required and
should be viewed accordingly. These charges are not reflected in the pro forma
consolidated data included in this Proxy Statement. Moreover, this range has
been based on the due diligence that has been performed to date in connection
with Merger and the Other Acquisitions and the range may be subject to change
and the actual charges incurred may be higher or lower than what is currently
contemplated, once the acquired institutions are assimilated from an operational
perspective and various contingencies are either satisfied or eliminated.
Furthermore, the range of anticipated charges will change if additional entries
are required. UPC regularly evaluates the potential acquisition of, and holds
discussions with, various potential acquisition candidates. As a general rule,
UPC will publicly announce such acquisitions only after a definitive agreement
has been reached, and only then if UPC considers the acquisition to be of such a
size as to be a significant acquisition. Since the range of anticipated
merger-related charges is likely to change with additional acquisitions, and
since UPC regularly engages in acquisition, such range could change, and
Peoples' shareholders should view such information accordingly.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following tables contain unaudited pro forma condensed
consolidated financial statements including a balance sheet as of December 31,
1997 and statements of earnings for the years ended December 31, 1997, 1996, and
1995. These statements present on a pro forma basis historical results for (i)
UPC for all periods, (ii) UPC and MGR for all periods, (iii) UPC, Peoples and
the Other Acquisitions (including MGR) for the year ended December 31, 1997, and
(iv) UPC, Peoples, MGR, Ambanc and Merchants for the years ended December 31,
1996 and 1995 (see "BUSINESS OF UPC--Recent Developments").
The Merger and all but four of the Other Acquisitions, are
expected to be accounted for using the pooling-of-interests method of
accounting. The pro forma information as of December 31, 1997 and for the year
ended December 31, 1997, reflect the acquisition of Peoples and the Other
Acquisitions as of
66
<PAGE> 80
January 1, 1997. The pro forma information for the years ended December 31, 1996
and 1995, reflect only the acquisition of Peoples, MGR, Ambanc and Merchants
because the Other Acquisitions (other than MGR, Ambanc and Merchants) are not
individually or in the aggregate, considered significant to UPC from a financial
statement presentation standpoint. Pro forma financial information 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 pro forma financial information
does not reflect preliminary estimates by UPC of acquisition related charges to
be incurred in connection with consummation of the Merger and the Other
Acquisitions. For additional information with respect to the estimated charges
UPC anticipates it would incur in connection with the Merger and the Other
Acquisitions, see "BUSINESS OF UPC--Recent Developments." For a discussion of
UPC's acquisition program, including a discussion of the significant charges UPC
has incurred incidental to acquisitions over the past three fiscal years, see
the caption "Acquisitions" (on pages 10, 11 and 12) in UPC's 1997 Annual Report
to Shareholders and Note 2 to UPC's audited consolidated financial statements
for the years ended December 31, 1997, 1996, and 1995 (on pages 49 and 50)
contained in such UPC 1997 Annual Report to Shareholders. UPC's 1997 Annual
Report to Shareholders is included as Exhibit 13 to UPC's 1997 Form 10-K, and
Exhibit 13 is incorporated by reference herein to the extent indicated herein.
See "DOCUMENTS INCORPORATED BY REFERENCE."
The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the consolidated historical
financial statements of UPC which are incorporated by reference herein. Pro
forma results are not necessarily indicative of future operating results.
Certain nonrecurring charges as discussed in "BUSINESS OF UPC--Recent
Developments--Earnings Considerations Related to Pending Acquisitions" have not
been included in the unaudited pro forma condensed consolidated financial
statements. See "DOCUMENTS INCORPORATED BY REFERENCE."
67
<PAGE> 81
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
UPC UPC, MGR,
AND AND OTHER
UPC MGR ACQUISITIONS
--- --- ------------
(Dollars in thousands)
<S> <C> <C> <C>
ASSETS
Cash and due from banks ................................... $ 816,472 $ 1,064,404 $ 1,242,983
Interest-bearing deposits at financial institutions ....... 24,490 24,490 33,944
Federal funds sold and securities purchased under
agreements to resell .................................... 109,192 157,394 249,017
Trading account assets .................................... 187,419 187,419 187,419
Loans held for resale ..................................... 170,742 170,742 175,325
Available for sale securities, at fair value .............. 3,247,680 5,239,794 7,621,521
Loans ..................................................... 12,687,089 17,171,055 20,642,776
Less: Unearned income .................................. (28,525) (28,679) (36,230)
Allowance for losses on loans ................... (225,389) (284,828) (323,066)
------------ ------------ ------------
Net loans .............................................. 12,433,175 16,857,548 20,283,480
Premises and equipment .................................... 330,703 449,290 534,679
Accrued interest receivable ............................... 204,504 251,240 281,558
FHA/VA claims receivable .................................. 134,112 134,112 134,112
Mortgage servicing rights ................................. 61,346 61,346 61,346
Goodwill and other intangibles ............................ 52,655 174,472 376,146
Other assets .............................................. 332,589 409,927 451,723
------------ ------------ ------------
Total assets ........................................... $ 18,105,079 $ 25,182,178 $ 31,633,253
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing ..................................... $ 2,323,367 $ 3,034,530 $ 3,839,096
Certificates of deposit of $100,000 and over ............ 1,426,751 2,166,011 2,625,003
Other interest-bearing .................................. 9,690,151 13,675,723 17,830,188
------------ ------------ ------------
Total deposits ....................................... 13,440,269 18,876,264 24,294,287
Short-term borrowings ..................................... 831,627 1,677,230 1,875,613
Medium-term bank notes .................................... 135,000 135,000 135,000
Federal Home Loan Bank advances ........................... 703,996 703,996 930,738
Other long-term debt ...................................... 710,908 802,964 852,325
Accrued interest, expenses and taxes ...................... 145,452 194,499 212,821
Other liabilities ......................................... 390,961 416,876 443,918
------------ ------------ ------------
Total liabilities .................................... 16,358,213 22,806,829 28,744,702
------------ ------------ ------------
Shareholders' equity
Convertible preferred stock ............................. 54,709 54,749 54,749
Common stock ............................................ 408,255 567,406 652,197
Additional paid-in capital .............................. 193,032 405,322 590,014
Retained earnings ....................................... 1,061,670 1,318,281 1,548,858
Unearned compensation ................................... (9,529) (14,364) (9,554)
Net unrealized gain on available for
sale securities ........................................ 38,729 43,955 52,287
------------ ------------ ------------
Total shareholders' equity ........................... 1,746,866 2,375,349 2,888,551
------------ ------------ ------------
Total liabilities and shareholders' equity ........... $ 18,105,079 $ 25,182,178 $ 31,633,253
============ ============ ============
</TABLE>
68
<PAGE> 82
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
UPC UPC, MGR,
AND AND OTHER
UPC MGR ACQUISITIONS
--- --- ------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
Interest income
Interest and fees on loans .............................. $ 1,165,925 $ 1,536,829 $ 1,839,742
Interest on investment securities
Taxable .............................................. 187,221 290,351 343,598
Tax-exempt ........................................... 29,032 40,516 52,133
Interest on deposits at financial institutions .......... 2,627 2,627 3,179
Interest on federal funds sold and securities
purchased under agreements to resell ................... 9,114 13,760 18,554
Interest on trading account assets ...................... 14,956 14,956 14,956
Interest on loans held for resale ....................... 7,819 7,819 7,982
------------ ------------ ------------
Total interest income ............................... 1,416,694 1,906,858 2,280,144
------------ ------------ ------------
Interest expense
Interest on deposits .................................... 494,517 698,778 860,526
Interest on short-term borrowings ....................... 41,280 81,980 104,620
Interest on long-term debt .............................. 110,512 116,687 120,184
------------ ------------ ------------
Total interest expense .............................. 646,309 897,445 1,085,330
------------ ------------ ------------
Net interest income ................................. 770,385 1,009,413 1,194,814
Provision for losses on loans ............................. 113,633 142,580 154,163
------------ ------------ ------------
Net interest income after provision for losses on loans 656,752 866,833 1,040,651
Noninterest income
Service charges on deposit accounts ..................... 107,248 133,352 151,454
Mortgage servicing income ............................... 57,265 57,265 58,051
Bank card income ........................................ 31,317 38,544 39,239
Factoring commissions ................................... 30,140 30,140 30,140
Trust service income .................................... 9,020 21,663 24,355
Profits and commissions from trading activities ......... 7,295 7,295 7,295
Investment securities gains ............................. 2,104 4,688 5,481
Other income ............................................ 117,221 139,945 153,075
------------ ------------ ------------
Total noninterest income .............................. 361,610 432,892 469,090
------------ ------------ ------------
Noninterest expense
Salaries and employee benefits .......................... 284,648 372,959 440,212
Net occupancy expense ................................... 44,813 64,140 73,676
Equipment expense ....................................... 43,812 53,579 62,466
Other expense ........................................... 324,431 379,663 430,225
------------ ------------ ------------
Total noninterest expense ............................. 697,704 870,341 1,006,579
------------ ------------ ------------
Earnings before income taxes .......................... 320,658 429,384 503,162
Applicable income taxes ................................... 111,897 147,948 173,787
------------ ------------ ------------
Net earnings .......................................... $ 208,761 $ 281,436 $ 329,375
============ ============ ============
Earnings per common share
Basic .................................................. $ 2.54 $ 2.48 $ 2.52
Diluted ................................................ 2.45 2.40 2.45
Weighted average shares outstanding (in thousands)
Basic .................................................. 80,336 111,418 128,555
Diluted ................................................ 85,195 117,884 135,180
</TABLE>
69
<PAGE> 83
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
UPC UPC, MGR,
AND PEOPLES, AMBANC
UPC MGR AND MERCHANTS
--- --- -------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
Interest income
Interest and fees on loans .............................. $ 1,095,148 $ 1,380,299 $ 1,535,342
Interest on investment securities
Taxable .............................................. 247,716 340,745 372,233
Tax-exempt ........................................... 30,839 37,980 45,560
Interest on deposits at financial institutions .......... 1,593 1,593 1,910
Interest on federal funds sold and securities
purchased under agreements to resell ................... 16,948 19,462 21,664
Interest on trading account assets ...................... 13,895 13,895 13,895
Interest on loans held for resale ....................... 6,852 6,852 7,241
------------ ------------ ------------
Total interest income ................................ 1,412,991 1,800,826 1,997,845
------------ ------------ ------------
Interest expense
Interest on deposits .................................... 512,668 670,856 755,680
Interest on short-term borrowings ....................... 64,689 93,501 100,543
Interest on long-term debt .............................. 90,782 97,530 97,680
------------ ------------ ------------
Total interest expense ............................... 668,139 861,887 953,903
------------ ------------ ------------
Net interest income .................................. 744,852 938,939 1,043,942
Provision for losses on loans ............................. 68,948 79,228 84,198
------------ ------------ ------------
Net interest income after provision for
losses on loans ..................................... 675,904 859,711 959,744
Noninterest income
Service charges on deposit accounts ..................... 107,535 130,978 141,119
Mortgage servicing income ............................... 63,003 63,003 63,003
Bank card income ........................................ 24,975 30,988 31,636
Factoring commissions ................................... 26,066 26,066 26,066
Trust service income .................................... 10,130 19,512 21,496
Profits and commissions from trading activities ......... 5,765 5,765 5,765
Investment securities gains ............................. 4,099 4,916 4,942
Other income ............................................ 78,929 89,632 94,739
------------ ------------ ------------
Total noninterest income ............................. 320,502 370,860 388,766
------------ ------------ ------------
Noninterest expense
Salaries and employee benefits .......................... 282,726 351,868 388,972
Net occupancy expense ................................... 47,215 65,195 70,142
Equipment expense ....................................... 44,418 53,149 60,704
Other expense ........................................... 357,458 399,991 422,915
------------ ------------ ------------
Total noninterest expense ............................ 731,817 870,203 942,733
------------ ------------ ------------
Earnings before income taxes ......................... 264,589 360,368 405,777
Applicable income taxes ................................... 93,115 125,755 139,649
------------ ------------ ------------
Net earnings ......................................... $ 171,474 $ 234,613 $ 266,128
============ ============ ============
Earnings per common share
Basic ................................................... $ 2.13 $ 2.18 $ 2.24
Diluted ................................................. 2.05 2.11 2.17
Weighted average shares outstanding (in thousands)
Basic ................................................... 77,240 104,539 115,726
Diluted ................................................. 83,542 112,425 123,714
</TABLE>
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UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
UPC UPC, MGR,
AND PEOPLES, AMBANC
UPC MGR AND MERCHANTS
--- ----- -------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C>
Interest income
Interest and fees on loans .............................. $ 986,230 $ 1,252,376 $ 1,388,252
Interest on investment securities
Taxable ............................................... 202,890 274,743 304,771
Tax-exempt ............................................ 32,400 39,666 47,200
Interest on deposits at financial institutions .......... 5,284 5,284 6,153
Interest on federal funds sold and securities
purchased under agreements to resell ................... 19,965 21,868 24,547
Interest on trading account assets ...................... 14,191 14,191 14,191
Interest on loans held for resale ....................... 4,858 4,858 5,184
------------ ------------ ------------
Total interest income ................................. 1,265,818 1,612,986 1,790,298
------------ ------------ ------------
Interest expense
Interest on deposits .................................... 478,641 616,666 695,224
Interest on short-term borrowings ....................... 44,492 64,725 70,706
Interest on long-term debt .............................. 73,234 79,293 79,674
------------ ------------ ------------
Total interest expense ................................ 596,367 760,684 845,604
------------ ------------ ------------
Net interest income ................................... 669,451 852,302 944,694
Provision for losses on loans ............................. 33,917 43,909 47,393
------------ ------------ ------------
Net interest income after provision for
losses on loans ...................................... 635,534 808,393 897,301
Noninterest income
Service charges on deposit accounts ..................... 102,932 125,419 134,243
Mortgage servicing income ............................... 55,903 55,903 55,903
Bank card income ........................................ 20,758 26,559 27,124
Factoring commissions ................................... 19,519 19,519 19,519
Trust service income .................................... 8,326 16,964 18,786
Profits and commissions from trading activities ......... 12,362 12,362 12,362
Investment securities gains ............................. 1,433 1,789 2,008
Other income ............................................ 72,477 83,058 87,381
------------ ------------ ------------
Total noninterest income ............................. 293,710 341,573 357,326
------------ ------------ ------------
Noninterest expense
Salaries and employee benefits .......................... 264,663 337,656 371,136
Net occupancy expense ................................... 44,061 61,738 66,224
Equipment expense ....................................... 42,251 51,218 57,289
Other expense ........................................... 256,214 302,794 324,295
------------ ------------ ------------
Total noninterest expense ............................. 607,189 753,406 818,944
------------ ------------ ------------
Earnings before income taxes .......................... 322,055 396,560 435,683
Applicable income taxes ................................... 110,799 134,082 145,486
------------ ------------ ------------
Net earnings .......................................... $ 211,256 $ 262,478 $ 290,197
============ ============ ============
Earnings per common share
Basic .................................................. $ 2.79 $ 2.56 $ 2.56
Diluted ................................................ 2.66 2.46 2.46
Weighted average shares outstanding (in thousands)
Basic .................................................. 72,512 99,346 110,196
Diluted ................................................ 78,798 106,632 117,604
</TABLE>
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CERTAIN REGULATORY CONSIDERATIONS
The following discussion sets forth certain of the material
elements of the regulatory framework applicable to banks and bank holding
companies and provides certain specific information related to UPC. A more
complete discussion is included in UPC's 1997 Form 10-K. Information relating to
Peoples is included in the Peoples 1997 Form 10-K. 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.
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.
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 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 Peoples are located has either moved up the date after which interstate
branching will be permissible or "opted out." Texas, where one of the Other
Acquisitions will occur, however, elect to "opt out," in legislation that
expires September 2, 1999. UPC utilized the provisions of the Interstate Banking
Act at the end of 1997 to merge substantially all of UPC's Banking Subsidiaries
with and into UPB. As a result of such consolidation, UPB is now a multi-state
national bank with branches in Tennessee, Alabama, Mississippi, Louisiana,
Arkansas, Missouri and Kentucky.
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
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<PAGE> 86
Federal Reserve to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. In determining whether a particular
activity is permissible, the Federal Reserve must consider whether the
performance of such an activity reasonably can be expected to produce benefits
to the public, such as greater convenience, increased competition, or gains in
efficiency, that outweigh possible adverse effects, such as undue concentration
of resources, decreased or unfair competition, conflicts of interest, or unsound
banking practices. For example, factoring accounts receivable, acquiring or
servicing loans, leasing personal property, conducting discount securities
brokerage activities, performing certain data processing services, acting as
agent or broker in selling credit life insurance and certain other types of
insurance in connection with credit transactions, and performing certain
insurance underwriting activities all have been determined by the Federal
Reserve to be permissible activities of bank holding companies. The BHC Act does
not place territorial limitations on permissible 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 UPC Banking Subsidiaries 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 its business, activities, and operations, and each is
supervised and examined by one or more state or federal bank regulatory
agencies.
The regulatory agencies having supervisory jurisdiction over
the respective subsidiary institutions of UPC and Peoples (the FDIC and the
applicable state authority in the case of state-chartered nonmember banks, the
Office of Thrift Supervision ("OTS") in the case of federally chartered thrift
institutions, the Federal Reserve in the case of state-chartered member banks,
and the Office of the Comptroller of the Currency ("OCC") in the case of
national banks) regularly examine the operations of such institutions and have
authority to approve or disapprove mergers, consolidations, the establishment of
branches, and similar corporate actions. The federal and state banking
regulators also have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law.
PAYMENT OF DIVIDENDS
UPC 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 shareholders, are dividends from its
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 Peoples to their shareholders.
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 regulations, 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
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statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
At December 31, 1997, under dividend restrictions imposed
under federal and state laws, the UPC Banking Subsidiaries, without obtaining
governmental approvals, could declare aggregate dividends to UPC of
approximately $103 million.
The payment of dividends by UPC and the UPC 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 the UPC Banking Subsidiaries 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
UPC Banking Subsidiary. 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 December 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
18.12% and 15.51%, 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 December 31, 1997, was 10.48%. 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 the UPC Banking Subsidiaries is subject to risk-based
and leverage capital requirements adopted by its federal banking regulator,
which are substantially similar to those adopted by the Federal Reserve for bank
holding companies. Each of the UPC Banking Subsidiaries was in compliance with
applicable minimum capital requirements as of December 31, 1997. Neither UPC nor
any
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<PAGE> 88
of the UPC Banking Subsidiaries has been advised by any federal banking agency
of any specific minimum capital ratio requirement applicable to it.
Failure to meet capital guidelines could subject a bank or
thrift to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the FDIC, a prohibition on
the taking of brokered deposits, and certain other restrictions on its business.
As described below, substantial additional restrictions can be imposed upon
FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire
to raise capital requirements applicable to banking organizations beyond their
current levels. In this regard, the Federal Reserve, the FDIC, and the OCC have,
pursuant to FDICIA, proposed an amendment to the risk-based capital standards
that would calculate the change in an institution's net economic value
attributable to increases and decreases in market interest rates and would
require banks with excessive interest rate risk exposure to hold additional
amounts of capital 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
the UPC 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
shareholders of the insured depository institution or its holding company, but
is subordinate to claims of depositors, secured creditors, and holders of
subordinated debt (other than affiliates) of the commonly controlled insured
depository institution. The UPC Banking Subsidiaries 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.
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Under the final agency rules implementing the prompt
corrective action provisions, an institution that (i) has a Total Capital Ratio
of 10% or greater, a Tier 1 Capital Ratio of 6.0% or greater, and a Leverage
Ratio of 5.0% or greater and (ii) is not subject to any written agreement,
order, capital directive, or prompt corrective action directive issued by the
appropriate federal banking agency is deemed to be well capitalized. An
institution with a Total Capital Ratio of 8.0% or greater, a Tier 1 Capital
Ratio of 4.0% or greater, and a Leverage Ratio of 4.0% or greater is considered
to be adequately capitalized. A depository institution that has a Total Capital
Ratio of less than 8.0%, a Tier 1 Capital Ratio of less than 4.0%, or a Leverage
Ratio of less than 4.0% is considered to be undercapitalized. A depository
institution that has a Total Capital Ratio of less than 6.0%, a Tier 1 Capital
Ratio of less than 3.0%, or a Leverage Ratio of less than 3.0% is considered to
be significantly undercapitalized, and an institution that has a tangible equity
capital to assets ratio equal to or less than 2.0% is deemed to be critically
undercapitalized. For purposes of the regulation, the term "tangible equity"
includes core capital elements counted as Tier 1 Capital for purposes of the
risk-based capital standards, plus the amount of outstanding cumulative
perpetual preferred stock (including related surplus), minus all intangible
assets with certain exceptions. A depository institution may be deemed to be in
a 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 December 31, 1997, all of the UPC Banking Subsidiaries had
the requisite capital levels to qualify as well capitalized.
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DESCRIPTION OF UPC CAPITAL STOCK
UPC's Charter currently authorizes the issuance of
[300,000,000] shares of UPC Common Stock and 10,000,000 shares of UPC Preferred
Stock. As of March 31, 1998, 83,865,183 shares of UPC Common Stock were
outstanding and approximately 8,548,615 shares were earmarked for issuance in
connection with currently outstanding UPC options, UPC's dividend reinvestment
plan, and with respect to conversion rights of currently outstanding UPC Series
E Preferred Stock (defined next). In addition, as of March 31, 1998, 1,478,888
shares of UPC's 8% Cumulative, Convertible Preferred Stock, Series E (the Series
E Preferred Stock) were outstanding. As of March 31, 1998, 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.
UPC COMMON STOCK
GENERAL. Shares of UPC Common Stock may be issued at such time
or times and for such consideration (not less than the par value thereof) as the
UPC Board may deem advisable, subject to such limitations as may be set forth in
the laws of the State of Tennessee, UPC's Charter or Bylaws or the rules of the
NYSE. UPB, a wholly-owned, first-tier subsidiary of UPC, is the Registrar,
Transfer Agent and Dividend Disbursing Agent for shares of UPC Common Stock. Its
address is Union Planters Bank, National Association, Corporate Trust
Department, 6200 Poplar Avenue, Third Floor, Memphis, Tennessee 38119. Its
mailing address is P.O. Box 387, Memphis, Tennessee 38147.
DIVIDENDS. Subject to the preferential dividend rights
applicable to outstanding shares of the UPC Preferred Stock and subject to
applicable requirements, if any, with respect to the setting aside of sums for
purchase, retirement, or sinking funds, if any, for all outstanding UPC
Preferred Stock, the holders of the UPC Common Stock are entitled to receive, to
the extent permitted by law, only such dividends as may be declared from time to
time by the UPC Board.
UPC has the right to, and may from time to time, enter into
borrowing arrangements or issue other debt instruments, the provisions of which
may contain restrictions on payment of dividends and other distributions on UPC
Common Stock and UPC Preferred Stock. UPC has no such arrangements in effect at
the date hereof. In December 1996, UPC caused to be issued $200,000,000 in
aggregate liquidation amount of 8.20% Capital Trust Pass - through Securities
("UPC Capital Securities") through a Delaware trust subsidiary. Pursuant to the
terms of the governing instruments, UPC would be prohibited from paying
dividends on any UPC Common Stock or UPC Preferred Stock if all quarterly
payments on the UPC Capital Securities had not been paid in full. The UPC
Capital Securities mature in 2026 and may be redeemed under certain
circumstances prior to maturity.
LIQUIDATION RIGHTS. In the event of the voluntary or
involuntary liquidation, dissolution, distribution of assets, or winding-up of
UPC, after distribution in full of the preferential amounts required to be
distributed to the holders of UPC Preferred Stock, holders of UPC Common Stock
will be entitled to receive all of the remaining assets of UPC, of whatever
kind, available for distribution to shareholders ratably in proportion to the
number of shares of UPC Common Stock held. The UPC Board may distribute in kind
to the holders of UPC Common Stock such remaining assets of UPC or may sell,
transfer, or otherwise dispose of all or any part of such remaining assets to
any other person or entity and receive payment therefor in cash, stock, or
obligations of such other person or entity, and may sell all or any part of the
consideration so received and distribute any balance thereof in kind to holders
of UPC Common Stock. Neither the merger or consolidation of UPC into or with any
other corporation, nor the merger of any other corporation into UPC, nor any
purchase or redemption of shares of stock of UPC of any class, shall be deemed
to be a dissolution, liquidation, or winding-up of UPC for purposes of this
paragraph.
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Because UPC is a holding company, its right and the rights of
its creditors and shareholders, including the holders of UPC Preferred Stock and
UPC Common Stock, to participate in the distribution of assets of a subsidiary
on its liquidation or recapitalization may be subject to prior claims of such
subsidiary's creditors except to the extent that UPC itself may be a creditor
having recognized claims against such subsidiary.
For a further description of UPC Common Stock, see "EFFECT OF
THE MERGER ON RIGHTS OF SHAREHOLDERS."
UPC PREFERRED STOCK
SERIES A PREFERRED STOCK. UPC's Charter provides for the
issuance of up to 750,000 shares (subject to adjustment by action of the UPC
Board) of Series A Preferred Stock under certain circumstances involving a
potential change in control of UPC. None of such shares are outstanding and
management is aware of no facts suggesting that issuance of such shares may be
imminent. The Series A Preferred Stock is described in more detail in UPC's
Registration Statement on Form 8-A, dated January 19, 1989, and filed February
1, 1989 (SEC File No. 0-6919) which is incorporated by reference herein.
SERIES E PREFERRED STOCK. 1,478,888 shares of Series E
Preferred Stock were outstanding as of March 31, 1998. All shares of Series E
Preferred Stock have a stated value of $25.00 per share. Dividends are payable
at the rate of $0.50 per share per quarter and are cumulative. The Series E
Preferred Stock is convertible at the rate of 1.25 shares of UPC Common Stock
for each share of Series E Preferred Stock. The Series E Preferred Stock is not
subject to any sinking fund provisions and has no preemptive rights. Such shares
have a liquidation preference of $25.00 per share plus unpaid dividends accrued
thereon and, at UPC's option and with the prior approval of the Federal Reserve,
are subject to redemption by UPC at any time at a redemption price of $25.00 per
share plus any unpaid dividends accrued thereon. 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."
OTHER MATTERS
As of the date of this Proxy Statement, the Peoples Board
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.
SHAREHOLDER PROPOSALS
UPC expects to hold its next annual meeting of shareholders
after the Merger in April 1999. Under SEC rules, proposals of UPC shareholders
intended to be presented at that meeting must be received by UPC at its
principal executive offices no later than the date specified in UPC's 1998
annual meeting proxy statement. It is not currently anticipated that Peoples
will hold its annual meeting unless the Merger should not be consummated. In the
event the Merger is not consummated, proposals of Peoples shareholders intended
to be presented at that meeting must have been received by Peoples at its
principal executive offices no later than November 1, 1998.
78
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EXPERTS
The consolidated financial statements of UPC and subsidiaries
incorporated in this Proxy Statement by reference to UPC's 1997 Form 10-K, 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 incorporated in this
Proxy Statement by reference to Peoples' 1997 Form 10-K, have been audited by
KPMG Peat Marwick LLP, independent auditors, as stated in its report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
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 Wyatt, Tarrant & Combs for UPC and by Brown, Todd & Heyburn PLLC for
Peoples.
79
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APPENDIX A
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
UNION PLANTERS CORPORATION,
UNION PLANTERS HOLDING CORPORATION
AND
PEOPLES FIRST CORPORATION
DATED AS OF NOVEMBER 17, 1997,
AS RESTATED TO REFLECT AMENDMENT, DATED APRIL 8, 1998
<PAGE> 94
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 -- TRANSACTIONS AND TERMS OF MERGER.............................. 1
1.1 Merger................................................... 1
1.2 Time and Place of Closing................................ 2
1.3 Effective Time........................................... 2
1.4 Execution of Option Agreement............................ 2
1.5 Restructure of Transaction............................... 2
ARTICLE 2 -- TERMS OF MERGER............................................... 2
2.1 Charter.................................................. 2
2.2 By-Laws.................................................. 2
2.3 Directors and Officers................................... 3
ARTICLE 3 -- MANNER OF CONVERTING SHARES................................... 3
3.1 Conversion of Shares..................................... 3
3.2 Anti-Dilution Provisions................................. 3
3.3 Shares Held by Subject Company or Parent................. 3
3.4 Fractional Shares........................................ 4
3.5 Conversion of Stock Options.............................. 4
ARTICLE 4 -- EXCHANGE OF SHARES............................................ 5
4.1 Exchange Procedures...................................... 5
4.2 Rights of Former Subject Company Shareholders............ 5
ARTICLE 5 -- REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY............. 6
5.1 Organization, Standing, and Power........................ 6
5.2 Authority; No Breach by Agreement........................ 6
5.3 Capital Stock............................................ 7
5.4 Subject Company Subsidiaries............................. 7
5.5 Financial Statements..................................... 8
5.6 Absence of Undisclosed Liabilities....................... 8
5.7 Absence of Certain Changes or Events..................... 8
5.8 Tax Matters.............................................. 9
5.9 Assets................................................... 10
5.10 Intellectual Property.................................... 10
5.11 Environmental Matters.................................... 10
5.12 Compliance With Laws..................................... 11
5.13 Labor Relations.......................................... 11
5.14 Employee Benefit Plans................................... 12
5.15 Material Contracts....................................... 13
5.16 Legal Proceedings........................................ 13
5.17 Reports.................................................. 14
5.18 Statements True and Correct.............................. 14
5.19 Accounting, Tax, and Regulatory Matters.................. 14
5.20 Subject Company Rights................................... 14
5.21 Article Provisions; Takeover Laws........................ 15
ARTICLE 6 -- REPRESENTATIONS AND WARRANTIES OF PARENT...................... 15
6.1 Organization, Standing and Power......................... 15
6.2 Authority; No Breach by Agreement........................ 15
6.3 Capital Stock............................................ 16
6.4 Parent Subsidiaries...................................... 16
6.5 Financial Statements..................................... 17
6.6 Absence of Undisclosed Liabilities....................... 17
</TABLE>
<PAGE> 95
<TABLE>
<S> <C> <C>
6.7 Absence of Certain Changes or Events..................... 17
6.8 Tax Matters.............................................. 17
6.9 Environmental Matters.................................... 17
6.10 Compliance With Laws..................................... 19
6.11 Legal Proceedings........................................ 19
6.12 Reports.................................................. 19
6.13 Statements True and Correct.............................. 19
6.14 Accounting, Tax, and Regulatory Matters.................. 20
ARTICLE 7 -- CONDUCT OF BUSINESS PENDING CONSUMMATION...................... 20
7.1 Affirmative Covenants of Subject Company................. 20
7.2 Negative Covenants of Subject Company.................... 20
7.3 Covenants of Parent...................................... 22
7.4 Adverse Changes in Condition............................. 22
7.5 Reports.................................................. 22
7.6 No Rights Triggered...................................... 23
ARTICLE 8 -- ADDITIONAL AGREEMENTS......................................... 23
8.1 Registration Statement; Proxy Statement;
Shareholder Approval.................................... 23
8.2 Authorization of Shares; Exchange Listing................ 23
8.3 Applications............................................. 24
8.4 Filings With State Offices............................... 24
8.5 Agreement as to Efforts to Consummate.................... 24
8.6 Investigation and Confidentiality........................ 24
8.7 Press Releases........................................... 25
8.8 Certain Actions.......................................... 25
8.9 Accounting and Tax Treatment............................. 25
8.10 Agreement of Affiliates.................................. 25
8.11 Employee Benefits and Contracts.......................... 26
8.12 Indemnification.......................................... 26
8.13 Merger Subsidiary........................................ 27
ARTICLE 9 -- CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE............. 27
9.1 Conditions to Obligations of Each Party.................. 27
9.2 Conditions to Obligations of Parent...................... 29
9.3 Conditions to Obligations of Subject Company............. 29
ARTICLE 10 -- TERMINATION.................................................. 30
10.1 Termination.............................................. 30
10.2 Effect of Termination.................................... 33
10.3 Non-Survival of Representations and Covenants............ 33
ARTICLE 11 -- MISCELLANEOUS................................................ 33
11.1 Definitions.............................................. 33
11.2 Expenses................................................. 39
11.3 Brokers and Finders...................................... 39
11.4 Entire Agreement......................................... 41
11.5 Amendments............................................... 41
11.6 Waivers.................................................. 41
11.7 Assignment............................................... 41
11.8 Notices.................................................. 42
11.9 Governing Law............................................ 42
11.10 Counterparts............................................. 42
11.11 Captions................................................. 42
11.12 Interpretations.......................................... 42
11.13 Enforcement of Agreement................................. 43
11.14 Severability............................................. 43
</TABLE>
<PAGE> 96
RESTATED AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is made
and entered into as of November 17, 1997, by and between Peoples First
Corporation, a Kentucky corporation having its principal office located in
Paducah, Kentucky ("Subject Company"), Union Planters Holding Corporation, a
Tennessee corporation having its principal office located in Memphis, Tennessee
("Merger Subsidiary"), and joined in by Union Planters Corporation, a Tennessee
corporation having its principal office located in Memphis, Tennessee
("Parent"), as restated to reflect the amendment thereto entered into by the
Parties as of April __, 1998.
PREAMBLE
The Boards of Directors of Subject Company, Merger Subsidiary
and Parent are of the opinion that the transactions described herein are in the
best interests of the parties and their respective shareholders. This Agreement
and the Plan of Merger attached hereto at Exhibit 1 and incorporated herein by
reference, provide for the acquisition of Subject Company by Parent pursuant to
the merger of Subject Company with and into Merger Subsidiary. At the effective
time of such merger, the outstanding shares of the common stock of Subject
Company shall be converted into the right to receive shares of the common stock
of Parent (except as provided in Sections 3.3 and 3.4 of this Agreement). As a
result, shareholders of Subject Company shall become shareholders of Parent and
Surviving Corporation shall continue to conduct its business and operations as a
wholly owned subsidiary of Parent. The transactions described in this Agreement
are subject to the approvals of the shareholders of Subject Company, the Board
of Governors of the Federal Reserve System, the Department of Financial
Institutions of the Commonwealth of Kentucky, 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 (i) for federal income tax purposes this Agreement shall
constitute a plan of merger and the Merger shall qualify as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code and (ii) for
accounting purposes the Merger shall qualify for treatment as a pooling of
interests.
Immediately after the execution and delivery of this Agreement,
as a condition and inducement to Parent's willingness to enter into this
Agreement, Subject Company and Parent are entering into a stock option agreement
pursuant to which Subject Company is granting to Parent an option to purchase
shares of Subject Company 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 and the Plan of Merger, at the Effective Time, Subject Company shall
be merged with and into Merger Subsidiary in accordance with the provisions of
KRS 271B.11-070 of the KBCA and Section 48-21-109 of the TBCA and with the
effect provided in KRS 271B.11-060 of the KBCA and Section 48-21-108 of the TBCA
(the "Merger"). Merger Subsidiary shall be the Surviving Corporation resulting
from the Merger and shall continue to be governed by the Laws of the State of
Tennessee. The Merger shall be consummated pursuant to the terms of this
Agreement and the Plan of Merger, which have been or will be approved and
adopted by the respective Boards of Directors of Subject Company, Parent and
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
<PAGE> 97
officers, may mutually agree. The Closing shall be held at such place as may be
mutually agreed upon by the Parties.
1.3 Effective Time. The Merger and other transactions
contemplated by this Agreement shall become effective on the Closing Date and at
the time the Articles of Merger reflecting the Merger shall become effective
with the Secretary of State of the Commonwealth of Kentucky and the Secretary of
State of the State of Tennessee (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 a date
designated by Parent which date shall be within 45 days following the last to
occur of (i) the effective date of the last required Consent of any Regulatory
Authority having authority over and approving or exempting the Merger (taking
into account any requisite waiting period in respect thereof), (ii) the date on
which the shareholders of Subject Company approve this Agreement, and (iii) the
date on which all other conditions precedent (other than those conditions which
relate to actions to be taken at the Closing) to each Party's obligations
hereunder shall have been satisfied or waived (to the extent waivable by such
Party).
1.4 Execution of Option Agreement. Immediately after the
execution of this Agreement by the Parties and as a condition thereto, Subject
Company is executing and delivering to Parent a stock option agreement (the
"Stock Option Agreement"), in substantially the form of Exhibit 2, pursuant to
which Subject Company is granting to Parent an option to purchase shares of
Subject Company Common Stock.
1.5 Restructure of Transaction. Parent 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 Parent may deem advisable; provided, however, that Parent
shall not have the right, without the approval of the Board of Directors of
Subject Company and, if required by the KBCA, the holders of the Subject Company
Common Stock, to make any revision to the structure of the Merger which: (i)
changes the amount of the consideration which the holders of shares of Subject
Company 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 Parent, Subject Company or the holders of shares of Subject
Company Common Stock or changes the intended pooling of interests accounting
treatment; (iii) would permit Parent to pay the consideration other than by
delivery of Parent 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 Subject Company or adverse to the holders of shares of Subject
Company Common Stock; (v) would materially impede or delay consummation of the
Merger; or (vi) would require a vote of Parent's shareholders under relevant
state Law. Parent may exercise this right of revision by giving written notice
to Subject Company in the manner provided in Section 11.8 of this Agreement
which notice shall be in the form of an amendment to this Agreement and the Plan
of Merger or in the form of an Amended and Restated Agreement and Plan of
Merger.
ARTICLE 2
TERMS OF MERGER
2.1 Charter. The Charter (the "Charter") of Merger
Subsidiary in effect immediately prior to the Effective Time shall be the
Charter of the Surviving Corporation until otherwise amended or repealed.
2.2 By-Laws. The By-laws of Merger Subsidiary (the
"By-Laws") in effect immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation until otherwise amended or repealed.
2
<PAGE> 98
2.3 Directors and Officers. The directors of Merger
Subsidiary 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 Merger Subsidiary 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 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 (and Section 7 of the Plan of Merger), at the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Merger
Subsidiary, Subject Company, or the shareholders of any of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of Parent Capital Stock,
including any associated Parent 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 Subsidiary Common Stock
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and shall represent one share of the
Surviving Corporation from and after the Effective Time.
(c) Except for Dissenting Shares, each share of
Subject Company Common Stock, including any associated or attached
Subject Company Rights, (excluding shares held by Subject Company, any
Subject Company Subsidiary, Parent or any Parent Subsidiary, 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 0.6 shares of Parent Common Stock (subject to
possible adjustment as set forth in Section 10.1(f) of this Agreement,
the "Exchange Ratio"). Pursuant to the Parent Rights Agreement, each
share of Parent Common Stock issued in connection with the Merger upon
conversion of Subject Company Common Stock shall be accompanied by a
Parent Right.
Dissenting Shares shall not be converted pursuant to Section 3.1(c) in the
Merger but, at and after the Effective Time, shall present only the right to
receive payment in accordance with Subtitle 13 of the KBCA. If a holder of
Dissenting Shares becomes ineligible for payment under Subtitle 13 of the KBCA,
then such holder's Dissenting Shares shall cease to be Dissenting Shares and
shall be converted in the manner set forth in Section 3.1(c) effective as of the
Effective Time.
3.2 Anti-Dilution Provisions. In the event Parent changes
the number of shares of Parent Common Stock issued and outstanding after the
date of this Agreement and 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 Subject Company or Parent. Each of the
shares of Subject Company Common Stock held by Subject Company, any Subject
Company Subsidiary, Parent or any Parent Subsidiary, in each case other than in
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
<PAGE> 99
3.4 Fractional Shares. Notwithstanding any other
provision of this Agreement, each holder of shares of Subject Company Common
Stock exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fractional share of Parent 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 share of Parent 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, any other authoritative source selected by Parent) 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 Subject Company
Common Stock pursuant to stock options, stock appreciation rights or
other rights, including stock awards, but excluding any Subject Company
Rights ("Subject Company Options") granted by Subject Company under the
Subject Company Stock Plans, which are outstanding at the Effective
Time, whether or not exercisable, shall be converted into and become
options with respect to Parent Common Stock, and Parent shall assume
each Subject Company Option, in accordance with the terms of the
applicable Subject Company Stock Plan and stock option or other
agreement by which it is evidenced, except that from and after the
Effective Time, (i) Parent and its Salary and Benefits Committee shall
be substituted for Subject Company and the committee of Subject
Company's Board of Directors (including, if applicable, the entire
Board of Directors of Subject Company) administering such Subject
Company Stock Plan, (ii) each Subject Company Option assumed by Parent
may be exercised solely for shares of Parent Common Stock (or cash in
the case of stock appreciation rights), (iii) the number of shares of
Parent Common Stock subject to such Subject Company Option shall be
equal to the number of shares of Subject Company Common Stock subject
to such Subject Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio and rounding to the nearest whole
share (rounding down with respect to any "incentive stock options"),
and (iv) the per share exercise price under each such Subject Company
Option shall be adjusted by dividing the per share exercise price under
each such Subject Company Option by the Exchange Ratio and rounding to
the nearest cent (rounding up with respect to any "incentive stock
options"). Notwithstanding clauses (iii) and (iv) of the first sentence
of this Section 3.5(a), each Subject Company Option that 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. Parent and Subject Company 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, Parent shall deliver to the participants in each Subject Company
Stock Plan an appropriate notice setting forth such participant's
rights pursuant thereto and the grants under such Subject Company 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 including any acceleration of option vesting resulting from
the Merger), and Parent shall comply with the terms of each Subject
Company Stock Plan to ensure, subject to the provisions of such Subject
Company Stock Plan, that Subject Company Options that 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, Parent shall file a registration statement on
Form S-8 with respect to the shares of Parent Common Stock subject to
such options and shall use its reasonable best efforts to maintain the
effectiveness of such registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding.
(c) All contractual restrictions or limitations
on transfer with respect to Subject Company Common Stock awarded under
the Subject Company Stock Plans or any other plan, program, or Contract
of Subject Company or any of the Subject Company Subsidiaries, to the
4
<PAGE> 100
extent that such restrictions or limitations shall not have already
lapsed (whether as a result of the Merger or otherwise), and except as
otherwise expressly provided in such plan, program, or Contract, shall
remain in full force and effect with respect to shares of Parent Common
Stock into which such restricted stock is converted pursuant to Section
3.1 of this Agreement.
ARTICLE 4
EXCHANGE OF SHARES
4.1 Exchange Procedures. Promptly after the Effective
Time, Parent and Subject Company shall cause the exchange agent selected by
Parent (the "Exchange Agent") to mail to the former shareholders of Subject
Company appropriate transmittal materials (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates theretofore
representing shares of Subject Company Common Stock shall pass, only upon proper
delivery of such certificates to the Exchange Agent). Subject Company shall have
the right to review and approve the transmittal materials. 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 Subject Company
Common Stock (other than Dissenting Shares or 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
Subject Company 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 Parent Common Stock to
which such holder may be otherwise entitled (without interest). Parent shall not
be obligated to deliver the consideration to which any former holder of Subject
Company Common Stock is entitled as a result of the merger until such holder
surrenders such holder's certificate or certificates representing the shares of
Subject Company Common Stock for exchange as provided in this Section 4.1. The
certificate or certificates of Subject Company Common Stock so surrendered shall
be duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither Parent nor the Exchange Agent shall be liable
to a holder of Subject Company 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 Subject Company Shareholders. At the
Effective Time, the stock transfer books of Subject Company shall be closed as
to holders of Subject Company Common Stock immediately prior to the Effective
Time and no transfer of Subject Company 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 Subject Company Common Stock (other than
Dissenting Shares or 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 obligations 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 Subject Company in respect of such shares of Subject Company 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 Parent
on the Parent 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 Parent 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 Parent Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Subject Company 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 Subject Company Common Stock certificate, both a Parent Common
Stock certificate
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<PAGE> 101
(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. In the event any Subject Company Common Stock
certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate to be lost,
stolen or destroyed and, if reasonably required by Parent, the posting by such
person of a bond in such amount as Parent may reasonably direct as indemnity
against any claim that may be made against it with respect to such certificate,
the Exchange Agent shall issue in exchange for such lost, stolen or destroyed
certificate the shares of Parent Common Stock and cash in lieu of fractional
shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SUBJECT COMPANY
Subject Company hereby represents and warrants to Parent,
except as set forth on the Subject Company Disclosure Memorandum, as follows:
5.1 Organization, Standing, and Power. Subject Company is
a corporation duly organized, validly existing, and in good standing under the
Laws of the Commonwealth of Kentucky, and has the corporate power and authority
to carry on its business as now conducted and to own, lease, and operate its
Assets. Subject Company 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 Subject Company.
5.2 Authority; No Breach by Agreement.
(a) Subject Company 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, and the
consummation of the transactions contemplated herein, including the
Merger, have been duly and validly authorized by all necessary
corporate action (including valid authorization and adoption of this
Agreement by Subject Company's duly constituted Board of Directors) in
respect thereof on the part of Subject Company, subject to the approval
of this Agreement and the Plan of Merger by the holders of the
outstanding shares of Subject Company Common Stock, which is the only
shareholder vote required for approval of this Agreement and
consummation of the Merger by Subject Company. Subject to such
requisite shareholder approval and assuming due authorization,
execution and delivery of this Agreement and the Plan of Merger by each
of Parent and Merger Subsidiary, this Agreement (which, for purposes of
this sentence, shall not include the Stock Option Agreement) and the
Plan of Merger each represents a legal, valid, and binding obligation
of Subject Company, enforceable against Subject Company in accordance
with its terms (except in all cases as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium, or similar Laws (including
provisions of the U.S., Tennessee and Kentucky Constitutions) 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 (which, for purposes of clause (iii) of this sentence, shall
not include the Stock Option Agreement) or the Plan of Merger by
Subject Company, nor the consummation by Subject Company of the
transactions contemplated hereby, nor compliance by Subject Company
with any of the provisions hereof or thereof, will (i) conflict with or
result in a breach of any provision of the Articles of Incorporation,
Charter or the By-laws, or (ii) constitute or result in a Default
under, or require any Consent
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<PAGE> 102
(excluding Consents required by Law or Order) pursuant to, or result in
the creation of any Lien on any material Asset of Subject Company or
any Subject Company Subsidiary under, any Contract or Permit of Subject
Company or any Subject Company Subsidiary, except for such Defaults,
Liens and Consents, which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company, or (iii) subject to receipt of the requisite
Consents referred to in Section 9.1(b) of this Agreement, violate any
Law or Order applicable to Subject Company, its Subsidiaries 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 Subject
Company, no notice to, filing with, or Consent of, any public body or
authority is necessary for the consummation by Subject Company of the
Merger and the other transactions contemplated in this Agreement.
5.3 Capital Stock.
(a) The authorized capital stock of Subject
Company consists of: 30,000,000 shares of Subject Company Common Stock,
of which 10,007,118 shares are issued and outstanding as of the date of
this Agreement (exclusive of treasury shares) and not more than
10,574,625 shares will be issued and outstanding at the Effective Time
(exclusive of shares issued or issuable pursuant to the Stock Option
Agreement); and 6,000,000 shares of preferred stock, of which no shares
are issued and outstanding. All of the issued and outstanding shares of
capital stock of Subject Company are duly and validly issued and
outstanding and are fully paid and nonassessable under the KBCA. None
of the outstanding shares of capital stock of Subject Company has been
issued in violation of any preemptive rights of the current or past
shareholders of Subject Company. As of the date of this Agreement,
Subject Company has 150,671 shares of Subject Company Common Stock
available for grant under the Subject Company Stock Plans, and there
are options to purchase not more than 567,507 shares of Subject Company
Common Stock outstanding.
(b) Except as set forth in Section 5.3(a) of
this Agreement, or as provided in the Stock Option Agreement, there are
no shares of capital stock or other equity securities of Subject
Company outstanding and no outstanding Rights relating to the capital
stock of Subject Company other than the Subject Company Rights.
5.4 Subject Company Subsidiaries. Subject Company has
disclosed in Section 5.4 of the Subject Company Disclosure Memorandum all of the
Subject Company Subsidiaries that are corporations (identifying its jurisdiction
of incorporation) and all of the Subject Company Subsidiaries that are general
or limited partnerships or other non-corporate entities (identifying the Law
under which such entity is organized, and the amount and nature of the ownership
interest therein of Subject Company Subsidiaries). Subject Company or one of its
wholly owned Subsidiaries owns all of the issued and outstanding shares of
capital stock (or other equity interests) of each of the Subject Company
Subsidiaries. Except for the Stock Option Agreement, Subject Company Rights and
options outstanding under the Subject Company Stock Plans, no capital stock (or
other equity interest) of any Subject Company Subsidiary is or may become
required to be issued (other than to another Subject Company Subsidiary) by
reason of any rights, and there are no Contracts by which Subject Company or any
of the Subject Company Subsidiaries is bound to issue (other than to Subject
Company or another of the Subject Company Subsidiaries) additional shares of its
capital stock (or other equity interests) or Rights or by which Subject Company
or any of the Subject Company Subsidiaries is or may be bound to transfer any
shares of the capital stock (or other equity interests) of any of Subject
Company or any of the Subject Company Subsidiaries (other than to Subject
Company or any of the Subject Company Subsidiaries).
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There are no Contracts relating to the rights of Subject Company or any Subject
Company Subsidiary to vote or to dispose of any shares of the capital stock (or
other equity interests) of Subject Company or any Subject Company Subsidiary.
All of the shares of capital stock (or other equity interests) of each Subject
Company Subsidiary held by Subject Company or any Subject Company Subsidiary are
fully paid and nonassessable (except pursuant to applicable state law, in the
case of the Bank) under the applicable corporation or similar Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by Subject Company or a Subject Company Subsidiary free and clear of any Liens.
Each Subject Company Subsidiary is either a bank, federal savings bank,
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 Subject Company 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 Subject Company. The only Subject Company Subsidiaries that
are a depository institution is the Bank and the Thrift. The Bank 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 and the Savings Association Insurance Fund. The Thrift 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 (and all amendments thereto) for Subject Company and each Subject
Company Subsidiary that is a "Significant Subsidiary" (as such term is defined
in Regulation S-X promulgated under the 1934 Act) have been or will be made
available to Parent for its review, and are true and complete as in effect as of
the date of this Agreement.
5.5 Financial Statements. Each of the Subject Company
Financial Statements (including, in each case, any related notes) contained in
the Subject Company SEC Reports, including any Subject Company SEC Reports filed
after the date of this Agreement until the Effective Time, complied, or will
comply, as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared, or will be
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, or will fairly present, in all material
respects the consolidated financial position of Subject Company and the Subject
Company Subsidiaries as of 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. Neither Subject
Company nor any of the Subject Company Subsidiaries has any Liabilities that are
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company, except Liabilities which are accrued or reserved
against in the consolidated balance sheets of Subject Company as of September
30, 1997, included in the Subject Company Financial Statements made available
prior to the date of this Agreement or reflected in the notes thereto. Neither
Subject Company nor any of the Subject Company Subsidiaries has incurred or paid
any Liability since September 30, 1997, except for such Liabilities incurred or
paid (i) in the ordinary course of business consistent with past business
practice or which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Subject Company or (ii) in connection
with the transactions contemplated by this Agreement.
5.7 Absence of Certain Changes or Events. Since December
31, 1996, except as disclosed in the Subject Company SEC Reports made available
prior to the date of this Agreement, 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 Subject Company.
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5.8 Tax Matters.
(a) All material Tax Returns required to be
filed by or on behalf of Subject Company or any of the Subject Company
Subsidiaries 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
all such Tax Returns filed are complete and accurate in all material
respects. All Taxes shown on filed Tax Returns have been paid. There is
no audit examination or refund Litigation with respect to any material
Taxes, except as reserved against in the Subject Company Financial
Statements made available prior to the date of this Agreement. All
material Taxes and other material Liabilities due with respect to
completed and settled examinations or concluded Litigation have been
paid. There are no material Liens with respect to Taxes upon any of the
Assets of Subject Company or any of the Subject Company Subsidiaries.
(b) Neither Subject Company nor any of the
Subject Company Subsidiaries 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 material Taxes
due or to become due for Subject Company or the Subject Company
Subsidiaries for the period or periods through and including the date
of the respective Subject Company Financial Statements has been made
and is reflected on such Subject Company Financial Statements.
(d) Material deferred Taxes of Subject Company
and the Subject Company Subsidiaries have been provided for in
accordance with GAAP.
(e) Subject Company and the Subject Company
Subsidiaries are in material compliance with, and its records contain
all information and documents (including properly completed Internal
Revenue Service Forms W-9) necessary to comply in all material respects
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) Neither Subject Company nor any of the
Subject Company Subsidiaries 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 Subject Company or
any of the Subject Company Subsidiaries that occurred during or after
any Taxable Period in which Subject Company or any of the Subject
Company Subsidiaries incurred a net operating loss that carries over to
any Taxable Period ending after December 31, 1996, except in connection
with the transactions contemplated pursuant to this Agreement.
(h) Neither Subject Company nor any of the
Subject Company Subsidiaries is a party to any tax allocation or
sharing agreement and neither Subject Company nor any of the Subject
Company Subsidiaries has been a member of an affiliated group filing a
consolidated federal income tax return (other than a group the common
parent of which was Subject Company) or has any material Liability for
taxes of any Person (other than Subject Company and the Subject Company
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.
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5.9 Assets. Except as disclosed or reserved against in
the Subject Company Financial Statements made available prior to the date of
this Agreement, Subject Company and the Subject Company Subsidiaries have good
and marketable title, free and clear of all Liens, to all of their respective
Assets. All tangible properties used in the businesses of Subject Company and
its Subsidiaries are in good condition, reasonable wear and tear excepted, and
are usable in the ordinary course of business of Subject Company and its
Subsidiaries. All Assets which are material to Subject Company's business on a
consolidated basis, held under leases or subleases by the Subject Company or any
of the Subject Company Subsidiaries, 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 (including provisions of the U.S., Tennessee and Kentucky
Constitutions) 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.
Subject Company and the Subject Company Subsidiaries currently maintain
insurance in amounts, scope, and coverage which, in the reasonable opinion of
management of Subject Company, are adequate for the operations of Subject
Company and the Subject Company Subsidiaries. Neither Subject Company nor any of
the Subject Company Subsidiaries 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 Subject
Company or any of the Subject Company Subsidiaries under such policies.
5.10 Intellectual Property. All of the Intellectual
Property rights of Subject Company and the Subject Company Subsidiaries are in
full force and effect and, if applicable, constitute legal, valid, and binding
obligations of the respective parties thereto, and there have not been, and, to
the Knowledge of Subject Company, there currently are not, any Defaults
thereunder by Subject Company or a Subject Company Subsidiary. Subject Company
or a Subject Company Subsidiary owns or is the valid licensee of all such
Intellectual Property rights free and clear of all Liens or claims of
infringement. Neither Subject Company nor any of the Subject Company
Subsidiaries nor, to the Knowledge of Subject Company, their respective
predecessors has infringed the Intellectual Property rights of others and, to
the Knowledge of Subject Company, none of the Intellectual Property rights as
used in the business conducted by Subject Company or the Subject Company
Subsidiaries infringes upon or otherwise violates the rights of any Person, nor
has any Person asserted a claim of such infringement. Neither Subject Company
nor the Subject Company Subsidiaries is obligated to pay any royalties to any
Person with respect to any such Intellectual Property. Subject Company or a
Subject Company Subsidiary 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 Subject Company or the Subject Company Subsidiaries is
party to any Contract which requires such officer, director, or employee to
assign any interest in any Intellectual Property or keep confidential any trade
secrets, proprietary data, customer information, or other business information
or which restricts or prohibits such officer, director, or employee from
engaging in activities competitive with any Person, including Subject Company or
any of the Subject Company Subsidiaries.
5.11 Environmental Matters.
(a) To the Knowledge of Subject Company, each of
Subject Company and the Subject Company Subsidiaries, 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 Subject Company.
(b) To the Knowledge of Subject Company, there
is no Litigation pending or threatened before any court, governmental
agency, or authority or other forum in which Subject Company, any of
the Subject Company Subsidiaries or any of their respective Operating
Properties or Participation Facilities (or Subject Company in respect
of such Operating Property or Participation Facility) has been or, with
respect to threatened Litigation, may be named as a
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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 Subject Company or any of the Subject
Company Subsidiaries or any of their respective 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 Subject Company, nor, to
the knowledge of Subject Company, is there any reasonable basis for any
Litigation of a type described in this sentence.
(c) During the period of (i) Subject Company's
or any of the Subject Company Subsidiaries' ownership or operation of
any of their respective current properties, (ii) Subject Company's or
any of the Subject Company Subsidiaries' participation in the
management of any Participation Facility, or (iii) Subject Company's or
any of the Subject Company Subsidiaries' holding of a security interest
in an Operating Property, to the Knowledge of Subject Company, 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 Subject Company. Prior to the period of (i)
Subject Company's or any of the Subject Company Subsidiaries' ownership
or operation of any of their respective current properties, (ii)
Subject Company's or any of the Subject Company Subsidiaries'
participation in the management of any Participation Facility, or (iii)
Subject Company's or any of the Subject Company Subsidiaries' holding
of a security interest in an Operating Property, to the Knowledge of
Subject Company, 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 Subject
Company.
5.12 Compliance With Laws. Subject Company is duly
registered as a bank holding company under the BHC Act. Each of Subject Company
and the Subject Company Subsidiaries 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, except where the failure to hold such Permits would not be
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company. Neither Subject Company nor any of the Subject
Company Subsidiaries:
(a) is in violation of any Laws, Orders, or
Permits applicable to its business or employees conducting its
business, except for such violations which would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on Subject Company; or
(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 Subject Company or any of the Subject Company
Subsidiaries is not in material 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
Subject Company or any of the Subject Company Subsidiaries 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.
5.13 Labor Relations. Neither Subject Company nor any of
the Subject Company Subsidiaries is the subject of any Litigation asserting that
Subject Company or any of the Subject Company Subsidiaries has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel Subject Company or any of the Subject
Company Subsidiaries to bargain with any labor organization as to wages or
conditions of employment, nor is there any strike or other labor dispute
involving Subject Company or any of the Subject Company Subsidiaries, pending
or, to the Knowledge of Subject Company, threatened, or to the Knowledge of
Subject Company, is there any activity involving Subject Company's or any of the
Subject Company
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Subsidiaries' employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
5.14 Employee Benefit Plans.
(a) Subject Company has disclosed in Section
5.14 of the Subject Company Disclosure Memorandum, and has delivered or
made available to Parent 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 Subject Company or the Subject Company
Subsidiaries or ERISA Affiliate thereof for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries of Subject Company or any Subject Company
Subsidiary and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries of Subject
Company or any Subject Company Subsidiary are eligible to participate
(collectively, the "Subject Company Benefit Plans"). Any of the Subject
Company 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 "Subject Company ERISA Plan." Neither Subject Company nor any Subject
Company Subsidiary maintains any "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code). No Subject Company
Pension Plan is or has been a multi-employer plan within the meaning of
Section 3(37) of ERISA.
(b) All Subject Company Benefit Plans are in
material 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 Subject Company. Each Subject Company
ERISA Plan that is intended to be qualified under Section 401(a) of the
Internal Revenue Code has either received a favorable determination
letter from the Internal Revenue Service (and Subject Company is not
aware of any circumstances likely to result in revocation of any such
favorable determination letter) or timely application has been made
therefor. To the Knowledge of Subject Company, neither Subject Company
nor any of the Subject Company Subsidiaries has engaged in a
transaction with respect to any Subject Company Benefit Plan that,
assuming the taxable period of such transaction expired as of the date
hereof, would subject any Subject Company to a material Tax imposed by
either Section 4975 of the Internal Revenue Code or Section 502(i) of
ERISA.
(c) No "defined benefit plan" (as defined in
Section 414(j) of the Internal Revenue Code) or any "single-employer
plan," within the meaning of Section 4001(a)(15) of ERISA, formerly
maintained by Subject Company or any of the Subject Company
Subsidiaries, or the single-employer plan of any entity which is
considered one employer with Subject Company 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. Neither Subject
Company nor any of the Subject Company Subsidiaries has provided, or,
to Subject Company's knowledge, is required to provide, security 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 material Liability under Subtitle C or D of Title IV
of ERISA has been incurred by Subject Company or any of the Subject
Company Subsidiaries with respect to any current, frozen, or terminated
single-employer plan or the single-employer plan of any ERISA
Affiliate. Neither Subject Company nor any of the Subject Company
Subsidiaries has incurred any material withdrawal Liability with
respect to a multi-employer plan under Subtitle E of Title IV of ERISA
(regardless of whether based on contributions of an ERISA Affiliate).
No notice of a "reportable event," within the
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meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Subject Company Pension Plan or by any ERISA Affiliate within the
12-month period ending on the date hereof.
(e) Neither Subject Company nor any of the
Subject Company Subsidiaries has any material Liability for retiree
health and life benefits under any of the Subject Company Benefit
Plans.
(f) 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 or golden parachute) becoming due to any director or any
employee of Subject Company or any of the Subject Company Subsidiaries
from Subject Company or any of the Subject Company Subsidiaries under
any Subject Company Benefit Plan, (ii) materially increase any benefits
otherwise payable under any Subject Company 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 Subject Company
Subsidiary 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 Subject Company Financial Statements
to the extent required by and in accordance with GAAP.
5.15 Material Contracts. Except as disclosed in the
Subject Company SEC Reports, neither Subject Company, the Subject Company
Subsidiaries, nor any of their respective Assets, businesses, or operations, is
a party to, or is bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting, or retirement Contract, (ii) any
Contract relating to the borrowing of money by Subject Company or any of the
Subject Company Subsidiaries or the guarantee by Subject Company or any of the
Subject Company Subsidiaries of any such obligation (other than Contracts
evidencing deposit liabilities, purchases of federal funds, fully-secured
repurchase agreements, trade payables, and Contracts relating to borrowings or
guarantees made in the ordinary course of business), (iii) any Contracts which
prohibit or restrict Subject Company or any of the Subject Company Subsidiaries
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 Subject Company and the Subject Company Subsidiaries, (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 Subject Company 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
Subject Company SEC Report filed by Subject Company with the SEC prior to the
date of this Agreement that has not been filed as an exhibit to a Subject
Company SEC Report (together with all Contracts referred to in Sections 5.9 and
5.14(a) of this Agreement, the "Subject Company Contracts"). With respect to
each Subject Company Contract: (i) the Contract is in full force and effect;
(ii) neither Subject Company nor any Subject Company Subsidiary is in Default
thereunder; (iii) neither Subject Company nor its Subsidiaries 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 Subject Company, in Default in any
respect or has repudiated or waived any material provision thereunder.
5.16 Legal Proceedings. There is no Litigation instituted
or pending, or, to the Knowledge of Subject Company, threatened (or unasserted
but considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Subject Company or any
of the Subject Company Subsidiaries, 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 Subject Company,
nor are there any Orders of any Regulatory Authorities, other governmental
authorities, or arbitrators outstanding against Subject Company or any of the
Subject
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Company Subsidiaries. Section 5.16 of the Subject Company Disclosure Memorandum
includes a summary report of all material Litigation as of the date of this
Agreement to which Subject Company or any Subject Company Subsidiary is a party
and which names Subject Company or a Subject Company Subsidiary as a defendant
or cross-defendant.
5.17 Reports. Since January 1, 1994, or the applicable
date of organization if later, Subject Company and each Subject Company
Subsidiary 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 (the "Subject Company SEC Reports"), (ii) other
Regulatory Authorities, and (iii) any applicable state securities or banking
authorities, except failures to file which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Subject Company.
As of its respective date (or, if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), 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 (or, if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), each Subject Company SEC
Report did not contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. None of the Subject Company Subsidiaries is required to
file any SEC Documents.
5.18 Statements True and Correct. None of the information
supplied or to be supplied by Subject Company for inclusion in the Registration
Statement to be filed by Parent 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
Subject Company for inclusion in the Proxy Statement to be mailed to Subject
Company's shareholders in connection with the Shareholders' Meeting, and any
other documents to be filed by Subject Company 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 Subject Company, 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 Subject Company or the Subject Company
Subsidiaries are 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.
5.19 Accounting, Tax, and Regulatory Matters. Neither
Subject Company nor any of the Subject Company Subsidiaries has taken any action
or has any Knowledge of any fact or circumstance relating to Subject Company
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.
5.20 Subject Company Rights.
(a) Subject Company has taken all necessary
action to exclude Parent or any Parent Subsidiary from being deemed an
"Acquiring Person" for purposes of the Subject Company Rights
Agreement, and to exclude the transactions contemplated by this
Agreement, the Plan of Merger and/or the Stock Option Agreement from
triggering, resulting in or causing a "Stock Acquisition Date" or
"Distribution Date" for purposes of the Subject Company Rights
Agreement, so long as, after the date of this Agreement, Parent does
not acquire beneficial ownership (within the meaning of Section 13d-3
promulgated under the 1934 Act) of more than
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100,000 shares of Subject Company Common Stock in addition to any
shares acquired pursuant to this Agreement or pursuant to the Stock
Option Agreement or any shares acquired in fiduciary capacity or as a
result of debts previously contracted.
(b) Subject Company has (i) duly entered into an
amendment to the Subject Company Rights Agreement in substantially the
form of set forth in Section 5.20 of the Subject Company Disclosure
Memorandum, and (ii) taken all other action necessary or appropriate so
that, the entering into of this Agreement and the Stock Option
Agreement, and the consummation of the transactions contemplated hereby
and thereby (including, without limitation, the Merger and/or the
purchase of shares of Subject Company Common Stock pursuant to the
Stock Option Agreement) do not and will not result in the ability of
any person to exercise any Subject Company Rights under the Subject
Company Rights Agreement or enable or require the Subject Company
Rights to separate from the shares of Subject Company Common Stock to
which they are attached or to be triggered or become exercisable.
(c) No "Distribution Date" or "Shares
Acquisition Date" (as such terms are defined in the Subject Company
Rights Agreement) has occurred.
5.21 Article Provisions; Takeover Laws. Subject Company
has taken all action so that the entering into of this Agreement and the
consummation of the Merger and the other transactions contemplated by this
Agreement do not and will not result in the grant of any rights to any Person
under the Articles of Incorporation or Charter, as the case may be, By-laws or
other governing instruments of Subject Company or any Subject Company Subsidiary
or restrict or impair the ability of Parent or any of the Parent Subsidiaries to
vote, or otherwise to exercise the rights of a shareholder with respect to,
shares of Subject Company or any Subject Company Subsidiary. Subject Company has
taken all necessary action to exempt this Agreement and the Stock Option
Agreement from, and the transactions contemplated by hereby and thereby are
exempt from, any "super-majority" voting requirements or the requirements of any
"moratorium," "fair price," "business combination," "control share," or other
anti--takeover provisions under applicable Laws, including Subtitle 12 of the
KBCA, or the Articles of Incorporation or Charter, as the case may be, or Bylaws
of the Subject Company or any Subject Company Subsidiary (collectively,
"Takeover Laws"). The transactions contemplated by this Agreement and the Stock
Option Agreement have been approved for purposes of Articles 8(b)(ii) and
9(b)(i) of the Subject Company's Articles of Incorporation.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Subject Company,
except as set forth on Parent's Disclosure Memorandum, as follows:
6.1 Organization, Standing and Power. Parent 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. Parent 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 Parent.
6.2 Authority; No Breach by Agreement.
(a) Parent 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
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performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been or will be duly
and validly authorized by all necessary corporate action (including
valid authorization and adoption of this Agreement and the Plan of
Merger by Parent's duly constituted Board of Directors) in respect
thereof on the part of Parent, subject to the adoption of an amendment
to the charter of Parent to increase the number of authorized shares of
Parent Common Stock. Assuming due authorization, execution and delivery
of this Agreement and the Plan of Merger by Subject Company, this
Agreement (which, for purposes of this sentence, shall not include the
Stock Option Agreement) and the Plan of Merger each represents a legal,
valid, and binding obligation of Parent, enforceable against Parent in
accordance with its terms (except in all cases as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar Laws (including provisions of the U.S.,
Tennessee and Kentucky Constitutions) 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 (which, for purposes of clause (iii) of this sentence, shall
not include the Stock Option Agreement) or the Plan of Merger by
Parent, nor the compliance by Parent with any of the provisions hereof,
will (i) conflict with or result in a breach of any provision of
Parent's Restated Charter of Incorporation or By-laws (subject to the
amendment of the Parent's Restated Charter of Incorporation to increase
the number of authorized shares of Parent Common Stock), or (ii)
constitute or result in a Default under, or require any Consent
(excluding Consents required by Law or Order) pursuant to, or result in
the creation of any Lien on any material Asset of Parent or any Parent
Subsidiary under, any Contract or Permit of Parent or any Parent
Subsidiary, except for such Defaults, Liens and Consents, which, if not
obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on Parent, 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 Parent or any
Parent Subsidiary 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 Parent,
no notice to, filing with, or Consent of, any public body or authority
is necessary for the consummation by Parent of the Merger and the other
transactions contemplated in this Agreement.
6.3 Capital Stock. The authorized capital stock of Parent
consists of (i) 100,000,000 shares of Parent Common Stock, of which 68,077,181
shares were issued and outstanding as of October 31, 1997, and (ii) 10,000,000
shares of Parent Preferred Stock, of which 2,278,228 shares of Parent Series E
Preferred Stock were issued and outstanding as of October 31, 1997. All of the
issued and outstanding shares of Parent Capital Stock are, and, subject to the
amendment of Parent's Restated Charter of Incorporation to increase the number
of authorized shares of Parent Common Stock, all of the shares of Parent Common
Stock to be issued in exchange for shares of Subject Company Common Stock upon
consummation of the Merger, when issued in exchange for shares of Subject
Company Common Stock upon consummation of the Merger, when issued in accordance
with the terms of this Agreement, will be, duly and validly issued and
outstanding and fully paid and nonassessable under the TBCA. None of the
outstanding shares of Parent Capital Stock has been, and none of the shares of
Parent Common Stock to be issued in exchange for shares of Subject Company
Common Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of Parent.
6.4 Parent Subsidiaries. Except for Capital Factors,
Inc., a majority of the outstanding stock of which may be acquired prior to the
Closing Date, Parent or one of its wholly owned Subsidiaries
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owns all of the issued and outstanding shares of capital stock (or other equity
interests) of each of the Parent Subsidiaries. No capital stock (or other equity
interest) of any Parent Subsidiary is or may become required to be issued (other
than to another Parent Subsidiary) by reason of any rights, and there are no
Contracts by which the Parent or any of the Parent Subsidiaries are bound to
issue (other than to Parent or any of the Parent Subsidiaries) additional shares
of its capital stock (or other equity interests) or Rights or by which Parent or
any of the Parent Subsidiaries are or may be bound to transfer any shares of the
capital stock (or other equity interests) of any of Parent or any of the Parent
Subsidiaries (other than to Parent or any of the Parent Subsidiaries). There are
no Contracts relating to the rights of Parent or any Parent Subsidiary to vote
or to dispose of any shares of the capital stock (or other equity interests) of
Parent or any of the Parent Subsidiaries. All of the shares of capital stock (or
other equity interests) of each Parent Subsidiary held by Parent or any Parent
Subsidiary are fully paid and nonassessable (except pursuant to 12 U.S.C.
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 or similar Law of the jurisdiction in which such Subsidiary is
incorporated or organized and are owned by Parent or a Parent Subsidiary free
and clear of any Liens. Each Parent 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 Parent 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 Parent. The minute book and other organizational documents
(and all amendments thereto) for each of Parent and each Parent Subsidiary that
is a Significant Subsidiary have been made available to Subject Company for its
review, and are true and complete as in effect as of the date of this Agreement.
6.5 Financial Statements. Each of the Parent Financial
Statements (including, in each case, any related notes) contained in the Parent
SEC Reports, including any Parent SEC Reports filed after the date of this
Agreement until the Effective Time, complied, or will comply, as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared, or will be 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,
or will fairly present, in all material respects the consolidated financial
position of Parent and the Parent Subsidiaries as at the respective dates and
the consolidated results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount or effect.
6.6 Absence of Undisclosed Liabilities. Neither Parent
nor any of the Parent Subsidiaries has any Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Parent, except Liabilities which are accrued or reserved against in the
consolidated balance sheets of Parent as of September 30, 1997, included in the
Parent Financial Statements made available prior to the date of this Agreement
or reflected in the notes thereto. Neither Parent nor any of the Parent
Subsidiaries has incurred or paid any Liability since September 30, 1997, except
for such Liabilities incurred or paid (i) in the ordinary course of business
consistent with past business practice or which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Parent or
(ii) in connection with the transaction contemplated by this Agreement.
6.7 Absence of Certain Changes or Events. Since December
31, 1996, except as disclosed in the Parent SEC Reports made available prior to
the date of this Agreement, 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 Parent.
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6.8 Tax Matters.
(a) All material Tax Returns required to be
filed by or on behalf of Parent or any of the Parent Subsidiaries 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 all such Tax Returns
filed are complete and accurate in all material respects. All Taxes
shown on filed Tax Returns have been paid. There is no audit
examination, or refund Litigation with respect to any material Taxes,
except as reserved against in the Parent Financial Statements delivered
prior to the date of this Agreement. All material Taxes and other
material Liabilities due with respect to completed and settled
examinations or concluded Litigation have been paid. There are no
material Liens with respect to Taxes upon any of the Assets of Parent
or any of the Parent Subsidiaries.
(b) Adequate provision for any material Taxes
due or to become due for Parent or any of the Parent Subsidiaries for
the period or periods through and including the date of the respective
Parent Financial Statements has been made and is reflected on such
Parent Financial Statements.
(c) Material deferred Taxes of Parent and the Parent
Subsidiaries have been provided for in accordance with GAAP.
6.9 Environmental Matters.
(a) To the Knowledge of Parent, each of Parent
and the Parent Subsidiaries, 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 Parent.
(b) To the Knowledge of Parent, there is no
Litigation pending or threatened before any court, governmental agency,
or authority or other forum in which Parent or any of the Parent
Subsidiaries or any of their respective Operating Properties or
Participation Facilities (or Parent 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 Parent or any of the Parent Subsidiaries or any of their respective
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 Parent,
nor, to the knowledge of Parent, is there any reasonable basis for any
Litigation of a type described in this sentence.
(c) During the period of (i) Parent's or any of
the Parent Subsidiaries' ownership or operation of any of their
respective current properties, (ii) any Parent's or any of the Parent
Subsidiaries' participation in the management of any Participation
Facility, or (iii) Parent's or any of the Parent Subsidiaries' holding
of a security interest in an Operating Property, to the Knowledge of
Parent, 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 Parent.
Prior to the period of (i) Parent's or any of Parent Subsidiaries'
ownership or operation of any of their respective current properties,
(ii) Parent's or any of Parent Subsidiaries' participation in the
management of any Participation Facility, or (iii) Parent or any of
Parent Subsidiaries' holding of a security interest in an Operating
Property, to the Knowledge of Parent, 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 Parent.
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6.10 Compliance With Laws. Parent is duly registered as a
bank holding company under the BHC Act. Each of Parent and the Parent
Subsidiaries 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,
except where the failure to hold such permits would not be reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Parent.
Neither Parent nor any of the Parent Subsidiaries:
(a) is in violation of any Laws, Orders, or
Permits applicable to its business or employees conducting its
business, except for such violations which would not be reasonably
likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent; or
(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 Parent or any Parent Subsidiary is not in material
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 Parent or any Parent Subsidiary 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 Parent, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Parent or any Parent
Subsidiary, or against any Asset, interest, or right of any of them, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Parent, nor are there any Orders of any Regulatory Authorities, other
governmental authorities, or arbitrators outstanding against Parent or any
Parent Subsidiary.
6.12 Reports. Since January 1, 1994, or the applicable
date of organization if later, Parent and each Parent Subsidiary 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 (the
"Parent SEC Reports"), (ii) other Regulatory Authorities, and (iii) any
applicable state securities or banking authorities, except failures to file
which are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Parent. As of its respective date (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing), 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 Parent SEC Report did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. Except for Parent Subsidiaries that are registered as a broker,
dealer, or investment advisor, no Parent Subsidiary is required to file any SEC
Documents.
6.13 Statements True and Correct. None of the information
supplied or to be supplied by Parent for inclusion in the Registration Statement
to be filed by Parent 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 Parent for
inclusion in the Proxy Statement to be mailed to Subject Company's shareholders
in connection with the Shareholders' Meeting, and any other documents to be
filed by Parent or any Parent Subsidiary 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 Subject Company, 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
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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 Parent or any Parent Subsidiary 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. Neither
Parent nor any Parent Subsidiary has taken any action or has any Knowledge of
any fact or circumstance relating to Parent 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.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 Affirmative Covenants of Subject Company. Unless the
prior written consent of Parent shall have been obtained, and except as
otherwise expressly contemplated herein or expressly provided for in the Subject
Company Disclosure Memorandum, Subject Company shall and shall cause each of the
Subject Company Subsidiaries to (i) operate its business only in the usual,
regular, and ordinary course, (ii) use reasonable efforts to 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 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 Subject Company. Except as
specifically permitted by this Agreement or as and to the extent expressly
disclosed or provided for in the Subject Company Disclosure Memorandum, from the
date of this Agreement until the earlier of the Effective Time or the
termination of this Agreement, Subject Company covenants and agrees that it will
not do or agree or commit to do, or permit any of the Subject Company
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 Parent, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation,
Charter, By-laws, or other governing instruments of Subject Company or
any Subject Company Subsidiary; or
(b) incur any additional debt obligation for
borrowed money (other than indebtedness of Subject Company or the
Subject Company Subsidiaries to each other) in excess of an aggregate
of $500,000 (for Subject Company and the Subject Company Subsidiaries
on a consolidated basis) except in the ordinary course of the business
of the Subject Company Subsidiaries consistent with past practices
(which shall include, for the Subject Company 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 material Asset of Subject Company or any of the Subject Company
Subsidiaries of any Lien or permit any such Lien to exist (other than
in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the
ordinary course of business, the satisfaction of legal requirements in
the exercise of trust-powers, and Liens in effect as of the date hereof
that are disclosed in the Subject Company Disclosure Memorandum); or
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(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 Subject Company or
any of the Subject Company Subsidiaries, or declare or pay any dividend
or make any other distribution in respect of Subject Company's capital
stock, provided that Subject Company 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
Subject Company Common Stock at a rate not in excess of $0.24 per share
with usual and regular record and payment dates in accordance with past
practice, 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 Subject Company Common Stock do
not become entitled to receive both a dividend in respect of their
Subject Company Common Stock and a dividend in respect of Parent Common
Stock or fail to be entitled to receive any dividend; or
(d) except (I) for this Agreement, (II) pursuant
to the exercise of stock options outstanding as of the date hereof and
pursuant to the terms thereof in existence on the date hereof under the
Subject Company Stock Plans or (III) 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 its common stock or any other capital stock, 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 Subject Company or any of the Subject Company
Subsidiaries or issue or authorize the issuance of any other securities
in respect of or in substitution for shares of Subject Company Common
Stock, or sell, lease, mortgage or otherwise dispose of or otherwise
encumber any shares of capital stock of any Subject Company Subsidiary
(unless any such shares of stock are sold or otherwise transferred to
another Subject Company Subsidiary) 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 for purchases of investment
securities acquired in the ordinary course of business consistent with
past practice, 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 Subsidiary of Subject Company, 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 Subject Company or the Subject
Company Subsidiaries, except in the ordinary course of business
consistent with past practice or as required by Law; pay any severance
or termination pay or any bonus other than pursuant to written policies
or written Contracts in effect on the date of this Agreement; enter
into or amend any severance agreements with officers of Subject Company
or the Subject Company Subsidiaries; grant any material increase in
fees or other increases in compensation or other benefits to directors
of Subject Company or the Subject Company Subsidiaries; 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
Subject Company); or
(h) enter into or amend any employment Contract
between Subject Company or the Subject Company Subsidiaries and any
Person (unless such amendment is required by Law) that Subject 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
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(i) adopt any new employee benefit plan of
Subject Company or the Subject Company Subsidiaries or terminate or
withdraw from, or make any material change in or to, any existing
employee benefit plans of Subject Company or the Subject Company
Subsidiaries 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 practices; or
(j) make any material 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 Subject Company or the Subject Company Subsidiaries for
material money damages or restrictions upon the operations of Subject
Company or the Subject Company Subsidiaries; or
(l) except in the ordinary course consistent
with past practice, 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 Parent. From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Parent covenants and agrees that it shall (i) continue to conduct its business
and the business of the Parent Subsidiaries in a manner designed in its
reasonable judgment to enhance the long-term value of the Parent Common Stock
and the business prospects of Parent and the Parent 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 hereby 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, (b)
materially adversely affect the ability of any Party to perform its covenants
and agreements under this Agreement, or (c) result in Parent entering into an
agreement with respect to an Acquisition Proposal with a third party which could
be reasonably expected to result in the Merger not being consummated or an
agreement with respect to an Acquisition Proposal to be consummated prior to the
Closing Date which would effect a change in the number or kind of shares of
Parent Common Stock held by Parent shareholders immediately prior to such
consummation; provided, that the foregoing shall not prevent Parent or any
Parent Subsidiary from acquiring any other Assets or businesses or from
discontinuing or disposing of any of its Assets or business if such action is,
in the reasonable judgment of Parent, desirable in the conduct of the business
of Parent and the Parent Subsidiaries and would not, in the reasonable judgment
of Parent, likely delay the Effective Time to a date subsequent to the date set
forth in Section 10.1(e) of 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, to the extent permitted by
Law, shall deliver to the other Party copies of all such reports promptly after
the same are filed. If financial statements are contained in any such reports
filed with the SEC, such financial statements will fairly present the
consolidated financial position of the entity filing such statements as of the
dates indicated and the consolidated results of operations, changes in
shareholders' equity, and cash flows for the periods then ended in accordance
with GAAP (subject in the case of interim financial statements to normal
recurring year-end adjustments that are not material). As of their respective
dates,
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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.
7.6 No Rights Triggered. Subject Company shall take all
steps necessary to ensure that the entering into of this Agreement, the Plan of
Merger and the Stock Option Agreement and the consummation of the transactions
contemplated hereby and thereby and any other action or combination of actions,
or any other transactions contemplated hereby or by the Stock Option Agreement,
do not and will not result in the grant of any Rights (including Subject Company
Rights) to any person (i) under Subject Company's Articles of Incorporation or
Bylaws, (ii) under the Subject Company Rights Agreement, or (iii) to exercise or
receive certificates for Rights (including Subject Company Rights), or acquire
any property in respect of Rights, under the Subject Company Rights Agreement.
Subject Company will cause the Subject Company Rights Agreement to be
terminated, and shall take all steps necessary to cause all Subject Company
Rights to cease to exist and be of no effect, immediately prior to the Effective
Time.
ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 Registration Statement; Proxy Statement; Shareholder
Approval. Each of Parent and Subject Company shall prepare and file the
Registration Statement, of which the Proxy Statement shall form a part, with the
SEC, and shall use its reasonable efforts to cause the Registration Statement to
become effective under the 1933 Act and Parent shall 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 Parent Common Stock upon consummation of the
Merger. Each of Parent and Subject Company shall furnish all information
concerning it and the holders of its capital stock as the other Party may
reasonably request in connection with such action. Subject Company shall call a
Shareholders' Meeting, to be held 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.
Assuming the Registration Statement is then effective, the Subject Company shall
call the Shareholders' Meeting to be held not later than 40 days after the
Parent's 1998 Annual Meeting of Shareholders. Otherwise, the Subject Company
shall call a Shareholders' Meeting as soon thereafter as practicable after the
Registration Statement is declared effective by the SEC. In connection with the
Shareholders' Meeting, (i) the Board of Directors of Subject Company shall
recommend (subject to compliance with its fiduciary duties as advised by
counsel) to its shareholders the approval of the Merger, and (ii) the Board of
Directors (subject to compliance with its fiduciary duties as advised by
counsel) and officers of Subject Company shall use their reasonable efforts to
obtain shareholder approval.
8.2 Authorization of Shares; Exchange Listing. Parent
shall submit to its shareholders, at the 1998 Annual Meeting of Shareholders of
Parent, a proposal to amend the Restated Charter of Incorporation of Parent to
increase the number of authorized shares of Parent Common Stock by an amount at
least equal to the number of shares of Parent Common Stock issuable in
connection with the Merger, and, subject to the approval of such amendment by
the shareholders of Parent, shall cause such amendment to become effective and
reserve for issuance a sufficient number of shares of Parent Common Stock for
the purpose of issuing shares of Parent Common Stock in accordance with the
provisions of Sections 3.1 and 3.5 of this Agreement and the Plan of Merger.
Parent shall use its reasonable efforts to list, prior to the Effective Time, on
the NYSE, subject to official notice of issuance, the shares of Parent Common
Stock to be issued to the holders of Subject Company Common Stock or Subject
Company Options pursuant to the Merger, and Parent shall give all notices and
make all filings with the NYSE required in connection with the transactions
contemplated herein.
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8.3 Applications. Parent shall prepare and file, and
Subject Company 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;
provided, however, that no party shall be required to seek any Consents for the
exercise of any rights or performance of any obligations under the Stock Option
Agreement except as set forth in such agreement. At least five business days
prior to each filing, Parent shall provide Subject Company 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, Parent and Subject Company shall
execute and file the Articles of Merger with the Secretary of State of the State
of Tennessee and the Secretary of State of the Commonwealth of Kentucky 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 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, however, that no party shall be required
to seek any Consents or take any other actions for the exercise of any rights or
performance of any obligations under the Stock Option Agreement except as set
forth in such agreement. Each Party shall use, and shall cause each of its
Subsidiaries to use, its reasonable efforts to obtain all Consents necessary or
desirable for the consummation of the transactions contemplated by this
Agreement; provided, however, that no party shall be required to seek any
Consents or take any other actions for the exercise of any rights or performance
of any obligations under the Stock Option Agreement except as set forth in such
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. Neither Party shall be required
to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of such Party's
customers, jeopardize any attorney-client privilege or contravene any
Law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The
Parties will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence
apply. No investigation by a Party shall affect the representations and
warranties of the other Party.
(b) Each Party will hold, and will cause its
respective Affiliates and their respective officers, directors,
employees, agents, consultants, and other representatives to hold, in
strict confidence, unless compelled to disclose by judicial or
administrative process (including without limitation in connection with
obtaining the necessary Consents of Regulatory Authorities) or by other
requirements of Law, all confidential documents and confidential or
proprietary information concerning the other Parties gathered from the
other Parties, or their respective officers, directors, employees,
agents, consultants or Representatives, pursuant to this Agreement, or
pursuant to the Confidentiality Agreement, dated September 23, 1997,
between Parent and Subject Company, except to the extent that such
documents or information can be shown to have
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been (a) previously lawfully known by the Party receiving such
documents or information, (b) in the public domain through no fault of
such receiving Party, or (c) later acquired by the receiving party from
other sources not themselves bound by, and in breach of, a
confidentiality agreement. Except as provided in Sections 8.1, 8.2 and
8.3 hereof, no Party will disclose or otherwise provide any such
confidential or proprietary documents or information to any other
Person, except to the Party's auditors, Representatives and other
consultants and advisors who need such documents or information in
connection with this Agreement or the Stock Option Agreement, and the
transactions contemplated hereby and thereby, and the Parties agree to
cause each of the foregoing to be subject to and bound by the
confidentiality provisions hereof.
8.7 Press Releases. Prior to the Effective Time, Subject
Company and Parent shall consult with each other as to the form and substance of
any press release or other public disclosure materially related to this
Agreement or any other transaction contemplated hereby; provided, that nothing
in this Section 8.7 shall be deemed to prohibit any Party from making any
disclosure which its counsel deems necessary or advisable in order to satisfy
such Party's disclosure obligations imposed by Law.
8.8 Certain Actions. Except with respect to this
Agreement and the transactions contemplated hereby, after the date of this
Agreement, neither Subject Company, the Subject Company Subsidiaries nor any
Representatives thereof retained by Subject Company or the Subject Company
Subsidiaries shall directly or indirectly solicit any Acquisition Proposal by
any Person. Except to the extent necessary to comply with the fiduciary duties
of Subject Company's Board of Directors as advised by counsel, Subject Company,
the Subject Company Subsidiaries, or Representatives thereof shall not 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 Subject Company 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. Subject Company shall promptly notify Parent orally and in writing in
the event that it receives any Acquisition Proposal or inquiry related thereto.
Subject Company shall (i) immediately cease and cause to be terminated any
existing activities, discussions, or negotiations with any Persons conducted
heretofore with respect to any of the foregoing, and (ii) direct and use its
reasonable efforts to cause all of its Representatives not to engage in any of
the foregoing.
8.9 Accounting and Tax Treatment. Each of the Parties
undertakes and agrees to use its reasonable efforts to cause the Merger, and to
take no action which would cause the Merger not, to qualify for
pooling-of-interests accounting treatment and treatment as a "reorganization"
within the meaning of Section 368(a) of the Internal Revenue Code for federal
income tax purposes.
8.10 Agreement of Affiliates. Subject Company has
disclosed in Section 8.10 of the Subject Company Disclosure Memorandum each
Person whom it reasonably believes is an "affiliate" of Subject Company as of
the date of this Agreement for purposes of Rule 145 under the 1933 Act. Subject
Company shall use its reasonable efforts to cause each such Person to deliver to
Parent not later than 40 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 Subject Company
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 Parent 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 Parent and Subject Company
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 Parent Common Stock issued
to such affiliates of Subject Company in exchange for shares of Subject Company
Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of Parent and Subject Company
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 8.10
(and Parent shall be entitled to place restrictive legends upon certificates for
shares of Parent Common Stock issued to affiliates of Subject Company pursuant
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to this Agreement to enforce the provisions of this Section 8.10). Parent shall
not be required to maintain the effectiveness of the Registration Statement
under the 1933 Act for the purposes of resale of Parent Common Stock by such
affiliates.
8.11 Employee Benefits and Contracts.
(a) Following the Effective Time, Parent shall
provide to officers and employees of the Subject Company and any
Subject Company Subsidiary, employee benefits under employee benefit
and welfare plans of Parent or the Parent Subsidiaries on terms and
conditions which when taken as a whole are substantially similar to
those currently provided by Parent or a Parent Subsidiary 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 Subject Company and any Subject Company Subsidiary
prior to the Effective Time shall be treated as service with Parent or
a Parent Subsidiary participating in such employee benefit plans.
(b) Except as set forth in the Supplemental
Letter, Parent shall, and shall cause the Parent Subsidiaries to, honor
in accordance with their terms the Subject Company Benefit Plans, each
as amended to the date hereof, and other contracts, arrangements,
commitments or understandings disclosed in Section 8.11 of the Subject
Company Disclosure Memorandum. Parent and Subject Company hereby
acknowledge that consummation of the Merger will constitute a "Change
in Control" for purposes of all employee benefit plans, contracts,
arrangements and commitments that contain change in control provisions
and, except as set forth in the Supplemental Letter, agree to abide by
the provisions of any employee benefit plan, contract, arrangement or
commitment which relates to a Change in Control.
8.12 Indemnification.
(a) After the Effective Time, Parent shall
indemnify, defend and hold harmless the present and former directors,
officers, employees, and agents of the Subject Company and any Subject
Company Subsidiary (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) to the full extent permitted under any of Kentucky Law,
Subject Company's Articles of Incorporation and By-laws as in effect on
the date hereof and any indemnity agreements entered into prior to the
date of this Agreement by Subject Company or any Subject Company
Subsidiary and any director, officer, employee or agent of Subject
Company or any Subject Company Subsidiary, 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 Parent is required to effectuate any indemnification,
Parent 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 Parent and the Indemnified Party.
(b) Parent shall use its reasonable efforts (and
Subject Company shall cooperate prior to the Effective Time in these
efforts) to maintain in effect for a period of three years after the
Effective Time Subject Company's existing directors' and officers'
liability insurance policy (provided that Parent may substitute
therefor (i) policies of at least the same coverage and amounts
containing terms and conditions which are substantially no less
advantageous or (ii) with the consent of Subject Company given prior to
the Effective Time, any other policy) with respect to claims arising
from facts or events which occurred prior to the Effective Time and
covering persons who are currently covered by such insurance; provided,
that the Surviving Corporation shall not be obligated to make aggregate
annual premium payments for such three-year period in respect of such
policy (or coverage replacing such policy) which exceed, for the
portion related to Subject Company's directors and officers, 150% of
the annual premium payments on Subject Company's current policy in
effect as of the date of this Agreement (the "Maximum Amount"). If
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the amount of the premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, Parent shall use its
reasonable efforts to maintain the most advantageous policies of
directors' and officers' liability insurance obtainable for a premium
equal to the Maximum Amount.
(c) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.12, upon learning
of any such Liability or Litigation, shall promptly notify Parent
thereof, provided that the failure so to notify shall not affect the
obligations of Parent under this Section 8.12 unless and to the extent
such failure materially increases Parent's Liability under this Section
8.12. In the event of any such Litigation (whether arising before or
after the Effective Time), (i) Parent or the Surviving Corporation
shall have the right to assume the defense thereof and Parent 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 Parent
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 Parent or the
Surviving Corporation and the Indemnified Parties or between the
Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Parent 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
Parent shall be obligated pursuant to this paragraph (c) to pay for
only two firms of counsel for all Indemnified Parties in any
jurisdiction, (ii) the Indemnified Parties will cooperate in the
defense of any such Litigation, and (iii) neither Parent nor the
Surviving Corporation shall be liable for any settlement effected
without its prior written consent or 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 either Parent or the Surviving
Corporation or any of their respective 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 Parent or the Surviving Corporation, as the case may be,
shall assume the obligations set forth in this Section 8.12.
(e) Parent shall pay all reasonable costs,
including attorneys' fees, that may be incurred by any Indemnified
Party in enforcing the indemnity and other obligations provided for in
this Section 8.12.
(f) The provisions of this Section 8.12 are
intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party and his or her heirs and representatives.
8.13 Merger Subsidiary. Prior to the Effective Time, the
outstanding capital stock of Merger Subsidiary shall consist of 1,000 shares of
Merger Subsidiary Common Stock, all of which shares shall be owned by Parent.
Parent, as the sole stockholder of Merger Subsidiary, shall vote prior to the
Effective Time the shares of Merger Subsidiary Common Stock in favor of this
Agreement.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 Conditions to Obligations of Each Party. The
respective obligations of each Party to perform this Agreement and consummate
the Merger and the other transactions contemplated hereby are subject to the
satisfaction of the following conditions, unless waived by both Parties pursuant
to Section 11.6 of this Agreement:
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(a) Shareholder Approval. The shareholders of
Subject Company shall have approved this Agreement and the consummation
of the transactions contemplated hereby and thereby, including the
Merger, as and to the extent required by Law, or by the provisions of
any governing instruments (without regard to any shares which are voted
pursuant to irrevocable proxies, the validity of which has been
contested by the underlying owner, unless the underlying owner has
given written instructions with respect to the voting of such shares in
connection with this Agreement).
(b) Regulatory Approvals. All Consents of,
filings and registrations with, and notifications to, all Regulatory
Authorities required for consummation of the Merger shall have been
obtained or made and shall be in full force and effect and all waiting
periods required by Law shall have expired. No Consent obtained from
any Regulatory Authority which is necessary to consummate the
transactions contemplated hereby shall be conditioned or restricted in
a manner (other than matters relating to the raising of additional
capital or the disposition of Assets or deposit Liabilities and
associated branches) which in the reasonable judgment of the Board of
Directors of Parent 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, Parent 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 by Law or Order (whether
temporary, preliminary, or permanent) or taken any other action which
prohibits, restricts, or makes illegal consummation of the transactions
contemplated by this Agreement.
(e) Registration Statement. The Registration
Statement shall be effective under the 1933 Act, no stop orders
suspending the effectiveness of the Registration Statement shall have
been issued, no action, suit, proceeding, or investigation by the SEC
to suspend the effectiveness thereof shall have been initiated and be
continuing, and all necessary approvals under state securities Laws or
the 1933 Act or 1934 Act relating to the issuance or trading of the
shares of Parent Common Stock issuable pursuant to the Merger shall
have been received.
(f) Exchange Listing. The shares of Parent
Common Stock issuable pursuant to the Merger shall have been approved
for listing on the NYSE, subject to official notice of issuance.
(g) Tax Matters. Parent shall have received a
written opinion of counsel from Wyatt, Tarrant & Combs, and Subject
Company shall have received a written opinion of counsel from Brown,
Todd & Heyburn, PLLC, in form and substance reasonably satisfactory to
Parent and Subject Company, respectively, dated as of the Effective
Time, in each case substantially to the effect that (i) the Merger will
constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code, (ii) Parent, Merger Subsidiary and Subject
Company will each be "a party to a reorganization" within the meaning
of Section 368(b) of the Internal Revenue Code; (iii) no gain or loss
will be recognized by the shareholders of Subject Company who exchange
all of their Subject Company Common Stock solely for Parent Common
Stock pursuant to the Merger (except with respect to cash received in
lieu of a fractional share interest in Parent Common Stock), (iv) the
tax basis of the Parent Common Stock received by shareholders of
Subject Company who exchange Subject Company Common Stock solely for
Parent Common Stock in the Merger will be the same as the tax basis of
the Subject Company Common Stock surrendered in exchange therefor, (v)
the holding period of the Parent Common Stock received by shareholders
of Subject Company in the Merger will include the period during which
the shares
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of Subject Company Common Stock surrendered in exchange therefor were
held, provided such Subject Company Common Stock was held as a capital
asset by the holder of such Subject Company Common Stock at the
Effective Time, and (vi) neither Subject Company nor Parent will
recognize gain or loss as a consequence of the Merger. In rendering
such Tax Opinion, such counsel shall require and be entitled to rely
upon representations and covenants of officers of Parent, Subject
Company, shareholders of Subject Company and others reasonably
satisfactory in form and substance to such counsel.
(h) Amendment of Parent's Charter. The
shareholders of Parent shall have approved an amendment to Parent's
Restated Charter of Incorporation to increase the number of authorized
shares of Parent Common Stock to at least 150,000,000 and in any event
to a sufficient number of authorized shares of Parent Common Stock to
enable Parent to issue authorized shares of Parent Common Stock in
accordance with its obligations under Article 3 of this Agreement and
the Plan of Merger.
9.2 Conditions to Obligations of Parent. The obligations
of Parent 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 Parent 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 Subject Company 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 specific date
shall speak only as of such date). The representations and warranties
of Subject Company set forth in Sections 5.1, 5.2, 5.3, 5.19, 5.20, and
5.21 of this Agreement shall each be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Subject Company set forth in this Agreement (including
the representations and warranties set forth in Sections 5.1, 5.2, 5.3,
5.19, 5.20, and 5.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse
Effect on Subject Company, provided that, for purposes of this sentence
only, those representations and warranties which are qualified by
references to "material" or "Material Adverse Effect" or "Knowledge"
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants.
Each and all of the agreements and covenants of Subject Company 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. Subject Company shall have
delivered to Parent (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 Sections 9.2(a) and 9.2(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly adopted by
Subject Company's Board of Directors and shareholders evidencing the
taking of all corporate action necessary to authorize the execution,
delivery, and performance of this Agreement, and the consummation of
the transactions contemplated hereby, all in such reasonable detail as
Parent shall request.
(d) Parent Pooling Letter. Parent shall have
received a copy of a letter, dated as of the date of filing of the
Registration Statement with the SEC and as of the Effective Time,
addressed to it and in a form reasonably acceptable to it, from Price
Waterhouse LLP to the effect that the Merger will qualify for pooling
of interests accounting treatment.
9.3 Conditions to Obligations of Subject Company. The
obligations of Subject Company to perform this Agreement and consummate the
Merger and the other transactions
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contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by Subject Company 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 Parent 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 Parent set forth
in Sections 6.1, 6.2, 6.3 and 6.14 of this Agreement shall each be true
and correct in all material respects. There shall not exist
inaccuracies in the representations and warranties of Parent set forth
in this Agreement (including the representations and warranties set
forth in Sections 6.1, 6.2, 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 Parent; provided that, for purposes of this
sentence only, those representations and warranties which are qualified
by references to "material" or "Material Adverse Effect" or "Knowledge"
shall be deemed not to include such qualifications.
(b) Performance of Agreements and Covenants.
Each and all of the agreements and covenants of Parent 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. Parent shall have delivered to
Subject Company (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 Sections 9.3(a) and 9.3(b) of this Agreement have been
satisfied, and (ii) certified copies of resolutions duly adopted by
Parent's or Merger Subsidiary's Boards 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
Subject Company shall request.
(d) Subject Company Pooling Letter. Subject
Company shall have received a copy of the letters contemplated by
Section 9.2(d).
(e) Fairness Opinion. Subject Company shall have
received opinions from Keefe, Bruyette & Woods, Inc. and Stifel,
Nicolaus & Company, Inc. to the effect that the Merger is fair to
Subject Company shareholders from a financial point of view dated the
date of the Proxy Statement.
ARTICLE 10
TERMINATION
10.1 Termination. Notwithstanding any other provision of
this Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Subject Company, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors
of Parent and the Board of Directors of Subject Company; 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 Subject Company and Section 9.3(a) in the case of Parent or
in material breach of any covenant or other agreement contained in this
Agreement) in the event of an inaccuracy of any representation or
30
<PAGE> 126
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 Subject Company and Section 9.3(a) of
this Agreement in the case of Parent; 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 Subject Company and Section 9.3(a) in the case of Parent 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 Subject
Company fail to vote their approval of this Agreement and the
transactions contemplated hereby as required by the KBCA and this
Agreement at the Shareholders' Meeting where the transactions were
presented to such shareholders for approval and voted upon, or (iii)
the shareholders of Parent, at the 1998 Annual Meeting of Shareholders
of Parent, fail to vote their approval of an amendment to the Restated
Charter of Incorporation of Parent to increase the number of authorized
shares of Parent Common Stock, to the extent Parent would not have
sufficient authorized shares of Parent Common Stock available for
issuance in the Merger; or
(e) By the Board of Directors of either Party in
the event that the Merger shall not have been consummated by August 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 Subject Company
upon written notice to Parent at any time during the ten-day period
commencing two days after the Determination Date, if either:
A. Both of the following conditions
are satisfied:
(1) the Average Closing Price
shall be less than the product of (i) 0.85 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
"Parent 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 0.10 from the quotient in this
clause (2)(ii) (such number being referred to herein
as the "Index Ratio"); or
B. The Average Closing Price shall be
less than the product obtained by multiplying 0.80 times the
Starting Price;
subject, however, to the following four sentences. If Subject Company
refuses to consummate the Merger pursuant to this Section 10.1(f), it
shall give prompt written notice thereof to Parent which notice shall
specify which of the clauses A. or B. is applicable (or if both would
be applicable, which clause is being invoked); 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
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<PAGE> 127
commencing with its receipt of such notice, Parent shall have the
option in the case of a failure to satisfy the condition in clause A.,
to elect to increase the Exchange Ratio to equal the lesser of (i) the
quotient obtained by dividing (1) the product of 0.85, 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 Parent Ratio. During the five-day period commencing with its
receipt of such notice, Parent shall have the option, in the case of a
failure to satisfy the condition in clause B., to elect to increase the
Exchange Ratio to the quotient obtained by dividing (i) the product of
0.80, the Starting Price and the Exchange Ratio (as then in effect), by
(ii) the Average Closing Price. If Parent makes an election
contemplated by the preceding two sentences, within such five-day
period, it shall give prompt written notice to Subject Company of such
election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 10.1(f) 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(f).
For purposes of this Section 10.1(f), the following terms
shall have the meanings indicated:
"Average Closing Price" shall mean the average of the daily
last sales prices of Parent 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 Parent) 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 Consent of the Board of
Governors of the Federal Reserve System shall be received (without regard to any
requisite waiting period thereof).
"Index Group" shall mean the 15 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
as of the Starting Date. In the event that any such company or companies are
removed from the Index Group as a result of any of the events described in the
preceding sentence, 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 15 bank holding companies and
the weights attributed to them are as follows:
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<PAGE> 128
<TABLE>
<CAPTION>
Bank Holding Companies Weighting
- ------------------------------------------- -------------------
<S> <C>
AmSouth Bancorporation 5.99%
BB&T Corporation 10.41
Crestar Financial Corporation 7.75
First American Corporation 3.94
First of America Bank Corporation 7.04
First Security Corporation 5.10
First Tennessee National Corporation 5.25
Firstar Corporation 7.55
Huntington Bancshares, Inc. 9.30
Marshall & Ilsley Corporation 7.40
Mercantile Bancorporation, Inc. 9.05
National Commerce Bancorp 2.11
Old Kent Financial Corporation 4.62
Regions Financial Corporation 7.30
SouthTrust Corporation 7.19
------
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
Parent 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
Parent) on the Starting Date.
If Parent or any company belonging to the Index Group 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 Parent shall be appropriately adjusted for the purposes of applying
this Section 10.1(f).
10.2 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 10.1 of this Agreement,
this Agreement and the Plan of Merger shall become void and have no effect,
except that (i) the provisions of this Section 10.2, Section 8.6(b), Section
11.2 and Section 11.3 of this Agreement shall survive any such termination and
abandonment, and (ii) a termination pursuant to the terms of this Agreement
shall not relieve the breaching Party from Liability for an uncured willful
breach of a representation, warranty, covenant, or agreement. The Stock Option
Agreement shall be governed by its 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 for those covenants
and agreements which by their terms apply in whole or in part after the
Effective Time.
ARTICLE 11
MISCELLANEOUS
11.1 Definitions.
(a) Except as otherwise provided herein, the
capitalized terms set forth below shall have the following meanings:
33
<PAGE> 129
"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 any other Person, directly
or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such Person.
"Agreement" shall mean this Agreement, including the Stock
Option Agreement and the Exhibits delivered pursuant hereto and
incorporated herein by reference.
"Articles of Merger" shall mean the Articles of Merger to be
executed by Subject Company and filed with the Secretary of State of
the Commonwealth of Kentucky and the Secretary of State of the State of
Tennessee relating to the Merger as contemplated by Section 1.1 of this
Agreement.
"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.
"Bank" shall mean Peoples First National Bank and Trust
Company.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Closing Date" shall mean the date on which the Closing
occurs.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets or business.
"Default" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event
that with the passage of time or the giving of notice or both would
constitute a breach or violation of or default under any Contract,
Order, or Permit, or (iii) any occurrence of any event that with or
without the passage of time or the giving of notice would give rise to
a right to terminate or revoke, change the current terms of, or
renegotiate, or to accelerate, increase or impose any Liability under,
any Contract, Order or Permit.
"Dissenting Shares" shall mean any shares of Subject Company
Common Stock with respect to which the record or beneficial holder has
properly perfected the holder's rights to dissent under Subtitle 13 of
Chapter 27IB of the KBCA.
"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.
34
<PAGE> 130
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.
"ERISA Affiliate" shall mean any trade or business, whether or
not incorporated, that together with Subject Company would be deemed a
"single employer" within the meaning of section 4001(b) of ERISA.
"Exhibits" 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).
"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.
"KBCA" shall mean the Kentucky Business Corporation Act.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall
mean those facts that are known by the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer, or
General Counsel of such Person.
"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a
Person or its Assets, Liabilities or business, including those
promulgated, interpreted, or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or
expense (including costs of investigation, collection, and defense),
claim, deficiency, guaranty, or endorsement of or by any Person (other
than endorsements of notes, bills, checks, and drafts presented for
collection or deposit in the ordinary course of business) of any type,
whether accrued, absolute or contingent, liquidated or unliquidated,
matured or unmatured, or otherwise.
35
<PAGE> 131
"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 Taxes upon the assets or
properties of a Party or its Subsidiaries which are not yet due and
payable, and (ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary
course of the banking business.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating
to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but
shall not include regular, periodic examinations of depository
institutions and their Affiliates by Regulatory Authorities.
"Material 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 in
accordance with applicable Law, 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 and their holding companies, (c) actions or
omissions of a Party (or any of its Subsidiaries) taken with the prior
written consent of the other Party, (d) changes in economic conditions
or interest rates generally affecting financial institutions, or (e)
the direct effects of compliance with this Agreement (including the
expense associated with the vesting of benefits under the various
employee benefit plans of Subject Company 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.
"Merger Subsidiary" shall mean Union Planters Holding
Corporation, a wholly owned subsidiary of Parent organized under the
Laws of the State of Tennessee.
"Merger Subsidiary Common Stock" shall mean the $1.00 par
value common stock of Merger Subsidiary.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"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.
36
<PAGE> 132
"Parent Capital Stock" shall mean, collectively, the Parent
Common Stock, the Parent Preferred Stock and any other class or series
of capital stock of Parent.
"Parent Common Stock" shall mean the $5.00 par value common
stock of Parent.
"Parent Disclosure Memorandum" shall mean the written
information entitled "Parent Memorandum" delivered prior to the date of
this Agreement to Subject Company 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.
"Parent Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of
Parent as of September 30, 1997, and as of December 31, 1996 and 1995,
and the related statements of earnings, changes in shareholders'
equity, and cash flows (including related notes and schedules, if any)
for the nine months ended September 30, 1997 and for each of the three
years ended December 31, 1996, 1995 and 1994, as filed by Parent in SEC
Documents, and (ii) the consolidated balance sheets of Parent
(including related notes and schedules, if any) and related statements
of earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to September 30, 1997.
"Parent Preferred Stock" shall mean the no par value preferred
stock of Parent and shall include the (i) Series A Preferred Stock and
(ii) Series E 8% Cumulative, Convertible Preferred Stock, of Parent
("Parent Series E Preferred Stock").
"Parent Rights" shall mean the preferred stock purchase rights
issued pursuant to the Parent Rights Agreement.
"Parent Rights Agreement" shall mean that certain Rights
Agreement, dated January 19, 1989, between Parent and UPNB, as Rights
Agent.
"Parent Subsidiaries" shall mean the Subsidiaries of Parent
and any corporation, bank, or other organization acquired as a
Subsidiary of Parent in the future and owned by Parent at the Effective
Time.
"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 Subject Company or Merger Subsidiary
or Parent, and "Parties" shall mean, collectively, Subject Company,
Merger Subsidiary and Parent.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing,
franchise, license, notice, permit, or right to which any Person is a
party or that is or may be binding upon or inure to the benefit of any
Person or its securities, Assets or business.
"Person" shall mean a natural person or any legal, commercial,
or governmental entity, such as, but not limited to, a corporation,
general partnership, joint venture, limited partnership, limited
liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"Plan of Merger" shall mean the Plan of Merger of even date
herewith entered into by Parent, Merger Subsidiary and Subject Company,
in the form of Exhibit 1.
37
<PAGE> 133
"Proxy Statement" shall mean the proxy statement used by
Subject Company to solicit the approval of its shareholders of the
transactions contemplated by this Agreement, which shall include the
prospectus of Parent relating to the issuance of the Parent Common
Stock to holders of Subject Company 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
Parent under the 1933 Act with respect to the shares of Parent Common
Stock to be issued to the shareholders of Subject Company 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 the
Comptroller of the Currency, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation, the Department of Financial
Institutions of the Commonwealth of Kentucky, 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, warrants, or other
binding obligations of any character whatsoever by which a Person is or
may be bound to issue additional shares of its capital stock or other
Rights, or securities or rights convertible into or exchangeable for,
shares of the capital stock of a Person.
"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 Law.
"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 Subject Company to be held pursuant to Section 8.1 of
this Agreement, including any adjournment or adjournments thereof.
"Stock Option Agreement" shall mean the Stock Option Agreement
of even date herewith issued to Parent by Subject Company,
substantially in the form of Exhibit 2.
"Subject Company Common Stock" shall mean the common stock of
Subject Company.
"Subject Company Disclosure Memorandum" shall mean the written
information entitled "Subject Company Disclosure Memorandum" delivered
prior to the date of this Agreement to Parent 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.
"Subject Company Financial Statements" shall mean (i) the
consolidated statements of financial position (including related notes
and schedules, if any) of Subject Company as of September 30, 1997, and
as of December 31, 1996 and 1995, and the related statements of
operations, shareholders' equity, and cash flows (including related
notes and schedules, if any) for the nine months ended September 30,
and for each of the three fiscal years ended December 31, 1996, 1995
and 1994, as filed by Subject Company in SEC Documents, and (ii) the
consol-
38
<PAGE> 134
idated statements of financial position of Subject Company(including
related notes and schedules, if any) and related statements of
operations, shareholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with
respect to periods ended subsequent to September 30, 1997.
"Subject Company Rights" shall mean the junior participating
preferred stock purchase rights issued pursuant to the Subject Company
Rights Agreement.
"Subject Company Rights Agreement" shall mean that certain
Rights Agreement, dated January 18, 1995, between Subject Company and
Boatman's Trust Company, as Rights Agent, as amended by the First
Amendment, dated October 20, 1997, between Subject Company and
Boatman's Trust Company, as Rights Agent, and by the Second Amendment,
dated November 17, 1997, between Subject Company and Registrar and
Trust Company, as successor trustee.
"Subject Company Stock Plans" shall mean the existing stock
option and other stock-based compensation plans of Subject Company.
"Subject Company Subsidiaries" shall mean the Subsidiaries of
Subject Company, which shall include Subject Company Subsidiaries
described in Section 5.4 of this Agreement and any corporation, bank,
or other organization acquired as a Subsidiary of Subject Company in
the future and owned by Subject Company at the Effective Time.
"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 equity the equity
securities of which are owned or controlled in a fiduciary capacity.
"Supplemental Letter" shall mean the supplemental letter of
even date herewith relating to certain understandings and agreements
with respect to certain employment matters following the Effective Time
in addition to those included in this Agreement.
"Surviving Corporation" shall mean Merger Subsidiary as the
surviving corporation resulting from the Merger.
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies
or other assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment, excise,
estimated, severance, stamp, occupation, property or other taxes,
customs duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts imposed by any taxing authority (domestic or
foreign).
"TBCA" shall mean the Tennessee Business Corporation Act.
"Thrift" shall mean Peoples First, FSB.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
39
<PAGE> 135
<TABLE>
<S> <C>
Average Closing Price.................................... Section 10.1(f)
Closing.................................................. Section 1.2
Determination Date....................................... Section 10.1(f)
Effective Time ......................................... Section 1.3
ERISA Affiliate ......................................... Section 5.14(c)
Exchange Agent ......................................... Section 4.1
Exchange Ratio ......................................... Section 3.1(c)
Indemnified Party........................................ Section 8.12(a)
Index Group ............................................. Section 10.1(f)
Index Price ............................................. Section 10.1(f)
Index Ratio ............................................. Section 10.1(f)
Maximum Amount .......................................... Section 8.12(b)
Merger ................................................. Section 1.1
Parent Ratio............................................. Section 10.1(f)
Parent SEC Reports....................................... Section 6.12
Starting Date............................................ Section 10.1(f)
Starting Price........................................... Section 10.1(f)
Subject Company Benefit Plans............................ Section 5.14(a)
Subject Company Contracts ............................... Section 5.15
Subject Company ERISA Plan............................... Section 5.14(a)
Subject Company Options.................................. Section 3.5(a)
Subject Company Pension Plan............................. Section 5.14(a)
Subject Company SEC Reports ............................. Section 5.17
Takeover Laws............................................ Section 5.20
Tax Opinion.............................................. Section 9.1(g)
</TABLE>
(c) Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the singular.
Whenever the words "include," "includes," or "including" are used in
this Agreement, they shall be deemed followed by the words "without
limitation."
11.2 Expenses.
(a) Except as otherwise provided in this Section
11.2, each of the Parties shall bear and pay all direct costs and
expenses incurred by it or on its behalf in connection with the
transactions contemplated hereunder, including filing, registration and
application fees, printing fees, and fees and expenses of its own
financial or other consultants, investment bankers, accountants, and
counsel, except that each of the Parties shall bear and pay the filing
fees payable in connection with the Registration Statement and the
Proxy Statement and printing costs incurred in connection with the
printing of the Registration Statement and the Proxy Statement based on
the relative Asset sizes of the Parties at December 31, 1996.
(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 Keefe, Bruyette &
Woods, Inc. and Stifel Nicolaus & Company Inc. each as to Subject Company, each
of the Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the transactions contemplated hereby. In the event of a claim by
any broker or finder based upon his or its representing or being retained by or
allegedly representing or being retained by Subject Company or Parent other than
those disclosed in the previous sentence, each of Subject Company and Parent, as
the case may be, agrees to indemnify and hold the other Party harmless of and
from any Liability incurred by such party in respect of any such claim.
39
<PAGE> 136
11.4 Entire Agreement. Except as otherwise expressly
provided herein, this Agreement (including the other documents and instruments
referred to herein) constitutes the entire agreement between the Parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereto, written or oral, including,
without limitation, the Confidentiality Agreement, dated September 23, 1997,
between Parent and Subject Company. Nothing in this Agreement expressed or
implied is intended to confer upon any Person, other than the Parties or their
respective successors, any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, other than as provided in Section 8.12 of this
Agreement.
11.5 Amendments. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by each of the Parties
upon the approval of the Boards of Directors of each of the Parties, whether
before or after shareholder approval of this Agreement has been obtained.
11.6 Waivers.
(a) Prior to or at the Effective Time, Parent,
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 Subject Company, to
waive or extend the time for the compliance or fulfillment by Subject
Company of any and all of its obligations under this Agreement, and to
waive any or all of the conditions precedent to the obligations of
Parent 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 Parent.
(b) Prior to or at the Effective Time, Subject
Company, 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 Parent, to
waive or extend the time for the compliance or fulfillment by Parent of
any and all of its obligations under this Agreement, and to waive any
or all of the conditions precedent to its obligations of Subject
Company 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 Subject Company.
(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 of a waiver of any other condition
or of the breach of any other term of this Agreement.
11.7 Assignment. 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.
41
<PAGE> 137
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 person at the
addresses set forth below (or at such other address as may be provided
hereunder), and shall be deemed to have been delivered as of the date so
delivered:
Subject Company: Peoples First Corporation
100 South Fourth Street
Paducah, Kentucky 42001
Attention: Aubrey W. Lippert
Telecopy Number: (502) 441-1526
Copy to Subject Counsel: Brown, Todd & Heyburn, PLLC
3200 Providian Center
Louisville, Kentucky 40202-3363
Attention: R. James Straus, Esq.
Telecopy Number: (502) 581-1087
Parent: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: Jackson W. Moore
Telecopy Number: (901) 580-2939
Copy to Counsel: Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Attention: E. James House, Jr., Esq.
Telecopy Number: (901) 580-2939
and
Wyatt, Tarrant & Combs
2800 Citizens Plaza
Louisville, Kentucky 40202
Attention: Stewart E. Conner, Esq.
Telecopy Number: (502) 589-0309
11.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the Commonwealth of Kentucky,
without regard to any applicable conflicts of Laws.
11.10 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
11.11 Captions. The captions contained in this Agreement
are for reference purposes only and are not part of this Agreement.
11.12 Interpretations. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved against any
party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The Parties acknowledge and agree
that this Agreement has been reviewed, negotiated, and accepted by all Parties
and their attorneys and shall be construed and interpreted according to the
ordinary meaning of the words used so as fairly to accomplish the purposes and
intentions of all parties hereto.
42
<PAGE> 138
11.13 Enforcement of Agreement. The Parties agree that time
is of the essence in the performance of their respective obligations under this
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 enforceable, the provision
shall be interpreted to be only so broad as is enforceable.
IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.
<TABLE>
<CAPTION>
ATTEST: PEOPLES FIRST CORPORATION
<S> <C>
By: /S/ EILEEN M. DUOBINIS-GRAY By: /S/ AUBREY W. LIPPERT
----------------------------- -------------------------------------
Title: SECRETARY Title: CHAIRMAN, PRESIDENT AND CEO
-------------------------- -----------------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /S/ E. JAMES HOUSE, JR. By: /S/ JACKSON W. MOORE
----------------------------- -------------------------------------
Jackson W. Moore
Title: CORPORATE SECRETARY Title: President & Chief Operating Officer
-------------------------- -----------------------------------
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: /S/ LYNN L. LANIGAN By: /S/ JACKSON W. MOORE
----------------------------- -------------------------------------
Jackson W. Moore
Title: SECRETARY Title: President
-------------------------- -----------------------------------
</TABLE>
[CORPORATE SEAL]
43
<PAGE> 139
APPENDIX B
PLAN OF MERGER
PROVIDING FOR THE MERGER OF
PEOPLES FIRST CORPORATION, A KENTUCKY CORPORATION,
WITH AND INTO
UNION PLANTERS HOLDING CORPORATION
THIS PLAN OF MERGER is made and entered into as of November 17,
1997, by and between Peoples First Corporation, a Kentucky corporation
("Subject Company"), Union Planters Holding Corporation, a Tennessee
corporation ("Merger Subsidiary"), and joined in by Union Planters Corporation,
a Tennessee corporation ("Parent").
This Plan of Merger is entered into concurrently with, and
pursuant to, the Plan and Agreement of Merger (the "Acquisition Agreement"),
dated the date hereof, between Subject Company and Merger Subsidiary, and
joined in by Parent.
Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Acquisition Agreement.
1. SUBJECT COMPANY. Subject Company is corporation duly organized
under the laws of the Commonwealth of Kentucky and has its principal office
located in Paducah, Kentucky. The authorized capital stock of Subject Company
consists of (a) shares of common stock ("Subject Company Common Stock"), and
(b) shares of preferred stock.
2. MERGER SUBSIDIARY. Merger Subsidiary is a corporation duly
organized under the laws of Tennessee and has its principal office located in
Memphis, Tennessee. The authorized capital stock of Merger Subsidiary consists
of 1,000 shares of common stock ("Merger Subsidiary Common Stock"), of which
1,000 shares are validly issued and outstanding and owned by Parent, fully paid
and nonassessable.
3. PARENT. Parent is a corporation duly organized under the laws of
Tennessee and has its principal office located in Memphis, Tennessee. The
authorized capital stock of Parent consists of shares of common stock ("Parent
Common Stock"), and (b) shares of preferred stock ("Parent Preferred Stock").
Parent will issue shares of Parent Common Stock in the Merger (as defined
below), and will own all of the outstanding shares of the Surviving
Corporation.
4. MERGER. Subject to the terms and conditions of this Plan of
Merger and the Acquisition Agreement, at the Effective Time (as defined in
Section 5 below), Subject Company shall be merged with and into Merger
Subsidiary in accordance with the provisions of KRS 271B.11-070 of the KBCA and
Section 48-21-109 of the TBCA and with the effect provided in KRS 271B.11-060
of the KBCA and Section 48-21-108 of the TBCA (the "Merger"). Merger Subsidiary
shall be the Surviving Corporation resulting from the Merger and shall continue
to be governed by the Laws of the State of Tennessee. The Merger shall be
consummated pursuant to the terms of this Plan of Merger and the Acquisition
Agreement, which have been or will be approved and adopted by the respective
Boards of Directors of Subject Company, Parent and Merger Subsidiary, as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended.
5. EFFECTIVE TIME. The Merger and other transactions contemplated
by the Acquisition Agreement and this Plan of Merger shall become effective on
the Closing Date and at the time the Articles of Merger reflecting the Merger
shall become effective with the Secretary of State of the Commonwealth of
Kentucky and the Secretary of State of the State of Tennessee (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 of Subject Company, Merger Subsidiary and Parent, Subject
Company, Merger Subsidiary and Parent shall use their reasonable efforts to
cause the Effective Time to occur on a date designated by Parent which date
shall be within 45 days following the last to occur of (i) the effective date
of the last required Consent of any Regulatory Authority having authority over
and
<PAGE> 140
approving or exempting the Merger (taking into account any requisite waiting
period in respect thereof), (ii) the date on which the shareholders of Subject
Company approve the Acquisition Agreement, and (iii) the date on which all
other conditions precedent (other than those conditions which relate to actions
to be taken at the Closing) to the obligations of each of Subject Company,
Merger Subsidiary and Parent under the Agreement shall have been satisfied or
waived (to the extent waivable by such party).
6. SURVIVING CORPORATION - CORPORATE MATTERS. From and after the
Effective Time, until changed or amended in accordance with the Charter of
Incorporation and Bylaws of the Surviving Corporation, or otherwise in
accordance with law:
(a) Charter. The Charter (the "Charter") of Merger
Subsidiary in effect immediately prior to the Effective Time shall be the
Charter of the Surviving Corporation until otherwise amended or repealed.
(b) By-Laws. The By-laws of Merger Subsidiary (the
"By-Laws") in effect immediately prior to the Effective Time shall be the
By-Laws of the Surviving Corporation until otherwise amended or repealed.
(c) Directors and Officers. The directors of Merger
Subsidiary 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
Merger Subsidiary 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 the Effective Time in accordance
with the By-laws of the Surviving Corporation.
7. MANNER OF CONVERSION OF SHARES.
(a) Conversion of Shares. Subject to the provisions of
this Section 7, at the Effective Time, by virtue of the Merger and without any
action on the part of Parent, Merger Subsidiary, Subject Company, or the
shareholders of any of the foregoing, the shares of the constituent
corporations shall be converted as follows:
(i) Each share of Parent Capital Stock,
including any associated Parent Rights, issued and outstanding
immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(ii) Each share of Merger Subsidiary Common Stock
issued and outstanding immediately prior to the Effective Time shall
remain issued and outstanding and shall represent one share of the
Surviving Corporation from and after the Effective Time.
(iii) Except for Dissenting Shares, each share of
Subject Company Common Stock, including any associated or attached
Subject Company Rights, (excluding shares held by Subject Company, any
Subject Company Subsidiary, Parent or any Parent Subsidiary, 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 0.6 shares of Parent Common Stock
(subject to possible adjustment as set forth in Section 7(f) of this
Agreement, the "Exchange Ratio"). Pursuant to the Parent Rights
Agreement, each share of Parent Common Stock issued in connection with
the Merger upon conversion of Subject Company Common Stock shall be
accompanied by a Parent Right.
Dissenting Shares shall not be converted pursuant to Section 7(a)(iii) in the
Merger but, at and after the Effective Time, shall represent only the right to
receive payment in accordance with Subtitle 13 of the KBCA. If a holder of
Dissenting Shares becomes ineligible for payment under Subtitle 13 of the KBCA,
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<PAGE> 141
then such holder's Dissenting Shares shall cease to be Dissenting Shares and
shall be converted in the manner set forth in Section 7(a)(iii) effective as of
the Effective Time.
(b) Anti-Dilution Provisions. In the event Parent changes
the number of shares of Parent Common Stock issued and outstanding after the
date of this Agreement and 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.
(c) Shares Held by Subject Company or Parent. Each of the
shares of Subject Company Common Stock held by Subject Company, any Subject
Company Subsidiary, Parent or any Parent Subsidiary, in each case other than in
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.
(d) Fractional Shares. Notwithstanding any other provision
of this Agreement, each holder of shares of Subject Company Common Stock
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fractional share of Parent 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 share of Parent 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, any other authoritative source selected by Parent) 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.
(e) Conversion of Stock Options.
(i) At the Effective Time, each option to
purchase or other right with respect to shares of Subject Company
Common Stock pursuant to stock options, stock appreciation rights or
other rights, including stock awards, but excluding any Subject
Company Rights ("Subject Company Options") granted by Subject Company
under the Subject Company Stock Plans, which are outstanding at the
Effective Time, whether or not exercisable, shall be converted into
and become options with respect to Parent Common Stock, and Parent
shall assume each Subject Company Option, in accordance with the terms
of the applicable Subject Company Stock Plan and stock option or other
agreement by which it is evidenced, except that from and after the
Effective Time, (i) Parent and its Salary and Benefits Committee shall
be substituted for Subject Company and the committee of Subject
Company's Board of Directors (including, if applicable, the entire
Board of Directors of Subject Company) administering such Subject
Company Stock Plan, (ii) each Subject Company Option assumed by Parent
may be exercised solely for shares of Parent Common Stock (or cash in
the case of stock appreciation rights), (iii) the number of shares of
Parent Common Stock subject to such Subject Company Option shall be
equal to the number of shares of Subject Company Common Stock subject
to such Subject Company Option immediately prior to the Effective Time
multiplied by the Exchange Ratio and rounding to the nearest whole
share (rounding down with respect to any "incentive stock options"),
and (iv) the per share exercise price under each such Subject Company
Option shall be adjusted by dividing the per share exercise price
under each such Subject Company Option by the Exchange Ratio and
rounding to the nearest cent (rounding up with respect to any
"incentive stock options"). Notwithstanding clauses (iii) and (iv) of
the first sentence of this Section 7(e)(i), each Subject Company
Option that 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. Parent and Subject
Company agree to take all necessary steps to effectuate the foregoing
provisions of this Section 7(e).
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<PAGE> 142
(ii) As soon as practicable after the Effective
Time, Parent shall deliver to the participants in each Subject Company
Stock Plan an appropriate notice setting forth such participant's
rights pursuant thereto and the grants under such Subject Company
Stock Plan shall continue in effect on the same terms and conditions
(subject to the adjustments required by Section 7(e)(i) after giving
effect to the Merger including any acceleration of option vesting
resulting from the Merger), and Parent shall comply with the terms of
each Subject Company Stock Plan to ensure, subject to the provisions
of such Subject Company Stock Plan, that Subject Company Options that
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, Parent shall file a
registration statement on Form S-8 with respect to the shares of
Parent Common Stock subject to such options and shall use its
reasonable best 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.
(iii) All contractual restrictions or limitations
ON transfer with respect to Subject Company Common Stock awarded under
the Subject Company Stock Plans or any other plan, program, or
Contract of Subject Company or any of the Subject Company
Subsidiaries, to the extent that such restrictions or limitations
shall not have already lapsed (whether as a result of the Merger or
otherwise), and except as otherwise expressly provided in such plan,
program, or Contract, shall remain in full force and effect with
respect to shares of Parent Common Stock into which such restricted
stock is converted pursuant to Section 7(a) of this Agreement.
(f) Adjustment of Exchange Ratio. If the Board of
Directors of Subject Company provides written notice to Parent in accordance
with the Acquisition Agreement that Subject Company refuses to consummate the
Merger because, at any time during the ten-day period commencing two days after
the Determination Date, if either:
A. Both of the following conditions are
satisfied:
(1) the Average Closing Price shall be
less than the product of (i) 0.85 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 "Parent 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 0.10 from the quotient in
this clause (2)(ii) (such number being referred to herein as
the "Index Ratio"); or
B. The Average Closing Price shall be
less than the product obtained by multiplying 0.80 times the
Starting Price;
which notice shall specify which of the clauses A. or B. is applicable (or if
both would be applicable, which clause is being invoked); then during the
five-day period commencing with its receipt of such notice, Parent shall have
the option to elect to increase the Exchange Ratio as follows: During the
five-day period commencing with its receipt of such notice, Parent shall have
the option, in the case of a failure to satisfy the condition in clause A., to
elect to increase the Exchange Ratio to equal the lesser of (i) the quotient
obtained by dividing (1) the product of 0.85, 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 Parent Ratio. During the five-day
period commencing with its receipt of such notice, Parent shall have the
option, in the case of a failure to satisfy the condition in clause B., to
elect to increase the Exchange Ratio to the quotient obtained by dividing (i)
the product of 0.80, the Starting Price and the Exchange Ratio (as then in
effect), by (ii) the Average Closing Price. If Parent makes an election
contemplated by the preceding two sentences, within such five-day period, it
shall give prompt written notice to Subject Company of such election and the
revised Exchange Ratio, whereupon no termination shall have occurred pursuant
to this Section 7(f) and this Plan of Merger shall remain in effect in
accordance with its terms (except as the Exchange Ratio shall have
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<PAGE> 143
been so modified), and any references in this Plan of Merger to "Exchange
Ratio" shall thereafter be deemed to refer to the Exchange Ratio as adjusted
pursuant to this Section 7(f).
For purposes of this Section 7(f), the following terms shall
have the meanings indicated:
"Average Closing Price" shall mean the average of the daily
last sales prices of Parent 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 Parent) 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 Consent of the Board of
Governors of the Federal Reserve System shall be received (without regard to
any requisite waiting period thereof).
"Index Group" shall mean the 15 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
as of the Starting Date. In the event that any such company or companies are
removed from the Index Group as a result of any of the events described in the
preceding sentence, 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 15 bank
holding companies and the weights attributed to them are as follows:
5
<PAGE> 144
<TABLE>
<CAPTION>
Bank Holding Companies Weighting
- ------------------------------------------------- ---------------
<S> <C>
AmSouth Bancorporation 5.99%
BB&T Corporation 10.41
Crestar Financial Corporation 7.75
First American Corporation 3.94
First of America Bank Corporation 7.04
First Security Corporation 5.10
First Tennessee National Corporation 5.25
Firstar Corporation 7.55
Huntington Bancshares, Inc. 9.30
Marshall & Ilsley Corporation 7.40
Mercantile Bancorporation, Inc. 9.05
National Commerce Bancorp 2.11
Old Kent Financial Corporation 4.62
Regions Financial Corporation 7.30
SouthTrust Corporation 7.19
---------------
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
Parent 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
Parent) on the Starting Date.
If Parent or any company belonging to the Index Group
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 Parent shall be appropriately adjusted for the
purposes of applying this Section 7(f).
8. SURRENDER OF CERTIFICATES AND EXCHANGE OF SHARES.
(a) Exchange Procedures. Promptly after the Effective
Time, Parent and Subject Company shall cause the exchange agent selected by
Parent (the "Exchange Agent") to mail to the former shareholders of Subject
Company appropriate transmittal materials (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates theretofore
representing shares of Subject Company Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent). Subject Company
shall have the right to review and approve the transmittal materials. 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
Subject Company Common Stock (other than Dissenting Shares or shares to be
canceled pursuant to Section 7(c) 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 7(a) of this
Agreement, together with all undelivered dividends or distributions in respect
of such shares (without interest thereon) pursuant to Section 8(b) of this
Agreement. To the extent required by Section 7(d) of this Agreement, each
holder of shares of Subject Company 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
Parent Common Stock to which such holder may be otherwise entitled (without
interest). Parent shall not be obligated to deliver the consideration to which
any former holder of Subject Company Common Stock is entitled as a result of
the merger until such holder surrenders such holder's certificate or
certificates
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<PAGE> 145
representing the shares of Subject Company Common Stock for exchange as
provided in this Section 8(a). The certificate or certificates of Subject
Company Common Stock so surrendered shall be duly endorsed as the Exchange
Agent may require. Any other provision of this Agreement notwithstanding,
neither Parent nor the Exchange Agent shall be liable to a holder of Subject
Company Common Stock for any amounts paid or property delivered in good faith
to a public official pursuant to any applicable abandoned property Law.
(b) Rights of Former Subject Company Shareholders. At the
Effective Time, the stock transfer books of Subject Company shall be closed as
to holders of Subject Company Common Stock immediately prior to the Effective
Time and no transfer of Subject Company Common Stock by any such holder shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 8(a) of this Agreement, each certificate
theretofore representing shares of Subject Company Common Stock (other than
Dissenting Shares or shares to be canceled pursuant to Section 7(c) of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 7(a) and 7(d)
of this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligations 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 Subject Company in respect of such shares of Subject Company Common Stock in
accordance with the terms of the Acquisition Agreement and which remain unpaid
at the Effective Time. Whenever a dividend or other distribution is declared by
Parent on the Parent 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 Parent 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 Parent Common Stock as of any time
subsequent to the Effective Time shall be delivered to the holder of any
certificate representing shares of Subject Company Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 8(a) of this Agreement. However, upon
surrender of such Subject Company Common Stock certificate, both a Parent
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. In the event any Subject Company
Common Stock certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such certificate to
be lost, stolen or destroyed and, if reasonably required by Parent, the posting
by such person of a bond in such amount as Parent may reasonably direct as
indemnity against any claim that may be made against it with respect to such
certificate, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed certificate the shares of Parent Common Stock and cash in lieu of
fractional shares deliverable in respect thereof pursuant to this Agreement.
9. TAX REORGANIZATION. The Boards of Directors of Parent, Merger
Subsidiary and Subject Company have each approved, or will approve, the
Acquisition Agreement and this Plan of Merger as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
10. EFFECT OF MERGER. From and after the Effective Time:
(a) Subject Company shall, as provided in Chapter 271B of
the KBCA and the TBCA, be merged into and continued in Merger Subsidiary, which
at all times after the Effective Time shall be referred to as the "Surviving
Corporation" and the separate existence of Subject Company shall cease;
(b) The title to all real estate and other property owned
by each corporation party to the Merger shall be vested in the Surviving
Corporation without reversion or impairment;
(c) The Surviving Corporation shall have all liabilities
of each corporation which is a party to the Merger; and
(d) A proceeding pending against Subject Company may be
continued as if the Merger did not occur or the Surviving Corporation may be
substituted in the proceeding for Subject Company.
7
<PAGE> 146
11. AMENDMENT, TERMINATION. This Plan of Merger shall terminate
automatically, and be of no further effect, if the Acquisition Agreement is
terminated in accordance with its terms prior to the Effective Time. This Plan
of Merger may be amended by a subsequent writing signed by each of the parties
upon the approval of the Boards of Directors of each of the parties, whether
before or after shareholder approval of this Agreement has been obtained.
12. DEFINITIONS. Capitalized terms not otherwise defined in this
Plan of Merger shall have the following meanings:
"Affiliate" of a Person shall mean any other Person, directly
or indirectly through one or more intermediaries, controlling,
controlled by, or under common control with such Person.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person
pursuant to any Contract, Law, Order or Permit.
"Dissenting Shares" shall mean any shares of Subject Company
Common Stock with respect to which the record or beneficial holder has
properly perfected the holder's rights to dissent under Subtitle 13 of
Chapter 27IB of the KBCA.
"KBCA" shall mean the Kentucky Business Corporation Act.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Parent Capital Stock" shall mean, collectively, the Parent
Common Stock, the Parent Preferred Stock and any other class or series
of capital stock of Parent.
"Parent Common Stock" shall mean the $5.00 par value common
stock of Parent.
"Parent Preferred Stock" shall mean the no par value
preferred stock of Parent and shall include the (i) Series A Preferred
Stock and (ii) Series E 8% Cumulative, Convertible Preferred Stock, of
Parent ("Parent Series E Preferred Stock").
"Parent Rights" shall mean the preferred stock purchase
rights issued pursuant to the Parent Rights Agreement.
"Parent Rights Agreement" shall mean that certain Rights
Agreement, dated January 19, 1989, between Parent and UPNB, as Rights
Agent.
"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.
"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
the Comptroller of the Currency, the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation, the Department of Financial
Institutions of the Commonwealth of Kentucky, all state regulatory
agencies having jurisdiction over the Parties and their respective
Subsidiaries, the NYSE, the NASD, and the SEC.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, warrants, or other
binding obligations of any character whatsoever by which a Person is
or may be bound to issue additional shares of its capital stock or
other Rights, or securities or rights convertible into or exchangeable
for, shares of the capital stock of a Person.
8
<PAGE> 147
"Shareholders' Meeting" shall mean the meeting of the
shareholders of Subject Company to be held pursuant to Section 8.1 of
this Agreement, including any adjournment or adjournments thereof.
"Subject Company Common Stock" shall mean the common stock of
Subject Company.
"Subject Company Rights" shall mean the junior participating
preferred stock purchase rights issued pursuant to the Subject Company
Rights Agreement.
"Subject Company Rights Agreement" shall mean that certain
Rights Agreement, dated January 18, 1995, between Subject Company and
Boatman's Trust Company, as Rights Agent, as amended by the First
Amendment, dated October 20, 1997, between Subject Company and
Boatman's Trust Company, as Rights Agent, and by the Second Amendment,
dated November 17, 1997, between Subject Company and Registrar and
Trust Company, as successor trustee.
"Subject Company Stock Plans" shall mean the existing stock
option and other stock-ba- sed compensation plans of Subject Company.
"Surviving Corporation" shall mean Merger Subsidiary as the
surviving corporation resulting from the Merger.
"TBCA" shall mean the Tennessee Business Corporation Act.
IN WITNESS WHEREOF, each of the parties has caused this Plan
of Merger to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.
<TABLE>
<CAPTION>
ATTEST: PEOPLES FIRST CORPORATION
<S> <C>
By: /S/ EILEEN M. DUOBINIS-GRAY By: /S/ AUBREY W. LIPPERT
------------------------------- -------------------------------------------
Title: SECRETARY Title: CHAIRMAN, PRESIDENT AND CEO
----------------------------- ----------------------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /S/ E. JAMES HOUSE, JR. By: /S/ JACKSON W. MOORE
-------------------------------- -------------------------------------------
Jackson W. Moore
Title: CORPORATE SECRETARY Title: President & Chief Operating Officer
----------------------------- ----------------------------------------
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: /S/ LYNN L. LANIGAN By: /S/ JACKSON W. MOORE
-------------------------------- -------------------------------------------
Jackson W. Moore
Title: SECRETARY Title: President
----------------------------- ----------------------------------------
[CORPORATE SEAL]
</TABLE>
9
<PAGE> 148
APPENDIX C
KBW Letterhead
_________ , 1998
The Board of Directors
Peoples First Corporation
100 South Fourth Street
Paducah, KY 42002
Members of the Board:
You have requested our opinion as investment bankers as to the
fairness, from a financial point of view, to the stockholders of Peoples First
Corporation ("Peoples") of the exchange ratio in the proposed merger (the
"Merger") of which Peoples is to merged with and into Union Planters Holding
Corporation, a wholly owned subsidiary of Union Planters Corporation ("Union
Planters"), pursuant to the Agreement and Plan of Merger, dated as of November
17, 1997, between Peoples and Union Planters (the "Agreement"). Pursuant to the
terms of the Agreement, each outstanding share of common stock, without par
value, of Peoples (the "Common Shares") will be converted into 0.60 shares of
common stock, par value $5.00 per share, of Union Planters. In connection with
the Merger, the parties entered into an option agreement, dated November 17,
1997, (the "Option Agreement") pursuant to which Peoples granted to Union
Planters an option to acquire, under certain circumstances, a certain number of
outstanding common shares, all as set forth more fully in the Option Agreement.
Keefe, Bruyette & Woods, Inc., as part of its investment banking
business, is continually engaged in the valuation of bank and bank holding
company securities in connection with acquisitions, negotiated underwritings,
secondary distributions of listed and unlisted securities, private placements
and valuations for various other purposes. As specialists in the securities of
banking companies, we have experience in, and knowledge of, the valuation of
the banking enterprises. In the ordinary course of our business as a
broker-dealer, we may, from time to time purchase securities from, and sell
securities to, Peoples and Union Planters, and as a market maker in securities,
we may from time to time have a long or short position in, and buy or sell,
debt or equity securities of Peoples and Union Planters for our own account and
for the accounts of our customers. To the extent we have any such position as
of the date of this opinion it has been disclosed to Peoples. We have acted
exclusively for the Board of Directors of Peoples in rendering this fairness
opinion and will receive a fee from Peoples for our services.
In connection with this opinion, we have reviewed, analyzed and relied
upon material bearing upon the financial and operating condition of Peoples and
Union Planters and the Merger, including among other things, the following: (i)
the Agreement; (ii) the Plan of Merger; (iii) the Option Agreement; (iv) the
Registration Statement on Form S-4 (including the proxy statement/prospectus
for the special meeting of stockholders of Peoples to be held in connection
with the Merger) dated November 17, 1997; (v) the Annual Reports to
Stockholders and Annual Reports on Form 10-K for the three years ended December
31, 1996 of Peoples and Union Planters; (vi) certain interim reports to
stockholders and Quarterly Reports on Form 10-Q of Peoples and Union Planters
and certain other communications from Peoples and Union Planters to their
respective stockholders; and (vii) other financial information concerning the
businesses and operations of Peoples and Union Planters furnished to us by
Peoples and
<PAGE> 149
The Board of Directors
Peoples First Corporation
______________, 1998
Page 12 of 3
Union Planters for purposes of our analysis. We have also held discussions with
senior management of Peoples and Union Planters regarding the past and current
business operations, regulatory relations, financial condition and future
prospects of their respective companies and such other matters as we have
deemed relevant to our inquiry. In addition, we have compared certain financial
and stock market information for Peoples and Union Planters with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of certain recent business combinations in
the banking industry and performed such other studies and analyses as we
considered appropriate.
In conducting our review and arriving at our opinion, we have relied
upon the accuracy and completeness of all of the financial and other
information provided to us or publicly available and we have not assumed any
responsibility for independently verifying the accuracy or completeness of any
such information. We have relied upon the management of Peoples and Union
Planters as to the reasonableness and achievability of the financial and
operating forecasts and projections (and the assumptions and bases therefor)
provided to us, and we have assumed that such forecasts and projections reflect
the best currently available estimates and judgments of such managements and
that such forecasts and projections will be realized in the amounts and in the
time periods currently estimated by such managments. We are not experts in the
independent verification of the adequacy of allowances for loan and lease
losses and we have assumed, with your consent, that the aggregate allowances
for loan and lease losses for Peoples and Union Planters are adequate to cover
such losses. In rendering our opinion, we have not made or obtained any
evaluations or appraisals of the property of Peoples or Union Planters, nor
have we examined any individual credit files.
<PAGE> 150
The Board of Directors
Peoples First Corporation
__________, 1998
Page 13 of 3
We have considered such financial and other factors as we have deemed
appropriate under the circumstances, including, among others, the following:
(i) the historical and current financial position and results of operations of
Peoples and Union Planters; (ii) the assets and liabilities of Peoples and
Union Planters; and (iii) the nature and terms of certain other merger
transactions involving banks and bank holding companies. We have also taken
into account our assessment of general economic, market and financial
conditions and our experience in other transactions, as well as our experience
in securities valuation and knowledge of the banking industry generally. Our
opinion is necessarily based upon conditions as they exist and can be evaluated
on the date hereof and the information made available to us through the date
hereof.
Based upon and subject to the foregoing, it is our opinion that, as of
the date hereof, the exchange ratio in the Merger is fair, from a financial
point of view, to holders of the Common Shares.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
<PAGE> 151
___________, 1998
Board of Directors
Peoples First Corporation
100 South Fourth Street
Paducah, KY 42001
Members of the Board:
You have requested our opinion as to the fairness from a financial
point of view to the shareholders of Peoples First Corporation ("Peoples") of
the consideration to be paid by Union Planters Corporation ("UPC") pursuant to
the terms of the Agreement and Plan of Merger, dated as of Novem- ber 17, 1997
(the "Agreement") by and between Peoples and UPC. Pursuant to the Agreement,
the holder of each share of common stock of Peoples would be entitled to
receive 0.6 shares of common stock of UPC. For the purposes of our opinion, we
have assumed that the transaction will constitute a tax-free reorganization as
contemplated by the Agreement and the Merger will qualify as a pooling of
interests for accounting purposes. We have also assumed that no securities will
be issued under the option agreement being entered into between Peoples and
UPC.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of its
investment banking services, is regularly engaged in the independent valuation
of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. We
are familiar with Peoples and UPC and have completed our financial analysis of
this transaction.
In rendering our opinion, we have reviewed the Agreement as well as
financial and other information that was publicly available or furnished to us
by Peoples and UPC including information provided during Stifel's discussions
with their respective management. We have conducted conversations with Peoples'
senior management regarding recent developments and management's financial
projections for Peoples and UPC. In addition, we have spoken to members of
Peoples' management and UPC's management regarding factors which affect each
entity's business. We have also compared certain financial and securities data
(as appropriate) of Peoples and UPC with various other companies whose
securities are traded in public markets, reviewed the historical stock prices
and trading volumes of the common stock of Peoples and UPC, reviewed prices and
premiums paid in other business combinations and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes of
this opinion.
In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to us or that was otherwise reviewed by
us. With respect to the financial projections supplied to us, we have assumed
that they were reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the management of Peoples and UPC as to
the future operating and financial performance of Peoples and UPC and that they
provided a reasonable basis upon which we could form our opinion. We also
assumed that there were no material changes in the assets, liabilities,
financial condition, results of operations, business or prospects of either
Peoples or UPC since the date of the last financial statements made available
to us. We did not make or obtain any independent evaluation, appraisal or
physical inspection of Peoples' or UPC's assets or liabilities nor did we
review loan files of Peoples or UPC. We relied on advice of counsel to Peoples
as to all legal matters with respect to Peoples, the Agreement and the
transactions and other matters contained or contemplated therein.
Our opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on the information made available to us
as of, the date of this letter. Our opinion is directed to the Board of
Directors of Peoples and does not constitute a recommendation to any share-
<PAGE> 152
Board of Directors - Peoples First Corporation
Page 15
holder as to how such shareholder should vote on the proposed transaction, nor
have we expressed any opinion as to the prices at which any securities of
Peoples or UPC might trade in the future. Except as required by applicable law,
including without limitation federal securities laws, our opinion may not be
published or otherwise used or referred to, nor shall any public reference to
Stifel be made, without our prior consent.
Based upon the foregoing and such other factors as we deem relevant,
we are of the opinion, as of the date hereof, that the consideration to be paid
to the shareholders of Peoples pursuant to the Agreement is fair to the
shareholders of Peoples from a financial point of view.
Very truly yours,
STIFEL, NICOLAUS & COMPANY, INCORPORATED
<PAGE> 153
APPENDIX D
SUBTITLE 13. DISSENTERS' RIGHTS
RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
271B.13-010. DEFINITIONS. As used in this subtitle:
(1) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under KRS 271B.13-020 and who exercises that
right when and in the manner required by KRS 271B.13- 200 to 271B.13-280.
(3) "Fair Value," with respect to a dissenter's shares, means
the value of the shares immediately before the effectuation of the corporate
action to which the dissenter objects, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion would be
inequitable. In any transaction subject to the requirements of KRS 271B.12-210
or exempted by KRS 271B.12- 220(2), "fair value" shall be at least an amount
required to be paid under KRS 271B.12-220(2) in order to be exempt from the
requirements of KRS 271B.12-210.
(4) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate currently paid
by the corporation on its principal bank loans or, if none, at a rate that is
fair and equitable under all the circumstances.
(5) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the beneficial owner
of shares to the extent of the rights granted by a nominee certificate on file
with a corporation.
(6) "Beneficial shareholder" means the person who is a
beneficial owner of shares held in a voting trust or by a nominee as the record
shareholder.
(7) "Shareholder" means the record shareholder or the
beneficial shareholder. (Enact. Acts 1988, ch. 23, ss.123, effective January 1,
1989.)
271B.13-020. RIGHT TO DISSENT. (1) A shareholder shall be
entitled to dissent from, and obtain payment of the fair value of his shares in
the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation
is a party:
1. If shareholder approval is required for the merger by KRS
271B.11-030 or the articles of incorporation and the shareholder is entitled to
vote on the merger; or
2. If the corporation is a subsidiary that is merged with its
parent under KRS 271B.11-040;
(b) Consummation of a plan of share exchange to which the
corporation is a party as the corporation whose shares will be acquired, if the
shareholder is entitled to vote on the plan;
(c) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation other than in the usual
and regular course of business, if the shareholder is entitled to vote on the
sale or exchange, including a sale in dissolution, but not including a sale
pursuant to court order or a sale for cash pursuant to a plan by which all or
substantially all of the net proceeds of the sale will be distributed to the
shareholders within one (1) year after the date of sale;
(d) An amendment of the articles of incorporation that
materially and adversely affects rights in respect of a dissenter's shares
because it:
1. Alters or abolishes a preferential right of the shares to a
distribution or in dissolution;
<PAGE> 154
2. Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
3. Excludes or limits the right of the shares to vote on any matter
other than a limitation by dilution through issuance of shares or other
securities with similar voting rights; or
4. Reduces the number of shares owned by the shareholder to a fraction
of a share if the fractional share so created is to be acquired for cash under
KRS 271B.6-040;
(e) Any transaction subject to the requirements of KRS
271B.12-210 or exempted by KRS 271B.12-220(2); or
(f) Any corporate action taken pursuant to a shareholder vote
to the extent the articles of incorporation, bylaws, or a resolution of the
board of directors provides that voting or nonvoting shareholders are entitled
to dissent and obtain payment for their shares.
(2) A shareholder entitled to dissent and obtain payment for
his shares under this chapter shall not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation. (Enact. Acts 1988, ch. 23, ss.124, effective
January 1, 1989.)
271B.13-030. DISSENT BY NOMINEE AND BENEFICIAL OWNERS. (1) A
record shareholder may assert dissenters' rights as to fewer than all the
shares registered in his name only if he shall dissent with respect to all
shares beneficially owned by any one (1) person and notify the corporation in
writing of the name and address of each person on whose behalf he asserts
dissenters' rights. The rights of a partial dissenter under this subsection
shall be determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as
to shares held on his behalf only if:
(a) He submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(b) He does so with respect to all shares of which he is the
beneficial shareholder or over which he has power to direct the vote. (Enact.
Acts 1988, ch. 23, ss.125, effective January 1, 1989.)
PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
271B.13-200. NOTICE OF DISSENTERS' RIGHTS. (1) If proposed
corporate action creating dissenters' rights under KRS 271B.13-020 is submitted
to a vote at a shareholders' meeting, the meeting notice must state that
shareholders are or may be entitled to assert dissenters' rights under this
subtitle and the corporation shall undertake to provide a copy of this subtitle
to any shareholder entitled to vote at the shareholders' meeting upon request
of that shareholder.
(2) If corporate action creating dissenters' rights under KRS
271B.13-020 is taken without a vote of shareholders, the corporation shall
notify in writing all shareholders entitled to assert dissenters' rights that
the action was taken and send them the dissenters' notice described in KRS
271B.13-220. (Enact. Acts 1988, ch. 23, ss.126, effective January 1, 1989.)
271B.13-210. NOTICE OF INTENT TO DEMAND PAYMENT. (1) If
proposed corporate action creating dissenters' rights under KRS 271B.13-020 is
submitted to a vote at a shareholders' meeting, a shareholder who wishes to
assert dissenters' rights:
<PAGE> 155
(a) Shall deliver to the corporation before the vote is taken
written notice of his intent to demand payment for his shares if the proposed
action is effectuated; and
(b) Shall not vote his shares in favor of the proposed
action.
(2) A shareholder who does not satisfy the requirements of
subsection (1) of this section shall not be entitled to payment for his shares
under this chapter. (Enact. Acts 1988, ch. 23, ss.127, effective January 1,
1989.)
271B.13-220. DISSENTERS' NOTICE. (1) If proposed corporate
action creating dissenters' rights under KRS 271B.13-020 is authorized at a
shareholders' meeting, the corporation shall deliver a written dissenters'
notice to all shareholders who satisfied the requirements of KRS 271B.13-210.
(2) The dissenters' notice shall be sent no later than ten
(10) days after the date the proposed corporate action was authorized by the
shareholders, or, if no shareholder authorization was obtained, by the board of
directors, and shall:
(a) State where the payment demand must be sent and where and
when certificates for certificated shares must be deposited;
(b) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment demand is received;
(c) Supply a form for demanding payment that includes the
date of the first announcement to news media or to shareholders of the terms of
the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership of
the shares before that date;
(d) Set a date by which the corporation must receive the
payment demand, which date may not be fewer than thirty (30), nor more than
sixty (60) days after the date the notice provided in subsection (1) of this
section is delivered; and
(e) Be accompanied by a copy of this subtitle. (Enact. Acts
1988, ch. 23, ss.128, effective January 1, 1989.)
271B.13-230. DUTY TO DEMAND PAYMENT. (1) A shareholder who is
sent a dissenters' notice described in KRS 271B.13-220 shall demand payment,
certify whether he acquired beneficial ownership of the shares before the date
required to be set forth in the dissenters' notice pursuant to subsection
(2)(c) of KRS 271B.13-220, and deposit his certificates in accordance with the
terms of the notice.
(2) The shareholder who demands payment and deposits his
share certificates under subsection (1) of this section shall retain all other
rights of a shareholder until these rights are cancelled or modified by the
taking of the proposed corporate action.
(3) A shareholder who does not demand payment or deposit his
share certificates where required, each by the date set in the dissenters'
notice, shall not be entitled to payment for his shares under this subtitle.
(Enact. Acts 1988, ch. 23, ss.129, effective January 1, 1989.)
271B.13-240. SHARE RESTRICTIONS. (1) The corporation may
restrict the transfer of uncertificated shares from the date the demand for
their payment is received until the proposed corporate action is taken or the
restrictions released under KRS 271B.13-260.
<PAGE> 156
(2) The person for whom dissenters' right are asserted as to
uncertificated shares shall retain all other rights of a shareholder until
these rights are cancelled or modified by the taking of the proposed corporate
action. (Enact. Acts 1988, ch. 23, ss.130, effective January 1, 1989.)
271B.13-250. PAYMENT. (1) Except as provided in KRS
271B.13-270, as soon as the proposed corporate action is taken, or upon receipt
of a payment demand, the corporation shall pay each dissenter who complied with
KRS 271B.13-230 the amount the corporation estimates to be the fair value of
his shares, plus accrued interest.
(2) The payment shall be accompanied by:
(a) The corporation's balance sheet as of the end of a fiscal
year ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders' equity
for that year, and the latest available interim financial statements, if any;
(b) A statement of the corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated; and
(d) A statement of the dissenter's right to demand payment
under KRS 271B.13-280. (Enact. Acts 1988, ch. 23, ss.131, effective January 1,
1989.)
271B.13-260. FAILURE TO TAKE ACTION. (1) If the corporation
does not take the proposed action within sixty (60) days after the date set for
demanding payment and depositing share certificates, the corporation shall
return the deposited certificates and release the transfer restrictions imposed
on uncertificated shares.
(2) If after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action, it shall send
a new dissenters' notice under KRS 271B.13-220 and repeat the payment demand
procedure. (Enact. Acts 1988, ch. 23, ss.132, effective January 1, 1989.)
271B.13-270. AFTER-ACQUIRED SHARES. (1) A corporation may
elect to withhold payment required by KRS 271B.13-250 from a dissenter unless
he was the beneficial owner of the shares before the date set forth in the
dissenters' notice as the date of the first announcement to news media or to
shareholders of the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment
under subsection (1) of this section, after taking the proposed corporate
action, it shall estimate the fair value of the shares, plus accrued interest,
and shall pay this amount to each dissenter who agrees to accept it in full
satisfaction of his demand. The corporation shall send with its offer a
statement of its estimate of the fair value of the shares, an explanation of
how the interest was calculated, and a statement of the dissenter's right to
demand payment under KRS 271B.13-280. (Enact. Acts 1988, ch. 23, ss.133,
effective January 1, 1989.)
271B.13-280. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH
PAYMENT OR OFFER. (1) A dissenter may notify the corporation in writing of his
own estimate of the fair value of his shares and amount of interest due, and
demand payment of his estimate (less any payment under KRS 271B.13- 250), or
reject the corporation's offer under KRS 271B.13-270 and demand payment of the
fair value of his shares and interest due, if:
(a) The dissenter believes that the amount paid under KRS
271B.13-250 or offered under KRS 271B.13-270 is less than the fair value of his
shares or that the interest due is incorrectly calculated;
<PAGE> 157
(b) The corporation fails to make payment under KRS
271B.13-250 within sixty (60) days after the date set for demanding payment; or
(c) The corporation, having failed to take the proposed
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within sixty (60) days after the
date set for demanding payment.
(2) A dissenter waives his right to demand payment under this
section unless he shall notify the corporation of his demand in writing under
subsection (1) of this section within thirty (30) days after the corporation
made or offered payment for his shares. (Enact. Acts 1988, ch. 23, ss. 134,
effective January 1, 1989.)
JUDICIAL APPRAISAL OF SHARES
271B.13-300 COURT ACTION. (1) If a demand for payment under
KRS 271B.13-280 remains unsettled, the corporation shall commence a proceeding
within sixty (60) days after receiving the payment demand and petition the
court to determine the fair value of the shares and accrued interest. If the
corporation does not commence the proceeding within the sixty (60) day period,
it shall pay each dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the
circuit court of the county where a corporation's principal office (or, if none
in this state, its registered office) is located. If the corporation is a
foreign corporation without a registered office in this state, it shall
commence the proceeding in the county in this state where the registered office
of the domestic corporation merged with or whose shares were acquired by the
foreign corporation was located.
(3) The corporation shall make all dissenters (whether or not
residents of this state) whose demands remain unsettled parties to the
proceeding as in an action against their shares and all parties shall be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(4) The jurisdiction of the court in which the proceeding is
commenced under subsection (2) of this section shall be plenary and exclusive.
The court may appoint one (1) or more persons as appraisers to receive evidence
and recommend decision on the question of fair value. The appraisers have the
powers described in the order appointing them, or in any amendment to it. The
dissenters shall be entitled to the same discovery rights as parties in other
civil proceedings.
(5) Each dissenter made a party to the proceeding shall be
entitled to judgment:
(a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the corporation;
or
(b) For the fair value, plus accrued interest, of his
after-acquired shares for which the corporation elected to withhold payment
under KRS 271B.13-270. (Enact. Acts 1988, ch. 23, ss.135, effective January 1,
1989.)
271B.13-310. COURT COSTS AND COUNSEL FEES. (1) The court in
an appraisal proceeding commenced under KRS 271B.13-300 shall determine all
costs of the proceeding, including the reasonable compensation and expenses of
appraisers appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously, or not in good faith in
demanding payment under KRS 271B.13-280.
<PAGE> 158
(2) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in amounts the court finds
equitable:
(a) Against the corporation and in favor of any or all
dissenters, if the court finds the corporation did not substantially comply
with the requirements of KRS 271B.13-200 to 271B.13-280; or
(b) Against either the corporation or a dissenter, in favor
of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this subtitle.
(3) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the
corporation, the court may award to these counsel reasonable fees to be paid
out of the amounts awarded the dissenters who were benefited. (Enact. Acts
1988, ch. 23, ss.136, effective January 1, 1989.)
<PAGE> 159
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 ordinary
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.
<PAGE> 160
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 Merger, dated as of November 17, 1997, by and
among Union Planters Corporation, Union Planters Holding Corporation
and Peoples First Corporation. (Incorporated by reference to Exhibit
2.1 to the Current Report on Form 8-K of UPC dated November 17, 1998
(File No. 0-6919).)
2.2 Plan of Merger of Peoples First Corporation into and with Union
Planters Holding Corporation. (Included as Appendix B to the Proxy
Statement included as part of this Registration Statement.)
2.3 Stock Option Agreement, dated as of November 17, 1997, by and among
Peoples First Corporation, Union Planters Holding Corporation and
Union Planters Corporation. (Incorporated by reference to Exhibit 2.2
to the Current Report on Form 8-K of UPC, dated November 17, 1997.)
2.4 Amendment, dated April 8, 1998, to Agreement and Plan of Merger,
dated as of November 17, 1997, by and among Union Planters
Corporation, Union Planters Holding Corporation and Peoples First
Corporation.
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 for
the fiscal year ended 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 for the fiscal year ended 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 Wyatt, Tarrant & Combs as to federal income tax consequences.
8.2 Opinion of Brown, Todd & Heyburn PLLC as to federal income tax consequences.
23.1 Consent of Price Waterhouse LLP, independent accountants for Union Planters Corporation.
23.2 Consent of KPMG Peat Marwick LLP, independent auditors for Peoples First Corporation.
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 Wyatt, Tarrant & Combs (included in Exhibit 8.1).
23.5 Consent of Brown, Todd & Heyburn, PLLC (included in Exhibit 8.2).
23.6 Consent of Keefe, Bruyette & Woods, Inc. (to be filed by amendment).
23.7 Consent of Stifel Nicolaus & Company, Inc.
24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of proxy of Peoples First Corporation.
</TABLE>
<PAGE> 161
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
<PAGE> 162
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.
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Memphis,
State of Tennessee on this the 19th day of February, 1998.
REGISTRANT
UNION PLANTERS CORPORATION
By: /s/ BENJAMIN W. RAWLINS, JR.
------------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and
Chief Executive Officer
We, the undersigned directors and officers of Union Planters
Corporation do hereby constitute and appoint E. James House, Jr. and M. Kirk
Walters, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for us and in our name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, and we do hereby ratify and confirm all that said attorneys-in-fact
and agents, or their substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this registration statement has been signed below by the following
persons in the capacities and at the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- -----
<S> <C> <C>
/s/ BENJAMIN W. RAWLINS, JR. Chairman of the Board, Chief Executive February 19, 1998
- ------------------------------ Officer, Director (Principal Executive Officer)
Benjamin W. Rawlins, Jr.
/s/ JACKSON W. MOORE President, Chief Operating Officer, February 19, 1998
- ------------------------------ Director
Jackson W. Moore
/s/ JOHN W. PARKER Executive Vice President and Chief Financial February 19, 1998
- ------------------------------ Officer (Principal Financial Officer)
John W. Parker
</TABLE>
<PAGE> 164
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ M. KIRK WALTERS Senior Vice President, Treasurer, and February 19, 1998
- ------------------------------ Chief Accounting Officer
M. Kirk Walters
/s/ EDGAR H. BAILEY Vice Chairman of the Board and Director February 19, 1998
- ------------------------------
Edgar H. Bailey
/s/ ALBERT M. AUSTIN Director February 19, 1998
- ------------------------------
Albert M. Austin
/s/ MARVIN E. BRUCE Director February 19, 1998
- ------------------------------
Marvin E. Bruce
/s/ GEORGE W. BRYAN Director February 19, 1998
- ------------------------------
George W. Bryan
/s/ JAMES E. HARWOOD Director February 19, 1998
- ------------------------------
James E. Harwood
/s/ PARNELL S. LEWIS, JR. Director February 19, 1998
- ------------------------------
Parnell S. Lewis, Jr.
/s/ C.J. LOWRANCE, III Director February 19, 1998
- ------------------------------
C.J. Lowrance, III
/s/ STANLEY D. OVERTON Director February 19, 1998
- ------------------------------
Stanley D. Overton
/s/ DR. V. LANE RAWLINS Director February 19, 1998
- ------------------------------
Dr. V. Lane Rawlins
</TABLE>
<PAGE> 165
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ DONALD F. SCHUPPE Director February 19, 1998
- ------------------------------
Donald F. Schuppe
/s/ MIKE P. STURDIVANT Director February 19, 1998
- ------------------------------
Mike P. Sturdivant
/s/ DAVID M. THOMAS Director February 19, 1998
- ------------------------------
David M. Thomas
Director
- ------------------------------
Richard A. Trippeer, Jr.
Director
- ------------------------------
Spence L. Wilson
</TABLE>
<PAGE> 166
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of November 17,
1997, by and among Union Planters Corporation, Union
Planters Holding Corporation and Peoples First Corpora-
tion. (Incorporated by reference to Exhibit 2.1 to the
Current Report on Form 8-K of UPC dated November 17, 1998
(File No. 0-6919).)
2.2 Plan of Merger of Peoples First Corporation into and with
Union Planters Holding Corporation. (Included as
Appendix B to the Proxy Statement included as part of
this Registration Statement.)
2.3 Stock Option Agreement, dated as of November 17, 1997, by
and among Peoples First Corporation, Union Planters
Holding Corporation and Union Planters Corporation.
(Incorporated by reference to Exhibit 2.2 to the Current
Report on Form 8-K of UPC, dated November 17, 1997.)
2.4 Amendment, dated April 8, 1998, to Agreement and Plan of
Merger, dated as of November 17, 1997, by and among Union
Planters Corporation, Union Planters Holding Corporation
and Peoples First Corporation.
4.1 Restated Charter of Union Planters Corporation. (Incor-
porated by reference to Exhibit 3(a) to the Annual Report
on Form 10-K of UPC for the fiscal year ended December
31, 1996.)
4.2 Amended and Restated Bylaws of Union Planters Corpora-
tion. (Incorporated by reference to Exhibit 3(d) to the
Annual Report on Form 10-K of UPC for the fiscal year
ended 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 Wyatt, Tarrant & Combs as to federal income
tax consequences.
8.2 Opinion of Brown, Todd & Heyburn PLLC as to federal
income tax consequences.
23.1 Consent of Price Waterhouse LLP, independent accountants for
Union Planters Corporation.
23.2 Consent of KPMG Peat Marwick LLP, independent auditors for
Peoples First Corporation.
</TABLE>
<PAGE> 167
<TABLE>
<S> <C>
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 Wyatt, Tarrant & Combs (included in Exhibit
8.1).
23.5 Consent of Brown, Todd & Heyburn, PLLC (included in
Exhibit 8.2).
23.6 Consent of Keefe, Bruyette & Woods, Inc. (to be filed by
amendment).
23.7 Consent of Stifel Nicolaus & Company, Inc.
24.1 Power of Attorney (contained on the signature page
hereof).
99.1 Form of proxy of Peoples First Corporation.
</TABLE>
<PAGE> 1
EXHIBIT 2.4
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT (this "Amendment"), dated April 8, 1998, amends
the AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated November 17, 1997, by
and between Peoples First Corporation, a Kentucky corporation having its
principal office located in Paducah, Kentucky ("Subject Company"), Union
Planters Holding Corporation, a Tennessee corporation having its principal
office located in Memphis, Tennessee ("Merger Subsidiary"), and joined in by
Union Planters Corporation, a Tennessee corporation having its principal office
located in Memphis, Tennessee ("Parent").
PREAMBLE
Subject Company, Merger Subsidiary and Parent mutually desire
to amend the Agreement, as provided below.
Capitalized terms used in this Amendment without definition
have the meanings given them in the Agreement.
NOW, THEREFORE, in consideration of the above, the parties
agree as follows:
AMENDMENT OF SECTION 5.3. Section 5.3 of the Agreement is amended to
read in its entirety as follows:
5.3 Capital Stock.
1. The authorized capital stock of Subject Company
consists of: 30,000,000 shares of Subject Company Common Stock, of
which 10,007,118 shares are issued and outstanding as of the date of
this Agreement (exclusive of treasury shares) and not more than
10,574,625 shares will be issued and outstanding at the Effective Time
(exclusive of shares issued or issuable pursuant to the Stock Option
Agreement); and 6,000,000 shares of preferred stock, of which no shares
are issued and outstanding. All of the issued and outstanding shares of
capital stock of Subject Company are duly and validly issued and
outstanding and are fully paid and nonassessable under the KBCA. None
of the outstanding shares of capital stock of Subject Company has been
issued in violation of any preemptive rights of the current or past
shareholders of Subject Company. As of the date of this Agreement,
Subject Company has 150,671 shares of Subject Company Common Stock
available for grant under the Subject Company Stock Plans, and there
are options to purchase not more than 567,507 shares of Subject Company
Common Stock outstanding.
2. 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 Subject Company
outstanding and no outstanding
<PAGE> 2
Rights relating to the capital stock of Subject Company other than the
Subject Company Rights.
REAFFIRMATION OF OTHER TERMS AND CONDITIONS. Except as modified by this
Amendment, all other terms and conditions of the Agreement, as in effect prior
to the execution of this Amendment, shall remain in full force and effect and
the same are hereby reaffirmed and ratified as if fully set forth herein.
IN WITNESS WHEREOF, each of the Parties has caused this
Amendment 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: PEOPLES FIRST CORPORATION
By: /s/ Eileen M. Duobinis-Gray By: /s/ Aubry W. Uppert
---------------------------- --------------------------------
Title: Secretary Title: Chairman of the Board, President
------------------------- & Chief Executive Officer
--------------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
---------------------------- -----------------------------------
Title: Corporate Secretary Jackson W. Moore
---------------------------- Title: President & Chief
Operating Officer
-----------------------------------
[CORPORATE SEAL]
ATTEST: UNION PLANTERS HOLDING CORPORATION
By: /s/ E. James House, Jr. By: /s/ Jackson W. Moore
---------------------------- -------------------------------
Title: Secretary Jackson W. Moore
---------------------------- Title: President
------------------------------
[CORPORATE SEAL]
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Union Planters Corporation]
April 8, 1998
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 6,364,897 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
6,364,897 shares of UPC's Common Stock, $5.00 par value per share, ("UPC Common
Stock") which may be issued by UPC pursuant to an Agreement and Plan of Merger
dated as of November 17, 1997, by and between UPC, Union Planters Holding
Corporation, Inc., and Peoples First Corporation ("PFC") (the "Agreement").
For purposes of rendering the opinion expressed herein, the
undersigned has examined UPC's corporate charter and all amendments thereto;
UPC's by-laws and amendments thereto; the Reorganization Agreement and such of
UPC's corporate records as the undersigned has deemed necessary and material to
rendering the undersigned's opinion. The undersigned has relied upon
certificates of public officials and representations of UPC officials, and has
assumed that all documents examined by the undersigned as originals are
authentic, that all documents submitted to the undersigned as photocopies are
exact duplicates of original documents, and that all signatures on all documents
are genuine.
Further, the undersigned is familiar with and has supervised
all corporate action taken in connection with the authorization of the issuance
and offering of the subject securities.
Based upon and subject to the foregoing and subsequent
assumptions, qualifications and exceptions, it is the undersigned's opinion
that:
1. UPC is a duly organized and validly existing corporation in
good standing under the laws of the State of Tennessee and has all requisite
power and authority to issue, sell and deliver the subject securities, and to
carry on its business and own its property; and
<PAGE> 2
2. The shares of UPC Common Stock to be issued by UPC pursuant
to the Merger will be duly authorized and when issued by UPC in accordance
therewith, such shares of UPC Common Stock will be fully paid and nonassessable.
The opinion expressed above is limited by the following
assumptions qualifications and exceptions:
(a) The undersigned is licensed to practice law only in the
State of Tennessee and expressed 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 "Legal Opinions" in the
Prospectus constituting part of the Registration Statement and to the filing of
this opinion with the Securities and Exchange Commission as well as all state
regulatory bodies and jurisdictions where qualification is sought for the sale
of the subject securities.
The undersigned is an officer of, and receives compensation
from UPC and therefore, is not independent from UPC.
Yours very truly,
UNION PLANTERS CORPORATION
By: /s/ E. JAMES HOUSE, JR.
---------------------------------
E. James House, Jr.
Manager, Legal Division
<PAGE> 1
EXHIBIT 8.1
[WYATT, TARRANT & COMBS LETTERHEAD]
April 8, 1998
Board of Directors
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Gentlemen:
We have acted as counsel to Union Planters Corporation, a Tennessee
corporation ("UPC"), in connection with (i) the proposed merger (the "Merger")
of Peoples First Corporation, a Kentucky corporation ("PFC"), with and into
Union Planters Holding Corporation, a Tennessee corporation and a wholly-owned
subsidiary of UPC ("Holdings"), pursuant to the terms of the Agreement and Plan
of Merger by and between UPC, Holdings and PFC dated November 17, 1997 (the
"Merger Agreement") and related Plan of Merger between UPC, Holdings and PFC
(collectively, the "Plan of Reorganization"), and (ii) the filing of the
registration statement by UPC on Form S-4 (together with all amendments and
exhibits thereto through the date hereof, the "Registration Statement"), under
the Securities Act of 1933, as amended (the "Act"), covering the shares of UPC
Common Stock to be issued pursuant to the Plan of Reorganization. Capitalized
terms used but not defined herein shall have the meanings assigned to them in
the Registration Statement.
In rendering this opinion we have examined such documents as we have
deemed relevant or necessary, including without limitation, the Plan of
Reorganization and the Registration Statement. In our examination, we have
assumed the genuineness of all signatures, the due execution and delivery of all
documents, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or copies, and the
authenticity of the originals of such copies.
<PAGE> 2
WYATT, TARRANT & COMBS
Board of Directors
Union Planters Corporation
April 8, 1998
Page 2.
As to factual matters, in rendering this opinion, we have relied solely
on and have assumed the present and continuing truth and accuracy of (i) the
description of the facts relating to the Merger contained in the Plan of
Reorganization and Registration Statement, (ii) the factual representations and
warranties contained in the Plan of Reorganization and Registration Statement
and related documents and agreements, and (iii) the factual matters addressed by
representations from certain executive officers of UPC, Holdings and PFC
contained in letters to us dated April 8, 1998 and April 7, 1998 (the
"Representation Letters"). The Representation Letters address various factual
matters relevant to the qualification of the Merger as a tax-deferred
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). The initial and continuing truth and accuracy of all such
factual matters constitutes an integral basis for, and a material condition to,
this opinion.
The scope of this opinion is limited strictly to the matters set forth
below and no other opinion may be implied or inferred beyond such matters.
Without limiting the foregoing sentence, we express no opinion as to (i) any of
the local, state, foreign or other federal tax consequences resulting from the
Merger, (ii) the federal income tax consequences to shareholders of PFC subject
to special rules under the Code, such as foreign persons, tax-exempt
organizations, insurance companies, financial institutions, dealers in stocks
and securities, and persons who do not own such stock as a capital asset, (iii)
the federal income tax consequences affecting shares of PFC Common Stock
acquired upon exercise of stock options, stock purchase plan rights or otherwise
as compensation; (iv) the tax consequences to holders of warrants, options or
other rights to acquire shares of PFC Common Stock; (v) the tax consequences of
the parties to the Merger Agreement of the inclusion in income of the amount of
the bad-debt reserve maintained by PFC and/or its subsidiaries and any other
amounts resulting from any required change in accounting methods; and (vi) the
tax consequences of the parties to the Merger Agreement of any income and
deferred gain recognized pursuant to Treasury Regulations issued under Section
1502 of the Code.
Subject to the qualifications, assumptions and conditions provided
herein, we are of the opinion that:
1. The acquisition by Holdings of substantially all of the assets of
PFC in exchange for shares of UPC Common Stock and the assumption of liabilities
of PFC pursuant to the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code.
<PAGE> 3
WYATT, TARRANT & COMBS
Board of Directors
Union Planters Corporation
April 8, 1998
Page 3.
2. PFC, UPC and Holdings will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code.
3. No gain or loss will be recognized by PFC as a result of the Merger.
4. No gain or loss will be recognized by Holdings or UPC as a result of
the Merger.
5. No gain or loss will be recognized by the shareholders of PFC as a
result of the exchange of PFC Common Stock for UPC Common Stock pursuant to the
Merger, except that a gain or loss will be recognized on the receipt of any cash
in lieu of a fractional share. Assuming that the PFC Common Stock is a capital
asset in the hands of the respective PFC shareholders, any gain or loss
recognized as a result of the receipt of cash in lieu of a fractional share will
be a capital gain or loss equal to the difference between the cash received and
that portion of the holder's tax basis in the PFC Common Stock allocable to the
fractional share.
6. The tax basis of UPC Common Stock to be received by the shareholders
of PFC will be the same as the tax basis of the PFC Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
7. The holding period of the UPC Common Stock to be received by
shareholders of PFC will include the holding period of the PFC Common Stock
surrendered in exchange therefor, provided the PFC shares were held as a capital
asset by the shareholders of PFC on the date of the exchange.
8. A shareholder of PFC who perfects his dissenter's rights and who
receives payment of the fair market value of his shares of PFC Common Stock will
be treated as having received such payment in redemption of such stock. Such
redemption will be subject to the conditions and limitations of Section 302 of
the Code.
This opinion is based on the Code, the Treasury Regulations promulgated
thereunder, judicial decisions and administrative pronouncements of the Internal
Revenue Service ("IRS"), all existing and in effect on the date of this opinion
and all of which are subject to change at any time, possibly retroactively. Any
such change could materially alter the conclusions reached in this opinion. We
undertake no obligation to you or any other person to give notice of any such
change. As noted above, this opinion is limited strictly to the matters
expressly stated herein and no other opinion may be implied or inferred beyond
such matters. You
<PAGE> 4
WYATT, TARRANT & COMBS
Board of Directors
Union Planters Corporation
April 8, 1998
Page 4.
should realize that this opinion is not binding on the IRS or the courts.
This opinion is provided to you solely for purposes of complying with
the requirements of Item 21(a) of Form S-4 under the Act and Section 9.1(g) of
the Merger Agreement. We hereby consent to the use of this opinion as an exhibit
to the Registration Statement, to the disclosure and summarization of the
opinion in the Registration Statement, including in the proxy
statement/prospectus included therein, and to the reference to this Firm in the
Registration Statement under the caption "Legal Matters." In giving this consent
we do not thereby admit that we come within the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Securities and Exchange Commission promulgated thereunder. Without our prior
written consent, this opinion may not otherwise be quoted or referred to in
whole or in part in any report or document or furnished to any other person or
entity other than your counsel, your accountants or your employees, except in
response to a valid subpoena or other lawful process.
Very truly yours,
/s/ WYATT, TARRANT & COMBS
WYATT, TARRANT & COMBS
<PAGE> 1
EXHIBIT 8.2
[BROWN, TODD & HEYBURN PLLC LETTERHEAD]
April 8, 1998
Peoples First Corporation
100 South 4th Street
P.O. Box 2200
Paducah, Kentucky 42002-2200
Re: Certain Federal Income Tax Matters
Ladies and Gentlemen:
You requested our opinion regarding certain federal income tax
consequences of the merger (the "Merger") of Peoples First Corporation ("PFC"),
a Kentucky corporation, into Union Planters Holding Corporation ("Union
Planters"), a Tennessee corporation, which is a wholly-owned subsidiary of Union
Planters Corporation ("Parent"), a Tennessee corporation. All capitalized terms
used and not otherwise defined herein shall have the meanings ascribed to such
terms in the Agreement and Plan of Merger among PFC, Union Planters, and Parent
dated as of November 17, 1997 (the "Agreement").
Description of the Merger
PFC is a bank holding company under the Bank Holding Company Act of
1956, as amended, and is a corporation incorporated under the laws of the
Commonwealth of Kentucky. PFC conducts a complete range of commercial and
personal banking activities through its subsidiaries. PFC's authorized capital
stock consists of (i) 30,000,000 shares of common stock ("PFC Common Stock"), of
which 10,007,118 shares will be issued and outstanding at the Effective Time
(exclusive of treasury
<PAGE> 2
Peoples First Corporation BROWN, TODD
April 8, 1998 & HEYBURN PLLC
Page 2
shares and shares issued or issuable pursuant to the Stock Option Agreement and
shares issuable upon the exercise of outstanding stock options), and (ii)
6,000,000 shares of preferred stock, of which no shares are issued or
outstanding. Each share of PFC Common Stock has identical rights and
preferences. PFC Common Stock is quoted by the NASDAQ Stock Market's National
Market System.
Subsidiary is a corporation organized under the laws of Tennessee.
Subsidiary's authorized capital stock consists of 1,000 shares of common stock
("Subsidiary Common Stock") all of which are issued and outstanding and owned by
Parent.
Parent is a corporation organized under the laws of Tennessee. Parent's
authorized capital stock consists of (i) 100,000,000 shares of common stock
("Parent Common Stock"), of which 68,077,181 shares were issued and outstanding
as of October 31, 1997, and (ii) 10,000,000 shares of preferred stock, of which
2,278,228 shares were issued and outstanding as of October 31, 1997.
In the Merger, shareholders of PFC will receive Parent Common Stock in
exchange for their PFC Common Stock. Each share of PFC Common Stock (other than
shares held by dissenters and shares exchanged for cash in lieu of the issuance
of fractional shares of Parent Common Stock) held by a shareholder of PFC at the
Effective Time will be exchanged for the right to receive 0.6 shares of Parent
Common Stock, subject to certain adjustments in the exchange ratio provided in
the Agreement.
No fractional shares of Parent Common Stock will be issued in the
Merger. In lieu of issuing fractional shares, Parent will pay each holder of PFC
Common Stock entitled to a fractional share of Parent Common Stock an amount of
cash equal to the fraction multiplied by the closing price of one share of
Parent Common Stock on the NYSE-Composite Transactions List on the last trading
day preceding the Effective Time.
PFC will merge into Subsidiary pursuant to the Agreement and a related
Plan of Merger. Subsidiary will be the surviving corporation (the "Surviving
Corporation") of the Merger and the separate corporate existence of PFC will
cease. After the Merger, Parent will own all of the issued and outstanding
shares of the common stock of the Surviving Corporation.
Business Reasons for the Transaction
In view of dramatic changes in the financial services industry, the
Merger offers PFC and Parent important competitive advantages. A combination of
their resources should enhance future growth and profitability, since
Subsidiary, as the survivor the Merger, should be able to generate cost savings,
draw upon a larger business base, make larger loans, and develop new and
innovative services. Parent desires to take advantage of this acquisition
opportunity to expand into new markets and to diversify its financial
operations.
<PAGE> 3
Peoples First Corporation BROWN, TODD
April 8, 1998 & HEYBURN PLLC
Page 3
Representations
With respect to the Merger, PFC and Parent have made the following
representations to us:
1. The fair market value of Parent Common Stock to be received
in the Merger by each shareholder of PFC will, in each instance, be
approximately equal to the fair market value of PFC Common Stock surrendered in
exchange therefor.
2. The cash received by shareholders of PFC who receive cash
in lieu of fractional shares of Parent Common Stock in the Merger will be
approximately equal to the fair market value of PFC Common Stock surrendered in
exchange therefor.
3. None of the shareholders of PFC holding 1% or more of the
outstanding PFC Common Stock has any plan or intention to sell or otherwise
dispose of the Parent Common Stock to be received in exchange therefor.
4. There is no plan or intention by the shareholders of PFC
who own 1% or more of the PFC Common Stock, and the management of PFC knows of
no plan or intention on the part of the remaining shareholders of PFC, to sell,
exchange, or otherwise dispose of an amount of shares of Parent Common Stock to
be received by them in the Merger which would reduce the PFC shareholders'
holdings of Parent Common Stock to a number of shares having, in the aggregate,
a value at the time of the Merger of less than 50% of the total value of PFC
Common Stock outstanding immediately before the Merger. For purposes of this
representation, shares of PFC Common Stock held by dissenters who receive cash,
shares of PFC Common Stock acquired for cash in lieu of fractional shares, and
shares of PFC Common Stock sold, redeemed, or otherwise disposed of, prior or
subsequent to the Merger and as part of the Merger, will be considered to be PFC
Common Stock outstanding at the time of the Merger.
5. Following the Merger, Subsidiary will hold at least 90% of
the fair market value of the net assets and at least 70% of the fair market
value of the gross assets held by PFC immediately prior to the Merger. For
purposes of this representation, assets held by PFC to pay its reorganization
expenses and assets held by PFC to pay dissenters, if any, and all redemptions
and distributions (except for regular, normal distributions) made by PFC
immediately preceding the Merger and which are a part of the plan of
reorganization will be considered as assets held by PFC immediately prior to the
Merger.
6. Parent has no plan or intention to sell, exchange, or
otherwise dispose of the Subsidiary Common Stock following the Merger, to
liquidate Subsidiary, to merge Subsidiary with any other corporation, or to
cause Subsidiary to sell or otherwise dispose of any of its assets to be
<PAGE> 4
Peoples First Corporation BROWN, TODD
April 8, 1998 & HEYBURN PLLC
Page 4
acquired in the Merger, except for transfers to corporations controlled by
Parent and dispositions made in the ordinary course of business.
7. No dividends or distributions, other than regular, normal
dividends and distributions, have been or will be made with respect to PFC
Common Stock prior to the Merger.
8. No stock of the Subsidiary will be issued to any
shareholder of PFC in the Merger.
9. The liabilities of PFC, if any, to be assumed by Subsidiary
in the Merger and the liabilities, if any, to which the transferred assets of
PFC are subject, were incurred by PFC in the ordinary course of its business.
10. At the time of the Merger, the fair market value of the
assets of PFC will exceed the sum of its liabilities plus the amount of
liabilities to which its assets are subject.
11. PFC, Subsidiary, Parent, and the shareholders of each of
them, will pay their own expenses incurred in connection with the Merger.
12. There is no intercorporate indebtedness between or among
PFC, Subsidiary, and Parent, which was issued, acquired, or which will be
settled as a discount.
13. The payment by Parent of cash to shareholders of PFC in
lieu of fractional shares of Parent Common Stock is solely for the purpose of
avoiding the expense and inconvenience to Parent of issuing fractional shares
and does not represent separately bargained for consideration. The total cash
consideration that will be paid to shareholders of PFC in lieu of issuing
fractional share interests of Parent Common Stock will not exceed 1% of the
total consideration that will be provided to shareholders of PFC in exchange for
their PFC Common Stock.
14. Parent has no plan, intention, or understanding with PFC
or with any shareholder of PFC to redeem or otherwise reacquire any shares of
Parent Common Stock that will be issued to the shareholders of the PFC in the
Merger.
15. Prior to the Merger, Parent will be in control of the
Subsidiary within the meaning of IRC ss.368(c).
16. Following the Merger, Subsidiary will not issue
additional shares of its stock which will result in Parent losing control of
Subsidiary within the meaning of IRC ss.368(c).
17. None of the compensation to be received by the
shareholder-employees of PFC will be part of the consideration for their PFC
Common Stock. Any consideration to be paid to any
<PAGE> 5
Peoples First Corporation BROWN, TODD
April 8, 1998 & HEYBURN PLLC
Page 5
shareholder-employees will be for services actually rendered and will be
commensurate in each instance with amounts paid to third parties bargaining at
arms-length for similar services. None of the Parent Common Stock to be received
by any shareholder-employee of PFC is separate consideration for, or allocable
to, any compensation owed to such shareholder-employee.
18. None of the parties to the Merger is an investment company
within the meaning of IRC ss.ss.368(a)(2)(F)(iii) and (iv).
19. PFC is not under the jurisdiction of a court under Title
11 of the United States Code nor is it involved, other than as a creditor, in a
receivership, foreclosure, or similar proceeding in a federal or state court.
20. At the time of the Merger, PFC will not have outstanding
any warrants, options, convertible securities, or any other type of right
pursuant to which any person could acquire PFC Common Stock that, if exercised,
would affect Parent's acquisition or retention of control of PFC within the
meaning of IRC ss.368(c).
Opinions
On the basis of the foregoing facts and representations, and assuming
the Merger is carried out in accordance therewith, we are of the opinion that:
1. The Merger will constitute a reorganization under IRC
ss.ss.368(a)(1)(A) and 368(a)(2)(D). PFC, Subsidiary, and Parent will each be a
"party to a reorganization" within the meaning of IRC ss.368(b).
2. No gain or loss will be recognized by the Subsidiary upon
the receipt of the assets of PFC. IRC ss.1032(a).
3. No gain or loss will be recognized by Parent in the Merger.
IRC ss.354(a).
4. No gain or loss will be recognized by PFC upon the transfer
of its assets and liabilities to Subsidiary. IRC ss.361(a)(1).
5. No gain or loss will be recognized by the shareholders of
PFC upon the receipt solely of Parent Common Stock in exchange for their shares
of PFC Common Stock. IRC ss.354(a)(1).
6. The basis of the shares of Parent Common Stock to be
received by shareholders of PFC (including any fractional share interest in
Parent Common Stock they may be deemed to have
<PAGE> 6
Peoples First Corporation BROWN, TODD
April 8, 1998 & HEYBURN PLLC
Page 6
received (see opinion 8)) will be the same as the basis of PFC Common Stock
surrendered in exchange therefor. IRC ss.358(a)(1).
7. The holding period of the shares of Parent Common Stock to
be received by the shareholders of PFC (including any fractional share interest
to which they may be entitled) will include the period during which PFC Common
Stock exchanged therefor was held by such shareholders, provided that the PFC
Common Stock was held as a capital asset on the date of the Merger. IRC
ss.1223(1).
8. The payment of cash in lieu of fractional share interests
of Parent Common Stock will be treated for federal income tax purposes as if the
fractional shares were distributed as part of the exchange and then redeemed by
Parent. These cash payments will be treated as having been received as
distributions in full payment in exchange for the stock redeemed as provided in
IRC ss.302(a). Rev. Proc. 77-41, 1977-2 C.B. 574; Rev. Rul. 66-365, 1966-2 C.B.
116. As provided in IRC ss.1001, gain or loss will be realized and recognized
measured by the difference between the redemption price and the adjusted basis
of Parent Common Stock surrendered therefor.
9. Subsidiary will succeed to and take into account the
earnings and profits, or deficit in earnings and profits, of PFC as of the time
of the Merger. Any deficit in the earnings and profits of PFC or the Subsidiary
will be used only to offset the earnings and profits accumulated after the
Merger. IRC ss.381(c)(2); Treas. Reg. ss.1.381(c)(2)-1.
* * * * *
Our opinions are directed solely to the shareholders of PFC and may not
be relied upon by any other person or entity. We consent to the inclusion of a
copy of this letter in the registration statement to be filed with the
Securities and Exchange Commission with respect to the transactions described
herein.
Our opinions are based upon existing laws applied to the facts and
representations stated in this letter. Any change in the law, or in the accuracy
of the facts and representations upon which we have relied, could result in the
invalidation of any one or more of our opinions.
Sincerely,
BROWN, TODD & HEYBURN PLLC
By /S/ DAVID L. BECKMAN, JR.
----------------------------------
David L. Beckman, Jr., Member
<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 15, 1998, except
as to Note 2 which is as of March 3, 1998, which appears on page 41 of Union
Planters Corporation's 1997 Annual Report to Shareholders, which is incorporated
by reference in its Annual Report on Form 10-K for the year ended December 31,
1997. We also consent to the reference to us under the heading "Experts" in such
Proxy Statement/Prospectus.
/S/ PRICE WATERHOUSE LLP
Memphis, Tennessee
April 7, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Peoples First Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/S/ KPMG PEAT MARWICK LLP
St. Louis, Missouri
April 8, 1998
<PAGE> 1
EXHIBIT 23.7
[STIFEL, NICOLAUS & COMPANY, INCORPORATION LETTERHEAD]
CONSENT OF STIFEL, NICOLAUS & COMPANY, INCORPORATED
We hereby consent to the summarization of our fairness opinion letter and
references to our firm under the caption "THE MERGER Opinion of Peoples
Financial Advisor" and to the inclusion of such letter in the Proxy Statement -
Prospectus which is part of this Registration Statement on Form S-4 of Peoples
First Corporation. By giving such consent, we do not thereby admit that we are
experts with respect to any part of such Registration Statement within the
meaning of the term "expert" as used in the Securities and Exchange Commission
promulgated thereunder.
STIFEL, NICOLAUS & COMPANY, INCORPORATED
By: /s/ MARK J. ROSS
-----------------------------
Mark J. Ross
Vice President
April 8, 1998
<PAGE> 1
EXHIBIT 99.1
FORM OF PROXY OF PEOPLES FIRST CORPORATION
<PAGE> 2
EXHIBIT 99.1
PEOPLES FIRST CORPORATION
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _________________ and
_________________, or either of them in case the other is unable or unwilling to
act, as Proxies, each with the power to appoint his/her substitute, and hereby
authorizes them to represent and to vote, as designated below, all of the shares
of voting stock of Peoples First Corporation held of record by the undersigned
on ________________, 1998, at the Special Meeting of Shareholders of Peoples
First Corporation to be held on _________, 1998, or any adjournments thereof.
The undersigned acknowledges receipt of the Proxy Statement/Prospectus, dated
___________, 1998, relating to the Special Meeting of Shareholders.
1. Approval of the Agreement and Plan of Merger, dated as of November 17,
1997, as amended by the Amendment thereto dated April 8, 1998, by and
between Peoples First Corporation, Union Planters Corporation and Union
Planters Holding Corporation, and the related Plan of Merger by and
between Peoples First Corporation and Union Planters Holding Corporation,
and joined in by Union Planter Corporation, as more fully described in
the Proxy Statement/Prospectus, dated _________, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED
FOR PROPOSAL 1.
DATED: , 1998
---------------------------
--------------------------------------------
Signature
--------------------------------------------
Signature, if held jointly
Please sign exactly as name appears on this
Proxy Card. When shares are held by joint
tenants, both should sign. When signing as
attorney-in-fact, executor, administrator,
personal representative, 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
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
