<PAGE> 1
As filed with the Securities and Exchange Commission on June 19, 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)
TENNESSEE 6712 62-0859007
(State or Other Jurisdiction of (Primary Standard (I.R.S. Employer
Incorporation or Organization) Industrial Identification No.)
Classification
Code Number)
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, ESQ.,
SECRETARY AND MANAGER OF THE LEGAL DEPARTMENT OF
UNION PLANTERS CORPORATION
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6000
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
COPIES TO:
J. ALLEN ROBERTS, ESQ. NORMAN L. EZELL, PRESIDENT AND
Wyatt, Tarrant & Combs CHIEF EXECUTIVE OFFICER
6075 Poplar Avenue, Suite 650 Duck Hill Bank
Memphis, Tennessee 38119 101 South State Street
(901) 537-1000 Duck Hill, Mississippi 38925
(601) 565-2416
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
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TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
REGISTERED REGISTERED(1) OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION FEE
UNIT(2) PRICE(2)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $5.00, par value per share, 42,403 $49.30 $2,090,274 $616.63
(and associated Preferred Share Rights) Shares (with
Preferred Share
Rights)
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(1) This Registration Statement covers the maximum number of shares of
common stock of the Registrant which is expected to be issued in
connection with the merger described herein.
(2) Estimated solely for the purpose of calculating the registration fee
and based, pursuant to Rule 457(f)(2) under the Securities Act on the
book value per share of the Common Stock of Duck Hill Bank as of the
latest practicable date prior to filing this Registration Statement.
DELAYING AMENDMENT
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
DUCK HILL BANK
101 SOUTH STATE STREET
DUCK HILL, MISSISSIPPI 38925
TO THE SHAREHOLDERS OF DUCK HILL BANK: June __, 1998
You are cordially invited to attend a special meeting of the
shareholders (the "Special Meeting") of Duck Hill Bank ("DHB") to be held at
DHB's offices located at 101 South State Street, Duck Hill, Mississippi 38925,
at 4:00 p.m., local time, on July 29, 1998, notice of which is enclosed.
At the Special Meeting, you will be asked to consider and vote on a
proposal to approve the Reorganization Agreement and Agreement to Merge (the
"Agreement") and a related Agreement to Merge (the "Agreement to Merge") by and
between DHB, Union Planters Corporation, a Tennessee corporation ("UPC"), Union
Planters Bank, National Association, a national banking association ("UPB"), and
Union Planters Holding Corporation, a Tennessee corporation which is a
wholly-owned subsidiary of UPC and the owner of all of the issued and
outstanding shares of UPB ("UPHC"). Pursuant to the Agreement and the Agreement
to Merge, DHB will merge (the "Merger") with and into UPB, with the effect that
UPB will be the surviving association resulting from the Merger. Upon
consummation of the Merger, each share of DHB common stock issued and
outstanding (excluding shares held by DHB or UPC, UPC's 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 10.6008 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. Under certain
circumstances more fully described in the accompanying Proxy
Statement/Prospectus, DHB may terminate the Merger if the average closing price
of UPC Common Stock on the New York Stock Exchange falls below $47.25. The Board
of Directors of DHB has no current intention of waiving its right to terminate
the Merger in such circumstances without resoliciting the shareholders of DHB.
The accompanying Proxy Statement/Prospectus sets forth certain of the factors
which the Board of Directors of DHB will consider on deciding whether to
exercise its right to terminate under those circumstances.
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 Agreement to Merge and the proposed
Merger, including a description of your rights as a shareholder of DHB to
exercise statutory dissenters' rights, the conditions to consummation of the
Merger and the effects of the Merger on the rights of DHB's shareholders. Please
read these materials carefully and consider thoughtfully the information set
forth in them.
THE BOARD OF DIRECTORS OF DHB HAS UNANIMOUSLY APPROVED AND ADOPTED THE
AGREEMENT AND THE AGREEMENT TO MERGE AND CONSUMMATION OF THE MERGER CONTEMPLATED
THEREBY, AND RECOMMENDS THAT YOU VOTE FOR APPROVAL OF THE AGREEMENT AND THE
AGREEMENT TO MERGE.
Approval of the Agreement and the Agreement to Merge will require the
affirmative vote of the holders of at least two-thirds of the issued and
outstanding shares of DHB Common Stock entitled to be voted at the Special
Meeting. 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 DHB and your
vote on this matter is of great importance.
ON BEHALF OF THE BOARD OF DIRECTORS, I URGE YOU TO VOTE FOR ADOPTION OF
THE AGREEMENT AND THE AGREEMENT TO MERGE BY MARKING THE ENCLOSED PROXY CARD
"FOR" ITEM ONE.
I look forward to seeing you at the Special Meeting.
Sincerely,
Norman L. Ezell,
President and Chief Executive Officer
<PAGE> 3
DUCK HILL BANK
101 SOUTH STATE STREET
DUCK HILL, MISSISSIPPI 38925
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AT 4:00 P.M. ON JULY 29, 1998
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders (the
"Special Meeting") of Duck Hill Bank ("DHB") will be held at DHB's offices
located at 101 South State Street, Duck Hill, Mississippi 38925 on Wednesday,
July 29, 1998, at 4:00 p.m., local time, for the following purposes:
1. MERGER. To consider and vote upon a proposal to approve the
Reorganization Agreement and Agreement to Merge, dated as of November 6, 1997
(the "Agreement"), and the related Agreement to Merge (the "Agreement to
Merge"), by and between DHB, Union Planters Corporation, a Tennessee corporation
("UPC"), Union Planters Bank, National Association, a national banking
association ("UPB"), and Union Planters Holding Corporation, a Tennessee
corporation which is a wholly-owned subsidiary of UPC and which owns all of the
outstanding and issued shares of UPB ("UPHC"), pursuant to which (i) DHB will
merge (the "Merger") with and into UPB, with the effect that UPB will be the
surviving association resulting from the Merger, and (ii) each share of the
$50.00 par value common stock of DHB ("DHB Common Stock") issued and outstanding
at the effective time of the Merger (excluding shares held by DHB or UPC, or
UPC's 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 10.6008 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. A copy of each of the Agreement
and the Agreement to Merge is set forth as Appendix A and Appendix B,
respectively, to the accompanying Proxy Statement/Prospectus and is incorporated
by reference therein.
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 June 26, 1998
will be entitled to receive notice of and to vote at the Special Meeting or any
adjournment or postponement thereof. APPROVAL OF THE AGREEMENT AND THE AGREEMENT
TO MERGE REQUIRES THE AFFIRMATIVE VOTE OF THE HOLDERS OF AT LEAST TWO-THIRDS OF
THE ISSUED AND OUTSTANDING SHARES OF DHB COMMON STOCK ENTITLED TO BE VOTED AT
THE SPECIAL MEETING.
DHB shareholders have the right to dissent from the Merger and to
receive the "fair value" of their shares of DHB Common Stock in cash, provided
the proper steps are taken to properly "perfect" statutory dissenters' rights.
Statutory dissenters' rights are more fully discussed in various sections of the
accompanying Proxy Statement/Prospectus, and a copy of Article 13 of the
Mississippi Business Corporation Act governing statutory dissenters' rights is
attached thereto as Appendix C. DHB shareholders considering the exercise of
their dissenters' rights should carefully review these materials and information
before voting with respect to the Agreement and the Agreement to Merge.
THE BOARD OF DIRECTORS OF DHB UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE FOR APPROVAL OF THE AGREEMENT AND THE AGREEMENT TO MERGE.
BY ORDER OF THE BOARD OF DIRECTORS
Norman L. Ezell,
President and Chief Executive Officer
June ____, 1998
Duck Hill, Mississippi
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> 4
PROSPECTUS
COMMON STOCK, $5.00 PAR VALUE
UNION PLANTERS CORPORATION
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS OF
DUCK HILL BANK
This Prospectus of Union Planters Corporation, a bank holding company
organized and existing under the laws of the State of Tennessee ("UPC"), relates
to the issuance of 42,403 shares of common stock, $5.00 par value, of UPC
(together with associated "Preferred Share Rights" (as defined herein) "UPC
Common Stock"), which are issuable to the shareholders of Duck Hill Bank, a
Mississippi banking corporation ("DHB"), upon consummation of the proposed
merger (the "Merger") of DHB with and into Union Planters Bank, National
Association, a national banking association organized under the laws of the
United States of America ("UPB"), and a wholly-owned subsidiary of Union
Planters Holding Corporation, a Tennessee corporation which is a wholly-owned
subsidiary of UPC ("UPHC"), with the effect that UPB will be the surviving
association of the Merger. The Merger will be consummated pursuant to the terms
of the Reorganization Agreement and Agreement to Merge, dated as of November 6,
1997 (the "Agreement"), and the related Agreement to Merge (the "Agreement to
Merge"), by and between UPC, DHB and UPHC. At the effective time of the Merger
(the "Effective Time"), except as described herein, each issued and outstanding
share of common stock, par value $50.00 per share, of DHB ("DHB Common Stock")
will be converted into and exchanged for the right to receive 10.6008 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 Exchange Ratio is adjustable upward only if certain conditions are
met concerning the quoted price of UPC Common Stock. The Board of Directors of
DHB (the "DHB Board"), would likely invoke the adjustment mechanism in the
Agreement if the conditions permit by giving notice of its election to
terminate, in which case UPC must determine whether to proceed with the Merger
at a higher Exchange Ratio and avoid termination. In making this determination,
the principal factors UPC will consider include the projected effect of the
Merger on UPC's pro forma earnings per share and whether UPC's assessment of
DHB's earning potential as part of UPC justifies the issuance of an increased
number of shares of UPC Common Stock. If UPC declines to adjust the Exchange
Ratio, DHB may elect to proceed without the adjustment by withdrawing its
election to terminate, although it has no current intention to so elect without
resoliciting the approval of DHB's shareholders. In making such determination,
the DHB Board will consider whether the Merger remains in the best interest of
DHB and its shareholders, despite a decline in the price of UPC Common Stock,
and whether the consideration to be received by the holders of DHB Common Stock
remains fair from a financial point of view. See "DESCRIPTION OF TRANSACTION -
Possible Adjustment of Exchange Ratio."
This Prospectus also serves as the Proxy Statement of DHB, and is being
furnished to the shareholders of DHB in connection with the solicitation of
proxies by the DHB Board for use at its special meeting of shareholders
(including any adjournment or postponement thereof, the "Special Meeting"), to
be held on Wednesday, July 29, 1998, to consider and vote upon the Agreement
and the Agreement to Merge and the transactions contemplated therein. This Proxy
Statement/Prospectus ("Proxy Statement") and related materials enclosed herewith
are being mailed to shareholders of DHB on or about June __, 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 June __, 1998
<PAGE> 5
AVAILABLE INFORMATION
UPC 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 that file electronically with the SEC.
The shares of UPC Common Stock are listed and traded on the New York Stock
Exchange (the "NYSE") under the symbol "UPC," and reports, proxy and information
statements, and other information concerning UPC also may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
The shares of DHB Common Stock are not traded on any exchange or
system, and DHB is not required to, and does not, file reports or information
with the SEC or any securities exchange or system.
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, DHB 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 with respect to DHB was supplied by DHB.
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 DHB 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
AND DHB, AND UPC FOLLOWING THE CONSUMMATION OF THE MERGER AND 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 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
<PAGE> 6
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 OR DHB, 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 (1) of Regulation S-K of the SEC shall not be deemed
to be incorporated herein and is not part of the Registration
Statement)(the "UPC 1997 Form 10-K");
(b) UPC's Quarterly Report on Form 10-Q for the three months ended
March 31, 1998 and its amendment to such form on Form 10-Q/A
(the "UPC March 31, 1998 Form 10-Q");
(c) UPC's Current Reports on Form 8-K dated January 15, 1998,
February 23, 1998, and April 16, 1998.
(d) The description of the current management and Board of
Directors of UPC contained in the Proxy Statement of UPC (the
"UPC Annual Meeting Proxy Statement") filed pursuant to
Section 14(a) of the Exchange Act with respect to UPC's Annual
Meeting of Shareholders 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.
All documents filed by UPC pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this Proxy Statement and prior to
final adjournment of the Special Meeting 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) 580-6000). In order to
ensure timely delivery of the documents, any request should be made by July 24,
1998.
<PAGE> 7
TABLE OF CONTENTS
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SUMMARY...................................................................................................1
THE PARTIES..........................................................................................1
MEETING OF SHAREHOLDERS..............................................................................2
THE MERGER...........................................................................................3
COMPARATIVE MARKET PRICES OF COMMON STOCK............................................................7
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA..................................................7
SELECTED FINANCIAL DATA..............................................................................10
SPECIAL MEETING OF DHB SHAREHOLDERS.......................................................................15
DATE, PLACE, TIME, AND PURPOSE.......................................................................15
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES...............................15
SOLICITATION OF PROXIES..............................................................................16
DISSENTERS' RIGHTS...................................................................................16
RECOMMENDATION.......................................................................................17
DESCRIPTION OF TRANSACTION................................................................................17
GENERAL..............................................................................................17
POSSIBLE ADJUSTMENT OF EXCHANGE RATIO................................................................17
BACKGROUND OF AND REASONS FOR THE MERGER.............................................................19
EFFECTIVE TIME OF THE MERGER.........................................................................22
DISSENTERS' RIGHTS...................................................................................22
DISTRIBUTION OF UPC STOCK CERTIFICATES...............................................................24
LIMITATION ON NEGOTIATIONS...........................................................................25
CONDITIONS TO CONSUMMATION OF THE MERGER.............................................................25
REGULATORY APPROVAL..................................................................................26
WAIVER, AMENDMENT, AND TERMINATION...................................................................27
CONDUCT OF BUSINESS PENDING THE MERGER...............................................................27
MANAGEMENT AND OPERATIONS AFTER THE MERGER...........................................................29
INTERESTS OF CERTAIN PERSONS IN THE MERGER...........................................................29
MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER...............................................30
ACCOUNTING TREATMENT.................................................................................32
EXPENSES AND FEES....................................................................................32
RESALES OF UPC COMMON STOCK..........................................................................32
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS............................................................33
ANTI-TAKEOVER PROVISIONS GENERALLY...................................................................33
AUTHORIZED CAPITAL STOCK.............................................................................34
PREEMPTIVE RIGHTS....................................................................................35
AMENDMENT OF CHARTER AND BYLAWS......................................................................35
CLASSIFIED BOARD OF DIRECTORS AND ABSENCE OF CUMULATIVE VOTING.......................................35
DIRECTOR REMOVAL AND VACANCIES.......................................................................36
INDEMNIFICATION......................................................................................36
SPECIAL MEETINGS OF SHAREHOLDERS.....................................................................38
ACTIONS BY SHAREHOLDERS WITHOUT A MEETING............................................................38
SHAREHOLDER NOMINATIONS AND PROPOSALS................................................................38
BUSINESS COMBINATIONS................................................................................38
LIMITATIONS ON ABILITY TO VOTE STOCK.................................................................40
DISSENTERS' RIGHTS OF APPRAISAL......................................................................40
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS....................................................41
DIVIDENDS............................................................................................41
COMPARATIVE MARKET PRICES AND DIVIDENDS...................................................................42
BUSINESS OF UPC...........................................................................................43
GENERAL..............................................................................................43
RECENT DEVELOPMENTS..................................................................................44
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PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION....................................................46
BUSINESS OF DHB...........................................................................................53
BUSINESS OF DHB......................................................................................53
PRIMARY SERVICE AREA.................................................................................53
OFFICES..............................................................................................53
COMPETITION..........................................................................................53
EMPLOYEES............................................................................................53
LEGAL PROCEEDINGS....................................................................................53
PRINCIPAL HOLDERS OF COMMON STOCK....................................................................53
COMMON STOCK OWNED BY MANAGEMENT.....................................................................54
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF DHB.........................................................................55
RESULTS OF OPERATIONS, THREE MONTHS ENDED MARCH 31, 1998, COMPARED TO
MARCH 31, 1997...................................................................................55
RESULTS OF OPERATIONS, 1997 COMPARED TO 1996.........................................................55
FINANCIAL CONDITION, MARCH 31, 1998, COMPARED TO DECEMBER 31, 1997...................................56
FINANCIAL CONDITION, 1997 COMPARED TO 1996...........................................................57
SOURCES AND USES OF FUNDS............................................................................58
LIQUIDITY AND INTEREST RATE RISK.....................................................................58
IMPACT OF INFLATION..................................................................................60
CERTAIN REGULATORY CONSIDERATIONS.........................................................................62
GENERAL..............................................................................................62
PAYMENT OF DIVIDENDS.................................................................................63
CAPITAL ADEQUACY.....................................................................................64
SUPPORT OF SUBSIDIARY INSTITUTIONS...................................................................65
PROMPT CORRECTIVE ACTION.............................................................................65
DESCRIPTION OF UPC CAPITAL STOCK..........................................................................66
UPC COMMON STOCK.....................................................................................67
UPC PREFERRED STOCK..................................................................................67
OTHER MATTERS.............................................................................................68
SHAREHOLDER PROPOSALS.....................................................................................68
EXPERTS...................................................................................................68
OPINIONS..................................................................................................68
</TABLE>
APPENDICES:
APPENDIX A -- AGREEMENT AND AGREEMENT TO MERGE, DATED AS OF NOVEMBER 6,
1997, BY AND BETWEEN UNION PLANTERS CORPORATION, UNION
PLANTERS HOLDING CORPORATION, UNION PLANTERS BANK, NATIONAL
ASSOCIATION AND DUCK HILL BANK.
APPENDIX B -- AGREEMENT TO MERGE OF DUCK HILL BANK INTO AND WITH UNION
PLANTERS BANK, NATIONAL ASSOCIATION
APPENDIX C -- COPY OF ARTICLE 13 OF THE MISSISSIPPI BUSINESS CORPORATION ACT
REGARDING DISSENTER'S RIGHTS.
APPENDIX D -- AUDITED FINANCIAL STATEMENTS OF DUCK HILL BANK AS OF AND FOR
THE YEAR ENDED DECEMBER 31, 1997 AND THE UNAUDITED FINANCIAL
STATEMENTS OF DUCK HILL BANK AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1996 (AND NOTES THERETO), AND UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE THREE
MONTHS ENDED MARCH 31, 1998 AND 1997 (AND NOTES THERETO).
v
<PAGE> 9
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
"DHB" REFER TO UNION PLANTERS CORPORATION AND DUCK HILL BANK, RESPECTIVELY, AND,
WHERE THE CONTEXT REQUIRES, TO THOSE ENTITIES AND THEIR RESPECTIVE SUBSIDIARIES.
THE PARTIES
DHB. DHB is a Mississippi banking corporation which operates from its
main office in Duck Hill, Montgomery County, Mississippi and from a branch
office in Elliott, Grenada County, Mississippi. As of March 31, 1998, DHB had
total assets of approximately $20 million, total loans of approximately $5
million, total consolidated deposits of approximately $18 million, and total
consolidated shareholders' equity of approximately $2 million.
The principal executive offices of DHB are located at 101 South State
Street, Duck Hill, Mississippi 38925, and its telephone number at such address
is (601) 565-2416. Additional information with respect to DHB and is included
elsewhere herein under various headings, including, but not limited to,
"BUSINESS OF DHB" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF DHB," and in the audited financial
statements of DHB for the year ended December 31, 1997, the unaudited financial
statements of DHB for the year ended December 31, 1996, (and notes thereto), and
the unaudited financial statements of DHB as of and for the three months ended
March 31, 1998 and 1997, copies of which are attached hereto collectively as
Appendix D.
UPC. UPC, a Tennessee corporation, is a bank holding company registered
with the Board of Governors of the Federal Reserve System ("Federal Reserve")
under the Bank Holding Company Act of 1956, as amended (the "BHC Act"). As of
March 31, 1998, UPC had total consolidated assets of approximately $18.4
billion, total consolidated loans of approximately $12.7 billion, total
consolidated deposits of approximately $13.6 billion, and total consolidated
shareholders' equity of approximately $1.8 billion.
UPC conducts its business activities through its principal bank
subsidiary, the $15.7 billion asset Union Planters Bank, National Association
("UPB"), a multi-state national banking association headquartered in Memphis,
Tennessee with branches in Alabama, Arkansas, Kentucky, Louisiana, Mississippi,
Missouri and Tennessee, one federally-chartered savings association
headquartered in Tennessee, two other Tennessee state-chartered banks
headquartered in Tennessee, two recently acquired Arkansas state-chartered
banks, and one Florida state-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 518 banking offices
and 676 automated teller machines ("ATMs"). UPC's total deposits at March 31,
1998 are allocable by state (before consolidating adjustments) approximately as
follows: $6.7 billion in Tennessee; $2.9 billion in Mississippi; $1.3 billion in
Florida; $1.2 billion in Missouri; $596 million in Arkansas; $598 million in
Louisiana; $412 million in Alabama; and $103 million in Kentucky.
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of UPC's business strategy. UPC completed 13
acquisitions in 1994, three in 1995, seven in 1996, and 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 June 1, 1998, UPC has
completed the acquisition of two financial institutions with approximately $520
million in aggregate total assets as of March 31, 1998 (the "Recently Completed
Acquisitions"). As of June 1, 1998, UPC was a party to definitive agreements to
acquire ten financial institutions, in addition to DHB, and to purchase certain
branch locations and assume deposit liabilities of California Federal Bank in
Florida (the "CalFed
1
<PAGE> 10
Branch Purchase") (collectively referred to herein as the "Other Pending
Acquisitions"). The Other Pending Acquisitions had aggregate total assets of
approximately $13.1 billion at March 31, 1998. For purposes of this Proxy
Statement, the terms "Recently Completed Acquisitions" and "Other Pending
Acquisitions" are referred to as "Other Acquisitions"). The largest of the Other
Pending Acquisitions is UPC's pending acquisition of Magna Group, Inc. ("MGR"),
St Louis, Missouri, which had total consolidated assets of approximately $7.3
billion at March 31, 1998. On May 1, 1998, MGR acquired Charter Financial, Inc.,
and its subsidiary, Charter Bank, S.B. (the "Charter Acquisition"). Charter is
located in Sparta, Illinois and at the time of consummation had total assets of
approximately $406 million, total deposits of approximately $309 million, and
total stockholders' equity of approximately $67 million. The Charter Acquisition
was 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" include the Charter Acquisition. For additional
information, see "BUSINESS OF UPC -- Recent Developments" and "PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION."
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 Common Stock or the incurring of additional indebtedness by UPC,
and could have a dilutive effect on the earnings or book value per share of UPC
Common Stock. Moreover, significant charges against earnings are sometimes
required incidental to acquisitions. For a description of the acquisitions in
addition to the Mergers which are currently pending, 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 in 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 UPC's 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.
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."
UPHC. UPHC is a wholly-owned subsidiary of UPC. UPHC is a bank holding
company itself which owns all of the common stock of UPB and other permissible
investments. Certain of the directors and officers of UPHC are executive
officers of UPC.
UPB. UPB is a wholly-owned subsidiary of UPHC. UPB is the principal
bank subsidiary of UPC and has offices in Alabama, Arkansas, Kentucky,
Louisiana, Mississippi, Missouri and Tennessee.
MEETING OF SHAREHOLDERS
This Proxy Statement is being furnished to the holders of DHB Common
Stock in connection with the solicitation by the DHB Board of proxies for use at
the Special Meeting at which DHB shareholders will be asked to vote upon (i) a
proposal to approve the Agreement and the Agreement to Merge and (ii) such other
business as may properly come before the Special Meeting but which is not now
anticipated. The Special Meeting will be held at DHB's offices, located at 101
South State Street, Duck Hill, Mississippi, at 4:00, local time, on July 29,
1998. See "SPECIAL MEETING OF DHB SHAREHOLDERS -- Date, Place, Time, and
Purpose."
The DHB Board has fixed the close of business on June 26, 1998, as the
record date (the "DHB Record Date") for determination of the shareholders
entitled to notice of and to vote at the
2
<PAGE> 11
Special Meeting. Only holders of record of shares of DHB Common Stock on the DHB
Record Date will be entitled to notice of and to vote at the Special Meeting.
Each share of DHB Common Stock is entitled to one vote. On the DHB Record Date,
there were 4,000 shares of DHB Common Stock outstanding. See "SPECIAL MEETING OF
DHB SHAREHOLDERS -- Record Date, Voting Rights, Required Vote, and Revocability
of Proxies."
Approval of the Agreement and the Agreement to Merge and the
transactions contemplated thereby requires the affirmative vote of the holders
of at least two-thirds of the issued and outstanding shares of DHB Common Stock
entitled to be voted at the Special Meeting. The directors and executive
officers of DHB (including immediate family members and affiliated entities)
owned, as of the DHB Record Date, 2,972 shares or approximately 74.3% of the
outstanding shares of DHB Common Stock. Assuming all such shares of DHB Common
Stock are voted "For" the Merger, then the requisite DHB shareholder approval
will have been obtained.
The directors and executive officers of UPC owned, as of the DHB Record
Date, no shares of DHB Common Stock. As of the DHB Record Date, UPC held no
shares of DHB Common Stock in a fiduciary capacity for others, or as a result of
debts previously contracted, and DHB held no shares of DHB Common Stock in a
fiduciary capacity for others. See "SPECIAL MEETING OF DHB SHAREHOLDERS --
Record Date, Voting Rights, Required Vote, and Revocability of Proxies."
For information with respect to the number and percentage of shares of
DHB Common Stock owned by directors and executive officers of DHB, as well as
beneficial owners of 5% or more of the outstanding shares of DHB Common Stock,
see "BUSINESS OF DHB -- Principal Holders of Common Stock."
THE MERGER
GENERAL. The Agreement provides for the acquisition of DHB by UPC
pursuant to the merger of DHB with and into UPB, a wholly-owned subsidiary of
UPHC, which is a wholly owned subsidiary of UPC, with the effect that UPB will
be the surviving association resulting from the Merger. At the Effective Time,
each share of DHB Common Stock then issued and outstanding (excluding shares
held by DHB, 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
10.6008 shares of UPC Common Stock, subject to possible adjustment as described
below (the "Exchange Ratio").
In the event both of the following conditions are satisfied, (i) the
"Average Closing Price" (defined in the Agreement as the average of the daily
last sale prices of UPC Common Stock quoted on the NYSE-Composite Transactions
List (as reported by The Wall Street Journal or, if not reported thereby,
another authoritative source as reasonably selected by UPC) for the 20
consecutive full trading days on which such shares are traded on the NYSE ending
at the close of trading on the later of the date of the Special Meeting and the
date on which the consent of the Federal Reserve shall be received (the
"Determination Date")) is less than $47.25 and (ii) (a) the quotient obtained by
dividing the Average Closing Price by $59.06 (such quotient being the "UPC
Ratio") is less than (b) the quotient obtained by dividing the weighted average
of the closing prices (the "Index Price") of 17 bank holding companies
designated in the Agreement (the "Index Group") on the Determination Date by the
Index Price on July 29, 1998, less 15% (such quotient being the "Index Ratio"),
then DHB will have the right to terminate the Agreement unless UPC elects to
adjust the Exchange Ratio in the manner described under "DESCRIPTION OF
TRANSACTION -- Possible Adjustment of Exchange Ratio."
Under no circumstances would the Exchange Ratio be less than 10.6008
shares of UPC Common Stock for each share of DHB Common Stock. The possible
upward adjustment of the Exchange Ratio depends on the factors mentioned above
and is not subject to a contractual limit. See "DESCRIPTION OF TRANSACTION
Possible Adjustment of Exchange Ratio." The DHB Board has no current intention
of waiving its right to terminate the Merger in such circumstances without
resoliciting shareholders of DHB. For a description of certain of the factors
that the DHB Board will consider in deciding whether to exercise its rights to
terminate the Merger in those circumstances. See "DESCRIPTION OF TRANSACTION -
Possible Adjustment of Exchange Ratio."
No fractional shares of UPC Common Stock will be issued. Rather, cash
(without interest) will be paid in lieu of any fractional share interest to
which any DHB shareholder would otherwise 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
3
<PAGE> 12
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
reasonably selected by UPC) on the last trading day preceding the Effective
Time. See "DESCRIPTION OF TRANSACTION -- General."
REASONS FOR THE MERGER; RECOMMENDATIONS OF THE BOARD OF DIRECTORS OF
DHB The DHB Board believes that the Agreement and the Merger are in the best
interests of DHB and its shareholders. THE DHB BOARD UNANIMOUSLY RECOMMENDS THAT
DHB SHAREHOLDERS VOTE FOR APPROVAL OF THE AGREEMENT AND THE AGREEMENT TO MERGE.
Among other things, the DHB Board believes that the Merger will result in a
company with expanded opportunities for profitable growth and that the combined
resources of DHB and UPC will provide an enhanced ability to compete in the
changing and competitive financial services industry. Furthermore, the UPC
Common Stock is traded on the NYSE, and accordingly, is more readily marketable
than the DHB Common Stock. See "DESCRIPTION OF TRANSACTION -- Background of and
Reasons for the Merger."
In approving the Agreement and the Agreement to Merge, DHB's Board
considered, among other things, DHB and UPC's financial conditions, the
financial terms and income tax consequences of the Merger and the likelihood of
the Merger being approved by regulatory authorities without undue conditions or
delay. See "DESCRIPTION OF TRANSACTION -- Background of and Reasons for the
Merger."
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 specified in the Certificate of Merger to be issued by the Office of
the Comptroller of the Currency (the "OCC"). Subject to the terms and conditions
of the Agreement, unless otherwise agreed upon by DHB and UPC, the Agreement
provides that the parties will use their reasonable efforts to cause the
Effective Time to occur on such date as may be designated by UPC within 30 days
following the last to occur of (i) the effective date of the last consent of any
regulatory authority having authority over and approving or exempting the
Merger, (ii) the date on which the shareholders of DHB approve the Agreement and
the Agreement to Merge, 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). It is anticipated that the
Effective Time will occur on August 1, 1998, 3 days after the Special Meeting.
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. DHB AND UPC ANTICIPATE THAT ALL CONDITIONS
TO THE CONSUMMATION OF THE MERGER WILL BE SATISFIED SO THAT THE MERGER CAN BE
CONSUMMATED ON OR ABOUT AUGUST 1, 1998. HOWEVER, DELAYS IN THE CONSUMMATION OF
THE MERGER COULD OCCUR.
DISTRIBUTION OF CONSIDERATION. 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 DHB 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 DHB 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 DHB, UPC, or the Exchange Agent
be liable to any holder of DHB 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. See "DESCRIPTION
OF TRANSACTION - Distribution of Consideration."
REGULATORY APPROVAL AND OTHER CONDITIONS. The Merger is subject to the
prior approval of the Federal Reserve, the OCC and the Mississippi Department of
Banking and Consumer Finance (the "Mississippi Department"). By letters dated
May 14, 1998 and June 10, 1998, the Federal Reserve and the OCC advised UPC that
the Merger had been approved. The Mississippi Department has raised no objection
to the Merger.
4
<PAGE> 13
Consummation of the Merger is subject to various other conditions,
including receipt of the required approval of the DHB shareholders and the
receipt of an opinion of counsel as to the tax-free nature of certain aspects of
the Merger, and certain other conditions at the Effective Time. 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 DHB 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 December
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 DHB
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 DHB without the approval of shareholders, whether
before or after approval of the Agreement and the Agreement to Merge by DHB
shareholders; provided, that after such approval by the DHB shareholders, there
shall be no amendment that modifies in any material respect the consideration to
be received by DHB shareholders without further approval of holders of DHB
Common Stock. See "DESCRIPTION OF TRANSACTION -- Possible Adjustment of Exchange
Ratio" and "-- Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS. Holders of DHB Common Stock have the right under
Article 13 of the Mississippi Business Corporation Act ("MBCA") to dissent to
the Merger and, upon consummation of the Merger and such holders' further
compliance with Article 13 of the MBCA, to be paid in cash for their shares of
DHB Common Stock. See "DESCRIPTION OF TRANSACTION -- Dissenters' Rights", and
Appendix C hereto, which is a copy of Article 13 of the MBCA.
INTERESTS OF CERTAIN PERSONS IN THE MERGER. Certain members of DHB's
management and the DHB Board have interests in the Merger in addition to their
interests as shareholders of DHB generally. These interests relate to the
receipt by Norman L. Ezell, President and Chief Executive Officer of DHB, of a
new employment contract with UPC upon the consummation of the Merger. See
"DESCRIPTION OF TRANSACTION -- Interests of Certain Persons in the Merger."
MATERIAL 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 DHB shareholder upon the exchange of all of such shareholder's shares of
DHB 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 dated the date of the Effective Time, substantially to this effect (the
"Tax Opinion"). The condition relating to the receipt of the Tax Opinion may be
waived by both UPC and DHB. Neither UPC nor DHB currently intends to waive the
condition relating to the receipt of the Tax Opinion. If the condition relating
to the receipt of the Tax Opinion was waived and the material federal income tax
consequences of the Merger was materially different from those described in this
Proxy Statement, DHB would resolicit the approval of its shareholders prior to
consummating the Merger. A dissenting holder of DHB Common Stock who perfects
dissenters' rights will recognize gain or loss measured by the difference
between the value received by such shareholder for shares of DHB Common Stock
and the shareholder's tax basis in such stock. TAX CONSEQUENCES OF THE MERGER
FOR INDIVIDUAL TAXPAYERS CAN VARY, HOWEVER, AND ALL DHB 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 including a description of the
tax opinion issued as of the date of this Proxy Statement, 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 purchase transaction for accounting and financial reporting purposes.
See "DESCRIPTION OF TRANSACTION -- Accounting Treatment."
5
<PAGE> 14
CERTAIN DIFFERENCES IN SHAREHOLDERS' RIGHTS. At the Effective Time, DHB
shareholders, whose rights are governed by DHB's Charter of Incorporation, as
amended, (the "DHB Charter"), Bylaws (the "DHB Bylaws"), the MBCA and by the
Mississippi banking laws ("MBL"), will automatically become UPC shareholders,
and their rights as UPC shareholders will be governed by UPC's Restated Charter
(the "UPC Charter"), Bylaws (the "UPC Bylaws"), and the Tennessee Business
Corporation Act (the "TBCA"). The rights of UPC shareholders differ from the
rights of DHB shareholders in certain important respects, including but not
limited to: (i) anti-takeover provisions generally; (ii) authorized capital
stock; (iii) preemptive rights; (iv) amendment of charter and bylaws; (v)
classified board of directors and absence of cumulative voting; (vi)
indemnification; (vii) special meeting of shareholders; (viii) shareholder
nominations and proposals; (ix) business combinations; (x) dissenters rights of
appraisal; (xi) shareholders' rights to examine books and records; and (xii)
dividends. See "EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS."
LIMITATION ON NEGOTIATIONS. Pursuant to Section 6.3 of the Agreement,
DHB is prohibited from soliciting or knowingly encouraging any "Acquisition
Proposal," defined as any tender offer, agreement, understanding, or other
proposal pursuant to which any corporation, partnership, person or other entity
or group, other than UPC or its subsidiaries, would directly or indirectly (i)
acquire or participate in a merger, share exchange, consolidation or any other
business combination involving DHB; (ii) acquire the right to vote ten percent
(10%) or more of DHB Common Stock; or (iii) acquire a significant portion of the
assets or earning power of DHB ("Acquisition Proposal"). As protection against
possible violation of this limitation, DHB has agreed, under certain
circumstances, to pay to UPC the sum of $150,000 in immediately available funds
in the event and at the time that DHB enters into a letter of intent or
agreement with respect to an Acquisition Proposal or supports or indicates an
intent to support an Acquisition Proposal other than pursuant to the Agreement.
This provision would survive the termination of the Agreement under certain
circumstances. See "DESCRIPTION OF TRANSACTION - Limitation on Negotiations".
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Agreement, and
subject to the exceptions as set forth therein, UPC has agreed that unless the
prior written consent of DHB has been obtained, UPC will (i) continue to conduct
its business and the business of its subsidiaries in a manner designed in UPC's
reasonable judgement to enhance the long-term value of the UPC Common Stock and
business prospects of UPC and its subsidiaries, and (ii) take no action which
would (a) materially or adversely affect the ability of any party to obtain any
consents required for the transactions contemplated by the Agreement without
imposition of a condition or restriction of the type referred to in the
Agreement or (b) adversely affect the ability of either party to perform its
covenants and agreements under the Agreement
DHB has agreed that unless the prior written consent of UPC has been
obtained, and except as otherwise expressly contemplated in the Agreement, DHB
will (i) operate its business only in the usual, regular, and ordinary course,
(ii) preserve intact its business organization and assets and maintain its
rights and franchises, and (iii) take no action which would (a) materially
adversely affect the ability of any party to obtain any consents required for
the transactions contemplated by the Agreement without imposition of a condition
or restriction of the type referred to in the Agreement or (b) adversely affect
the ability of either party to perform its covenants and agreements under the
Agreement.
In addition, DHB has agreed that until the earliest of the Effective
Time or termination of the Agreement, DHB will not, except with the prior
written consent of the chief executive officer or chief operating officer of UPC
(which consent shall not be unreasonably withheld), agree or commit to take
certain actions, including generally, but not limited to: (i) incurring,
guaranteeing, or otherwise becoming responsible for, any additional debt
obligation for borrowed money in excess of $25,000 other than in the ordinary
course of business consistent with past practices; (ii) declare or pay any
dividends, except that DHB was and is allowed to declare and pay regular cash
dividends on the shares of DHB Common Stock at a rate not to exceed $10.00 per
share, on or about December 15, 1997, and at a rate not to exceed $5.00 per
share, on or after June 30, 1998; (iii) subject to certain exceptions, permit to
become outstanding, any additional shares of DHB Common Stock, or any other
capital stock of DHB or any rights to acquire such stock or any security
convertible into such stock; (iv) subject to certain exceptions, acquire direct
or indirect control of any other entity; (v) subject to certain exceptions set
forth in the Agreement, grant any increase in compensation or benefits or pay
any bonus to the employees or officers of DHB;
6
<PAGE> 15
or (vi) subject to certain exceptions, enter into or amend any employment
contract between DHB and any person, which DHB does not have an unconditional
right to terminate without liability. See "DESCRIPTION OF TRANSACTION - Conduct
of Business Pending the Merger."
COMPARATIVE MARKET PRICES OF COMMON STOCK
Shares of UPC Common Stock are traded on the NYSE under the symbol
"UPC." Shares of DHB Common Stock are not traded on any exchange or in the
over-the-counter market. Management of DHB is aware of only a few transfers of
DHB Common Stock since January, 1995. In many instances, when shares of DHB
Common Stock are sold, management of DHB is not made aware of the price per
share at which the DHB Common Stock did in fact trade. As to transactions of
which DHB management is aware, the purchase price per share of DHB Common Stock
has been in a range of from $210 to $250 per share.
The following table sets forth the reported closing sale prices per
share for UPC Common Stock and the equivalent per share prices giving effect to
the Merger (as explained below) for DHB Common Stock on (i) November 6, 1997,
the last trading day preceding the public announcement of the execution of the
Agreement, and (ii) June 18, 1998, the latest practicable date prior to the
mailing of this Proxy Statement.
<TABLE>
<CAPTION>
UPC Equivalent Price
Common Stock Per DHB Share(1)
------------ ----------------
<S> <C> <C>
November 6, 1997 $61.06 $647.29
June 18, 1998 $54.75 $580.39
</TABLE>
- -------------------------------------
(1) The equivalent price per share of DHB 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 10.6008. 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, or anytime thereafter.
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 DHB; (ii) a pro
forma combined basis per share of UPC Common Stock, giving effect to the Merger
and the Other Acquisitions; (iii) an equivalent pro forma basis per share of DHB
Common Stock, giving effect to UPC only, and, (iv) an equivalent pro forma basis
per share of DHB Common Stock, giving effect to the Merger and the Other
Acquisitions. The UPC pro forma combined information and the DHB equivalent pro
forma information give effect to the Merger and the Other Acquisitions and
reflect an Exchange Ratio of 10.6008 shares of UPC Common Stock for each
outstanding share of DHB Common Stock. Each of the Other Pending Acquisitions
(with the exception of the Merger, the Charter Acquisition and the CalFed
Purchase) are expected to be, and the Recently Completed Acquisition of Security
Bancshares, Inc. was, accounted for using the pooling of interests method of
accounting. The Recently Completed Acquisition of Sho-Me Financial Corp. and the
Charter Acquisition were, and the Merger and the CalFed Branch Purchase are
expected to be, accounted for using the purchase method of accounting. The pro
forma information as of and for the three months ended March 31, 1998, and for
1997 reflect the acquisitions of DHB or the Other Acquisitions as of January 1,
1997. The pro forma information for 1996 and 1995 reflect only the acquisitions
of MGR, Merchants Bancshares, Inc. ("Merchants"), Peoples First Corporation
("Peoples") and AMBANC Corp. ("AMBANC") because DHB and the Other Acquisitions
(other than MGR, Merchants, Peoples, and AMBANC) are not individually or in the
aggregate considered material to UPC from a
7
<PAGE> 16
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 periods 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 informational purposes only and are not necessarily indicative of
the results of operations or combined financial position that would have
resulted had the Merger or each of 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
book value per share data reflects preliminary estimates by UPC of
acquisition-related charges to be incurred in connection with consummation of
the Merger and the Other Acquisitions; however, the earnings per share amounts
do not reflect the estimated acquisition related charges. 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 the UPC 1997 Annual Report to Shareholders. UPC's 1997 Annual Report to
Shareholders is included as Exhibit 13 to the UPC 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, including the notes thereto, incorporated by reference herein, and the
financial statements of DHB for the three months ended March 31, 1998 and 1997
(and notes thereto) and for the years ended December 31, 1997 and 1996,
including the notes thereto, copies of which are attached hereto collectively
as Appendix D. See "DOCUMENTS INCORPORATED BY REFERENCE," "-- Selected Financial
Data," "BUSINESS OF UPC -- Recent Developments," "PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION," "BUSINESS OF DHB" -- "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OF DHB."
8
<PAGE> 17
UNION PLANTERS CORPORATION AND DUCK HILL BANK
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Three Months
Ended Years Ended December 31,(1)
March 31, ---------------------------------------
1998 1997 1996 1995
------------ ------ ------ ------
<S> <C> <C> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
UPC
Basic.................................. $ .89 $ 2.54 $ 2.13 $ 2.79
Diluted................................ .86 2.45 2.05 2.66
DHB
Earnings per common share.............. 10.36 50.79 69.32 44.38
UPC pro forma (all Other Acquisitions
including DHB)
Basic.................................. .80 2.52 2.24 2.56
Diluted................................ .78 2.45 2.17 2.46
DHB equivalent pro forma (UPC only)(1)
Basic................................... 9.43 26.93 22.58 29.58
Diluted................................. 9.12 25.97 21.73 28.20
DHB equivalent pro forma (all Other
Acquisitions including DHB)
Basic................................... 8.48 26.71 23.75 27.14
Diluted................................. 8.27 25.97 22.90 26.08
CASH DIVIDENDS PER SHARE
UPC....................................... .50 1.495 1.08 .98
DHB....................................... -- 10.00 10.00 8.00
DHB equivalent pro forma(1)............... 5.30 15.85 11.45 10.39
</TABLE>
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
UPC...................................... $ 21.13 $ 20.72
DHB...................................... 518.50 506.50
UPC pro forma (all Other Acquisitions
And DHB)............................... 20.82 21.73
DHB equivalent pro forma (UPC
only) (1).............................. 223.99 219.65
DHB equivalent pro forma (all Other
Acquisitions including DHB)(1)......... 220.71 230.36
</TABLE>
- ------------------------------
(1) The equivalent pro forma per share data for DHB is computed by multiplying
UPC's pro forma information by an Exchange Ratio of 10.6008.
9
<PAGE> 18
SELECTED FINANCIAL DATA
The following tables present selected consolidated financial data for
UPC and DHB for the three months ended March 31, 1998 and 1997 and 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
unaudited consolidated financial statements of UPC incorporated in this Proxy
Statement by reference to the UPC March 31, 1998 Form 10-Q, and the audited
consolidated financial statements of UPC incorporated in this Proxy Statement by
reference to the UPC 1997 Form 10-K, and should be read in conjunction therewith
and with the notes thereto. See "DOCUMENTS INCORPORATED BY REFERENCE." The
information for DHB has been derived from the financial statements of DHB,
including the audited financial statements of DHB for the year ended December
31, 1997 and unaudited financial statements of DHB for the year ended December
31, 1996 and for the three months ended March 31, 1998 and 1997, copies of which
are attached to this Proxy Statement collectively as Appendix D, and should be
read in conjunction therewith and with the notes thereto. Historical results are
not necessarily indicative of results to be expected for any future period. In
the opinion of the respective management of UPC and DHB, all adjustments (which
include only normal recurring adjustments) necessary to arrive at a fair
statement of interim results of operations of UPC and DHB, have been included.
With respect to UPC and DHB, results for the three months ended March 31, 1998
are not necessarily indicative of results which may be expected for any other
interim period or for the year as a whole. For additional information concerning
UPC's Other Acquisitions, see BUSINESS OF UPC - Recent Developments" and "PRO
FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION."
10
<PAGE> 19
UPC SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,(1) YEARS ENDED DECEMBER 31,(2)
------------------ --------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ------------ -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income........ $ 190,707 $ 190,590 $ 770,385 $ 744,852 $ 669,451 $ 627,439 $ 558,036
Provision for losses on
loans.................... 17,909 22,004 113,633 68,948 33,917 15,989 35,235
Investment securities gains
(losses)................. 5,215 173 2,104 4,099 1,433 (21,302) 6,686
Other noninterest income... 90,503 82,811 359,506 316,403 292,277 237,129 228,996
Noninterest expense........ 153,624 148,646 697,704 731,817 607,189 634,965 550,045
----------- ----------- ----------- ----------- ----------- ------------ -----------
Earnings before income
taxes, extraordinary
item, and accounting
changes.................. 114,892 102,924 320,658 264,589 322,055 192,312 208,438
Applicable income taxes.... 40,320 36,479 111,897 93,115 110,799 63,058 66,570
----------- ----------- ----------- ----------- ----------- ------------ -----------
Earnings before
extraordinary item and
accounting changes....... 74,572 66,445 208,761 171,474 211,256 129,254 141,868
Extraordinary item and
accounting changes, net
of taxes................. -- -- -- -- -- -- 4,505
----------- ----------- ----------- ----------- ----------- ------------ -----------
Net earnings............... $ 74,572 $ 66,445 $ 208,761 $ 171,474 $ 211,256 $ 129,254 $ 146,373
=========== =========== =========== =========== =========== ============ ===========
PER COMMON SHARE DATA(3)
Basic
Earnings before
extraordinary item
and accounting
changes.............. $ .89 $ .82 $ 2.54 $ 2.13 $ 2.79 $ 1.67 $ 2.19
Net earnings........... .89 .82 2.54 2.13 2.79 1.67 2.27
Diluted
Earnings before
extraordinary item
and accounting
changes.............. .86 .79 2.45 2.05 2.66 1.63 2.13
Net earnings........... .86 .79 2.45 2.05 2.66 1.63 2.21
Cash dividends............. .50 .32 1.495 1.08 .98 .88 .72
Book value................. 21.13 20.00 20.72 19.57 18.34 15.28 14.50
</TABLE>
(continued on following page)
11
<PAGE> 20
UPC SELECTED CONSOLIDATED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,(1) YEARS ENDED DECEMBER 31,(2)
------------------ --------------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- ----------- ------------ -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD
END)
Total assets............... $18,413,614 $18,054,916 $18,105,079 $18,330,588 $17,182,861 $ 15,893,162 $14,180,524
Loans, net of unearned
income................... 12,727,659 12,560,838 12,658,564 12,578,571 10,917,307 10,074,458 8,077,152
Allowance for losses on
loans.................... 223,837 192,943 225,389 189,118 179,968 174,604 172,330
Investment securities...... 3,287,664 3,449,824 3,247,680 3,387,217 3,970,036 4,016,506 4,124,679
Total Deposits............. 13,581,227 13,386,397 13,440,269 13,514,144 13,047,488 12,506,212 11,732,707
Short-term borrowings...... 442,051 611,757 831,627 961,051 974,416 887,074 392,980
Long-term debt(4)
Parent company......... 373,242 373,468 373,746 373,459 214,758 114,790 114,729
Subsidiary banks....... 1,630,693 1,473,599 1,176,158 1,332,534 1,087,273 819,982 481,193
Total shareholders'
equity................... 1,809,442 1,663,363 1,746,866 1,618,883 1,450,546 1,202,686 1,111,158
Average assets............. 18,005,794 18,031,648 17,991,160 18,202,355 16,263,164 15,472,568 13,823,185
Average shareholders'
equity................... 1,760,458 1,615,979 1,690,992 1,533,348 1,334,995 1,226,852 973,087
Average shares outstanding
(in thousands)(3)
Basic.................. 83,379 78,904 80,336 77,240 72,512 71,678 56,169
Diluted................ 86,974 84,465 85,195 83,542 78,798 77,579 60,832
PROFITABILITY AND CAPITAL
RATIOS
Return on average assets... 1.68% 1.49% 1.16% .94% 1.30% .84% 1.06%
Return on average common
equity................... 17.50 17.16 12.54 11.38 16.56 10.74 15.88
Net interest income
(taxable-
equivalent)/average
earning assets(5)........ 4.80 4.80 4.79 4.56 4.60 4.56 4.58
Loans/deposits............. 93.72 93.83 94.18 93.08 83.67 80.56 68.84
Common and preferred
dividend payout ratio.... 57.03 37.71 54.96 44.57 29.25 35.03 24.42
Equity/assets (period
end)..................... 9.83 9.21 9.65 8.83 8.44 7.57 7.84
Average shareholders'
equity/average total
assets................... 9.78 8.96 9.40 8.42 8.21 7.93 7.04
Leverage ratio............. 10.72 10.05 10.48 9.50 8.11 7.56 7.73
Tier 1
capital/risk-weighted
assets................... 15.66 14.88 15.51 14.92 13.28 12.58 13.65
Total capital/risk-weighted
assets................... 20.71 17.55 18.12 17.60 16.21 14.67 15.92
CREDIT QUALITY RATIOS(6)
Allowance/period-end
loans.................... 1.95% 1.76% 1.99% 1.72% 1.82% 1.87% 2.27%
Nonperforming loans/total
loans.................... .81 .85 .92 .91 .85 .74 1.18
Allowance/nonperforming
loans.................... 240 207 215 188 213 252 193
Nonperforming assets/loans
and foreclosed
properties............... 1.01 1.14 1.13 1.21 1.09 1.08 1.76
Provision/average loans.... .62 .81 1.01 .65 .35 .19 .47
Net charge-offs/average
loans.................... .79 .67 .72 .61 .32 .27 .34
</TABLE>
- ---------------
(1) Interim period ratios have been annualized were applicable.
(2) Reference is made to "Basis of Presentation" in Note 1 to UPC's consolidated
financial statements contained in UPC's 1997 Annual Report to Shareholders.
(3) 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.
(4) 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.
(5) Average balances and calculations do not include the impact of the net
unrealized gain or loss on available for sale securities.
(6) FHA/VA government-insured/guaranteed loans have been excluded, since they
represent minimal credit risk to UPC.
12
<PAGE> 21
DHB SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Years Ended
March 31, (1) December 31,
----------------- -----------------------------------------------
1998 1997 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $ 180 $ 175 $ 750 $ 691 $ 671 $ 623 $ 599
Provision for loan losses -- -- 14 35 10 6 --
Securities gains, net -- 12 73 264 106 72 43
Other noninterest income 23 21 86 80 84 115 107
Noninterest expense 150 145 612 610 596 597 548
------- ------- ------- ------- ------- ------- -------
Income before income taxes 53 63 283 390 255 207 201
Applicable income taxes 11 17 80 113 77 54 52
------- ------- ------- ------- ------- ------- -------
Net income $ 42 $ 46 $ 203 $ 277 $ 178 $ 153 $ 149
======= ======= ======= ======= ======= ======= =======
PER COMMON SHARE DATA
Primary earnings per share $ 10.36 $ 11.46 $ 50.79 $ 69.32 $ 44.38 $ 38.34 $ 37.32
Book value, excluding unrealized
gain/loss on securities 495.23 455.54 484.87 444.08 384.76 348.39 318.04
</TABLE>
(Continued on following page)
13
<PAGE> 22
DHB SELECTED FINANCIAL DATA (Continued)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Three Months Ended Years Ended
March 31, (1) December 31,
------------------------- -------------------------
1998 1997 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets $ 19,719 $ 19,713 $ 20,633 $ 19,146
Loans, net of unearned income 5,487 5,358 6,205 5,481
Reserve for loan losses 82 90 92 91
Securities 10,861 12,378 11,073 12,322
Deposits 17,521 17,661 18,453 16,979
Total stockholders' equity 2,074 1,866 2,026 1,863
Average assets 20,716 19,430 19,890 19,371
Average stockholder's equity 2,050 1,865 1,945 1,840
Average number of shares outstanding 4,000 4,000 4,000 4,000
PROFITABILITY AND CAPITAL RATIOS
Return on average assets .8% .9% 1.0% 1.4%
Return on average common equity 8.2% 10.0% 10.4% 15.1%
Net interest income margin (2) 3.9% 3.9% 4.0% 3.9%
Loans/deposits 31.3% 30.3% 33.6% 32.3%
Equity/assets 10.5% 9.5% 9.8% 9.7%
Average stockholder's equity/average assets 10.2% 9.6% 9.7% 9.5%
Leverage ratio 9.7% 9.2% 9.5% 8.9%
Tier 1 capital to risk-weighted assets 30.1% 31.2% 27.1% 29.9%
Total capital to risk-weighted assets 31.4% 32.4% 28.4% 31.2%
ASSET QUALITY RATIOS
Reserve/period end loans, net of unearned income 1.5% 1.7% 1.5% 1.7%
Nonperforming loans/total loans, net of unearned income -- .7% -- .3%
Nonperforming assets/loans and foreclosed properties -- .7% -- .3%
Provision/average loans, net of unearned income -- -- .3% .7%
Net charge-offs/average loans, net of unearned income .2% -- .2% .7%
</TABLE>
<TABLE>
<CAPTION>
Years Ended
December 31,
-----------------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA
Total assets $ 19,595 $ 17,771 $ 17,994
Loans, net of unearned income 4,902 4,219 3,527
Reserve for loan losses 90 85 83
Securities 12,534 12,184 12,221
Deposits 17,505 16,391 16,665
Total stockholders' equity 1,817 1,297 1,272
Average assets 18,683 17,883 17,431
Average stockholder's equity 1,557 1,285 1,213
Average number of shares outstanding 4,000 4,000 4,000
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.0% .9% .9%
Return on average common equity 11.4% 11.9% 12.3%
Net interest income margin (2) 3.9% 3.8% 3.8%
Loans/deposits 28.0% 25.7% 21.2%
Equity/assets 9.3% 7.3% 7.1%
Average stockholder's equity/average assets 8.3% 7.2% 7.0%
Leverage ratio 7.7% 7.3% 7.3%
Tier 1 capital to risk-weighted assets 28.6% 28.4% 28.1%
Total capital to risk-weighted assets 30.4% 29.8% 29.5%
ASSET QUALITY RATIOS
Reserve/period end loans, net of unearned income 1.8% 2.0% 2.4%
Nonperforming loans/total loans, net of unearned income -- -- .1%
Nonperforming assets/loans and foreclosed properties -- -- .1%
Provision/average loans, net of unearned income .2% .2% --
Net charge-offs/average loans, net of unearned income .1% .1% (.1%)
</TABLE>
(1) Income amounts have been annualized for calculation of ratios, if
applicable.
(2) Calculated as net interest income divided by average earning
assets.
14
<PAGE> 23
SPECIAL MEETING OF DHB SHAREHOLDERS
DATE, PLACE, TIME, AND PURPOSE
This Proxy Statement is being furnished to the holders of DHB Common
Stock in connection with the solicitation by the DHB Board of proxies for use at
the Special Meeting and at any adjournments or postponements thereof at which
DHB shareholders will be asked to vote upon a proposal to approve the Agreement
and the Agreement to Merge. The Special Meeting will be held at DHB's offices,
located at 101 South State Street, Duck Hill, Mississippi, at 4:00 p.m., local
time, on Wednesday, July 29, 1998. See "DESCRIPTION OF TRANSACTION."
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES
The close of business on June 26, 1998, has been fixed as the DHB
Record Date for determining holders of outstanding shares of DHB Common Stock
entitled to notice of and to vote at the Special Meeting. Only holders of DHB
Common Stock of record on the books of DHB at the close of business on the DHB
Record Date are entitled to notice of and to vote at the Special Meeting. As of
the DHB Record Date, there were 4,000 shares of DHB Common Stock issued and
outstanding held by approximately 37 holders of record.
Each holder of record of shares of DHB Common Stock on the DHB Record
Date is entitled to cast one vote per share on the proposal to approve the
Agreement and the Agreement to Merge, and on any other matter properly submitted
for the vote of the DHB 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 DHB Common Stock entitled to vote at the Special
Meeting is necessary to constitute a quorum at the Special Meeting.
DHB intends to count shares of DHB Common Stock present in person at
the Special Meeting but not voting, and shares of DHB 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 the Agreement to Merge requires the affirmative vote of the
holders of at least two-thirds of the issued and outstanding shares of DHB
Common Stock entitled to vote 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 Agreement to Merge without specific
instructions from such customers. Given that the approval of the Agreement and
the Agreement to Merge requires the affirmative vote of the holders of at least
two-thirds of the outstanding shares of DHB Common Stock entitled to vote
thereon, any abstention, non-voting share or "broker non-vote" with respect to
such shares of DHB Common Stock will have the same effect as a vote AGAINST the
approval of the Agreement and the Agreement to Merge.
Shares of DHB Common Stock represented by properly executed proxies, if
such proxies are received prior to or 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 AGREEMENT TO MERGE AND IN THE DISCRETION OF THE
PROXY HOLDER AS TO ANY OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE SPECIAL
MEETING. IF NECESSARY, THE PROXY HOLDER MAY VOTE IN FAVOR OF A PROPOSAL TO
ADJOURN THE SPECIAL MEETING IN ORDER TO PERMIT FURTHER SOLICITATION OF PROXIES
IN THE EVENT THERE ARE NOT SUFFICIENT VOTES TO APPROVE THE FOREGOING PROPOSAL AT
THE TIME OF THE SPECIAL MEETING. HOWEVER, NO PROXY HOLDER WILL VOTE ANY PROXIES
VOTED AGAINST APPROVAL OF THE AGREEMENT AND THE AGREEMENT TO MERGE FOR A
PROPOSAL TO ADJOURN THE SPECIAL MEETING.
A DHB shareholder who has given a proxy solicited by the DHB Board may
revoke it at any time prior to its exercise at the Special Meeting by either (i)
giving written notice of revocation to the Corporate Secretary of DHB, (ii)
properly submitting to DHB 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
15
<PAGE> 24
revocation of proxies should be addressed as follows: Duck Hill Bank, 101 South
State Street, Duck Hill, Mississippi 38925; Attention: Betty Bowen, Executive
Vice-President and Secretary.
The directors and executive officers of DHB (including immediate family
members and affiliated entities) owned, as of the DHB Record Date, 2,972 shares,
or approximately 74.3% of the outstanding shares of DHB Common Stock. The
directors and executive officers of DHB have indicated their intent to vote for
approval of the Agreement and Agreement to Merge. Assuming that occurs, then the
requisite shareholder approval necessary to approve the Agreement and Agreement
to Merge shall have been obtained. Still, however, the vote of all shareholders
of DHB is important. Furthermore, certain specific steps must be taken by any
DHB shareholder desiring to exercise dissenters' rights. See " --Dissenters'
Rights", "DESCRIPTION OF THE TRANSACTION -- Dissenters' Rights" and Appendix C
hereto, which is a copy of the Mississippi statute governing dissenters' rights.
The directors and executive officers of UPC owned, as of the DHB Record
Date, no shares of DHB Common Stock. As of the DHB Record Date, UPC held no
shares of DHB Common Stock in a fiduciary capacity for others, or as a result of
debts previously contracted, and DHB held no shares of DHB Common Stock in a
fiduciary capacity for others.
For information with respect to beneficial owners of 5% or more of the
outstanding shares of DHB Common Stock, and information with respect to the
number and percentage of outstanding shares of DHB Common Stock beneficially
owned by the directors and executive officers of DHB, see "BUSINESS OF DHB --
Principal Holders of Common Stock."
SOLICITATION OF PROXIES
Proxies may be solicited by the directors, officers, and employees of
DHB by mail, in person, or by telephone or telegraph. Such persons will receive
no additional compensation for such services. DHB 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 DHB 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
borne by UPC as provided in the Agreement. See "DESCRIPTION OF TRANSACTION --
Expenses and Fees."
DISSENTERS' RIGHTS
Holders of DHB Common Stock have the right to dissent from the Merger
and, assuming the Merger is consummated, to receive in cash an amount determined
to be the "fair value" of their shares of DHB Common Stock. In order to be
entitled to fully exercise dissenters' rights, a DHB shareholder choosing to
dissent (a "Dissenting Shareholder") must NOT vote FOR approval of the Agreement
and the Agreement to Merge and must take certain other procedural steps to
"perfect" such Dissenting Shareholder's rights under Article 13 of the MBCA. See
"DESCRIPTION OF TRANSACTION - Dissenters' Rights" and Appendix D hereto, which
is a copy of Article 13 of the MBCA governing statutory dissenters' rights.
It is not necessary for a DHB shareholder to vote against consummation
of the Merger in order to perfect his or her right to dissent and demand
appraisal. However, no such shareholder may vote for approval and adoption of
the Agreement and the Agreement to Merge and thereafter demand his or her
dissenters' rights. Because all proxies submitted which do not specify how such
proxy is to be voted will be voted in favor of the adoption and approval of the
Agreement and the Agreement to Merge, a DHB shareholder who desires to dissent
from approval of the Merger should not submit such a proxy. A DHB shareholder
who votes for approval and adoption of the Agreement and the Agreement to Merge
or who submits a proxy which does not specify how such proxy is to be voted will
waive any rights of dissent and appraisal. A vote against consummation of the
Merger will not satisfy the statutory requirement that a DHB shareholder give
notice of his or her intention to dissent and make demand for payment of his or
her shares of DHB Common Stock.
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RECOMMENDATION
THE DHB BOARD HAS UNANIMOUSLY APPROVED THE AGREEMENT, THE AGREEMENT TO
MERGE, AND THE MERGER CONTEMPLATED THEREBY, BELIEVES THAT THE PROPOSAL TO
APPROVE THE AGREEMENT AND THE AGREEMENT TO MERGE IS IN THE BEST INTERESTS OF DHB
AND ITS SHAREHOLDERS, AND RECOMMENDS THAT THE DHB SHAREHOLDERS VOTE FOR APPROVAL
OF THE AGREEMENT AND THE AGREEMENT TO MERGE.
DESCRIPTION OF TRANSACTION
The following information describes material aspects of the Merger.
This description does not purport to be complete and is qualified in its
entirety by reference to the Appendices hereto, including the Agreement and the
Agreement to Merge, which are attached as Appendices A and B, respectively, to
this Proxy Statement and incorporated herein by reference. All shareholders are
urged to read the Appendices in their entirety.
GENERAL
The Agreement provides for the acquisition of DHB by UPC pursuant to
the merger of DHB with and into UPB, a national banking association which is a
wholly-owned subsidiary of UPHC, which is a wholly-owned subsidiary of UPC, with
the effect that UPB will be the surviving corporation resulting from the Merger.
At the Effective Time, each share of DHB Common Stock then issued and
outstanding (excluding shares held by DHB, UPC, or UPC's subsidiaries, in each
case other than shares held in a fiduciary capacity or as a result of debts
previously contracted and shares held by dissenting shareholders) will be
converted into and exchanged for the right to receive 10.6008 shares of UPC
Common Stock, subject to possible adjustment as described below.
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 DHB
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 reasonably
selected by UPC) on the last trading day preceding the Effective Time.
As of the DHB Record Date, DHB had 4,000 shares of DHB Common Stock
outstanding. Based upon the Exchange Ratio, upon consummation of the Merger, UPC
will issue approximately 42,403 shares of UPC Common Stock.
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 10.6008 SHARES OF UPC COMMON
STOCK FOR EACH SHARE OF DHB COMMON STOCK. An adjustment could occur if the DHB
Board elects 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.
DHB is not obligated to consummate the Merger with UPC if both:
(a) the Average Closing Price, as defined below, is less than $47.25;
and
(b) (i) the quotient obtained by dividing the Average Closing Price by
$59.06 (the "UPC Ratio") is less than (ii) the quotient 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 Determination Date as defined below
by the Index Price on November 13, 1997 (the "Index Ratio"), less 15%.
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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, or other authoritative source as chosen by
UPC) for the twenty (20) consecutive trading days in which such shares are
traded on the NYSE ending at the close of trading on the Determination Date. The
Determination Date is the later of the date of the Special Meeting and the date
on which consent of the Federal Reserve shall be received (without regard to any
requisite waiting period thereof.)
In such case, the DHB Board has the right to terminate the Agreement
during the ten-day period commencing two days after the Determination Date by
giving UPC prompt notice of that decision. DHB may withdraw its termination
notice at any time during that ten-day period. During the five-day period after
receipt of such notice, UPC has the option to increase the consideration payable
to DHB shareholders by adjusting the Exchange Ratio in the manner described
below. UPC IS UNDER NO OBLIGATION TO ADJUST THE EXCHANGE RATIO. Should UPC elect
to adjust the Exchange Ratio, it must give DHB prompt notice of that election
and of the adjusted Exchange Ratio, in which case no termination shall have
occurred pursuant to such right of termination.
These conditions reflect the parties' agreement that DHB shareholders
will assume the risk of declines in the value of UPC Common Stock to $47.25. Any
adjustment of the Exchange Ratio below a decline in the price of UPC Common
Stock to $47.25 would be dependent on whether the Average Closing Price of UPC
Common Stock lags behind the relative performance of the common stocks of the
Index Group by more than 15%.
If the Average Closing Price is less than $47.25 per share and the UPC
Ratio is less than the Index Ratio, the DHB Board would likely elect to
terminate the Agreement so as to require UPC to consider increasing the Exchange
Ratio. If the DHB 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 DHB's earning potential as part of UPC justifies the
issuance of an increased number of shares of UPC Common Stock. If UPC declines
to adjust the Exchange Ratio, DHB may elect to proceed without the adjustment,
provided it does so within 12 days of the Determination Date, although it has no
current intention to so elect without resoliciting the approval of the DHB
shareholders. In making such determination, the DHB 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 and the future prospects
for UPC Common Stock following the Merger), the business, financial condition,
results of operations and prospects of DHB, developments in the banking industry
and the advice of its financial advisor and legal counsel. UPC IS UNDER NO
OBLIGATION TO ADJUST THE EXCHANGE RATIO.
The operation of the adjustment mechanism can be illustrated by three
scenarios. (For purposes of the scenarios, it has been assumed that the initial
Exchange Ratio is 10.6008, the Starting Price of UPC Common Stock is $59.06, and
the Index Price, as of the Starting Date, is $100).
(1) The first scenario occurs if the Average Closing Price is not less than
$47.25. 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 DHB shareholders could have fallen from a pro forma $626.08
per share of DHB Common Stock as of the Starting Date (10.6008
multiplied by $59.06), to as low as $500.89 per share of DHB Common
Stock, as of the Determination Date (10.6008 multiplied by $47.25).
(2) The second scenario occurs if the Average Closing Price is less than
$47.25, but does not represent a decline from the Starting Price of
more (i.e. more than 15%) 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 DHB shareholders would have fallen from
a pro forma $626.08 per share of DHB Common Stock 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.
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(3) The third scenario occurs if both the Average Closing Price declines
below $47.25 and the UPC Ratio is below the Index. Under this scenario,
the adjustment in the Exchange Ratio is designed to ensure, subject to
the DHB Board exercising its right to terminate the Agreement and the
UPC Board electing to avoid such termination, that, if the Merger is
consummated, the DHB shareholders receive shares of UPC Common Stock
having a value (based upon the Average Closing Price) that corresponds
to at least $47.25 or a 15% decline from the stock price performance
reflected by the Index Group, whichever is the lesser amount.
For example, if the Average Closing Price were $35.00, and the ending
Index Price, as of the Determination Date, were $90, the UPC Ratio
(.5926) [the result of dividing $35.00 by $59.06] would be below the
Index Ratio (.75) [the result of dividing $90 by $100 =.90, less .15],
DHB could terminate the Agreement unless UPC elected within five days
to increase the Exchange Ratio to equal 13.4165, which represents the
lesser of (a) 14.3111 [the result of dividing $500.89 (the product of
$47.25 and the 10.6008 Exchange Ratio) by the Average Closing Price
($35.00), rounded to the nearest thousandth] and (b) 13.4165 [the
result of dividing 7.9506 (the product of the Index Ratio (.75) and
10.6008) by the UPC Ratio (.5926), rounded to the nearest thousandth].
Based upon the assumed $35.00 Average Closing Price, the new Exchange
Ratio would represent a value to the DHB shareholders of $469.58 per
share of DHB Common Stock.
If, on the other hand, the Average Closing Price were $45.00, and the
ending Index Price, as of the Determination Date, were $100, the UPC
Ratio (.7619) would be below the Index Ratio (.85) [the result of
dividing $100 by $100 or 1.00, less .15). DHB could terminate the
Agreement unless UPC elected within five days after its receipt from
DHB of notice of intent to terminate, to increase the Exchange Ratio to
equal 11.1309, which represents the lesser of (a) 11.1309 [the result
of dividing $500.89 (the product of $47.25 and the 10.6008 Exchange
Ratio) by the Average Closing Price ($45.00), rounded to the nearest
thousandth] and (b) 11.8266 [the result of dividing 9.0107 (the product
of the Index Ratio (.85) and 10.6008) by the UPC Ratio (.7619), rounded
to the nearest thousandth]. Based upon the assumed $45.00 Average
Closing Price, the new Exchange Ratio would represent a value to the
DHB shareholders of $500.89 per share of DHB Common Stock.
The actual market value of a share of UPC Common Stock at the Effective Time, at
the time certificates for those shares are delivered following surrender and
exchange of Certificates for shares of DHB Common Stock and at any time
thereafter, may be more or less than the Average Closing Price. DHB shareholders
are urged to obtain current market quotations for UPC Common Stock. See
"COMPARATIVE MARKET PRICES AND DIVIDENDS."
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. In the early 1990s, traditional banking began
its transition into financial services. Many things contributed to this
evolution:
- Proliferation and speed of the newer computers;
- An increasing need for specialized financing and leasing;
- Spread and availability of ATM shared networks;
- Sophistication and needs of the Baby Boomer generation of customers;
- Higher salaried individuals for each of several financial services to be
offered; and
- Need for extensive training and experience in managing a bank's
securities portfolio. (60% of the assets of DHB are in its securities
portfolio).
Based on this transition, DHB's Board and management began deep
consideration of the future of DHB, as well as the future of most small banks.
DHB operates mostly in a small, closed environment of small family businesses,
small farms and a large elderly population. The needs and abilities of this
customer base are necessarily limited. Therefore, DHB's management felt it could
do little to increase loan interest or fee income. Furthermore, demographics of
Grenada and Montgomery Counties, Mississippi do not offer much encouragement for
a wide
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change in this pattern and outlook. DHB was, and is, surrounded by several
large, well-run institutions that are able to offer the full range of requested
services with qualified and knowledgeable specialist officers.
In short, DHB's profit margin was getting harder to maintain each year
and its options to improve it were diminishing. Additionally, in recent years,
DHB has been operating in a low cost-of-interest environment. It was rather easy
to produce a model scenario of DHB's future potential, if rates and the
cost-of-deposits should rise two or three percentage points.
In early 1994, President Norman Ezell was approached by a group of
individuals who expressed an interest in purchasing all of the issued and
outstanding shares of DHB (the "1994 Inquiry"). President Ezell advised the DHB
Board of the inquiry and the matter of a sale was discussed at length. President
Ezell was directed to continue the discussions to see what offer would be made
and to examine the group's intention for DHB and its location. The group's
ultimate offer was considered insufficient for DHB's perceived value by the DHB
Board, and the discussions ended. However, the 1994 Inquiry prompted management
and the DHB Board to again earnestly consider DHB's future, stockholder equity,
and income and resulted in the DHB Board requesting that President Ezell make
inquiries to ascertain a level of interest in a sale or merger. The DHB Board
determined that it would only consider a sale or merger that would result in DHB
continuing to be operated within its present community.
Soon thereafter, President Ezell contacted DHB's accountants, T. E.
Lott & Company, and a personal friend who is a retired CPA, for their opinion on
DHB's consideration to merge. A lengthy discussion into details was held with
each, and both advised DHB to consider a sale or merger. Thereafter, both were
given permission by President Ezell to contact financial institutions with which
they worked and inquire as to the specific institution's interest. At least
three discussions resulted from these contacts.
Additionally, President Ezell contacted two large financial
institutions in both Jackson, Mississippi and Memphis, Tennessee to inquire as
to the particular institution's interest in purchasing DHB. Neither expressed
interest, but indicated that each would pass the information along to other
financial institutions that might be interested.
Since the 1994 Inquiry, serious discussions have been held with seven
financial institutions and eight separate groups of individuals. In June 1996,
DHB received its first formal offer from a large bank with interests in DHB's
primary service area (the "June 1996 Offer"). This offer was for a stock
exchange based upon a DHB stock price of about 98% of book value. The DHB Board
declined the offer as insufficient. In February 1997, the June 1996 Offer was
increased slightly, but it was rejected by the DHB Board in April 1997.
In July 1996, DHB received an oral offer from a financial institution
with plans to expand into DHB's primary service area. This offer would result in
DHB stockholders receiving an amount equal to approximately book value for their
DHB Common Stock. Their offer was likewise rejected as insufficient.
On October 8, 1996, President Ezell called the President of Union
Planters Bank of Grenada ("Grenada") to inquire as to UPC's interest level in
acquiring DHB. Several meetings were held over a period of the following months,
but resulted in no firm offer. Both sides agreed that the two institutions would
fit well into DHB's primary service area as UPC had always maintained a
small-bank feel for businesses and individuals. Furthermore, the demographics of
both communities and the needs of both banks were similar.
In June of 1997, DHB received a verbal offer from another bank within
its geographical location. This offer was similar to the prior three. President
Ezell and the DHB Board realized that DHB could not expect to receive a large
premium above book value for the sale of DHB. The limited loan and financial
services demand of DHB's primary service area reduced the prospects of much
profit increase, and the downsize in a deteriorated economy could be
significant. Furthermore, about this time, Year 2000 concerns began to surface
in the news and within communications from banking regulators and hardware sales
representatives. Investigation of DHB's aging computer and data hardware
revealed that it would have to be replaced on or before January 1, 2000. DHB
could anticipate an expenditure of approximately $200,000.00 to remedy the
situation and survive into the coming millennium.
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In August of 1997, Grenada's President and President Ezell agreed on a
tentative 1.20 times DHB book value as an exchange ratio. On that date, UPC
Common Stock's closing price on the NYSE was $49.25 per share, meaning that
UPC's offer on that date was approximately $650.00 per share of DHB Common
Stock. During the next two months, both sides negotiated an agreement. In
mid-October, President Ezell and Vice President Betty Bowen met at the Grenada
office of Union Planters with Grenada's President and some of his staff to
discuss DHB's concern about the changing valuation on DHB shares due to the
continuing rise of UPC stock. The valuation was staying the same, but the number
of shares would be reduced significantly, effecting dividends for shareholders
dependent on this for income. Staff and operational considerations were also
discussed.
For various reasons, the Agreement was not executed until November 6,
1997. According to the Agreement, the amount of UPC Common Stock to be received
by DHB shareholders was to be based upon the daily closing price for UPC Common
Stock on the NYSE for 20 days prior to the execution of the Agreement. Thus, on
November 6, 1997, the 20-day average closing price of UPC Common Stock on the
NYSE was $61.30. The proposed Exchange Ratio was determined to be 10.6008 shares
of UPC Common Stock for each share of DHB Common Stock, based upon a $650.00 per
share valuation of DHB Common Stock.
DHB'S REASONS FOR THE MERGER. In reaching its decision to approve the
Agreement and the Merger, the DHB Board consulted its counsel, accountants and
DHB's management. A number of factors were considered over this period,
including the following:
- DHB Board's familiarity with and review of DHB's business, operations,
earnings, management depth, financial condition, future capital
requirements, and earnings potential;
- The age and health of President and majority stockholder Norman L.
Ezell;
- The DHB Board's belief that the terms of the Agreement with UPC
were attractive to DHB shareholders in that the Agreement would allow
DHB shareholders to become shareholders of UPC, one of the largest bank
holding company in the area, whose stock is traded on the NYSE, and
because of the recent earnings performance of UPC;
- UPC's dividend payment history in contrast to DHB's lack of potential
for future dividend consistency;
- The value being offered to DHB shareholders by UPC in relation to the
market value, book value and earnings per share of DHB Common Stock;
- UPC's long-standing philosophy of community banking which maintains
local autonomy by use of local management and employees;
- As the interest of most regional bank holding companies in DHB had
decreased, UPC had been aggressive in merging and acquiring community
banks. DHB desired to take advantage of UPC's philosophy as the DHB
Board felt that UPC's desire to merge could change when interest rates
rose;
- The current and prospective economic and regulatory environment and
competitive constraints facing the banking industry and small financial
institutions in DHB's primary service area;
- DHB Board's belief that, due to the reasons set forth above, UPC was the
most attractive choice as a long-term affiliation partner of DHB; and
- The expectation that the Merger would be a tax-free transaction to DHB
and its shareholders.
The DHB Board did not quantify or otherwise attempt to assign any
specific or relative weight to any of the factors discussed above in its
determination that the Agreement and the Merger are in the best interests of DHB
shareholders.
ACCORDINGLY, THE DHB BOARD UNANIMOUSLY RECOMMENDS THAT YOU EXECUTE THE
ENCLOSED PROXY AND THAT YOU VOTE FOR APPROVAL OF THE AGREEMENT AND THE AGREEMENT
TO MERGE.
UPC'S REASONS FOR THE MERGER. In adopting the Agreement, the Agreement
to Merge, 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:
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(a) review, based in part on a presentation by UPC's management, of (i)
the business, operations, earnings, and financial condition, including the DHB
levels and asset quality, of DHB on a 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 DHB
operates, including existing competition, history of the market areas with
respect to financial institutions, and average demand for credit, on a
historical and prospective basis, and (iii) the results of UPC's due diligence
review of DHB; 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
Mississippi served by DHB.
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 stated in
the Certificate of Merger to be issued by the OCC. Subject to the terms and
conditions of the Agreement, unless otherwise agreed upon in writing by UPC and
DHB, the Agreement provides that the parties will use their reasonable efforts
to cause the Effective Time to occur on such date as may be designated by UPC
within 30 days following the last to occur of (i) the effective date of the last
required consent of any regulatory authority having authority over and approving
of exempting the Merger (including any requisite waiting period in respect
thereof), (ii) the date on which the shareholders of DHB approve the Agreement
and the Agreement to Merge, 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). It is anticipated that the
Effective Time will occur on August 1, 1998, 3 days after the Special Meeting.
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. DHB and UPC anticipate that all conditions to
consummation of the Merger will be satisfied so that the Merger can be
consummated on or about August 1, 1998. However, delays in the consummation of
the Merger could occur.
The Board of Directors of either DHB or UPC generally may terminate the
Agreement and the Agreement to Merge if the Merger is not consummated by
December 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 or certain other
specific conditions exist. See "-- Conditions to Consummation of the Merger" and
"-- Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS
Holders of record of DHB Common Stock who follow the procedures
specified by Article 13 of the MBCA ("Article 13") will be entitled to the
payment of the "fair value" of their DHB Common Stock immediately before the
Effective Time, excluding any appreciation or depreciation resulting from the
accomplishment or expectation of the Merger but including "a fair rate of
interest" thereon.
THE FOLLOWING SUMMARY OF THE PROVISIONS OF ARTICLE 13 IS NOT INTENDED
TO BE A COMPLETE STATEMENT OF SUCH PROVISIONS, THE FULL TEXT OF WHICH FOLLOWS IN
APPENDIX C, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE THERETO.
A holder of record of DHB Common Stock electing to exercise dissenters'
rights (1) must deliver to DHB, before the vote at the DHB Special Meeting, a
written demand for payment of such shares of common stock made by or on behalf
of the record holder reasonably informing DHB of the identity of such holder and
of such holder's intention to demand payment of such holder's DHB Common Stock
if the Merger is effectuated (the "Objection Notice") and (2) must not vote in
favor of the Agreement and the Agreement to Merge which provide for the Merger.
The requirement of such written demand is in addition to and separate from the
requirement that such
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shares not be voted in favor of the Agreement and the Agreement to Merge, and
the requirement of such written demand is not satisfied by voting against the
Agreement and the Agreement to Merge either in person or by proxy. The
requirement that such shares not be voted in favor of the Agreement and the
Agreement to Merge will be satisfied if no proxy is returned and such shares are
not voted in person. Because a properly executed and delivered proxy which is
left blank will, unless revoked, be voted FOR approval of the Agreement and the
Agreement to Merge, in order to be assured that such holder's DHB Common Stock
are not voted in favor of the Agreement and the Agreement to Merge, a holder of
DHB Common Stock electing to exercise dissenters' rights who votes by proxy must
not leave the proxy blank but must (i) vote AGAINST the approval of the
Agreement and the Agreement to Merge or (ii) ABSTAIN from voting. NEITHER A VOTE
AGAINST APPROVAL OF THE AGREEMENT AND THE AGREEMENT TO MERGE NOR AN ABSTENTION
WILL SATISFY THE REQUIREMENT THAT A WRITTEN DEMAND FOR APPRAISAL BE DELIVERED TO
DHB BEFORE THE VOTE ON THE AGREEMENT AND THE AGREEMENT TO MERGE AT THE SPECIAL
MEETING.
Any shareholder of DHB entitled to vote on the Agreement and Agreement
to Merge has the right to receive payment of the fair value of his or her shares
of DHB Common Stock. A DHB shareholder may not dissent as to less than all of
the shares that he or she beneficially owns. A nominee or fiduciary may not
dissent on behalf of a beneficial owner as to less than all of the shares of
such beneficial owner held of record by such nominee or fiduciary. A beneficial
owner asserting dissenters' rights to shares held on his or her behalf must
notify DHB in writing of the name and address of the record holder of the
shares, if known to him or her.
If the Agreement and Agreement to Merge is approved by DHB's
shareholders at the Special Meeting, each DHB shareholder who has filed an
Objection Notice will be notified by DHB of such approval no later than ten (10)
days after the Effective Time (the "Dissenter's Notice"). The Dissenters Notice
will (i) state where the payment demand must be sent and where and when
certificates for certificated shares of DHB Common Stock (the "Certificates")
must be deposited, (ii) inform holders of uncertificated shares (if any) to what
extent transfer of the shares will be restricted after the payment demand is
received, (iii) supply a form for demanding payment that includes the date of
the first announcement to news media or to shareholders of the principal terms
of the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he or she acquired beneficial
ownership of the shares before that date, (iv) set a date by which DHB must
receive the payment demand, which date may not be fewer than thirty (30) nor
more than sixty (60) days after the date the Dissenter's Notice was delivered,
and (v) be accompanied by a copy of Article 13 of the MBCA.
Within the time prescribed in the Dissenter's Notice, a DHB shareholder
electing to dissent must make a demand for payment (the "Payment Demand"),
certify whether he or she (or the beneficial shareholder on whose behalf he or
she is asserting dissenters' rights) acquired beneficial ownership of the shares
of DHB Common Stock before November 7, 1997 (the date of the first public
announcement of the terms of the Agreement), and deposit his or her Certificates
in accordance with the terms of the Dissenter's Notice. Upon delivering the
Payment Demand and depositing the Certificates in accordance with the
Dissenter's Notice, the DHB shareholder will retain all other rights of a DHB
shareholder until these rights are cancelled or modified by consummation of the
Merger.
FAILURE TO COMPLY SUBSTANTIALLY WITH THESE PROCEDURES WILL CAUSE THE
DHB SHAREHOLDER TO LOSE HIS OR HER DISSENTERS' RIGHTS TO PAYMENT FOR THE SHARES
IN CASH. CONSEQUENTLY, ANY DHB SHAREHOLDER WHO DESIRES TO EXERCISE HIS OR HER
RIGHTS TO PAYMENT FOR HIS OR SHARES IS URGED TO CONSULT HIS OR HER LEGAL ADVISOR
BEFORE ATTEMPTING TO EXERCISE SUCH RIGHTS.
As soon as the Merger is consummated, or upon later receipt of a timely
Payment Demand, UPB, as the surviving corporation of the Merger, shall, pursuant
to Section 79-4-13.25 of the MBCA, pay to each dissenting shareholders who has
complied with the requirements of Section 79-4-13.23 of the MBCA the amount that
UPB estimates to be the fair value of the shares of DHB Common Stock, plus
accrued interest. Such payment must be accompanied by (i) certain DHB financial
statements, (ii) a statement of UPB's estimate of the fair value of the shares,
(iii) an explanation of how the interest was calculated, (iv) a statement of the
dissenter's right to demand payment under Section 79-4-13.28 of the MBCA, and
(v) a copy of Article 13 of the MBCA. As authorized by Section 79-4-13.27 of the
MBCA, UPB intends to delay any payments with respect to any shares (the
"after-acquired shares") held by a dissenting shareholder which were not held by
such shareholder on November 7, 1997,
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the date of the first public announcement of the terms of the Agreement. To the
extent UPB should elect to withhold payment, after effecting the Merger, UPB as
the surviving corporation in the Merger must estimate the fair value of the
shares, plus accrued interest, and pay such amount to each dissenter who agrees
to accept it in full satisfaction of this demand. UPB shall send with such
payment 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 additional payment under Section 79-4-13.28 of the
MBCA.
If (i) a dissenter believes that the amount paid with respect to his or
her shares or offered under Sections 79-4-13.25 or 79-4-13.27 is less than the
fair value of his or her shares or that the interest due is incorrectly
calculated, (ii) UPB fails to make payment under Section 79-4-13.25 within sixty
(60) days after the date set for demanding payment, or (iii) DHB, having failed
to effect the Merger, 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, the dissenter may notify DHB (or UPB,
if the Merger is consummated) in writing (which notice is invalid if not
delivered to DHB, or UPB, if the Merger is consummated, within thirty (30) days
after DHB or UPB made or offered payment for such shareholder's shares) of his
or her own estimate of the fair value of the shares and the amount of interest
due and may demand payment of the difference between his or her estimate of the
fair value and the amount of any payment with respect to such shares already
received by the shareholder. In the alternative, if payment has not yet been
made by UPB or DHB, the shareholder may reject UPB's offer under Section
79-4-13.27 of the MBCA and demand payment of the fair value of his or her shares
and interest due.
If UPB cannot agree with such dissenter on a fair value within sixty
(60) days after UPB receives the Payment Demand, UPB will institute judicial
proceedings in the Chancery Court of Montgomery County, Mississippi (the
"Court"), naming all dissenters (whether or not Mississippi residents) whose
demands remain unsettled as parties to the proceeding and serving such parties
with a copy of the petition. The Court will then undertake to establish the fair
value of the shares as of the point in time immediately prior to the
consummation of the Merger, excluding any appreciation or depreciation in
anticipation of the Merger, unless the Court determines that the exclusion would
be inequitable, and will determine the interest owing on the disputed amount.
The fair value of a dissenter's shares of DHB Common Stock may be more than,
less than or the same as the consideration provided for in the Agreement. The
Court may, in its discretion, appoint one or more persons as appraisers to
receive evidence and render a decision on the questions of fair value. Each
dissenter made a party to the proceeding is entitled to judgment for the amount
(if any) by which the Court finds the fair value of his or shares, plus accrued
interest, exceeds the amount paid by UPB or the fair value, plus accrued
interest, of his or her after-acquired shares for which UPB elected to withhold
payment under Section 79-4-13.27 of the MBCA.
The Court shall assess the costs and expenses of such proceeding
(including reasonable compensation for, and expenses of the appraiser but
excluding fees and expenses of counsel and experts) against UPB, except that the
Court may assess such costs and expenses as it deems appropriate against any or
all of the dissenting shareholders if it should find that their demand for
additional payment was arbitrary, vexatious or not in good faith. The Court may
award fees and expenses of counsel and experts in amounts the Court finds
equitable: (i) against UPB, if the Court finds that UPB or DHB did not comply
substantially with the relevant requirements of the MBCA or (ii) against UPB or
any dissenting shareholder if the Court finds that the party against whom the
fees and expenses are assessed acted arbitrarily, vexatiously or not in good
faith.
FAILURE TO FOLLOW PROPERLY ALL PROCEDURES SPECIFIED IN ARTICLE 13 WILL
RESULT IN A LOSS OF STOCKHOLDER'S APPRAISAL RIGHTS.
For a discussion of the Federal income tax consequences of a receipt of
cash for shares of DHB Common Stock, see "DESCRIPTION OF TRANSACTION - Certain
Income Tax Consequences."
DISTRIBUTION OF UPC STOCK CERTIFICATES
Promptly after the Effective Time, UPC and DHB will cause UPB, acting
in its capacity as Exchange Agent, to mail to the former shareholders of DHB a
letter of transmittal, together with instructions for the
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exchange of the Certificates representing shares of DHB Common Stock for
certificates representing shares of UPC Common Stock.
DHB 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 DHB Common
Stock, together with a properly completed letter of transmittal, there will be
issued and mailed to each holder of DHB Common Stock surrendering such items a
certificate or certificates representing the number of shares of UPC Common
Stock to which such holder is entitled and a check for the amount to be paid in
lieu of any fractional share (without interest), if any, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon), if any. UPC will not be obligated to deliver the
consideration to which any former holder of DHB Common Stock is entitled as a
result of the Merger until the holder surrenders such holder's Certificates
representing the shares of DHB 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
beginning 30 days after the Effective Time, 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 DHB Common Stock Certificate until the holder
duly surrenders such Certificate. Upon surrender of such DHB Common Stock
Certificate, however, 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. In the event any DHB Common Stock Certificate has been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the Certificate to be lost, stolen, or destroyed 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 it 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, other than with respect to holders of shares of
DHB Common Stock who dissent from the Merger pursuant to Article 13 of the MBCA,
the stock transfer books of DHB will be closed to holders of DHB Common Stock
and no transfer of shares of DHB Common Stock by any such holder will thereafter
be made or recognized. If Certificates representing shares of DHB 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.
LIMITATION ON NEGOTIATIONS
Section 6.3 of the Agreement provides that DHB shall not solicit or
knowingly encourage any Acquisition Proposal by any person. Furthermore, except
to the extent necessary to comply with the fiduciary duties of the DHB Board, as
advised by legal counsel, DHB is prohibited from furnishing any non-public
information that it is not legally obligated to furnish, negotiating with
respect to or entering into any agreement with respect to, any Acquisition
Proposal. DHB must promptly notify UPC immediately following receipt of any
Acquisition Proposal. As protection against possible violation of this
limitation, DHB has agreed, under certain circumstances, to pay to UPC the sum
of $150,000 in immediately available funds in the event and at the time that DHB
enters into a letter of intent or agreement with respect to an Acquisition
Proposal or supports or indicates an intent to support an Acquisition Proposal
other than pursuant to the Agreement. The limitation would survive termination
of the Agreement in certain circumstances. This provision may have, or may have
had, the effect of discouraging competing offers to acquire or merge with DHB.
CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is subject to various conditions, including
(i) receipt of the approval of the shareholders of DHB of the Agreement and the
Agreement to Merge, and the consummation of the transactions contemplated
thereby, including the Merger, as and to the extent required by the law or by
the provisions of any
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<PAGE> 34
governing instrument, (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 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
DHB and UPC as set forth in the Agreement, (vii) the performance of all
agreements and the compliance with all covenants of DHB 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 DHB or UPC, (ix) 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, (x) receipt by
UPC of agreements from each affiliate of DHB (xi) satisfaction of certain other
conditions, including the receipt of various certificates from the officers of
DHB and UPC. See "-- Regulatory Approval" and "-- Waiver, Amendment, and
Termination."
No assurance can be provided as to when or if all of the conditions
precedent to the Merger can or will be satisfied or waived by the party
permitted to do so. Except in limited circumstances, in the event the Merger is
not effected on or before December 31, 1998, the Agreement may be terminated and
the Merger abandoned by the Board of Directors of either DHB 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 DHB
shall have received all applicable regulatory approvals to consummate the
transactions contemplated by 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.
By letters dated May 14, 1998 and June 10, 1998, the Federal Reserve and the OCC
advised UPC that the Merger had been approved. As of the date of this
Registration Statement, the Mississippi Department has not objected to the
Merger.
Neither DHB nor UPC are 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 is presently
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.
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The Merger also is subject to the approval of the OCC and the
Mississippi Department who will both consider similar factors as the Federal
Reserve.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the Agreement may be amended by a
subsequent writing signed by each of the parties upon the approval of the Board
of Directors of each of the parties, whether before or after shareholder
approval of the Agreement and the Agreement to Merge has been obtained; provided
however, that after any such approval by the holders of DHB Common Stock, except
as contemplated by the Agreement, there shall be made no amendment that modifies
in any material respect the consideration to be received by DHB shareholders in
the Merger without the further approval of the holders of DHB Common Stock. In
addition, prior to or at the Effective Time, either DHB or UPC, or both, acting
through their respective Boards of Directors, chief executive officers, or other
authorized officers, may waive any default in the performance of any term of the
Agreement by the other party, may waive or extend the time for the compliance or
fulfillment by the other party of any and all of its obligations under the
Agreement and may waive any of the conditions precedent to the obligations of
such party under the Agreement, except any condition that, if not satisfied,
would result in the violation of any applicable law or governmental regulation.
No such waiver will be effective unless written and unless executed by a duly
authorized officer of DHB or UPC, as the case may be.
The Agreement and the Agreement to Merge 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 DHB and UPC; (ii) by the DHB Board or the
UPC Board (a) in the event of any inaccuracy of any representation or warranty
of the other party contained in the Agreement which cannot be or has not been
cured within 30 days after giving written notice to the breaching party of such
inaccuracy and which inaccuracy would provide the terminating party the ability
to refuse to consummate the Merger under the applicable standards set forth in
the Agreement (provided that the terminating party is not then in breach of any
representation or warranty contained in the Agreement under the applicable
standards set forth in the Agreement or in material breach of any covenant or
other agreement contained in the Agreement), (b) in the event of a material
breach by the other party of any covenant or agreement contained in the
Agreement which cannot be or has not been cured within 30 days after the giving
of written notice to the breaching party of such breach (provided that the
terminating party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standards set forth in the
Agreement or in material breach of any covenant or other agreement contained in
the Agreement), (c) if (1) any consent of any regulatory authority required for
consummation of the Merger and the other transactions contemplated by the
Agreement has been denied by final nonappealable action, or if any action taken
by such authority is not appealed within the time limit for appeal or (2) the
shareholders of DHB fail to vote their approval of the Agreement as required by
the MBCA, the MBL and the Agreement at the Special Meeting, or (d) if the Merger
is not consummated by December 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 DHB 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
Agreement to Merge will become void and have no effect, except that certain
provisions of the Agreement, including those relating to the obligations to
share certain expenses, maintain the confidentiality of certain information
obtained, and return all documents obtained from the other party under the
Agreement, will survive. In addition, termination of the Agreement will not
relieve any breaching party from liability for any uncured willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination. See "-- Expenses and Fees."
CONDUCT OF BUSINESS PENDING THE MERGER
Pursuant to the Agreement, DHB has agreed that unless the prior written
consent of UPC has been obtained, and except as otherwise expressly contemplated
in the Agreement, DHB will (i) operate its business only in the usual, regular,
and ordinary course, (ii) preserve intact its business organization and assets
and maintain its rights and franchises, and (iii) take no action which would (a)
materially adversely affect the ability of any party to obtain any consents
required for the transactions
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contemplated by the Agreement or prevent the transactions contemplated by the
Agreement, including the Merger, from qualifying as a reorganization within the
meaning of Section 368(a) of the Code (see "-Certain Federal Income Tax
Consequences of the Merger"), or (b) materially or adversely affect the ability
of any party to perform its covenants and agreements under the Agreement.
In addition, DHB has agreed that, except as specifically permitted by
the Agreement, prior to the earlier of the Effective Time or termination of the
Agreement, DHB will not, except with the prior written consent of the chief
executive officer or chief operating officer of UPC (which consent shall not be
unreasonably withheld), agree or commit to do, any of the following: (i) amend
the DHB Charter and Bylaws, or other governing instruments of DHB; (ii) incur
any additional debt obligation or other obligation for borrowed money in excess
of an aggregate of $25,000, except in the ordinary course of business of DHB
consistent with past practices (which shall include the creation of deposit
liabilities, purchases of federal funds, advances from the Federal Reserve Bank
or the Federal Home Loan Bank, and entry into repurchase agreements fully
secured by U.S. government or agency securities), or impose, or suffer the
imposition, on any material asset of DHB of any lien or permit any such lien to
exist (other than in connection with deposits, repurchase agreements, bankers
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business, the satisfaction of legal requirements in the exercise of trust
powers, and liens in effect as of the date of the Agreement that were previously
disclosed to UPC by DHB); (iii) repurchase, redeem, or otherwise acquire or
exchange (other than exchanges in the ordinary course under employee benefit
plans), directly or indirectly, any shares, or any securities convertible into
any shares, of the DHB Common Stock, or declare or pay any dividend or make any
other distribution in respect of any DHB Common Stock, provided that DHB had (or
has) the right (to the extent legally and contractually permitted to do so), to
declare and pay (a) on or about December 15, 1997, cash dividends on the shares
of DHB Common Stock at a rate not in excess of $10.00 per share, and (b) on or
after June 30, 1998, cash dividends on DHB Common Stock at a rate not in excess
of $5.00 per share; (iv) except for the 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 DHB 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; (v) adjust, split, combine, or reclassify any capital stock of DHB or
issue or authorize the issuance of any other securities in respect of or in
substitution for shares of DHB Common Stock, or sell, lease, mortgage, or
otherwise dispose of or otherwise encumber any shares of capital stock of DHB or
any assets other than in the ordinary course of business for reasonable and
adequate consideration; (vi) except for purchases of U.S. Treasury Securities or
U.S. Government Agency Securities, which in either case have maturities of three
years or less, or Federal Home Loan Bank Stock, purchase any securities or make
any material investment, either by purchase of stock or securities,
contributions to capital, asset transfers, or purchase of any assets, in any
person, or otherwise acquire direct or indirect control over any person, with
certain exceptions; (vii) grant any increase in compensation or benefits to the
employees or officers of DHB, except in the ordinary course of business
consistent with past practices as previously disclosed to UPC by DHB or as
required by law; provided, however, that DHB was entitled to pay bonuses for
1997 in a single aggregate amount not to exceed Twenty-One Thousand Dollars
($21,000.00); pay any severance or termination pay or any bonus other than
pursuant to written policies or written contracts in effect on the date of the
Agreement and previously disclosed to UPC by DHB; enter into or amend any
severance agreements with officers of DHB; grant any material increase in fees
or other increases in compensation or other benefits to directors of DHB 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 DHB); (viii) enter into
or amend any employment contract between DHB and any person (unless such
amendment is required by law) that DHB 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; (ix) adopt any new
employee benefit plan of DHB or terminate or withdraw from, or make any material
change in or to, any existing employee benefit plans of DHB other than any such
change that is required by law or that, in the opinion of counsel, is necessary
or advisable to maintain the tax qualified status of any such plan, or make any
distribution from such employee benefit plans, except as required by law or the
terms of the plans, or in a manner consistent with past practices; (x) 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 generally accepted accounting
principles; (xi) commence any litigation other than in accordance with past
practice or settle any litigation involving any liability of DHB for material
money damages or restrictions
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upon the operations of DHB; or (xii) enter into, modify, amend, or terminate any
material contract (excluding any loan contract) or waive, release, compromise,
or assign any material rights or claims.
DHB has also agreed, that, except with respect to the Agreement, the
Agreement to Merge, and the transactions contemplated thereby, neither DHB nor
any representative thereof will, directly or indirectly, solicit or engage in
negotiations concerning any Acquisition Proposal, or provide any confidential
information or assistance to, or have any discussions with, any person with
respect to an Acquisition Proposal; provided that DHB may, and may authorize and
permit its representatives to, provide persons with confidential information,
have discussions or negotiations with, or otherwise facilitate an effort by such
person to make or implement an Acquisition Proposal not solicited in violation
of the Agreement if DHB's Board, after having consulted with, and based upon the
advice of, outside counsel, determines in good faith that the failure to take
such actions could constitute a breach of the fiduciary duties of DHB's Board
under applicable law, subject to the satisfaction of certain conditions.
The Agreement also provides that from the date of the Agreement until
the earlier of the Effective Time or the termination of the Agreement, UPC
covenants and agrees that it will (i) continue to conduct its business and the
business of its subsidiaries in a manner designed, in its reasonable judgment,
to enhance the long-term value of the UPC Common Stock and the business
prospects of UPC and its subsidiaries and (ii) take no action which would (a)
materially adversely affect the ability of any party to obtain any consents
required for the transactions contemplated by the Agreement or prevent the
transactions contemplated by the Agreement, including the Merger, from
qualifying 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, provided, that the foregoing shall not prevent
UPC or any UPC 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 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 December 31, 1998.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
Consummation of the Merger will not alter the present Board of
Directors or management team of UPC or UPB immediately after the Merger is
consummated. Information concerning the management of UPC is included in the
documents incorporated herein by reference. See "DOCUMENTS INCORPORATED BY
REFERENCE." For additional information regarding the interests of certain
persons in the Merger, see "-- Interests of Certain Persons in the Merger."
UPB will be the surviving association resulting from the Merger and
shall continue to be governed by the laws of the United States of America and
operate in accordance with its Articles of Association and Bylaws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of DHB's management and the DHB Board may be
deemed to have interests in the Merger that are in addition to their interests
as shareholders of DHB generally. The DHB Board was aware of these interests and
considered them, among other matters, in approving the Agreement and the
transactions contemplated thereby.
EMPLOYMENT AGREEMENTS. Mr. Norman L. Ezell ("Ezell") will be offered an
employment agreement with UPC after consummation of the Merger. The employment
agreement will provide for an employment term which commences upon the Effective
Time and terminates on December 31, 1998. The employment agreement will provide
Ezell with a base salary in an amount commensurate with salaries of similarly
situated employees of UPC, and Ezell will be entitled to participate in the
various employee benefit plans offered by UPC. The employment agreement will
provide that if the executive is terminated without cause anytime during the
term of the employment agreement, he will be paid an amount equal to the greater
of (i) his base salary for the remainder of the term, or (ii) six (6) months
base salary. Beginning January 1, 1999, Ezell shall be retained as a consultant
to UPC for a five (5) year period. Ezell shall perform these consulting services
in exchange for an annual consulting
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fee of $7,500.00 per annum. The employment agreement will also contain
provisions prohibiting Ezell from competing with UPC or disclosing certain
confidential information during the term of the employment agreement and the
five (5) year consulting period.
MATERIAL 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 (the "IRS") as to the federal income tax
consequences of the Merger. Instead, UPC has obtained the opinion of Wyatt,
Tarrant & Combs, counsel to UPC ("WTC") (the "Tax Opinion"), as to the material
federal income tax consequences of the Merger to DHB shareholders, a copy of
which is attached as Exhibit 8.1 to the Registration Statement.
The Tax Opinion does not address, among other matters: (i) state,
local, foreign or other federal tax consequences of the Merger not specifically
addressed therein; (ii) federal income tax consequences to shareholders of DHB
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 DHB 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 DHB, if any, 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.
The Tax Opinion represents WTC's best judgement as to the expected
federal income tax consequences of the Merger and is not binding on the IRS or
the courts. There is a lack of clear legal precedent dealing with the tax
characterization of the Merger. The IRS may challenge the conclusions stated in
the Tax Opinion and the shareholders of DHB 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 DHB and indirectly UPC.
As of the date of this Proxy Statement and subject to the conditions,
qualifications, representations and assumptions contained herein and in the Tax
Opinion, WTC has opined that:
(1) For federal income tax purposes, the Merger will be viewed as
an acquisition by UPC of substantially all of the assets of
DHB solely in exchange for UPC Common Stock and the assumption
of all of the liabilities of DHB followed by (i) the transfer
of the assets and all of the liabilities acquired from DHB by
UPC to UPHC, and (ii) the transfer of the assets and all of
the liabilities acquired from DHB by UPHC to UPB. Rev. Rul.
70-224, 1970-1 C.B. 79, Rev. Rul. 64-73, 1964-1 (Part 1) C.B.
142; Rev. Rul. 58-93, 1958-1 C.B. 188.
(2) The acquisition by UPC of substantially all the assets and
liabilities of DHB solely in exchange for UPC Common Stock
will constitute a reorganization within the meaning of Section
368(a)(1)(C) of the Code. Pursuant to Section 368(a)(2)(C),
the Merger will not be disqualified by reason of the transfer
of the DHB assets and liabilities from UPC to UPHC, or the
transfer of the DHB assets and liabilities from UPHC to UPB,
such transfers to be accomplished by the merger of DHB with
and into UPB. Code Section 368(a)(2)(C) and Rev. Rul.
64-73, 1964-1 (Part 1) C.B. 142.
(3) UPC and DHB will each be "a party to a reorganization" within
the meaning of Section 368(b) of the Code.
(4) No gain or loss will be recognized by DHB as a result of the
Merger.
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(5) No gain or loss will be recognized by UPC, UPHC or UPB as a
result of the Merger.
(6) No gain or loss will be recognized by the shareholders of DHB
as a result of the exchange of DHB 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 DHB Common Stock is a
capital asset in the hands of the respective DHB 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 DHB Common Stock
allocable to the fractional share.
(7) The tax basis of UPC Common Stock to be received by the
shareholders of DHB will be the same as the tax basis of the
DHB Common Stock surrendered in exchange therefor (reduced by
any amount allocable to a fractional share interest for which
cash is received).
(8) The holding period of the UPC Common Stock to be received by
shareholders of DHB will include the holding period of the DHB
Common Stock surrendered in exchange therefor, provided the
DHB shares were held as a capital asset by the shareholders of
DHB on the date of the exchange.
The Tax Opinion is based on the Code, the Treasury Regulations
promulgated thereunder, judicial decisions and administrative pronouncements of
the IRS, all existing and in effect on the date of this Registration Statement
and all of which are subject to change at any time, possibly retroactively. Any
such change could have a material impact on the conclusions reached in the Tax
Opinion.
In rendering the Tax Opinion, WTC has relied, as to factual matters,
solely on the continuing accuracy of (i) the description of the facts relating
to the Merger contained in the Agreement and Registration Statement and related
documents and agreements, (ii) the factual representations and warranties
contained in the Agreement and Registration Statement and related documents and
agreements, and (iii) certain factual matters addressed by representations and
warranties made by certain executive officers of UPC, UPHC, UPB and DHB, as
further described in the Tax Opinion and Exhibits thereunder. Events occurring
after the date of the Tax Opinion could alter the facts upon which the Tax
Opinion is based, in which event the conclusions reached therein and in this
summary could be materially impacted.
Based upon the current ruling position of the IRS, cash received by a
holder of DHB Common Stock in lieu of a fractional share interest in UPC Common
Stock will be treated as received in exchange for such fractional share
interest, and gain or loss will be recognized for federal income tax purposes
measured by the difference between the amount of cash received and the portion
of the basis of the share of DHB Common Stock allocable to such fractional share
interest. Such gain or loss will constitute capital gain or loss if DHB Common
Stock was held as a capital asset at the Effective Time, and will be a long-term
capital gain or loss if the holding period for such shares was greater than one
year at the Effective Time. Any capital gain recognized as a result of the
Merger will be taxed at rates applicable to capital gains. The tax rate
applicable to capital gains of an individual taxpayer varies depending on the
taxpayer's holding period for such shares. Pursuant to recently enacted
legislation, in the case of an individual, any such capital gain will be subject
to a maximum federal income tax rate of (A) 20% if the holder's holding period
in such stock was more than 18 months on the date of the Effective Time and (B)
28% if the holder's holding period was more than one year but not more than 18
months on the date of the Effective Time. The deductibility of capital losses is
subject to limitations for both individuals and corporations.
A Dissenting Shareholder will recognize gain or loss measured by the
difference between the value received by such shareholder of his or her shares
of DHB Common Stock and his or her tax basis in such stock.
ACCORDINGLY, FOR ALL OF THE ABOVE REASONS, SHAREHOLDERS OF DHB 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.
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ACCOUNTING TREATMENT
It is anticipated that the Merger will be accounted for as a purchase.
Under the purchase method of accounting, the recorded amounts of assets and
liabilities of DHB will be recorded at their fair market value at the date of
acquisition. The excess of any consideration given over the aggregate fair
market value of identifiable assets is recorded as goodwill. Income and other
financial statements of UPC issued after consummation of the Merger will include
DHB prospectively.
For information concerning certain conditions to be imposed on the
exchange of DHB Common Stock for UPC Common Stock in the Merger by affiliates of
DHB and certain restrictions to be imposed on the transferability of the UPC
Common Stock received by those affiliates in the Merger. See "--Resales of UPC
Common Stock."
EXPENSES AND FEES
The Agreement provides that each of the parties will bear and pay its
own expenses in connection with the transactions contemplated by the Agreement,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that UPC will bear and pay
the filing fees payable in connection with the Registration Statement and this
Proxy Statement and the printing costs and certain other third-party costs in
connection with the Registration Statement and this Proxy Statement.
RESALES OF UPC COMMON STOCK
UPC Common Stock to be issued to shareholders of DHB in connection with
the Merger will be registered under the Securities Act. All shares of UPC Common
Stock received by holders of DHB 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 DHB not
deemed to be "Affiliates" of DHB or UPC. "Affiliates" generally are defined as
persons or entities who control, are controlled by, or are under common control
with DHB 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 period
following the Effective Time, Affiliates of DHB 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 DHB 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 DHB or UPC.
DHB has agreed to use its reasonable efforts to cause each person who
may be deemed to be an Affiliate of DHB to execute and deliver to UPC not later
than 30 days prior to the Effective Time, an agreement (each, an "Affiliate
Agreement") providing that such Affiliate will not sell, pledge, transfer, or
otherwise dispose of any DHB 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
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combined operations of UPC and DHB have been published. Shares of UPC Common
Stock issued to such Affiliates of DHB in exchange for shares of DHB Common
Stock will not be transferable until such time as financial results covering at
least 30 days of combined operations of UPC and DHB 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 DHB). Certificates
representing shares of DHB Common Stock surrendered for exchange by any person
who is an Affiliate of DHB for purposes of Rule 145(c) under the Securities Act
shall be exchanged for certificates representing share of UPC Common Stock as
described under "--Distribution of UPC Stock Certificates," with the certificate
representing such shares of UPC Common Stock containing a legend summarizing the
foregoing restrictions. 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. See "-- Conditions to Consummation of the Merger."
EFFECT OF THE MERGER ON RIGHTS OF SHAREHOLDERS
As a result of the Merger, holders of DHB Common Stock will be
exchanging their shares of a Mississippi banking corporation governed by the
MBL, MBCA and DHB's Charter 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 DHB 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 acquirer 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 MBL, MBCA and the TBCA as well as
to UPC's Charter and Bylaws and DHB's Charter and Bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
The provisions of UPC's Charter and Bylaws described below under the
headings, "-- Authorized Capital Stock," "-- Amendment of Charter and Bylaws,"
"-- Classified Board of Directors and Absence of Cumulative Voting," "--
Director Removal and Vacancies," "-- Limitations on Director Liability," "--
Indemnification," "-- Special Meeting of 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 acquirer. Such purchases may increase the market price of UPC Common
Stock temporarily, enabling shareholders to sell their shares at a price higher
than that which otherwise would prevail. In addition, the Protective Provisions
may decrease the market price of UPC Common Stock by making the stock less
attractive to persons who invest in securities in anticipation of price
increases from potential acquisition attempts. The Protective Provisions also
may make it more difficult and time consuming for a potential acquirer to obtain
control of UPC through replacing the Board of Directors and management.
Furthermore, the Protective Provisions may make it more difficult for UPC's
shareholders to replace the Board of Directors or management, even if a majority
of the shareholders believe such replacement is in the best interests of UPC. As
a result, the Protective Provisions may tend to perpetuate the incumbent Board
of Directors and management.
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AUTHORIZED CAPITAL STOCK
UPC. UPC's Charter currently authorizes the issuance of up to (i)
300,000,000 shares of UPC Common Stock, of which 84,970,899 shares were
outstanding as of May 31, 1998, and (ii) 10,000,000 shares of no par value
preferred stock ("UPC Preferred Stock" and, together with the UPC Common Stock,
"UPC Capital Stock"), of which no shares of UPC Series A Preferred Stock, and
1,156,231 shares of UPC Series E Preferred Stock were issued and outstanding as
of May 31, 1998. At the 1998 annual meeting of the shareholders of UPC, the UPC
shareholders approved an amendment to the UPC Charter to increase the number of
authorized shares of UPC Common Stock from 100,000,000 shares to 300,000,000
shares.
The UPC Board may authorize the issuance of additional authorized
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 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 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 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 authorized 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 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 acquirer)
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.
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DHB. DHB's Charter authorizes the issuance of up to 4,000
shares of DHB Common Stock, par value $50.00 per share, of which 4,000 shares
were issued and outstanding as of the Record Date. These are the only voting
securities of DHB authorized to be issued.
Under MBL, DHB must obtain the approval of 2/3 of the
outstanding DHB Common Stock, as well as the Commissioner of the Mississippi
Department, to increase the number of authorized but unissued shares of stock.
Provided, however, that the total amount of such additional authorized stock may
not exceed 15% of the amount issued and outstanding shares of DHB Common Stock
at the time shareholder approval is sought.
PREEMPTIVE RIGHTS
UPC. Pursuant to the TBCA, a shareholder of a corporation does
not have a preemptive right to acquire a corporation's unissued shares except to
the extent the charter of the corporation so provides. UPC's Charter does not
grant its shareholders preemptive rights. However, see the discussion
"--Authorized Common Stock" relating to the Share Purchase Rights Plan.
DHB. The shareholders of DHB have been granted preemptive
rights. In any case where the amount of authorized stock of DHB is increased,
DHB shareholders have a preference to purchase such additional stock in
proportion to the shares currently held by them.
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 UPC 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.
DHB. Under the MBL, any amendment or renewal of the DHB Charter must
be approved by a majority of all stock outstanding as well as the Commissioner
of the Mississippi Department, the attorney general, the governor and the
secretary of state. Pursuant to DHB's Bylaws, the power to amend, alter or
repeal DHB's Bylaws is vested in DHB's shareholders. The Bylaws may be amended
by the vote of two-thirds of the issued and outstanding shares of DHB.
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
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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 acquirer could obtain working control of the UPC Board, this
provision may discourage some potential mergers, tender offers, or takeover
attempts.
Pursuant to the Charter of UPC, each shareholder is entitled to one
vote for each share of UPC Common Stock held and is not entitled to cumulative
voting rights in the election of directors. With cumulative voting, a
shareholder has the right to cast a number of votes equal to the total number of
such holder's shares multiplied by the number of directors to be elected. The
shareholder has the right to distribute all of his votes in any manner among any
number of candidates or to accumulate such shares in favor of one candidate.
Directors are elected by a plurality of the total votes cast by all
shareholders. With cumulative voting, it may be possible for minority
shareholders to obtain representation on the Board of Directors. Without
cumulative voting, the holders of more than 50% of the shares of UPC Common
Stock generally have the ability to elect 100% of the directors. As a result,
the holders of the remaining UPC voting capital 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.
DHB. The DHB Board consists of five directors who serve for a one
year term. Neither the DHB Charter nor Bylaws divide the DHB Board into classes.
Pursuant to the DHB Charter, each shareholder is entitled to vote for
each share of DHB Common Stock held. The MBCA provides that shareholders may
cumulate their votes unless the corporation's articles of incorporation provides
otherwise. Neither the DHB Charter nor DHB Bylaws addresses the issue of
cumulative voting and the election of directors.
DIRECTOR REMOVAL AND VACANCIES
UPC. UPC's Charter provides that a director may be removed by the
shareholders only upon the affirmative vote of the holders of 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.
DHB. The DHB Charter and Bylaws do not address the issue of director
removal. The MBCA provides that shareholders may remove one or more directors
with or without cause unless the articles of incorporation provide otherwise. A
director may be removed by the shareholders only at a meeting called for the
purpose of removing him and a meeting notice must state that purpose. A majority
vote of those shareholders entitled to vote is sufficient to remove a director.
If cumulative voting is authorized, a director may not be removed if the number
of votes sufficient to elect him under cumulative voting is voted against his
removal. The Bylaws of DHB provide that, in case of a vacancy on the Board of
Directors caused by resignation, death or removal, the remaining members of the
Board at any regular meeting will elect a shareholder to fill the vacancy.
INDEMNIFICATION
UPC. Under the TBCA, subject to certain exceptions, a Tennessee
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 charter of incorporation, a
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Tennessee 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 of a Tennessee corporation may also apply for court-ordered
indemnification under certain circumstances. Unless a Tennessee corporation's
charter of incorporation provides 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 charter 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.
DHB. Under the MBCA, a corporation may indemnify a director who is a
party to a proceeding against liability incurred in the proceeding if (i) he or
she conducted himself in good faith; (ii) he or she reasonably believed that his
or her conduct in his or her official capacity was in the best interests of the
corporation, or in cases other than when acting in his or her official capacity,
believed that his conduct was at least not opposed to the best interests of the
corporation; and (iii) in the case of a criminal proceeding, he or she had no
reason to believe his or her conduct was unlawful. Furthermore, 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 in his or her
capacity as 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 relevant
standard of conduct, and 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 not
entitled to be indemnified by the corporation against such expenses and it is
ultimately determined that he or she has not met the relevant standard of
conduct.
A director who is a party to a proceeding because he or she is a
director may apply for indemnification or an advance for expenses to the court.
The court will order indemnification if the court determines that (i) the
director is entitled to mandatory indemnification; or (ii) the corporation
obligated itself to do so in its articles of incorporation, bylaws, by
resolution, or by contract approved by its board of directors; or (iii)
indemnification is fair and reasonable in view of all the circumstances. If a
court determines that a director is entitled to indemnification, the court may
also require the corporation to indemnify the director against the reasonable
expenses incurred in obtaining the court ordered indemnification.
A corporation may indemnify or advance expenses to a officer of the
corporation (i) who is a party to a proceeding because he or she is a officer of
the corporation, to the same extent as to a director and (ii) if the officer is
not a director or is made a party to a proceeding on the basis of said officer's
acts or omissions solely as on officer, to such further extent as is provided in
the articles of incorporation, bylaws, resolutions by the board of
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directors or contract except for (a) liability in connection with a proceeding
by or in the right of the corporation other than for reasonable expenses or (b)
liability arising out of conduct that constitutes (i) improper financial benefit
(ii) intentional acts.
An officer of a corporation who is not a director is entitled to
mandatory indemnification and may apply to a court for indemnification or an
advance of expenses, in each case to the same extent to which a director may be
entitled to indemnification or the advancement of expenses.
DHB's Charter and Bylaws do not address the issue of indemnification.
SPECIAL MEETINGS 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.
DHB. The DHB Charter and Bylaws do not address the issue of special
meetings of shareholders. The MBCA provides that a special meeting of
shareholders may be called by a corporation's board of directors or by the
persons authorized to call special meetings under the corporation's articles of
incorporation and bylaws, or, unless the articles of incorporation provide
otherwise, by written demand of the shareholders having at least 10% of all the
votes entitled to be cast on an issue to be considered at the special 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.
DHB. The DHB Charter and Bylaws do not address the issue of actions of
shareholders without a meeting. Under the MBCA, shareholders may act by written
consent if all the shareholders entitled to vote on the action consent to taking
such action without a meeting. Shareholders may act by written consent only if
the action is taken by all the shareholders entitled to vote thereon.
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 shareholders. UPC's 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 years annual meeting.
DHB. DHB's Charter and Bylaws do not address whether a shareholder may
nominate members of the Board of Directors nor the manner in which shareholder
proposals are submitted.
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 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
38
<PAGE> 47
entity of which a majority of the outstanding shares of all classes of capital
stock entitled to vote in the election of directors is owned by UPC or any UPC
company.
The requirement of a supermajority vote of shareholders to approve
certain business transactions, as described above, may discourage a change in
control of UPC by allowing a minority of UPC's shareholders to prevent a
transaction favored by the majority of the shareholders. Also, in some
circumstances, the Board of Directors could cause a two-thirds vote to be
required to approve a transaction thereby enabling management to retain control
over the affairs of UPC and their positions with UPC. The primary purpose of the
supermajority vote requirement, however, is to encourage negotiations with UPC's
management by groups or corporations interested in acquiring control of UPC and
to reduce the danger of a forced merger or sale of assets.
As a Tennessee corporation, UPC is or could be subject to various
legislative acts set forth in Chapter 35 of Title 48 of the Tennessee Code,
which 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, 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 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
39
<PAGE> 48
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.
DHB. As a Mississippi state banking corporation, DHB is or could be
subject to various legislative acts set forth in the MBL and the MBCA which
impose certain restrictions on business combinations. The Mississippi
Shareholder Protection Act (the "MSPA") imposes certain requirements in
connection with certain business combinations with interested shareholders (as
defined in the MSPA), but does not apply to state banks or corporations with
less than 500 shareholders (DHB has approximately 37 shareholders).
The Mississippi Control Share Act, the purpose of which is similar to
the Tennessee Control Share Act described above, excludes state banks, such as
DHB, from its coverage unless such bank elects to be covered thereby by amending
its charter to so provide; DHB has not so amended the DHB Charter.
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.
DHB. DHB's Articles of Incorporation and Bylaws do not contain any
provision restricting a shareholder's ability to vote shares of DHB voting
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 or her
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
40
<PAGE> 49
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.
Under Tennessee law, no shareholder who holds shares of a security which is
listed on an exchange registered under ss. 6 of the Securities Exchange Act of
1934 (the "34 Act") or is a "national market system security," as defined in the
rules promulgated by the 34 Act, has the right to dissent and obtain fair value
for his or her shares from any of the aforementioned corporate actions.
DHB. For a discussion of dissenters' rights under the MBCA, see "--
SPECIAL MEETING OF DHB SHAREHOLDERS - Dissenters' Rights.". Appendix C of this
Registration Statement contains the full text Article 13.
SHAREHOLDERS' RIGHTS TO EXAMINE BOOKS AND RECORDS
UPC. The TBCA provides that a shareholder of a Tennessee corporation
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.
DHB. Similarly, under the MBCA, a shareholder of a corporation is
entitled to inspect and copy books and records during regular business hours at
the corporation's principal office if he or she gives the corporation written
notice of his demand at least five business days before the date he or she
wishes to inspect or copy. A shareholder may inspect such records only if: (i)
his or her demand is made in good faith and for a proper purpose; (ii) he or she
describes with reasonable particularity the purpose and the records he or she
desires to inspect; and (iii) the records are directly connected with his or her
purpose. Some of the records eligible for inspection and copying include:
excerpts from minutes of any meeting of the board of directors, records of any
action of a committee of the board of directors while acting in place of the
board of directors on behalf of the corporation, minutes of any meeting of the
shareholders, and the records of action taken by the shareholders without a
meeting.
DIVIDENDS
UPC. UPC's ability to pay dividends on UPC Capital 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, as the case may be. See "CERTAIN
REGULATORY CONSIDERATIONS -- Payment of Dividends."
DHB. The Bylaws of DHB provide that the profits of the business of the
Bank shall be ascertained at the close of each fiscal year, and the directors
shall order such dividends to be declared as they may deem proper, and the terms
of paying same, and any surplus profits in excess of the dividend paid, shall be
transferred to the reserve fund on the books of the Bank.
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<PAGE> 50
COMPARATIVE MARKET PRICES AND DIVIDENDS
UPC Common Stock is traded on the NYSE under the symbol "UPC." DHB
Common Stock is not traded on any exchange or quoted on any market system. The
shares of DHB Common Stock are not actively traded, and such trading activity,
as it occurs, takes place in privately negotiated transactions. Management of
DHB is aware of certain transactions in shares of Common Stock of DHB that have
occurred since January, 1995, although the prices of all stock transactions are
not known. During that time, management of DHB is aware that approximately 30
shares have changed hands in privately negotiated sales at prices ranging from
$210 to $250 per share. The most recent sale of which management is aware took
place on March 31, 1995 when 20 shares were sold at $210 per share.
Dividends, when paid by DHB, are normally paid after the close
of DHB fiscal year, which begins on the first Thursday in January, and for the
previous quarter. During 1996 and 1997, DHB paid annual cash dividends of $10
per share. DHB was permitted by UPC to pay a cash dividend of $5.00 per share in
June, 1998.
The following table sets forth, for the indicated periods, the
high and low closing sale prices for the UPC Common Stock as reported by the
NYSE, and the cash dividends declared per share of UPC Common Stock and DHB
Common Stock for the indicated periods. The stock prices do not include retail
mark-ups, mark-downs or commissions.
<TABLE>
<CAPTION>
UPC
-------------------------------
Cash
Dividends
Price Range Declared
------------------- Per
High Low Share
- ------------------------ ------- ------ ------
1998
- ------------------------
<S> <C> <C> <C>
First Quarter ........ $ 67.31 $58.38 $ .50
------
Second Quarter
(through June 18, 1998)
Total ................ $ 62.56 $54.75 .50
$ 1.00
======
1997
- ------------------------
First Quarter ....... $ 47.75 $38.38 $0.320
Second Quarter ...... 52.13 41.25 .375
Third Quarter ....... 56.50 49.25 .400
------
Fourth Quarter ...... 67.88 57.00 .400
------
Total ............. $1.495
======
1996
- ------------------------
First Quarter ....... $ 31.75 $29.00 $ 0.27
Second Quarter ...... 31.25 29.63 0.27
Third Quarter ....... 36.25 28.63 0.27
Fourth Quarter ...... 41.38 34.63 0.27
------
Total ............. $ 1.08
======
</TABLE>
On June 18, 1998, the last sale price of UPC Common Stock as reported
on the NYSE was $54.75 per share. On November 6, 1997, the last business day
prior to public announcement of the Merger, the last sale price of the UPC
Common Stock as reported by the NYSE was $61.06.
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 UPC Board's consideration of
42
<PAGE> 51
other relevant factors. The Agreement provides that DHB may not declare and pay
cash dividends prior to the Effective Time or the termination of the Agreement,
although DHB was permitted to declare a dividend of up to $10.00 per share on or
about December 15 1997, and up to $5.00 per share on or after June 30, 1998.
UPC is a legal entity separate and distinct from its subsidiaries and its
revenues depend in significant part on the payment of dividends from its
subsidiary depository institutions. UPC's subsidiary depository institutions are
subject to certain legal restrictions on the amount of dividends they are
permitted to pay. See "CERTAIN REGULATORY CONSIDERATIONS -- Payment of
Dividends."
BUSINESS OF UPC
GENERAL
UPC, a Tennessee corporation, is a bank holding company registered with
the Federal Reserve under the BHC Act. As of March 31, 1998, UPC had total
consolidated assets of approximately $18.4 billion, total consolidated loans of
approximately $12.7 billion, total consolidated deposits of approximately $13.6
billion, and total consolidated shareholders' equity of approximately $1.8
billion.
UPC conducts its business activities through its principal bank
subsidiary, the $15.7 billion asset UPB, founded in 1869, headquartered in
Memphis, Tennessee, with branches in Tennessee, Mississippi, Missouri, Arkansas,
Louisiana, Alabama, and Kentucky. UPC also had, as of January 1, 1998, six other
financial institution subsidiaries, the largest of which being Union Planters
Bank of Florida, Miami, Florida, which had total consolidated assets as of March
31, 1998 of approximately $2.2 billion. UPC undertook a corporate reorganization
plan in the fourth quarter of 1997, the primary purpose of which was to
consolidate substantially all of its bank subsidiaries into UPB. This corporate
reorganization was completed January 1, 1998. 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 518 banking offices and 676 ATMs. UPC's total
deposits at March 31, 1998 are allocable by state to its banking offices (before
consolidating adjustments) approximately as follows: $6.7 billion in Tennessee;
$2.9 billion in Mississippi; $1.3 billion in Florida; $1.2 billion in Missouri;
$596 million in Arkansas; $598 million in Louisiana; $412 million in Alabama;
and $103 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 three
acquisitions in 1995, seven in 1996, and six in 1997, adding approximately $1.3
billion in total assets in 1995, $4.2 billion in 1996 and $3.6 billion in 1997.
Through June 1, 1998, UPC has completed the acquisitions of two financial
institutions with approximately $520 million in aggregate total assets as of
March 31, 1998 (the "Recently Completed Acquisitions"). As of June 1, 1998, UPC
was a party to definitive agreements to acquire ten financial institutions, in
addition to DHB, and to the proposed purchase of twenty-four branch locations
and assumption of $1.5 billion of deposits of California Federal Bank, a Federal
savings bank, located in Florida, (the "CalFed Bank Purchase"), all of which had
aggregate total assets of approximately $13.1 billion at March 31, 1998 (the
CalFed Bank Purchase, the Recently Completed Acquisitions and the Other Pending
Acquisitions are collectively 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 $7.3 billion at March 31, 1998. On May 1, 1998, MGR
consummated the acquisition of Charter, Inc., and its subsidiary, Charter Bank,
S.B. (the "Charter Acquisition"). Charter is located in Sparta, Illinois and at
the time of the consummation had total assets of approximately $406 million,
total deposits of approximately $309 million, and total stockholders' equity of
approximately $67 million. The Charter Acquisition was 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 information with respect to
these Other Acquisitions, see "-- Recent Developments" and "PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION." For a discussion of UPC's acquisition
program, see the caption "Acquisitions" (on 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 (on pages 49
and
43
<PAGE> 52
50) contained in such Annual Report to Shareholders. UPC's Annual Report to
Shareholders is included as Exhibit 13 to the UPC 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 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
subsidiary is included in documents incorporated by reference in this Proxy
Statement. See "AVAILABLE INFORMATION" and "DOCUMENTS INCORPORATED BY
REFERENCE."
RECENT DEVELOPMENTS
RECENTLY COMPLETED ACQUISITIONS. Since December 31, 1997, UPC has
completed the acquisitions of two institutions (the "Recently Completed
Acquisitions").
<TABLE>
<CAPTION>
Asset Size
Institution (In Millions) Type of Consideration
-------------------------------------------------- ------------- ---------------------
<S> <C> <C>
Sho-Me Financial Corp, Mt. Vernon, Missouri, $ 374 1,153,459 shares
and its subsidiary, 1st Savings Bank, f.s.b., of UPC Common Stock
Mt. Vernon, Missouri.
Security Bancshares, Inc., Des Arc, Arkansas and 146 490,821 shares
its subsidiaries, Farmers & Merchants Bank ------- of UPC Common Stock
Des Arc, Arkansas and Merchants & Farmers
Bank, West Helena, Arkansas.
TOTAL $ 520
=======
</TABLE>
OTHER PENDING ACQUISITIONS. UPC has entered into definitive agreements
to acquire the following financial institutions in addition to DHB
(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. For
purposes of this Proxy Statement, including the pro forma financial information
included herein, the term "Other Pending Acquisitions" includes the Charter
Acquisition.
44
<PAGE> 53
<TABLE>
<CAPTION>
Asset Size Projected
Institution (In Millions)(1) Type of Consideration(s) Closing Date
--------------------------------------------- ---------------- -------------------------- ------------
<S> <C> <C>
Magna Group, St. Louis, Missouri and its $7,657 Approximately 35.4 million Third Quarter
subsidiaries, including Magna Bank, N.A., St. shares of UPC Common Stock 1998
Louis, Missouri (3) and $39,620 in cash
Peoples First Corporation, Paducah, Kentucky 1,493 Approximately 6,338,000 shares Third Quarter
and its subsidiaries, including Peoples First of UPC Common Stock 1998
National Bank, Paducah, Kentucky
Purchaser of 24 branches and deposits of 1,465 $110 million deposit premium in Third Quarter
California Federal Bank in Florida ("CallFed cash 1998
Branch Purchase")
AMBANC Corp., Vincennes Indiana, and its 734 Approximately 3,398,000 shares Third Quarter
subsidiaries, AMBANC Illinois, N.A., of UPC Common Stock 1998
AMBANC Indiana and American National
Realty Corp.
Merchants Bancshares, Inc., Houston, Texas, 552 Approximately 2,000,000 shares Third Quarter
and its subsidiary, Merchants Bank, Houston of UPC Common Stock 1998
Texas
Transflorida Bank, Boca Raton, Florida 318 Approximately 1,655,000 shares Fourth Quarter
of UPC Common stock 1998
CB & T, Inc., McMinnville, Tennessee, and 271 Approximately 1,450,000 shares Third Quarter
its subsidiary, City Bank & Trust Company, shares of UPC Common Stock 1998
McMinnville, Tennessee
Capital Savings Bancorp, Inc., Jefferson City, 232 Approximately 801,000 shares of Third Quarter
Missouri, and its subsidiary, Capital Savings UPC Common Stock 1998
Bank, FSB, Jefferson City, Missouri
First National Bancshares of Wetumpka, Inc., 217 Approximately 836,000 shares of Third Quarter
Wetumpka, Alabama, and its subsidiary, First UPC Common Stock 1998
National Bank, Wetumpka, Alabama
Alvin Bancshares, Inc., Alvin, Texas, and its 121 Approximately 425,000 shares of Third Quarter
subsidiary, Alvin State Bank, Alvin, Texas UPC Common Stock 1998
First Community Bancshares, Inc., Middleton, 41 Approximately 129,000 shares of Third Quarter
TN, and its subsidiary, Bank of Middleton, UPC Common Stock 1998
Middleton, Tennessee
-------
TOTALS $13,101
=======
</TABLE>
(1) Approximate total assets at March 31, 1998.
(2) Assumes no adjustment to shares pursuant to exchange ratio adjustment
mechanisms.
(3) Includes the pro forma impact of Charter Acquisition.
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 the MGR
and Peoples acquisitions and the CalFed Branch Purchase. Anticipated charges
would normally arise from matters such as, but not limited to: (i) legal,
accounting, financial, advisory and consulting fees; (ii) payment of contractual
benefits triggered by a change of control, early retirement
45
<PAGE> 54
and involuntary separation and related benefits; (iii) costs associated with
elimination of duplicate facilities and branch consolidations; (iv) data
processing charges; (v) cancellation of vendor contracts and (vi) 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" (on page 10) 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 (on 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.
Each of the Other Pending Acquisitions, (with the exception of the
Merger, the Charter Acquisition and the CalFed Branch Purchase) are expected to
be, and the Recently Completed Acquisition of Security Bancshares, Inc., was,
accounted for as a pooling of interests. The Recently Completed Acquisition of
Sho-Me Financial Corp. and the Charter Acquisition were, and the Merger and the
CalFed Branch Purchase are expected to be, accounted for as purchases. UPC
currently estimates incurring aggregate pretax charges in the range of $100
million to $115 million (approximately $91 million related to MGR) before taxes
in connection with the consummation of the Merger and the Other Acquisitions. On
an after tax basis these anticipated charges are estimated to be in the range of
$75 million to $80 million (approximately $61 million related to MGR). 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 pro forma impact of these
anticipated charges are included in the pro forma balance sheet information
included in this Proxy Statement. See "SUMMARY--Historical and Pro Forma Per
Share Data" and "PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION."
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. The anticipated charges are reflected in the pro forma
consolidated balance sheet included in this Proxy Statement. Moreover, this
range has been based on the due diligence that has been performed to date in
connection with the 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 these 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 entities are acquired. 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 acquisition-related charges is likely to change with
additional acquisitions, and since UPC regularly engages in acquisitions, such
range could change, and DHB's shareholders should view such information
accordingly.
For information with respect to the pro forma effect of the Acquisition
on the historical financial statements of UPC, See "PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION".
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following tables contain unaudited pro forma condensed consolidated
financial statements including a balance sheet as of March 31, 1998 and
statements of earnings for the three months ended March 31, 1998 and 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, MGR, DHB and the Other Acquisitions for the three months
ended March 31, 1998 and the year ended December 31, 1997, and (iv) UPC, MGR,
Peoples, AMBANC, and Merchants for the years ended December 31, 1996 and 1995
(see "BUSINESS OF UPC -- Recent Developments--Other Pending Acquisitions").
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<PAGE> 55
Except for the Merger and three of the Other Acquisitions, the Other
Acquisitions are expected to be accounted for using the pooling-of-interests
method of accounting. The pro forma information as of March 31, 1998 and for the
three months ended March 31, 1998, and for the year ended December 31, 1997,
reflect the acquisition of MGR and the Other Acquisitions as of January 1, 1997.
The pro forma information for the years ended December 31, 1996 and 1995,
reflect only the acquisition of MGR, Peoples, AMBANC and Merchants, because DHB
and the Other Acquisitions (other than Magna, Peoples, AMBANC, and Merchants)
are not individually or in the aggregate, 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 the periods
presented has been excluded due to the lack of information available for
operation of the branches on a historical basis. 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 balance
sheet reflects preliminary estimates by UPC of acquisition-related charges to be
incurred in connection with consummation of the Merger and the Other
Acquisitions; however, the statement of earnings do not reflect these
anticipated charges. 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 and DHB which are incorporated by reference herein. Pro forma
results are not necessarily indicative of future operating results. See
"DOCUMENTS INCORPORATED BY REFERENCE."
47
<PAGE> 56
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
UPC,
MGR, FNB
UPC AND
PRO FORMA AND OTHER
UPC MGR ADJUSTMENTS MGR ACQUISITIONS
----------- ---------- ----------- ----------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks.......................... $ 660,528 $ 220,317 $ 880,845 $ 1,008,839
Interest-bearing deposits at financial
institutions................................... 20,425 -- 20,425 49,640
Federal funds sold and securities purchased under
agreements to resell........................... 309,415 95,126 404,541 545,801
Trading account assets........................... 163,698 -- 163,698 163,698
Loans held for resale............................ 253,021 -- 253,021 259,017
Investment securities............................ 3,287,664 2,239,113 5,526,777 7,812,071
Loans............................................ 12,754,653 4,379,021 17,133,674 20,272,013
Less: Unearned income....................... (26,994) (93) (27,087) (34,152)
Allowance for losses on loans......... (223,837) (59,928) -- (283,765) (320,107)
----------- ---------- --------- ----------- -----------
Net loans.................................... 12,503,822 4,319,000 16,822,822 19,917,754
Premises and equipment 338,799 117,253 456,052 534,387
Accrued interest receivable...................... 196,595 46,523 243,118 279,665
FHA/VA claims receivable......................... 138,626 -- 138,626 138,626
Mortgage servicing rights........................ 98,089 1,237 99,326 99,832
Goodwill and other intangibles................... 78,927 120,951 199,878 375,339
Other assets..................................... 364,005 91,098 29,060(b) 484,163 519,252
----------- ---------- --------- ----------- -----------
Total assets............................. $18,413,614 $7,250,618 $ 29,060 $25,693,292 $31,703,921
=========== ========== ========= =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest-bearing.......................... $ 2,290,776 $ 641,300 $ 2,932,076 $ 3,781,318
Certificates of deposit of $100,000 and
over....................................... 1,417,728 932,141 2,349,869 2,854,920
Other interest-bearing....................... 9,872,723 3,973,247 13,845,970 17,696,215
----------- ---------- --------- ----------- -----------
Total deposits........................... 13,581,227 5,546,688 -- 19,127,915 24,332,453
Short-term borrowings............................ 442,051 891,706 1,333,757 1,365,605
Short- and medium-term bank notes................ 135,000 -- 135,000 139,743
Federal Home Loan Bank advances.................. 846,291 106,370 952,661 1,215,073
Other long-term debt............................. 1,022,644 9,513 1,032,157 1,037,766
Accrued interest, expenses and taxes............. 182,422 76,604 90,511(b) 349,537 406,185
Other liabilities................................ 394,537 8,759 403,296 410,918
----------- ---------- --------- ----------- -----------
Total liabilities........................ 16,604,172 6,639,640 90,511 23,334,323 28,907,743
----------- ---------- --------- ----------- -----------
Shareholders' equity
Convertible preferred stock.................. 36,972 40 37,012 37,012
Common stock 419,326 68,075 89,631(a) 577,032 662,544
Additional paid-in capital................... 272,157 343,601 (150,257)(a) 457,905 580,938
(7,596)(b)
Retained earnings............................ 1,060,029 267,982 (61,451)(b) 1,266,560 1,489,763
Treasury stock............................... -- (60,626) 60,626(a) -- --
Unearned compensation........................ (9,550) (7,596) 7,596(b) (9,550) (10,021)
Net unrealized gain on available for sale
securities................................. 30,508 (498) -- 30,010 35,942
----------- ---------- --------- ----------- -----------
Total shareholders' equity............... 1,809,442 610,978 (61,451) 2,358,969 2,796,178
----------- ---------- --------- ----------- -----------
Total liabilities and shareholders'
equity................................. $18,413,614 $7,250,618 $ 29,060 $25,693,292 $31,703,921
=========== ========== ========= =========== ===========
</TABLE>
(a) Issuance of shares to acquire MGR (32,563,752 MGR shares outstanding
times the exchange ratio of .9686 equals 31,541,250 shares of UPC Common
Stock to be issued).
(b) Acquisition - related charges -- see "Business of UPC -- Recent
Developments -- Earnings Considerations Related to the Merger and the Other
Acquisitions."
48
<PAGE> 57
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
UPC, MGR, FNB
UPC AND
AND OTHER
UPC MGR ACQUISITIONS
------------- ------------- ------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
Interest income
Interest and fees on loans.......................... $ 292,160 $ 388,325 $ 465,341
Interest on investment securities
Taxable.......................................... 41,475 69,870 83,000
Tax-exempt....................................... 7,066 10,836 13,777
Interest on deposits at financial institutions...... 424 470 735
Interest on federal funds sold and securities
purchased under agreements to resell............. 2,710 4,837 6,387
Interest on trading account assets.................. 3,020 3,020 3,020
Interest on loans held for resale................... 2,280 2,280 2,383
----------- ----------- -----------
Total interest income............................ 349,135 479,638 574,643
----------- ----------- -----------
Interest expense
Interest on deposits................................ 124,085 179,549 221,207
Interest on short-term borrowings................... 6,016 17,237 21,987
Interest on long-term debt.......................... 28,327 29,936 30,779
----------- ----------- -----------
Total interest expense........................... 158,428 226,722 273,973
----------- ----------- -----------
Net interest income.............................. 190,707 252,916 300,670
Provision for losses on loans......................... 17,909 21,459 24,775
----------- ----------- -----------
Net interest income after provision for losses on
loans.......................................... 172,798 231,457 275,895
Noninterest income
Service charges on deposit accounts................. 25,746 32,074 36,435
Mortgage servicing income........................... 16,191 16,453 16,890
Bank card income.................................... 7,498 9,426 9,641
Factoring commissions............................... 7,304 7,304 7,304
Trust service income................................ 2,407 5,723 6,381
Profits and commissions from trading activities..... 1,847 1,848 1,848
Investment securities gains......................... 5,215 5,811 6,552
Other income........................................ 29,510 41,058 43,559
----------- ----------- -----------
Total noninterest income......................... 95,718 119,697 128,610
Noninterest expense
Salaries and employee benefits...................... 73,230 96,595 113,940
Net occupancy expense............................... 10,644 15,473 18,137
Equipment expense................................... 10,997 13,694 16,052
Other expense....................................... 58,753 77,892 90,669
----------- ----------- -----------
Total noninterest expense........................ 153,624 203,654 238,798
----------- ----------- -----------
Earnings before income taxes..................... 114,892 147,500 165,707
Applicable income taxes............................. 40,320 52,417 59,139
----------- ----------- -----------
Net earnings..................................... $ 74,572 $ 95,083 $ 106,568
=========== =========== ===========
Earnings per common share
Basic............................................... $ .89 $ .82 $ .80
Diluted............................................. .86 .79 .78
Weighted average shares outstanding (in thousands)
Basic............................................... 83,379 114,868 131,931
Diluted............................................. 86,974 120,157 137,409
</TABLE>
49
<PAGE> 58
UNION PLANTERS CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
UPC, MGR, FNB
UPC 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>
50
<PAGE> 59
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>
51
<PAGE> 60
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>
52
<PAGE> 61
BUSINESS OF DHB
BUSINESS OF DHB
DHB is a Mississippi banking corporation that was organized in 1906
and is subject to the regulation of the Federal Reserve, the FDIC and the
Mississippi Department. As of March 31, 1998, DHB had total assets of
approximately $20 million, total loans of approximately $5 million, total
deposits of approximately $18 million and total stockholders' equity of
approximately $2 million.
DHB offers a wide range of banking services to individuals located in
its primary service area. DHB is actively engaged in the business of seeking
deposits from the public and making real estate, commercial and consumer loans.
DHB offers a variety of deposit accounts to its individual and commercial
customers, as well as related banking services. These services include interest
bearing checking accounts, savings accounts, certificates of deposit, ATM
cards, commercial checking accounts, individual retirement accounts, safe
deposit boxes, bank-by-mail service, drive-up teller service, extended lobby
and drive-in hours and extended daily cut-off time, letters of credit, draft
collection and direct deposit. DHB has a small trust department of about 10
accounts of $200,000.00 total assets.
PRIMARY SERVICE AREA
DHB's primary service areas are Montgomery and Grenada County,
Mississippi. Montgomery County has a population of approximately 12,000 and
Grenada County has a population of approximately 22,000.
OFFICES
The corporate offices and main banking office of DHB are located at
101 South State Street, Duck Hill, Mississippi 38925. In addition to its main
banking office, DHB operates a full service branch in Elliott, Grenada County,
Mississippi, the location of which is owned by DHB. The property on which the
main office and branch office are located is owned by DHB free of any
encumbrances. DHB also holds from time to time real estate acquired through
foreclosure.
COMPETITION
All phases of DHB's business are highly competitive. DHB competes with
other commercial banks, credit unions and savings and loan associations, many
of which have assets, capital and lending limits larger than DHB. DHB is one of
5 commercial banks that have 6 offices located within Montgomery County and one
of 6 commercial banks that have 12 offices located within Grenada County.
EMPLOYEES
DHB has 8 full-time employees.
LEGAL PROCEEDINGS
DHB is not a party to any material pending legal proceedings, other
than routine litigation incidental to its banking business.
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth, as of the DHB Record Date, the persons
known by DHB to be beneficial owners of more than 5% of the outstanding shares
of Company Common Stock.
53
<PAGE> 62
<TABLE>
<CAPTION>
Name and Address Number of Shares
of Beneficial Owner Beneficially Owned(1) Percentage of Class
- ------------------- --------------------- -------------------
<S> <C> <C>
Betty W. Bowen (2)
P.O. Box 506
Duck Hill, Mississippi 38925 435 10.9%
James A. Bowen (2)
P.O. Box 506
Duck Hill, Mississippi 38925 435 10.9%
Norman L. Ezell (3)
P.O. Box 186
Duck Hill, Mississippi 38925 2,383 59.6%
</TABLE>
- -------------------
(1) "Beneficial Ownership" includes shares for which an individual,
directly or indirectly, has or shares voting or investment power or both,
including the right to acquire beneficial ownership within 60 days. All of the
listed persons above have sole voting and investment power over the shares
listed opposite their names unless otherwise indicated in additional notes to
this table. Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 of the Securities Exchange Act of
1034, as amended. The percentages are based upon 4,000 shares outstanding plus
for each person listed the number of shares of DHB Common Stock which such
person has a right to acquire within 60 days, if any. There are no options
respecting DHB's shares outstanding.
(2) Mr. Bowen and Ms. Bowen are husband and wife. Does not include 4
shares owned by Ms. Bowen's brother nor 24 shares owned by Ms. Bowen's
nephew-in-law.
(3) Includes 32 shares owned by Mr. Ezell's spouse. Does not include 64
shares owned by two of Mr. Ezell's brother-in-laws (32 shares held by each).
COMMON STOCK OWNED BY MANAGEMENT
The following table sets forth, as of the DHB Record Date, the number
of shares of DHB's Common Stock beneficially owned by each director and
executive officer of DHB and all directors and executive officers of DHB as a
group.
<TABLE>
<CAPTION>
Number of Shares
Name Position with DHB Beneficially Owned (1)(2) % of Class
- ---- ----------------- ------------------------- ----------
<S> <C> <C> <C>
Betty W. Bowen Executive-Vice President 435 10.9%
James A. Bowen Director 435 10.9%
Norman L. Ezell Director, President &
Chief Executive Officer 2,383 59.6%
Julian S. Kirk Director 32(3) *
Alan Devere
Lancaster Director 22(4) 1.0%
Grover W. Wood Director 100 2.5%
All Directors and
Executive Officers as
a Group 2,972 74.3%
</TABLE>
54
<PAGE> 63
* Less than one percent
- ---------------------------
(1) See footnote 1 to the table above at "Principal Holders of Common
Stock."
(2) See footnotes (2) and (3) to the table above at "Principal Holders of
Common Stock" for an identification of certain family relationships
among officers and principal stockholders.
(3) Mr. Kirk is the brother-in-law of Mr. Ezell. Does not include shares
owned by Mr. or Mrs. Ezell.
(4) Does not include 10 shares owned by Mr. Lancaster's father and 8
shares owned by Mr. Lancaster's uncle.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF DHB
The following discussion provides certain information concerning DHB's
financial condition and results of operations. For a more complete
understanding of the following discussion, reference should be made to the
financial statements of DHB and related notes thereto presented elsewhere in
this Prospectus and Proxy Statement.
RESULTS OF OPERATIONS, THREE MONTHS ENDED MARCH 31, 1998, COMPARED TO MARCH 31,
1997
Net income for the three months ended March 31, 1998, was $42,164, a
decrease of $4,206 from net income of $46,370 for the same period in 1997. The
decrease is primarily attributable to a decrease in gains from the sale of
available-for-sale investment securities.
The annualized return on average assets for the three months ended March
31, 1998, was .8% versus .9% for the same period in 1997 and 1.0% for the year
ended December 31, 1997. The annualized return on average shareholders' equity
for the three months ended March 31, 1998, was 8.2% compared to 10.0% for the
same period in 1997, and 10.4% for the year ended December 31, 1997.
Net interest income remained stable for the three month period ended
March 31, 1998, compared to the same three month period in 1997, with an
increase from $175,08 5 in 1997 to $178,306 in 1998.
Noninterest income for the three months ended March 31, 1998, was
$22,656, a decrease of $10,226 from the $33,317 reported for the same period in
1997. The decline was primarily the result of a decrease in amounts reported as
gains on securities sold.
Noninterest expense for the three months ended March 31, 1998, remained
stable when compared to the same period in 1997. Noninterest expense totaled
$150,362 for the three month period in 1998 compared to $145,167 for the same
three month period in 1997.
RESULTS OF OPERATIONS, 1997 COMPARED TO 1996
Net income for the year ended December 31, 1997, was $203,161, or
approximately $74,000 less than net income of $277,291 for the year ended
December 31, 1996. The decrease in net income was primarily due to a decrease
in securities gains of approximately $190,000 offset by an increase in net
interest income of approximately $60,000 and a decrease in the provision for
loan losses of $20,500.
The return on average assets for the year 1997 was 1.0% compared to
1.4% for 1996. Return on average stockholders' equity was 10.4% and 15.1% in
1997 and 1996, respectively. DHB paid dividends of $10 per share in 1997 and
1996.
55
<PAGE> 64
Net interest income is the major component of DHB's income and
represents the amount by which interest and fees generated by earning assets
exceeds the total costs of the funds used to support the earning assets. Net
interest income for the year 1997 was $750,260, an increase of approximately
$60,000 over the amount reported for 1996. The increase in net interest income
was attributable to an increase in the average earning assets, principally
loans, in 1997.
DHB's provision for loan losses is, in management's opinion,
sufficient to maintain an adequate reserve for loan losses and to support
increases in the loan portfolio. The provision for loan losses for 1997 was
$14,000 compared to $34,500 for 1996. Net loans charged off in 1997 was $12,107
versus $34,065 in 1996.
Noninterest income declined by approximately $185,000 in 1997 when
compared to 1996. In 1996, DHB reported securities gains of $264,221 compared
to $73,427 in 1997. Securities gains included recoveries on bonds previously
written down of $256,819 in 1996 and $63,588 in 1997. These recoveries were on
bonds issued as guaranteed investment contracts with Executive Life Insurance
Company. Executive Life Insurance Company had previously been placed in
conservatorship, and in 1991, DHB considered the bonds to be permanently
impaired and adjusted their basis to estimated fair value. Management of DHB is
uncertain as to the possibility of future recoveries on these bonds, but
expects any such recovery to have an insignificant effect on future net income.
Other components of noninterest income consisting principally of service
charges and other fees on deposits were not significantly different in 1997
when compared to 1996.
Total noninterest expense for 1997 was $612,587 or approximately .63%
more than the $608,757 reported for 1996. There were no significant changes in
1997 in the amounts of expense for the various components of noninterest
expense when compared to 1996.
Income tax expense totaled $79,639 and $113,344 for the years ended December
31, 1997, and 1996, respectively. These amounts represent effective tax rates
of 28% for 1997 and 29% for 1996. Management expects that future tax rates will
remain at levels commensurate with that of 1997.
FINANCIAL CONDITION, MARCH 31, 1998, COMPARED TO DECEMBER 31, 1997
Total assets decreased from $20,632,638 at December 31, 1997, to
$19,719,404 at March 31, 1998. The decline was primarily due to a decrease in
loans.
Investment securities at March 31, 1998, totaled $10,860,765, a decline
of $211,716 from $11,072,481 at December 31, 1997. This decline was due to
calls of securities and principal payments on installment obligations.
Total loans, net of unearned interest at March 31, 1998, were $5,487,175
compared to $6,205,412 at December 31, 1997. This decline was primarily due to
payments of loans due. The reserve for loan losses at March 31, 1998, was
$82,364, a decrease of $10,090 from the reserve at December 31, 1997. The
decline in the reserve was due to loan charge-offs net of recoveries of
$10,090. As a percentage of loans, the reserve for loan losses was 1.5% at
March 31, 1998, and December 31, 1997. Management believes the level of the
reserve for loan losses is adequate in relation to the size, mix and quality of
the loan portfolio at March 31, 1998. At March 31, 1998, no loans were
classified as nonperforming. For a listing of nonperforming loans in 1997 and
1996, see Table I below entitled "Duck Hill Bank Nonperforming Assets."
Deposits decreased by 5.1% from $18,452,194 at December 31, 1997, to
$17,521,386 at March 31, 1998. The decline of approximately $932,000 was due to
a decline in noninterest-bearing deposits of approximately $807,000. Management
considers this decline to be normal for the first quarter when compared to
similar periods of previous years.
Total stockholders' equity at March 31, 1998, was $2,074,206 compared to
$2,026,416 at December 31, 1997. At March 31, 1998, DHB's Tier 1 and total
capital to risk-weighted assets were 30.1% and 31.4%, respectively, compared to
27.1% and 28.4%, respectively, at December 31, 1997. Banking regulatory
agencies require "well capitalized" institutions to have Tier 1 and total
capital ratios of 6% and 10%, respectively.
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At March 31, 1998, DHB's leverage ratio (Tier 1 capital divided by
unadjusted average assets) was 9.7% compared to 9.5% at December 31, 1997. The
regulatory guideline for "well capitalized" institutions is 5%.
FINANCIAL CONDITION, 1997 COMPARED TO 1996
Total assets of DHB at December 31, 1997, were $20,632,638 compared to
$19,146,310 at December 31, 1996, an increase of 7.7%. The asset growth history
of DHB has been modest with annual growth rates, generally, being 5% or less.
DHB's two primary earnings assets are its investment securities and
loans. At December 31, 1997, investment securities totaled $11,072,481 as
compared to $12,322,308 at December 31, 1996. This decline of approximately
$1,250,000 was due to the shift of funds from investment securities to loans
and other interest-bearing assets. Investment securities consist principally of
U. S. Government and obligations of other U. S. Government agencies. All have
been classified as available-for-sale as provided for in Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." The unrealized gain, net of tax, on these securities was $86,631
at December 31, 1997, and $86,275 at December 31, 1996.
Total loans, net of unearned interest, at December 31, 1997, were
$6,205,412 compared to $5,480,645 at December 31, 1996. Loans increased by
$724,767 or 13.2%. This increase was primarily due to an increase in real
estate loans and consumer loans. The reserve for loan losses at December 31,
1997, was $92,454, an increase of $1,893 over the reserve at December 31, 1996.
As a percentage of loans, the reserve for loan losses was 1.5% and 1.7% at
December 31, 1997 and 1996, respectively. The adequacy of the reserve for loan
losses is determined on an ongoing basis using historical loan loss experience
of DHB, portfolio growth and trends, and economic conditions within DHB's trade
area. The evaluation of the adequacy of the reserve for loan losses involves
the use of certain estimates and assumptions which are susceptible to change in
the near term. Management believes the level of the reserve for loan losses is
adequate in relation to the size, mix and quality of the loan portfolio at
December 31, 1997. Table II below presents a summary of DHB's Loan Loss
Experience in 1997 and 1996.
At December 31, 1997, federal funds sold totaled $2,050,000 as
compared to $250,000 at December 31, 1996. Federal funds sold represent excess
funds DHB elects to sell in return for interest, usually to correspondent
banks, for periods of one to three days. The increase in available funds to be
sold in 1997, was due to the increase in deposits for the year.
Total deposits increased by 8.7% to $18,452,194 at December 31, 1997,
as compared to $16,977,706 at December 31, 1996. This increase was principally
due to an increase in noninterest-bearing deposits of approximately $900,000.
Management is of the opinion improving economic conditions in its trade area
contributed to this growth. Included in deposits are $2,152,719 and $1,851,386
of time deposits greater than or equal to $100,000 at December 31, 1997 and
1996, respectively. At December 31, 1997, DHB's loan to deposit ratio was 33%,
compared to 32% at December 31, 1996.
Total stockholders' equity as of December 31, 1997, was $2,026,146,
compared to $1,862,629 at December 31, 1996.
The capital adequacy of a bank is determined based upon the level of
capital as well as asset quality, liquidity, earnings history, and economic
conditions. Management's goal is to maintain its bank in the "well-capitalized"
category for regulatory capital purposes. At December 31, 1997 and 1996, DHB
was in this category.
The regulatory capital guidelines divide capital into two tiers - Tier
1 capital and Tier 2 capital. Tier 1 capital of DHB consists of stockholders'
equity excluding the unrealized gain on available-for-sale investment
securities. Tier 2 capital includes the allowance for loan losses with certain
limitations. In determining the risk-based capital requirements, assets are
assigned risk weights of zero to 100 percent, depending upon the regulatory
assigned levels of credit risk associated with such assets. Off-balance-sheet
items are included in the calculation of risk-adjusted assets through
conversion factors established by regulatory agencies.
At December 31, 1997, DHB's Tier 1 and total capital to risk-weighted
assets ratios were 27.1% and 28.4%, respectively, compared to 29.9% and 31.2%,
respectively at year end 1996. The regulatory agencies require
"well-capitalized" institutions to have Tier 1 and total capital ratios of 6%
and 10%, respectively.
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In addition to the risk-based capital requirements, the regulatory
agencies have established leverage capital requirements. This ratio is computed
by dividing Tier 1 capital by unadjusted (not risk-weighted) average total
assets. DHB's leverage ratio at December 31, 1997, was 9.5% compared to 8.9% at
year end 1996, and compared to the regulatory guideline of 5% for "well
capitalized" institutions.
SOURCES AND USES OF FUNDS
The primary source of funds for DHB is the deposits of customers, both
individual and business. DHB primarily relies on its core deposit base of
demand deposits, as well as its savings deposits and time deposits with account
balances of less than $100,000. Time deposit accounts of $100,000 or more and
public deposits provide an additional source of funds. DHB maintains its
deposit base by offering rates and services comparable to competing banks in
its trade area. DHB does not hold or attempt to obtain brokered deposits.
DHB also utilizes its investment securities portfolio as a source of
funds as maturities, repayments, and calls provide funds throughout a year. In
1997 and 1996, these provided funds of approximately $867,000 and $799,000,
respectively. Also, management will sell bonds in its investment portfolio as
part of its asset/liability management or to change its investment strategy.
Proceeds from the sale of investment securities totaled $3,429,257 in 1997, and
$2,874,382 in 1996.
DHB also obtains funds from its operating activities. For 1997 and
1996, funds provided by operating activities totaled $18,000 and $306,000,
respectively.
DHB uses funds in making loans to borrowers. In 1997, loan
disbursements exceeded loan collection by approximately $737,000. In 1996, loan
disbursements exceeded loan collections by approximately $613,000.
Another use of funds is the purchase of investment securities. In
1997, purchases totaled $2,990,866 and in 1996, purchases totaled $3,547,442.
DHB also uses funds to pay dividends and to acquire DHB premises and
equipment. For 1997 and 1996, these were not significant.
Cash and cash equivalents increased from $3,087,626 at December 31,
1997, to $3,132,947 at March 31, 1998. Net cash provided from operations for
the three months ended March 31, 1998, totaled approximately $56,000. Net cash
provided by investing activities for the three month period ended March 31,
1998, was approximately $921,000. These funds were primarily provided from a
net decrease in loans of approximately $708,000 and calls and repayments of
investment securities of approximately $214,000. Cash used in financing
activities totaled approximately $932,000 for the three months ended March 31,
1998. Funds used were for a decline in deposits of the same amount.
LIQUIDITY AND INTEREST RATE RISK
Liquidity management involves planning to meet depositors' and
borrowers' cash flow requirements at a reasonable cost, as well as developing
contingency plans to meet unanticipated funding needs or a loss of funding
sources. DHB's core deposits and its available-for-sale investment securities
provide stability with respect to liquidity.
Interest rate risk is the risk that future changes in interest rates
will reduce DHB's net interest income and the market value of its portfolio
equity. A movement in interest rates and the corresponding effect on net
interest income may significantly affect profitability. The degrees of any
potential consequences of such interest rate changes can be mitigated by
maintaining a balance between interest rate sensitive assets and liabilities
within given time frames. Management endeavors to maintain consistent earnings
with minimum interest rate risk by closely monitoring the sensitivity and
repricing of assets and liabilities to interest rate fluctuations.
The difference between assets and liabilities within a given pricing period is
expressed as a ratio and as a dollar amount known as the "gap," both of which
are used as a measure of interest rate risk. A ratio of 100% suggests a
balanced position between rate sensitive assets and liabilities within a given
repricing period. The table below
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reflects DHB's interest rate sensitivity position both individually and within
specified time periods and cumulatively, over various time horizon. In the
table, assets and liabilities are placed in categories based on their actual or
expected repricing date. As indicated, at December 31, 1997, the ratio of
rate-sensitive assets to rate-sensitive liabilities maturing or repricing
within one year or less was in a negative one-year gap position. As of March
31, 1998, the liquidity and interest rate risk position of DHB were not
significantly different than that of December 31, 1997. In a period of
generally falling interest rates, this gap position will normally result in an
increase in net interest income. Whereas, in a period of generally rising
interest rates, this gap position will normally result in a decrease in net
interest income.
INTEREST RATE GAP ANALYSIS
<TABLE>
<CAPTION>
Repriceable or Maturity Within
-------------------------------------------------------------
0 - 3 3 - 12 1 - 5 After 5
Months Months Years Years Total
------------- ------------ ------------ ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Federal funds sold $ 2,050 $ -- $ -- $ -- $ 2,050
Securities 1,761 2,744 4,278 2,290 11,073
Loans 1,970 1,360 2,816 59 6,205
------------- ------------ ------------ ----------- -----------
5,781 4,104 7,094 2,349 19,328
Interest-bearing liabilities:
Demand deposits $ 2,684 $ -- $ -- $ -- $ 2,684
Other interest-bearing deposits 4,457 7,748 273 -- 12,478
------------- ------------ ------------ ----------- -----------
(7,141) (7,748) (273) -- (15,162)
------------- ------------ ------------ ----------- -----------
Interest rate sensitivity gap $ (1,360) $ (3,644) $ 6,821 $ 2,349 $ 4,166
============= ============ ============ =========== ===========
Cumulative interest rate
sensitivity gap $ (1,360) $ (5,004) $ 1,817 $ 4,166
============= ============ ============ ===========
Cumulative as a % of total
interest-earning assets. (7.0%) (25.9%) 9.4% 21.6%
============= ============ ============= ===========
</TABLE>
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IMPACT OF INFLATION
The financial statements and related financial data presented herein have been
prepared in accordance with generally accepted accounting principles and
practices within the banking industry which require the measurement of
financial position and operating results in terms of historical dollars without
considering the changes in the relative purchasing power of money over time due
to inflation. Unlike most industrial companies, virtually all the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation.
TABLE I
DUCK HILL BANK
NONPERFORMING ASSETS
<TABLE>
<CAPTION>
($ In Thousands)
December 31,
--------------------------
1997 1996
----------- ---------
<S> <C> <C>
Nonaccrual loans $ -- --
Loans contractually past due ninety days or more as to
interest or principal payments and still accruing -- 18
Restructured loans -- --
Loans now current about which there are serious doubts
as to the ability of the borrower to comply with present
loan repayment terms. -- --
</TABLE>
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TABLE II
DUCK HILL BANK
SUMMARY OF LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
($ In Thousands)
Years Ended December 31,
------------------------
1997 1996
--------- ---------
<S> <C> <C>
Average amount of loans outstanding $ 5,843 $ 5,192
========= =========
Balance of reserve for loan losses at beginning of period $ 91 $ 90
Loans charged off:
Commercial, agricultural and real estate (2) (30)
Installment loans to individuals (19) (6)
--------- ---------
Total charge-offs (21) (36)
--------- ---------
Recoveries:
Commercial, agricultural and real estate 6 --
Installment loans to individuals 2 2
--------- ---------
Total recoveries 8 2
--------- ---------
Net charge-offs (13) (34)
--------- ---------
Provision for loan losses charged to operations 14 35
--------- ---------
Balance of reserve for loan losses at end of period $ 92 $ 91
========= =========
Ratio of net loans charged-off to average loans outstanding .22% .65%
Reserve for loan losses to year-end loans, net of unearned interest 1.48% 1.66%
</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 and DHB. A more complete
discussion regarding UPC is included in UPC's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997. See "AVAILABLE INFORMATION" and
"DOCUMENTS INCORPORATED BY REFERENCE."
GENERAL
UPC is a bank holding company and is registered with the Federal
Reserve under the BHC Act. As such, UPC, and its respective non-bank
subsidiaries, is 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% 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
issues includes the parties' performance under the Community Reinvestment Act
of 1977.
The BHC Act, as amended by the interstate banking provisions of the
Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
("Interstate Banking Act"), which became effective in September 1995, repealed
the prior statutory restrictions on interstate acquisitions of banks by bank
holding companies, such that UPC and any other bank holding company located in
Tennessee may now acquire a bank located in any state other than their
respective home states, and any bank holding company located outside Tennessee
may lawfully acquire a Tennessee-based bank, regardless of state law to the
contrary, 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 current UPC Banking Subsidiaries are located or intends to be located
through an other Pending Acquisition (other than Texas, which elected to
opt-out pursuant to 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 bank holding companies from engaging
in activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those activities
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be a proper incident thereto. In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity reasonably can be
expected to produce benefits to the public, such as greater
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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.
DHB is a Mississippi banking corporation and is registered with the
Federal Reserve through applicable regulations of the FDIC.
Each of the UPC Banking Subsidiaries and DHB is a member of the
Federal Deposit Insurance Corporation (the "FDIC"), and as such, their deposits
are insured by the FDIC to the extent provided by law. DHB and each such
subsidiary is also subject to numerous state and federal statutes and
regulations that affect is business, activities, and operations, and each is
supervised and examined by one or more state or federal bank regulatory
agencies.
The regulatory agencies having supervisory jurisdiction over DHB and
the respective bank subsidiaries of UPC (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 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 each 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 the case may be, as well as by UPC or DHB to their
respective shareholders.
As to the payment of dividends, DHB and 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 subsidiary that is a thrift institution is
subject to the OTS' dividend distributions regulation, and those bank
subsidiaries of UPC that are national banks are subject to the regulations of
the OCC.
If, in the opinion of the federal banking regulator, a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice (which, depending on the financial condition of the
depository institution, could include the payment of dividends), such agency
may require, after notice and hearing, that such institution cease and desist
from such practice. The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice. Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized. See "-- Prompt
Corrective Action." Moreover, the federal agencies have issued policy
statements that provide that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.
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At March 31, 1998, 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 $172.4
million.
The payment of dividends by UPC, the UPC Banking Subsidiaries, and DHB
may also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
DHB, UPC and 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 or state banking regulator in the case of UPC
Banking Subsidiaries and DHB. 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%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At March 31, 1998, 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
20.71% and 15.66 respectively, and DHB's Total Capital Ratio and Tier 1 Capital
Ratio were 31.4% and 30.1%, 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% 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%, plus an additional cushion of 100 to 200 basis
points. UPC's Leverage Ratio at March 31, 1998, was 10.72% and DHB's Leverage
Ratio at March 31, 1998 as 9.7%. 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 and DHB 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. DHB and each of the UPC Banking Subsidiaries was in
compliance with applicable minimum capital requirements as of March 31, 1998.
DHB, UPC nor any 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
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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 their
respective 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.
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% or greater, and a Leverage Ratio of 5% 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% or greater, a Tier 1 Capital Ratio of 4% or greater,
and a Leverage Ratio of 4% or greater is considered to be adequately
capitalized. A depository institution that has a Total Capital Ratio of less
than 8%, a Tier 1 Capital Ratio of less than 4%, or a Leverage Ratio of less
than 4% is considered to be
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undercapitalized. A depository institution that has a Total Capital Ratio of
less than 6%, a Tier 1 Capital Ratio of less than 3%, or a Leverage Ratio of
less than 3% is considered to be significantly undercapitalized, and an
institution that has a tangible equity capital to assets ratio equal to or less
than 2% 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% of an
undercapitalized subsidiary's assets or the amount required to meet regulatory
capital requirements. An undercapitalized institution is also generally
prohibited from increasing its average total assets, making acquisitions,
establishing any branches, or engaging in any new line of business, except in
accordance with an accepted capital restoration plan or with the approval of
the FDIC. In addition, the appropriate federal banking agency is given
authority with respect to any undercapitalized depository institution to take
any of the actions it is required to or may take with respect to a
significantly undercapitalized institution as described below if it determines
"that those actions are necessary to carry out the purpose" of FDICIA.
For those institutions that are significantly undercapitalized or
undercapitalized and either fail to submit an acceptable capital restoration
plan or fail to implement an approved capital restoration plan, the appropriate
federal banking agency must require the institution to take one or more of the
following actions: (i) sell enough shares, including voting shares, to become
adequately capitalized; (ii) merge with (or be sold to) another institution (or
holding company), but only if grounds exist for appointing a conservator or
receiver; (iii) restrict certain transactions with banking affiliates as if the
"sister bank" exception to the requirements of Section 23A of the Federal
Reserve Act did not exist; (iv) otherwise restrict transactions with bank or
non-bank affiliates; (v) restrict interest rates that the institution pays on
deposits to "prevailing rates" in the institution's "region;" (vi) restrict
asset growth or reduce total assets; (vii) alter, reduce, or terminate
activities; (viii) hold a new election of directors; (ix) dismiss any director
or senior executive officer who held office for more than 180 days immediately
before the institution became undercapitalized, provided that in requiring
dismissal of a director or senior officer, the agency must comply with certain
procedural requirements, including the opportunity for an appeal in which the
director or officer will have the burden of proving his or her value to the
institution; (x) employ "qualified" senior executive officers; (xi) cease
accepting deposits from correspondent depository institutions; (xii) divest
certain nondepository affiliates which pose a danger to the institution; or
(xiii) be divested by a parent holding company. In addition, without the prior
approval of the appropriate federal banking agency, a significantly
undercapitalized institution may not pay any bonus to any senior executive
officer or increase the rate of compensation for such an officer.
At March 31, 1998, all of the UPC Banking Subsidiaries had the
requisite capital levels to qualify as well capitalized. An institution's
capital category is determined solely for the purposes of applying the prompt
corrective action law and it may not constitute an accurate representation of
an institution's overall financial condition or prospects.
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 May 31,
1998, 84,970,899 shares of UPC Common Stock were outstanding and approximately
7,792,332 shares were earmarked for issuance in connection with currently
outstanding UPC options, UPC's dividend reinvestment plan, and with respect to
the conversion rights of the currently outstanding UPC Series E Preferred Stock
(defined next). In addition, as of May 31, 1998, 1,156,231 shares of UPC's 8%
Cumulative, Convertible Preferred Stock, Series E (the "Series E Preferred
Stock") were
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outstanding. As of May 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 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. 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 Capital 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.
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
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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. 1,156,231 shares of Series E Preferred Stock
were outstanding as of May 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 DHB 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 have been received by UPC at its principal
executive offices no later than the date specified in UPC's 1998 annual meeting
proxy statement. DHB's annual meeting of shareholders for 1998 has been held.
It is not currently anticipated that DHB will hold its annual meeting in 1999
unless the Merger is not consummated. In the event the Merger is not
consummated, proposals of DHB shareholders for directors nominations intended
to be presented at that meeting must have been received by DHB at its principal
executive offices no later than 60 days prior to the meeting.
EXPERTS
The consolidated financial statements of UPC and subsidiaries
incorporated in this Prospectus/Proxy Statement by reference to the UPC Annual
Report on Form 10-K for the year ended December 31, 1997, 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 financial statements of DHB as of the years ended December 31,
1997 (and notes thereto) have been included in this Proxy Statement in reliance
upon the report of T. E. Lott & Company, independent certified public
accountants, given upon the authority of such firm 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.
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Certain tax consequences of the transaction have been passed upon by
Wyatt, Tarrant & Combs, Memphis, Tennessee for UPC.
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APPENDIX A
REORGANIZATION AGREEMENT AND AGREEMENT TO MERGE
DATED AS OF NOVEMBER 6, 1997
BETWEEN
UNION PLANTERS CORPORATION,
UNION PLANTERS NATIONAL BANK,
AND
DUCK HILL BANK
<PAGE> 79
<TABLE>
<S> <C>
Preamble.......................................................................1
ARTICLE 1
TERMS OF THE MERGER
1.1 Merger .................................................................1
1.2 Time and Place of Closing ..............................................2
1.3 Effective Time .........................................................2
1.4 Articles of Association ................................................2
1.5 Bylaws .................................................................2
1.6 Name ...................................................................2
1.7 Directors and Officers .................................................2
1.8 UPC's Right to Revise the Structure of the Transaction .................2
1.9 Post Signing Due Diligence Review ......................................2
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 Conversion; Cancellation and Exchange of Shares; Exchange Ratio ........3
2.2 Anti-Dilution Provisions ...............................................4
ARTICLE 3
EXCHANGE OF SHARES
3.1 Exchange Procedures ....................................................4
3.2 Rights of Former Duck Hill Record Holders ..............................5
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DUCK HILL
4.1 Organization, Standing, and Power.......................................5
4.2 Authority; No Breach By Agreement.......................................5
4.3 Capital Stock ..........................................................6
4.4 Duck Hill Subsidiaries..................................................7
4.5 Duck Hill Financial Statements..........................................7
4.6 Absence of Undisclosed Liabilities......................................7
4.7 Absence of Certain Changes or Events....................................8
4.8 Tax Matters.............................................................8
4.9 Allowance for Possible Loan Losses......................................9
4.10 Assets..................................................................9
4.11 Intellectual Property..................................................10
4.12 Environmental Matters..................................................10
4.13 Compliance with Laws...................................................11
4.14 Labor Relations........................................................11
4.15 Employee Benefit Plans.................................................11
4.16 Material Contracts.....................................................12
4.17 Legal Proceedings......................................................13
4.18 Reports................................................................13
</TABLE>
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<TABLE>
<S> <C> <C>
4.19 Statements True and Correct............................................13
4.20 Accounting, Tax, and Regulatory Matters................................14
4.21 State Takeover Laws....................................................14
4.22 Articles of Incorporation Provisions..................................14
4.23 Articles of Incorporation Documents....................................14
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UPC
5.1 Organization, Standing, and Power......................................14
5.2 Authority: No Breach By Agreement......................................14
5.3 Capital Stock..........................................................15
5.4 SEC Filings: Financial Statements......................................15
5.5 Absence of Undisclosed Liabilities.....................................16
5.6 Absence of Certain Changes or Events...................................16
5.7 Compliance with Laws...................................................16
5.8 Legal Proceedings......................................................16
5.9 Reports................................................................16
5.10 Statements True and Correct............................................16
5.11 Accounting, Tax, and Regulatory Matters................................17
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 Affirmative Covenants of Duck Hill.....................................17
6.2 Negative Covenants of Duck Hill........................................17
6.3 Certain Actions........................................................19
6.4 Covenants of UPC.......................................................20
6.5 Adverse Changes in Condition...........................................20
6.6 Reports. ..............................................................20
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 Registration Statement: Proxy Statement: Shareholder Approvals.........21
7.2 Exchange Listing.......................................................21
7.3 Applications...........................................................21
7.4 Filings with State Offices.............................................21
7.5 Agreement as to Efforts to Consummate..................................21
7.6 Investigation and Confidentiality......................................21
7.7 Press Releases.........................................................22
7.8 Accounting and Tax Treatment...........................................22
7.9 State Takeover Laws....................................................22
7.10 Provisions of Articles of Incorporation................................22
7.11 Agreement of Affiliates................................................22
7.12 Employee Benefits and Contracts........................................23
</TABLE>
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ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
<TABLE>
<S> <C> <C>
8.1 Conditions to Obligations of Each Party................................23
8.2 Conditions to Obligations of UPC.......................................24
8.3 Conditions to Obligations of Duck Hill.................................25
ARTICLE 9
TERMINATION
9.1 Termination............................................................26
9.2 Effect of Termination..................................................29
9.3 Non-Survival of Representations and Covenants..........................29
ARTICLE 10
GENERAL PROVISIONS
10.1 Definitions ...........................................................29
10.2 Expenses ..............................................................36
10.3 Brokers and Finders ...................................................36
10.4 Entire Agreement ......................................................37
10.5 Amendments ............................................................37
10.6 Waivers ...............................................................37
10.7 Assignment ............................................................37
10.8 Notices ...............................................................37
10.9 Governing Law .........................................................38
10.10 Counterparts ..........................................................38
10.11 Captions ..............................................................38
10.12 Interpretation ........................................................38
10.13 Enforcement of Agreement ..............................................38
10.14 Attorneys' Fees .......................................................38
10.15 Severability ..........................................................38
10.16 Remedies Cumulative ...................................................39
</TABLE>
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REORGANIZATION AGREEMENT AND AGREEMENT TO MERGE
THIS REORGANIZATION AGREEMENT AND AGREEMENT TO MERGE (the "Agreement")
is made and entered into as of the 6th day of November, 1997, by and between
UNION PLANTERS CORPORATION ("UPC"), a corporation chartered and existing under
the laws of the State of Tennessee which is registered both as a bank holding
company and as a savings and loan holding company having its principal office
located in Memphis, Tennessee; UNION PLANTERS HOLDING CORPORATION ("UPHC"), a
corporation chartered and existing under the laws of the State of Tennessee
having its principal office located in Memphis, Tennessee which joins in this
Agreement as the sole shareholder of Union Planters National Bank solely for the
purpose of evidencing its consent to the transactions contemplated herein as
such sole shareholder; UNION PLANTERS NATIONAL BANK ("UPB" or "Surviving
Association" as applicable), a national banking association organized under the
laws of the United States of America having its principal office located in
Memphis, Tennessee; and DUCK HILL BANK ("Duck Hill"), a banking corporation
organized under the laws of the State of Mississippi having its principal office
located in Duck Hill, Mississippi.
Certain other capitalized terms used in this Agreement are defined
below in Section 10.1
PREAMBLE
The Boards of Directors of UPC and Duck Hill are of the opinion that
the transactions described herein are in the best interests of the parties and
their respective shareholders. This Agreement provides for the acquisition of
Duck Hill by UPC pursuant to the merger of Duck Hill with and into a
wholly-owned, second-tier subsidiary of UPC. At the Effective Time of such
Merger, the outstanding shares of the common stock of Duck Hill shall be
converted into the right to receive shares of the common stock of UPC (except as
otherwise provided in this Agreement). As a result, shareholders of Duck Hill
shall become shareholders of UPC and Duck Hill shall be merged with and into
UPB, a wholly-owned second-tier subsidiary of UPC. The transactions described in
this Agreement are subject to the approvals of the shareholders of Duck Hill,
the Board of Governors of the Federal Reserve System, and other applicable
federal and state regulatory authorities, and the satisfaction of certain other
conditions described in this Agreement. It is the intention of the parties to
this Agreement that the Merger for federal income tax purposes shall qualify as
a "reorganization" within the meaning of Section 368(a) of the Internal Revenue
Code, and for accounting purposes shall qualify for treatment as a pooling of
interests.
Certain terms used in this Agreement are defined in Section 10.1 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 THE MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement
and the satisfaction (or lawful waiver) of all of the conditions to the
obligations of each of the Parties to this Agreement, at the Effective Time Duck
Hill shall be merged with and into UPB in accordance with Sections 215a-1,
1828(c) and 1831(u) of the United States Code and with the effect provided in
such sections and in Section 81-23-7 of the Mississippi Code (the "Merger"). UPB
shall be the Surviving Association resulting from the Merger and shall continue
to be governed by the Laws of the United States of America. The Merger shall be
consummated pursuant to the terms of this Agreement, which has been approved and
adopted by the respective Boards of Directors of UPC, UPHC, Duck Hill, and UPB,
and the Agreement to Merge, in the form of Exhibit 1 which has been approved and
adopted by the Board of Directors of Duck Hill, UPC and UPHC to evidence its
consent to the transactions contemplated hereby in its capacity as sole
shareholder of UPB.
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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 operating
officers, may mutually agree. The Closing shall be held at the Union Planters
Administrative Center, Union Planters Corporation Executive Offices (Fourth
Floor), 7130 Goodlett Farms Parkway, Memphis, Shelby County, Tennessee 38018, or
at such other place as the Parties, acting through their chief executive
officers or chief operating officers, may mutually agree.
1.3 EFFECTIVE TIME. The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time stated in
the Certificate of Merger to be issued by the Office of the Comptroller of the
Currency ("OCC")(the "Effective Time").
1.4 ARTICLES OF ASSOCIATION. The Articles of Association of UPB in
effect immediately prior to the Effective Time shall be the Articles of
Association of UPB as the Surviving Association until otherwise amended or
repealed.
1.5 BYLAWS. The Bylaws of UPB in effect immediately prior to the
Effective Time shall be the Bylaws of UPB as the Surviving Association until
otherwise amended or repealed.
1.6 NAME. The name of UPB shall remain unchanged after the
Effective Time, unless and until otherwise renamed.
1.7 DIRECTORS AND OFFICERS. The directors and officers of UPB in
office immediately prior to the Effective Time, together with such additional
persons as may thereafter be elected or appointed, shall serve as the directors
and officers of UPB as the Surviving Association from and after the Effective
Time in accordance with the Bylaws of the Surviving Association, unless and
until their successors shall have been elected or appointed and shall have
qualified or until they shall have been removed in the manner provided therein.
1.8 UPC'S RIGHT TO REVISE THE STRUCTURE OF THE TRANSACTION. UPC
shall have the unilateral right to revise the structure of the Merger in order
to achieve tax benefits or for any other reason which UPC may deem advisable;
provided, however, that UPC shall not have the right, without the approval of
the Board of Directors of Duck Hill, to make any revision to the structure of
the Merger which (i) changes the amount of the Consideration which the Duck Hill
Record Holders are to receive as determined in the manner provided in 2.1(c) of
this Agreement; (ii) changes the intended tax-free effect of the Merger to UPC,
UPB, Duck Hill, or to any Duck Hill Record Holder; or (iii) would permit UPC to
pay the Consideration other than by delivery of shares of UPC Common Stock
registered with the SEC (in the manner described in Section 7.1 of this
Agreement). UPC may exercise this right of revision by giving written notice to
Duck Hill in the manner provided in Section 10.8 of this Agreement.
1.9 POST SIGNING DUE DILIGENCE REVIEW. Upon execution hereof,
UPC shall be entitled forthwith to perform a due diligence review of the Records
and operations of Duck Hill, including, but not limited to, a review of Duck
Hill's Assets, including its loan portfolios, ORE and classified assets,
investment portfolios and properties, to verify the quality of such Assets, the
adequacy of the Allowances which have been provided against them and the
reasonableness of Duck Hill's earnings projections, growth projections and
sustained earnings prospects after consummation of the Merger at reasonable
growth rates; provided, however, that any review conducted by UPC pursuant to
the provisions of this Section 1.9 shall be completed within thirty (30) days
from the date of the execution of this Agreement. Should, as a result of such
review, UPC find in good faith that the Allowances and other reserves provided
by Duck Hill are insufficient to absorb any losses inherent in Duck Hill's
Assets or that the earnings projections, growth projections or sustained
earnings prospects provided by Duck Hill are not likely to be achieved or
maintained after consummation of the Merger, or that any other event has been
determined to have a Material Adverse Effect on UPC, UPC may, prior to the
expiration of the post signing due diligence review period, terminate this
Agreement without penalty by giving Duck Hill
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written notice of such termination in the manner provided in Section 10.8.
Nothing in this Section 1.19 shall be construed to limit the right of UPC to
continue its due diligence through the Closing Date or release Duck Hill from
its obligation to provide updates or amendments to its Disclosure Memorandum
after the expiration of such 30 day time period and prior to the Effective Time
of the Merger.
ARTICLE 2
MANNER OF CONVERTING SHARES AND OPTIONS; EXCHANGE RATIO
2.1 CONVERSION; CANCELLATION AND EXCHANGE OF SHARES; EXCHANGE
RATIO. At the Effective Time, by virtue of the Merger becoming effective and
without any action on the part of UPC, UPHC, UPB, Duck Hill, or the shareholders
of any of the foregoing, the shares of the constituent corporations shall be
affected as follows:
(a) UPC CAPITAL STOCK. Each share of UPC Capital Stock,
including any associated UPC Rights, issued and outstanding immediately prior to
the Effective Time shall remain issued and outstanding from and after the
Effective Time.
(b) UPB COMMON STOCK. Each share of UPB common stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding from and after the Effective Time.
(c) DUCK HILL COMMON STOCK. Each share of Duck Hill
Common Stock issued and outstanding at the Effective Time shall cease to
represent any interest (equity, shareholder or otherwise) in Duck Hill and shall
automatically be converted exclusively into, and constitute only the right of
each Duck Hill Record Holder to receive in exchange for such holder's shares of
Duck Hill Common Stock, the Consideration to which the Duck Hill Record Holder
is entitled as provided in this Section 2.1(c).
(i) THE EXCHANGE RATIO. The number of shares of
UPC Common Stock to be exchanged for each share of Duck Hill Common Stock which
shall be validly issued and outstanding immediately prior to the Effective Time
shall be based on an exchange ratio of 10.6008 shares of UPC Common Stock for
each share of Duck Hill Common Stock (the "Exchange Ratio").
The Exchange Ratio is based upon there being no more than an aggregate
of 4,000 fully diluted shares of Duck Hill Common Stock validly issued and
outstanding immediately prior to the Effective Time (which for the purposes of
the Exchange Ratio shall be determined by counting all unexercised Duck Hill
Stock Options, if any, and any other Rights issued and outstanding immediately
prior to the Effective Time as if they had been fully exercised prior to the
Effective Time.) Duck Hill Common Stock held by Duck Hill, other than in a
fiduciary capacity or as a result of debts previously contracted, shall not be
considered as outstanding immediately prior to the Effective Time for purposes
of the Exchange Ratio.
(ii) DEFINITION OF "CURRENT MARKET PRICE PER
SHARE." The "Current Market Price Per Share" shall be the closing price per
share of UPC Common Stock on the NYSE Composite Transaction List (as reported by
The Wall Street Journal or, if not reported thereby, any other authoritative
source selected by UPC) on the particular trading day.
(iii) EFFECT OF STOCK SPLITS, REVERSE STOCK
SPLITS, STOCK DIVIDENDS AND SIMILAR CHANGES IN THE CAPITAL OF DUCK HILL. Should
Duck Hill effect any stock splits, reverse stock splits, stock dividends or
similar changes in its respective capital accounts subsequent to the date of
this Agreement but prior to the Effective Time, or should there be more than
4,000 fully diluted shares of Duck Hill Common Stock
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outstanding immediately prior to the Effective Time, the Exchange Ratio may, in
UPC's sole discretion if such change in the capital accounts constitutes a
breach of any of Duck Hill's representations, warranties or covenants, be
adjusted in such a manner as the Board of Directors of UPC shall deem in good
faith to be fair and reasonable in order to give effect to such changes.
Notwithstanding the foregoing, nothing in this subparagraph (iii) shall be
deemed to be a waiver of the inaccuracy of any representation or warranty or
breach of any covenant by Duck Hill set forth herein.
(d) SHARES HELD BY DUCK HILL OR UPC. Each of the shares
of Duck Hill Common Stock held by Duck Hill or by any UPC Company, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
Consideration shall be issued in exchange therefor.
(e) DISSENTERS' RIGHTS OF DUCK HILL SHAREHOLDERS. Any
Duck Hill Record Holder who shall comply strictly with the provisions of
Sections 79-4-13.01 et. seq. of the Mississippi Code regarding dissenters'
rights ("Duck Hill Dissenting Shareholders"), shall be entitled to dissent from
the Merger and to seek those appraisal remedies afforded by such sections.
(f) FRACTIONAL SHARES. Notwithstanding any other
provision of this Agreement, each holder of shares of Duck Hill Common Stock
exchanged pursuant to the Merger who would otherwise have been entitled to
receive a fraction of a share of UPC Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of UPC
Common Stock multiplied by the Current Market Price per share of one share of
UPC Common Stock 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.
2.2 ANTI-DILUTION PROVISIONS. In the event UPC changes the number
of shares of UPC Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, or 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. The
Parties hereto acknowledge and agree that UPC's issuance of additional shares of
UPC Common Stock, or any other Capital Stock, for what the Board of Directors of
UPC determines to be adequate consideration, including but not limited to, the
issuance of additional shares in connection with other acquisitions, dividend
reinvestment plans or employee benefit plans, would not give rise to an
adjustment to the Exchange Ratio pursuant to this Section 2.2.
ARTICLE 3
EXCHANGE OF SHARES
3.1 EXCHANGE PROCEDURES. As soon as reasonably practical after the
Effective Time, UPC and Duck Hill shall cause the Exchange Agent to mail to the
Duck Hill Record Holders appropriate transmittal materials (which shall specify
that delivery shall be effected, and risk of loss and title to the certificates
theretofore representing shares of Duck Hill Common Stock shall pass, only upon
proper delivery of such certificates to the Exchange Agent). The Exchange Agent
may establish reasonable and customary rules and procedures in connection with
its duties. After the Effective Time, each Duck Hill Record Holder of Duck Hill
Common Stock (other than shares to be canceled pursuant to Section 2.1(d) of
this Agreement) issued and outstanding at the Effective Time shall surrender the
certificate or certificates representing such shares to the Exchange Agent and
shall promptly upon surrender thereof receive in exchange therefor the
Consideration provided in Section 2.1(c) of this Agreement, together with all
undelivered dividends or distributions in respect of such shares (without
interest thereon) pursuant to Section 3.2 of this Agreement. To the extent
required by Section 2.1(c) of this Agreement, each Duck Hill Record Holder also
shall receive, upon surrender of the certificate or certificates representing
his or her shares of Duck Hill Common Stock outstanding immediately prior to the
Effective Time, cash in lieu of any fractional share of UPC Common Stock to
which such holder may be otherwise entitled (without interest). UPC shall not be
obligated to deliver the Consideration to which any
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Duck Hill Record Holder is entitled as a result of the Merger until such Duck
Hill Record Holder surrenders such holder's certificate or certificates
representing the shares of Duck Hill Common Stock for exchange as provided in
this Section 3.1. The certificate or certificates of Duck Hill Common Stock so
surrendered shall be duly endorsed as the Exchange Agent may require. Any other
provision of this Agreement notwithstanding, neither UPC nor the Exchange Agent
shall be liable to a Duck Hill Record Holder for any amounts paid or property
delivered in good faith to a public official pursuant to any applicable
abandoned property Law. Approval of this Agreement and the Agreement to Merge by
the shareholders of Duck Hill shall constitute all shareholders' ratification of
the appointment of the Exchange Agent.
3.2 RIGHTS OF FORMER DUCK HILL RECORD HOLDERS. At the Effective
Time, the stock transfer books of Duck Hill shall be closed as to holders of
Duck Hill Common Stock outstanding immediately prior to the Effective Time, and
no transfer of Duck Hill Common Stock by any Duck Hill Record Holder shall
thereafter be made or recognized. Until surrendered for exchange in accordance
with the provisions of Section 3.1 of this Agreement, each certificate
theretofore representing shares of Duck Hill Common Stock (other than shares to
be canceled pursuant to Section 2.1(d) of this Agreement) shall from and after
the Effective Time represent for all purposes only the right to receive the
Consideration provided in Section 2.1(c) of this Agreement in exchange therefor,
subject, however, to the Surviving Association's obligation to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which have been declared or made by Duck Hill in respect of such shares of Duck
Hill Common Stock in accordance with the terms of this Agreement and which
remain unpaid at the Effective Time. Whenever a dividend or other distribution
is declared by UPC on the UPC Common Stock, the record date for which is on or
after the Effective Date, the declaration shall include dividends or other
distributions on all shares of UPC Common Stock issuable pursuant to this
Agreement, but no dividend or other distribution payable to the holders of
record of UPC Common Stock as of any time subsequent to the Effective Time shall
be delivered to a Duck Hill Record Holder until such Duck Hill Record Holder
surrenders his or her certificate or certificates evidencing Duck Hill Common
Stock for exchange as provided in Section 3.1 of this Agreement. However, upon
surrender of such Duck Hill Common Stock certificate, both the UPC Common Stock
certificate (together with all such undelivered dividends or other
distributions, without interest) and any undelivered dividends and cash payments
payable hereunder (without interest), shall be delivered and paid with respect
to each share represented by such certificate.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF DUCK HILL
Except as disclosed in the Duck Hill Disclosure Memorandum, Duck Hill
hereby represents and warrants to UPC as follows:
4.1 ORGANIZATION, STANDING, AND POWER. Duck Hill is a banking
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Mississippi and has the corporate power and authority and
all required regulatory approvals and authorizations to carry on its business as
now conducted and to own, lease, and operate its Assets.
4.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Duck Hill has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this
Reorganization Agreement and Agreement to Merge and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and
performance of this Agreement and the Agreement to Merge, as appropriate, and
the consummation of the transactions contemplated herein and therein, including
the Merger, have been duly and validly authorized by all necessary corporate
action in respect thereof on the part of Duck Hill, subject to the approval of
this Reorganization Agreement and Agreement to Merge by the holders of a
majority (or such greater percentage as may be required by the Articles of
Incorporation of Duck Hill or other applicable Law) of the outstanding shares of
Duck Hill Common Stock,
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which is the only shareholder vote required for approval of this Agreement and
the Agreement to Merge, and consummation of the Merger by Duck Hill. Subject to
the receipt of such requisite shareholder approval, this Agreement and the
Agreement to Merge represent legal, valid, and binding obligations of Duck Hill,
enforceable against Duck Hill in accordance with their respective terms (except
in all cases as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, receivership, conservatorship, moratorium, or
similar laws affecting the enforcement of creditors' rights generally and except
that the availability of the equitable remedy of specific performance of
injunctive relief is subject to the discretion of the court before which any
proceeding may be brought).
(b) Neither the execution and delivery of this Agreement or the
Agreement to Merge, as appropriate, by Duck Hill, nor the consummation by Duck
Hill of the transactions contemplated hereby or thereby, nor compliance by Duck
Hill with any of the provisions hereof or thereof will (i) conflict with or
result in a breach of any provision of Duck Hill's Articles of Incorporation or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to or result in the creation of any Lien on any material Asset of Duck
Hill under, any Contract or Permits of Duck Hill, or (iii) subject to receipt of
the requisite Consents referred to in Section 7.3 of this Agreement, violate any
Law or Order applicable to Duck Hill or any of their respective Material Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate Laws, other than Consents
required from Regulatory Authorities and other than notices to or filings with
the Internal Revenue Service or the Pension Benefit Guaranty Corporation with
respect to any Duck Hill Employee Plans or under the HSR Act, and other than
Consents, filings, or notifications which, if not obtained or made, are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Duck Hill, no notice to, filing with, or Consent of, any public body
or authority is necessary for the consummation by Duck Hill of the Merger and
the other transactions contemplated in this Agreement and the Agreement to
Merge.
(d) Duck Hill is not a party to, or subject to, or bound by, any
agreement or judgment, order, letter of understanding, writ, prohibition,
injunction, or decree of any court or other governmental body of competent
jurisdiction, or any Law which would prevent the execution and delivery of this
Agreement and the Agreement to Merge by Duck Hill, or the consummation of the
transactions contemplated hereby and thereby, and no action or proceeding is
pending against Duck Hill in which the validity of this Agreement, the
transactions contemplated hereby or any other action which has been taken by any
other of such Parties in connection herewith or in connection with the
transaction contemplated hereby is at issue.
4.3 CAPITAL STOCK.
(a) The authorized capital stock of Duck Hill consists of
(i) 4,000 shares of Duck Hill Common Stock, $50.00 par value, of which 4,000
shares are issued and outstanding as of the date of this Agreement, and not more
than 4,000 shares will be issued and outstanding at the Effective Time, and (ii)
zero (0) shares of preferred stock of which no shares are, or will be, issued
and outstanding as of the date of the original Agreement or at the Effective
Time, respectively. All of the issued and outstanding shares of capital stock of
Duck Hill are duly and validly issued and outstanding and are fully paid and
nonassessable under the Laws of the State of Mississippi and Duck Hill's
Articles of Incorporation. None of the outstanding shares of capital stock of
Duck Hill has been issued in violation of any preemptive rights of the current
or past shareholders of Duck Hill or any of its predecessors.
(b) As of the date of this Agreement and as of the date
hereof, there are no options, Rights, warrants, scrip or similar rights of any
nature, including stock options, stock appreciation or similar rights, issued
and outstanding by Duck Hill to purchase shares of Duck Hill Common Stock, any
other capital stock of Duck Hill, or any other securities or instruments of any
nature which are convertible into or exchangeable for, or which derive their
value, in whole or in part from, shares of Duck Hill Common Stock or any other
capital stock of Duck Hill. Therefore, at the Effective Time there will be no
issued and outstanding options, securities,
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Rights or instruments of any nature whatsoever to purchase or otherwise acquire
shares of Duck Hill Common Stock or any other capital stock of Duck Hill, or
which derive their value, in whole or in part from Duck Hill Common Stock or any
other capital stock of Duck Hill.
4.4 DUCK HILL SUBSIDIARIES. Duck Hill has disclosed or shall
disclose in Section 4.4 of the Duck Hill Disclosure Memorandum that there are no
subsidiaries owned in whole or in part by Duck Hill.
4.5 DUCK HILL FINANCIAL STATEMENTS.
(a) DUCK HILL FINANCIAL STATEMENTS. As disclosed in
Section 4.5 of the Duck Hill Disclosure Memorandum, Duck Hill has delivered or
will deliver to UPC (or will deliver, when available, with respect to periods
ended after the date of the original Agreement) true, correct and complete
copies of (i) the consolidated statements of financial position (including
related notes and schedules, if any) of Duck Hill as of September 30, 1997, and
as of December 31, 1996, and December 31, 1995, and the related statements of
operations, stockholders' equity, and cash flows (including related notes and
schedules, if any) for the three months ended September 30, 1997, and for each
of the three fiscal years ended December 31, 1996, 1995, and 1994, (ii) the
consolidated statements of financial position of Duck Hill (including related
notes and schedules, if any) and related statements of operations, stockholders'
equity, and cash flows (including related notes and schedules, if any) with
respect to any period ending subsequent to September 30, 1997, and prior to the
Closing Date, and (iii) all Call Reports, including any amendments thereto,
filed with any Regulatory Authorities by Duck Hill and each of the Bank
Subsidiaries for the years ended December 31, 1996, 1995, 1994 and 1993,
together with any correspondence with the SEC or with any other Regulatory
Authorities concerning any of the aforesaid financial statements and Reports
(the "Duck Hill Financial Statements"). Such Duck Hill Financial Statements (i)
were (or will be) prepared from the Records of Duck Hill and/or each Duck Hill
Subsidiary; (ii) were (or will be) prepared in accordance with GAAP (or, where
applicable, regulatory accounting principles) consistently applied; (iii)
accurately present (or, when prepared, will present) Duck Hill's and each Duck
Hill Subsidiary's financial condition and the results of its operations, changes
in stockholders' equity and cash flows at the relevant dates thereof and for the
periods covered thereby, except that the unaudited interim Financial Statements
were or are subject to normal and recurring year-end adjustments which were not
expected to be material in amount or effect; (iv) do contain or reflect (or,
when prepared, will contain and reflect) all necessary adjustments and accruals
for an accurate presentation of Duck Hill's and each Duck Hill Subsidiary's
financial condition and the results of Duck Hill's and each Duck Hill
Subsidiary's operations and cash flows for the periods covered by such financial
statements; (v) do contain and reflect (or, when prepared, will contain and
reflect) adequate provisions or Allowances for loan losses, for ORE reserves and
for all reasonably anticipatable Liabilities and Taxes, with respect to the
periods then ended; and (vi) do contain and reflect (or, when prepared, will
contain and reflect) adequate provisions for all reasonably anticipated
liabilities for Post Retirement Benefits Other Than Pensions ("OPEB") pursuant
to SFAS Nos. 106 and 112.
4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Duck Hill has no
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Duck Hill, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Duck Hill as
of September 30, 1997, and December 31, 1996, included in the Duck Hill
Financial Statements or reflected in the notes or schedules, if any, thereto,
and delivered or to be delivered with the Duck Hill Disclosure Memorandum prior
to the date of this Agreement. Duck Hill has not incurred or paid any Liability
since December 31, 1996, except for such Liabilities incurred or paid in the
ordinary course of business consistent with past business practice and which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Duck Hill.
4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Balance Sheet
Date there has not been:
(a) any material transaction by Duck Hill which was not undertaken
in the ordinary course of business and in conformity with past practice.
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(b) any loss of a key employee or any damage, destruction or loss,
whether or not covered by insurance, which has had or which may be reasonably
expected to have a Material Adverse Effect on Duck Hill.
(c) any acquisition or disposition by Duck Hill of any Asset
having a fair market value, singularly or in the aggregate for Duck Hill, in an
amount greater than Five Thousand Dollars ($5,000), except in the ordinary
course of business and in conformity with past practice.
(d) any mortgage, pledge or subjection to Lien, of any kind on any
of the Assets of Duck Hill, except to secure extensions of credit in the
ordinary course of business and in conformity with past practice.
(e) any amendment, modification or termination of any Contract
relating to Duck Hill or to which Duck Hill is a party which would or may be
reasonably expected to have a Material Adverse Effect on Duck Hill.
(f) other than as described in Section 4.7(f) of the Duck Hill
Disclosure Memorandum, any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee or
agent of Duck Hill, or any bonus payment or similar arrangement made to or with
any of such officers, directors, employees or agents, other than routine
increases made in the ordinary course of business not exceeding the greater of
ten percent (10%) per annum or $5,000 for any of them individually.
(g) any incurring of, assumption of, or taking of, by Duck Hill,
any Asset subject to any Liability, except for Liabilities incurred or assumed
or Assets taken subsequent to the Balance Sheet Date in the ordinary course of
business and in conformity with past practice.
(h) any material alteration in the manner of keeping the books,
accounts or Records of Duck Hill, or in the accounting policies or practices
therein reflected.
(i) any release or discharge (or partial release or discharge) of
any obligation or Liability of any Person related to or arising out of any loan
made by Duck Hill, except in the ordinary course of business and in conformity
with past practice.
4.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of Duck
Hill 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 Tax Returns filed are complete and
accurate. All Taxes shown on filed Tax Returns have been paid. There is no
audit examination, deficiency, or refund Litigation with respect to any Taxes,
except as fully reserved against in the Duck Hill Financial Statements made
available prior to the date of this Agreement. All Taxes and other Liabilities
due with respect to completed and settled examinations or concluded Litigation
have been paid. There are no Liens with respect to Taxes upon any of the Assets
of Duck Hill.
(b) Duck Hill has not executed an extension or waiver of any
statute of limitations on the assessment or collection of any Tax due
(excluding such statutes that relate to years currently under examination by
the Internal Revenue Service or other applicable taxing authorities) that is
currently in effect.
(c) Adequate provision for any Taxes due or to become due for any
of Duck Hill for the period or periods through and including the date of the
respective Duck Hill Financial Statements has been made and is reflected on
such Duck Hill Financial Statements.
(d) Deferred Taxes of Duck Hill have been provided for in
accordance with GAAP.
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(e) Duck Hill is in compliance with, and its Records
contain all information and documents (including properly completed IRS Forms
W-9) necessary to comply with, all applicable information reporting and Tax
withholding requirements under federal, state, and local tax Laws, and such
records identify with specificity all accounts subject to backup withholding
under Section 3406 of the IRC.
(f) Duck Hill has not made any payments, is obligated to
make any payments, or is a party to any Contract that could obligate it to make
any payments that would be disallowed as a deduction under Section 28OG or
162(m) of the Internal Revenue Code.
(g) There has not been an ownership change, as defined in
the IRC Section 382(g), of Duck Hill that occurred during or after any Taxable
Period in which the Companies incurred a net operating loss that carries over to
any Taxable Period ending after December 31, 1996.
(h) Duck Hill is not a party to any tax allocation or
sharing agreement, and Duck Hill has not been a member of an affiliated group
filing a consolidated federal income tax return which has any Liability for
taxes of any Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law) as a transferee or successor or by
Contract or otherwise.
4.9 ALLOWANCE FOR POSSIBLE LOAN LOSSES. The allowance for possible
loan or credit losses, including any allowances or reserves for losses on ORE
and other collateral taken in satisfaction, or partial satisfaction of a debt
previously contracted, (the "Allowance") shown on the consolidated balance
sheets of Duck Hill included in the most recent Duck Hill Financial Statements
dated prior to the date of this Agreement was, and the Allowance shown on the
consolidated balance sheets of Duck Hill included in the Duck Hill Financial
Statements as of dates subsequent to the execution of this Agreement will be, as
of the dates thereof, in the reasonable opinion of management of Duck Hill
adequate (within the meaning of GAAP and applicable regulatory requirements or
guidelines) to provide for all known and reasonably anticipated losses relating
to or inherent in the loan and lease portfolios (including accrued interest
receivables and ORE reserves) of Duck Hill and other extensions of credit
(including letters of credit and commitments to make loans or extend credit) by
Duck Hill as of the dates thereof. Except as described in Section 4.9 of the
Duck Hill Disclosure Memorandum (by loan type, loan number, classification and
outstanding balance) which includes all Loans or extensions of credit which are
listed on Duck Hill's watch list, Duck Hill has no Loan or other extension of
credit which has been (or should have been in management's reasonable opinion)
classified by Duck Hill management as "Other Assets Especially Mentioned,"
"Substandard," "Doubtful" or "Loss", or similar classifications, that were not
classified in Duck Hill's most recent report of examination or most current
watch list, copies of which have been made available to UPC for review prior to
the date of this Agreement. The net book value of Duck Hill's assets acquired
through foreclosure in satisfaction of problem loans ("ORE") are carried on the
balance sheet of the Duck Hill Financial Statements at fair value at the time of
acquisition less estimated selling costs which approximates the net realizable
value of the ORE in accordance with the American Institute of Certified Public
Accountants' Statement of Position 92-3.
4.10 ASSETS. Except as disclosed or reserved against in the Duck
Hill Financial Statements made available prior to the date of this Agreement,
Duck Hill have good and marketable title, free and clear of all Liens, to all of
their respective Assets. All tangible Assets used in the businesses of Duck Hill
are in good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Duck Hill's past practices. All
Assets which are material to Duck Hill's business on a consolidated basis, held
under leases or subleases by any of Duck Hill are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting the enforcement of creditors' rights generally and
except that the availability of the equitable remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceedings may be brought), and each such Contract is in full force and effect.
Duck Hill currently maintains insurance similar in amounts, scope, and coverage
to that maintained by other peer banking organizations. Duck Hill has not
received notice from any insurance carrier that (i) such insurance would be
canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect
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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 Duck Hill under such policies.
4.11 INTELLECTUAL PROPERTY. All of the Intellectual Property rights
of Duck Hill are in full force and effect and constitute legal, valid, and
binding obligations of the respective parties thereto, and there have not been,
and, to the Knowledge of Duck Hill, there currently are not, any Defaults
thereunder by Duck Hill. Duck Hill owns or is the valid licensee of all such
Intellectual Property rights free and clear of all Liens or claims of
infringement. Duck Hill has not misused the Intellectual Property rights of
others and none of the Intellectual Property rights as used in the business
conducted by Duck Hill infringes upon or otherwise violates the rights of any
Person, nor has any Person asserted a claim of such infringement. Duck Hill is
not obligated to pay any royalties to any Person with respect to any such
Intellectual Property. Duck Hill 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 Duck Hill 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 Duck Hill.
4.12 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Duck Hill, its Participation
Facilities, and its Operating Properties are, and have been, in compliance with
an Environmental Laws, except for violations which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Duck Hill.
(b) To the Knowledge of Duck Hill, there is no Litigation
pending or threatened before any court, governmental agency, or authority or
other forum in which Duck Hill or any of its Operating Properties or
Participation Facilities (or Duck Hill 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 Duck Hill or any of its Operating Properties or Participation
Facilities, except for such Litigation pending or threatened that is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Duck Hill, nor is there any reasonable basis for any Litigation of a
type described in this sentence.
(c) During the period of (i) Duck Hill's ownership or
operation of any of their respective current properties, (ii) Duck Hill's
participation in the management of any Participation Facility, or (iii) Duck
Hill's holding of a security interest in an Operating Property, to the Knowledge
of Duck Hill, 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 Duck Hill. Prior to the period of (i) Duck Hill's
ownership or operation of any of their respective current properties, (ii) Duck
Hill's participation in the management of any Participation Facility, or (iii)
Duck Hill's holding of a security interest in an Operating Property, to the
Knowledge of Duck Hill, 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 Duck Hill.
4.13 COMPLIANCE WITH LAWS. Duck Hill has in effect all Permits
necessary for it to own, lease, or operate its material Assets and to carry on
its business as now conducted, and there has occurred no Default under any such
Permit. Duck Hill is not or has not:
(a) in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business; and
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(b) 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 Duck Hill is not in compliance
with any of the Laws or Orders which such governmental authority or Regulatory
Authority enforces, (ii) threatening to revoke any Permits, or (iii) requiring
Duck Hill to enter into or consent to the issuance of a cease and desist order,
formal agreement, directive, or memorandum of understanding, or to adopt any
Board resolution or similar undertaking, which restricts materially the conduct
of its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
4.14 LABOR RELATIONS. Duck Hill is not the subject of any
Litigation asserting that it has committed an unfair labor practice (within the
meaning of the National Labor Relations Act or comparable state law) or seeking
to compel it to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving Duck Hill,
pending or threatened, or to the Knowledge of Duck Hill, is there any activity
involving Duck Hill's employees seeking to certify a collective bargaining unit
or engaging in any other organization activity.
4.15 EMPLOYEE BENEFIT PLANS.
(a) Duck Hill has disclosed or will disclose in Section
4.15(a) of the Duck Hill Disclosure Memorandum, and has delivered or made
available to UPC prior to the date of this Agreement copies in each case of, all
pension, retirement, profit-sharing, deferred compensation, stock option,
employee stock ownership, severance pay, vacation, bonus, or other incentive
plan, all other written employee programs, arrangements, or agreements, all
medical, vision, dental, or other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including "employee
benefit plans" as that term is defined in Section 3(3) of ERISA, currently
adopted, maintained by, sponsored in whole or in part by, or contributed to by
Duck Hill or ERISA Affiliate thereof for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
and under which employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries are eligible to participate (collectively,
the "Duck Hill Benefit Plans"). Any of the Duck Hill 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 "Duck Hill ERISA Plan." Each Duck Hill ERISA
Plan which is also a "defined benefit plan" (as defined in Section 414(j) of the
Internal Revenue Code) is referred to herein as a "Duck Hill Pension Plan." No
Duck Hill Pension Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA.
(b) All Duck Hill Benefit Plans are in compliance with
the applicable terms of ERISA, the Internal Revenue Code, and any other
applicable Laws the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Duck Hill. Each
Duck Hill ERISA Plan which is intended to be qualified under Section 401(a) of
the Internal Revenue Code has received a favorable determination letter from the
Internal Revenue Service, and Duck Hill is not aware of any circumstances likely
to result in revocation of any such favorable determination letter. Duck Hill
has not engaged in a transaction with respect to any Duck Hill Benefit Plan
that, assuming the taxable period of such on expired as of the date hereof,
would subject Duck Hill to a Tax imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.
(c) No Duck Hill Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements. Since the date of the most
recent actuarial evaluation, there has been (i) no material change in the
financial position of any Duck Hill Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Duck Hill Pension Plan, and (iii) no
increase in benefits under any Duck Hill Pension Plan as a result of plan
amendments or changes in applicable Law which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Duck Hill or
materially adversely affect the funding status of any such plan. Neither any
Duck Hill Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently
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or formerly maintained by Duck Hill, or the single-employer plan of any entity
which is considered one employer with Duck Hill 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.
Duck Hill has not provided, nor is it required to provide, security to a Duck
Hill Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant
to Section 401(a)(29) of the Internal Revenue Code.
(d) Within the six-year period preceding the Effective
Time, no Liability under Subtitle C or D of Title IV of ERISA has been or is
expected to be incurred by Duck Hill with respect to any ongoing, frozen, or
terminated single-employer plan or the single-employer plan of any ERISA
Affiliate. Duck Hill has not incurred any withdrawal Liability with respect to a
multiemployer plan under Subtitle B of Title IV of ERISA (regardless of whether
based on contributions of an ERISA Affiliate). No notice of a "reportable
event," within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Duck Hill Pension Plan or by any ERISA Affiliate within the 12-month period
ending on the date hereof.
(e) Duck Hill has no Liability for retiree health and
life benefits under any of the Duck Hill Benefit Plans and there are no
restrictions on the rights of Duck Hill to amend or terminate any such retiree
health or benefit Plan without incurring Liability thereunder.
(f) Except as disclosed in Section 4.15(f) of the Duck
Hill Disclosure Memorandum, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including severance, unemployment compensation, golden parachute,
or otherwise) becoming due to any director or any employee of Duck Hill from
Duck Hill under any Duck Hill Benefit Plan or otherwise, (ii) increase any
benefits otherwise payable under any Duck Hill 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 Duck Hill 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 Duck Hill Financial Statements to the extent
required by and in accordance with GAAP.
4.16 MATERIAL CONTRACTS. Except as disclosed in Section 4.16 of the
Duck Hill Disclosure Memorandum, Duck Hill nor any of its 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
Duck Hill, other than as specifically disclosed on the Duck Hill Financial
Statements, or the guarantee by Duck Hill of any such obligation (other than
Contracts evidencing deposit liabilities, purchases of federal funds,
fully-secured repurchase agreements, and Federal Home Loan Bank advances of
depository institution Subsidiaries, trade payables, and Contracts relating to
borrowings or guarantees made in the ordinary course of business), (iii) any
Contracts which prohibit or restrict Duck Hill from engaging in any business
activities in any geographic area, line of business, or otherwise in competition
with any other Person, (iv) 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 Duck
Hill Financial Statements delivered prior to the date of this Agreement) which
is a financial derivative Contract (including various combinations thereof), and
(v) any other Contract or amendment thereto that would be required to be filed
as an exhibit to a Duck Hill SEC Report (whether or not Duck Hill is subject to
the filing requirements of the SEC) filed (or which would have been filed if
Duck Hill were subject to the SEC reporting requirements) by Duck Hill with the
SEC prior to the date of this Agreement (together with all Contracts referred to
in Sections 4.10 and 4.15(a) of this Agreement, (the "Duck Hill Contracts").
With respect to each Duck Hill Contract: (i) the Contract is in full force and
effect; (ii) Duck Hill is not in Default thereunder, (iii) Duck Hill has not
repudiated or waived any material provision of any such
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Contract; and (iv) no other party to any such Contract is, to the Knowledge of
Duck Hill, in Default in any respect or has repudiated or waived any material
provision thereunder. Except as set forth in Section 4.16 of the Duck Hill
Disclosure Memorandum all of the indebtedness of Duck Hill for money borrowed is
prepayable at any time by Duck Hill without penalty or premium.
4.17 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of Duck Hill, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Duck Hill 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 Duck Hill, nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against Duck Hill.
4.18 REPORTS. Since January 1, 1992, or the date of organization if
later, Duck Hill has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the SEC, if applicable, including Forms 10-K, Forms 10-Q, Forms
8-K, and proxy statements, (ii) other Regulatory Authorities, and (iii) any
applicable state securities or banking authorities (except, in the case of state
securities authorities, failures to file which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Duck Hill).
As of their respective dates, each of such reports and documents, including the
financial statements, exhibits, and schedules thereto, complied in all material
respects with all applicable Laws. As of its respective date, each such report
and document did not, in all material respects, contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein light of the circumstances
under which they were made, not misleading.
4.19 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument, or other writing furnished or to be furnished by Duck Hill to UPC
pursuant to this Agreement, this Agreement or any other document, agreement, or
instrument referred to therein or herein contains, or will contain, any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by Duck
Hill or any Affiliate thereof for inclusion in the Registration Statement to be
filed by UPC with the SEC will, when the Registration Statement becomes
effective, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein not misleading.
None of the information supplied or to be supplied by Duck Hill or any Affiliate
thereof for inclusion in the Proxy Statement to be mailed to Duck Hill's
shareholders in connection with the Shareholders' Meeting, and any other
documents to be filed by Duck Hill or any Affiliate thereof with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby, will, at the respective time such documents are filed, and with respect
to the Proxy Statement, when first mailed to the shareholders of Duck Hill 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 Duck Hill or any Affiliate thereof is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all material respects
with the provisions of applicable Law.
4.20 ACCOUNTING, TAX, AND REGULATORY MATTERS. Duck Hill has not
taken any action or has any Knowledge of any fact or circumstance relating to
Duck Hill 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 IRC, or (ii) materially impede or delay receipt of any Consents of
Regulatory Authorities referred to in Section 8.1(b) of this Agreement or result
in the imposition of a condition or restriction of the type referred to in the
last sentence of such section.
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4.21 STATE TAKEOVER LAWS. Duck Hill has taken all necessary action
to exempt the transactions contemplated by this Agreement and the Agreement to
Merge from, or if necessary challenge the validity or applicability of any
applicable "moratorium," "fair price," "business combination," "control share,"
or other anti-takeover Laws (collectively, "Takeover Laws"), including any
applicable sections of the Mississippi Code.
4.22 ARTICLES OF INCORPORATION PROVISIONS. Duck Hill has taken all
action so that the entering into of this Reorganization Agreement and the
Agreement to Merge and the consummation of the Merger and the other transactions
contemplated by this Reorganization Agreement and the Agreement to Merge do not
and will not result in the grant of any rights to any Person under the Articles
of Incorporation, Bylaws or other governing instruments of Duck Hill or restrict
or impair the ability of UPC or any of its Subsidiaries to vote, or otherwise to
exercise the rights of a shareholder with respect to, shares of Duck Hill that
may be directly or indirectly acquired or controlled by it.
4.23 ARTICLES OF INCORPORATION DOCUMENTS. Duck Hill has previously
provided UPC true and correct copies of the Articles of Incorporation and Bylaws
of Duck Hill, as amended to date, and the same are in full force and effect.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF UPC
Except as disclosed in the UPC Disclosure Memorandum, UPC hereby
represents and warrants to Duck Hill as follows:
5.1 ORGANIZATION, STANDING, AND POWER. UPC is a corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Tennessee, and UPB is a national banking association duly organized and existing
under the Laws of the United States of America. Each has the power and authority
to carry on its business as now conducted and to own, lease and operate its
material Assets. UPC is duly qualified or licensed to transact business as a
foreign corporation in good standing in the States of the United States and
foreign jurisdictions where the character of its Assets or the nature or conduct
of its business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC.
5.2 AUTHORITY: NO BREACH BY AGREEMENT.
(a) UPC and UPB each has the power and authority
necessary to execute, deliver and perform its obligations under this Agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and the Agreement to Merge (as to UPB) and the
consummation of the transactions contemplated herein, including the Merger, have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of UPC and UPB including the approval of UPHC in its
capacity as the sole shareholder of UPB. This Agreement represents a legal,
valid, and binding obligation of UPC, enforceable against UPC in accordance with
its terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement
by UPC, nor the consummation by UPC and UPB of the transactions contemplated
hereby, nor compliance by UPC and UPB with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of any UPC Company's
Charter (or similar governing instrument) or Bylaws, or (ii) constitute or
result in a Default under, or require any Consent pursuant to, or result in the
creation of any Lien on any Asset of any UPC Company under any Contract or
Permit of any UPC Company, or (iii) subject to receipt of the requisite
approvals referred to in Section 8.1(b)
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of this Agreement, violate any Law or Order applicable to any UPC Company or any
of their respective material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and the rules of
the NYSE, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
or under the HSR Act, and other than Consents, filings, or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, no notice to, filing with, or
Consent of, any public body or authority is necessary for the consummation by
UPC and UPB of the Merger and the other transactions contemplated in this
Agreement.
5.3 CAPITAL STOCK. The authorized capital stock of UPC consists of
(i) 100,000,000 shares of UPC Common Stock, of which 68,077,181 shares are
issued and outstanding as of October 31, 1997, and (ii) 10,000,000 shares of UPC
Preferred Stock, of which zero (0) shares of UPC Series A Preferred Stock and
2,278,228 shares of UPC Series E Preferred Stock are issued and outstanding. All
of the issued and outstanding shares of UPC Capital Stock are, and all of the
shares of UPC Common Stock to be issued in exchange for shares of Duck Hill
Common Stock upon consummation of the Merger, when issued in accordance with the
terms of this Agreement, will be, duly and validly issued and outstanding and
fully paid and nonassessable under the Tennessee Code and the UPC Charter. None
of the outstanding shares of UPC Capital Stock has been, and none of the shares
of UPC Common Stock to be issued in exchange for shares of Duck Hill Common
Stock upon consummation of the Merger will be, issued in violation of any
preemptive rights of the current or past shareholders of UPC. UPC has reserved
for issuance a sufficient number of shares of UPC Common Stock for the purpose
of issuing shares of UPC Common Stock in accordance with the provisions of
Sections 2.1(c) and 2.2 of this Agreement and the related Agreement to Merge.
5.4 SEC FILINGS: FINANCIAL STATEMENTS.
(a) UPC has filed and made available to Duck Hill all SEC
documents required to be filed by UPC since December 31, 1994 (the "UPC SEC
Reports"). The UPC SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Laws and (ii) did
not, at the time they were filed (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in such UPC SEC Reports or necessary in order to make the statements
in such UPC SEC Reports, in light of the circumstances under which they were
made, not misleading. Except for UPC Subsidiaries that are registered as a
broker, dealer or investment advisor, no UPC Subsidiary is required to file any
SEC Documents.
(b) Each of the UPC Financial Statements (including, in
each case, any related notes) contained in the UPC SEC Reports, including any
UPC SEC Reports filed after the date of this Agreement until the Effective Time,
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
GAAP applied on a consistent basis throughout the periods involved (except as
may be indicated in the notes to such financial statements or, in the case of
unaudited interim statements, as permitted by Form 10-Q of the SEC), and fairly
presented in all material respects the consolidated financial position of UPC
and its Subsidiaries as at the respective dates and the consolidated results of
its operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be material
in amount or effect.
5.5 ABSENCE OF UNDISCLOSED LIABILITIES. No UPC Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of UPC as of
September 30, 1997,
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included in the UPC Financial Statements made available prior to the date of
this Agreement or reflected in the notes thereto. No UPC Company has incurred or
paid any liability since September 30, 1997, except for such Liabilities
incurred or paid (i) in the ordinary course of business consistent with past
business practice and which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on UPC or (ii) in connection with
the transactions contemplated by this Agreement.
5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1996,
except as disclosed in the UPC Financial Statements delivered prior to the date
of this Agreement or contemplated by pending federal legislation applicable to
financial institutions generally, (i) there have been no events, changes, or
occurrences which have had, or are reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on UPC, and (ii) the UPC Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a material breach or violation of any of the
covenants and agreements of UPC provided in Article 6 of this Agreement.
5.7 COMPLIANCE WITH LAWS. UPC is duly registered as a bank holding
company under the BHC Act and as a savings and loan holding company under the
HOLA. Each UPC Company has in effect all Permits necessary for it to own, lease,
or operate its material Assets and to carry on its business as now conducted,
and there has occurred no Default under any such Permit.
5.8 LEGAL PROCEEDINGS. There is no Litigation instituted or
pending, or, to the Knowledge of UPC, threatened (or unasserted but considered
probable of assertion and which if asserted would have at least a reasonable
probability of an unfavorable outcome) against any UPC Company, or against any
Asset, interest, or right of any of them, that is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC.
5.9 REPORTS. Since January 1, 1996, UPC has filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements, (ii) other
Regulatory Authorities, and (iii) any applicable state securities or banking
authorities (except, in the case of state securities authorities, failures to
file which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on UPC). As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, each such report and document did not, in all
material respects, contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
5.10 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any UPC Company or
any Affiliate thereof to Duck Hill pursuant to this Agreement, this Agreement or
any other document, agreement, or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied or
to be supplied by any UPC Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by UPC with the SEC, will, when the
Registration Statement becomes effective, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to make the
statements therein not misleading. None of the information supplied or to be
supplied by any UPC Company or any Affiliate thereof for inclusion in the Proxy
Statement to be mailed to Duck Hill's Shareholders in connection with the
Shareholders' Meetings, and any other documents to be filed by any UPC Company
or any Affiliate thereof with the SEC or any other Regulatory Authority in
connection with the transactions contemplated hereby, will, at the respective
time such documents are filed, and with respect to the Joint Proxy Statement,
when first mailed to the shareholders of Duck Hill, 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
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supplement thereto, at the time of the Shareholders' Meetings, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Shareholders' Meetings. All documents that
any UPC Company or any Affiliate thereof is responsible for filing with any
Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
5.11 ACCOUNTING, TAX, AND REGULATORY MATTERS. No UPC Company or any
Affiliate thereof has taken any action or has any Knowledge of any fact or
circumstance relating to UPC, UPHC, or UPB that is reasonably likely to (i)
prevent the transactions contemplated hereby, including the Merger, from
qualifying for pooling-of-interests accounting treatment or as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code, or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 8.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CONSUMMATION
6.1 AFFIRMATIVE COVENANTS OF DUCK HILL. Unless the prior written
consent of UPC shall have been obtained, and except as otherwise expressly
contemplated herein, Duck Hill shall, and shall cause each of its Subsidiaries
to: (i) operate its business only in the usual, regular, and ordinary course,
(ii) preserve intact its business organization and Assets and maintain its
rights and franchises, and (iii) take no action which would (a) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 8.1(b) of
this Agreement or prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the IRC or (b) materially
adversely affect the ability of any Party to perform its covenants and
agreements under this Agreement.
6.2 NEGATIVE COVENANTS OF DUCK HILL. Except as specifically
permitted by this Agreement from the date of the original Agreement until the
earlier of the Effective Time or the termination of this Agreement, Duck Hill
covenants and agrees that it will not do or agree or commit to do, or permit any
of its Subsidiaries to do or agree or commit to do, any of the following without
the prior written consent of the chief executive officer or chief operating
officer of UPC, which consent shall not be unreasonably withheld:
(a) amend the Articles of Incorporation, Bylaws, or other
governing instruments of Duck Hill; or
(b) incur any additional debt obligation or other
obligation for borrowed money in excess of an aggregate of $25,000 (for Duck
Hill on a consolidated basis) except in the ordinary course of the business of
Duck Hill consistent with past practices (which shall include the creation of
deposit liabilities, purchases of federal funds, advances from the Federal
Reserve Bank or Federal Home Loan Bank, and entry into repurchase agreements
fully secured by U.S. government or agency securities), or impose, or suffer the
imposition on any Asset of Duck Hill, 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 have been previously
disclosed); or
(c) declare or pay any dividend or make any other
distribution in respect of Duck Hill's capital stock, repurchase, redeem, or
otherwise acquire or exchange (other than exchanges in the ordinary course under
employee benefit plans), directly or indirectly, any shares, or any securities
convertible into any shares, of the capital stock of Duck Hill provided that
Duck Hill may (to the extent legally and contractually
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permitted to do so), but shall not be obligated to, declare and pay regular cash
dividends on shares of Duck Hill Common Stock at a rate not in excess of Ten
Dollars ($10.00) per share payable on or about December 15, 1997; or
(d) except pursuant to this 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 Duck Hill Common Stock or any other
capital stock of Duck Hill, or any stock appreciation rights, or any option,
warrant, conversion, or other Right to acquire any such stock, or any security
convertible into any such stock or any stock equivalent type rights; or
(e) adjust, split, combine or reclassify any capital
stock of Duck Hill or issue or authorize the issuance of any other securities in
respect of or in substitution for shares of Duck Hill Common Stock, or sell,
lease, mortgage or otherwise dispose of or otherwise encumber any shares of
capital stock of any Duck Hill Subsidiary, or any Asset, other than in the
ordinary course of business for reasonable and adequate consideration; or
(f) except for purchases of U.S. Treasury securities or
U.S. Government agency securities, which in either case have maturities of three
years or less or Federal Home Loan Bank Stock, purchase any securities or make
any Material investment, either by purchase of stock or securities,
contributions to capital, Asset transfers, or purchase of any Assets, in any
Person other than a wholly owned Duck Hill Subsidiary, or otherwise acquire
direct or indirect control over any Person, other than in connection with (i)
foreclosures in the ordinary course of business, (ii) acquisitions of control by
a depository institution Subsidiary in its fiduciary capacity, or (iii) the
creation of new wholly owned Subsidiaries organized to conduct or continue
activities otherwise permitted by this Agreement; or
(g) grant any increase in compensation or benefits to the
employees or officers of Duck Hill, except in accordance with past practice
disclosed or to be disclosed in Section 6.2(g) of the Duck Hill Disclosure
Memorandum or as required by Law; pay any severance or termination pay or any
bonus other than pursuant to written policies or written Contracts in effect on
the date of this Agreement and disclosed or to be disclosed in Section 6.2(g) of
the Duck Hill Disclosure Memorandum; and enter into or amend any severance
agreements with officers of Duck Hill; grant any material increase in fees or
other increases in compensation or other benefits to directors of Duck Hill
except in accordance with past practice disclosed or to be disclosed in Section
6.2(g) of the Duck Hill Disclosure Memorandum; or voluntarily accelerate the
vesting of any stock options or other stock-based compensation or employee
benefits (other than the acceleration of vesting which occurs under a benefit
plan upon a change of control of Duck Hill). Notwithstanding the foregoing and
in accordance with past practice, Duck Hill shall be entitled to pay bonuses for
1997 in an aggregate amount not to exceed Twenty-One Thousand Dollars
($21,000.00); or
(h) enter into or amend any employment Contract between
Duck Hill and any Person (unless such amendment is required by Law) that Duck
Hill does not have the unconditional right to terminate without Liability (other
than Liability for services already rendered), at any time on or after the
Effective Time; or
(i) adopt any new employee benefit plan of Duck Hill or
terminate or withdraw from, or make any material change in or to, any existing
employee benefit plans of Duck Hill other than any such change that is required
by Law or that, in the opinion of counsel is necessary or advisable to maintain
the tax qualified status of any such plan, or make any distributions from such
employee benefit plans, except as required by Law, the terms of such plans or
consistent with past practice; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
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(k) commence any Litigation other than in accordance with
past practice, settle any Litigation involving any Liability of Duck Hill for
material money damages or restrictions upon the operations of Duck Hill or
(l) enter into, modify, amend, or terminate any material
Contract (excluding any loan Contract) or waive, release, compromise, or assign
any material rights or claims.
6.3 CERTAIN ACTIONS.
(a) Except to the extent necessary to consummate the
transactions specifically contemplated by this Agreement, Duck Hill shall not,
and shall use its best efforts to ensure that its respective directors,
officers, employees, and advisors do not, directly or indirectly, institute,
solicit, or knowingly encourage (including by way of furnishing any information
not legally required to be furnished) any inquiry, discussion, or proposal, or
participate in any discussions or negotiations with, or provide any confidential
or non-public information to, any corporation, partnership, person or other
entity or group (other than to UPC or any UPC Subsidiary) concerning any
Acquisition Proposal (as defined in Section 10.1 hereof), except for actions
reasonably considered by the Board of Directors of Duck Hill, based upon the
advice of outside legal counsel, to be required in order to fulfill its
fiduciary obligations. Duck Hill shall notify UPC immediately if any Acquisition
Proposal has been or should hereafter be received by Duck Hill, such notice to
contain, at a minimum, the identity of such persons, and, subject to disclosure
being consistent with the fiduciary obligations of Duck Hill's Board of
Directors, a copy of any written inquiry, the terms of any proposal or inquiry,
any information requested or discussions sought to be initiated, and the status
of any reports, negotiations or expressions of interest.
(b) As a condition of and as an inducement to UPC,s
entering into this Agreement, Duck Hill covenants, acknowledges, and agrees that
it shall be a specific, absolute, and unconditionally binding condition
precedent to Duck Hill's entering into a letter of intent, agreement in
principle, or definitive agreement (whether or not considered binding,
non-binding, conditional or unconditional) with any third party with respect to
an Acquisition Proposal, or supporting or indicating an intent to support an
Acquisition Proposal, other than this Agreement and the transactions
contemplated in this Agreement, regardless of whether Duck Hill has otherwise
complied with the provisions of Section 6.3(a) hereof, that Duck Hill or such
third party which is a party of the Acquisition Proposal shall have paid UPC, as
liquidated damages, the sum of One Hundred Fifty Thousand Dollars ($150,000),
which sum represents the (i) direct costs and expenses (including, but not
limited to, fees and expenses incurred by UPC's financial or other consultants,
printing costs, investment bankers, accountants, and counsel) incurred by or on
behalf of UPC in negotiating and undertaking to carry out the transactions
contemplated by this Agreement; and (ii) indirect costs and expenses of UPC in
connection with the transactions contemplated by this Agreement, including UPC's
management time devoted to negotiation and preparation for the transactions
contemplated by this Agreement; and (iii) UPC's loss as a result of the
transactions contemplated by this Agreement not being consummated. Accordingly,
Duck Hill hereby stipulates and covenants that prior to Duck Hill's entering
into a letter of intent, agreement in principle, or definitive agreement,
(whether binding or non-binding, conditional or unconditional) with any third
party with respect to an Acquisition Proposal or supporting or indicating an
intent to support an Acquisition Proposal, either Duck Hill or such third party
shall have paid to UPC the amount set forth above in immediately available funds
to satisfy the specific, absolute, and unconditionally binding condition
precedent imposed by this Section 6.3. Notwithstanding anything to the contrary
in this Section 6.3(b), in the event such Acquisition Proposal should be the
result of a hostile takeover of Duck Hill, any sums due UPC hereunder shall be
paid only at the closing of the transactions set forth in such Acquisition
Proposal. UPC acknowledges that under no circumstances shall any officer or
director of Duck Hill) (unless such officer or director shall have an interest
in a potential acquiring party in any Acquisition Proposal) be held personally
liable to UPC for any amount of the foregoing payment. On payment of such amount
to UPC, UPC shall have no cause of action or claim (either in law or equity)
whatsoever against Duck Hill, or any officer of director of Duck Hill, with
respect to or in connection with such Acquisition Proposal or this Agreement.
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(c) The requirements, conditions, and obligations imposed by this
Section 6.3 shall continue in effect from the date of this Agreement until
December 31, 1998 should (i) the Merger fail to receive the requisite
shareholder approval by the Duck Hill shareholders; or (ii) Duck Hill willfully
or recklessly (a) be in violation of any of its representations or warranties
set forth herein; (b) breach any of its covenants set forth herein; (c) fail to
deliver, or cause to be delivered, the certificates, agreements and other
documents or otherwise fail to meet the conditions to UPC's obligation to close
set forth herein. Absent the occurrence of any of such events, the provisions of
this Section 6.3 would terminate the earlier of the Effective Time or the
termination of this Agreement pursuant to the terms of Article 9.
6.4 COVENANTS OF UPC. From the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement, UPC
covenants and agrees that it shall (i) continue to conduct its business and the
business of its Subsidiaries in a manner designed in its reasonable judgment to
enhance the long-term value of the UPC Common Stock and the business prospects
of the UPC Companies, and (ii) take no action which would (a) materially
adversely affect the ability of any Party to obtain any Consents required for
the transactions contemplated hereby without imposition of a condition or
restriction of the type referred to in the last sentence of Section 8.1(b) of
this Agreement or prevent the transactions contemplated hereby, including the
Merger, from qualifying for pooling-of-interests accounting treatment or as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, or (b) materially adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement, provided, that the foregoing
shall not prevent any UPC Company from acquiring any other Assets or businesses
or from discontinuing or disposing of any of its Assets or business if such
action is, in the judgment of UPC, desirable in the conduct of the business of
UPC and its Subsidiaries and would not, in the judgment of UPC, likely delay the
Effective Time to a date subsequent to the date set forth in Section 9.1(e) of
this Agreement.
6.5 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.
6.6 REPORTS. Each Party and its Subsidiaries shall file all
reports required to be filed by it with Regulatory Authorities between the date
of this Agreement and the Effective Time and shall deliver to the other Party
copies of all such reports promptly after the same are filed. If financial
statements are contained in any such reports filed with the SEC or any other
Regulatory Authority pursuant to the Securities Laws, such financial statements
will fairly present the consolidated financial position of the entity filing
such statements as of the dates indicated and the consolidated results of
operations, changes in shareholders' equity, and cash flows for the periods then
ended in accordance with GAAP (subject in the case of interim financial
statements to normal recurring year-end adjustments that are not material). As
of their respective dates, such reports filed with the SEC or other Regulatory
Authorities pursuant to the Securities Laws will comply in all material respects
with the Securities Laws and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Any financial statements contained in any
other reports to another Regulatory Authority shall be prepared in accordance
with Laws applicable to such reports.
ARTICLE 7
ADDITIONAL AGREEMENTS
7.1 REGISTRATION STATEMENT: PROXY STATEMENT: SHAREHOLDER
APPROVALS. UPC shall file the Registration Statement with the SEC, and shall use
its reasonable efforts to cause the Registration Statement to become effective
under the 1933 Act and take any action required to be taken under the applicable
state
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Blue Sky or securities Laws in connection with the issuance of the shares of UPC
Common Stock upon consummation of the Merger. Duck Hill shall furnish all
information concerning it and the holders of its capital stock as UPC may
reasonably request in connection with such action. Duck Hill shall call a
Shareholders' Meeting, to be held as soon as reasonably practicable after the
Registration Statement is declared effective by the SEC, for the purpose of
voting upon approval of this Agreement and the Agreement to Merge and such other
related matters as it deems appropriate. In connection with the Shareholders'
Meeting, (i) UPC and Duck Hill shall prepare and file with the SEC a Proxy
Statement and mail such Proxy Statement to the shareholders of Duck Hill, (ii)
the Parties shall furnish to each other all information concerning them that
they may reasonably request in connection with such Proxy Statement, (iii) the
Board of Directors of Duck Hill shall recommend (subject to compliance with
their fiduciary duties as advised by counsel) to their shareholders the approval
of the matters submitted for approval, and (iv) the Board of Directors and
officers of Duck Hill shall (subject to compliance with their fiduciary duties
as advised by counsel) use their reasonable efforts to obtain such shareholders'
approvals.
7.2 EXCHANGE LISTING. UPC shall use its reasonable efforts to
list, prior to the Effective Time, on the NYSE, subject to official notice of
issuance, the shares of UPC Common Stock to be issued to the holders of Duck
Hill Common Stock or Duck Hill Stock Options, if any, pursuant to the Merger,
and UPC shall give all notices and make all filings with the NYSE required in
connection with the transactions contemplated herein.
7.3 APPLICATIONS. UPC shall prepare and file, and Duck Hill shall
cooperate in the preparation and, where appropriate, filing of applications with
all Regulatory Authorities having jurisdiction over the transactions
contemplated by this Agreement seeking the requisite Consents necessary to
consummate the transactions contemplated by this Agreement. At least five
business days prior to filing UPC shall use its reasonable best efforts to
provide Duck Hill 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.
7.4 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including using its reasonable efforts to lift or rescind any
Order adversely affecting its ability to consummate the transactions
contemplated herein and to cause to be satisfied the conditions referred to in
Article 8 of this Agreement; provided, however, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
efforts to obtain all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement; provided, however, that nothing
in this Section 7.5 shall be construed to obligate UPC, UPHC, or UPB to take any
action to meet any condition required to obtain and Consent if UPC shall, in its
sole discretion, deem such condition to be unreasonable or to constitute a
significant impediment upon UPC's ability to carry on its business or
acquisition programs to require UPC to increase its capital ratios to amounts in
excess of the Federal Reserves minimum capital ratio guidelines which may from
time to time be in effect.
7.5 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep
the other Party advised of all material developments relevant to its business
and to consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
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(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Duck Hill shall use its reasonable efforts to
exercise its rights under confidentiality agreements entered into with Persons
which are considering an Acquisition Proposal with Duck Hill to preserve the
confidentiality of the information relating to Duck Hill provided to such
Persons and their Affiliates and Representatives.
7.6 PRESS RELEASES. Prior to the Effective Time, Duck Hill and UPC
shall consult with each other as to the form and substance of any press release
or other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 7.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
7.7 ACCOUNTING AND TAX TREATMENT. Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.
7.8 STATE TAKEOVER LAWS. Duck Hill shall take all necessary steps
to exempt the transactions contemplated by this Reorganization Agreement and the
Agreement to Merge from, or if necessary challenge the validity or applicability
of any applicable Takeover Law.
7.9 PROVISIONS OF ARTICLES OF INCORPORATION. Duck Hill shall take
all necessary action to ensure that the entering into of this Agreement and the
Agreement to Merge and the consummation of the Merger and the other transactions
contemplated hereby and thereby do not and will not result in the grant of any
rights to any Person under the Articles of Incorporation, Bylaws, or other
governing instruments of Duck Hill or restrict or impair the ability of UPC or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
shareholder with respect to, shares of Duck Hill that may be directly or
indirectly acquired or controlled by it.
7.10 AGREEMENT OF AFFILIATES. Duck Hill has disclosed or will
disclose in Section 7.10 of the Duck Hill Disclosure Memorandum all Persons whom
it reasonably believes is an "affiliate" of Duck Hill for purposes of Rule 145
under the 1933 Act. Duck Hill shall use its reasonable efforts to cause each
such Person to deliver to UPC not later than 30 days prior to the Effective
Time, a written agreement, substantially in the form of Exhibit 3, providing
that such Person will not sell, pledge, transfer, or otherwise dispose of the
shares of Duck Hill Common Stock held by such Person except as contemplated by
such agreement or by this Agreement and will not sell, pledge, transfer, or
otherwise dispose of the shares of UPC Common Stock to be received by such
Person upon consummation of the Merger except in compliance with applicable
provisions of the 1933 Act and the rules and regulations thereunder and until
such time as financial results covering at least 30 days of combined operations
of UPC and Duck Hill have been published within the meaning of Section 201.01 of
the SEC's Codification of Financial Reporting Policies. If the Merger will
qualify for pooling-of-interests accounting treatment, shares of UPC Common
Stock issued to such affiliates of Duck Hill in exchange for shares of Duck Hill
Common Stock shall not be transferable until such time as financial results
covering at least 30 days of combined operations of UPC and Duck Hill have been
published within the meaning of Section 201.01 of the SEC's Codification of
Financial Reporting Policies, regardless of whether each such affiliate has
provided the written agreement referred to in this Section 7.11 (and UPC shall
be entitled to place restrictive legends upon certificates for shares of UPC
Common Stock issued to affiliates of Duck Hill pursuant to this Agreement to
enforce the provisions of this Section 7.11). UPC shall not be required to
maintain the effectiveness of the Registration Statement under the 1933 Act for
the purposes of resale of UPC Common Stock by such affiliates.
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7.11 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time,
UPC shall provide to officers and employees of Duck Hill employee benefits under
employee benefit and welfare plans, on terms and conditions which when taken as
a whole are substantially similar to those currently provided by the UPC
Companies to their similarly situated officers and employees. For purposes of
participation, vesting and benefit accrual under any such UPC employee benefit
plans, the service of the employees of Duck Hill prior to the Effective Time
shall be treated as service with a UPC Company participating in such employee
benefit plan. Nothing herein shall be deemed to have reduced, contracted,
enlarged, undertaken, authorized, approved or otherwise to have affected
whatever contractual rights the officers or employees of Duck Hill may have
under existing documentation other than as expressly stated herein, and nothing
herein shall be deemed to be an employment contract, agreement or understanding,
or offer of employment by UPC or any of its direct or indirect Subsidiaries
after the Effective Time.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
8.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
10.6 of this Agreement:
(a) SHAREHOLDER APPROVALS. The shareholders of Duck Hill
shall have approved this Agreement and the Plan of Merger, and the consummation
of the transactions contemplated hereby and thereby, including the Merger, as
and to the extent required by Law, by the provisions of any governing
instruments.
(b) REGULATORY APPROVALS. All Consents of, filings and
registrations with, and notifications to, all Regulatory Authorities required
for consummation of the Merger shall have been obtained or made and shall be in
full force and effect and all waiting periods required by Law shall have
expired. No Consent obtained from any Regulatory Authority which is necessary to
consummate the transactions contemplated hereby shall be conditioned or
restricted in a manner, which in the reasonable judgment of the Board of
Directors of UPC would so materially adversely impact the financial or economic
benefits of the transactions contemplated by this Agreement that, had such
condition or requirement been known, UPC would not, in its reasonable judgment,
have entered into this Agreement.
(c) CONSENTS AND APPROVALS. Each Party shall have
obtained any and all Consents required for consummation of the Merger (other
than those referred to in Section 8.1(b) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party which, if
not obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(d) LEGAL PROCEEDINGS. No court or governmental or
regulatory authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits, restricts,
or makes illegal consummation of the transactions contemplated by this Agreement
and the Agreement to Merge.
(e) REGISTRATION STATEMENT. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no action,
suit, proceeding, or investigation by the SEC to the effectiveness thereof shall
have been initiated and be continuing, and all necessary approvals under state
securities Laws or the 1933 Act or 1934 Act relating to the issuance or trading
of the shares of UPC Common Stock issuable pursuant to the Merger shall have
been received.
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(f) EXCHANGE LISTING. The shares of UPC Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(g) POOLING LETTERS. Each of the Parties shall have
received copies of the letters, dated as of the date of filing of the
Registration Statement with the SEC and as of the Effective Time, addressed to
UPC, from Price Waterhouse LLP to the effect that the Merger will qualify for
pooling-of-interests accounting treatment.
(h) TAX MATTERS. UPC shall have received a written
opinion of counsel from Wyatt, Tarrant & Combs in form reasonably satisfactory
to such Parties (the "Tax Opinion"), to the effect that (i) the Merger would
constitute a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code, (ii) the exchange in the Merger of Duck Hill Common Stock for UPC
Common Stock will not give rise to gain or loss to the shareholders of Duck Hill
with respect to such exchange (except to the extent of any cash received), and
(ii) none of Duck Hill or UPC will recognize gain or loss as a consequence of
the Merger (except for the inclusion in income of the amount of the bad-debt
reserve maintained by Duck Hill and any other amounts resulting from any
required change in accounting methods and any income and deferred gain
recognized pursuant to Treasury regulations issued under Section 1502 of the
Internal Revenue Code). In rendering such Tax Opinion, such counsel shall be
entitled to rely upon representations of officers of Duck Hill and UPC
reasonably satisfactory in form and substance to such counsel.
8.2 CONDITIONS TO OBLIGATIONS OF UPC. The obligations of UPC to
perform this Agreement and consummate the Merger and the other transactions
contemplated hereby are subject to the satisfaction of the following conditions,
unless waived by UPC pursuant to Section 10.6(a) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 8.2(a), the accuracy of the representations and warranties of Duck Hill
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
Duck Hill set forth in Section 4.3 of this Agreement shall be true and correct.
The representations and warranties of Duck Hill set forth in Sections 4.20,
4.21, and 4.22 of this Agreement shall be true and correct in all material
respects. There shall not exist inaccuracies in the representations and
warranties of Duck Hill set forth in this Agreement (including the
representations and warranties set forth in Sections 4.3, 4.20, 4.21, and 4.22)
such that the aggregate effect of such inaccuracies has, or is reasonably likely
to have, a Material Adverse Effect on Duck Hill.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all
of the agreements and covenants of Duck Hill 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. Duck Hill shall have delivered to UPC
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief operating officer, to the effect that
the conditions of its obligations set forth in Section 8.2(a) and 8.2(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by Duck Hill'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 Agreement to Merge, and the consummation
of the transactions contemplated hereby and hereby, all in such reasonable
detail as UPC and its counsel shall request.
(d) AFFILIATES AGREEMENTS. UPC shall have received from
each affiliate of Duck Hill the affiliates letter referred to in Section 7.12 of
this Agreement, to the extent necessary to assure in the reasonable judgment of
UPC that the transactions contemplated hereby will qualify for
pooling-of-interests accounting treatment.
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(e) LEGAL OPINION. Duck Hill shall have delivered to UPC
an opinion of counsel, dated as of the Closing Date, addressed to and in form
and substance satisfactory to UPC, to the effect that:
(i) Duck Hill is a Mississippi banking
corporation duly organized, validly existing, and in good standing under the
laws of the State of Mississippi.
(ii) This Reorganization Agreement and the
Agreement to Merge have been duly and validly authorized, executed and delivered
on behalf of Duck Hill by a duly authorized officer or representative of Duck
Hill, and (assuming they are each a binding obligation of UPC and UPC)
constitute a valid and binding obligation of Duck Hill enforceable in accordance
with its terms, subject as to enforceability to applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and subject to the application of equitable
principles and judicial discretion;
(iii) The execution, delivery and performance of
this Reorganization Agreement and Agreement to Merge and the consummation of the
transactions contemplated herein and therein, including the Merger, have been
duly and validly authorized by all necessary corporate and shareholder action in
respect thereof on the part of Duck Hill.
(f) MAINTENANCE OF CERTAIN COVENANTS, ETC. At the time of
Closing, (i) the total consolidated assets of Duck Hill shall be not less than
$19 million (ii) the total consolidated stockholders' equity of Duck Hill shall
have been not less than $2 million at September 30, 1997, and shall have
increased since that date through normal earnings growth (less approved
dividends); (iii) the tangible equity capital of Duck Hill shall be not less
than its reported level as of December 31, 1996, and shall have increased since
that time through normal earnings growth (less approved dividends); and (iv)
from December 31, 1996, there shall have been no extraordinary sale of assets,
nor any material investment portfolio restructuring by any Duck Hill Company.
The financial criteria and calculations set forth above shall be determined in
accordance with GAAP assuming that Duck Hill and each other Duck Hill Company
shall have been operated consistently in the normal course of their respective
businesses; provided, however, that the effects of any balance sheet expansion
through abnormal, unusual, nonrecurring or out-of-the-ordinary borrowings or by
the realization of extraordinary or nonrecurring gains otherwise than in the
ordinary course of business or other income from the disposition of assets or
liabilities or through similar transactions shall be eliminated from the
calculations;
(g) EMPLOYMENT AGREEMENT UPC shall have received an
executed Employment Agreement from Norman Ezell, substantially similar to
Exhibit 2 hereto.
8.3 CONDITIONS TO OBLIGATIONS OF DUCK HILL. The
obligations of Duck Hill to perform this Agreement and the Agreement to Merge
and consummate the Merger and the other transactions contemplated hereby are
subject to the satisfaction of the following conditions, unless waived by Duck
Hill pursuant to Section 10.6(b) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 8.3(a), the accuracy of the representations and warranties of UPC set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of UPC set forth
in Section 5.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimus in amount). The representations and warranties
of UPC set forth in Section 5.11 of this Agreement shall be true and correct in
all material respects. There shall not exist inaccuracies in the representations
and warranties of UPC set forth in this Agreement (including the representations
and warranties set forth in Sections 5.3 and 5.11) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on UPC.
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(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all
of the agreements and covenants of UPC to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
material respects.
(c) CERTIFICATES. UPC shall have delivered to Duck Hill
(i) a certificate, dated as of the Effective Time and signed on its behalf by
its chief executive officer and its chief operating officer, to the effect that
the conditions of its obligations set forth in Section 8.3(a) and 8.3(b) of this
Agreement have been satisfied, and (ii) certified copies of resolutions duly
adopted by UPC's Board of Directors evidencing the taking of all corporate
action necessary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, all in
such reasonable detail as Duck Hill and its counsel shall request.
(d) LEGAL OPINION. UPC shall have delivered to Duck Hill
an opinion of counsel, which may be in-house counsel of UPC, dated as of the
Closing Date, addressed to and in form and substance satisfactory to Duck Hill,
to the effect that:
(i) UPC is a Tennessee corporation duly
organized, validly existing, and in good standing under the Laws of the State of
Tennessee. UPB is a national banking association duly organized, validly
existing and in good standing under the Laws of the United State of America.
(ii) This Reorganization Agreement and Agreement
to Merge have been duly and validly authorized, executed and delivered on behalf
of UPC, UPHC, and UPB by a duly authorized officer or representative thereof,
and (assuming they are each a binding obligation of Duck Hill) constitutes a
valid and binding obligation of UPC and UPB enforceable in accordance with its
terms, subject as to enforceability to applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and subject to the application of equitable
principles and judicial discretion;
(iii) The execution, delivery and performance of
this Agreement and the Agreement to Merge, as appropriate, and the consummation
of the transactions contemplated herein and therein, including the Merger, have
been duly and validly authorized by all necessary corporate and shareholder
action in respect thereof on the part of UPC and UPB.
(e) EMPLOYMENT AGREEMENT. Norman Ezell shall have been
offered an Employment Agreement with UPC and/or UPB substantially in the form of
the Agreement attached hereto as Exhibit 2, and such offer shall not have been
withdrawn or materially amended by UPC and/or UPB prior to Closing.
ARTICLE 9
TERMINATION
9.1 TERMINATION. Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Reorganization Agreement
and Agreement to Merge by the shareholders of UPC or Duck Hill, this Agreement
and the Agreement to Merge may be terminated and the Merger abandoned at any
time prior to the Effective Time, as follows:
(a) By mutual consent of the Board of Directors of UPC
and the Board of Directors of Duck Hill, or
(b) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 8.2(a) of this Agreement in the case of Duck Hill and Section 8.3(a) in
the case of UPC or in material
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<PAGE> 108
breach of any covenant or other agreement contained in this Agreement) in the
event of an inaccuracy of any representation or warranty of the other Party
contained in this Agreement which cannot be or has not been cured within 30 days
after the giving of written notice to the breaching Party of such inaccuracy and
which inaccuracy would provide the terminating Party the ability to consummate
the Merger under the applicable standard set forth in Section 8.2(a) of this
Agreement in the case of Duck Hill and Section 8.3(a) of this Agreement in the
case of UPC; or
(c) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 8.2(a) of this Agreement in the case of Duck Hill and Section 8.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event of a material breach by the other
Party of any covenant or agreement contained in this Agreement which cannot be
or has not been cured within 30 days after the giving of written notice to the
breaching Party of such breach; or
(d) By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required for consummation of
the Merger shall have been denied by final nonappealable action of such
Regulatory Authority or if any action taken by such Regulatory Authority is not
appealed within the time limit for appeal or (ii) the shareholders Duck Hill
fail to vote their approval of this Agreement and the transactions contemplated
hereby as required by Mississippi Law and Duck Hill's Articles of Incorporation
and Bylaws, and the rules of the NYSE or National Association of Securities
Dealers, if applicable, at the Shareholders' Meeting where this Agreement and
the Agreement to Merge were presented to such shareholders for approval and
voted upon; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by December 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 9.1 (e); and further, if UPC shall have
filed all applications to obtain the necessary Consents of banking Regulatory
Authorities within sixty (60) days of the date hereof, and if the Closing shall
not have occurred because of a delay caused by a bank Regulatory Authority in
its review of the application before it, or by the SEC in its review of the
Registration Statement to be filed by UPC, then Duck Hill shall, upon UPC's
written request, extend the December 31, 1998 date for a reasonable time, in no
event less than thirty (30) days in order for UPC to obtain all Consents of bank
Regulatory Authorities required and/or all Consents of the SEC and any other
securities Regulatory Authorities, and for the expiration of any stipulated
waiting periods; or
(f) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 8.2(a) of this Agreement in the case of Duck Hill and Section 8.3(a) in
the case of UPC or in material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions precedent
to the obligations of such Party to consummate the Merger cannot be satisfied or
fulfilled by the date specified in Section 9.1(e) of this Agreement; or
(g) By the Board of Directors of Duck Hill if it
determines by a vote of a majority of the members of its entire Board, at any
time during the ten-day period commencing two days after the Determination Date,
if both of the following conditions are satisfied:
(1) the Average Closing Price shall be less than the
product of (i) 0.80 and (ii) the Starting Price; and
(2) (i) the quotient obtained by dividing the Average
Closing Price by the Starting Price (such number being
referred to herein as the "UPC Ratio") shall be less than (ii)
the quotient obtained by dividing the Index Price on the
Determination Date by the Index Price on the Starting Date and
subtracting 0.15 from the quotient in this clause (2)(ii)
(such number being referred to herein as the "Index Ratio");
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<PAGE> 109
subject, however, to the following three sentences. If Duck Hill refuses to
consummate the Merger pursuant to Section 9.1(g), it shall give prompt written
notice thereof to UPC; provided, that such notice of election to terminate may
be withdrawn at any time within the aforementioned ten-day period. During the
five-day period commencing with its receipt of such notice, UPC shall have the
option to elect to increase the Exchange Ratio to equal the lesser of (i) the
quotient obtained by dividing (1) the product of 0.80, the Starting Price, and
the Exchange Ratio (as then in effect) by (2) the Average Closing Price, and
(ii) the quotient obtained by dividing (1) the product of the Index Ratio and
the Exchange Ratio (as then in effect) by (2) the UPC Ratio. If UPC makes an
election contemplated by the preceding sentence, within such five-day period, it
shall give prompt written notice to Duck Hill of such election and the revised
Exchange Ratio, whereupon no termination shall have occurred pursuant to this
Section 9.1(g), and this Agreement shall remain in effect in accordance with its
terms (except as the Exchange Ratio shall have been so modified), and any
references in this Agreement to "Exchange Ratio" shall thereafter be deemed to
refer to the Exchange Ratio as adjusted pursuant to this Section 9.1(g).
For purposes of this Section 9.1(g), the following terms shall have the
meanings indicated:
"Average Closing Price" shall mean the average of the daily
last sales prices of UPC Common Stock as reported on the NYSE (as
reported by The Wall Street Journal or, if not reported thereby,
another authoritative source as chosen by UPC) for the twenty (20)
consecutive 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 or (ii) on which the last consent of the
Board of Governors of the Federal Reserve System shall be received.
"Index Group" shall mean the 17 bank holding companies listed
below, the common stocks of all of which shall be publicly traded and
as to which there shall not have been, since the Starting Date and
before the Determination Date, any public announcement of a proposal
for such company to be acquired or for such company to acquire another
company or companies in transactions with a value exceeding 25% of the
acquiror's market capitalization. In the event that any such company or
companies are removed from the Index Group, the weights (which shall be
determined based upon the number of outstanding shares of common stock)
shall be redistributed proportionately for purposes of determining the
Index Price. The 17 bank holding companies and the weights attributed
to them are as follows:
<TABLE>
<CAPTION>
BANK HOLDING COMPANIES WEIGHTING
---------------------- ---------
<S> <C>
AmSouth Bancorporation 4.87%
Central Fidelity Banks, Inc. 5.11
Compass Bancshares, Inc. 3.63
Deposit Guaranty Corporation 3.56
Fifth Third Bancorp 9.24
First American Corporation 2.60
First Commerce Corporation (AR) 3.39
First Tennessee National Corporation 5.62
First Virginia Banks, Inc. 2.83
Hibernia Corporation 11.25
Huntington Bancshares, Inc. 12.35
Mercantile Bancorporation, Inc. 5.30
National Commerce Bancorp 2.14
Regions Financial Corporation 5.80
Signet Banking Corporation 5.25
Southern National Corporation 9.55
Star Banc Corporation 7.50
------
Total 100.00%
</TABLE>
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<PAGE> 110
"Index Price" on a give date shall mean the weighted average
(weighted in accordance with the factors listed above) of the closing
prices of the companies composing the Index Group.
"Starting Date" shall mean the fourth full trading day after
the announcement by press release of the Merger.
"Starting Price" shall mean the closing price per share of UPC
Common Stock as reported on the NYSE (as reported by The Wall Street
Journal or, if not reported thereby, another authoritative source as
chosen by UPC) on the Starting Date.
If any company belonging to the Index Group or UPC declares or effects
a stock dividend, reclassification, recapitalization, split-up, combination,
exchange of shares, or similar transaction between the date of this Agreement
and the Determination Date, the prices for the common stock of such company or
UPC shall be appropriately adjusted for the purposes of applying this Section
9.1(h).
9.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 of this Agreement, this
Agreement and the Agreement to Merge shall become void and have no effect,
except that (i) the provisions of this Section 9.2, Section 6.3, Section 7.6(b)
and Article 10 of this Agreement shall survive any such termination and
abandonment, (ii) a termination pursuant to Sections 9.1(b), 9.1(c), 9.1(f) or
9.1(g) of this Agreement shall not relieve the breaching Party from Liability
for an uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination.
9.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 9.3, Articles
1, 2, 3 and 10, and Sections 6.3, 7.8, and 7.12 of this Agreement.
ARTICLE 10
GENERAL PROVISIONS
10.1 DEFINITIONS
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"ACQUISITION PROPOSAL" means any tender offer,
agreement, understanding or other proposal of any nature pursuant to which any
corporation, partnership, person or other entity or group, other than UPC or any
UPC Subsidiary, would directly or indirectly (i) acquire or participate in a
merger, share exchange, consolidation or any other business combination
involving Duck Hill; (ii) acquire the right to vote ten percent (10%) or more of
Duck Hill Common Stock; or (iii) acquire a significant portion of the assets or
earning power of Duck Hill.
"AFFILIATE" of a Party means any Person, partnership,
corporation, association, limited liability company, business trust, or
other legal entity directly or indirectly controlling, controlled by or
under common Control, with that Party.
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<PAGE> 111
"AGREEMENT" shall mean this Agreement, the Agreement
to Merge, and the Exhibits delivered pursuant hereto and incorporated
herein by reference.
"AGREEMENT TO MERGE" shall mean the plan of merger
providing for the Merger, in substantially the form of Exhibit 1.
"ALLOWANCES" shall mean the allowances for loan,
lease and other credit losses, including losses in connection with ORE,
of any Person.
"ASSETS" of a Person shall mean all of the assets,
properties, businesses, and rights of such Person of every kind,
nature, character and description, whether real, personal or mixed,
tangible or intangible, accrued or contingent, or otherwise relating to
or utilized in such Person's business, directly or indirectly, in whole
or in part, whether or not carried on the books and records of such
Person, and whether or not owned in the name of such Person or any
Affiliate of such Person and wherever located.
"BALANCE SHEET DATE" shall mean December 31, 1996.
"BHC ACT" shall mean the Bank Holding Company Act of
1956, as amended.
"BUSINESS DAY" shall mean any Monday, Tuesday,
Wednesday, Thursday or Friday that is not a federal or state holiday
generally recognized or observed by banks in the State of Tennessee and
in the State of Mississippi.
"CLOSING" shall mean the consummation of the Merger.
"CLOSING DATE" shall mean the date on which the
Closing occurs.
"CONSENT" shall mean any consent, approval,
authorization, clearance, exemption, waiver, or affirmation by any
Person pursuant to any Contract, Law, Order, or Permit.
"CONSIDERATION" shall mean the shares of UPC Common
Stock and the cash settlement of any remaining fractional share of UPC
Common Stock deliverable to the Duck Hill Record Holders pursuant to
Section 2.1(c) of this Agreement.
"CONTRACT" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture,
instrument, lease, obligation, plan, practice, restriction,
understanding, or undertaking of any kind or character, or other
document to which any Person is a party or that is binding on any
Person or its capital stock, Assets, or business.
"CONTROL" shall have the meaning assigned to such
term in Section 2(a)(2) of the Bank Holding Company Act of 1956, as
amended.
"DEFAULT" shall mean (i) any breach or violation of
or default under any Contract, Order, or Permit, (ii) any occurrence of
any event that with the passage of time or the giving of notice or both
would constitute a breach or violation of or default under any
Contract, Order, or Permit, or (iii) any occurrence or any event that
with or without the passage of time or the giving of notice would give
rise to a right to terminate or revoke, change the current terms of or
renegotiate, or to accelerate, increase, or impose any Liability under,
any Contract, Order or Permit.
"DEPOSITS" shall mean all deposits (including, but
not limited to, certificates of deposit, savings accounts, NOW accounts
and checking accounts) of the Bank Subsidiary and other deposit-taking
Affiliates.
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<PAGE> 112
"EFFECTIVE DATE" shall mean that date on which the
Effective Time of the Merger shall have occurred.
"EFFECTIVE TIME" shall mean the date and time stated
in the Certificate of Merger to be issued by the Office of the
Comptroller of the Currency.
"ENVIRONMENTAL LAWS" shall mean all Laws relating to
pollution or protection of human health or the environment (including
ambient air, surface water, ground water, land surface or subsurface
strata) and which are administered, interpreted or enforced by the
United States Environmental Protection Agency and any state and local
agencies with jurisdiction over, and including common law in respect
of, pollution or protection of the environment, including the
Comprehensive Environmental Response Compensation and Liability Act, as
amended, 42 U.S. C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and
other Laws relating to emissions, discharges, releases, or threatened
releases of any Hazardous Material, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"EXCHANGE AGENT" shall mean Union Planters National
Bank, Memphis, Tennessee, a wholly-owned subsidiary of UPC, acting
through its Corporate Trust Department.
"EXCHANGE RATIO" shall mean the number of shares of
UPC Common Stock, and fractions thereof, to be exchanged for each share
of Duck Hill Common Stock pursuant to Section 2.1(c) of this Agreement,
subject to such adjustments as may be provided in this Agreement and
the Agreement to Merge.
"EXHIBITS" 1 through 3, inclusive, shall mean the
Exhibits so marked, copies of which are attached to this Agreement.
Such Exhibits are hereby incorporated by reference herein and made a
part hereof, and may be referred to in this Agreement and any other
related instrument or document without being attached hereto or
thereto.
"DUCK HILL COMMON STOCK" shall mean the common stock
of Duck Hill, $50.00 par value per share.
"DUCK HILL COMPANY(IES)" shall mean Duck Hill and all
of its Subsidiaries, whether direct or indirect.
"DUCK HILL DISCLOSURE MEMORANDUM" shall mean the
written information entitled "Duck Hill Holding Company Disclosure
Memorandum" delivered prior to the date of this Agreement pursuant to
Section 1.9 to UPC describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section of this Agreement under which
such disclosure is being made. Information disclosed with respect to
one Section shall not be deemed to be disclosed for purposes of any
other Section not specifically referenced with respect thereto.
"DUCK HILL EMPLOYEE PLANS" shall mean any pension
plans, profit sharing plans, deferred compensation plans, stock option
plans, cafeteria plans, and any other such or related benefit plans or
arrangements offered or funded by Duck Hill or any Duck Hill
Subsidiary, to or for the benefit of the officers, directors,
employees, independent contractors or consultants of Duck Hill or any
Duck Hill Subsidiary.
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<PAGE> 113
"DUCK HILL RECORD HOLDERS" means those Persons who
shall be the holders of record of any of the issued and outstanding
shares of Duck Hill Common Stock immediately prior to the Effective
Time.
"FDIC" shall mean the Federal Deposit Insurance
Corporation.
"FEDERAL RESERVE" shall mean the Board of Governors
of the Federal Reserve System and shall include the Federal Reserve
Bank of St. Louis when acting under delegated authority.
"GAAP" shall mean generally accepted accounting
principles as in effect from time to time, consistently applied.
"HAZARDOUS MATERIAL" shall mean (i) any hazardous
substance, hazardous material, hazardous waste, regulated substance, or
toxic substance (as those terms are defined by any applicable
Environmental Laws) and (ii) any chemicals, pollutants, contaminants,
petroleum, petroleum products, or oil (and specifically shall include
asbestos requiring abatement, removal, or encapsulation pursuant to the
requirements of governmental authorities and any polychlorinated
biphenyls).
"HSR ACT" shall mean Section 7A of the Clayton Act,
as added by Title Ill of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"INTELLECTUAL PROPERTY" shall mean copyrights,
patents, trademarks, service marks, service names, trade names,
applications therefor, technology rights and licenses, computer
software (including any source or object codes therefor or
documentation relating thereto), trade secrets, franchises, know-how,
inventions, and other intellectual property rights.
"IRC" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"KNOWLEDGE" as used with respect to a Person
(including references to such Person being aware of a particular
matter) shall mean those facts that are known by the Chairman, Chief
Executive Officer, President, Chief Administrative Officer, Chief
Operating Officer, Chief Financial Officer, Chief Accounting Officer,
Chief Credit Officer or General Counsel of such Person, or such other
officer of such Person, regardless of title, charged with or
responsible for the oversight of a particular area, department or
function to which the subject matter relates.
"LAW" shall mean any code, law, ordinance,
regulation, reporting or licensing requirement, rule, or statute
applicable to a Person or its Assets, Liabilities or business,
including those promulgated, interpreted, or enforced by any Regulatory
Authority.
"LIABILITY" shall mean any direct or indirect,
primary or secondary, liability, indebtedness, obligation, penalty,
cost, or expense (including costs of investigation, collection, and
defense), claim, deficiency, guaranty, or endorsement of or by any
Person (other than endorsements of notes, bills, checks, and drafts
presented for collection or deposit in the ordinary course of business)
of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"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
32
<PAGE> 114
interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for
current property Taxes not yet due and payable, and (ii) for depository
institution Subsidiaries of a Party, pledges to secure deposits and
other Liens incurred in the ordinary course of the banking business.
"LITIGATION" shall mean any action, arbitration,
cause of action, claim, complaint, criminal prosecution, demand letter,
governmental or other examination or investigation, hearing, inquiry,
administrative or other proceeding, or notice (written or oral) by any
Person alleging potential Liability or requesting information relating
to or affecting a Party, its business, its Assets (including Contracts
related to it), or the transactions contemplated by this Agreement, but
shall not include regular, periodic routine examinations of depository
institutions and their Affiliates by Regulatory Authorities.
"MATERIAL ADVERSE EFFECT" on a Party shall mean an
event, change, or occurrence which, individually or together with any
other event, change, or occurrence, has a material adverse impact on
(i) the financial position, business, or results of operations of such
Party and its Subsidiaries, taken as a whole, or (ii) the ability of
such Party to perform its obligations under this Agreement or to
consummate the Merger or the other transactions contemplated by this
Agreement.
"MERGER" shall mean the merger of Duck Hill with and
into UPB as described in Section 1.1 of this Agreement.
"MISSISSIPPI CODE" shall mean the Mississippi Code
Annotated 1972, as amended.
"NYSE" shall mean the New York Stock Exchange, or its
successor, upon which shares of the UPC Common Stock are listed for
trading.
"1933 ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"1934 ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"OPERATING PROPERTY" shall mean any property owned by
the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security interest, and, where required by
the context, includes the owner or operator of such property, but only
with respect to such property.
"ORDER" shall mean any administrative decision or
award, decree, injunction, judgment, order, quasi-judicial decision or
award, ruling, or writ of any federal, state, local, or foreign or
other court, arbitrator, mediator, tribunal, administrative agency, or
Regulatory Authority.
"ORE" shall mean real estate and other property
acquired through foreclosure, deed in lieu of foreclosure or similar
procedures.
"PARTICIPATION FACILITY" shall mean any facility or
property in which the Party in question or any of its Subsidiaries
participates in the management and, where required by the context, said
term means the owner or operator of such facility or property, but only
with respect to such facility or property.
"PARTY" shall mean either UPC, UPB or Duck Hill, and
"Parties" shall mean UPC, UPB and Duck Hill.
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<PAGE> 115
"PENSION PLAN" shall mean any employee pension
benefit plan as such term is defined in Section 3(2) of ERISA which is
maintained by the referenced Party.
"PERMIT" shall mean any federal, state, local, and
foreign governmental approval, authorization, certificate, easement,
filing, franchise, license, notice, permit, or right to which any
Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, Assets or business.
"PERSON" shall mean a natural person or any legal,
commercial, or governmental entity, such as, but not limited to, a
corporation, general partnership, joint venture, limited partnership,
limited liability company, trust, business association, group acting in
concert, or any person acting in a representative capacity.
"PROXY STATEMENT" shall mean the proxy statement to
be used by Duck Hill to solicit proxies with a view to securing the
approval of the Duck Hill shareholders of this Agreement and the
Agreement to Merge.
"RECORDS" means all available records, minutes of
meetings of the Board of Directors, committees and shareholders of a
Party; original instruments and other documentation, pertaining to a
Party or any of its Subsidiaries' or assets (including plans and
specifications relating to any realty), Liabilities, Deposits,
Contracts, capital stock, and loans; and all other business and
financial records which are necessary or customary for use in the
conduct of such Person or any of such person's Subsidiary businesses on
and after the Effective Time as it was conducted prior to the Effective
Time.
"REGISTRATION STATEMENT" shall mean the Registration
Statement on Form S-4, or other appropriate form, including any
pre-effective or post-effective amendments or supplements thereto,
filed with the SEC by UPC under the 1933 Act with respect to the shares
of UPC Common Stock to be issued to the shareholders of Duck Hill in
connection with the transactions contemplated by this Agreement.
"REGULATORY AUTHORITIES" shall mean, collectively,
the Federal Trade Commission, the United States Department of Justice,
the Federal Reserve, the Office of Thrift Supervision (including its
predecessor, the Federal Home Loan Bank Board), the Office of the
Comptroller of the Currency, the FDIC, all state regulatory agencies
having jurisdiction over the Parties and their respective Subsidiaries,
the NYSE, the National Association of Securities Dealers and the SEC,
or any respective successor thereto.
"REPRESENTATIVE" shall mean any investment banker,
financial advisor, attorney, accountant, consultant, or other
representative of a Person.
"RIGHTS" shall mean all arrangements, calls,
commitments, Contracts, options, rights to subscribe to, scrip,
understandings, warrants, or other binding obligations of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for shares of the capital stock of a Person, or which
derive their value in whole or in part from shares of the capital stock
of a Person, including stock appreciation rights and phantom stock, or
by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC DOCUMENTS" shall mean all forms, proxy
statements, registration statements, reports, schedules, and other
documents filed, or required to be filed, by a Party or any of its
Subsidiaries with any Regulatory Authority pursuant to the Securities
Laws.
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<PAGE> 116
"SEC" shall mean the United States Securities and
Exchange Commission, or any successor thereto.
"SECURITIES LAWS" shall mean the 1933 Act, the 1934
Act, the Investment Company Act of 1940, as amended, the Investment
Advisors Act of 1940, as amended, the Trust Indenture Act of 1939, as
amended, and the rules and regulations of the SEC promulgated
thereunder, as well as any similar state securities laws and any
similar rules and regulations promulgated by the applicable federal or
state bank Regulatory Authorities.
"SHAREHOLDERS MEETING" shall mean the special meeting
of the shareholders of Duck Hill to be held pursuant to Section 7.1 of
this Agreement, including any adjournment or adjournments thereof.
"SUBSIDIARIES" shall mean all of those Persons of
which the entity in question owns or controls 5% or more of the
outstanding voting equity securities or equity interest, either
directly or through an unbroken chain of entities as to each of which
5% or more of the outstanding equity securities or equity interest is
owned directly or indirectly by its parent; provided, however, that
there shall not be included any Person acquired through foreclosure or
in satisfaction of a debt previously contracted in good faith, any such
entity that owns or operates an automatic teller machine interchange
network, or any such Person the equity securities or equity interest of
which are owned or controlled in a fiduciary capacity or through a
small business development corporation.
"SURVIVING ASSOCIATION" shall mean Union Planters
National Bank as the association resulting from and surviving the
consummation of the Merger as set forth in Section 1.1 of this
Agreement.
"TAX" or "TAXES" shall mean any federal, state,
county, local, or foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise,
occupancy, and other taxes, assessments, charges, fares, or
impositions, including interest, penalties, and additions imposed
thereon or with respect thereto
"TENNESSEE CODE" shall mean the Tennessee Code
Annotated, as amended.
"UPC" shall mean Union Planters Corporation, a
corporation chartered and existing under the laws of the State of
Tennessee which is registered both as a bank holding company and as a
savings and loan holding company and whose principal offices are
located at 7130 Goodlett Farms Parkway, Memphis, Shelby County,
Tennessee 38018.
"UPC CAPITAL STOCK" shall mean, collectively, the UPC
Common Stock, the UPC Preferred Stock and any other class or series of
capital stock of UPC.
"UPC COMMON STOCK" shall mean the $5.00 par value
common stock of UPC.
"UPC COMPANIES" shall mean, collectively, UPC and all
UPC Subsidiaries.
"UPC DISCLOSURE MEMORANDUM" shall mean the written
information entitled "Union Planters Corporation Disclosure Memorandum"
delivered prior to the date of this Agreement pursuant to Section 1.9
(post-signing due diligence period) to Duck Hill describing in
reasonable detail the matters contained therein and, with respect to
each disclosure made therein, specifically referencing each Section of
this Agreement under which such disclosure is being made. Information
disclosed with respect to one Section shall be deemed to be disclosed
for purposes of any other Section not specifically referenced with
respect thereto.
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<PAGE> 117
"UPC FINANCIAL STATEMENTS" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of UPC 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 UPC in SEC
Documents, (ii) the consolidated balance sheets of UPC (including
related notes and schedules, if any) and related statements of
earnings, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) included in SEC Documents filed
with respect to periods ended subsequent to September 30, 1997.
"UPC PREFERRED STOCK" shall mean the no par value
preferred stock of UPC and shall include the (i) Series A Preferred
Stock, and (ii) Series E, 8% Cumulative, Convertible Preferred Stock,
of UPC ("UPC Series E Preferred Stock").
"UPC RIGHTS" shall mean the preferred stock purchase
rights issued pursuant to the UPC Rights Agreement.
"UPC RIGHTS AGREEMENT" shall mean that certain Rights
Agreement dated January 19, 1989, between UPC and UPNB, as Rights
Agent.
"UPC SUBSIDIARIES" shall mean the Subsidiaries of
UPC.
(b) Any singular term in this Agreement shall be deemed to
include the plural and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they
shall be deemed followed by the words "without limitation."
10.2 EXPENSES.
(a) Except as otherwise provided in this Section 10.2,
each of the Parties shall bear and pay all direct costs and expenses incurred by
it or on its behalf in connection with the ones contemplated hereunder,
including filing, registration and application fees, printing fees, and fees and
expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that UPC shall bear and pay the filing fees
payable in connection with the Registration Statement and the Proxy Statement
and the costs incurred in connection with the printing and mailing of the Proxy
Statement.
(b) Nothing contained in this Section 10.2 shall
constitute or shall be deemed to constitute liquidated damages for the willful
breach by a Party of the terms of this Agreement or otherwise limit the rights
of the nonbreaching Party.
10.3 BROKERS AND FINDERS. Except as identified and described in
Section 10.3 of the Duck Hill Disclosure Memorandum as to Duck Hill, each of the
Parties represents and warrants that neither it nor any of its officers,
directors, employees, or Affiliates has employed any broker or finder or
incurred any Liability for any financial advisory fees, investment bankers'
fees, brokerage fees, commissions, or finders' fees in connection with this
Agreement or the ones contemplated hereby. In the event of a claim by any broker
or finder based upon his or its representing or being retained by or allegedly
representing or being retained by Duck Hill or UPC, each of Duck Hill and UPC,
as the case may be, agrees to indemnify and hold the other Party harmless of and
from any Liability in respect of any such claim.
10.4 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the other documents and instruments referred
to herein) constitutes the entire agreement between the Parties with respect to
the transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended
36
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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.
10.5 AMENDMENTS. To the extent permitted by Law, this Agreement may
be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties, whether before or
after shareholder approval of this Agreement and the Agreement to Merge has been
obtained; provided, that after any such approval by the holders of Duck Hill
Common Stock, there shall be made no amendment that modifies in any material
respect the Consideration to be received by the Duck Hill Record Holders.
10.6 WAIVERS.
(a) Prior to or at the Effective Time, UPC, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Duck Hill, to waive or extend the time for the
compliance or fulfillment by Duck Hill of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of UPC under this Agreement, except any condition which, if not
satisfied, would result in the violation of any Law. No such waiver shall be
effective unless in writing signed by a duly authorized officer of UPC.
(b) Prior to or at the Effective Time, Duck Hill, acting
through its Board of Directors, chief executive officer, or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by UPC, to waive or extend the time for the compliance or
fulfillment by UPC of any and all of its obligations under this Agreement, and
to waive any or all of the conditions precedent to the obligations of Duck Hill
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 Duck Hill.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
10.7 ASSIGNMENT. Except as expressly contemplated hereby, neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned by any Party hereto (whether by operation of Law or otherwise)
without the prior written consent of the other Party; provided, however, UPC
and/or UPC UPB may assign all of their rights hereunder to any other
wholly-owned Subsidiary whether now existing or hereinafter acquired or
organized. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the Parties and their
respective successors and assigns.
10.8 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
prepaid, or by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered:
37
<PAGE> 119
If to UPC/Merger Sub: Union Planters Corporation
Post Office Box 387 (for mailing)
. Memphis, Tennessee 38147
7130 Goodlett Farms Parkway (for deliveries)
Memphis, Tennessee 38018
Attn: Mr. Jackson W. Moore, President
Telephone (901) 580-6093
Fax: (901) 580-2877
E. James House, Jr., Esquire, Corporate Secretary
Telephone (901) 580-6596
Fax: (901) 580-2939
If to Duck Hill: Duck Hill Bank
101 South State Street
Duck Hill, Mississippi 38925
Attn: Mr. Norman Ezell, President and Chief
Executive Officer
Telephone: (601)565-2415
Fax: (601) 565-2955
10.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the United States of America, including
the national banking laws as contained in Title 12 of the United States Code.
10.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same document.
10.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
10.12 INTERPRETATION. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of all Parties
hereto.
10.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
10.14 ATTORNEYS' FEES. If any Party hereto shall bring an action at
law or in equity to enforce its rights under this Agreement (including an action
based upon a misrepresentation or the breach of any warranty, covenant,
agreement or obligation contained herein), the prevailing Party in such action
shall be entitled to recover from the other Party its reasonable costs and
expenses necessarily incurred in connection with such action (including fees,
disbursements and expenses of attorneys and costs of investigation).
10.15 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision
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<PAGE> 120
of this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
10.16 REMEDIES CUMULATIVE. All remedies provided in this Agreement,
by Law or otherwise, shall be cumulative and not alternative.
IN WITNESS WHEREOF, each of the Parties hereto has duly
executed and delivered this Agreement or has caused this Agreement to be
executed and delivered in its name and on its behalf by its representatives
thereunto duly authorized, all as of the date first written above.
DUCK HILL BANK
By: /s/ Norman Ezell
---------------------------------
Norman Ezell
Its: President and Chief
Executive Officer
ATTEST:
/s/ Betty Bowen
- ---------------------------------
Betty Bowen, Secretary
UNION PLANTERS CORPORATION
By: /s/ Jackson W. Moore
----------------------------------
Jackson W. Moore
Its: President and Chief
Operating Officer
ATTEST:
/s/ E. James House
- ----------------------------------
E. James House, Jr., Secretary
UNION PLANTERS NATIONAL BANK.
By: /a/ Kenneth W. Plunk
----------------------------------
Kenneth W. Plunk
Its: Chairman
ATTEST:
/s/ Pete Williston
- -----------------------------------
Pete Williston, Secretary
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<PAGE> 121
UPHC joins herein for the sole purpose of evidencing its consent to the
transactions contemplated herein as sole shareholder of UPB.
UNION PLANTERS HOLDING CORPORATION
By: /s/ Jackson W. Moore
----------------------------------
Jackson W. Moore
Its: Chairman and President
ATTEST:
/s/ Lynn L. Lanigan
- ----------------------------------
Lynn L. Lanigan, Secretary
40
<PAGE> 122
APPENDIX B
AGREEMENT TO MERGE
BETWEEN
DUCK HILL BANK
AND
UNION PLANTERS NATIONAL BANK
UNDER THE ARTICLES OF ASSOCIATION OF
UNION PLANTERS NATIONAL BANK
UNDER THE TITLE OF
UNION PLANTERS BANK, NATIONAL ASSOCIATION
<PAGE> 123
AGREEMENT TO MERGE
BETWEEN
DUCK HILL BANK
AND
UNION PLANTERS NATIONAL BANK
UNDER THE ARTICLES OF ASSOCIATION OF
UNION PLANTERS NATIONAL BANK
UNDER THE TITLE OF
UNION PLANTERS BANK, NATIONAL ASSOCIATION
THIS AGREEMENT TO MERGE (the "Merger Agreement") is made and entered
into as of the 6th day of November, 1997, by and between UNION PLANTERS NATIONAL
BANK, a national banking association organized and existing under the laws of
the United States of America with its main office located in Memphis, Shelby
County, Tennessee ("UPNB" sometimes referred to hereafter as the "Receiving
Association" or as the "Continuing Bank" as the context may require), DUCK HILL
BANK, a state chartered banking corporation organized and existing under the
laws of the State of Mississippi with its main office located in Duck Hill,
Montgomery County, Mississippi, and UNION PLANTERS CORPORATION, a Tennessee
corporation which is registered as a bank holding company ("UPC"). This Merger
Agreement is Exhibit 1 to that certain Reorganization Agreement dated as of
November 6, 1997 between UPC, UPNB and Duck Hill Bank ("Reorganization
Agreement"), which Reorganization Agreement is Exhibit A to this Merger
Agreement and incorporated herein by reference as if fully copied herein in
words and figures. Duck Hill Bank, UPC and the Receiving Association are each
acting pursuant to resolutions of their respective Boards of Directors adopted
by the votes of at least a majority of their respective directors pursuant to
the authority given by, and in accordance with, applicable law. UNION PLANTERS
HOLDING CORPORATION ("UP Holding"), a Tennessee corporation registered as a bank
holding company is the record holder of one hundred percent (100%) of the
outstanding voting shares of UPNB. UP Holding has joined in the Reorganization
Agreement as well as this Merger Agreement for the sole purpose of giving its
written consent to the execution, delivery and performance of the Reorganization
Agreement and this Merger Agreement in its capacity as the sole shareholder of
UPNB.
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W I T N E S S E T H
WHEREAS, the Parties hereto have agreed to undertake the corporate
reorganization reflected in this Merger Agreement whereby Duck Hill Bank would
be merged with and into UPNB (the "Bank Merger") pursuant to Title 12 U.S.C.
Sections 215a-1, 1828(c) and 1831u, with UPNB being the Receiving Association
and the Continuing Bank surviving the Merger, and thereby retaining UPNB's main
office as the main office of the Continuing Bank pursuant to 12 U.S.C. Section
1828 and to retain the former main office and branches of Duck Hill Bank, as
well as the branches of the Receiving Association, as branches of the Continuing
Bank pursuant to 12 U.S.C. Sections 36(d) and 1831u(d); and
WHEREAS, UPNB as the Receiving Association is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America, having its principal office located in the City
of Memphis, County of Shelby, State of Tennessee, having no outstanding
preferred stock; and having a common stock account of $18,047,010 divided into
1,804,701 shares of the par value of Ten Dollars ($10.00) each, additional
paid-in capital of $187,789,158, net unrealized gain/(loss) - available for sale
securities of $12,823,879, and retained earnings of $269,232,769 as of June 30,
1997, for a total of $487,892,816 capital (based on applicable regulatory
accounting principles); and
WHEREAS, Duck Hill Bank is a state chartered banking corporation duly
organized, validly existing and in good standing under the laws of the State of
Mississippi, having its principal office located in Duck Hill, Montgomery
County, State of Mississippi; having no outstanding preferred stock; and having
a common stock account of $200,000 divided into 4,000 shares of the par value of
Fifty Dollars ($50.00) each, additional paid-in capital of $0, net unrealized
gain/(loss) - available for sale securities of $57,000, and retained earnings of
$1,804,000 as of June 30, 1997, for a total of $2,004,000 capital (based on
applicable regulatory accounting principles); and
WHEREAS, all of the shares of common stock of the Receiving Association
are owned beneficially and held of record by UP Holding; and all of the shares
of common stock of UP Holding are owned beneficially and held of record by UPC;
and
WHEREAS, the Board of Directors of Duck Hill Bank; the Board of
Directors of the Receiving Association; UPC, in its capacity as the beneficial
owner and holder of record of all outstanding shares of UP Holding; and UP
Holding, as the beneficial owner and holder of record of all outstanding shares
of UPNB, have each approved this Merger Agreement and have authorized its
execution and delivery.
NOW THEREFORE, in consideration of the premises and for other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged, Duck Hill Bank and UPNB hereby enter into this Merger Agreement
and prescribe the terms and conditions of the merger of Duck Hill Bank with and
into UPNB, which shall survive the merger and be the Receiving Association, and
the manner of carrying the said Bank Merger into effect, as follows:
2
<PAGE> 125
Section 1. Definitions. As used in this Merger Agreement and in any
amendments hereto, the following terms shall have the following meanings
respectively:
"BANK MERGER" shall mean the merger of Duck Hill Bank with and into
UPNB as the Receiving Association as provided in this Merger Agreement, to be
effected pursuant to this Merger Agreement.
"COMPTROLLER" shall mean the Office of the Comptroller of the Currency
or any successor thereto.
"CONTINUING BANK" shall mean the Receiving Association upon, and
subsequent to the Effective Time of the Bank Merger.
"DUCK HILL BANK" shall mean Duck Hill Bank, a banking corporation
organized and existing under the laws of the State of Mississippi and
headquartered in Duck Hill, Montgomery County, Mississippi.
"DUCK HILL BANK COMMON STOCK" shall mean the $50.00 par value common
stock of Duck Hill Bank.
"EFFECTIVE TIME OF THE BANK MERGER" shall mean the date and time
specified for the effectiveness of the Bank Merger in the official certification
letter to be issued by the Comptroller.
"PARTY" shall mean either Duck Hill Bank or the Receiving Association
and "PARTIES" shall mean both the Receiving Association and Duck Hill Bank.
"RECEIVING ASSOCIATION" shall mean UPNB.
"REORGANIZATION AGREEMENT" shall mean that certain Reorganization
Agreement dated as of November __, 1997 between UPC, UPNB and Duck Hill Bank
providing for the acquisition of Duck Hill Bank by UPC through the merger of
Duck Hill Bank with and into UPNB. This Merger Agreement is Exhibit 1 to the
Reorganization Agreement. The Reorganization Agreement is Exhibit A to this
Merger Agreement.
"UPC" shall mean Union Planters Corporation, a Tennessee corporation
registered as a bank holding company.
"UPC COMMON STOCK" shall mean the $5.00 par value common stock of UPC.
"UP HOLDING" shall mean Union Planters Holding Corporation, a Tennessee
corporation registered as a bank holding company.
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<PAGE> 126
"UPNB" shall mean Union Planters National Bank, a national banking
association organized and existing under the laws of the United States and
having its main office located in Memphis, Shelby County, Tennessee. UPNB is
presently a party to various bank merger agreements with certain of its
affiliate banks and, as a result of the consummation of one or all of the
affiliate bank mergers, will change its name to Union Planters Bank, National
Association. It is currently contemplated that the affiliate bank mergers will
be consummated prior to the bank merger contemplated by this Merger Agreement,
in which case at the time of the consummation of the Bank Merger, the name of
UPNB will have been changed accordingly; therefore, for purposes hereof, "UPNB"
shall also be deemed to refer to Union Planters Bank, National Association, if
and where applicable.
"UPNB COMMON STOCK" shall mean the $10.00 par value common stock of the
Receiving Association.
Terms not otherwise defined herein shall have the meanings set forth in
the Reorganization Agreement.
Section 2. Merger; Closing. Subject to the terms and conditions of this
Merger Agreement, at the Effective Time of the Bank Merger, Duck Hill Bank shall
be merged with and into the Receiving Association under the Charter and Articles
of Association of the Receiving Association and in accordance with this Merger
Agreement and the provisions of Sections 12 U.S.C. Section 1828(c), 1831u and
'215a-1, and the rules and procedures promulgated by the Comptroller thereunder
and with the effect provided in this Merger Agreement and the applicable
statutes (the "Bank Merger"). UPNB shall be the entity surviving the Bank Merger
and the Continuing Bank under the title UNION PLANTERS BANK NATIONAL ASSOCIATION
and shall continue to be governed by the laws of the United States of America.
The closing of the transactions contemplated hereby (the "Closing") shall take
place as soon as practicable after (but not before) the satisfaction of all
conditions precedent to closing set forth herein, including the receipt of all
required regulatory approvals and the expiration of any waiting periods.
Section 3. Name; Articles of Association; Bylaws; Offices. Upon and as
of the Effective Time of the Bank Merger, the name of the Continuing Bank shall
continue to be UNION PLANTERS BANK, NATIONAL ASSOCIATION; its Articles of
Association, a copy of which is attached hereto as Exhibit "A", shall be the
existing Articles of Association of the Receiving Association; its Bylaws shall
be the existing Bylaws of the Receiving Association; the head office and
established branch offices and facilities (including its branch offices,
wherever located and including all CBCTs, wherever located) of Duck Hill Bank
shall become and be established branch offices and facilities of the Continuing
Bank; and the head office, established branch offices and facilities (including
CBCTs) of the Receiving Association shall continue to be the head office,
established branch offices and facilities (including CBCTs) of the Continuing
Bank.
Section 4. Property and Rights of Continuing Bank. Upon and as of the
Effective Time of the Bank Merger, the corporate existence of Duck Hill Bank and
the Receiving Association shall,
4
<PAGE> 127
as provided in 12 U.S.C. Section 215a-1, be merged into and continued in the
Continuing Bank and the Continuing Bank shall be deemed to be the same
association as both Duck Hill Bank and the Receiving Association. Upon and as of
the Effective Time of the Bank Merger, all rights, franchises and interests of
Duck Hill Bank and the Receiving Association, respectively, in and to every type
of property (whether real, personal or mixed) and choses in action shall be
transferred to, and vested in the Continuing Bank by virtue of the Bank Merger
becoming effective without any deed or other transfer and the Continuing Bank,
without any order or other action on the part of any court or otherwise, shall
hold and enjoy all rights of property, franchises and interests, including
appointments, designations and nominations, and all other rights and interests
as trustee, executor, administrator, registrar or transfer agent of stocks and
bonds, guardian of estates, assignee, receiver, and committee of estates of
lunatics, and in every other fiduciary capacity, in the same manner and to the
same extent as such rights, franchises and interests were held or enjoyed by
Duck Hill Bank or by the Receiving Association immediately before the Effective
Time of the Bank Merger.
Section 5. Liabilities Assumed. Upon and as of the Effective Time of
the Bank Merger, the Continuing Bank shall become and be liable for all then
existing liabilities of Duck Hill Bank and of the Receiving Association. All
then existing deposits, debts, liabilities, obligations and contracts of Duck
Hill Bank and the Receiving Association, whether matured or unmatured; whether
accrued, absolute, contingent or otherwise; and whether or not reflected or
reserved against on balance sheets, books of account or records of Duck Hill
Bank or the Receiving Association, as the case may be, shall be those of the
Continuing Bank and shall not be released or impaired by the Bank Merger. All
then existing rights of creditors and other obligees and all liens on property
of either Duck Hill Bank or the Receiving Association shall be preserved
unimpaired.
Section 6. Directors and Officers. Upon and as of the Effective Time of
the Bank Merger, (i) the Board of Directors of the Continuing Bank shall consist
of all persons who shall be the directors of the Receiving Association
immediately before the Effective Time of the Bank Merger, (ii) the officers of
the Receiving Association immediately prior to the Effective Time of the Bank
Merger shall remain officers of the Continuing Bank, and (iii); the officers of
Duck Hill Bank in office immediately prior to the Effective Time of the Bank
Merger shall become Regional Officers, as defined in the Continuing Bank's
Bylaws, serving in regional capacities of the Continuing Bank in the Grenada
Region; provided, however, that nothing herein shall be deemed to restrict in
any way the rights of the shareholders and directors of the Continuing Bank at
any time after the Effective Time of the Bank Merger to nominate, elect, select
or remove, as the case may be, such directors and officers, including but not
limited to, Regional Officers of the Continuing Bank, as they shall see fit.
Section 7. Effect on Stock and Capital. Upon and as of the Effective
Time of the Bank Merger and by reason of the Bank Merger becoming effective:
a. Duck Hill Bank Common Stock. Each share of Duck Hill Bank
Common Stock which shall be issued and outstanding immediately prior to the
Effective Time of the Bank Merger shall, at and after the Effective Time of the
Bank Merger, shall cease to represent any interest (equity, shareholder or
otherwise) in Duck Hill Bank and shall automatically be converted exclusively
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<PAGE> 128
into, and constitute only the right of each Duck Hill Record Holder to receive
in exchange for such holder's shares of Duck Hill Common Stock, that number of
whole shares of UPC Common Stock, and cash for fractional shares, as set forth
in Subsections 2.1(c), (d) and (f) of the Reorganization Agreement, which are
incorporated herein by reference. Duck Hill Dissenting Shareholders, as defined
in Subsection 2.1(e) of the Reorganization Agreement, shall have the rights
provided dissenting shareholders under applicable Mississippi law, as set forth
in Subsection 2.1(e) of the reorganization Agreement, which is incorporated
herein by reference.
b. Outstanding Stock of Continuing Bank. The shares of common
capital stock of the Receiving Association which shall be issued and outstanding
at the Effective Time of the Bank Merger shall continue to be issued and
outstanding shares of the same class of common stock of the Continuing Bank.
c. Capital Accounts of Continuing Bank. The capital structures
of the Receiving Association and Duck Hill Bank as of June 30, 1997, and the pro
forma capital structure of the Continuing Bank immediately after the
consummation of the Bank Merger are as set forth on Exhibit "B" hereto.
Section 8. Conditions to Obligations of Receiving Association. The
obligations of the Receiving Association to proceed with the Closing and
consummation of the Bank Merger are subject to the satisfaction at or prior to
the Closing of all of the conditions set forth in Section Sections 8.1 and 8.2
of the Reorganization Agreement, which Sections are incorporated by reference
herein, any one or more of which, to the extent that they may lawfully be
waived, may be waived, in whole or in part, by the Receiving Association and
UPC.
Section 9. Conditions to Obligations of Duck Hill Bank. The
obligations of Duck Hill Bank to proceed with the Closing and consummation of
the Bank Merger are subject to the satisfaction, at or prior to the Closing, of
all of the conditions set forth in Sections 8.1 and 8.3 of the Reorganization
Agreement, which Sections are incorporated herein by reference, any one or more
of which, to the extent they may be lawfully waived, may be waived, in whole or
in part, by Duck Hill Bank.
Section 10. Termination. This Merger Agreement is subject to
termination by the Parties under the terms and conditions set forth in Article 9
of the Reorganization Agreement, which Article is incorporated herein by
reference.
Section 11. Miscellaneous.
a. Succession. This Merger Agreement shall be binding upon,
and shall inure to the benefit of the Parties and their respective successors
and assigns, provided, however, that neither this Merger Agreement nor any right
hereunder may be assigned by any Party without the consent of the other Party
hereto.
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<PAGE> 129
b. Entire Agreement; Amendments; Etc. This Merger Agreement,
the Reorganization Agreement which is Exhibit A hereto, and Exhibits B and C
hereto, constitutes the entire agreement of the Parties hereto with respect to
this Bank Merger and the acquisition of Duck Hill Bank by UPC, and supersedes
all other prior agreements, if any, with respect thereto. This Merger Agreement
may be amended, and any provision hereof waived, but only in a writing signed by
the party against whom such amendment or waiver is sought to be enforced. Except
as otherwise expressly provided herein, no person other than the parties hereto
shall have any right hereunder or be entitled to the benefit of any provision
hereof.
c. Counterparts. This Merger Agreement may be executed in one
or more counterparts, all of which shall together constitute one and the same
instrument and shall become effective when one or more counterparts hereof shall
have been signed by Duck Hill Bank and by at least a majority of the directors
of Duck Hill Bank and delivered to the Receiving Association and one or more
counterparts hereof shall have been signed by the Receiving Association and a
majority of the directors of the Receiving Association and delivered to Duck
Hill Bank.
d. Governing Law. This Merger Agreement shall be governed by
and construed in accordance with the laws of the United States of America,
including the national banking laws as contained in Title 12 of the United
States Code.
IN WITNESS WHEREOF, the Receiving Association and Duck Hill Bank have
each caused this Merger Agreement to be executed by their duly authorized
officers and the corporate seals of the Receiving Association and Duck Hill Bank
to be hereunto affixed as of the date first above written and directors
constituting a majority of the incumbent members of the respective Boards of
Directors of Duck Hill Bank and of the Receiving Association have hereunto, or
on counterparts hereof, subscribed their names. UPC has caused this Merger
Agreement to be executed by its duly authorized officers as of the date first
above written for the purpose of providing its consent to this Merger Agreement
and its agreement to issue shares of UPC Common Stock (and cash for fractional
shares) in exchange for shares of Duck Hill Common Stock pursuant to the terms
and subject to the conditions of this Merger Agreement and the Reorganization
Agreement. UP Holding has caused this Merger Agreement to be executed by its
duly authorized officers as of the date first written above for the purpose of
providing its written consent to the transactions contemplated by this Merger
Agreement and the Reorganization Agreement in its capacity as the sole
shareholder of UPNB.
UNION PLANTERS NATIONAL BANK
[SEAL]
By: /s/ Kenneth W. Plunk
--------------------------------------
Kenneth W. Plunk, Chairman
ATTEST:
/s/ Peter G. Williston
- ---------------------------------
Peter G. Williston, Secretary
7
<PAGE> 130
DUCK HILL BANK
By: /s/ Norman Ezell, President
----------------------------
Norman Ezell, President
ATTEST:
/s/ Betty Bowen
- ------------------------------
Betty Bowen, Secretary
UNION PLANTERS CORPORATION
[SEAL]
By: /s/ Jackson W. Moore
----------------------------
Jackson W. Moore, President
ATTEST:
/s/ E. James House, Jr.
- ------------------------------
E. James House, Jr., Secretary
UNION PLANTERS HOLDING CORPORATION
[SEAL]
By: /s/ Jackson W. Moore
----------------------------
Jackson W. Moore, President
ATTEST:
/s/ Lynn L. Lanigan
- ------------------------------
Lynn L. Lanigan, Secretary
8
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CERTIFICATES
STATE OF TENNESSEE
SS
COUNTY OF SHELBY
On this 6th day of November, 1997, before me, a notary public for the
state and county aforesaid, personally appeared Jackson W. Moore, as President,
and E. James House, Jr., as Secretary of Union Planters Corporation, a Tennessee
corporation, to me personally known, and each in his respective capacity,
acknowledged the foregoing instrument to be the act and deed of said Tennessee
corporation and the seal affixed thereto to be its seal.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Laurie C. Voyles
------------------------------
Notary Public
[SEAL]
My Commission Expires: 11/28/99
STATE OF TENNESSEE
SS
COUNTY OF SHELBY
On this 6th day of November, 1997, before me, a notary public for the
state and county aforesaid, personally appeared Jackson W. Moore, as Chairman
and President, and Lynn L. Lanigan, as Secretary of Union Planters Holding
Corporation, a Tennessee corporation, to me personally known, and each in his
respective capacity, acknowledged the foregoing instrument to be the act and
deed of said Tennessee corporation and the seal affixed thereto to be its seal.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Laurie C. Voyles
------------------------------
Notary Public
[SEAL]
My Commission Expires: 11/28/99
9
<PAGE> 132
STATE OF TENNESSEE
SS.
COUNTY OF SHELBY
On this 7th day of November, 1997, before me, a notary public for
the state and county aforesaid, personally came Kenneth W. Plunk, as Chairman
and Chief Administrative Officer, and Peter G. Williston, as Secretary, of Union
Planters National Bank, a national banking association organized and existing
under the laws of the United States of America, to me personally known, and in
their respective capacities acknowledged the foregoing instrument to be the act
and deed of said national banking association and the seal affixed thereto to be
its seal.
WITNESS my official seal and signature this day and year aforesaid.
[SEAL]
/s/ Carma A. Cowan
-------------------------------------
Notary Public
My Commission Expires: 6/5/01
STATE OF MISSISSIPPI
SS.
COUNTY OF MONTGOMERY
On this 6th day of November, 1997, before me, a notary public for the
state and county aforesaid, personally appeared Norman Ezell, as President, and
Betty Bowen, as Secretary, of Duck Hill Bank, a Mississippi banking corporation,
to me personally known, and in their respective capacities, acknowledged the
foregoing instrument to be the act and deed of Duck Hill Bank and the seal
affixed thereto to be its seal.
WITNESS my official seal and signature this day and year aforesaid.
/s/ Diane A. McCormich
------------------------------
Notary Public
[SEAL]
My Commission Expires: 1-22-99
10
<PAGE> 133
APPENDIX C
MISSISSIPPI BUSINESS CORPORATION ACT
ARTICLE 13
SS. 79-4-13.01. DEFINITIONS.
In this article:
(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 Section 79-4-13.02 and who exercises that right when
and in the manner required by Sections 79-4-13.20 through 79-4-13.28.
(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.
(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.
SS. 79-4-13.02. RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and obtain payment
of the fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation
is a party (i) if shareholder approval is required for the merger
by Section 79-4-11.03 or the articles of incorporation and the
shareholder is entitled to vote on the merger, or (ii) if the
corporation is a subsidiary that is merged with its parent under
Section 79-4-11.04;
(2) 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;
(3) 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 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;
<PAGE> 134
(4) An amendment to the articles of incorporation that
materially and adversely affects rights in respect of a
dissenter's shares because it:
(i) Alters or abolishes a preferential right of the
shares;
(ii) 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;
(iii) Alters or abolishes a preemptive right of the
holder of the shares to acquire shares or other securities;
(iv) 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
(v) Reduces the number of shares owned by the
shareholder vote to a fraction of a share if the fraction
share so created is to be acquired for cash under Section
79-4-6.04; or
(5) 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.
(b) Nothing in subsection (a)(4) shall entitle a shareholder of a
corporation to dissent and obtain payment for his shares as a result of an
amendment of the articles of incorporation exclusively for the purpose of either
(i) making such corporation subject to application of the Mississippi Control
Share Act, or (ii) making such action applicable to a control share acquisition
of such corporation.
(c) A shareholder entitled to dissent and obtain payment for his
shares under this article may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent with respect to the
shareholder or the corporation.
SS. 79-4-13.03. DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in his name only if he dissents with
respect to all shares beneficially owned by any one person and notifies 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 are determined as if the shares as to which he dissents and his other
shares were registered in the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to
shares held on his behalf only if:
(1) 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
(2) 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.
SS. 79-4-13.20. NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights
under Section 79-4-13.02 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 article and be accompanied by a copy of this
article.
4
<PAGE> 135
(b) If corporate action creating dissenters' rights under Section
79-4-13.02 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 Section
79-4-13.22.
SS. 79-4-13.21. NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights
under Section 79-4-13.02 is submitted to a vote at a shareholders' meeting, a
shareholder who wishes to assert dissenters' rights (1) must 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 (2) must not
vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirement of
subsection (a) is not entitled to payment for his shares under this article.
SS. 79-4-13.22. DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights
under Section 79-4-13.02 is authorized at a shareholders' meeting, the
corporation shall deliver a written dissenters' notice to all shareholders who
satisfied the requirements of Section 79-4-13.21.
(b) The dissenters' notice must be sent no later than ten (10)
days after the corporate action was taken, and must:
(1) State where the payment demand must be sent and where and
when certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(3) 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;
(4) 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 of the subsection (a)
notice is delivered; and
(5) Be accompanied by a copy of this article.
SS. 79-4-13.23. DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in Section
79-4-13.22 must demand payment, certify whether he acquired beneficial ownership
of the shares before the date required to be set forth in the dissenter's notice
pursuant to Section 79-4-13.22(b)(3), and deposit his certificates in accordance
with the terms of the notice.
(b) The shareholder who demands payment and deposits his shares
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(c) A shareholder who does not demand payment or deposit his
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under this article.
5
<PAGE> 136
SS. 79-4-13.24. SHARE RESTRICTIONS.
(a) 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 Section 79-4-13.26.
(b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
SS. 79-4-13.25. PAYMENT.
(a) Except as provided in Section 79-4-13.27, as soon as the
proposed corporate action is taken, or upon receipt of a demand, the corporation
shall pay each dissenter who complied with Section 79-4-13.23 the amount the
corporation estimates to be the fair value of his shares, plus accrued interest.
(b) The payment must be accompanied by:
(1) 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;
(2) A statement of the corporation's estimate of the fair
value of the shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment
under Section 79-4-13.28; and
(5) A copy of this article.
SS. 79-4-13.26. FAILURE TO TAKE ACTION.
(a) 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.
(b) If after returning deposited certificates and releasing
transfer restrictions, the corporation takes the proposed action, it must send a
new dissenters' notice under Section 79-4-13.22 and repeat the payment demand
procedure.
SS. 79-4-13.27. AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by
Section 79-4-13.25 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.
(b) To the extent the corporation elects to withhold payment
under subsection (a), 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 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
Section 79-4-13.28.
6
<PAGE> 137
SS. 79-4-13.28. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) 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 Section 79-4-13.25), or reject
the corporation's offer under Section 79-4-13.27 and demand payment of the fair
value of his shares and interest due, if:
(1) The dissenter believes that the amount paid under Section
79-4-13.25 or offered under Section 79-4-13.27 is less than the
fair value of his shares or that the interest due is incorrectly
calculated;
(2) The corporation fails to make payment under Section
79-4-13.25 within sixty (60) days after the date set for
demanding payment; or
(3) 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.
(b) A dissenter waives his right to demand payment under this
section unless he notifies the corporation of his demand in writing under
subsection (a) within thirty (30) days after the corporation made or offered
payment for his shares.
SS. 79-4-13.30. COURT ACTION.
(a) If a demand for payment under Section 79-4-13.28 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 60-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the chancery
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.
(c) 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 must be served
with a copy of the petition. Nonresidents may be served by registered or
certified mail or by publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is
commenced under subsection (b) is plenary and exclusive. The court may appoint
one 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 are entitled to
the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to
judgment (1) 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 (2)
for the fair value, plus accrued interest, of his after-acquired shares for
which the corporation elected to withhold payment under Section 79-4-13.27.
SS. 79-4-13.31. COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Section
79-4-13.30 shall determine all costs of the proceeding, including the reasonable
compensation and expenses of appraisers appointed by the court. The court shall
7
<PAGE> 138
assess the costs against the corporation, except that the court may assess costs
against all or some of the dissenters acted arbitrarily, vexatiously or not in
good faith in demanding payment under Section 79-4-13.28.
(b) The court may also assess the fees and expenses of counsel
and experts for the respective parties, in amounts the court finds equitable:
(1) 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 Sections 79-4-13.20
through 79-4-13.28; or
(2) 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 article.
(c) 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
8
<PAGE> 139
APPENDIX D
Duck Hill Bank
Unaudited Financial Statements
As of and for the Three Months Ended
March 31, 1998 and
for the Year Ended December 31, 1996
and Audited Financial Statements for
the Year Ended December 31, 1997
<PAGE> 140
Duck Hill Bank
Unaudited Financial Statements
for the Three Months Ended March 31, 1998
<PAGE> 141
DUCK HILL BANK
UNAUDITED BALANCE SHEET
MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and due from banks $ 1,233
Federal funds sold 1,900
Securities 10,861
Loans, net of reserve for loan losses of $82 5,405
Premises and equipment 90
Interest receivable 193
Other assets 37
-------
$19,719
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 2,483
Time, $100,000 or more 2,068
Other interest-bearing, including NOW accounts of $2,709 12,970
-------
Total deposits 17,521
Other liabilities 124
-------
Total liabilities 17,645
Stockholders' Equity:
Common stock - authorized, issued and outstanding
4,000 shares of $50 par value 200
Surplus 1,500
Undivided profits 281
Net unrealized gain on available-for-sale securities,
net of tax of $48 93
-------
Total stockholders' equity 2,074
-------
$19,719
=======
</TABLE>
The accompanying notes are an integral part of this unaudited statement.
<PAGE> 142
DUCK HILL BANK
UNAUDITED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 146 $ 131
Interest and dividends on investment securities:
Taxable interest and dividends 169 188
Nontaxable interest 7 7
Interest on federal funds sold 23 8
------ ------
Total interest income 345 334
------ ------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more 27 23
Interest on other deposits 138 136
------ ------
Total interest expense 165 159
------ ------
Net interest income 180 175
Provision for loan losses -- --
------ ------
Net interest income after provision for loan losses 180 175
OTHER INCOME
Service charges on deposit accounts 15 17
Other service charges and fees 5 4
Securities gains, net -- 12
Other 3 --
------ ------
Total other income 23 33
OTHER EXPENSES
Salaries 66 65
Employee benefits 20 19
Net occupancy expense 9 8
Furniture and equipment expense 21 16
Printing and supplies 6 8
Other 28 29
------ ------
Total other expenses 150 145
------ ------
Income before income taxes 53 63
Income taxes 11 17
------ ------
Net income $ 42 $ 46
====== ======
Net income per share $10.36 $11.46
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 143
DUCK HILL BANK
UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Net
Unrealized
Gain (Loss)
On
Available
Common Undivided For-Sale
Stock Surplus Profits Securities Total
------ ------- --------- ---------- ------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $ 200 $ 1,500 $ 239 $ 87 $2,026
Net income for three months -- -- 42 -- 42
Net change in unrealized gain
(loss) on available-for-sale
securities, net of tax -- -- -- 6 6
------ ------- --------- ---------- ------
Balance at March 31, 1998 $ 200 $ 1,500 $ 281 $ 93 $2,074
====== ======= ========= ========== ======
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 144
DUCK HILL BANK
UNAUDITED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 42 $ 46
Adjustments to reconcile net income to net cash:
Depreciation 10 12
Gains on securities -- (12)
Amortization and accretion, net 6 5
(Increase) decrease in interest receivable 37 (28)
Increase (decrease) in other assets (7) 8
Decrease in other liabilities (32) (97)
-------- --------
Net cash provided by (used in) operating activities 56 (66)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities -- (601)
Proceeds from maturities, calls, and repayments of
available-for-sale securities 214 164
Proceeds from sales of available-for-sale securities -- 324
Decrease in loans 708 122
(Purchase of) proceeds from sale of premises and
equipment, net (1) 30
-------- --------
Net cash provided by investing activities 921 39
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in deposits (932) 682
-------- --------
Net cash provided by (used in) financing activities (932) 682
-------- --------
Net increase in cash and cash equivalents 45 655
Cash and cash equivalents at beginning of period 3,088 1,082
-------- --------
Cash and cash equivalents at end of period $ 3,133 $ 1,737
======== ========
SUPPLEMENTAL INFORMATION:
Interest $ 159 $ 158
Income taxes 32 53
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 145
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements reflect all adjustments which
are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. The statements should be read in
conjunction with the summary of accounting policies and notes to financial
statements included in the Bank's financial statements for the year ended
December 31, 1997. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted in accordance with the rules
of the Securities and Exchange Commission.
NOTE B - ACCOUNTING POLICIES
Reference is made to the accounting policies of the Bank described in the
notes to consolidated financial statements for the year ended December 31,
1997. The Bank has consistently followed those policies in preparing this
report.
NOTE C - PROPOSED MERGER
In November, 1997, the Bank executed a merger agreement with Union Planters
Corporation. Consummation of the merger is dependent upon the approval of the
shareholders and various regulatory agencies.
<PAGE> 146
Duck Hill Bank
Audited Financial Statements
for the Year Ended December 31, 1997
<PAGE> 147
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Duck Hill Bank
Duck Hill, Mississippi
We have audited the accompanying balance sheet of Duck Hill Bank as of December
31, 1997, and the related statements of income, changes in stockholders' equity,
and cash flows for the year then ended. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of Duck Hill Bank as of December
31, 1997, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
/S/ T. E. LOTT & COMPANY
Columbus, Mississippi
February 9, 1998
<PAGE> 148
DUCK HILL BANK
BALANCE SHEET
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and due from banks $ 1,038
Federal funds sold 2,050
Securities (Note B) 11,073
Loans, net of reserve for loan losses of $92 (Note C) 6,113
Premises and equipment (Note D) 99
Interest receivable 230
Other assets 30
-------
$20,633
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 3,290
Time, $100,000 or more 2,153
Other interest-bearing, including NOW accounts of $2,684 13,010
-------
Total deposits 18,453
Other liabilities 154
-------
Total liabilities 18,607
-------
Stockholders' Equity (Note E):
Common stock - authorized, issued and outstanding
4,000 shares of $50 par value 200
Surplus 1,500
Undivided profits 239
Net unrealized gain on available-for-sale securities,
net of tax of $46 87
-------
Total stockholders' equity 2,026
-------
$20,633
=======
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 149
DUCK HILL BANK
STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
<S> <C>
INTEREST INCOME
Interest and fees on loans $ 576
Interest and dividends on investment securities:
Taxable interest and dividends 771
Nontaxable interest 29
Interest on federal funds sold 29
------
Total interest income 1,405
------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more 95
Interest on other deposits 560
------
Total interest expense 655
------
Net interest income 750
Provision for loan losses 14
------
Net interest income after provision for loan losses 736
OTHER INCOME
Service charges on deposit accounts 61
Other service charges and fees 24
Securities gains, net (Note B) 73
Other 1
------
Total other income 159
------
OTHER EXPENSES
Salaries 278
Employee benefits 76
Net occupancy expense 35
Furniture and equipment expense 75
Printing and supplies 26
Other 122
------
Total other expenses 612
------
Income before income taxes 283
Income taxes (Note F) 80
------
Net income $ 203
======
Net income per share $50.79
======
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 150
DUCK HILL BANK
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Net
Unrealized
Gain on
Available
Common Undivided For-Sale
Stock Surplus Profits Securities Total
------ ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1997 $ 200 $ 1,400 $ 176 $ 87 $ 1,863
Net income for 1997 -- -- 203 -- 203
Cash dividends, $10 per share -- -- (40) -- (40)
Transfer to surplus -- 100 (100) -- --
------ ------- --------- ---------- -------
Balance, December 31, 1997 $ 200 $ 1,500 $ 239 $ 87 $ 2,026
====== ======= ========= ========== =======
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 151
DUCK HILL BANK
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 203
Adjustments to reconcile net income to net cash:
Depreciation 42
Deferred income tax benefit (11)
Gains on securities (73)
Provision for loan losses 14
Amortization and accretion, net 20
Increase in interest receivable (30)
Increase in other assets (5)
Decrease in other liabilities (142)
-------
Net cash provided by operating activities 18
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities (2,991)
Proceeds from maturities, calls, and repayments of
available-for-sale securities 867
Proceeds from sales of available-for-sale securities 3,429
Increase in loans (737)
Net addition to premises and equipment (14)
-------
Net cash provided by investing activities 554
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits 1,474
Dividends paid (40)
-------
Net cash provided by financing activities 1,434
-------
Net increase in cash and cash equivalents 2,006
Cash and cash equivalents at beginning of year 1,082
-------
Cash and cash equivalents at end of year $ 3,088
=======
SUPPLEMENTAL INFORMATION:
Interest $ 652
Income taxes 113
=======
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 152
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A - SUMMARY OF ACCOUNTING POLICIES
The accounting and reporting policies of Duck Hill Bank (the "Bank") conform
to generally accepted accounting principles and, where applicable, to general
practice within the banking industry. The following is a description of the
significant policies:
1. NATURE OF OPERATIONS
Duck Hill Bank operates under a state bank charter and provides full banking
services. It is subject to the regulation of the Federal Deposit Insurance
Corporation and the State of Mississippi. The Bank provides services primarily
to the counties of Montgomery and Grenada, Mississippi.
2. ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. SECURITIES
Investments in securities are classified into three categories and are
accounted for as follows:
Available-for-Sale Securities
Securities classified as available-for-sale are those securities that are
intended to be held for an indefinite period of time, but not necessarily to
maturity. Any decision to sell a security classified as available-for-sale
would be based on various factors, including movements in interest rates,
liquidity needs, security risk assessments, changes in the mix of assets and
liabilities and other similar factors. These securities are carried at their
estimated fair value, and the net unrealized gain or loss is reported in
stockholders' equity, net of tax, until realized.
Gains and losses on the sale of available-for-sale securities are determined
using the adjusted cost of the specific security sold.
Amortization of premiums and accretion of discounts are recognized as an
adjustment to interest income.
( Continued )
<PAGE> 153
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)
3. SECURITIES (Continued)
Securities to be Held-to-Maturity
Securities classified as held-to-maturity are those securities for which there
is a positive intent and ability to hold to maturity. These securities are
carried at cost adjusted for amortization of premiums and accretion of
discounts, which are recognized as adjustments to interest income.
Trading Account Securities
Trading account securities are those securities which are held for the purpose
of selling them at a profit. There were no trading account securities on hand
at December 31, 1997.
4. LOANS
Loans are carried at the principal amount outstanding, net of unearned
interest, and the reserve for loan losses. Interest income on installment
loans is recognized using a method which approximates the interest method.
Interest income on all other loans is recognized based on the principal
balance outstanding and the stated rate of the loan.
Loans are generally placed on a nonaccrual status when principal or interest
is past due ninety days, or when payment in full is not anticipated. When a
loan is placed on nonaccrual status, interest accrued but not received is
generally reversed against interest income. If collectibility is in doubt,
cash receipts on nonaccrual loans are used to reduce principal rather than
recorded as interest income.
Loan origination fees and certain direct origination costs are recognized
currently as income and period costs, respectively, and do not vary materially
from the results that would be recorded using the deferred method.
5. RESERVE FOR LOAN LOSSES
For financial reporting purposes, the provision for loan losses charged to
operations is based upon management's estimations of the amount necessary to
maintain the reserve at an adequate level, considering losses charged to the
loan portfolio, current economic conditions, credit reviews of the loan
portfolio, and other factors warranting consideration. Reserves for any
impaired loans are generally determined based on collateral values. Loans are
charged against the reserve for loan losses when management believes the
collectibility of the principal is unlikely. The reserve is maintained at a
level believed adequate by management to absorb potential loan losses. In
evaluating the adequacy of the reserve, management makes estimates and
assumptions which may be subject to change.
( Continued )
<PAGE> 154
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)
6. PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated depreciation. The
depreciation policy is to provide for depreciation over the estimated useful
lives of the assets using the straight-line and accelerated methods. Repairs
and maintenance expenditures are charged to operating expenses; major
expenditures for renewals and betterments are capitalized and depreciated over
their estimated useful lives.
7. INCOME TAXES
Deferred tax assets and liabilities are recognized for differences between the
financial statement and tax bases of assets and liabilities and are measured
using tax rates expected to apply to taxable income in the year that these
temporary differences reverse.
8. STATEMENT OF CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents include cash
and due from banks and federal funds sold. Generally, federal funds are sold
for a one-day period.
9. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
In the ordinary course of business, the Bank enters into off-balance sheet
financial instruments consisting of commitments to extend credit, credit card
lines and standby letters of credit. Such financial instruments are recorded
in the financial statements when they are exercised.
10. NET INCOME PER SHARE
Net income per share is based on the weighted average common shares
outstanding of 4,000 shares. The Bank had no arrangements which would be
considered dilutive.
<PAGE> 155
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE B - SECURITIES
Securities at December 31, 1997, consisted of available-for-sale securities
with a carrying amount of $11,072,481. The amortized cost, gross unrealized
gains, gross unrealized losses and estimated fair value of these securities at
December 31, 1997, are as follows:
<TABLE>
<CAPTION>
(In Thousands)
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Available-for-sale securities:
U. S. Treasury securities $ 1,202 $ 19 $ 2 $ 1,219
Obligations of other U. S
Government agencies 4,007 20 -- 4,027
Obligations of states and
municipal subdivisions 800 21 -- 821
Mortgage-backed and other
installment obligations 4,931 79 4 5,006
--------- --------- --------- ---------
$ 10,940 $ 139 $ 6 $ 11,073
========= ========= ========= =========
</TABLE>
The scheduled maturities of securities available-for-sale at December 31,
1997, are as follows:
<TABLE>
<CAPTION>
(In Thousands)
Estimated
Amortized Fair
Cost Value
--------- ---------
<S> <C> <C>
Due in one year or less $ 296 $ 299
Due after one year through five years 3,713 3,746
Due after five years through ten years 1,818 1,840
Due after ten years 182 182
Mortgage-backed securities and other
installment obligations 4,931 5,006
--------- ---------
$ 10,940 $ 11,073
========= =========
</TABLE>
( Continued )
<PAGE> 156
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE B - SECURITIES (Continued)
For the year ended December 31, 1997, gross gains of $75,515 and gross losses
of $2,088 were realized on available-for-sale securities. Included in gains is
$63,588 collected on bonds issued as guaranteed investment contracts with
Executive Life Insurance Company (Executive Life). In 1991, the Bank
determined that these investments were permanently impaired as Executive Life
was placed into conservatorship and, as a result, the bonds were written down
to their estimated value. Subsequently, the Bank received collections from the
conservator and collections in excess of the remaining bases have been
reported as securities gains. In 1997, the Bank received $85,123 of which
$63,588 has been reported as securities gains and $21,535 as interest income
on investment securities. Interest income is reported once the amounts
received exceed the original principal cost which occurred in 1997. Management
of the Bank is uncertain of any future collections.
Securities with a carrying value of $1,302,000 at December 31, 1997, were
pledged for various purposes as required by law.
Banking regulations define "high-risked mortgage securities" as mortgage
derivative products that are determined through testing to have more
volatility, particularly price volatility, than a benchmark mortgage
pass-through security. It is the policy of the Bank to monitor its mortgage
derivative products through testing to determine if any are considered
"high-risked." At December 31, 1997, securities included no "high-risked
mortgage securities."
NOTE C - LOANS
Loans outstanding include the following types at December 31, 1997:
<TABLE>
<CAPTION>
(In Thousands)
<S> <C>
Real estate $ 3,208
Agricultural 801
Commercial and industrial 662
Loans to individuals for personal expenditures 1,709
-------
6,380
Unearned interest (175)
Reserve for loan losses (92)
-------
$ 6,113
=======
</TABLE>
( Continued )
<PAGE> 157
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE C - LOANS (Continued)
At December 31, 1997, the Bank had no loans on which the accrual of interest
had been discontinued.
Transactions in the reserve for loan losses for the year ended December 31,
1997, were as follows:
<TABLE>
<CAPTION>
(In
Thousands)
<S> <C>
Balance at beginning of year $ 91
Additions:
Recoveries 8
Provision for loan losses charged to operations 14
-------
113
Deductions:
Loans charged off (21)
-------
Balance at end of year $ 92
=======
</TABLE>
NOTE D - PREMISES AND EQUIPMENT
The detail of premises and equipment at December 31, 1997, is as follows:
<TABLE>
<CAPTION>
(In
Thousands)
<S> <C>
Premises:
Land $ 16
Buildings and improvements 170
Equipment 333
-------
519
Less accumulated depreciation (420)
-------
$ 99
=======
</TABLE>
The amounts charged to operating expense for depreciation totaled $42,036 for
1997.
<PAGE> 158
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE E - REGULATORY MATTERS
The Bank is subject to regulatory capital requirements administered by federal
banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory, and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of assets, liabilities,
and certain off-balance-sheet items as calculated under regulatory accounting
practices. Capital amounts and classifications are also subject to qualitative
judgment by regulators about components, risk weightings, and other related
factors.
To ensure capital adequacy, quantitative measures have been established by
regulators and these require the Bank to maintain minimum amounts and ratios
(set forth in the table below) of total and Tier I capital (as defined) to
risk-weighted assets (as defined), and of Tier I capital to average adjusted
total assets (leverage). Management believes, as of December 31, 1997, that
the Bank exceeds all capital adequacy requirements.
At December 31, 1997, the Bank was categorized by regulators as
well-capitalized under the regulatory framework for prompt corrective action.
A financial institution is considered to be well-capitalized if it has total
risk-based capital of 10% or more, has a Tier I risk-based ratio of 6% or
more, and has a Tier I leverage capital ratio of 5% or more. There are no
conditions or anticipated events that, in the opinion of management, would
change the categorization.
The actual capital amounts and ratios at December 31, 1997, are presented in
the following table. No amount was deducted from capital for interest-rate
risk exposure:
<TABLE>
<CAPTION>
($ In Thousands)
Amount Ratio
------ -----
<S> <C> <C>
Total risk-based $2,029 28.4%
Tier I risk-based 1,940 27.1%
Tier I leverage 1,940 9.5%
</TABLE>
( Continued )
<PAGE> 159
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE E - REGULATORY MATTERS (Continued)
The minimum amounts of capital and ratios as established by banking regulators
at December 31, 1997, were as follows:
<TABLE>
<CAPTION>
($ In Thousands)
Amount Ratio
------ -----
<S> <C> <C>
Total risk-based $ 572 8.0%
Tier I risk-based 286 4.0%
Tier I leverage 814 4.0%
</TABLE>
Banking regulations also limit the amount of dividends that may be paid
without prior approval of the agencies which regulate the Bank.
NOTE F - INCOME TAXES
The current and deferred income tax provisions included in the statement of
income for the year ended December 31, 1997, are as follows:
<TABLE>
<CAPTION>
(In
Thousands)
<S> <C>
Current tax expense $ 91
Deferred tax benefit (11)
-------
$ 80
=======
</TABLE>
The reasons for the differences between the federal statutory rates and the
effective rates are as follows:
<TABLE>
<CAPTION>
($ In Thousands)
% of
Pretax
Amount Income
------ ------
<S> <C> <C>
Tax at statutory rate $ 96 34%
Change in rates resulting from:
Tax-exempt interest (10) (4%)
Nondeductible expenses 2 --
Other, net (8) (2%)
------ ------
Actual Tax Provision $ 80 28%
====== ======
</TABLE>
( Continued )
<PAGE> 160
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE F - INCOME TAXES (Continued)
The components of the net deferred tax liability included in the financial
statements at December 31, 1997, are as follows:
<TABLE>
<CAPTION>
(In
Thousands)
<S> <C>
Deferred tax asset:
Reserve for loan losses $ 18
State net operating loss carryover 15
-------
33
-------
Deferred tax liability:
Premises and equipment 5
Unrealized gain on available-for-sale securities 46
Securities 17
-------
68
-------
Net deferred tax liability $ 35
=======
</TABLE>
The Bank's tax returns for the years 1995 and 1996 are being examined by the
Internal Revenue Service. Based upon preliminary findings, management is of
the opinion that any adjustments will not be significant.
NOTE G - RELATED PARTY TRANSACTIONS
In the normal course of business, the Bank makes loans to its directors and
officers and to companies in which they have a significant ownership interest.
These loans are made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other persons. Such loans amounted to approximately $115,404 at December
31, 1997. In the opinion of management, such loans are consistent with sound
banking policies and are within applicable regulatory and lending limitations.
<PAGE> 161
DUCK HILL BANK
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
NOTE H - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are outstanding various commitments
and contingent liabilities, such as guaranties, commitments to extend credit
life, etc., which are not reflected in the accompanying financial statements.
At December 31, 1997, the Bank had no outstanding letters of credit, and had
made loan commitments of approximately $107,000. The Bank's exposure to credit
loss in the event of nonperformance by the other party to the financial
instrument for commitments to extend credit and letters of credit is
represented by the contractual amount of the instrument. The Bank uses the
same credit policies in making commitments and conditional obligations as it
does for its lending activities. No significant losses are anticipated as a
result of these transactions.
NOTE I - CONCENTRATION OF CREDIT RISK
Most of the Bank's loans, commitments, and letters of credit have been granted
in the Bank's primary market area. Generally, borrowers are also depositors of
the Bank. Investments in states and municipal securities also include
governmental entities within the Bank's market area. The concentrations of
credit by type of loan are set forth in Note C. The distribution of
commitments to extend credit approximates the distribution of loans
outstanding. Letters of credit were granted primarily to commercial borrowers.
NOTE J - MERGER AGREEMENT
The Bank executed a merger agreement dated November 6, 1997, with Union
Planters Bank, National Association. Consummation of the merger is dependent
upon the approval of the Bank's stockholders and applicable regulatory
agencies. The agreement restricts certain activities of the Bank prior to the
consummation of the transaction, including payment of dividends.
<PAGE> 162
Duck Hill Bank
Unaudited Financial Statements
for Year Ended December 31, 1996
<PAGE> 163
DUCK HILL BANK
UNAUDITED BALANCE SHEET
DECEMBER 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and due from banks $ 832
Federal funds sold 250
Securities (Note B) 12,322
Loans, net of reserve for loan losses of $91 (Note C) 5,390
Premises and equipment (Note D) 127
Interest receivable 200
Other assets 25
-------
$19,146
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 2,390
Time, $100,000 or more 1,851
Other interest-bearing, including NOW accounts of $2,464 12,738
-------
Total deposits 16,979
Other liabilities 304
-------
Total liabilities 17,283
Stockholders' Equity (Note E):
Common stock - authorized, issued and outstanding
4,000 shares of $50 par value 200
Surplus 1,400
Undivided profits 176
Net unrealized gain on available-for-sale securities,
net of tax of $44 87
-------
Total stockholders' equity 1,863
-------
$19,146
=======
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 164
DUCK HILL BANK
UNAUDITED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 517 $ 464
Interest and dividends on investment securities:
Taxable interest and dividends 726 731
Nontaxable interest 42 43
Interest on federal funds sold 34 34
------ ------
Total interest income 1,319 1,272
------ ------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more 95 86
Interest on other deposits 533 515
------ ------
Total interest expense 628 601
------ ------
Net interest income 691 671
Provision for loan losses 35 10
------ ------
Net interest income after provision for loan losses 656 661
------ ------
OTHER INCOME
Service charges on deposit accounts 54 54
Other service charges and fees 24 23
Securities gains, net (Note B) 264 106
Other 2 7
------ ------
Total other income 344 190
------ ------
OTHER EXPENSES
Salaries 278 268
Employee benefits 74 73
Net occupancy expense 33 35
Furniture and equipment expense 74 71
Printing and supplies 31 30
Other 120 119
------ ------
Total other expenses 610 596
------ ------
Income before income taxes 390 255
Income taxes (Note F) 113 77
------ ------
Net income $ 277 $ 178
====== ======
Net income per share $69.32 $44.38
====== ======
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 165
DUCK HILL BANK
UNAUDITED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Net
Unrealized
Gain (Loss)
On
Available
Common Undivided For-Sale
Stock Surplus Profits Securities Total
------ ------ --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $ 200 $1,100 $ 93 $ (96) $ 1,297
Net income for 1995 -- -- 178 -- 178
Cash dividends, $8 per share -- -- (32) -- (32)
Transfer to surplus -- 100 (100) -- --
Net change in unrealized gain
(loss) on available-for-sale
securities, net of tax -- -- -- 374 374
------ ------ --------- --------- -------
Balance at December 31, 1995 200 1,200 139 278 1,817
Net income for 1996 -- -- 277 -- 277
Cash dividends, $10 per share -- -- (40) -- (40)
Transfer to surplus -- 200 (200) -- --
Net change in unrealized gain
(loss) in available-for-sale
securities, net of tax -- -- -- (191) (191)
------ ------ --------- --------- -------
Balance at December 31, 1996 $ 200 $1,400 $ 176 $ 87 $ 1,863
====== ====== ========= ========= =======
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 166
DUCK HILL BANK
UNAUDITED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 277 $ 178
Adjustments to reconcile net income to net cash:
Depreciation 46 40
Deferred income tax (benefit) (1) 3
Gains on securities (264) (106)
Provision for loan losses 35 10
Amortization and accretion, net 25 22
(Increase) decrease in interest receivable 26 (2)
Increase in other assets (4) (8)
Increase in other liabilities 166 11
-------- --------
Net cash provided by operating activities 306 148
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of available-for-sale securities (3,547) (2,314)
Proceeds from maturities, calls, and repayments of
available-for-sale securities 799 1,141
Proceeds from sales of available-for-sale securities 2,874 1,521
Increase in loans (613) (688)
Net addition to premises and equipment -- (50)
-------- --------
Net cash used in investing activities (487) (390)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in deposits (526) 1,114
Dividends paid (40) (32)
-------- --------
Net cash provided by (used in) financing activities (566) 1,082
-------- --------
Net increase (decrease) in cash and cash equivalents (747) 840
Cash and cash equivalents at beginning of year 1,829 989
-------- --------
Cash and cash equivalents at end of year $ 1,082 $ 1,829
======== ========
SUPPLEMENTAL INFORMATION:
Interest $ 620 $ 585
Income taxes 76 67
</TABLE>
The accompanying notes are an integral part of these unaudited statements.
<PAGE> 167
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF ACCOUNTING POLICIES
The accounting and reporting policies of Duck Hill Bank (the "Bank")
conform to generally accepted accounting principles and, where applicable,
to general practice within the banking industry. The following is a
description of the significant policies:
1. NATURE OF OPERATIONS
Duck Hill Bank operates under a state bank charter and provides full
banking services. It is subject to the regulation of the Federal Deposit
Insurance Corporation and the State of Mississippi. The Bank provides
services primarily to the counties of Montgomery and Grenada, Mississippi.
2. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
3. SECURITIES
Investments in securities are classified into three categories and are
accounted for as follows:
Available-for-Sale Securities
Securities classified as available-for-sale are those securities that are
intended to be held for an indefinite period of time, but not necessarily
to maturity. Any decision to sell a security classified as
available-for-sale would be based on various factors, including movements
in interest rates, liquidity needs, security risk assessments, changes in
the mix of assets and liabilities and other similar factors. These
securities are carried at their estimated fair value, and the net
unrealized gain or loss is reported in stockholders' equity, net of tax,
until realized.
Gains and losses on the sale of available-for-sale securities are
determined using the adjusted cost of the specific security sold.
Amortization of premiums and accretion of discounts are recognized as an
adjustment to interest income.
( Continued )
<PAGE> 168
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)
3. SECURITIES (Continued)
Securities to be Held-to-Maturity
Securities classified as held-to-maturity are those securities for which
there is a positive intent and ability to hold to maturity. These
securities are carried at cost adjusted for amortization of premiums and
accretion of discounts, which are recognized as adjustments to interest
income.
Trading Account Securities
Trading account securities are those securities which are held for the
purpose of selling them at a profit. There were no trading account
securities on hand at December 31, 1996.
4. LOANS
Loans are carried at the principal amount outstanding, net of unearned
interest, and the reserve for loan losses. Interest income on installment
loans is recognized using a method which approximates the interest method.
Interest income on all other loans is recognized based on the principal
balance outstanding and the stated rate of the loan.
Loans are generally placed on a nonaccrual status when principal or
interest is past due ninety days, or when payment in full is not
anticipated. When a loan is placed on nonaccrual status, interest accrued
but not received is generally reversed against interest income. If
collectibility is in doubt, cash receipts on nonaccrual loans are used to
reduce principal rather than recorded as interest income.
Loan origination fees and certain direct origination costs are recognized
currently as income and period costs, respectively, and do not vary
materially from the results that would be recorded using the deferred
method.
5. RESERVE FOR LOAN LOSSES
For financial reporting purposes, the provision for loan losses charged to
operations is based upon management's estimations of the amount necessary
to maintain the reserve at an adequate level, considering losses charged to
the loan portfolio, current economic conditions, credit reviews of the loan
portfolio, and other factors warranting consideration. Reserves for any
impaired loans are generally determined based on collateral values. Loans
are charged against the reserve for loan losses when management believes
the collectibility of the principal is unlikely. The reserve is maintained
at a level believed adequate by management to absorb potential loan losses.
In evaluating the adequacy of the reserve, management makes estimates and
assumptions which may be subject to change.
( Continued )
<PAGE> 169
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF ACCOUNTING POLICIES (Continued)
6. PREMISES AND EQUIPMENT
Premises and equipment are stated at cost, less accumulated depreciation.
The depreciation policy is to provide for depreciation over the estimated
useful lives of the assets using the straight-line and accelerated methods.
Repairs and maintenance expenditures are charged to operating expenses;
major expenditures for renewals and betterments are capitalized and
depreciated over their estimated useful lives.
7. INCOME TAXES
Deferred tax assets and liabilities are recognized for differences between
the financial statement and tax bases of assets and liabilities and are
measured using tax rates expected to apply to taxable income in the year
that these temporary differences reverse.
8. STATEMENT OF CASH FLOWS
For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks and federal funds sold. Generally, federal funds
are sold for a one-day period.
9. OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
In the ordinary course of business, the Bank enters into off-balance sheet
financial instruments consisting of commitments to extend credit, credit
card lines and standby letters of credit. Such financial instruments are
recorded in the financial statements when they are exercised.
10. NET INCOME PER SHARE
Net income per share is based on the weighted average common shares
outstanding of 4,000 shares. The Bank had no arrangements which would be
considered dilutive.
<PAGE> 170
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE B - SECURITIES
Securities at December 31, 1996, consisted of available-for-sale securities
with a carrying amount of $12,322,000. The amortized cost, gross unrealized
gains, gross unrealized losses and estimated fair value of these securities
at December 31, 1996, are as follows:
<TABLE>
<CAPTION>
(In Thousands)
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Available-for-sale securities:
U. S. Treasury securities $ 3,102 $ 30 $ 9 $ 3,123
Obligations of other U. S.
Government agencies 2,915 19 28 2,906
Obligations of states and
municipal subdivisions 803 58 6 855
Mortgage-backed and other
installment obligations 5,371 79 12 5,438
------------- ------------ ------------- -------------
$ 12,191 $ 186 $ 55 $ 12,322
============= ============ ============= =============
</TABLE>
The scheduled maturities of securities available-for-sale at December 31,
1996, are as follows:
<TABLE>
<CAPTION>
(In Thousands)
Estimated
Amortized Fair
Cost Value
-------------- ---------------
<S> <C> <C>
Due in one year or less $ 897 $ 947
Due after one year through five years 4,078 4,100
Due after five years through ten years 1,659 1,653
Due after ten years 186 184
Mortgage-backed securities and other
installment obligations 5,371 5,438
-------------- ---------------
$ 12,191 $ 12,322
============== ===============
</TABLE>
( Continued )
<PAGE> 171
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE B - SECURITIES (Continued)
For the years ended December 31, 1996 and 1995, gross gains of $264,806 and
$122,030, respectively, and gross losses of $585 and $15,556, respectively,
were realized on available-for-sale securities. Included in gains is
$256,819 in 1996 and $122,030 in 1995 collected on bonds issued as
guaranteed investment contracts with Executive Life Insurance Company
(Executive Life). In 1991, the Bank determined that these investments were
permanently impaired as Executive Life was placed into conservatorship and,
as a result, the bonds were written down to their estimated value.
Subsequently, the Bank received collections from the conservator and
collections in excess of the remaining bases have been reported as
securities gains. Management of the Bank is uncertain of any future
collections.
Securities with carrying values of $1,200,000 at December 31, 1996, were
pledged for various purposes as required by law.
Banking regulations define "high-risked mortgage securities" as mortgage
derivative products that are determined through testing to have more
volatility, particularly price volatility, than a benchmark mortgage
pass-through security. It is the policy of the Bank to monitor its mortgage
derivative products through testing to determine if any are considered
"high-risked." At December 31, 1996, securities included no "high-risked
mortgage securities."
NOTE C - LOANS
Loans outstanding include the following types at December 31, 1996:
<TABLE>
<CAPTION>
(In
Thousands)
<S> <C>
Real estate $ 2,824
Agricultural 896
Commercial and industrial 476
Loans to individuals for personal expenditures 1,429
---------
5,625
Unearned interest (144)
Reserve for loan losses (91)
---------
$ 5,390
=========
</TABLE>
At December 31, 1996, the Bank had no loans on which the accrual of
interest had been discontinued.
( Continued )
<PAGE> 172
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE C - LOANS (Continued)
Transactions in the reserve for loan losses for the years ended December
31, 1996 and 1995, were as follows:
<TABLE>
<CAPTION>
(In Thousands)
1996 1995
----------- -----------
<S> <C> <C>
Balance at beginning of year $ 90 $ 85
Additions:
Recoveries 2 5
Provision for loan losses charged to operations 35 10
----------- -----------
127 100
Deductions:
Loans charged off (36) (10)
----------- -----------
Balance at end of year $ 91 $ 90
=========== ===========
</TABLE>
NOTE D - PREMISES AND EQUIPMENT
The detail of premises and equipment at December 31, 1996, is as follows:
<TABLE>
<CAPTION>
(In
Thousands)
----------
<S> <C>
Premises:
Land $ 16
Buildings and improvements 170
Equipment 318
---------
504
Less accumulated depreciation (377)
---------
$ 127
=========
</TABLE>
The amounts charged to operating expense for depreciation totaled $45,639
for 1996.
<PAGE> 173
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE E - REGULATORY MATTERS
The Bank is subject to regulatory capital requirements administered by
federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory, and possibly additional discretionary, actions
by regulators that, if undertaken, could have a direct material effect on
the Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet
specific capital guidelines that involve quantitative measures of assets,
liabilities, and certain off-balance-sheet items as calculated under
regulatory accounting practices. Capital amounts and classifications are
also subject to qualitative judgment by regulators about components, risk
weightings, and other related factors.
To ensure capital adequacy, quantitative measures have been established by
regulators and these require the Bank to maintain minimum amounts and
ratios (set forth in the table below) of total and Tier I capital (as
defined) to risk-weighted assets (as defined), and of Tier I capital to
average adjusted total assets (leverage). Management believes, as of
December 31, 1996, that the Bank exceeds all capital adequacy requirements.
At December 31, 1996, the Bank was categorized by regulators as
well-capitalized under the regulatory framework for prompt corrective
action. A financial institution is considered to be well-capitalized if it
has total risk-based capital of 10% or more, has a Tier I risk-based ratio
of 6% or more, and has a Tier I leverage capital ratio of 5% or more. There
are no conditions or anticipated events that, in the opinion of management,
would change the categorization.
The actual capital amounts and ratios at December 31, 1996, are presented
in the following table. No amount was deducted from capital for
interest-rate risk exposure:
<TABLE>
<CAPTION>
($ In Thousands)
Amount Ratio
----------- -------
<S> <C> <C>
Total risk-based $ 1,851 31.2%
Tier I risk-based 1,777 29.9%
Tier I leverage 1,777 8.9%
</TABLE>
The minimum amounts of capital and ratios as established by banking
regulators at December 31, 1996, were as follows:
<TABLE>
<CAPTION>
($ In Thousands)
Amount Ratio
----------- -------
<S> <C> <C>
Total risk-based $ 475 8.0%
Tier I risk-based 237 4.0%
Tier I leverage 800 4.0%
</TABLE>
Banking regulations also limit the amount of dividends that may be paid
without prior approval of the agencies which regulate the Bank.
<PAGE> 174
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE F - INCOME TAXES
The current and deferred income tax provisions included in the statements
of income for the years ended December 31, 1996 and 1995, are as follows:
<TABLE>
<CAPTION>
(In Thousands)
1996 1995
-------- ---------
<S> <C> <C>
Current tax expense $ 114 $ 74
Deferred tax expense (benefit) (1) 3
-------- ---------
$ 113 $ 77
======== =========
</TABLE>
The reasons for the differences between the federal statutory rates and the
effective rates are as follows:
<TABLE>
<CAPTION>
($ In Thousands)
Years Ended December 31,
---------------------------------------------------------
1996 1995
-------------------------- -------------------------
% of % of
Pretax Pretax
Amount Income Amount Income
----------- ---------- ----------- --------
<S> <C> <C> <C> <C>
Tax at statutory rate $ 133 34% $ 87 34%
Change in rates resulting from:
Tax-exempt interest (13) (3%) (11) (4%)
Nondeductible expenses 2 -- 2 --
Other (9%) (2) (1) --
---- ----------- ---------- ----------- --------
Actual Tax Provision $ 113 29% $ 77 30%
=========== ========== =========== ========
</TABLE>
The components of the net deferred tax liability included in the financial
statements at December 31, 1996, are as follows:
<TABLE>
<CAPTION>
(In
Thousands)
<S> <C>
Deferred tax asset:
Reserve for loan losses $ 17
State net operating loss carryover 12
--------
29
--------
Deferred tax liability:
Premises and equipment 13
Unrealized gain on available-for-sale securities 44
Securities 17
--------
74
--------
Net deferred tax liability $ 45
========
</TABLE>
The Bank's tax returns for the years 1995 and 1996 are being examined by
the Internal Revenue Service. Based upon preliminary findings, management
is of the opinion that any adjustments will not be significant.
<PAGE> 175
DUCK HILL BANK
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE G - RELATED PARTY TRANSACTIONS
In the normal course of business, the Bank makes loans to its directors and
officers and to companies in which they have a significant ownership
interest. These loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons. Such loans amounted to
approximately $118,000 at December 31, 1996. In the opinion of management,
such loans are consistent with sound banking policies and are within
applicable regulatory and lending limitations.
NOTE H - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, there are outstanding various commitments
and contingent liabilities, such as guaranties, commitments to extend
credit life, etc., which are not reflected in the accompanying financial
statements at December 31, 1996. The Bank had no outstanding letters of
credit, and had made loan commitments of approximately $34,000. The Bank's
exposure to credit loss in the event of nonperformance by the other party
to the financial instrument for commitments to extend credit and letters of
credit is represented by the contractual amount of the instrument. The Bank
uses the same credit policies in making commitments and conditional
obligations as it does for its lending activities. No significant losses
are anticipated as a result of these transactions.
NOTE I - CONCENTRATION OF CREDIT RISK
Most of the Bank's loans, commitments, and letters of credit have been
granted in the Bank's primary market area. Generally, borrowers are also
depositors of the Bank. Investments in states and municipal securities also
include governmental entities within the Bank's market area. The
concentrations of credit by type of loan are set forth in Note C. The
distribution of commitments to extend credit approximates the distribution
of loans outstanding. Letters of credit were granted primarily to
commercial borrowers.
<PAGE> 176
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Charter of the Registrant provides as follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the
Corporation may indemnify or purchase and maintain insurance to
indemnify any of its directors, officers, employees or agents and any
persons who may serve at the request of the Corporation as directors,
officers, employees, trustees or agents of any other corporation, firm,
association, national banking association, state-chartered bank, trust
company, business trust, organization or any other type of entity
whether or not the Corporation shall have any ownership interest in
such entity. Such indemnification(s) may be provided for in the Bylaws,
or by resolution of the Board of Directors or by appropriate contract
with the person involved.
Article V, INDEMNIFICATION, of the Registrant's Amended and Restated
Bylaws provides as follows:
The Corporation does hereby indemnify its directors and
officers to the fullest extent permitted by the laws of the State of
Tennessee and by ARTICLE TWELFTH of its Charter. The Corporation may
indemnify any other person to the extent permitted by the Charter and
by applicable law.
Indemnification of corporate directors and officers is
governed by Sections 48-18-501 through 48-18-509 of the Tennessee
Business Corporation Act (the "Act"). Under the Act, a person may be
indemnified by a corporation against judgments, fines, amounts paid in
settlement and reasonable expenses (including attorneys' fees) actually
and necessarily incurred by him in connection with any threatened or
pending suit or proceeding or any appeal thereof (other than an action
by or in the right of the corporation), whether civil or criminal, by
reason of the fact that he is or was a director or officer of the
corporation or is or was serving at the request of the corporation as a
director or officer, employee or agent of another corporation of any
type or kind, domestic or foreign, if such director or officer acted in
good faith for a purpose which he reasonably believed to be in the best
interest of the corporation and, in criminal actions or proceedings
only, in addition, had no reasonable cause to believe that his conduct
was unlawful. A Tennessee corporation may indemnify a director or
officer thereof in a suit by or in the right of the corporation against
amounts paid in settlement and reasonable expenses, including
attorneys' fees, actually and necessarily incurred as a result of such
suit unless such director or officer did not act in good faith or with
the degree of diligence, care and skill which ordinarily prudent men
exercise under similar circumstances and in like positions.
A person who has been wholly successful, on the merits or
otherwise, in the defense of any of the foregoing types of suits or
proceedings is entitled to indemnification for the foregoing amounts. A
person who has not been wholly successful in any such suit or
proceeding may be indemnified only upon the order of a court or a
finding that the director or officer met the required statutory
standard of conduct by (i) a majority vote of a disinterested quorum of
the Board of Directors, (ii) the Board of Directors based upon the
written opinion of independent legal counsel to such effect, or (iii) a
vote of the shareholders.
II-1
<PAGE> 177
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 Agreement to Merge, dated as of November 6, 1997, by and between Union
Planters Corporation, Union Planters Holding Corporation, Union Planters Bank, National
Association and Duck Hill Bank. (Included as Appendix A to the Proxy Statement included as part
of this Registration Statement)
2.2 Agreement to Merge of Duck Hill Bank into and with Union Planters Bank, National Association
(Included as Appendix B to the Proxy Statement included as part of this Registration Statement)
4.1 Restated Charter of Union Planters Corporation. (Incorporated by reference to Exhibit 3(a) of
the UPC March 31, 1998 Form 10-Q/A)
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
23.1 Consent of Price Waterhouse LLP
23.2 Consent of T. E. Lott & Company, independent auditors for Duck Hill Bank
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)
24.1 Power of Attorney (contained on the signature page hereof)
99.1 Form of proxy of Duck Hill Bank
</TABLE>
II-2
<PAGE> 178
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) That for purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(3) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
(5) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(6) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it became
effective.
(7) That prior to any public reoffering of the securities registered
hereunder through the use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
(8) That every prospectus: (i) that is filed pursuant to Paragraph (7)
immediately preceding, or (ii) that purports to meet the requirements of Section
10(a)(3) of the Act and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 179
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 16th day of April, 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, 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 April 16, 1998
- ----------------------------------- Officer, Director (Principal
Benjamin W. Rawlins, Jr. Executive Officer)
/S/Jackson W. Moore President, Chief Operating Officer, April 16, 1998
- ----------------------------------- Director
Jackson W. Moore
/S/John W. Parker Executive Vice President and April 16, 1998
- ----------------------------------- Chief Financial Officer
John W. Parker (Principal Financial Officer)
/S/M. Kirk Walters Senior Vice President, Treasurer, April 16, 1998
- ----------------------------------- and Chief Accounting Officer
M. Kirk Walters
</TABLE>
II-4
<PAGE> 180
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/S/Albert M. Austin Director April 16, 1998
- ----------------------------------
Albert M. Austin
/S/Marvin E. Bruce Director April 16, 1998
- ----------------------------------
Marvin E. Bruce
/S/George W. Bryan Director April 16, 1998
- ----------------------------------
George W. Bryan
/S/James E. Harwood Director April 16, 1998
- ----------------------------------
James E. Harwood
/S/Parnell S. Lewis, Jr. Director April 16, 1998
- ----------------------------------
Parnell S. Lewis, Jr.
/S/C.J. Lowrance, III Director April 16, 1998
- ----------------------------------
C. J. Lowrance, III
/S/Stanley D. Overton Director April 16, 1998
- ----------------------------------
Stanley D. Overton
/S/Dr. V. Lane Rawlins Director April 16, 1998
- ----------------------------------
Dr. V. Lane Rawlins
/S/Donald F. Schuppe Director April 16, 1998
- ----------------------------------
Donald F. Schuppe
/S/David M. Thomas Director April 16, 1998
- ----------------------------------
David M. Thomas
/S/Richard A. Tripper, Jr Director April 16, 1998
- ----------------------------------
Richard A. Tripper, Jr.
/S/ Spence L. Wilson Director April 16, 1998
- ----------------------------------
Spence L. Wilson
</TABLE>
II-5
<PAGE> 181
EXHIBIT INDEX
The following exhibits are filed herein or have been, as
noted, previously filed:
<TABLE>
<CAPTION>
Exhibit No. Description
- -------------- ---------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Agreement to Merge, dated as of November 6, 1997, by and between Union Planters
Corporation, Union Planters Holding Corporation, Union Planters Bank, National Association
and Duck Hill Bank. (Included as Appendix A to the Proxy Statement included as part of this
Registration Statement)
2.2 Agreement to Merge of Duck Hill Bank into and with Union Planters Bank, National Association
(Included as Appendix B to the Proxy Statement included as part of this Registration Statement)
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
23.1 Consent of Price Waterhouse LLP
23.2 Consent of T. E. Lott & Company, independent auditors for Duck Hill Bank
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)
24.1 Power of Attorney (contained on the signature page hereof)
99.1 Form of proxy of Duck Hill Bank
</TABLE>
<PAGE> 1
EXHIBIT 5.1
LOGO
UNION PLANTERS CORPORATION
June 17, 1998
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 42,403 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 42,403 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 6, 1997, by and
between UPC, Union Planters Holding Corporation ("UPHC"), Union Planters Bank,
National Association and Duck Hill Bank. ("DHB") (the "Agreement").
For purposes of rendering the opinion expressed herein, the undersigned has
examined UPC's Charter and all amendments thereto; UPC's Bylaws and amendments
thereto; the Merger Agreement and such of UPC's corporate records as the
undersigned has deemed necessary and material to rendering the undersigned's
opinion. The undersigned has relied upon certificates of public officials and
representations of UPC officials, and has assumed that all documents examined by
the undersigned as originals are authentic, that all documents submitted to the
undersigned as photocopies are exact duplicates of original documents, and that
all signatures on all documents are genuine.
Further, the undersigned is familiar with and has supervised all corporate
action taken in connection with the authorization of the issuance and offering
of the subject securities.
Based upon and subject to the foregoing and subsequent assumptions,
qualifications and exceptions, it is the undersigned's opinion that:
1. UPC is a duly organized and validly existing corporation in good standing
under the laws of the State of Tennessee and has all requisite power and
authority to issue, sell and deliver the subject securities, and to carry on its
business and own its property; and
2. The shares of UPC Common Stock to be issued by UPC pursuant to the Merger
have or will have been duly authorized and when issued by UPC in accordance with
the Agreement, such shares of UPC Common Stock will be fully paid and
nonassessable.
The opinion expressed above is limited by the following assumptions,
qualifications and exceptions.
(a) The undersigned is licensed to practice law only in the State of
Tennessee and expresses no opinion with respect to the effect of any laws other
than those of the State of Tennessee and of the United States of America.
<PAGE> 2
(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 is limited to the legal matters expressly set forth
herein, and no opinion is to be implied or inferred beyond the legal matters
expressly so addressed.
The undersigned hereby consents to the undersigned being named as a party
rendering a legal opinion under the caption "Legal Opinions" in the Prospectus
constituting part of the Registration Statement and to the filing of this
opinion with the Securities and Exchange Commission as well as all state
regulatory bodies and jurisdictions where qualification is sought for the sale
of the subject securities.
The undersigned is an officer of, and receives compensation from UPC and
therefore is not independent from UPC.
Very truly yours,
UNION PLANTERS CORPORATION
By: /s/ E. James House, Jr.
---------------------------------
E. James House, Jr.
Manager, Legal Department
<PAGE> 1
EXHIBIT 8.1
[WYATT, TARRANT & COMBS LETTERHEAD]
June 19, 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 Duck Hill Bank, a Mississippi corporation ("DHB"), with and into Union
Planters National Bank, a Tennessee corporation and a wholly-owned second-tier
subsidiary of UPC ("UPB"), pursuant to the terms of the Reorganization Agreement
and Agreement to Merge by and between UPC, UPB, Union Planters Holding
Corporation, a Tennessee corporation and the sole shareholder of UPB and a
wholly owned subsidiary of UPC ("Holdings") and DHB dated November 6, 1997 (the
"Merger Agreement") and related Agreement to Merger between UPC, UPB and DHB
(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.
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, UPB and DHB
contained in letters to us dated June 17, 1998, copies of which are attached as
Exhibit A and Exhibit B to this opinion (the "Representation Letters"). The
Representation Letters address various factual matters relevant to the
qualification of the Merger as a tax-
<PAGE> 2
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 DHB 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 DHB 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 DHB 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 DHB 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.
You should note that this opinion represents only our best judgement as
to the expected federal income tax consequences of the Merger and is not binding
on the Internal Revenue Service ("IRS") or the courts. You should also note that
there is a lack of clear legal precedent dealing with the tax characterization
of the Merger. The IRS may challenge the conclusions stated in this opinion and
the shareholders of DHB may incur the cost and expenses 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 DHB and indirectly UPC.
Subject to the qualifications, assumptions and conditions provided
herein, we are of the opinion that:
1. For federal income tax purposes, the Merger will be viewed as an
acquisition by UPC of substantially all of the assets of DHB solely in exchange
for UPC Common Stock and the assumption of all of the liabilities of DHB
followed by (i) the transfer of the assets and all of the liabilities acquired
from DHB by UPC to Holdings, and (ii) the transfer of the assets and all of the
liabilities acquired from DHB by Holdings to UPB. Rev. Rul. 70-224, 1970-1 C.B.
79, Rev. Rul. 64-73, 1964-1 (Part 1) C.B. 142; Rev. Rul. 58-93, 1958-1 C.B. 188.
2. The acquisition by UPC of substantially all the assets and
liabilities of DHB solely in exchange for UPC Common Stock will constitute a
reorganization within the meaning of Section 368(a)(1)(C) of the Code. Pursuant
to Section 368(a)(2)(C), the Merger will not be disqualified by reason of the
transfer of the DHB assets and liabilities from UPC to Holdings, or the transfer
of the DHB assets and liabilities from Holdings to UPB, such transfers to be
accomplished by the merger of DHB with and into UPB. Code Section 368(a)(2)(C)
and Rev. Rul. 64-73, 1964-1 (Part 1) C.B. 142.
3. UPC and DHB will each be "a party to a reorganization" within the
meaning of Section 368(b) of the Code.
4. No gain or loss will be recognized by DHB as a result of the Merger.
5. No gain or loss will be recognized by UPC, Holdings or UPB as a
result of the Merger.
6. No gain or loss will be recognized by the shareholders of DHB as a
result of the exchange of DHB 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 DHB Common Stock is a capital
asset in the hands of the respective DHB 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 DHB Common Stock allocable to the
fractional share.
<PAGE> 3
7. The tax basis of UPC Common Stock to be received by the shareholders
of DHB will be the same as the tax basis of the DHB Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received).
8. The holding period of the UPC Common Stock to be received by
shareholders of DHB will include the holding period of the DHB Common Stock
surrendered in exchange therefor, provided the DHB shares were held as a capital
asset by the shareholders of DHB on the date of the exchange.
9. A shareholder of DHB who perfects his dissenter's rights and who
receives payment of the fair market value of his shares of DHB 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 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.
This opinion is provided to you solely for purposes of complying with
the requirements of Item 21(a) of Form S-4 under the Act and Section 8.1(h) of
the Merger Agreement. We hereby consent to the use of this opinion as an exhibit
to the Registration Statement, 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.
Very truly yours,
WYATT, TARRANT & COMBS
/S/WYATT TARRANT & COMBS
------------------------
<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 of the year ended December 31,
1997. We also consent to the reference to us under the heading "EXPERTS" in such
Proxy Statement/Prospectus.
PRICE WATERHOUSE LLP
/s/ PRICE WATERHOUSE LLP
- ------------------------
Memphis, Tennessee
June 19, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Prospectus/Proxy Statement
constituting part of this Registration Statement on Form S-4 of Union Planters
Corporation of our report dated March 10, 1998, relating to the financial
statements of Duck Hill Bank as and for the year ended December 31, 1997, which
appears in such Prospectus/Proxy Statement. We also consent to the reference to
us under the heading "Experts" in such Prospectus/Prospectus/Proxy Statement.
T. E. LOTT & COMPANY
/S/ T. E. LOTT & COMPANY
- ----------------------------------
Columbus, Mississippi
June 16, 1998
<PAGE> 1
EXHIBIT 99.1
DUCK HILL BANK
The undersigned hereby constitutes and appoints Norman L. Ezell or
Betty Bowen, or either of them, as proxies, each with full power of
substitution, to vote the number of shares of common stock of Duck Hill Bank
("DHB") which the undersigned would be entitled to vote if personally present at
the Special Meeting of DHB Shareholders to be held at DHB, 101 South State
Street, Duck Hill, Mississippi at 4:00 p.m., local time, Wednesday, July 29,
1998, and at any adjournment or postponement thereof (the "Special Meeting")
upon the proposals described in the Proxy Statement/Prospectus and the Notice of
Special Meeting of Shareholders, both dated June _____, 1998, the receipt of
which is acknowledged in the manner specified below.
1. MERGER. To consider and vote upon a proposal to approve an Agreement
and Agreement to Merge, dated as of November 6, 1997 (the "Agreement"),
by and between DHB, Union Planters Corporation, a Tennessee corporation
("UPC"), and Union Planters Holding Corporation, a wholly-owned
subsidiary of UPC ("UPHC"), and Union Planters Bank, National
Association, a national banking association and wholly-owned subsidiary
of UPHC ("UPB"), and the related Agreement to Merge (the "Agreement to
Merge"), by and between DHB, UPC, UPHC and UPB, pursuant to which (i)
DHB will merge (the "Merger") with and into UPB, with the effect that
UPB shall be the corporation surviving from the Merger, and (ii) each
share of the $50.00 par value common stock of DHB ("DHB Common Stock")
issued and outstanding at the effective time of the Merger will be
converted into 10.6008 shares of the $5.00 par value common stock of
UPC, and the associated "Preferred Share Rights" (as hereinafter
defined), subject to possible adjustment, and cash in lieu of any
fractional share, all as more fully described in the accompanying Proxy
Statement/Prospectus.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 ABOVE.
Please sign exactly as name appears below. When shares are held jointly, both
should sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
DATED: ____________________, 1998
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
DUCK HILL BANK
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
