<PAGE> 1
As filed with the Securities and Exchange Commission on November 20, 1998
Registration No. 333-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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UNION PLANTERS CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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TENNESSEE 6712 62-0859007
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)
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7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6000
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
E. JAMES HOUSE, JR.
SECRETARY AND MANAGER OF THE LEGAL DEPARTMENT
UNION PLANTERS CORPORATION
7130 GOODLETT FARMS PARKWAY
MEMPHIS, TENNESSEE 38018
(901) 580-6596
(Name, address, including ZIP code, and telephone number, including area
code, of agent for service)
WITH COPIES TO:
Stewart E. Conner, Esq. Dennis R. Wendte, Esq.
Wyatt, Tarrant & Combs Barack, Ferrazzano, Kirschbaum, Perlman
2800 Citizens Plaza & Nagelberg
Louisville, Kentucky 40202 333 West Wacker Drive, Suite 2700
(502) 562-7223 Chicago, Illinois 60606
(312) 984-3100
Approximate date of commencement of proposed sale of securities to the public:
As soon as practicable after this Registration Statement becomes effective and
after conditions described in the Agreement and Plan of Merger have been
satisfied.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Title of each class Proposed maximum Proposed maximum
of securities Amount offering price aggregate Amount of
to be registered to be Registered per unit(1) offering price(1) registration fee
<S> <C> <C> <C> <C>
Common Stock, 1,450,000 shares $17.625 $25,556,250 $7,104.64
$5.00 par value (and associated
(and associated Preferred Share Rights)
Preferred Share
Rights)
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(1) Estimated solely for the purpose of calculating the registration fee
and based, pursuant to Rule 457(c) and (f) under the Securities Act of
1933, as amended, on the closing sales price of common stock of First
Mutual Bancorp, Inc. as reported on the Nasdaq National Market System
on November 18, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETER MINE.
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<PAGE> 2
PROXY STATEMENT
FOR THE SPECIAL MEETING PROSPECTUS
OF STOCKHOLDERS OF UNION PLANTERS CORPORATION
FIRST MUTUAL BANCORP, INC.
This proxy statement-prospectus is being provided to you by the board
of directors of First Mutual Bancorp, Inc. We have signed certain agreements
with Union Planters Corporation for the merger of First Mutual into a subsidiary
of Union Planters, and we have called a special meeting of stockholders to
approve these agreements and the merger transaction. If the merger is completed,
you will receive shares of Union Planters common stock in exchange for your
shares of First Mutual common stock. We cannot complete the merger unless First
Mutual stockholders approve it.
If we complete the merger, you will receive shares of Union Planters
common stock having a market value equal to $18.50 for each of your shares of
First Mutual common stock. Union Planters common stock is traded on the New York
Stock Exchange under the symbol "UPC". The number of shares of Union Planters
common stock you will receive will be determined by dividing $18.50 by the
average of the closing sales prices of Union Planters common stock for the 20
consecutive trading days prior to the third business day before the day we
complete the merger. If the exchange results in your owning any fraction of a
share of Union Planters common stock, you will receive cash (without interest)
instead of stock for that fraction. On November 13, 1998, the closing price of
Union Planters common stock was $48.00. If the average trading price of Union
Planters common stock during the specified trading period is $48.00, you will
receive .385 share of Union Planters common stock for each of your shares of
First Mutual common stock.
This proxy statement-prospectus provides you with detailed information
about the proposed merger. In addition, you may obtain information about First
Mutual and Union Planters from documents filed with the Securities and Exchange
Commission. We encourage you to carefully read this entire document and the
other documents that we refer you to in this document.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SHARES OF UNION PLANTERS COMMON
STOCK TO BE ISSUED IN THE MERGER OR DETERMINED IF THIS PROXY
STATEMENT-PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
SHARES OF UNION PLANTERS COMMON STOCK 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.
The date of this proxy statement-prospectus is November __, 1998. It is
first being mailed to stockholders on November __, 1998.
<PAGE> 3
First Mutual Bancorp, Inc.
135 East Main Street
Decatur, Illinois 62523
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY __, 1999
First Mutual Bancorp, Inc. will hold a special meeting of stockholders at
the Decatur Club, 158 West Prairie Avenue, in Decatur, Illinois, at 2:00 p.m.
local time on January __, 1999, to vote on:
1. The Agreement and Plan of Reorganization, dated as of July 2, 1998,
between First Mutual Bancorp, Inc. and Union Planters Corporation, and
the related Plan of Merger, dated July 2, 1998, between First Mutual
Bancorp, Inc. and Union Planters Holding Corporation, a wholly owned
subsidiary of Union Planters Corporation, and the transactions
contemplated by that agreement and plan. These transactions include
the merger of First Mutual into Union Planters Holding Corporation.
2. Any other matters that properly come before the special meeting, or
any adjournments or postponements of the special meeting.
Record holders of First Mutual common stock at the close of business on
November 6, 1998, will receive notice of and may vote at the special meeting,
including any adjournments or postponements. The Agreement and Plan of
Reorganization and related Plan of Merger require approval by the holders of a
majority of the outstanding shares of First Mutual common stock.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting, please take the time to vote by completing and mailing the enclosed
proxy card. If you sign, date and mail your proxy card without indicating how
you want to vote, we will vote your proxy in favor of the merger. If you do not
return your card, the effect will be a vote against the merger.
BY ORDER OF THE BOARD OF DIRECTORS
----------------------------------
G. Lynn Brinkman, Secretary
November __, 1998
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE AGREEMENT AND PLAN OF REORGANIZATION AND PLAN OF MERGER.
<PAGE> 4
TABLE OF CONTENTS
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Page
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SUMMARY .........................................................................................................3
INTRODUCTION.....................................................................................................21
SPECIAL MEETING OF FIRST MUTUAL STOCKHOLDERS.....................................................................21
Date, Place, Time, and Purpose..........................................................................21
Record Date, Voting Rights, Required Vote, and Revocability Of Proxies..................................21
Solicitation of Proxies.................................................................................23
Recommendation..........................................................................................23
DESCRIPTION OF TRANSACTION.......................................................................................23
General ...............................................................................................23
Effect of the Merger on Options.........................................................................24
Background of and Reasons for the Merger................................................................27
Opinion of First Mutual's Financial Advisor......................................................................32
Effective Time of the Merger............................................................................39
Dissenters' Rights......................................................................................40
Distribution of Union Planters Stock Certificates.......................................................40
Conditions to Consummation of the Merger................................................................41
Regulatory Approval.....................................................................................42
Waiver, Amendment, and Termination......................................................................43
Conduct of Business Pending the Merger..................................................................44
Management and Operations After the Merger..............................................................45
Interests of Certain Persons in the Merger..............................................................45
Accounting Treatment....................................................................................49
Expenses and Fees.......................................................................................49
Resales of Union Planters Common Stock..................................................................49
Option Agreement........................................................................................50
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS...................................................................54
Anti-Takeover Provisions Generally......................................................................54
Authorized Capital Stock................................................................................55
Amendment of Charter and Bylaws.........................................................................56
Director Removal........................................................................................57
Limitations on Director Liability.......................................................................57
Indemnification.........................................................................................58
Special Meetings of Stockholders........................................................................60
Stockholder Nominations and Proposals...................................................................60
Business Combinations...................................................................................61
Dissenters' Rights of Appraisal.........................................................................65
Dividends...............................................................................................65
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COMPARATIVE MARKET PRICES AND DIVIDENDS..........................................................................66
BUSINESS OF FIRST MUTUAL.........................................................................................68
Beneficial Ownership of First Mutual Common Stock.......................................................68
BUSINESS OF UNION PLANTERS.......................................................................................69
General ...............................................................................................69
Recent Developments.....................................................................................70
CERTAIN REGULATORY CONSIDERATIONS................................................................................73
General ...............................................................................................73
Payment of Dividends....................................................................................76
Capital Adequacy........................................................................................77
Support of Subsidiary Institutions......................................................................78
Prompt Corrective Action................................................................................79
DESCRIPTION OF UNION PLANTERS CAPITAL STOCK......................................................................81
Union Planters Common Stock.............................................................................82
Union Planters Preferred Stock..........................................................................83
OTHER MATTERS....................................................................................................84
STOCKHOLDER PROPOSALS............................................................................................84
EXPERTS ........................................................................................................84
OPINIONS ........................................................................................................84
WHERE YOU CAN FIND MORE INFORMATION..............................................................................85
Appendix A Agreement and Plan of Reorganization..........................................................A-1
Appendix B Plan of Merger................................................................................B-1
Appendix C Opinion of Robert W. Baird & Co., Inc.........................................................C-1
</TABLE>
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<PAGE> 6
PLEASE NOTE
We have not authorized anyone to provide you with any information other
than the information included in this document and the documents we refer you
to. If someone provides you with other information, please do not rely on it as
being authorized by us.
This proxy statement-prospectus has been prepared as of November __,
1998. There may be changes in the affairs of Union Planters or First Mutual
since that date which are not reflected in this document.
As used in this proxy statement-prospectus, the term "Union Planters"
refers to Union Planters Corporation and, where the context requires, to Union
Planters and its subsidiaries, and the term "First Mutual" refers to First
Mutual Bancorp, Inc., and, where the context requires, to First Mutual and its
subsidiaries.
HOW TO OBTAIN ADDITIONAL INFORMATION
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT UNION PLANTERS AND FIRST MUTUAL THAT IS NOT INCLUDED
IN OR DELIVERED WITH THIS DOCUMENT. YOU CAN OBTAIN FREE COPIES OF THIS
INFORMATION BY WRITING OR CALLING:
FOR UNION PLANTERS DOCUMENTS: FOR FIRST MUTUAL DOCUMENTS:
E. James House, Jr. G. Lynn Brinkman
Secretary and Manager of the Legal Department Secretary
Union Planters Corporation First Mutual Bancorp, Inc.
7130 Goodlett Farms Parkway 135 East Main Street
Memphis, Tennessee 38018 Decatur, Illinois 62523
(telephone (901) 580-6584) (telephone (217) 429-2306)
IN ORDER TO OBTAIN TIMELY DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST
THE INFORMATION BY DECEMBER __, 1998.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements about Union Planters
and First Mutual and about Union Planters following the merger and other
acquisitions by Union Planters. These statements can be identified by our use of
words like "expect", "may", "could", "intend", "project", "estimate" or
"anticipate". These forward-looking statements reflect our current views, but
they are based on assumptions and are subject to risks, uncertainties and other
factors.
These factors include the following:
(1) expected cost savings from the merger and the other acquisitions
cannot be fully realized;
<PAGE> 7
(2) deposit attrition, customer loss, or revenue loss following the merger
and the other acquisitions is greater than expected;
(3) competitive pressure in the banking industry increases significantly;
(4) costs or difficulties related to the integration of the businesses of
Union Planters and the institutions to be acquired are greater than
expected;
(5) changes in the interest rate environment reduce margins;
(6) general economic conditions, either nationally or regionally, are less
favorable than expected, resulting in, among other things, a
deterioration in credit quality;
(7) changes in the regulatory environment;
(8) changes in business conditions and inflation;
(9) changes in the securities markets; and
(10) disruptions of the operations of Union Planters, First Mutual or any
of their 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-prospectus have not been examined or compiled by the independent
public accountants of Union Planters and First Mutual, nor have our independent
accountants applied any procedures to our estimates. 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
Union Planters after the merger and the other acquisitions is included in the
SEC filings incorporated by reference in this proxy statement-prospectus.
2
<PAGE> 8
SUMMARY
This summary highlights selected information from this proxy
statement-prospectus and may not contain all of the information that is
important to you. You should carefully read this entire document and the other
documents we refer to in this document. These will give you a more complete
description of the transaction we are proposing. For more information about the
two companies, see "WHERE YOU CAN FIND MORE INFORMATION" on page 83. We have
included page references in this summary to direct you to other places in this
proxy statement-prospectus where you can find a more complete description of the
topics we have summarized.
THE COMPANIES (SEE PAGE 66 FOR FIRST MUTUAL, PAGE 67 FOR UNION PLANTERS)
First Mutual Bancorp, Inc.
135 East Main Street
Decatur, Illinois 62523
(217) 429-2306
First Mutual is a bank holding company incorporated in Delaware. First
Mutual, through its wholly owned subsidiary, First Mutual Bank, S.B., conducts a
complete range of commercial and personal banking activities in central
Illinois. In addition to its main office in Decatur, Illinois, the bank operates
13 branches in seven counties in Illinois. As of September 30, 1998, First
Mutual had assets of approximately $371 million, loans of approximately $297
million, deposits of approximately $309 million, and stockholders' equity of
approximately $56 million.
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
(901) 580-6000
Union Planters is a bank holding company incorporated in Tennessee.
Through Union Planters Bank, National Association, its principal bank
subsidiary, and various other banking and bank related subsidiaries, Union
Planters provides a diversified range of financial services in the communities
in which it operates. It maintains 801 banking offices and 1,000 automated
teller machines.
Union Planters considers acquisitions an important part of its business
strategy and expects that they will continue to be important in the future.
During the period beginning January 1, 1994 and ending September 30, 1998, Union
Planters completed 43 acquisitions adding approximately $26.4 billion to Union
Planters' assets. Union Planters also has pending acquisitions to acquire 5
financial institutions, not including First Mutual, in four states, and an
agreement to purchase 56 branches and assume deposit liabilities of
approximately $1.8 billion in Indiana ("Indiana Branch Purchase'). These other
pending acquisitions, not including First Mutual, represent combined total
assets of approximately $3.2 billion at September 30, 1998.
3
<PAGE> 9
On September 30, 1998, Union Planters had consolidated assets of
approximately $30.5 billion, consolidated loans of approximately $19.7 billion,
consolidated deposits of approximately $23.3 billion, and consolidated
stockholders' equity of approximately $2.9 billion.
Union Planters Holding Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
(902) 580-6000
Union Planters Holding Corporation is a wholly owned subsidiary of
Union Planters. It is a bank holding company. Union Planters owns most of its
banking subsidiaries, including Union Planters Bank, National Association,
through Union Planters Holding Corporation. The directors and officers of Union
Planters Holding Corporation are officers of Union Planters.
THE MERGER (SEE PAGE 23)
Union Planters proposes to acquire First Mutual by merging First Mutual
with Union Planters Holding Corporation. First Mutual stockholders will receive
shares of Union Planters common stock. After the merger, First Mutual's business
will continue to be conducted by Union Planters Holding Corporation as the
surviving corporation in the merger. The agreement and plan of reorganization,
attached to this proxy statement-prospectus as Appendix A, is an agreement
between Union Planters and First Mutual and governs the transaction. The plan of
merger, which is attached to the agreement and plan of reorganization as an
exhibit, is an agreement between Union Planters Holding Corporation and First
Mutual that governs the merger of these two corporations. The agreement and plan
of reorganization and related plan of merger were entered into on July 2, 1998.
WHAT FIRST MUTUAL STOCKHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 23)
If we complete the merger, you will receive shares of Union Planters
common stock having a value of $18.50 for each share of your First Mutual common
stock. The number of shares of Union Planters common stock you receive will be
based on the average of the prices of Union Planters common stock in the 20
consecutive trading days before the third business day prior to the completion
of the merger.
Union Planters will not issue any fractions of a share of common stock.
Rather, Union Planters will pay cash (without interest) for any fractional share
interest any First Mutual stockholder would otherwise receive in the merger. The
cash payment will be in an amount equal to the fraction multiplied by the
closing price of one share of Union Planters common stock on the New York Stock
Exchange on the day the merger is completed.
4
<PAGE> 10
EFFECT OF THE MERGER ON EMPLOYEE OPTIONS (SEE PAGE 24)
First Mutual has granted certain options to acquire First Mutual common
stock under its stock option plans. First Mutual has agreed to cause each option
to be exercised or canceled in exchange for a cash payment to the option holder
prior to the completion of the merger.
OWNERSHIP OF UNION PLANTERS AFTER THE MERGER
Based on the market value of Union Planters common stock on November 13,
1998, Union Planters will issue approximately 1,359,269 shares of Union Planters
common stock to First Mutual stockholders in the merger. Based on that number,
after the merger, First Mutual stockholders will own approximately 1.0% of the
outstanding shares of Union Planters common stock. This information is based on
the number of shares of First Mutual and Union Planters common stock outstanding
on October 31, 1998. It does not reflect shares that Union Planters may issue
due to other pending acquisitions or due to the exercise of Union Planters stock
options, or for other purposes.
NO DISSENTERS' RIGHTS (SEE PAGE 39)
Under Delaware law, First Mutual stockholders will NOT have the statutory
right to dissent from the merger and to receive the fair value of their shares
of First Mutual common stock if the merger is approved by First Mutual's
stockholders and completed.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (SEE PAGE 24)
We expect that, for federal income tax purposes, First Mutual stockholders
will not immediately recognize any gain or loss upon the exchange of their First
Mutual shares solely for shares of Union Planters common stock. But you may
recognize taxable gain or loss related to any cash you receive in lieu of a
fractional share of Union Planters common stock. See the discussion under "What
You Will Receive in the Merger." Before the merger can be completed, Union
Planters and First Mutual expect to receive an opinion of Union Planters'
counsel, Wyatt, Tarrant & Combs, substantially to this effect.
Tax matters are very complicated and the tax consequences to you of the
merger will depend on your own situation. You should consult your own tax
advisors to determine the effect of the merger on you under federal, state,
local, and foreign tax laws.
COMPARATIVE MARKET PRICES OF COMMON STOCK
Shares of Union Planters common stock are traded on the New York Stock
Exchange under the symbol "UPC". Shares of First Mutual common stock are quoted
on the Nasdaq National Market System under the symbol "FMBD." On July 1, 1998,
the last trading day before we announced the execution of the agreement, Union
Planters common stock closed at $59.94.
5
<PAGE> 11
per share, and First Mutual common stock closed at $17.50 per share. On November
__, 1998, the latest practicable date before the mailing of this proxy
statement-prospectus, Union Planters common stock closed at $_______ per share,
and First Mutual common stock closed at $______ per share.
We can provide no assurance as to what the market price of the Union
Planters common stock will be if and when the merger is completed. However, you
will receive shares of Union Planters common stock having a market value of
$18.50 for each share of First Mutual common stock which you own. The exact
number of shares of Union Planters common stock you receive will depend on the
market value of Union Planters common stock for the 20 consecutive trading days
before the third business day before the day we complete the merger. You should
obtain current stock price quotations for Union Planters common stock and First
Mutual common stock before deciding whether to vote for the merger.
OUR REASONS FOR THE MERGER (SEE PAGE 29)
We believe that the merger will result in our stockholders receiving stock
in a high quality company at a favorable exchange ratio. In addition, we
anticipate that Union Planters will be better able to compete in the changing
and competitive financial services industry than First Mutual on its own.
FAIRNESS OPINION OF FIRST MUTUAL'S FINANCIAL ADVISOR (SEE PAGE 32)
In deciding to approve the merger, we considered an opinion from our
financial advisor, Robert W. Baird & Co., Inc., that the price to be paid to
First Mutual stockholders is fair, from a financial point of view to the First
Mutual stockholders (other than Union Planters and its affiliates). The full
text of this opinion is attached as Appendix C to this proxy
statement-prospectus. We encourage you to read this opinion.
SPECIAL MEETING OF STOCKHOLDERS (SEE PAGE 21)
The special meeting will be held at the Decatur Club, located at 135 West
Prairie Avenue, Decatur, Illinois, at 2:00 p.m., local time, on January __,
1998. At the special meeting, we will ask you:
(1) to approve the merger, the agreement and plan of reorganization and
the related plan of merger; and
(2) to act on any other matters that may be put to a vote at the special
meeting.
6
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VOTING RIGHTS AT THE SPECIAL MEETING (SEE PAGE 21)
You are entitled to vote at the special meeting if you owned shares as of
the close of business on November 6, 1998, the record date. On the record date,
there were 3,530,570 shares of First Mutual common stock outstanding. You will
be entitled to one vote for each share of First Mutual common stock you own on
the record date. You may vote either by attending the special meeting and voting
your shares or by completing the enclosed proxy card and mailing it to us in the
enclosed envelope.
We are seeking your proxy to use at the special meeting. This proxy
statement-prospectus has been prepared to assist you in deciding how to vote and
whether or not to grant your proxy to us. If you have elected not to attend the
meeting, please indicate on your proxy card how you want to vote. Then sign,
date and mail it to us as soon as possible so that your shares will be
represented at the special meeting. If you sign, date and mail your proxy card
without indicating how you wish to vote, your proxy will be counted as a vote
for the merger and the agreement and related plan of merger. If you fail to
return your proxy card and fail to vote at the meeting, the effect will be a
vote against the merger. If you have elected to attend the meeting, you need to
do nothing at this time. If you sign a proxy, you may revoke it at any time
before the special meeting or by attending and voting at the special meeting.
You cannot vote shares held in "street name"; only your broker can. If you do
not provide your broker with instructions on how to vote your shares, your
broker will not be permitted to vote them, and your shares will be treated as
votes against the merger.
OUR RECOMMENDATION TO STOCKHOLDERS (SEE PAGE 29)
First Mutual's board of directors has approved the agreement and plan of
reorganization and the related plan of merger. We believe that the proposed
merger is fair to you and in your best interests. WE RECOMMEND THAT YOU VOTE TO
APPROVE THE MERGER, THE AGREEMENT AND PLAN OF REORGANIZATION AND THE RELATED
PLAN OF MERGER.
STOCKHOLDER VOTE REQUIRED TO APPROVE THE MERGER (SEE PAGE 21)
To approve the merger, stockholders who own a majority of the outstanding
shares of First Mutual common stock must vote for the merger. If you do not
vote, this will have the same effect as a vote against the merger. Union
Planters stockholders will not vote on the merger.
SHARE OWNERSHIP OF MANAGEMENT AND CERTAIN STOCKHOLDERS (SEE PAGE 22)
On the record date, First Mutual's directors and executive officers, their
immediate family members and entities they control owned 520,818 shares, or
approximately 14.75% of the outstanding shares of First Mutual common stock,
including shares they may acquire through exercising stock options. On the
record date, First Mutual's subsidiary banks held no shares of First Mutual
common stock in a fiduciary capacity for others and First Mutual's Employee
Stock
7
<PAGE> 13
Ownership Plan held 282,000 shares of First Mutual common stock, or
approximately 8% of the outstanding shares of First Mutual common stock.
On the record date, Union Planters, and its directors and executive
officers, owned no shares of First Mutual common stock and Union Planters held
no shares of First Mutual common stock in a fiduciary capacity for others, or as
a result of debts previously contracted.
INTERESTS OF CERTAIN PERSONS IN THE MERGER THAT MAY BE DIFFERENT FROM YOURS (SEE
PAGE 44)
First Mutual's directors and certain officers have employment agreements,
stock options and other benefit plans and other arrangements that may provide
them with interests and benefits in the merger that are different from yours.
The board of directors of First Mutual was aware of these interests and
considered them in approving and recommending the merger.
EFFECTIVE TIME (SEE PAGE 38)
The merger will become final when a Certificate of Merger is filed with the
Secretary of State of the State of Delaware and Articles of Merger are filed
with the Secretary of State of the State of Tennessee. If First Mutual
stockholders approve the merger at the special meeting, and Union Planters
obtains all required regulatory approvals, we currently anticipate that the
merger will be completed on or about January 31, 1999, although delays could
occur.
Union Planters and First Mutual cannot assure you that they can obtain the
necessary stockholder and regulatory approvals or that the other conditions to
completion of the merger can or will be satisfied.
EXCHANGE OF STOCK CERTIFICATES (SEE PAGE 39)
Promptly after the merger is completed, you will receive a letter and
instructions on how to surrender your First Mutual stock certificates in
exchange for Union Planters stock certificates. You will need to carefully
review and complete these materials and return them as instructed along with
your stock certificates for First Mutual common stock. Please do not send First
Mutual's or Union Planters' transfer agent any stock certificates until you
receive these instructions. If you do not have stock certificates but hold
shares of First Mutual common stock in the form of a book entry with First
Mutual's transfer agent, the transfer agent will automatically exchange the
shares, and your Union Planters shares will remain in book entry form.
REGULATORY APPROVAL AND OTHER CONDITIONS (SEE PAGE 40 AND 41)
Union Planters is required to notify and obtain approvals from certain
government regulatory agencies before the merger, including the Board of
Governors of the Federal Reserve
8
<PAGE> 14
System and state banking regulators.
In addition to the required regulatory approvals, the merger will be
completed only if certain conditions, including the following, are met or
waived, if waivable:
(1) First Mutual stockholders approve the merger at the special meeting;
(2) First Mutual and Union Planters receive an opinion that the merger
will qualify as a tax-free reorganization; and
(3) neither Union Planters nor First Mutual has breached any of its
representations or obligations under the agreement and plan of
reorganization.
In addition to these conditions, the agreement and plan of reorganization
attached to this proxy statement-prospectus as an appendix, describes other
conditions that must be met before the merger may be completed.
WAIVER, AMENDMENT, AND TERMINATION (SEE PAGE 42)
Union Planters and First Mutual may agree to terminate the agreement and
plan of reorganization and the related plan of merger and elect not to complete
the merger at any time before the merger is completed.
Each of the parties also can terminate the merger if the merger is not
completed by March 31, 1999. However, a party may not terminate the agreement
and plan of reorganization if (a) it willfully breached the agreement and plan
of reorganization and (b) its breach is the reason the merger has not been
completed. There are also some instances where the parties cannot use this
reason to terminate the merger if the delay results from actions of third
parties.
The parties may also terminate the merger if other conditions, as described
in the agreement and plan of reorganization, occur.
The agreement and plan of reorganization and the related plan of merger may
be amended by the written agreement of Union Planters and First Mutual. The
parties can amend the agreement without stockholder approval, even if the First
Mutual stockholders have already approved the merger.
ACCOUNTING TREATMENT (SEE PAGE 48)
Union Planters intends to account for the merger as a purchase transaction
for accounting and financial reporting purposes. The key differences between
this method of accounting and the pooling-of-interests accounting method fall
into two areas: income measurement and asset valuation. Under
pooling-of-interests, the earnings of each company are combined as though the
9
<PAGE> 15
combination had occurred at the beginning of the earliest financial period
presented or, in the case of transactions which are not considered significant,
from the date of consummation forward. Under purchase accounting, the earnings
of the acquired company are included only after the closing of the merger. Under
pooling-of-interests, the assets of the acquired company are valued at their
historical cost. Under the purchase method, the assets are valued at their fair
value at the time of the merger. The excess of the consideration the acquiring
company pays over the fair value of the target's assets is recorded as goodwill
on the acquiring company's financial statements.
CERTAIN DIFFERENCES IN STOCKHOLDERS' RIGHTS (SEE PAGE 52)
When the merger is completed, you will automatically become a Union
Planters stockholder. The rights of Union Planters stockholders differ from the
rights of First Mutual stockholders in certain important ways. Many of these
have to do with provisions in Union Planters' charter and bylaws and Tennessee
law. Certain of these provisions are intended to make a takeover of Union
Planters harder if the Union Planters board of directors does not approve it.
OPTION AGREEMENT (SEE PAGE 49)
In connection with the merger, we granted Union Planters an option to
purchase up to 702,583 shares of First Mutual common stock at a price of $18.50
per share. Union Planters may exercise the option if certain events occur that
create the potential for another party to acquire control of First Mutual. We do
not believe that any event that would permit exercise of the option has occurred
as of the date of this proxy statement-prospectus. We granted the option as a
condition of and in consideration for Union Planters entering into the agreement
and plan of reorganization. The option is intended to increase the likelihood
that the merger will be completed by making it more difficult and more expensive
for a third party to acquire control of First Mutual.
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
The following table shows certain comparative per share data relating to
earnings (before extraordinary items and accounting changes), cash dividends,
and book value. The equivalent pro forma information is based on an exchange
ratio of .385. This exchange ratio assumes that the average of the closing
prices of Union Planters common stock for the 20 consecutive trading days ending
on the third business day before completion of the merger will be $48.00 (based
on the closing sales price of Union Planters common stock on November 13, 1998,
as reported on the New York Stock Exchange).
With the exception of the Indiana Branch Purchase, the merger and the
pending merger with First & Farmers Bancshares, Inc., which are expected to be
accounted for using the purchase method of accounting, the other acquisitions
which Union Planters has pending are expected to
10
<PAGE> 16
be accounted for using the pooling-of-interests method of accounting. The First
Mutual equivalent pro forma information reflects only the acquisition of First
Mutual because the other acquisitions which Union Planters currently has pending
are not considered significant to Union Planters from a financial statement
presentation standpoint. See "BUSINESS OF UNION PLANTERS - Recent Developments"
for a discussion of Union Planters' other pending acquisitions.
This pro forma and equivalent pro forma data is presented for your
information only. It does not necessarily indicate the results of operations or
combined financial position that would have resulted had Union Planters
completed the merger or the other acquisitions at the times indicated, and it
does not necessarily indicate what the future results of operations or the
combined financial position will be.
You should read the information shown below in conjunction with the
historical consolidated financial statements of Union Planters and First Mutual
and the notes provided with them. In reviewing Union Planters' historical
information, please keep in mind that Union Planters has restated its historical
financial statements to reflect the impact of four mergers completed in the
third quarter of 1998 and accounted for as poolings-of-interests. You will find
the restated numbers in Union Planters' Quarterly Report on Form 10-Q dated
September 30, 1998, Exhibit 99.1. See "WHERE YOU CAN FIND MORE INFORMATION," "--
Selected Financial Data," and "BUSINESS OF UNION PLANTERS -- Recent
Developments."
11
<PAGE> 17
UNION PLANTERS AND FIRST MUTUAL
HISTORICAL AND PRO FORMA COMPARATIVE PER SHARE DATA
<TABLE>
<CAPTION>
Twelve Months Ended Nine Months Ended
December 31, 1997 September 30, 1998
------------------- -------------------
<S> <C> <C>
EARNINGS BEFORE EXTRAORDINARY ITEMS
AND ACCOUNTING CHANGES
Union Planters
Basic $ 2.50 $ 1.44
Diluted 2.43 1.41
First Mutual
Basic .31 .44
Diluted .30 .43
Pro forma (Union Planters and
First Mutual)
Basic 2.48 1.43
Diluted 2.41 1.40
First Mutual equivalent pro forma
Basic .95 .55
Diluted .93 .54
CASH DIVIDENDS PER SHARE
Union Planters $ 1.495 $ 1.50
First Mutual .32 .24
First Mutual equivalent pro forma (1) .58 .58
<CAPTION>
December 31, 1997 September 30, 1998
----------------- ------------------
<S> <C> <C>
BOOK VALUE PER COMMON SHARE
Union Planters $20.93 $21.43
First Mutual 15.45 15.88
Pro forma (Union Planters and First Mutual) 20.92 21.48
First Mutual equivalent pro forma (Union Planters 8.05 8.27
only) (1)
</TABLE>
- -------------------------------------
(1) The equivalent pro forma per share data for First Mutual is computed by
multiplying pro forma information by an exchange ratio of .385.
(2) Represents six months ended December 31, 1995 for First Mutual.
12
<PAGE> 18
SELECTED FINANCIAL DATA
The following tables present for Union Planters and First Mutual selected
consolidated financial data for the nine-month periods ended September 30, 1998
and 1997, and for the five year period ended December 31, 1997. The information
for Union Planters is based on consolidated financial statements contained in
reports Union Planters has filed with the Securities and Exchange Commission,
including its September 30, 1998 Quarterly Report on Form 10-Q. Union Planters'
September 30, 1998 Quarterly Report on Form 10-Q includes as Exhibit 99.1
restated 1997 audited financial statements and restated Management's Discussion
and Analysis of Financial Condition and Results of Operation for the three years
ended December 31, 1997. The financial information was restated for four
significant acquisitions completed in the third quarter of 1998 and accounted
for as pooling-of-interests. The information for First Mutual is based on the
historical financial information that is contained in reports First Mutual has
previously filed with the Securities and Exchange Commission. Historical
financial statements of First Mutual can be found in its September 30, 1998 Form
10- Q and its 1997 Annual Report on Form 10-K. All of these documents are
incorporated by reference in this proxy statement-prospectus. See "WHERE YOU
CAN FIND MORE INFORMATION" on page 83.
You should read the following tables in conjunction with the consolidated
financial statements of Union Planters and First Mutual described above and with
the notes to them.
Historical results do not necessarily indicate the results that you can
expect for any future period. Union Planters and First Mutual believe that they
have included all adjustments (which include only normal recurring adjustments)
necessary to arrive at a fair statement of interim results of operations of
Union Planters and First Mutual. Results for the nine months ended September 30,
1998 do not necessarily indicate the results which you can expect for any other
interim period or for the year as a whole. See "BUSINESS OF UNION PLANTERS --
Recent Developments" on page 69 for information concerning Union Planters' other
acquisitions.
13
<PAGE> 19
UNION PLANTERS
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
Years Ended December 31, (1) (2) and (3)
------------------------------------------------------- -------------------
1993 1994 1995 1996 1997 1997 1998
-------- --------- -------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $779,756 $ 881,875 $944,694 $1,043,942 $1,122,149 $835,730 $ 858,506
Provision for losses on loans 49,267 23,000 47,393 84,198 150,606 104,440 122,436
Investment securities gains (losses) 12,160 (21,053) 2,008 4,942 4,781 4,500 (15,111)
Other noninterest income 282,124 297,596 355,317 383,824 449,261 333,146 375,596
Noninterest expense 737,608 845,217 818,944 942,733 950,986 645,979 795,169
-------- --------- -------- ---------- ---------- -------- ---------
Earnings before income taxes, extraordinary item,
and accounting changes 287,165 290,201 435,682 405,777 474,599 422,957 301,386
Applicable income taxes 86,669 92,325 145,485 139,649 162,302 144,291 113,321
-------- --------- -------- ---------- ---------- -------- ---------
Earnings before extraordinary item and accounting
changes 200,496 197,876 290,197 266,128 312,297 278,666 188,065
Extraordinary item and accounting changes, net of
taxes 4,757 -- -- -- -- -- --
-------- --------- -------- ---------- ---------- -------- ---------
Net earnings $205,253 $ 197,876 $290,197 $ 266,128 $ 312,297 $278,666 $ 188,065
======== ========= ======== ========== ========== ======== =========
PER COMMON SHARE DATA (4)
Basic
Earnings before extraordinary item and accounting
changes $ 2.11 $ 1.74 $ 2.55 $ 2.24 $ 2.50 $ 2.25 $ 1.44
Net earnings 2.16 1.74 2.55 2.24 2.50 2.25 1.44
Diluted
Earnings before extraordinary item and accounting
changes 1.97 1.71 2.46 2.17 2.43 2.18 1.41
Net earnings 2.02 1.71 2.46 2.17 2.43 2.18 1.41
</TABLE>
14
<PAGE> 20
UNION PLANTERS
SELECTED FINANCIAL DATA (continued)
<TABLE>
<CAPTION>
Years Ended December 31, (1)
----------------------------------------------------------------
1993 1994 1995 1996 1997
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Cash dividends 0.72 0.88 0.98 1.08 1.495
Book value 15.23 15.66 18.64 19.87 20.93
BALANCE SHEET DATA (AT PERIOD END)
Total assets $20,330,065 $22,620,487 $24,596,205 $26,427,236 $27,993,452
Loans, net of unearned income 11,815,553 14,381,566 15,713,783 17,819,088 19,126,708
Allowance for losses on loans 229,334 237,377 243,395 257,638 310,385
Investment securities 5,970,140 5,810,934 5,976,297 5,667,251 5,840,704
Total deposits 16,989,720 17,954,001 19,014,248 19,899,772 21,203,147
Short-term borrowings 432,461 980,935 1,074,673 1,732,437 1,784,347
Long-term debt (5)
Parent company 114,729 114,790 214,758 373,459 373,746
Subsidiary banks 530,810 937,160 1,193,861 1,426,433 1,327,451
Total shareholders' equity 1,657,832 1,768,009 2,147,621 2,376,768 2,668,721
Average assets 19,462,599 21,796,952 23,261,530 26,003,849 27,366,896
Average shareholders' equity 1,481,351 1,779,158 1,963,852 2,247,335 2,562,009
Average shares outstanding (in thousands) (4)
Basic 90,360 107,981 110,255 115,794 122,812
Diluted 96,001 114,810 117,673 123,793 129,397
<CAPTION>
Nine Months Ended
September 30, (2) and (3)
------------------------------
1997 1998
----------- -----------
<C> <C>
Cash dividends 1.095 1.50
Book value 21.13 21.43
BALANCE SHEET DATA (AT PERIOD END)
Total assets $27,939,458 $30,525,482
Loans, net of unearned income 18,936,526 19,653,468
Allowance for losses on loans 291,084 352,643
Investment securities 5,709,842 7,867,587
Total deposits 20,800,890 23,288,899
Short-term borrowings 1,827,953 1,829,275
Long-term debt (5)
Parent company 373,169 380,164
Subsidiary banks 1,588,764 1,362,894
Total shareholders' equity 2,680,841 2,932,567
Average assets 27,240,642 28,724,000
Average shareholders' equity 2,396,275 2,734,717
Average shares outstanding (in thousands) (4)
Basic 122,068 129,561
Diluted 127,924 133,784
</TABLE>
15
<PAGE> 21
UNION PLANTERS
SELECTED FINANCIAL DATA (CONTINUED)
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, (1) September 30, (2) and (3)
----------------------------------------------- -------------------------
1993 1994 1995 1996 1997 1997 1998
------- -------- ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
PROFITABILITY AND CAPITAL RATIOS
Return on average assets 1.05% 0.91% 1.25% 1.02% 1.14% 1.37% 0.88%
Return on average common equity 14.65 11.89 15.60 12.32 12.51 15.79 9.23
Net interest income (taxable-equivalent) / average
earning assets (6) 4.28 4.53 4.52 4.45 4.57 4.55 4.45
Loans / deposits 69.55 80.10 82.64 89.54 90.21 91.04 84.39
Equity / assets (period end) 8.15 7.82 8.73 8.99 9.53 9.60 9.61
Average shareholders' equity / average total assets 7.61 8.16 8.44 8.64 9.36 8.80 9.52
Leverage ratio 8.02 7.93 8.41 9.32 9.62 9.67 9.29
Tier 1 capital / risk-weighted assets 13.47 12.75 13.32 14.39 14.25 14.05 13.49
Total capital / risk-weighted assets 15.41 14.57 15.71 16.63 16.39 16.20 17.07
CREDIT QUALITY RATIOS (7)
Allowance / period end loans 2.02 1.74 1.65 1.59 1.74 1.66 1.87
Nonperforming loans / total loans 1.22 .76 .80 .81 .83 .83 .79
Allowance / nonperforming loans 166 228 206 195 210 199 236
Nonperforming assets / loans and foreclosed
properties 1.73 1.06 1.03 1.04 1.01 1.01 .93
Provision / average loans .45 .18 .33 .54 .87 .80 .88
Net charge-offs / average loans .38 .21 .31 .49 .66 .65 .75
</TABLE>
16
<PAGE> 22
UNION PLANTERS
SELECTED FINANCIAL DATA (CONTINUED)
Notes to Union Planters Corporation Selected Financial Data
- -----------------------------------------------------------
(1) Union Planters' audited financial statements for the three years ended
December 31, 1997 and the related management's discussion and analysis of
results of operations and financial condition were restated for four
acquisitions completed in the third quarter of 1998 and accounted for as
poolings-of-interests. The 1997 restated audited financial statements
("1997 Restated Financial Statements") and the restated management's
discussion and analysis of results of operations and financial condition
were filed as Exhibit 99.1 to Union Planters' Quarterly Report on Form 10-Q
dated September 30, 1998. Additionally, the selected financial data for
1993 and 1994 has been restated to reflect the aforementioned four
acquisitions.
(2) Interim period ratios have been annualized where applicable.
(3) Reference is made to Union Planters' Quarterly Report on Form 10-Q dated
September 30, 1998 for a discussion of merger-related and other charges
that significantly impacted operating results for the nine months ended
September 30, 1998.
(4) 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 earnings per share as discussed in
Notes 2 and 16 to the 1997 Restated Financial Statements.
(5) 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.
(6) Average balances and calculations do not include the impact of the net
unrealized gain or loss on available for sale securities.
(7) FHA/VA government-insured/guaranteed loans have been excluded, since they
represent minimal credit risk to Union Planters.
17
<PAGE> 23
FIRST MUTUAL SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
-------------------------------------------------------- ----------------------
1993 1994 1995(1) 1996 1997 1997 1998
---------- ------- -------- --------- ------- --------- --------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net interest income $7,572 $7,666 $8,792 $10,388 $11,422 $ 8,591 $8,851
Provisions for losses on loans -- -- -- 113 560 396 431
Investment securities gains
(losses) 8 -- -- -- 19 (8) --
Other noninterest income 927 666 848 1,065 1,700 1,233 2,107
Noninterest expense 4,899 5,613 5,902 9,460 11,191 8,340 8,241
Earnings before income taxes,
extraordinary item, and
accounting changes 3,608 2,719 3,738 1,880 1,390 1,080 2,286
Applicable income taxes 1,351 987 1,340 709 404 292 866
------ ------ ------ ------- ------- ------- ------
Earnings before extraordinary
item and accounting changes 2,257 1,732 2,398 1,171 986 788 1,420
Extraordinary item and
accounting changes, net of
taxes 401 -- -- -- -- -- --
Net earnings $2,658 $1,732 $2,398 $ 1,171 $ 986 $ 788 $1,420
====== ====== ====== ======= ======= ======= ======
PER COMMON SHARE DATA
Basic
Earnings before extraordinary item and
accounting changes N/A N/A $ .32 $ .29 $ .31 $ .25 $ .44
Net earnings N/A N/A .32 .29 .31 .25 .44
Diluted
Earnings before extraordinary item and
accounting changes N/A N/A .32 .29 .30 .24 .43
Net earnings N/A N/A .32 .29 .30 .24 .43
Cash dividends N/A N/A .14 .30 .32 .24 .24
Book value N/A N/A 15.22 15.22 15.45 15.38 15.88
</TABLE>
18
<PAGE> 24
FIRST MUTUAL SELECTED FINANCIAL DATA (Continued)
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
-------------------------------------------------------- ------------------
1993 1994 1995(1) 1996 1997 1997 1998
--------- ------- -------- --------- ----- --------- -------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total Assets $ 231,211 $250,402 $275,676 $331,776 $391,439 $402,389 $371,357
Loans, net of unearned income 200,874 200,034 220,798 284,413 310,725 309,329 297,023
Allowance for losses on loans 1,129 1,148 1,172 1,244 1,431 1,461 1,473
Investment securities 22,161 24,580 28,991 23,007 33,993 46,517 30,272
Deposits 201,197 200,245 192,468 202,923 320,031 322,862 309,410
Short-term borrowings 1,200 19,600 4,100 50,300 10,500 12,500 2,000
Long-term debt
Parent company -- -- -- -- -- -- --
Subsidiary banks -- -- -- 12,500 2,000 2,000 0
Total stockholders' equity(3) 26,079 27,811 71,528 62,217 54,189 53,918 56,073
Average assets 234,769 233,716 257,155 304,295 411,494 417,378 384,859
Average stockholders' equity(3) 25,136 27,083 53,270 68,343 54,975 55,246 55,356
Average shares outstanding (in
thousands)
Basic N/A N/A 4,329(4) 4,079 3,195 3,221 3,175
Diluted N/A N/A 4,329(4) 4,095 3,298 3,322 3,318
PROFITABILITY AND CAPITAL RATIOS
Return on average assets(5) 1.13% .74% .93% .38% .24% .25% .49%
Return on average common equity(5) 10.57 6.4 4.5 1.71 1.79 1.9 3.42
Net interest income (taxable-
equivalent/average earning
assets) 3.32 3.39 3.55 3.56 3.02 2.98 3.35
Loans/deposits 99.84 99.89 114.72 140.16 97.09 95.81 96.00
Common and preferred dividend
payout ratio N/A N/A 12.64 102.56 109.74 104.95 54.79
Equity/assets (period end) 11.28 11.11 25.95 18.75 13.84 13.4 15.1
Average stockholders'
equity(3)/average total assets 10.71 11.59 20.72 22.46 13.36 13.24 14.38
</TABLE>
19
<PAGE> 25
FIRST MUTUAL SELECTED FINANCIAL DATA (Continued)
<TABLE>
<CAPTION>
Nine Months Ended
Years Ended December 31, September 30,
--------------------------------------------------- -------------------
1993 1994 1995(1) 1996 1997 1997 1998
------- ------ -------- -------- ----- ------- ------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Leverage ratio 11.16 11.87 26.54 19.06 10.82 10.4 11.88
Tier 1 capital/risk-weighted assets 21.48 22.05 52.38 33.09 18.91 18.96 19.96
Total capital/risk-weighted assets 22.41 22.96 53.24 33.75 19.56 19.63 20.63
CREDIT QUALITY RATIOS
Allowance/period end loans .56 .57 .53 .44 .46 .47 .50
Nonperforming loans(6)/total loans .12 .03 .08 .04 .15 .07 .12
Allowance/nonperforming loans 453.41 2014.04 654.75 1151.85 301.9 716.18 409.17
Nonperforming assets(7)/loans and
foreclosed properties .16 .06 0.1 .07 .17 .08 .16
Provisions/average loans (5) - - - .04 .18 .17 .19
Net charge-offs (recoveries)/average
loans (5) (.01) (.01) (.01) .02 .14 .11 .17
</TABLE>
(1) Per share data is for the six months ended December 31, 1995.
(2) Does not include Federal Home Loan Bank stock.
(3) Retained earnings for years prior to 1995.
(4) Average for period 7/1/95 - 12/31/95.
(5) Interim period ratios have been annualized when applicable.
(6) Nonaccrual loans and restructured loans.
(7) Nonaccrual loans and restructured loans and OREO.
20
<PAGE> 26
INTRODUCTION
Union Planters and First Mutual are furnishing this proxy
statement-prospectus to holders of First Mutual common stock, $.10 par value per
share, in connection with the proxy solicitation by First Mutual's board of
directors. The First Mutual board of directors will use the proxies at the
special meeting of stockholders of First Mutual to be held on January ____,
1999, and at any adjournments.
At the special meeting, holders of First Mutual common stock will be
asked to vote upon a proposal to approve the Agreement and Plan of
Reorganization, dated July 2, 1998, between Union Planters and First Mutual, and
a related Plan of Merger between First Mutual and Union Planters Holding
Corporation, a wholly owned subsidiary of Union Planters (the "Agreement" and
the "Plan of Merger"). Pursuant to the Agreement and the Plan of Merger, First
Mutual will merge into Union Planters Holding Corporation, and the outstanding
shares of First Mutual common stock will be converted into whole shares of Union
Planters common stock, $5.00 par value per share, and associated Preferred Share
Rights. For information about Union Planters' Preferred Share Rights, see page
54 of this proxy statement-prospectus. First Mutual stockholders will receive
cash in lieu of any fractional shares.
SPECIAL MEETING OF FIRST MUTUAL STOCKHOLDERS
DATE, PLACE, TIME, AND PURPOSE
The special meeting of First Mutual's stockholders will be held at the
Decatur Club, located at 158 W. Prairie Avenue, Decatur, Illinois, at 2:00 p.m.,
local time, on January __, 1999. At the special meeting, holders of First
Mutual common stock will be asked to vote upon a proposal to approve the
Agreement, the Plan of Merger and the merger.
RECORD DATE, VOTING RIGHTS, REQUIRED VOTE, AND REVOCABILITY OF PROXIES
First Mutual's board of directors fixed the close of business on
November 6, 1998 as the record date for determining those First Mutual
stockholders who are entitled to notice of and to vote at the special meeting.
Only holders of First Mutual common stock of record on the books of First Mutual
at the close of business on the record date have the right to receive notice of
and to vote at the special meeting. On the record date, there were 3,530,570
shares of First Mutual common stock issued and outstanding held by approximately
603 holders of record.
At the special meeting, First Mutual stockholders will have one vote
for each share of First Mutual common stock owned on the record date. The
holders of a majority of the outstanding shares of First Mutual common stock
entitled to vote at the special meeting must be present in order for a quorum to
exist at the special meeting.
To determine if a quorum is present, First Mutual intends to count the
following:
- shares of First Mutual common stock present at the special
meeting either in person or by proxy;
21
<PAGE> 27
- shares of First Mutual common stock present in person at the
special meeting but not voting; and
- shares of First Mutual common stock for which it has received
proxies but with respect to which holders of shares have
abstained on any matter.
Approval of the Agreement and the Plan of Merger requires the affirmative vote
of a majority of the outstanding shares of First Mutual common stock.
Brokers who hold shares in street name for customers who are the
beneficial owners of such shares may not give a proxy to vote those shares
without specific instructions from their customers. Any abstention, non-voting
share or "broker non-vote" will have the same effect as a vote AGAINST the
approval of the Agreement and the Plan of Merger.
Properly executed proxies that First Mutual receives before the vote at
the special meeting that are not revoked will be voted in accordance with the
instructions indicated on the proxies. IF NO INSTRUCTIONS ARE INDICATED, SUCH
PROXIES WILL BE VOTED FOR THE PROPOSAL TO APPROVE THE AGREEMENT AND THE PLAN OF
MERGER, AND THE PROXY HOLDER MAY VOTE THE PROXY IN ITS DISCRETION AS TO ANY
OTHER MATTER WHICH MAY COME PROPERLY BEFORE THE SPECIAL MEETING. IF NECESSARY,
THE PROXY HOLDERS MAY VOTE IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING
IN ORDER TO PERMIT FURTHER SOLICITATION OF PROXIES IF THERE ARE NOT SUFFICIENT
VOTES TO APPROVE THE PROPOSAL AT THE TIME OF THE SPECIAL MEETING. HOWEVER, NO
PROXY HOLDER WILL VOTE ANY PROXIES VOTED AGAINST APPROVAL OF THE AGREEMENT AND
THE PLAN OF MERGER IN FAVOR OF A PROPOSAL TO ADJOURN THE SPECIAL MEETING.
A First Mutual stockholder who has given a proxy solicited by First
Mutual's board of directors may revoke it at any time prior to its exercise at
the special meeting by (1) giving written notice of revocation to the Secretary
of First Mutual, (2) properly submitting to First Mutual a duly executed proxy
bearing a later date, or (3) attending the special meeting and voting in person.
All written notices of revocation and other communications with respect to
revocation of proxies should be sent to: First Mutual Bancorp, Inc., 135 East
Main Street, Decatur, Illinois 62523, Attention: G. Lynn Brinkman, Secretary.
On the record date, First Mutual's directors and executive officers,
including their immediate family members and affiliated entities owned 520,818
shares or approximately 14.75% of the outstanding shares of First Mutual common
stock, including shares subject to options to purchase First Mutual common
stock. On the record date, Union Planters' directors and executive officers
owned no shares of First Mutual common stock.
On the record date, Union Planters held no shares of First Mutual
common stock in a fiduciary capacity for others, or as a result of debts
previously contracted, and First Mutual held no shares of First Mutual common
stock in a fiduciary capacity for others. On the record date, First Mutual's
Employee Stock Ownership Plan held 282,000 shares of First Mutual common stock,
or approximately 8% of the outstanding shares of First Mutual common stock.
22
<PAGE> 28
SOLICITATION OF PROXIES
First Mutual has retained Regan & Associates to solicit proxies for the
special meeting, and expects the cost of these services to be approximately
$3,500. Additionally, directors, officers and employees of First Mutual may
solicit proxies by mail, in person, or by telephone or telegraph. They will
receive no additional compensation for such services. First Mutual 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 First Mutual common stock held of record by such persons.
First Mutual will reimburse any such brokers, custodians, nominees, and
fiduciaries for the reasonable out-of-pocket expenses incurred by them for such
services. Union Planters and First Mutual will share 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-prospectus, as provided in the Agreement. See "DESCRIPTION OF
TRANSACTION -- Expenses and Fees" on page 48.
RECOMMENDATION
First Mutual's board of directors has approved the Agreement, the Plan
of Merger, and the merger and believes that the proposal to approve the
Agreement and the Plan of Merger is in the best interests of First Mutual and
its stockholders. First Mutual's board of directors recommends that the First
Mutual stockholders vote FOR approval of the Agreement and the Plan of Merger.
DESCRIPTION OF TRANSACTION
The following information describes material aspects of the merger.
This description does not provide a complete description of all the terms and
conditions of the Agreement and the Plan of Merger. It is qualified in its
entirety by the Appendices hereto, including the text of the Agreement and the
Plan of Merger, which are attached as Appendices A and B, respectively, to this
proxy statement-prospectus. The Agreement and the Plan of Merger are
incorporated herein by reference. You are urged to read the Appendices in their
entirety.
GENERAL
The Agreement provides for the acquisition of First Mutual by Union
Planters pursuant to the merger of First Mutual with and into Union Planters
Holding Corporation. Union Planters Holding Corporation is a Tennessee
corporation and a wholly owned subsidiary of Union Planters. Union Planters
Holding Corporation will be the surviving corporation resulting from the merger.
At the time the merger becomes effective, each share of First Mutual common
stock then issued and outstanding (except shares held by First Mutual, Union
Planters and their subsidiaries 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 shares of Union Planters common stock having
a value equal to $18.50. The number of shares of Union Planters common stock you
will receive will be determined by dividing $18.50 by the average of the closing
sales
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prices of Union Planters common stock for the 20 consecutive trading days prior
to the third business day before we complete the merger (the "exchange ratio").
No fractional shares of Union Planters common stock will be issued.
Rather, Union Planters will pay cash (without interest) in an amount equal to
such fractional part of a share of Union Planters common stock multiplied by the
closing price of Union Planters common stock on the New York Stock Exchange (as
reported by The Wall Street Journal) on the last trading day before the merger
becomes effective.
On the record date, First Mutual had 3,530,570 shares of common stock
issued and outstanding. The closing price of Union Planters common stock on
November 13, 1998 was $48.00. Assuming that the average of the closing prices
for the 20 consecutive trading days prior to the third business day before the
completion of the merger is $48.00, the exchange ratio will be .385. Based on
this exchange ratio, upon completion of the merger, Union Planters will issue
approximately 1,359,269 shares of its common stock to First Mutual stockholders.
After the merger, Union Planters would then have outstanding approximately
137,422,304 shares of common stock based on the number of shares of Union
Planters common stock outstanding on October 31, 1998 (not including shares
Union Planters may issue in its other pending acquisitions and shares it may
issue pursuant to the exercise of Union Planters stock options or for other
purposes). Based on that number, after the merger, First Mutual stockholders
would own approximately 1.0% of the outstanding shares of Union Planters common
stock.
EFFECT OF THE MERGER ON OPTIONS
Prior to the completion of the merger, First Mutual has agreed to cause
each option to purchase shares of First Mutual common stock granted by First
Mutual under any stock option plan, whether or not then exercisable, to be
canceled in exchange for cash in an amount equal to the total number of shares
of First Mutual common stock subject to the option times the excess of $18.50
over the exercise price per share of the option.
For information with respect to stock options held by First Mutual's
management, see "-- Interests of Certain Persons in the Merger."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
Union Planters and First Mutual have not and do not intend to seek a
ruling from the Internal Revenue Service ("IRS") as to the federal income tax
consequences of the merger. Instead, Union Planters and First Mutual have
obtained the opinion of Union Planters' counsel, Wyatt, Tarrant & Combs, as to
certain of the expected federal income tax consequences of the merger. A copy of
this opinion is attached as an exhibit to the registration statement.
The tax opinion which Union Planters and First Mutual have obtained
does not address, among other matters:
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(1) state, local, foreign or other federal tax consequences of
the merger not specifically addressed in the opinion;
(2) federal income tax consequences to First Mutual stockholders
who are subject to special rules under the Internal Revenue
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;
(3) federal income tax consequences affecting shares of First
Mutual common stock acquired upon the exercise of stock
options, stock purchase plan rights or otherwise as
compensation;
(4) the tax consequences to holders of warrants, options or other
rights to acquire shares of such stock;
(5) the tax consequences of Union Planters and First Mutual of the
inclusion in income of the amount of the bad-debt reserve
maintained by First Mutual and/or its subsidiaries and any
other amounts resulting from any required change in accounting
methods; and
(6) the tax consequences of Union Planters and First Mutual of any
income and deferred gain recognized pursuant to Treasury
Regulations issued under Section 1502 of the Internal Revenue
Code.
Subject to the conditions, qualifications, representations and
assumptions contained herein, and in the tax opinion, Wyatt, Tarrant & Combs has
opined that:
(1) The acquisition by Union Planters Holding Corporation of
substantially all of the assets of First Mutual in exchange
for shares of Union Planters common stock and the assumption
of liabilities of First Mutual pursuant to the merger will
constitute a reorganization within the meaning of Section
368(a) of the Internal Revenue Code.
(2) First Mutual, Union Planters and Union Planters Holding
Corporation will each be "a party to a reorganization" within
the meaning of Section 368(b) of the Internal Revenue Code.
(3) No gain or loss will be recognized by First Mutual as a
result of the merger.
(4) No gain or loss will be recognized by Union Planters Holding
Corporation or Union Planters as a result of the merger.
(5) No gain or loss will be recognized by the stockholders of
First Mutual as a result of the exchange of First Mutual
common stock for Union Planters 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 First Mutual common
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stock is a capital asset in the hands of the respective First
Mutual stockholders, 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
First Mutual common stock allocable to the fractional share.
(6) The tax basis of Union Planters common stock to be received by
the stockholders of First Mutual will be the same as the tax
basis of the First Mutual common stock surrendered in exchange
therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
(7) The holding period of the Union Planters common stock to be
received by stockholders of First Mutual will include the
holding period of the First Mutual common stock surrendered in
exchange therefor, provided the First Mutual shares were held
as a capital asset by the stockholders of First Mutual on the
date of the exchange.
The tax opinion is based on the Internal Revenue Code, Treasury
Regulations promulgated under the Internal Revenue Code by the IRS, judicial
decisions and administrative pronouncements of the IRS, all existing and in
effect on the date of this proxy statement-prospectus 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 opinion. The opinion
represents only such counsel's best judgment as to the expected federal income
tax consequences of the merger and is not binding on the IRS or the courts. The
IRS may challenge the conclusions stated in the opinion and stockholders of
First Mutual 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
stockholders of First Mutual and Union Planters.
In rendering the tax opinion, Wyatt, Tarrant & Combs has relied, as to
factual matters, solely on the continuing accuracy of (1) the description of the
facts relating to the merger contained in the Agreement and this proxy
statement-prospectus, (2) the factual representations and warranties contained
in the Agreement and this proxy statement-prospectus and related documents and
agreements, and (3) certain factual matters addressed by representations made by
certain executive officers of First Mutual, Union Planters and Union Planters
Holding Corporation, as further described in the opinion. Events occurring after
the date of the opinion could alter the facts upon which the opinion is based.
In such case, the conclusions reached in the opinion and in this summary could
be materially impacted.
Accordingly, for all of the above reasons, stockholders of First Mutual
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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The obligation of Union Planters and First Mutual to complete the
merger is conditioned on, among other things, receipt by Union Planters and
First Mutual of an opinion of Wyatt, Tarrant & Combs substantially to the
foregoing effect. The conditions relating to the receipt of the tax opinion may
be waived by both Union Planters and First Mutual. Neither Union Planters nor
First Mutual currently intends to waive the conditions relating to the receipt
of the tax opinion. If the conditions relating to the receipt of the tax opinion
were waived and the material federal income tax consequences of the merger were
substantially different from those described in this proxy statement-prospectus,
First Mutual would resolicit the approval of its stockholders prior to
completing the merger.
BACKGROUND OF AND REASONS FOR THE MERGER
BACKGROUND OF THE MERGER. The past several years have been a period of
substantial and rapid change in the financial services industry characterized by
increasing consolidation, intensifying competition and continued growth through
acquisition by many of the larger domestic banking organizations. Since First
Mutual's conversion from a mutual to a stock institution in June, 1995, First
Mutual has actively sought to acquire additional financial institutions so as to
deploy its excess capital and diversify geographically. Except for the
acquisition of three bank branches in January, 1997, First Mutual was unable to
identify potential acquisition candidates that met its pricing and other
purchase criteria. First Mutual's Board of Directors has also periodically
reviewed its strategic alternatives and taken various steps to maintain and
enhance its long-term competitive position and profitability in the face of
these changing regulatory and market conditions.
As a result of such a review conducted in the fall of 1997, and after
consultation with its outside special legal counsel, Barack Ferrazzano
Kirschbaum Perlman & Nagelberg, the First Mutual board formed a special
committee comprised of C. Robert Chastain, Paul K. Reynolds and Glen J. Whitney
(the "strategic alternatives committee") to assist in the investigation of First
Mutual's strategic options, including a possible sale. The strategic
alternatives committee was directed to participate in retaining a financial
advisor to assist in this process. After conducting interviews with several
prominent investment banking firms, on December 2, 1997, the First Mutual board
engaged Robert W. Baird & Co. Incorporated ("Baird") to serve as First Mutual's
financial advisor.
After its retention, Baird examined First Mutual's strategic plans and
held several discussions with the strategic alternatives committee to discuss
these plans and related issues. As part of these discussions, Baird reviewed
with the First Mutual board a list of banking organizations located in and out
of First Mutual's market that might be interested in a business combination with
First Mutual, including the financial ability of such organizations to complete
a business combination, their acquisition history and potential strategic fit
with First Mutual.
After extensive discussion concerning the strategic options available
to First Mutual, the First Mutual board authorized senior management and Baird
to conduct exploratory discussions
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concerning a possible business combination transaction. Baird was instructed to
contact a group of banking institutions that were selected by First Mutual's
board after consultation with Baird. During January, 1998, Baird conducted
preliminary discussions with several of these institutions. When such
discussions involved the provision to such institutions of proprietary
information, First Mutual required such parties to execute customary
confidentiality agreements to preserve the confidential nature of any
proprietary information.
On January 27, 1998, Baird presented to the First Mutual board the
results of its preliminary conversations with certain potential acquirors.
Through its exploratory discussions with these various banking institutions,
First Mutual received several preliminary indications of interest, and Baird was
then instructed to contact each of these institutions in an effort to further
develop their interest. On February 11, 1998, First Mutual also received an
unsolicited expression of interest for the acquisition of First Mutual at a
price significantly in excess of the other expressions of interest that had been
received by Baird up to such time. Upon careful review of the expression of
interest, and after discussions with executive officers of the potential
acquiror, the First Mutual board directed Baird to suspend discussions with the
other interested parties and to assist in the negotiation of a definitive
acquisition agreement with this potential acquiror. After several weeks of
negotiation and due diligence, these discussions were terminated.
Thereafter, the First Mutual board, after consultation with Baird,
determined that a business combination should still be actively pursued. The
First Mutual board directed Baird to recontact the initial group of
organizations that had expressed an interest in affiliating with First Mutual As
a result of these efforts, Baird received an expression of interest from Union
Planters, the successor by merger to one of this initial group. Baird was also
contacted by an organization that the First Mutual board had not directed Baird
to contact because of that organization's comparative size, its concentration of
ownership and the relative illiquidity of its stock.
On May 26, 1998, representatives of Baird and Barack Ferrazzano met
with the First Mutual board to review the status of negotiations with Union
Planters and also preliminary discussions with one other potential acquiror.
Representatives of Baird, Barack Ferrazzano and members of the corporate
developments committee: (i) reviewed in detail the Union Planters proposal to
exchange $18.50 of Union Planters common stock for each outstanding share of
First Mutual common stock; (ii) discussed Union Planters' requirement that First
Mutual also grant to Union Planters a stock option; and (iii) discussed the
likelihood of receiving a formal proposal from other potential business
combination partners with a value to the holders of First Mutual common stock
greater than the Union Planters' proposal. Based upon the results of these
discussions, the First Mutual board determined that it was in the best interests
of the holders of First Mutual common stock to pursue the Union Planters
proposal and authorized Paul Reynolds to execute a letter of intent with Union
Planters containing the terms of this offer. Union Planters and First Mutual
subsequently executed a letter of intent on June 3, 1998.
Shortly thereafter, First Mutual received the first draft of the
Agreement from Union Planters, and representatives of First Mutual, Baird and
Barack Ferrazzano commenced
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negotiations with representatives of Union Planters, its financial advisor and
its legal counsel regarding the final form of this agreement. During this
period, Union Planters conducted its due diligence on First Mutual, and First
Mutual and Baird conducted their due diligence on Union Planters.
On June 25, 1998, the First Mutual board held a meeting to discuss at
length and review, with the assistance of Baird and Barack Ferrazzano, the
Agreement and the Plan of Merger, the stock option agreement and related
documents and all of the transactions contemplated by these documents. At this
meeting, the First Mutual board reviewed in detail with Baird, Barack Ferrazzano
and senior management the terms of the merger, the Agreement, the Plan of Merger
and the stock option agreement. Barack Ferrazzano also reviewed again with the
First Mutual board the fiduciary duties owed by the First Mutual board to First
Mutual and its stockholders in connection with the review of First Mutual's
strategic alternatives.
Following the review and discussion by the First Mutual board of the
definitive terms of the transaction, the opinion of Baird and numerous other
relevant factors (described below in "THE MERGER -- Reasons for the Merger;
First Mutual Board Recommendation"), by a majority vote, the First Mutual board
authorized and approved the Agreement, the related Plan of Merger and the stock
option agreement and the transactions contemplated by these documents. The First
Mutual board also determined that the Agreement and the Plan of Merger be
submitted to a vote of First Mutual's stockholders and that the First Mutual
board recommend that First Mutual stockholders approve and adopt the Agreement
and the Plan of Merger, subject to certain conditions, including among other
things the receipt of a fairness opinion of Baird.
On July 1, 1998, Baird delivered to the First Mutual board its opinion
(subsequently confirmed in writing as of the date of this proxy
statement-prospectus) to the effect that, as of that date, the exchange ratio
was fair, from a financial point of view, to the holders of First Mutual common
stock (other than Union Planters and its affiliates). THE OPINION OF BAIRD DATED
NOVEMBER 16, 1998, IS ATTACHED HERETO AS APPENDIX C AND HOLDERS OF FIRST MUTUAL
COMMON STOCK ARE ENCOURAGED TO READ THAT OPINION CAREFULLY AND IN ITS ENTIRETY.
See "THE MERGER -- Opinion of Financial Advisor to First Mutual."
REASONS FOR THE MERGER; FIRST MUTUAL BOARD RECOMMENDATION. In reaching
its determination, the First Mutual board consulted with Barack Ferrazzano,
First Mutual's outside special counsel, with respect to the legal duties of the
First Mutual board, various regulatory matters and the Agreement, the Plan of
Merger, the Stock Option Agreement and related issues. The First Mutual board
also consulted with Baird, First Mutual's financial advisor, with respect to the
financial aspects and fairness of the consideration to be received by the First
Mutual stockholders in the merger. The First Mutual board also consulted with
senior management on all of these issues as well as more conceptual issues and
advantages of the proposed merger. The First Mutual board considered a number of
factors, without assigning any specific or relative weight to the consideration
of such factors. The material factors considered were:
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(1) Information concerning the businesses, earnings, operations,
financial condition, prospects, capital levels and asset quality of First Mutual
and Union Planters, both individually and as combined. In particular, the First
Mutual board focused on the strategic fit of the business lines and the
operating philosophies of the two institutions;
(2) The advantages of a combination with an institution, such as
Union Planters, that already had a significant local market share (through its
acquisition of Magna Bancorp, Inc.), and the opportunities for increased
efficiencies and significant cost savings from a combination within First
Mutual's current market resulting in increased profitability of the combined
entity over time as opposed to a possible combination with an institution
without a similar local market presence;
(3) The current and prospective economic and competitive
environments facing First Mutual and other financial institutions characterized
by intensifying competition from both banks and nonbank financial services
organizations, the increasing necessity for strong fee-based income producing
components within a bank holding company, and the growing costs associated with
regulatory compliance in the banking industry;
(4) First Mutual's dependence on earnings from retail banking,
which have been subject to increasing margin pressure, and countervailing
benefits associated with Union Planters' complementary strength in commercial
banking and significant percentage of fee-based income not subject to such
margin pressure;
(5) The high costs of technology and new facilities required in
order to grow deposits in light of the fact that deposit growth for First
Mutual and the banking industry in general has been difficult and such funding
limitations would hamper First Mutual's long-term asset growth;
(6) First Mutual's concentration of first and second mortgages and
the interest rate risk and prepayment risk associated therewith as compared to
more diverse income generating assets and operations maintained by other
banking institutions (including Union Planters);
(7) The belief that, following the merger, Union Planters would be
well positioned to continue to grow through possible future acquisitions or
expansions while at the same time not being so large as to reduce its
attractiveness as a possible acquisition candidate;
(8) The belief that the merger would result in stockholders of
First Mutual receiving stock in a high quality combined company that should
benefit stockholders through enhanced operating efficiencies and better
penetration of commercial and consumer banking markets;
(9) The opinion of Baird that, as of the date of its opinion, the
consideration to be received by the First Mutual stockholders in the merger is
fair, from a financial point of view, to the holders of First Mutual common
stock (other than Union Planters and its affiliates) (see "THE MERGER --Opinion
of Financial Advisor to First Mutual");
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(10) A comparison of the legal terms of the Agreement and the other
documents relating to the merger to the terms customarily seen in similar
transactions and in prior transactions involving Union Planters; and
(11) The impact of the merger on First Mutual's employees in terms
of working environment, career opportunities, and layoffs, that would likely
result in a transaction with Union Planters, the impact on First Mutual's
depositors and customers in terms of the wider range of products and services
that will be available from a strong and sound combined institution, and on the
communities which First Mutual serves in terms of the enhanced strength and
accessibility of the combined Illinois franchise.
The foregoing discussion of the information and factors considered by
the First Mutual board is not intended to be exhaustive but is believed to
include all material factors considered by the First Mutual board. Throughout
its deliberations, the First Mutual board received the advice of its outside
legal counsel. After deliberating with respect to the merger and the other
transactions contemplated by the Agreement, considering, among other things, the
information and factors described above (including reliance on the opinion of
Baird), the First Mutual board concluded that the merger is fair to, and in the
best interest of, its stockholders. In reaching this conclusion, the First
Mutual board did not assign relative or specific weights to the above
information and factors or determine that any information or factor was of
particular importance. A determination of various weightings would, in the view
of the First Mutual board, be impractical. Rather, the First Mutual board viewed
its position and recommendations as being based on the totality of the
information and factors presented to and considered by it. In addition,
individual members of the First Mutual board may have given different weight to
different information and factors.
FOR THE REASONS DESCRIBED ABOVE, THE FIRST MUTUAL BOARD HAS DETERMINED
THAT THE TERMS OF THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, FIRST
MUTUAL'S STOCKHOLDERS. ACCORDINGLY, BY A MAJORITY VOTE, THE FIRST MUTUAL BOARD
OF DIRECTORS APPROVED THE AGREEMENT AND THE PLAN OF MERGER AND RECOMMENDS THAT
THE STOCKHOLDERS OF FIRST MUTUAL VOTE FOR APPROVAL OF THE AGREEMENT AND THE PLAN
OF MERGER.
UNION PLANTERS' REASONS FOR THE MERGER. In adopting the Agreement, the
Plan of Merger and the merger, the Union Planters' board of directors considered
a number of factors concerning the benefits of the merger. Without assigning any
relative or specific weights to the factors, the Union Planters' board of
directors considered the following additional material factors:
(1) a review, based in part on a presentation by Union Planters'
management, of
- the business, operations, earnings, and financial
condition, including the capital levels and asset
quality, of First Mutual on an historical,
prospective, and pro forma basis and in comparison
to other financial institutions in the area,
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- the demographic, economic, and financial
characteristics of the markets in which First Mutual
operates, including existing competition, history of
the market areas with respect to financial
institutions, and average demand for credit, on
historical and prospective basis, and
- the results of Union Planters' due diligence review
of First Mutual; and
(2) a variety of factors affecting and relating to the overall
strategic focus of Union Planters, including Union Planters'
desire to expand into markets in Illinois and the business
lines pursued by First Mutual.
Union Planters' board of directors determined that the merger was in
the best interests of Union Planters and its stockholders and unanimously
approved the proposed merger on October 15, 1998.
OPINION OF FIRST MUTUAL'S FINANCIAL ADVISOR
The First Mutual board retained Baird to act as its financial advisor
in connection with the merger and to render its opinion as to whether or not the
exchange ratio is fair, from a financial point of view, to the holders of First
Mutual common stock (other than Union Planters and its affiliates). On July 1,
1998, Baird delivered its opinion to the First Mutual board to the effect that,
as of such date, the exchange ratio was fair, from a financial point of view, to
such holders. Baird subsequently rendered a written opinion, dated November 16,
1998, confirming its earlier opinion to the effect that, as of November 16,
1998, the exchange ratio is fair, from a financial point of view, to such
holders.
The full text of Baird's opinion, dated November 16, 1998, which sets
forth the assumptions made, general procedures followed, matters considered and
limitations on the scope of review undertaken by Baird in rendering its opinion,
is attached as Appendix C to this proxy statement/prospectus. Baird's opinion is
directed only to the fairness, as of the date of the opinion and from a
financial point of view, of the exchange ratio to the holders of First Mutual
common stock (other than Union Planters and its affiliates) and does not
constitute a recommendation to any First Mutual stockholder as to how such
stockholder should vote with respect to the merger. Baird did not make any
recommendation to First Mutual concerning the form or amount of consideration to
be received in the merger. The summary of Baird's opinion set forth below is
qualified in its entirety by reference to the full text of the opinion attached
as Appendix C. First Mutual stockholders are urged to read the opinion carefully
in its entirety.
In conducting its investigation and analysis and in arriving at its
opinion, Baird reviewed such information and took into account such financial
and economic factors as it deemed relevant under the circumstances. In that
connection, Baird, among other things:
(1) reviewed certain internal information, primarily financial in
nature, including projections, concerning the business and operations of First
Mutual and Union Planters furnished
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to Baird for purposes of its analysis, as well as publicly available
information, including First Mutual's and Union Planters's recent filings with
the Securities and Exchange Commission and equity analyst research reports
prepared by various investment banking firms;
(2) reviewed the Agreement and the Plan of Merger;
(3) compared the historical market prices and trading activity of
First Mutual common stock and Union Planters common stock with those of certain
other publicly traded companies Baird deemed relevant;
(4) compared the financial position and operating results of First
Mutual and Union Planters with those of other publicly traded companies Baird
deemed relevant;
(5) compared the proposed financial terms of the merger with the
financial terms of certain other business combinations involving thrift
institutions that Baird deemed relevant; and
(6) reviewed certain potential proforma financial effects of the
merger.
Baird held discussions with members of First Mutual's and Union
Planters's senior management concerning First Mutual's and Union Planters's
historical and current financial condition and operating results, as well as the
future prospects of First Mutual and Union Planters. As a part of its
engagement, Baird was requested to and did solicit third party indications of
interest in acquiring First Mutual. Baird also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as Baird deemed relevant for the preparation of its
opinion. The exchange ratio was determined by First Mutual and Union Planters in
arms-length negotiations. First Mutual did not place any limitation upon Baird
with respect to the procedures followed or factors considered by Baird in
rendering its opinion.
In arriving at its opinion, Baird assumed and relied upon the accuracy
and completeness of all of the financial and other information that was publicly
available or provided to it by or on behalf of First Mutual and Union Planters
and was not engaged to independently verify any such information. Baird assumed,
with First Mutual's consent, that:
(1) all material assets and liabilities (contingent or otherwise,
known or unknown) of First Mutual and Union Planters are set forth in their
respective financial statements;
(2) the merger will be accounted for under the purchase method of
accounting;
(3) the prospective cost savings contemplated by Union Planters's
management following the merger will be realized and;
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(4) the merger will be consummated in accordance with the terms of
the Agreement without any amendment or waiver by First Mutual or Union Planters
of any condition to their obligations.
Baird also assumed that the financial forecasts examined by it were
reasonably prepared on bases reflecting the best available estimates and good
faith judgments of First Mutual's and Union Planters' senior management as to
future performance of First Mutual and Union Planters. In conducting its review,
Baird did not undertake or obtain an independent evaluation or appraisal of any
of the assets or liabilities (contingent or otherwise) of First Mutual or Union
Planters, nor did it make a physical inspection of the properties or facilities
of First Mutual or Union Planters. Baird assumed that all necessary regulatory
approvals for the merger would be obtained with out undue delay. Baird's opinion
necessarily was based upon economic, monetary and market conditions as they
existed and could be evaluated on the date of the opinion, and did not predict
or take into account any changes which may occur, or information which may
become available, after the date thereof. Furthermore, Baird expressed no
opinion as to the price or trading range at which First Mutual's or Union
Planters' securities would trade following the date of the opinion.
The following is a summary of the material financial analyses performed
by Baird in connection with rendering its opinion and making its presentation to
the First Mutual board.
ANALYSIS OF FIRST MUTUAL VALUATION MULTIPLES. Baird reviewed the terms
of the proposed merger, including the form of the merger consideration, the
proposed method of accounting and the indicated value of the First Mutual common
stock implied by the terms of the merger. The indicated value for the merger was
$18.50 per share of First Mutual common stock (the "Indicated Value"). Baird
calculated multiples of the Indicated Value to First Mutual earnings per share
("EPS") for the latest twelve months ("LTM") ended March 31, 1998 ("LTM
Earnings"), First Mutual management's estimates of 1998 EPS ("Projected 1998
Earnings") and reported book value and tangible book value per share as of March
31, 1998 ("Book Value" and "Tangible Book Value," respectively). These
calculations resulted in multiples of Indicated Value to EPS ("P/E Ratios") of
46.3x based on LTM Earnings and 36.3x based on Projected 1998 Earnings. These
calculations also resulted in multiples of Indicated Value to Book Value of
118.3%, an Indicated Value to Tangible Book Value of 152.8% and an implied core
deposit premium of 8.6% (based on core deposits as of March 31, 1998).
ANALYSIS OF PUBLICLY TRADED COMPANIES COMPARABLE TO FIRST MUTUAL. Baird
reviewed certain publicly available financial information as of the most
recently reported period and stock market information as of June 25, 1998 for
certain publicly traded companies which Baird deemed relevant. These companies
consisted of: Americana Bancorp, First Midwest Financial, Inc., Enterprise
Federal Bancorp, FSF Financial Corp., First Federal Financial Corp., Home
Bancorp, Industrial Bancorp, Inc., Kankakee Bancorp, Inc., Permanent Bancorp,
Inc. and Western Ohio Financial Corp. (the "Thrift Comparable Companies"). The
data described below with respect to the Thrift Comparable Companies consists of
the median data for such group as
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of the most recently reported period and are compared to First Mutual's
financial and operating information as reported as of March 31, 1998.
Baird noted that the ratios of the Indicated Value of First Mutual
common stock to the LTM earnings per share, Projected 1998 Earnings, Book Value
and Tangible Book Value were 46.3x, 36.3x, 118.3% and 152.8%, respectively, for
First Mutual. This compared to median ratios of closing stock price to LTM EPS,
projected 1998 earnings (as derived from equity research analysts' reports as
reported by I/B/E/S), Book Value and Tangible Book Value of 18.5x, 15.9x, 154.8%
and 163.8% for the Thrift Comparable Companies. The assets and equity reported
for First Mutual were approximately $390 million and $55 million compared to a
median of approximately $394 million and $43 million for the Thrift Comparable
Companies.
Baird also noted LTM net interest income of 3.11% of average assets for
First Mutual as compared to a median of 3.09% for the Thrift Comparable
Companies. General and Administrative ("G&A") expenses as a percent of average
assets were approximately 2.55% for First Mutual as compared to a median of
1.94% for the Thrift Comparable Companies. First Mutual recorded a ratio of LTM
income to average asset (i.e. return on average assets "ROAA")) for the LTM
ended March 31, 1998 of 0.32% and ratio of LTM earnings to average equity
("ROAE") of 2.38% as compared to medians of 0.85% and 7.24% respectively, for
the Thrift Comparable Companies. Also, Baird noted capital-to-assets and
tangible capital-to-assets ratios of 14.15% and 11.32% for First Mutual as
compared to medians of 11.02% and 10.93% respectively, for the Thrift Comparable
Companies.
ANALYSIS OF UNION PLANTERS. In order to assess the relative public
market valuation of the Union Planters common stock to be issued in the merger,
Baird reviewed certain publicly available financial information as of the most
recently reported period and stock market information as of June 25, 1998 for
Union Planters and certain selected publicly traded companies which Baird deemed
relevant. Such comparable companies consisted of: AmSouth Bancorporation,
Popular, Inc., Fifth Third Bancorp, First Security Corp., Firstar Corp., First
Tennessee National Corporation, Marshall & Ilsley Corp. and Northern Trust Corp.
(the "Union Planters Comparable Companies"). The data described below with
respect to the Union Planters Comparable Companies consist of median data for
such group and are compared to Union Planters common stock price (both based on
closing prices as of June 25, 1998) and Union Planters's financial and operating
information as reported as of March 31, 1998.
Baird noted that the ratios of the closing price of Union Planters
common stock to LTM EPS, projected 1998 earnings (as estimated by Union Planters
senior management for Union Planters and as derived from equity research
analysts' reports as reported by I/B/E/S for the Union Planters Comparable
Companies), Book Value and Tangible Book Value were 21.7x, 16.0x, 269.5% and
269.5%, respectively, for Union Planters as compared to medians of to 20.4x,
18.6x, 316.1% and 374.7% for the Union Planters Comparable Companies. Baird
noted that after adjusting Union Planters's EPS for merger related expenses and
one-time charges associated with merging several Union Planters bank charters,
the ratio of closing price of Union Planters
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common stock to revised LTM EPS was 18.3x. The assets and equity reported for
Union Planters were approximately $18.4 billion and $1.8 billion compared to a
median of approximately $19.8 billion and $1.6 billion for the Union Planters
Comparable Companies.
ANALYSIS OF SELECTED COMPARABLE TRANSACTIONS. Baird reviewed certain
information relating to three groups of transactions involving business
combinations of thrift institutions announced from January 1, 1997 through June
18, 1998:
- all such business combinations announced during such period
as reported by SNL Datasource (the "Entire Group");
- business combinations included in the Entire Group involving
selling institutions based in Midwestern states (the
"Midwestern Group"); and
- business combinations included in the Entire Group involving
selling institutions having an equity-to-asset ratio greater
than 12% (the "Hi-Cap Group").
Baird calculated that:
(1) the ratio of Indicated Value to First
Mutual's Book Value equaled 118.3%, compared with high,
median and low price-to-book ratios of 480.1%, 185.6% and
89.7% for the Entire Group; 349.4%, 175.0% and 115.2% for the
Midwestern Group; and 257.4%, 149.4% and 102.1% for the
Hi-Cap Group;
(2) the ratio of Indicated Value to First
Mutual's Tangible Book equaled 152.8%, compared with high,
median and low price-to-tangible book ratios of 480.1%,
188.8% and 89.7% for the Entire Group; 372.7%, 175.7% and
115.2% for the Midwestern Group; and 262.7%, 150.8% and
102.1% for the Hi-Cap Group;
(3) the multiple of Indicated Value to LTM
Earnings of First Mutual equaled 46.3x, compared with high,
median and low P/E Ratios based on LTM earnings of 54.0x,
21.3x and 8.0x for the Entire Group; 45.4x, 23.1x and 13.7x
for the Midwestern Group; and 51.7x, 25.0x and 8.0x for the
Hi-Cap Group; and
(4) the implied core deposit premium indicated
by the Merger equaled 8.6%, compared with high, median, and
low premiums to "core" deposits of 45.6%, 13.2% and 1.5% for
the Entire Group; 45.6%, 13.1% and 3.3% for the Midwestern
Group; and 42.4%, 13.8% and 3.9% for the Hi-Cap Group.
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Baird also calculated that:
(1) the ratio of the Indicated Value to First Mutual
Common Stock trading price on June 25, 1998 equaled 105.0%
compared with high, median and low premium to day-prior
trading prices of 229.1%, 117.2% and 85.5% for the Entire
Group; 229.1%, 111.3% and 99.0% for the Midwestern Group; and
229.1%, 110.7% and 101.2% for the Hi-Cap Group;
(2) the ratio of the Indicated Value to First Mutual
Common Stock trading price one month prior to June 25, 1998
equaled 102.8% compared with high, median and low premium to
closing stock prices for the selling institution one month
prior to the announcement date of 229.1%, 126.9% and 93.3% for
the Entire Group; 229.1%, 118.4% and 103.2% for the Midwestern
Group; and 229.1%, 116.8% and 97.7% for the High-Cap Group;
and
(3) the ratio of the Indicated Value to First Mutual
Common Stock trading price three months prior to June 25, 1998
equaled 95.5% compared with high, median and low premium to
closing stock prices for the selling institution three months
prior to the announcement date of 231.8%, 139.3% and 89.6% for
the Entire Group; 231.8%, 126.8% and 106.1% for the Midwestern
Group; and 231.8%, 116.5% and 89.6% for the Hi-Cap Group.
PRO FORMA MERGER ANALYSIS. Baird performed an analysis of certain
proforma financial effects of the merger. Using earnings estimates for First
Mutual (prepared by First Mutual management) and Union Planters (prepared by
Union Planters management), Baird compared Union Planters's earnings per share
and book value on a stand alone basis to the earnings per share and book value
of the combined companies on a pro forma basis. In conducting this analysis,
Baird assumed certain effects of the merger would be realized as estimated by
First Mutual and Union Planters management, including cost savings, operating
synergies, share repurchases of all shares to be issued in the merger by Union
Planters and tax effects resulting from the merger. This analysis indicated that
the merger would be accretive to Union Planters' pro forma earnings per share in
calendar years 1998 and 1999 and would have no effect on Union Planters' pro
forma book value.
DISCOUNTED EARNINGS ANALYSIS. Baird performed a discounted earnings
analysis of First Mutual on a stand alone basis using First Mutual management's
earnings projections through 2003, without taking into account any cost savings
and synergies that may be realized following the merger. In such analysis, Baird
assumed terminal value multiples ranging from 21.0x to 23.0x such projected
earnings and discount rates ranging from 12% to 14%. Such analysis produced
implied values of First Mutual common stock ranging from $16.67 to $19.40. Baird
noted that the discounted earnings analysis was included because it is a widely
used valuation methodology, but noted that the results of such methodology are
highly dependent upon the numerous
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assumptions that must be made, including earnings growth rates, dividend payout
rates, terminal values and discount rates.
CONTRIBUTION ANALYSIS. Baird analyzed First Mutual's and Union
Planters' relative contribution to the combined company resulting from the
merger with respect to assets, deposits, historical income, market
capitalization and tangible equity. As a result of the merger, and assuming an
exchange ratio of 0.325 (the Indicated Value divided by the closing price of
Union Planters Common Stock on June 25, 1998), First Mutual stockholders will
own approximately 0.8% of the outstanding Union Planters common stock, which
compares to First Mutual's contribution of 1.2% of assets, 1.3% of deposits,
0.6% of historical income, 0.4% each of management's estimates of net income for
1998 and 1999, 1.3% of market capitalization as of June 25, 1998, and 1.5% of
tangible equity.
In conducting its analysis, Baird also reviewed the historical trading
prices and volume of First Mutual common stock and Union Planters common stock
on a daily basis from June 25, 1997 to June 25, 1998.
In connection with its written opinion dated November 16, 1998, Baird
confirmed the appropriateness of its reliance on the analyses used to render its
opinion dated July 1, 1998, by performing procedures to update certain of its
analyses and by reviewing the assumptions on which such analyses were based and
the factors considered therewith.
The foregoing summary does not purport to be a complete description of
the analyses performed by Baird. The preparation of a fairness opinion is a
complete process and is not susceptible to partial analysis or a summary
description. Baird believes that its analyses must be considered as a whole and
that selecting portions of such analyses without considering all factors and
analyses would create an incomplete view of the processes underlying its
opinion. In its analyses, Baird relied upon numerous assumptions made by senior
management of First Mutual and Union Planters with respect to industry
performance, general business and economic conditions, and other matters, many
of which are beyond the control of First Mutual or Union Planters. Analyses
based upon forecasts of future results are not necessarily indicative of actual
values, which may be significantly more or less favorable than suggested by such
analyses. No company or transaction used as a comparison in the analyses is
identical to First Mutual or Union Planters or to the merger. Accordingly, an
analysis of the results of the foregoing necessarily involves complex
considerations and judgments concerning financial and operating characteristics
of the companies and other factors that could affect the public trading volume
of the companies to which First Mutual and Union Planters and the merger are
being compared. Additionally, any estimates included in Baird's analyses do not
purport to be appraisals and are not necessarily reflective of the prices at
which businesses actually may be sold. Because such estimates are inherently
subject to uncertainty, Baird does not assume responsibility for their accuracy.
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Baird, as part of its investment banking business, is engaged in the
evaluation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes. First Mutual retained Baird
because of its experience and expertise in the valuation of businesses and their
securities in connection with mergers and acquisitions. In the ordinary course
of business, Baird may from time to time trade equity securities of First Mutual
and Union Planters for its own account and for accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
COMPENSATION. Pursuant to an engagement letter dated December 2, 1997
between First Mutual and Baird, Baird has earned a retainer fee of $30,000, a
fee of $100,000 for the rendering of its opinion dated July 1, 1998 and a fee of
$50,000 for the rendering of its opinion dated November 16, 1998. In addition,
upon completion of the merger, Baird will receive a fee equal to 0.60% of the
value of the total consideration payable in the merger. This fee is contingent
upon completion of the merger. Baird has agreed to pay 20% of such fees to
Keefe, Bruyette & Woods, Inc. First Mutual also agreed to reimburse Baird for
its out-of-pocket expenses. First Mutual has also agreed to indemnify Baird, its
affiliates and their respective directors, officers, employees, agents and
controlling persons against certain liabilities relating to or arising out of
its engagement, including liabilities under the federal securities laws.
EFFECTIVE TIME OF THE MERGER
Subject to the conditions to the obligations of the parties to effect
the merger, the merger will become effective when a Certificate and Articles of
Merger reflecting the merger become effective with the Secretary of State of the
State of Delaware and the Secretary of State of the State of Tennessee. Unless
Union Planters and First Mutual agree otherwise, they will use reasonable
efforts to cause the merger to become effective on the date designated by Union
Planters that is within 15 days after the last to occur of:
(1) the effective date of the last consent of any regulatory
authority having authority over and approving or exempting the merger (taking
into account any required waiting period); and
(2) the date on which First Mutual's stockholders approve the
Agreement and the Plan of Merger.
First Mutual and Union Planters anticipate that the merger will become
effective on or about January 31, 1999. However, delays could occur.
Union Planters and First Mutual cannot assure that the necessary
stockholder and regulatory approvals of the merger will be obtained or that
other conditions precedent to the merger can or will be satisfied. Either First
Mutual's or Union Planters' board of directors may
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terminate the Agreement and the Plan of Merger if the merger is not completed by
March 31, 1999, unless it is not completed because of the willful breach of the
Agreement by the party seeking termination. See "-- Conditions to Consummation
of the Merger" and "-- Waiver, Amendment, and Termination."
DISSENTERS' RIGHTS
Because First Mutual common stock is traded on the Nasdaq National
Market System, stockholders of First Mutual will not have appraisal rights under
Delaware law.
DISTRIBUTION OF UNION PLANTERS STOCK CERTIFICATES
Promptly after the merger is completed, each former First Mutual
stockholder will be mailed a letter of transmittal and instructions for the
exchange of the certificates representing shares of First Mutual common stock
for certificates representing shares of Union Planters common stock. Union
Planters expects that one of its bank subsidiaries will serve as the exchange
agent.
You should not send in your certificates until you receive a letter of
transmittal and instructions.
After you surrender to the exchange agent certificates for First Mutual
common stock with a properly completed letter of transmittal, the exchange agent
will mail you a certificate or certificates representing the number of shares of
Union Planters common stock to which you are 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 the shares of
Union Planters common stock (without interest thereon), if any. Union Planters
will not be obligated to deliver the consideration to you, as a former First
Mutual stockholder, until you have surrendered your First Mutual common stock
certificates.
Whenever a dividend or other distribution is declared by Union Planters
on Union Planters common stock with a record date after the date on which the
merger became effective, the declaration will include dividends or other
distributions on all shares of Union Planters common stock that may be issued in
the merger. However, Union Planters will not pay any dividend or other
distribution that is payable after the effective date of the merger to any
former First Mutual stockholder who has not surrendered his or her First Mutual
common stock certificate until the holder surrenders the certificate. If any
First Mutual stockholder's common stock certificate has been lost, stolen, or
destroyed, the exchange agent will issue the shares of Union Planters common
stock and any cash in lieu of fractional shares upon the stockholder's
submission of an affidavit claiming the certificate to be lost, stolen, or
destroyed by the stockholder of record and the posting of a bond in such amount
as Union Planters may reasonably direct as indemnity against any claim that may
be made against Union Planters with respect to the certificate.
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At the time the merger becomes effective, the stock transfer books of
First Mutual will be closed to First Mutual's stockholders and no transfer of
shares of First Mutual common stock by any stockholder will thereafter be made
or recognized. If certificates for shares of First Mutual common stock are
presented for transfer after the merger becomes effective, they will be canceled
and exchanged for shares of Union Planters common stock, a check for the amount
due in lieu of fractional shares, if any, and any undelivered dividends on the
Union Planters common stock.
CONDITIONS TO CONSUMMATION OF THE MERGER
Union Planters and First Mutual are required to complete the merger
only after the satisfaction of various conditions. These conditions include:
(1) the holders of a majority of the outstanding shares of First
Mutual common stock must approve the Agreement and the Plan of
Merger;
(2) Union Planters and First Mutual must receive certain required
regulatory approvals;
(3) Union Planters and First Mutual must receive a written opinion
of counsel as to the tax-free nature of the merger;
(4) the Securities and Exchange Commission must declare the
registration statement, registering the shares of Union
Planters common stock to be issued to First Mutual
stockholders in the merger, effective under the Securities Act
of 1933, as amended;
(5) the shares of Union Planters common stock to be issued in the
merger must be approved for listing on the New York Stock
Exchange, subject to official notice of issuance;
(6) the representations and warranties of First Mutual and Union
Planters as set forth in the Agreement must be accurate as of
the date of the Agreement and as of the date the merger
becomes effective;
(7) Union Planters and First Mutual must perform all agreements
and comply with all covenants as set forth in the Agreement;
(8) Union Planters and First Mutual must receive all other
consents that may be required to complete the merger or to
prevent any default under any contract or permit which would
be reasonably likely to have, individually or in the
aggregate, a material adverse effect on First Mutual or Union
Planters;
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(9) the absence of any law or order or any action taken by any
court, governmental, or regulatory authority of competent
jurisdiction prohibiting or restricting the merger or making
it illegal;
(10) First Mutual must receive an opinion from its financial
advisor to the effect that the merger is fair to First
Mutual's stockholders from a financial point of view;
(11) Union Planters must receive agreements from each person First
Mutual reasonably believes may be deemed an affiliate of First
Mutual; and
(12) certain other conditions must be satisfied, including the
receipt of various certificates from the officers of First
Mutual and Union Planters.
Neither Union Planters nor First Mutual can assure First Mutual
stockholders as to when or if all of the conditions to the merger can or will be
satisfied or waived by the party permitted to do so. If the merger is not
effected on or before March 31, 1999, the board of directors of either First
Mutual or Union Planters may terminate the Agreement and abandon the merger. See
"-- Waiver, Amendment, and Termination."
REGULATORY APPROVAL
Union Planters must receive certain regulatory approvals before the
merger can be completed. There is no assurance that these regulatory approvals
will be obtained or when they will be obtained.
It is a condition to the completion of the merger that Union Planters
and First Mutual receive all necessary regulatory approvals to the merger,
without the imposition by any regulator of any condition that, in the reasonable
judgment of the Union Planters board of directors, would so materially adversely
impact the financial or economic benefits of the merger that, had such condition
or requirement been known, Union Planters would not have entered into the
Agreement. There can be no assurance that the regulatory approvals of the merger
will not contain terms, conditions or requirements which would have such an
impact.
First Mutual and Union Planters are not aware of any material
governmental approvals or actions that are required to complete the merger,
except as described below. Should any other approval or action be required,
Union Planters and First Mutual contemplate that they would seek such approval
or action.
The merger is subject to the prior approval of the Federal Reserve,
pursuant to Section 3 of the Bank Holding Company Act. Factors considered by the
Federal Reserve in evaluating the merger are discussed under the heading
"CERTAIN REGULATORY CONSIDERATIONS-General" on page 72. The merger may not be
completed until the 30th day following the date of the Federal Reserve approval,
although the Federal Reserve may reduce that period to 15 days. During this
period the United States Department of Justice is given the opportunity to
challenge the
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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 specifically ordered otherwise.
The merger is also considered to be a change in control of First Mutual
which, under the Illinois Savings Bank Act, as amended, requires the approval of
the Illinois Commissioner of Banks and Real Estate. The regulations of the
Illinois Commissioner provide that the Illinois Commissioner may disapprove a
proposed change in control if he finds that:
(1) the financial condition of the acquiror may jeopardize the
financial stability of the savings bank or prejudice the interests of
the savings bank's depositors, borrowers or stockholders;
(2) the acquiror's plans with respect to the savings bank are not
fair and reasonable to the savings bank's depositors, borrowers or
stockholders or are not in the public interest;
(3) in light of the banking and business experience and integrity
of the acquiror, the acquisition would not be in the best interests of
the depositors, borrowers or stockholders of the savings bank; or
(4) the acquisition would not be in the public interest.
WAIVER, AMENDMENT, AND TERMINATION
To the extent permitted by law, the boards of directors of Union
Planters and First Mutual may agree in writing to amend the Agreement, whether
before or after First Mutual's stockholders have approved the Agreement and the
Plan of Merger. In addition, before or at the time the merger becomes effective,
either First Mutual or Union Planters, or both, may waive any default in the
performance of any term of the Agreement by the other party or 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. In addition, either Union Planters
or First Mutual may waive any of the conditions precedent to its obligations
under the Agreement, unless a violation of any law or governmental regulation
would result. To be effective, a waiver must be in writing and signed by a duly
authorized officer of First Mutual or Union Planters, as the case may be.
At any time before the merger becomes effective, the boards of
directors of Union Planters and First Mutual may agree to terminate the
Agreement and the Plan of Merger. In addition, either First Mutual's board of
directors or the Union Planters board of directors may terminate the Agreement
in the following circumstances:
(1) in certain circumstances, upon the inaccuracy of any
representation or warranty of a party contained in the
Agreement if the inaccuracy 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
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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 standard set forth in the Agreement or in
material breach of any covenant or other agreement contained
in the Agreement);
(2) if a material breach by the other party of any covenant or
agreement contained in the Agreement cannot be or has not been
cured within 30 days after the giving of written notice to the
breaching party of such breach (provided that the terminating
party is not then in breach of any representation or warranty
contained in the Agreement under the applicable standard set
forth in the Agreement or in material breach of any covenant
or other agreement contained in the Agreement);
(3) if any consent of any regulatory authority required to
complete the merger or 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;
(4) if the stockholders of First Mutual fail to approve the
Agreement, the Plan of Merger and the merger at the special
meeting; or
(5) if the merger is not consummated by March 31, 1999, provided
that the failure to consummate is not caused by any willful
breach of the Agreement by the party electing to terminate.
If the merger is terminated, the Agreement and the Plan of Merger will
become void and have no effect, except that certain provisions of the Agreement,
including those relating to the obligations to share certain expenses and
maintain the confidentiality of certain information obtained, will survive.
Termination of the Agreement will not relieve any breaching party from liability
for any uncured willful breach of a representation, warranty, covenant, or
agreement. The Option Agreement is governed by its own terms as to its
termination. See "-- Expenses and Fees" and "-- Option Agreement."
CONDUCT OF BUSINESS PENDING THE MERGER
The Agreement obligates First Mutual to conduct its business only in
the usual, regular, and ordinary course before the merger becomes effective and
imposes certain limitations on the operations of First Mutual and its banking
subsidiaries. These items are listed in Article 7 of the Agreement which is
attached as Appendix A to this proxy statement-prospectus. The Agreement
authorizes First Mutual to declare and pay regular quarterly dividends on the
First Mutual common stock in accordance with its past practice in an amount not
to exceed $.08 per share per quarter. The Agreement contemplates that the merger
will be timed to occur at such a time that the First Mutual stockholders will
not fail to receive a dividend during a quarterly period, nor will they receive
a dividend on both their First Mutual common stock and the Union Planters common
stock they receive in the merger during the same quarterly period.
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First Mutual has also agreed that neither it nor any of its
representatives will directly or indirectly solicit any proposal for the
acquisition of First Mutual or, except to the extent necessary to comply with
the fiduciary duties of First Mutual's board of directors as advised by its
counsel, furnish any non-public information concerning First Mutual that it is
not legally obligated to furnish, negotiate with respect to, or enter into any
contract with respect to, any proposal to acquire First Mutual.
Union Planters and First Mutual have also agreed not to take any action
that would (a) materially adversely affect their ability to obtain any consents
required for the merger or prevent the merger from qualifying as a tax-free
reorganization under the Internal Revenue Code (see "-- Certain Federal Income
Tax Consequences of the Merger"), or (b) materially adversely affect their
ability to perform their covenants and agreements under the Agreement.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
The merger will not change the present management team or board of
directors of Union Planters. Information concerning the management of Union
Planters is included in the documents incorporated by reference in this proxy
statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION." For additional
information regarding the interests of certain persons in the merger, see "--
Interests of Certain Persons in the Merger."
Union Planters Holding Corporation will be the surviving corporation
resulting from the merger and will continue to be governed by the laws of the
State of Tennessee and operate in accordance with its charter and bylaws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
GENERAL. Certain members of First Mutual's management and First
Mutual's board of directors may be deemed to have certain interests in the
merger that are in addition to their interests as stockholders of First Mutual
generally. First Mutual's board of directors was aware of these interests and
considered them, among other matters, in approving the Agreement, the Plan of
Merger and the merger.
EMPLOYMENT AGREEMENT. First Mutual is a party to an employment
agreement with Paul K. Reynolds dated as of June 30, 1995, as amended December
30, 1997. The agreement provides for a minimum base salary of $155,667 and
entitles Mr. Reynolds to receive certain other employee benefits and to
participate in incentive bonus and stock option plans. The agreement provides
for an initial term through January 31, 1997 and additional 12 month terms
unless, at least 10 days and not more than 30 days prior to the anniversary
date, notice of nonrenewal is provided to Mr. Reynolds, in which case the
agreement will expire on the next anniversary date.
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The employment agreement provides that if Mr. Reynold's employment is
terminated for cause, Mr. Reynolds will be provided his salary through the date
of termination. If termination of employment is due to disability, Mr. Reynolds
will be provided his base salary for a period of one year plus a pro rata
distribution under any annual incentive bonus in the year in which termination
of employment occurs. If termination of employment is due to death, payments for
base salary at the rate then in effect and medical, dental, family and other
benefits normally provided for Mr. Reynolds would continue for one year after
his death. If Mr. Reynolds' employment is terminated for any other reason (other
than disability, death or retirement, or following a change in control of First
Mutual or for cause) or Mr. Reynolds resigns in certain circumstances, Mr.
Reynolds will be provided 3 times the average of his 3 preceding years' base
salary, including bonuses and other cash compensation paid Mr. Reynolds during
such years and the amount of any benefits paid pursuant to any employee benefit
plans or accrued on his behalf during such years. In addition, any life,
medical, dental and disability coverages provided Mr.
Reynolds will continue to be maintained for a 12 month period.
Upon Mr. Reynolds' voluntary termination, in certain circumstances,
First Mutual, at its discretion, may pay Mr. Reynolds a severance payment not to
exceed 3 times the average of his 3 preceding years' base salary.
Following a change in control of First Mutual, and Mr. Reynolds'
subsequent termination of employment during the term of the agreement (other
than a termination because of death, disability, normal retirement or for
cause), Mr. Reynolds will be provided a severance payment equal to 2.99 times
the average of his 5 preceding years' base salary, including bonuses and other
taxable compensation. In addition, Mr. Reynolds will be provided continued life,
medical, dental and disability coverage for 3 years and any benefits granted to
him under any First Mutual stock option plan or other stock benefit plan. With
respect to benefits paid, accrued or accelerated because of a change in control,
the agreement requires First Mutual to make certain tax gross-up payments to
cover the income tax and excise tax liability of Mr. Reynolds with respect to
those benefits, including tax liabilities associated with the gross-up payments.
The benefits for Mr. Reynolds payable under his employment agreement would total
approximately $923,300.
First Mutual and Union Planters have entered into a letter agreement
that provides that Union Planters will cause First Mutual to honor Mr. Reynolds'
employment agreement.
SEVERANCE AGREEMENTS. Five other officers of First Mutual are covered
by severance agreements dated as of January 31, 1996, as amended December 30,
1997, that provide them certain protections in the event of a change in control
of First Mutual. The term of the severance agreements extends automatically for
one additional year on each January 31, unless First Mutual elects not to extend
the term.
Under these agreements, if the officer is terminated during the term of
the agreement following a change in control of First Mutual (other than a
termination for cause), the officer will be entitled to receive severance pay
equal to 2.99 times the average of the officer's 5 preceding
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<PAGE> 52
years' annual compensation, including bonuses and any other taxable compensation
paid to the officer during such year. In addition, the officer will be provided
continued life, medical, dental and disability coverage for a 12 month period
(unless the officer's subsequent employer provides coverage of equal or greater
value than that provided by First Mutual), and any benefits granted to the
officer under any First Mutual stock option plan or other stock benefit plan.
The agreements also require First Mutual to make certain tax gross-up payments
to cover the income tax and excise tax liability of the officers with respect to
such benefits, including tax liabilities associated with the gross-up payments.
Union Planters has agreed to cause First Mutual to honor the severance
agreements.
STOCK OPTIONS. First Mutual has granted stock options to directors,
executive officers and other employees under its stock option plan. Prior to the
closing, First Mutual has agreed to cause each outstanding option under First
Mutual's stock option plan to be exercised or canceled in exchange for a cash
payment to the option holder.
The following table sets forth with respect to First Mutual's chief
executive officer and all executive officers and directors as a group, the
number of shares of First Mutual common stock covered by outstanding options
held by such persons, the average exercise price of the options and the
aggregate value of the options.
<TABLE>
<CAPTION>
Weighted
Average Aggregate
Stock Exercise Price Value of
Options Held Per Option Stock Options
------------ -------------- -------------
<S> <C> <C> <C>
Paul K. Reynolds 117,500 $11.75 $ 793,125
Directors and
executive officers
as a group 343,100 $11.75 $2,315,925
</TABLE>
MANAGEMENT RECOGNITION PLAN. First Mutual has awarded certain directors
and officers shares of First Mutual common stock under First Mutual's Management
Recognition Plan. All awards under the plan will vest at the completion of the
merger. The following table sets forth with respect to First Mutual's chief
executive officer and all executive officers and directors as a group, the
number of shares of First Mutual common stock covered by currently unvested
awards, and the aggregate value of the awards.
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<PAGE> 53
<TABLE>
<CAPTION>
Aggregate
Awards Held Value of Awards
----------- ---------------
<S> <C> <C>
Paul K. Reynolds 18,800 shares $ 347,800
Directors and
Executive Officers
as a Group 63,920 shares $1,182,520
</TABLE>
INDEMNIFICATION; DIRECTORS AND OFFICERS INSURANCE. Union Planters has
agreed to indemnify the present and former directors, officers, employees, and
agents of First Mutual and its subsidiaries against certain liabilities arising
out of actions or omissions occurring at or prior to the time the merger becomes
effective (including the merger) to the fullest extent permitted under Delaware
law, First Mutual's certificate of incorporation and bylaws, and any indemnity
agreements previously entered into by First Mutual or any of its subsidiaries
and any director, officer, employee, or agent of First Mutual or any of its
subsidiaries. This provision of the Agreement is consistently included in Union
Planters' standard form merger agreement and is not intended to broaden in any
manner the scope of indemnification to which the present and former directors,
officers, employees, and agents of First Mutual and its subsidiaries are
entitled, but serves to ratify the legal obligations of First Mutual and its
subsidiaries to provide indemnification in accordance with Delaware law, First
Mutual's certificate of incorporation and bylaws, and any indemnification
agreements to which First Mutual or its subsidiaries is a party with an
indemnified person. These obligations will be assumed by Union Planters Holding
Corporation upon completion of the merger. The indemnification provided under
these instruments will be subject to the same standards that currently apply in
determining whether indemnified parties are entitled to indemnification.
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<PAGE> 54
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 First Mutual 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 will be recorded as goodwill. Income
and other financial statements of Union Planters issued after the completion of
the merger will include First Mutual prospectively.
The key differences between the purchase method of accounting and the
pooling-of-interests accounting method fall into two areas: income measurement
and asset valuation. Under pooling-of-interests, the earnings of each company
are combined as though the combination had occurred at the beginning of the
earliest financial period presented or, in the case of transactions which are
not considered significant, from date of consummation forward. Under purchase
accounting, the earnings of the acquired company are included only after the
closing of the merger. Under pooling-of-interests, the assets of the acquired
company are valued at their historical cost. Under the purchase method, the
assets are valued at their fair value. The excess of the consideration the
acquiring company pays over the fair value of the target's assets is recorded as
goodwill.
EXPENSES AND FEES
Union Planters and First Mutual will each pay their own expenses in
connection with the merger, including filing, registration and application fees,
printing fees, and fees and expenses of its own financial or other consultants,
investment bankers, accountants, and counsel, except that each of Union Planters
and First Mutual will bear and pay one-half of the printing costs incurred in
connection with the registration statement and this proxy statement-prospectus.
RESALES OF UNION PLANTERS COMMON STOCK
Union Planters common stock to be issued to stockholders of First
Mutual in the merger will be registered under the Securities Act of 1933, as
amended. All shares of Union Planters common stock received by stockholders of
First Mutual in the merger will be freely transferable after the merger by those
stockholders of First Mutual who are not considered to be "affiliates" of First
Mutual or Union Planters. "Affiliates" generally are defined as persons or
entities who control, are controlled by, or are under common control with First
Mutual or Union Planters at the time of the special meeting (generally,
executive officers, directors, and 10% or greater stockholders).
Rule 145 promulgated under the Securities Act of 1933, as amended,
restricts the sale of Union Planters common stock received in the merger by
affiliates of First Mutual and certain of their family members and related
entities. Under the rule, during the first calendar year after the merger
becomes effective, affiliates of First Mutual or Union Planters may publicly
resell the Union Planters common stock they receive in the merger but only
within certain limitations as to
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<PAGE> 55
the amount of Union Planters common stock they can sell in any three-month
period and as to the manner of sale. After the one-year period, affiliates of
First Mutual who are not affiliates of Union Planters may resell their shares
without restriction. Union Planters must continue to satisfy its reporting
requirements under the Securities Exchange Act of 1934, as amended, in order for
affiliates to resell, under Rule 145, shares of Union Planters common stock
received in the merger. Affiliates also would be permitted to resell Union
Planters common stock received in the merger pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or an
available exemption from the registration requirements. This proxy
statement-prospectus does not cover any resales of Union Planters common stock
received by persons who may be deemed to be affiliates of First Mutual or Union
Planters.
First Mutual has agreed to use its reasonable efforts to cause each
person who may be deemed to be an affiliate of First Mutual to execute and
deliver to Union Planters not later than 30 days prior to the effective time of
the merger, an agreement intended to ensure compliance with the Securities Act
of 1933, as amended. Each First Mutual affiliate must agree not to sell, pledge,
transfer, or otherwise dispose of any First Mutual common stock held by the
affiliate except as contemplated by the Agreement or the affiliate agreement. In
addition, each First Mutual affiliate must agree not to sell, pledge, transfer
or otherwise dispose of any Union Planters common stock received in the merger
except in compliance with the Securities Act of 1933, as amended, and the rules
and regulations under the Securities Act of 1933, as amended. The stock
certificates representing Union Planters common stock issued to affiliates in
the merger may bear a legend summarizing these restrictions on transfer. See "--
Conditions to Consummation of the Merger."
OPTION AGREEMENT
As an inducement and a condition to Union Planters entering into the
Agreement, First Mutual and Union Planters entered into a Stock Option
Agreement, dated July 2, 1998 ("Option Agreement"). Under this agreement, First
Mutual granted Union Planters an option (the "Option") entitling it to purchase
up to 702,583 shares of First Mutual common stock under the circumstances
described below. This amount represents approximately 19.9% of the First Mutual
shares issued and outstanding before giving effect to the issuance of additional
shares of First Mutual pursuant to the exercise of the Option. Union Planters
may purchase the shares subject to the Option, at a cash price per share equal
to $18.50, subject to possible adjustment in certain circumstances. This
description of the Option Agreement and the Option does not contain all of the
terms and conditions of the Option and is qualified in its entirety by reference
to the Option Agreement, which is filed as an exhibit to the registration
statement and incorporated herein by reference.
If no preliminary or permanent injunction or other order against the
delivery of the shares of First Mutual common stock covered by the Option issued
by any court of competent jurisdiction is in effect, Union Planters may exercise
the Option, in whole or in part, at any time, from time to time, if, but only
if, a Purchase Event (as defined below) occurs prior to termination of the
Option. Union Planters may not exercise the Option if it is in material breach
of the
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<PAGE> 56
Option Agreement or the Agreement. The Option Agreement defines "Purchase Event"
as either of the following events:
(1) without Union Planters' prior written consent, First Mutual
authorizes, recommends, publicly proposes, or publicly
announces an intention to authorize, recommend, or propose or
enters into an agreement with any third party to effect:
(a) a merger, consolidation, or similar transaction
involving First Mutual or any of its subsidiaries
(other than transactions solely between First
Mutual's subsidiaries or other than transactions
involving First Mutual or any of its subsidiaries in
which the voting securities outstanding immediately
prior to the transaction continue to represent at
least 75% of the combined voting power of the voting
securities of First Mutual or the surviving entity);
(b) the disposition, by sale, lease, exchange, or
otherwise, of 20% or more of the consolidated assets
of First Mutual and its subsidiaries; or
(c) the issuance, sale, or other disposition (including
by way of merger, consolidation, share exchange, or
any similar transaction) of securities representing
20% or more of the voting power of First Mutual or
any of its subsidiaries; or
(2) any person (other than Union Planters or any Union Planters
subsidiary) acquires beneficial ownership (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), or
the right to acquire beneficial ownership of, or the
formation of any "group" (as defined under the Exchange Act),
other than a group of which Union Planters or any Union
Planters subsidiary is a member, that beneficially owns or
has the right to acquire beneficial ownership of, 20% or more
of the outstanding shares of First Mutual common stock.
The Option will terminate upon the earliest of the following:
(1) the time the merger becomes effective;
(2) the termination of the Agreement in accordance with its terms
before the occurrence of a Purchase Event or a Preliminary
Purchase Event (as defined below) (unless the Agreement is
terminated under certain circumstances involving a willful
breach by First Mutual of a representation or warranty
contained in the Agreement or a breach by First Mutual of a
covenant contained in the Agreement) (a "Default
Termination");
(3) 18 months after termination of the Agreement by Union Planters
pursuant to a Default Termination; or
(4) 18 months after termination of the Agreement following the
occurrence of a Purchase Event or a Preliminary Purchase
Event.
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<PAGE> 57
As defined in the Option Agreement, "Preliminary Purchase Event"
includes the following events:
(1) the commencement or filing of a registration statement under
the Securities Act by any third party of a tender offer or
exchange offer to purchase any shares of First Mutual common
stock such that, upon completion of the offer, the third party
would own or control 15% or more of the then-outstanding
shares of First Mutual common stock (a "Tender Offer" or an
"Exchange Offer," respectively); or
(2) the failure of the First Mutual stockholders to approve the
Agreement and the Plan of Merger at the special meeting, the
failure to have the special meeting or another such meeting
held for the purpose of voting on the Agreement, or the
cancellation of the special meeting prior to termination of
the Agreement, or the withdrawal or modification by First
Mutual's board of directors in a manner adverse to Union
Planters of its recommendation with respect to the Agreement,
in each case, after public announcement that a third party:
(a) made a proposal to engage in an acquisition
transaction;
(b) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an
Exchange Offer; or
(c) filed an application or gave a notice under any
federal or state statutes or regulations for approval
or consent to engage in an acquisition transaction.
If there is any change in First Mutual common stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares, or similar transaction, the type and number of securities subject to
the Option, and the purchase price, will be adjusted appropriately. In the event
that any additional shares of First Mutual common stock are issued after July 2,
1998 (other than pursuant to an event described in the preceding sentence), the
number of shares of First Mutual common stock subject to the Option will be
adjusted so that, after such issuance, it, together with any shares of First
Mutual common stock previously issued under the Option Agreement, will not
exceed 19.9% of the number of shares of First Mutual common stock then issued
and outstanding, without giving effect to any shares subject to or issued
pursuant to the Option.
Upon the occurrence of a Repurchase Event (as defined below) that
occurs prior to the exercise or termination of the Option, at the request of
Union Planters, First Mutual will be obligated to repurchase the Option and any
shares of First Mutual common stock purchased pursuant to the Option Agreement
at a specified price, subject to any regulatory restrictions that may apply.
Union Planters must deliver its request within 18 months of a Repurchase Event.
As defined in the Option Agreement, a "Repurchase Event" occurs if:
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<PAGE> 58
(1) any person (other than Union Planters or any Union Planters
subsidiary) acquires beneficial ownership, or the right to
acquire beneficial ownership, or any "group" (as such term is
defined under the Exchange Act) is formed which beneficially
owns or has the right to acquire beneficial ownership of 50%
or more of the then-outstanding shares of First Mutual common
stock; or
(2) any of the following transactions is consummated:
(a) First Mutual consolidates with or merges into any
person, other than Union Planters or one of Union
Planters' subsidiaries, and is not the continuing or
surviving corporation of such consolidation or
merger;
(b) First Mutual permits any person, other than Union
Planters or one of Union Planters' subsidiaries, to
merge into First Mutual and First Mutual is the
continuing or surviving corporation, but, in
connection with such merger, the then-outstanding
shares of First Mutual common stock are changed into
or exchanged for stock or other securities of First
Mutual or any other person or cash or any other
property or the outstanding shares of First Mutual
common stock immediately prior to such merger shall
after such merger represent less than 50% of the
outstanding shares and share equivalents of the
merged company; or
(c) First Mutual sells or otherwise transfers all or
substantially all of its assets to any person, other
than Union Planters or one of Union Planters'
subsidiaries.
After the occurrence of a Purchase Event, Union Planters may assign the
Option Agreement and its rights under the Option Agreement in whole or in part.
Upon the occurrence of certain events, First Mutual has agreed to file
with the Securities and Exchange Commission and to cause to become effective
certain registration statements under the Securities Act of 1993, as amended, so
that Union Planters and its assigns may dispose of all or part of the Option
and/or any shares of First Mutual common stock into which the Option is
exercisable.
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<PAGE> 59
EFFECT OF THE MERGER ON RIGHTS OF STOCKHOLDERS
In the merger, stockholders of First Mutual will exchange their shares
of First Mutual for shares of Union Planters. First Mutual is a Delaware
corporation governed by Delaware law and First Mutual's certificate of
incorporation and bylaws. Union Planters is a Tennessee corporation governed by
Tennessee law and Union Planters' charter and bylaws. There are significant
differences between the rights of First Mutual stockholders and Union Planters'
stockholders. The following is a summary of the principal differences between
the current rights of First Mutual stockholders and those of Union Planters'
stockholders.
The following summary is not intended to be complete and is qualified
it its entirety by reference to the Delaware General Corporation Law and the
Tennessee Business Corporation Act as well as Union Planters' charter and bylaws
and First Mutual's certificate of incorporation and bylaws.
ANTI-TAKEOVER PROVISIONS GENERALLY
Union Planters' charter and bylaws contain certain provisions designed
to assist the Union Planters board of directors in playing a role if any group
or person attempts to acquire control of Union Planters so that the Union
Planters board of directors can further protect the interests of Union Planters
and its stockholders under the circumstances. These provisions may help the
Union Planters board of directors determine that a sale of control is in the
best interests of Union Planters' stockholders, or enhance the Union Planters
board of directors' ability to maximize the value to be received by the
stockholders upon a sale of control of Union Planters.
Although Union Planters' management believes that these provisions are
beneficial to Union Planters' stockholders, they also may tend to discourage
some takeover bids. As a result, Union Planters' stockholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices. On the other hand, defeating undesirable
acquisition offers can be a very expensive and time-consuming process. To the
extent that these provisions discourage undesirable proposals, Union Planters
may be able to avoid those expenditures of time and money.
These provisions also may discourage open market purchases by a company
that may desire to acquire Union Planters. Those purchases may increase the
market price of Union Planters common stock temporarily, and enable stockholders
to sell their shares at a price higher than that they might otherwise obtain. In
addition, these provisions may decrease the market price of Union Planters
common stock by making the stock less attractive to persons who invest in
securities in anticipation of price increases from potential acquisition
attempts. The provisions also may make it more difficult and time consuming for
a potential acquiror to obtain control of Union Planters through replacing the
board of directors and management. Furthermore, the provisions may make it more
difficult for Union Planters' stockholders to replace the board of directors or
management, even if a majority of the stockholders believe that replacing the
board
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<PAGE> 60
of directors or management is in the best interests of Union Planters. Because
of these factors, these provisions may tend to perpetuate the incumbent board of
directors and management.
First Mutual's certificate of incorporation and bylaws also contain
certain anti-takeover provisions which are described below. These provisions may
discourage or prevent tender or exchange offers by a corporation or group that
intends to use the acquisition of a substantial number of shares of First Mutual
to initiate a takeover culminating in a merger or other business combination.
These provisions may also have the effect of making the removal of current
management more difficult.
AUTHORIZED CAPITAL STOCK
UNION PLANTERS. Union Planters is authorized to issue 300,000,000
shares of common stock, of which 136,063,035 shares were issued and outstanding
as of October 31, 1998, and 10,000,000 shares of no par value preferred stock,
of which 968,865 shares of Series E preferred stock were issued and outstanding
as of October 31, 1998. The Union Planters board of directors may authorize the
issuance of additional shares of common stock without further action by its
stockholders, unless applicable laws or regulations or a stock exchange on which
Union Planters' capital stock is listed requires stockholder action.
Union Planters may issue, without a stockholder vote, shares of its
preferred stock, in one or more classes or series, with voting, conversion,
dividend, and liquidation rights as it specifies in its charter. The Union
Planters board of directors may determine, among other things, the distinctive
designation and number of shares comprising a series of preferred stock, the
dividend rate or rates on the shares of such series and the relation of such
dividends to the dividends payable on other classes of stock, whether the shares
of such series shall be convertible into or exchangeable for shares of any other
class or series of Union Planters 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 Union Planters, holders of preferred
stock will have priority over holders of common stock.
The authority to issue additional shares of common stock or preferred
stock provides Union Planters with the flexibility necessary to meet its future
needs without the delay resulting from seeking stockholder approval. The
authorized but unissued shares of common stock and preferred stock may be issued
from time to time for any corporate purpose, including, stock splits, stock
dividends, employee benefit and compensation plans, acquisitions, and public or
private sales for cash as a means of raising capital. The shares could be used
to dilute the stock ownership of persons seeking to obtain control of Union
Planters. The sale of a substantial number of shares of voting stock to persons
who have an understanding with Union Planters concerning the voting of such
shares, or the distribution or declaration of a dividend of shares of
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<PAGE> 61
voting stock (or the right to receive voting stock) to its stockholders, may
have the effect of discouraging or increasing the cost of unsolicited attempts
to acquire control of Union Planters.
Union Planters has 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 Union Planters
common stock. Under the Plan, one Preferred Share Right is automatically
distributed for each share of Union Planters common stock. The Preferred Share
Rights may deter coercive takeover tactics and encourage persons interested in
potentially acquiring control of Union Planters to treat each stockholder on a
fair and equal basis. Each Preferred Share Right trades on the same basis with
the share of Union Planters common stock to which it relates until the
occurrence of certain events. Upon a potential change in control of Union
Planters, the Preferred Share Rights would separate from Union Planters common
stock and each holder of a Preferred Share Right (other than the potential
acquiror) would be entitled to purchase equity securities of Union Planters at
prices below their market value. Union Planters has authorized 750,000 shares of
Series A preferred stock for issuance under the Preferred Share Rights Plan. No
shares have been issued as of the date of this proxy statement-prospectus. Until
a Preferred Share Right is exercised, the holder has no rights as a stockholder
of Union Planters.
FIRST MUTUAL. First Mutual is authorized to issue up to
8,000,000 shares of common stock, of which 3,530,570 shares were issued and
outstanding as of October 31, 1998, and 2,000,000 shares of preferred stock, of
which no shares were issued or outstanding as of October 31, 1998.
First Mutual's board of directors has substantially the same
powers with respect to the issuance of common stock and preferred stock as does
the Union Planters' board of directors described above. First Mutual has not
adopted any plan similar to the Union Planters' Preferred Share Rights Plan.
AMENDMENT OF CHARTER AND BYLAWS
UNION PLANTERS. Union Planters may amend its charter in any manner
permitted by Tennessee law. The Tennessee Business Corporation Act provides that
a corporation's charter may be amended by a majority of votes entitled to be
cast on an amendment, subject to any condition the board of directors may place
on its submission of the amendment to the stockholders. Union Planters' 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 Union Planters board of directors may adopt, amend, or repeal Union
Planters' bylaws by a majority vote of the entire board of directors. The bylaws
may also be amended or repealed by action of Union Planters' stockholders.
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<PAGE> 62
Union Planters' charter provides that the Union Planters board of
directors must exercise all powers unless otherwise provided by law. The board
of directors may designate an executive committee consisting of five or more
directors and may authorize that committee to exercise all of the authority of
the board of directors.
FIRST MUTUAL. First Mutual may amend its certificate of incorporation
in any manner permitted by Delaware law. The Delaware General Corporation Law
provides that amendments to the certificate of incorporation must be approved by
a majority of the outstanding shares of First Mutual's voting stock. However,
under First Mutual's certificate of incorporation, approval of at least 80% of
First Mutual's outstanding voting stock is generally required to amend certain
provisions of the First Mutual's certificate of incorporation including
provisions relating to the number, classification, election and removal of
directors, the amendment of bylaws, limitations on shares eligible to vote, call
of special stockholder meetings, acts of stockholders, certain business
combinations and amendments to provisions relating to these matters.
First Mutual's bylaws may be amended by a majority vote of its board of
directors or by the vote of at least 80% of the total votes which may be cast in
the election of directors.
DIRECTOR REMOVAL
UNION PLANTERS. Union Planters' charter provides that a director may be
removed by the stockholders only if the stockholders holding at least two-thirds
of the voting power entitled to vote generally in the election of directors vote
for such removal. The purpose of this provision is to prevent a majority
stockholder from circumventing the classified board system by removing directors
and filling the vacancies with new individuals selected by that stockholder.
This provision may have the effect of impeding efforts to gain control of the
board of directors by anyone who obtains a controlling interest in Union
Planters common stock.
FIRST MUTUAL. First Mutual's certificate of incorporation provides
that, subject to the rights of First Mutual preferred stockholders, if any, a
director may be removed from office at any time, but only for cause and only by
the vote of the holders of at least 80% of the First Mutual capital stock that
is eligible to vote in the election of directors, voting together as a single
class.
LIMITATIONS ON DIRECTOR LIABILITY
UNION PLANTERS. Union Planters' charter does not address the issue of a
director's liability to the corporation. Section 48-18-301 of the Tennessee
Business Corporation Act provides that a director shall not be liable for any
action, or failure to take action if he discharges his duties:
- in good faith;
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- with the care of an ordinarily prudent person in a like
position under similar circumstances; and
- in a manner the director reasonably believes to be in the best
interests of the corporation.
In discharging his duties, a director may rely on the information, opinions,
reports, or statements, including financial statements, if prepared or presented
by officers or employees of the corporation whom the director reasonably
believes to be reliable. The director may also rely on such information prepared
or presented by legal counsel, public accountants or other persons as to matters
that the director reasonably believes are the person's competence.
FIRST MUTUAL. First Mutual's certificate of incorporation provides that
a director will not be personally liable to First Mutual or its stockholders for
monetary damages resulting from the director's breach of his or her duty of
care, except:
- for any breach of a director's duty of loyalty to First Mutual
or its stockholders;
- for actions, or the failure to take actions, not in good faith
or which involve intentional misconduct or a knowing
violation of law;
- under Section 174 of the Delaware General Corporation Law
which imposes liability on directors for unlawful payment of
dividends or unlawful stock repurchases; or
- for any transactions from which the director derived any
improper personal benefit.
These provisions do not, however, relieve directors of their duty to
act with due care. In addition, these provisions do not prevent a stockholder
from seeking other "equitable" remedies, such as an injunction prohibiting a
proposed action or transaction or rescission of a consummated action or
transaction.
INDEMNIFICATION
UNION PLANTERS. Under the Tennessee Business Corporation Act, a
corporation may indemnify any director against liability if the director:
- conducted himself or herself in good faith;
- reasonably believed, 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;
- reasonably believed, and in all other cases, that his or her
conduct was at least not opposed to the corporation's best
interests;
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- and, in the case of any criminal proceeding, had no reasonable
cause to believe his or her conduct was unlawful.
Unless limited by its charter, a Tennessee corporation must indemnify,
against reasonable expenses incurred by him or her, a director who was wholly
successful, on the merits or otherwise, in defending any proceeding to which he
or she was a party because he or she is or was a director of the corporation.
Expenses incurred by a director in defending a proceeding may be paid by the
corporation in advance of the final disposition of the proceeding if three
conditions are met:
(1) the director must furnish the corporation a written
affirmation of the director's good faith belief that he or she
has met the standard of conduct as set forth above;
(2) the director must furnish the corporation a written
undertaking by or on behalf of a director to repay such amount
if it is ultimately determined that he or she is not entitled
to be indemnified by the corporation against such expenses;
and
(3) a determination must be made that the facts then known to
those making the determination would not preclude
indemnification.
A director may apply for court-ordered indemnification under certain
circumstances. Unless a corporation's charter provide otherwise,
(1) 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;
(2) 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
(3) 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, bylaws, general or specific action of its board
of directors, or contract.
Union Planters' 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 of 1933, as amended, may be permitted to directors, officers, or persons
controlling Union Planters under the provisions described above, Union Planters
has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is therefore unenforceable.
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<PAGE> 65
FIRST MUTUAL. Under Delaware law, directors, officers, employees and
other individuals may be indemnified against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement under certain
circumstances. In certain types of actions, suits or proceedings, whether they
are civil, criminal, administrative or investigative (other than an action by,
or in the right of the corporation - a "derivative action"), directors may be
indemnified against liability of the director if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful. A similar standard
applies in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) resulting from the defense or
settlement of such actions. In the case of derivative actions, Delaware law
requires court approval before there can be any indemnification when the person
seeking indemnification has been found liable to the corporation. To the extent
that a person otherwise eligible to be indemnified is successful on the merits
or otherwise of any claim or defense, indemnification for expenses (including
attorneys' fees) actually and reasonably incurred is required.
In addition to the indemnification provisions contained in the Delaware
General Corporation Law, First Mutual's certificate of incorporation also
permits the payment of expenses in advance of the completion of an action, to
the extent permitted by law.
SPECIAL MEETINGS OF STOCKHOLDERS
UNION PLANTERS. Special meetings of Union Planters' stockholders may be
called 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.
FIRST MUTUAL. A special meeting of First Mutual's stockholders may only
be called by a majority of the whole First Mutual board of directors.
STOCKHOLDER NOMINATIONS AND PROPOSALS
UNION PLANTERS. Union Planters' charter and bylaws do not address
whether a stockholder may nominate members of the board of directors.
Holders of Union Planters common stock are entitled to submit proposals
to be presented at an annual meeting of Union Planters stockholders. Union
Planters' bylaws provide that any proposal of a stockholder which is to be
presented at any annual meeting of stockholders must be sent so it is be
received by Union Planters not less than 120 days in advance of the anniversary
date of the proxy statement issued in connection with the previous year's
annual meeting.
FIRST MUTUAL. First Mutual's bylaws provide that notice of any
stockholder nomination or proposal for new business must be received by First
Mutual at least 30 days in advance of the annual meeting. In the event that
fewer than 40 days' notice or prior public disclosure of the date
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of the meeting is given or made by First Mutual, written notice must be
submitted no later than the tenth day following the earlier of the date such
notice is given or public disclosure made.
BUSINESS COMBINATIONS
UNION PLANTERS. Holders of two-thirds or more of Union Planters common
stock must approve a merger, consolidation, or a sale or lease of all or
substantially all of the assets of Union Planters if the other party to the
transaction is a beneficial owner of 10% or more of the outstanding shares of
Union Planters. A two-thirds vote is not required for any merger or
consolidation of Union Planters with or into any corporation or entity if a
majority of the outstanding shares of voting capital stock is owned by Union
Planters.
The requirement of a supermajority vote of stockholders to approve
certain business transactions may discourage a change in control of Union
Planters by allowing a minority of Union Planters' stockholders to prevent a
transaction favored by the majority of the stockholders. Also, in some
circumstances, the board of directors could cause a two-thirds vote to be
required to approve a transaction and thereby enable management to retain
control over the affairs of Union Planters. The primary purpose of the
supermajority vote requirement is to encourage negotiations with Union Planters'
management by groups or corporations interested in acquiring control of Union
Planters and to reduce the danger of a forced merger or sale of assets.
As a Tennessee corporation, Union Planters is or could be subject to
certain restrictions on business combinations under Tennessee law, including,
but not limited to, combinations with interested stockholders.
Tennessee has three anti-takeover acts which are applicable to Union
Planters, the Tennessee Business Combination Act, the Tennessee Greenmail Act,
and the Tennessee Investor Protection Act. The Tennessee Control Share
Acquisition Act does not apply to Union Planters, because Union Planters'
charter does not include a provision electing to be covered by that act.
The Tennessee Business Combination Act. The Tennessee Business
Combination Act generally prohibits a "business combination" by Union Planters
or a subsidiary with an "interested stockholder" within five years after the
stockholder becomes an interested stockholder. But Union Planters or a
subsidiary can enter into a business combination within that period if, before
the interested stockholder became such, the Union Planters board of directors
approved:
- the business combination or
- the transaction in which the interested stockholder became an
interested stockholder.
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After that five year moratorium, the business combination with the interested
stockholder can be consummated only if it satisfies certain fair price criteria
or is approved by two-thirds of the other stockholders.
For purposes of the Tennessee Business Combination Act, a "business
combination" includes mergers, share exchanges, sales and leases of assets,
issuances of securities, and similar transactions. An "interested stockholder"
is generally any person or entity that beneficially owns ten percent or more of
the voting power of any outstanding class or series of Union Planters stock.
Tennessee law also severely limits the extent to which Union Planters
or any of its officers or directors could be held liable for resisting any
business combination. Under the Tennessee Business Corporation Act, neither a
Tennessee corporation having any stock registered or traded on a national
securities exchange, nor any of its officers or directors, may be held liable
for:
- failing to approve the acquisition of shares by an interested
stockholder on or before the date the stockholders acquired
such shares;
- seeking to enforce or implement the provisions of Tennessee
law;
- failing to adopt or recommend any charter or by-law amendment
or provision relating to such provisions of Tennessee law; or
- opposing any merger, exchange, tender offer, or significant
asset sale because of a good faith belief that such
transaction would adversely affect the corporation's
employees, customers, suppliers, the communities in which the
corporation or its subsidiaries operate or any other relevant
factor. But the officers and directors can only consider such
factors if the corporation's charter permits the board to do
so in connection with the transaction.
The Tennessee Greenmail Act. The Tennessee Greenmail Act applies to a
Tennessee corporation that has a class of voting stock registered or traded on a
national securities exchange or registered with the Securities and Exchange
Commission pursuant to Section 12(g) of the Exchange Act. Under the Tennessee
Greenmail Act, Union Planters may not purchase any of its shares at a price
above the market value of such shares 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 Union Planters or Union Planters makes an offer, of at least equal
value per share, to all stockholders of such class.
The Tennessee Investor Protection Act. The Tennessee Investor
Protection Act generally requires the registration, or an exemption from
registration, before a person can make a tender offer for shares of a Tennessee
corporation which, if successful, would result in the offeror
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beneficially owning more than 10% of any class. Registration requires the filing
with the Tennessee Commissioner of Commerce and Insurance of a registration
statement, a copy of which must be sent to the target company, and the public
disclosure of the material terms of the proposed offer. Additional requirements
are imposed under that act if the offeror beneficially owns 5% or more of any
class of equity securities of the target company, any of which was purchased
within one year prior to the proposed takeover offer. The Tennessee Investor
Protection Act also prohibits fraudulent and deceptive practices in connection
with takeover offers, and provides remedies for violations.
The Tennessee Investor Protection Act does not apply to an offer
involving a vote by holders of equity securities of the offeree company,
pursuant to its charter, on a merger, consolidation or sale of corporate assets
in consideration of the issuance of securities of another corporation, or on a
sale of its securities in exchange for cash or securities of another
corporation. Also excepted from the Tennessee Investor Protection Act are tender
offers which are open on substantially equal terms to all stockholders, are
recommended by the board of directors of the target company and include full
disclosure of all terms.
The Tennessee Investor Protection Act applies to tender offers for
corporations with substantial ties in Tennessee, including corporations
incorporated in Tennessee or which have their principal offices in the state.
The Sixth Circuit Court of Appeals has held that the application of this act,
and Tennessee's other takeover statutes, to a target company that wasn't
organized under Tennessee law is unconstitutional. Tyson Foods, Inc. v.
McReynolds, 865 F.2d 99 (6th Cir. 1989).
The acts described above along with the provisions of Union Planters'
charter regarding business combinations might be deemed to make Union Planters
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 Union Planters common stock, the acquiror would not
thereby obtain the ability to replace a majority of the Union Planters board of
directors until at least the second annual meeting of stockholders following the
acquisition. 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, Union Planters' stockholders may be deprived of
opportunities to sell some or all of their shares at prices that represent a
premium over prevailing market prices in a takeover context. The provisions
described above also may make it more difficult for Union Planters' stockholders
to replace the Union Planters board of directors or management, even if the
holders of a majority of the Union Planters common stock should believe that
such replacement is in the interests of Union Planters. As a result, such
provisions may tend to perpetuate the incumbent Union Planters board of
directors and management.
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FIRST MUTUAL. Delaware law requires the approval of the First Mutual
board of directors and the holders of a majority of the outstanding stock of
First Mutual eligible to vote for mergers or consolidations, or sales, leases,
or exchanges of all or nearly all of First Mutual's property and assets. In
connection with certain business combinations and transactions between First
Mutual and an interested stockholder (which generally means any person or entity
owning or controlling more than 5% of the outstanding voting stock of First
Mutual), First Mutual's certificate of incorporation provides that any business
combination involving an interested stockholder must be approved by at least 80%
of all outstanding shares of voting stock, voting together as a single class,
unless the transaction (1) is authorized by a majority of the directors who are
unaffiliated with the interested stockholder and who were directors before the
interested stockholder became an interested stockholder, or (2) meets certain
fair price requirements. If the First Mutual board of directors gives such
approval or if the fair price requirements are met, only the vote of the
majority of the outstanding stock, voting as a single class, is required.
Section 203 of the Delaware General Corporation Law generally prohibits
any person who acquires 15% or more of a corporation's outstanding voting stock
from entering into any "business combination" with the corporation for three
years, unless one of the specified exceptions applies. Under Section 203,
"business combination" is defined to include mergers and consolidations, sales
of the corporation's assets, transactions which result in the issuance or
transfer by the corporation of its stock, transactions having the effect of
increasing the proportionate share of the stock of any class or series of the
corporation, and the receipt by a person who owns 15% or more of the
corporation's outstanding stock of certain financial benefits provided by the
corporation.
The three-year prohibition does not apply, however, if (1) the
corporation's board of directors approved the business combination before the
person became an interested stockholder or approved in advance the transaction
that resulted in 15% ownership; (2) in the transaction in which the interested
stockholder acquired 15% ownership, the stockholder owned at least 85% of the
voting stock outstanding when the transaction was initiated (excluding shares
owned by officer-directors and certain employee stock plans); or (3) the
business combination subsequently is approved by the board of directors and
authorized at a stockholders' meeting by at least 66- 2/3% of the outstanding
voting stock, not including the stock owned by the interested stockholder.
Section 203 also does not apply at all if:
- the corporation's original certificate of incorporation
indicates that Section 203 does not apply;
- the board of directors amended the corporation's bylaws within
90 days of the effective date of Section 203 in order to avoid
application of Section 203;
- the corporation's stockholders amend the certificate or bylaws
so that Section 203 does not apply (although such an amendment
will not be effective for 12 months);
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- the corporation's voting stock is not listed on a national
securities exchange, authorized for quotation on an
interdealer system on a registered national securities
association, or held of record by more than 2,000 stockholders
(unless the corporation nonetheless elects to be governed by
Section 203);
- the stockholder acquires 15% ownership inadvertently and then
disposes of enough shares to avoid that status; or
- the business combination is proposed after the public
announcement of a proposed business combination transaction
and prior to the initiation or abandonment of such
transaction.
DISSENTERS' RIGHTS OF APPRAISAL
UNION PLANTERS. Under the Tennessee Business Corporation Act, a
stockholder is generally entitled to dissent from a corporate action and obtain
payment of the fair value of his shares in certain events. These events
generally include:
(1) mergers, share exchanges and sales of substantially all of the
corporation's assets other than in the usual and regular
course of business, if the stockholder is entitled to vote on
the transaction;
(2) certain types of amendments of the corporation's charter that
materially and adversely affects a stockholder's rights; or
(3) other corporate actions taken pursuant to a stockholder vote,
to the extent the charter, bylaws, or a resolution of the
board of directors provide for dissenters' rights. Union
Planters' charter and bylaws do not provide for any such
additional dissenters' rights.
Under the Tennessee Business Corporation Act, a stockholder will not have the
right to dissent as to any shares which are listed on a national securities
exchange registered under Section 6 of the Exchange Act or are national market
system securities under the Exchange Act rules. Union Planters common stock is
currently listed on the New York Stock Exchange. Accordingly, stockholders of
Union Planters will NOT be able to assert dissenters' rights with respect to
their shares of Union Planters common stock even if Union Planters were to
engage in one of the actions listed above.
FIRST MUTUAL. Under Delaware law, stockholders are not entitled to
dissent from a corporate action if the shares of any class or series of stock
are quoted on the Nasdaq National Market System.
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DIVIDENDS
UNION PLANTERS. Union Planters' ability to pay dividends on its common
stock is governed by Tennessee corporate law. Under Tennessee corporate law,
dividends may be paid so long as the corporation would be able to pay its debts
as they become due in the ordinary course of business and the corporation's
total assets would not be less than the sum of its total liabilities plus the
amount that would be needed, if the corporation were to be dissolved at the time
of the distribution, to satisfy the preferential rights upon dissolution to
stockholders whose preferential rights are superior to those receiving the
distribution.
There are various statutory limitations on the ability of the Union
Planters' banking subsidiaries to pay dividends to Union Planters. See "CERTAIN
REGULATORY CONSIDERATIONS -- Payment of Dividends."
FIRST MUTUAL. First Mutual's ability to pay dividends on its common
stock is governed by Delaware corporate law. Under Delaware corporate law,
unless there are restrictions in the corporation's certificate of incorporation,
dividends may be declared from the corporation's surplus, or, if there is no
surplus, from its net profits for the fiscal year in which the dividend is
declared and the preceding year. Dividends may not be declared, however, if the
corporation's capital is less than the amount of all capital represented by the
issued and outstanding stock of all classes having a preference upon the
distribution of assets.
Substantially all of the funds available for the payment of dividends
by First Mutual come from the operations of its bank subsidiary. There are
various statutory limitations on the ability of First Mutual's bank subsidiary
to pay dividends to First Mutual. See "Certain Regulatory Considerations -
Payment of Dividends."
COMPARATIVE MARKET PRICES AND DIVIDENDS
Union Planters common stock is traded on the New York Stock Exchange
under the symbol "UPC". First Mutual common stock is quoted on the Nasdaq
National Market under the symbol "FMBD". The following table sets forth, for the
indicated periods, the high and low closing sale prices for the Union Planters
common stock and First Mutual common stock as reported by the New York Stock
Exchange and Nasdaq National Market, respectively, and the cash dividends
declared per share on Union Planters common stock and First Mutual common stock
for the indicated periods. The stock prices and dividend amounts have been
restated to give effect to stock splits and stock dividends. The stock prices do
not include retail mark-ups, mark-downs or commissions.
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<TABLE>
<CAPTION>
Union Planters First Mutual
---------------------------------- ---------------------------------
Cash Cash
Price Range Dividends Price Range Dividends
----------- Declared ----------- Declared
High Low Per Share High Low Per Share
---- --- --------- ---- --- ---------
<S> <C> <C> <C> <C> <C> <C>
1996
First Quarter $31.75 $29.00 $ .27 $14.25 $12.38 $.07
Second Quarter 31.25 29.63 .27 13.00 11.75 .07
Third Quarter 36.25 28.63 .27 13.38 11.63 .08
Fourth Quarter 41.38 34.63 .27 15.50 13.00 .08
------ ----
Total $ 1.08 $.30
====== ====
1997
First Quarter $47.75 $38.38 $ .320 $16.00 $14.75 $.08
Second Quarter 52.13 41.25 .375 16.00 13.75 .08
Third Quarter 56.50 49.25 .400 19.00 15.00 .08
Fourth Quarter 67.88 57.00 .400 27.25 17.00 .08
------ ----
Total $1.495 $.32
====== ====
1998
First Quarter $67.31 $58.38 $ .50 $25.25 $17.25 $.08
Second Quarter 62.56 53.94 .50 20.13 16.81 .08
Third Quarter 61.94 40.25 .50 18.00 14.00 .08
Fourth Quarter .50
(through November
_____, 1998
------ ------ ------ ------ ------ ----
Total $ 2.00 $.24
====== ====
</TABLE>
On __________, 1998, the last sale prices of Union Planters common
stock and First Mutual common stock as reported on the New York Stock Exchange
and Nasdaq National Market, respectively, were $__________ and $_______ per
share, respectively. On July 1, 1998, the last business day prior to public
announcement of the proposed merger, the last sale prices of the Union Planters
common stock and First Mutual common stock as reported by the New York Stock
Exchange and Nasdaq National Market, respectively, were $59.94 and $17.50,
respectively.
The holders of Union Planters common stock are entitled to receive
dividends when and if declared by the board of directors out of funds legally
available therefor. Although Union Planters currently intends to continue to pay
quarterly cash dividends on the Union Planters common stock, there can be no
assurance that Union Planters' 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 Union Planters board of directors' consideration of other
relevant factors.
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Union Planters is a legal entity separate and distinct from its
subsidiaries and its revenues depend in significant part on the payment of
dividends and management fees from its subsidiary depository institutions. Union
Planters' 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 FIRST MUTUAL
First Mutual, headquartered in Decatur, Illinois, is a bank holding
company registered with the Federal Reserve under the Bank Holding Company Act.
First Mutual conducts a complete range of commercial and personal banking
activities through its wholly owned banking subsidiary, First Mutual Bank, S.B.
First Mutual Bank, S.B. operates 14 banking offices in Central Illinois.
First Mutual is a Delaware corporation and was incorporated on December
22, 1994, to become the bank holding company for its banking subsidiaries. As of
September 30, 1998, First Mutual had total consolidated assets of approximately
$371 million, total consolidated loans of approximately $297 million, total
consolidated deposits of approximately $309 million, and total consolidated
stockholders' equity of approximately $56 million.
The principal executive offices of First Mutual are located at 135 East
Main Street, Decatur, Illinois and its telephone number at such address is (217)
429-2306. Additional information with respect to First Mutual and its
subsidiaries is included elsewhere in this proxy statement-prospectus and in
documents incorporated by reference in this proxy statement-prospectus. See
"WHERE YOU CAN FIND MORE INFORMATION".
BENEFICIAL OWNERSHIP OF FIRST MUTUAL COMMON STOCK
To the knowledge of First Mutual, no person beneficially owns 5.0% or
more of the outstanding shares of First Mutual common stock except as shown in
the following table.
<TABLE>
<CAPTION>
Name of Beneficial Owner Amount of Shares Owned
------------------------ ----------------------
<S> <C>
First Mutual Bank, S.B.
Employer Stock Ownership Plan
135 East Main Street
Decatur, Illinois 282,000 (7.99%)
John Hancock Advisers, Inc.
101 Huntington Avenue
Boston, Massachusetts 02199 238,000 (6.74%)
</TABLE>
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BUSINESS OF UNION PLANTERS
GENERAL
Union Planters, a Tennessee corporation, is a registered bank holding
company. On September 30, 1998, Union Planters had total consolidated assets of
approximately $30.5 billion, total consolidated loans of approximately $19.7
billion, total consolidated deposits of approximately $23.3 billion, and total
consolidated stockholders' equity of approximately $2.9 billion.
Union Planters conducts its business activities through Union Planters
Bank, National Association, its principal bank subsidiary, and a number of other
banking and bank related subsidiaries. Through its various subsidiaries, Union
Planters provides a diversified range of financial services maintaining 801
banking offices and 1,000 ATMs in the states in which it operates, as follows:
<TABLE>
<CAPTION>
FULL SERVICE AND
----------------
LIMITED SERVICE
---------------
STATE BRANCHES ATMS
- ----- -------- ----
<S> <C> <C>
Alabama 22 22
Arkansas 48 37
Florida 65 47
Illinois 95 104
Indiana 17 18
Iowa 30 33
Kentucky 28 26
Louisiana 22 17
Mississippi 151 170
Missouri 98 123
Tennessee 209 375
Texas 16 28
--- -----
801 1,000
=== =====
</TABLE>
Acquisitions have been, and are expected to continue to be, an
important part of the expansion of Union Planters' business. During the period
beginning January 1, 1994 and ending September 30, 1998, Union Planters
completed the acquisition of 43 institutions with approximately $26.4 billion in
total assets. The restated consolidated financial statements of Union Planters
included in Exhibit 99.1 to its September 30, 1998 Quarterly Report on
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<PAGE> 75
Form 10-Q and filed with the Securities and Exchange Commission, and the
financial information relating to Union Planters included under "Selected
Financial Data" in this proxy statement-prospectus, reflect the financial impact
of all of such acquisitions, including the acquisitions completed during 1998.
In addition, as of September 30, 1998, Union Planters was a party to
definitive agreements to acquire five financial institutions, in addition to
First Mutual, and to complete the Indiana Branch Purchase (the "Other Pending
Acquisitions"). The Other Pending Acquisitions had aggregate total assets of
approximately $3.2 billion at September 30, 1998. For information with respect
to these acquisitions see "-- Recent Developments."
Union Planters expects to continue to take advantage of the
consolidation of the financial services industry by further developing its
franchise through the acquisition of financial institutions. Future acquisitions
may entail the payment by Union Planters of consideration in excess of the book
value of the underlying net assets acquired, may result in the issuance of
additional shares of Union Planters capital stock or the incurring of additional
indebtedness by Union Planters, and could have a dilutive effect on the earnings
or book value per share of Union Planters 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" below.
The principal executive offices of Union Planters are located at 7130
Goodlett Farms Parkway, Memphis, Tennessee 38018, and its telephone number at
that address is (901) 580-6000. Additional information with respect to Union
Planters and its subsidiaries is included in documents incorporated by reference
in this proxy statement-prospectus. See "WHERE YOU CAN FIND MORE INFORMATION" on
page 83.
RECENT DEVELOPMENTS
RECENT SALE OF CREDIT CARD PORTFOLIO. On October 15, 1998, Union
Planters sold substantially all of its credit card portfolio to MBNA Bank
America, N.A. Union Planters also entered into an agreement with MBNA Bank
America, N.A. to sell it a large majority of the credit card portfolios of Union
Planters Bank of Kentucky, a wholly-owned subsidiary of Union Planters and of
Magna Bank, N.A. which merged into Union Planters Bank, National Association on
October 9, 1998. The value of the credit card portfolio sold totaled $460
million. In the fourth quarter of 1998, Union Planters expects to recognize a
net gain of $65 to $70 million on a pre-tax basis and approximately $40 to $43
million after taxes as a result of the sale. Certain estimated costs related to
selling the credit card portfolios, including employee severance, equipment
write-offs and other fees, have been netted against the gain. Union Planters
also expects to charge off approximately $10 million to $15 million of credit
card receivables that will not be purchased by MBNA Bank America, N.A. in the
fourth quarter of 1998. A smaller portion of the transaction will be completed
in the first quarter of 1999.
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RECENTLY COMPLETED ACQUISITIONS. Since December 31, 1997, Union
Planters has completed 14 acquisitions, representing approximately $13.5 billion
in assets. The financial impact of all of such acquisitions deemed material are
reflected in the restated consolidated financial statements of Union Planters
included in Exhibit 99.1 to its Quarterly Report on Form 10-Q dated September
30, 1998 and filed with the Securities and Exchange Commission, and in the
financial information relating to Union Planters included under "Selected
Financial Data" in this proxy statement-prospectus.
OTHER PENDING ACQUISITIONS. Union Planters has entered into definitive
agreements to acquire the following financial institutions in addition to First
Mutual which Union Planters' management considers probable of consummation and
which are expected to close in 1998 and early 1999.
<TABLE>
<CAPTION>
Asset Size Projected
Institution (in millions)(1) Type of Consideration(2)(3) Closing Date
----------- ---------------- --------------------------- ------------
<S> <C> <C> <C>
Purchase of 56 branches of First $1,800 $294 million deposit premium 02/12/99
Chicago NBD Corporation in in cash(4)
Indiana (4)
Ready State Bank, Hialeah, 595 3,214,000 shares of Union 12/31/98
Florida Planters common stock
Southeast Bancorp, Inc., Corbin, 335 1,250,000 shares of Union 12/31/98
Kentucky Planters common stock
First & Farmers Bancshares, Inc., 275 $76 million in cash 01/31/99
Somerset, Kentucky
FSB, Inc., Covington, Tennessee 145 907,000 shares of Union 12/31/98
Planters common stock
La Place Bancshares, Inc., 70 412,000 shares of Union 12/31/98
La Place, Louisiana ------ Planters common stock
TOTAL $3,220
======
</TABLE>
- ----------------------------------------
(1) Approximate total assets on September 30, 1998.
(2) Assumes no adjustment to shares pursuant to exchange ratio adjustment
mechanisms.
(3) Union Planters intends to purchase, in the open market, approximately 1
million shares of Union Planters' common stock to facilitate its
purchase of First Mutual.
(4) The purchase price of the premises and equipment to be purchased has
not yet been determined.
FOURTH QUARTER EARNINGS CONSIDERATIONS. It is expected that either
Union Planters or the institutions acquired or to be acquired in connection
with the merger and the Other Pending
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<PAGE> 77
Acquisitions will incur charges arising from such acquisitions and from the
assimilation of those institutions into the Union Planters organization.
Anticipated charges would normally arise from matters such as, but not limited
to:
- legal, accounting, financial advisory and consulting fees;
- payment of contractual benefits triggered by a change of
control, early retirement and involuntary separation and
related benefits;
- costs associated with elimination of duplicate facilities and
branch consolidations;
- data processing charges;
- cancellation of vendor contracts; and
- other contingencies and similar costs which normally arise
from the consolidation of operational activities.
For a discussion of Union Planters' acquisition program and the
significant charges Union Planters has incurred over the past three years
incidental to its acquisition program, see the caption "Acquisitions" on pages
A-3, A-4, and A-5 in Union Planters' restated financial statements filed in
Union Planters' Quarterly Report on Form 10-Q dated September 30, 1998, Exhibit
99.1, and note 2 to Union Planters' restated audited consolidated financial
statements for the years ended December 31, 1997, 1996, and 1995 also contained
in Union Planters' September 30, 1998 Quarterly Report on Form 10-Q, Exhibit
99.1. Reference is also made to pages 17, 18, 20 and 21 to Union Planters'
September 30, 1998 Quarterly Report on Form 10-Q for a discussion of significant
charges incurred in the nine months ended September 30, 1998.
The Other Pending Acquisitions (with the exception of the Indiana
Branch Purchase and the merger with First & Farmers Bancshares, Inc.) are
expected to be accounted for as pooling-of-interests. Union Planters currently
estimates incurring aggregate pre-tax charges in the range of $5 million to $6
million in connection with completing the merger and the Other Pending
Acquisitions. Union Planters also expects to incur expenses of approximately $30
million in the fourth quarter of 1998, both on a pre-tax and after tax basis,
primarily in connection with the settlement of employment agreements related to
entities acquired in the third quarter of 1998. To the extent that Union
Planters' recognition of these acquisition-related charges is contingent upon
consummation of a particular transaction, those charges would be recognized in
the period in which the transaction closes. See "SUMMARY - Historical and Pro
Forma Comparative Per Share Data."
The range of anticipated charges to be incurred in connection with
consummating the merger and the Other Pending Acquisitions is a preliminary
estimate of the significant charges which may, in the aggregate, be required and
should be viewed accordingly. Moreover, this range has been based on the due
diligence that has been performed to date in connection with the
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merger and the Other Pending Acquisitions. The range may be subject to change,
and the actual charges incurred may be higher or lower than what is currently
contemplated, once the acquired institutions are assimilated from an operational
perspective and various contingencies are either satisfied or eliminated.
Furthermore, the range of anticipated charges will change if additional entities
are acquired. Union Planters regularly evaluates the potential acquisition of,
and holds discussions with, various potential acquisition candidates. As a
general rule, Union Planters will publicly announce such acquisitions only after
a definitive agreement has been reached, and only then if Union Planters
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 Union Planters
regularly engages in acquisitions, such range could change, and you should view
such information accordingly.
Since September 30, 1998, Union Planters has expensed that portion of
certain restricted stock grants that would otherwise have remained unrecognized
at the recipient's earliest possible retirement age. This will have the effect
of increasing benefits expense in the fourth quarter of 1998 by approximately
$8.9 million pre-tax and $5.5 million on an after tax basis. Additionally, in
connection with the consolidation of certain loan and deposit functions, Union
Planters is implementing a plan to image all documents related to loans and
deposits. During the fourth quarter of 1998, Union Planters will engage a third
party to image all of its current documents. The total expenses estimated to be
incurred in the fourth quarter of 1998 related to this project is approximately
$4.8 million pre-tax and $3.29 million on an after tax basis.
Certain acquisitions during 1998 have significantly increased the
goodwill and other intangible costs to $361 million at September 30, 1998. Given
changing market conditions, primarily interest rates and the related volatility
of the mortgage markets, Union Planters plans to perform a review of the
realization of these intangibles and other related assets, such as investment
securities premiums, during the fourth quarter of 1998. The impact of this
review cannot be quantified at this time.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
Union Planters and First Mutual are bank holding companies registered
with the Federal Reserve. As such, Union Planters and First Mutual and their
non-bank subsidiaries are subject to the supervision, examination, and reporting
requirements of the Bank Holding Company Act and the regulations of the Federal
Reserve. The following discussion summarizes the regulatory framework applicable
to banks and bank holding companies and provides certain specific information
related to Union Planters. A more complete discussion is included in Union
Planters' 1997 Form 10-K. Information relating to First Mutual is included in
First Mutual's 1997 Form 10-K. See "WHERE YOU CAN FIND MORE INFORMATION" on page
83.
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Bank holding companies are required to obtain the prior approval of the
Federal Reserve before they may:
- acquire direct or indirect ownership or control of more than
5% of the voting shares of any bank;
- acquire all or substantially all of the assets of any bank; or
- merge or consolidate with any other bank holding company.
The Federal Reserve generally may not approve any transaction that
would result in a monopoly or that would further a combination or conspiracy to
monopolize banking in the United States. Nor can the Federal Reserve approve a
transaction that could substantially lessen competition in any section of the
country, that would tend to create a monopoly in any section of the country, or
that would be in restraint of trade. But the Federal Reserve may approve any
such transaction if it determines that the public interest in meeting the
convenience and needs of the community served clearly outweighs the
anticompetitive effects of the proposed transaction. The Federal Reserve is also
required to consider the financial and managerial resources and future prospects
of the bank holding companies and banks concerned, as well as the convenience
and needs of the community to be served. Consideration of financial resources
generally focuses on capital adequacy, which is discussed below. Consideration
of convenience and needs includes the parties' performance under the Community
Reinvestment Act of 1977.
Another factor that is gaining increasing scrutiny in the application
process is the Year 2000 readiness of the parties involved in acquisition
transactions. Banking organizations whose Year 2000 readiness is in less than
satisfactory condition are undergoing special scrutiny in connection with
acquisition transactions requiring regulatory approval, and may not be eligible
to use expedited application procedures for acquisition transactions.
Under the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Interstate Banking Act"), Union Planters and any other bank
holding company may now acquire a bank located in any state, subject to certain
deposit-percentage limitations, aging requirements, and other restrictions. The
Interstate Banking Act also generally permits a bank to branch interstate
through acquisitions of banks in other states. By adopting legislation prior to
June 1, 1997, a state had the ability either to "opt in" and accelerate the date
after which interstate branching is permissible or "opt out" and prohibit
interstate branching altogether. Texas, where Union Planters recently completed
an acquisition, elected to "opt out," in legislation that expires September 2,
1999. Union Planters has used the Interstate Banking Act to merge substantially
all of Union Planters' banking subsidiaries with and into Union Planters Bank,
National Association. As a result, that bank is now a multi-state national bank
with branches in Alabama, Arkansas, Florida, Iowa, Illinois, Kentucky,
Louisiana, Mississippi, Missouri, and Tennessee.
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The Bank Holding Company Act prohibits Union Planters from:
(1) engaging in activities other than banking, managing, or
controlling banks or other permissible subsidiaries; and
(2) 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 that outweigh
possible adverse effects. Possible benefits the Federal Reserve considers
include greater convenience, increased competition, or gains in efficiency.
Possible adverse effects include undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices. The
Federal Reserve has determined the following, among others, to be permissible
activities of bank holding companies:
- 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.
There are no territorial limitations on permissible non-banking
activities of bank holding companies. Despite prior approval, the Federal
Reserve has the power to order a holding company or its subsidiaries to
terminate any activity or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that a serious risk to the
financial safety, soundness, or stability of any bank subsidiary of that bank
holding company may result from such activity.
The banks owned by Union Planters are members of the Federal Deposit
Insurance Corporation. Their deposits are insured by the Federal Deposit
Insurance Corporation to the extent provided by law. Each bank is also subject
to numerous state and federal statutes and
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regulations that affect its business, activities, and operations, and each is
supervised and examined by one or more state or federal bank regulatory
agencies.
The Federal Deposit Insurance Corporation and the applicable state
authority in the case of state-chartered nonmember banks, the Office of Thrift
Supervision in the case of federally chartered thrift institutions, the Federal
Reserve in the case of state-chartered member banks, and the Office of the
Comptroller of the Currency in the case of national banks supervise the
subsidiaries of Union Planters and First Mutual and regularly examine the
operations of such institutions. They 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
Union Planters is a legal entity separate and distinct from its
banking, thrift, and other subsidiaries. The principal sources of cash flow of
Union Planters, including cash flow to pay dividends to its stockholders, are
dividends from its subsidiary depository institutions. There are statutory and
regulatory limitations on the payment of dividends by these subsidiary
depository institutions to Union Planters, as well as by Union Planters and
First Mutual to their stockholders.
As to the payment of dividends, each of Union Planters' state-chartered
banking subsidiaries is subject to the laws and regulations of the state in
which the bank is located, and to the regulations of the bank's primary federal
regulator. Union Planters' subsidiaries that are thrift institutions are subject
to the Office of Thrift Supervision's capital distributions regulations, and
those that are national banks are subject to the regulations of the Office of
the Comptroller of the Currency.
If the federal banking regulator determines that a depository
institution under its jurisdiction is engaged in or is about to engage in an
unsafe or unsound practice, the regulator may require, after notice and hearing,
that the institution cease and desist from such practice. Depending on the
financial condition of the depository institution, an unsafe or unsound practice
could include the payment of dividends. 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, 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." The federal agencies have also 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 September 30,1998, under dividend restrictions imposed under federal
and state laws, Union Planters' banking subsidiaries, without obtaining
governmental approvals, could declare aggregate dividends to Union Planters of
approximately $119 million.
The payment of dividends by Union Planters and its bank subsidiaries
may also be affected or limited by other factors, such as the requirement to
maintain adequate capital above regulatory guidelines.
CAPITAL ADEQUACY
Union Planters and its banking subsidiaries are required to comply with
the capital adequacy standards established by the Federal Reserve in the case of
Union Planters, and the appropriate federal banking regulator in the case of
each Union Planters bank. There are two basic measures of capital adequacy for
bank holding companies and the depository institutions that they own: a
risk-based measure and a leverage measure. All applicable capital standards must
be satisfied for a bank holding company to be considered in compliance.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profile among
depository institutions and bank holding companies, to account for
off-balance-sheet exposure, and to minimize disincentives for holding liquid
assets. Assets and off-balance-sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio ("Total Capital Ratio") of total
capital ("Total Capital") to risk-weighted assets (including certain
off-balance-sheet items, such as standby letters of credit) is 8.0%. At least
half of Total Capital must be composed of common equity, undivided profits,
minority interests in the equity accounts of consolidated subsidiaries,
noncumulative perpetual preferred stock, and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
("Tier 1 Capital"). The remainder may consist of subordinated debt, other
preferred stock, and a limited amount of loan loss reserves ("Tier 2 Capital").
At September 30, 1998, Union Planters' consolidated Total Capital Ratio and its
Tier 1 Capital Ratio (i.e., the ratio of Tier 1 Capital to risk-weighted assets)
were 17.07% and 13.49%, respectively.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for bank holding companies that
meet certain specified criteria, including having the highest regulatory rating.
All other bank holding companies generally are required to maintain a Leverage
Ratio of at least 4.0%, plus an additional cushion of 100 to 200 basis points.
Union Planters' Leverage Ratio at September 30, 1998, was 9.29%. The guidelines
also provide that bank holding companies that experience internal growth or make
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without
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significant reliance on intangible assets. The Federal Reserve 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 Union Planters' banks is subject to risk-based and leverage
capital requirements adopted by its federal banking regulator. Those
requirements are similar to those adopted by the Federal Reserve for bank
holding companies. In addition, the capital requirements applicable to Union
Planters' banks contemplate that the bank regulators may establish higher
capital requirements for a particular institution based upon the institution's
risk profile including exposure to interest rate risk. Each of Union Planters'
banks was in compliance with those minimum capital requirements as of September
30, 1998. No federal banking agency has advised Union Planters or its bank
subsidiaries of any specific minimum capital ratio requirement applicable to it.
A bank or thrift that fails to meet its capital guidelines may be
subject to a variety of enforcement remedies and certain other restrictions on
its business. Remedies could include the issuance of a capital directive, the
termination of deposit insurance by the Federal Deposit Insurance Corporation,
and a prohibition on the taking of brokered deposits. As described below,
substantial additional restrictions can be imposed upon Federal Deposit
Insurance Corporation-insured depository institutions that fail to meet their
capital requirements. See "-- Prompt Corrective Action."
The federal bank regulators continue to indicate their desire to raise
the capital requirements that apply to banks beyond their current levels. The
Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of
the Comptroller of the Currency have amended the risk-based capital standards
to calculate the change in a bank's net economic value attributable to
increases and decreases in market interest rates and require banks with
excessive interest rate risk exposure to hold additional amounts of capital
against such exposures. The Office of Thrift Supervision has also 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, Union Planters is expected to act as a
source of financial strength for, and commit its resources to support, each
Union Planters bank. This support may be required at times when Union Planters
may not be inclined to provide it. In addition, any capital loans by a bank
holding company to any of its bank subsidiaries are subordinate to the payment
of deposits and to certain other indebtedness. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a bank subsidiary will be
assumed by the bankruptcy trustee and entitled to a priority of payment.
A depository institution insured by the Federal Deposit Insurance
Corporation can be held liable for any loss incurred by, or reasonably expected
to be incurred by, the Federal Deposit
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Insurance Corporation in connection with the default of a commonly controlled
Federal Deposit Insurance Corporation-insured depository institution or any
assistance provided by the Federal Deposit Insurance Corporation to any commonly
controlled Federal Deposit Insurance Corporation-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 Federal Deposit Insurance
Corporation's claim for damages is superior to claims of stockholders of the
insured depository institution or its holding company, but is subordinate to
claims of depositors, secured creditors, and holders of subordinated debt (other
than affiliates) of the commonly controlled insured depository institution.
Union Planters' banks are subject to these cross-guarantee provisions. As a
result, any loss suffered by the Federal Deposit Insurance Corporation in
respect of any of Union Planters' banks would likely result in assertion of the
cross-guarantee provisions, the assessment of estimated losses against Union
Planters' banking or thrift affiliates, and a potential loss of Union Planters'
investments in its other banks.
PROMPT CORRECTIVE ACTION
The Federal Deposit Insurance Corporation Improvement Act of 1991
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). With respect
to institutions in the three undercapitalized categories, the regulators must
take certain supervisory actions, and are authorized to take other discretionary
actions. The severity of the actions will depend upon the capital category in
which the institution is placed. Generally, subject to a narrow exception, the
Federal Deposit Insurance Corporation Improvement Act of 1991 requires the
banking regulator to appoint a receiver or conservator for an institution that
is critically undercapitalized. The federal banking agencies have specified the
relevant capital level for each category.
An institution is deemed to be well capitalized if it:
- has a Total Capital Ratio of 10% or greater;
- has a Tier 1 Capital Ratio of 6.0% or greater;
- has a Leverage Ratio of 5.0% or greater; and
- is not subject to any written agreement, order, capital
directive, or prompt corrective action directive issued by its
federal banking agency.
An institution is considered to be adequately capitalized if it has:
- a Total Capital Ratio of 8.0% or greater;
- a Tier 1 Capital Ratio of 4.0% or greater; and
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- a Leverage Ratio of 4.0% or greater (or, if the institution
received a composite 1 rating under the regulator's CAMEL
rating system, a Leverage Ratio of 3.0% or greater).
A depository institution is considered to be undercapitalized if it has:
- a Total Capital Ratio of less than 8.0%;
- a Tier 1 Capital Ratio of less than 4.0%; or
- a Leverage Ratio of less than 4.0% (or, if the institution
received a composite 1 rating under the regulator's CAMEL
rating system, a Leverage Ratio of 3.0% or greater).
A depository institution is considered to be significantly undercapitalized if
it has:
- a Total Capital Ratio of less than 6.0%;
- a Tier 1 Capital Ratio of less than 3.0%; or
- a Leverage Ratio of less than 3.0%.
An institution that has a tangible equity capital to assets ratio equal to or
less than 2.0% is deemed to be critically undercapitalized. "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.
In addition, a bank holding company must guarantee that a subsidiary bank meet
its capital restoration plan. This obligation to fund a capital restoration plan
is limited to the lesser of 5.0% of an undercapitalized subsidiary's assets or
the amount required to meet regulatory capital requirements. Except in
accordance with an accepted capital restoration plan or with the approval of the
Federal Deposit Insurance Corporation, 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. In addition, its federal banking agency is given authority with
respect to any undercapitalized institution to take any of the actions it is
required to or may take with respect to a significantly undercapitalized
institution if it determines "that those actions are necessary to carry out the
purpose" of Federal Deposit Insurance Corporation Act of 1991.
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
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restoration plan, its federal banking agency must require the institution to
take one or more of the following actions, as the regulator determines will best
address the institution's capital problems:
(1) sell enough shares, including voting shares, to become
adequately capitalized;
(2) merge with (or be sold to) another institution (or holding
company), but only if grounds exist for appointing a
conservator or receiver;
(3) restrict certain transactions with its banking affiliates;
(4) restrict transactions with bank or non-bank affiliates;
(5) restrict interest rates that the institution pays on deposits
to "prevailing rates" in the institution's "region";
(6) restrict asset growth or reduce total assets;
(7) alter, reduce, or terminate activities;
(8) hold a new election of directors;
(9) 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;
(10) employ "qualified" senior executive officers;
(11) cease accepting deposits from correspondent depository
institutions;
(12) divest certain nondepository affiliates which pose a danger to
the institution; or
(13) be divested by a parent holding company. In addition, without
the prior approval of its 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.
DESCRIPTION OF UNION PLANTERS CAPITAL STOCK
Union Planters' charter currently authorizes the issuance of
300,000,000 shares of Union Planters common stock and 10,000,000 shares of Union
Planters Preferred Stock. On October 31, 1998, 136,063,035 shares of Union
Planters common stock were outstanding and approximately 11,819,814 shares were
earmarked for issuance in connection with currently outstanding Union Planters
options, Union Planters' dividend reinvestment plan, two small convertible debt
issues and with respect to conversion rights of currently outstanding Union
Planters Series E preferred stock. In addition, as of October 31, 1998, 968,865
shares of Union
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Planters' 8% Cumulative, Convertible Series E preferred stock, were outstanding.
On October 31, 1998, none of Union Planters' 750,000 authorized shares of Series
A preferred stock were issued and outstanding, nor is Union Planters' management
aware of the existence of circumstances from which it may be inferred that such
issuance is imminent. THE CAPITAL STOCK OF UNION PLANTERS DOES NOT REPRESENT OR
CONSTITUTE A DEPOSIT ACCOUNT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND, OR
ANY GOVERNMENTAL AGENCY.
UNION PLANTERS COMMON STOCK
GENERAL. Shares of Union Planters common stock may be issued at such
time or times and for such consideration (not less than the par value thereof)
as the Union Planters board of directors may deem advisable, subject to such
limitations as may be set forth in the laws of the State of Tennessee, Union
Planters' charter or bylaws or the rules of the New York Stock Exchange. Union
Planters Bank is the Registrar, Transfer Agent and Dividend Disbursing Agent for
shares of Union Planters common stock. Its address is Union Planters Bank,
Corporate Trust Department, 1 South Church Street, Belleville, Illinois 62220.
DIVIDENDS. Subject to the preferential dividend rights applicable to
outstanding shares of the Union Planters 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 Union
Planters preferred stock, the holders of the Union Planters 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 Union Planters board of directors.
Union Planters 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
Union Planters common stock and Union Planters preferred stock. Union Planters
has no such arrangements in effect at the date hereof. In December 1996, Union
Planters caused to be issued $200,000,000 in aggregate liquidation amount of
8.20% Capital Trust Pass-through Securities ("Union Planters Capital
Securities") through a Delaware trust subsidiary. Pursuant to the terms of the
governing instruments, Union Planters would be prohibited from paying dividends
on any Union Planters common stock or Union Planters preferred stock if all
quarterly payments on the Union Planters Capital Securities had not been paid in
full. The Union Planters 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 Union
Planters, after distribution in full of the preferential amounts required to be
distributed to the holders of Union Planters preferred stock, holders of Union
Planters common stock will be entitled to receive all of the remaining assets of
Union Planters, of whatever kind, available for distribution to stockholders
ratably in proportion
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to the number of shares of Union Planters common stock held. The Union Planters
board of directors may distribute in kind to the holders of Union Planters
common stock such remaining assets of Union Planters 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 Union
Planters common stock. Neither the merger or consolidation of Union Planters
into or with any other corporation, nor the merger of any other corporation into
Union Planters, nor any purchase or redemption of shares of stock of Union
Planters of any class, shall be deemed to be a dissolution, liquidation, or
winding-up of Union Planters for purposes of this paragraph.
Because Union Planters is a holding company, its right and the rights
of its creditors and stockholders, including the holders of Union Planters
preferred stock and Union Planters 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 Union Planters itself may be a creditor having recognized claims
against such subsidiary.
For a further description of Union Planters common stock, see "EFFECT
OF THE MERGER ON RIGHTS OF STOCKHOLDERS."
UNION PLANTERS PREFERRED STOCK
SERIES A PREFERRED STOCK. Union Planters' charter provides for the
issuance of up to 750,000 shares (subject to adjustment by action of the Union
Planters board of directors) of Series A preferred stock under certain
circumstances involving a potential change in control of Union Planters. 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 Union Planters' registration statement on Form 8-A,
dated January 19, 1989, and filed February 1, 1989 (Securities and Exchange
Commission File No. 0-6919) which is incorporated by reference herein.
SERIES E PREFERRED STOCK. As of October 31, 1998, 968,865 shares of
Series E preferred stock were outstanding. 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 Union Planters 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 Union Planters' option and with the prior approval of the
Federal Reserve, are subject to redemption by Union Planters 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."
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OTHER MATTERS
As of the date of this proxy statement-prospectus, First Mutual's board
of directors knows of no matters that will be presented for consideration at the
special meeting other than as described in this proxy statement-prospectus.
However, if any other matters properly come before the special meeting or any
adjournment or postponement of the special meeting and are voted upon, the
enclosed proxy will be deemed to confer discretionary authority to the
individuals named as proxies to vote the shares represented by such proxy as to
any such matters.
STOCKHOLDER PROPOSALS
Union Planters expects to hold its next annual meeting of stockholders
in April 1999, after the merger. Under Securities and Exchange Commission rules,
proposals of Union Planters stockholders intended to be presented at that
meeting must be received by Union Planters at its principal executive offices no
later than _______________, 1998. It is not currently anticipated that First
Mutual will hold its annual meeting unless the merger should not be consummated.
In the event the merger is not consummated, proposals of First Mutual
stockholders intended to be presented at that meeting must have been received by
First Mutual at its principal executive offices no later than ___________, 1998.
EXPERTS
The consolidated financial statements of Union Planters and
subsidiaries incorporated in this proxy statement-prospectus by reference to
Exhibit 99.1 to Union Planters' September 30, 1998 Quarterly Report on Form 10-Q
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The consolidated financial statements of First Mutual and subsidiaries
incorporated in this proxy statement-prospectus by reference to First Mutual's
annual report on Form 10-K for the year ended December 31, 1997 have been
audited by Crowe, Chizek and Company LLP, independent auditors, as stated in
their report, which is incorporated herein by reference and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
OPINIONS
The legality of the shares of Union Planters 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 Union Planters. E. James House, Jr. is an officer of,
and receives compensation from, Union Planters.
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Certain tax consequences of the transaction have been passed upon by
Wyatt, Tarrant & Combs.
WHERE YOU CAN FIND MORE INFORMATION
Union Planters and First Mutual file annual, quarterly and current
reports, proxy and information statements, and other information with the
Securities and Exchange Commission under the Securities Exchange Act of 1934.
You may read and copy this information at the Public Reference Section at the
Securities and Exchange Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet
site that contains reports, proxy and information statements, and other
information about issuers that file electronically with the Securities and
Exchange Commission. The address of that site is http://www.sec.gov. In
addition, you can read and copy this information at the regional offices of the
Securities and Exchange Commission at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. You can also inspect reports, proxy and information
statements, and other information about Union Planters at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005 and about First
Mutual at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006.
Union Planters filed a registration statement with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the Union Planters common stock offered to the First Mutual stockholders. The
registration statement contains additional information about Union Planters and
the Union Planters common stock. The Securities and Exchange Commission allows
Union Planters to omit certain information included in the registration
statement from this proxy statement-prospectus. The registration statement may
be inspected and copied at the Securities and Exchange Commission's public
reference facilities described above.
This proxy statement-prospectus incorporates important business and
financial information about Union Planters and First Mutual that is not included
in or delivered with this proxy statement-prospectus. The following documents
filed with the Securities and Exchange Commission by Union Planters are
incorporated by reference in this proxy statement-prospectus (Securities and
Exchange Commission File No. 1-10160):
(1) Union Planters' Annual Report on Form 10-K for the year ended
December 31, 1997 (provided that any information included or
incorporated by reference in response to Items 402(a)(8), (i),
(k), or (l) of Regulation S-K promulgated by the Securities
and Exchange Commission shall not be deemed to be incorporated
herein and is not part of the registration statement);
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(2) Union Planters' Quarterly Report on Form 10-Q for the three
months ended March 31, 1998 and the amendment thereto filed on
Form 10-Q/A;
(3) Union Planters' Quarterly Report on Form 10-Q for the six
months ended June 30, 1998;
(4) Union Planters' Quarterly Report on Form 10-Q for the nine
months ended September 30, 1998 (which includes supplemental
consolidated financial statements of Union Planters and
related management's discussion and analysis of financial
condition and results of operations of Union Planters, giving
effect to the acquisitions Union Planters has consummated
since December 31, 1997);
(5) Union Planters' Current Reports on Form 8-K dated January 15,
1998, February 22, 1998, April 16, 1998, July 10, 1998 July
16, 1998, September 1, 1998, September 8, 1998, October 15,
1998 and October 16, 1998;
(6) The description of the current management and board of
directors of Union Planters contained in the proxy statement
of Union Planters filed pursuant to Section 14(a) of the
Exchange Act for Union Planters's Annual Meeting of
Stockholders held on April 16, 1998;
(7) Union Planters' Registration Statement on Form 8-A dated
January 19, 1989, filed on February 1, 1989; (Securities and
Exchange Commission File No. 0-6919) in connection with Union
Planters' designation and authorization of its Series A
Preferred Stock; and
(8) The description of the Union Planters common stock contained
in Union Planters' registration statement under Section 12(b)
of the Exchange Act and any amendment or report filed for the
purpose of updating such description.
The following documents filed with the Securities and Exchange
Commission by First Mutual are incorporated by reference in this Proxy Statement
(Securities and Exchange Commission File No. 0-26184):
(1) First Mutual's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(2) First Mutual's Quarterly Report on Form 10-Q for the three
months ended March 31, 1998;
(3) First Mutual's Quarterly Report on Form 10-Q for the six
months ended June 30, 1998;
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(4) First Mutual's Quarterly Report on Form 10-Q for the nine
months ended September 30, 1998;
(5) First Mutual's Current Report on Form 8-K dated July 2, 1998;
(6) The description of the current management and board of
directors of First Mutual contained in the proxy statement of
First Mutual filed on March 10, 1998, pursuant to Section
14(a) of the Securities and Exchange Act of 1934; and
(7) The description of the First Mutual common stock contained in
First Mutual's Registration Statement under Section 12(g) of
the Securities and Exchange Act of 1934 and any amendment or
report filed for the purpose of updating such description.
Union Planters and First Mutual also incorporate by reference
additional documents filed by them pursuant to Sections 13(a), 13(c), 14, or
15(d) of the Exchange Act after the date of this proxy statement-prospectus and
prior to final adjournment of the special meeting. Any statement contained in
this proxy statement-prospectus or in a document incorporated or deemed to be
incorporated by reference in this proxy statement-prospectus shall be deemed to
be modified or superseded 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. In particular,
reference is made to the Union Planters' September 30, 1998 Quarterly Report on
Form 10-Q, which includes supplemental consolidated financial statements and the
related management's discussion and analysis of financial condition and results
of operations of Union Planters, giving effect to the acquisitions Union
Planters has consummated since December 31, 1997. See "BUSINESS OF UNION
PLANTERS - Recent Developments."
You may obtain copies of the information incorporated by reference in
this proxy statement-prospectus upon written or oral request. The inside front
cover of this proxy statement-prospectus (page ii) contains information about
how such requests should be made.
All information contained in this proxy statement-prospectus or
incorporated herein by reference with respect to Union Planters was supplied by
Union Planters, and all information contained in this proxy statement-prospectus
or incorporated herein by reference with respect to First Mutual was supplied by
First Mutual.
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APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRST MUTUAL BANCORP, INC.
AND
UNION PLANTERS CORPORATION
DATED AS OF JULY 2, 1998
<PAGE> 94
TABLE OF CONTENTS
<TABLE>
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<S> <C> <C>
ARTICLE 1 - TRANSACTIONS AND TERMS OF MERGER..................................1
1.1 MERGER..........................................................1
1.2 TIME AND PLACE OF CLOSING.......................................2
1.3 EFFECTIVE TIME..................................................2
1.4 EXECUTION OF STOCK OPTION AGREEMENT.............................2
1.5 RESTRUCTURE OF TRANSACTION......................................2
ARTICLE 2 - TERMS OF MERGER...................................................2
2.1 CHARTER.........................................................2
2.2 BYLAWS..........................................................3
2.3 DIRECTORS AND OFFICERS..........................................3
ARTICLE 3 - MANNER OF CONVERTING SHARES.......................................3
3.1 CONVERSION OF SHARES............................................3
3.2 ANTI-DILUTION PROVISIONS........................................3
3.3 SHARES HELD BY MUTUAL OR UPC....................................3
3.4 FRACTIONAL SHARES...............................................4
3.5 CONVERSION OF STOCK RIGHTS......................................4
ARTICLE 4 - EXCHANGE OF SHARES................................................4
4.1 EXCHANGE PROCEDURES.............................................4
4.2 RIGHTS OF FORMER MUTUAL STOCKHOLDERS............................5
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF MUTUAL..........................5
5.1 ORGANIZATION, STANDING, AND POWER...............................5
5.2 AUTHORITY; NO BREACH BY AGREEMENT...............................5
5.3 CAPITAL STOCK...................................................6
5.4 MUTUAL SUBSIDIARIES.............................................7
5.5 SEC FILINGS; FINANCIAL STATEMENTS...............................7
5.6 ABSENCE OF UNDISCLOSED LIABILITIES..............................8
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS............................8
5.8 TAX MATTERS.....................................................8
5.9 ASSETS..........................................................9
5.10 ENVIRONMENTAL MATTERS..........................................9
5.11 COMPLIANCE WITH LAWS..........................................10
5.12 LABOR RELATIONS...............................................10
5.13 EMPLOYEE BENEFIT PLANS........................................11
5.14 MATERIAL CONTRACTS............................................13
5.15 LEGAL PROCEEDINGS.............................................13
5.16 REPORTS.......................................................14
5.17 STATEMENTS TRUE AND CORRECT...................................14
5.18 TAX AND REGULATORY MATTERS....................................14
5.19 STATE TAKEOVER LAWS...........................................14
5.20 CHARTER PROVISIONS............................................14
5.21 RIGHTS AGREEMENT..............................................15
5.22 DERIVATIVES...................................................15
5.23 YEAR 2000.....................................................15
</TABLE>
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<TABLE>
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ARTICLE 6 - REPRESENTATIONS AND WARRANTIES OF UPC............................15
6.1 ORGANIZATION, STANDING, AND POWER..............................15
6.2 AUTHORITY; NO BREACH BY AGREEMENT..............................15
6.3 CAPITAL STOCK..................................................16
6.4 UPC SUBSIDIARIES...............................................16
6.5 SEC FILINGS; FINANCIAL STATEMENTS..............................17
6.6 ABSENCE OF UNDISCLOSED LIABILITIES.............................17
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS...........................17
6.8 TAX MATTERS....................................................18
6.9 ASSETS.........................................................18
6.10 ENVIRONMENTAL MATTERS.........................................19
6.11 COMPLIANCE WITH LAWS..........................................20
6.12 LABOR RELATIONS...............................................20
6.13 LEGAL PROCEEDINGS.............................................20
6.14 REPORTS.......................................................20
6.15 STATEMENTS TRUE AND CORRECT...................................21
6.16 TAX AND REGULATORY MATTERS....................................21
6.17 EMPLOYEE BENEFIT PLANS........................................21
6.18 DERIVATIVES...................................................22
6.19 YEAR 2000.....................................................22
ARTICLE 7 - CONDUCT OF BUSINESS PENDING CONSUMMATION.........................22
7.1 AFFIRMATIVE COVENANTS OF BOTH PARTIES..........................22
7.2 NEGATIVE COVENANTS OF MUTUAL...................................22
7.3 ADVERSE CHANGES IN CONDITION...................................24
7.4 REPORTS........................................................24
ARTICLE 8 - ADDITIONAL AGREEMENTS............................................25
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER
APPROVAL. .................................................25
8.2 EXCHANGE LISTING...............................................25
8.3 APPLICATIONS...................................................25
8.4 FILINGS WITH STATE OFFICES.....................................25
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE..........................25
8.6 INVESTIGATION AND CONFIDENTIALITY..............................26
8.7 PRESS RELEASES.................................................26
8.8 CERTAIN ACTIONS................................................26
8.9 TAX TREATMENT..................................................27
8.10 STATE TAKEOVER LAWS...........................................27
8.11 CHARTER PROVISIONS............................................27
8.12 AGREEMENT OF AFFILIATES.......................................27
8.13 EMPLOYEE BENEFITS AND CONTRACTS...............................27
8.14 INDEMNIFICATION...............................................28
8.15 CERTAIN MODIFICATIONS.........................................29
ARTICLE 9 - CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE................29
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY........................29
9.2 CONDITIONS TO OBLIGATIONS OF UPC...............................31
9.3 CONDITIONS TO OBLIGATIONS OF MUTUAL............................31
ARTICLE 10 - TERMINATION.....................................................32
10.1 TERMINATION...................................................32
</TABLE>
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<TABLE>
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10.2 EFFECT OF TERMINATION.........................................33
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS.................33
ARTICLE 11 - MISCELLANEOUS...................................................34
11.1 DEFINITIONS...................................................34
11.2 EXPENSES......................................................40
11.3 BROKERS AND FINDERS...........................................41
11.4 ENTIRE AGREEMENT..............................................41
11.5 AMENDMENTS....................................................41
11.6 WAIVERS.......................................................41
11.7 ASSIGNMENT....................................................42
11.8 NOTICES.......................................................42
11.9 GOVERNING LAW.................................................43
11.10 COUNTERPARTS.................................................43
11.11 CAPTIONS.....................................................43
11.12 INTERPRETATIONS..............................................43
11.13 ENFORCEMENT OF AGREEMENT.....................................43
11.14 SEVERABILITY.................................................43
</TABLE>
LIST OF EXHIBITS
Exhibit 1 Stock Option Agreement
Exhibit 2 Plan of Merger
Exhibit 3 Affiliate Agreement
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<PAGE> 97
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement")
is made and entered into as of July 2, 1998, by and between FIRST MUTUAL
BANCORP, INC. ("Mutual"), a corporation organized and existing under the Laws of
the State of Delaware, with its principal office located in Decatur, Illinois;
and UNION PLANTERS CORPORATION ("UPC"), a corporation organized and existing
under the Laws of the State of Tennessee, with its principal office located in
Memphis, Tennessee.
PREAMBLE
The Boards of Directors of Mutual and UPC are of the opinion
that the transactions described herein are in the best interests of the parties
to this Agreement and their respective stockholders. This Agreement provides for
the acquisition of Mutual by UPC pursuant to the merger (the "Merger") of Mutual
with and into Union Planters Holding Corporation ("UPHC"), a wholly-owned
subsidiary of UPC organized under the Laws of the State of Tennessee. At the
effective time of the Merger, the outstanding shares of the common stock of
Mutual shall be converted into shares of the common stock of UPC (except as
provided herein). As a result, stockholders of Mutual shall become stockholders
of UPC, and UPHC shall continue to conduct the business and operations of Mutual
as a wholly-owned subsidiary of UPC. The transactions described in this
Agreement are subject to the approvals of the stockholders of Mutual, the Board
of Governors of the Federal Reserve System, and certain 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.
Immediately after the execution and delivery of this
Agreement, as a condition and inducement to UPC's willingness to enter into this
Agreement, Mutual and UPC are entering into a stock option agreement (the "Stock
Option Agreement"), in substantially the form of Exhibit 1, pursuant to which
Mutual is granting to UPC an option to purchase shares of Mutual Common Stock.
Certain terms used in this Agreement are defined in Section
11.1 of this Agreement.
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants, and agreements set forth herein, the
Parties agree as follows:
ARTICLE 1
TRANSACTIONS AND TERMS OF MERGER
1.1 MERGER. Subject to the terms and conditions of this Agreement, at
the Effective Time, Mutual shall be merged with and into UPHC in accordance with
the provisions of Section 252 of the DGCL and with the effect provided in
Section 259 of the DGCL and in accordance with the provisions of Section
48-21-109 of the TBCA and with the effect provided in Section 48-21-108 of the
TBCA (the "Merger"). UPHC shall be the Surviving Corporation resulting from the
Merger and shall continue to be governed by the Laws of the State of Tennessee.
The Merger shall be consummated pursuant to the terms of this Agreement, which
has been approved and adopted by the Board of Directors of Mutual and has been
or will be adopted by the Board of Directors of UPC, and the Plan of Merger, in
substantially the form of Exhibit 2, which has been approved and
<PAGE> 98
adopted by the Board of Directors of Mutual and will be approved and adopted by
the Board of Directors of UPHC prior to the Effective Time.
1.2 TIME AND PLACE OF CLOSING. The consummation of the Merger (the
"Closing") shall 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 duly
authorized officers, may mutually agree. The place of Closing shall be at such
location as may be mutually agreed upon by the Parties.
1.3 EFFECTIVE TIME. The Merger and the other transactions contemplated
by this Agreement shall become effective on the date and at the time the
Certificate of Merger shall become effective with the Secretary of State of the
State of Delaware and the Articles of Merger shall become effective with the
Secretary of State of the State of Tennessee (the "Effective Time"). Subject to
the terms and conditions hereof, unless otherwise mutually agreed upon in
writing by the duly authorized officers of each Party, the Parties shall use
their reasonable efforts to cause the Effective Time to occur on or before the
15th business day (as designated by UPC) following the last to occur of (i) the
effective date (including expiration of any applicable waiting period) of the
last required Consent of any Regulatory Authority having authority over and
approving or exempting the Merger and (ii) the date on which the stockholders of
Mutual approve the matters relating to this Agreement required to be approved by
such stockholders by applicable Law.
1.4 EXECUTION OF STOCK OPTION AGREEMENT. Immediately after the
execution of this Agreement and as a condition hereto, Mutual is executing and
delivering to UPC the Stock Option Agreement.
1.5 RESTRUCTURE OF TRANSACTION. UPC shall, in its reasonable
discretion, have the unilateral right to revise the structure of the Merger
contemplated by this Agreement in order to achieve tax benefits or for any other
reason which UPC may deem advisable; provided, however, that UPC shall not have
the right, without the approval of the Board of Directors of Mutual, to make any
revision to the structure of the Merger which: (i) changes the amount of the
consideration which the holders of shares of Mutual Common Stock are entitled to
receive (determined in the manner provided in Section 3.1 of this Agreement);
(ii) changes the intended tax-free effects of the Merger to UPC or the holders
of shares of Mutual Common Stock; (iii) would permit UPC to pay the
consideration other than by delivery of UPC Common Stock registered with the SEC
(in the manner described in Section 4.1 of this Agreement); (iv) would be
materially adverse to the interests of Mutual or holders of shares of Mutual
Common Stock; (v) would unreasonably impede or delay consummation of the Merger;
or (vi) would affect any of the provisions in Sections 8.13 or 8.14 of this
Agreement. UPC may exercise this right of revision by giving written notice to
Mutual in the manner provided in Section 11.8 of this Agreement which notice
shall be in the form of an amendment to this Agreement or in the form of an
Amended and Restated Agreement and Plan of Merger.
ARTICLE 2
TERMS OF MERGER
2.1 CHARTER. The Charter of UPHC in effect immediately prior to the
Effective Time shall be the Charter of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
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2.2 BYLAWS. The Bylaws of UPHC in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.3 DIRECTORS AND OFFICERS. The directors of UPHC in office immediately
prior to the Effective Time, together with such additional individuals
thereafter elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of UPHC in office immediately prior to the Effective
Time, together with such additional individuals thereafter elected, shall serve
as the officers of the Surviving Corporation from and after the Effective Time
in accordance with the Bylaws of the Surviving Corporation.
ARTICLE 3
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of UPC or Mutual, or the stockholders of either of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of UPC Common Stock issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding from
and after the Effective Time.
(b) Each share of UPHC Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of Mutual Common Stock, but excluding
shares held by any Mutual Company or any UPC Company (in each case other than in
a fiduciary capacity or as a result of debts previously contracted), issued and
outstanding at the Effective Time shall be converted into a fraction of a share
of UPC Common Stock equal to the quotient obtained (the "Exchange Ratio") by
dividing [i] $18.50 by [ii] 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 chosen by UPC) for the 20
consecutive full trading days in which such shares are traded on the NYSE
preceding the third business day prior to the Closing Date. Pursuant to the UPC
Rights Agreement, each share of UPC Common Stock issued in connection with the
Merger upon conversion of Mutual Common Stock shall be accompanied by a UPC
Right.
3.2 ANTI-DILUTION PROVISIONS. In the event Mutual changes the number of
shares of Mutual Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, recapitalization, or similar
transaction with respect to such stock, the Exchange Ratio shall be
proportionately adjusted. 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, recapitalization, or similar transaction with
respect to such stock and the record date therefor (in the case of a stock
dividend) or the effective date thereof (in the case of a stock split or similar
recapitalization for which a record date is not established) shall be prior to
the Effective Time, the Exchange Ratio shall be proportionately adjusted.
3.3 SHARES HELD BY MUTUAL OR UPC. Each of the shares of Mutual Common
Stock issued but not outstanding or held by any Mutual Company or by any UPC
Company, in each case
3
<PAGE> 100
other than in a fiduciary capacity or as a result of debts previously
contracted, shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this
Agreement, each holder of shares of Mutual Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of UPC Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the market value of one share of UPC Common Stock at the Effective Time. The
market value of one share of UPC Common Stock at the Effective Time shall be the
last sale price of UPC Common Stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day preceding the
Effective Time. No such holder will be entitled to dividends, voting rights, or
any other rights as a stockholder in respect of any fractional shares.
3.5 CONVERSION OF STOCK RIGHTS. At or prior to the Closing, Mutual
shall cause each option to purchase shares of Mutual Common Stock granted by
Mutual under the Mutual Stock Plans, which are outstanding, whether or not then
exercisable, to be canceled in exchange for cash in an amount equal to the
product of (i) the total number of shares of Mutual Common Stock subject to such
option and (ii) the excess of $18.50 over the exercise price per share subject
to such option.
ARTICLE 4
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, UPC and
Mutual shall cause the exchange agent selected by UPC (the "Exchange Agent") to
mail to the former stockholders of Mutual appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of Mutual Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of Mutual Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Agreement) issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.4 of this
Agreement, each holder of shares of Mutual Common Stock issued and outstanding
at the Effective Time also shall receive, upon surrender of the certificate or
certificates representing such shares, cash in lieu of any fractional share of
UPC Common Stock to which such holder may be otherwise entitled (without
interest). UPC shall not be obligated to deliver the consideration to which any
former holder of Mutual Common Stock is entitled as a result of the Merger until
such holder surrenders such holder's certificate or certificates representing
the shares of Mutual Common Stock for exchange as provided in this Section 4.1.
The certificate or certificates of Mutual Common Stock so surrendered shall be
duly endorsed as the Exchange Agent may require. Any other provision of this
Agreement notwithstanding, neither the Surviving Corporation nor the Exchange
Agent shall be liable to a holder of Mutual Common Stock for any amounts paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property Law.
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<PAGE> 101
4.2 RIGHTS OF FORMER MUTUAL STOCKHOLDERS. At the Effective Time, the
stock transfer books of Mutual shall be closed as to holders of Mutual Capital
Stock immediately prior to the Effective Time and no transfer of Mutual Capital
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Agreement, each certificate theretofore representing shares of Mutual
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Agreement) shall from and after the Effective Time represent for all purposes
only the right to receive the consideration provided in Sections 3.1 and 3.4 of
this Agreement in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Mutual in respect of such shares of Mutual Common Stock in accordance with
the terms of this Agreement and which remain unpaid at the Effective Time. To
the extent permitted by Law, former stockholders of record of Mutual shall be
entitled to vote after the Effective Time at any meeting of UPC stockholders the
number of whole shares of UPC Common Stock into which their respective shares of
Mutual Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Mutual Common Stock for certificates
representing UPC Common Stock in accordance with the provisions of this
Agreement. Whenever a dividend or other distribution is declared by UPC on the
UPC Common Stock, the record date for which is at or after the Effective Time,
the declaration shall include dividends or other distributions on all shares
issuable pursuant to this Agreement, but beginning 30 days after the Effective
Time no dividend or other distribution payable to the holders of record of UPC
Common Stock as of any time subsequent to the Effective Time shall be delivered
to the holder of any certificate representing shares of Mutual Common Stock
issued and outstanding at the Effective Time until such holder surrenders such
certificate for exchange as provided in Section 4.1 of this Agreement. However,
upon surrender of such Mutual Common Stock certificate, both the UPC Common
Stock certificate (together with all such undelivered dividends or other
distributions without interest) and any undelivered dividends and cash payments
to be paid for fractional share interests (without interest) shall be delivered
and paid with respect to each share represented by such certificate.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MUTUAL
Except as set forth below and as set forth in the Mutual
Disclosure Memorandum referencing a specific section of this Agreement, Mutual
hereby represents and warrants to UPC as follows:
5.1 ORGANIZATION, STANDING, AND POWER. Mutual is a corporation duly
organized and validly existing under the Laws of the State of Delaware, and has
the corporate power and authority to carry on its business as now conducted and
to own, lease, and operate its Material Assets. Mutual is duly qualified or
licensed to transact business as a foreign corporation 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 Mutual.
5.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) Mutual has the corporate power and authority
necessary to execute, deliver, and perform its obligations under this Agreement
and the Plan of Merger and to consummate the transactions contemplated hereby
and thereby. Except as set forth in Section 5.2(a) of the Mutual
5
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Disclosure Memorandum, the execution, delivery, and performance of this
Agreement and the Plan of Merger, 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 Mutual, subject to the approval of this Agreement and the Plan of Merger
by holders of a majority of the issued and outstanding shares of Mutual Common
Stock, voting together as one class, as required by Law, which is the only
stockholder vote required for approval of this Agreement and the Plan of Merger
and consummation of the Merger by Mutual. Subject to such requisite stockholder
approval and as set forth in Section 5.2(a) of the Mutual Disclosure Memorandum,
this Agreement and the Plan of Merger represent legal, valid, and binding
obligations of Mutual, enforceable against Mutual in accordance with their
respective terms (except in all cases as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought).
(b) Neither the execution and delivery of this Agreement
and the Plan of Merger by Mutual, nor the consummation by Mutual of the
transactions contemplated hereby or thereby, nor compliance by Mutual with any
of the provisions hereof or thereof, will (i) conflict with or result in a
breach of any provision of Mutual's Certificate 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 Asset of any Mutual Company
under, any Contract or Permit of any Mutual Company, where such Default or Lien,
or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Mutual, or (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(b) of
this Agreement, violate any Law or Order applicable to any Mutual Company or any
of their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws and applicable state corporate and securities
Laws and rules of the Nasdaq, 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 Mutual, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by Mutual of the Merger and the other transactions contemplated
in this Agreement and the Plan of Merger.
5.3 CAPITAL STOCK.
(a) The authorized capital stock of Mutual consists, as
of the date of this Agreement, of (i) 8,000,000 shares of Mutual Common Stock,
of which 3,530,570 shares were issued and outstanding, and 1,169,430 shares were
held by Mutual in treasury, as of June 30, 1998, and not more than 3,530,570
shares will be issued and outstanding, and not more than 1,169,430 shares will
be held by Mutual in treasury, at the Effective Time and (ii) 2,000,000 shares
of Mutual Preferred Stock, of which no shares are issued and outstanding and of
which no shares will be issued and outstanding at the Effective Time. All of the
issued and outstanding shares of Mutual Common Stock are duly and validly issued
and outstanding and are fully paid and nonassessable under the DGCL. None of the
outstanding shares of Mutual Common Stock has been issued in violation of any
preemptive rights of the current or past stockholders of Mutual.
(b) Except (i) as set forth in Section 5.3(a) of this
Agreement, (ii) with respect to 383,700 shares of Mutual Common Stock subject to
outstanding options under the Mutual Stock
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Plans, and (iii) as provided pursuant to the Stock Option Agreement, there are
no shares of capital stock or other equity securities of Mutual outstanding and
no outstanding Rights relating to the capital stock of Mutual.
5.4 MUTUAL SUBSIDIARIES. Mutual has disclosed in Section 5.4 of the
Mutual Disclosure Memorandum all of the Mutual Subsidiaries. Mutual or one of
its Subsidiaries owns all of the issued and outstanding shares of capital stock
of each Mutual Subsidiary. No equity securities of any Mutual Subsidiary are or
may become required to be issued (other than to another Mutual Company) by
reason of any Rights, and there are no Contracts by which any Mutual Subsidiary
is bound to issue (other than to another Mutual Company) additional shares of
its capital stock or Rights or by which any Mutual Company is or may be bound to
transfer any shares of the capital stock of any Mutual Subsidiary (other than to
another Mutual Company). There are no Contracts relating to the rights of any
Mutual Company to vote or to dispose of any shares of the capital stock of any
Mutual Subsidiary. All of the shares of capital stock of each Mutual Subsidiary
held by an Mutual Company are duly authorized, validly issued, and fully paid
and, except as provided in statutes pursuant to which depository institution
Subsidiaries are organized, nonassessable under the applicable corporation Law
of the jurisdiction in which such Subsidiary is incorporated or organized and
are owned by the Mutual Company free and clear of any Lien. Each Mutual
Subsidiary is either a bank, a savings association or a corporation, and is duly
organized, validly existing, and (as to national banking associations) in good
standing under the Laws of the jurisdiction in which it is incorporated or
organized, and has the corporate power and authority necessary for it to own,
lease, and operate its Assets and to carry on its business as now conducted.
Each Mutual Subsidiary is duly qualified or licensed to transact business as a
foreign corporation 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 Mutual.
Each Mutual Subsidiary that is a depository institution is an "insured
institution" as defined in the Federal Deposit Insurance Act and applicable
regulations thereunder, and the deposits in which are insured by the Bank
Insurance Fund or Savings Association Insurance Fund.
5.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Mutual has filed and made available to UPC all forms,
reports, and documents required to be filed by Mutual with the SEC since June
30, 1995 (collectively, the "Mutual SEC Reports"). The Mutual SEC Reports (i) at
the time filed, complied in all Material respects with the applicable
requirements of the 1933 Act and the 1934 Act, as the case may be, 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 latter filing) contain
any untrue statement of a Material fact or omit to state a Material fact
required to be stated in such Mutual SEC Reports or necessary in order to make
the statements in such Mutual SEC Reports, in light of the circumstances under
which they were made, not misleading. None of Mutual's Subsidiaries is required
to file any forms, reports, or other documents with the SEC.
(b) Each of the Mutual Financial Statements (including,
in each case, any related notes) contained in the Mutual SEC Reports, including
any Mutual SEC Reports filed after the date of this Agreement until the
Effective Time, complied or will comply as to form in all Material respects with
the applicable published rules and regulations of the SEC with respect thereto,
was prepared or will be prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements, or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC), and fairly presented or will fairly present
in all Material respects the consolidated financial position of Mutual and its
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Subsidiaries as at the respective dates and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring
year-end adjustments which were not or are not expected to be Material in amount
or effect.
5.6 ABSENCE OF UNDISCLOSED LIABILITIES. No Mutual Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Mutual, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of Mutual as of
March 31, 1998, included in the Mutual Financial Statements or reflected in the
notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to March 31, 1998. No Mutual Company has incurred or paid
any Liability since March 31, 1998, 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 Mutual and Liabilities incurred in connection with
this Agreement and the transactions contemplated hereby.
5.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1998, except
as disclosed in the Mutual Financial Statements, (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 Mutual and (ii)
the Mutual Companies have conducted their respective businesses in the ordinary
and usual course (excluding the incurrence of expenses in connection with this
Agreement and the transactions contemplated hereby).
5.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of any of the Mutual Companies have been timely filed, or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before December 31, 1996, and, to the Knowledge of Mutual, all Tax
Returns filed are complete and accurate in all Material respects. All Tax
Returns for periods ending on or before the date of the most recent fiscal year
end immediately preceding the Effective Time will be timely filed or requests
for extensions will be timely filed. All Taxes shown on filed Tax Returns have
been paid. There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes, that is reasonably likely to result in a determination
that would have, individually or in the aggregate, a Material Adverse Effect on
Mutual, except to the extent reserved against in the Mutual Financial Statements
dated 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.
(b) None of the Mutual Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the Mutual Companies for the period or periods through and including
the date of the respective Mutual Financial Statements has been made and is
reflected on such Mutual Financial Statements.
(d) Each of the Mutual Companies is in compliance with,
and its records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and Tax withholding requirements under federal, state, and local Tax
Laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and
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such omissions as are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Mutual.
(e) Except as disclosed in Section 5.8(e) of the Mutual
Disclosure Memorandum, none of the Mutual Companies has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes
upon any of the Assets of the Mutual Companies.
(g) No Mutual Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible corporations.
5.9 ASSETS. The Mutual Companies have good and marketable title, free
and clear of all Liens, to all of their respective Assets, except where the
failure to have such good and marketable title is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Mutual. All
Material tangible properties used in the businesses of the Mutual Companies are
in good condition, reasonable wear and tear excepted, and are usable in the
ordinary course of business consistent with Mutual's past practices. All Assets
which are Material to Mutual's business on a consolidated basis, held under
leases or subleases by any of the Mutual Companies, are held under valid
Contracts enforceable in accordance with their respective terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws affecting the enforcement of
creditors' rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceedings may be brought), and each such
Contract is in full force and effect. The Mutual Companies currently maintain
insurance in amounts, scope, and coverage reasonably necessary for their
operations. None of the Mutual Companies has received notice from any insurance
carrier that (i) such insurance will be canceled or that coverage thereunder
will be reduced or eliminated or (ii) premium costs with respect to such
policies of insurance will be substantially increased. The Assets of the Mutual
Companies include all Assets required to operate the business of the Mutual
Companies as presently conducted.
5.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of Mutual, each Mutual Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except those violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Mutual.
(b) There is no Litigation pending or, to the Knowledge
of Mutual, threatened before any court, governmental agency, or authority, or
other forum in which any Mutual Company or any of its Participation Facilities
has been or, with respect to threatened Litigation, may reasonably be expected
to 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,
or involving a site owned, leased, or operated by any Mutual Company or any of
its 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 Mutual.
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(c) There is no Litigation pending, or to the Knowledge
of Mutual, threatened before any court, governmental agency, or board, or other
forum in which any of its Loan Properties (or Mutual in respect of such Loan
Property) has been or, with respect to threatened Litigation, may reasonably be
expected to be named as a defendant or potentially responsible party (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, or involving a Loan Property, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Mutual.
(d) To the Knowledge of Mutual, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c), except
such as is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Mutual.
(e) To the Knowledge of Mutual, during the period of (i)
any Mutual Company's ownership or operation of any of their respective current
properties, (ii) any Mutual Company's participation in the management of any
Participation Facility, or (iii) any Mutual Company's holding of a security
interest in a Loan Property, there have been no releases of Hazardous Material
in, on, under, 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 Mutual. To the Knowledge of Mutual, prior to the
period of (i) any Mutual Company's ownership or operation of any of their
respective current properties, (ii) any Mutual Company's participation in the
management of any Participation Facility, or (iii) any Mutual Company's holding
of a security interest in a Loan Property, to the Knowledge of Mutual, there
were no releases of Hazardous Material in, on, under, or affecting any such
property, Participation Facility, or Loan Property, except such as are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Mutual.
5.11 COMPLIANCE WITH LAWS. Mutual is duly registered as a bank holding
company under the BHC Act. Each Mutual 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, except for those Permits the absence of which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual, and there has occurred no Default under any such
Permit, other than Defaults which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Mutual. None of
the Mutual Companies:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Mutual; and
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Mutual Company
is not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Mutual, (ii) threatening to revoke any Permits, the revocation of
which is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual, or (iii) requiring any Mutual Company (x) to enter
into or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
5.12 LABOR RELATIONS. No Mutual Company is the subject of any
Litigation asserting that it or any other Mutual Company has committed an unfair
labor practice (within the meaning
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of the National Labor Relations Act or comparable state Law) or seeking to
compel it or any other Mutual Company to bargain with any labor organization as
to wages or conditions of employment, nor is any Mutual Company a party to or
bound by any collective bargaining agreement, Contract, or other agreement or
understanding with a labor union or labor organization, nor is there any strike
or other labor dispute involving any Mutual Company, pending or, to the
Knowledge of Mutual, threatened, or to the Knowledge of Mutual, is there any
activity involving any Mutual Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
5.13 EMPLOYEE BENEFIT PLANS.
(a) Mutual has disclosed to UPC in writing prior to the
execution of the Agreement and in Section 5.13(a) of the Mutual Disclosure
Memorandum, and has delivered or made available to UPC prior to the execution of
this Agreement correct and complete copies in each case of, all Material Mutual
Benefits Plans. For purposes of this Agreement, "Mutual Benefit Plans" means 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 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, without limitation, "employee
benefit plans" as that term is defined in Section 3(3) of ERISA maintained by,
sponsored in whole or in part by, or contributed to by, any Mutual Company 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. Any of the Mutual Benefit Plans which is an
"employee welfare benefit plan," as that term is defined in Section 3(l) of
ERISA, or an "employee pension benefit plan," as that term is defined in Section
3(2) of ERISA, is referred to herein as a "Mutual ERISA Plan." Any Mutual ERISA
Plan which is also a "defined benefit plan" (as defined in Section 414(j) of the
Internal Revenue Code or Section 3(35) of ERISA) is referred to herein as a
"Mutual Pension Plan." Neither Mutual nor any Mutual Company has an "obligation
to contribute" (as defined in ERISA Section 4212) to a "multiemployer plan" (as
defined in ERISA Sections 4001(a)(3) and 3(37)(A)). Each "employee pension
benefit plan," as defined in Section 3(2) of ERISA, maintained by any Mutual
Company at any time during the last six years that was intended to qualify under
Section 401(a) of the Internal Revenue Code and with respect to which any Mutual
Company has any Liability, is disclosed as such in Section 5.13(a) of the Mutual
Disclosure Memorandum.
(b) Mutual has delivered or made available to UPC prior
to the execution of this Agreement correct and complete copies of the following
documents: (i) all trust agreements or other funding arrangements for such
Mutual Benefit Plans (including insurance contracts), and all amendments
thereto, (ii) with respect to any such Mutual Benefit Plans or amendments
thereto, all determination letters, rulings, opinion letters, information
letters, or advisory opinions issued by the Internal Revenue Service, the United
States Department of Labor, or the Pension Benefit Guaranty Corporation after
December 31, 1994, (iii) annual reports or returns, audited or unaudited
financial statements, actuarial valuations and reports, and summary annual
reports prepared for any Mutual Benefit Plan with respect to the most recent
plan year, and (iv) the most recent summary plan descriptions and any
modifications thereto.
(c) All Mutual 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 is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Mutual. Each
Mutual 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,
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and Mutual is not aware of any circumstances which could reasonably result in
revocation of any such favorable determination letter. Each trust created under
any Mutual ERISA Plan has been determined to be exempt from Tax under Section
501(a) of the Internal Revenue Code and Mutual is not aware of any circumstance
which could reasonably result in revocation of such exemption. With respect to
each Mutual Benefit Plan, to the Knowledge of Mutual, no event has occurred
which could reasonably give rise to a loss of any intended Tax consequences
under the Internal Revenue Code or to any Tax under Section 511 of the Internal
Revenue Code that is reasonably likely, individually or in the aggregate, to
have a Material Adverse Effect on Mutual. There is no Material pending or, to
the Knowledge of Mutual, threatened Litigation (other than routine claims for
benefits) relating to any Mutual ERISA Plan.
(d) No Mutual Company has engaged in a transaction with
respect to any Mutual Benefit Plan that, assuming the Taxable Period of such
transaction expired as of the date of this Agreement, would subject any Mutual
Company to a Material Tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Mutual. Neither Mutual nor, to the Knowledge of Mutual, any administrator or
fiduciary of any Mutual Benefit Plan (or any agent of any of the foregoing) has
engaged in any transaction, or acted or failed to act in any manner which could
subject Mutual to any direct or indirect Liability (by indemnity or otherwise)
for breach of any fiduciary, co-fiduciary, or other duty under ERISA, where such
Liability, individually or in the aggregate, is reasonably likely to have a
Material Adverse Effect on Mutual. Except as disclosed under Section 5.13 of the
Mutual Disclosure Memorandum, no oral or written representation or communication
with respect to any aspect of the Mutual Benefit Plans has been made to
employees of any Mutual Company which is not in accordance with the written or
otherwise preexisting terms and provisions of such plans, where any Liability
with respect to such representation or disclosure is reasonably likely to have a
Material Adverse Effect on Mutual.
(e) No Mutual 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 all benefits (whether vested or not) accrued to date by all
present or former participants in such Mutual Pension Plan exceeds the plan's
"benefit liabilities" as that term is defined in Section 4001(a)(16) of ERISA.
For this purpose, the assumptions for valuing plan Assets or Liabilities shall
be the assumptions set forth in the most recent actuarial valuations and reports
with respect to any such Mutual Pension Plan. Since the date of the most recent
actuarial valuation, there has been (i) no Material change in the financial
position or funded status of any Mutual Pension Plan, (ii) no change in the
actuarial assumptions with respect to any Mutual Pension Plan, and (iii) no
increase in benefits under any Mutual Pension Plan as a result of plan
amendments or changes in applicable Law, any of which is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Mutual.
Neither any Mutual Pension Plan nor any "single-employer plan," within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any
Mutual Company, or the single-employer plan of any entity which is considered
one employer with Mutual under Section 4001 of ERISA or Section 414 of the
Internal Revenue Code or Section 302 of ERISA (a "Mutual ERISA Affiliate") has
an "accumulated funding deficiency" within the meaning of Section 412 of the
Internal Revenue Code or Section 302 of ERISA (whether or not waived). All
contributions with respect to a Mutual Pension Plan or any single-employer plan
of an Mutual ERISA Affiliate have or will be timely made and there is no lien or
expected to be a lien under Internal Revenue Code Section 412(n) or ERISA
Section 302(f) or Tax under Internal Revenue Code Section 4971. No Mutual
Company has provided, or is required to provide, security to an Mutual Pension
Plan or to any single-employer plan of an Mutual ERISA Affiliate pursuant to
Section 401(a)(29) of the Internal Revenue Code. All premiums required to be
paid under ERISA Section 4006 have been timely paid by Mutual, except to the
extent any failure would not have a Material Adverse Effect on Mutual.
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(f) No Liability under Title IV of ERISA has been or is
expected to be incurred by any Mutual Company with respect to any defined
benefit plan currently or formerly maintained by any of them or by any Mutual
ERISA Affiliate that has not been satisfied in full (other than Liability for
Pension Benefit Guaranty Corporation premiums, which have been paid when due)
except to the extent any failure would not have a Material Adverse Effect on
Mutual.
(g) Except as set forth in Section 5.13(g) of the Mutual
Disclosure Memorandum, no Mutual Company has any obligations for retiree health
and retiree life benefits under any of the Mutual Benefit Plans other than with
respect to benefit coverage mandated by applicable Law.
(h) Except as set forth in Section 5.13(h) of the Mutual
Disclosure Memorandum, neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will, by themselves,
(i) result in any payment (including, without limitation, severance, golden
parachute, or otherwise) becoming due to any director or any employee of any
Mutual Company from any Mutual Company under any Mutual Benefit Plan or
otherwise, (ii) increase any benefits otherwise payable under any Mutual Benefit
Plan, or (iii) result in any acceleration of the time of payment or vesting of
any such benefit.
5.14 MATERIAL CONTRACTS. Except as set forth in Section 5.14 of the
Mutual Disclosure Memorandum, none of the Mutual Companies, nor any of their
respective Assets, businesses, or operations, is a party to, or is bound or
affected by, or receives benefits under, (i) any employment, severance,
termination, consulting, or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, (ii) any Contract
relating to the borrowing of money by any Mutual Company or the guarantee by any
Mutual Company of any such obligation (other than Contracts evidencing deposit
liabilities, purchases of federal funds, fully-secured repurchase agreements,
and Federal Home Loan Bank advances of depository institution Subsidiaries,
trade payables, and Contracts relating to borrowings or guarantees made in the
ordinary course of business), and (iii) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-K filed by Mutual
with the SEC as of the date of this Agreement that has not been filed as an
exhibit to Mutual's Form 10-K filed for the fiscal year ended December 31, 1997,
or in another SEC Document (together with all Contracts referred to in Sections
5.9 and 5.13(a) of this Agreement, the "Mutual Contracts"). With respect to each
Mutual Contract: (i) the Contract is in full force and effect; (ii) no Mutual
Company is in Default thereunder, other than Defaults which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
Mutual; (iii) no Mutual Company has repudiated or waived any Material provision
of any such Contract; and (iv) no other party to any such Contract is, to the
Knowledge of Mutual, in Default in any respect, other than Defaults which are
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual, or has repudiated or waived any Material provision
thereunder.
5.15 LEGAL PROCEEDINGS.
(a) There is no Litigation instituted or pending, or, to
the Knowledge of Mutual, threatened (or unasserted but considered probable of
assertion and which if asserted would have at least a reasonable probability of
an unfavorable outcome to any Mutual Company) against any Mutual Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual, nor are there any Orders of any Regulatory
Authorities, other governmental authorities, or arbitrators outstanding against
any Mutual Company, that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Mutual.
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(b) Section 5.15(b) of the Mutual Disclosure Memorandum
includes a summary report of all Litigation as of the date of this Agreement to
which any Mutual Company is a party and which names a Mutual Company as a
defendant or cross-defendant and where the maximum exposure is estimated to be
$50,000 or more.
5.16 REPORTS. Since January 1, 1994, or the date of organization if
later, each Mutual Company has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with any Regulatory Authorities, except failures to file which
are not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on Mutual. 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.
5.17 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any Mutual Company regarding Mutual 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 contain any untrue statement of a Material fact, or omit
to state any Material fact required to be stated thereunder or necessary to make
the statements therein not misleading. None of the information supplied or to
be supplied by any Mutual Company for inclusion in the Proxy Statement to be
mailed to Mutual's stockholders in connection with the Stockholders' Meeting
will, when first mailed to the stockholders of Mutual, be false or misleading
with respect to any Material fact, or contain any misstatement of Material fact,
or omit to state any Material fact required to be stated therein or 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 Stockholders' Meeting, be
false or misleading with respect to any Material fact, or omit to state any
Material fact required to be stated therein or necessary to correct any Material
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that any Mutual Company 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.
5.18 TAX AND REGULATORY MATTERS. No Mutual Company has taken or agreed
to take any action, and Mutual has no Knowledge of any fact or circumstance that
is reasonably likely to (i) prevent the transactions contemplated hereby,
including the Merger, from qualifying as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code or (ii) materially impede or delay
receipt of any Consents of Regulatory Authorities referred to in Section 9.1(b)
of this Agreement or result in the imposition of a condition or restriction of
the type referred to in the last sentence of such Section.
5.19 STATE TAKEOVER LAWS. Each Mutual Company has taken all necessary
action to exempt the transactions contemplated by this Agreement and the Plan of
Merger from any applicable "moratorium," "control share," "fair price,"
"business combination," or other anti-takeover laws and regulations
(collectively, "Takeover Laws").
5.20 CHARTER PROVISIONS. Except as set forth in Section 5.2(a) of the
Mutual Disclosure Memorandum, each Mutual Company has taken all action so that
the entering into of this Agreement and the Plan of Merger and the consummation
of the Merger and the other transactions contemplated by this Agreement and the
Plan of Merger do not and will not result in the grant of any rights to any
Person under the Certificate of Incorporation, Bylaws, or other governing
instruments of any Mutual Company or restrict or impair the ability of UPC or
any of its Subsidiaries to
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vote, or otherwise to exercise the rights of a stockholder with respect to,
shares of any Mutual Company that may be directly or indirectly acquired or
controlled by it.
5.21 RIGHTS AGREEMENT. Mutual is not a party to any rights agreement or
rights plan as a result of which any Person has or may acquire Rights with
respect to Mutual Capital Stock.
5.22 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for Mutual's own account, or for the account
of one or more of the Mutual Subsidiaries or their customers, were entered into
(i) in accordance with prudent business practices and all applicable Laws and
(ii) with counterparties believed to be financially responsible.
5.23 YEAR 2000. Mutual has disclosed to UPC a complete and accurate
copy of Mutual's plan, including an estimate of the anticipated associated
costs, for implementing modifications to Mutual's hardware, software, and
computer systems, chips, and microprocessors, to ensure proper execution and
accurate processing of all date-related data, whether from years in the same
century or in different centuries. Between the date of this Agreement and the
Effective Time, Mutual shall endeavor to continue its efforts to implement such
plan.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UPC
UPC hereby represents and warrants to Mutual as follows:
6.1 ORGANIZATION, STANDING, AND POWER. UPC is a corporation duly
organized and validly existing under the Laws of the State of Tennessee, and has
the corporate power and authority to carry on its business as now conducted and
to own, lease, and operate its Material Assets. UPC is duly qualified or
licensed to transact business as a foreign corporation in the States of the
United States and foreign jurisdictions where the character of its Assets or the
nature or conduct of its business requires it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC.
6.2 AUTHORITY; NO BREACH BY AGREEMENT.
(a) UPC has the corporate power and authority necessary
to execute, deliver, and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of UPC. This
Agreement 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, receivership, conservatorship, moratorium, or similar Laws
affecting the enforcement of creditors' rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought).
(b) Neither the execution and delivery of this Agreement
by UPC, nor the consummation by UPC of the transactions contemplated hereby, nor
compliance by UPC with any of the provisions hereof, will (i) conflict with or
result in a breach of any provision of UPC's Restated
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Charter or Bylaws, (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, where such Default
or Lien, or any failure to obtain such Consent, is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC, or (iii)
subject to receipt of the requisite Consents referred to in Section 9.1(b) of
this Agreement, violate any Law or Order applicable to any UPC Company or any of
their respective Material Assets.
(c) Other than in connection or compliance with the
provisions of the Securities Laws, applicable state corporate and securities
Laws, and rules of the NYSE, and other than Consents required from Regulatory
Authorities, and other than notices to or filings with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation with respect to any employee
benefit plans, or under the HSR Act, and other than Consents, filings, or
notifications which, if not obtained or made, are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC, no notice
to, filing with, or Consent of, any public body or authority is necessary for
the consummation by UPC of the Merger and the other transactions contemplated in
this Agreement.
6.3 CAPITAL STOCK. The authorized capital stock of UPC consists of (i)
300,000,000 shares of UPC Common Stock as of the date of this Agreement, of
which 84,970,899 shares are issued and outstanding as of May 31, 1998 and (ii)
10,000,000 shares of UPC Preferred Stock, of which 1,156,231 shares of UPC
Series E Preferred Stock were issued and outstanding as of May 31, 1998. 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 Mutual Common
Stock upon consummation of the Merger when issued in accordance with the terms
of this Agreement, will be, duly and validly issued and outstanding and fully
paid and nonassessable under the TBCA. None of the outstanding shares of UPC
Capital Stock has been, and none of the shares of UPC Common Stock to be issued
in exchange for shares of Mutual Common Stock upon consummation of the Merger
will be, issued in violation of any preemptive rights of the current or past
stockholders of UPC.
6.4 UPC SUBSIDIARIES. Except with respect to Capital Factors, Inc. or
as otherwise disclosed in the UPC SEC Reports, UPC or one of its Subsidiaries
owns all of the issued and outstanding shares of capital stock of each UPC
Subsidiary. No equity securities of any UPC Subsidiary are or may become
required to be issued (other than to another UPC Company) by reason of any
Rights, and there are no Contracts by which any UPC Subsidiary is bound to issue
(other than to another UPC Company) additional shares of its capital stock or
Rights or by which any UPC Company is or may be bound to transfer any shares of
the capital stock of any UPC Subsidiary (other than to another UPC Company).
There are no Contracts relating to the rights of any UPC Company to vote or to
dispose of any shares of the capital stock of any UPC Subsidiary. All of the
shares of capital stock of each UPC Subsidiary held by a UPC Company are duly
authorized, validly issued, fully paid and, except as provided in statutes
pursuant to which depository institution Subsidiaries are organized,
nonassessable under the applicable corporation Law of the jurisdiction in which
such Subsidiary is incorporated or organized and are owned by the UPC Company
free and clear of any Lien. Each UPC Subsidiary is either a bank or a
corporation, and is duly organized, validly existing, and (as to national
banking associations) in good standing under the Laws of the jurisdiction in
which it is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease, and operate its Assets and to carry on its
business as now conducted. Each UPC Subsidiary is duly qualified or licensed to
transact business as a foreign corporation in 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
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reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC. Each UPC Subsidiary that is a depository institution is an
"insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder, and the deposits in which are insured by the
Bank Insurance Fund or Savings Association Insurance Fund.
6.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) UPC has filed and made available to Mutual all forms,
reports, and documents required to be filed by UPC with the SEC since December
31, 1993 (collectively, the "UPC SEC Reports"). The UPC SEC Reports (i) at the
time filed, complied in all Material respects with the applicable requirements
of the 1933 Act and the 1934 Act, as the case may be, 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 latter 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 or filings required due to fiduciary holdings of
the UPC Subsidiaries, none of UPC Subsidiaries is required to file any forms,
reports, or other documents with the SEC.
(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 or will comply as to form in all Material respects with the applicable
published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q of
the SEC), and fairly presented or will fairly present in all Material respects
the consolidated financial position of 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.
6.6 ABSENCE OF UNDISCLOSED LIABILITIES. No UPC Company has any
Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC, except Liabilities which are
accrued or reserved against in the consolidated balance sheets of UPC as of
March 31, 1998, included in the UPC Financial Statements or reflected in the
notes thereto and except for Liabilities incurred in the ordinary course of
business subsequent to March 31, 1998. No UPC Company has incurred or paid any
Liability since March 31, 1998, 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 UPC.
6.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since March 31, 1998, except
as disclosed in the UPC Financial Statements delivered prior to the date of this
Agreement, (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 conducted their respective
businesses in the ordinary and usual course (excluding the incurrence of
expenses in connection with this Agreement and the transactions contemplated
hereby).
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6.8 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf
of any of the UPC Companies have been timely filed, or requests for extensions
have been timely filed, granted, and have not expired for periods ended on or
before December 31, 1996, and, to the Knowledge of UPC, all Tax Returns filed
are complete and accurate in all Material respects. All Tax Returns for periods
ending on or before the date of the most recent fiscal year end immediately
preceding the Effective Time will be timely filed or requests for extensions
will be timely filed. All Taxes shown on filed Tax Returns have been paid. There
is no audit examination, deficiency, or refund Litigation with respect to any
Taxes, that is reasonably likely to result in a determination that would have,
individually or in the aggregate, a Material Adverse Effect on UPC, except to
the extent reserved against in the UPC Financial Statements dated 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.
(b) None of the UPC Companies has executed an extension
or waiver of any statute of limitations on the assessment or collection of any
Tax due (excluding such statutes that relate to years currently under
examination by the Internal Revenue Service or other applicable taxing
authorities) that is currently in effect.
(c) Adequate provision for any Taxes due or to become due
for any of the UPC Companies for the period or periods through and including the
date of the respective UPC Financial Statements has been made and is reflected
on such UPC Financial Statements.
(d) Each of the UPC Companies is in compliance with, and
its records contain all information and documents (including properly completed
IRS Forms W-9) necessary to comply with, all applicable information reporting
and Tax withholding requirements under federal, state, and local Tax Laws, and
such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Internal Revenue Code, except for such
instances of noncompliance and such omissions as are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on UPC.
(e) None of the UPC Companies has made any payments, is
obligated to make any payments, or is a party to any contract, agreement, or
other arrangement that could obligate it to make any payments that would be
disallowed as a deduction under Section 280G or 162(m) of the Internal Revenue
Code.
(f) There are no Material Liens with respect to Taxes
upon any of the Assets of the UPC Companies.
(g) No UPC Company has filed any consent under Section
341(f) of the Internal Revenue Code concerning collapsible corporations.
6.9 ASSETS. The UPC Companies have good and marketable title, free and
clear of all Liens, to all of their respective Assets, except where the failure
to have such good and marketable title is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC. All Material
tangible properties used in the businesses of the UPC Companies are in good
condition, reasonable wear and tear excepted, and are usable in the ordinary
course of business consistent with UPC's past practices. All Assets which are
Material to UPC's business on a consolidated basis, held under leases or
subleases by any of the UPC Companies, are held under valid Contracts
enforceable in accordance with their respective terms (except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
or other Laws affecting
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the enforcement of creditors' rights generally and except that the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceedings may be brought), and
each such Contract is in full force and effect. The UPC Companies currently
maintain insurance sufficient in amounts, scope, and coverage reasonably
necessary for their operations. None of the UPC Companies has received notice
from any insurance carrier that (i) such insurance will be canceled or that
coverage thereunder will be reduced or eliminated or (ii) premium costs with
respect to such policies of insurance will be substantially increased. The
Assets of the UPC Companies include all Assets required to operate the business
of the UPC Companies as presently conducted.
6.10 ENVIRONMENTAL MATTERS.
(a) To the Knowledge of UPC, each UPC Company, its
Participation Facilities, and its Loan Properties are, and have been, in
compliance with all Environmental Laws, except those violations which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC.
(b) There is no Litigation pending or, to the Knowledge
of UPC, threatened before any court, governmental agency, or authority, or other
forum in which any UPC Company or any of its Participation Facilities has been
or, with respect to threatened Litigation, may reasonably be expected to 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,
or involving a site owned, leased, or operated by any UPC Company or any of its
Participation Facilities, except for such Litigation pending or threatened that
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC.
(c) There is no Litigation pending or, to the Knowledge
of UPC, threatened before any court, governmental agency, or board, or other
forum in which any of its Loan Properties (or UPC in respect of such Loan
Property) has been or, with respect to threatened Litigation, may reasonably be
expected to be named as a defendant or potentially responsible party (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, or involving a Loan Property, except for
such Litigation pending or threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC.
(d) To the Knowledge of UPC, there is no reasonable basis
for any Litigation of a type described in subsections (b) or (c), except such as
is not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC.
(e) To the Knowledge of UPC, during the period of (i) any
UPC Company's ownership or operation of any of their respective current
properties, (ii) any UPC Company's participation in the management of any
Participation Facility, or (iii) any UPC Company's holding of a security
interest in a Loan Property, there have been no releases of Hazardous Material
in, on, under, or affecting (or potentially affecting) such properties, except
such as are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC. To the Knowledge of UPC, prior to the period of
(i) any UPC Company's ownership or operation of any of their respective current
properties, (ii) any UPC Company's participation in the management of any
Participation Facility, or (iii) any UPC Company's holding of a security
interest in a Loan Property, to the Knowledge of UPC, there were no releases of
Hazardous Material in, on, under, or affecting any such property, Participation
Facility, or Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC.
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6.11 COMPLIANCE WITH LAWS. UPC is duly registered as a bank holding
company under the BHC Act. 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, except for those Permits the absence of which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC, and there has occurred no Default under any such Permit, other
than Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC. None of the UPC Companies:
(a) is in violation of any Laws, Orders, or Permits
applicable to its business or employees conducting its business, except for
violations which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on UPC; and
(b) has received any notification or communication from
any agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any UPC Company is
not in compliance with any of the Laws or Orders which such governmental
authority or Regulatory Authority enforces, where such noncompliance is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on UPC, (ii) threatening to revoke any Permits, the revocation of which
is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC, or (iii) requiring any UPC Company (x) to enter into or
consent to the issuance of a cease and desist order, formal agreement,
directive, commitment, or memorandum of understanding, or (y) to adopt any Board
resolution or similar undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.
6.12 LABOR RELATIONS. No UPC Company is the subject of any Litigation
asserting that it or any other UPC Company has committed an unfair labor
practice (within the meaning of the National Labor Relations Act or comparable
state Law) or seeking to compel it or any other UPC Company to bargain with any
labor organization as to wages or conditions of employment, nor is any UPC
Company a party to or bound by any collective bargaining agreement, Contract, or
other agreement or understanding with a labor union or labor organization, nor
is there any strike or other labor dispute involving any UPC Company, pending
or, to the Knowledge of UPC, threatened, or to the Knowledge of UPC, is there
any activity involving any UPC Company's employees seeking to certify a
collective bargaining unit or engaging in any other organization activity.
6.13 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 to any UPC Company) against any UPC Company, or
against any Asset, employee benefit plan, interest, or right of any of them,
that is reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on UPC, nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against any UPC
Company, that are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on UPC.
6.14 REPORTS. Since January 1, 1994, or the date of organization if
later, each UPC Company has timely filed all reports and statements, together
with any amendments required to be made with respect thereto, that it was
required to file with any Regulatory Authorities, except 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.
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6.15 STATEMENTS TRUE AND CORRECT. None of the information supplied or
to be supplied by any UPC Company regarding UPC 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 contain any untrue statement of a Material fact, or omit
to state any Material fact required to be stated thereunder or necessary to make
the statements therein not misleading. None of the information supplied or to
be supplied by any UPC Company for inclusion in the Proxy Statement to be mailed
to Mutual's stockholders in connection with the Stockholders' Meeting, will,
when first mailed to the stockholders of Mutual, be false or misleading with
respect to any Material fact, or contain any misstatement of Material fact, or
omit to state any Material fact required to be stated therein or 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 Stockholders' Meeting, be
false or misleading with respect to any Material fact, or omit to state any
Material fact required to be stated therein or necessary to correct any Material
statement in any earlier communication with respect to the solicitation of any
proxy for the Stockholders' Meeting. All documents that any UPC Company is
responsible for filing with any Regulatory Authority in connection with the
transactions contemplated hereby will comply as to form in all Material respects
with the provisions of applicable Law.
6.16 TAX AND REGULATORY MATTERS. No UPC Company or any Affiliate
thereof has taken or agreed to take any action, and UPC has no Knowledge of any
fact or circumstance that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code or (ii)
materially impede or delay receipt of any Consents of Regulatory Authorities
referred to in Section 9.1(b) of this Agreement or result in the imposition of a
condition or restriction of the type referred to in the last sentence of such
Section.
6.17 EMPLOYEE BENEFIT PLANS. All UPC 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 is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on UPC. For purposes
of this Agreement, the term "UPC Plan" means each bonus, incentive compensation,
severance pay, medical or other insurance program, retirement plan, or other
employee benefit plan program, agreement, or arrangement sponsored, maintained,
or contributed to by UPC or any trade or business, whether or not incorporated,
that together with UPC or any of its Subsidiaries would be deemed a "single
employer" under Section 4001 of ERISA or Section 414 of the Internal Revenue
Code (a "UPC ERISA Affiliate") or under which UPC or any UPC ERISA Affiliate has
any Liability or obligation. No Liability under Title IV of ERISA has been
incurred by UPC or any UPC ERISA Affiliate that has not been satisfied in full,
and no condition exists that presents a Material risk to UPC or any UPC ERISA
Affiliate of incurring any such Liability. With respect to any UPC Plan that is
subject to Title IV of ERISA, full payment has been made, or will be made in
accordance with Section 404(a)(6) of the Internal Revenue Code, of all amounts
that UPC or any UPC ERISA Affiliate is required to pay under Section 412 of the
Internal Revenue Code or under the terms of the UPC Plans, and no accumulated
funding deficiency (within the meaning of Section 412 of the Internal Revenue
Code or Section 302 of ERISA, whether or not waived) exists with respect to any
UPC Plan. There are no Material actions, suits, or claims pending, or, to the
Knowledge of UPC, threatened or anticipated relating to any UPC Plan. There has
been no Material adverse change in the financial position or funded status of
any UPC Plan that is subject to Title IV of ERISA since the date of the
information relating to the financial position and funded status of each such
plan contained in the most recent Annual Report on Form 10-K filed by UPC with
the SEC.
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6.18 DERIVATIVES. All interest rate swaps, caps, floors, option
agreements, futures and forward contracts, and other similar risk management
arrangements, whether entered into for UPC's own account, or for the account of
one or more of the UPC Subsidiaries or their customers, were entered into (i) in
accordance with prudent business practices and all applicable Laws and (ii) with
counterparties believed to be financially responsible.
6.19 YEAR 2000. UPC has disclosed to Mutual a complete and accurate
copy of UPC's plan, including an estimate of the anticipated associated costs,
for implementing modifications to UPC's hardware, software, and computer
systems, chips, and microprocessors, to ensure proper execution and accurate
processing of all date-related data, whether from years in the same century or
in different centuries. Between the date of this Agreement and the Effective
Time, UPC shall endeavor to continue its efforts to implement such plan.
ARTICLE 7
CONDUCT OF BUSINESS PENDING CONSUMMATION
7.1 AFFIRMATIVE COVENANTS OF BOTH PARTIES. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement, unless the prior written consent of the other Party shall have been
obtained, and except as otherwise expressly contemplated herein, each Party
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, (iii) use its
reasonable efforts to maintain its current employee relationships, and (iv) take
no action which would (a) adversely affect the ability of any Party to obtain
any Consents required for the transactions contemplated hereby without
imposition of a condition or restriction of the type referred to in the last
sentence of Section 9.1(b) of this Agreement, or (b) adversely affect the
ability of any Party to perform its covenants and agreements under this
Agreement; provided that in the case of UPC, the provisions of this Section 7.1
(other than the provisions of clause (iv) above) shall not be deemed to preclude
UPC from continuing to implement its program of acquiring unaffiliated
depository and nondepository institu tions.
7.2 NEGATIVE COVENANTS OF MUTUAL. From the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement, Mutual
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 financial
officer of UPC, which consent shall not be unreasonably withheld:
(a) except for the Savings Bank Charter Amendment, amend
the Certificate of Incorporation, Bylaws, or other governing instruments of any
Mutual Company, or
(b) incur, guarantee, or otherwise become responsible
for, any additional debt obligation or other obligation for borrowed money
(other than indebtedness of an Mutual Company to another Mutual Company) in
excess of an aggregate of $50,000 (for the Mutual Companies on a consolidated
basis), except in the ordinary course of the business consistent with past
practices (which shall include, for Mutual Subsidiaries that are depository
institutions, creation of deposit liabilities, purchases of federal funds,
advances from the Federal Reserve Bank or Federal Home Loan Bank, and entry into
repurchase agreements fully secured by U.S. government or agency securities), or
impose, or suffer the imposition, on any Asset of any Mutual Company of any Lien
or permit any such Lien to exist (other than in connection with deposits,
repurchase agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of
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business, the satisfaction of legal requirements in the exercise of trust
powers, and Liens in effect as of the date hereof that are disclosed in the
Mutual Disclosure Memorandum or incurred in the ordinary course of business
consistent with past practices); or
(c) repurchase, redeem, or otherwise acquire or exchange
(other than exchanges in the ordinary course under employee benefit plans),
directly or indirectly, any shares, or any securities convertible into any
shares, of the capital stock of any Mutual Company, or declare or pay any
dividend or make any other distribution in respect of Mutual's capital stock,
provided that Mutual may (to the extent legally and contractually permitted to
do so), but shall not be obligated to, declare and pay regular quarterly cash
dividends on the shares of Mutual Common Stock at a rate of $.08 per share, with
usual and regular record and payment dates in accordance with past practice as
disclosed in Section 7.2(c) of the Mutual Disclosure Memorandum and such dates
may not be changed without the prior written consent of UPC; provided, that,
notwithstanding the provisions of Section 1.3 of this Agreement, the Parties
shall cooperate in selecting the Effective Time to ensure that, with respect to
the quarterly period in which the Effective Time occurs, the holders of Mutual
Common Stock do not receive both a dividend in respect of their Mutual Common
Stock and a dividend in respect of UPC Common Stock or fail to receive any
dividend; or
(d) except for this Agreement, or pursuant to the Stock
Option Agreement or pursuant to the exercise of Rights outstanding as of the
date of this Agreement and pursuant to the terms thereof in existence on the
date of 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
Mutual Common Stock or any other capital stock of any Mutual Company, or any
stock appreciation rights, or any option, warrant, conversion, or other right to
acquire any such stock, or any security convertible into any such stock; or
(e) adjust, split, combine, or reclassify any capital
stock of any Mutual Company or issue or authorize the issuance of any other
securities in respect of or in substitution for shares of Mutual Common Stock,
or sell, lease, mortgage, or otherwise dispose of or otherwise encumber (i) any
shares of capital stock of any Mutual Subsidiary (unless any such shares of
stock are sold or otherwise transferred to another Mutual Company) or (ii) any
Asset having a book value in excess of $50,000 other than in the ordinary course
of business for reasonable and adequate consideration; or
(f) except for purchases of investment securities
acquired in the ordinary course of business consistent with past practice,
purchase any securities or make any Material investment, either by purchase of
stock or securities, contributions to capital, Asset transfers, or purchase of
any Assets, in any Person other than a wholly-owned Mutual 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) except as permitted by this Agreement, grant any
increase in compensation or benefits to the employees or officers of any Mutual
Company, except in accordance with the ordinary course of business consistent
with past practice or as required by Law; pay any severance or termination pay
or any bonus other than pursuant to written policies or written Contracts in
effect on the date of this Agreement; enter into or amend any severance
agreements with officers of any Mutual Company; grant any Material increase in
fees or other increases in compensation or other benefits to directors of any
Mutual Company except in accordance with the ordinary course of
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business consistent with past practice; or voluntarily accelerate the vesting of
any stock options or other stock-based compensation or employee benefits; or
(h) enter into or amend any employment Contract between
any Mutual Company and any Person (unless such amendment is required by Law or a
pre-existing contractual obligation) that the Mutual Company does not have the
unconditional right to terminate without Liability (other than Liability for
services already rendered), at any time on or after the Effective Time; or
(i) adopt any new employee benefit plan of any Mutual
Company or make any Material change in or to any existing employee benefit plans
of any Mutual Company other than any such change that is required by Law or
that, in the opinion of counsel, is necessary or advisable to maintain the tax
qualified status of any such plan; or
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as may be appropriate
to conform to changes in Tax Laws or regulatory accounting requirements or GAAP;
or
(k) commence any Litigation other than as necessary for
the prudent operation of its business or settle any Litigation involving any
Liability of any Mutual Company for Material money damages or restrictions upon
the operations of any Mutual Company; or
(l) except in the ordinary course of business, modify,
amend, or terminate any Material Contract or waive, release, compromise, or
assign any Material rights or claims.
7.3 ADVERSE CHANGES IN CONDITION. Each Party agrees to give written
notice promptly to the other Party upon becoming aware of the occurrence or
impending occurrence of any event or circumstance relating to it or any of its
Subsidiaries which (i) is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on it or (ii) would cause or constitute a
Material breach of any of its representations, warranties, or covenants
contained herein, and to use its reasonable efforts to prevent or promptly to
remedy the same.
7.4 REPORTS. Each Party and its Subsidiaries shall file all reports
required to be filed by it with Regulatory Authorities between the date of this
Agreement and the Effective Time and shall deliver to the other Party copies of
all such reports promptly after the same are filed. If financial statements are
contained in any such reports filed with the SEC, such financial statements will
fairly present the consolidated financial position of the entity filing such
statements as of the dates indicated and the consolidated results of operations,
changes in stockholders' equity, and cash flows for the periods then ended in
accordance with GAAP (subject in the case of interim financial statements to
normal recurring year-end adjustments that are not Material). As of their
respective dates, such reports filed with the SEC will comply in all Material
respects with the Securities Laws and will not contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Any financial statements contained
in any other reports to another Regulatory Authority shall be prepared in
accordance with Laws applicable to such reports.
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ARTICLE 8
ADDITIONAL AGREEMENTS
8.1 REGISTRATION STATEMENT; PROXY STATEMENT; STOCKHOLDER APPROVAL.
As soon as reasonably practicable after execution of this Agreement, UPC shall
file the Registration Statement with the SEC, and shall use its reasonable
efforts to cause the Registration Statement to become effective under the 1933
Act and take any action required to be taken under the applicable state Blue Sky
or securities Laws in connection with the issuance of the shares of UPC Common
Stock upon consummation of the Merger. Prior to the filing of the Registration
Statement, UPC shall provide Mutual and its counsel copies thereof. Mutual shall
furnish all information concerning it and the holders of its capital stock as
UPC may reasonably request in connection with such action. Mutual shall call a
Stockholders' 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 (i) this Agreement and the Plan of Merger and (ii) such
other related matters as it deems appropriate. In connection with the
Stockholders' Meeting, (i) Mutual shall prepare and file with the SEC a Proxy
Statement and mail such Proxy Statement to Mutual's stockholders, (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 Mutual shall recommend to Mutual's stockholders the approval of
the matters submitted for approval, and (iv) the Board of Directors and officers
of Mutual shall use their reasonable efforts to obtain such stockholders'
approvals, provided that Mutual may withdraw, modify, or change in an adverse
manner to UPC its recommendations if the Board of Directors of Mutual, after
having consulted with and based upon the advice of outside counsel, determines
in good faith that the failure to so withdraw, modify, or change its
recommendation could constitute a breach of the fiduciary duties of Mutual's
Board of Directors under applicable Law. In addition, nothing in this Section
8.1 or elsewhere in this Agreement shall prohibit accurate disclosure by either
Party of information that is required to be disclosed in the Registration
Statement or the Proxy Statement or in any other document required to be filed
with the SEC (including, without limitation, a Solicitation/Recommendation
Statement on Schedule 14D-9 under the 1934 Act) or otherwise required to be
publicly disclosed by applicable Law or regulations or rules of the NYSE or the
NASD.
8.2 EXCHANGE LISTING. UPC shall use its reasonable efforts to list,
prior to the Effective Time, on the NYSE, subject to official notice of
issuance, the shares of UPC Common Stock to be issued to the holders of Mutual
Common Stock pursuant to the Merger.
8.3 APPLICATIONS. UPC shall promptly prepare and file, and Mutual 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. Prior to each
filing, UPC shall provide Mutual and its counsel with copies of such
applications.
8.4 FILINGS WITH STATE OFFICES. Upon the terms and subject to the
conditions of this Agreement, UPC shall cause UPHC to execute and file the
Certificate of Merger with the Secretary of State of the State of Delaware and
the Articles of Merger with the Secretary of State of the State of Tennessee.
8.5 AGREEMENT AS TO EFFORTS TO CONSUMMATE. Subject to the terms and
conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
reasonably practicable after the date of this Agreement, the transactions
contemplated
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by this Agreement, including, without limitation, using its reasonable efforts
to lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article 9 of this Agreement; provided, that nothing herein shall
preclude either Party from exercising its rights under this Agreement. Each
Party shall use, and shall cause each of its Subsidiaries to use, its reasonable
efforts to obtain all Consents necessary or desirable for the consummation of
the transactions contemplated by this Agreement.
8.6 INVESTIGATION AND CONFIDENTIALITY.
(a) Prior to the Effective Time, each Party shall keep
the other Party advised of all Material developments relevant to its business
and to consummation of the Merger and shall permit the other Party to make or
cause to be made such investigation of the business and properties of it and its
Subsidiaries and of their respective financial and legal conditions as the other
Party reasonably requests, provided that such investigation shall be reasonably
related to the transactions contemplated hereby and shall not interfere
unnecessarily with normal operations. No investigation by a Party shall affect
the representations and warranties of the other Party.
(b) Each Party shall, and shall cause its advisers and
agents to, maintain the confidentiality of all confidential information
furnished to it by the other Party concerning its and its Subsidiaries'
businesses, operations, and financial positions and shall not use such
information for any purpose except in furtherance of the transactions
contemplated by this Agreement. If this Agreement is terminated prior to the
Effective Time, each Party shall promptly return or certify the destruction of
all documents and copies thereof, and all work papers containing confidential
information received from the other Party.
(c) Each Party agrees to give the other Party notice as
soon as practicable after any determination by it of any fact or occurrence
relating to the other Party which it has discovered through the course of its
investigation and which represents, or is reasonably likely to represent, either
a Material breach of any representation, warranty, covenant, or agreement of the
other Party or which has had or is reasonably likely to have a Material Adverse
Effect on the other Party.
(d) Neither Party nor any of their respective
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure would violate or prejudice the rights of its
customers, jeopardize the attorney-client or similar privilege with respect to
such information or contravene any Law, rule, regulation, Order, judgment,
decree, fiduciary duty, or agreement entered into prior to the date of this
Agreement. The Parties will use their reasonable efforts to make appropriate
substitute disclosure arrangements, to the extent practicable, in circumstances
in which the restrictions of the preceding sentence apply.
8.7 PRESS RELEASES. Prior to the Effective Time, UPC and Mutual shall
consult with each other as to the form and substance of any press release or
other public disclosure materially related to this Agreement or any other
transaction contemplated hereby; provided, that nothing in this Section 8.7
shall be deemed to prohibit any Party from making any disclosure which its
counsel deems necessary or advisable in order to satisfy such Party's disclosure
obligations imposed by Law.
8.8 CERTAIN ACTIONS. Except with respect to this Agreement and the Plan
of Merger and the transactions contemplated hereby and thereby, no Mutual
Company nor any Affiliate thereof nor any Representatives thereof retained by
any Mutual Company shall 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. Notwithstanding the foregoing, Mutual may,
and may authorize and permit
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its Representatives to, provide Persons with confidential information, have
discussions or negotiations with, or otherwise facilitate an effort or attempt
by such Person to make or implement an Acquisition Proposal not solicited in
violation of this Agreement if Mutual's Board of Directors, 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 Mutual's Board of Directors under applicable Law;
provided, that Mutual shall promptly advise UPC following the receipt of any
Acquisition Proposal and the Material details thereof; and, provided further,
that prior to delivery of confidential information relating to Mutual or access
to Mutual's books, records, or properties in connection therewith, the other
Person shall have entered into a confidentiality agreement substantially similar
to the Confidentiality Agreement previously entered into between Mutual and UPC.
Nothing contained in this Section 8.8 shall prohibit the Board of Directors of
Mutual from complying with Rule 14e-2, promulgated under the 1934 Act. Mutual
shall (i) immediately cease and cause to be terminated any existing activities,
discussions, or negotiations with any Persons conducted heretofore with respect
to any of the foregoing and (ii) direct and use its reasonable efforts to cause
of all its Representatives not to engage in any of the foregoing.
8.9 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 as a "reorganization" within the meaning of Section
368(a) of the Internal Revenue Code for federal income tax purposes.
8.10 STATE TAKEOVER LAWS. Each Mutual Company shall take all necessary
steps to exempt the transactions contemplated by this Agreement and the Plan of
Merger from, or if necessary, challenge the validity or applicability of, any
applicable Takeover Laws.
8.11 CHARTER PROVISIONS. Each Mutual Company shall take all necessary
action to ensure that the entering into of this Agreement and the Plan of Merger
and the consummation of the Merger and the other transactions contemplated
hereby and thereby do not and will not result in the grant of any rights to any
Person under the Certificate of Incorporation, Bylaws, or other governing
instruments of any Mutual Company or restrict or impair the ability of UPC or
any of its Subsidiaries to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of any Mutual Company that may be directly
or indirectly acquired or controlled by it. Prior to the Closing, Mutual shall
cause the charter of First Mutual Bank, S.B. to be amended to delete the
provisions of Section 8.A thereof (the "Savings Bank Charter Amendment").
8.12 AGREEMENT OF AFFILIATES. Mutual has disclosed in Section 8.12 of
the Mutual Disclosure Memorandum each Person whom it reasonably believes may be
deemed an "affiliate" of Mutual for purposes of Rule 145 under the 1933 Act.
Mutual 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, in
substantially the form of Exhibit 3, providing that such Person will not sell,
pledge, transfer, or otherwise dispose of the shares of Mutual 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 UPC shall be entitled to place restrictive
legends upon certificates for shares of UPC Common Stock issued to affiliates of
Mutual pursuant to this Agreement to enforce the provisions of this Section
8.12). UPC shall not be required to maintain the effectiveness of the
Registration Statement under the 1933 Act for the purposes of resale of UPC
Common Stock by such affiliates.
8.13 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective Time, but
in no event earlier than the consolidation of Mutual's depository institution
Subsidiaries with UPC's
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depository institution Subsidiaries, UPC shall provide to officers and employees
of the Mutual Companies (the "Continuing Employees"), employee benefits under
employee benefit 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 accruals (but not accrual of benefits under UPC's
tax-qualified retirement plans) under such employee benefit plans, (i) service
under any qualified defined benefit or contribution plans of Mutual shall be
treated as service under UPC's qualified defined benefit or contribution plans
and (ii) service under any other employee benefit plans of Mutual shall be
treated as service under any similar employee benefit plans maintained by UPC.
UPC shall cause the UPC welfare benefit plans that cover the Continuing
Employees after the Effective Time to (i) waive any waiting period and
restrictions and limitations for preexisting conditions or insurability and (ii)
cause any deductible, co-insurance, or maximum out-of-pocket payments made by
the Continuing Employees under Mutual's welfare benefit plans to be credited to
such Continuing Employees under the UPC welfare benefit plans, so as to reduce
the amount of any deductible, co-insurance, or maximum out-of-pocket payments
payable by the Continuing Employees under the UPC welfare benefit plans. Prior
to the commencement of the Continuing Employee's participation in the UPC
employee benefit plans and programs, the benefit coverage of, and participation
in benefit plans by, the Continuing Employees shall continue under the Mutual
Benefit Plans, as in effect immediately prior to the Effective Time. During such
transition period, the coverage under and participation in the Mutual Benefit
Plans shall be deemed to provide the Continuing Employees with benefits that are
no less favorable than those offered to other employees of UPC and its
Subsidiaries. Except as expressly provided in the Supplemental Letter, UPC also
shall cause Mutual and its Subsidiaries to honor all employment, severance,
consulting, and other compensation Contracts disclosed in Section 8.13 of the
Mutual Disclosure Memorandum to UPC between any Mutual Company and any current
or former director, officer, independent contractor, or employee thereof, and
all provisions of the Mutual Benefit Plans.
8.14 INDEMNIFICATION.
(a) After the Effective Time, UPC shall indemnify, defend
and hold harmless the present and former directors, officers, employees, and
agents of Mutual or any of Mutual's Subsidiaries (each, a "Indemnified Party")
(including any person who becomes a director, officer, employee, or agent prior
to the Effective Time) against all Liabilities (including reasonable attorneys'
fees, and expenses, judgments, fines and amounts paid in settlement) arising out
of actions or omissions occurring at or prior to the Effective Time (including
the transactions contemplated by this Agreement and the Stock Option Agreement)
to the full extent permitted under Delaware Law and by Mutual's Certificate of
Incorporation and Bylaws, as in effect on the date hereof, and any indemnity
agreements entered into prior to the date of this Agreement by any of the Mutual
Companies and any director, officer, employee, or agent of any of the Mutual
Companies, including, without limitation, provisions relating to advances of
expenses incurred in the defense of any Litigation, and as provided in Section
8.14(a) of the Mutual Disclosure Memorandum. Without limiting the foregoing, in
any case in which approval by UPC is required to effectuate any indemnification,
UPC shall direct, at the election of the Indemnified Party, that the
determination of any such approval shall be made by independent counsel mutually
agreed upon between UPC and the Indemnified Party.
(b) Any Indemnified Party wishing to claim
indemnification under paragraph (a) of this Section 8.14, upon learning of any
such Liability or Litigation, shall promptly notify UPC thereof, provided that
the failure so to notify shall not affect the obligations of UPC under this
Section 8.14 unless and to the extent such failure materially increases UPC's
Liability under this Section 8.14. In the event of any such Litigation (whether
arising before or after the Effective Time), (i) UPC or the Surviving
Corporation shall have the right to assume the defense thereof and
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UPC shall not be liable to such Indemnified Parties for any legal expenses of
other counsel or any other expenses subsequently incurred by such Indemnified
Parties in connection with the defense thereof, except that if UPC or the
Surviving Corporation elects not to assume such defense or counsel for the
Indemnified Parties advises that there are substantive issues which raise
conflicts of interest between UPC or the Surviving Corporation and the
Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to
them, and UPC or the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received; provided, that UPC shall be obligated pursuant to this
paragraph (c) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction, (ii) the Indemnified Parties will cooperate in the defense of
any such Litigation, and (iii) UPC shall not be liable for any settlement
effected without its prior written consent; and provided further that the
Surviving Corporation shall not have any obligation hereunder to any Indemnified
Party when and if a court of competent jurisdiction shall determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
Law.
(c) The Surviving Corporation shall not be liable for any
settlement effected without its prior written consent which shall not be
unreasonably withheld.
(d) If either UPC or the Surviving Corporation or any of
their respective successors or assigns shall consolidate with or merge into any
other Person and shall not be the continuing or surviving Person of such
consolidation or merger or shall transfer all or substantially all of its Assets
to any Person, then and in each case, proper provision shall be made so that the
successors and assigns of either UPC or the Surviving Corporation shall assume
the obligations set forth in this Section 8.14.
(e) UPC shall pay all reasonable costs, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 8.14.
(f) The provisions of this Section 8.14 are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs or representatives.
8.15 CERTAIN MODIFICATIONS. UPC and Mutual shall consult with each
other with respect to their loan, litigation, and real estate valuation policies
and practices (including loan classifications and levels of reserves) and Mutual
shall make such modifications or changes to its policies and practices, if any,
prior to the Effective Time, as may be mutually agreed upon. UPC and Mutual also
shall consult with each other with respect to the character, amount, and timing
of restructuring and Merger-related expense charges to be taken by each of the
Parties in connection with the transactions contemplated by this Agreement and
shall take such charges in accordance with GAAP as may be mutually agreed upon
by the Parties. Neither Party's representations, warranties, and covenants
contained in this Agreement shall be deemed to be inaccurate or breached in any
respect as a consequence of any modifications or charges undertaken solely on
account of this Section 8.15.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE
9.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY. The respective obligations
of each Party to perform this Agreement and the Plan of Merger and to consummate
the Merger and
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the other transactions contemplated hereby are subject to the satisfaction of
the following conditions, unless waived by both Parties pursuant to Section 11.6
of this Agreement:
(a) STOCKHOLDER APPROVALS. The stockholders of Mutual
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 and 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 (excluding requirements relating to the raising of
additional capital or the disposition of Assets or deposits) which in the
reasonable good faith judgment of the Board of Directors of UPC would so
materially adversely impact the economic or business benefits of the
transactions contemplated by this Agreement so as to render inadvisable the
consummation of the Merger.
(c) CONSENTS AND APPROVALS. Each Party shall have
obtained any and all Consents required for consummation of the Merger (other
than those referred to in Section 9.1(b) of this Agreement) or for the
preventing of any Default under any Contract or Permit of such Party which, if
not obtained or made, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on such Party.
(d) LEGAL PROCEEDINGS. No court or governmental or
Regulatory Authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced, or entered any Law or Order (whether temporary,
preliminary, or permanent) or taken any other action which prohibits, restricts,
or makes illegal consummation of the transactions contemplated by this
Agreement.
(e) REGISTRATION STATEMENT. The Registration Statement
shall be effective under the 1933 Act, no stop orders suspending the
effectiveness of the Registration Statement shall have been issued, no action,
suit, proceeding, or investigation by the SEC to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state securities Laws or the 1933 Act or 1934 Act relating to the issuance
or trading of the shares of UPC Common Stock issuable pursuant to the Merger
shall have been received.
(f) EXCHANGE LISTING. The shares of UPC Common Stock
issuable pursuant to the Merger shall have been approved for listing on the
NYSE, subject to official notice of issuance.
(g) TAX MATTERS. Mutual and UPC shall have received a
written opinion from Wyatt, Tarrant & Combs in each case in a form reasonably
satisfactory to such Party (the "Tax Opinions"), dated the date of the Effective
Time, substantially to the effect that (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, (ii) no gain or loss will be recognized by holders of Mutual Common Stock
who exchange all of their Mutual Common Stock solely for UPC Common Stock
pursuant to the Merger (except with respect to any cash received in lieu of a
fractional share interest in UPC Common Stock), (iii) the tax basis of the UPC
Common Stock received by holders of Mutual Common Stock who exchange all of
their Mutual Common Stock solely for UPC Common Stock in the Merger will be the
same as the tax basis of the Mutual Common Stock surrendered in exchange for the
UPC Common Stock (reduced by an amount allocable to a fractional share interest
in UPC Common Stock for which cash is
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received), and (iv) the holding period of the UPC Common Stock received by
holders who exchange all of their Mutual Common Stock solely for UPC Common
Stock in the Merger will be the same as the holding period of the Mutual Common
Stock surrendered in exchange therefor, provided that such Mutual Common Stock
is held as a capital asset at the Effective Time. In rendering such Tax
Opinions, such counsel shall be entitled to rely upon representations of
officers of Mutual and UPC reasonably satisfactory in form and substance to such
counsel.
9.2 CONDITIONS TO OBLIGATIONS OF UPC. The obligations of UPC to perform
this Agreement and consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction of the following conditions, unless
waived by UPC pursuant to Section 11.6(a) of this Agreement:
(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.2(a), the accuracy of the representations and warranties of Mutual 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 Mutual set
forth in Section 5.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimis in amount). The representations and warranties
of Mutual set forth in Sections 5.18, 5.19, 5.20, and 5.21 of this Agreement
shall be true and correct in all Material respects. There shall not exist
inaccuracies in the representations and warranties of Mutual set forth in this
Agreement (including the representations and warranties set forth in Sections
5.3, 5.18, 5.19, 5.20, and 5.21) such that the aggregate effect of such
inaccuracies has, or is reasonably likely to have, a Material Adverse Effect on
Mutual; provided that, for purposes of this sentence only, those representations
and warranties which are qualified by references to "material, "Material,"
"Material Adverse Effect," or variations thereof, or to the "Knowledge" of
Mutual or to a matter being "known" by Mutual shall be deemed not to include
such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all
of the agreements and covenants of Mutual 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. Mutual shall have delivered to UPC (i)
a certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its obligations
set forth in Section 9.2(a) and 9.2(b) of this Agreement have been satisfied and
(ii) certified copies of resolutions duly adopted by Mutual's Board of Directors
and stockholders evidencing the taking of all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement and the
Plan of Merger, and the consummation of the transactions contemplated hereby and
thereby, all in such reasonable detail as UPC and its counsel shall request.
(d) AFFILIATE AGREEMENTS. UPC shall have received from
each affiliate of Mutual the affiliates agreement referred to in Section 8.12 of
this Agreement.
9.3 CONDITIONS TO OBLIGATIONS OF MUTUAL. The obligations of Mutual to
perform this Agreement and the Plan of Merger and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Mutual pursuant to Section 11.6(b) of
this Agreement:
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(a) REPRESENTATIONS AND WARRANTIES. For purposes of this
Section 9.3(a), the accuracy of the representations and warranties of UPC set
forth in this Agreement shall be assessed as of the date of this Agreement and
as of the Effective Time with the same effect as though all such representations
and warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date). The representations and warranties of UPC set forth
in Section 6.3 of this Agreement shall be true and correct (except for
inaccuracies which are de minimis in amount). The representations and warranties
of UPC set forth in Section 6.16 of this Agreement shall be true and correct in
all Material respects. There shall not exist inaccuracies in the representations
and warranties of UPC set forth in this Agreement (including the representations
and warranties set forth in Sections 6.3 and 6.16) such that the aggregate
effect of such inaccuracies has, or is reasonably likely to have, a Material
Adverse Effect on UPC; provided that, for purposes of this sentence only, those
representations and warranties which are qualified by references to "material,"
"Material," "Material Adverse Effect," or variations thereof, or to the
"Knowledge" of UPC or to a matter being "known" by UPC shall be deemed not to
include such qualifications.
(b) PERFORMANCE OF AGREEMENTS AND COVENANTS. Each and all
of the agreements and covenants of UPC to be performed and complied with
pursuant to this Agreement and the other agreements contemplated hereby prior to
the Effective Time shall have been duly performed and complied with in all
Material respects.
(c) CERTIFICATES. UPC shall have delivered to Mutual (i)
a certificate, dated as of the Effective Time and signed on its behalf by its
duly authorized officers, to the effect that the conditions of its obligations
set forth in Section 9.3(a) and 9.3(b) of this Agreement have been satisfied and
(ii) certified copies of resolutions duly adopted by UPC's Board of Directors
evidencing the taking of all corporate action necessary to authorize the
execution, delivery, and performance of this Agreement and the consummation of
the transactions contemplated hereby, all in such reasonable detail as Mutual
and its counsel shall request.
(d) FAIRNESS OPINION. Mutual shall have received an
opinion from Robert W. Baird & Co. Incorporated to the effect that the Merger is
fair to shareholders of Mutual from a financial point of view dated the date of
the Proxy Statement.
ARTICLE 10
TERMINATION
10.1 TERMINATION. Notwithstanding any other provision of this Agreement
and the Plan of Merger, and notwithstanding the approval of this Agreement by
the stockholders of Mutual or UPC, this Agreement may be terminated and the
Merger abandoned at any time prior to the Effective Time:
(a) By mutual consent of the Board of Directors of UPC
and the Board of Directors of Mutual; or
(b) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Mutual and Section 9.3(a) of
this Agreement in the case of UPC or in Material breach of any covenant or other
agreement contained in this Agreement) in the event of an inaccuracy of any
representation or warranty of the other Party contained in this Agreement which
cannot be or has not been cured
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within 30 days after the giving of written notice to the breaching Party of such
inaccuracy and which inaccuracy would provide the terminating Party the ability
to refuse to consummate the Merger under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Mutual and Section 9.3(a) of
this Agreement in the case of UPC; or
(c) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Mutual and Section 9.3(a) in the
case of UPC) in the event of a Material breach by the other Party of any
covenant or agreement contained in this Agreement which cannot be or has not
been cured within 30 days after the giving of written notice to the breaching
Party of such breach; or
(d) By the Board of Directors of either Party in the
event (i) any Consent of any Regulatory Authority required for consummation of
the Merger and the other transactions contemplated hereby shall have been denied
by final nonappealable action of such authority or if any action taken by such
authority is not appealed within the time limit for appeal, or (ii) the
stockholders of Mutual fail to vote their approval of the matters submitted for
the approval by such stockholders at the Stockholders' Meeting where the
transactions were presented to such stockholders for approval and voted upon; or
(e) By the Board of Directors of either Party in the
event that the Merger shall not have been consummated by March 31, 1999, if the
failure to consummate the transactions contemplated hereby on or before such
date is not caused by any breach of this Agreement by the Party electing to
terminate pursuant to this Section 10.1(e); or
(f) By the Board of Directors of either Party (provided
that the terminating Party is not then in breach of any representation or
warranty contained in this Agreement under the applicable standard set forth in
Section 9.2(a) of this Agreement in the case of Mutual and Section 9.3(a) of
this Agreement in the case of UPC or in Material breach of any covenant or other
agreement contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such Party to consummate the Merger cannot be
satisfied or fulfilled by the date specified in Section 10.1(e) of this
Agreement;
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement, the Plan of Merger, and the Supplemental Letter shall become void and
have no effect, except that (i) the provisions of this Section 10.2 and Article
11 and Section 8.6(b) of this Agreement shall survive any such termination and
abandonment and (ii) a termination pursuant to Sections 10.1(b), 10.1(c), or
10.1(f) of this Agreement shall not relieve the breaching Party from Liability
for an uncured willful breach of a representation, warranty, covenant, or
agreement giving rise to such termination. The Stock Option Agreement shall be
governed by its own terms.
10.3 NON-SURVIVAL OF REPRESENTATIONS AND COVENANTS. The respective
representations, warranties, obligations, covenants, and agreements of the
Parties shall not survive the Effective Time except this Section 10.3 and
Articles 2, 3, 4, and 11 and Sections 8.12, 8.13 and 8.14 of this Agreement and
the Supplemental Letter.
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ARTICLE 11
MISCELLANEOUS
11.1 DEFINITIONS.
(a) Except as otherwise provided herein, the capitalized
terms set forth below shall have the following meanings:
"Acquisition Proposal" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition of all
of the stock or Assets of, or other business combination involving such Party or
any of its Subsidiaries or the acquisition of a substantial equity interest in,
or a substantial portion of the Assets of, such Party or any of its
Subsidiaries.
"Affiliate" of a Person shall mean any other Person directly,
or indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person.
"Agreement" shall mean this Agreement and Plan of
Reorganization, including the Exhibits hereto (except the Stock Option
Agreement) delivered pursuant hereto and incorporated herein by reference.
"Articles of Merger" shall mean the Articles of Merger to be
executed by UPHC and filed with the Secretary of State of the State of Tennessee
relating to the Merger as contemplated by Sections 1.1 and 1.3 of this
Agreement.
"Assets" of a Person shall mean all of the assets, properties,
businesses, and rights of such Person of every kind, nature, character, and
description, whether real, personal, or mixed, tangible or intangible, accrued
or contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"BHC Act" shall mean the federal Bank Holding Company Act of
1956, as amended.
"Certificate of Merger" shall mean the Certificate of Merger
to be executed by UPHC and filed with the Secretary of State of the State of
Delaware relating to the Merger as contemplated by Section 1.1 and 1.3 of this
Agreement.
"Confidentiality Agreements" shall mean those certain
Confidentiality Agreements, entered into prior to the date of this Agreement,
between Mutual and UPC.
"Consent" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement,
arrangement, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding, or undertaking of any
kind or character, or other document to which any Person is a party or that is
binding on any Person or its capital stock, Assets, or business.
"DGCL" shall mean the Delaware General Corporation Law.
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"Default" shall mean (i) any breach or violation of or default
under any Contract, Order, or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order, or Permit, or (iii) any
occurrence of any event that with or without the passage of time or the giving
of notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order, or Permit, where, in any such event, such Default is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on a Party.
"Environmental Laws" shall mean all Laws relating to pollution
or protection of human health or the environment (including ambient air, surface
water, ground water, land surface, or subsurface strata) and which are
administered, interpreted, or enforced by the United States Environmental
Protection Agency and state and local agencies with jurisdiction over, and
including common law in respect of, pollution or protection of the environment,
including the Comprehensive Environmental Response Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq. ("CERCLA"), the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. 6901 et seq. ("RCRA"), and other Laws
relating to emissions, discharges, releases, or threatened releases of any
Hazardous Material, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of any
Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Exhibits" 1 through 3, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof, and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.
"Hazardous Material" shall mean (i) any hazardous substance,
hazardous material, hazardous waste, regulated substance, or toxic substance (as
those terms are defined by any applicable Environmental Laws) and (ii) any
chemicals, pollutants, contaminants, petroleum, petroleum products, or oil (and
specifically shall include asbestos requiring abatement, removal, or
encapsulation pursuant to the requirements of governmental authorities and any
polychlorinated biphenyls).
"HSR Act" shall mean Section 7A of the Clayton Act, as added
by Title II of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder.
"Internal Revenue Code" shall mean the Internal Revenue Code
of 1986, as amended.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) shall mean the
personal knowledge of the chairman, president, chief financial officer, chief
accounting officer, chief credit officer, general counsel, or any executive vice
president of such Person.
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"Law" shall mean any code, law, ordinance, regulation,
reporting or licensing requirement, rule, or statute applicable to a Person or
its Assets, Liabilities, or business, including those promulgated, interpreted,
or enforced by any Regulatory Authority.
"Liability" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost, or expense
(including costs of investigation, collection, and defense), claim, deficiency,
guaranty, or endorsement of or by any Person (other than endorsements of notes,
bills, checks, and drafts presented for collection or deposit in the ordinary
course of business) of any type, whether accrued, absolute or contingent,
liquidated or unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for property Taxes not yet due and
payable and (ii) for depository institution Subsidiaries of a Party, pledges to
secure deposits, and other Liens incurred in the ordinary course of the banking
business.
"Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter, governmental or
other examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its
business, its Assets (including Contracts related to it), or the transactions
contemplated by this Agreement, but shall not include regular, periodic
examinations of depository institutions and their Affiliates by Regulatory
Authorities.
"Loan Property" shall mean any property owned, leased, or
operated by the Party in question or by any of its Subsidiaries or in which such
Party or Subsidiary holds a security or other interest (including an interest in
a fiduciary capacity), and, where required by the context, includes the owner or
operator of such property, but only with respect to such property.
"Material" for purposes of this Agreement shall be determined
in light of the facts and circumstances of the matter in question; provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event,
change, or occurrence which, individually or together with any other event,
change, or occurrence, has a Material adverse impact on (i) the financial
condition, results of operations, or business of such Party and its
Subsidiaries, taken as a whole or (ii) the ability of such Party to perform its
obligations under this Agreement or to consummate the Merger or the other
transactions contemplated by this Agreement, provided that "Material Adverse
Effect" shall not be deemed to include the impact of (a) changes in banking and
similar Laws of general applicability or interpretations thereof by courts or
governmental authorities, (b) changes in GAAP or regulatory accounting
principles generally applicable to banks and their holding companies, (c)
actions and omissions of a Party (or any of its Subsidiaries) taken with the
prior informed consent of the other Party in contemplation of the transactions
contemplated hereby, and (d) the Merger and compliance with the provisions of
this Agreement (including the expense associated with the vesting of benefits
under the various employee or other benefit plans of Mutual as a result of the
Merger constituting a change of control) on the operating performance of the
Parties.
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"Mutual Capital Stock" shall mean Mutual Common Stock and
Mutual Preferred Stock.
"Mutual Common Stock" shall mean the $.10 par value common
stock of Mutual.
"Mutual Companies" shall mean, collectively, Mutual and all
Mutual Subsidiaries.
"Mutual Disclosure Memorandum" shall mean the written
information entitled "Mutual Disclosure Memorandum" delivered prior to the
execution of this Agreement to UPC describing in reasonable detail the matters
contained therein and, with respect to each disclosure made therein,
specifically referencing each Section or subsection of this Agreement under
which such disclosure is being made.
"Mutual Financial Statements" shall mean (i) the consolidated
statements of condition (including related notes and schedules, if any) of
Mutual as of December 31, 1997, 1996 and 1995, and the related statements of
income, changes in stockholders' equity, and cash flows (including related notes
and schedules, if any) for each of the three years ended December 31, 1997, 1996
and 1995, as filed by Mutual in SEC Documents and (ii) the consolidated
statements of condition of Mutual (including related notes and schedules, if
any) and related statements of income, changes in stockholders' equity, and cash
flows (including related notes and schedules, if any) included in SEC Documents
filed with respect to periods ended subsequent to December 31, 1997.
"Mutual Preferred Stock" shall mean the $.10 par value
preferred stock of Mutual.
"Mutual Stock Plans" shall mean the existing stock option and
other stock-based compensation plans of Mutual.
"Mutual Subsidiaries" shall mean the Subsidiaries of Mutual,
which shall include the Mutual Subsidiaries described in Section 5.4 of this
Agreement and any corporation, bank, savings association, or other organization
acquired as a Subsidiary of Mutual in the future and owned by Mutual at the
Effective Time.
"NASD" shall mean the National Association of Securities
Dealers, Inc.
"NYSE" shall mean the New York Stock Exchange, Inc.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Order" shall mean any administrative decision or award,
decree, injunction, judgment, order, quasi-judicial decision or award, ruling,
or writ of any federal, state, local, or foreign or other court, arbitrator,
mediator, tribunal, administrative agency, or Regulatory Authority.
"Participation Facility" shall mean any facility or property
in which the Party in question or any of its Subsidiaries participates in the
management (including, but not limited to, participating in a fiduciary
capacity) 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 Mutual or UPC, and "Parties" shall
mean both Mutual and UPC.
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"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that is or
may be binding upon or inure to the benefit of any Person or its securities,
Assets, or business.
"Person" shall mean a natural person or any legal, commercial,
or governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Plan of Merger" shall mean the plan of merger providing for
the Merger, in substantially the form of Exhibit 2.
"Proxy Statement" shall mean the proxy statement used by
Mutual to solicit the approval of its stockholders of the transactions
contemplated by this Agreement, which shall include the prospectus of UPC
relating to the issuance of the UPC Common Stock to holders of Mutual Common
Stock.
"Registration Statement" shall mean the Registration Statement
on Form S-4, or other appropriate form, including any pre-effective or
post-effective amendments or supplements thereto, filed with the SEC by UPC
under the 1933 Act with respect to the shares of UPC Common Stock to be issued
to the stockholders of Mutual in connection with the transactions contemplated
by this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Office of Thrift
Supervision, all state regulatory agencies having jurisdiction over the Parties
and their respective Subsidiaries, the NASD, the NYSE and the SEC.
"Representative" shall mean any investment banker, financial
advisor, attorney, accountant, consultant, or other representative of a Person.
"Rights" shall mean all arrangements, calls, commitments,
Contracts, options, rights to subscribe to, scrip, understandings, warrants, or
other binding obligations of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, shares of the capital stock of a
Person or by which a Person is or may be bound to issue additional shares of its
capital stock or other Rights.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall mean all forms, proxy statements,
registration statements, reports, schedules, and other documents filed, or
required to be filed, by a Party or any of its Subsidiaries with any Regulatory
Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of 1940,
as amended, the Trust Indenture Act of 1939, as amended, and the rules and
regulations of any Regulatory Authority promulgated thereunder.
"Stock Option Agreement" shall mean the stock option agreement
by and between Mutual and UPC, in substantially the form of Exhibit 1.
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"Stockholders' Meeting" shall mean the meeting of the
stockholders of Mutual to be held pursuant to Section 8.1 of this Agreement,
including any adjournment or adjournments thereof.
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent; provided, there
shall not be included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a fiduciary
capacity.
"Supplemental Letter" shall mean the supplemental letter of
even date herewith between the Parties relating to certain understandings and
agreements in addition to those included in this Agreement.
"Surviving Corporation" shall mean UPHC as the surviving
corporation resulting from the Merger.
"Tax" or "Taxes" shall mean all federal, state, local, and
foreign taxes, charges, fees, levies, imposts, duties, or other assessments,
including income, gross receipts, excise, employment, sales, use, transfer,
license, payroll, franchise, severance, stamp, occupation, windfall profits,
environmental, federal highway use, commercial rent, customs duties, capital
stock, paid-up capital, profits, withholding, Social Security, single business
and unemployment, disability, real property, personal property, registration, ad
valorem, value added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, imposed or required to be withheld by the United States or
any state, local, or foreign government or subdivision or agency thereof,
including any interest, penalties, or additions thereto.
"Taxable Period" shall mean any period prescribed by any
governmental authority, including the United States or any state, local, or
foreign government or subdivision or agency thereof for which a Tax Return is
required to be filed or Tax is required to be paid.
"Tax Return" shall mean any report, return, information
return, or other information required to be supplied to a taxing authority in
connection with Taxes, including any return of an affiliated or combined or
unitary group that includes a Party or its Subsidiaries.
"TBCA" shall mean the Tennessee Business Corporation Act.
"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 Financial Statements" shall mean (i) the consolidated
balance sheets (including related notes and schedules, if any) of UPC as of
December 31, 1997 and 1996, and the related statements of earnings, changes in
stockholders' equity, and cash flows (including related notes and schedules, if
any) for each of the three years ended December 31, 1997, 1996 and 1995, as
filed by UPC in SEC Documents and (ii) the consolidated balance sheets of UPC
(including related notes and schedules, if any) and related statements of
earnings, changes in stockholders' equity, and cash flows (including related
notes and schedules, if any) included in SEC Documents filed with respect to
periods ended subsequent to December 31, 1997.
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"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 Union Planters Bank, National
Association, as Rights Agent.
"UPC Subsidiaries" shall mean the Subsidiaries of UPC and any
corporation, bank, or other organization acquired as a Subsidiary of UPC in the
future and owned by UPC at the Effective Time.
"UPHC" shall mean the wholly-owned subsidiary of UPC organized
under the Laws of the State of Tennessee.
"UPHC Common Stock" shall mean the $1.00 par value common
stock of UPHC.
(b) The terms set forth below shall have the meanings
ascribed thereto in the referenced sections:
Mutual Benefit Plans Section 5.13(a)
Mutual Contracts Section 5.14
Mutual ERISA Affiliate Section 5.13(e)
Mutual ERISA Plan Section 5.13(a)
Mutual Rights Section 3.5(a)
Mutual Pension Plan Section 5.13(a)
Mutual SEC Reports Section 5.5(a)
Closing Section 1.2
Effective Time Section 1.3
Exchange Agent Section 4.1
Exchange Ratio Section 3.1(c)
Indemnified Party Section 8.14
Merger Section 1.1
Takeover Laws Section 5.19
Tax Opinion Section 9.1(g)
UPC ERISA Affiliate Section 6.17
UPC SEC Reports Section 6.5(a)
(c) Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular. Whenever the words
"include," "includes," or "including" are used in this Agreement, they shall be
deemed followed by the words "without limitation."
11.2 EXPENSES.
(a) Except as otherwise provided in this Section 11.2,
each of the Parties shall bear and pay all direct costs and expenses incurred by
it or on its behalf in connection with the transactions contemplated hereunder,
including filing, registration, and application fees, printing fees, and fees
and expenses of its own financial or other consultants, investment bankers,
accountants, and counsel, except that each of the Parties shall bear and pay
one-half of the
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printing costs incurred in connection with the printing of the Registration
Statement and the Proxy Statement.
(b) Nothing contained in this Section 11.2 shall
constitute or shall be deemed to constitute liquidated damages for the willful
breach by a Party of the terms of this Agreement or otherwise limit the rights
of the nonbreaching Party.
11.3 BROKERS AND FINDERS. Except for Robert W. Baird & Co. Incorporated
as to Mutual, each of the Parties represents and warrants that neither it nor
any of its officers, directors, employees, or Affiliates has employed any broker
or finder or incurred any Liability for any financial advisory fees, investment
bankers' fees, brokerage fees, commissions, or finders' fees in connection with
this Agreement or the transactions contemplated hereby. In the event of a claim
by any broker or finder based upon his, her, or its representing or being
retained by or allegedly representing or being retained by Mutual or UPC, each
of Mutual and UPC, as the case may be, agrees to indemnify and hold the other
Party harmless of and from any Liability in respect of any such claim.
11.4 ENTIRE AGREEMENT. Except as otherwise expressly provided herein,
this Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral (including any provision of
the Confidentiality Agreements which would act to preclude UPC (or any Holder as
defined in the Stock Option Agreement from exercising its rights under the Stock
Option Agreement) to the extent that the Stock Option Agreement is in force and
effect, but excluding the Supplemental Letter). Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Sections 8.12 and 8.14 of this Agreement.
11.5 AMENDMENTS. To the extent permitted by Law, this Agreement may be
amended by a subsequent writing signed by each of the Parties upon the approval
of the Boards of Directors of each of the Parties, whether before or after
stockholder approval of this Agreement has been obtained; provided, that the
provisions of this Agreement relating to the manner or basis in which shares of
Mutual Common Stock will be exchanged for UPC Common Stock shall not be amended
after the Stockholders' Meeting without the requisite approval of the holders of
the issued and outstanding shares of UPC Common Stock and Mutual Common Stock,
as the case may be, entitled to vote thereon.
11.6 WAIVERS.
(a) Prior to or at the Effective Time, UPC, acting
through its Board of Directors, chief executive officer, chief financial
officer, or other authorized officer, shall have the right to waive any Default
in the performance of any term of this Agreement by Mutual, to waive or extend
the time for the compliance or fulfillment by Mutual 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, Mutual, acting
through its Board of Directors, chief executive officer, chief financial
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
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Agreement, and to waive any or all of the conditions precedent to the
obligations of Mutual 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 Mutual.
(c) The failure of any Party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such Party at a later time to enforce the same or any other provision of this
Agreement. No waiver of any condition or of the breach of any term contained in
this Agreement in one or more instances shall be deemed to be or construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach of any other term of this Agreement.
11.7 ASSIGNMENT. Except as expressly contemplated hereby, neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
assigned by any Party hereto (whether by operation of Law or otherwise) without
the prior written consent of the other Party. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of, and be enforceable
by the Parties and their respective successors and assigns.
11.8 NOTICES. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, by registered or certified mail, postage pre-paid, or by
courier or overnight carrier, to the persons at the addresses set forth below
(or at such other address as may be provided hereunder), and shall be deemed to
have been delivered as of the date so delivered:
Mutual: First Mutual Bancorp, Inc.
135 East Main Street
Decatur, Illinois 62523
Telecopy Number: (217) 429-8517
Attn: Paul K. Reynolds, President and
Chief Executive Officer
Copy to Counsel: Barack Ferrazzano Kirschbaum
Perlman & Nagelberg
333 West Wacker Drive
Chicago, IL 60606
Telecopy Number: 312-984-3150
Attn: James J. Brennan
UPC: UNION PLANTERS CORPORATION
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attn: Jackson W. Moore
President and
Chief Operating Officer
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Copy to Counsel: UNION PLANTERS CORPORATION
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Telecopy Number: (901) 580-2939
Attn: E. James House, Jr.
WYATT, TARRANT & COMBS
2800 Citizens Plaza
Louisville, KY 40202
Telecopy Number: (502) 589-0309
Attn: Stewart E. Conner
11.9 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Tennessee, without regard to any
applicable conflicts of Laws, except to the extent that the Laws of the State of
Delaware relate to the consummation of the Merger.
11.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
11.11 CAPTIONS. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
11.12 INTERPRETATIONS. Neither this Agreement nor any uncertainty or
ambiguity herein shall be construed or resolved against any Party, whether under
any rule of construction or otherwise. No Party to this Agreement shall be
considered the draftsman. The Parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all Parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as fairly to accomplish the purposes and intentions of the
Parties.
11.13 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
11.14 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
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IN WITNESS WHEREOF, each of the Parties has caused this
Agreement to be executed on its behalf and its corporate seal to be hereunto
affixed and attested by officers thereunto as of the day and year first above
written.
ATTEST: FIRST MUTUAL BANCORP, INC.
By: G. Lynn Brinkman By: Paul K. Reynolds
------------------------ --------------------------------
G. Lynn Brinkman Paul K. Reynolds
Secretary President and Chief Executive Officer
[CORPORATE SEAL]
ATTEST: UNION PLANTERS CORPORATION
By: E. James House, Jr. By: Jackson W. Moore
------------------------ -------------------------------------
E. James House, Jr. Jackson W. Moore
Secretary President
[CORPORATE SEAL]
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APPENDIX B
PLAN OF MERGER
OF
FIRST MUTUAL BANCORP, INC.
INTO AND WITH
UNION PLANTERS HOLDING CORPORATION
Pursuant to this Plan of Merger ("Plan of Merger"), FIRST
MUTUAL BANCORP, INC. ("Mutual"), a corporation organized and existing under the
Laws of the State of Delaware, shall be merged into and with UNION PLANTERS
HOLDING CORPORATION ("UPHC"), a corporation organized and existing under the
laws of the State of Tennessee and a wholly-owned subsidiary of UNION PLANTERS
CORPORATION, a corporation organized and existing under the laws of the State of
Tennessee ("UPC").
ARTICLE 1
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set
forth below shall have the following meanings:
1.1 "ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by UPHC and filed with the Secretary of State of the State of Tennessee
relating to the Merger as contemplated by Section 2.1 of this Plan of Merger.
1.2 "CERTIFICATE OF MERGER" shall mean the Certificate of Merger to be
executed by UPHC and filed with the Secretary of State of the State of Delaware
relating to the Merger as contemplated by Section 2.1 of this Plan of Merger.
1.3 "CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant to
any Contract, Law, Order, or Permit.
1.4 "DGCL" shall mean the Delaware General Corporation Law.
1.5 "EFFECTIVE TIME" shall mean the date and time on which the Merger
becomes effective as defined in Section 2.2 of this Plan of Merger.
1.6 "EXCHANGE AGENT" shall mean the exchange agent selected by UPC.
1.7 "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of
1986, as amended, and the rules and regulations promulgated thereunder.
1.8 "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.
1.9 "MERGER" shall mean the merger of Mutual into and with UPHC as
provided in Section 2.1 of this Plan of Merger.
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1.10 "MERGER AGREEMENT" shall mean the Agreement and Plan of
Reorganization, dated as of July 2, 1998, by and between UPC and Mutual.
1.11 "MUTUAL COMMON STOCK" shall mean the $.10 par value common stock
of Mutual.
1.12 "MUTUAL COMPANIES" shall mean, collectively, Mutual and all Mutual
Subsidiaries.
1.13 "MUTUAL STOCK PLANS" shall have the meaning set forth in the
Merger Agreement.
1.14 "MUTUAL SUBSIDIARIES" shall have the meaning set forth in the
Merger Agreement.
1.15 "NASD" shall mean the National Association of Securities Dealers,
Inc.
1.16 "NYSE" shall mean the New York Stock Exchange, Inc.
1.17 "REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the Office of Thrift
Supervision, all state regulatory agencies having jurisdiction over the Parties
and their respective Subsidiaries, the NASD, the NYSE, and the SEC.
1.18 "SEC" shall mean the United States Securities and Exchange
Commission.
1.19 "STOCKHOLDERS' MEETING" shall mean the meeting of the stockholders
of Mutual to be held pursuant to Section 8.1 of the Merger Agreement, including
any adjournment or adjournments thereof.
1.20 "SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or controls
50% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 50% or more of the outstanding
equity securities is owned directly or indirectly by its parent; provided, there
shall not be included any such entity acquired through foreclosure or any such
entity the equity securities of which are owned or controlled in a fiduciary
capacity.
1.21 "SURVIVING CORPORATION" shall refer to UPHC as the surviving
corporation resulting from the Merger.
1.22 "TBCA" shall mean the Tennessee Business Corporation Act, as in
effect at the Effective Time.
1.23 "UPC CAPITAL STOCK" shall mean, collectively, the UPC Common
Stock, the UPC Preferred Stock, and any other class or series of capital stock
of UPC.
1.24 "UPC COMMON STOCK" shall mean the $5.00 par value common stock of
UPC.
1.25 "UPC COMPANIES" shall mean, collectively, UPC and all UPC
Subsidiaries.
1.26 "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.
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1.27 "UPC RIGHTS" shall mean the preferred stock purchase nights issued
pursuant to the UPC Rights Agreement.
1.28 "UPC RIGHTS AGREEMENT" shall mean that certain Rights Agreement,
dated January 19, 1989, between UPC and Union Planters Bank, National
Association, as Rights Agent.
1.29 "UPHC COMMON STOCK" shall mean the $1.00 par value common stock of
UPHC.
Any capitalized term not defined herein shall have the meaning
ascribed to it in the Merger Agreement.
ARTICLE 2.
TRANSACTIONS AND TERMS OF MERGER
2.1 MERGER. Subject to the terms and conditions of this Plan of Merger,
at the Effective Time, Mutual shall be merged with and into UPHC in accordance
with the provisions of Section 252 of the DGCL and with the effect provided in
Section 259 of the DGCL and in accordance with the provisions of Section
48-21-109 of the TBCA and with the effect provided in Section 48-21-108 of the
TBCA (the "Merger"). UPHC shall be the Surviving Corporation resulting from the
Merger and shall continue to be governed by the Laws of the State of Tennessee.
2.2 EFFECTIVE TIME. The Merger and the other transactions contemplated
by this Plan of Merger shall become effective on the date and at the time the
Articles of Merger shall become effective with the Secretary of State of the
State of Delaware and the Secretary of State of the State of Tennessee (the
"Effective Time"). Subject to the terms and conditions hereof, unless otherwise
mutually agreed upon in writing by the duly authorized officers of each Party,
the Parties shall use their reasonable efforts to cause the Effective Time to
occur on or before the 15th business day (as designated by UPC) following the
last to occur of (i) the effective date (including expiration of any applicable
waiting period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on which
the stockholders of Mutual approve the matters relating to this Plan of Merger
required to be approved by such stockholders by applicable Law.
2.3 CHARTER. The Charter of UPHC in effect immediately prior to the
Effective Time shall be the Charter of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.4 BYLAWS. The Bylaws of UPHC in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation after the
Effective Time until otherwise amended or repealed.
2.5 DIRECTORS AND OFFICERS. The directors of UPHC in office immediately
prior to the Effective Time, together with such additional individuals
thereafter elected, shall serve as the directors of the Surviving Corporation
from and after the Effective Time in accordance with the Bylaws of the Surviving
Corporation. The officers of UPHC in office immediately prior to the Effective
Time, together with such additional individuals thereafter elected, shall serve
as the officers of the Surviving Corporation from and after the Effective Time
in accordance with the Bylaws of the Surviving Corporation.
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ARTICLE 3.
MANNER OF CONVERTING SHARES
3.1 CONVERSION OF SHARES. Subject to the provisions of this Article 3,
at the Effective Time, by virtue of the Merger and without any action on the
part of UPC or Mutual, or the stockholders of either of the foregoing, the
shares of the constituent corporations shall be converted as follows:
(a) Each share of UPC Capital Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(b) Each share of UPHC Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding from and after the Effective Time.
(c) Each share of Mutual Common Stock, but excluding
shares held by any Mutual Company or any UPC Company (in each case other than in
a fiduciary capacity or as a result of debts previously contracted), issued and
outstanding at the Effective Time shall be converted into a fraction of a share
of UPC Common Stock equal to the quotient obtained (the "Exchange Ratio") by
dividing [i] $18.50 by [ii] 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 chosen by UPC) for the 20
consecutive full trading days in which such shares are traded on the NYSE
preceding the third business day prior to the Closing Date. Pursuant to the UPC
Rights Agreement, each share of UPC Common Stock issued in connection with the
Merger upon conversion of Mutual Common Stock shall be accompanied by a UPC
Right.
3.2 ANTI-DILUTION PROVISIONS. In the event Mutual changes the number of
shares of Mutual Common Stock issued and outstanding prior to the Effective Time
as a result of a stock split, stock dividend, recapitalization. or similar
transaction with respect to such stock, the Exchange Ratio, as the case may be,
shall be proportionately adjusted. 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, recapitalization, or similar
transaction with respect to such stock and the record date therefor (in the case
of a stock dividend) or the effective date thereof (in the case of a stock split
or similar recapitalization for which a record date is not established) shall be
prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.
3.3 SHARES HELD BY MUTUAL OR UPC. Each of the shares of Mutual Common
Stock issued but not outstanding or held by any Mutual Company or by any UPC
Company, in each case other than in a fiduciary capacity or as a result of debts
previously contracted, shall be canceled and retired at the Effective Time and
no consideration shall be issued in exchange therefor.
3.4 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan
of Merger, each holder of shares of Mutual Common Stock exchanged pursuant to
the Merger who would otherwise have been entitled to receive a fraction of a
share of UPC Common Stock (after taking into account all certificates delivered
by such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of UPC Common Stock multiplied
by the market value of one share of UPC Common Stock at the Effective Time. The
market value of one share of UPC Common Stock at the Effective Time shall be the
last sale price of UPC Common Stock on the NYSE-Composite Transactions List (as
reported by The Wall Street Journal or, if not reported thereby, any other
authoritative source selected by UPC) on the last trading day preceding
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the Effective Time. No such holder will be entitled to dividends, voting rights,
or any other rights as a stockholder in respect of any fractional shares.
ARTICLE 4.
EXCHANGE OF SHARES
4.1 EXCHANGE PROCEDURES. Promptly after the Effective Time, UPC and
Mutual shall cause the exchange agent selected by UPC (the "Exchange Agent") to
mail to the former stockholders of Mutual appropriate transmittal materials
(which shall specify that delivery shall be effected, and risk of loss and title
to the certificates theretofore representing shares of Mutual Common Stock shall
pass, only upon proper delivery of such certificates to the Exchange Agent).
After the Effective Time, each holder of shares of Mutual Common Stock (other
than shares to be canceled pursuant to Section 3.3 of this Plan of Merger)
issued and outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Plan of Merger, together with all undelivered dividends
or distributions in respect of such shares (without interest thereon) pursuant
to Section 4.2 of this Plan of Merger. To the extent required by Section 3.4 of
this Plan of Merger, each holder of shares of Mutual Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of UPC Common Stock to which such holder may be otherwise
entitled (without interest). UPC shall not be obligated to deliver the
consideration to which any former holder of Mutual Common Stock is entitled as a
result of the Merger until such holder surrenders such holder's certificate or
certificates representing the shares of Mutual Common Stock for exchange as
provided in this Section 4.1. The certificate or certificates of Mutual Common
Stock so surrendered shall be duly endorsed as the Exchange Agent may require.
Any other provision of this Plan of Merger notwithstanding, neither the
Surviving Corporation nor the Exchange Agent shall be liable to a holder of
Mutual Common Stock for any amounts paid or property delivered in good faith to
a public official pursuant to any applicable abandoned property Law.
4.2 RIGHTS OF FORMER MUTUAL STOCKHOLDERS. At the Effective Time, the
stock transfer books of Mutual shall be closed as to holders of Mutual Common
Stock immediately prior to the Effective Time and no transfer of Mutual Common
Stock by any such holder shall thereafter be made or recognized. Until
surrendered for exchange in accordance with the provisions of Section 4.1 of
this Plan of Merger, each certificate theretofore representing shares of Mutual
Common Stock (other than shares to be canceled pursuant to Section 3.3 of this
Plan of Merger) shall from and after the Effective Time represent for all
purposes only the right to receive the consideration provided in Section 3.1 of
this Plan of Merger in exchange therefor, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any other distributions
with a record date prior to the Effective Time which have been declared or made
by Mutual in respect of such shares of Mutual Common Stock in accordance with
the terms of this Plan of Merger and which remain unpaid at the Effective Time.
To the extent permitted by Law, former stockholders of record of Mutual shall be
entitled to vote after the Effective Time at any meeting of UPC stockholders the
number of whole shares of UPC Common Stock into which their respective shares of
Mutual Common Stock are converted, regardless of whether such holders have
exchanged their certificates representing Mutual Common Stock for certificates
representing UPC Common Stock in accordance with the provisions of this Plan of
Merger. Whenever a dividend or other distribution is declared by UPC on the UPC
Common Stock, the record date for which is at or after the Effective Time, the
declaration shall include dividends or other distributions on all shares
issuable
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pursuant to this Plan of Merger, but beginning 30 days after the Effective Time
no dividend or other distribution payable to the holders of record of UPC Common
Stock as of any time subsequent to the Effective Time shall be delivered to the
holder of any certificate representing shares of Mutual Common Stock issued and
outstanding at the Effective Time until such holder surrenders such certificate
for exchange as provided in Section 4.1 of this Plan of Merger. However, upon
surrender of such Mutual Common Stock certificate, both the UPC Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) and any undelivered dividends and cash payments to be paid for
fractional share interests (without interest) shall be delivered and paid with
respect to each share represented by such certificate.
ARTICLE 5.
MISCELLANEOUS
5.1 CONDITIONS PRECEDENT. Consummation of the Merger by UPHC shall be
conditioned on the satisfaction of, or waiver by UPC of, the conditions
precedent to the Merger set forth in Sections 9.1 and 9.2 of the Merger
Agreement. Consummation of the Merger by Mutual shall be conditioned on the
satisfaction of, or waiver by Mutual of, of the conditions precedent to the
Merger set forth in Sections 9.1 and 9.3 of the Merger Agreement.
5.2 TERMINATION. This Plan of Merger may be terminated at any time
prior to the Effective Time by the parties hereto as provided in Article 10 of
the Merger Agreement.
5.3 COUNTERPARTS. This Plan of Merger may be executed in counterparts,
each of which shall be an original; but all of such counterparts together shall
constitute one and the same instrument
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Plan of Merger as of the date first above
written.
FIRST MUTUAL BANCORP, INC.
ATTEST: G. Lynn Brinkman By: Paul K. Reynolds
---------------------------- ----------------------------------
G. Lynn Brinkman, Secretary Paul K. Reynolds,
President and Chief Executive Officer
UNION PLANTERS HOLDING
CORPORATION
ATTEST: E. James House, Jr. By: Jackson W. Moore
---------------------------- ----------------------------------
E. James House, Jr., Jackson W. Moore,
Secretary President
<PAGE> 147
APPENDIX C
November 16, 1998
Board of Directors
First Mutual Bancorp, Inc.
135 East Main Street
Decatur, IL 62523-1204
Gentlemen:
First Mutual Bancorp, Inc. ("Mutual") has entered into an Agreement and
Plan of Reorganization (the "Agreement") with Union Planters Corporation
("UPC"). Pursuant to the Agreement, at the Effective Time (as defined in the
Agreement), Mutual will merge (the "Merger") with and into Union Planters
Holding Corporation and each outstanding share of common stock, par value $0.10
per share ("Mutual Common Stock") of Mutual (except for those held by Mutual,
UPC or any of their respective subsidiaries) will be converted into the right to
receive the number of shares of common stock, par value $5.00 per share (the
"UPC Common Stock") equal to the Exchange Ratio (as hereinafter defined). The
"Exchange Ratio" means the quotient obtained by dividing (i) $18.50 by (ii) the
average of the daily last per share sales price of UPC Common Stock for the 20
consecutive trading full days preceding the third business day prior to the
closing date of the Merger.
You have requested our opinion as to the fairness, from a financial
point of view, of the Exchange Ratio to the holders of Mutual Common Stock
(other than UPC and its affiliates).
Robert W. Baird & Co. Incorporated ("Baird"), as part of its investment
banking business, is engaged in the evaluation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes.
In conducting our investigation and analysis and in arriving at our
opinion herein, we have reviewed such information and taken into account such
financial and economic factors as we have deemed relevant under the
circumstances. In that connection, we have, among other things: (i) reviewed
certain internal information, primarily financial in nature, including
projections, concerning the business and operations of Mutual and UPC furnished
to us for purposes of our analysis, as well as publicly available information,
including, but not limited to, Mutual's and UPC's recent filings with the
Securities and Exchange Commission and equity analyst research reports prepared
by various investment banking firms; (ii) reviewed the Agreement; (iii) compared
the historical market prices and trading activity of Mutual Common Stock and UPC
Common Stock with those of certain other publicly traded companies we deemed
relevant; (iv) compared the financial position and
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operating results of Mutual and UPC with those of other publicly traded
companies we deemed relevant; (v) compared the proposed financial terms of the
Merger with the financial terms of certain other business combination
transactions involving thrift institutions that we deemed relevant; and (vi)
reviewed certain potential pro forma effects of the Merger. We have held
discussions with members of Mutual's and UPC's respective senior managements
concerning Mutual's and UPC's historical and current financial condition and
operating results, as well as the future prospects of Mutual and UPC,
respectively. As part of our engagement, we were requested to and did solicit
third party indications of interest in acquiring Mutual. We have also considered
such other information, financial studies, analyses and investigations and
financial, economic and market criteria which we deemed relevant for the
preparation of this opinion.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of all of the financial and other information that was
publicly available or provided us by or on behalf of Mutual and UPC, and have
not been engaged to independently verify any such information. We have assumed,
with your consent, (i) that all material assets and liabilities (contingent or
otherwise, known or unknown) of Mutual and UPC are as set forth in their
respective financial statements; (ii) the Merger will be accounted for under the
purchase method of accounting; (iii) the prospective cost savings and operating
benefits contemplated by UPC's management to result from the Merger will be
realized; and (iv) that the Merger will be consummated in accordance with the
terms of the Agreement without any amendment thereto or waiver by Mutual or UPC
of any condition to their respective obligations. We have also assumed that the
financial forecasts examined by us were reasonably prepared on bases reflecting
the best available estimates and good faith judgments of Mutual's and UPC's
respective senior managements as to future performance of Mutual and UPC,
respectively. In conducting our review, we have not undertaken nor obtained an
independent evaluation or appraisal of any of the assets or liabilities
(contingent or otherwise) of Mutual and UPC nor have we made a physical
inspection of the properties or facilities of Mutual or UPC. Baird assumed that
all necessary regulatory approvals for the Merger will be obtained without undue
delay. Our opinion necessarily is based upon economic, monetary and market
conditions as they exist and can be evaluated on the date hereof, and does not
predict or take into account any changes which may occur, or information which
may become available, after the date hereof. Furthermore, we express no opinion
as to the price or trading range at which Mutual's or UPC's securities will
trade following the date hereof.
Our opinion has been prepared at the request and for the information of
the Board of Directors of Mutual, and shall not be used for any other purpose or
disclosed to any other party without the prior written consent of Baird;
provided, however, that this letter may be reproduced in full in the Proxy
Statement-Prospectus to be provided to Mutual's stockholders in connection with
the Merger. This opinion does not address the relative merits of the Merger and
any other potential transactions or business strategies considered by Mutual's
Board of Directors, and does not constitute a recommendation to any stockholder
of Mutual as to how any such stockholder should
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vote with respect to the Merger. Baird will receive a fee for rendering this
opinion and a fee upon successful completion of the Merger.
In the ordinary course of our business, we may from time to time trade
the securities of Mutual or UPC for our own account or the accounts of our
customers and, accordingly, may at any time hold long or short positions in such
securities.
Based upon and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Exchange Ratio is fair, from a financial point of view,
to the holders of the Mutual Common Stock (other than UPC and its affiliates).
Very truly yours,
/s/ ROBERT W. BAIRD & CO. INCORPORATED
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Restated Charter of the Registrant provides as follows:
TWELFTH: INDEMNIFICATION OF CERTAIN PERSONS:
To the fullest extent permitted by Tennessee law, the
Corporation may indemnify or purchase and maintain insurance to indemnify any of
its directors, officers, employees or agents and any persons who may serve at
the request of the Corporation as directors, officers, employees, trustees or
agents of any other corporation, firm, association, national banking
association, state-chartered bank, trust company, business trust, organization
or any other type of entity whether or not the Corpo ration 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 in volved.
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 Cor poration 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 rea sonable
expenses (including attorneys' fees) actually and necessarily incurred by him in
connection with any threatened or pending suit or proceeding or any appeal
thereof (other than an action by or in the right of the corporation), whether
civil or criminal, by reason of the fact that he is or was a director or officer
of the corporation or is or was serving at the request of the corporation as a
director or officer, employee or agent of another corporation of any type or
kind, domestic or foreign, if such director or officer acted in good faith for a
purpose which he reasonably believed to be in the best interest of the
corporation and, in criminal actions or proceedings only, in addition, had no
reasonable cause to believe that his conduct was unlawful. A Tennessee
corporation may indemnify a director or officer thereof in a suit by or in the
right of the corporation against amounts paid in settlement and reasonable
expenses, including attorneys' fees, actually and necessarily incurred as a
result of such suit unless such director or officer did not act in good faith or
with the degree of diligence, care and skill which ordinary prudent men exercise
under similar circumstances and in like positions.
A person who has been wholly successful, on the merits or
otherwise, in the defense of any of the foregoing types of suits or proceedings
is entitled to indemnification for the foregoing amounts. A person who has not
been wholly successful in any such suit or proceeding may be indemni
II-1
<PAGE> 151
fied only upon the order of a court or a finding that the director or officer
met the required statutory standard of conduct by (i) a majority vote of a
disinterested quorum of the Board of Directors, (ii) the Board of Directors
based upon the written opinion of independent legal counsel to such effect, or
(iii) a vote to the shareholders.
ITEM 21. EXHIBITS.
The following exhibits are filed herein:
Exhibit No. Description
2.1 Agreement and Plan of Reorganization, dated as of July 2, 1998, between
Union Planters Corporation and First Mutual Bancorp, Inc. (Included as
Appendix A to the Proxy Statement included as part of this Registration
Statement.)
2.2 Plan of Merger of First Mutual Bancorp, Inc. into and with Union
Planters Holding Corporation. (Included as Appendix B to the Proxy
Statement included as part of this Registration Statement.)
2.3 Stock Option Agreement, dated as of July 2, 1998, between First Mutual
Bancorp, Inc. and Union Planters Corporation. (Incorporated by
reference to Exhibit 1 to the Schedule 13D, dated July 13, 1998, filed
by UPC (File No. 0-6919) with respect to the common stock of First
Mutual Bancorp, Inc. (File No. 0-26184).)
4.1 Restated Charter of Union Planters Corporation (Incorporated by
reference to Exhibit 3(a) to the Quarterly Report on Form 10-Q of UPC
for the nine months ended March 31, 1998 (File No. 1-10160).)
4.2 Amended and Restated Bylaws of Union Planters Corporation.
(Incorporated by reference to Exhibit 3(b) to the Annual Report on Form
10-K of UPC for the fiscal year ended December 31, 1996 (File No.
1-10160).)
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 PricewaterhouseCoopers LLP, independent accountants for
Union Planters Corporation.
23.2 Consent of Crowe, Chizek and Company LLP, independent auditors for
First Mutual Bancorp, Inc.
23.3 Consent of E. James House, Jr., Secretary and Manager of the Legal
Department of Union Planters Corporation (included in Exhibit 5.1).
II-2
<PAGE> 152
23.4 Consent of Wyatt, Tarrant & Combs (included in Exhibit 8.1).
23.6 Consent of Robert W. Baird & Co., Inc.
24.1 Power of Attorney (contained on the signature page hereof).
99.1 Form of proxy of First Mutual Bancorp, Inc.
II-3
<PAGE> 153
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
state ment 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 pro spectus 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 trans action, 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
II-4
<PAGE> 154
to be an underwriter within the meaning of Rule 145(c), the issuer undertakes
that such reoffering pro spectus 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 preced ing, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connec tion 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-5
<PAGE> 155
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-4 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly au thorized, in the City of Memphis, State of Tennessee, on October 15,
1998.
UNION PLANTERS CORPORATION
By: /s/ BENJAMIN W. RAWLINS, JR.
---------------------------------------------
Benjamin W. Rawlins, Jr.
Chairman of the Board and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints E. James House, Jr. and M. Kirk
Walters, and each of them, with the power to act without the other, his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her, and in his or her name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
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, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully and to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or her 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 Registra tion Statement on Form S-4 has been signed below by the
following persons as of the 16th day of April, 1998 in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ BENJAMIN W. RAWLINS, JR. Chairman of the Board, Chief Executive October 15, 1998
- -------------------------------- Officer, Director (Principal Executive Officer)
Benjamin W. Rawlins, Jr.
</TABLE>
II-6
<PAGE> 156
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ JOHN W. PARKER Executive Vice President and Chief Financial October 15, 1998
- -------------------------------- Officer (Principal Financial Officer)
John W. Parker
/s/ M. KIRK WALTERS Senior Vice President, Treasurer, and October 15, 1998
- -------------------------------- Chief Accounting Officer
M. Kirk Walters
- -------------------------------- Director
Albert M. Austin
/s/ MARVIN E. BRUCE Director October 15, 1998
- --------------------------------
Marvin E. Bruce
/s/ GEORGE W. BRYAN Director October 15, 1998
- --------------------------------
George W. Bryan
/s/ JAMES E. HARWOOD Director October 15, 1998
- --------------------------------
James E. Harwood
/s/ PARNELL S. LEWIS, JR. Director October 15, 1998
- --------------------------------
Parnell S. Lewis, Jr.
/s/ C.J. LOWRANCE, III Director October 15, 1998
- --------------------------------
C.J. Lowrance, III
/s/ JACKSON W. MOORE President, Chief Operating Officer, October 15, 1998
- -------------------------------- Director
Jackson W. Moore
</TABLE>
II-7
<PAGE> 157
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ STANLEY D. OVERTON Director October 15, 1998
- --------------------------------
Stanley D. Overton
/s/ V. LANE RAWLINS Director October 15, 1998
- --------------------------------
V. Lane Rawlins
/s/ DONALD F. SCHUPPE Director October 15, 1998
- --------------------------------
Donald F. Schuppe
/s/ DAVID M. THOMAS Director October 15, 1998
- --------------------------------
David M. Thomas
- -------------------------------- Director
Richard A. Trippeer, Jr.
/s/ SPENCE L. WILSON Director October 15, 1998
- -------------------------------
Spence L. Wilson
</TABLE>
II-8
<PAGE> 1
EXHIBIT 5.1
[Letterhead of Union Planters Corporation]
November 18, 1998
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Re: 1,450,000 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
1,450,000 shares of UPC's Common Stock, $5.00 par value per share, ("UPC Common
Stock") which may be issued by UPC pursuant to an Agreement and Plan of
Reorganization dated as of July 2, 1998, by and between UPC and First Mutual
Bancorp, Inc. ("First Mutual") (the "Agreement").
For purposes of rendering the opinion expressed herein, the
undersigned has examined UPC's corporate charter and all amendments thereto;
UPC's by-laws and amendments thereto; the Agreement and such of UPC's corporate
records as the undersigned has deemed necessary and material to rendering the
undersigned's opinion. The undersigned has relied upon certificates of public
officials and representations of UPC officials, and has assumed that all
documents examined by the undersigned as originals are authentic, that all
documents submitted to the undersigned as photocopies are exact duplicates of
original documents, and that all signatures on all documents are genuine.
Further, the undersigned is familiar with and has supervised
all corporate action taken in connection with the authorization of the issuance
and offering of the subject securities.
Based upon and subject to the foregoing and subsequent
assumptions, qualifications and exceptions, it is the undersigned's opinion
that:
1. UPC is a duly organized and validly existing corporation in
good standing under the laws of the State of Tennessee and has all requisite
power and authority to issue, sell and deliver the subject securities, and to
carry on its business and own its property; and
2. The shares of UPC Common Stock to be issued by UPC pursuant
to the Merger will be duly authorized and when issued by UPC in accordance
therewith, such shares of UPC Common Stock will be fully paid and nonassessable.
<PAGE> 2
The opinion expressed above is limited by the following
assumptions qualifications and exceptions:
(a) The undersigned is licensed to practice law only in the
State of Tennessee and expressed no opinion with respect to the effect of any
laws other than those of the State of Tennessee and of the United States of
America.
(b) The opinion stated herein is based upon statutes,
regulations, rules, court decisions and other authorities existing and effective
as of the date of this opinion, and the undersigned undertakes no responsibility
to update or supplement said opinion in the event of or in response to any
subsequent changes in the law or said authorities, or upon the occurrence after
the date hereof of events or circumstances that, if occurring prior to the date
hereof, might have resulted in a different opinion.
(c) This opinion is limited to the legal matters expressly set
forth herein, and no opinion is to be implied or inferred beyond the legal
matters expressly so addressed.
The undersigned hereby consents to the undersigned being named
as a party rendering a legal opinion under the caption "Legal Opinions" in the
Prospectus constituting part of the Registration Statement and to the filing of
this opinion with the Securities and Exchange Commission as well as all state
regulatory bodies and jurisdictions where qualification is sought for the sale
of the subject securities.
The undersigned is an officer of, and receives compensation
from, UPC and therefore, is not independent from UPC.
Yours very truly,
UNION PLANTERS CORPORATION
By: /s/ E. JAMES HOUSE, JR.
------------------------------
E. James House, Jr.
Manager, Legal Division
<PAGE> 1
EXHIBIT 8.1
November 18, 1998
Board of Directors
Union Planters Corporation
7130 Goodlett Farms Parkway
Memphis, Tennessee 38018
Board of Directors
First Mutual Bancorp, Inc.
135 East Main Street
Decatur, Illinois 62523
Gentlemen:
We have acted as counsel to Union Planters Corporation, a Tennessee
corporation ("UPC"), in connection with (i) the proposed merger (the "Merger")
of First Mutual Bancorp, Inc. a Delaware corporation ("Mutual"), with and into
Union Planters Holding Corporation, a Tennessee corporation and a wholly-owned
subsidiary of UPC ("UP Holdings"), pursuant to the terms of the Agreement and
Plan of Reorganization by and between UPC and Mutual dated July 2, 1998 (the
"Merger Agreement") and related Plan of Merger between UPC, UP Holdings and
Mutual (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
<PAGE> 2
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, UP Holdings and Mutual contained in letters to us
dated November 18, 1998 and November 18, 1998 (the "Representation Letters").
The Representation Letters address various factual matters relevant to the
qualification of the Merger as a tax-deferred reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"). The
initial and continuing truth and accuracy of all such factual matters
constitutes an integral basis for, and a material condition to, this opinion.
The scope of this opinion is limited strictly to the matters set forth
below and no other opinion may be implied or inferred beyond such matters.
Without limiting the foregoing sentence, we express no opinion as to (i) any of
the local, state, foreign or other federal tax consequences resulting from the
Merger, (ii) the federal income tax consequences to shareholders of Mutual
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 Mutual 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 Mutual 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 Mutual and/or its subsidiaries and any
other amounts resulting from any required change in accounting methods; and (vi)
the tax consequences of the parties to the Merger Agreement of any income and
deferred gain recognized pursuant to Treasury Regulations issued under Section
1502 of the Code.
Subject to the qualifications, assumptions and conditions provided
herein, we are of the opinion that:
1. The acquisition by UP Holdings of substantially all of the assets of
Mutual in exchange for shares of UPC Common Stock and the assumption of
liabilities of Mutual pursuant to the Merger will constitute a reorganization
within the meaning of Section 368(a) of the Code.
2. Mutual, UPC and UP Holdings will each be "a party to a
reorganization" within the meaning of Section 368(b) of the Code.
3. No gain or loss will be recognized by Mutual as a result of the
Merger.
4. No gain or loss will be recognized by UP Holdings or UPC as a result
of the Merger.
<PAGE> 3
5. No gain or loss will be recognized by the shareholders of Mutual as
a result of the exchange of Mutual 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 Mutual Common Stock is a
capital asset in the hands of the respective Mutual 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 Mutual Common Stock allocable
to the fractional share.
6. The tax basis of UPC Common Stock to be received by the shareholders
of Mutual will be the same as the tax basis of the Mutual Common Stock
surrendered in exchange therefor (reduced by any amount allocable to a
fractional share interest for which cash is received).
7. The holding period of the UPC Common Stock to be received by
shareholders of Mutual will include the holding period of the Mutual Common
Stock surrendered in exchange therefor, provided the Mutual shares were held as
a capital asset by the shareholders of Mutual on the date of the exchange.
8. A shareholder of Mutual who perfects his dissenter's rights and who
receives payment of the fair market value of his shares of Mutual Common Stock
will be treated as having received such payment in redemption of such stock.
Such redemption will be subject to the conditions and limitations of Section 302
of the Code.
This opinion is based on the Code, the Treasury Regulations promulgated
thereunder, judicial decisions and administrative pronouncements of the Internal
Revenue Service ("IRS"), all existing and in effect on the date of this opinion
and all of which are subject to change at any time, possibly retroactively. Any
such change could materially alter the conclusions reached in this opinion. We
undertake no obligation to you or any other person to give notice of any such
change. As noted above, this opinion is limited strictly to the matters
expressly stated herein and no other opinion may be implied or inferred beyond
such matters. You should realize that this opinion is not binding on the IRS or
the courts.
This opinion is provided to you solely for purposes of complying with
the requirements of Item 21(a) of Form S-4 under the Act and Section 9.1(g) of
the Merger Agreement. We hereby consent to the use of this opinion as an exhibit
to the Registration Statement, to the disclosure and
<PAGE> 4
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,
/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 October 15, 1998, which
appears on page B-2 of Exhibit 99.1 in the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1998 of Union Planters Corporation. We also consent
to the reference to us under the heading "EXPERTS" in such Proxy
Statement/Prospectus.
/s/ PricewaterhouseCoopers LLP
Memphis, Tennessee
November 20, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
First Mutual Bancorp, Inc.
We consent to the incorporation by reference in this Proxy Statement and
Prospectus on Form S-4 filed with the Securities and Exchange Commission of our
report dated January 16, 1998 on the financial statements included in the Form
10-K of First Mutual Bancorp, Inc. for the year ended December 31, 1997. We also
consent to the reference to us under the heading "Experts" in this Prospectus.
/s/ Crowe, Chizek and Company LLP
Oak Brook, Illinois
November 11, 1998
<PAGE> 1
EXHIBIT 23.6
Robert W. Baird & Co. Incorporated ("Baird") hereby consents to the inclusion in
the Joint Proxy Statement/Prospectus of Union Planters Corporation and First
Mutual Bancorp, Inc., as a part of this Registration Statement on Form S-4 of
Union Planters Corporation, of its opinion dated November 16, 1998, and to the
references made to Baird in the sections of such Proxy Statement/Prospectus
entitled "The Merger - Background of the Merger," "The Merger - Reasons for the
Merger" and "Opinion of First Mutual's Financial Advisor." In giving such
consent, we do not thereby admit that we come within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933 or the
rules and regulations and regulations of the Securities and Exchange Commission
promulgated thereunder.
/s/ ROBERT W. BAIRD & CO. INCORPORATED
November 20, 1998
<PAGE> 1
EXHIBIT 99.1
FIRST MUTUAL BANCORP, INC.
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints _________________ and _________________
or either of them in case the other is unable or unwilling to act, as Proxies,
each with the power to appoint his/her substitute, and hereby authorizes them to
represent and to vote, as designated below, all of the shares of voting stock of
FIRST MUTUAL BANCORP, INC. held of record by the undersigned on November 6,
1998, at the Special Meeting of Shareholders of FIRST MUTUAL BANCORP to be held
on January __, 1998, or any adjournments thereof. The undersigned acknowledges
receipt of the Proxy Statement/Prospectus, dated November __, 1998, relating to
the Special Meeting of Shareholders.
1. Approval of the Agreement and Plan of Reorganization, dated as of July
2,1998, by and between FIRST MUTUAL BANCORP, INC. and Union Planters
Corporation and the related Plan of Merger by and between FIRST MUTUAL
BANCORP, INC., and Union Planters Holding Corporation, as more fully
described in the Proxy Statement/Prospectus, dated November __, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY, WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED
FOR PROPOSAL 1.
DATED: ___________________________, 1998
------------------------------------------
Signature
------------------------------------------
Signature, if held jointly
Please sign exactly as name appears on this
Proxy Card. When shares are held by joint
tenants, both should sign. When signing as
attorney-in-fact, executor, administrator,
personal representative, trustee or
guardian, please give full title as such. If
a corporation, please sign in full corporate
name by President or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
